inox.listedcompany.cominox.listedcompany.com/misc/financials/q208_en.pdf(TRANSLATION) REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT . To the Shareholders’ and Board of Directors’

(TRANSLATION)

REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT

To the Shareholders’ and Board of Directors’ of THAINOX STAINLESS PUBLIC COMPANY LIMITED

I have reviewed the accompanying consolidated and the separate balance sheets as of

June 30, 2008, and the related consolidated and separate income statements for the quarter and for the

six months period ended on June 30, 2008 and 2007, the statements of changes in shareholders’ equity

and the cash flow statements for the six months period ended on June 30, 2008 and 2007, of

THAINOX STAINLESS PUBLIC COMPANY LIMITED and its subsidiary and the separate

financial statements of THAINOX STAINLESS PUBLIC COMPANY LIMITED, These financial

statements are the responsibility of the company’s management as to their correctness and

completeness of the presentation. My responsibility is to issue a report on these financial statements

based on my reviews.

I conducted my reviews in accordance with the auditing standards applicable to

review engagements. These standards require that I plan and perform the reviews to obtain moderate

assurance as to whether the financial statements are free of significant misstatement. A review is

limited primarily to inquiries of company personnel and analytical procedures applied to financial

data and thus provides less assurance than an audit in accordance with generally accepted auditing

standards, and accordingly, I do not express an opinion.

Based on my reviews, nothing has come to my attention that causes me to believe

that the accompanying financial statements are not presented fairly, in all material respects, in

accordance with generally accepted accounting principles.

I have previously audited the consolidated financial statements and the separate

financial statements for the year ended on December 31, 2007 of THAINOX STAINLESS PUBLIC

COMPANY LIMITED, in accordance with generally accepted auditing standards and expressed an

unqualified opinion on those statements in my report dated February 4, 2008. The consolidated and

the separate balance sheets as of December 31, 2007, which has been presented herein for

comparative purpose, I have not performed any other audit procedures subsequent to the date of that

report.

S.K. ACCOUNTANT SERVICES COMPANY LIMITED

(Somchai Kurujitkosol)

Authorized Auditor No. 3277

Bangkok,

July 31, 2008

3

2008 2007 2008 2007

'000 Baht '000 Baht '000 Baht '000 Baht

Unaudited Audited Unaudited Audited

Limited Review Only Limited Review Only

ASSETS

CURRENT ASSETS

Cash and Cash Equivalents (Note 5) 2,500,332 856,065 2,500,332 856,065

Current Investments (Note 6) 1,774,542 152,343 1,774,542 152,343

Trade Accounts Receivable - Net (Note 7) 1,114,837 780,320 1,114,837 780,320

Trade Accounts Related Companies (Note 4.2) 180,600 58,556 180,600 58,556

Inventories - Net (Note 8) 5,069,161 5,096,404 5,069,161 5,096,404

Other Current Assets

Account Receivable - Revenue Department 8,230 34,452 8,230 34,452

Advance Payable 4,669 20,134 4,669 20,134

Input Tax Pending 14,910 8,462 14,910 8,462

Deferred Interest Income 2,635 4,139 2,635 4,139

Others 5,502 4,547 5,832 4,547

Total Current Assets 10,675,418 7,015,422 10,675,748 7,015,422

NON-CURRENT ASSETS

Long Term Investments (Note 9)

Investment in Associated Company 10,024 6,155 4,900 4,900

General Investments - Net 810 810 810 810

Investment in Subsidiary Company (Note 10) - - - -

Property, Plant and Equipment - Net (Note 11) 9,235,888 9,324,661 9,235,888 9,324,661

Land Not Used in Operations (Note 12) 895,153 843,209 895,153 843,209

Other Assets

Deposit for Assets 19,080 34,518 19,080 34,518

Others 2,714 2,503 2,714 2,503

Total Non - Current Assets 10,163,669 10,211,856 10,158,545 10,210,601

Total Assets 20,839,087 17,227,278 20,834,293 17,226,023

Notes to financial statements are an integral part of these statements.

THAINOX STAINLESS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY

BALANCE SHEETS

As of June 30,2008 And December 31, 2007

The Separate Financial StatementsConsolidated

4

2008 2007 2008 2007




LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Trade Accounts and Notes Payable 2,071,448 2,322,103 2,071,448 2,322,103

Accounts Payable Related Company (Note 4.2) 5,392,899 1,953,290 5,392,899 1,953,290

Current Portion of Long Term Loans (Note 13) 49,174 45,808 49,174 45,808

Other Current Liabilities

Account Payable - Revenue Department - 11,002 - 11,002

Accrued Expenses 114,448 108,397 114,448 108,397

Accrued Expenses Related Companies (Note 4.2) 346 1,465 346 1,465

Deposit from Customers 52,763 82,709 52,763 82,709

Other Accounts Payable 10,327 78,970 10,327 78,970

Withholding Income Tax Payable 2,590 10,554 2,590 10,554

Others 13,436 11,324 13,421 11,324

Total Current Liabilities 7,707,431 4,625,622 7,707,416 4,625,622

NON - CURRENT LIABILITIES

Long Term Loan - Net (Note 13) 407,195 341,381 407,195 341,381

Employees’ Retirement Indemnity (Note 14) 54,779 51,550 54,779 51,550

Total Non-Current Liabilities 461,974 392,931 461,974 392,931

Total Liabilities 8,169,405 5,018,553 8,169,390 5,018,553



BALANCE SHEETS


Consolidated The Separate Financial Statements

5

2008 2007 2008 2007




SHAREHOLDERS’ EQUITY

Share Capital

Authorized Share Capital

8,000,000,000 Ordinary Share @ Baht 1.00 8,000,000 8,000,000 8,000,000 8,000,000

Issued and Paid-up Share Capital

8,000,000,000 Ordinary Share @ Baht 1.00 8,000,000 8,000,000 8,000,000 8,000,000

Premiun on Share Capital - Net 332,131 332,131 332,131 332,131

Revaluation Increment in Property, Plant and Equipment - Net (Note 11,18) 2,223,453 2,364,969 2,223,453 2,364,969

Unrealized Gain on Investment in Securities Available for Sale (Note 6) - 2,343 - 2,343

Treasury Stock (Note 15) (249,558) (249,558) (249,558) (249,558)

Retained Earnings

Appropriated

Legal Reserve (Note 17) 530,000 530,000 530,000 530,000

Treasury Stock Reserve (Note 15) 249,558 249,558 249,558 249,558

Unappropriated 1,584,267 979,282 1,579,319 978,027

Total Shareholders' Company 12,669,851 12,208,725 12,664,903 12,207,470

Minority Shareholders' Interest (169) - - -

Total Shareholders' Equity 12,669,682 12,208,725 12,664,903 12,207,470

Total Liabilities and Shareholders' Equity 20,839,087 17,227,278 20,834,293 17,226,023


BALANCE SHEETS




6

Unaudited

Limited Reviewed Only

2008 2007 2008 2007


Revenue from Sale 4,582,795 6,223,189 4,582,795 6,223,189

Cost of Goods Sold (4,020,579) (6,071,555) (4,020,579) (6,071,555)

Gross Margin 562,216 151,634 562,216 151,634

Other Income

Interest Income 23,830 61,096 23,830 61,096

Gain on Exchange Rate - 91,541 - 91,541

Others 3,054 2,850 3,054 2,850

Selling and Administrative Expenses (200,985) (212,683) (200,639) (212,683)

Other Expenses

Loss on Exchange Rate (76,121) - (76,121) -

Director's Remuneration (Note 4.1) (2,077) (7,610) (2,077) (7,610)

Financial Expenses

Bank Charge (1,189) (2,286) (1,189) (2,286)

Participating Profit in Associated Company 2,853 639 - -

Profit Before Income Tax 311,581 85,181 309,074 84,542

Corporate Income Tax (Note 19) - - - -

Net Profit 311,581 85,181 309,074 84,542

Apportion Profit(Loss)

Part of Parent Company Shareholders' Interest 311,750 85,181 309,074 84,542

Part of Minority Shareholders' Interest (169) - - -

311,581 85,181 309,074 84,542

BASIC EARNINGS PER SHARE (Unit : Baht) (Note 20) 0.0400 0.0109 0.0396 0.0108

ORDINARY SHARES (Unit : '000 Share) (Note 20) 7,795,709 7,795,709 7,795,709 7,795,709


The Separate Financial Statements


STATEMENTS OF INCOME

For the Quarter Period Ended on June 30, 2008 and 2007

Consolidated

7

Unaudited


2008 2007 2008 2007


Revenue from Sale 9,254,506 11,282,102 9,254,506 11,282,102

Cost of Goods Sold (8,434,131) (10,390,551) (8,434,131) (10,390,551)

Gross Margin 820,375 891,551 820,375 891,551

Other Income

Interest Income 40,982 110,050 40,982 110,050

Gain on Exchange Rate 182,696 157,864 182,696 157,864

Realized Gain on Investment in Securities Available for Sale 2,421 - 2,421 -

Others 6,151 5,059 6,151 5,059

Selling and Administrative Expenses (368,291) (415,366) (367,946) (415,366)

Other Expenses

Director's Remuneration (Note 4.1) (2,687) (8,330) (2,687) (8,330)

Financial Expenses

Bank Charge (2,671) (4,535) (2,671) (4,535)

Interest Expense (71) (1) (71) (1)

Participating Profit in Associated Company 3,869 1,135 - -

Profit Before Income Tax 682,774 737,427 679,250 736,292

Corporate Income Tax (Note 19) - - - -

Net Profit 682,774 737,427 679,250 736,292


Part of Parent Company Shareholders' Interest 682,943 737,427 679,250 736,292

Part of Minority Shareholders' Interest (169) - - -

682,774 737,427 679,250 736,292

BASIC EARNINGS PER SHARE (Unit : Baht) (Note 20) 0.0876 0.0946 0.0871 0.0944

ORDINARY SHARES (Unit : '000 Share) (Note 20) 7,795,709 7,795,709 7,795,709 7,795,709




STATEMENTS OF INCOME

For the Six Months Period Ended on June 30, 2008 and 2007

Consolidated

8

Unaudited


Issued and Premiums on Revaluation Increment Unrealized Gain Treasury Stock Minority

Paid-Up Share Capital - Net in Property, Plant and on Investments Unappropriated Stareholders' Total

Share Capital Equipment - Net Available for Sale Legal Reserve Treasury Stock Interest

Securities Reserve

'000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht

Balance as of December 31, 2007 8,000,000 332,131 2,364,969 2,343 (249,558) 530,000 249,558 979,282 - 12,208,725

Net Profit - - - - - - - 682,943 (169) 682,774

Depreciation (Note 11,18) - - (141,516) - - - - - - (141,516)

Dividend (Note 16) - - - - - - - (77,958) - (77,958)

Realized Gain on Investment in Securities Available for Sale - - - (2,343) - - - - - (2,343)

Balance as of June 30, 2008 8,000,000 332,131 2,223,453 - (249,558) 530,000 249,558 1,584,267 (169) 12,669,682

Balance as of December 31, 2006 8,000,000 332,131 2,648,913 - (249,558) 523,000 249,558 852,204 - 12,356,248

Net Profit - - - - - - - 737,427 - 737,427

Depreciation (Note 18) - - (140,805) - - - - - - (140,805)

Balance as of June 30, 2007 8,000,000 332,131 2,508,108 - (249,558) 523,000 249,558 1,589,631 - 12,952,870



STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY(CONSOLIDATED)


Appropriated

Retained Earnings

9

Unaudited


Issued and Premiums on Revaluation Increment Unrealized Gain Treasury Stock

Paid-Up Share Capital - Net in Property, Plant and on Investments Unappropriated Total

Share Capital Equipment - Net Available for Sale Legal Reserve Treasury Stock

Securities Reserve

'000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht '000 Baht

Balance as at December 31, 2007 8,000,000 332,131 2,364,969 2,343 (249,558) 530,000 249,558 978,027 12,207,470

Net Profit - - - - - - - 679,250 679,250

Depreciation (Note 11,18) - - (141,516) - - - - - (141,516)

Dividend (Note 16) - - - - - - - (77,958) (77,958)

Realized Gain on Investment in Securities Available for Sale - - - (2,343) - - - - (2,343)

Balance as of June 30, 2008 8,000,000 332,131 2,223,453 - (249,558) 530,000 249,558 1,579,319 12,664,903

Balance as at December 31, 2006 before Adjustments 8,000,000 332,131 2,648,913 - (249,558) 523,000 249,558 852,204 12,356,248

Effect from the Change in Accounting Policy - - - - - - - (421) (421)

Balance as at December 31, 2006 after Adjustments 8,000,000 332,131 2,648,913 - (249,558) 523,000 249,558 851,783 12,355,827

Net Profit - - - - - - - 736,292 736,292

Depreciation (Note 18) - - (140,805) - - - - - (140,805)

Balance as of June 30, 2007 8,000,000 332,131 2,508,108 - (249,558) 523,000 249,558 1,588,075 12,951,314



STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY(THE SEPARATE FINANCIAL STATEMENTS)


Appropriated

Retained Earnings

10

Unaudited


2008 2007 2008 2007


CASH FLOW FROM OPERATING ACTIVITIES

Net profit 682,943 737,427 679,250 736,292

Adjustment to Net Profit (Loss) for Cash Received (Paid) from Operations

Depreciation 261,033 269,168 261,033 269,168

Allowance from Declining in Value of Inventories (Reversal) (248,345) 757,076 (248,345) 757,076

Amortization of Discount on Debt Instruments (1,389) - (1,300) -

Write off Spareparts and Expenses of Building 1,800 9,883 1,800 9,883

Amortization of Spareparts 78,982 57,759 78,982 57,759

Unrealized (Gain) Loss on Exchange Rate 186,468 (141,456) 186,468 (141,456)

Realized (Gain) on Investment in Securities Available for Sale (2,421) - (2,421) -

Allowance for Doubtful Accounts (Reversal) (310) 40 (310) 40

Provision for Employee Retirement Indemnity 3,229 3,229 3,229 3,229

Interest Expenses 734 303 734 303

Interest Income (42,487) (110,050) (42,487) (110,050)

Participating Profit in Associated Company (3,869) (1,135) - -

Minority Shareholders' Interest in Net Profit(Loss) (169) - - -

Profit from Operating Activities before Changes in Operating 916,199 1,582,244 916,633 1,582,244

Assets and Liabilities

(Increase) Decrease in Trade Accounts Receivable (309,264) (236,457) (309,264) (236,457)

(Increase) Decrease in Trade Accounts Receivable Related Companies (122,016) - (122,016) -

(Increase) Decrease in Inventories 275,588 (3,431,237) 275,588 (3,431,237)

(Increase) Decrease in Other Current Assets 31,332 (136,009) 31,001 (136,009)

(Increase) Decrease in Other Assets (9,099) 2,938 (9,099) 2,938

Increase (Decrease) in Trade Accounts (214,375) 3,951,179 (214,375) 3,951,179

Increase (Decrease) in Accounts Payable Related Company 3,225,528 2,377,093 3,225,528 2,377,093

Increase (Decrease) in Other Current Liabilities (120,093) (59,739) (120,107) (59,739)

Increase (Decrease) in Other Current Liabilities Related Company (1,119) (25,121) (1,119) (25,121)

Paid for Income Tax (245) (599) (245) (599)

Cash Received from Interest 43,991 100,411 43,991 100,411

Net Cash Received (Used) from Operating Activities 3,716,427 4,124,703 3,716,516 4,124,703



CASH FLOW STATEMENTS



11

Unaudited


2008 2007 2008 2007


CASH FLOW FROM INVESTING ACTIVITIES

Cash Paid for Purchase of Fixed Assets (355,373) (1,094,874) (355,373) (1,094,874)

Cash Paid for Purchase of Land not Used in Operations (51,944) - (51,944) -

Cash Received from Current Investments 152,421 - 152,421 -

Cash Paid for Investment in Debenture Hold on Due Date (1,773,153) (244,581) (1,773,242) (244,581)

Net Cash Received(Used) from Investing Activities (2,028,049) (1,339,455) (2,028,138) (1,339,455)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash Received from Long Term Loan 33,847 167,273 33,847 167,273

Cash paid for Deferred Financing Service Fee for Long Term Loan - (24,443) - (24,443)

Cash Paid for Dividend (77,958) - (77,958) -

Net Cash Received(Used) from Financing Activities (44,111) 142,830 (44,111) 142,830

Cash on Hand and Cash Equivalents Increase (Decrease)-Net 1,644,267 2,928,078 1,644,267 2,928,078

Cash on Hand and Cash Equivalents at Beginning of the Period (Note 5) 856,065 4,798,397 856,065 4,798,397

Cash on Hand and Cash Equivalents at Ending of the Period (Note 5) 2,500,332 7,726,475 2,500,332 7,726,475

Additional Disclosure of Cash Flow:

1. Cash paid during the period for

Interest Expenses Added to Cost of Assets 146 165 146 165





CASH FLOW STATEMENTS

12


Notes to Financial Statements

June 30, 2008 (Unaudited/Limited Review Only)

And December 31, 2007 (Audited)

1. General Information

The Company is a company registered in Thailand registration number 0107547000419 and

listed on the Stock Exchange of Thailand. The principal activities of the Company are production and

sales of cold - rolled stainless steel for use in the manufacture of sinks, kitchen appliances, washing

machines and a variety of other consumers and industrial products. The Mahagitsiri Group is the

largest shareholder.

Presently, the Company has offices located at the following addresses:

a) Head Office : 31st floor Unit 3101-3, CRC Tower, All Seasons Place, 87/2 Wireless

Road, Lumpini, Pathumwan, Bangkok 10330, Thailand.

b) Factory : 324 Moo 8, Highway 3191 Road, Tambol Mabkha, Nikom Pattana, Rayong

21180, Thailand.

2. Basis of Preparation of the Interim Financial Statements.

2.1 These interim financial statements were presented in the set abbreviated format as stipulated

under accounting standard No. 41 (Revised 2007) concerning “Interim Financial Statements”.

Anyhow, the Company has presented transactions in balance sheet, statements of income, the

statements of changes in shareholders’ equity and the cash flow statement in format of

accounting standard No.35 (Revised 2007) concerning “Presentation of financial statements”.

2.2 In order to prepare the financial statements to comply with generally accepted accounting

principles, the company’s management had to make some estimates and assumptions which may

effect to the amount of revenue, expense, assets, liabilities, assets disclosures and contingent

liabilities, therefore the actual result may differ from the estimated amount.

2.3 These interim financial statements were prepared to provide additional information over the latest

annual financial statements. Therefore, the interim financial statements emphasis on present activities,

events and situations in order to avoid the duplicate information. The persons who use these

interim financial statements should use it together with the latest annual financial statements

available.

13

2.4 Summary of Significant Accounting Policy

These interim financial statements were prepared under the same accounting policy and

calculation methods as used in the annual financial statements ending on December 31, 2007

The additional accounting policy, which was used in the financial statements for the

quarter ended on June 30, 2008, is as follows:

(1) Investment in debenture bonds that are held until maturity.

- Investment in asset is recognized at the cost of investment. The cost of

investments comprises the purchase price and all direct expenses which the

Company paid to get those investments.

- Investment is presented at the amortized cost method.

(2) Investment in subsidiary is presented at cost method less allowance for impairment

(If any).

2.5 The Accounts Reclassification.

For the purpose of comparability and according to the account reclassification in current

period, the Company has reclassified accounts in the financial statements as of December 31, 2007

and there was no effect to the net profit or shareholders’ equity presented in the report. The items

were as follows:

Increase (Decrease)

’000 Baht

Deposit for Assets - Non Current Assets 4,396

Deposit for Assets - Current Assets (4,396)

Trade Accounts Payable Related Company 474,330

Trade Accounts Payable (474,330)

2.6 Thai Accounting Standards which are effective for the year 2008 are as follows:

No. 25 (Revised 2007) Cash Flow Statements

No. 29 (Revised 2007) Leases

No. 31 (Revised 2007) Inventories

No. 33 (Revised 2007) Borrowing Costs

No. 35 (Revised 2007) Presentation of Financial Statements

No. 39 (Revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors

No. 41 (Revised 2007) Interim Financial Reporting

No. 43 (Revised 2007) Business Combinations

No. 49 (Revised 2007) Construction Contracts

No. 51 (Revised 2007) Intangible Assets

The new released and revised accounting standards shall not impact significantly to the

financial statements.

14

3. Basis of Consolidation

3.1 In preparation of the consolidated financial statements, the company will only take its subsidiary

company which is under the main control of THAINOX STAINLESS PUBLIC COMPANY

LIMITED into account, after having eliminated the remaining balances and transactions among

themselves. As of June 30, 2008, and for the quarter and six months period ended on June 30,

2008 of the THAINOX STAINLESS PUBLIC COMPANY LIMITED which holds shares in

subsidiary companies with percentage of shareholding as follows:

Company’s Name Type of Business Relationship Percentage of

Country

Shareholdings

2008 2007

THAI STAINLESS COMPONENTS Production and Distribution Subsidiary 51% - Thailand

COMPANY LIMITED of Stainless Steel Flat Products

and Components for Export

3.2 Accounting policy of the subsidiary company will utilize the same policy as of the THAINOX

STAINLESS PUBLIC COMPANY LIMITED in the preparation of the consolidated financial

statements.

4. Related Party - Transactions

The significant inter-transactions among the Company, related companies and directors were

as follows:

4.1 Related Party-Revenues and Expenses


Policy to For the Quarter For the Six months

Assign Ended on June 30, Ended on June 30,

2008 2007 2008 2007

’000 Baht ’000 Baht ’000 Baht ’000 Baht

Sales (1)

NS - Thainox Auto Co., Ltd. 57,783 - 83,326 -

POSCO Asia Co., Ltd. - 14,049 1,660 14,049

POSCO Steel Services and Sales Ltd. - 6,738 - 6,738

POSCO Thailand Co., Ltd. - 11,372 - 11,372

Nippon Steel Trading (Hong Kong) Ltd. 3,503 12,143 11,613 12,143

Nippon Steel Trading (Singapore) Ltd. - 13,509 - 34,638

Nippon Steel Trading (Thailand) Co., Ltd. 791,626 956,571 1,437,848 1,624,206

JFE Shoji Trade Corporation - - 17,913 -

JFE Shoji Trade (Thailand) Co., Ltd. 2,884 - 2,884 -

Total 855,796 1,014,382 1,555,244 1,703,146

15


Policy to For the Quarter For the Six months

Assign Ended on June 30, Ended on June 30,

2008 2007 2008 2007


Purchase of Raw Material (2)

POSCO Ltd. 2,540,470 2,171,875 3,458,267 6,011,076

Nippon Steel & Sumikin Stainless Steel Corporation 78,417 13,711 101,558 13,711

JFE Shoji Trade Corporation 111,713 - 132,002 -

Nikkinko Trading Co., Ltd. 784,680 - 1,493,837 -

Total 3,515,280 2,185,586 5,185,664 6,024,787

Commission (3)

Siam Lotus Co., Ltd. 489 535 947 1,003

Director's Remuneration (4) 2,077 7,610 2,687 8,330

(1) Sales - The market price, which was nearly comparable to the sale prices to others.

(2) Purchase of raw material - The market price, which was nearly comparable to the

purchasing prices from others.

(3) Based on agreed price, which was comparable to the others.

(4) Director’s Remuneration - Include Bonus, according to Annual general meeting of

the Shareholders.

4.2 Related Party -Assets and Liabilities


As of

June 30, 2008 December 31, 2007

’000 Baht ’000 Baht

Trade Accounts Receivable

NS - Thainox Auto Co., Ltd. 62,653 15,828

POSCO Asia Co., Ltd. - 2,753

Nippon Steel Trading (Thailand) Co., Ltd. 115,552 39,975

Nippon Steel Trading (Hong Kong) Ltd. 2,395 -

Total 180,600 58,556

Advance Payable

Thai Stainless Components Co., Ltd. 331 -

16


As of

June 30, 2008 December 31, 2007


Trade Accounts Payable

POSCO Ltd. 3,589,412 1,449,887

JFE Shoji Trade Corporation 136,238 -

Nippon Steel & Sumikin Stainless Corporation 98,206 29,074

Nikkinko Trading Co., Ltd. 1,569,043 474,329

Total 5,392,899 1,953,290

Accrued Expenses

Siam Lotus Co., Ltd. 346 1,465

4.3 Type of Relationship with the Company Name of Company Country Relationship

NS-Thainox Auto Co., Ltd.

Nature of Relationship

Thailand Associated Company Direct Shareholders and Mutual Management

Thai Stainless Components Co., Ltd. Thailand Subsidiary Company Direct Shareholders and Mutual Management

POSCO Ltd. (Related Company start at January

29, 2007)

South Korea Related Company Direct Shareholders

POSCO (Thailand) Co., Ltd. Thailand Related Company This Company had been related with Related Companies

POSCO Asia Co., Ltd. Hong Kong Related Company This Company had been related with Related Companies

POSCO Steel Services and Sales Ltd. South Korea Related Company This Company had been related with Related Companies

Nippon Steel & Sumikin Stainless Corporation Japan Related Company Direct Minority Shareholders

Nippon Steel Trading (Thailand) Co., Ltd. Thailand Related Company This Company had been related with Related Companies

Nippon Steel Trading (Hong Kong) Ltd. Hong Kong Related Company This Company had been related with Related Companies

Nippon Steel Trading (Singapore) Ltd. Singapore Related Company This Company had been related with Related Companies

Siam Lotus Co., Ltd. Thailand Related Company This Company had been related with Related Companies

JFE Shoji Trade Corporation Japan Related Company Indirect Minority Shareholders

JFE Shoji Trade (Thailand) Co., Ltd Thailand Related Company This Company had been related with Related Companies

Nikkinko Trading Co., Ltd. Japan Related Company This Company had been related with Related Companies

17

5. Cash and Cash Equivalents

Consist of:

Consolidated/


As of

June 30, 2008 December 31, 2007


Cash 179 179

Bank Deposit - Current Account 69 69

Bank Deposit - Saving Account 2,330,084 488,064

Bill of Exchange - Due within 30 days 170,000 367,753

Total 2,500,332 856,065

6. Current Investment

Consist of:

Consolidated/


As of

June 30, 2008 December 31, 2007

Cost Fair Value Cost Fair Value


Unit Trusts

Unit Trusts - - 150,000 152,343

Add Unrealized Gain on Investments in

Securities Available for Sale - - 2,343 -

Total - - 152,343 152,343

Debt Instruments Due within 1 year

Government Bond 1,773,153 1,772,058 - -

Add 1,389 Investment Discount - - -

Total 1,774,542 1,772,058 - -

Grand Total 1,774,542 1,772,058 152,343 152,343

18

As of June 30, 2008 and December 31, 2007, investment in securities has movement as

follows:

Consolidated/


As of

June 30, 2008 December 31, 2007


Book Value Beginning - Net 152,343 -

Buy Securities 1,773,153 150,000

Sale Unit Trusts (152,343) -

Change in Fair Value of Securities - 2,343

Discount on Investment 1,389 -

Book Value Ending - Net 1,774,542 152,343

7. Accounts Receivable - Net

Consist of:

Consolidated/


As of

June 30, 2008 December 31, 2007


Within credit term 1,036,734 761,613

Over credit term less than 3 months 78,103 18,707

Over credit term 3 - 6 months - -

Over credit term 6 - 12 months - -

Over credit term 12 months 73,377 73,687

Total 1,188,214 854,007

Less (73,377) allowance for doubtful debt (73,687)

Net 1,114,837 780,320

19

As of June 30, 2008 and December 31, 2007, Allowance for doubtful debt has movement as

follows:

Consolidated/


As of

June 30, 2008 December 31, 2007


Allowance for Doubtful Debt - Beginning (73,687) (73,757)

Add - Reserve within Period -

Less 310 Refund Doubtful Accounts within Period 70

Allowance for Doubtful Debt - Ending (73,377) (73,687)

8. Inventories-Net

Consist of:

Consolidated/


As of

June 30, 2008 December 31, 2007


Finished Goods 1,623,490 1,845,216

Work in Process 1,734,517 1,578,707

Raw Materials 27,741 760,857

Supplies 52,195 44,058

Material in - transit 1,732,713 1,217,406

Total 5,170,656 5,446,244

Less (101,495) Allowance from Declining in Value (349,840)

Net 5,069,161 5,096,404

20

As of June 30, 2008 and December 31, 2007, Allowance from declining in value has

movement as follows:

Consolidated/


As of

June 30, 2008 December 31, 2007


Allowance from Declining in Value - Beginning (349,840) (38,376)

Add - Reserve within Period (311,464)

Less 248,345 Reversal of Declining in Value -

Allowance from Declining in Value - Ending (101,495) (349,840)

9. Long Term Investment

Consist of:

Paid-up Capital Percentage of Shareholdings Consolidated The Separate Financial Statements

Equity Method Cost Method

As of As of As of As of As of

As of As of

As of

Company Name June 30, December 31, June 30, December 31, June 30, December 31,

June 30, December 31,

2008 2007 2008 2007 2008 2007

2008 2007

’000 Baht ’000 Baht Percentage Percentage ’000 Baht ’000 Baht


Associated Company

NS-THAINOX AUTO CO., LTD. 10,000 10,000 49.00 49.00 10,024 6,155

4,900 4,900

Total 10,024 6,155

4,900 4,900

General Investment - Net

CHANTHABURI COUNTRYCLUB CO., LTD. 30,000 30,000 0.25 0.25 2,250 2,250

2,250 2,250

KHOWKIEAW COUNTRYCLUB CO., LTD. 42,686 42,686 0.01 0.01 1,960 1,960

1,960 1,960

Total 4,210 4,210

4,210 4,210

Less Loss from Impairment of Investment (3,400) (3,400)

(3,400) (3,400)

Net 810 810

810 810

As of June 30, 2008 and December 31, 2007, the Company recorded investment in associated

company in the Company separate financial statements by historical cost, i.e. initial cost price is equal

to Baht 4.90 million.

21

As of June 30, 2008, the Company recorded investment in associated company by equity

method and recognized participating of profit in the associated company based upon the operating

results for the quarter and six months period ended on June 30, 2008. The financial statements of the

associated company were prepared by the management of that associated company. Its total assets

were Baht 83.01 million (equal to 0.40 percent of total assets of the Company) and participating profit

in the associated company for the quarter ended on June 30, 2008 was Baht 2.85 million (equal to

0.06 percent of total revenues of the Company for the quarter ended on June 30, 2008) and

participating profit in the associated company for the six months period ended on June 30, 2008 was

Baht 3.87 million (equal to 0.04 percent of total revenues of the Company for the six months period

ended on June 30, 2008)

As of December 31, 2007, the Company recorded investment in associated company by

equity method in the consolidated financial statements and recognized participating of profit in the

associated company based upon the operating results for the year ended on December 31, 2007. The

financial statements of the associated company were prepared by the management of that associated

company. Its total assets were Baht 32.91 million (equal to 0.19 percent of total assets of the

Company) and participating profit in the associated company for the year ended on December 31,

2007 was Baht 1.09 million (equal to 0.0058 percent of total revenues of the Company for the year

ended on December 31, 2007)

The financial statements of the associated company as of December 31, 2007 which was

audited by its auditor according to the report dated on February 28, 2008 reflected total assets of the

associated company in amount of Baht 32.14 million and participating profit in the associated

company amounted to Baht 0.51 million. As a result, participating profit in the associated company

was lower than its financial statements prepared by management amounting to Baht 0.58 million. The

impact is not material, consequently, the Company does not adjust retroactively but it adjusts against

the present period of the financial statements.

22

10. Investment in Subsidiary Company

Percentage of The Separate Financial Statements

Company’s Name Shareholding Investment Cost Method

As of

June 30, 2008 December 31, 2007


Thai Stainless Components Co., Ltd 51 17,850 -

Less Share Subscription Payable (17,850) -

Balance - -

The board of directors’ meeting No. 2/2008 held on February 28, 2008, approved to form a

new company and to become a shareholder in that new company to expand business opportunity of

the Company. The Company signed a shareholders agreement for investment with Intersider Acciai

S.p.A. from ltaly, to establish the new company. Name of the company is Thai Stainless Components

Co., Ltd. Main objective are for the production and distribution of stainless steel flat products and

components for export. The proposed registered capital is divided into 14 million shares at par value

of Baht 10 per share, total amount of Baht 140 million. The Company shall hold 51 percent shares.

The new company completed the registration on May 29, 2008.

As of June 30, 2008, the subsidiary company had called-up 25 percent of par value of Baht

10 per share on all of the 14 million shares. During July 2008, the subsidiary had received paid-up

amount of share from the shareholders’ holding 14 million shares, for an amount of Baht 2.50 per

share, aggregating to Baht 35 million.

23

11. Property, Plant and Equipment-Net

For the six months period ended on June 30, 2008 are as follows:

Consolidated/


’000 Baht

Beginning Book Value-Net 9,324,661

Purchase 355,373

Interest Expenses and Commitment Fee Capitalized to Assets 11,662

Transfer out Deposit of Assets to Assets 27,523

Sales -

Write off Spare part and Expenses of Building (1,800)

Amortization Spare part (78,982)

Accumulated Depreciation on Sold Assets -

Depreciation for Portion Shown in Statement of Income (261,033)

Depreciation for Portion Shown in Shareholders’ Equity (141,516)

Ending Book Value-Net 9,235,888

In July 2004, the Company engaged a consulting company (The Valuation & Consultants

Co., Ltd.), as an independent appraiser, to reappraise buildings and improvements, machinery and

equipment outstanding as at June 30, 2004. According to the appraisal report dated July 1, 2004, those

assets, which had a net book value as at June 30, 2004 of Baht 7,802.8 million, had a value, based on

the replacement cost approach method net of accumulated depreciation, totaling Baht 9,397.8 million.

The Company recorded the revaluation increment amounting to Baht 1,595 million as a component of

“Shareholders’ Equity” in the balance sheet.

As of June 30, 2008 and December 31, 2007, the Company recorded the related revaluation

increment (net of accumulated depreciation and the portion relating to assets disposed of) amounting

to approximately Baht 2,223.45 million and Baht 2,364.97 million respectively as a component of

“Shareholders’ Equity” in the balance sheet. The revaluation increment of property, plant and

equipment is not available for dividend distribution.

As of June 30, 2008 and December 31, 2007, the Company had some of its assets fully

depreciated but still in use which had a cost value of Baht 284.65 million and Baht 262.29 million

respectively and book value amount of Baht 3,433 and Baht 3,213 respectively.

24

12. Land not Used in Operations

For the six months period ended on June 30, 2008 are as follows:

Consolidated/


’000 Baht

Land not Used in Operation - Beginning 843,209

Increase 51,944

Land not Used in Operation - Ending 895,153

At the board of directors’ meeting No. 1/2008 held on January 10, 2008, the board of

directors passed the resolution to approve purchase of additional land, to be useful in the future for the

Company from persons which are not connected persons. That land is adjacent to the existing land of

the Company in number of 200 Rai, 1 Ngan, and 36 square-wah. Presently, the Company had

purchased and transferred right of ownership of the land in number of 193 Rai, 3 Ngan, and 26 square-

wah.

13. Long Term Loan-Net

Consist of:

Consolidated/


As of

June 30, 2008 December 31, 2007


Foreign Currency Loans

Due within 1 year 49,174 45,808

Due within 2 - 5 years 393,394 229,040

Due more than 5 years 34,855 135,009

Total 477,423 409,857

Less (21,054) Deferred Financing Service Fee (22,668)

Balance 456,369 387,189

Less (49,174) Current Portion of Long Term Loans (45,808)

Net 407,195 341,381

25

As of June 30, 2008 and December 31, 2007, the Company had a commitment of credit

agreement from a foreign commercial bank for machine payment with a credit line of Euro 12.94

million, with fixed interest rate at 4.12 percent per annum. Credit drawn amounted to Euro 8.96

million and Euro 8.26 million respectively. Principal is repayment within fourteen periods, every six

months, the first such repayment to be made on December 29, 2008.

The loan is unsecured loan with negative pledge clause. The loan is guaranteed by

COFACE, (a French Export Credit Agency). A commitment fee at 0.10 percent per annum is payable

on any unused credit line.

14. Employees’ Retirement Indemnity

The Company adopted the accounting for retirement indemnity following the International

Financial Reporting Standard (IFRS) No. 19 “Employee Benefits”. The retirement indemnity will be

paid to employees upon retirement from the Company. The retirement indemnity is calculated

annually by a qualified actuary using the projected unit credit method in order to determine the

present value of the obligation and the current service cost.

Based on the actuarial valuation report issued by the independent actuaries dated January 14,

2005, the retirement indemnity for the Company’s employees for the six months period ended on June

30, 2008 and for the year ended on December 31, 2007, computed according to the IFRS No. 19

amounted to Baht 3.23 million and 6.46 million, respectively.

Employees’ retirement indemnity is analyzed are as follows:

Consolidated/


For the Six Months Period For the Year

Ended on Ended on

June, 30 2008 December, 31 2007


Balance sheet provisions as at January 1

Present value of the obligation 40,066 33,692

Fair value of financial assets - -

Total 40,066 33,692

Unrecognized actuarial gain (loss) 9,011 9,011

Unrecognized past service cost - -

Unrecognized net transition assets (liabilities) - -

Liabilities recognized in balance sheet 49,077 42,703

26

Consolidated/


For the Six Months Period For the Year

Ended on Ended on

June, 30 2008 December, 31 2007


Benefit expense for the year

Current service cost 1,198 4,791

Interest cost 1,004 2,009

Net actuarial (gain) loss recognized in the year (171) (342)

Past service cost - -

Transitional (asset) liabilities - -

Expense recognized in the income statement 2,031 6,458

Movements in the net liabilities recognized in the

Balance sheet

Opening net liabilities 51,550 45,092

Expenses 3,229 6,458

Benefit paid - -

Closing net liabilities 54,779 51,550

Main actuarial assumptions (%)

Discount rate 6.00 6.00

Average rate of salary increase 3.00 3.00

Inflation rate 6.00 6.00

15. Treasury Stock

The board of directors’ meeting No. 8/2005 held on September 13, 2005, resolved to let

shareholders meeting consider, and the shareholders approved per EGM No. 1/2005 to allow the

Company to rectify the Company’s article No. 10 of the articles of association in respect of the buy

back of its Shares as the Company may purchase its shares back and dispose of such shares within the

time limit prescribed in the Ministerial Regulations pursuant to the provisions of the public companies

laws and securities and stock exchange laws. In case the Company does not or could not dispose all

of the shares which have been purchased-back by the Company within the prescribed time, the

Company shall reduce its paid-up capital by canceling any such shares which remain undisposed.

The shares held by the Company shall not be counted for constituting a quorum of the shareholders’

meeting nor entitle the Company to voting rights and dividend payments. The Company may

purchase its shares back, subject to an approval from the shareholders of the Company. However, the

27

Board of Directors of the Company shall have the authority to approve the purchase-back of the

shares of the Company if the number of shares to be purchased back does not exceed 10 per cent of

the total paid-up capital of the Company the transaction related to Treasury stock is analyzed as

follows:

Consolidated/


As of

June 30, 2008 December 31, 2007

Treasury Stock (’000 Shares) Purchased 204,291 204,291

Percent of Authorized and Paid Up Share Capital 2.55 2.55

Total Cost of Treasury Stock (’000 Baht) 249,558 249,558

Average Price per Share (Baht) 1.2216 1.2216

Reserve for Treasury Stock (’000 Baht) 249,558 249,558

The board of directors’ meeting No. 4/2007 held on February 27, 2007, resolved to approve

the sale of 204,290,900 Treasury shares of the Company which is equivalent to 2.55 percent of shares

totally issued and paid-up to be sold on the Stock Exchange of Thailand. The period for sale of

Treasury shares is during March 14, 2007 to June 4, 2009. The principle used to determine the resale

price of Treasury shares is not less than 85 percent of the average closing prices of the share for the

preceding five business days. Presently, the Company has not sold any Treasury shares.

The board of directors’ meeting No. 9/2007 held on August 9, 2007, resolved to approve

repurchase of shares for financial management purposes. Number of shares to be repurchased was to

595,709,100 shares, par value 1.00 baht per share, or equal to 7.45 percent of the total paid-up capital.

The maximum amount for the share repurchase is not over Baht 1,000 million. The repurchase period

was to started from August 27, 2007 to February 26, 2008 (completion date) by buying through the

Stock Exchange of Thailand. The disposal of any repurchased shares shall only be after six months

from completion date of share repurchase and not later than three years from this time. At present,

the Company has not repurchased any shares under this project.

16. Dividend

At the shareholders’ annual general meeting for the year 2008 held on April 25, 2008, it was

resolved to approve the dividend payment for the year 2007 to the shareholders of 7,795,709,100

shares at the rate of Baht 0.01 per share. The dividend paid to shareholders amounted to Baht

77,957,091 and the dividend was paid on May 9, 2008.

28

17. Legal Reserve

Under the provisions of the Limited Public Company act B.E. 2535, the Company is required

to appropriate at least 5 percent of its annual net profit after deduction of the deficit brought forward

(if any) as legal reserve until the reserve reaches not less than 10 percent of the authorized share

capital. As of June 30, 2008 and December 31, 2007, the Company appropriated for the legal reserve

amounting to Baht 530 million.

18. Amortization of the Revaluation Increment in Property, Plant and Equipment

The Company gradually amortizes the revaluation increment which was reflected in the asset

value and deducts against the revaluation increment which was reflected in the shareholders’ equity.

As a result, depreciation is charged to profit and loss account computed by historical cost. Such

accounting method may be selected to practice in accordance with the guidance under Thai

accounting standard which is different from international accounting standard (IAS 16 : Property

Plant and Equipment) which stipulates that the revaluation increment which was reflected in the

shareholders’ equity has to be directly transferred to retained earnings. As a result, depreciation

which was recorded in the statement of income is reflected by the new appraised value. However, if

the Company selected to use the accounting method in respect of the transfer of the revaluation

increment according to the international accounting standard, it would incur affect to the financial

statements as follows:

Consolidated/


For the Quarter For the Six months

Ended On June 30, Ended On June 30,

2008 2007 2008 2007


Depreciation Increase 70,779 70,791 141,516 140,805

Net Profit Decrease (70,779) (70,791) (141,516) (140,805)

Profit per Share Decrease (Baht : Share) (0.0091) (0.0091) (0.0182) (0.0181)

29

19. Corporate Income Tax

For the six months period ended on June 30, 2008, the Company calculated the income tax at

the rate of 25 percent, which complies with royal decree No.475 to reduce corporate income tax from

30 percent to 25 percent of net profit not over Baht 300 million for the three consecutively accounting

periods commencing from the first accounting period which commenced within or after January 1,

2008, for the companies registered according to the law of securities market, after adding adjusted

transaction in accordance with the Revenue Code which is beginning deficit not over five periods.

For the six months period ended on June 30, 2007 the Company calculated the income tax at

the rate of 25 percent, which complied with the basis in the Act in accordance with the Decree no.

387, which amended the rate of the corporate income tax from 30 percent to 25 percent of net profit

not over Baht 300 million for the five consecutively accounting periods from the initial accounting

period or after the date a public company is listed on the Stock Exchange, after adding adjusted

transaction in accordance with the Revenue Code which is beginning deficit not over five periods.

The Company has received an exemption of income tax for a period of five years at the rate

of 50 percent after the promotion period expired by virtue of the provisions of the Industrial

Investment Promotion Act as described in Note 21.

20. Basic Earnings Per Share

Basic earnings per share for the quarter and for the six months period ended on June 30, 2008

and 2007 were calculated by dividing the net profit by the weighted average number of shares as

follows:

Consolidated



2008 2007 2008 2007

Net Profit (’000 Baht) 311,750 85,181 682,943 737,427

Weighted Average Number of Shares Net

from Treasury Stock (’000 Shares) 7,795,709 7,795,709 7,795,709 7,795,709

Earnings Per Share (Baht) 0.0400 0.0109 0.0876 0.0946

Par Value (Baht) 1.00 1.00 1.00 1.00

30




2008 2007 2008 2007

Net Profit (’000 Baht) 309,074 84,542 679,250 736,292

Weighted Average Number of Shares Net

Treasury Stock (’000 Shares) 7,795,709 7,795,709 7,795,709 7,795,709

Earnings Per Share (Baht) 0.0396 0.0108 0.0871 0.0944

Par Value (Baht) 1.00 1.00 1.00 1.00

21. Promotional Privileges

By virtue of the provisions of the Industrial Investment Promotion Act B.E. 2520, the

Company was granted certain promotional privileges in the business relating to the manufacturing of

cold rolled stainless steel which included, among other, the following:

(1) Exemption from import duty on imported machinery and equipment.

(2) Exemption from 100 percent income tax for a period of eight years from the first derived

income as starting on December 11, 1997 and expiring on December 10, 2005.

(3) Exemption of income tax for a further period of 5 years at the rate of 50 percent after the

end of above promotion period. This promotion will be expired on December 10, 2010.

As a promoted industry, the Company must comply with the conditions provided for in the

promotional certificate.

22. Employees’ Provident Fund

The Company established a contributory registered provident fund in accordance with the

Provident Fund Act, B.E. 2530. The registered provident fund plan was approved by the Ministry of

Finance in accordance with the Ministerial Regulation No. 183 (B.E. 2533) on October 11, 1993.

Under the plan, the employees are required to contribute to the fund an amount equivalent to certain

percentages of their basic salaries. The Company also makes monthly contributions to the fund at the

percentage of the employees’ basic salaries. The Company appointed a fund manager to manage the

fund in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E.

2532) issued under the Provident Fund Act, B.E. 2530.

For the six months period ended on June 30, 2008 and 2007, the Company contributed to the

fund amounting to Baht 6.33 million and Baht 5.93 million respectively.

31

23. Segment Financial Information

The Company operates in one segment business which is business of production and

distribution of cold - rolled stainless steel and operates in geographical sector at domestic and export.

As a result, the revenue, profit and all assets which are reflected in the financial statements

are related to business sector and geographical sector in accordance with those mentioned. Revenue

from sale and services are segment financial information as follows: Consolidated

For the Six months Period

Ended on June 30, 2008

Segment Sales Total

Stainless

Domestic Export

’000 Baht ’000 Baht ’000 Baht

Revenue from Sales 4,965,313 4,289,193 9,254,506

Cost of Goods Sold (4,769,511) (3,664,620) (8,434,131)

Gross Margin 195,802 624,573 820,375

Other Income 232,250

Selling and Administrative Expenses (370,978)

Bank Charge (2,671)

Interest Expenses (71)

Participating Profit in Associated Company 3,869

Profit Before Income Tax 682,774

Corporate Income Tax -

Net Profit 682,774


Part of Shareholders' Parent Company 682,943

Part of Minority Shareholders' Interest (169)

682,774

Fixed Assets 10,131,041

Others Assets 10,708,046

Total Assets 20,839,087

Consolidated

For the Six months Period

Ended on June 30, 2007

Segment Sales Total

Stainless

Domestic Export

’000 Baht ’000 Baht ’000 Baht

Revenue from Sale 5,225,214 6,056,888 11,282,102

Cost of Goods Sold (5,265,397) (5,125,154) (10,390,551)

Gross Margin (40,183) 931,734 891,551

Other Income 272,973

Selling and Administrative Expenses (423,696)

Bank Charge (4,535)

Interest Expenses (1)

Participating Profit in Associated Company 1,135

Profit Before Income Tax 737,427

Corporate Income Tax -

Net Profit 737,427

Fixed Assets 10,167,870

Others Assets 7,059,408

Total Assets 17,227,278

32

The Company’s profit(loss) from operating of each segment occurred from total revenue less

cost of sales of those segment.

24. Directors’ Remuneration

Directors’ Remuneration was paid to the Company’s directors under Section 90 of Public

Company Limited Act which did not include salary and related benefits paid to the Company’s

management directors.

25. The Important Contract

As of June 30, 2008 and December 31, 2007, the Company has agreements as follows:

25.1 Supply Agreement of Hot-Rolled Stainless Steel Coils

The Company entered into an agreement with Arcelor, a company incorporated under the

laws of Luxembourg, whereby the latter agreed to supply and deliver the quantity of hot-rolled

stainless steel coils (raw materials) required by the Company and accepted by the party in

accordance with terms and conditions of the agreement at the purchase price as stipulated in the

agreement. This agreement is for a period of five (5) years commencing on March 19, 2004

and automatically extended for one or more additional three (3) years, unless either party gives

a one hundred and eighty (180) days written advance notice to the other party.

25.2 Reinstated Agency Agreement

The Company had entered into an agreement with Arcelor Stainless International,

a company incorporated under the laws of France, whereby the latter will provide exclusive

representation to promote the sales of the Company’s products all over the world, excluding

Japan and Thailand. In consideration thereof, the Company commits to pay commission at the

rates specified in the agreement based on the free on board (FOB) value of the products. The

agreement is effective on March 19, 2004 for an indefinite period of time. Either party may

terminate the agreement at any time by giving a six (6) months written advance notice to the

other party.

The Company is negotiating and finalizing the revised terms for a non-exclusive contract

which is already being applied with mutual consent.

33

25.3 Technology License Fee

The Company entered into a technology license agreement dated December 18, 2004

with Usinor, (a societe anonyme registered in France and formerly the Company’s major

shareholder) to supersede the technology license agreement dated May 19, 2004 for the

permanent right to use the existing technology of the Company, previously transferred to the

Company by Usinor under a Technical Assistance Agreement entered into on July 26, 1996 and

effective for a period of 10 years as from September 16, 1997. In this connection, the

Company paid a lump sum fee of U.S. Dollars 5.9 million (US Dollars 5 million net of

withholding tax) on December 28, 2004 to Ugine & ALZ France, a related company of Usinor.

25.4 Supply and Distribution Agreement

The Company entered into the Supply and Distribution agreement dated January 24,

2007 with POSCO Ltd., a company incorporated under the laws of South Korea with important

conditions as follows:

25.4.1 Hot – rolled coils

- The Company agreed to purchase up to 80 percent of its total annual purchase

volume of hot bands, excluding 409 L products and 200 series provided the price of

hot rolled coils is favorable to the Company.

- The agreement shall have an initial term of three years, and shall be automatically

renewed for successive three year terms unless otherwise terminated by either party.

25.4.2 Cold – rolled coils

- POSCO Ltd. will act as the distribution agent for the Company’s cold-rolled

products, the volume of which shall be determined on the basis of 40 percent of the

total volume of the hot bands purchased from POSCO Ltd. by the Company.

- The distribution agreement, which will cover customers in any markets outside of

Thailand, shall have an initial term of three years and shall be automatically renewed

for successive three years terms unless otherwise terminated by either party.

- The export price of the cold-rolled products - every month the Company will notify

the minimum export price by grade, thickness and country.

34

26. Forward Contract

The Company has outstanding forward contracts, due within one year, as follows:

Consolidated/


Assets in foreign currency Liabilities in foreign currency

As of As of

June 30, 2008 December 31, 2007 June 30, 2008 December 31, 2007

Hedging

Million US Dollars - 3.50 183.08 -

- Cost (Million Baht) - 118.34 6,047.29 -

- Fair Value (Million Baht) - 118.10 6,147.37 -

The Company has significant non-hedged foreign currency assets as follows:

Consolidated/


Assets in foreign currency Liabilities in foreign currency

As of As of

June 30, 2008 December 31, 2007 June 30, 2008 December 31, 2007

Non - Hedging

Million US Dollars 90.94 21.54 38.66 125.37

Million EURO - - 9.86 8.91

27. Obligation

27.1 Obligations with commercial banks

Apart from liabilities shown on the balance sheets as of June 30, 2008 and December 31,

2007 the Company still have other obligations as follows:

Consolidated/


As of

June 30, 2008 December 31, 2007

Credit Line Credit Used Credit Line

- Letters of Credit (Million Baht)

Credit Used

1,680.00 - 1,680.00 18.72

- Letters of Credit (Million US Dollar) 455.00 240.47 495.00 140.50

- Letters of Guarantee (Million Baht) 326.00 260.91 326.00 260.41

As of June 30, 2008 and December 31, 2007, the Company had an obligation contract

to borrow money, from a foreign commercial bank as mentioned in Note 13. The Company has

to pay a commitment fee at 0.10 percent per annum of unused loan amount.

35

27.2 Obligations pertaining to the domestic and overseas purchase for the machines and equipment

to increase capacity as follows:

Consolidated/


As of

June 30, 2008 December 31, 2007

- Million Baht 3.27 36.14

- Million EURO 3.52 4.22

- Million US Dollar 0.93 0.93

27.3 Obligations pertaining to the contract for construction of warehouse for the Company have

value amounting to Baht 101 million. As of June 30, 2008 and December 31, 2007 the

Company had already paid Baht 100.62 million and Baht 24.95 million respectively and the

balance value of the contract amounted to Baht 0.38 million and Baht 76.05 million

respectively.

27.4 Obligations pertaining to the agreement for purchase of spare part for the operations are as

follows:

Consolidated/


As of

June 30, 2008 December 31, 2007

- Million Baht 7.50 -

- Million EURO 0.62 1.15

- Million US Dollar - 0.03

27.5 Obligations pertaining to the agreement to hire system operation consultant in factory as

follows:

Consolidated/


As of

June 30, 2008 December 31, 2007

- Million Baht 0.15 0.16

- Million EURO 0.07 -

36

28. Non-Cash Flow Items

28.1 During the six months period ended on June 30, 2008 are as follow:

28.1.1 The Company has recorded accrued interest amounting to Baht 9.93 million, accrued

commitment fee amounting to Baht 0.12 million and amortized deferred financing

service fee amounting to Baht 1.61 million. It was occurred from long term loan from

a foreign commercial bank as described in Note 13, to cost of assets.

28.1.2 The Company has transferred deposit for assets amounting to Baht 24.33 million and

prepaid duty tax amounting to Baht 3.23 million to assets, because it already received

such assets.

28.2 During the six months period ended on June 30, 2007 are as follows:

28.2.1 The Company has reclassified Land not Used for Operations amounting to Baht 516.65

million out of Property, Plant and Equipment, since there is the change of the purpose

for use.

28.2.2 The Company has reclassified deposit for assets amounting to Baht 98.65 million to

project in progress, as a result of receipt of the assets at factory and to be under

installation period.

28.2.3 The Company has recorded accrued interest amounting to Baht 0.16 million and

amortized deferred financing service fee amounting to Baht 0.14 million. It was

occurred from long term loan from a foreign commercial bank as described in Note 13,

to cost of assets.

29. Others

29.1 The board of directors’ meeting No. 3/2008 held on April 2, 2008, approved to measure the

land and audit the title deed to the piece of land or “nor sor sam kor” for the Company’s

ownership right in land for approximately 1,800 Rai which is bought with the objective, to be

useful in the future of the Company.

29.2 At the annual general shareholders’ meeting for the year 2008 held on April 25, 2008 the

meeting resolved to approve as follows:

29.2.1 Approved bonus for the year 2007 to be paid to board of directors in the amount of

150,000 Baht per person. The remuneration for directors to be 25,000 Baht per month

per person replacing the formal monthly payment of 20,000 Baht per person.

37

29.2.2 Approved the amendment of the memorandum of association and the objective of the

Company as follows:

(1) Amendment of the article No. 3 of memorandum of association that the objectives

of the Company be changed from former 12 articles to be 13 articles.

(2) Amendment and adding the objectives of the Company as follows :

(2.1) Amendment article No. 9 former "To become or hold a limited partner in a

limited company, public company limited or limited partnership, to take

responsible in partnership or buy, transfer the shares in other public company

limited, limited company or limited partnership, irrespective of whether

such partnership or company has the same objects as those of the Company.

Change to be "To form a new company, become or hold a limited

partner in a limited company, public company limited or limited partnership,

to take responsible in partnership or buy, transfer the shares in other public

company limited, limited company or limited partnership, irrespective of

whether such partnership or company has the same objects as those of the

Company including to conduct or engage in any transaction with the

company in which the Company has interest."

(2.2) Adding article No. 13 of the objectives of the Company to be “To conduct

real estate development business or other businesses relating to or

concerning with real estate development business including other businesses

relating with construction, housing projects, office buildings, condominiums,

hotels, resorts, golf courses, stadiums or other sport complexes and provide

services or facilities relating to or concerning with such businesses and other

related public utilities.”

Presently, the Company has registered the amendment of the

memorandum of association and the objectives of the Company.

29.3 At the board of directors’ meeting No. 4/2008 held on May 13, 2008, approved to measure the

land and audit the title deeds to the piece of land on Rama 4 road for approximately 5 Rai The

objective are the office building of the Company and useful for business of the Company.

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30. Subsequent Event

At the board of directors’ meeting No. 5/2008 held on July 3, 2008, it was resolved to

approve as follows:

30.1 Approved to purchase approximately 130 Rai land at Rayong from persons who are not

connected and related persons. The land is situated at Tambol Mabkha, Ampur Baankai,

Rayong and will be used for construction of a plant to distribute stainless steel flat products

which will be rented later by the subsidiary, Thai Stainless Components Co., Ltd., in which the

Company holds 51 percent of its total shares.

30.2 Approved to purchase or sale securities in other companies that listed in the Stock Exchange of

Thailand or the mutual funds with the objective of cash management and for a budget not

exceeding Baht 1,500 million.

30.3 Approved the budget for designing and construction a golf course with clubhouse and the hotel

on land as Note 12 amounting to Baht 378.51 million. It has the budget for designing and

construction is not exceeding Baht 650 million.

31. Approval of the Interim Financial Statements

These interim financial statements have been approved by the authorized directors on

July 31, 2008.

Documents

inox.listedcompany.cominox.listedcompany.com/misc/financials/q208_en.pdf(TRANSLATION) REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT . To the Shareholders’ and Board of Directors’