pranda 03

THREE THINGS ABOUT PRANDA

3

The Strengths of PRANDAThe Strengths of PRANDAThe Strengths of PRANDAThe Strengths of PRANDAThe Strengths of PRANDA Jewelry Jewelry Jewelry Jewelry Jewelry.....2003 marked the 30th anniversary of Pranda Jewelry Public Company Limited as a leading gemstone jewelry

manufacturer.

This 30th anniversary celebration ,held on September 8, 2003 reflected the long-term business achievement

and expertise in the production of gemstone jewelry which has been accumulated over the past three decades.

The company’s achievement is evidenced by it’s capacity to expand the business and win recognition in

international markets, currently operating through 12 subsidiary companies in the domestic market and across

the world.

The Company plays a critical part as a real driving force, supporting the government’s ambitious plan to

develop Bangkok as the Fashion City, in order to upgrade Thailand’s gemstone jewelry and accessories penetra-

tion of the international market.

There are three main strengths of Pranda Jewelry which have resulted in the company becoming the leading

manufacturer of gemstone jewelry over the past 30 years.

Firstly, Pranda ExpertisePranda ExpertisePranda ExpertisePranda ExpertisePranda Expertise. The Company is currently a leading manufacturer of the gemstone jewelry

industry with expertise ranging from it’s unique and innovative design and development center, to production

handled by highly skilled craftsmen, all supported by extensive exclusive distributors and the Pranda Group’s

own sales network worldwide.

Secondly, Pranda ScalePranda ScalePranda ScalePranda ScalePranda Scale. With high competency in jewelry manufacturing producing in excess of 4,000,000

items per year with more than 3,500 highly skilled crafts persons at five manufacturing facilities located throughout

South East Asia.

Two of them in Thailand, one in Indonesia, one in Vietnam, and another recently opened in China , enabling

the company to cater to a wide range of target customers and regional markets throughout the world.

Thirdly, Pranda Corporate CulturePranda Corporate CulturePranda Corporate CulturePranda Corporate CulturePranda Corporate Culture. The company runs the business under good corporate culture princi-

pals, creating team spirit and commitment from staff at all levels to cater to the different demands of clients

with maximum care, and to ensure fair and equal treatment to all related parties ,especially for the Company’s

stakeholders.

Summary - These three strengths of Pranda Jewelry Public Company Limited and the Pranda Group as a

whole have created a confidence throughout the group, that the new decade of the company in business would

be also another decade of continuous growth.

The Pranda Group is committed to playing a part as a driving force, fully supporting the government’s

“Bangkok Fashion City” project in order to create the greatest benefit to Thailand and all Thai people.

MESSAGE FROM CHAIRMAN

5

Thailand’s economy has experienced a satisfactorygrowth in 2003 to the extent that the country had obviouslysucceeded in steering clear of the economic slump.Several positive factors also transpired in the industry suchas the robust expansion of exports, restored confidence ofgeneral consumers and investors, and expandedinvestment in the macroeconomic level.

Still, there were some negative factors to the country’seconomy which posed a risk to all businesses, promptingthe operators to immediately fine-tune themselves to theincident. That was the outbreak of Severe AcuteRespiratory Syndrome or Sars.

Despite the Sars devastation, Thailand’s genuinejewelry exports expanded by 12% in 2003 to US$1,105million compared with the figures of 2002. This year, theindustry outlook is likely to become brighter, as thegovernment has earmarked a relatively huge financialpackage to support the country’s first-ever BangkokFashion City with an aim to increase potential of the uniquedesign, production and competitiveness of Thai gems andjewelry in the world market.

In 2004, the Company is still committed to pursuing theexisting growth strategy both in terms of revenues andprofits with the main focus on expansion into Asian marketunder Prima Gold and Esse Brand.In the meantime, theCompany plans to enlarge the European market for silveraccessories and North America for gold products.

The Company is also committed to developing in-house production to become more Original BrandManufacturing (OBM) from a current Original DesignManufacturing (ODM) which complies with “ProductLeadership,” the organization’s business goal. In additionthe Company states clearly a policy of social contributionand environmental care to bring the surroundingenvironments to sustainable growth together with us.

I would like to thank all stakeholders, clients, as well asbusiness partners who continue providing good supportto the Company’s business development. Again, I wouldlike to thank employees at all levels who collectively andwhole-heartedly cooperate in the company’s operations,the government sector and other related agencies whichshare a part both directly and indirectly to contribute theirsupports to the Company.

Last but not least, the Company’s Board of Directors iscommitted to operating business to generate maximumreturns and share profits to all groups of related partieswith transparency and fairness in accordance with the codeof the best practice under the good corporate governance,and we look forward to receiving continued support fromall of you in the future.

Prida Tiasuwan,

Chairman

In 2004, the Company is stillcommitted to pursuing the existinggrowth strategy both in terms ofrevenues and profits with the mainfocus on expansion into Asian marketunder Prima Gold and Esse Brand.In the meantime, the Company plansto enlarge the European market forsilver accessories and North Americafor gold products.

7

MESSAGE FROM THE PRESIDENT

Prapee Sorakraikitikul

President

Performance of Pranda Jewelry Public CompanyLimited in 2003 was very positive benefiting from thegovernment’s import tariff waiver for raw materials used inthe gems and jewelry industry, implementation of BangkokFashion City project, and the planned free trade area (FTA)agreements with several trade partners such as Japan,India, Peru, Australia and the United States.However, the outbreak of Sars (severe acute respiratorysyndrome) had generated some negative impact to theCompany, as the deadly virus caused many businessmento cancel their business trips to Thailand.

However, because of the Company’s extensive existingoverseas representative offices now operating in our majorexport markets and with business strategy adjustments toconform to the market changing conditions, Pranda JewelryPublic Company Limited has well weathered theseproblems and achieved our business targets, becomingthe country’s the largest genuine gem and jewelry exporterlast year.

On the manufacturing front, the Company hadincreased last year , the production capacity of the threeplants located at Bangna-Trad, Nakhon Ratchasima andVietnam fully and efficiently utilizing existing resourceswith no new capital injection.

In addition, the Company had raised productioncapacity of the factory in Guangzhou in China. As a result,the Company’s total production capacity increased by 10%in combination last year in line with expanding exports.On human resources which are always taken as the criticalpart of the Company, Pranda Jewelry Public CompanyLimited has well prepared human resource developmentplans with extensive training courses throughout thedepartments to increase the experience and boost theefficiency of our workers. Information technology was alsoupgraded to cater to a wide range of increased demandsof the customers.

The Company has also implemented an efficientmanagement strategy within the organization as well asthe promotion of brands awareness resulting in increasedprofitability.

To meet this end, the Company has injected 50 millionbaht to expand the distribution bases of Prima GoldInternational Co., Ltd. which resulted in not only anincrease of its sales but also greater awareness of theCompany’s brands including Prima Gold, Prima Diamond,Esse, and Prima Art in both the domestic and overseasmarket.

The Company’s commitment to develop high qualityproducts through our product design ,planning center andthe provision of services to meet different requirements ofthe clients through our extensive distribution network both

The Company has also implementedan efficient management strategy withinthe organization as well as thepromotion of brands awarenessresulting in increased profitability.

in the domestic and international market played a vitalpart to bring about appreciation of the Company’s productsand services both to existing and new customers.

For the achievement in 2003, I would like to thank theboard of directors, the company’s employees at all levelsand the management who all dedicate themselves withgreat responsibility. and I look forward to maintaining theircontinuous supports in the future.

8

THE BOARD OF DIRECTORS

MrMrMrMrMr.Prida T.Prida T.Prida T.Prida T.Prida Tiasuwaniasuwaniasuwaniasuwaniasuwan

Chairman

Sub.Lieut. Prayoon TSub.Lieut. Prayoon TSub.Lieut. Prayoon TSub.Lieut. Prayoon TSub.Lieut. Prayoon Talerngsrialerngsrialerngsrialerngsrialerngsri

Chairman (Executive Committee)Lieut. Olarn KrairikshLieut. Olarn KrairikshLieut. Olarn KrairikshLieut. Olarn KrairikshLieut. Olarn Krairiksh

Independent Director/Chairman of Audit Committee

Lieut. Anan Panananda R.N.Lieut. Anan Panananda R.N.Lieut. Anan Panananda R.N.Lieut. Anan Panananda R.N.Lieut. Anan Panananda R.N.

Independent Director/Audit CommitteeMrs. Prapee SorakraikitikulMrs. Prapee SorakraikitikulMrs. Prapee SorakraikitikulMrs. Prapee SorakraikitikulMrs. Prapee Sorakraikitikul

President

9

THE BOARD OF DIRECTORS

Mrs. Sunanta TMrs. Sunanta TMrs. Sunanta TMrs. Sunanta TMrs. Sunanta Tiasuwaniasuwaniasuwaniasuwaniasuwan

Corporate Finance ChairmanMrs. Pranee KhunprasertMrs. Pranee KhunprasertMrs. Pranee KhunprasertMrs. Pranee KhunprasertMrs. Pranee Khunprasert

Senior Vice President

MrMrMrMrMr. Pramote T. Pramote T. Pramote T. Pramote T. Pramote Tiasuwaniasuwaniasuwaniasuwaniasuwan

Senior Vice PresidentMrs. Panidda TMrs. Panidda TMrs. Panidda TMrs. Panidda TMrs. Panidda Tiasuwaniasuwaniasuwaniasuwaniasuwan

Vice President

MrMrMrMrMr. V. V. V. V. Vorasit Pokachaiyapatorasit Pokachaiyapatorasit Pokachaiyapatorasit Pokachaiyapatorasit Pokachaiyapat

Independent Director/Audit CommitteeMrMrMrMrMr. Eugene S. Davis. Eugene S. Davis. Eugene S. Davis. Eugene S. Davis. Eugene S. Davis

Director

10

EXECUTIVE DIRECTORS

Sub.Lieut. Prayoon TSub.Lieut. Prayoon TSub.Lieut. Prayoon TSub.Lieut. Prayoon TSub.Lieut. Prayoon Talerngsrialerngsrialerngsrialerngsrialerngsri

Executive Chairman

Mrs. Prapee SorakraikitikulMrs. Prapee SorakraikitikulMrs. Prapee SorakraikitikulMrs. Prapee SorakraikitikulMrs. Prapee Sorakraikitikul

Vice Executive ChairmanMrs. Sunanta TMrs. Sunanta TMrs. Sunanta TMrs. Sunanta TMrs. Sunanta Tiasuwaniasuwaniasuwaniasuwaniasuwan

Vice Executive Chairman

MrMrMrMrMr. Pramote T. Pramote T. Pramote T. Pramote T. Pramote Tiasuwaniasuwaniasuwaniasuwaniasuwan

Vice Executive ChairmanMrs. Pranee KhunprasertMrs. Pranee KhunprasertMrs. Pranee KhunprasertMrs. Pranee KhunprasertMrs. Pranee Khunprasert

Vice Executive Chairman

11

EXECUTIVE DIRECTORS

Miss Pittaya TMiss Pittaya TMiss Pittaya TMiss Pittaya TMiss Pittaya Tiasuwaniasuwaniasuwaniasuwaniasuwan

Executive DirectorMrs. Panidda TMrs. Panidda TMrs. Panidda TMrs. Panidda TMrs. Panidda Tiasuwaniasuwaniasuwaniasuwaniasuwan

Executive Director

MrMrMrMrMr. Banjong W. Banjong W. Banjong W. Banjong W. Banjong Wongkaewongkaewongkaewongkaewongkaew

Executive DirectorMrMrMrMrMr. Decha Nuntanajaroenkul. Decha Nuntanajaroenkul. Decha Nuntanajaroenkul. Decha Nuntanajaroenkul. Decha Nuntanajaroenkul

Executive Director

GENERAL INFORMATION

13

Pranda Jewelry Public Company Limited

Registration : Public company 445

Business : Manufacturing and export 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 : 238,851,900 Baht

Par value : 1 baht per share

COMPANY INFORMATION

JURISTIC PERSONS OF WHICH THE COMPANY’SSHAREHOLDING EXCEEDED 10 %

Domestic Subsidiaries

Crystaline Co., Ltd.Crystaline Co., Ltd.Crystaline Co., Ltd.Crystaline Co., Ltd.Crystaline Co., Ltd.

Type of Business : Manufacturing and export of costume jewelry

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

Primagold International Co., Ltd.Primagold International Co., Ltd.Primagold International Co., Ltd.Primagold International Co., Ltd.Primagold International Co., Ltd.

Type of Business : Distribution of pure gold 99.99 %, diamond and gems

jewelry under brands of Prima Gold, Prima Diamond, 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




GENERAL INFORMATION

14

Pranda Lodging Co., Ltd.Pranda Lodging Co., Ltd.Pranda Lodging Co., Ltd.Pranda Lodging Co., Ltd.Pranda Lodging Co., Ltd.

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




Overseas Subsidiaries

Pranda North America, Inc.Pranda North America, Inc.Pranda North America, Inc.Pranda North America, Inc.Pranda North America, Inc.

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


Crystaline North America, Inc.Crystaline North America, Inc.Crystaline North America, Inc.Crystaline North America, Inc.Crystaline North America, Inc.

Type of Business : Distribution of costume jewelry and silver 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,)


GENERAL INFORMATION

15

H.Gringoire s.a.rH.Gringoire s.a.rH.Gringoire s.a.rH.Gringoire s.a.rH.Gringoire s.a.r.l..l..l..l..l.

Type of Business : Distribution of gold jewelry under H.Gringoire brand 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


Pranda UK LimitedPranda UK LimitedPranda UK LimitedPranda UK LimitedPranda UK Limited

Type of Business : Distribution of gold, Silver and costume jewelry under Cristalina

brand 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


Pranda Vietnam Company LimitedPranda Vietnam Company LimitedPranda Vietnam Company LimitedPranda Vietnam Company LimitedPranda Vietnam Company Limited

Type of Business : Manufacturing and export of costume jewelry and distributor of

silverware under ESSE brand 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


Pranda Singapore Pte LimitedPranda Singapore Pte LimitedPranda Singapore Pte LimitedPranda Singapore Pte LimitedPranda Singapore Pte Limited

Type of Business : Venture in Malaysia and Indonesia

Address : Asiaciti Management Pte. Limited 3 Raffles Place, # 09-01

Bharat Building Singapore 048617

Tel. (65) 533-2611 Fax : (65) 532-5092

Paid-up shares : 3 Million SGD


GENERAL INFORMATION

16

Guangzhou Pangda Zhubao Shoushi YGuangzhou Pangda Zhubao Shoushi YGuangzhou Pangda Zhubao Shoushi YGuangzhou Pangda Zhubao Shoushi YGuangzhou Pangda Zhubao Shoushi Youxian Gongsiouxian Gongsiouxian Gongsiouxian Gongsiouxian Gongsi

Type of Business : Manufacturing of 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 8480 3359, 139 0243 9101

Fax : (86) 139 0243 9101

Paid-up shares : 0.25 Million USD


Domestic Associated Company

LG-Pranda Co., Ltd.LG-Pranda Co., Ltd.LG-Pranda Co., Ltd.LG-Pranda Co., Ltd.LG-Pranda Co., Ltd.

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




Overseas Associated Company

PPPPP.T.T.T.T.T. Pranda SCL. Pranda SCL. Pranda SCL. Pranda SCL. Pranda SCL Indonesia Indonesia Indonesia Indonesia Indonesia

Type of Business : Manufacturing of Jewelry for export and domestic

distribution

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


GENERAL INFORMATION

17

Official RegistrarOfficial RegistrarOfficial RegistrarOfficial RegistrarOfficial Registrar : 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

AuditorAuditorAuditorAuditorAuditor : 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, 2661-9190

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

Law ConsultantsLaw ConsultantsLaw ConsultantsLaw ConsultantsLaw Consultants : 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

REFERENCE PERSONS

NATURE OF BUSINESS

19

Pranda Jewelry Public Company Limited (Pranda) was founded in 1973 by Pranda Design Group and 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 later converted into Public Company Limited on June 3, 1994. The

Company has current registered capital worth of 400 million baht with 236.85 million baht paid up. P r a n d a

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-orientated

golden and silver-based jewelry. Since the inception, Pranda Jewelry Company Limited has now been in business

for over 30 years and operated 12 companies both in the country and foreign markets, producing a wide range of

products from golden jewelry to silver-based ornaments. Extensive portfolio of the Company’s products including

rings, earrings, brooch, locket, necklaces, and bracelets have driven Pranda Jewelry Public Company Limited

as the jewelry specialist to the extent that the Company has achieved in expansion into the overseas market.

Major market destinations include the United States, European Union, Australia, Asia Pacific and the Middle

East. On the domestic front, the Company is currently the manufacturer of 99.99% gold jewelry under Prima

Gold brand, diamond jewelry under Prima Diamond brand, and silver jewelry under Esse brand which are distributed

through Primagold International, the Company’s wholly-owned subsidiary. In addition, the Company has

generated additional revenues from contracted manufacturing for other companies, state units, and a wide range

of institutions, which want to produce their own souvenirs or commemoratives.

The Company’s current core business is the production and distribution of jewelry, covering nine subsidiaries

and two joint venture firms with five manufacturing plants in four countries including Thailand, Indonesia, Vietnam.

At the latest development, to increase the distribution channels and expand the Company’s markets, the Company

has established the wholly owned Guangzhou Pangda Zhubao Shoushi Youxian Gongsi to operate production of

jewelry under a wide range of brands for distribution in the domestic market in China.

NATURE OF BUSINESS

20

PRINCIPAL BUSINESS STRUCTURE OF PRANDA JEWELRYPUBLIC COMPANY LIMITED

Production BaseProduction BaseProduction BaseProduction BaseProduction Base

Joint VJoint VJoint VJoint VJoint Ventureentureentureentureenture 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 sliverjewelry for exports

and distribution underEsse brand in

Vietnam

GUANGZHOUPANGDA ZHUBAO

SHOUSHI YOUXIANGONGSI (CHINA)

Jewelry producer fordistributorIn China

P.T. PRANDASCL.

(INDONESIA)Manufacturing ofJewelry for export

and domesticdistribution

PRANDASINGAPOREPte. Limited

(SINGAPORE)Joint venture firm

inMalaysia

and Indonesia.

CRYSTALINECo.,Ltd.

(THAILAND)Producer and

exporter ofcostume jewelry

PRIMAGOLDINTERNATIONAL Co., Ltd.

(THAILAND)Distributor of pure gold ,

diamond and jewelry underPrima Gold, Prima Diamond

and Esse brand.

PRANDA JEWELRYPUBLIC COMPANY LIMITED

(THAILAND)Jewelry producer

and exporter

LG- PRANDA Co.,Ltd(THAILAND)

Importer and distributor ofpure silver and pure gold

in nuggets and bars.

PRANDANORTH

AMERICA, INC.(USA),

Distributor of goldaccessories in theUSA and Canada

H. GRINGOIRES.A.R.L.

(FRANCE),distributor of goldjewelry under H.

Gringoire inFrance and Europe

PRANDA U.K.LTD.

(ENGLAND ),distributor of goldand silver jewelryunder Cristalina

brand in England

CRYSTALINENORTH

AMERICA, INC.(USA),

distributor ofcostume jewelry

and silver jewelryin the US and

Canada

NATURE OF BUSINESS

21

SIGNIFICANT CHANGE AND DEVELOPMENT IN THE PAST YEARThe Company established last year Guangzhou Pangda Zhubao Shoushi Youshi Youxian Gongsi, a new

wholly-owned subsidiary, to operate the production of jewelry under a wide range of brands for distribution in

China through cooperation with Home Shopping Shanghai Limited (TVSN), China’s largest retail network, which

operates sales channels through a wide range of media including television, Internet, catalogue and department

stores and retail outlets in China. The new subsidiary would enable the Company’s products to get more access

to over 120 million household target customers in 30 major economic cities of China.

The Company has also injected 50 million baht in new capital into Primagold International Co, the subsidiary,

for use as working capital to expand the Group’s distribution base and develop “Prima Art” brand artwork.

INDUSTRY OUTLOOK.The jewelry industry itself has experienced a continuous robust growth especially in the segment of colored

gemstone and silver accessories, because of a greater line of products available to meet different demands of

the global market, and a gradual recovery of the world economy and government initiatives such as Bangkok

Fashion City project, and import tariff waiver for imported raw materials. The government’s ambitious plans to

implement international free trade either on bilateral or multilateral basis and the trade liberalization; in the

meantime, has prompted the market competition particularly in the pricing to be more intensified. However,

Pranda Jewelry Public Company Limited has strictly adhered to policy and commitments to developing its own

brands and upgrading itself to achieve Original Brand Manufacturing (OBM) practice to sustain long-term

competitiveness in the world market and comply with the greatest satisfaction of customers through the Company’s

extensive networks and subsidiaries throughout Europe, the Untied States, and Asia.

REVENUE STRUCTURE

Producer and exporter of costume jewelry, gold

and silver accessories

Distributor of Prima Gold, Prima Diamond and

Eighteen K.

Local gem distributor

Producer and exporter of costume jewelry

Distributor of gold accessories in the US and

Canada

Distributor of costume jewelry and silver jewelry

in the US and Canada

Distributor of gold jewelry under H. Gringoire

brand in France and Europe

Distributor of gold & silver and costume jewelry

under Cristalina brand in UK and Europe

Producer and exporter of costume jewelry and

distributor of silverware under Esse brand in

Vietnam

Property rental/properties

Venture in Malaysia and Indonesia

Pranda Jewelry Plc.

Subsidiaries-Domestic

Primagold International

Co., Ltd.

Pranda Intergems Co.,

Ltd.

Crystaline Co., Ltd.

Subsidiaries-Overseas

Pranda North America, Inc.

Crystaline North

America, Inc.

H.Gringoire

Pranda U.K. Limited

Pranda Vietnam Co.,Ltd.

Returns on investments

from joint venture

Pranda Lodging Co., Ltd.

Pranda Singapore Pte

Limited

Returns on investments

from joint venture

Other revenues

Total revenues

23

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

sales and exports (after deduction of intercompany transaction items)

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

financial statements

2,229

386

2,615

85.24

14.76

100.00

2,082

425

2,507

83.05

16.95

100.00

1,942

303

2,245

86.50

13.50

100.00

Revenue from Exports

Revenue from Domestic Sales

Total

2003 2002 2001

million baht % million baht million baht% %

100

100

92

100

100

100

100

100

83

100

Company

2003 2002 2001

Million baht % % %

958

271

-

127

696

205

352

6

2,615

4

-

7

24

2,650

36.15

10.23

-

4.79

26.26

7.74

13.28

0.23

98.68

0.15

-

0.26

0.91

100.00

896

264

-

126

745

218

255

3

2,507

4

-

(10)

31

2,532

35.39

10.43

-

4.98

29.42

8.61

10.07

0.12

99.01

0.16

-

(0.39)

1.22

100.00

39.45

8.82

0.09

4.76

23.57

10.03

10.25

0.13

97.10

0.22

-

0.65

2.03

100.00

912

204

2

110

545

232

237

3

2,245

5

-

15

47

2,312

Type of Revenue% of

holdings Million baht Million baht

2003 HIGHLIGHTS

25

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

2001

2,855

1,651

1,204

2,335

2,245

1,351

894

577

317

116

365

Unit : Million BahtUnit : Million BahtUnit : Million BahtUnit : Million BahtUnit : Million Baht

Total Assets

Total Liabilities

Shareholders’ Equity

Total Revenues

Total Sales

Cost of Sales

Gross Margin

Operating Expenses

Profit from Operation

Interest Expenses

Net Profit for the year

2003

8.23

1.43

2002

7.71

1.85

2001

6.75

2.05

Unit : BahtUnit : BahtUnit : BahtUnit : BahtUnit : Baht

Basic book value per share

Basic earnings per share

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

2001

0.07

39.82

16.23

14.12

16.25

6.26

3.58

1.71

11.73

30.28

2.74

1.37

0.58

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

2003 HIGHLIGHTS

26

2003 HIGHLIGHTS

27

MANAGEMENT STRUCTURESHAREHOLDER AND

29

SHAREHOLDING STRUCTUREThe first 10 major shareholders with number of shares and percentage of shareholding as at the latest closing

book dated December 30, 2003

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

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

10.33

6.81

5.44

5.05

4.83

4.49

3.98

3.74

3.48

3.39

(No. of Shares)

24,662,700

16,262,320

13,000,000

12,068,280

11,533,700

10,732,780

9,503,280

8,932,780

8,310,500

8,091,280

Thai NVDR Co., Ltd.

Mr.Prida Tiasuwan

Pranda Holding Co., Ltd.

Mrs.Pranee Khunprasert

GOLDMAN SACHS & CO

Mrs. Panidda Tiasuwan

Ms. Pittaya Tiasuwan

Mrs. Prapee Sorakraikitikul

Mrs. Sunanta Tiasuwan

Mr. Pramote Tiasuwan

as at December 30, 2003

Shareholders Distribution by NationalityAs of December 30, 2003 Compared to December 27, 2002

Shareholding

Distribution by

Nationality

Juristic Persons Private Individuals

Thais

Foreigners

TTTTTota lo ta lo ta lo ta lo ta l

No. of

Shareholders

2003

38

17

5 55 55 55 55 5

2002

30

8

3 83 83 83 83 8

No. of

Shares

2003

50,392,200

28,824,500

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

2002

22,317,700

35,580,900

57,898,60057,898,60057,898,60057,898,60057,898,600

%

2003

21.10

12.07

33.1733.1733.1733.1733.17

2002

11.14

17.76

28.8928.8928.8928.8928.89

No. of

Shares

2003

158,275,700

1,359,500

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

2002

141,142,400

1,352,000

142,494,400142,494,400142,494,400142,494,400142,494,400

%

2003

66.27

0.57

66.8366.8366.8366.8366.83

2002

70.43

0.67

71.171.171.171.171.111111

No. of

Shareholders

2003

2,245

37

2,2822,2822,2822,2822,282

2002

1,484

37

1,5211,5211,5211,5211,521

20032003200320032003 20022002200220022002

No. of

Shareholders

No. of Total

Shares%

No. of

Shareholders

No. of Total

Shares%

Thai Shareholders

Foreign Shareholders

TTTTTotalotalotalotalotal

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

100100100100100

1,514

45

1,5591,5591,5591,5591,559

163,460,100

36,932,900

200,393,000200,393,000200,393,000200,393,000200,393,000

81.57

18.43

100100100100100


30

20032003200320032003 20022002200220022002

No. of

share

holders

No. of

shares

% of paid

up capital

1. State, state enterprises and state units

2. Directors, managers executives

including related and connected

persons

3. Shareholders of > 5 %

4. Retail investors

5. Shareholders of less than one

transaction unit

TTTTTota lo ta lo ta lo ta lo ta l

No. of

share

holders

No. of

shares

% of paid

up capital

8

29

2

2,283

15

2,2372,2372,2372,2372,237

3,465,390

90,407,500

37,662,700

107,315,970

340

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

1.45

37.85

15.77

44.93

0.00

100100100100100

7

29

2

1,506

15

1,5591,5591,5591,5591,559

3,464,890

92,385,900

37,679,900

66,861,980

330

200,393,000200,393,000200,393,000200,393,000200,393,000

1.73

46.10

18.80

33.37

0.00

100100100100100

Numbers of shares of the Management, which experienced changes.Name Shares Change (Shares)

29 Dec. 2003 27 Dec. 2002

1. Lieut. Anan Panananda R.N.

2. Mr.Pramote Tiasuwan

3. Mrs.Pranee Khunprasert

300,000

8,025,280

12,068,280

168,000

9,025,280

11,068,280

132,000

(1,000,000)

1,000,000


31

MANAGEMENT

Organization Chart

2.Investment Committee (7)

Board of Directors (11)

Corporate Finance

Corporate Finance Chairman

Executive Chairman

President


Production Management

Vice President

Stones Management

Vice President

Executive Committee (9)

1. Audit Committee (3)


Accounting and

Finance

Manager

Marketing

and Sales

Vice President

Mini Factory

Vice President

Design and

Development

Center

Senior

Vice President

(act.)


32

Board of Directors1. Mr. Prida Tiasuwan Chairman

2. Sub.Lieut. Prayoon Talerngsri Chairman (Management 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. Olarn Krairiksh Independent Director / Chairman of Audit Committee

9. Lieut. Anan Panananda R.N. Independent Director / Audit Committee

10. Mr. Vorasit Pokachaiyapat Independent Director / Audit Committee

11. Mr. Eugene S. Davis Board Director

Executive Committee1. 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

Audit Committee1. Lieut. Olarn Krairiksh Chairman of Audit Committee

2. Lieut. Anan Panananda R.N. Member

3. Mr. Vorasit Pokachaiyapat Member

Investment Committee1. Mr. Prida Tiasuwan Chairman

2. Sub.Lieut. Prayoon Talerngsri Vice Chairman

3. Mrs. Prapee Sorakraikitikul Member

4. Mrs. Sunanta Tiasuwan Member

5. Mrs. Pranee Khunprasert Member

6. Mr. Pramote Tiasuwan Member

7. Mr. Decha Nuntanajaroenkul Member


33

Management1. 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. Ms. Tanaporn Tana-Anunchok Accounting and Finance Manager

Scope of Functions and responsibilities of Board of DirectorsThe Board of Directors will consider and clearly determine scope of duties and responsibilities of the direc-

tors, the sub-committee and management as well as regularly communicate such roles, duties and responsibili-

ties to the directors, sub-committees, management and employees. The details are as follows :

1. The Board of Directors is to oversee and ensure that the Company’s operation is compliant with the laws,

relevant regulations concerning the business and the Company itself, and resolutions of the shareholders’ meet-

ing with honesty, sincerity and caution for the greatest benefits of the Company.

2. The Board of Directors is to take responsibilities for determining and directing the Company’s strategic

policies and operations, monitoring and supervising to ensure that the operations work efficiently and effectively

in conformity with the strategic plans.

3. The Board of Directors is held to take accountability to all shareholders, managing the operations for the

shareholders’ interests including proper information disclosure to the investors in a correct, complete and trans-

parent manner.

4. The Board of Directors is authorized to nominate the executive directors, delegate them responsibilities,

and determine scope of their approval authorization and report to the Board of Directors to ensure the Company’s

operation is managed in accordance with the Company’s strategic plans and goal. To this end, the executive

directors will choose among one another as a chairman, at least one vice chairman and a managing director.

5. Under the above authorities in 1 or 4, the Board of Directors is authorized to consider and approve all

matters concerning the Company’s management and operations.

Scope of duties and responsibilities of the Executive Committee.The executive committee are to take responsibilities as follows:

1. To monitor and supervise the Company’s operations in compliance with policies of the Company’s Board

of Directors, relevant laws, conditions, and rules governing the business and the Company’s regulations.

2. To determine the Company’s corporate directions, business development and expansion in conformity

with the Board of Directors’ plans and policies.

3. To appoint necessary and appropriate numbers of persons as the Company’s executives to handle routine

operations, and determine scope of their authorities and responsibilities, as well as authorize persons to handle

duties on the Board of Directors’ behalf as appropriate.


34

4. manner that they are not against the laws and regulations governing the business.

5. To consider salary structure and other benefits.

6. To review the Company’s operation and its creditability presented in the annual financial statements, and

complete duties as assigned by the Board of Directors.

7. To review the accuracy, completeness, adequacy and creditability of the Company’s financial statements.

8. To review and oversee the appropriateness of the Company’s internal control systems.

9. To handle other responsibilities as assigned by the Board of Directors.

Scope of functions and responsibilities of Executive ChairmanThe Executive Chairman is to take duties and responsibilities as follows:

1. To carry out the policies of the Executive Committee in compliance with the laws, conditions, rules and the

Company’s internal regulations.

2. To oversee and supervise the Company’s operations to ensure their conformity with the policies of the

Executive Committee.

3. To consider and propose a change and improvement of related regulations as appropriate to the Executive

Committee for further approval.

4. To handle other assignments of the Executive Committee.

However, above-mentioned authorities and responsibilities do not cover the authorizations for the above

Management to approve transactions which they or related persons may have vested interests or cause con-

flicts of interests with the Company and subsidiaries.

Connected transactions and acquisitions or distributions of significant assets of the listed companies under

the rules, and regulations of the Stock Exchange of Thailand which the Company is committed to abide by are

also not covered under such Management’s duties.

In addition, the authorities and responsibilities single other issues, which are required to go through the

approval of the shareholders’ meeting.

Scope of functions and responsibilities of the Audit Committee.1. To review the Company’s financial statements to ensure that they are accurate, complete, adequate and

credible.

2. To ensure the appropriateness and efficiency of the Company’s internal control functions.

3. To consider, select and propose the appointments of the Company’s external auditor.

4. To oversee and supervise the Company’s compliance with relevant regulations and laws.

5. To prevent any possible conflict of interests

6. To act upon other assignments of the Board of Directors.

7. To prepare the code of conducts of the Audit Committee and present in the Company’s annual reports.


35

Scope of functions and responsibilities of the Investment Committee.1. To monitor and supervise the subsidiaries and associated companies’ operation in compliance with

Company’s policy.

2. To review the accuracy, completeness, adequacy and creditability of the subsidiaries and associated

companies’ financial statements.

Nomination of the Board of Directors and Executives 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 shareholders

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.


36

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 of Directors and Management of the Company

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.

Other remuneration

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

benefits and revenues.

Inside Information ControlsThe Company has determined the principle of best practice and responsibilities of the executives especially

towards shareholders as follows:

1. The executives are required to exercise their duties and responsibilities with 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.

Internal Control and Audit SystemsThe 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

Item Type of Remuneration / No. of Executive Total

(million baht)

4.82

17.45

Salary and Bonus

1

9

Directors’ Attendance Fees

2

-

No. of Executive

3

9

Company’s Directors

Executive Directors and

Management


37

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 deploy-

ment 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.

With 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.

GOOD CORPORATE GOVERNANCE

39

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

Jewelry 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.

Policy on Good Corporate GovernanceThe 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: -

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

To perform business on the principles of efficiency, cost-effectiveness, effectiveness, and transpar-

ency; adhere to accountability for all beneficiaries; generate appropriate returns to investors; and sus-

tain the Company’s business growth and prosperity

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

the Company

To report the Company’s financial and general information to related parties, shareholders, and general

investors with accuracy and transparency

To prepare financial statement to disclose the Company’s financial stability and annual operating perfor-

mance

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

To develop creditability and effectiveness of internal control and audit system

To appraise and provide comments on adequacy and appropriateness of the Company’s internal control

and good governance

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

To prevent from exploiting authority and assignment for their personal gains

To avoid disclosing confidential information of the Company and take the Company’s confidential infor-

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

To operate no activities which affect the conflict of interests of the Company without the Company’s

consent.

Shareholders: Shareholders’ RightsThe Company has given the greatest convenience to the shareholders’ meeting and treating equally all

shareholders. 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.

BEST PRACTICE IN CORPORATE GOVERNANCE

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.


40

The invitation letter includes comment of the Board of Directors in each agenda. For agenda on the appoint-

ment of the Board of Directors, for instance, preliminary information of the proposed directors including their

age, education background, expertise and experience would be made avai-lable. The agenda on the audit com-

mittee 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 independent 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 reexamination by the

shareholders.

Rights of Related PartiesThe 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. The Company also takes information of clients strictly confidential, thereby set-

ting up supervisory units and staff to handle complaints of customers and surrounding communities.

Shareholders’ MeetingThe 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.

Leadership and VisionThe Board of Directors has clearly and independently involved in determining the Company’s commitment,

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 ISO2000 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

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 foundations 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, management, 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

Conflict of interestsThe 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 undertaken

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

tee has carefully managed to prevent transactions, which may cause the conflict of interests. The Company has

stated clearly regulations for related items or those concerning asset acquisition or distribution as directed by

the Stock Exchange of Thailand and 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.

41


42

Business EthicsThe 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.

Counter-Balance of Non-Management DirectorsThe 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 direc-

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

Position’s Combination or SeparationChairman 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 cross-checking remain existent.

Remuneration of Directors and ManagementRemuneration of directors and management is considered a proper rate compared with the industry’s offer-

ings. 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 shareholders, while

remuneration for senior management would be subject to principles and policy of the board of directors’ consid-

eration.

The Board of Directors’ MeetingThe 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 2003, the Board of Directors had

held 13 ordinary meetings, and two extraordinary meetings. Here are the records of the attendance of each

director.


43

Sub-CommitteesThe Company has set up sub-committees to help supervise and monitor the Company’s operations, com-

prising the audit committee and investment committee.

1. Audit Committee1. Audit Committee1. Audit Committee1. Audit Committee1. Audit Committee

The Board of Directors has appointed the Audit committee on January 29, 1999. The Audit Committee

comprises three directors, all of them are independent as follows: -

Lieut.Olarn Krairiksh Chairman of Audit Committee

Lieut. Anan Panananda R.N. Member

Mr. Vorasit Pokachaiyapat Member

The Audit Committee has held meetings regularly for four times in 2003 and reported directly to the Company’s

Board of Directors.

Scope of the Committee’s Duties and responsibilitiesScope of the Committee’s Duties and responsibilitiesScope of the Committee’s Duties and responsibilitiesScope of the Committee’s Duties and responsibilitiesScope of the Committee’s Duties and responsibilities

To review the Company’s financial statement to ensure its accuracy, adequacy and creditability.

To maximize efficient and effective internal control system of the Company

To consider, select and propose the appointment of the Company’s auditors

To oversee the compliance with related rules and regulations

To prevent the conflict of interests

To exercise duties as assigned by the Board of Directors

To prepare report on the supervision and monitoring of the audit committee which is made available in

the Company’s annual report.

NameAttendance/Meeting

Ordinary Meeting Extraordinary Meeting Total Attendance

1. Mr.Prida Tiasuwan

2. Sub. Lieut. Prayoon Talerngsri

3. Mrs. Prapee Sorakraikitikul

4. Mrs. Sunanta Tiasuwan

5. Mrs. Pranee Khunprasert

6. Mr. Pramote Tiasuwan

7. Mrs. Panidda Tiasuwan

8. Mr. Eugene S. Davis

9. Mr. Vorasit Pokachaiyapat

10. Lieut.Olarn Krairiksh


12/13

13/13

13/13

13/13

12/13

13/13

13/13

5/13

6/13

13/13

13/13

2/2

2/2

2/2

2/2

2/2

2/2

2/2

2/2

2/2

2/2

2/2

14/15

15/15

15/15

15/15

14/15

15/15

15/15

7/15

8/15

15/15

15/15

1.

2.

3.

4.

5.

6.

7.

1.

2.

3.


44

2. Investment Committee2. Investment Committee2. Investment Committee2. Investment Committee2. Investment Committee

The Investment Committee has taken responsibility to oversee and supervise the Company’s overseas

operations. The committee comprises seven directors who are competent in different fields from production,

manufacturing to finance, representing the Company’s senior management as follows: -

Mr.Prida Tiasuwan Chairman

Sub.Lieut. Prayoon Talerngsri Vice Chairman

Mrs. Prapee Sorakraikitikul Member

Mrs. Sunanta Tiasuwan Member

Mrs. Pranee Khunprasert Member

Mr. Pramote Tiasuwan Member

Mr. Decha Nuntanajaroenkul Member

The investment committee has held four meetings, informing the presidents of subsidiaries the report on the

Company’s operating performance and providing them suggestions to improve the Company’s operations in

order to ensure that they perform in accordance with policies designated by the Board of Directors. Corporate

Finance Office would function as secretary to monitor and review the Company’s operating performance. The

executives would pay a frequent visit to overseas subsidiaries for at least two times a year to supervise and

monitor their operations.

Internal Control and Audit SystemThe Company has realized the importance of effective internal control both in the management and opera-

tions 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 investment

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 operations and

financial activities of the Company are undertaken in line with the policy; and produce optimal efficiency. 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 Direc-

tors; 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 committees to work out safe-

guard 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’ ReportThe 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

1.

2.

3.

4.

5.

6.

7.


45

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-management directors to

oversee the adequacy of the financial statements and internal control system. Comments of the audit commit-

tee would appear in the audit committee’s report as shown in the Company’s 2003 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, 2003.

Responsibilities of the Board of Directors Towards Financial Statement

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

pleteness and transparency

To allow the Company’s auditors to perform their duties freely and independently without intervention

To prepare financial statement to disclose the Company’s financial status and performance in the past

year with true and fair presentation

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

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

accounting policies.

Relationship with InvestorsThe 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 department 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 had also

attended the Investors Fair as well in the previous year and 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 as well as now held supplementary investor relations’ activities by issuing ‘’ Investor Relations News-

letter’’ both in Thai and English to disseminate the Company’s operating performance to the financial analysts

and interested people through electronic mailing system. Additionally, The Company plans to issue a quarterly

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.

1.

2.

3.

4.

5.

AND OPERATION RESULTSFINANCIAL ANALYSIS

47

Operating resultsOperating resultsOperating resultsOperating resultsOperating resultsProceeds from new share allocations to increase registered capital in 2001 and the exercise of Pranda

warrants by the warrant holders to buy ordinary shares during 2002 and 2003 had enabled the company to

achieve in debt restructuring and better investment and business management. As a result, the company had

reported a 4.3% rise of sale turnovers in 2003 compared with a year earlier, with gross margin increasing 24

million baht, interest expenses decreasing 29 million baht. The company posted operating profit before foreign

exchange, extraordinary items and others totalling 318 million baht or a 12.15% of sales turnovers. Because

exchange rate fluctuation and termination of Debt Restructuring Agreement, the company’s net income decreased

by 58 million baht compared with a year before which gained from debt restructuring agreement in addition to

operating activities.

The company’s corporate philosophy has been firmly on the ground of maximize shareholders’ wealth which

was reflected by dividend payment 2 years consecutively. For the sake of mutual benefit for other stakeholders,

the company was committed to enforcing sales growth through marketing strategy, controlling selling and

administrative expenses, enhancing efficiency on Pranda Group’s asset utilization and aligning optimal capital

structure for business expansion. Debt to Equity improved from 0.83 times to 0.67 times, resulting in an increase

of the company’s debt repayment capacity to 6.49 times from 0.67 times. Because of the company’s increased

capacity in liquidity management both in the domestic and international operations, the company’s operating

cash flow surged to 314 million baht in 2003 compared with just 95 million baht in 2002.

Financial StatusFinancial StatusFinancial StatusFinancial StatusFinancial StatusAs of December 2003, the company and subsidiary firms had total assets worth 2,992 million baht,a 168

million baht rise from 2002, with cash in hand increasing 87 million baht mainly due to higher cash inflow 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.

Productive AssetsProductive AssetsProductive AssetsProductive AssetsProductive Assets

The company and subsidiary firms had total assets turnover that slightly declined to 0.87 times from 0.89

times and fixed assets turnover improved from 2.47 times to 2.61 times.

The company and subsidiary companies generated cash flow from operating activity totalling 314 million

baht, up 219 million baht from 2002 due to sales growth, reduced interest expenses progressive collection, and

expanding trade credit term. The Pranda had invested in machinery and equipment worth around 27 million baht

to replace the old ones. Despite the company paid off long-term debt installment of 131 million baht, short-term

loans of 16 million baht, dividend worth a total of 172 million baht, the company still had cash on hand increasing

87 million baht including cash at the beginning of the period totaling 373 million baht. As a result, the company

and subsidiary firms’ cash at the end of 2003 totalled 460 million baht or 15.39% of total assets.

Liquidity RatioLiquidity RatioLiquidity RatioLiquidity RatioLiquidity Ratio

Current ratio slight declined from 5.26 times to 5.23 times while Quick ratio declined from 2.61 times to 2.55

times because the company had extended the trade debt repayment period to 24 days from 18 days previously.


Risk from Short-term debtRisk from Short-term debtRisk from Short-term debtRisk from Short-term debtRisk from Short-term debt

Pranda and subsidiary firms had short-term loan amounting of 380 million baht, while having total current

assets at 1,991 million baht. This can be concluded that Pranda has sufficient

liquidity for short-term debt payment and having interest coverage improved from 4.36 times to 6.49 times.

Capital ExpenditureCapital ExpenditureCapital ExpenditureCapital ExpenditureCapital ExpenditurePrevious spending on capital expenditurePrevious spending on capital expenditurePrevious spending on capital expenditurePrevious spending on capital expenditurePrevious spending on capital expenditure

The company made investment on new machinery and equipment worth 27 million baht to replace the old

ones.

Current Capital Expenditure PlanCurrent Capital Expenditure PlanCurrent Capital Expenditure PlanCurrent Capital Expenditure PlanCurrent Capital Expenditure Plan

The company is still on the process of establishing the new production facility in China. The new factory

which is scheduled to start operations in the first quarter of 2004 will have 60 workers at the start, and adding up

to full capacity of 400 workers at the ninth year of its operation.Initial production run will be 120,000 pieces per

annum, which full capacity at 700,000 pieces within 9 years. Capital expenditure spending for this project was

approved at 60 million baht.

Sources of FundSources of FundSources of FundSources of FundSources of FundCapital StructureCapital StructureCapital StructureCapital StructureCapital Structure

Resulting from having operational profit consecutively with successive debt restructuring, the company’s

debt to equity ratio improved to 0.67 times from 0.83 times, with debt ratio reducing from 0.45 times to 0.40

times comparing with 2002. In conclusion, Pranda has strong balance sheet, which will support business expansion

in the future.

Shareholders’ EquityShareholders’ EquityShareholders’ EquityShareholders’ EquityShareholders’ Equity

The company has raised its capital and issued warrants in 2002, and in 2003, the company had allocated a

total of 38,458,900 new shares for the warrant conversions to ordinary shares. As of December 31, 2003, the

company has registered ordinary shares at 238,851,900 shares.As of the end of December 2003, the company

Pranda booked retained earnings at 826 million baht, up 141 million baht or 20.50% comparing to 2002 and book

value per share increasing from 7.71 baht to 8.23 baht. At the end of 2003, the company’s shares were traded at

7.40 baht apiece.

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

Pranda and subsidiary firms had total current liabilities at 380 million baht or 31.81% of total liabilities. Non-

current liabilities were 815 million consisting of long-term bank loan at 812 million baht or 62.90% of total

liabilities. This bank term-loan scheduled under condition of debt repayment by quarterly installment till the term

serves on January 2011.

Future TFuture TFuture TFuture TFuture TrendrendrendrendrendThe company has operated quality growth strategy by manufacturing its own product brands through Product

Development Center and effective distributions through subsidiary firms and trade partners. The company is

committed to upgrading its production from existing Original Brand Manufacturing (OBM) to Original Design

Manufacturing (ODM) through cooperation with clients who have already their own brands in each region to

jointly develop the product designs.

48


The company is also committed to providing seamless services to customers through distribution offices. It

could therefore well understand the market in each region, hence providing the company a clear prospect in

marketing planning with the main focus on expanding of the company’s own product brands in Asia, while

developing silver accessories in Europe, and gold accessories for the North America.

The company strongly believes to steer the company to grow at least 12% in US-dollar denominated sales

turnovers, with strong profitability in 2004.

49

RISK FACTORS

51

RISK FACTORS WHICH AFFECTED THE INDUSTRYWith 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 periodic wars and terrorist

attacks as well as 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 distribution

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

RISK FACTORS WHICH AFFECTED THE COMPANY’S OPERATIONS

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 Production

Rapidly 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 reduces

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 Risk

The continuous growth both in the local and overseas market has resulted with inadequacy of experienced

workforce in the marketing, finance, and production.

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

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 Risk

3.1 Now that the Company also got involved in exports to overseas market and imports of certain raw

materials (about 33% 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 collections and debt controls as

well as close contacts with debtors and provisions set aside for doubtful debts of suspected accounts. As a

result, substantial impact from the debt defaults was unlikely.

RISK FACTORS

52

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 Technologyechnologyechnologyechnologyechnology

The Company’s business network, which covers the production bases and distribution channels throughout

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 planned

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

RELATED PARTY TRANSACTIONS

54

THE PAST RELATED PARTY TRANSACTIONS

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

2003 and 2002 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).

NECESSITY AND RATIONALIZATION

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.

MEASURES OR STEPS FOR APPROVAL OF THE INTERTWINED ITEMS

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 com-

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

issues.

POLICIES AND TRENDS ON MAKING THE FUTURE INTERTWINED ITEMS

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 intertwined items for supplementing

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.

SOCIAL ACTIVITIES

To provide vocational education in bilateral system. The Company has teamed up with 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 further their

studies on the bilateral education system on gems and costume jewelry at the higher and advanced vocational

certificate levels.

To provide supplementary education and experiences to university students. Pranda Jewelry Public Company

Limited has always paid attention to promote students’ education in order to broaden their perspective in keeping

with the state-of-the-art technology.

The Company has also realized the importance of a sense of participation in social development as well as

educational opportunities of Thai youths who deserve development to become the country’s future valuable

human resources in order to steer up the country into further prosperity. The Company fully hoped that Thai

people come up with higher quality of life and better education.

Throughout the operations for more than three decades, Pranda Jewelry Public Company Limited has offered

opportunities for Thai students to increase their out-of-the-class education and visit and experience the

sophisticated production technology of the Company.

56

Pranda Jewelry Public Company Limited has not only played a part in business to promote reputation for

Thailand’s jewelry industry into worldwide recognition of high quality products, but also realized social

accountabilities throughout 30 years.

The Company was therefore set to participate in arising social activities either in education, community

promotion, public welfare, or environmental care to better the surrounding environments to grow in parallel with

the Company’s business prosperity.

The Company’s social activities included:-

EDUCATIONAL PROMOTION

SOCIAL ACTIVITIES

The Company in conjunction with Bangna Police Station joined the friendly football match with an aim to

underline relationship within the community

The Company has participated in activities to support the charity walk and run event held by Siriraj Hospital

under the theme “Hundred Hearts for Her Majesty’’.

Pranda Jewelry Public Company Limited has taken part in activities held by the Sukhumvit 105 committee to

sponsor the opening of multi-purpose sports fields under the heath and anti-drug campaign.

The Company has taken part in the “Clean, Safe,

Pollution-Free and Lively’’ Office Scheme held by the

Public Health Office of the Bangkok Metropolitan

Administration and won award.

To provide educational opportunities to schools in remote areas through donation of educational instruments,

sports gears as well as other necessities to Banpai School and Ban Kormor 80 School in Prachin Buri.

Social PromotionPranda Jewelry Public Company Limited has taken responsibilities and realized the importance of being a

good member of the society.

The Company has therefore provided constant supports to surrounding societies and are committed to

developing good environments to communities we stay in order to promote and continue long-nourished culture

in the society for the better life of Thai society. Throughout the operations, the Company has supported community

activities as follows:-

To promote activities held on the National Children Day through cooperation with several neighboring

organizations to organize the National Children Day fair, and donate stationery, presents and snacks to

Phongploynusorn and Sri-iam Schools. The activities have been conducted for over the three consecutive

years.

57

SOCIAL ACTIVITIES

Cooperated with the National Blood Service Center of the Thai Red Cross to donate blood every three

months.

Joined Matichon Public Company limited in the Matichon 25 th Year’s event to mobilize fund to buy books to

250 libraries of needy schools nationwide.

Donated necessities, consumer products, computer, electrical appliances and other apparatus to Wat Suankaew

Foundation of Prakrupisal Dhammapatee (Phra Payom Kalayano) as part to support and develop society.

The Company has promoted the family institute by co-sponsoring the ‘’Glittering Gems’’ event and providing

free golden marriage certificates with platinum heart-form locket to 10 couples who registered their marriage on

the Valentine’s Day, the Day of Love, held by Thai Gems and Jewelry Traders Association, in conjunction with

Jewel Fest Club, and Bangrak District of Bangkok Metropolitan Administration and the Tourism Authority of

Thailand.

58

Public Activities

REPORT OF THE AUDIT COMMITTEE

60

Chairman of the Board of Directors

The Audit Committee comprises member as follows:-

1. Lieut.Olarn Krairiksh


3. Mr. Vorasit Pokachaiyapat

The appointed Audit Committee has taken responsibility mainly to prevent any vested interests and ensure

the transparency in financial and accounting management and the company’s compliance with the rules and

regulations of the Stock Exchange of Thailand.

The Audit Committee held four meetings in 2003 at which the company’s inside auditors also attended, as

the Board of Directors saw it necessary for the inside auditors to thoroughly understand the inside auditing

duties to upgrade the quality of their duties.

However, the inside auditing is relatively new for mid-sized company, the inside auditors themselves are

required to deeply realize that the jewelry firm which grew into the mid-sized company was always originally

derived from the family-run business.

Therefore, the code of good corporate governance as directed by the Stock Exchange of Thailand deserves

development on the step-by-step basis to ensure the business’s quality and steady growth.

The supervision is thus to rely on the external auditors, and Audit Committee found that the auditing of the

external auditors was handled without barriers or limitations in information disclosure. As a result, the company’s

operations are proven transparent both in the financial and accounting front and the compliance with the Stock

Exchange of Thailand.

The Audit Committee also found the company’s financial liquidity management was carefully operated. How-

ever, as the jewelry accessory market always experienced intensified competition, with majority of the produc-

tion made on order from foreign importers, and most businesses are operated by not more than 15 years, the

company which makes its presence for over 30 years clearly reflects its high competitiveness. However, the

company should also pay heed to these following factors which might affect its operations.

1. To assess the performance of subsidiary firm on how well it could adjust its business to changing

environments both in the short term and in the long run or which business deserves development or change.

2. To analyze how long relationship with company’s major clients would last and whether the purchase

orders would drop in the future.

3. To closely monitor the price of raw materials whether its change would generate significant impact on

the company’s profitability.

4. The company has full competence in the production cost controls. However, it was still required to pay

attention to operations of the competitors whether their businesses would affect the company in order to design

preparatory plans as appropriate.

The company was found that it well protected the interests of all small shareholders.

Lieut.Olarn Krairiksh

Chairman of the Audit Committee

AUDITOR’S REPORT ANDFINANCIAL STATEMENTS

Report of Independent AuditorTo The Board of Directors and Shareholders ofPranda 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 2003, the related consolidated statements of earnings, changes in shareholders’ equity and cash flows for

the year 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 audit. The consolidated

financial statements of Pranda Jewelry Public Company Limited and its subsidiaries and the separate financial statements of

Pranda Jewelry Public Company Limited as at 31 December 2002 and for the year then ended, were audited by another auditor

in my office, who expressed unqualified audit opinion on those statements, based on his audit and another auditors’ reports,

under the report dated 21 February 2003.

I did not audit the financial statements, included in the consolidated financial statements for the year ended 31 December 2003,

of a local subsidiary company, Pranda Lodging Co., Ltd., and 4 overseas subsidiary companies, Pranda Vietnam Co., Ltd.,

Pranda U.K. Ltd., H. GRINGOIRE s.a.r.l. 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 2003 of Baht 734 million (2002 : Baht 749 million), total revenues and net loss

for the year then ended of Baht 1,272 million and Baht 9 million, respectively (2002 : total revenues and net earnings of Baht

1,231 million and Baht 16 million, respectively). In addition, the Company’s financial statements include its investment in those

subsidiaries stated under the equity method, amounting to Baht 197 million as at 31 December 2003 (2002 : Baht 210 million)

and its share of loss for the year then ended, amounting to Baht 9 million (2002 : share of profit Baht 16 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 for the year 2003, 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 audit together with the reports of the other auditors mentioned

above provides a reasonable basis for my opinion.

In my opinion, based on my audit 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 2003 and the results of their operations and cash flows for the year

then ended in accordance with generally accepted accounting principles.

Siraporn Ouaanunkun

Certified Public Accountant (Thailand) No. 3844

Ernst & Young Office Limited

Bangkok : 17 February 2004

62


460,469,166

549,529

671,771,860

5 6,194,704

(202,329,854)

4 475,636,710

5 318,432

6 1,019,651,865

5,511,767

27,859,566

1,989,997,035

7 9,782,800

8 -

8 34,550,475

9 14,881,033

5 -

5 -

10 560,346,280

11 354,329,189

28,192,713

1,002,082,490

2,992,079,525

372,990,200

3,224,643

685,777,266

6,028,059

(204,964,214)

486,841,111

558,701

912,377,158

11,745,098

22,808,286

1,810,545,197

8,618,940

-

29,985,310

14,779,158

-

-

587,251,159

354,329,189

18,983,082

1,013,946,838

2,824,492,035

PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESBALANCE SHEETSBALANCE SHEETSBALANCE SHEETSBALANCE SHEETSBALANCE SHEETS

AS AAS AAS AAS AAS ATTTTT 31 DECEMBER 2003 AND 2002 31 DECEMBER 2003 AND 2002 31 DECEMBER 2003 AND 2002 31 DECEMBER 2003 AND 2002 31 DECEMBER 2003 AND 2002( U n i t : B a h t )( U n i t : B a h t )( U n i t : B a h t )( U n i t : B a h t )( U n i t : B a h t )

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

219,364,510

-

14,508,803

24,969,191

85,115,912

438,627,546

354,329,189

12,114,126

1,158,332,077

2,824,563,182

275,421,078

2,744,643

294,507,070

569,413,445

(202,184,363)

661,736,152

33,414,308

521,763,367

6,065,205

9,452,750

1,510,597,503

8,618,940

175,964,689

-

14,444,278

33,584,786

102,711,835

449,277,826

354,329,189

5,653,688

1,144,585,231

2,655,182,734

Consolidated Consolidated Consolidated Consolidated Consolidated The Company OnlyThe Company OnlyThe Company OnlyThe Company OnlyThe Company Only

NOTE 2003 2002 2003 2002

63

ASSETS ASSETS ASSETS ASSETS ASSETS

CURRENT ASSETSCURRENT ASSETSCURRENT ASSETSCURRENT ASSETSCURRENT 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

TTTTTOTOTOTOTOTALALALALAL CURRENT CURRENT CURRENT CURRENT CURRENT ASSETS ASSETS ASSETS ASSETS ASSETS

NON-CURRENT ASSETSNON-CURRENT ASSETSNON-CURRENT ASSETSNON-CURRENT ASSETSNON-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

TTTTTOTOTOTOTOTALALALALAL NON-CURRENT NON-CURRENT NON-CURRENT NON-CURRENT NON-CURRENT ASSETS ASSETS ASSETS ASSETS ASSETS

TTTTTOTOTOTOTOTALALALALAL ASSETS ASSETS ASSETS ASSETS ASSETS

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


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

52,492,670

89,936,075

847,304

90,783,379

129,331,397

-

1,974,762

4,027,002

47,481,510

18,083,294

344,174,014

936,424,210

613,017

937,037,227

1,281,211,241

C o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e d The Company Only The Company Only The Company Only The Company Only The Company Only

12

5

13

5

13

-

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

811,980,000

-

811,980,000

1,034,687,275

-

31,772,880

392,308

32,165,188

120,840,000

9,254,625

-

4,027,002

16,060,343

3,047,548

185,394,706

932,820,000

-

932,820,000

1,118,214,706

Note 2003 2002 2003 2002

PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESBALANCE SHEETS (Continued)BALANCE SHEETS (Continued)BALANCE SHEETS (Continued)BALANCE SHEETS (Continued)BALANCE SHEETS (Continued)


(Restated) (Restated)

64

LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIESCURRENT 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

TTTTTOTOTOTOTOTALALALALAL CURRENT CURRENT CURRENT CURRENT CURRENT LIABILITIES LIABILITIES LIABILITIES LIABILITIES LIABILITIES

NON-CURRENT LIABILITIESNON-CURRENT LIABILITIESNON-CURRENT LIABILITIESNON-CURRENT LIABILITIESNON-CURRENT LIABILITIES

Long-term loans - net of current portion

Other non-current liabilities

TTTTTOTOTOTOTOTALALALALAL NON-CURRENT NON-CURRENT NON-CURRENT NON-CURRENT NON-CURRENT LIABILITIES LIABILITIES LIABILITIES LIABILITIES LIABILITIES

TTTTTOTOTOTOTOTALALALALAL LIABILITIES LIABILITIES LIABILITIES LIABILITIES LIABILITIES



PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESBALANCE SHEETS (Continued)BALANCE SHEETS (Continued)BALANCE SHEETS (Continued)BALANCE SHEETS (Continued)BALANCE SHEETS (Continued)


Note 2003 2002 2003 2002


16

10

16

18

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

400,000,000

200,393,000

407,654,160

202,996,742

8,400,000

32,373,187

37,183,870

647,967,069

1,536,968,028

6,312,766

1,543,280,794

2,824,492,035

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

2,824,563,182

400,000,000

200,393,000

407,654,160

202,996,742

8,400,000

32,373,187

37,183,870

647,967,069

1,536,968,028

-

1,536,968,028

2,655,182,734

Consolidated The Company OnlyConsolidated The Company OnlyConsolidated The Company OnlyConsolidated The Company OnlyConsolidated The Company Only


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

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

65

SHAREHOLDERS’ EQUITY

Share capital

Authorized share capital

400 million ordinary shares of Baht 1 each

Issued and paid-up share capital

238,851,900 ordinary shares of Baht 1 each

(2002 : 200,393,000 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

DIRECTORS


Consol idated The Company OnlyConsol idated The Company OnlyConsol idated The Company OnlyConsol idated The Company OnlyConsol idated The Company Only

66

19

20

14

21

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

-

1.43

218,354,345

0.98

-

0.98

318,971,297

2,506,840,507

8,861,013

26,867,835

-

2,542,569,355

1,549,400,852

573,003,245

6,921,693

5,082,800

10,139,979

2,144,548,569

398,020,786

(86,913,223)

(2,323,645)

308,783,918

61,637,623

370,421,541

1.54

0.31

1.85

200,187,325

1.20

0.24

1.44

256,474,342

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

-

1.43

218,354,345

0.98

-

0.98

318,971,297

1,950,670,638

15,274,158

48,602,687

12,365,208

2,026,912,691

1,382,256,905

250,129,565

6,281,986

5,082,800

-

1,643,751,256

383,161,435

(74,337,517)

(40,000)

308,783,918

61,637,623

370,421,541

1.54

0.31

1.85

200,187,325

1.20

0.24

1.44

256,474,342

PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESEARNINGS STEARNINGS STEARNINGS STEARNINGS STEARNINGS STAAAAATEMENTSTEMENTSTEMENTSTEMENTSTEMENTS

FOR THE YEARS ENDED 31 DECEMBER 2003 AND 2002FOR THE YEARS ENDED 31 DECEMBER 2003 AND 2002FOR THE YEARS ENDED 31 DECEMBER 2003 AND 2002FOR THE YEARS ENDED 31 DECEMBER 2003 AND 2002FOR THE YEARS ENDED 31 DECEMBER 2003 AND 2002( U n i t : B a h t )( U n i t : B a h t )( U n i t : B a h t )( U n i t : B a h t )( U n i t : B a h t )

2003 2002 2003 2002


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 FROM ORDINARY ACTIVITIES

EXTRAORDINARY ITEM - net

Gain on debts restructuring

NET EARNINGS FOR THE YEAR

EARNINGS PER SHARE

BASIC EARNINGS PER SHARE

Earnings from ordinary activities

Extraordinary item - net

Net earnings

Weighted average number of ordinary shares (shares)

DILUTED EARNINGS PER SHARE

Earnings from ordinary activities

Extraordinary item - net

Net earnings

Weighted average number of ordinary shares (shares)


Note


Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Incr

ease

d in s

hare

capit

al

Shar

e sub

scrip

tion r

eceiv

ed in

adva

nce

Tran

slatio

n adju

stmen

t (Res

tate

d)

Divid

end p

aid

Lega

l rese

rve

Net e

arnin

gs fo

r the y

ear (

Resta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Prior

year

adjus

tmen

ts

Bala

nce

- as

at

31

De

cem

ber

2002

, as

re

stat

edBa

lanc

e -

as

at

31

Dece

mbe

r 20

02,

as

rest

ated

Bala

nce

- as

at

31

De

cem

ber

2002

, as

re

stat

edBa

lanc

e -

as

at

31

Dece

mbe

r 20

02,

as

rest

ated

Bala

nce

- as

at

31

De

cem

ber

2002

, as

re

stat

ed

Incr

ease

d in s

hare

capit

al

Shar

e sub

scrip

tion r

eceiv

ed in

adva

nce

Tran

slatio

n adju

stmen

t

Divid

end p

aid

Lega

l rese

rve

Net e

arnin

gs fo

r the y

ear

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

fina

ncia

l sta

tem

ents

.

PR

AN

DA

PR

AN

DA

PR

AN

DA

PR

AN

DA

PR

AN

DA

JE

WE

LR

JE

WE

LR

JE

WE

LR

JE

WE

LR

JE

WE

LR

YYYY Y P

UB

LIC

CO

MP

PU

BL

IC C

OM

P P

UB

LIC

CO

MP

PU

BL

IC C

OM

P P

UB

LIC

CO

MP

AN

YA

NY

AN

YA

NY

AN

Y L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

RYYYY Y

CO

MP

CO

MP

CO

MP

CO

MP

CO

MP

AN

IES

AN

IES

AN

IES

AN

IES

AN

IES

ST

ST

ST

ST

ST

AAAA AT

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

R’S

E

QU

ITY

TE

ME

NT

S

OF

C

HA

NG

ES

IN

S

HA

RE

HO

LD

ER

’S

EQ

UIT

YT

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

R’S

E

QU

ITY

TE

ME

NT

S

OF

C

HA

NG

ES

IN

S

HA

RE

HO

LD

ER

’S

EQ

UIT

YT

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

R’S

E

QU

ITY

FO

R T

HE

YE

AR

S E

ND

ED

31

DE

CE

MB

ER

20

03

AN

D 2

00

2F

OR

TH

E Y

EA

RS

EN

DE

D 3

1 D

EC

EM

BE

R 2

00

3 A

ND

20

02

FO

R T

HE

YE

AR

S E

ND

ED

31

DE

CE

MB

ER

20

03

AN

D 2

00

2F

OR

TH

E Y

EA

RS

EN

DE

D 3

1 D

EC

EM

BE

R 2

00

3 A

ND

20

02

FO

R T

HE

YE

AR

S E

ND

ED

31

DE

CE

MB

ER

20

03

AN

D 2

00

2

(Un

it:B

ah

t)

Not

e

Issu

ed a

nd p

aid-

up

shar

e ca

pita

l

Pre

miu

m o

n

shar

e ca

pita

l

Rev

alua

tion

surp

lus

on la

nd

Sha

re s

ubsc

riptio

n

rece

ived

in a

dvan

ce

Ret

aine

d ea

rnin

gs

App

ropr

iate

d

Una

ppro

pria

ted

Tota

l

CO

NS

OLI

DAT

ED

Tran

slat

ion

adju

stm

ent

Min

ority

inte

rest

67


Issu

ed a

nd p

aid-

up

shar

e ca

pita

l

TH

E C

OM

PAN

Y O

NLY

PR

AN

DA

PR

AN

DA

PR

AN

DA

PR

AN

DA

PR

AN

DA

JE

WE

LR

JE

WE

LR

JE

WE

LR

JE

WE

LR

JE

WE

LR

YYYY Y P

UB

LIC

CO

MP

PU

BL

IC C

OM

P P

UB

LIC

CO

MP

PU

BL

IC C

OM

P P

UB

LIC

CO

MP

AN

YA

NY

AN

YA

NY

AN

Y L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

R L

IMIT

ED

AN

D I

TS

SU

BS

IDIA

RYYYY Y

CO

MP

CO

MP

CO

MP

CO

MP

CO

MP

AN

IES

AN

IES

AN

IES

AN

IES

AN

IES

ST

ST

ST

ST

ST

AAAA AT

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

RS

’T

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

RS

’T

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

RS

’T

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

RS

’T

EM

EN

TS

O

F

CH

AN

GE

S

IN

SH

AR

EH

OL

DE

RS

’ E

QU

ITY

E

QU

ITY

E

QU

ITY

E

QU

ITY

E

QU

ITY

(C

on

tin

ue

d)

(C

on

tin

ue

d)

(C

on

tin

ue

d)

(C

on

tin

ue

d)

(C

on

tin

ue

d)

FO

R T

HE

YE

AR

S E

ND

ED

31

DE

CE

MB

ER

20

03

AN

D 2

00

2F

OR

TH

E Y

EA

RS

EN

DE

D 3

1 D

EC

EM

BE

R 2

00

3 A

ND

20

02

FO

R T

HE

YE

AR

S E

ND

ED

31

DE

CE

MB

ER

20

03

AN

D 2

00

2F

OR

TH

E Y

EA

RS

EN

DE

D 3

1 D

EC

EM

BE

R 2

00

3 A

ND

20

02

FO

R T

HE

YE

AR

S E

ND

ED

31

DE

CE

MB

ER

20

03

AN

D 2

00

2

(Uni

t :

Bah

t)

Pre

miu

m o

n

shar

e ca

pita

l

Rev

alua

tion

surp

lus

on la

nd

Sha

re s

ubsc

riptio

n

rece

ived

in a

dvan

ce

Tran

slat

ion

adju

stm

ent

Ret

aine

d ea

rnin

gs

App

ropr

iate

d

Una

ppro

pria

ted

Tota

l

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Bala

nce

- as

at

31

De

cem

ber

2001

Incr

ease

d in s

hare

capit

al

Shar

e sub

scrip

tion r

eceiv

ed in

adva

nce

Tran

slatio

n adju

stmen

t (Res

tate

d)

Divid

end p

aid

Lega

l rese

rve

Net e

arnin

gs fo

r the y

ear (

Resta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

(R

esta

ted)

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Bala

nce

- as

at

31

De

cem

ber

2002

, as

pr

evio

usly

repo

rted

Prior

year

adjus

tmen

ts

Bala

nce

- as

at

31

De

cem

ber

2002

, as

re

stat

edBa

lanc

e -

as

at

31

Dece

mbe

r 20

02,

as

rest

ated

Bala

nce

- as

at

31

De

cem

ber

2002

, as

re

stat

edBa

lanc

e -

as

at

31

Dece

mbe

r 20

02,

as

rest

ated

Bala

nce

- as

at

31

De

cem

ber

2002

, as

re

stat

ed

Incr

ease

d in s

hare

capit

al

Shar

e sub

scrip

tion r

eceiv

ed in

adva

nce

Tran

slatio

n adju

stmen

t

Divid

end p

aid

Lega

l rese

rve

Net e

arnin

gs fo

r the y

ear

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

Bala

nce

- as

at

31

De

cem

ber

2003

The

acco

mpa

nyin

g no

tes

are

an in

tegr

al p

art o

f the

fina

ncia

l sta

tem

ents

.

68


Cash f lows from (used in) operat ing act iv i t ies :Cash f lows from (used in) operat ing act iv i t ies :Cash f lows from (used in) operat ing act iv i t ies :Cash f lows from (used in) operat ing act iv i t ies :Cash f lows from (used in) operat ing act iv i t ies :

Net earnings for the year

Adjustments to reconcile net earnings to net cash

provided by (used in) operating activities

Depreciation/amortization

Written-off fixed assets

Amortized deferred discount from debt restructuring

Amortized 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

Loss (gain) from written-off investment

Gain on disposal of machinery and equipment

Unrealized loss (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 before extraordinary item

Gain on debts restructuring

Net cash provided by operating activities


C o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e d The Company OnlyThe Company OnlyThe Company OnlyThe Company OnlyThe Company Only

PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESSTSTSTSTSTAAAAATEMENTS OF CASH FLOWSTEMENTS OF CASH FLOWSTEMENTS OF CASH FLOWSTEMENTS OF CASH FLOWSTEMENTS OF CASH FLOWS


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

-

314,014,984

370,421,541

48,775,088

111,838

(3,712,073)

-

18,314,628

3,172,241

10,139,979

5,337,231

(820,587)

2,851

451,742,737

(177,863,133)

11,471,428

799,959

(126,738,868)

(1,643,494)

(8,672,655)

29,258,449

847,304

-

3,593,408

(4,955,960)

761,693

(18,522,056)

(3,887,274)

156,191,538

(61,637,623)

94,553,915

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

-

333,841,120

370,421,541

25,813,968

97,781

(3,712,073)

-

14,083,009

4,000,000

(12,365,208)

(2,608,531)

(820,587)

(8,616,802)

386,293,098

(22,651,130)

(102,517,597)

(22,202,719)

(76,716,701)

(4,714,660)

(5,378,659)

11,927,321

224,826

385,219

4,027,002

809,656

(1,213,069)

(1,165,367)

-

167,107,220

(61,637,623)

105,469,597

69



C o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e dC o n s o l i d a t e d The Company OnlyThe Company OnlyThe Company OnlyThe Company OnlyThe Company Only

Cash flows from (used in) investing activit ies :Cash flows from (used in) investing activit ies :Cash flows from (used in) investing activit ies :Cash flows from (used in) investing activit ies :Cash flows from (used in) investing activit ies :

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

has maturity period of more than 3 months

Payment in other long-term investment

Proceeds from loans and amount due from related parties

Decrease in advances for investment

Payment for investment in subsidiary company

Acquisition of machinery and equipment

Proceeds from disposal of machinery and equipment

Proceeds from other long-term investment

Net cash used in investing activities

Cash flows from (used in) f inancing activit ies :Cash flows from (used in) f inancing activit ies :Cash flows from (used in) f inancing activit ies :Cash flows from (used in) f inancing activit ies :Cash flows 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 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 (refund) during the year

Interest paid

Corporate income tax

Non cash transactions :-Non cash transactions :-Non cash transactions :-Non cash transactions :-Non cash transactions :-

The conversion of advances for investment in an overseas

subsidiary company to become the capital of that subsidiary company


PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESSTSTSTSTSTAAAAATEMENTS OF CASH FLOWS (Continued)TEMENTS OF CASH FLOWS (Continued)TEMENTS OF CASH FLOWS (Continued)TEMENTS OF CASH FLOWS (Continued)TEMENTS OF CASH FLOWS (Continued)


70



PRANDAPRANDAPRANDAPRANDAPRANDA JEWELR JEWELR JEWELR JEWELR JEWELRYYYYY PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMP PUBLIC COMPANYANYANYANYANY LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIAR LIMITED AND ITS SUBSIDIARYYYYY COMP COMP COMP COMP COMPANIESANIESANIESANIESANIESNOTES TNOTES TNOTES TNOTES TNOTES TO CONSOLIDAO CONSOLIDAO CONSOLIDAO CONSOLIDAO CONSOLIDATED FINANCIALTED FINANCIALTED FINANCIALTED FINANCIALTED FINANCIAL ST ST ST ST STAAAAATEMENTSTEMENTSTEMENTSTEMENTSTEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2003FOR THE YEAR ENDED 31 DECEMBER 2003FOR THE YEAR ENDED 31 DECEMBER 2003FOR THE YEAR ENDED 31 DECEMBER 2003FOR THE YEAR ENDED 31 DECEMBER 2003

1 .1 .1 .1 .1 . GENERALGENERALGENERALGENERALGENERAL INFORMA INFORMA INFORMA INFORMA INFORMATIONTIONTIONTIONTION

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 inThailand and is

principally engaged in the manufacture and distribution of jewelry.

2 .2 .2 .2 .2 . BASIS OF CONSOLIDABASIS OF CONSOLIDABASIS OF CONSOLIDABASIS OF CONSOLIDABASIS OF CONSOLIDATIONTIONTIONTIONTION

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

2003 and 2002 of the Company and the following subsidiary companies (hereinafter called “the subsidiary

companies”):-

The subsidiary companies

Primagold International Co., Ltd.

Crystaline Co., Ltd.

Pranda Lodging 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.

2003 2002

100 100 Thailand

92 92 Thailand

83 83 Thailand

100 100 U.S.A.

100 100 U.S.A.

100 100 France

100 100 United Kingdom

100 100 Singapore

100 100 Malaysia

100 100 Vietnam

Percentage of

shareholdingby the

Company

and subsidiary

companies

Country of

incorporation Nature of business

Total assets

included in the consolidated

balance sheets

Total income

included in the consolidated

earnings statements

Distribution of jewelry

Manufacture and distribution of

jewelry

Dormitory rental





Holding company


(ceased its operations in 2000)

Manufacture and distribution of

jewelry

71

2003 2002 2003 2002

(Restated)

226 155 272 264

73 71 127 129

38 39 5 5

177 258 697 747

220 213 210 221

261 197 852 255

42 38 7 -

38 42 8 3


2.2 The financial statements of a local subsidiary company, Pranda Lodging Co., Ltd. and 4 overseas subsidiary

companies, Pranda Vietnam Co., Ltd., Pranda UK Ltd., H. GRINGOIRE s.a.r.l and Pranda North America, Inc.,

which incorporate the financial statements of its subsidiary, Crystaline North America, Inc., were included in

the consolidated financial statements with total assets as at 31 December 2003 of Baht 734 million (31

December 2002 : Baht 749 million), total revenues and net loss for the year then ended of Baht 1,272 million

and Baht 9 million, respectively (2002 : total revenues and net earnings of Baht 1,231 million and Baht 16

million, respectively). Those subsidiary companies’ financial statements were audited by their auditors who

expressed an unqualified audit opinion on those financial statements, except for the financial statements of

Pranda UK Ltd., on which the audit opinion is qualified on the prior year adjustment and the financial

statements of H.GRINGOIRE s.a.r.l, on which the audit opinion is qualified on its financial position.

2.3 The consolidated financial statements of an overseas subsidiary company, Pranda Singapore Pte. Limited and

its subsidiary, Pranda Acceptance Sdn. Bhd., which were included in the consolidated financial statements,

were prepared by the management of the subsidiary company and not audited by its auditor because of time

restrictions. As at 31 December 2003, this subsidiary company has assets included in the consolidated

financial statements of Baht 42 million (2002 : Baht 38 million), revenues for the year ended 31 December

2003 of Baht 7 million (2002 : no revenue) and net earnings for the year then ended of Baht 7 million (2002 :

net loss of Baht 11 million). These amounts are immaterial to the consolidated financial statements.

In addition, the financial statements of an overseas subsidiary company, Pranda Acceptance Sdn. Bhd.,

included in the consolidated financial statements of Pranda Singapore Pte. Limited, are for the period ended

31 March 2000 since this company ceased its operations during the first quarter of 2000. Assets of this

subsidiary company amounting to approximately 0.3 million Singapore dollars (or equivalent to Baht 8 million)

were included in the consolidated financial statements.

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 signif icant 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.

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 dif ference is shown under the caption of “Translation adjustment” in the

shareholders’ equity.

3 .3 .3 .3 .3 . SIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIESSIGNIFICANT ACCOUNTING POLICIES

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.

Signi f icant account ing pol ic ies adopted by the Company and i ts subsidiar ies are summarized below :-

72


3 . 13 . 13 . 13 . 13 . 1 Revenue recogni t ionRevenue recogni t ionRevenue recogni t ionRevenue recogni t ionRevenue recogni t ion

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

allowances.

Rental and service income is recognized when service is rendered. Rental and service income presents the

invoiced value, excluding value added tax.

3 . 23 . 23 . 23 . 23 . 2 Trade accounts receivable and al lowance for doubt fu l accountsTrade accounts receivable and al lowance for doubt fu l accountsTrade accounts receivable and al lowance for doubt fu l accountsTrade accounts receivable and al lowance for doubt fu l accountsTrade accounts receivable and al lowance for doubt fu l accounts

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

isprovided 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 I n v e n t o r i e sI n v e n t o r i e sI n v e n t o r i e sI n v e n t o r i e sI n v e n t o r i e s

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).

3 . 43 . 43 . 43 . 43 . 4 Basis of recording provis ion for d iminut ion in value of s tocksBasis of recording provis ion for d iminut ion in value of s tocksBasis of recording provis ion for d iminut ion in value of s tocksBasis of recording provis ion for d iminut ion in value of s tocksBasis of recording provis ion for d iminut ion in value of s tocks

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.

3 . 53 . 53 . 53 . 53 . 5 PropertyPropertyPropertyPropertyProperty, p lant and equipment/Depreciat ion and amort isat ion, p lant and equipment/Depreciat ion and amort isat ion, p lant and equipment/Depreciat ion and amort isat ion, p lant and equipment/Depreciat ion and amort isat ion, p lant and equipment/Depreciat ion and amort isat ion

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

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 recognized as income to the extent that it reverses a revaluation decrease of land

previously recognized as an expense.

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

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 :-

73


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 . 63 . 63 . 63 . 63 . 6 I n v e s t m e n t sI n v e s t m e n t sI n v e s t m e n t sI n v e s t m e n t sI n v e s t m e n t s

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 . 73 . 73 . 73 . 73 . 7 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 . 83 . 83 . 83 . 83 . 8 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 issuable to convert all dilutive potential ordinary shares (warrants) into ordinary shares.

3 . 93 . 93 . 93 . 93 . 9 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.

20 years

14, 20 years

(5 - 39 years)

5 - 10 years

3 - 10 years

3 - 6 years

Land improvements

Buildings

Leasehold improvements

Machinery

Furniture, fixtures and equipment

Motor vehicles

period of lease

74


3 . 1 03 . 1 03 . 1 03 . 1 03 . 1 0 Financia l inst rumentsFinancia l inst rumentsFinancia l inst rumentsFinancia l inst rumentsFinancia l inst ruments

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 . 13 . 13 . 13 . 13 . 111111 Use of account ing est imatesUse of account ing est imatesUse of account ing est imatesUse of account ing est imatesUse of account ing est imates

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.

3 . 1 23 . 1 23 . 1 23 . 1 23 . 1 2 Gain f rom debt rest ructur ingGain f rom debt rest ructur ingGain f rom debt rest ructur ingGain f rom debt rest ructur ingGain f rom debt rest ructur ing

The Company adopts the Accounting Standard No. 34 “an accounting for troubled debt restructuring” when

the debt restructuring involves a waiver of debts, a portion of the waived debts that exceeds the aggregate

amount of repayment to be incurred over the term of the new agreement is recognised as an extraordinary

gain in the earnings statements.

4 .4 .4 .4 .4 . TRADE ACCOUNTS AND NOTES RECEIVTRADE ACCOUNTS AND NOTES RECEIVTRADE ACCOUNTS AND NOTES RECEIVTRADE ACCOUNTS AND NOTES RECEIVTRADE ACCOUNTS AND NOTES RECEIVABLEABLEABLEABLEABLE

The outstanding balances of trade accounts and notes receivable as at 31 December 2003 and 2002 are

aged as follows :-

75

(Unit : Thousand Baht)

Consolidated

Trade accounts receivable

- related parties

Trade accounts receivable

- other companiesTotal

Not yet due

Past due

Up to 3 months

3 - 6 months

6 - 12 months

Over 12 months

Add : Trade accounts receivable of one

overseas subsidiary company

- no information

Total

Less : Allowance for doubtful accounts

Total

2003 2002 2002 20022003 2003

69

1,466

1,096

3,131

433

-

6,195

-

6,195

17

3,725

703

1,563

20

-

6,028

-

6,028

202,895

183,882

47,470

31,015

206,510

-

671,772

(202,330)

469,442

190,031

142,614

27,425

51,374

176,391

97,942

685,777

(204,964)

480,813

190,048

146,339

28,128

52,937

176,411

97,942

691,805

(204,964)

486,841

202,964

185,348

48,566

34,146

206,943

-

677,967

(202,330)

475,637



The Company Only

Trade accounts receivable Trade accounts receivable

- related parties - other companies Total

Not yet due Past due

Up to 3 months 3 - 6 months 6 - 12 months Over 12 months

Total Less : Allowance for doubtful accounts Total

The Company’s management believes that allowance for doubtful accounts set aside is adequate in the present situation.

An overseas subsidiary company has pledged some of its trade accounts receivable to secure loans granted to it by a bank.

During 2003, sales by two overseas subsidiary companies, Pranda North America, Inc. and Crystaline North America, Inc. to

two significant customers totaled USD 14 million or approximately Baht 581 million, equivalent to 84 percent of its net sales (2002

: three significant customers totaled USD 15 million or approximately Baht 644 million, equivalent to 87 percent of its net sales).

5 .5 .5 .5 .5 . RELARELARELARELARELATED PTED PTED PTED PTED PARARARARARTYTYTYTYTY TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS

During the year, 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 :

(Unit : Million Baht)

Consolidated The Company Only Pricing policy

2003 2002 2003 2002

Transactions with subsidiary companies

(eliminated from the consolidated

financial statements)

Sales Normal business price closed as

charged to other customers

Purchases of goods and raw materials Standard cost or with reference

to market price

Loan interest income Interest rate at 7.5% p.a.

Service income Cost plus margin

Management income At 2% of net sales

Service fees Agreed between the parties

Transactions with associated companies

Purchases of raw materials With reference to market price


Transactions with related companies

Sales Normal business price closed as

charged to other customers


Service fee Agreed between the parties

76


The outstanding balances with those companies have been separately shown in the balance sheets. Details are as follows :-


Consol idatedConsol idatedConsol idatedConsol idatedConsol idated The Company OnlyThe Company OnlyThe Company OnlyThe Company OnlyThe Company Only

Accounts receivable - related partiesAccounts receivable - related partiesAccounts receivable - related partiesAccounts receivable - related partiesAccounts receivable - related parties

Subsidiary companiesSubsidiary companiesSubsidiary companiesSubsidiary companiesSubsidiary companies

Primagold International Co., Ltd. Crystaline Co., Ltd. Pranda UK Ltd. H. GRINGOIRE s.a.r.l. Crystaline North America, Inc. Pranda North America, Inc. Pranda Acceptance Sdn. Bhd. Others

Associated companyAssociated companyAssociated companyAssociated companyAssociated company

P.T. Pranda SCL Indonesia Related companyRelated companyRelated companyRelated companyRelated company

PT. Gold Martindo TTTTTotal accounts receivable - related partiesotal accounts receivable - related partiesotal accounts receivable - related partiesotal accounts receivable - related partiesotal accounts receivable - related parties

Amounts due from related partiesAmounts due from related partiesAmounts due from related partiesAmounts due from related partiesAmounts due from related parties


Primagold International Co., Ltd. Crystaline North America, Inc. Pranda North America, Inc. Others

Associated companyAssociated companyAssociated companyAssociated companyAssociated company

P.T. Pranda SCL Indonesia Related companiesRelated companiesRelated companiesRelated companiesRelated companies

Others TTTTTotal amount due from related partiesotal amount due from related partiesotal amount due from related partiesotal amount due from related partiesotal amount due from related parties

77



Consolidated The Company Only

Loans and amounts due from related partiesLoans and amounts due from related partiesLoans and amounts due from related partiesLoans and amounts due from related partiesLoans and amounts due from related parties


Loans grantedLoans grantedLoans grantedLoans grantedLoans granted

Crystaline Co., Ltd. Primagold International Co., Ltd. Pranda Singapore Pte. Limted Interest-free loan

Amount due fromAmount due fromAmount due fromAmount due fromAmount due from

Crystaline Co., Ltd. Primagold International Co., Ltd. TTTTTotal loans and amounts due from related partiesotal loans and amounts due from related partiesotal loans and amounts due from related partiesotal loans and amounts due from related partiesotal loans and amounts due from related parties

Advances for investmentAdvances for investmentAdvances for investmentAdvances for investmentAdvances for investment

Pranda Vietnam Co., Ltd. TTTTTotal advances for investmentotal advances for investmentotal advances for investmentotal advances for investmentotal advances for investment

These loans are unsecured and repayable on demand.



Accounts payable – related partiesAccounts payable – related partiesAccounts payable – related partiesAccounts payable – related partiesAccounts payable – related parties


Pranda North America, Inc. Others

Related companiesRelated companiesRelated companiesRelated companiesRelated companies

Others TTTTTotal accounts payable - related partiesotal accounts payable - related partiesotal accounts payable - related partiesotal accounts payable - related partiesotal accounts payable - related parties

Short-term loan and amounts due to related partiesShort-term loan and amounts due to related partiesShort-term loan and amounts due to related partiesShort-term loan and amounts due to related partiesShort-term loan and amounts due to related parties


Amounts due toAmounts due toAmounts due toAmounts due toAmounts due to

Primagold International Co., Ltd. Pranda UK Ltd. Pranda North America, Inc.

Short-term loan from related individual TTTTTotal short-term loan and amounts due to related partiesotal short-term loan and amounts due to related partiesotal short-term loan and amounts due to related partiesotal short-term loan and amounts due to related partiesotal short-term loan and amounts due to related parties

Interest

Policies

78

The average balances

for the year ended

31 December

Percentage

per annum


79

6. INVENTORIES6. INVENTORIES6. INVENTORIES6. INVENTORIES6. INVENTORIES

(Unit : Baht)


(Restated)

Raw materials Work in process Finished goods Total Less : Provision for diminution in value of stocks Inventories, netInventories, netInventories, netInventories, netInventories, net

The Company’s management believes that provision for diminution in value of stocks set aside is adequate in the present situation.

7 .7 .7 .7 .7 . DEPOSIT WITH FINANCIAL INSTITUTION - PLEDGE�DEPOSIT WITH FINANCIAL INSTITUTION - PLEDGE�DEPOSIT WITH FINANCIAL INSTITUTION - PLEDGE�DEPOSIT WITH FINANCIAL INSTITUTION - PLEDGE�DEPOSIT WITH FINANCIAL INSTITUTION - PLEDGE�

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.

8 .8 .8 .8 .8 . INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHODINVESTMENTS ACCOUNTED FOR UNDER EQUITY METHODINVESTMENTS ACCOUNTED FOR UNDER EQUITY METHODINVESTMENTS ACCOUNTED FOR UNDER EQUITY METHODINVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD

Investments in subsidiary and associated companies are recorded under the equity method. They are summarized below :-

Paid up capital Currency The Company Only

Investments in subsidiary companiesInvestments in subsidiary companiesInvestments in subsidiary companiesInvestments in subsidiary companiesInvestments in subsidiary companies (Restated)

Pranda North America, Inc. Thousand USD Crystaline North America, Inc.

(held by Pranda North America, Inc.)

H. GRINGOIRE s.a.r.l. Million EUR Pranda UK Ltd. Million GBP Pranda Vietnam Co., Ltd. Million USD Pranda Singapore Pte. Limited Million SGD Pranda Acceptance Sdn. Bhd.

(held by Pranda Singapore Pte. Limited)

Primagold International Co., Ltd. Million Baht Crystaline Co., Ltd. Million Baht Pranda Lodging Co., Ltd. Million Baht Total investments - at cost Less : Cumulative share of loss from investments

Translation adjustment TTTTTotal investments in subsidiary companiesotal investments in subsidiary companiesotal investments in subsidiary companiesotal investments in subsidiary companiesotal investments in subsidiary companies

(Unit : Baht)Percentage ofshareholding by

the Company andsubsidiary companies


80

On 26 December 2003, a meeting of the Company’s Board of Directors resolved to purchase Baht 50 million of the

new ordinary shares of a local subsidiary, Primagold International Co., Ltd., (5 million ordinary shares of Baht 10 each). As a

result, there is no change in the Company’s percentage shareholding in the subsidiary company, which registered the resulting

increase in its share capital with the Ministry of Commerce on 6 January 2004.

(Unit : Baht)


Investments in associated companiesInvestments in associated companiesInvestments in associated companiesInvestments in associated companiesInvestments in associated companies

LG - Pranda Co., Ltd. P.T. Pranda SCL Indonesia Total investments - at cost Less : Cumulative share of loss from investments Translation adjustment TTTTTotal investments in associated companiesotal investments in associated companiesotal investments in associated companiesotal investments in associated companiesotal investments in associated companies

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 2003 and 2002, the Company received no dividend income from its investments in subsidiary and associated companies.

9 .9 .9 .9 .9 . OTHER LONG-TERM INVESTMENTSOTHER LONG-TERM INVESTMENTSOTHER LONG-TERM INVESTMENTSOTHER LONG-TERM INVESTMENTSOTHER LONG-TERM INVESTMENTS

The other long-term investments are summarized below :-

(Unit : Baht)


Held-to-maturity

Government bonds Other long-term investments Total other long-term investments

Percentage of shareholding

by the Company and

subsidiary companies


81

10 .10 .10 .10 .10 . PROPERPROPERPROPERPROPERPROPERTYTYTYTYTY, PLANT, PLANT, PLANT, PLANT, PLANT AND EQUIPMENT AND EQUIPMENT AND EQUIPMENT AND EQUIPMENT AND EQUIPMENT

(Unit : Baht)

CONSOLIDATED

Land Building Total

Cost/Revaluation :Cost/Revaluation :Cost/Revaluation :Cost/Revaluation :Cost/Revaluation :

At 31 December 2002 Purchases Transferred in/(out) Disposals Translation adjustment At 31 December 2003

Accumulated depreciation :Accumulated depreciation :Accumulated depreciation :Accumulated depreciation :Accumulated depreciation :

At 31 December 2002 Depreciation for the year Depreciation - disposals Translation adjustment At 31 December 2003

Net book value :Net book value :Net book value :Net book value :Net book value :

At 31 December 2003At 31 December 2003At 31 December 2003At 31 December 2003At 31 December 2003 At 31 December 2002At 31 December 2002At 31 December 2002At 31 December 2002At 31 December 2002

Depreciation charged included in the earnings statements for the year

20032003200320032003 20022002200220022002

(Unit : Baht)

THE COMPANY ONLY

Land Total

Cost/revaluation :Cost/revaluation :Cost/revaluation :Cost/revaluation :Cost/revaluation :

At 31 December 2002 Purchases Transferred in/(out) Disposals At 31 December 2003

Accumulated depreciation :Accumulated depreciation :Accumulated depreciation :Accumulated depreciation :Accumulated depreciation :

At 31 December 2002 Depreciation for the year Depreciation - disposals At 31 December 2003

Net book valueNet book valueNet book valueNet book valueNet book value

At 31 December 2003At 31 December 2003At 31 December 2003At 31 December 2003At 31 December 2003 At 31 December 2002At 31 December 2002At 31 December 2002At 31 December 2002At 31 December 2002

Depreciation charged included in the earnings statements for the year

20032003200320032003 20022002200220022002

Land

improvement

Leasehold

improvement

Leasehold

rights Machinery

Furniture,

fixtures and

equipment

Motor

vehicles

Construction

in progress

Land

improvement Building

Leasehold

rights Machinery

Furniture,

fixtures and

equipment

Motor

vehicles

Construction

in progress


82

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 2003 would have been

Baht 51,711,917.

111111 .1 .1 .1 .1 . LAND HELD FOR DEVELOPMENT�LAND HELD FOR DEVELOPMENT�LAND HELD FOR DEVELOPMENT�LAND HELD FOR DEVELOPMENT�LAND HELD FOR DEVELOPMENT��

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 2003 and 2002, the balances of land held for development consist of the following :-


Land Capitalised interest Land improvement

Less : Provision for impairment loss Total

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.

12 .12 .12 .12 .12 . BANK OVERDRAFTS AND SHORBANK OVERDRAFTS AND SHORBANK OVERDRAFTS AND SHORBANK OVERDRAFTS AND SHORBANK OVERDRAFTS AND SHORTTTTT-TERM LOANS FROM FINANCIAL-TERM LOANS FROM FINANCIAL-TERM LOANS FROM FINANCIAL-TERM LOANS FROM FINANCIAL-TERM LOANS FROM FINANCIAL INSTITUTIONS INSTITUTIONS INSTITUTIONS INSTITUTIONS INSTITUTIONS

As at 31 December 2003, 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 bank overdrafts of a local subsidiary company are secured 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.


83

(Unit : Baht)


The CompanyThe CompanyThe CompanyThe CompanyThe Company

13.1 Baht loan, to refinance restructured debt - Interest at MLR less 1% per annum

- Repayable quarterly as from October 2002 to January 2011

The local subsidiary companyThe local subsidiary companyThe local subsidiary companyThe local subsidiary companyThe local subsidiary company

13.2 Baht loan

- Interest at MLR per annum

- Repayable monthly as from 1994 to 2004 The overseas subsidiary companyThe overseas subsidiary companyThe overseas subsidiary companyThe overseas subsidiary companyThe overseas subsidiary company

13.3 GBP loan - Interest at LIBOR plus 2.5% per annum

- Repayable monthly as from April 2002 to April 2004

Total Less : Current portion of long-term loans Long-term loans-net of current portion

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 long-term loan of the overseas subsidiary company is secured by that subsidiary’s

assets.

14 .14 .14 .14 .14 . GAIN ON DEBT RESTRUCTURINGGAIN ON DEBT RESTRUCTURINGGAIN ON DEBT RESTRUCTURINGGAIN ON DEBT RESTRUCTURINGGAIN ON DEBT RESTRUCTURING

In September 2002, the Company repaid all of the outstanding balance of its restructured loan before the due date stipulated in

the debt restructuring agreement, resulting in a gain on debt restructuring of approximately Baht 62 million. Part of this gain was from

forgiveness of the portion of the outstanding loan balance in excess of the bank overdraft facilities and part of the accrued interest,

amounting to Baht 20 million, while the other Baht 42 million was from recognition of the difference between the loan balances per the

Company’s accounts and under the debt restructuring agreement, which had previously been recorded as “Deferred discount from debt

restructuring”. No corporate income tax was payable on such gain as the Company has received income tax privileges. The gain on debt

restructuring has been shown as an extraordinary item in the 2002 earnings statements.

13 .13 .13 .13 .13 . LONG-TERM LOANSLONG-TERM LOANSLONG-TERM LOANSLONG-TERM LOANSLONG-TERM LOANS

The outstanding balances of long-term loans as at 31 December 2003 and 2002 are as follows :-


84

15 .15 .15 .15 .15 . WWWWWARRANTSARRANTSARRANTSARRANTSARRANTS-----

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, 41,353,450 warrants have been exercised. As at 31 December 2003, the Company has 155,238,550 outstand-

ing warrants not yet exercised.

16 .16 .16 .16 .16 . SHARE CAPITSHARE CAPITSHARE CAPITSHARE CAPITSHARE CAPITALALALALAL / SHARE SUBSCRIPTION RECEIVED IN ADV / SHARE SUBSCRIPTION RECEIVED IN ADV / SHARE SUBSCRIPTION RECEIVED IN ADV / SHARE SUBSCRIPTION RECEIVED IN ADV / SHARE SUBSCRIPTION RECEIVED IN ADVANCEANCEANCEANCEANCE

During the year 2003, 44,353,450 warrants have been exercised to be new ordinary shares. The Company registered the

capital increase of 38,458,900 shares with the Ministry of Commerce during the year, raising the Company’s issued and paid-up share

capital increased to Baht 238,851,900 (238,851,900 ordinary shares of Baht 1 each). For the remaining 5,894,550 shares resulting from

the exercise of the warrants, the Company registered the resulting capital increase with the Ministry of Commerce on 7 January 2004.

As at balance sheet date, the proceeds of Baht 16.5 million (5,894,550 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.

17 .17 .17 .17 .17 . DIVIDENDDIVIDENDDIVIDENDDIVIDENDDIVIDEND

During 2003, the Company declared the following dividends in respect of the net earnings of 2002 for payment to

shareholders :-

17.1 Dividend of Baht 0.50 per share for the 210,727,700 ordinary shares, a total of approximately Baht 105 million,

declared at the Annual General Meeting of the Company’s shareholders No. 1/2003 on 22 April 2003.

17.2 Dividend of Baht 0.30 per share for the 220,958,500 ordinary shares, a total of approximately Baht 66 million,

declared at Board of director’s Meeting No.7/2003 on 13 August 2003.

During 2002, the Company paid dividend of Baht 2.50 per share for the 20 million ordinary shares to its shareholders in

accordance with the resolutions of the Annual General Meeting of the Company’s shareholders no. 1/2002 on 18 April 2002.

18 .18 .18 .18 .18 . LEGAL RESERVELEGAL RESERVELEGAL RESERVELEGAL RESERVELEGAL RESERVE

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.


85

19 .19 .19 .19 .19 . DIRECTDIRECTDIRECTDIRECTDIRECTORS’ORS’ORS’ORS’ORS’ REMUNERA REMUNERA REMUNERA REMUNERA REMUNERATIONTIONTIONTIONTION

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.

20 .20 .20 .20 .20 . CORPORACORPORACORPORACORPORACORPORATE INCOME TTE INCOME TTE INCOME TTE INCOME TTE INCOME TAXAXAXAXAX

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 deducting

income which is exempted from income tax, adding back expenses which are disallowable for tax computation purposes and taxable

loss brought forward from the previous year. 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.

21 .21 .21 .21 .21 . RECONCILIARECONCILIARECONCILIARECONCILIARECONCILIATION OF DILUTED EARNINGS PER SHARETION OF DILUTED EARNINGS PER SHARETION OF DILUTED EARNINGS PER SHARETION OF DILUTED EARNINGS PER SHARETION OF DILUTED EARNINGS PER SHARE

For the years ended 31 December

Weighted average number

Net earnings of ordinary shares Earnings per share

Baht Baht

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

Net earnings Effect of dilutive potentialEffect of dilutive potentialEffect of dilutive potentialEffect of dilutive potentialEffect of dilutive potential

ordinary sharesordinary sharesordinary sharesordinary sharesordinary shares

Warrants Diluted earnings per shareDiluted earnings per shareDiluted earnings per shareDiluted earnings per shareDiluted earnings per share

Net earnings of ordinary

shareholders assuming

the conversion of dilutive

potential ordinary shares


Thousand

Shares

Thousand

Shares

Thousand

Baht

Thousand

Baht


86

22 .22 .22 .22 .22 . PRIOR YEAR ADJUSTMENTSPRIOR YEAR ADJUSTMENTSPRIOR YEAR ADJUSTMENTSPRIOR YEAR ADJUSTMENTSPRIOR YEAR ADJUSTMENTS

In the second quarter of the current year, 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 stocktak-

ing 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.

23 .23 .23 .23 .23 . PROMOTIONAL PRIVILEGESPROMOTIONAL PRIVILEGESPROMOTIONAL PRIVILEGESPROMOTIONAL PRIVILEGESPROMOTIONAL PRIVILEGES

23.1 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.

23.2 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 revenues for 2003 below are divided between those from promoted and non-promoted activities :-

(Unit : Baht)

Promoted Non-Promoted

Activities Activities Total

REVENUESREVENUESREVENUESREVENUESREVENUES

Domestic sales Export sales


87


The consolidated financial statements for the years ended 31 December

The manufacturing and distribution of Jewelry Dormitory Rental

Domestic Overseas Domestic Eliminate Total

Sales – net

Gross profit Share of profit (loss) from investments

accounted for under equity method Loss on exchange Other income Selling and administrative expenses Interest expenses Corporate income tax Extraordinary item - gains on debts

restructuring Net earnings for the year

Property, plant and equipment - net Other assets Total assets


24 .24 .24 .24 .24 . EMPLOYEES AND RELAEMPLOYEES AND RELAEMPLOYEES AND RELAEMPLOYEES AND RELAEMPLOYEES AND RELATED COSTSTED COSTSTED COSTSTED COSTSTED COSTS


Number of employees at end of year (persons) Employee costs for the year (Thousand Baht)

25 .25 .25 .25 .25 . FINANCIALFINANCIALFINANCIALFINANCIALFINANCIAL INFORMA INFORMA INFORMA INFORMA INFORMATION BYTION BYTION BYTION BYTION BY SEGMENT SEGMENT SEGMENT SEGMENT SEGMENT

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 2003 and 2002 are as follows :-


88

26 .26 .26 .26 .26 . COMMITMENTS AND CONTINGENT LIABILITIESCOMMITMENTS AND CONTINGENT LIABILITIESCOMMITMENTS AND CONTINGENT LIABILITIESCOMMITMENTS AND CONTINGENT LIABILITIESCOMMITMENTS AND CONTINGENT LIABILITIES

26.126.126.126.126.1 CommitmentsCommitmentsCommitmentsCommitmentsCommitments

As at 31 December 2003, the Company and its subsidiaries have outstanding lease and service commitments under

which total approximately Baht 20.7 million is payable. These commitments comprise commitments of the Company

amounting to Baht 10.1 million, commitments of a local subsidiary amounting to Baht 3.8 million and commitments of

two overseas subsidiaries amounting to GBP 32,587 and USD 114,251 or equivalent to approximately Baht 6.8

million.

26.226.226.226.226.2 Bank guaranteesBank guaranteesBank guaranteesBank guaranteesBank guarantees

As at 31 December 2003, there were outstanding guarantees totaling of approximately Baht 13.7 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 1.9 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 11.3 million

issued on behalf of an overseas subsidiary company.

26.326.326.326.326.3 GuaranteesGuaranteesGuaranteesGuaranteesGuarantees

As at 31 December 2003, the Company has issued guarantees to secure bank overdrafts facilities from banks of a

local subsidiary company, totaling Baht 20 million.

26.426.426.426.426.4 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 2003, 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 12.6 million.

27 .27 .27 .27 .27 . SUBSEQUENT EVENTSUBSEQUENT EVENTSUBSEQUENT EVENTSUBSEQUENT EVENTSUBSEQUENT EVENT

On 5 January 2004, a meeting of the Company’s Board of Directors passed a resolution approving the establishment of a new

company in the People’s Republic of China, to be named Guangzhou Pangda Zhubao Shoushi Youxian Gongsi, with a registered share

capital of USD 250,000, or approximately Baht 10 million. The Company will hold 100 percent of the shares of this company.

28. FINANCIAL INSTRUMENTS28. FINANCIAL INSTRUMENTS28. FINANCIAL INSTRUMENTS28. FINANCIAL INSTRUMENTS28. FINANCIAL INSTRUMENTS

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 nonper-

formance 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.


89

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 2003 the Company and its local subsidiary companies have foreign currency assets/liabilities as

follows :-

Unit of currency Assets Liabilities

Million USD Million GBP Million EURO

The Company has entered into various forward exchange contracts, to sell USD currency of approximately USD 5.5 million

at pre-determined sold exchange rates ranging from Baht 39.09 to 39.69 per USD 1 to prevent the foreign currency risk

derived from cash payment made by customers.

Subsequent to the balance sheet date up to 17 February 2004, the Company has entered into various forward exchange

contracts to sell USD currency of approximately USD 5.7 million at pre-determined sold exchange rates ranging from Baht

38.95 to 39.36 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.


90

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.

29 .29 .29 .29 .29 . PRESENTPRESENTPRESENTPRESENTPRESENTAAAAATIONTIONTIONTIONTION

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.

30 .30 .30 .30 .30 . APPROVAPPROVAPPROVAPPROVAPPROVALALALALAL OF FINANCIAL OF FINANCIAL OF FINANCIAL OF FINANCIAL OF FINANCIAL ST ST ST ST STAAAAATEMENTSTEMENTSTEMENTSTEMENTSTEMENTS

These financial statements have been approved by the directors of the Company.

pranda 03

Documents

jewelry manufacturing

thailands gemstone jewelry

production of gemstone

enablingthe company

pranda groupsown sales

gemstone jewelryindustry

business wouldbe

real driving force