(UNAUDITED BUT REVIEWED)
EASTERN WIRE PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED 30 JUNE 2004
1.	GENERAL INFORMATION
1.1	Assumption of preparation of the financial statements
As at 30 June 2004 the Company and its subsidiary had accounts payable, short-term loans and long-term loans totaling Baht 357 million (including the long-term loan haircut amounting to Baht 97 million granted under the debt restructuring agreement made with a creditor on 23 July 2004 discussed in Note 6.1.4 to the interim financial statements). In order to be able to continue their business as going concerns, the Company and its subsidiary will have to generate sufficient earnings from their future operations, find external and internal sources of funds for their operations, negotiate the new round of debt restructuring with the remaining creditor of the subsidiary and repay the loans to their lenders in accordance with the agreements. The Company’s and the subsidiary’s management expect to complete the debt restructuring within 2004 and are confident they will receive the continuous financial support from a local company which is the new lender. Therefore, the aforementioned financial statements have been prepared under the accounting assumption that the Company and its subsidiary will continue their operations as going concerns, assuming that the realisation of assets and settlement of liabilities and obligations will occur in the ordinary course of business of the Company and its subsidiary, without any expectation of significant disruption to their ongoing activities.
1.2	Basis for the preparation of the interim financial statements
	These interim financial statements are prepared in accordance with Accounting Standards Pronouncement No. 41 “Interim financial statements”, with the Company choosing to present condensed interim financial statements. However, additional line items are presented in the balance sheets, and the statements of earnings, changes in shareholders’ equity, and cash flows as in the annual financial statements.

(UNAUDITED BUT REVIEWED)
	These interim financial statements are intended to provide information additional to that included in the latest annual financial statements. Accordingly, they focus on new activities, events and circumstances so as not to duplicate information previously reported. These interim financial statements should therefore be read in conjunction with the latest annual financial statements. 
	1.3	Basis of consolidation
	These consolidated financial statements include the financial statements of Eastern Wire Public Company Limited and its subsidiary and have been prepared on the same basis as that applied for the consolidated financial statements for the year ended 31 December 2003. There have been no changes in the composition of its subsidiary during the current period.
1.4	Significant accounting policies
	The interim financial statements are prepared using the same accounting policies and methods of computation adopted as for the financial statements for the year ended 31 December 2003.
2.	TRADE ACCOUNTS RECEIVABLE
	The aging analysis of trade accounts receivable as of 30 June 2004 and 31 December 2003 is as     follow :-
		(Unit : Thousand Baht)	
	Consolidated	The Company Only	
	30 June 2004	31 December 2003	30 June 2004	31 December 2003	
		(Audited)		(Audited)	
Trade accounts receivable					
   Less than 3 months	170,194	153,878	-	-	
   More than 3 months - 6 months	4,112	488	-	-	
   More than 6 months - 12 months	1,401	-	-	-	
   Over 12 months	124,262	127,309	120,572	123,288	
	299,969	281,675	120,572	123,288	
Less : Allowance for doubtful accounts	(121,792)	(123,974)	(120,480)	(123,176)	
Trade accounts receivable - net	178,177	157,701	92	112	
	
(UNAUDITED BUT REVIEWED)
3.	RELATED PARTY TRANSACTIONS
	Short-term loans from the related company are unsecured loan, denominated in Thai Baht. The loans repayment are on call and the loans carry the interests according to the agreements, which are costs of fund for the lender plus the margins. During the three-month and six-month periods ended 30 June 2004, the Company and the subsidiary had interest expenses of these loans of Baht 0.2 million and Baht 0.4 million, respectively (the Company only : Baht 0.1 million and Baht 0.2 million, respectively).
	The movement of the short-term loans from related company during the period are as follows :-
	(Unit : Thousand Baht)	
	Consolidated	The Company Only	
Balance as at 31 December 2003	8,701	-	
Loan raised during the period for repayment 			
   of loan under debt restructuring 	8,414	8,215	
Transfer rights of claim to other person 	(8,215)	(8,215)	
Reclassification to short-term loan from other parties	(8,900)	-	
Balance as at 30 June 2004	-	-	
	The rights of claim to a loan of Baht 8 million from a related company were transferred to a third party person under an agreement dated 11 May 2004. This loan principal and accrued interest are repayable within one year, with interest payable quarterly, at the minimum loan rate of a commercial bank. The loan principle may be settled with shares in the Company.
4.	INVESTMENT IN SUBSIDIARY ACCOUNTED FOR UNDER EQUITY METHOD
	(Unit : Thousand Baht)	
	THE COMPANY ONLY	
	Paid - up share capital	Percentage of shareholding	Investment at cost	Investment at equity	
	30 June 2004	31 December 2003	30 June 2004	31 December 2003	30 June 2004	31 December 2003	30 June 2004	31 December 2003	
	Million Baht	Million Baht	%	%		(Audited)		(Audited)	
Rayong Wire Industires									
   Company Limited	100	100	100	100 	99,999	99,999	196,230	91,987	

(UNAUDITED BUT REVIEWED)
5.	PROPERTY, PLANT AND EQUIPMENT
	On 14 January 2004, the Company entered into the agreement to sale the land, building, machinery and unutilized machinery with one local company amounting to Baht 60 million. The proceed from these disposal was to be used for debt settlement under rehabilitation plan, as mentioned in Note 6.2 to interim financial statements. The Company recognized gain on disposal of assets amounting to Baht 17 million. 
6.	DEBT RESTRUCTURING
			(Unit : Thousand Baht)	
	Consolidated	The Company Only	
	30 June 2004	31 December 2003	30 June 2004	31 December 2003	
		(Audited)		(Audited)	
Long-term loans under debt restructuring					
     - Financial institutions	158,673	379,947	-	94,420	
     - Related company	-	53,526	-	5,410	
	Total	158,673	433,473	-	99,830	
					
6.1	Long-term loans under the debt restructuring agreement of the subsidiary
	On 27 March 2000, the subsidiary entered into a debt restructuring agreement with its financial institution and related company creditors. During the year 2002, the subsidiary had ceased the repayment which were scheduled to be paid in compliance with the debt restructuring agreement and began negotiations with its creditors for a new round of debt restructuring.   By an extraordinary resolution of a creditors’ meeting held on 8 March 2004 the former debt restructuring agreement was terminated and the subsidiary began negotiations with the creditors regarding the revision of the terms of the debt restructuring as follows : 
6.1.1 The subsidiary had entered into a debt restructuring agreement with one of its financial institution creditors which had outstanding debt balance of Baht 90 million, whereby the subsidiary raised a loan from a local company (as mentioned in Note 7.2) to make payment of the outstanding debt of Baht 45 million and recognized the gain on debt restructuring as a result of the Baht 45 million haircut granted by the financial institution creditor as an extraordinary item in the earnings statement for the first quarter of 2004.

(UNAUDITED BUT REVIEWED)
 6.1.2 	On 25 March 2004, a related company creditor entered into an agreement with a local company to transfer rights of claim over loan of the subsidiary amounting to Baht 48 million, together with the loan collateral. The new creditor has signed a memorandum of understanding under which it agrees to grant the subsidiary a relaxation of the repayment conditions, as discussed in Note 7.1. 
6.1.3	The subsidiary had entered into a debt restructuring agreement with one of its financial institution creditors which had outstanding debt balance of Baht 37 million, whereby the subsidiary raised a loan from a local company (as mentioned in Note 7.2) to make payment of the outstanding debt of Baht 8 million and recognized the gain on debt restructuring as a result of the Baht 29 million haircut granted by the financial institution creditor as an extraordinary item in the earnings statement for the second quarter of 2004.
6.1.4	Subsequent to the financial statements date the subsidiary has successfully completed debt restructuring negotiation with another financial institution, with outstanding debt of Baht 125 million. The lender granted a haircut of Baht 97 million to the subsidiary and the remaining balance of Baht 28 million was repaid on 23 July 2004.
As at this report date (5 August 2004), the subsidiary had succeeded in the debt restructuring of Baht 300 million represented 90 percent of total indebtedness.
The subsidiary has proposed a revised debt restructuring scheme to the remaining creditor which had the outstanding debt balance of Baht 34 million to consider.  As at this report date (5 August 2004), the result of the negotiation has yet been reached.
6.2	Long-term loans under the debt restructuring agreement of the Company
On 21 June 2001, the Central Bankruptcy Court approved the rehabilitation plan of the Company lodged with the Company’s petition for rehabilitation on 26 June 2000. The significant agreements between the Company and the creditors under the rehabilitation plan were as follows:
-	Within 30 days, the Company was to dispose of mortgaged machinery at the price of Baht 28,000,000 to a subsidiary, Rayong Wire Industries Company Limited.

(UNAUDITED BUT REVIEWED)
-	Within 35 days, the Company was to prepare Baht 110,000,000, comprising Baht 60,000,000 from the Company and Baht 50,000,000 from the subsidiary, to be used for debt settlement. The payment from the subsidiary was to be made as the repayment of short-term loan and advance.
-	Within 360 days, the Company was to dispose and transfer of the mortgaged land, building and machinery to Egga Holding Company Limited, the related company, or to any other party provided by the related company, at a total price of Baht 60,000,000. Such amount was to be used for debt settlement.
-	Within 365 days, the Company was to raise loan of Baht 8,000,000 from the related company to make payment to the creditors, and all remaining outstanding debt was to be written off on the same day, except for this loan of Baht 8,000,000 from the related company.
The steps taken by the Company under the rehabilitation plan during the first quarter are the settlement of Baht 97 million to the creditors by the Company’s fund of Baht 29 million, dispose of the land, building and machinery to a local company with the value of Baht 60 million as mentioned in Note 5 for debt settlement and raising loan of Baht 8 million from the related company to make payment of the remaining debt in accordance with the rehabilitation plan.
On 10 March 2004, the Central Bankruptcy Court ordered the termination of the rehabilitation plan of the Company, since the Company had implemented most of the plan.
7.	LONG-TERM LOANS
		(Unit : Thousand Baht)	
		Consolidated	The Company Only	
		30 June 2004	30 June 2004	
Long-term loans				
     - Transfer rights of claim agreement	(7.1)	48,116	-	
     - Credit facility agreement of Baht 125 million	(7.2)	52,554	-	
Total long-term loans		100,670	-	
Less : current portion		(5,729)	-	
Long-term loans - net of current portion		94,941	-	

(UNAUDITED BUT REVIEWED)
7.1 	A loan of Baht 48 million from a local company provided under an agreement to transfer rights of claim dated 25 March 2004 which that company made with a related company creditor of the subsidiary (as mentioned in Note 6.1.2 to the interim financial statements). Loan principal of Baht 34 million is thereby repayable in 20 quarterly installments of Baht 1,145,849, the first of which comes due in June 2004. The interest on loan are repayable monthly. The loan carries interest at the rate of 3% for the first year, and thereafter at the Minimum Loan Rate of a commercial bank. Accrued interest of Baht 14 million transferred from the former creditor comes due in the last quarter of the period of repayment, together with the remaining principal.
7.2 	A loan of Baht 52 million from the same creditor as mentioned in Note 7.1 to the interim financial statements. This loan is the part of the credit facility of Baht 125 million granted under the loan agreement dated 2 March 2004 and the addendum to the loan agreement dated 29 June 2004, which the subsidiary raised in order to make payment to creditors under the debt restructuring agreements (as mentioned in Note 6.1.1 and 6.1.3 to the interim financial statements). Both principal and interest of this loan are to be paid within 3 years as from 30 September 2004 or as from the date the facility was fully disbursed.The loan may be settled with shares in the Company and/or the subsidiary. Loan interest is due quarterly, at the Minimum Loan Rate declared by a commercial bank. 
8.	PENDING LITIGATION
During 2002, one of the creditors under the rehabilitation plan of the Company sued the subsidiary in a civil proceeding, in order to force the subsidiary to repay a loan in lieu of the Company, in accordance with its obligation as joint debtor amounting to Baht 27.9 million. The Court of First Instance ordered the subsidiary to repay loan debt, net of the partial payment made by the Company, amounting to Baht 26.5 million. On 9 November 2001, the subsidiary appealed the decision of the Court of First Instance, with the Appeals Court accepting the case on 24 January 2003, since the subsidiary expects that with further negotiations it can reduce the debt. However, the subsidiary has already recorded this obligation in the financial statements of 2002.

(UNAUDITED BUT REVIEWED)
On 2 October 2003, the Appeals Court issued an order denying a petition to extend the period of appeal. On 29 January 2004, the subsidiary has submitted the petition to object the decision of the Appeals Court. 
9.	STATEMENTS OF CASH FLOWS
	For the purposes of the statements of cash flows, cash and cash equivalents include cash and deposits at financial institutions and short-term investments in fixed deposits with original maturity of 3 months or less and not subject to restrictions.
10.	CREDIT FACILITIES
	During the period the subsidiary has terminated the mortgaged/pledged of the leasehold right, building and machinery placed as collaterals to the creditors under the debt restructuring agreement after the debt settlement as mentioned in Note 6.1.
As at 30 June 2004, the Company’s and its subsidiary’s credit facilities are secured by:
	-	Cash at bank of the Company and its subsidiary totaling Baht 35 million (31 December 2003 : Baht 33 million).
As at 30 June 2004, the subsidiary has submitted the documents of ownership in machinery to the creditor as the collateral as stipulated in the loan agreements and the memorandum of understanding made with that company (Note 7 to the interim financial statements).
11.	BANK GUARANTEES 
	As at 30 June 2004, there were outstanding bank guarantees totaling Baht 35  million (the Company only : Baht 0.3 million) issued by banks on behalf of the Company and its subsidiary in respect of certain performance bonds as required in the normal course of their businesses.

(UNAUDITED BUT REVIEWED)
12.	COMMITMENTS
	As at 30 June 2004, the Company and its subsidiary had commitments as follows :
12.1	The subsidiary had commitments regarding the lease of building and equipment and related services with the annual rental fee of Baht 1.2 million. The contract was 1 year contract with the grant for the future lease renewal period of 3 years. 
12.2	The subsidiary had commitment in accordance with land lease agreement, for the land of which the  subsidiary’s factory located on, for the lease period of 26 years maturity in 2020 and with the annual rental fee of Baht 1.5 million.
12.3	The Company had entered into a Financial and Law Advisory Agreement in advising for rectification of SET denouncement and new securities and debentures trade proposal. The outstanding commitment in accordance with that agreement totaling Baht 1.7 million.
13.	FINANCIAL INFORMATION BY SEGMENT
The operations of the Company and its subsidiary mainly involve a single industry segment, the manufacture and distribution of steel wire rod, and are carried on in a single geographic area, Thailand. As a result, all of the revenues, operating profit (loss) and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area.
14.	CORPORATE INCOME TAX
	The subsidiary was granted promotional privileges under the investment promotion act (B.E. 2520) by the Board of Investment under the promotional certificates No. 1244/2537, 1439/2537 and 1353/2537.  Subject to certain imposed conditions, the privileges include the exemption of corporate income tax on the net profit from promoted activities for a certain period of eight years commencing as from the date of earning operating income for each activity, a fifty percent reduction of corporate income tax on net profits for a period of five years after the expiration of the corporate income tax exemption period and an exemption of income tax on dividends paid to the shareholders from the profit of the promoted activities during the  corporate income tax exemption period.

(UNAUDITED BUT REVIEWED)
Corporate income tax of the Company has been calculated on net earnings of the Company for the year after deducting share of profit from the subsidiary accounted under equity method and adding back certain expenses which are disallowable for tax computation purpose. No corporate income tax was payable on net earnings of the Company for the six-month period ended 30 June 2004 since the tax loss brought forward from previous year exceeded estimated taxable profit for the year.
Corporate income tax of the subsidiary has been calculated on net earnings of the non-promoted activities of the subsidiary for the year after adding back certain expenses which are disallowable for tax computation purpose. No corporate income tax was payable on net earnings of the subsidiary for the six-month period ended 30 June 2004 since the tax loss brought forward from previous year exceeded estimated taxable profit of the non-promoted activities for the year.
15.	SUBSEQUENT EVENTS 
	On 4 August 2004, The extraordinary general meeting of the Company’s shareholders resolved to increase the Company’s registered share capital from 279,367,440 Baht (27,936,744 ordinary shares of Baht 10 each) to 340,000,000 Baht (34,000,000 ordinary shares of Baht 10 each) through the issue of 6,063,256 new ordinary shares, to be offered to Asset Billion Company Limited at par value through private placement.
	Subsequent to the financial statements date, the subsidiary completed debt restructuring negotiation with another creditor, with outstanding debt of Baht 125 million, as discussed in Note 6.1.4 to the interim financial statements. 
16.  RECLASSIFICATION 
	Certain amounts in the financial statements of prior periods, as presented herein for comparative purpose, have been reclassified to conform to the current period’s classifications, with no effect on previously reported net earnings or shareholders’ equity.
17.	APPROVAL OF THE INTERIM FINANCIAL STATEMENTS
	These interim financial statements have been approved by the Company’s directors.