pranda : annual report 2004

Pranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company Limited 01

⌧

☺ ⌧

Prida Tiasuwan

Chairman

02 Pranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company LimitedPranda Jewelry Publ ic Company Limited

⌧

Thailand is widely and internationally recognized

as one of the countries in the world that is potential

with production capacity of world-class jewelry, thanks

to the kingdom's preparedness as the major gemstones

trading center, rich skilled and experienced craftsmen

as well as government's continuous support to the

gems and jewelry industry.

As a result of the Thai government's commit-

ment on bilateral free trade that initiated implementa-

tion with certain countries and multilateral free trade

which is currently under negotiation, competition is likely

to get inevitably intensified. In addition, the Thai cur-

rency is expected to become appreciated against the

US dollar while the fluctuation of the gold prices

remain in the pipeline due to the global economic un-

certainty. Such risk factors are expected to threat

throughout this year. However, despite such challenges,

Pranda Jewelry Public Company Limited, the manu-

facturer and distributor of jewelry for more than 30

years, remains committed to being "The World Class

Mass Brand Producer" by upholding firmly corporate

philosophy to preserve the best quality that meets trust

and world wide recognition from related parties.

Despite being besieged by the oil rallies, a surge

of gold price, and relentless competition, Pranda

Jewelry Public Company Limited has managed to

growth in the year 2004 with sale revenue worth a total

of 3,323 million Baht or having growth up to 27%

compared with 2,615 million Baht in the year 2003. A

significant growth of the Company's revenue well

reflected the company's achievement mainly thanks

to an excellent teamwork of our management and all

employees. As a result, the Company posted in 2004

a net profit worth 362 million Baht which increased

amount of 312 million Baht or arose up to 16% in

comparison with a year earlier. More importantly, the

Company also had solid capital structure as evidenced

by Long-term debt to Equity ratio, which was as low as

0.39 and Time Interest Earned (TIE) of as high as 8.5

the perfect path in effective human resource develop-

ment. The Company stays committed to promoting

royalty among existing employees through reasonable

and fair remuneration system.

More importantly, the Company always realizes

how surrounding communities are vital to the business.

Pranda Jewelry Public Company Limited has there-

fore whole-heartedly adopted as its corporate policy

the social contribution, environmental preservation and

social care.

The Company always upholds belief that a

perfect synergy of design and product development,

production, distribution, human resource development,

environmental care, is capable to win unlimited demand

of customers being the right direction. The Company

is also balanced to sustain growth for mutual interests

of stakeholders, customers, trade partners, employ-

ees and surrounding communities, which would even-

tually promote Thailand as the future leader of the world

fashion concerns.

Last but not least, on behalf of the Company,

We would like to thank all shareholders, employees at

all levels, and related parties who deliver trust and

supports both directly and indirectly to the company.

The Board of Directors is committed to adopting the

principle of the good corporate governance as the

norms in business management, and hope to see fur-

ther unwavering supports from all of you.

Prayoon Talerngsri

Executive Chairman

⌧

Pranda Jewelry Publ ic Company Limited Pranda Jewelry Publ ic Company Limited Pranda Jewelry Publ ic Company Limited Pranda Jewelry Publ ic Company Limited Pranda Jewelry Publ ic Company Limited 03

For the year 2005, the Company is still commit-

ted to continuing the effective growth strategy boosted

by outstanding own in-house design and product

development center, efficiency five production bases

in four countries which enable the company to achieve

economies of scale, and productive distribution bases

which span worldwide key regions including North

America, Europe and Asia. Moreover, the Company

has distributed the a diversity of its own brands

comprising Prima Gold, Prima Diamond, Prima Art,

Century Gold, Esse, Cristalina, and H.Gringoire through

its retail outlets both in domestic and international

market including franchise system. The Company is

also committed to human resource development

through practice operation system which their perfor-

mance is evaluated to meet the imposed objective,


Chairman

Chairman of Executive Committee

President

Corporate Finance Chairman

Senior Vice President


Independent Director / Audit Committee

Director

Senior Vice President

Vice President

Independent Director / Chairman of Audit Committee

☺ Independent Director / Audit Committee


⌧

Executive Chairman

Vice Executive Chairman





⌧

Executive Director

Executive Director

Executive Director

Executive Director


The Audit Committee of Pranda Jewelry Public Company Limited is composed of Lieut. Olarn Krairiksh,

the chairman of the Audit Committee, Lieut. Anan Panananda R.N. and Mr.Vorasit Pokachaiyapat, the Audit

Committee's members. All directors of the committee are independent and qualified as stipulated by the rules of

the Stock Exchange of Thailand. Lieut.Olarn Krairiksh and Lieut. Anan Panananda R.N. are the expert and

specialist in accounting and tax, while Mr.Vorasit Pokachaiyapat is the specialist in finance and investment.

In 2004 fiscal year, four meetings were held and participated by the Company's internal auditors and the

auditing directors to jointly discuss the auditing scope and plans with no representatives from the management

attending. The Audit Committee's responsibilities are to supervise the Company fully in compliance with the

rules and regulations of the Stock Exchange of Thailand, ensure the transparency of the accounting system,

prevent the conflict of interests of the board of directors and the Company and promote the good corporate

governance among the Company's employees and outsiders.

The Audit Committee has appraised the the Company's internal control system according to the guide-

lines imposed by the Securities and Exchange Commission and found that the internal auditors had freedom to

handle their responsibilities determined in advance in the annual auditing plans and were informed the progress

of the implementation of the plan on the quarterly basis. The Audit Committee commented the Company's

internal auditing was adequately, properly and efficiently prepared.

However, the Company is recommended to consider other issues as follows:-

1. The Company should monitor the performance and operations of the Company's subsidiaries on a

frequent basis, including their short-and-long-term operation plans.

2. The Company should explore more channels to upgrade the Company into the brand name manufac-

turer.

3. The Company should promote the internal auditing system both by manpower and systems which

facilitate the internal auditing.

Lieut. Olarn Krairiksh

Chairman of the Audit Committee


☺

⌧

⌧

ItemsValue(million US$) Change (%)

2003

1,105.40

386.90

703.30

15.20

2004

1,275.40

461.60

797.30

16.40

2003

12.01

24.69

5.95

18.75

2004

15.38

19.31

13.37

7.89

Fine jewelry

Silver jewelry

Gold jewelry

Other precious metal jewelry

Source : Ministry Of Commerce Thailand

Throughout 2004, the expansion rate and market share of Thai gems and jewelry products in the world

market remained growing despite stiff competition environment. It could be summed up that Thai fine jewelry

producers and exporters had come up with greater competitiveness against both rivals with lower raw material

costs and wages such as India and China and countries with advanced production technology and own brands

like Italy. In 2004, the fine jewelry products fetched Thailand up to US$1,275.40 million, a significant rise of

15.38% from US$1,105.40 million received in 2003.

Million $


⌧ ☺

Total value US$ 1,275.40 million

Growth rate of Thailand's jewelry exports in the world market Breakdown of five major export destinations for

Thailand's jewelry products in 2004.

: Despite the United States' economic slowdown in the past year, the overall performance

of Thai jewelry exports to the US market remained strong with expansion rate of 12.69% to US$557.8 million in

2004 compared with US$495 million in a year earlier thanks to relatively medium prices of Thai jewelry which

meet demand of most of the US local consumers.

: The UK market saw a continuous growth, with consumption of costume jewelry

seconded only to the United States. Thai jewelry products currently rank No. 6 in the UK market which is taken

as one of Thailand's target export markets. Thai jewelry export increased by 22.25% in 2004 worth US$120.90

million, a rise from US$147.80 million in 2003.

: Over the past year, the expansion rate of Thai jewelry export values into the German market was

not so much high due to its local economic problems. Despite such fact, Germany's import values in 2004 were

still strong, with the expansion rate of 1.64% worth US$87 million compared with 85.60 million in 2003.

☺: Japan's economy started recovering in the past year, resulting in greater dispensable income and higher

purchasing power for jewelry. Now that Japan, in particular, has a tradition to offer costume jewelry and gems as

a gift on various occasions, Thai gems and jewelry exports see greater expansion. In 2004, Thailand's jewelry

exports to Japan expanded by 5.75% worth US$58.90 against US$55.70 million in 2003.

: France was another country hit by economic slowdown. However, export volume of Thai genuine

jewelry to France remained healthy due to the unique quality of Thai products. Thai jewelry exports last year

contributed US$47.50 million in 2004, a 13.91% rise from US$41.70 million in 2003.

: Export markets for genuine costume products of Thai exporters with healthy expansion rate

and export potential include Israel, Italy, Australia, the United Arab Emirates, and other countries. Those

countries despite relatively low export values could be promoted and developed as Thailand's major export

destinations.


☺

Registration : Public company 445

Business : Manufacturer and distributor of jewelry

Headquarters address : 333 Soi Rungsang, Bangna-Trad Road,

Bangna Sub-district, Bangna District, Bangkok 10260

Telephone : (66) 2361-3311, 2393-8428, 2393-8779

Fax : (66) 2361-3088, 2398-2143, 2399-4874

Website : www.pranda.co.th

Registered capital of ordinary share : 400,000,000 Baht

Paid-up shares : 274,911,150 Baht

Par value : 1 Baht per share

☺ ⌧

Type of Business : Manufacturing and export of costume jewelry under

Cristalina trade mark

Address : 331 Soi Rungsang, Bangna-Trad Rd., Bangna Sub-district,

Bangna District, Bangkok 10260

Tel. (66) 2746-9580-5 Fax : (66) 2399-4878

www.crystaline.com



% of Shareholding : 92

Type of Business : Distribution of gold jewelry 99.9 %, diamond and silver

jewelry under trade mark of Prima Gold, Prima Diamond,

Prima Art, Century Gold and ESSE

Address : 1093/64 12th Flr., Central City Bangna Building,

Bangna-Trad Rd., Bangna Sub-district, Bangna District,

Bangkok 10260

Tel. (66) 2745-6111 Fax : (66) 2745-6117

www.primagold.co.th





Type of Business : Property rental / Properties

Address : 333 Soi Rungsang, Bangna-Trad Rd., Bangna Sub-district,

Bangna District, Bangkok 10260

Tel. (66) 2361-3311 Fax : (66) 2361-3088




Type of Business : Distribution of gold Jewelry in the US and Canada

Address : 1 Wholesale Way, Cranston, RI 02920, U.S.A.

Tel. 1(401) 490-5100-10 Fax : 1(401) 490-5106

E-mail : [email protected]

Paid-up shares : 2,000 USD


Type of Business : Distribution of silver jewelry and costume jewelry in the US

and Canada

Address : 1 Wholesale Way, Cranston, RI 02920, U.S.A.

Tel. 1(401) 946-2104 Fax : 1(401) 946-2109


Paid-up shares : 25,000 USD (held by Pranda North America, Inc,)


Type of Business : Distribution of gold jewelry under H.Gringoire trade mark in

France and Europe

Address : 79 Rue De Turbigo F-75003, Paris, France

Tel. 33 (1) 5301-9530 Fax : 33 (1) 5301-9540


Paid-up shares : 1.893 Million EUR


Type of Business : Distribution of gold, silver and costume jewelry under

Cristalina trade mark in UK and Europe

Address : P.O. Box 270, Walton On Thames, Surrey KT 12 3 YS

Tel. 44 (1) 932-220-645 Fax : 44 (1) 932-221-438


Paid-up shares : 0.5 Million GBP



Type of Business : Manufacturing and distribution of gold and silver jewelry

under Prima Gold, ESSE trade mark in Vietnam

Address : 16 Road 2A, Bien Hoa Industrial Zone II, Dong Nai, Vietnam

Tel. 84 (61) 836 627, 836 739 Fax : 84 (61) 836 738


Paid-up shares : 1.5 Million USD


Type of Business : Venture in Malaysia and Indonesia

Address : Asiaciti Management Pte. Limited 1 Raffles Place, # 21-01

OBU Centre Singapore 048616

Tel. (65) 6533-2611 Fax : (65) 6532-5092

Paid-up shares : 3.0 Million SGD


⌧ ⌧ ⌧ ⌧ ⌧ Type of Business : Manufacturing of silver jewelry for locally distributed to

People's Republic of China

Address : No. 381 Yushan Road West, 2/F., Shiqiao, Panyu,

Guangzhou, Guangdong, CHINA

Tel. (86) 020 8466 3051

Fax : (86) 020 3481 1631

Paid-up shares : 0.325 Million USD


: (Rename LG-PRANDA Co., Ltd. as of December 19, 2004)

Type of Business : Import and distribution of silver and pure gold granules and

bars

Address : 159 Sukhumvit Road 21 (Asoke) Khongtoey Sub-district,

Wattana District, Bangkok 10110

Tel. (66) 2204-1441-3 Fax : (66) 2204-1444





Type of Business : Manufacturing, export and local distribution of gold,

silver jewelry

Address : JL.I Gusit Ngurah Rai No.1, Jakarta 13420, INDONESIA

Tel. 62 21 819 9280-2 Fax : 62 21 819 9223


Paid-up shares : 4,000 Million IDR


: Thailand Securities Depository Company Limited

62 The Stock Exchange of Thailand Building,

4, 7th Floor, Rachadapisek Road,

Klongtoey, Bangkok 10110, THAILAND.

Tel. (66) 2229-2800

Fax : (66) 2359-1259

: 1. Mr.Ruth Chaowanagawi, CPA No. 3247 and/or

2. Mr. Narong Pantawong, CPA No. 3315 and/or

3. Ms.Siraporn Ouaanunkun, CPA No. 3844

Ernst & Young Office Limited

33rd Floor, Lake Rajada Office Complex

193/136-137 New Rajadapisek Road

(Near Queen Sirikit's National Convention Centre)

Klongtoey, Bangkok 10110, THAILAND

Tel : (66) 2264-0777, (66) 2661-9190

Fax : (66) 2264-0789-90, (66) 2661-9192

: White & Case (Thailand) Limited

5th Floor, Gaysorn Place (Gaysorn Plaza)

999 Ploenchit Road, Lumpini

Pathumwan, Bangkok 10330, THAILAND

Tel : (66) 2656-1721

Fax : (66) 2656-1733


Pranda Jewelry Public Company Limited (Pranda) was founded in 1973 by Pranda Design which later

renamed to Pranda Jewelry Limited on April 27, 1984. The Company had listed its ordinary shares in the Stock

Exchange of Thailand on July 6, 1990 and converted into the Public Company Limited on June 3, 1994. The

Company has currently registered capital worth of 400 million baht with 274.91 million baht paid up. Pranda

Jewelry Public Company Limited’s headquarter is located at 333 Moo.11, Soi Rungsaeng, Bangna-Trad, Bangna,

Bangkok. The Company operates under the promotional privileges of the Board of Investment for export-orien-

tated golden and silver-based jewelry. With experiences of more than 30 years in the jewelry business, Pranda

Jewelry Public Company Limited has steadfastly upheld the competitiveness particularly strengthened by

Design Development Center which enables the Company’s production to achieve the economies of scale, and

five manufacturing plants with production capacity of 5.87 million pieces a year in four countries comprising

Thailand, Indonesia, Vietnam and China. The Company has also distributed a wide range of products through its

distribution bases operated by the Company’s subsidiaries spanning in key regions of the world. It is hence clear

that the Company is committed in quality control starting from design to the customer services.

The Group of Companies is composed of nine subsidiaries and two joint venture firms, producing and

distributing primarily gold and silver-based ornaments. Extensive portfolio of the Company’s products which

cover rings, earrings, brooch, locket, necklaces and bracelets have driven Pranda as the jewelry specialist to

the extent that the Company has achieved in expansion into the overseas market. Major export market includes

the United States, European Union, Australia, Asia Pacific and the Middle East. For the domestic market, the

Company is currently the owner of Prima Gold brand- 99.9% gold jewelry, Prima Diamond brand-the genuine

diamond jewelry, Prima Art- the 99.9% gold arts product, silver jewelry under Esse brand, and Century Gold- the

96.5 % gold jewelry which are distributed through Primagold International, the Company’s wholly-owned subsid-

iary. The Company has also earned additional revenues from contracted manufacturing for other firms, govern-

ment agencies and several institutions, which want to produce their own souvenirs, amulets or commemoratives.

Pranda Group stays committed to business goal to generate maximum gains to the organization, stake-

holders, and communities through sustainable growth strategy propelled by modern design, efficient production,

and rapid distribution and delivery which are the derivation of the Company’s motto “Pranda Keeps Quality”“Pranda Keeps Quality”“Pranda Keeps Quality”“Pranda Keeps Quality”“Pranda Keeps Quality”

and enable the Company to achieve Export Honorary Recognition award from the Export Promotion Department

of Commerce Ministry thanks to the Company’s ability to sustain the product quality standard and export growth

for over 10 consecutive years.The Company is set to move ahead to become the best and greatest manufac-

turer in the jewelry industry.


Production BaseProduction BaseProduction BaseProduction BaseProduction Base

Joint VJoint VJoint VJoint VJoint Venture Baseenture Baseenture Baseenture Baseenture Base Domestic Distribution BaseDomestic Distribution BaseDomestic Distribution BaseDomestic Distribution BaseDomestic Distribution Base

Overseas Distribution BaseOverseas Distribution BaseOverseas Distribution BaseOverseas Distribution BaseOverseas Distribution Base

100%

100%

100% 100%

100%

100% 100% 100%92%

40%

50%

PRANDA VIETNAMCo., Ltd.

(VIETNAM) Producer and

distributor of silverjewelry for exports

and distribution underEsse brand in

Vietnam

GUANGZHOUPANGDA ZHUBAO

SHOUSHI YOUXIANGONGSI (CHINA)

Jewelry producer fordistribution

In China

P.T. PRANDASCL.

(INDONESIA)Producer of

jewelry for exportand domestic

market

PRANDASINGAPOREPte. Limited

(SINGAPORE)Joint venture firmin Malaysia and

Indonesia.

CRYSTALINECo.,Ltd.

(THAILAND)Producer and

exporter ofcostume jewelry

PRIMAGOLDINTERNATIONAL Co., Ltd.

(THAILAND)Distributor of 99.9% gold jewelry,

diamond and jewelry underseveral brands such as Prima

Gold, Prima Diamond, Prima Artand ESSE

PRANDA JEWELRYPUBLIC COMPANY LIMITED

(THAILAND)Manufacturer and

distributor of jewelry

KZ- PRANDA Co.,Ltd(THAILAND)

Importer and distributor ofpure silver and pure gold

in nuggets and bars.

PRANDA NORTHAMERICA, INC.

(USA),Distributor of goldaccessories in theUSA and Canada

H. GRINGOIRES.A.R.L.

(FRANCE),Distributor of gold

jewelry underH. Gringoire trademarkin France and Europe

PRANDA U.K. LTD.(ENGLAND ),

Distributor of gold andsilver jewelry underCristalina brand in

England and Europe

CRYSTALINENORTH

AMERICA, INC.(USA),

Distributor ofcostume jewelry

and silver jewelryin the USA and

Canada

☺


Despite unfavorable factors such as a hike of the prices of gold and oil as well as the baht appreciation

against US dollar last year, Pranda Jewelry Public Company Limited still managed to see a significant business

growth both in the domestic and export markets in 2004. The Company's sale revenue rose from 2,615 million

baht to 3,323 million baht in 2004, a 27.05% increase, with net profit increasing from 312 million baht to 362

million baht, a 15.89% rise. Moreover, the Company saw stronger financial status as evidenced by the debt-to-

equity ratio at 0.56 times and capacity to pay the loan's interest at 8.45 times.

Free trade agreements which start implementation on the bilateral basis with certain countries and on the

multilateral level is expected to put in place soon are likely to produce intensified trade competition.However, the

jewelry industry's growth prospect remains bright thanks to the government's commitment to develop Thailand

as regional fashion center. To meet this end, Thailand has already exempted import tariff on raw materials for the

industry and earmarked certain budget to boost competitiveness to the jewelry industry and establish jewelry

research and development institute and develop skilled craftsman through universities. The private sector itself

has also greater preparedness to offer gemstones trading center and jewelry research as well as expertise in

jewelry production.

Pranda Jewelry Public Company Limited has well recognized such stiff competition scenario and hence

adopted quality policy for over many decades with focus on initiating to manufacture its own brands and becom-

ing the world class mass brand producer as well as ability to cater to the highest satisfaction of customers

through subsidiaries in Europe, the United States, and Asia. Moreover, the Company has promoted the business

common sense to pay respect to environment, rights of communities and societies and run business under the

fair treatment to all related parties.


TTTTTotal revenuesotal revenuesotal revenuesotal revenuesotal revenues

Revenue from Exports

Revenue from Domestic Sales

Total

million baht

2,841

482

3,323

%

85.50

14.50

100

million baht

2,229

386

2,615

%

85.24

14.76

100

%

83.05

16.95

100

million baht

2,082

425

2,507

The revenue structure of Pranda Jewelry Public Company Limited and Subsidiaries broken down to domestic

sales and exports (after deduction of intercompany transaction items)

2003 20022004

Revenue Structure of Pranda Jewelry Public Company Limited and Subsidiaries according to consolidated

financial statements

Company% of

holdingsType of Revenue

2004 2003 2002

Millionbaht

% Millionbaht

% Millionbaht

%

Pranda Jewelry Plc.

PrimaGold International

Co., Ltd.

Crystaline Co., Ltd.

Pranda North America, Inc

Crystaline North America, Inc.

H.Gringoire

Pranda U.K. Limited

Pranda Vietnam Co.,Ltd.

Guangzhou Pangda Zhubao

Shoushi Youxian Gongsi

Pranda Lodging Co., Ltd.

Returns on investments from

joint venture

Other revenues

Manufacturer and distributor of

jewelry

Distributor of gold jewelry 99.9%,

diamond and gems jewelry under

brands of Prima Gold, Prima Diamond,

Prima Art and Esse

Manufacturer and distributor of

costume jewelry

Distributor of gold jewelry in the US

and Canada

Distributor of costume jewelry and

silver jewelry in the US and Canada

Distributor of gold jewelry under

brands H. Gringoire in France and

Europe

Distributor of gold and silver and

costume jewelry under brands

Cristalina in UK and Europe

Manufacturer and exporter of silver

jewelry under brands Esse

Manufacturer silver jewelry for

Distributor in China

Property rental/properties

1,233

326

204

983

199

366

11

1

3 , 3 2 33 , 3 2 33 , 3 2 33 , 3 2 33 , 3 2 3

6

7

22

3,358

36.72

9.70

6.08

29.27

5.93

10.90

0.33

0.03

9 8 . 9 69 8 . 9 69 8 . 9 69 8 . 9 69 8 . 9 6

0.18

0.21

0.65

100

958

271

127

696

205

352

6

-

2 , 6 1 52 , 6 1 52 , 6 1 52 , 6 1 52 , 6 1 5

4

7

24

2,650

36.15

10.23

4.79

26.26

7.74

13.28

0.23

-

9 8 . 6 89 8 . 6 89 8 . 6 89 8 . 6 89 8 . 6 8

0.15

0.26

0.91

100

896

264

126

745

218

255

3

-

2 , 5 0 72 , 5 0 72 , 5 0 72 , 5 0 72 , 5 0 7

4

(10)

31

2,532

35.39

10.43

4.98

29.42

8.61

10.07

0.12

-

9 9 . 0 19 9 . 0 19 9 . 0 19 9 . 0 19 9 . 0 1

0.16

(0.39)

1.22

100

100

92

100

100

100

100

100

100

83

}

Returns on investments from joint ventureReturns on investments from joint ventureReturns on investments from joint ventureReturns on investments from joint ventureReturns on investments from joint venture

2004

3,303

1,191

2,112

3,358

3,323

2,174

1,149

723

425

50

362

2003

2,992

1,196

1,796

2,650

2,615

1,633

982

606

376

58

312

2002

2,824

1,281

1,543

2,543

2,507

1,549

958

578

380

87

370

Unit : Million Baht

Total Assets

Total Liabilities

Shareholders' Equity

Total Revenues

Net Sales

Cost of Sales

Gross Margin

Operating Expenses

Profit from Operation

Interest Expenses

Net Profit (Loss) for the year


2004

8.02

1.37

2003

8.23

1.43

2002

7.71

1.85

Unit : Baht

Basic book value per share

Basic earnings per share

2004

27.05

34.39

14.37

12.80

10.89

4.58

2.31

1.90

14.09

17.19

8.45

0.56

0.36

2003

4.33

37.55

16.31

14.36

11.93

5.23

2.55

1.60

13.55

17.43

6.49

0.67

0.40

2002

11.66

38.19

17.08

15.13

14.78

5.26

2.61

1.70

14.25

24.10

4.36

0.83

0.45

Sales growth

Gross Margin

EBITDA / Sales

EBIT / Sales

Net Profit / Sales

Current Ratio

Quick Ratio

Inventory Turnover

ROCE

Return on Shareholders' Equity (ROE)

Time Interest Earned

Debt to Equity Ratio

Debt to Asset Ratio

%

%

%

%

%

X

X

X

%

%

X

X

X


The first 10 major shareholders with number of shares and percentage of shareholding as at the latest

closing book dated December 30, 2004.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

(No.) (Name)(% of Total Shares)

13.87

5.92

4.73

4.39

3.94

3.48

3.28

3.21

2.84

2.84

(No. of Shares)

38,126,900

16,262,320

13,000,000

12,068,280

10,842,780

9,553,280

9,025,280

8,832,780

7,810,500

7,809,000

Thai NVDR Co., Ltd.

Mr.Prida Tiasuwan

Pranda Holding Co., Ltd.

Mrs.Pranee Khunprasert

Mrs. Panidda Tiasuwan

Ms. Pittaya Tiasuwan

Mr. Pramote Tiasuwan

Mrs. Prapee Sorakraikitikul

Mrs. Sunanta Tiasuwan

GOLDMAN SACHS & CO

as at December 30, 2004

As of December 30, 2004 Compared to December 30, 2003

Shareholding

Distribution by

Nationality

Juristic Persons Private Individuals

Thais

Foreigners

Total

No. of

Shareholders

2004

39

13

5 25 25 25 25 2

No. of

Shares%

No. of

Shares%

No. of

Shareholders

2003

38

17

5 55 55 55 55 5

2004

23.59

7.68

31.2831.2831.2831.2831.28

2004

64,857,500

21,122,800

85,980,30085,980,30085,980,30085,980,30085,980,300

2003

50,392,200

28,824,500

79,216,70079,216,70079,216,70079,216,70079,216,700

2003

21.10

12.07

33.1733.1733.1733.1733.17

2004

2,720

39

2,7592,7592,7592,7592,759

2003

2,245

37

2,2822,2822,2822,2822,282

2004

187,318,650

1,612,200

188,930,850188,930,850188,930,850188,930,850188,930,850

2003

158,275,700

1,359,500

159,635,200159,635,200159,635,200159,635,200159,635,200

2004

68.14

0.59

68.7268.7268.7268.7268.72

2003

66.27

0.57

66.8366.8366.8366.8366.83

2004

No. of

Total ShareholdersNo. of Total Shares % No. of

Total ShareholdersNo. of Total Shares %

2,759

52

2,812,812,812,812,8111111

252,176,150

22,735,000

274,91274,91274,91274,91274,911,1501,1501,1501,1501,150

91.73

8.27

100100100100100

2,283

54

2,3372,3372,3372,3372,337

208,667,900

30,184,000

238,851,900238,851,900238,851,900238,851,900238,851,900

87.36

12.64

100

Thai Shareholders

Foreign Shareholders

TTTTTotalotalotalotalotal

2003


⌧

NameShares

Change (Shares)29 Dec. 2004 27 Dec. 2003

1. Ms.Pittaya Tiasuwan

2. Mrs.Panidda Tiasuwan

3. Mr.Pramote Tiasuwan

4. Mrs.Prapee Sorakraikitikul

5. Mrs.Sunanta Tiasuwan

9,553,280

10,842,780

9,025,280

8,832,780

7,810,500

9,503,280

10,732,780

8,025,280

8,932,780

8,310,500

50,000

110,000

1,000,000

(100,000)

(500,000)


Selection Committee (8)

Finance Committee (7)

President

Vice President

Production Management

Vice President

Stones Management

Vice President

Audit Committee (3)

Accounting and

Finance

Manager

Maketing

and Sales

Vice President

Mini Factory

Vice President

Design and

Development

Center

Senior

Vice President

(act.)

Board of Directors

(11)

Executive Committee

(9)


1. Mr. Prida Tiasuwan Chairman

2. Sub.Lieut. Prayoon Talerngsri Chairman of Executive Committee

3. Mrs. Prapee Sorakraikitikul President

4. Mrs. Sunanta Tiasuwan Corporate Finance Chairman

5. Mrs. Pranee Khunprasert Senior Vice President

6. Mr. Pramote Tiasuwan Senior Vice President

7. Mrs. Panidda Tiasuwan Vice President

8. Lieut. Orarn Krairiksh Independent Director / Chairman of Audit Committee

9. Lt. Jg. Anan Panananda R.T.N. Independent Director / Audit Committee

10.Mr. Vorasit Pokachaiyapat Independent Director / Audit Committee

11. Mr. Eugene S. Davis Director

12.Ms. Pittaya Tiasuwan Advisor

⌧ 1. Sub. Lieut. Prayoon Talerngsri Executive Chairman

2. Mrs. Prapee Sorakraikitikul Vice Executive Chairman

3. Mrs. Sunanta Tiasuwan Vice Executive Chairman

4. Mr. Pramote Tiasuwan Vice Executive Chairman

5. Mrs. Pranee Khunprasert Vice Executive Chairman

6. Ms. Pittaya Tiasuwan Executive Director

7. Mrs. Panidda Tiasuwan Executive Director

8. Mr. Decha Nuntanajaroenkul Executive Director

9. Mr. Banjong Wongkaew Executive Director

10.Mr. Prida Tiasuwan Advisor

1. Sub.Lieut. Prayoon Talerngsri Chairman

2. Mrs. Prapee Sorakraikitikul Member

3. Mrs. Sunanta Tiasuwan Member

4. Mr. Pramote Tiasuwan Member

5. Mrs. Pranee Khunprasert Member

6. Mrs. Panidda Tiasuwan Member

7. Lt. Jg. Anan Panananda R.T.N. Member

8. Ms. Pittaya Tiasuwan Member

9. Mr. Prida Tiasuwan Advisor


1. Mrs. Sunanta Tiasuwan Chairman

2. Sub.Lieut. Prayoon Talerngsri Vice Chairman

3. Mrs. Prapee Sorakraikitikul Member

4. Mr. Pramote Tiasuwan Member

5. Mrs. Pranee Khunprasert Member

6. Mrs. Panidda Tiasuwan Member

7. Ms. Pittaya Tiasuwan Member

8. Mr. Prida Tiasuwan Advisor

9. Mrs. Sarita Bunnag Advisor

10.Mr. Len Biggs Advisor

1. Lieut. Orarn Krairirk Chairman

2. Lt. Jg. Anan Panananda R.T.N. Member

3. Mr. Vorasit Pokachaiyapat Member

4. Mrs. Sarita Bunnag Advisor

1. Mrs. Prapee Sorakraikitikul President

2. Mrs. Pranee Khunprasert Senior Vice President

3. Mr. Pramote Tiasuwan Senior Vice President

4. Mrs. Panidda Tiasuwan Vice President - Production Management

5. Ms. Pittaya Tiasuwan Vice President - Stones Management

6. Mr. Decha Nuntanajaroenkul Vice President - Marketing

7. Mr. Banjong Wongkaew Vice President - Mini Factory

8. Mr. Thanes Panjakrid Accounting and Finance Manager

1. To determine strategic policies and oversee the company's operations to ensure its compliance with

the laws, objectives, the Company's regulations and the resolutions of the shareholders.

2. To nominate one or many directors to take responsibilities on the Board of Directors' behalf.

3. To determine and change authorized directors and impose conditions as appropriate to protect the

Company's interests and that are not against the governing laws.

4. To appoint the financial committee.

5. To appoint the audit committee.

6. To appoint the nomination committee

7. To appoint the executive committee

8. To appoint the Company's advisers.

9. To approve the high-ranking executives.

10. To empower the chairman to supervise and ensure the compliance with authorized responsibilities

and accountabilities mentioned above.


⌧ 1. To consider and determine the operation plans and business strategies and supervise the Company's

operations in compliance with the policies of the Board of Directors, related laws, conditions, rules

and regulations of the Company.

2. To determine corporate directions, business development and expansion in compliance with the

policies and resolutions of the Board of Directors.

3. To appoint the Company's executives to handle routine operations at all positions except high-ranking

executive appointment which requires the approval of the Board of Directors, and to authorize

persons to handle duties and responsibilities on the Board of Directors' behalf as appropriate.

4. To determine the ways to practice and regulations for the Company's employees that are not against

related regulations and laws.

5. To approve the Company's administration structure, employees' salary structure and other fringe

benefits, as well as administration structures of the department levels onwards.

6. To consider and screen the performance and monthly/annual budget and asset management before

going before the Board of Directors for consideration.

7. To endorse the annual budget, supervise and monitor the assessment of the performance to ensure

its compliance with the policies, objectives, and budgeting plans approved, and to consider and

approve bonus, rewards and other fringe benefits to employees to boost their morale.

8. To supervise and ensure the effectiveness and appropriateness of the Company's internal control

system through cooperation with the audit committee

9. To empower the chairman to supervise and ensure effectively and efficiently the compliance with

assigned responsibilities and accountabilities mentioned above.

1. To propose criteria and guidelines in selecting the Company's independent directors and high-ranking

executives as well as their remunerations.

2. To nominate, select and propose knowledgeable and qualified persons as the Company's high-ranking

executives as well as their remuneration to the Board of Directors for approval.

3. To propose criteria, methods, and steps of performance assessment for high-ranking executives to

the Board of Directors.

4. To assess the performance of directors as assigned by the Board of Directors.

1. To look for funds as stipulated in policies and resolutions of the Board of Directors to finance the

Company's businesses and those of subsidiaries.

2. To analyze investment, related risks and expected benefits and gains, and to monitor and assess

risks and investment projects.

3. To control, oversee and analyze the operating performance of the Company's subsidiaries and invest

ment projects and propose to the Board of Directors for consideration and amendment.

4. To take responsibilities and accountabilities in compliance with the laws, regulation and policies of the

Stock Exchange of Thailand.

5. To empower the chairman to supervise and ensure the compliance with responsibilities and account

abilities mentioned above.


1. To review the company's financial reporting process to ensure accuracy and adequacy;

2. To ensure that the company has suitable and efficient internal control system and internal audit;

3. To review the performance of the company to ensure compliance with the securities and exchange

law, regulations of the Exchange or laws relating to business of the company;

4. To consider, select, nominate and recommend remuneration of the company's external auditor;

5. To review the disclosure of information of the company in case that there is a connected transaction

or transaction that may lead to conflict of interest so as to ensure the accurateness and complete-

ness; and

6. To prepare a report on monitoring activities of the audit committee and disclose it in an annual report

of the company, and have such report signed by the chairman of the audit committee.

⌧

Nomination of DirectorsNomination of DirectorsNomination of DirectorsNomination of DirectorsNomination of Directors: the Nomination Committee would take responsibilities to consider and select

qualified and knowledgeable candidates before forwarding through the Company's Board of Directors to the

meeting of shareholders to approve the appointment of independent directors of the Company.

Nomination of High-Ranking ExecutivesNomination of High-Ranking ExecutivesNomination of High-Ranking ExecutivesNomination of High-Ranking ExecutivesNomination of High-Ranking Executives: the Nomination Committee would also take responsibili-

ties to consider and select qualified persons, taking into account particularly the candidate's personal ability to

build up effectiveness of the Company's operations and competitiveness before submitting the shortlist to the

executive committee for appointment approval with the consent of the Board of Directors.

High-ranking executivesHigh-ranking executivesHigh-ranking executivesHigh-ranking executivesHigh-ranking executives: High-ranking executives are president, vice presidents, executive vice presi-

dents and other positions determined by the Company's Board of Directors.

- Directors of the Company are not mandatory to be the Company's shareholders. The Company's Board of

Directors is composed of members of not fewer than five but not over than 20 persons at least a half of the board

members is required to become Thai residents, and they have to possess qualifications as stated in the laws.

The selection of persons to serve as Directors is considered by the Meeting of Shareholders , in accordance

with the principles and methods of casting votes, as follows :-

1. One shareholder possesses one voting right for each share held.

2. Each shareholder is required to exercise his voting rights in full according to the number of shares held

3. He may nominate one or several persons as Directors, but may not share his voting rights with others.

Persons with the highest number of votes in descending order will be nominated as Directors,

according to the number of Directors the Meeting of Shareholders is required to appoint. In the event

that a person nominated as a Director has the same number of votes as the next nominee, but both

nominees exceed the number of Directors which the Meeting of Shareholders is required to appoint, the

Chairman will cast the deciding vote.


- At the annual ordinary meeting of shareholders, one/third of the Board of Directors is required to remove. If

such requirement could not be met, at least one/third of directors should be removed at the first year of their

tenure, and draws will be held at the second year and the following years for the next directors to be removed.

The last director would be finally removed according to the terms. However, the removed directors could resume

their tenure accordingly.

- In addition to the term's expiry, the directors would be removed from their tenure in the event of

1. Death,

2. Resignation,

3. Lack of qualifications and disqualification under the public company laws,

4. Dismissal by the resolutions of the shareholders' meeting with not fewer than 3/4 votes of share-

holders which own voting rights and combined shareholdings of not less than a half of total shares

held by attending shareholders and those who possess voting rights,

5. By the court's sanction.

- Any directors who want to resign are required to submit their resignations to the Company. Their resignations

will take immediate effect once the letter was received.

- Remuneration to Executives Remuneration in the form of cash for 2003

Remark : There are six persons of company's directors who are in executive directors position, excluding

remuneration of accounting and finance manager

- Other remuneration

At present, the Company's management is entitled only to salary and bonus as remuneration, with no any

other benefits and revenues.

Item Type of Remuneration / No. of Executive Total

(million baht)

6.28

24.94

Salary and Bonus

1

9

Directors' Attendance

Fees

2

-

No. of Executive

3

9

Company's Directors

Executive Directors and

Management


The Company has determined the principle of best practice and responsibilities of the executives

especially towards shareholders as follows:

1. Honesty, and manage the Company with sincerity, transparency and for the best benefits of the

Company and shareholders.

2. The executives must not abuse their power and responsibilities for the sake of personal interests or

related persons.

3. The executives who are aware of inside information are prohibited from revealing inside information to

the people outside or persons who are not involved without the consent of the Company, and causing

the ways that may result in the conflict of interests to the Company.

The Company has realized the importance of the efficiency of the internal control both in the management

and operations level. The efficient internal control is regarded as a crucial mechanism to establish confidence to

the management on matters as follows:

1. To help offset the Company's business risk

2. To help prevent any damage or leakage or misuse of the Company's assets

3. To help strengthen the accuracy and creditability of the Company's financial statements

4. To help ensure the compliance with the laws and relevant regulations of the Company's personnel.

5. To help ensure the efficiency of the Company's business management, and efficient and effective

deployment of the Company's human resources.

6. To help protect the investment of the Company's shareholders.

The Company has set up the internal audit department to ensure that the Company's important operations

and financial activities are undertaken in line with the policy and produce the greatest efficiency. The Internal

Audit department has overseen the compliance with the laws and regulations, which may affect the Company.

And in the best efforts to make the internal audit department independent and fully capable of handling its audit

duties and counterbalance, the Board of Directors has required the department to report its auditing results

directly to the Company's Audit Committee. The Audit Committee will then assess its performance.


In the best attempt to establish transparency and effectiveness of the Company's administration which

would eventually affect confidence of the Company's shareholders, investors, and related parties, Pranda Jew-

elry Public Company Limited has strictly adhered to 15 principles of the best practice of the good corporate

governance as stated by the Stock Exchange of Thailand.

The Board of Directors of the Company has realized the importance of the best practice of good corporate

governance in order to increase transparency, competitiveness and greater confidence of stakeholders, inves-

tors, and all related parties. The Company has therefore determined policies to promote the best practice of

good corporate governance covering the following issues: -

1. To determine policies and directions of the Company and establish the best practice of good corporate

governance for the Company's management to pursue efficiently and effectively.

2. To perform business on the principles of efficiency, cost-effectiveness, effectiveness, and transparency;

adhere to accountability for all beneficiaries; generate appropriate returns to investors; and sustain the

Company's business growth and prosperity.

3. To perform business with care, reliability, accountability and transparency for the greatest benefits of the

Company.

4. To report the Company's financial and general information to related parties, shareholders, and general

investors with accuracy and transparency.

5. To prepare financial statement to disclose the Company's financial stability and annual operating perfor-

mance.

6. To ensure the compliance with rules and regulations of the Stock Exchange of Thailand.

7. To develop creditability and effectiveness of internal control and audit system.

8. To appraise and provide comments on adequacy and appropriateness of the Company's internal control and

good governance.

9. To organize the meeting between the Board of Directors and the audit committee.

10.To prevent from exploiting authority and assignment for their personal gains.

11. To avoid disclosing confidential information of the Company and take the Company's confidential information

for personal gains or interests of related parties without due approval.

12.To operate no activities which affect the conflict of interests of the Company without the Company's consent.

The Company has given the greatest convenience to the shareholders' meeting, treating equally all share-

holders. Shareholders could exercise their voting rights at will and are allowed to raise any questions to the

meeting in accordance with agenda and other issues proposed. All shareholders are also entitled to have rights

and equitability to receive accurate, up-to-date, complete information, as well as reexamine it. Documents

dispatched by the Company to the shareholders include invitation letter, minutes of the meeting, annual report

and three forms of proxy prepared according to the announcement of the Commerce Ministry for the sharehold-

ers' selection. The invitation letter includes comment of the Board of Directors in each agenda. For agenda on

the appointment of the Board of Directors, for instance, preliminary information of the proposed directors


including their age, education background, expertise and experience would be made available. The agenda on

the audit committee appointment would also state clearly name, office and remuneration of the proposed audit

committee. In addition, the Company has designed extra alternatives to the shareholders by allowing indepen-

dent directors to hold proxy on the Shareholders' behalf in case of their abstention in order to protect their rights.

All information of the meeting would be recorded accurately, completely and systematically for later reexamina-

tion by the shareholders.

The Company has always paid attention to the rights of all related parties, be they in organization such as

employees, the Company's administration and subsidiaries or external persons including shareholders, trade

partners, creditors, clients, competitors and surrounding communities and environment. The Company has

promoted "the Code of Conduct and Accountabilities of Management and Employees of the Company'' to streamline

the Company's operations and ensure fair treatment to all parties.

Throughout the operations of the Company, Pranda Jewelry Public Company Limited has treated equally

and fairly all levels of employees with proper remuneration offered. Transactions and services with the trade

partners are conducted in accordance with the contracts under which the Company is committed to fulfilling the

contracts to trade partners and lenders with great care and accountability. In addition the Company also takes

information of clients strictly confidential, thereby setting up supervisory units and staff to handle complaints of

customers and surrounding communities.

The Company has dispatched invitation letters enclosed with the meeting's agenda to shareholders about

seven days ahead of the meeting. At the meeting, appropriate time would be allocated by the chairman to allow

all shareholders to speak their comments and raise inquiries to the meeting in accordance with agenda and

proposed topics by the chairman. The meeting would allow equally the shareholders to have rights to examine

the Company's operation, inquire and express their comments and suggestions to the Board of Directors. All

members of audit committee would also be made available in the meeting to answer all questions and inquiries

raised as well as provide additional information to the meeting. About one hour would generally be set aside for

shareholders' registration prior to the meeting.

The Board of Directors has clearly and independently involved in determining the Company's vision,

mission, strategy, business goal, policy and business plan as well as annual budget. For the maximum gains for

the Company and entire shareholders, the Board of Directors has adopted Total Quality Management and ISO

2000 as well as Monitory and Supervision process for the management to pursue effectively and efficiently with

an aim to procreate fortune to the Company and generate maximum returns to the shareholders under the proper

risk and constant monitoring system.

“Pranda Keeps Quality” is always the commitment the Company has adopted since its inception.


The Company is committed to

1. Manufacturing superb quality and high-valued jewelry accessories

2. Swift and punctual delivery

3. Increasing productivity, and production efficiency

4. Taking care of customers with swift and punctual services

5. Ensuring maximum safety to customers and employees as well as environments

The Company has set a new strategic plan and vision with commitment to upgrade the entire organization

as the high quality and excellent enterprise for customers, shareholders, employees, distributors, communities

and societies as a whole. Pranda Jewelry Public Company Limited is committed to generating profitability and

sustainable growth to the Company; as well as developing organizational culture which would reflect the Company's

leadership and mission in order to achieve the Company's business goal.

The Board of Directors comprises those who are knowledgeable, competent and professionally capable

of business supervision and monitoring as well as dedicated to establish and entrench the Company's founda-

tions in keeping with present and future competition. The Board is set to drive the sustainable growth into the

Company, which eventually results in more values to shareholders and the entire society. The Board takes

responsibility to clearly delegate and designate role, task and responsibility of the board members, manage-

ment, sub-committees and employees, be it in financial operation or internal communications. All of the Company's

board members have also passed through Direct Certification Program (DCP) which was held by the Thai

Institute of Directors Association (IOD), as follows:-

1. Mrs.Prapee Sorakraikitikul

2. Mrs.Sunanta Tiasuwan

3. Mr.Vorasit Pokachaiyapat

4. Mr.Pramote Tiasuwan

And Director Accreditation Program (DAP) which was held by the Thai Institute of Directors Association (IOD),

as follows:-

1. Mrs.Panidda Tiasuwan

2. Mrs.Pranee Khunprasert

3. Ms.Pittaya Tiasuwan

The Company has strictly pursued policy and responsibilities to all beneficiaries. The Board of Directors

is well aware of items and connected transactions which may cause the conflict of interests, and have under-

taken great care of appropriateness of those items. In the best attempt to curb any conflict of interests, the

Board of Directors has carefully managed to prevent transactions, which may cause the conflict of interests.

The Company has stately clearly regulations for related items or those concerning asset acquisition or distribu-

tion as directed by the Stock Exchange of Thailand. The Board of Directors has also abided by all regulations of

the Stock Exchange of Thailand.


Pranda Jewelry Public Company Limited's investment strategy focuses mainly on consistent production

and distribution to prevent the conflict of interests. Therefore, the Company has adopted policy to take a full

control in all investment projects both in and out of the country ranging from manufacturing to distribution levels.

The Company's investment in the joint ventures primarily aims at raising the Company's competitiveness and

strengthening the group's operations through raw material supply and supplementary businesses for the Company's

core.

Inside Information Controls. The Company's executives are required to report changes of their securities

holding to the Securities and Exchange Commission and Stock Exchange of Thailand according to the Article

59 of the Securities and Stock Exchange of Thailand Act for the sake of transparency and to prevent any abuse

of inside information for personal gains. The Company's Board of Directors has a mandate to prohibit the Board

of Directors, administration, employees, temporary staff and their family members from disclosing important

inside information of the Company and a group of companies to people outside or persons who are not involved,

nor having securities trading particularly one month ahead of the disclosure of the financial statements to the

general public for their personal interests and anybody's gains.

The Company has promoted the code of conduct for the management and employees as announced on

December 22, 2000. The Company has informed all directors and employees to strictly abide by the code of

conduct in order to steer the Company into the principles of effectiveness and efficiency, cost-effectiveness,

transparency and accountabilities to all beneficiaries; and produce appropriate returns to investors as well as

develop long-term prosperity to the Company. Regular monitoring process has also been developed to achieve

the principles.

The Board of Directors comprises 11 members as follows: -

Directors who hold management position in the Company 6

Non-management directors 3

Independent directors 3

The Company has three independent directors accounting for 27.27% of total directors. Independent

directors have no direct involvement in routine management and are not major shareholders of the Company.


Chairman of director will not be the same person with the Company's president in order to separate their

responsibilities. The chairman is regarded as the Company's leader who will take a major part to determine the

Company's policy in cooperation with the management. Chairman and president should represent major share-

holders of the Company. However, as independent directors account for one-third of the directors, the Company's

counter-balance and crosschecking remain existent.

Remuneration of directors and management is considered a proper rate compared with the industry's

offerings. The Board of directors and management are also entitled to other fringe benefits based on their

additional assignments and responsibilities. The Board's remuneration would be on approval of the sharehold-

ers, while remuneration for senior management would be subject to principles and policy of the Company and the

Company's operating performance. Final decision on the remuneration of the senior management would go

before the sub-committee, which handles remuneration. Rate of remuneration of directors and managers is

made available in “Shareholders and Management Structure” topic.

The Board of Directors would hold a quarterly meeting in a year and call an extra meeting if needed.

Agenda of the meeting and report on the quarterly operating performance, which goes through, the Board of

Director's monitoring and review would be prepared in advance. Invitation Letter enclosed with the meeting's

agenda and other documents would be prepared about seven days ahead of the meeting so that the Board of

Directors have sufficient time to study information. Generally, the meeting would take about 2-3 hours. Minutes

of the meeting would be fully recorded, and well saved for later examination and reference. In 2004, the Board of

Directors had held 11 ordinary meetings, and two extraordinary meetings. Here are the records of the attendance

of each director.

1. Mr. Prida Tiasuwan2. Sub. Lieut. Prayoon Talerngsri3. Mrs. Prapee Sorakraikitikul4. Mrs. Sunanta Tiasuwan5. Mrs. Pranee Khunprasert6. Mr. Pramote Tiasuwan7. Mrs. Panidda Tiasuwan8. Lieut. Anan Panananda R.N.9. Lieut.Olarn Krairiksh10.Mr. Eugene S. Davis11. Mr. Vorasit Pokachaiyapat

Attendance/MeetingName Ordinary

Meeting

Extraordinary

Meeting

Total

Attendance


The Company has set up sub-committees to help supervise and monitor the Company's operations,

comprising the audit committee, finance committee and selection committee.

Prida TiasuwanPrayoon TalerngsriPrapee SorakraikitikulSunanta TiasuwanPramote TiasuwanPranee KhunprasertPanidda TiasuwanLieut. Olarn KrairikshLieut. Anan Panananda R.N.Vorasit PokachaiyapatMr.Eugene S.DavisPittaya TiasuwanBanjong WongkaewDecha NuntanajaroenkulSarita BunnagMr. Len Biggs

Director / Advisors Audit Committee3 persons

Finance Committee7 persons

Selection8 persons

Advisor

Chairman

AdvisorAdvisor

Chairman

Advisor

AdvisorChairman

The Company has realized the importance of effective internal control both in the management and

operations level. Responsibilities of each management and employee are clearly stated and written to ensure

optimal utilization of the Company's assets. Separate divisions of the Company have carefully studied invest-

ment budget and the feasibility of each investment project in order to bring about counter-balance and cross-

checking.

The Company has also stressed up the maintenance of the internal audit to ensure that important opera-

tions and financial activities of the Company are undertaken in line with the policy; and produce optimal effi-

ciency. The Internal Audit Department would be given a free hand to handle their jobs. The Company has

assigned the Internal Audit Department to report its internal audit result directly to the Audit Committee.

The Board of Directors; in addition, has paid a full attention to effective risk management under which the

Board has empowered the Corporate Finance Office to take responsibilities in designating scope and policy on

risk management as well as organizing meetings with the executive committees to set and appraise the risk of

operations for every six months. The Board of directors would work collaboratively with the executive commit-

tees to work out safeguard and risk management measures as well as develop the early warning system and

monitoring system to ensure its compliance with related laws and regulations.


The Board of Directors is held responsible for the consolidated financial report of the Company and its

subsidiaries as well as financial information appeared in the annual report. Financial report was prepared accord-

ing to the accounting standard recognized in Thailand, using proper and widely adopted accounting policy and

disclosing sufficient financial information. Financial information is made available on the notes to the Company's

financial report. The Board of Directors has promoted the maintenance of the effective internal controls system

to ensure an accuracy, completeness and adequacy of the accounting information so that the Company could

effectively manage existing assets and realize its weakness to prevent any possible irregularities.

In this case, the Board of Directors has set up the audit committee which comprises the non-manage-

ment directors to oversee the adequacy of the financial statements and internal control system. Comments of

the audit committee would appear in the audit committee's report as shown in the Company's 2004 annual

report.

The Board of Directors commented the Company's internal control system was satisfactory and saw it

efficient enough to create confidence and trust towards financial statement of the Company and subsidiaries as

of December 31, 2004.

Responsibilities of the Board of Directors Towards Financial Statement

1. To report financial and general information to shareholders and general investors with accuracy,

completeness and transparency

2. To allow the Company's auditors to perform their duties freely and independently without intervention

3. To prepare financial statement to disclose the Company's financial status and performance in the past

year with true and fair presentation

4. To ensure the accuracy, completeness and adequacy of accounting information to protect the Company's

interests and assets from any irregularities and dishonest practices and find the Company's weakness

5. To secure the compliance with the generally recognized accounting standard strictly using appropriate

accounting policies.

The Board of Directors has always realized the importance of the disclosure of accurate, complete and

transparent information on finance, general and important information which might affect the prices of the

Company's securities. The Company has disseminated information to investors and related parties through a

wide range of channels as well as the media of the Stock Exchange of Thailand and the Company's own

website. The Company has also set up investor relations section to provide information services and inform the

Company's activities to investors, shareholders, analysts, and the public. Interested investors could contact the

Company at [email protected]. Moreover, the Company has linked the Company's internal information with the

Stock Exchange of Thailand's website: www.set.or.th and the Company's website: www.pranda.co.th, which is

available in the investor relations section.

In the past year, the Company has welcome a great deal of visitors from the government agencies and

educational institutes as well as representatives from the fund management firms, financial analysts, and inter-

ested investors who paid a visit to the Company. Pranda Jewelry Public Company Limited has also participated

in Opportunity Day held by the Stock Exchange of Thailand as the forum for executives of local companies to

express their vision and explain operating performance of their individual companies. The Company also at-

tended the Set in the city 2004 during 11 - 14 November 2004 at Queen Sirikit National Convention Center. The

Company has also held other promotional activities by inviting financial analysts and investors to attend the

Analyst Meeting held once a year at the Company's premise with an aim to explain the Company's operations

and exchange opinion between the Company's management and financial analysts. The Company has now held

supplementary investor relations' activities by issuing '' Investor Relations Newsletter'' both in Thai and English

to disseminate the Company's operating performance to the financial analysts and interested people through

electronic mailing system. The Company plans to issue a half year issue to explain the Company's performance

and future business directions as well as answer all questions which are in the people's interests. Questions are

mostly collected from inquiries raised by financial analysts. However, all questions are welcome at

[email protected]. Questions and answers would be then prepared at the said corporate website.



Operational Results

During 2004, Pranda Jewelry Public Company Limited recorded revenue of 3,322.67 million baht, up

27.05% or 707.39 million baht from 2003 mainly in light of a more competitive pricing strategy carried out by the

Company's two subsidiaries in US market which produced higher sales to the Group. Although gross profit

margin declined to 34.57%, from 37.54% in the same period last year because of a hike of selling costs of about

3.3%, particularly for gold which made up for up to 85% and saw its cost increase significantly by 12%, opera-

tional profits after sale and management expense deduction rose to 425.38 million baht, up 12.80% of total

sales. As a result, Pranda's net profits rose to 361.76 million baht, up 15.93% from 312.06 million baht. Mean-

while, total assets rose 10.39% with total asset turnover rose to 17.58%, suggested improved operational

efficiency.

Pranda's corporate philosophy has been firmly on the ground to maximize shareholders' wealth which

focused on quality profit growth policy, adequate liquidity management for business expansion and appropriate

capital structure management to reduce financial risk as evidenced by a profit growth of 15.93%, an improved

return on asset (ROA) from 11.49% last year to 10.73%. As a result, the company's asset turnover rose to 1.07

times, from 0.91 times. The company maintains appropriate capital structure to reduce financial risk witness by

the reduction of debt to equity (DE) ratio to 0.56 times from 0.67 times last year.

Financial Status

As of December 31, 2004, the company had total assets worth 3,302.96, up 10.4% from a year before,

with cash on hand increasing 102.26 million baht due to greater cash flow from improved operating performance

and the exercise of Pranda warrants than cash expenses for investment in machinery and equipment and short-

term and long-term debt repayments.

Assets QualityAssets QualityAssets QualityAssets QualityAssets Quality

Total asset turnover rose from 0.91 times to 1.07 times last year. With efficient asset management,

receivable turnover rose from 3.81 times to 5.15 times, and inventory turnover rose from 2.58 times to 3.08

times. There were the results from average collection period shortened from 95 days to 70 days and average

age of inventory shortened from 140 days to 117 days. Return on fixed assets rose from 36.02% to 41.27%

compared with 2003. The company has improved asset management efficiency from a year before.

Financial Liquidity

Cash Flow CompositionCash Flow CompositionCash Flow CompositionCash Flow CompositionCash Flow Composition

The Company had reported lower net cash flow compared to 2003 because the company's trade account

receivables and inventories in 2004 increased to 80.75 million baht and 159.09 million baht respectively arising

from higher purchase orders and increased goods in transit and work in process. However, that was mainly

because of the higher sales, and a surge of 12% in gold prices. In 2004, rich cash arranged at beginning of the

year and increased net profit in 2004 has enabled the company to repay debts and invest more with remaining

cash in the company, reflecting excellent financial liquidity of the company.


Liquidity RatioLiquidity RatioLiquidity RatioLiquidity RatioLiquidity Ratio

Company's current ratio was stable at 4.58 times from 5.23 times in 2003. The company's quick ratio

declined from 2.46 times to 2.23 times because net inventories increased to 122.54 million baht, with most of

them were on schedule to delivery, and higher prices of gold and other precious stones. However, given the

overall performance of the company, Pranda still maintained relatively high liquidity with the period to hold cash

down from 211 days to 165 days, and net cash at the end of the year worth 523.27 million baht.

Risk from Short-term obligationsRisk from Short-term obligationsRisk from Short-term obligationsRisk from Short-term obligationsRisk from Short-term obligations

Pranda's current liabilities recorded 501.63 million baht and the total current assets of 2,299.81 million

baht. This indicates that the company has sufficient liquidity to completely settle all short-term obligations.

Moreover, the company's interest payment capacity increased from 6.49 times to 7.26 times.

Capital Expenditure

Previous capital expenditure spendingPrevious capital expenditure spendingPrevious capital expenditure spendingPrevious capital expenditure spendingPrevious capital expenditure spending

The company had invested in new machinery and equipment, worth 60.33 million baht to replace the old,

obsolete ones. Moreover, the company has invested in Guangzhou Pranda Shoushi Youxian Gongsi in China

which has registered capital of US$ 425,000 or approximately 17 million baht. The company has entire owner-

ship of the subsidiary. The subsidiary has been registered in May 2004 and started operations.

Capital Expenditure PlanCapital Expenditure PlanCapital Expenditure PlanCapital Expenditure PlanCapital Expenditure Plan

The company's new production facility in China with an aim to expand production capacity and distribu-

tion in China market is on the process to start operations and training the workers. During 2004, the company

has a production target of 120,000 pieces during the first year and up to 700,000 pieces in the ninth year. Total

capital expenditure on this project is estimated Baht 60 million. The subsidiary will start with silver jewelry

production and expect to post first profits in the third year.

Sources of Fund

Capital StructureCapital StructureCapital StructureCapital StructureCapital Structure

Resulting from consecutive years of profitable operation, Pranda's retained earnings rose to 1,043.68

million baht 825.58 million in 2003, or rising 26.42%. Pranda's debt to equity ratio decline from 0.67 times to 0.56

times, reflecting the company's strong financial base which is sufficient to accommodate future business

expansion.

Shareholders' EquityShareholders' EquityShareholders' EquityShareholders' EquityShareholders' Equity

The company had raised its capital and issued warrants in 2002. During of 2004, a total of 42,543,650 new

ordinary shares were allotted to warrant holders. As at December 31, 2004, the company has total of 274,

911,150 registered ordinary shares outstanding, and retained earnings worth 1,043.68 million baht. As a result,

the shareholders' equity increased 17.60%.

Liabil i t iesLiabil i t iesLiabil i t iesLiabil i t iesLiabil i t ies

Pranda had total liabilities of 1,191.21 million, composed of current liabilities of 501.63 million baht,

representing 42.11% of total liabilities. And non-current liabilities were worth 689.58 million baht, accounting for

57.88. Long-term loans were worth 685.77 millions baht, making up for 57.56% of total liabilities. Such long-

term loans would be honored on the quarterly basis and mature in January 2011.


With trade liberalization, Thailand's current jewelry market has experienced intensified competition not

only on the design and quality front but also pricing. Moreover, continuous expansion of the jewelry market

exacerbated the skilled labor's shortage under which a number of skilled craftsmen failed to meet significantly

growing demand in the market including foreign exchange fluctuation mainly derived from the dollar depreciated

by the US government in order to increase its trade competitiveness in the world market. In addition, the

country's economic recovery and substantial improvement of financial and fiscal conditions, which resulted in

the Thai baht appreciation against the US dollar, had also impact to the performance of Thailand's overall jewelry

industry.

The Company has realized such challenges, and therefore not only expanding its production bases to

cover Asian region, but also developing new product patterns through the Company's product development

center, developing its own brands and distribution channels and initiating training courses to develop its own

skilled labor in keeping with growing market. In order to diversify risk, the Company has also expanded distribu-

tion channels to cover over 40 countries as well as developed the domestic market through local distributors.

1. Risk Factors on Sales and Production1. Risk Factors on Sales and Production1. Risk Factors on Sales and Production1. Risk Factors on Sales and Production1. Risk Factors on Sales and ProductionRapidly changing environments have prompted the Company's existing customers to reduce significantly

their inventories and required more developed products as well as product items in a wider price range and

quality

To cope with this change, the Company has adopted the state-of-the-art technology in design and re-

duces production process as well as diversified production bases throughout Asia in order to sustain price and

product competitiveness.

2. Human Resource Risk2. Human Resource Risk2. Human Resource Risk2. Human Resource Risk2. Human Resource RiskThe continuous growth both in the local and overseas market has resulted with inadequacy of experi-

enced workforce in the marketing, finance and production.

Having realized such a risk, the Company has operated training courses not only to the senior manage-

ment but also employees, and students on the bilateral basis to harness growing demand and offer them

appropriate remuneration in order to retain competent personnel.

3. Financial Risk3. Financial Risk3. Financial Risk3. Financial Risk3. Financial Risk3.1 Now that the Company also got involved in exports to overseas market and imports of certain raw

materials (about 43% of the entire raw materials used in production), the Company might face either foreign

exchange gain or loss.

The Company has realized the exposure arising from volatility of the foreign exchange and hedged with

forward contracts and natural hedging


3.2 Credit Risk arising from overdue payment of direct customers and related companies.

The Company has set policy to be strictly careful of extending credit lines to new clients. All transactions

as well as client information were completely recorded and could be immediately monitored once the purchase

orders were made. In addition, The Company has also had strict policy on debt controls as well as close

contacts with debtors and provisions set aside for doubtful debts of suspected accounts. As a result, substan-

tial impact from the debt defaults was unlikely .

4. Risk Factors on Business Planning and Information T4. Risk Factors on Business Planning and Information T4. Risk Factors on Business Planning and Information T4. Risk Factors on Business Planning and Information T4. Risk Factors on Business Planning and Information TechnologyechnologyechnologyechnologyechnologyThe Company's business network, which covers the production bases and distribution channels through-

out strategic regions of the world, has prompted the Company to realize information technology adoption in order

to increase operation efficiency. However, the Company also realized that information technology system itself

might cause the Company certain technical restrictions, which might result with inability to fully utilize important

information.

In a bid to curb such a risk, the Company has developed backup information system either on the daily,

weekly or monthly basis. Backup information could be retrieved and made available immediately once the

system failure. In addition, the Company has prepared back-up power supply and voltage regulation to support

the information system to protect electronic appliances in good conditions. Moreover, the Company has already

planned to develop the entire network to become computer online system to cope with future business

expansion.

The company and the major shareholders had no other business involved or competed against it. During

2004 and 2003 the company had related transactions with the affiliates, subsidiaries and related companies with

joint management and directors, which are the normal trade practices (please see the financial remark No. 5).

The related transactions occurred among the company, its affiliates and subsidiaries are business items

are normal practice, and the board of directors or the board of executives had approved them in compliance with

the appropriate procedures according to the regulations of the Company in all respects.

The related transactions that occurred and could take place in the future the board of directors or the

board of executives must approve according to the appropriate procedures according to the regulations of the

company. The directors who had vested interest in approving the said items were refrained from voting on such

issues.

The future related transactions of the company shall be implemented in the normal business practice as

usual without a special treatment. No transfers of interests among the company, the affiliates and persons of

vested interest. Nevertheless, the company shall ask the inspection committee or the auditor of the company or

an independent specialist to audit and show appropriateness of the prices and rationalization of making the

items too. It shall disclose type and value of the said items with reasons of making the items to the annual

general meeting of the shareholders.

Moreover, the board of directors had to comply with the laws on securities and the Stock Exchange of

Thailand (SET) and regulations, notices, orders or requirements of the SET. Including compliance with the

requirements on data disclosure of information on making the related transactions and acquiring or disposal of

the important assets of the company or its affiliates. It complied with the standards of accounting prescribed by

the Accounting and Auditor Association of Thailand (AAAT).

Nevertheless, if there was a related transactions between the company or its affiliates or people who may

have conflict of interest or had vested interest or future conflict of interest, the company would have the inspec-

tion committee to comment on the necessity and appropriateness of such items. In case the inspection com-

mittee had no expertise in considering the related transactions that may happen, the company would ask an

independent specialist or the auditor of the company to give opinions on the related transactions for supplement-

ing the decision of the committee or the shareholders as the case maybe. Nonetheless, the company would

reveal the related transactions in the remarks supplementing the financial statement that had been audited by

the company's auditor.



☺

To promote and support university students to optimize their leisure time through experiences on

training and extra jobs during the ends of their academic sessions under the “Capital Market for“Capital Market for“Capital Market for“Capital Market for“Capital Market for

School Children and University Students”School Children and University Students”School Children and University Students”School Children and University Students”School Children and University Students” project initiated by the government. The project

held during March until April, 2004 attracted a total of 33 participants.

To cooperate with the Kanchanapisek Technical College and College of Fine Arts, Bangkok to

manage bilateral vocational education system and the Non-Formal Education Department to offer

occupational education for underprivileged children to continue their studies on the bilateral educa-

tion system on gems and costume jewelry at the higher and advanced vocational certificate

levels.This project has been operating continually for four years.

Pranda Group to cooperate with the Faculty of Fine and and Applied Arts, the Faculty of Education

and Faculty of Architecture, Chulalongkorn University, under the Project "T"T"T"T"To Strengthen Artso Strengthen Artso Strengthen Artso Strengthen Artso Strengthen Arts

Experiences for Business''Experiences for Business''Experiences for Business''Experiences for Business''Experiences for Business'' and donated computers as educational tools to university lecturers

Education.

To participate in the “Art For All”“Art For All”“Art For All”“Art For All”“Art For All” project for underprivileged children to develop their art skills and

creativity as well as hone disabled child's potential to outpace their physical limitations with confi-

dence, pride and ability to live their happy life in society.


To participate in the discussion panel on how to promote education management of the educational

centers in the entrepreneurial offices held by Policy and Planning Bureau (PPB), the Office of the

Education Council in cooperation with the Office of Permanent Secretary for Education to brain-

storm and draw suggestions from all engaged parties which would be used as information and data

base to effectively manage educational policy and management measures of the educational cen-

ters in the entrepreneurial offices, organizations and other communities.

To cooperate in the program to offer opportunities for students from vocational schools to partici-

pate in training sessions in the real factories and direct experiences to upgrade their professional

skills which would thus produce quality human resources to the country.

Pranda Jewelry Plc.,to cooperate with Social Venture Network to organize seminar on “Corporate“Corporate“Corporate“Corporate“Corporate

Community Involvement: Real Practice in Thai Society”Community Involvement: Real Practice in Thai Society”Community Involvement: Real Practice in Thai Society”Community Involvement: Real Practice in Thai Society”Community Involvement: Real Practice in Thai Society”.

Prida TPrida TPrida TPrida TPrida Tiasuwaniasuwaniasuwaniasuwaniasuwan, chairman of Pranda Jewelry Public Company and president of the Social

Venture Network is an honorable speaker for the topic on “Case Study In Thailand For Corpo-“Case Study In Thailand For Corpo-“Case Study In Thailand For Corpo-“Case Study In Thailand For Corpo-“Case Study In Thailand For Corpo-

rate Community Involvement”rate Community Involvement”rate Community Involvement”rate Community Involvement”rate Community Involvement” with Dr. Bradley k. Googins, director of the Center for

Corporate Citizenship, Boston College, presenting a speech on Corporate Citizenship. Paul Wedel,

Director of the Kenan Institute Asia delivered the opening and welcome speech. The speech is held

at Westin Grand Sukhumvit .


To participate in the “National Skilled Labor Contest”“National Skilled Labor Contest”“National Skilled Labor Contest”“National Skilled Labor Contest”“National Skilled Labor Contest” to promote and upgrade Thai skilled

labor on par with international standards through participation as a member of the sub-committee

and donation of apparatus and instrument.

Sunanta TSunanta TSunanta TSunanta TSunanta Tiasuwaniasuwaniasuwaniasuwaniasuwan, the Corporate Finance Chairman of Pranda Jewelry Public Company

Limited, represents Pranda Group of Companies, customers and trade partners of the Group as

well as employees and executives to donate 2 million baht cash to the Foundation for Children,

Duang Prateep Foundation, and the Local Development Foundation to help relieve and rehabilitate

the tsunami-stricken victims in the six southern provinces. Prof. DrProf. DrProf. DrProf. DrProf. Dr. Prawase W. Prawase W. Prawase W. Prawase W. Prawase Wasiasiasiasiasi, senior

citizen and president of the Foundation for Children, Piphop Dhongchai, Piphop Dhongchai, Piphop Dhongchai, Piphop Dhongchai, Piphop Dhongchai, secretary, Prateep Prateep Prateep Prateep Prateep

Ungsongtham HataUngsongtham HataUngsongtham HataUngsongtham HataUngsongtham Hata, head of the Duang Prateep Foundation, and DrDrDrDrDr. Poldej Pinprateep. Poldej Pinprateep. Poldej Pinprateep. Poldej Pinprateep. Poldej Pinprateep,

director of the Local Development Institute, receive the check, with social critic Sulak SivaraksaSulak SivaraksaSulak SivaraksaSulak SivaraksaSulak Sivaraksa

giving a speech to thank the company.

Prida TPrida TPrida TPrida TPrida Tiasuwaniasuwaniasuwaniasuwaniasuwan, chairman of Pranda Jewelry Public Company Limited was honored by the

Export Promotion Department, Commerce Ministry to win Export Honorary Recognition Award for

sustaining the product's quality and robust export values for over 10 years. The award granted by

Prime Minister Thaksin ShinawatraPrime Minister Thaksin ShinawatraPrime Minister Thaksin ShinawatraPrime Minister Thaksin ShinawatraPrime Minister Thaksin Shinawatra at Santimitri building, the Government House.


To The Board of Directors and Shareholders of

Pranda Jewelry Public Company Limited

I have audited the accompanying consolidated balance sheets of Pranda Jewelry Public Company Limited

and its subsidiaries as at 31 December 2004 and 2003, the related consolidated statements of earnings, changes

in shareholders' equity and cash flows for the years then ended, and the separate financial statements of Pranda

Jewelry Public Company Limited for the same periods. These financial statements are the responsibility of the

Company's management as to their correctness and the completeness of the presentation. My responsibility is

to express an opinion on these financial statements based on my audits.

I did not audit the financial statements, included in the consolidated financial statements for the year

ended 31 December 2004, of a local subsidiary company, Pranda Lodging Co., Ltd., and 5 overseas subsidiary

companies, Pranda Vietnam Co., Ltd., Pranda U.K. Ltd., H. GRINGOIRE s.a.r.l., Pranda (Guangzhou) Co., Ltd.

and Pranda North America, Inc., which incorporated the financial statements of another subsidiary, Crystaline

North America, Inc. Those financial statements were included in the consolidated financial statements with total

assets as at 31 December 2004 of Baht 794 million, total revenues and net loss for the year then ended of Baht

1,619 million and Baht 21 million, respectively (2003 : a local subsidiary company and 4 overseas subsidiary

companies with total assets of Baht 734 million, total revenues of Baht 1,272 million and net loss of Baht 9

million). In addition, the Company's financial statements include its investment in those subsidiaries stated

under the equity method, amounting to Baht 227 million as at 31 December 2004 (2003 : Baht 197 million) and

its share of loss for the year then ended, amounting to Baht 21 million (2003 : share of loss Baht 9 million). The

subsidiary companies' financial statements were audited by other auditors, as discussed in note 2.2 to the

financial statements. Their reports have already been furnished to me. My opinion on the consolidated financial

statements, insofar as they relate to the amounts included for those subsidiaries, is based solely on the reports

of the other auditors


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 together with the reports of the other auditors mentioned above provides a reasonable

basis for my opinion.

In my opinion, based on my audits and the reports of other auditors, the financial statements referred to

above present fairly, in all material respects, the financial position of Pranda Jewelry Public Company Limited

and its subsidiary companies and of Pranda Jewelry Public Company Limited as at 31 December 2004 and 2003

and the results of their operations and cash flows for the years then ended in accordance with generally accepted

accounting principles.

Siraporn Ouaanunkun

Certified Public Accountant (Thailand) No. 3844

Ernst & Young Office Limited

Bangkok : 21 February 2005


ASSETS

CURRENT ASSETS

Cash and cash equivalents

Current investments - fixed deposit with maturity of more than 3 months

Trade accounts and notes receivable

Accounts and notes receivable

Accounts receivable - related parties

Less : Allowance for doubtful accounts

Trade accounts and notes receivable, net

Amounts due from related parties

Inventories, net

Other current assets

Value added tax refundable

Others

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS

Deposit with financial institution - pledge

Investments accounted for under equity method

Investments in subsidiary companies

Investments in associated companies

Other long-term investments

Advances for investment

Loans and amounts due from related parties, net

Property, plant and equipment, net

Land held for development, net

Other non-current assets

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS

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

Note 2004

523,276,532

40,000,000

601,926,127

11,417,792

(56,480,285)

556,863,634

63,124

1,142,200,732

4,938,628

32,471,841

2,299,814,491

9,300,158

-

41,953,271

14,970,806

-

-

553,856,462

354,329,189

28,740,275

1,003,150,161

3,302,964,652

2003

460,469,166

549,529

671,771,860

6,194,704

(202,329,854)

475,636,710

318,432

1,019,651,865

5,511,767

27,859,566

1,989,997,035

9,782,800

-

34,550,475

14,881,033

-

-

560,346,280

354,329,189

28,192,713

1,002,082,490

2,992,079,525

☺

(Unit : Baht)

2004

367,092,494

40,000,000

223,775,672

591,834,762

(42,874,226)

772,736,208

39,548,123

614,745,734

570,057

13,378,462

1,848,071,078

8,817,860

252,292,114

-

14,573,327

20,355,913

101,840,801

437,251,720

354,329,189

9,967,428

1,199,428,352

3,047,499,430

2003

389,530,733

547,232

338,793,479

581,956,304

(200,572,014)

720,177,769

19,029,737

525,147,030

290,997

11,507,607

1,666,231,105

9,302,800

234,760,701

-

14,508,803

24,969,191

85,115,912

438,627,546

354,329,189

12,114,126

1,173,728,268

2,839,959,373

The Company Only

5

4

5

6

7

8

8

9

5

5

10

11

Consolidated


Note

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Bank overdrafts and short-term loans

from financial institutions

Trade accounts and notes payable

Accounts and notes payable

Accounts payable - related parties

Total trade accounts and notes payable

Current portion of long-term loans

Short-term loan and amounts due to related parties

Other current liabilities

Corporate income tax payable

Accrued interest expenses

Accrued expenses

Others

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES

Provision for loss from investment in subsidiaries

Long-term loans - net of current portion

Other non-current liabilities

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES


2004

90,483,183

135,366,210

2,969,396

138,335,606

126,210,000

747,294

16,472,005

3,592,733

80,003,504

45,784,680

501,629,005

-

685,770,000

3,810,508

689,580,508

1,191,209,513

2003

36,072,542

128,796,828

1,328,647

130,125,475

122,937,345

2,000,000

1,513,114

3,763,226

53,832,636

30,181,602

380,425,940

-

811,980,000

3,484,912

815,464,912

1,195,890,852

The Company Only

☺

(Unit : Baht)

12

5

13

5

8

13

2004

-

68,117,174

857,360

68,974,534

126,210,000

901,169

11,423,640

3,592,733

26,552,777

16,830,078

254,484,931

2,308,235

685,770,000

-

688,078,235

942,563,166

2003

-

69,294,945

369,123

69,664,068

120,840,000

9,280,970

285,519

3,763,226

16,216,272

2,657,220

222,707,275

15,396,191

811,980,000

-

827,376,191

1,050,083,466

Consolidated


SHAREHOLDERS' EQUITY

Share capital

Authorised share capital

400 million ordinary shares of Baht 1 each

Issued and paid-up share capital

274,911,150 ordinary shares of Baht 1 each

(2003 : 238,851,900 ordinary shares of Baht 1 each)

Additional paid-in capital

Premium on share capital

Revaluation surplus on land

Share subscription received in advance

Translation adjustment

Retained earnings

Appropriated - legal reserve

Unappropriated

EQUITY ATTRIBUTABLE TO COMPANY'S SHAREHOLDERS

MINORITY INTEREST - equity attributable to minority

shareholders of subsidiary

TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


...................................................................................

...................................................................................

15

10

15

17

DIRECTORS

Consolidated The Company Only

☺

(Unit : Baht)

2004

400,000,000

274,911,150

541,786,830

202,996,742

9,756,320

31,801,160

40,000,000

1,003,684,062

2,104,936,264

6,818,875

2,111,755,139

3,302,964,652

2003

400,000,000

238,851,900

476,880,180

202,996,742

16,504,740

29,060,293

40,000,000

785,582,052

1,789,875,907

6,312,766

1,796,188,673

2,992,079,525

2004

400,000,000

274,911,150

541,786,830

202,996,742

9,756,320

31,801,160

40,000,000

1,003,684,062

2,104,936,264

-

2,104,936,264

3,047,499,430

2003

400,000,000

238,851,900

476,880,180

202,996,742

16,504,740

29,060,293

40,000,000

785,582,052

1,789,875,907

-

1,789,875,907

2,839,959,373

Note


REVENUES

Sales

Other income

Interest income

Others

Share of profit from investments accounted for under equity method

TOTAL REVENUES

EXPENSES

Cost of sales

Selling and administrative expenses

Loss on exchange

Directors' remuneration

Share of loss from investments accounted for under equity method

TOTAL EXPENSES

EARNINGS BEFORE INTEREST EXPENSES

AND CORPORATE INCOME TAX

INTEREST EXPENSES

CORPORATE INCOME TAX

EARNINGS BEFORE MINORITY INTEREST

MINORITY INTEREST IN NET OF EARNINGS OF SUBSIDIARIES

NET EARNINGS FOR THE YEAR

EARNINGS PER SHARE

Basic earning per share

Net earnings

Weighted average number of ordinary shares (shares)

Diluted earnings per share

Net earnings

Weighted average number of ordinary shares (shares)



☺

(Unit : Baht)

18

19

20

Note 2003

2,053,211,449

14,821,956

40,074,067

-

2,108,107,472

1,478,444,519

231,242,928

34,838,898

4,816,800

3,287,285

1,752,630,430

355,477,042

(42,829,631)

(587,098)

312,060,313

-

312,060,313

1.43

218,354,345

0.98

318,971,297

2004

2,499,869,151

13,998,344

47,370,665

15,007,502

2,576,245,662

1,822,265,210

306,514,954

11,066,463

6,285,000

-

2,146,131,627

430,114,035

(41,908,093)

(26,445,169)

361,760,773

-

361,760,773

1.37

263,324,141

1.06

342,816,751

2003

2,615,278,441

9,232,209

18,624,632

6,582,384

2,649,717,666

1,633,279,143

601,638,864

36,404,857

4,816,800

-

2,276,139,664

373,578,002

(57,850,845)

(3,666,844)

312,060,313

-

312,060,313

1.43

218,354,345

0.98

318,971,297

2004

3,322,671,501

10,864,662

17,751,746

6,572,389

3,357,860,298

2,173,875,872

717,128,995

11,378,047

6,285,000

-

2,908,667,914

449,192,384

(50,315,072)

(36,610,430)

362,266,882

(506,109)

361,760,773

1.37

263,324,141

1.06

342,816,751


☺

(Uni

t :

Bah

t)


☺

(U

nit

: B

aht)


Cash f lows from (used in) operating activit ies :Cash f lows from (used in) operating activit ies :Cash f lows from (used in) operating activit ies :Cash f lows from (used in) operating activit ies :Cash f lows from (used in) operating activit ies :

Net earnings for the year

Adjustments to reconcile net earnings to net cash

provided by (used in) operating activities

Depreciation/amortisation

Written-off fixed assets

Impairment loss from equipment

Amortised discounted value of government bond

Provision for doubtful accounts (reversal)

Provision for diminution in value of stocks (reversal)

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

Gain on disposal of machinery and equipment

Minority interest in net of earnings of subsidiaries

Unrealised gain on exchange

Decrease (increase) in operating assets :-

Trade accounts and notes receivable

Trade accounts receivable - related parties

Amounts due from related parties

Inventories

Other current assets

Other non-current assets

Increase (decrease) in operating liabilities :-

Trade accounts and notes payable

Trade accounts payable - related parties

Amounts due to related parties

Accrued interest expenses

Accrued expenses

Corporate income tax payable

Other current liabilities

Other non-current liabilities

Net cash provided by operating activities


☺

(Unit : Baht)

312,060,313

28,473,705

98,198

-

(64,525)

(1,612,349)

-

3,287,285

(123,095)

-

18,232,961

360,352,493

(52,270,176)

(19,813,587)

14,384,571

(3,383,663)

3,719,351

(6,460,438)

37,522,065

(23,185)

26,345

(263,776)

155,929

285,519

(390,328)

-

333,841,120

361,760,773

52,027,558

4,835,646

9,340,099

(64,524)

15,433,666

36,712,842

(6,572,389)

(795,971)

506,109

3,765,698

476,949,507

(80,754,111)

(20,543,104)

255,308

(159,090,168)

(3,068,649)

(547,562)

6,569,382

1,640,749

-

(170,493)

26,170,868

14,958,891

15,603,078

325,596

278,299,292

312,060,313

50,913,505

98,198

-

(64,525)

(2,634,360)

(188,994)

(6,582,384)

(359,188)

-

9,150,994

362,393,559

6,021,639

(617,432)

240,269

(105,933,472)

1,182,051

(9,209,631)

38,860,753

481,343

-

(263,776)

6,351,126

(461,648)

12,098,308

2,871,895

314,014,984

361,760,773

31,176,142

426,495

9,340,099

(64,524)

3,585,448

34,302,000

(15,007,502)

(785,625)

-

14,321,628

439,054,934

(35,582,037)

(35,486,738)

(20,518,386)

(123,900,704)

(1,179,428)

2,146,698

(1,177,771)

488,237

(8,379,801)

(170,493)

10,336,505

11,138,121

14,172,858

-

250,941,995

2004 2003 2004 2003



794,814

-

-

-

(27,448,326)

1,041,877

(25,611,635)

(16,420,128)

2,000,000

(130,838,262)

99,284,920

16,504,740

(171,629,200)

(201,097,930)

173,547

87,478,966

372,990,200

460,469,166

50,319,511

1,923,435

(39,067,388)

(16,724,889)

4,345,611

(12,871,000)

(39,932,852)

1,151,567

(103,098,951)

-

-

(120,840,000)

84,461,160

9,756,320

(143,658,763)

(170,281,283)

-

(22,438,239)

389,530,733

367,092,494

42,078,585

15,307,048

797,111

17,595,923

6,353,569

(50,000,000)

(18,358,136)

559,608

(43,051,925)

-

-

(120,840,000)

99,284,920

16,504,740

(171,629,200)

(176,679,540)

-

114,109,655

275,421,078

389,530,733

43,093,407

302,654


☺

(Unit : Baht)

2004 2003 2004 2003

Cash f lows from (used in) investing activit ies :Cash f lows from (used in) investing activit ies :Cash f lows from (used in) investing activit ies :Cash f lows from (used in) investing activit ies :Cash f lows from (used in) investing activit ies :

Decrease (increase) in cash at banks which is pledged or

has maturity period of more than 3 months

Proceeds from (payment of) loans and amount due from related parties

Decrease in advances for investment

Payment for investment in subsidiary company

Acquisition of plant, machinery and equipment

Proceeds from disposal of machinery and equipment

Net cash used in investing activities

Cash f lows from (used in) f inancing activit ies :Cash f lows from (used in) f inancing activit ies :Cash f lows from (used in) f inancing activit ies :Cash f lows from (used in) f inancing activit ies :Cash f lows from (used in) f inancing activit ies :

Increase (decrease) in bank overdrafts and

short-term loans from financial institutions

Proceeds from (repayment of) loans from related parties

Repayment of long-term loans

Proceeds from increase in share capital

Share subscription received in advance

Dividend paid

Net cash used in financing activities

Translation adjustmentTranslation adjustmentTranslation adjustmentTranslation adjustmentTranslation adjustment

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental cash f lows information :-Supplemental cash f lows information :-Supplemental cash f lows information :-Supplemental cash f lows information :-Supplemental cash f lows information :-

Cash paid during the year

Interest paid

Corporate income tax


(39,067,389)

-

-

-

(60,332,409)

1,364,544

(98,035,254)

54,410,641

(1,252,706)

(122,937,345)

84,461,160

9,756,320

(143,658,763)

(119,220,693)

1,764,021

62,807,366

460,469,166

523,276,532

47,911,018

24,743,114


☺

Pranda Jewelry Public Company Limited (hereinafter called "the Company") is a Public Company Limited

under Thai Laws and listed on the Stock Exchange of Thailand. Its registered address is 333 Soi Rungsang,

Bangna-trad Road, Bangna Subdistrict, Bangna District, Bangkok 10260. The Company operates its business

in Thailand and is principally engaged in the manufacture and distribution of jewelry.

2.1 The consolidated financial statements include the financial statements for the years ended 31 December

2004 and 2003 of the Company and the following subsidiary companies (hereinafter called "the subsidiary

companies") :-

Primagold International Co., Ltd.

Crystaline Co., Ltd.


Pranda North America, Inc.

Crystaline North America, Inc.

(held by Pranda North America, Inc.)

H. GRINGOIRE s.a.r.l.

Pranda UK Ltd.

Pranda Singapore Pte. Limited

Pranda Acceptance Sdn. Bhd.

(held by Pranda Singapore Pte. Limited)

Pranda Vietnam Co., Ltd.

Pranda (Guangzhou) Co., Ltd.

2004

100

92

83

100

100

100

100

100

100

100

100

2003

100

92

83

100

100

100

100

100

100

100

-

Thailand

Thailand

Thailand

U.S.A.

U.S.A.

France

United Kingdom

Singapore

Malaysia

Vietnam

The People's

republic of china

Distr ibution of jewelry

Manufacture and distribution of

j e w e l r y

Dormitory rental





Holding company


(ceased its operations in 2000)


j e w e l r y


j e w e l r y

2004

262

96

34

247

191

271

44

41

10

2003

226

73

38

177

220

261

42

38

-

2004

326

159

6

987

203

411

7

11

1

The subsidiary companies

2003

272

127

5

697

210

352

7

8

-

Percentage of

shareholding

by the Company

and subsidiary

companies

Country of

incorporation Nature of business

Total assets

included in the

consolidated

balance sheets

(Unit : Million Baht)

Total income

included in the

consolidated

earnings

statements

In May 2005, the Company invested USD 250,000, or approximately Baht 10 million, in a 100 percent

shareholding in a new subsidiary company, Pranda (Guangzhou) Co., Ltd.

In November 2004, this company increased its authorised share capital to be USD 425,000 and the

Company had paid part the additional capital. As at 31 December 2004, the paid-up capital of this company

is USD 325,000, or approximately Baht 13 million.


2.2 The following financial statements of subsidiary companies are audited by their auditors who expressed

an unqualified opinion on those financial statements, except for the financial statements of H.GRINGOIRE

s.a.r.l. on which the audit opinion is qualified on its financial position.

2.3 The following is the financial statements of a subsidiary company, included in the consolidated financial

statements, which is prepared by the management of that subsidiary company and not audited by its

auditors because of time restrictions.

2.4 The assets, liabilities and results of operations of the subsidiaries are included in the consolidated

financial statements from the date of acquisition to the date of disposition.

2.5 Balances and significant transactions between the Company and its subsidiary companies, cost of

investments in subsidiary companies, the share capital of the subsidiary companies, and profits included

in ending balance of inventories have been eliminated from the consolidated financial statements.

Subsidiary companies


Pranda Vietnam Co., Ltd.

Pranda UK Ltd.

H.GRINGOIRE s.a.r.l

Pranda North America, Inc.

(included the financial statements

of Crystaline North America, Inc.

Pranda (Guangzhou) Co., Ltd.


The financial statements have been prepared in accordance with accounting standards pronounced by

the Institute of Certified Accountants and Auditors of Thailand which are effective under the Accounting Act

B.E. 2543.

Significant accounting policies adopted by the Company and its subsidiaries are summarized below :-

3.13.13.13.13.1 Revenue recognitionRevenue recognitionRevenue recognitionRevenue recognitionRevenue recognition

Sales are the invoiced value of goods supplied, excluding value added tax, after deducting discounts

and allowances.

Rental and service income is recognised when service is rendered. Rental and service income presents

the invoiced value, excluding value added tax.

3.23.23.23.23.2 TTTTTrade accounts receivable and allowance for doubtful accountsrade accounts receivable and allowance for doubtful accountsrade accounts receivable and allowance for doubtful accountsrade accounts receivable and allowance for doubtful accountsrade accounts receivable and allowance for doubtful accounts

Trade accounts receivable are stated at their net realisable value. Allowance for doubtful accounts is

provided for the estimated losses that may be incurred in collection of receivables. The allowance is

based on analysis of debtor aging, the financial position of the debtors, and the likelihood of settlement

of debt, on a specific account basis.

3.33.33.33.33.3 Inventories and provision for diminution in value of stocksInventories and provision for diminution in value of stocksInventories and provision for diminution in value of stocksInventories and provision for diminution in value of stocksInventories and provision for diminution in value of stocks

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

Work in process and finished goods are valued at the lower of cost and net realisable value, with cost

being determined on a standard cost basis which approximates actual cost (FIFO method).

The Company records provision for diminution in the value of stocks based on an appraisal of the

value of stocks and expected future sales trends, and taking into consideration the type of product and

the age of the goods.

2.6 The financial statements of the subsidiary companies incorporated overseas are translated to Thai Baht

at the closing exchange rate as to assets and liabilities, and at the average exchange rate as to revenues

and expenses. The resultant difference is shown under the caption of "Translation adjustment" in the

shareholders' equity.


Land improvements 20 years

Buildings 14, 20 years

Leasehold improvements period of lease (5 - 39 years)

Machinery 5 - 10 years

Furniture, fixtures and equipment 3 - 10 years

Motor vehicles 3 - 6 years

No depreciation is provided for land and construction in progress.

The Company and some subsidiary companies amortise leasehold rights on a straight-line basis over

the period of the lease.

The Company and its subsidiary companies recognise impairment loss if events or changes in

circumstances indicate the carrying value of assets may not be recoverable.

3.43.43.43.43.4 PropertyPropertyPropertyPropertyProperty, plant and equipment/Depreciation and amortisation, plant and equipment/Depreciation and amortisation, plant and equipment/Depreciation and amortisation, plant and equipment/Depreciation and amortisation, plant and equipment/Depreciation and amortisation

Land is initially recorded at cost and subsequently revalued by an independent appraiser to its fair

value. Revaluations are to be made with sufficient regularity to ensure that the carrying amount does not

differ materially from the fair value at the balance sheet date.

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

- When the carrying amount of land is increased as a result of the revaluation, such increase is credited

directly to equity under the heading of "Revaluation surplus on land". However, a revaluation increase

will be recognised as income to the extent that it reverses a revaluation decrease of land previously

recognised as an expense.

- When carrying amount of land is decreased as a result of a revaluation, such decrease is recognised

as an expense. However, a revaluation decrease will be charged directly against the related "Revaluation

surplus on land" to the extent that the decrease does not exceed the amount held in the revaluation

surplus in respect of land.

Plant and equipment is stated at cost less accumulated depreciation. Depreciation of plant and

equipment is generally calculated by reference to its cost on a straight-line basis (although for certain

assets of some subsidiary companies, a declining balance method is used) over the following estimated

useful lives :-


3.53.53.53.53.5 InvestmentsInvestmentsInvestmentsInvestmentsInvestments

Investments in subsidiary companies (in the separate financial statements of the Company) and

investments in associated companies are recorded under the equity method.

Investments in debt securities, expected to be held to maturity, are determined at depreciated cost.

Long-term investments are held as other investments and valued at cost. A provision for impairment

loss will be made when the fair value of an investment is lower than its cost.

3.63.63.63.63.6 Foreign currenciesForeign currenciesForeign currenciesForeign currenciesForeign currencies

Foreign currency transactions incurred during the year are translated into Baht at the rates of exchange

ruling on the transaction dates. Assets and liabilities denominated in foreign currency outstanding at the

balance sheet date are translated into Baht at the rates of exchange ruling on the balance sheet date.

Exchange gains and losses are included in determining earnings.

3.73.73.73.73.7 Basic earnings per shareBasic earnings per shareBasic earnings per shareBasic earnings per shareBasic earnings per share

The basic earnings per share is determined by dividing net earnings for the year by the weighted

average number of ordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing net earnings for the year by the total sum of the

weighted average number of ordinary shares in issue during the year and the weighted average number

of ordinary shares that would need to be issued to convert all dilutive potential ordinary shares (warrants)

into ordinary shares.

3.83.83.83.83.8 Cash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalentsCash and cash equivalents

Cash and cash equivalents include cash, cash at banks and financial institutions with an original

maturity of 3 months or less and not subject to restrictions.

3.93.93.93.93.9 Financial instrumentsFinancial instrumentsFinancial instrumentsFinancial instrumentsFinancial instruments

The Company has no policy to speculate in or engage in the trading of any financial derivative instruments.

Financial instruments carried in the balance sheet include cash and bank balances, trade accounts

receivable, and trade accounts payable. The particular recognition methods adopted are disclosed in the

individual policy statements associated with each item.


3.103.103.103.103.10 Use of accounting estimatesUse of accounting estimatesUse of accounting estimatesUse of accounting estimatesUse of accounting estimates

Preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates for certain accounting transactions such as accrued expenses, affecting

amounts reported in the financial statements and notes related thereto. Subsequent actual results may

differ from these estimates.

The outstanding balances of trade accounts and notes receivable as at 31 December 2004 and 2003 are

aged as follows :-


During the years, the Company had significant business transactions with its subsidiary, associated and

related companies (related by way of common shareholders and/or common directors). Such transactions,

which have been concluded on terms negotiated between the relevant parties, but without written agreements,

are summarised below :

The Company's management believes that allowance for doubtful accounts set aside is adequate in the

current circumstances.

During 2004, the Company wrote off bad debts totalling Baht 161 million for which allowance for doubtful

accounts had already set aside.

An overseas subsidiary company has pledged some of its trade accounts receivable to secure loans

granted to it by a bank.

During 2004, sales by two overseas subsidiary companies, Pranda North America, Inc. and Crystaline

North America, Inc. to two significant customers totaled USD 21 million or approximately Baht 828 million,

equivalent to 84 percent of their net sales (2003 : sales to two significant customers totaled USD 14 million,

or approximately Baht 581 million, equivalent to 84 percent of the net sales of the subsidiaries).


The outstanding balances with those companies have been separately shown in the balance sheets.

Details are as follows :-


These loans are unsecured and repayable on demand.


The Company's management believes that provision for diminution in value of stocks set aside is

adequate in the current circumstances.

These balances are the Company and its subsidiaries' deposit with banks, pledged to secure the guarantee

issued by local banks and an overseas bank for electricity usage and for the lawsuit brought against an

overseas customer.


Investment in subsidiary companies and associated companies which are accounted for under equity

method as at 31 December 2004 and 2003 are the following :-


The share of profit (loss) from investment in an associated company incorporated overseas as included

in the consolidated statements of earnings has been calculated from the financial statements prepared by

that Company's management but not audited by its auditor. However, the management believes that there

would be no material difference if those financial statements had been to be audited by its auditor.

During 2004 and 2003, the Company received no dividend income from its investments in subsidiary and

associated companies.

The other long-term investments are summarised below :-

(Unit : Baht)


2004 2003 2004 2003

Held-to-maturity

Government bonds 14,548,327 14,483,803 14,548,327 14,483,803

Other long-term investments 422,479 397,230 25,000 25,000

Total other long-term investments 14,970,806 14,881,033 14,573,327 14,508,803


⌧

⌧


As at 31 December 2004, the Company has equipment items which have been fully depreciated but are

still in use. The original cost, before deducting accumulated depreciation of these fully depreciated assets

amounted to Baht 204 million.

Most of the land, buildings thereon and leasehold rights have been mortgaged with financial institutions

to secure the credit facilities of the Company and subsidiary companies.

In December 2001, the Company hired an independent appraiser to appraise the fair value of land, which

showed the fair market value of the land to be approximately Baht 203 million higher than its book value. The

Company recorded the land at the reappraised value and credited the surplus of Baht 203 million directly to

equity, under the heading of "Revaluation Surplus on land" in the balance sheet. Had the land been presented

at cost in the financial statements, its book value as of 31 December 2004 would have been Baht 51,711,917.

The Company's land held for development is land for future projects and has been mortgaged to secure

the credit facilities of the Company. This balance is stated at cost, covering the cost of land, land improvements

and other related capitalized expenses and interest less provision for impairment loss if the carrying value is

less than the recoverable amount.

As at 31 December 2004 and 2003, the balances of land held for development consist of the following :-

(Unit : Thousand Baht)

2004 2003

Land 503,374 503,374

Capitalised interest 156,017 156,017

Land improvement 7,990 7,990

667,381 667,381

Less : Provision for impairment loss (313,052) (313,052)

Total 354,329 354,329

In December 2001, the Company hired an independent appraiser to conduct an appraisal of the fair value

of the land held for development, the results of which showed that its fair value was approximately Baht 313

million lower than its net book value. The Company has recognised the difference in the accounts.

As at 31 December 2004, the credit facilities of bank overdrafts of the Company are secured by the

mortgage of the Company's land and buildings, land held for development and by the guarantees of its

directors.


The outstanding balances of long-term loans as at 31 December 2004 and 2003 are as follows :-

☺

The long-term loan of the Company was granted by a local commercial bank for the purpose of refinancing

its outstanding balance of restructured debt under the debt restructuring agreement (dated 18 September

2000). The loan agreement stipulates various conditions with which the Company must comply.

This long-term loan is secured by the mortgage of land and the building thereon, and land held for

development, and by the guarantee of the Company's directors.

The long-term loan of the local subsidiary company is secured by the pledge of leasehold rights and by

the guarantees of the Company's and its subsidiary's directors.

The bank overdrafts of a local subsidiary company are secured by the pledge of leasehold rights and by

the guarantees of the Company and its directors. The bank overdrafts and short-term loans of an overseas

subsidiary company are secured by some of its accounts receivable and assets.


During the second quarter of 2002, the Company received approval from the Office of the Securities and

Exchange Commission to offer 200 million warrants to purchase ordinary shares to the Company's

shareholders in proportion to their shareholding, in a ratio of 1 warrant per 1 existing ordinary share. No value

is to be charged for the warrants upon issue. The warrants have an exercise price of Baht 2.80 per share and

are exercisable at the ratio of 1 warrant per 1 ordinary share. However, 15,000 warrants were not offered to

some shareholders thus the Company has 199,985,000 outstanding warrants. The warrants' life is 5 years

and is exercisable every month with the first exercise date on the last business day of May 2002 until 2 May

2007.

The Stock Exchange of Thailand has set the warrants to be traded on the Stock Exchange of Thailand

commencing from 20 May 2002.

During the year, 36,649,100 warrants have been exercised. As at 31 December 2004, the Company has

121,589,950 outstanding warrants not yet exercised.

During the year 2004, 42,543,650 warrants have been exercised to be new ordinary shares. The Company

registered the capital increase of 36,059,250 shares with the Ministry of Commerce during the year, raising

the Company's issued and paid-up share capital increased to Baht 274,911,150 (274,911,150 ordinary shares

of Baht 1 each). For the remaining 3,484,400 shares resulting from the exercise of the warrants, the Company

registered the resulting capital increase with the Ministry of Commerce on 7 January 2005. As at

balance sheet date, the proceeds of Baht 9.8 million (3,484,400 shares at an exercise price of Baht 2.80 per

share) from the exercise of these rights was presented under the heading of "Share subscription received in

advance" in the shareholders' equity.

During 2004 and 2003, the Company declared the following dividends :-


Under the Public Company Limited Act B.E. 2535, the Company is required to set aside a legal reserve

at least 5 percent of its net profit of the year, after deducting accumulated deficit brought forward (if any), until

the reserve reaches 10 percent of its registered share capital. The statutory reserve could not use for

dividend payment.

Directors' remuneration represents the benefits paid to the Company's directors in accordance with

Section 90 of the Public Limited Companies Act, exclusive of salaries and related benefits payable to the

executive directors.

The corporate income tax for the year represents the corporate income tax of the Company and its

subsidiary companies. The Company's corporate income tax is calculated on the net earnings from operations

without BOI promotional privileges after adding back expenses which are disallowable for tax computation

purposes. The subsidiary companies' corporate income tax is calculated on the net earnings before tax,

adding back certain expenses which are disallowable for tax computation purposes and deducting the tax

loss brought forward from previous years.


☺

In the second quarter of 2003, an overseas subsidiary company, Pranda UK Ltd., had completed changing

its accounting system and also reviewed its assets and liabilities valuation, that subsidiary company had

made adjustments to decrease the balance of current assets as at 31 December 2002 of GBP 99,979 (or

approximately Baht 7 million) and increase the balance of current liabilities as at 31 December 2002 of GBP

31,949 (or approximately Baht 2 million) to the balance of retained earnings brought forward to the beginning

of the year 2003 and a retrospective adjustment to the financial statements for the year ended 31 December

2002. As a result, the net earnings of the year ended 31 December 2002 decreased by Baht 9 million. The

adjustments have been presented under the heading "Prior year adjustments" in the respective statement of

changes in shareholders' equity.

In addition, under the reviews of its assets valuation as referred above that subsidiary company also

performed stocktaking on 31 May 2003. As a result, the discrepancy amounting to GBP 65,000 (or

approximately Baht 5 million) had adjusted to increase cost of sales in the statement of earnings for the year

2003.

22.1 The Company was granted various tax privileges under the Investment Promotion Act B.E. 2520 by

the Board of Investment under the certificate no. 1010/2544 for its factory located in the Suranaree

Industrial Estate Zone in Nakorn Rachasima province. Subject to certain imposed conditions, the

privileges include exemption from corporate income tax on profits for a period of eight years commencing

as from the date of first earnings operating income (beginning on 1 January 2003), exemption from

income tax on dividends paid from the profits of the operations on which corporate income tax is

exempted throughout the corporate income tax exemption period and an allowance permitting five

percent on the increment in export income over that of the preceding year to be deductible from

taxable income for a period of ten years commencing as from the date of first earnings operating

income.

22.2 A subsidiary company (Crystaline Co., Ltd.) was granted promotional privileges under the Investment

Promotion Act B.E. 2520 by the Board of Investment on 24 June 2002. Subject to certain imposed

conditions, the privileges include exemption from import duty on imported raw materials and supplies

for use in export manufacturing from 2002 until 2004.


The Company's and the subsidiary companies' operations involve major industry segments, the

manufacture and distribution of jewelry which is carried on in both Thailand and overseas, while a subsidiary

company carries a business of dormitory rental in Thailand. The financial information of the Company and its

subsidiary companies by industry and geographical segment, as of and for the years ended 31 December

2004 and 2003 are as follows :-

The Company's revenues for 2004 below are divided between those from promoted and non-promoted

activities :-

⌧

☺

⌧ ⌧ ⌧ ⌧


25.125.125.125.125.1 CommitmentsCommitmentsCommitmentsCommitmentsCommitments

As at 31 December 2004, the Company and its subsidiaries have outstanding lease and service

commitments under which total approximately Baht 18.8 million is payable. These commitments

comprise commitments of the Company amounting to Baht 4.7 million, commitments of a local subsidiary

amounting to Baht 9.3 million and commitments of two overseas subsidiaries amounting to GBP

24,467 and USD 74,701 or equivalent to approximately Baht 4.8 million.

25.225.225.225.225.2 Bank guaranteesBank guaranteesBank guaranteesBank guaranteesBank guarantees

As at 31 December 2004, there were outstanding guarantees totaling of approximately Baht 13.3

million issued by banks on behalf of the Company and its subsidiaries in respect of performance

bonds as required in the normal course of their businesses. Baht 0.8 million of these bank guarantees

were issued on behalf of the Company, Baht 0.5 million issued on behalf of local subsidiaries and

GBP 160,000 or equivalent to approximately Baht 12 million issued on behalf of an overseas subsidiary

company.

25.325.325.325.325.3 GuaranteesGuaranteesGuaranteesGuaranteesGuarantees

As at 31 December 2004, the Company has issued guarantees to secure bank overdrafts facilities

from banks of a local subsidiary company, totaling Baht 20 million.

25.425.425.425.425.4 Agreement to reserve leasehold rightsAgreement to reserve leasehold rightsAgreement to reserve leasehold rightsAgreement to reserve leasehold rightsAgreement to reserve leasehold rights

As at 31 December 2004, a local subsidiary company has commitments in relation to the payment

of fees for leasehold rights in a shopping mall under an agreement to reserve the leasehold rights

amounting to approximately Baht 10.8 million.

Financial risk management and policiesFinancial risk management and policiesFinancial risk management and policiesFinancial risk management and policiesFinancial risk management and policies

The Company and its subsidiary companies are exposed to risks from interest rates, currency exchange

rates and nonperformance of contractual obligations by counterparties. The Company and its subsidiary

companies use derivative instruments, as and when they consider appropriate, to manage such risks. They

have no policy to hold or issue derivative instruments for speculative or trading purposes.


Interest rate riskInterest rate riskInterest rate riskInterest rate riskInterest rate risk

The interest rate risk is the risk that future movements in market interest rates will affect the results of

the Company and its subsidiary companies' operations and their cash flows. The Company and its subsidiary

companies' exposure to interest rate risk relates primarily to their deposits with banks, loans to related

parties, bank overdrafts and long-term loans. The Company and its subsidiary companies do not use derivative

financial instruments such as interest swap to hedge such risk since they believe that the exposure to such

risk is minimal (the details of loans are set out in Notes 12 and 13).

Foreign currency riskForeign currency riskForeign currency riskForeign currency riskForeign currency risk

The Company and its subsidiary companies' exposure to foreign currency risk relates primarily to their

deposits with banks, receivables, payables, loans and amounts due from related parties, advances for

investment and amount due to related parties which are denominated in foreign currencies. In addition to

those transactional exposures, the Company is also exposed to the effect of foreign exchange movements

on its investments in foreign subsidiary and associated companies.

As at 31 December 2004 the Company and its local subsidiary companies have foreign currency assets/

liabilities as follows :-

Amount

AssetsAssetsAssetsAssetsAssets

Assets denominated in US dollars USD 1.9 million

Assets denominated in pounds GBP 0.1 million

Assets denominated in Euro EUR 0.3 million

Liabil i t iesLiabil i t iesLiabil i t iesLiabil i t iesLiabil i t ies

Liabilities denominated in US dollars USD 1.6 million

The Company has entered into various forward exchange contracts, to sell USD currency of approximately

USD 3.5 million at pre-determined sold exchange rates ranging from Baht 39.15 to 41.42 per USD 1 to

prevent the foreign currency risk derived from cash payment made by customers.

Subsequent to the balance sheet date up to 14 February 2005, the Company has entered into various

forward exchange contracts to sell USD currency of approximately USD 3.5 million at pre-determined sold

exchange rates ranging from Baht 38.28 to 41.33 per USD 1.


Credit riskCredit riskCredit riskCredit riskCredit risk

The Company and its subsidiary companies are exposed to credit risk primarily with respect to trade

accounts and notes receivable and loans to related parties. However, as the Company and its subsidiary

companies have a prudent credit policy and a diversified customer base, the management of the Company

and its subsidiary companies do not anticipate losses from debt collection in excess of the allowance for

doubtful accounts already set up in the accounts. In general, the Company operates in the matter of concerns

as the normal course of business.

Fair valueFair valueFair valueFair valueFair value

Since most of long-term investments of the Company and its subsidiary companies are recorded under

the equity method, long-term loans carry interest at rates which vary with the current market rates, and the

majority of the other financial assets and liabilities are short-term, the management of the Company and its

subsidiary companies believes that the fair value of the Company and its subsidiary companies' financial

assets and liabilities do not materially differ from their carrying value.

The presentation of the financial statements has been made in compliance with the stipulations of the

Notification of the Department of Business Development dated 14 September 2001, under the Accounting

Act B.E. 2543.

Certain amounts in the financial statements for the year ended 31 December 2003 have been reclassified

to conform to the current year's classification, with no effect on previously reported net earnings or

shareholders' equity.

These financial statements have been approved by the directors of the Company.