(TRANSLATION) REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT. To the Shareholders of THAINOX STAINLESS PUBLIC COMPANY LIMITED

Transcription

1 (TRANSLATION) REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT To the Shareholders of THAINOX STAINLESS PUBLIC COMPANY LIMITED I have reviewed balance sheet as of March 31, 2006, the statements of income, the statements of changes in shareholders equity, and the cash flow statements for each of the quarter ended on March 31, 2006 and 2005, of THAINOX STAINLESS PUBLIC COMPANY LIMITED. These financial statements are the responsibility of the company s management as to their correctness and completeness of the presentation. My responsibility is to issue a report on these financial statements based on my reviews. I conducted my reviews in accordance with the auditing standard applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit in accordance with generally accepted auditing standards, accordingly, I do not express an audit opinion. Based on my reviews, nothing has come to my attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles.

2 I have previously audited the financial statements of THAINOX STAINLESS PUBLIC COMPANY LIMITED for the year ended December 31, 2005, in accordance with generally accepted auditing standards and expressed an unqualified opinion on those statements in my report dated January 27, The balance sheet of THAINOX STAINLESS PUBLIC COMPANY LIMITED as at December 31, 2005, which has been presented herein for comparative purpose, is a component of those financial statements which I have audited and reported thereon. I have not performed any audit procedures subsequent to the date of that report. S.K. ACCOUNTANT SERVICES COMPANY LIMITED (Somchai Kurujitkosol) Authorized Auditor No Bangkok, April 25, 2006

3 3 THAINOX STAINLESS PUBLIC COMPANY LIMITED BALANCE SHEETS As of March 31,2006 and December 31, '000 Baht '000 Baht Unaudited Audited Limited Reviewed Only ASSETS CURRENT ASSETS Cash and Cash Equivalents 2,691,487 2,959,398 Trade Accounts Receivable - Net (Note 4) 1,256,934 1,253,470 Inventories - Net (Note 5) 1,824,285 2,208,974 Other Current Assets Account Receivable-Revenue Department 56,834 77,348 Others 68,795 34,425 Total Current Assets 5,898,335 6,533,615 NON-CURRENT ASSETS General Investments Property, Plant and Equipment - Net (Note 6) 9,571,419 9,200,794 Other Assets 1,340 10,680 Total Non-Current Assets 9,573,569 9,212,284 Total Assets 15,471,904 15,745,899 Notes to financial statements are an integral part of these statements.

4 4 THAINOX STAINLESS PUBLIC COMPANY LIMITED BALANCE SHEETS As of March 31,2006 and December 31, '000 Baht '000 Baht Unaudited Audited Limited Reviewed Only LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Trade Accounts and Notes Payable 3,437,375 3,294,206 Trade Accounts Payable Related Company (Note 3.2) 127,086 76,852 Other Current Liabilities Withholding Income Tax Payable 5, Accounts Payable-Revenue Department 12,490 - Accrued Expenses (Note 7) 95, ,496 Accrued Expenses Related Companies (Note 3.2) 20,155 20,155 Advance from Customers 48,676 21,005 Others Accounts Receivable-Revenue Department 5,470 1,276 Total Current Liabilities 3,751,979 3,764,984 NON - CURRENT LIABILITIES Employees Retirement Indemnity (Note 8) 40,858 39,447 Total Non-Current Liabilities 40,858 39,447 Total Liabilities 3,792,837 3,804,431 Notes to financial statements are an integral part of these statements.

5 5 THAINOX STAINLESS PUBLIC COMPANY LIMITED BALANCE SHEETS As of March 31,2006 and December 31, '000 Baht '000 Baht Unaudited Audited Limited Reviewed Only SHAREHOLDERS EQUITY Share Capital Authorized Share Capital 8,000,000,000 Ordinary Baht ,000,000 8,000,000 Issued and Paid-up Share Capital 8,000,000,000 Ordinary Baht ,000,000 8,000,000 Premiun on Share Capital - Net 332, ,131 Revaluation Increment in Property, Plant and Equipment - Net 2,862,843 2,932,857 Treasury Stock (Note 9) (249,558) (249,558) Retained Earnings (Deficit) Appropriated Legal Reserve (Note 11) 418, ,000 Treasury Stock Reserve (Note 9) 249, ,558 Unappropriated 66, ,480 Total Shareholders Equity 11,679,067 11,941,468 Total Liabilities and Shareholders' Equity 15,471,904 15,745,899 Notes to financial statements are an integral part of these statements.

6 6 THAINOX STAINLESS PUBLIC COMPANY LIMITED STATEMENTS OF INCOME For the Quarter Period Ended on March 31, 2006 and 2005 Unaudited Limited Reviewed Only '000 Baht '000 Baht REVENUES Sales 3,351,729 4,419,023 Other Income Interest Income 19,848 10,493 Gain on Exchang Rate 1,355 - Other 939 1,389 Total Revenues 3,373,871 4,430,905 EXPENSES Cost of Sales 3,220,669 3,808,906 Selling and Administrative Expenses 148, ,679 Loss on Exchange Rate - 50,372 Director's Remuneration (Note16) 720 5,395 Total Expenses 3,369,975 4,053,352 Profit Before Interest Expense 3, ,553 Interest Expense (1,390) (5) Net Profit 2, ,548 BASIC EARNINGS PER SHARE (Unit : Baht) (Note12) ORDINARY SHARES (Unit : '000 Share) (Note12) 7,795,709 8,000,000 Notes to financial statements are an integral part of these statements.

7 7 THAINOX STAINLESS PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY For the Quarter Period Ended on March 31, 2006 and 2005 Unaudited Limited Reviewed Only Issued and Premiums on Capital Surplus Treasury Stock Retained Earnings (Deficit) Paid-Up Share Capital - net Arisen From Appropriated Unappropriated Share Capital Assets Revaluation - net Legal Reserve Treasury Stock Total Reserve '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht Balance as at December 31, ,000, ,131 2,932,857 (249,558) 418, , ,480 11,941,468 Dividend (Note10) (194,893) (194,893) Net Profit ,506 2,506 Depreciation - - (70,014) (70,014) Balance as at March 31, ,000, ,131 2,862,843 (249,558) 418, ,558 66,093 11,679,067 Balance as at January 1, 2005 before Adjustments 8,000, ,131 3,280, , ,889 12,991,800 Over Stated from Capital Surplus Arisen from - Assets Revaluation (Note2) - - (62,554.00) (62,554) Balance as at January 1, 2005 after Adjustments 8,000, ,131 3,218, , ,889 12,929,246 Net Profit , ,548 Depreciation - - (71,438) (71,438) Balance as at March 31, ,000, ,131 3,146, ,000-1,356,437 13,235,356 Notes to financial statements are an integral part of these statements.

8 8 THAINOX STAINLESS PUBLIC COMPANY LIMITED CASH FLOW STATEMENTS For the Quarter Period Ended on March 31, 2006 and 2005 Unaudited Limited Reviewed Only '000 Baht '000 Baht CASH FLOW FROM OPERATING ACTIVITIES Net profit 2, ,548 Adjustment to Net Profit (Loss) for Cash Received (Paid) from Operations Depreciation 131, ,093 Unrealized (Gain) Loss on Exchange Rate (65,148) 29,838 Reversal of Allowance for Doubtful Account (250) (250) Reversal of Allowance for Loss on Declining Value of Inventories (18,345) (1,141) Allowance of Import Duty Claimable 1,667 - Provision for Employee Retirement Indemnity 1,411 1,255 Allowance of Withholding Tax - 1,732 Profit(Loss) from Operating Activities before Changes in Operating Assets and Liabilities 53, ,075 (Increase) Decrease in Trade Accounts Receivable 6,734 (96,110) (Increase) Decrease in Inventories 403,035 (685,878) (Increase) Decrease in Other Current Assets (15,524) 32,163 Increase (Decrease) in Trade Accounts and Notes Payable 194,880 1,551,487 Increase (Decrease) in Trade Accounts Payable-Related Company 53,724 - Increase (Decrease) in Accounts Payable Related Company - 110,219 Increase (Decrease) in Other Current Liabilities (206,409) (132,651) Cash Provided (Used) from Operating Activities-Net 489,958 1,318,305 CASH FLOW FROM INVESTING ACTIVITIES Cash Paid for Purchase of Fixed Assets (563,042) (14,707) (Increase) Decrease in Other Non-Current Assets Cash Provided (Used) from Investing Activities-Net (562,976) (14,685) CASH FLOWS FROM FINANCING ACTIVITIES: Cash Paid for Dividend (194,893) - Cash Provided (Used) from Financing Activities - Net (194,893) - Cash on Hand and Cash Equivalents Increase (Decrease)-Net (267,911) 1,303,620 Cash on Hand and Cash Equivalents at Beginning of the Period 2,959,398 3,185,642 Cash on Hand and Cash Equivalents at Ending of the Period 2,691,487 4,489,262 Notes to financial statements are an integral part of these statements.

9 9 THAINOX STAINLESS PUBLIC COMPANY LIMITED CASH FLOW STATEMENTS For the Quarter Period Ended on March 31, 2006 and 2005 Unaudited Limited Reviewed Only '000 Baht '000 Baht Additional Disclosure of Cash Flow: 1. Cash paid during the period for Interest Expenses 1, Cash and Cash Equivalents Consist of: 2.1 Cash on Hand Bank Deposit 2,590,315 1,761, Bill of Exchange - 2,201, Promissory Notes - Period Days 100, ,500 2,691,487 4,489,262 Notes to financial statements are an integral part of these statements.

10 10 THAINOX STAINLESS PUBLIC COMPANY LIMITED NOTES TO FINANCIAL STATEMENTS March 31, 2006 and December 31, General Information 1.1 Basis of Preparation of the Interim Financial Statements. These interim financial statements were prepared with generally accepted accounting principles and presented in the set abbreviated format as stipulated under accounting standard No. 41 concerning Interim Financial Statements with additional items in the basic financial statements such as the Balance Sheet, the Statement of Income, the Statements of Change in Shareholder s Equity and the Statement of Cash Flow and set out in the manner proscribed under the announcement of the Commercial Registration Department concerning Compulsory Sub-Entries for Financial Statements (2001) and in order to comply with the announcement of the Securities and Exchange Commission and the regulations of the Stock Exchange of Thailand. In order to prepare the financial statements to comply with generally accepted accounting principles, the company s management had to make some estimates and assumptions which may effect to the amount of revenue, expense, assets, liabilities, assets disclosures and contingent liabilities, therefore the actual result may differ from the estimated amount. These interim financial statements prepared to provide additional information over the latest annual financial statements. Therefore, the interim financial statements emphasis on present activities, events and situations in order to avoid the duplicate information. The persons who use this interim financial statements should use it together with the latest annual financial statement available. 1.2 Summary of Significant Accounting Policy These interim financial statements were prepared under the same accounting policy and calculation methods as used in the annual financial statements ending on December 31, 2005.

11 The Accounts Reclassification. For the purpose of comparability and according to the account reclassification in current period, the company has reclassified accounts in the financial statements as of December 31, 2005 and there was no effect to the balance of net profit or shareholders equity represented in the report. The items were as follows: Account 000 Baht Trade Account Payable Related Company 76,852 Trade Account and Note Payable (76,852) 2. Transactions of Error Corrections For the second quarter ended on June 30, 2004, the Company engaged a consulting company as independent appraiser to reappraise building and improvements, machinery and equipment, which had a net book value as of June 30, 2004 of Baht 7, million. The amount was excluded from direct costs related to the procurement of building and machinery in order that the building and machinery are ready for appropriate operation at the book value as of June 30, 2004 of Baht million and Baht million respectively, which caused the company recorded high amount of revaluation increment under property, plant and equipment amounting to the revaluation increment. So, the company recorded retro adjustments by decreasing the revaluation increment under property, plant and equipment amounting to Baht million and accumulated depreciation amounting to Baht 2.94 million and also decrease the revaluation increment in property, plant and equipment amounting to Baht million as a component under Shareholders Equity 3. Inter - Transactions The significant inter-transactions among the Company and related companies were as follows: 3.1 Inter-Revenues and Expenses For the Quarter Ended on March 31, Baht 000 Baht Purchase of raw material J F E Shoji Trade Corporation 89, ,129

12 12 - Purchase of hot rolled coil from related companies was based on the market price, which was comparatively close to the purchasing prices from others. 3.2 Inter-Assets and Liabilities As of March 31, 2006 December 31, Baht 000 Baht Trade Account Payable J F E Shoji Trade Corporation 127,086 76,852 Accrued Expenses Nippon Steel & Sumikin Stainless Steel Corporation 7,167 7,167 Nisshin Steel Co., Ltd. 3,584 3,584 Nippon Metal Industry Co., Ltd. 3,584 3,584 J F E Steel Corporation 3,584 3,584 Nippon Yakin Kogyo Co., Ltd. 2,236 2,236 20,155 20, Type of Relationship with the Company Name of Company Country Relationship Nature of Relationship Nippon Steel & Sumikin Stainless Steel Corporation Japan Related Company Direct Minority Shareholders Nisshin Steel Co., Ltd. Japan Related Company Direct Minority Shareholders Nippon Metal Industry Co., Ltd. Japan Related Company Direct Minority Shareholders J F E Steel Corporation Japan Related Company Direct Minority Shareholders Nippon Yakin Kogyo Co., Ltd. Japan Related Company Direct Minority Shareholders J F E Shoji Trade Corporation Japan Related Company Indirect Minority Shareholders

13 13 4. Accounts Receivable - Net Consist of: As of March 31, 2006 December 31, Baht 000 Baht Within credit term 1,194,725 1,133,245 Over credit term less than 3 months 61, ,210 Over credit term 3-6 months Over credit term 6-12 months - - Over credit term 12 months 85,019 85,284 Total 1,341,953 1,338,739 Less allowance for doubtful debt (85,019) (85,269) Net 1,256,934 1,253, Inventories-Net Consist of: As of March 31, 2006 December 31, Baht 000 Baht Finished Goods 976, ,726 Work in Process 703,102 1,135,842 Raw Materials 128, ,210 Supplies 43,506 44,374 Total 1,852,117 2,255,152 Less Allowance from Declining in Value (27,832) (46,178) Net 1,824,285 2,208,974

14 14 6. Property, Plant and Equipment-Net For the quarter period ended on March 31, 2006 as follow: 000 Baht Beginning Book Value-Net 9,200,794 Purchase/Transfer in 572,316 Sales/Transfer out 53 Accumulated Depreciation on Sold Assets (53) Depreciation for Portion Shown in Statement of Income (131,677) Depreciation for Portion Shown in Shareholders Equity (70,014) Ending Book Value-Net 9,571,419 In January 1998, the Company engaged a consulting company (Chesterton Thai Property Consultants Limited), as independent appraiser, to appraise buildings and improvements, machinery and equipment, used for its operation as at December 31, 1997 with a net book value of Baht 3,800.6 million. The appraisal value, as shown in the appraisal reports dated January 26, 1998, amounting to Baht 6,836.8 million. The Company recorded the revaluation increment (net of accumulated depreciation and the portion of assets disposed of) amounting to Baht 3,036.2 million as a component of Shareholders Equity in the balance sheet. In July 2004, the Company engaged a consulting company (The Valuation & Consultants Co., Ltd.), as independent appraiser, to reappraise buildings and improvements, machinery and equipment outstanding as at June 30, According to the appraisal report dated July 1, 2004, those assets, which had a net book value as at June 30, 2004 of Baht 7,802.8 million, had a value, based on the replacement cost approach net of accumulated depreciation, totaling Baht 9,397.8 million. The Company recorded the revaluation increment amounting to Baht 1,595 million as a component of Shareholders Equity in the balance sheet. As at March and December 31, 2005, the Company recorded the revaluation increment (net of accumulated depreciation and the portion relating to assets disposed of) amounting to approximately Baht 2, million and Baht 2, million respectively as a component of Shareholders Equity in the balance sheet. The revaluation increment of property, plant and equipment is not available for dividend distribution.

15 15 7. Accrued Expenses As at December 31, 2005, partial accrued expenses amounting to Baht million which was accrued royalties to be paid to a foreign company, formerly direct majority shareholders. Presently the company has already paid such amount. 8. Employees Retirement Indemnity The Company adopted the accounting for retirement indemnity following the International Financial Reporting Standard (IFRS) No. 19 Employee Benefits. The retirement indemnity will be paid to employees upon retirement from the Company. The retirement indemnity is calculated annually by a qualified actuary using the projected unit credit method in order to determine the present value of the obligation and the current service cost. Based on the actuarial valuation report issued by the independent actuaries dated January 14, 2005, the retirement indemnity for the Company s employees for the quarter ended March 31, 2006 and for the year ended December 31, 2005 computed according to the IFRS No. 19 amounted to Baht 1.5 million and 5.02 million, respectively. Employees retirement indemnity is analyzed as follows: For the Quarter For the Year Ended On Ended On March 31, 2006 December 31, 2005 Million Baht Million Baht Balance sheet provisions as at January 1 Present value of the obligation Fair value of financial assets - - Total Unrecognised actuarial gain (loss) Unrecognised past service cost - - Unrecognised net transition assets (liabilities) - - Liabilities recognised in balance sheet Benefit expense for the year Current service cost Interest cost Net actuarial (gain) loss recognized in the year (0.01) (0.43) Past service cost - - Transitional (asset) liabilities - - Expense (Income) recognized in the income statement

16 16 For the Quarter For the Year Ended On Ended On March 31, 2006 December 31, 2005 Million Baht Million Baht Movements in the net liabilities recognized in the balance sheet Opening net liabilities as at January Expenses Benefit paid - (2.81) Closing net liabilities as at December Main actuarial assumptions (%) Discount rate Average rate of salary increase Inflation rate Treasury Stock At the board of directors meeting No. 8/2548 held on September 13, 2005, the meeting resolved to allow the Company to rectify the Company s article No. 10 of the articles of association in respect of the buy back of its Shares and at the extraordinary shareholders meeting No. 1/2548 held on October 13, 2005, the shareholders unanimously approved the resolution to change the Company s article No. 10 of the articles of association as the Company may purchase its shares back and dispose of such shares within the time limit prescribed in the Ministerial Regulations pursuant to the provisions of the public companies laws and securities and stock exchange laws. In case the Company does not or could not dispose all of the shares which have been purchased-back by the Company within the prescribed time, the Company shall reduce its paid-up capital by canceling any such shares which remain undisposed. The shares held by the Company shall not be counted for constituting a quorum of the shareholders meeting nor entitle the Company to voting rights and dividend payments. The Company may purchase its shares back, subject to an approval from the shareholders of the Company. However, the Board of Directors of the Company shall have the authority to approve the purchase-back of the shares of the Company if the number of shares to be purchased back does not exceed 10 per cent of the total paid-up capital of the Company.

17 17 Treasury stock is analyzed as follows: As of March 31, 2006 December 31, 2005 Treasury Stock ( 000 Shares) 204, ,291 Percent per Authorized Share Capital Total par Value ( 000 Baht) 249, ,558 Average Price per Share (Baht) Reserve for Treasury Stock ( 000 Shares) 249, , Dividend At the board of directors meeting No. 1/2006 held on January 24, 2006, it was resolved that the company will pay interim dividend from the performance result of January 1,2005 to September 30, 2005 to shareholders by number of 7,795,709,100 shares such of which number of shares have been deducted by repurchased shares which the company repurchased by number of 204,290,900.- shares, at the rate of Baht per share, aggregating to dividend payable to shareholders of Baht194,892, The dividend had been derived from the net profit of Board of Investment privileges operation. At present, the Company had paid this mentioned dividend. At the ordinary shareholders meeting No. 1/2005 held on April 25, 2005, the meeting resolved to approve for the legal reserve appropriation amounting to Baht 400 million and paid dividends to shareholders at Baht 0.10 per share for number of shares 8,000 million amounting to Baht 800 million. The dividend had been derived from the net profit of Board of Investment privileges operation. At present, the Company had paid this mentioned dividend. 11. Legal Reserve Under the provisions of the Limited Public Company act B.E. 2535, the Company is required to appropriate at least 5% of its annual net profit after deduction of the deficit brought forward (if any) as legal reserve until the reserve reaches not less than 10% of the authorized share capital. As of March 31, 2006 and December 31, 2005, the Company appropriated for the legal reserve amounting to Baht 418 million.

18 Basic Earnings per Share Basic earnings per share for the quarter ended on March 31, 2006 and 2005 were calculated by dividing the net profit with the weighted average number of shares as follows: For the Quarter Ended On March 31, Net Profit ( 000 Baht) 2, ,548 Weighted Average Number of Shares ( 000 Shares) 7,795,709 8,000,000 Earnings Per Share (Baht) Par Value (Baht) Promotional Privileges By virtue of the provisions of the Industrial Investment Promotion Act B.E. 2520, the company was granted certain promotional privileges in the business relating to the manufacturing of cold rolled stainless steel which included, among other, the following: 1. Exemption of import duty on imported machinery and equipment. 2. Exemption from income tax for a period of six years and eight years from the first derived income and expiring on November 30, 1999, and November 11, 2005, respectively. 3. Exemption of income tax for a period of 5 years at the rate of 50% after the promotion periods expiring on November 30, 2004, and November 11, 2010, respectively. As a promoted industry, the Company must comply with the conditions provided for in the promotional certificate. 14. Employees Provident Fund The Company established a contributory registered provident fund in accordance with the Provident Fund Act, B.E The registered provident fund plan was approved by the Ministry of Finance in accordance with the Ministerial Regulation No. 183 (B.E. 2533) on October 11, Under the plan, the employees are required to contribute to the fund an amount equivalent to certain percentages of their basic salaries. The Company also makes monthly contributions to the fund at the percentage of the employees basic salaries. The Company appointed a fund manager to manage the fund in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issued under the Provident Fund Act, B.E For the quarter period ended on March 31, 2006 and 2005, the Company contributed to the fund amounting to Baht 2.64 million and Baht 2.52 million respectively.

19 Segment Financial Information The Company operates in one segment business which is business of production and distribution of stainless steel product and operates in one geographical sector, i.e. Thailand. As a result, the total revenue, profit and assets which are reflected in the financial statements will be related to business sector and geographical sector in accordance with those mentioned. For the quarter period ended on March 31, 2006 and 2005, the company has net export sales and domestic sales per total net sales as follows: (Unit : % Per Total Net Sale ) For the Quarter Ended On March 31, Net Export Sale Net Domestic Sale Directors Remuneration Directors Remuneration was paid to the company s directors under Section 90 of Public Company Limited Act which did not include salaries and related benefits paid to the company s management directors. 17. The Important Contract As at March 31, 2006 and December 31, 2005, the Company has agreements as follows: 17.1 Supply Agreement of Hot-Rolled Stainless Steel Coils The Company entered into an agreement with Arcelor, a company incorporated under the laws of Luxembourg, whereby the latter agreed to supply and deliver the quantity of hot-rolled stainless steel coils (raw materials) required by the Company and accepted by the party in accordance with terms and conditions of the agreement at the purchase price as stipulated in the agreement. This agreement is for a period of five (5) years commencing on March 19, 2004 and automatically extended for one or more additional three (3) years, unless either party gives a one hundred and eighty (180) days written advance notice to the other party.

20 Reinstated Exclusive Agency Agreement The Company entered into an agreement with Arcelor Stainless International, a company incorporated under the laws of France, whereby the latter will provide exclusive representation to promote the sales of the Company s products all over the world, excluding Japan and Thailand. In consideration thereof, the Company commits to pay commission at the rates specified in the agreement based on the free on board (FOB) value of the products. The agreement is effective on March 19, 2004 for an indefinite period of time. Either party may terminate the agreement at any time by giving a six (6) months written advance notice to the other party Reinstated Usinor Recruitment and Advisory Service Agreement The Company entered into an agreement with Usinor, a company incorporated under the laws of France, whereby the latter agreed to provide advisory services to the Company on business organization, marketing, etc. and recruitment service of personnel at the level of director and management of the plant and finance departments. Under the agreement, the Company committed to pay service fee at the rates specified in the agreement. This agreement is effective on March 19, 2004 and will terminate in December Presently, the Company has not renewed the new version of the contract with Usinor but still remained using the service of the Latter Technology License Fee The Company entered into a technology license agreement dated December 18, 2004 with Usinor, (a society anonym registered in France and formerly the Company s major shareholder) to supersede the technology license agreement dated May 19, 2004 for the permanent right to use the existing technology of the Company, previously transferred to the Company by Usinor under a Technical Assistance Agreement entered into on July 26, 1996 and effective for a period of 10 years as from September 16, In this connection, the Company paid a lump sum fee of U.S. Dollars 5.9 million (US Dollars 5 million net of withholding tax) on December 28, 2004 to Ugine & ALZ France, a related company of Usinor.

21 Forward Contract As at March 31, 2006, the Company has outstanding forward contracts, due within one year of US Dollars million at the Cost Value Baht 1, million and Fair Value Baht 1, million. As at December 31, 2005, the Company has outstanding forward contracts, due within one year of US Dollars million at the Cost Value Baht million and Fair Value Baht million, EURO 0.64 million at the Cost Value Baht million and Fair Value Baht million. In addition, as of March 31, 2006 and December 31, 2005, the Company has significant unhedged foreign currency assets of US Dollars million and US Dollars million respectively and unhedged foreign currency liabilities of US Dollars million and US Dollars million respectively. 19. Obligation and Contingent Liabilities Apart from liabilities shown on the balance sheets as of March 31, 2006 and December 31, 2005 the company still remains other obligations with commercial banks as follows: As of March 31, 2006 December 31,2005 Credit Line Credit Used Credit Line Credit Used - Letters of Credit (Million Baht) 2, , Letters of Credit (Million US Dollar) Letters of Guarantee (Million Baht) As of March 31, 2006 and December 31, 2005, the company has an obligation contract to purchase the machines from overseas in the purpose of capacity expansion including contract to design the head office building amounting to Baht million and million respectively. 20. Others 20.1 At the board of directors meeting No.2/2006 held on February 1, 2006, the board of directors passed the resolutions as follows: It is approved that the Company purchases the piece of land in the area of Narathivas Road in number of 5 Rai, 3 Ngan, and 43 square-wa in the price of Baht million so as to construct the head office building from persons who do not have relationship, nor related with the main shareholders or the Company s management. Presently, the Company has completely paid for land purchase.

22 At the board of directors meeting No.3/2006 held on February 16, 2006, the board of directors passed the resolutions as follows: In addition to increase productivity of Cold Rolling Steel about 100,000 tons per year(from 200,000 tons per year to 300,000 tons per year), and investment cost not to exceed Baht 1,200 million by obtaining main machine and other domestic contracts such as Structure and Other Utilities which are necessary for installation of COLD ROLLING MILL, SENDZIMIR TYPE. 21. Approval of the Interim Financial Statements These Interim financial statements have been approved by the Company s directors.