THAI NAM PLASTIC PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
June 30, 2004 and 2003 (Unaudited/Limited Review Only)
and December 31, 2003 (Audited)
______________________

1.	Basic of Financial Statement Preparation

1.1	Continued Operation
The Company has incurred losses continuously for several years.  As of June 30, 2004 and  December 31, 2003, accumulative losses from operations in the consolidated and the Company financial statements holds Baht 483.81 million and Baht 461.81 million respectively.  As of June 30, 2004, total current liabilities exceeded total current assets in consolidated and the Company financial statements by Baht 123.65 million and Baht 89.88 million respectively and as of December 31, 2003 current liabilities exceeded current assets in the consolidated and the Company financial statements hold Baht 86.21 million and Baht 52.93 million respectively.  Such factors cause doubt as to whether the Company cannot continue its operation as a going concern. Presently such event has been relieved after the Company has conducted a debt restructuring agreement dated October 15, 1999 in accordance with the basis of debt restructuring of the financial institutes which Bank of Thailand announced to suit with debt repayment ability of the Company (debtors) and so that the Company (debtors) can continue its business. Consequently, liabilities were reclassified to long term liabilities as noted in the financial statement No.8.  Resulting from success of debt restructuring, the Company obtained more working capital.
1.2	The consolidated and the Company interim financial statements were prepared in accordance with generally accepted accounting principles in Thailand and presented in the condensed form as determined in the accounting standard No.41 on “The Interim Financial Statement” and included additional transactions in the primary financial statements, i.e. balance sheets, statement of income and changes in shareholders’ equity and cash flow statements and shown in the format determined in the announcement of the Department of Commercial Registration on the subject of condensed transactions which are required in the financial statements [B.E. 2544] inorder to comply with the pronouncement of the Securities and Exchange Commission and also regulations of the Stock Exchange of Thailand.
1.3	The consolidated interim financial statements combine accounting transactions of the Company and its subsidiaries after eliminating inter-transactions over which the company holds shares at the percentage of shareholding as follows :

Name of Companies	Percentages of Shareholding
As of	Established
in the Country	Type of Business	
	June 30, 2004	December 31, 2003			
T.N.P. INDUSTRY CO., LTD.	99.30	99.30	Thailand	Production of Rigid PVC	
THAI NAM-KYOWA CO., LTD.	50.00	50.00	Thailand	Production of PVC/PP Foam Sheet	

1.4	The Company prepares its statutory financial statements in Thai language in conformity with the regulations of Thai Law.  For the convenience of the readers, such financial statements has been translated into English.

2.	Accounting Policies

 		The significant accounting policy for the interim financial statements is the accounting policy used with the financial statements for the year ended on December 31, 2003.  As a result, these interim financial statements should be simultaneously read in conjunction with the financial statements for the accounting year of 2003.

3.	Inter Transactions with Related Entities 

The Company constitutes accounting transactions incurred with related entities, comprising the same group of shareholders or common directors.  The inter-transactions between the Company and related entities are as follows :
( Unit : ’000 Baht )
Description / Company Name	Relationship	Consolidated	The Company Only	
		As of	As of	
		June 30,	December 31,	June 30,	December 31,	
		2004	2003	2004	2003	
Trade Accounts Receivable						
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	-	-	461	    628	
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	-	-	14,121	15,436	
		-	-	14,582	16,064	

( Unit : ’000 Baht )
Description / Company Name	Relationship	Consolidated	The Company Only	
		As of	As of	
		June 30,	December 31,	June 30,	December 31,	
		2004	2003	2004	2003	
Other  Receivable						
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	-	-	1,950	    460	
SUNPRENE (THAILAND) COMPANY LIMITED	Associated Company	214	97	97	      97	
		214	97	2,047	    557	
Accrued Rental Income						
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	-	-	180	  90	
SUNPRENE (THAILAND) COMPANY LIMITED	Associated Company	-	106	117	106	
		-	106	297	196	
Total		214	203	2,344	753	
Trade Accounts Payable						
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	-	-	1,284	  1,246	
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	-	-	10,940	11,285	
		-	-	12,224	12,531	
Other Payable					
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	-	-	10,119	  7,429	
Loan from						
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company					
     Beginning Balance		-	-	27,750	  3,470	
     Increase in This Period		-	-	  30,350	64,300	
     Decrease in This Period  		-	-	(14,300)	(40,020)	
     Ending Balance		-	-	43,800	27,750	

As of June 30, 2004 and December 31, 2003, the whole amount of loans from subsidiary companies were not contracted nor carried inter-interest.

 ( Unit : ’000 Baht )
		The Company Only
For the six-month
periods ended on June 30,	
		2004	2003	
Sales	Relationship			
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	1,292	  3,489	
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	39,729	14,695	

( Unit : ’000 Baht )
		The Company Only
For the six-month
periods ended on June 30,	
		2004	2003	
Purchase				
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	808	992	
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	19,027	4,428	
Manufacturing Expenses				
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	2,489	2,829	
Other Income				
T.N.P. INDUSTRY COMPANY LIMITED	Subsidiary Company	102	-	
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	1,188	897	
Rental Revenue				
THAI NAM-KYOWA COMPANY LIMITED	Subsidiary Company	540	540	
SUNPRENE (THAILAND) COMPANY LIMITED	Associated Company	671	683	

Inter-purchase and sale of merchandise between the Company and T.N.P. INDUSTRY COMPANY LIMITED is at cost price but with THAI NAM-KYOWA COMPANY LIMITED is at market price and other income is pursuant to agreement defined in the contract.

The Company’s rental income from the subsidiary and associated companies was pursuant to conditions specified in land renting agreement with SUNPRENE (THAILAND) COMPANY LIMITED and factory area renting agreement with THAI NAM-KYOWA COMPANY LIMITED.  Both agreements are   3 years’ term and once the term ends, the agreements will be extended for every 3 years if renters have not broken any terms and conditions of the agreements and rental fees will be increased by 5%.  

4.	Trade Accounts and Notes Receivable-Net

As at June 30, 2004 and December 31, 2003, the trade accounts receivable are classified by aging overdue as follows :
(Unit : ’000 Baht)
	CONSOLIDATED	THE COMPANY ONLY	
	As of	As of	
	June 30, 2004	December 31, 2003	June 30, 2004	December 31, 2003	
Trade Accounts Receivable-Domestic 					
   An aging analysis of accounts					
   Within  credit term	147,789	 126,062	102,469	  93,903	
   Overdue credit term 1-180  days	         33,132	  28,771	30,393	  28,615	
                                         181-270  days	              400	           9	316	           9	
                                         271-365  days	              12	         27	12	         27	
                                       Over 365  days	         62,690	  60,611	43,911	  43,785	
	244,023	215,480	177,101	166,339	
Trade Accounts Receivable-Overseas	          43,993	  43,531	37,859	  30,323	
Notes Receivable	          5,066	    5,197	5,066	    2,107	
                    Total	293,082	264,208	220,026	198,769	
Less Allowance for Doubtful Debts	(69,978)	(69,424)	(48,963)	(48,146)	
                     Net	223,104	194,784	171,063	150,623	

5.	Investments recorded by Equity Method

Consisted of: 								
(Unit :’000 Baht)
                                                                  CONSOLIDATED AND THE COMPANY ONLY
                                                                    As of June 30, 2004
		  Company’s Name                          Paid-Up         Investment                        Investment	                            Loss in Excess of          Dividend
	Capital	Ratio	Cost Method	Equity Method	Investment		
Subsidiary Companies							
   T.N.P. Industry Co.,Ltd.	214,197	99.30 %	212,697	-	(219,884)	-	
   Thainam-Kyowa Co., Ltd.	40,000	50.00%	  20,000	17,874	-	200	
Associated Company							
   Sunprene (Thailand) Co., Ltd.	176,000	21.99 %	  38,700	45,235	-	-	
                 Total			271,397	63,109	(219,884)	200	

(Unit :’000 Baht)
                                                                  CONSOLIDATED AND THE COMPANY ONLY
                                                                       As of December 31, 2003
		  Company’s Name                          Paid-Up         Investment                        Investment	                            Loss in Excess of          Dividend
	Capital	Ratio	Cost Method	Equity Method	Investment		
Subsidiary Companies							
   T.N.P. Industry Co.,Ltd.	214,197	99.30 %	212,697	-	(216,709)	-	
   Thainam-Kyowa Co., Ltd.	  40,000	50.00%	  20,000	18,384	-	-	
Associated Company							
   Sunprene (Thailand) Co., Ltd.	176,000	21.99 %	  38,700	41,205	-	-	
                 Total			271,397	59,589	(216,709)	-	

The financial statements as of June 30, 2004 and December 31, 2003, of T.N.P. INDUSTRY COMPANY LIMITED were reviewed and audited by another auditor in the same firm.  However, the respective auditors could not give any assurances or offer any opinions on the financial statements of such subsidiary due to uncertainty  in relation to continued operation of the business.  As of June 30, 2004 and December 31, 2003, the financial statements of subsidiary companies incorporated in the consolidated balance sheets possessed negative net assets equal to 11.82% and 11.75% of total consolidated assets respectively and net profit or loss were combined in the income statement for the six-month period ended on June 30, 2004 and for the year ended on December 31, 2003 in amount of Baht 3.17 million and Baht 3.90 million.  The subsidiary company incurred loss from operation and a substantial accumulated loss but all financial statements of the subsidiary company were prepared under a going-concern concept.  However, the Company recognized loss in excess of its investment value.

		As of June 30, 2004 and December 31, 2003, the financial statements of THAI NAM-KYOWA COMPANY LIMITED, a subsidiary company, were reviewed and audited by another auditor in the same firm who reported assurance and expressed an unqualified opinion.

For the six-month period ended on June 30, 2004 and 2003, the participating profit in the associated company which was combined in the consolidated and the Company financial statements was computed from the financial statements for the six-month periods ended on the same date respectively but were not yet reviewed by respective auditors.  Such associated company complied with the policy of the parent company in Japan.  The participating profit in the associated company can be stated as percentages of net profit or loss as follows: 

    			       	For the six-month periods	
	ended on June 30,	
	2004	2003	
Participating Profit in Associated Company (Unit : ’000 Baht)	4,030	6,067	
% of Net Profit (Loss)	18.32	62.07	

6.	Property, Plant and Equipments - Net

For the six-month period ended on June 30, 2004 are as follows :

		(Unit :’000 Baht)	
	CONSOLIDATED	THE COMPANY ONLY	
Beginning Net Book Value	843,331	723,779	
Purchase	    23,296	   22,477	
Sale	(135)	(135)	
Depreciation-Surplus Revaluation of Assets	 (21,706)	(21,706)	
Depreciation	 (29,864)	  (18,967)	
Ending Net Book Value	814,922	705,448	

 			The whole amount of land and building, machinery and some equipment of the Company and its subsidiary were pledged as collateral against short term and long term loans due to the financial institutions.

				As of June 30, 2004 and December 31, 2003, the building and equipment in Company financial statements, the cost amount of Baht 523.57 million and Baht 515.39 million, respectively and the consolidated financial statement, the cost amount of Baht 725.53 million and Baht 711.49 million, respectively, were fully depreciated but still in use.

7.	Bank Overdrafts and Short-Term Loans from Financial Institutions

Consist of :
(Unit : ’000 Baht)
                                                  	                  CONSOLIDATED                               THE COMPANY ONLY
	As of	As of	
	June 30, 2004	December 31, 2003	June 30, 2004	December 31, 2003	
Bank Overdrafts	79,041	  78,630	53,157	  52,446	
Trust Receipts	72,892	  90,807	59,661	  68,882	
Short-Term Loans	141,380	141,380	96,535	  96,535	
          Total	293,313	310,817	209,353	217,863	

As of June 30, 2004 and December 31, 2003, all short-term loans in the consolidated and the Company financial statements were  promissory notes due to financial institutions and commercial banks bearing interest rates 6.50-7.25% per annum respectively.

As of June 30, 2004 and December 31, 2003, credit from financial institutions was mainly secured by the Company’s part of land, machines and the subsidiary company’s land, building and equipment. The directors of the parent company and the subsidiary companies also gave their personal guarantee.

8.	Long -Term Loans

Consisted of :
(Unit : ’000 Baht)
                                                  	                                                   CONSOLIDATED                              THE COMPANY ONLY
	As of	As of	
	June 30, 2004	December 31, 2003	June 30, 2004	December 31, 2003	
Local Long-Term Loans due to Financial Institutions	220,011	220,011	121,892	121,892	
Local Long-Term Loans due to Commercial  Banks	349,139	349,139	196,203	196,203	
                          Total	569,150	569,150	318,095	318,095	
Less  Current Portion of Long-Term Loans           	(20,671)	-	(11,976)	-	
                          Total	548,479	569,150	306,119	318,095	

				Movement of loans for the six-month period ended on June 30, 2004

(Unit : ’000 Baht)
                                                  	                                                    CONSOLIDATED    THE COMPANY ONLY
Beginning book value	569,150	318,095	
Loan pursuant to the new loan contract	-	-	
Loan Repayment in this period	-	-	
Ending book value	569,150	318,095	

As of June 30, 2004 and December 31, 2003, the whole amount was long term loan from debt restructuring which the parent company and its subsidiary conducted the contract of debt restructuring of whole amount of long-term loans with banks and several financial institutions in 1999.  The debt restructuring agreement between the Company and its bank creditors and financial institutions can be summarized as follows:

1.	Reclassified new long-term loans
	CONSOLIDATED	THE COMPANY ONLY	
	MILLION BAHT	MILLION BAHT	
1.1   Tranche A			
- Secured Loans	  40.17	  21.76	
- Unsecured Loans	  36.15	  20.89	
1.2   Tranche B	538.28	299.40	
1.3   Debt to be converted to equity			
- Secured Loans	  40.17	  21.76	
- Unsecured Loans	108.44	  62.66	

2.	Terms of  repayment shared with subsidiary companies.

2.1	The term of repayment of principal is extended by 10 years.

2.1.1	The period of principal of Tranche A is repayable every 3 months.  The first installment is repayable after the repayment of principal plus suspense interest of long term loan of Tranche B is completely  repayable.

2.1.2	The period of principal repayment of Tranche B is provided with the grace period of principal for 24 months commencing from the date of signing in the debt restructuring agreement.  The principal is repayable every 3 months.  The first principal installment is repayable after the grace period of 24 months completed.
As of December 14, 2001, the creditor specially resolved to amend debt restructuring contract regarding the extension of principal repayment to be complied with the proportion of repayment of the installed month of 24, 27, 30 and 33 (totalling 4 installments) by additional average in the month of 75, 78, 81, 84, 87, 90, 93 and 96 (totalling 8 installments).  The period term of repayment remains unchanged.
As of July 29, 2003, the Company received acknowledged letter informed by creditor of finance institute regarding the consention to postpone schedule of debt repayment for another 2 years (8 installments) commenced from 42th  month of installment (April 30, 2003) to 63th  month  (January 31, 2005).  The period of debt repayment will terminate in 123rd month (January 31, 2010).   

2.2	Interest on the Tranche A long-term loans will be  charged at the average MLR% per annum of  the 3 financial institutions, recorded as suspense account and paid in the final year.

2.3	Interest on the Tranche B long-term loans will be charged at the average MLR% rate per annum  of the 3 financial institutions as follows:-	

2.3.1	During the grace period, interest is calculated at 7% or the average MLR% per annum whichever is lower. The spread of interest is pending for repayment  in  the  final  year  before  the Tranche A long-term loans principal is repayable.	

2.3.2	During repayment of the first half of principal, interest is charged at 10% or the average MLR% per annum whichever is lower. The spread of interest is suspended for repayment in the final year before the Tranche A long-term loan principal is repayable.	

2.3.3	During repayment of the second half of principal, interest is charged at the average MLR% per annum.

2.4	The remaining balance of liabilities is maintained as working capital of the company.  The support of working capital is incremental in amount of Baht 136.10 million to add up liquidity of the company.

2.5	The parent company has to proceed with the reduction of shares capital by 75 percent of the registered capital which called for paid-up and reappointment of the board of directors. Five representatives from the finance institution are designated as directors of the company.

With respect to bank deposit-saving account, the Company has performed novation contract regarding claimed right and any other benefit in the bank account so as for guarantee against debt repayment to bank creditors and finance institution pursuant to debt restructuring contract.

9.	Other Non-Current Liabilities

As of June 30, 2004 and December 31, 2003, part of other non-current liabilities in the consolidated financial statement by amounted of Baht 34.32 million and Baht 32.14 million respectively, and in Company financial statement by amounted of Baht 19.15 million and Baht 17.93 million respectively, were accrued interest which were derived from accrued record pursuant to term and condition of long term loans repayment as Note no.8.

10.	Disclosure of  Sectoral Business Operation

The Company and its subsidiary company operate  in one business sector, i. e. production and distribution of plastic - coated products, and in one geographical area i.e. Thailand based upon the location of the operation.  Thus, all income, profit and assets as reflected in the financial statements were related to the said business sector and geographical area.

11.	Obligations and Contingent Liabilities

11.1	In addition to liabilities reflected in the balance sheets as of June 30, 2004 and December 31, 2003, the parent company and its subsidiary companies contributed to obligations and contingent liabilities due to banks as follows :
(Unit : Millions Baht)
	As of June 30, 2004	As of December 31, 2003	
	Parent	Subsidiary	Total	Parent	Subsidiary	Total	
Letter of Guarantee	  3.73	  4.04	  7.77	  3.76	8.05	11.81	
Letter of Credit	32.43	5.42	37.85	35.46	1.17	36.63	

	Apart from this, the parent company offered guarantee against debt settlement of subsidiary to the creditor of finance institution pursuant to debt restructuring agreement in the credit limit of Baht 593.10 million.  Moreover, contingent liability conducted with the creditor finance institution of its subsidiary is respectively combined until the creditor-finance institution is wholely repaid in accordance with the contract of credit facility including interest, service fee and various expense.

11.2	The Company has conducted a contract regarding the technical support in the production of PVC leather products with Kyowa Leather Cloth Co., Ltd.  pursuant to agreement dated August 1, 2001, in amount of Yen 10 million.  The Company has to repay ¼ of the technical fee within 30 days after the effective date is enforced (August 1, 2001) and has to repay another ¼ of year 1, 2 and 3. 

12.	Financial Instrument

 	12.1	The Company and subsidiary hold risk management for exchange rates using derivatives for trading with multiple merchant banks from credit facilities where merchant banks provided pursuant to Forward Foreign Exchange Contracts in the US Dollars currency. 
	As of June 30, 2004, in the consolidated financial statements, there is a Forward Foreign Exchange Purchase Contract in the US Dollars currency in aggregate cost of Baht 7.48 million (185,149.50USD) and aggregate fair value in amount of Baht 7.60 million.  In addition, in the Euro currency, the aggregate cost was Baht 3.96 million (81,011.85 EUR) and aggregate fair value was Baht 4.03 million.  In addition, there is a Forward Foreign Exchange Sale Contract in the US Dollars currency in aggregate cost of Baht 0.25 million (6,289.78 USD) and aggregate fair value in amount of Baht 0.26 million.

	12.2	Foreign currencies assets and liabilities which are not hedged in the forward contract against  risk
	
	As of June 30, 2004, the Company and subsidiary company have foreign currency assets and liabilities which  the Company and subsidiary company have not hedged  in the forward contract against risk on exchange rates as follows: 

	(Unit : Thousand Foreign Currency) 	
Currency	Asset	Liability	
US Dollars	843	926	
Euro	47	  723	
Pound Sterling	12	-	
Yen	-	62,266	

13.	Other

 These financial statements have been approved by the board of THAI NAM PLASTIC PUBLIC COMPANY LIMITED.