TUNTEX (THAILAND) PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.	GENERAL INFORMATION 
	Tuntex (Thailand) Public Company Limited (“the Company”) was incorporated as a public company limited under the Thai laws. The Company operates in Thailand and its principal activity is the manufacture of polyester yarn. 
	The Company registered the change of its status to a public company under the Public Limited Company Act on 1 August 1994. Its registered address is No. 54, BB Building, 20th Floor, Sukhumvit 21 Road (Asoke), Klongtoey Nua, Wattana, Bangkok.
2.	FUNDAMENTAL ACCOUNTING ASSUMPTION
As at the balance sheet dates, the Company has current liabilities significantly in excess of current assets, has incurred significant losses from its normal operations, and has a significant deficit. In addition, the Company has been operating under the direction of the business rehabilitation plan, which contains certain conditions. Nevertheless, the financial statements have been prepared on the going concern basis, assuming that the realization of assets and settlement of liabilities and obligations will occur in the ordinary course of business of the Company without any expectation of significant disruption to the ongoing activities since the Company is confident that it will be able to conduct its business in compliance with the business rehabilitation plan.
3.	BUSINESS REHABILITATION PLAN
The Company encountered liquidity problems and has been unable to comply with the conditions and covenants stipulated in the debt restructuring agreement. On 17 November 2003, the Company filed a petition with the Central Bankruptcy Court requesting it to order the rehabilitation of the business of the Company, and on 15 December 2003, the Central Bankruptcy Court issued an order to rehabilitate the business of the Company, appointing the Company to prepare the business rehabilitation plan (“the plan”), without any objection. The Company completed the business rehabilitation plan and this plan was approved by a meeting of the creditors on 6 August 2004 and by the Central Bankruptcy Court on 10 September 2004 and the Court appointed the Company to be the business rehabilitation plan administrator.
The summary of the plan and the balance of indebtedness outstanding as of the date on which the Central Bankruptcy Court issued an order to rehabilitate the business of the Company is as follow:

(a)	Secured debts amounting to Baht 8,319 million are to be settled as follows:
	A loan of Baht 3,567 million, there are changes in conditions in relation to interest rates, repayment schedule, etc. 
	A loan of Baht 2,800 million is to be repaid by the transfer of the Company’s investment in 129.06 million shares of TPT Petrochemicals Public Company Limited (formerly known as “Tuntex Petrochemicals (Thailand) Public Company Limited”). 
	For loan of Baht 914 million under a working capital facilities of Baht 1,150 million, there are no changes to the existing terms and conditions. 
	A loan of Baht 600 million is to be converted to convertible debentures awaiting conversion to equity. 
	Claims totaling Baht 438 million, representing various interest and bank charge accruals, will be relinquished by the financial creditor.
(b)	Unsecured debts amounting to Baht 5,115 million will be reduced by 78% and the remaining 22%, will be converted to convertible debentures. 
(c)	There are no changes to the existing terms and conditions for unsecured debt totaling Baht 185 million under working capital facilities.
(d)	Unsecured related parties debts totaling Baht 1,961 million will be reduced by 8.30%. Of the remaining debts Baht 798 million is to be paid in full under existing conditions, and the remaining Baht 1,000 million is to be converted to convertible debentures awaiting conversion to equity. 
(e)	Unsecured trade creditors totaling Baht 295 million are to be repaid in full under the existing conditions and credit must continue to be granted by the creditors as usual.
(f)	Unsecured contingent creditors totaling Baht 10,495 million are to be repaid in the future when due and in accordance with the terms and conditions stipulated in the agreements.
 (g)	For unsecured creditors which are guarantors of debts of the Company totaling Baht 11,601 million, if they have to pay debt on behalf of the Company in the future, and have recourse to the Company, they are to reduce the debt by 78% and the Company will pay the remaining 22% on the last business day of the fifteenth year, without any interest.

(h)	With regard to creditors providing financial support totaling Baht 1,261 million under the Sponsor Support Agreement, whereby the Company agreed to provide financial support to a related company if it experiences financial liquidity problems, if the Official Receiver or the Central Bankruptcy Court, by final order or sentence, orders the Company to repay the debt, the creditors are to reduce the debt obligation by 78% and the Company will pay the remaining 22% on the last business day of the fifteenth year, without any interest. However on 29 October 2004, the Company, through the plan administrator, notified the financial creditors that it was terminating its agreement to provide financial support to a related company. The termination of this agreement is in accordance with the business rehabilitation plan approved by the Court.
 (i)	The registered capital is to be reduced from Baht 2,960 million to Baht 2,780 million and increased by an amount sufficient for the exercise of the convertible debentures by the holders. The Company may also raise capital through the issuance of ordinary shares, securities and/or any other financial instruments for use in the Company’s operations and/or to make debt repayments. In addition, the Company will need to raise additional funds of not less than Baht 1,800 million for use in its operations and for implementation of the plan. These can be raised by means of the issue of shares or other financial instruments or by borrowing from financial institutions, but all additional obligations are to be secured. 
(j)	Upon completion of the plan, the Company can pay dividends and other benefits to its shareholders under the conditions set forth in the business rehabilitation plan. However, in no case will the Company pay dividends or other benefits in 2005 and 2006.  
(k)		No remuneration will be paid to the plan administrator. 
As at 31 December 2004, the Company had yet to record the effects of the plan on its financial position since it had yet to complete implementation of certain actions required under the plan. 
Subsequently, on 15 March 2005 the Company completed implementation of certain actions required under the business rehabilitation plan. The Company recorded a gain on debt restructuring amounting to Baht 6,513 million, including the obligations incurred between 15 December 2003 and 15 March 2005 (implementation date), in accordance with the business rehabilitation plan. Such gain on debt restructuring has been presented as an extraordinary item in the earnings statements of the current year, while the long-term liabilities outstanding after the recording of the debt restructuring transactions have been presented under the caption of “Long-term debts under business rehabilitation plan” in the balance sheet.

Gain on debts restructuring under business rehabilitation plan consists of the following: 
	Million Baht	
Forgiveness of debt	4,504	
Gain on transfer of assets to settle debts	1,329	
Debts in which the creditors submitted no claims	581	
Unpaid obligations  	99	
Total	6,513	
4.	BASIS OF CONSOLIDATION
4.1	The consolidated financial statements incorporate the financial statements of Tuntex (Thailand) Public Company Limited and its subsidiary company, Chao Pha Ya Heritage Company Limited (herein after called “subsidiary company”), which has been dormant.
	As at the balance sheets date, the total assets of the subsidiary company constitute an insignificant amount in the consolidated total assets and constitute an insignificant revenue in the consolidated total revenues. 
4.2	Intercompany balances and transactions, investment in the subsidiary in the Company’s accounts and the subsidiary’s share capital are eliminated from the consolidated financial statements.
5.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547, except for an accounting policy in respect of deferred tax assets (Note 5.7).
	Significant accounting policies adopted by the Company and its subsidiary are summarized below:
	5.1	Revenue recognition
		Sales of goods are recognized when products are delivered and title passes to customers.
5.2	Trade accounts receivable and allowance for doubtful accounts
	Trade accounts receivable are stated at the net realizable value. Allowance for doubtful accounts is determined by estimating the collection losses that may be incurred in collection of receivables.  The allowance is based on collection experience and the age status of receivables outstanding at the balance sheet date.
5.3	Inventories
	Inventories are stated at the lower of cost (average method) or net realizable value.
5.4	Property, plant and equipment
	Property, plant and equipment are initially recorded at cost. Property, plant and machinery are however subsequently revalued by independent professional valuer, on an asset-by-asset basis, to their fair values. Revaluations will be made with sufficient regularity to ensure that their carrying amount does not differ materially from their fair value at the balance sheet date.
	The differences arising from revaluation are dealt in the financial statements as follows: 
-	When an asset’s carrying amount is increased as a result of the revaluation, the increase is credited directly to the equity under the heading of “Revaluation surplus”.  However, a revaluation increase will be recognized as income to the extent that it reverses a revaluation decrease of the same asset previously recognized as an expense.
-	If the revalued assets are reappraised, and an asset’s carrying amount decreases as a result of the revaluation, the decrease will be recognized as an expense. However, such revaluation decrease will be charged directly against the related “Revaluation surplus” to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of that same asset.
5.5	Depreciation 
	Depreciation is calculated on the straight-line basis  (to write off the cost or the revaluation value of the assets to be expenses) over the expected useful economic lives of the assets concerned as follows:
Leasehold land improvements	Lease periods	
Plant and buildings		30	years	
Revaluation of plant and buildings		16, 24	years	
Machinery		20	years	
Revaluation of machinery		6, 14	years	
Tools and equipment		 5	years	
Furniture and equipment		 5	years	
Vehicles		 5	years	
	Depreciation is included in determining earnings. The revaluation surplus relating to plant and equipment is amortized on the straight-line method over the period of their remaining useful lives and is charged directly as a deduction against depreciation in the earnings statement.
	No depreciation is provided for land, land revaluation surplus, and works in process. 

5.6	Investments 
		Investments in subsidiary (in the financial statements of the Company only) and associated companies are accounted for under equity accounting method. The investments are initially carried at their acquisition cost and will be adjusted to incorporate the Company's proportionate share of the operating results of the subsidiary and associated companies after acquisition.
		Investments in the ordinary shares, which are non-listed securities, are valued at cost and will recognize loss on impairment of securities (if any) in the earnings statement. Allowance for impairment of securities may be set up after taking into consideration the net book value and other factors.
	5.7	Deferred tax assets
	The Company and its subsidiary company adopt deferred tax accounting. Deferred tax assets are set up for deductible temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and tax losses can be utilized. Temporary differences are differences between the carrying amount of an asset or liability for accounting and tax purposes.
	5.8	Financial derivative instruments
	The Company occasionally purchase forward exchange contracts to reduce their exposure from exchange rate fluctuation risk. For contracts that are designated and effective as hedges against identifiable foreign currency assets and liabilities, discounts or premiums (the difference between the spot exchange rate and the forward exchange rate at inception of the contracts) are deferred and amortized to earnings over the contract lives using the straight-line method.  
5.9	Foreign currencies
Foreign currency transactions incurred during the year are translated into Baht at the exchange rates ruling on the transaction dates. Assets and liabilities denominated in foreign currency outstanding at the balance sheet dates are translated into Baht at the exchange rates ruling on the balance sheet date.
	Differences on foreign exchange are included in determining earnings.

5.10	Basic earnings per share
	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, after adjusting for the effect of transactions relating to dilutive potential ordinary shares, by the weighted average number for ordinary shares in issue during the year and the ordinary shares to be issued for conversion of dilutive potential ordinary shares into ordinary shares.
5.11	Troubled debt restructuring
	The Company records troubled debt restructuring transactions in accordance with Thai Accounting Standard No. 34 “Accounting for Troubled Debt Restructuring”.
5.12	Use of accounting estimates
	Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from these estimates.
6.	TRADE ACCOUNTS RECEIVABLE
	Aging of  outstanding balances of trade accounts receivable as at 31 December were classified by past due period as follows:
		(Unit : Baht)	
	2005	2004	
Trade accounts receivable - other companies			
Under 90 days	512,019,633	457,025,364	
91 - 180 days	-	-	
181 - 270 days	-	-	
271 - 360 days	5,086	-	
Over 360 days	6,175,018	6,175,018	
Total	518,199,737	463,200,382	
Less: Allowance for doubtful accounts	(10,075,018)	(17,153,324)	
Trade accounts receivable - other companies, net	508,124,719	446,047,058	

		(Unit : Baht)	
	2005	2004	
Trade accounts receivable - related companies			
Under 90 days	-	32,392,543	
91 - 180 days	1,545,036	-	
181 - 270 days	-	-	
271 - 360 days	-	-	
Over 360 days	26,692,632	26,692,632	
Total	28,237,668	59,085,175	
Less: Allowance for doubtful accounts	(28,237,668)	(26,692,632)	
Trade accounts receivable - related companies, net	-	32,392,543	
Included in the trade accounts receivable - other companies as at 31 December 2005 were total of USD 2.4 million (2004: USD 1.9 million) receivable from foreign customers and Baht 29 million (2004: Baht 5.7 million) receivable from local customers which the Company had sold at a discount to financial institutions.
7.	RELATED PARTY TRANSACTIONS
	During the years, the Company had significant business transactions with subsidiary company, associated companies, and related companies (related by way of common shareholders and/or directors).  Such transactions are summarised as follows:
		(Unit: Million Baht)	
		Consolidated and the Company Only	
		2005	2004	
Transactions with related companies				
Sales of goods	67	158	
Interest income 	14	17	
Purchase of raw materials	2,758	-	
Purchase of electricity power, steam and penalty expense 	241	-	
Interest expense	5	20	
Advances from and accrued interest (average during the year)	-	16	
Short-term loans and advances to (average during the year)	224	256	
Service fee expenses	1	-	

		(Unit: Million Baht)	
		Consolidated and the Company Only	
		2005	2004	
Transactions with associated companies			
Sales of goods	-	185	
Dividend received	303	202	
Purchase of raw materials	1,031	3,472	
Purchase of raw materials through agent	303	864	
Purchase of electricity power and steam	79	365	
Interest expenses	37	184	
Service fee expenses	6	31	
		(Unit: Million Baht)	
	The Company Only	
	2005	2004	
Transactions with a subsidiary company			
 (eliminated on the consolidated financial statements)			
Interest income	10	10	
Short-term loans and advances to (average during the year)	249	238	
	Business transactions and pricing policies are summarised as follows:
Transactions with related companies	Pricing policies	
	o	Sales of goods	:	Market price.
	o	Interest income/expenses	:	Mutually agreed rates, which approximate market rates. 
	o	Purchases of raw materials  	:	Price per agreement - determined with reference to the list price of a major regional manufacturer in this region less negotiate discount.
	o	Purchases of electricity	:	Price per agreement, based on the selling price of the Provincial Electricity Authority, less discount of 5 percent.
	o	Purchases of steam	:	Contract price. The price may be changed depending on fuel cost, consumer price index and level and quantities of the acquisition.

Transactions with associated companies	Pricing policies	
	o	Sales of goods  	:	Market price.
	o	Purchases of raw materials  	:	Price per agreement - determined with reference to the list price of a major regional manufacturer in this region less negotiate discount.
	o	Purchase of raw material	:	Contract price. The price is determined based on the selling
		  through agent		price announced by major manufactures in this region.
	o	Purchases of electricity	:	Price per agreement, based on the selling price of the Provincial Electricity Authority, less discount of 5 percent.
	o	Purchases of steam	:	Contract price. The price may be changed depending on fuel cost, consumer price index and level and quantities of the acquisition.
	o	Service fee expenses	:	Mutually agree rate.
	o	Interest income/expenses	:	At the rates between 6.7% to 12.0% per annum. (2004: 4.4% to 12.0% per annum).
Transaction with subsidiary company	Pricing policy	
	o	Interest income	:	The minimum loan rate plus 2.0% per annum. 
	The outstanding balances of the related companies transactions have been shown in the balance sheets under the following captions:
	 (Unit: Baht)	
	2005	2004	
Trade accounts receivable - related companies			
Related companies			
Tuntex Textile (Thailand) Company Limited	26,692,632	26,692,632	
Tri Ocean Tuntex Textile (Thailand) Company Limited	1,545,036	32,392,543	
Total	28,237,668	59,085,175	
Less: Provision for doubtful debts	(28,237,668)	(26,692,632)	
Net	-	32,392,543	

	 (Unit: Baht)	
	2005	2004	
Short-term loans and advances to related parties			
Related companies			
Tuntex Industrial Park Company Limited	193,259,088	180,232,130	
Advance Engineering (B.V.I.) Limited	-	55,047,722	
Tuntex Distinct Corporation Limited	21,014,193	21,014,193	
TIP  Holding Company Limited	6,276,627	5,837,352	
TTC Polyester Company Limited
(Formerly known as “Tuntex Utilities (Thailand) Company Limited”)	
158,193	
148,463	
Portex Textile Company Limited
(Formerly known as “Tuntex Management Company Limited”)	
127,093	
133,092	
Total	220,835,194	262,412,952	
Less : Provision for doubtful debts	(220,549,908)	(207,083,675)	
Net	285,286	55,329,277	
Subsidiary company			
Chao Pha Ya Heritage Company Limited	253,310,456	243,074,497	
Less: Provision for doubtful debts	(253,310,456)	(243,074,497)	
Net 	-	-	
Total	285,286	55,329,277	
Trade accounts payable  - related parties 			
Related companies/associated companies			
TPT Petrochemicals Public Company Limited	767,784,183	2,166,721,258	
TPT Utilities Company Limited	35,864,825	24,742,073	
Tuntex Distinct Corporation Limited	12,161,104	30,078,747	
Total 	815,810,112	2,221,542,078	
Advances from related parties and accrued interest			
Related parties			
Advance Engineering (B.V.I.) Limited	-	8,971,993	
Smart Holding Co., Ltd.
(Formerly known as “TDC (Thailand) Company Limited”)	
-	
1,415,076	
Tuntex Incorporation Limited	-	5,277,911	
Total 	-	15,664,980	
Long-term loans from related party and accrued interest 		
Related party			
Advance Engineering (B.V.I.) Limited			
- Current portion	-	136,527,527	
- Long-term portion	-	307,620,212	
Long-term trade account payable and accrued			
   interest - related party			
Related company (2004: associated company)			
TPT Petrochemicals Public Company Limited			
- Current portion	-	200,000,000	
- Long-term portion	-	633,402,740	
	Since 2001, the Company has been unable to comply with the covenants stipulated in the debt restructuring agreements with regard to loans from related companies and accrued interest, and the Company therefore entered into business rehabilitation process. The outstanding balance of debts as of 31 December 2004 were adjusted and/or converted in accordance with the conditions of the business rehabilitation plan mentioned in note 3.
	In 2004, purchase and sales transactions with TPT Petrochemicals Public Company Limited are offset each month.
8.	INVENTORIES
		(Unit: Baht)	
	2005	2004	
			
Finished goods	399,869,869	690,721,877	
Work in process	96,282,891	142,604,495	
Raw materials	135,186,309	157,212,336	
Supplies and packaging	79,486,090	63,585,612	
Raw materials and goods in transit	145,996,090	189,907,540	
Total 	856,821,249	1,244,031,860	
Less: Provision for diminution in value of inventories	(49,034,000)	(42,786,000)	
Net	807,787,249	1,201,245,860	
	During the current year, the Company has set aside allowance for diminution in the value of inventories amounting to approximately Baht 6.2 million (2004: Baht 9.7 million) since the market value of these inventories has declined.

9.	RESTRICTED BANK DEPOSITS
	As at 31 December 2005 and 2004, the Company has pledged its bank deposits as collateral to secure credit facilities and bank guarantees granted and issued by bank.
10.	INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD/RESERVE FOR LOSS OF INVESTMENT ACCOUNTED FOR UNDER EQUITY METHOD
					(Unit: Baht)	
			Percentage		Value of investments 	
		Paid up	of share	Cost	under equity method	
Name of company	Nature of business	capital	holding	2005	2004	2005	2004	
		(Million Baht)	(Percent)					
Investment in subsidiary company					
Chao PhaYa Heritage								
   Company Limited	Cease operational	750	100	732,499,900	732,499,900	-	-	
Reserve for loss of investment accounted for under equity method	732,499,900	732,499,900	(15,200)	(13,296)	
Investments in associated companies					
TPT Petrochemicals Public	Manufacturing and 							
   Company Limited	distribution of  PTA	4,925	40.97	-	2,036,022,269	-	4,749,825,692	
Less : Effect of adjustment 								
 to reconcile intercompany 								
  transaction to equity method						-	(396,794,955)	
						-	4,353,030,737	
Asia Industrial Park	Holding company and							
   Company Limited	developing industrial estate	1,000	49.00	1,163,000,300	1,163,000,300	582,657,538	581,576,445	
Total 				1,163,000,300	3,199,022,569	582,657,538	4,934,607,182	
On 4 March 2005 and 1 October 2004, the Company received dividends of Baht 303 million and Baht 202 million respectively from TPT Petrochemicals Public Company Limited. Such amounts have been incorporated as part of the value of investment in TPT Petrochemicals Public Company Limited under the equity method.
On 15 March 2005, in line with the business rehabilitation plan, the Company has transferred 129.06 million shares of TPT Petrochemicals Public Company Limited to settle its debt to a financial creditor. Following such transfer, the Company holds 72.70 million shares of this company, which represents a 14.76 percent interest in its issued shares capital. The Company has therefore classified this investment as other long-term investment, as presented in Note 11.

As at 31 December 2005, the value of investment in Asia Industrial Park Company Limited (“AIP”), under the equity method, incorporates Baht 14.74 million (2004: Baht 13.85 million) of unrealised gain on changes in fair values of investments (applied on the Company’s interest in the equity of AIP) which AIP has incorporated in its shareholders’ equity as at the balance sheet dates. 
The Company has pledged the share certificates of Asia Industrial Park Company Limited, and of TPT Petrochemicals Public Company Limited for its investments in these companies to secure credit facilities granted to the Company by institutional lenders. 
11.	OTHER LONG-TERM INVESTMENTS
				Percentage	(Unit: Baht)	
	Paid up	of share		
Companies	capital	 holding	2005	2004	
	(Million Baht)	(Percent)			
Tuntex Textile (Thailand) Company Limited	1,200	16.67	200,000,000	200,000,000	
Tri Ocean Tuntex Textile (Thailand) Company Limited	175	6.00	10,500,000	10,500,000	
Total			210,500,000	210,500,000	
Less: Provision on diminution in investment value			(210,500,000)	(188,727,361)	
			-	21,772,639	
TPT Petrochemicals Public Company Limited	4,925	14.76	828,581,881	-	
Total other long-term investments - net			828,581,881	21,772,639	
During the current year, the Company received financial information from Tuntex Textile (Thailand) Company Limited and Tri Ocean Tuntex Textile (Thailand) Company Limited, which indicated the values of the investments in those companies had diminished. The Company has therefore set aside additional provision for diminution in the values of investments amounting to approximately Baht 22 million in the current year (2004: Baht 61 million).
The Company has pledged 0.8 million shares certificates of Tuntex Textile (Thailand) Company Limited for its investment in this company to secure loans granted by its overseas related company.
The Company has pledged the share certificates of TPT Petrochemicals Public Company Limited for its investment in this company to secure credit facilities granted to the Company by an institutional lender.
12.	
PROPERTY, PLANT AND EQUIPMENT 
		(Unit: Baht)	
	Cost Basis	Revaluation Basis		
	Leasehold land	Tools and	Furniture		Work in		Plant and			
	Improvements	equipment	and equipment	Vehicles	progress	Land	building	Machinery	Total	
At cost / Revaluation										
As at 31 December 2004	11,998,238	715,946,884	69,195,093	31,279,239	668,858	26,070,286	1,562,816,121	11,818,284,257	14,236,258,976	
Less : Accumulated depreciation										
  of revalued assets	-	-	-	-	-	-	(18,470,275)	-	(18,470,275)	
	11,998,238	715,946,884	69,195,093	31,279,239	668,858	26,070,286	1,544,345,846	11,818,284,257	14,217,788,701	
Revaluation increase (decrease)  										
 under Open Market Value										
   for Existing Use basis	-	-	-	-	-	-	(193,023,060)	1,326,160,556	1,133,137,496	
Revaluation decrease under 										
   Income Approach basis	-	-	-	-	-	-	(145,210,171)	(1,417,557,067)	(1,562,767,238)	
At cost/Newly revaluation	11,998,238	715,946,884	69,195,093	31,279,239	668,858	26,070,286	1,206,112,615	11,726,887,746	13,788,158,959	
Acquisitions / transfer in	-	7,858,718	7,670,457	       1,674,494	-	-	7,246,027	119,269,462	143,719,158	
Disposals / transfer out	-	-	-	(11,943,858)	       (668,858)	-	-	-	(12,612,716)	
As at 31 December 2005	11,998,238	723,805,602	76,865,550	21,009,875	-	26,070,286	1,213,358,642	11,846,157,208	13,919,265,401	
Accumulated depreciation										
As at 31 December 2004	3,590,501	604,300,867	54,430,009	21,728,141	-	-	449,696,488	4,525,944,815	5,659,690,821	
Less : Accumulated depreciation										
  of revalued assets	-	-	-	-	-	-	(18,470,275)	-	(18,470,275)	
Accumulated depreciation	3,590,501	604,300,867	54,430,009	21,728,141	-	-	431,226,213	4,525,944,815	5,641,220,546	
Depreciation charged	241,984	40,777,767	5,158,485	2,684,271	-	-	41,456,557	708,937,985	799,257,049	
Depreciation for disposals	-	-	-	(10,608,428)	-	-	-	-	(10,608,428)	
As at 31 December 2005	3,832,485	645,078,634	59,588,494	13,803,984	-	-	472,682,770	5,234,882,800	6,429,869,167	
Net book value 										
As at 31 December 2004	8,407,737	111,646,017	14,765,084	9,551,098	668,858	26,070,286	1,113,119,633	7,292,339,442	8,576,568,155	
As at 31 December 2005	8,165,753	78,726,968	17,277,056	7,205,891	-	26,070,286	740,675,872	6,611,274,408	7,489,396,234	
										
Depreciation charged to earnings statements for the year										
2004									646,058,305	
2005									653,850,366	
Depreciation on the surplus of the reappraised assets										
2004									130,823,840	
2005									145,406,683	
	During October 2002, the Company arranged to have its property, plant and equipment outstanding as of 31 October 2002 revalued by an independent valuer, which the basis of revaluation was as follows:
Assets	Basis	
		
Land, plant and buildings	-   The Depreciated Replacement Cost Value	
Machinery	-   The Net Current Replacement Cost Value	
	
The Company had reflected the changes in asset values resulting from this revaluation of assets outstanding as at 31 October 2002 into the relevant records and has also reflected the revaluation decrease of Baht 814 million against the revaluation surplus in shareholders’ equity of the year 2002. 
	As at 31 December 2004, property, plant and equipment were presented at the values previously appraised by an independent appraiser in 2002. The Company engaged an independent appraiser to perform a revaluation of these assts, which was not yet been completed in 2004. However, the Company believed that there were no significant changes in the values of there assets.
In 2005, the independent valuer completed the revaluation of the Company’s property, plant and equipment. The basis of revaluation used by the valuer was “Open Market Value for Existing Use”, and the results of revaluation are presented as follow:

 (Unit : Thousand Baht)	
	Plant and 			
	buildings	Machinery	Total	
Net book value under “Open Market	876,200	8,618,500	9,494,700	
   Value for Existing Use” basis				
Net book value at the beginning of year	(1,069,223)	(7,292,339)	(8,361,562)	
(Decrease)/increase	(193,023)	1,326,161	1,133,138	
The Company recorded the decreases and increases of the revaluation of those assets as follow:

 (Unit : Thousand Baht)	
	Plant and 			
	buildings	Machinery	Total	
Adjustment the increase (decrease) 				
  in value against revaluation surplus 				
    in shareholders’ equity	(172,290)	1,326,161	1,153,871	
Diminution in value recorded as 				
    expenses in earnings statement	(20,733)	-	(20,733)	
Total	(193,023)	1,326,161	1,133,138	

In addition, to measure the fair value of the Company’s plant and building and machinery, during the current year, the Company arranged to have its assets revalued by an independent valuer, with the basis of revaluation applied to determine the value in use being the “Income Approach”. The results of revaluation are presented as follow:
	(Unit : Thousand Baht)	
	Amount	
New revaluation under Income Approach 	7,986,000	
Net book value of assets at 15 March 2005	9,548,767	
Decrease	1,562,767	
The Company has reflected the revaluation decrease as a deduction against the values of its core assets, which they have been recorded on a revaluation basis as follow:
(Unit : Thousand Baht)	
	Plant and 			
	buildings	Machinery	Total	
Net book value under “Open Market				
   Value for Existing Use” basis	910,693	8,466,839	9,377,532	
Less : Revaluation decrease	(145,210)	(1,417,557)	(1,562,767)	
Value under “Income Approach” basis	765,483	7,049,282	7,814,765	
The Company recorded the decrease in the value of those assets as follow:

 (Unit : Thousand Baht)	
	Plant and 			
	buildings	Machinery	Total	
Adjustment the decrease in value against the revaluation surplus in shareholders’ equity	-	(1,417,557)	(1,417,557)	
Diminution in value recorded as expenses in earnings statement	(145,210)	-	(145,210)	
Total	(145,210)	(1,417,557)	(1,562,767)	

Had these assets been presented in the financial statements on a cost basis, their net book value as of  31 December would have been follows:
			 (Unit: Thousand Baht)	
		Plant and			
Net book value	Land	buildings	Machinery	Total	
					
As of 31 December 2004	15,543	917,341	5,774,990	6,707,874	
As of 31 December 2005	15,543	872,762	5,321,146	6,209,451	
Land, buildings and machinery of the Company have been mortgaged/pledged as collateral to secure credit facilities granted by a local bank.
	As at 31 December 2005, certain plant and equipment items have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounted to Baht 590 million (2004: Baht 578 million).
13.	BANK OVERDRAFTS AND BANK LOANS / ACCOUNTS PAYABLE-TRUST RECEIPTS
	Bank overdrafts, bank loans and trust receipts are guaranteed by mortgage of land, buildings, machinery, and pledge of the share certificates for the Company’s investment in a company, the assignment of rights under the land lease agreement made with the Industrial Estate Authority of Thailand and a personal guarantee provided by the Company’s director.
	In 2004, the Company received additional credit facilities in term of working capital amounting to Baht 1,100 million from two local financial institutions. These credit facilities are guaranteed by the pledged of the Company’s investment in shares of an associated company.
14.	LONG-TERM LOAN UNDER BUSINESS REHABILITATION PLAN
Following the implementation of the business rehabilitation plan, the existing long-term loans and accrued interest were changed to long-term loans under business rehabilitation plan which consist of the followings:
14.1	Long-term loan under business rehabilitation plan
		The balance of long-term loan under business rehabilitation plan is Baht 3,567.02 million. Under the loan agreement, this loan is to be repaid in 10 semi-annual installments commencing June 2007. The first to the fourth of these are to amount to Baht 214.02 million each, the fifth to the eighth are to amount to Baht 321.03 million each, and the ninth to the tenth are to amount to Baht 713.41 million each. The loan carries interest at rates of 4 percent per annum for the first year, 5 percent per annum for the second year, and MLR per annum thereafter. 

		Long-term loan under business rehabilitation plan have been secured by the mortgage/pledge of land, buildings, machinery, and the share certificates for the Company’s investment in a company, the assignment of rights under the land lease agreement made with the Industrial Estate Authority of Thailand, and personal guarantees provided by the Company’s directors.
		The loan agreement contains normal covenants pertaining to matters such as restrictions on creating additional debts, the maintenance of financial ratios, restrictions on the balances of outstanding debts with related companies, and on the raising of funds and capital expenditure.
		As at 31 December 2005, the Company was unable to maintain a financial ratio stipulated under the conditions of the loan agreement. The Company is seeking waiver of this default and believes that the financial lender will grant the Company such waiver. The Company has therefore classified this long-term loan in accordance with the terms stipulated in the original loan agreement.			
	14.2	Accrued interest and liabilities under debt restructuring
The balance of accrued interest and liabilities under debt restructuring as at 31 December 2005 is Baht 774.42 million. This amount will be amortized in line with the interest payment schedule under the loan agreement. The current portion of them, amounting to Baht 148.21 million, has been presented under current liabilities in the balance sheet.
15.	CONVERTIBLE DEBENTURES
Following the implementation of the business rehabilitation plan, certain debts amounting to Baht 1,111.88 million were converted to unsecured, convertible, 8-year (beginning from 10 March 2005), zero-coupon debentures, with a face value of Baht 1,000 each, at a conversion ratio as stipulated in the plan. The debenture holders are entitled to convert the debentures to ordinary shares only on the maturity date, and if such conversion results in the holder receiving shares with a value less than the amount of debt repayment (liquidation value), the Company is to transfer additional cash and/or other assets to make up the shortfall. The Company is entitled to force the conversion of such debentures to ordinary shares on the maturity date.
16.	LONG-TERM LOAN
	During the current year, the Company has obtained an additional loan from a financial institution with a facility of Baht 1,200 million on which Baht 410 million has been drawn down as of 31 December 2005. This loan facility was incorporated as part of the long-term loan under business rehabilitation plan. 	

Under the loan agreement, this loan is to be repaid in 10 semi-annual installments commencing June 2007. The first to the fourth of these are to amount to Baht 72 million each, the fifth to the eighth are to amount to Baht 108 million each, and the ninth to the tenth are to amount to Baht 240 million each. The loan carries interest at rate of MLR per annum. 
	This long-term loan is secured by the same collaterals used to secured long-term loan under business rehabilitation plan.
17.	CURRENT PORTION OF LONG-TERM LOANS / LONG-TERM LOANS
				(Unit: Baht)	
	Balances			
Principals	2005	2004	2005	2004	
	(Million USD)			
Floating Rate Note of					
USD 70 Million	-	70.0	-	2,744,175,000	
USD 10 Million	-	3.5	-	137,992,800	
USD 4.5 Million	-	4.5	-	176,411,250	
USD 4 Million	-	3.6	-	141,129,000	
USD 12 Million	-	12.0	-	470,430,000	
USD 6.9 Million	-	2.1	-	84,274,046	
Baht 240 Million			-	240,000,000	
Baht 2,259.71 Million			-	2,247,000,000	
Baht 4,620.02 Million			-	4,620,026,000	
Baht 50 Million			-	50,000,000	
Baht 50 Million			-	50,000,000	
Total 			-	10,961,438,096	
Less: Current portion of long-term loans	-	(2,740,359,524)	
Long-term loans, net of current portion		-	8,221,078,572	
Since 2001, the Company was unable to comply with the covenants stipulated in the debt restructuring agreement and, as described in Note 3, the Company entered into the business rehabilitation process. The long-term loans and accrued interest outstanding as of 31 December 2004 were adjusted/converted in accordance with the conditions of the business rehabilitation plan.  
Loans and credit facilities from local financial institution as at 31 December 2004 had been secured by the mortgage of land, buildings, machinery, and the pledge of share certificates for the Company’s investment in an associated company, the assignment of rights under the land lease agreement made with the Industrial Estate Authority of Thailand and a personal guarantee provided by a director of the Company.

Some parts of the foreign loans as at 31 December 2004 had been secured by the mortgage of land, and the pledge of shares belonging to a director of the Company. The floating rate notes were guaranteed by a director of the Company.
18.	SHARE CAPITAL
	In order to reserve for exercise of the convertible debentures by the holders, on 20 June 2005 the Company, through the Board of the Plan Administrators, submitted a petition to the Central Bankruptcy Court seeking permission to reduce and increase its registered share capital. On 11 July 2005, the Central Bankruptcy Court approved such petition, with the details as follow:
The Company’s registered share capital was to be reduced from Baht 10,780 million to Baht 2,780 million by canceling 800 million unissued registered ordinary shares with a par value of Baht 10 each. The remaining registered share capital would then comprise 278 million issued and fully paid ordinary shares with a par value of Baht 10 each. The Company, through the plan administrator, registered the reduction in the Company’s registered share capital with the Ministry of Commerce on 5 August 2005.
The Company’s registered share capital was to be increased from Baht 2,780 million to Baht 15,500 million through the issuance of 1,272 million new ordinary shares with a par value of Baht 10 each, to support the issues of ordinary shares against the exercise of the convertible debentures by the holders. The Company, through the plan administrator, registered the increase in the Company’s registered share capital with the Ministry of Commerce on 8 August 2005.
19.	CONVERTIBLE DEBENTURES AWAITING CONVERSION TO EQUITY
Following the implementation of the business rehabilitation plan, certain debts have been converted to convertible debentures. These convertible debentures consist of Baht 600 million of secured convertible debentures and Baht 1,000 million of unsecured convertible debentures. These are zero-coupon, 10-year (beginning from 10 March 2005) convertible debentures with a face value of Baht 1,000 each, awaiting conversion to equity at the conversion ratio stipulated in the business rehabilitation plan. The Company is entitled to force the conversion of the debentures on the maturity date. However, prior to the maturity date the holders are entitled to convert such bonds in accordance with the conditions stipulated in the plan.

20.	DEFERRED TAX LIABILITIES ON REVALUATION SURPLUS / REVALUATION SURPLUS
	(Unit: Thousand Baht)	
	2005	2004	
			
Balance of revaluation surplus at the beginning of year	1,472,239	1,603,063	
Increase in revaluation of assets during the year	1,153,871	-	
Decrease in revaluation of assets during the year	(1,417,557)	-	
Amount amortised to deduct against depreciation			
   charges in the earnings statements	(145,407)	(130,824)	
	1,063,146	1,472,239	
Less: Deferred tax liability at 30% on revaluation surplus	(318,944)	(441,672)	
Balance - end of year	744,202	1,030,567	
The revaluation surplus can neither be offset against retained deficit nor used for dividend payment.
21.	DEFERRED TAX LIABILITIES ON REVALUATION SURPLUS OF AN ASSOCIATED COMPANY/ REVALUATION SURPLUS OF AN ASSOCIATED COMPANY
		(Unit: Thousand Baht)	
	2005	2004	
Balance of revaluation surplus of an associated company			
at the end of year applied on the Company’s interest			
    in the equity of that associated company	-	1,674,091	
Less: Deferred tax liability at 30% on revaluation surplus	-	(502,227)	
Balance - end of year	-	1,171,864	
	As discussed in Note 10, during this year the Company has reclassified an investment in shares of an associated company which had been accounted for under the equity method to other long-term investment, accounted for under the cost method since the Company’s interest in the equity of this company was reduced. In line with accounting policy, the Company has adjusted the deferred tax liabilities on revaluation surplus of the associated company and revaluation surplus of the associated company against the investment in associated company in this year.
	The revaluation surplus can neither be offset against retained deficit nor used for dividend payment.

22.	STATUTORY RESERVE
	According to section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a statutory reserve of at least 5% of its net profit after deducting accumulated deficit brought forward (if any) until the reserve reaches 10% of the registered share capital.
23.	DIRECTORS’ REMUNERATION
	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 executive directors.
24.	REVENUE ON INCOME TAX / VALUATION ALLOWANCE FOR DEFERRED TAX BENEFITS
		(Unit: Thousand Baht)	
	Consolidated	The Company Only	

	2005	2004	2005	2004	
Revenue on income tax					
Income tax payable	-	-	-	-	
Deferred tax derived from					
   Increase in temporary differences	429,090	653,300	426,018	650,284	
   Decrease in temporary differences	-	(87,831)	-	(87,831)	
Decrease in deferred tax liabilities	313,934	-	313,934	-	
Revenue on income tax 	743,024	565,469	739,952	562,453	
Less: Valuation allowance for deferred tax 					
            benefits recorded during the year	(743,024)	(565,469)	(739,952)	(562,453)	
Net	-	-	-	-	

25.	CASH FLOWS STATEMENTS 
For the purpose of the cash flows statements, cash and cash equivalents include cash in hand and at banks with an original period of maturity of three months or less and without commitment. 
Significant non-cash transactions which are not shown in the cash flows statement are as follow:
	(Unit: Million Baht)	
	2005	2004	
Operating activity			
Unpaid insurance	40	39	
			
Financing activity			
The conversion of liabilities to convertible debenture	1,112	-	
The conversion of liabilities to convertible debenture			
   awaiting conversion to equity	1,600	-	
26.	PROMOTIONAL PRIVILEGES
	The Company has been granted various promotional privileges under the Investment Promotion Act, B.E. 2520, which included the 100% exemption from corporate income tax on net profits from promoted operations for a period of 8 years, commencing from the date of the project expansion first earning operating income, and 50% exemption from corporate income tax for a further period of 5 years.  The Company commenced the commercial operations of the expanded and new projects in September 1995 and October 1998 respectively.
Revenues from sales of merchandises are divided into promoted and non-promoted operations as follows:
				(Unit: Thousand Baht)	
	2005	2004	
	Promoted earnings	Non-promoted		Promoted earnings	Non-promoted		
	(tax exempted)	earnings	Total	(tax exempted)	earnings	Total	
							
Local sales	2,832,749	48,439	2,881,188	3,224,731	1,027	3,225,758	
Export sales	5,069,513	-	5,069,513	6,739,502	110,716	6,850,218	
Total	7,902,262	48,439	7,950,701	9,964,233	111,743	10,075,976	

27.	NUMBER OF EMPLOYEES AND RELATED EXPENSES
	2005	2004	
			
Number of employees at end of year	934	1,285	
Employees expenses for the year (Thousand Baht)	269,751	294,017	
28.	PROVIDENT FUND
	The Company and its employees have jointly registered a provident fund scheme under the provident fund Act B.E. 2530.  The fund is contributed to by both the Company and its employees and is managed by Bangkok Bank Public Company Limited. The fund will be paid to the employees upon termination in accordance with the rules of the Company’s staff provident fund.
29.	FINANCIAL INFORMATION BY SEGMENT
	The Company’s operations involve a single industry segment, polyester yarn manufacturing, and are carried on in the single geographic area of Thailand. The revenues, operating profits and assets as reflected in these financial statements pertain to the aforementioned industry segment and geographic area. 
30.	FINANCIAL INSTRUMENTS
Financial risk management and policies
The Company is exposed to risks from changes in market interest rates and currency exchange rates.  The Company uses derivative instruments as and when it considers appropriate to manage such risks. It does not hold or issue derivative financial instrument for speculative or trading purposes.
Interest rate risk
The interest rate risk is the risk that future movements in market interest rates will affect the results of the Company’s operations and its cash flows.  The Company’s exposure to interest rate risk relates primarily to its deposits with financial institutions, bank overdrafts, loans from financial institutions and trust receipts.

Foreign currency risk
	As at 31 December 2005, the Company had foreign currency-denominated assets and liabilities as follows:
		Amount	
Assets			
Assets denominated in US dollars		USD			 	5,344,333	
Liabilities 			
Liabilities denominated in US dollars		USD					22,867,084	
Liabilities denominated in EURO		EUR	O				422,813	
Liabilities denominated in Japanese yen		JPY					1,325,500	
Liabilities denominated in Taiwan dollars		TWD				29,772	
In order to hedge its exposure to foreign exchange risk, the Company has entered into various forward exchange contracts, which the outstanding of them as at 31 December 2005 are summarized below.
		Average		Average	
		forward rate for		forward rate for	
Foreign currency	Amount bought	amount bought	Amount sold	amount sold	
	(Million)	(Baht per unit of	(Million)	(Baht per unit of	
		foreign currency)		foreign currency)	
					
US dollar	15.1	41.1221	1.2	41.3869	
EURO	0.4	49.7006	-	-	
Credit risk
The Company is exposed to credit risk primarily with respect to trade accounts receivable. However, due to the Company’s prudent credit policy and its diversified customer base, the Company does not anticipate material losses from its debt collection.
Fair value
The majority of financial assets and liabilities are short-term, and certain financial liabilities carry interest at floating rates close to current market rates. The Company’s management believes that fair value of such financial assets and liabilities does not materially differ from their carrying value. 

31.	BANK GUARANTEES
	As at 31 December 2005 and 2004, there were outstanding bank guarantees of Baht 6 million issued by banks on behalf of the Company in respect of certain performance bonds as required in the normal course of business of the Company.
32.	COMMITMENTS 
	As at 31 December 2005, the Company has the following commitments:
a)  	The Company entered into lease agreements with the Industrial Estate Authority of Thailand on 31 December 1988 whereby the Company leased the land where the factories were erected for a period of thirty years from 13 May 1988, renewable for and additional twenty years. The total annual rental under these agreements amounted to Baht 6 million.  Under the terms of the agreement, the Company has paid deposits of Baht 6 million and placed bank guarantees of Baht 6 million with the lessor. The Company has assigned the right over the lease agreement with IEAT to secure credit facilities granted by a local bank.
b)	The Company has entered into two rental agreements with a company in respect of storage of the chemicals, which constitute the main raw materials of the Company. Such agreements cover a period of 10 years, commencing from 1995 and 1998.  Future rental payments are as follows:
Year	Million Baht	
		
2006	14	
2007 - 2008	14	
Total	28	
c)	The Company has capital commitments of approximately Baht 68.8 million in respect of plant maintenance, the purchase and installation of machinery.
d)	The Company has commitment in respect of marketing assistance agreements entered with overseas companies, under which the Company is to pay fees totaling approximately USD 0.5 million.
e)	The Company has commitments in respect of an office rental agreement, covering a period of 3 years. Future payment commitments total approximately Baht 1.3 million. 

33.	RECONCILIATION OF DILUTED EARNINGS PER SHARE
	For the year ended 31 December 2005	
		Weighted average 		
		number of 		
	Net earnings	ordinary shares	Earnings per share	
	(Baht)	(Shares)	(Baht)	
Basic earnings per share				
Net earnings	5,199,816,057	278,000,000	18.70	
Effect of dilutive securities				
Convertible debentures and convertible         				
   debentures awaiting conversation to equity	-	1,158,733,851	(15.08)	
Diluted earnings per share				
Net earnings of ordinary shareholders 				
   assuming the conversion of convertible				
      debentures to ordinary share	5,199,816,057	1,436,733,851	3.62	
34.	CONTINGENT LIABILITIES 
Following the court order for the rehabilitation of the Company’s business in late 2003, trade creditors and loan creditors, including creditors for contingent obligations, were required to lodge claims for settlement of debt outstanding as of 15 December 2003 with the Official Receiver. The claims, lodged in 2004, totaled approximately Baht 12,672 million, an amount which exceeds the outstanding balances as per the Company’s records as at 15 December 2003, which consists of:
		Million Baht	
-	Long term contractual obligations pertaining to services		 		rendered and purchases of raw materials	
10,495	
-	Potential liabilities in relation to sponsor support 
	   obligations to a related company	
1,261	
-	Duplicated loans pertaining to letter of credit agreements	845	
-	Contingent liabilities regarding letters of guarantee and aval	71	

The Company was of the opinion that these excess claims were not actual debt obligations since certain amounts of indebtedness were duplicated or they were not yet payable. The Company lodged disputes of those claims with the Official Receiver, and did not record that excess amount in its 2004 accounts. In addition, on 29 October 2004, the Company, through the plan administrator, notified the financial creditors that it was terminating its agreement to provide financial support amounting to Baht 1,261 million to a related company. The termination of this agreement was in accordance with the business rehabilitation plan. The Official Receiver subsequently investigated the claims submitted by the creditors and issued orders to cancel certain claims submitted by some creditors, while issuing orders for the Company to settle other claims lodged by creditors. The Company adjusted the 2005 accounts to reflect the claims which the Official Receiver ordered the Company to settle. These adjustments were insignificant to the financial statements.
In the course of the business rehabilitation process, certain creditors did not lodge claims for settlement of debts totaling Baht 581 million. The Company realized such amount as a gain on debt restructuring. However, the debt of Baht 325 million was guaranteed by the Company’s director and if this director were to settle such debt, the director would be entitled to claim settlement from the Company at a rate 22 percent, or approximately Baht 71 million, in line with the business rehabilitation plan. However, the Company did not record the amount in its accounts since it was of the opinion that such event was still uncertain.
35.	PRESENTATION
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, issued under the Accounting Act B.E. 2543.
Certain amounts in the 2004 financial statements, as presented herein for comparative purpose, have been reclassified to conform to the current year’s presentation, with no effect on the previously reported net loss or shareholders’ equity. 
36.	APPROVAL OF FINANCIAL STATEMENTS
	These financial statements were authorized for issue by the business rehabilitation plan administrator on 10 February 2006.