PRANDA : Annual Report 2006 by orapan kokong

Pranda Jewelry Public Company Limited

Pranda Jewelry Public Company Limited 28 Soi Bangna-Trad 28, Bangna-Trad Rd., Bangna, Bangkok 10260 Thailand Tel. +66-2361-3311, +66-2393-8779 Fax. +66-2399-4877 www.pranda.co.th, www.pranda.com

Annual Report

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Annual Report 2006

CONTENT 2

MESSAGE FROM CHAIRMAN

THE BOARD OF DIRECTORS AND TOP MANAGEMENT

12 GOOD CORPORATE GOVERNANCE 19 OUTLOOK OF THE JEWELRY MARKET IN 2006 22 GENERAL INFORMATION 25 BRIEF HISTORY 27 NATURE OF BUSINESS 33 SHAREHOLDER AND MANAGEMENT STRUCTURE 41 RISK FACTORS 43 RELATED PARTIES 44 SOCIAL ACCOUNTABILITIES 48 HIGHLIGHT OF COMPANY OPERATION 51 MANAGEMENT DISCUSSION AND ANALYSIS 55 THE AUDIT COMMITTEE'S REPORT 56 REPORT OF THE BOARD OF DIRECTOR'S RESPONSIBILITIES TO FINANCIAL REPORT 57 AUDITOR'S REPORT AND FINANCIAL STATEMENTS

ANNUAL REPORT 2006 PRANDA JEWELRY

MESSAGE FROM CHAIRMAN

Despite those challenges, Pranda Jewelry Public Company Limited has still successfully managed to grow both in revenues and profits as planned, notably thanks to the fact that the company has pursued its business on the principles of the Sufficiency Economy Philosophy of His Majesty the King for over 30 consecutive years. Because of such practices, the company has been chosen as one of the four enterprises which run their business on the Sufficiency Economy Philosophy by the National Economic and Social Development Board (NESDB), the state think-tank agency.

To all shareholders The oil prices remained relatively high and unstable in 2006, prompting inflation to rise accordingly, inevitably leading a hike of the interest rates. The lingering threat of the oil prices has exacerbated the world's weak economy. On top of that, the international trade liberalization has opened doors to unpredictable price competition. In the previous year, the political instability coupled with an ongoing swing of the baht against US dollar and its relentless appreciation, together with a surge of gold and silver prices has put the whole gems and jewelry industry into difficulty, leading Thailand's gem and jewelry exports to be substantially lower than the export target.

ANNUAL REPORT 2006 PRANDA JEWELRY

The company's business philosophy is mainly based on three components "Moderation in Growth", "Rationality in Doing Business," and "Good Immunization to Business" closely run on business expertise and ethics as follows:1. "Moderation in Growth" as indicated by the company's expansion of its distribution and production base based mainly on the company's cash flow. 2. "Rationality in Doing Business" as evidenced by focus on the middle-class target customers in all key regions of the world and diversification of production bases in four countries to maintain competitive edge of the company's products at all price ranges. 3. "Immunization to Regional Business changes" shown by the company's sales diversification into different regions of the world from North America, Europe, and Asia and development of the company's own brands. For 2006, the company had generated sales of 4,076 million baht, representing a 16.75% growth, with gross profit of 1,358 million baht or about 33.31% of total sales. The company had still successfully maintained strong gross margin in the vicinity of previous years despite a significant increase in the cost of raw materials.

The company had operating profit of 510 million baht, a rise of 121 million baht or 31.11% thanks to the company's successful sales expense control and efficient management. Net profit was 432 million baht, representing a 21.22% rise. The company as well remains solid in its capital structure as is reflected by the company's liabilities of 1,298 million baht, with total shareholder's equity of 2,806 million baht or Debt-to-Equity ratio of as low as 0.46 times and Times-Interest-Earned of 9.27 times. In 2007, the company remains committed to pursuing the moderate growth strategy through balanced admini stration structures as follow:Product Design and Development capitalizing on the company's world-class product design and development center in developing products for leading brands both of the company and the clients. Production Bases through five factories in four countries including Thailand, Vietnam, China and Indonesia to produce products that meet varying requirements of customers at all price ranges. Distribution Bases capitalizing on domestic distribution companies to expand existing markets and tap into emerging markets in key regions of the world including North America, Europe, and Asia focusing primarily on the leading brands of the key customers. Own Brand Development using our domestic distribution companies and the distribution licensing system to expand markets and open new markets in the Asian region focusing mainly on the company's leading own brands Prima Gold, Prima Diamond, Prima Art, Century Gold, and Esse.

Thanks to the presence of our own product design and development center and continual development of the company's own brands, the "Siam Pannarai" Collection of gold accessories by Prima Gold has won the Hot Design Award at the 37th Bangkok Gems & Jewelry Fair. More importantly, having realized that care for the "neighborhood society" also plays a critical role to the company's business achievement, the Company has never stopped developing opportunities for social contribution as well as environmental conservation and continues its commitment to the principals indicated in our agreement to the United Nations Global Compact which features human rights, employment standards, and environmental impact which the company has signed up to many years ago. Last but not least, on behalf of the company, we would like to thank all shareholders, employees at all levels, and related parties who have given thorough trust and support both directly and indirectly to the company. The company's Board of Directors promises to abide by the principle of the Sufficiency Economy of His Majesty the King and Good Corporate Governance as the norms in running our business to create economic added values to all related parties. Above all, we hope to see unwavering support from all of you as usual.

(Mr. Prida Tiasuwan) Board Chairman

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THE BOARD OF DIRECTORS AND TOP MANAGEMENT Mr. Prida Tiasuwan The Board Chairman / Acting Chairman of Executive Directors Present Position : Board's chairman of Social Venture Network Asia (Thailand) or SVN Asia (Thailand) Advisor to the Thai Gem and Jewelry Traders Association Advisor to the Thai Gem and Jewelry Manufacturers Association Vice President of FXB Foundation, Thailand Director of Duang Pratheep Foundation Chairman of Board of Pranda Group, 5 companies Director of Pranda Group, 5 companies Previous Position : Vice President of Thai Gem and Jewelry Traders Association for two times Director of The Thai Chamber of Commerce for two times Director of Thailand-US Business Council Director of Listed Companies Association Education : Higher National Diploma in Business Studies - Thames Valley University, England Distinguished Senior Executive Program in Government and Business at Harvard University, U.S.A. Director Accreditation Program (DAP), Class 37/2005 of the Thai Institute of Directors Association (IOD)

Mrs. Sunanta Tiasuwan Corporate Finance Chairman / Vice Executive Chairman/Secretary Knowledgeable and specialized in finance, rules and regulations of the Stock Exchange of Thailand Present Position : Vice president of the Listed Companies Association Chairman of Board of Pranda Group, 1 company Director of Pranda Group, 9 companies Previous Position : Former secretary-general of the Listed Companies Association Education : Ordinary National Diploma in Business Studies from Westminster University, England. Director Certificate Program, Class 22/2002 of the Thai Institute of Directors Association (IOD)

ANNUAL REPORT 2006 PRANDA JEWELRY

THE BOARD OF DIRECTORS AND TOP MANAGEMENT Mrs. Prapee Sorakraikitikul President / Vice Executive Chairman Well experienced in several business fields from the United States and England Present Position : Vice president of the Thai Gem and Jewelry Traders Association Vice president of the Gem and Jewelry Business Committee of the Thai Chamber of Commerce Advisor to the Gem and Jewelry Industry Club of the Federation of Thai Industries Advisor to the Thai Gold Card Importer & Exporter Association Director of Businesswoman Committee of the Thai Chamber of Commerce Chairman of Board of Pranda Group, 4 companies Director of Pranda Group 4 companies Previous Position : Director of the Thai Gold Card Importer & Exporter Association Education : B.S.C Accounting Wookburry University Major Accounting, Los Angeles, California U.S.A. Director Certificate Program, Class 17/2002 of the Thai Institute of Directors Association (IOD)

Mrs. Pranee Khunprasert Senior Vice President / Vice Executive Chairman Specialized in product design and development and marketing Present Position : Chairman of Board of Pranda Group, 1 company Director of Pranda Group, 2 companies Previous Position : Business Studies Course from Ealing Technical College, London, England Director Accreditation Program (DAP), Class 26/2004 of the Thai Institute of Directors Association (IOD)

ANNUAL REPORT 2006 PRANDA JEWELRY

THE BOARD OF DIRECTORS AND TOP MANAGEMENT Mr. Pramote Tiasuwan Senior Vice President / Vice Executive Chairman Experienced and specialized in jewelry production technology Present Position : Director of Pranda Group, 4 companies Previous Position : Director of the Gem and Jewelry Industry Club of the Federation of Thai Industries Education : Ordinary National Diploma in Technology. (Mechanical Engineers) From Willesden College of Technology, London England Director Certificate Program, Class 46/2004 and Director Accreditation Program (DAP), Class 16/2004 and Finance for Non-Finance Program, Class 12/2004 of the Thai Institute of Directors Association (IOD)

Mrs. Panidda Tiasuwan Vice President/ Executive Director Specialized in production management Present Position : Chairman and Director of Pranda Group, 1 company Education : Amatayanukul school and language study in England Director Accreditation Program (DAP), Class 25/2004 of the Thai Institute of Directors Association (IOD)

ANNUAL REPORT 2006 PRANDA JEWELRY

THE BOARD OF DIRECTORS AND TOP MANAGEMENT Lt.Jg. Anan Panananda R.T.N. Director and Chairman of the Audit Committee Present Position : Retired Government Officer Director of the Thai-German Ceramic Industry Public Company Limited Advisor of A.J. Plus Public Company Limited. Previous Position : Deputy Director-General of Customs Department Advisor to Deputy Finance Minister Director of the Sports Authority of Thailand Advisor to Finance Minister Director of the Rubber Replanting Aid Fund Advisor to Deputy Prime Minister Director of Mutual Fund Securities Public Company Limited Director of ACL Bank Public Company Limited Education : BS. In Civil Engineering, W.P.I., Mass., U.S.A. Certificate in Special Course in Project Analysis, U.N. Asian Institute for Economic Development and Planning Director Management Course, Organized by the Office of the Civil Commission Senior Executive Development Program (Norborsor 1) Class 6, the Office of the Civil Commission Certificate, the National Defense College. Class 34 Director Accreditation Program (DAP), Class 23/2004 of the Thai Institute of Directors Association (IOD)

Mrs. Sarita Bunnag Director and the Audit Committee Present Position : Associate Professor (Level 9), Department of Banking and Finance, Faculty of Commerce & Accountancy Chulalongkorn University Director of Asian Seafoods Cold Storage Public Company Limited Director of ITV Public Company Limited Education : B.A. (Accounting), Chulalongkorn University M.A. (Finance), Western New Mexico University, U.S.A. Director Certificate Program, Class 22/2002 Audit Committee Program (ACP), Class 1/2004 of the Thai Institute of Directors Association (IOD)

ANNUAL REPORT 2006 PRANDA JEWELRY

THE BOARD OF DIRECTORS AND TOP MANAGEMENT Mr. Verachai Tantikul Director and Audit Committee Knowledgeable and specialized in different laws especially about taxation Present Position : Advisor, the Law of Cement Thai Company Limited Advisor to and Sukhumvit Asset Management Co's Board of Directors Tax Advisor of the Siam Commercial Bank Public Company Limited Director and Audit Committee of Oishi Group Public Company Limited Member of the Board of Taxation under the Revenue Code Director of the Audit Committee of the Finance Ministry Member of the Petroleum Committee under the Petroleum Law The National Legislative Assembly, Thailand. Previous Position : Director General, the Treasury Department, Ministry of Finance Inspectors - General, Ministry of Finance Director General, the Excise Department, Ministry of Finance Deputy Director - General, the Revenue Department Deputy Permanent Secretary, Ministry of Finance Director of The Siam commercial Bank Public Company Limited Education : LL.M., the University of California, at Berkely, U.S.A. Barrister-at-law, Thai Bar Association LL.B (Honors), Thammasat University Certificate, National Defense College of Thailand. Class 37 Senior Executive Development Program of the Office of the Civil Service Commission (OCSC), Course 1, Class 13. Director Certificate Program, Class 37/2003 of the Thai Institute of Directors Association (IOD)

Mr. Eugene S. Davis Director Expert in financial business Present Position : Director of Finansa Credit Public Company Limited Directors of Finansa Public Company Limited Previous Position : Director of Siam Paper Public Company Limited Siam Investment Fund 2 Education : MBA (Finance and International Business) New York University, NY, U.S.A. B.A International Relations / French University of Virginia, Charlottesville, U.S.A.

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THE BOARD OF DIRECTORS AND TOP MANAGEMENT Ms. Pittaya Tiasuwan Executive Director / Vice President, Stones Management A jewelry expert for more than 30 years Present Position : Director of Pranda Group, 1 company Previous Position : Director of Pranda Jewelry Public Company Limited Education : Kilburn-Polytechnic - London, England City and Guilds of London Institute Training Course about Gemological Sciences at the Asian Institute of Gemological Sciences (AIGS) Director Accreditation Program (DAP), Class 26/2004 from the Thai Institute of Directors Association (IOD)

Mr. Decha Nuntanajaroenkul Executive Director / Vice President Marketing An expert and specialist in sales, marketing and distribution Present Position : Visiting lecturer at Srinakharinwirot University, Sukhumvit, General Science Department, Materials Science (Gems and Jewelry) during 1996-1997 Education : MBA in Marketing Memphis State University Memphis U.S.A.

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10 ANNUAL REPORT 2006 PRANDA JEWELRY

/ + // / + //

2. Mrs. Sunanta Tiasuwan Khunprasert Sorakraikitikul

3. Mrs. Pranee 4. Mrs. Prapee

/ + //

Tiasuwan Panananda R.N. Tantikul

6. Mr. Pramote 7. Lieut. Anan 8. Mr. Verachai

= President

X + //

/ + //

*PNA

X + //

/ + //

*CNA

// = Executive Chairman

/ + //

X + / + //

/ + //

PLG

X + //

HGG

Country

/ + //

X + //

/ + //

X + //

/ + //

X + //

X + / + //

/ + //

X + / + //

P.SCL

Foreign

= Acting Chairman of Executive Committee # due to retire on year 2007

X + //

/ + //

*P.UK P.VN P.Sing P. Guangzhou KZ-PRANDA

Foreign

/ + //

Pranda & Kroll

Report only of directors of subsidiaries which contribute over 10% of total revenues including * PMG, * PNA, * CNA, * P.UK PRANDA = Pranda Jewelry Plc. PMG = Primagold International Co., Ltd CTL = Crystaline Co., Ltd. PLG = Pranda Lodging Co., Ltd. KZ - PRANDA = KZ - Pranda Co.Ltd. P.SCL = P.T. Pranda SCL Indonesia PNA = Pranda North America, Inc. CNA = Crystaline North America, Inc. HGG = H.Gringoire s.a.r.l. P.UK = Pranda UK Ltd. P.Sing = Pranda Singapore Pte Ltd. P.VN = Pranda Vietnam Co.,Ltd. P.Guangzhou = Guangzhou Pandgda Zhubao Shoushi Youxian Gongsi Pranda & Kroll = Pranda & Kroll GmbH Co. KG

X = Chairman

/ = Director

/ + //

NOTE

Sutaparvong

11. Mr. Sutha

/ + //

X + //

/ + //

Bunnag

10. Mrs. Sarita

X + //

/ + //

CTL

12. Ms. Rungnapa Ngowngamratana

9. Mr. Eugene S. Davis

/ + //

5. Mrs. Panidda Tiasuwan

+ / + //

X+/+

Tiasuwan

1. Mr. Prida

*PMG

Country

ASSOCIATED COMPANY PARTNERSHIP

Experienced in gold craftsmanship and setter for more than 40 years, a renowned expert in mini factory and jewelry stereotypical design Present Position : Sub-committee to set the national skill standards for the jewelry branch Previous Position : A member of Technical sub-committee which prepares and chooses Thai young artisans to participate in the 35th International Skill Contest on costume accessory artisan branch. Education : Thaiwatanapracharat School, Sikiew District, Nakhon Ratchasima

PRANDA

SUBSIDIARY COMPANIES

Mr. Banjong Wongkaew Executive Director / Vice President, Mini Factory

NAME

Details of Directors and Executives

THE BOARD OF DIRECTORS AND TOP MANAGEMENT

GOOD CORPORATE GOVERNANCE Policy on the Good Corporate Governance The Board of Directors has always recognized the importance of the best practices of good corporate governance which includes having directors and management with good leadership qualities, vision and a strong sense of responsibility, the presence of an administration structure which provides control mechanisms and counterbalances to ensure that the company's administration and management are run on a transparent, fair, and explicit basis, acceptable and fair to all shareholders, and responsible to all stakeholders. All the components are taken as a crucial factor to increase maximum values and returns to the company's shareholders in the long run. The company has thoroughly pursued its supervisory policies which comply with the Sufficiency Economy philosophy promoted by His Majesty the King for sustainable development. Thanks to such efforts, the company has been chosen by the National Economic and Social Development Board (NESDB), the state thinktank agency, as one of a few companies in Thailand who manage and run their enterprises based on the Self-Sufficiency Economy philosophy. To strengthen the company's supervisory measures, the Board of Directors has established a firm policy on good corporate governance by dividing the policy into five sections as follows :1. Responsibilities of the Board 2. Equitable Treatment of Shareholders and all stakeholders 3. Information disclosure and transparency 4. Controls and risk management 5. Ethics

Section 1: Responsibilities of the Board Leadership and Vision Pranda Jewelry Public Company Limited has set a clear vision to become the world-class mass brand producer with a mission as follows:-

ANNUAL REPORT 2006 PRANDA JEWELRY

1. To manufacture the best jewelry products at affordable price range of US$5-250. 2. To produce jewelry under the leading brands of the world's jewelry distributors and at the same time develop the company's own brands. 3. To develop production systems to achieve economies of scale 4. To differentiate the company's products from our competitors through innovations in design and production techniques . 5. To expand the company's production and distribution bases to cover the world's key markets in order to retain the company's competitive edge 6. To apply information technology to help facilitate decision-making more effectively. 7. To strengthen financial stability and produce reasonable returns to shareholders. To achieve the above vision and mission, the company has set an action plan according to the principles of Total Quality Management and ISO 2000 as well as standard monitoring and supervision processes under which the company's management is strictly required to carry out this policy with maximum effectiveness and efficiency in a bid to increase economic values to the enterprise and generate proper returns to shareholders. The company has also strictly adhered to measures that ensure an appropriate risk management through the establishment of internal controls and internal audit systems under close and frequent supervision by the company's Audit Committee. The company has a well established and strong foundation to accommodate the planned vision, mission and action plan as indicated by having a balanced management structure which is composed of production bases which achieve economies of scale, modern and creative design and product development, and a customer service network through subsidiaries which span throughout the key markets in the world to ensure sustainable business growth of the group

GOOD CORPORATE GOVERNANCE The Board of Directors is composed of those who are knowledgeable, competent and professionally capable of business supervision and monitoring as well as dedicated to establish and build up the groundwork to keep the company abreast of present and future competition. The Board is also set to usher the company into sustainable growth, which will eventually increase values to shareholders and the entire stakeholder society. The Board of Directors is held responsible for designating and distinguishing roles, duties, and

responsibilities between the Board of Director members and the company's management. Scope of authorities of those who handle financial operations and communications of roles and responsibilities are clearly elaborated to all parties. The company has a policy to encourage the company's directors to participate in various seminars organized by concerned agencies such as the Thai Institute of Directors Association (IOD) and Stock Exchange of Thailand to upgrade and sharpen their skills more efficiently. The company's directors who have gone through training courses and seminars organized by IOD are as follow:-

COURSE DIRECTOR

1. Mr. Prida 2. Mrs. Sunanta 3. Mrs. Panidda 4. Mrs. Prapee 5. Mrs. Pranee 6. Mr. Pramote 7. Mr. Anan 8. Mr. Verachai 9. Mr.Eugene S. 10. Mrs. Sarita

Tiasuwan Tiasuwan Tiasuwan Sorakraikitikul Khunprasert Tiasuwan Panananda Tantikul Davis Bunnag

Director Certificate Program (DCP)

Director Accreditation Program (DAP)

Audit Committee Program (ACP)

Finance for Non-Finance Program (FN)

(Class 37/2005) (Class 22/2002) (Class 25/2004) (Class 17/2002) (Class 46/2004)

(Class 26/2004) (Class 16/2004) (Class 23/2004)

(Class 12/2004)

(Class 37/2003) (Class 22/2002)

Counterbalance of Non-Management Directors The Board of Directors comprises 10 members as follow:Directors who hold management positions 5 Non-management directors 5 Independent directors 3

(Class 1/2004)

The company has three independent directors, representing 30% of total directors. Independent directors have no direct connections with routine management and are not the company's major shareholders.

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GOOD CORPORATE GOVERNANCE Position Separation or Combination The company has completely separated the position of Board Chairman out of the President position. The Board Chairman will not be the same person as the company's President and have separated authorities. The direct responsibility of the Board Chairman as the leader of company policy, whilst the major responsibility of the President is to take care of company administration and management, hence inducing proper checks and balance in the company's operation.

Remuneration of Directors and Management Remuneration of directors and management is considered a proper rate compared with the industry's offerings and according to contributions of each member of the Board of Directors. Remuneration of the Board of Directors will be subject to the shareholders' meeting, while remuneration of the high-ranking management is offered according to principle and policy imposed by the Board of Directors based on operating performance of the company through consideration and approval of the Selection Committee. In fiscal 2006, the rate of remuneration of directors and

NAME 1. Mr. Prida 2. Mrs. Prapee 3. Mrs. Sunanta 4. Mrs. Pranee 5. Mr. Pramote 6. Mrs. Panidda 7. Lieut. Anan 8. Mr. Verachai 9. Mr.Eugene 10. Mrs. Sarita - Lieut. Olarn

Tiasuwan Sorakraikitikul Tiasuwan Khunprasert Tiasuwan Tiasuwan Panananda R.N. Tantikul S. Davis Bunnag Krairiksh

(resigned on July 6, 2006)

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GOOD CORPORATE GOVERNANCE

managers is made available in "Shareholder and Management Structure" topic.

Meeting of the Board of Directors The Board of Directors requires a frequent meeting in every quarter and has set the meeting's schedule in advance throughout the year in order to enable all directors to manage their time to attend every meeting to protect the company's interests. The company may call an additional meeting if needed. Invitation letters enclosed with the meeting's agenda and other documents would also be delivered to all directors at least seven days ahead of the meeting so that the Board of Directors has sufficient time to study information. Generally, the meeting would take about 2-3 hours. Minutes of the meeting and important issues have been prepared accurately and completely at appropriate time. Minutes of the meeting which have gone through an acknowledgement of the Board of Directors would be filed properly for later examination of the Board of Directors, shareholders, and related parties, and for references. Here are the records of the attendance of each director in 2006.

ATTENDANCE/MEETING Ordinary 4/4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 4/4 1/1 1/1

Extraordinary 16/16 16/16 16/16 16/16 16/16 16/16 14/16 14/16 16/16 3/3 6/11

Total 20/20 20/20 20/20 20/20 20/20 20/20 18/20 18/20 20/20 4/4 7/12

Sub-Committee The company's Board of Directors has set up a series of key sub-committees which are composed of knowledgeable persons and those with appropriate expertise to help supervise and examine several issues and assignments to ensure their accuracy, transparency and completeness before submitting to the Board of Directors for approval or acknowledgement on case-by -case basis. The company's sub-committees include Executive Directors composed of five directors of the company out of the total nine members, with the rest chosen from people outside. Audit Committee composed of three independent directors. In 2006, four meetings of the audit committee have been held. Report of the Audit Committee signed by the Chairman of the Audit Committee also appears in this annual report. Selection and Remuneration Committee composed of one independent director who holds the chairman position. The committee's meeting would be held occasionally as appropriate. Finance Committee composed of five directors of the company, and one member chosen from person outside who is knowledgeable and specialized in the industry. Name list of members of the sub-committees and scope of their responsibilities are provided in the Shareholder and Management Structure and Management at the page 35-38 in this annual report. The Board of Directors' Report The Board of Directors is held responsible for financial statement of the company and subsidiaries and takes charge of assigning the Audit Committee to look after the company's financial reports and internal control system to ensure its accuracy and creditability according to widely-accepted accounting standards. The Board has also responsibility to ensure the adequacy of key information disclosure in the notes in

the company's financial statement, and provide management discussion and analysis (MD&A) enclosed with the quarterly and yearly financial statements both of the company's individual financial statement and consolidated ones. Reports of the Board of Directors and the Audit Committee appear in the annual report in 2006.

Section 2: Equitable Treatment of Shareholders and roles to stakeholders Rights and Equality of Shareholders The company is fully aware of the importance of shareholders and has always paid due respect to their rights, treating them equally as they are in effect the business owners, as well as disclosing accurate, complete and up-to-date information to all shareholders. Shareholders can exercise their voting rights at will and are allowed to freely raise any questions to the meeting in accordance with the agenda and other proposals. For each meeting, the company will deliver all and complete documents including invitation letters, minutes of the previous meeting, annual report and proxies at least 14 days prior to the meeting so that the shareholders should have enough time to study before attending the meeting. The Objectives and rationale in each agenda of the meeting together with opinions of the Board of Directors will also be made available. Ahead of the meeting, at least one hour is given for shareholders' registrations. Shareholders who fail to attend the meeting in person are allowed to have their proxy holders attend the meeting and cast votes on their behalf. In addition, the company has offered extra channels for shareholders, allowing them to appoint at least one independent director as their authorized person to attend the meeting to protect their interest as stated in the notice of the meeting. All information would be recorded accurately, completely and systematically for later reexamination.

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GOOD CORPORATE GOVERNANCE Meanwhile, the company also takes into consideration the rights and equality of shareholders ranging from the rights to attend the meeting, the rights to vote, and the eligibility to a diversity of benefits offered. The company has therefor set up the opportunity every year for shareholders to propose their agenda, nominate candidates for the Board of Directors, and raise questions ahead of the ordinary meeting of shareholders through the company's web site during October 31 to December 31 of the year or until the company receives written documents from the shareholders during that period. Should the occasion arise, the company would later disclose through the Stock Exchange of Thailand reasons why the Board of Directors had considered not including proposals of shareholders to agenda of the meeting.

Rights of Related Parties The company has always paid respect to the rights of all related parties, be they in organization such as employees, the company's executives and subsidiaries or people outside such as shareholders, trade partners, creditors, clients, competitors the public and surrounding environment. The company has prescribed to ``the Code of Conduct and Accountabilities of Management and Employees of the Company'' to streamline the company's operations, build up stability and ensure fair treatment to all parties as follows:Shareholders: to be a good representative of the shareholders in running business with transparency and to generate profit and returns as well as produce sustainable growth to the business. Employees: to promote good corporate culture and pleasant and safe working environments and treat equally and fairly all levels of employees with proper and fair remuneration, given the fact that employees are the most valuable asset of the company and instrumental to the company's achievement. Customers: To meet varying demands and create maximum satisfaction to customers, be it the product's

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quality and values, excellent services, good customer relations, creditability in the organization's reputation and the presence of units or persons which take care of customers' complaints. Trade Partners and Creditors: Transactions and services with the trade partners are conducted in accordance with contracts. The company is committed to fulfilling the trade contracts to trade partners and lending contracts with care and accountability. Competitors: To comply with the rules of fair competition and avoid any practices to defame competitors with groundless accusations. Society and Environment: as a Thai-owned company and as a part of Thai society which has sense of accountability to help communities and society, the company has frequently participated in activities and events organized by local communities and societies and strictly complied with related rules and regulations.

Shareholders' Meeting The company holds one shareholders' ordinary meeting within four months of the company's closing book at each year end giving 14 days notice of the time and date of the meeting, and would call an extraordinary meeting of the shareholders as appropriate. Adequate information would also be provided to shareholders to supplement their decision-making in each agenda. The meeting would be carried out according to the best guidelines of the shareholders' meeting and relevant legal requirements as follows :1. Invitation letters and the meeting's agenda together with opinions of the Board of Directors and process of the meeting would be sent to all shareholders 14 days prior to the meeting date. 2. The company would allow shareholders to propose their own agendum, nominate candidates for the company's directors as well as submit their questions every year through the company's website (www.pranda.com). during the months of October to December prior to the meeting.

GOOD CORPORATE GOVERNANCE 3. The company would immediately reveal the meeting's agenda and supplementary documents once completed, on the company's website so that shareholders could visit and study before the invitation letters are sent out.

Section 3: Transparency information Relationship with Investors The company has acknowledged the importance of disclosing accurate, complete and transparent information, and presenting financial reports, information of the organization, as well as important information which may affect the prices of the company's securities to investors. The company has disseminated information to investors and related parties through a wide range of channels as well as the media of the Stock Exchange of Thailand and the company's own website (www. pranda.com). The company has also set up investor relations section to provide information services and inform the company's activities to investors, shareholders, analysts, and the public. Interested investors could contact the company at e-mail address: IR@pranda.co.th or through telephone at 02-361-3311 ext 515. In addition, the company's shareholders, and/or interested investors and the general public can also access company information through different channels as follows :1. The Stock Exchange of Thailand - Information Disclosure Reports (Form 56-1) - The company's financial statement and annual report - Resolutions of the shareholders' meeting and other information provided. 2. The Office of the Securities and Exchange Commission (SEC) 3. The Department of Business Development of the Ministry of Commerce 4. The company's website: www.pranda.com 5. Media, publications, and others. 6. Analyst Meeting

7. Opportunity Day held bi-annually on March 14, 2006, and December 18, 2006 by the Stock Exchange of Thailand at its building as the forum for executives to express their vision and explain the operating performance of their individual companies. 8. Investor Relations activities through ``Investor Relations Newsletter'' published both in Thai and English which disseminates the company's performance to financial analysts and those who are interested through electronic mailing systems to explain the company's operating performance and future business direction as well as questions which are in the people's interests. Questions are mostly collected from those raised by the financial analysts through the company's website. All questions are welcome to the company's website at IR@pranda.co.th

Section 4: Internal Control and Risk Management Internal Control and Internal Audit System The company has realized the importance of effective internal control both at management and operational levels. Responsibilities and authorities of each are clearly stated and written to ensure optimized utilization of the company's assets. Budgeting and feasibility studies on potential investment projects are fully prepared before any investment decision. Roles and responsibilities of those who handle the operational tasks are also entirely separated from those who handle monitoring and assessment process to bring about maximum checks and balances. The company has also stressed the importance and maintenance of the internal audit to ensure that important operations and financial activities of the company are undertaken in line with policy, producing optimal efficiency as well as to ensure the compliance with the laws and related guidelines. To ensure the freedom of the company's Internal Audit Department and its ability to totally examine and counterbalance, the company has given a full independence to the Internal Audit Department to report internal audit results directly to the Audit Committee. ANNUAL REPORT 2006 PRANDA JEWELRY

GOOD CORPORATE GOVERNANCE

Section 5: Ethics Conflict of Interests The company has strictly pursued policies to prevent the conflict of interests. Regulations and responsibilities to various groups of beneficiaries and related parties are clearly stated. Once any transactions which may lead to the conflict of interest and connected transactions are found, the Audit Committee is set to examine its appropriateness. In order to prevent any conflict of interest, the company has determined clearly regulations about how to handle the issues of related transactions or items about asset acquisition or disposal as stated in the regulations of the Stock Exchange of Thailand in which the company throughout its operations has strictly abided by. The company's investment strategy focuses mainly on consistency of production and distribution to prevent the conflict of interests. Therefore, the company decides to take a full control in all investment projects which cover the production and distribution bases both in the domestic and overseas market. In part of the company's joint ventures, the company's investment primarily aims

ANNUAL REPORT 2006 PRANDA JEWELRY

at supplementing and strengthening the company's competitiveness to cope with demands for product items which are not the key products manufactured by the group. According to the Articles 59 of the Securities and Stock Exchange of Thailand Act, the company's executives are required to report changes of their stake holdings to the Securities and Exchange Commission and Stock Exchange of Thailand to ensure transparency and prevent any abuse of inside information for personal gains. The Board of Directors has a mandate to prohibit the company's directors, management, employees, temporary staff and their family members from disclosing the important inside information of the company or group of companies to people outside or persons who are not involved, nor having securities trading particularly one month ahead of the disclosure of the financial statements to the general public for their personal interests or other persons gains. The written announcement was signed by the Board Chairman on December 22, 2000.

Thailand's gems and jewelry market in 2006 had experienced a relatively robust growth and achieved the target as expected by the Commerce Ministry, with export values of the sector being ranked No. 6 of the country's largest exports. The sector's exports topped US$3,644 million last year, a rise of 12.73% from US$ 3,232 million in a year earlier which reflected a 22.19% growth over 2004. Last year's slower growth against

4000 3500

3,644 3,233

3000 2,515

The company has set the "code of conduct for the management and employees" as announced on December 22, 2000, and informed all directors and employees to strictly abide by the code of conduct in order to steer the company into the principles of effectiveness and efficiency, cost effectiveness, transparency and accountability to all beneficiaries and related parties. The company is also committed to generating appropriate returns to investors as well as developing long-term prosperity to the company. A regular monitoring process has also been developed to achieve those principles in an honest and straightforward manner.

2,646

2500 2000

1,718 1,691

1500

1,275 1,105

1000 Business Ethics

that of 2005 was mainly attributed to a surge of gold price, a key raw material for costume accessories and higher fuel oil prices which affected purchasing power of consumers throughout the world. However, consumption of silver accessories turned otherwise last year, experiencing exceptional growth which reflects a good sign for Thailand, as the Kingdom has much greater advantage in silver production than any other competitors.

Export Structure of Thailand's Gems and Jewelry Products

million US dollar

The Board of Directors has also given importance to effective risk management under which the Board has empowered the corporate finance office to designate the scope and policy on risk management, as well as organizing meetings with the executive committee to set and appraise the risk of operation for every six months, as well as to study preventive measures of risk management and develop early warning and monitoring systems to ensure the compliance with related laws and regulations.

OUTLOOK OF THE OVERALL JEWELRY MARKET

500

703.30

797.40

386.9

461.4

2003

2004

1,140.20

1,110.80

505.7

568.4

0 2005

2006

Source: The Export promotion Department, Commerce Ministry

Gems and jewelry Fine jewelry Gold jewelry Silver jewelry

Given the export performance of Thailand's fine jewelry which is a part of the gems and jewelry industry, the fine jewelry exports fetched the country last year US$ 1,718 million, a 1.6% growth from US$1,691 million in 2005 which saw outstanding growth of 32.6% from a year earlier.

ANNUAL REPORT 2006 PRANDA JEWELRY

OUTLOOK OF THE OVERALL JEWELRY MARKET

Top 10 Export Destinations of Thailand's Fine Jewelry Products

2003 1. The United States 2. The United Kingdom 3. Germany 4. Japan 5. France 6. Hong Kong 7. Australia 8. Israel 9. The Untied Arab Emirates 10. Italy Total 10 items Others Total value

CHANGE %

million US dollar

COUNTRY

2004

2005

2006

495 754.5 557.7 811.5 120.9 197.2 147.8 145 85.6 95.3 87 102.2 55.7 69.1 58.9 81.8 41.7 57.4 47.5 54.5 30.8 56.9 31.1 51.9 20.4 51 30.5 38.4 34.7 48.1 42.5 48 28.1 43.4 29 42.6 28.3 40.5 32.6 41.3 941 1,064.50 1,417.30 1,413.40 164.3 304.7 210.8 273.7 1,105.30 1,275.30 1,691.00 1,718.10

2003

2004

2005

2006

11.51 32.42 11.17 5.29 6.11 52.48 -3.32 -24.4 30.09 6.79 12.06 11.62 12

12.67 22.25 1.64 5.75 13.91 0.97 49.51 22.48 3.2 15.19 13.12 28.3 15.38

45.51 -1.89 17.47 38.88 14.74 66.88 25.9 12.94 46.9 26.69 33.14 29.84 32.6

-7.02 36 -6.75 -15.53 5.32 9.63 32.81 0.21 1.88 -1.94 -0.28 11.33 1.6

Japan: the export performance also contracted last year, with export values of US$69.1 million, a drop of 15.53% from US$81.8 million in a year earlier. The Thai products captured 15.51% of Japan's silver accessory market, being ranked No. 2, while in the gold jewelry market Thailand had market share of 5.11%, the sixth player in the market. France: Throughout operations, the export activities to this market have experienced a steady growth. In 2006, Thailand's fine jewelry exports rose 5.32% to US$57.4 million from $54.5 million in 2005. Thailand is the largest exporter in France's silver jewelry market controlling 24.11% market share. In the gold jewelry

market, the Thai products had 4.51% market share, being ranked No. 5. Despite the overall exports of fine jewelry products from Thailand had fell from a year earlier, Pranda Jewelry Public Company Limited had still outperformed the overall industry last year, thanks to strong production bases which span in five strategic locations in four countries, as well as extensive domestic marketing network, and especially the sophisticated product design and development center which is set to churn out innovative products that meet varying taste and different requirement of consumers in each market.

Source: The Export Promotion Department, Commerce Ministry

Given the top five markets of Thailand's fine jewelry markets- The United States, the United Kingdom, Germany, Japan and France, it could be summarized as followsThe United States: In 2006, the US market remained the largest market for Thailand's fine jewelry export, with export values topping US$754.4 million, a drop of 7.02% from a year earlier. Despite the export's decline, the Thai products remained ranked No. 3 in the US gold accessory market, controlling 9.65% market share. For silver accessory, the Thai products controlled 24.9% market share, and was ranked No. 2 in the US market.

ANNUAL REPORT 2006 PRANDA JEWELRY

The United Kingdom: exports of fine jewelry to the UK market grew healthily by 36% last year to US$ 197.2 million. Thai gold accessories captured 7.33% of the market share, being ranked No. 7 in the UK market, but in the silver jewelry market, the Thai products controlled 37.98% market share. Germany: The market shrunk last year, with export values worth of US$95.3 million, down 6.75%. Thailand last year controlled 30.5% of the silver accessory market in the Germany, being the second largest player. In the gold accessory market, the Thai products had 17.58% market share, and was ranked No. 2 in this market.

ANNUAL REPORT 2006 PRANDA JEWELRY

GENERAL INFORMATION Pranda Jewelry Public Company Limited At Bangkok. Manufacturer and distributor of Jewelry Registration : 0107537001986 Head office : 28 Soi Bangna-Trad 28, Bangna Sub-district Bangna District, Bangkok 10260 Thailand. Telephone 0-2361 3311, 0-2393 8779 FAX 0-2361 3088, 0-2398 2143 Registered Capital 400 Million Baht Paid Capital 358.41 Million Baht Home Page : www.pranda.co.th, www.pranda.com Responsible Person : Mrs. Prapee Sorakraikitikul E-mail : Prapee@pranda.co.th Pranda Jewelry Public Company Limited At Korat. Branch office : 332-333 Suranaree Industrial Zone, Muang Nakhonratchasima, 30000 Thailand. Telephone (044) 212593-4 FAX (044) 212685 Responsible Person : Mr.Somsak Sriruengmon E-mail : Somsak_s@pranda.co.th Investment in other company In Year 2006 which the Company's Shareholding Exceeded 10 % of Paid Capital to be Product Base and Distribution Base as follow :-

Product Base Crystaline Co., Ltd. Producer and export of costume jewelry No. 22 Soi Bangna-Trad 28, Bangna Sub-district, Bangna District, Bangkok 10260 Telephone 0-2746 9580-5 FAX 0-2399 4878 Registered Capital 100 Million Baht Paid Capital 100 Million Baht 96 % of Holding Home Page : www.crystaline.com Responsible Person : Mr. Chartchai Teekaveerakit E-mail : Chartchai@crystaline.com

ANNUAL REPORT 2006 PRANDA JEWELRY

GENERAL INFORMATION Pranda Vietnam Co., Ltd Producer and distributor of silver jewelry for exports and distribution under brands in Vietnam 16 Road 2A, Bien Hoa Industrial Zone II, Dong Nai, Vietnam Telephone 84(61) 836 627, 836 739 FAX 84 (61) 991-798 Registered Capital US$100 Million Paid Capital US$100 Million 100 % of Holding Responsible Person : Mr. Santiparp Riyai E-mail : santiparp@pranda.com.vn Guangzhou Pangda Zhubao Shoushi Youxian Gongsi Jewelry producer for distribution in China. No. 381 Yushan Road West, 2/F., Shiqiao, Panyu, Guangzhou, Guangdong, CHINA Telephone (86) 20 846 63051 FAX (86) 20 348 11631 Registered Capital US$0.843 Million Paid Capital US$0.843 Million 100 % of Holding Responsible Person : Mr. Winai Pornpitaksit E-mail : winai_p@pranda.co.th P.T. Pranda SCL Indonesia Producer of jewelry for export and domestic marker under Julia and Batik Silver Brand JL.I Gusit Ngurah Rai No.1, Jakarta 13420, INDONESIA Telephone 62 21 819 9280-2 FAX 62 21 819 9223 Registered Capital 4 Billion IDR Paid Capital 4 Billion IDR 50 % of Holding Responsible Person : Mr. Johnny Salmon E-mail : Pranscl@cbn.net.id

Distribution Base Primagold International Co., Ltd. Distribution of gold jewelry 99.9% Diamond and Silver jewelry under Trademark of Prima Gold, Prima Diamond, Prima Art, Century Gold and No. 1093/64 12th Floor, Central City Bangna Tower, Bangna-Trad Rd., Bangna Sub-district, Bangna District, Bangkok 10260 Telephone 0-2745 6111 FAX 0-2745 6117 Registered Capital 100 Million Baht Paid Capital 100 Million Baht 100 % of Holding Home Page : www.primagold.co.th Responsible Person : Ms. Rungnapa Ngowngamratana E-mail : rungnapa@primagold.co.th Pranda North America, Inc. Distribution of gold Jewelry in the USA and Canada. No. 1 Wholesale Way, Cranston, RI 02920, U.S.A. Telephone 1(401) 490 5100-10 FAX 1(401) 490 5106 Registered Capital US$ 2,000 Paid Capital US$ 2,000 100 % of Holding Responsible Person : Mr. Dominic Chandarasanti E-mail : Dchand@prandana.com Crystaline North America, Inc. (held through Pranda North America, Inc.) Distribution of silver Jewelry and costume jewelry in the USA and Canada. No. 1 Wholesale Way, Cranston, RI 02920, U.S.A. Telephone 1(401) 946 2104 FAX 1(401) 946 2109 Registered Capital US$ 25,000 Paid Capital US$ 25,000 100 % of Holding Responsible Person : Ms. Maureen Kelley E-mail : mkelley@cna-corp.com

H.GRINGOIRE s.a.r.l. Distribution of gold jewelry under H.Gringoire trademark in France and Europe. No. 79 Rue De Turbigo F-75003, Paris, France Telephone 33 (1) 5301 9530 FAX 33 (1) 5301 9540 Registered Capital 1.893 Million Euro Paid Capital 1.893 Million Euro 100 % of Holding Responsible Person : Mrs. Francoise Betschart E-mail : h.gringoire@libertysurf.fr Pranda UK Limited Distribution of gold, Silver and costume jewelry under Cristalina brand in UK and Europe. Sighal House West No.1 Armfield Close West Molesey Surrey KT8 2RT, United Kingdom Telephone 44 (1) 0208 979 3896 FAX 44 (1) 0208 783 2010 Registered Capital 0.5 Million pound Paid Capital 0.5 Million pound 100 % of Holding Responsible Person : Mr. John Warren E-mail : Johnwarren@pranda.co.uk Pranda Singapore Pte. Limited Venture in Indonesia. Asiaciti Management Pte. Limited No.1 Raffles Place, # 21-01 OUB Centre, Singapore 048616 Telephone (65) 6533 2611 FAX (65) 6532 5092 Registered Capital 3.0 Million Singapore dollar Paid Capital 3.0 Million Singapore dollar 100 % of Holding Responsible Person : Mrs. Sunanta Tiasuwan E-mail : Sunanta@pranda.co.th

ANNUAL REPORT 2006 PRANDA JEWELRY

GENERAL INFORMATION Pranda & Kroll GmbH & Co. KG Distribution of gold, Silver in Germany and European. No. Wildpfad 23 - 75180 Pforzheim Germany Telephone 49 (0) 7231 154 47-0 FAX 49 (0) 7231 154 47-25 Registered Capital 150,000 Euro Paid Capital 150,000 Euro 51 % of Holding Home Page : www.kroll-schmuck.de Responsible Person : Mr. Gregor Kroll E-mail : gregor.kroll@pranda-kroll.de

BRIEF HISTORY Reference Persons Official Registrar:

Suported Business KZ - PRANDA Co., Ltd. (Previous name: LG - PRANDA Co., Ltd) Import and distribution of silver and pure gold granules and bars. No. 75/51 Ocean Tower 2 Condominium Building 24th Floor, Soi Sukhumvit 19, Sukhumvit Road Khongtoey Sub-district, Wattana District, Bangkok 10110 Telephone (66) 2204 1441-3 FAX (66) 2204 1444 Registered Capital 30 Million Baht Paid Capital 9 Million Baht 40 % of Holding Responsible Person : Mr. K.C. Lee E-mail : kclee@koreazinc.co..kr Pranda lodging Co., Ltd. Property rental / Properties Head office : 28 Soi Bangna-Trad 28, Bangna Sub-district Bangna District, Bangkok 10260 Thailand. Telephone 0-2361 3311, 0-2393 8779 FAX 0-2361 3088, 0-2398 2143 Registered Capital 50 Million Baht Paid Capital 50 Million Baht 83 % of Holding Responsible Person : Mrs. Panidda Tiasuwan E-mail : Panidda@pranda.co.th

ANNUAL REPORT 2006 PRANDA JEWELRY

Auditor:

Law Consultant:

Thailand Securities Depository Company Limited Capital Market Academy, The Stock Exchange of Thailand Building, 2/7 Moo 4 (North Park project), Vibhavadi Rangsit Km. 27., Tungsonghong Sub-district, Laksi district, Bangkok 10210 Tel : 0-2596 9000 ext 9304, Direct : 0-2596-9304 Fax : 0-2832-4994 - 4996 Ernst & Young Office Limited 33rd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road (Near Queen Sirikit's National Convention Centre) Klongtoey, Bangkok 10110, THAILAND Tel : (66) 2264-0777, (66) 2661-9190 Fax : (66) 2264-0789-90, (66) 2661-9192 White & Case (Thailand) Limited 22nd Floor, Mercury Tower, 540 Ploenchit Road, Lumpini Sub-district, Pathumwan District, Bangkok 10330 Tel : 0-2264-8000 Fax : 0-2657-2222

2006

Primagold International launched "Siam Pannarai" designer Collection and received "The Hot Design Award" at the 37th Bangkok Gems & Jewelry Fair Pranda & Kroll (Germany) launch a new brand "Cai", at the Inhorgenta Fair , Munich, Germany. Pranda Jewelry Plc. has been selected as one of just four Thai Companies meeting the Sufficiency Economy standards in the running of the business by the office of the National Economic and Social Development Board. PRANDA SCL (Indonesia) expanded capacity in response to increased overseas demand from 450 workers to 700 workers , an increase of over 50%

2005

The company raised its investment in Crystaline Company Limited Bangkok by 50 million baht to 100 million baht. The company holds 96% stake in Crystaline. PrimaGold International Company Limited signed a joint venture deal with Tomei Gold & Jewelry Holding to distribute "Prima Gold'' products in Malaysia. PrimaGold International Company Limited appointed Mr. Citan Davi to handle marketing and distribution of "Prima Gold" products in India. PrimaGold International Company Limited operates at this time 48 retail outlets in Thailand and 35 outlets in international markets. In total the company operates 83 distribution outlets. Pranda Jewelry Public Company Limited signed a joint venture agreement with Gregor Kroll of Kroll GmbH with Pranda holding 51% of the shares Kroll 49 % to set up "Pranda & Kroll GmbH & Co. KG" in Germany to distribute gold and silver jewelry products in Germany and Europe including the new Eastern European member states.

2004

The company awarded The Prime Minister Award for the Best Exporter (Export Honorary Recognition) from the Department of Export Promotion, Commerce Ministry as the Thai exporter with most robust growth for 10 consecutive years. Primagold International Company Limited launched gold jewelry with 96.5% purity under "Century Gold" brand with the first retail outlet opened at the Mall Department Store, Bangkhae. expanded to seven branches within the same year.

2003

Established a new production base to China under "Pranda Guangzhou" Increased investment in Primagold International Company Limited by 50 million baht raising the registered capital to 100 million baht in which the company holds 100% stake

2002

The Company offered 200,000,000 units of the five-year warrants (2 May, 2002 to 2007) to existing shareholders

ANNUAL REPORT 2006 PRANDA JEWELRY

BRIEF HISTORY 2000

The company was awarded the Gold Card exporter from the Customs Department, Finance Ministry with "fast track" benefits on imported raw materials.

1996

Expanded the foreign market for "Primagold International" and co-invested in LG Pranda (now operated under the name of KZ-Pranda) to import and distribute silver and gold products

1995

Established foreign production bases "Pranda Vietnam" and "Pranda SCL" (Indonesia) Set up Pranda Singapore Pte. Limited to invest in Malaysia and Indonesia Invested in establishing Pranda Lodging Company Limited to provide accommodation services to the company's employees The company awarded The Prime Minister Award for the Best Exporter from the Department of Export Promotion, the Commerce Ministry

1994

Established a new production base to Nakhon Ratchasima (Korat) Established a new distribution base in the United Kingdom under "Pranda UK Ltd." with a 100% shareholding

1992

Expanded business by establishing its own distribution bases to tap foreign markets under "Pranda North America, Inc." (Rhode Island USA), Crystaline North America, Inc. and H. Gringoire s.a.r.l. (Paris) Established product and brand development center under "Prima Gold" and domestic distribution launched

1990

NATURE OF BUSINESS Pranda Jewelry Public Company Limited ("PRANDA") was founded in 1973 initially under Pranda Design Company Limited which was later officially renamed to Pranda Jewelry Limited on April 27, 1984. The company had listed its ordinary shares in the Stock Exchange of Thailand on July 6, 1990 and converted into the Public Company Limited on June 3, 1994. The company has currently registered capital worth of 400 million baht with 358.41 million baht paid up. Pranda Jewelry Public Company Limited's headquarters are located at Soi Bangna-Trad 28, Bangna, Bangkok. The company is the manufacturer and distributor of genuine jewelry under the principles to promote social contribution and environmental responsibilities. The company's major customers span throughout the key regions of the world covering the North America, the European Union, Australia, Asia Pacific and the Middle East. Pranda Jewelry Public Company Limited has a vision

to become the "World-Class Mass Brand Produce" and lays out the solid groundwork to accommodate and achieve the vision as indicated by balanced management structures as follow:1. Production Bases for affordable jewelry products that meet economies of scale through five manufacturing plants in four countries including Thailand, Vietnam, China and Indonesia with production capacity of over 6.72 million pieces a year both in the company's own brands and contracted manufacturing for leading brands of customers. 2. Own Design and Product Development Center for leading brands both of the customers and the company's own brands. 3. Distribution Bases spanning five key regions of the world in four countries including the United States, England, Germany and France. 4. Own Brand Retail scattering through 53 local distribution outlets and distribution licensing system in 37 countries. In total, the company has up to 90 distribution channels.

Jewelry trademarks of Pranda Group of Companies

Pranda registered and traded on the Stock Exchange of Thailand (SET) under trading symbol "Pranda" Invested in setting up production base under "Crystaline Co. Ltd."

the 99.9% gold jewelry, the everlasting value. 1984

Expanded business by establishing production base and changed company name to "Pranda Jewelry"

1973

Commenced export trading operations under "Pranda Design"

the diamond jewelry, superior with unique design

the gold craftsmanship.

the 96.5% gold jewelry, the creative design for modern life

ANNUAL REPORT 2006 PRANDA JEWELRY

ANNUAL REPORT 2006 PRANDA JEWELRY 100%

100%

50%

Guangzhou Pangda Zhubao Shoushi Youxian Gongsi (China) Jewelry producer for distributor in China

Pranda Vietnam Co., Ltd. (Vietnam) Producer and distributor of sliver jewelry for exports and distribution

Pranda Singapore Pte. Limited (Singapore) Joint venture firm in Indonesia.

Overseas P.T. Pranda SCL. (Indonesia) Producer of jewelry for export and domestic market under Julia and Batik brands.

PRANDA JEWELRY PUBLIC COMPANY LIMITED (THAILAND) Jewelry producer and export

and

PRIMAGOLD IINTERNATIONAL Co., Ltd. (THAILAND) Distributor of 99.9% and 96.5% gold jewelry, diamond and jewelry under several brands such as Prima Gold, Prima Diamond,

100%

Domestic

Distribution Base

51%

100%

50%

CRYSTALINE NORTH AMERICA, INC. (USA) Distributor of costume jewelry and silver jewelry in the USA and Canada

Pranda & Kroll GmbH & Co. KG (Germany) Distributor of gold and silver jewelry in Germany and Europe

H. GRINGOIRE S.A.R.L. (France) Distributor of gold jewelry under H. Gringoire trademark in France and Europe

PRANDA U.K. LTD. (England) Distributor of gold, silver jewelry, and costume jewelry under Cristalina brand in England and Europe

PRANDA NORTH AMERICA, INC. (USA) Distributor of gold jewelry in the USA and Canada

Overseas

"The Essence of Style".

CRYSTALINE Co.,Ltd (THAILAND) Producer and exporter of costume jewelry

28 Production Base

"Your Style - Your Life" and "more than Jewelry - it is fashion accessories".

96%

Inspired by the beautiful Batik motif, the architecture of Bali, with the western form of jewelry.

Domestic

Modern, Innovative and Achievable 18k gold with real diamond.

Core Business Structure of Pranda Jewelry Public Company Limited

NATURE OF BUSINESS

ANNUAL REPORT 2006 PRANDA JEWELRY

NATURE OF BUSINESS

Revenue Structure of Pranda Jewelry Public Company Limited and Subsidiaries

Million baht

Revenue from exports Revenue from domestic sales Total

3,523 553 4,076

2005 % 86.43 13.57 100

Million baht

2,920 571 3,491

2004 % 83.64 16.36 100

Million baht

2,841 482 3,323

% OF

TYPE OF REVENUE

HOLDING

Pranda Jewelry Plc

Manufacturer and distributor of jewelry

% 85.50 14.50 100

Million baht

2,229 386 2,615

2006 Million % baht

2005 Million % baht

2004 Million % baht

1,199

1,288

1,233

28.57

36.16

Pranda Vietnam Co.,Ltd.

2006 Million % baht

100 Manufacturer and distributor of gold and silver accessories for export and domestic sales under esse brand

2005 Million % baht

2004 Million % baht

2003 Million % baht

0.17

0.22

0.33

0.23

2003 % 85.24 14.76 100

Revenue structure of Pranda Jewelry Public Company Limited and its subsidiaries according to consolidated financial statement. COMPANY

TYPE OF REVENUE

HOLDING

The revenue structure of Pranda Jewelry Public Company Limited and its subsidiaries broken down to domestic sales and exports (after deduction of intercompany transaction items). 2006

% OF

COMPANY

36.72

2003 Million % baht 958

36.15

Guangzhou Pangda Zhubao 100 Shoushi Youxian Gongsi

Manufacturer of jewelry for domestic distribution in China.

0.71

0.22

0.03

Pranda & Kroll GmbH & Co. KG

Distributor of gold and silver accessories in Germany and Europe

218

5.19

2.70

4,076

97.12

3,491

98.00

3,323

98.96

2,615

98.68

0.29

0.34

0.18

0.15

0.10

0.28

0.21

0.26

106

2.53

1.38

0.65

0.91

4,198

100

3,562

100

3,358

100

2,650

100

Sales Revenue Pranda Lodging Co., Ltd. 83

Property rental/properties

Returns on investments from joint ventures Other revenues Total Revenues

Subsidiaries-domestic Primagold International 100 Distributor of 99.9% and 99.5 gold accessories and genuine Co., Ltd.

9.84

405

11.37

326

9.70

271

10.23

220

5.24

217

6.09

204

6.08

127

4.79

Pranda North America, 100 Distributor of gold jewelry in Inc. the USA and Canada Crystaline North America, 100 Distributor of costume jewelry and silver jewelry in the USA Inc. and Canada H.Gringoire s.a.r.l. 100 Distributor of gold accessories under H. Gringoire brand in France and Europe

1,501

35.76

921

25.86

983

29.27

696

26.26

136

3.24

185

5.19

199

5.93

205

7.74

100 Distributor of gold, silver and costume jewelry under Cristalina brand in UK and Europe.

352

8.39

363

10.19

366

10.90

352

13.28

ºÃÔÉÑ· ¤ÃÔÊµÍÅäÅ¹ ¨Ó¡Ñ´

diamond and costume under its own brands such as Prima Gold, Prima Diamond, Prima Art, Century Gold and esse. Manufacturer and distributor of costume jewelry

413

Subsidiaries-overseas

Pranda U.K. Limited

ANNUAL REPORT 2006 PRANDA JEWELRY

Significant changes and developments in 2006 Production Base Expansion - Crystaline Company Limited, the manufacturer and distributor of fashion ornaments, has constructed its second factory at Nakhon Ratchasima province to expand its production capacity. The new plant has already commenced its production since early 2005, employing over 100 workers. The new factory has employed more 100 workers at end of the first quarter of 2006, with the number of workers planned to increase to 400-500 before 2007. - P.T. PRADNA SCL (INDONESIA) has expanded production capacity of its existing factory to accommodate the market growth both in foreign market and Indonesia. To this end, the company has increased its workers and skilled craftsmen to 700 from earlier 450. The company has also set aside another plot of land in the event where further expansion is needed.

- PRANDA VIETNAM CO., LTD is under way to expandits existing factory to accommodate future growth and employ more 150 workers from existing 290 to 440. The expansion plan is due to completion by February, 2007. Distribution Base Expansion - PrimaGold International Company Limited has launched the Siam Pannarai Collection of gold accessories at Siam Paragon, the new bustling shopping complex, to showcase its leadership in design. The new Siam Pannarai collection also won Hot Design award at the 37th Bangkok Gems & Jewelry Fair recently held in Bangkok. - Pranda & Kroll, the company's joint venture firm based in Germany, has launched Sterling Silver costume accessories under Cai Brand which features modern designs under three themes: Wild Thing, Peace of My Heart and Pretty Woman at Inhorgenta Fair in Germany.

ANNUAL REPORT 2006 PRANDA JEWELRY

NATURE OF BUSINESS Financial Structure The company has issued and paid-up capital worth 358.41 million baht and retained earnings worth 1,412 million baht, with shareholders' equity totaling 2,806 million baht. The company's current liabilities were worth 850 and non-current liabilities worth of 447 baht. In total, the company had total liabilities of 1,298 million baht. Based on the company's total liabilities and shareholder's equity, the company's debt-to-equity ratio was equivalent to 0.46 times. And based on the company's long-term liabilities and shareholders' equity, the company was found to report long-term loans to equity equivalent to only 0.16 times, and Times Interest Earned equivalent to 9.34 times.

Industry Outlook and Future Competition Thanks to bilateral free trade agreements (FTAs), now in place with several countries, resulting in for instance a deep cut of import tariffs on gems and jewelry between Thailand and India to zero percent since September 2006, trade competition is inevitably intensifying. The international jewelry market's competition could be categorized into two classes-pricing competition particularly from Chinese and Indian exporters, and design and marketing competition with major competitors mainly from Italy, the United States and Hong Kong. As a result of the cut-throat competition, the growth of Thailand's gems and jewelry exports has failed to live up to expectation in a significant degree.

ANNUAL REPORT 2006 PRANDA JEWELRY

SHAREHOLDER AND MANAGEMENT STRUCTURE However. Thailand's jewelry industry has still managed to maintain its competitive edge in terms of pricing, creative design, and marketing because of the government's supports through a myriad of measures ranging from import tariff waivers for raw materials used in production, an establishment of Jewelry Research and Development Institute, and artisans development through partnership with high education institutions, as well as the preparedness of the Thai private sector as the centers for gemstones trading and jewelry research as well as excellence in jewelry manufacturing. The company, having been fully aware of such competition environments, has continuously pursued quality policy throughout several decades in business. The company has stayed clearly focused on creative design and marketing excellence as indicated by the company's present market leadership in its own brands development and the world-class mass brand producer as well as ability to cater to maximum satisfaction of varying customers through the company's subsidiary network which covers the key market regions including Europe, the United States and Asia. In addition, the company is committed to steadfastly promoting the sense of business responsibilities which will eventually lead to respect for environments, the legitimate rights of surrounding communities and societies while running business on the fair treatment to all parties.

Shareholder The first 10 major shareholders with number of shares and percentage of shareholding as at closing book dated December 29, 2006.

NAME OF SHAREHOLDER 1. Thai NVDR Co., Ltd. 2. Mr. Prida Tiasuwan 3. Mrs. Pranee Khunprasert 4. Ms. Pittaya Tiasuwan 5. Mrs. Panidda Tiasuwan 6. GOLDMAN SACHS & CO 7. Mr. Pramote Tiasuwan 8. Pranda Holding Co., Ltd 9. N.C.B.TRUST LIMITED-UBS AG LONDON BR-IPB CLIENT AC 10. Mrs. Prapee Sorakraikitikul 11. Others NO OF SHARES PAID UP

AS AT DECEMBER 29, 2006 No. of Shares % of total shares 79,840,100 16,862,320 14,133,360 13,953,280 13,691,780 12,528,000 11,900,560 11,900,000 11,182,400 8,832,780 163,589,160 358,413,740

22.28 4.70 3.94 3.89 3.82 3.50 3.32 3.32 3.12 2.46 45.64 100

THAI SHAREHOLDER

303,213,540

84.60

FOREIGN SHAREHOLDER

55,200,200

15.40

"Updated information of the company's shareholders is made available for investors at the company's website: www.pranda.co.th prior to the annual ordinary meeting of the shareholders." Group of major shareholders which has a significant impact on the formulation of management policies - None The name of any shareholder which conceals true identity - None -

ANNUAL REPORT 2006 PRANDA JEWELRY

SHAREHOLDER AND MANAGEMENT STRUCTURE

Management

Scope of Responsibilities of Each Committee

Organization Chart The company's management structure is composed of the Board of Directors and sub-committees including the Executive Directors, the Audit Committee, Selection Committee, and Finance Committee whose scope of responsibilities are shown in the organization chart as follows:-

Board of Directors Audit Committee Finance Committee Executive Directors

Nomination and Remuneration Committee

President

Senior Vice President

Production Vice President

Senior Vice President

Stones Vice President

Marketing Mini Factory Vice President Vice President

Accounting and Finance Manager

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Design and Development Center Vice President (act.)

(1) Board of Directors The company's Board of Directors is composed of the company's executives at the ratio of not over a half of the total members. The Board needs to have at least three independent directors who are free from management division and from any vested interests or connections with the company's business. That means the company's Board of Directors will be balanced by the non-management directors, enabling them to fully perform their supervision and control. The retirement age of Board is 65 years old but this is not applied to the independent directors. Scope of Responsibilities of the Board of Directors 1. To determine strategic policies and supervise the company's operations to ensure the compliance with the relevant laws, objectives, the company's regulations and the resolutions of the shareholders 2. To nominate one or many directors to take responsibilities on the Board of Directors' behalf 3. To determine and change authorized directors and impose conditions deemed appropriate to protect the company's interests without a breach of governing laws. 4. To appoint executive directors or sub-committees to handle administration and management as designated by the Board of Directors 5. To endorse the appointment of the high-ranking executives 6. To empower the chairman to supervise and ensure the compliance with authorized responsibilities and accountabilities mentioned above.

Name list of the Board of Directors 1. Mr. Prida Tiasuwan Chairman 2. Mrs. Prapee Sorakraikitikul President 3. Mrs. Sunanta Tiasuwan Corporate Finance Chairman/secretary 4. Mrs. Pranee Khunprasert Senior Vice President 5. Mr. Pramote Tiasuwan Senior Vice President 6. Mrs. Panidda Tiasuwan Vice President 7. Lt. Jg. Anan Panananda R.T.N Chairman of the Audit Committee/ Director 8. Mr. Verachai Tantikul Audit Committee/ Director 9. Mrs. Sarita Bunnag Audit Committee/ Director 10. Mr. Eugene S. Davis Director Name list of the company's advisor Ms. Pittaya Tiasuwan Advisor Secretary of the Board of Directors: Mrs. Sunanta Tiasuwan

(2) Executive Directors Nine Executive Directors are composed of six directors of the company, with the remaining three members chosen from those who are knowledgeable and specialized in the industry. Scope of Responsibilities of Executive Chairman 1. To be fully authorized to execute the policy of the Board of Director according to relevant laws, conditions, and the company's regulations. 2. To supervise the company's operation to ensure its compliance with the policy entrusted by the Board of Directors. 3. To consider, propose, and amend the ways of practice as deemed appropriate to the Board of Directors for approval. 4. To perform other duties as delegated by the Board of Directors.

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SHAREHOLDER AND MANAGEMENT STRUCTURE However, above-mentioned authorities exclude the authorization of the Executive Chairman to approve items that he/she or any persons may have the conflict of interests or may have other invested interests with the company or its subsidiaries; and exclude any exercises relating to connected items and the items about the acquisition and disposal of important assets of the listed companies according to the rules and regulations of the Stock Exchange of Thailand which the company always abides by, and the regulations of the Stock Exchange of Thailand on individual items. In addition, such authorities also exclude other issues which require prior approval of the shareholders' meeting. Scope and Responsibilities of the Executive Committee 1. To consider and determine the operation plans and business strategies and supervise the company's operations to ensure its compliance with the policies of the Board of Directors, related laws, conditions, rules and regulations of the company. 2. To determine corporate directions, business development and expansion in conformity with the policies and resolutions of the Board of Directors. 3. To appoint the Company's executives to run routine operations at all positions except the appointment of high-ranking executives which needs prior approval of the Board of Directors; and to authorize persons to handle duties and responsibilities on the Board of Director's behalf as appropriate. 4. To determine that the working practice and regulations for the company's employees are not against related regulations and laws. 5. To approve the company's administration structure, employees' salary structure and other fringe benefits as well as administration structures of the department levels onwards. 6. To consider and screen the performance and monthly/annual budgeting and asset management before going before the Board of Directors for consideration 7. To endorse annual budgeting, supervise and monitor the assessment of the performance to ensure its compliance with the policies, objectives, and budgeting plans approved,

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and to consider and approve bonus, rewards, and other perks to employees to boost their morale. 8. To supervise and ensure the effectiveness and appropriateness of the company's internal control system through cooperation with the audit committee 9. To empower the Board Chairman to supervise and ensure effectively and efficiently the compliance with assigned responsibilities and accountabilities mentioned above. Name list of the Executive Directors 1. Mr. Prida Tiasuwan Acting Chairman 2. Mrs. Prapee Sorakraikitikul Vice Executive Chairman 3. Mrs. Sunanta Tiasuwan Vice Executive Chairman 4. Mr. Pramote Tiasuwan Vice Executive Chairman 5. Mrs. Pranee Khunprasert Vice Executive Chairman 6. Ms. Pittaya Tiasuwan Executive Director 7. Mrs. Panidda Tiasuwan Executive Director 8. Mr. Decha Nuntanajaroenkul Executive Director 9. Mr. Banjong Wongkaew Executive Director

(3) Audit Committee The Board of Directors, having acknowledged the importance of good and effective internal control, has considered and appointed the Audit Committee as a key instrument of the Board of Directors in supervising and controlling the company's administration to ensure it meets widely accepted standards, of accuracy, transparency, effective internal control system, and creditable and useful reporting systems both for investors and related parties. The Audit Committee's presence is fully compliant with criteria and requirements of the Stock Exchange of Thailand and allowed to freely perform their duties and to report directly to the Board of Directors. Scope of their duties and responsibilities has been determined in compliance with the requirements of the Stock Exchange of Thailand and stated clearly in the company's regulations under which the company's internal audit and internal control department will re-examine the adequacy of the company's internal audit and internal control system and submit their results directly to the Audit Committee.

SHAREHOLDER AND MANAGEMENT STRUCTURE Scope of Responsibilities of the Audit Committee 1. To review the company's financial report to ensure its accuracy and adequacy, reading the reports of the company's internal auditors and balance sheet before submitting it to the shareholders' meeting 2. To ensure that the company has come up with efficient and effective internal control and internal audit system 3. To ensure the company's compliance with the laws on securities and the Stock Exchange, regulations of the Stock Exchange and/or laws relevant to the company's businesses 4. To consider, nominate, propose the appointment, and propose remuneration of the company's auditors. 5. To consider the information disclosure of the company in case there are interrelated transactions between the company and subsidiaries or between the company and directors and in case that the remuneration offered may cause the conflict of interests and/or may result in loss to the company. 6. To prepare report on the Audit Committee and disclose it in the company's annual report. Such report must be signed by Chairman of the Audit Committee. Name list of the Audit Committee 1. Lt. Jg. Anan Panananda R.T.N Chairman 2. Mr. Verachai Tantikul Member 3. Mrs. Sarita Bunnag Member

(4) Selection and Remuneration Committee Conditions of the selection and nomination of the company's directors as imposed in the company's regulations could be summarized as follows:1. Directors of the company are not mandatory to be the company's shareholders. 2. The company's Board of Directors is composed of members of not fewer than five but not over than 20 persons. At least a half of the Board members are required to be Thai residents, and they have to possess qualifications at stated in Thai law. 3. To allow the shareholders' meeting to elect the directors according to the regulations and methods as follows:-

3.1 One shareholder possesses one voting right for each share held 3.2 Each shareholder is required to exercise his voting rights in full according to the number of shares held (3.1) to nominate one or several persons as directors, but many not share his voting rights with others. 3.3 Persons with the highest number of votes in descending order will be nominated as Directors, according to the number of Directors or the requirement to appoint. In the event that a person nominated as a Director has the same number of votes as the next nominee, but both nominees exceed the number of Directors which the meeting of shareholders is required to appoint, the chairman will cast the deciding vote. 4. At the annual ordinary meeting of shareholders, one/third of the Board of Directors is required to resign. If such requirement could not be met, at least one/third of the directors should be removed and removed directors could be re-appointed in the following year. Apart from the requirements for selection and nomination of the company's directors, the company has realized the importance of the monitoring and counterbalance systems. The company has therefore determined the criteria for the appointment of three independent directors as follows :1. They should not hold over than 2% of the entire voting shares in the company, subsidiaries and associated firms or persons may have the conflict of interests. Persons probably in conflict of interests are (A) The company's executives (B) The company's major shareholders (C) Those who have dominant authority over the company (D) Persons who come from the same bloodline or legitimate relationship with persons in (A), (B) or (C) such as the father, mother, spouse, sons or other close relatives (E) Any legal entities in which person in (A), (B), and (C) hold shares or have dominant authorities or substantial vested interests both directly and indirectly. ANNUAL REPORT 2006 PRANDA JEWELRY

SHAREHOLDER AND MANAGEMENT STRUCTURE 2. They should not be the company's employee, staff, advisors or person with dominant authority of the company, subsidiaries and associated firm or persons who may have the conflict of interests. 3. They should not be a person who shave the same bloodline or legitimate relationship with the person who may have the conflict of interests. 4. They should not have the business relationship with the company, subsidiaries and associated firm or persons, who may have the conflict of interests, in the appearance of obstruction of the independent discretion. 5. They should be able to perform their roles and express independent comments about the company's operations. Scope of Responsibilities of the Selection and Remuneration Committee 1. To propose criteria and guidelines in selecting and recruiting the company's independent directors and highranking executives as well as their remunerations. 2. To nominate, select and propose knowledgeable and qualified persons as the company's high-ranking executives as well as their remuneration to the Board of Directors for approval. 3. To propose criteria, methods and steps of performance assessment for high-ranking executives to the Board of Directors. 4. To assess the performance of directors as assigned by the Board of Directors. Name list of the Selection and Remuneration Committee 1. Lt. Jg. Anan Panananda R.T.N Chairman 2. Mrs. Prapee Sorakraikitikul Member 3. Mrs. Sunanta Tiasuwan Member 4. Mr. Pramote Tiasuwan Member 5. Mrs. Pranee Khunprasert Member 6. Mrs. Panidda Tiasuwan Member Name list of advisors to the Selection and Remuneration Committee 1. Ms. Pittaya Tiasuwan Advisor 2. Mr. Prida Tiasuwan Advisor

ANNUAL REPORT 2006 PRANDA JEWELRY

(5) Finance Committee The Finance Committee is composed of six members including five directors of the company and one who is chosen from those who are knowledgeable and specialized in the industry. Scope of Responsibilities of the Finance Committee 1. To seek funding according to policy and resolutions of the meeting of the Board of Directors to use as the working capital of the company and subsidiaries. 2. To analyst the potential investment, risk and benefits and gains as well as to follow and appraise potential risk and investment projects 3. To control, supervise and analyze operating performance of the subsidiaries and investment projects for the Board of Directors' consideration and approval 4. To take duties and responsibilities in compliance with the laws, rules and regulations as well as policies of the Stock Exchange of Thailand 5. To authorize the Board Chairman to supervise and ensure the compliance with those responsibilities and duties. Name list of the Finance Committee 1. Mrs. Sunanta Tiasuwan Chairman 2. Mrs. Prapee Sorakraikitikul Member 3. Mr. Pramote Tiasuwan Member 4. Mrs. Pranee Khunprasert Member 5. Mrs. Panidda Tiasuwan Member 6. Ms. Pittaya Tiasuwan Member Name list of advisors to the Advisors to the Finance Committee 1. Mr. Prida Tiasuwan Advisor 2. Mr. Len Biggs Advisor Name list of executives 1 according to definition of the Securities and Exchange Commission (SEC) 1. Mrs. Prapee Sorakraikitikul President 2. Mrs. Pranee Khunprasert Senior Vice President 3. Mr. Pramote Tiasuwan Senior Vice President 4. Mrs. Panidda Tiasuwan Vice PresidentProduction management

SHAREHOLDER AND MANAGEMENT STRUCTURE 5. Ms. Pittaya Tiasuwan

Vice PresidentStones Management 6. Mr. Decha Nuntanajaroenkul Vice PresidentMarketing 7. Mr. Banjong Wongkaew Vice PresidentMini Factory 8. Mr. Thanes Panjakrid Accounting and Finance Manager

Note: 1 "Executives" mean directors, managers or those who hold the first four positions lower than the managers (who hold the highest position of the company), those who hold the same position with the four executives including those who hold management positions in accounting or finance division from division managers or equivalent onwards.

Remuneration of Directors and Management of the Company Remuneration to executives. Remuneration in the form of cash during January 31, 2006. Remuneration in the form of cash during January 1, 2006 to December 31, 2006 (A) Remuneration to directors (Unit : Million baht)

ITEM

1. 2. 3. 4. -

NAME OF DIRECTORS Mr. Prida Lt.jg. Anan Mr. Verachai Mrs. Sarita Lieut. Orarn

SALARY/BONUS

POSITION'S ALLOWANCE

TOTAL

4.99 4.99

0.76 0.68 0.24 0.23 1.91

4.99 0.76 0.68 0.24 0.23 6.90

Tiasuwan Panananda R.T.N. Tantikul Bunnag Krairiksh

Total remuneration to directors

Note: Lieut. Orarn Krairiksh had resigned from the company's director position, with his resignation letter effective on July 6, 2006. (B) Total remuneration of the company's executive directors and management

Executive directors and management

TYPE

NO. (PERSON)

AMOUNT (MILLION BAHT)

Salary and bonus

21.59

Note: Five of the company's directors are the executive director members. Remuneration excludes that given to the accounting and finance manager. Other remunerations At present, the company's executives are entitled only to salary and bonus as remuneration, without any other benefits and revenues.

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SHAREHOLDER AND MANAGEMENT STRUCTURE Inside Information Control

1. To minimize the company's business risk 2. To help prevent any loss, leakage or misuse of the company's assets 3. To increase accuracy and creditability of the company's financial report 4. To help ensure the compliance with the laws and relevant regulations of the company's personnel. 5. To help ensure the efficiency of the company's business management through useful and effective deployment of the company's resources to achieve the maximum benefits to all stakeholders. To help protect the investment of the company's shareholders. The company also has its own Internal Audit Department to ensure that the company's important operations and financial activities are undertaken in line with this policy and to produce the greatest efficiency. The internal audit department has also overseen the compliance with the laws and regulations which many affect the company. To make the Internal Audit Department independent and fully capable of performing its duties and counterbalance, the Board of Directors has also a mandate that the department reports its auditing results directly to the company's Audit Committee who will then re-evaluate the performance.

The company has determined principles of the best practice and responsibilities for executives and the use of insider information by the company's employees that can be summarized as follows: They (the company's executives and employees) must not abuse power and responsibilities for the sake of personal interests or anybody's gains; not disclose confidential information of the company for personal interests or to anybody without the due consent of the company; not to perform any actions that may result in the conflict of interests to the company without informing the company. They must also not let outsiders get access to or to be aware of the company's inside information which has yet to be publicized and could affect the company's share prices, and not trade the company's shares for personal gains or that of any others.

Internal Control The company has given importance of the efficiency of the internal control both in management and operational levels, because the company has realized that efficient internal control is instrumental to build sensible confidence within the management on matters as follows:-

Dividend Policy The company has policy to pay dividend at the rate of not more than 60% of the annual net profit after corporate income tax deduction. The company's Board of Directors would consider first the operating profit, financial conditions, and capital requirement both at present and the future. The company's subsidiaries have also policy to pay net profit available form the performance after legal reserves set aside. The dividend payment would be based on the company's operating performance, financial conditions, and capital requirement considered by the Board of Directors and endorsed by the shareholders. DIVIDEND PAYMENT RATE AGAINST PROFIT

60.00%

59.63% 57.35%

50.00%

RISK FACTORS Risk factors that affected the industry As a result of trade liberalization, Thailand's current jewelry market has experienced stiffer competition not only on the design and quality front but also pricing and a continuous price surge of raw materials for jewelry manufacturing such as gold, silver and stones. Above all, the prices of raw materials are expected to be subject to further volatility, hence delaying purchases. Having realized such challenges, the company has pursued A policy to expand production bases to across the Asian region to capitalize on the existing strong points of each country. Also, the company has upgraded production techniques to reduce the reliance on key raw materials resulting in a substantial reduction of our material costs making the overal production costs steady and stable to a satisfactory level. Moreover, the company has well diversified marketing risk by expanding distribution through the company's own channels and regional distribution bases to cover over 40 different countries.

Risk factors that affected the company's operations. 1. Risk Factors on Sales and Production Rapidly changing environments have prompted the Company's existing customers to reduce significantly their inventories and to need more developed products as well as items in a wider price range and quality. To cope with this change, the company has developed production techniques to cut lead times on production reducing accordingly the customers' stock levels. The company has also adopted state-of-the-art technology in design to create product diversity, to accommodate varying demands of our trade partners. The company has also been able to achieve the in manufacturing of products in different range of prices and quality using our mix of production bases which span throughout Asian region.

2. Human Resource Risk As by nature the jewelry industry desperately needs high expertise, skill as well as innovation and creativity, the company has pursued a policy to continuously improve the administration, management and human resource development structure starting from selection process to recruit suitable persons, and to upgrade competency and operational capacity of staff in each position with in house training programs coupled with offering of incentives and awards on performance and sharing a joint vision for everyone in the organization to pursue, in order to retain our quality workers. 3. Financial Risk 3.1 As the company engages in exports to foreign markets and imports of raw materials for production (about 43% of the production), the company could be subject either to gain or loss from foreign exchange volatility. The company has well realized the exposure arising from the foreign exchange fluctuation, thus hedging with forward contracts and providing a natural hedge against foreign currency obligations. 3.2 Credit Risk arising from overdue payment of direct customers and related companies. The Company has a set policy to be strictly careful of extending credit lines to new clients, with all evidence, documentary information and references taken into account to prevent any later dispute resulting in the ability to select new customers who have the quality and efficiency for long term development and financial stability. In addition, the company has also had strict policy on debt collection and debt controls as well as close contacts with debtors and provisions set aside for doubtful debts of any suspect accounts. As a result, substantial impact from the debt defaults was unlikely.

45.29% 46.05%

40.00% 00.00% 2003

2004

2005

2006

Graphic displays the history of dividend payment of the company over the last four years ANNUAL REPORT 2006 PRANDA JEWELRY

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RISK FACTORS 4. Risk Factors on Business Planning and Information Technology As a result of information technology advancement and a growing contact with customers through the Internet, the company has realized its information network is subject to hacking risk from international users. In a bid to curb such a risk, the Company has installed firewall systems to prevent an access from unauthorized users and set policies to effectively control the access into the company's information network, as well as state -of-the-art backup information system.

RELATE PARTY TRANSACTIONS 5. Risk from Market Liberalization Currently, the world's gems and jewelry industry has experienced a deep cut of import tariffs as evidenced by the international trade with India which starts a tariff cut to zero percent since September last year. As result, the industry would be definitely hit particularly in terms of increasing number of competitors in the market. Despite that challenge, the company still manages to see continuous growth, thanks to the company's focus on product leadership, and unique creative designs for the leading brands of each client.

Inter-related Transactions. The company and the major shareholders had no other business involved or competing against it. During 2005 and 2006 the company had inter-related transactions only with the affiliates, subsidiaries and related companies with joint management and Directors within normal trade practices. (please see the financial remark No.6)

Necessity and rationalization The inter-related items occurring among the company, its affiliates and subsidiaries are business items are normal practice, and the board of directors or the board of executives had approved them in compliance with the appropriate procedures according to the regulations of the Company in all respects.

Measures or steps for approval of the inter-related items The inter-related items that occurred or that could take place in the future are subject to the approval of the board of directors, or executive Directors who must approve according to the appropriate procedures according to the regulations of the company. The directors who had vested interest in approving the said items were refrained from voting on such issues.

Policies and trends on making the future inter-related items The future inter-related items of the company shall be implemented in the normal business practice as usual without a special treatment. No transfers of interests among the company, the affiliates and persons of vested

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interest. Nevertheless, the company shall ask the inspection committee or the auditor of the company or an independent specialist to audit and show appropriateness of the prices and rationalization of making the items . It shall disclose type and value of the said items with reasons of making the items to the annual general meeting of the shareholders. Moreover, the board of directors had to comply with the laws on securities and the Stock Exchange of Thailand (SET) and regulations, notices, orders or requirements of the SET. Including compliance with the requirements on data disclosure of information on making the inter-related items and acquiring or disposal of the important assets of the company or its affiliates. It complied with the standards of accounting prescribed by the Accounting and Auditor Association of Thailand (AAAT). Nevertheless, if there were inter-related items between the company or its affiliates or people who may have conflict of interest or had vested interest or future conflict of interest, the company would have the inspection committee comment on the necessity and appropriateness of such items. In case the inspection committee had no expertise in considering the inter-related items that may happen, the company would ask an independent specialist or the auditor of the company to give opinions on the inter-related items for supplementing the decision of the committee or the shareholders as the case maybe. Nonetheless, the company would reveal the inter-related items in the remarks supplementing the financial statement that had been audited by the company's auditor.

ANNUAL REPORT 2006 PRANDA JEWELRY

SOCIAL ACCOUNTABILITIES

SOCIAL ACCOUNTABILITIES Pranda Jewelry Public Company Limited has always acknowledged that sustainable business development could not be achieved if all stakeholders including social accountabilities were ignored. Throughout 2006, the company has therefor pursued many social activities in different fields as follows :-

Education

To cooperate with the The Golden Jubillee Royal Goldsmith College and The Bangkok Arts and Crafts College to manage a "Bilateral Education Program" and to team up with the Non-Formal Education Department to offer occupational education opportunities to underprivileged children, enabling them to continue their studies on gems and jewelry at higher and advanced vocational certificate levels for the 7th consecutive year. To support financially the construction of mobile libraries for the younger generations under "60 Compact Libraries Connecting Us with 60 Schools" scheme developed by Thai Fund Foundation and Chulalongkorn University Book Center. The company has constructed mobile libraries and handed over them to two schools Sri-iamnusorn School and Pongploynusorn School To co-sponsor activities of the "Art for All" arts camp held by Chulalongkorn University's Faculty of Arts and other four partners for disabled children,

ANNUAL REPORT 2006 PRANDA JEWELRY

giving them an opportunity to learn and develop their artistic skills together with normal children. To support the production of ornamental accessories in order develop the creative design potential of university's students on gems and jewelry under "Silver Jewelry Design Contest" Nakhon Ratchasima Factory of Pranda has held activities and handed out useful articles to school children in adjacent communities in the province as social return and as a part to create opportunity to children in rural areas to get more access to education so that they will be a good and quality citizen for the country in the future. To offer educational equipment, stationary, souvenirs and gifts as well as snacks to children on "the National Children Day" to Pongployanusorn School and Sri-iamnusorn School every year To encourage the company's high-ranking executives and experts to participate on several occasions each year as the guest speakers to students at various universities. To offer opportunity for educational institutes and various agencies to study and observe the company's operations.

Relationship with Nearby Communities

To participate in "Pleasant factory project" to celebrate the 60th anniversary of His Majesty the King's accession to the throne. To team up with Bangna Police Station to organize soccer matches to underline the relationship between the company and local police. To participate in a charity walk rally in an anti-drug campaign held by Bangna Police Station To co-sponsor various events such as activities on the National Children Day held by Bangna Police Station To jointly develop environmental pilot street with Bangna District Office To jointly plant trees along the footpath area in front of Rungsaeng playground at Lasal Road.

Social Contribution Activities

To jointly present activities on Sufficiency Economy at "National Science and Technology Day" event. To take part in tribute to His Majesty the King, marking the 60th anniversary of his accession to the throne under "the White Day "Long Live the King" scheme held by businesswomen committee of Thai Chamber of Commerce To participate in the charity bowling competition as the celebrations of the 60th anniversary of His Majesty the King's accession to the throne, with a part of proceeds contributed through a charity fund started by the King to the Chaipatana Foundation

To co-sponsor the family institute on different occasions, for instance, offering gold marriage certificates to 10 couples who register marriage certificates at the Valentine's Day event held by Thai Gem & Jewelry Traders Association, The Jewel Fest Club, together with Bangrak District, the Bangkok Metropolitan Administration, and the Tourism Authority of Thailand. To cooperate with the Gem and Jewelry Institute of Thailand to establish the gem museum and to contribute gems, jewelry and samples of precious metals as well as equipment and apparatus used to make ornamental accessories as a valuable source to develop knowledge of interested people. To participate in blood donation to the Thai Red Cross Society every three months. To contribute money and consumer products to the needy compatriots who suffer from crisis in different occasions such as the flood victims in many provinces Pranda Group of Companies has jointly donated money, items and survival kits to help alleviated the plight of the flood victims. Pranda Jewelry Public Company Limited alone has contributed 100,000 baht to the flood-affected area in Chanthaburi, while Primagold International Co., Ltd has handed out relief items and survival kits to the flood victims in Chawai Sub-District, Chaiyo District, Ang Thong Province.

Promotion and Campaign for Sense of Social Accountabilities

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SOCIAL ACCOUNTABILITIES To encourage the company's executives and employees to adopt the Sufficiency Economy philosophy of His Majesty the King as the norm both in working and living To jointly celebrate the 60th anniversary of His Majesty the King's accession to the throne by wearing a yellow T-shirt with the royal emblem. To participate in the business seminar on Sufficiency Economy at the sixth National Health Assembly held under the concept of "Sufficient Economy for peaceful and happy society" To join the campaign for "Sharing among Friends" project to encourage and call for sharing and contribution from different countries and campaign for help to orphans and underprivileged children in society To attend a seminar on "Big Trend; CSR, Business and Social Accountability Thai business can no longer ignore" to promote and motivate Thai business sector to elevate their sense of social accountabilities. To partner with Social Venture Network (SVN) to hold seminars for business leaders both from Thailand and foreign countries every year in a bid to encourage and stimulate business organizations to realize the importance of their role in environmental and social responsibility. To participate in the United Nations Global Compact since 2000 which requires businesses to run on principles of human rights, labor standards, environmental protection and anti-corruption.

ANNUAL REPORT 2006 PRANDA JEWELRY

SOCIAL ACCOUNTABILITIES

Pranda Jewelry Public Company Limited is committed to running its business with responsibility to ensure that the company's business produces positive impact on the overall society.

Life Quality Standards of Employees Pranda Jewelry Public Company has provided different welfares to employees such as library as a source of their information, medical services together with doctors and nurses, nursery center, canteen and corporate uniform, annual medical checkups, social security management, mailing and postal services, lodging

and accommodations, exercise room, sports club and center, better livelihood, skill and career development, equal and fair treatments to employees at all levels, as well as widened opportunities for potential employees to grow in their careers and get promoted to higher positions. On top of that, the company has realized the importance of personnel in different facets as follow:To allow the election of Welfare Committee within Pranda Jewelry Public Company Limited has been allowed to represent its personnel in jointly advising, discussing and proposing opinions about labor welfare deemed useful to the company's personnel and the company. To organize the first-aid courses to the company's employees to help them better understand the importance of the first aid and its basic practices so that they can take care of their own health, family members and neighbors. To organize fire drill and Evacuation Drill every year as well as other emergency drills as determined by the business risk management principles. To manage environmental conditions to achieve safety and sanitation standards, as well as develop certain spaces of the factories as the green and shady area, rest corners and recreational corners for employees to make them feel relaxed and less stressful which will eventually increase their productivity. The company has always recognized the importance of this issue. To organize the Safety Week activities every year to motivate the company's personnel to realize and

acknowledge the importance of safety and; more importantly, to reduce potential accidents arising during working and enable personnel to exercise knowledge into real practice for their own safety. To organize the inter-organization sports competition every year to promote good health among employees and build up unity within the organization. To organize annual event every year to award distinguished rings as a thankful attribute and honor to employees who have stayed with the company for certain periods. To organize New Year celebration party every year as to thank and reward all employees who have dedicated physically and mentally to the company throughout the year. To organize the Thank You party to the Group's executives every year in order to thank all company's executives who have contributed their physical strength and thought power throughout the year to steer the company into accomplishment and achieve business target as planned. The company will continue to pursue a business policy that strictly adhere to the principals of social accountabilities in parallel with it's development. The Company throughout the years has never ignored the principal of benefit sharing among employees and all stakeholders. Following these principals we believe, will eventually help guarantee steady and sustainable growth for the company.

ANNUAL REPORT 2006 PRANDA JEWELRY

HIGHLIGHT OF COMPANY OPERATION

2006

2005

2004

2003

Total Assets Total Liabilities Shareholders' Equity Total Revenues Total Sales Cost of sales Gross Margin Operating Expenses Profit fromOperation Interest Expenses Net profit for the year

4,104 1,298 2,806 4,198 4,076 2,718 1,358 848 510 55 432

3,681 1,216 2,465 3,562 3,491 2,267 1,224 835 389 46 356

3,303 1,191 2,112 3,358 3,323 2,174 1,149 723 426 50 362

2,990 1,196 1,796 2,649 2,615 1,633 982 607 375 58 312

Pranda Performance Chart of Sales 4,500 4,076

4,000 3,491

3,323

3,500 Million BHT

Unit : Million Baht

3,000 2,615

2,500 2,000 1,500 1,000 500 Year

0 2546

2547

2548

2549

Chart of Profitabilitiy

2006

2005

2004

2003

Basic earning per share Basic book value per share

1.29 8.16

1.13 7.52

1.37 8.00

1.43 8.21

Gross Margin Operation Profit Net Income

1,224

1,200 1,000 Million BHT

Unit : Million Baht

1,358

1,400 1,149 982

800 600

ANNUAL REPORT 2006 PRANDA JEWELRY

2005

2004

2003

16.75% 33.31% 14.03% 12.51% 10.61% 3.42 1.43 1.60 14.23% 15.86% 9.27 0.46 0.32

5.06% 35.06% 12.72% 11.14% 10.20% 3.99 1.68 1.55 11.82% 15.02% 8.46 0.49 0.33

27.07% 34.58% 14.38% 12.82% 10.89% 4.59 2.31 1.90 14.11% 17.20% 8.52 0.56 0.36

4.31% 37.55% 16.29% 14.34% 11.93% 5.24 2.56 1.60 13.53% 17.43% 6.47 0.67 0.40

400

375

432 362

312

389 356

200 Year

0 2546

Chart of Liabilities and Equity

2547

2548

2549

3,000

Total Liabilities Equity

2,806 2,465

2,500 2,112

2,000 Million BHT

Sales growth Gross Margin EBITDA / Sales EBIT / Sales Net profit / Sales Current Ratio (x) Quick ratio (x) Inventory Turnover (x) ROCE Return on Shareholders' Equity (ROE) Time Interest Earned (x) Debt to Equity Ratio (x) Debt to Asset Ratio (x)

2006

510 426

1,796

1,500 1,196

1,191

1,216

1,298

1000 500 Year

0 2546

2547

2548

2549 ANNUAL REPORT 2006 PRANDA JEWELRY

HIGHLIGHT OF COMPANY OPERATION

MANAGEMENT DISCUSSION AND ANALYSIS Operating results of the Company and Subsidiaries

Pranda Performance Chart of Capital Structure

Time:X

D/E TIE

10 9 8 7 6 5 4 3 2 1 0

9.27 8.52

8.46

6.47

0.67

0.56

0.49

0.46

Year 2003

2004

2005

2006

Chart of Return ROE ROCE

20 17.43%

17.20% 15.86% 15.02%

14.11%

13.53%

14.23%

11.82%

Year

2003

2004

2005

2006

Chart of Corporate Value EPS BV

10 8.16 8.21

8.00

7.52

Baht

6 4 2

1.43

1.37

1.13

1.29

Year

0 2003

ANNUAL REPORT 2006 PRANDA JEWELRY

2004

2005

2006

Despite the world's economy remains clouded with uncertainties, be it from the volatile fuel oil prices which trigger inflation and inevitably set off a hike of interest rate, the unstable and ongoing baht appreciation against US dollar, and a surge of gold and silver prices which directly hard hits the jewelry industry as evidenced by a substantial fall of Thailand's jewelry exports. The Company has been fully aware of such growing challenges. Thus, the company adopts policy of a risk management to ensure the Company's sustainable growth. Pranda Jewelry Public Company Limited has thoroughly carried out a growth strategy through the means of market penetration, market development, and product development, thereby leading the Company to maintain steady business growth in 2006 as indicated by the company's sales in 2006 which rose by 16.75% or 585 million baht over a year earlier. The Company also successfully retained strong gross profit on par with the rate in a year earlier which was equivalent to 33% of sales, despite the gold and silver prices rose by over 35%. On top of that, the Company has effectively controlled sales and administration expenses, with the expenses as a result increasing only 1.56% over a year before. The operating profit increased by 31.11% or 121 million baht accordingly. Although the Company was subject to foreign exchange loss of 110 million baht last year due to stronger baht, the company still managed to generate a robust growth of 16.75% in sales with operating profit rising 31.11%. In addition, the Company has re-appraised the land prices, resulting a reduction of allowance for impairment loss on land held for development by 67 million baht which was recognized as revenue from reversal allowance for impairment loss on land held for development in the profit and loss statement. As a result, the company posted net profit of 432 million baht, a rise of 21.22% from 357 million baht in 2005. In the meantime, the Company has been able to

maintain financial stability as evidenced by Times Interest Earned (TIE) which was as strong as 9.34 times with Debt to Equity (D/E) at only 0.46 times. With steady operating results and financial strength as well as adequate liquidity, the Company is able to pursue policy to expand business mainly based from the Company's retained earnings in order to reduce financial risk and provide appropriate returns to shareholders.

Income Analysis Sales Income The Company and subsidiaries had recorded sales revenue of 4,076 million baht in 2006, a rise of 585 million baht or 16.75% thanks to sales growth from expanding the existing customer base in America and penetration of new markets in Europe by developing new quality design including matching modern production technology. Other income The Company and subsidiaries had generated revenues from services provided mainly to the affiliated companies such as consultation fee, charge for blueprint of the new product, interest income from bank, and interest charge on loans extended to related companies. Revenue from reversal allowance for impairment loss on land held for development The Company has re-appraised the Company's land, making as a result allowance for impairment loss on land held for development down 67 million baht.

Cost of Sales and Sales and Administration Expenses Cost of sales was 2,718 million baht, an increase of 451 million baht or 19.89% over a year earlier because of sales growth. On the other hand, cost of sales and administration increased by only 13 million baht or 1.56% from previous year due to effective control measures on sales and administration expenses. Interest expense rose 9 million baht to 55 million baht due to higher interest rates.

ANNUAL REPORT 2006 PRANDA JEWELRY

MANAGEMENT DISCUSSION AND ANALYSIS Income Statement Analysis The company and its subsidiaries reported net profits of 432 million baht, a rise of 75 million baht, reflecting 21.22% increase from a year earlier attributable mainly to two reasons as follow:1. The sales growth from expanding the existing customer

MANAGEMENT DISCUSSION AND ANALYSIS

base in America and penetration Into the new market in Europe by developing new quality design and matching modern production technology, expense controls and better administration. 2. Revenue from reversal allowance for impairment loss on land held for development.

Income Statement Breakdown Unit: Million Baht

January - December Sales revenue Cost of Sales Gross Profit Selling and administration expenses Operating profit Gain (Loss) on Exchange Reversal allowance for impairment loss on land Interest payment Other Corporate income tax Net profit

2006 4,076 2,718 1,358 848 510 (110) 67 (55) 70 (50) 432

2005 3,491 2,267 1,224 835 389 28 (46) 43 (58) 357

Change (%) 16.75% 19.89% 10.95% 1.56% 31.11% (493%) 100% 19.57% 62.79% (13.79%) 21.22%

Financial Status Analysis Assets Asset Composition Comparative Balance Sheet for the Fiscal Years ended 2006 and 2005 Unit: Thousand Baht

Balance Sheets Cash and Current investments Accounts Receivable - net Short-term loans and amounts sue from related parties Inventories - net Other current assets Total Current Assets Total Non-Current Assets Total Assets

ANNUAL REPORT 2006 PRANDA JEWELRY

Dec. 31, 2006

9.48% 389 726 17.69% 0.49% 20 1,696 41.33% 1.92% 79 2,910 70.91% 1,194 29.09% 4,104 100.00%

Dec. 31, 2005

374 10.16% 610 16.57% 0.84% 31 1,467 39.85% 55 1.49% 2,536 68.89% 1,145 31.11% 3,681 100.00%

In 2006, the company had total assets of 4,104 million baht, a rise by 423 million baht from a year before or 11.49%. Current assets rose 374 million baht mainly because of an increase of account receivable and inventories by 116 million baht and 229 million baht respectively. Non-current assets increased 49 million baht mostly from the increase of values of land, building, and equipment worth of three million baht and the land pending the development of 67 million baht from the price re-appraisal. Asset's Quality With a rise of the accounts receivable turnover mostly from regular accounts which are not due yet which increased by 116 million baht. The Company has separated

the period of accounts receivable in the note to the financial statement No. 7. In the meantime, the Company had better efficiency in Asset Management as reflected by average collection period from 66 days to 64 days and receivable turnover rose from 5.44 rounds to 5.62 rounds. Liquidity Cash Flow Composition The Company and subsidiaries in 2006 reported a net cash flow from operating activities of 191 million baht because of the sales growth, and faster debt collection. Detail of the cash flow in each activity is as follows:-

Comparative Statement of Cash Flow for the Fiscal Years Ended 2005 and 2004 Unit: Thousand Baht

Statements of Cash Flows Net Cash from Operating Activities Net Cash from Investing Activities Net Cash from Financing Activities Difference from currency translation Net Cash Cash at beginning of period Cash at end of period

Liquidity Ratio The company's current ratio dropped from 3.99 times to 3.42 times and the quick ratio dropped from 1.55 times to 1.31 times because inventories increased by 229 million baht. However, most of the inventories are goods in transit. Ability to Pay Short-Term Debts The Company had short-term liabilities worth of 850 million baht, and a short-term asset of 2,910 million baht. This could be implied that the Company has sufficient liquidity to completely settle all short-term liabilities.

Dec. 31, 2006

Dec. 31, 2005

191 (57) (107) (11) 15 374 389

121 (68) (202) (1) (149) 523 374

Capital Expenditure Previous Spending on Capital Expenditure The company has made investment of 62 million baht which divided into 2 categories: 48 million baht was invested in production facilities at Pranda Jewelry, Crystaline, Pranda Guangzhou, and Pranda Vietnam in order to increase production capacity and replace existing machines, and another 14 million baht was invested in the distribution bases such as Prima Gold, Pranda UK, and Pranda & Kroll in order to serve more customers and distribute merchandise to cover more markets.

ANNUAL REPORT 2006 PRANDA JEWELRY

MANAGEMENT DISCUSSION AND ANALYSIS Sources of Fund Capital Structure From consistently profitable operations, the company's retained earnings increased from 1,193 million baht to 1,412 million baht or up by 18.36%. Moreover, long-term liabilities declined from 581 million baht to 449 million baht, or down by 22.89%. Shareholders' Equity From the recapitalization and issuance of new warrants since 2002, 52,878,110 warrants were exercised as at December 31, 2006, and remained 27,186,860 warrants outstanding, making for 13.59% of the total warrants. The company had paid-up capital of 358,413,740 baht or 89.60% of the total registered capital together with the retained earnings of 1,412 million baht as at December 31, 2006. Liabilities The company had total liabilities of 1,298 million baht, up 82 million baht from a year earlier or 6.74% in which current liabilities increased 215 million baht mainly due to a rise of accounts receivable worth 151 million baht, and non-current liabilities dropped by 133 million baht because the long-term loans under which the repayment is made on the quarterly basis would fully be settled in January 2011.

Critical factors that may affect company's operation or financial status in the future The market's liberalization both on the bilateral and multilateral level is expected to trigger intensifying competition in the future, In the contrast, this free trade should expand the market which suites our capacity in term of mass production and price range $ 5 - $ 250 as well as product variety. while the price swing of precious metal may affect to defer customers' buying decisions including exchange rate fluctuation may generate gain or loss from exchange.

ANNUAL REPORT 2006 PRANDA JEWELRY

Future Projects The expansion of distribution base in India due to the sheer size of its gold jewelry market and growing economic outlook. The Company plans to forge a joint venture with partners in India to set up distribution base in India focusing mainly on distributing products of the company's own brands in India. The Company will control 51% of the joint venture worth about US$22,000, while the Indian partner holds the remaining stake. Investment return is likely over the next three years, with Internal Rate of Return (IRR) at 15% per year. Factors which may fail the project -None-

Remuneration of the Auditor Auditing fee The Company and subsidiaries paid auditing fee to - The Company's auditors in the past fiscal year totaling 1,840,000 baht. - The audit office the auditors work for, persons or enterprises connected to the auditors and the audit office the auditors work for in the last fiscal year totaling 660,000 baht. Non-audit fee The Company and subsidiaries had no fee of other services to - The Company's auditors in the last fiscal year totaling 0 baht and future payment arising from agreements which are yet to be honored in the last fiscal year totaling 0 baht. - The audit office the auditors work for, persons or enterprises connected to the auditors and the audit office in the last fiscal year totaling 0 baht and future payment arising from agreements which are yet to be honored in the last fiscal year totaling 0 Baht.

THE AUDIT COMMITTEE'S REPORT The Audit Committee of Pranda Jewelry Public Company Limited is composed of three members including Lt. Jg. Anan Panananda R.T.N. , Chairman of the Audit Committee, with Mr. Verachai Tantikul, and Assoc. Prof. Sarita Bunnag as the audit committee members. All three directors are fully qualified according to requirements of the Stock Exchange of Thailand and have well performed their duties as specified in the company's regulations. The presence of the Audit Committee is to ensure the company's good corporate governance, strengthen the company's administration efficiency, and to bring increased value to the company, which will eventually bring the company to achieve its business goal and target. In 2006, the Audit Committee provided for a collective meeting among the internal auditors, external auditors and the Audit Committee on four occasions in order to verify information on the company's financial statement and related items of the company and subsidiaries. The committee also were able to make valuable suggestions to further improve accuracy, completeness and creditability of financial report as well as better efficiency of the organization's internal control. In such meetings, there were no executives of the company attending. The result of each meeting was presented to the Board of Directors to be looked at every time seeking further improvement. Last year, we can conclude the various issues from the collective meeting as follows :1. The company's financial report has been prepared according to the generally accepted accounting principles and accounting standards of the Federation of Accounting Profession on an accurate, complete and creditable basis as well as sufficient disclosure of important information and that of related items and any other items which may lead to a conflict of interests. 2. Adequacy of the company's internal control system. The Audit Committee has reconsidered and reviewed the annual internal auditing plan focusing mainly on the company's finance and operation to ensure precise, appropriate and sufficient internal control systems. 3. The enterprise risk management. In the previous year, the Audit Committee had given full importance to several risk issues in the organization, and has then thoroughly considered and reviewed the potential risks which could affect the enterprise's business and goals. 4. Compliance with the regulations and laws of the Stock Exchange of Thailand. The company has given full importance to the compliance with the laws on securities and regulations of the Stock Exchange of Thailand, promotion and support on good corporate governance, as well laws which are relevant to the company's business such as the code of revenue department and the customs formalities. 5. The Board of Directors have chosen the company's auditors based on their creditability, experience, number and volume of their auditing services from various auditing firms and found it appropriate to re-appoint the Ernst & Young Office Limited, Miss Siraporn Ouaanunkun as the company's auditor in 2007 for further approval of the shareholders' meeting. The Audit Committee, having considered the above, have come to the opinion that the company has disclosed complete, accurate, creditable, and sufficient information in the financial report, has in place sufficient and appropriate internal control systems, and good corporate governance, as well as accurate and full compliance with the rules and regulations of the Stock Exchange of Thailand and all relevant laws.

Lt. Jg. Anan Panananda R.T.N. Chairman of the Audit Committee ANNUAL REPORT 2006 PRANDA JEWELRY

REPORT OF THE BOARD OF DIRECTOR'S RESPONSIBILITIES TO FINANCIAL REPORT The Board of Directors of Pranda Jewelry Public Company Limited is held responsible for ensuring accuracy, completeness, and transparency of financial and general information to be submitted to related parties. Annual financial statements of the company and subsidiaries have been commissioned in compliance with generally recognized accounting standards, and adequate disclosure of important information in the clarifications of the financial statements. The annual financial statements also meet effective internal control systems to ensure that the financial information has been recorded in accurate, complete, transparent and sufficient manner in order to protect the company's assets and prevent any potential irregularities or actions which may run against the international principles. The Board of Directors has appointed the audit committee which is composed of directors who have no direct control over the quality of the financial report and internal control systems whereby the audit company has provided comments in the annual report on topic of the Report of the Audit Committee. The Board of Directors found the overall internal control system of the company satisfactory and sufficient to create sensible confidence to the creditability of the financial statements of the company and subsidiaries as of December, 31, 2006. The company's audit committee has audited in accordance with generally recognized accounting standards and expressed comments that the company's financial statements have well reflected the company's financial status, operating performance and cash flow as required by the generally recognized accounting principles.

Mr.Prida Tiasuwan Chairman

Mrs. Prapee Sorakraikitikul President

REPORT AND CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Auditor To The Board of Directors and Shareholders of Pranda Jewelry Public Company Limited I have audited the accompanying consolidated balance sheets of Pranda Jewelry Public Company Limited and its subsidiaries as at 31 December 2006 and 2005, the related consolidated statements of income, changes in shareholders' equity and cash flows for the years then ended, and the separate financial statements of Pranda Jewelry Public Company Limited for the same periods. These financial statements are the responsibility of the Company's management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I did not audit the financial statements, included in the consolidated financial statements for the year ended 31 December 2006, of a local subsidiary company, Pranda Lodging Co., Ltd., and 6 overseas subsidiary companies, Pranda Vietnam Co., Ltd., Pranda UK Ltd., H.GRINGOIRE s.a.r.l., Pranda (Guangzhou) Co., Ltd., Pranda & Kroll GmbH & Co. KG and Pranda North America, Inc., which incorporated the financial statements of another subsidiary, Crystaline North America, Inc. Those financial statements were included in the consolidated financial statements with total assets as at 31 December 2006 of Baht 1,329 million, total revenues and net loss for the year then ended of Baht 2,282 million and Baht 14 million, respectively (2005: a local subsidiary company and 6 overseas subsidiary companies with total assets of Baht 1,135 million, total revenues of Baht 1,602 million and net loss of Baht 102 million). In addition, the Company's financial statements include its investment in those subsidiaries stated under the equity method, amounting to Baht 246 million as at 31 December 2006 (2005: Baht 166 million) and its share of loss for the year then ended, amounting to Baht 14 million (2005: share of loss Baht 102 million). The subsidiary companies' financial statements were audited by other auditors, as discussed in note 3.2 to the financial statements. Their reports have already been furnished to me. My opinion on the consolidated financial statements, insofar as they relate to the amounts included for those subsidiaries, is based solely on the reports of the other auditors I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits together with the reports of the other auditors mentioned above provide a reasonable basis for my opinion. In my opinion, based on my audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Pranda Jewelry Public Company Limited and its subsidiary companies and of Pranda Jewelry Public Company Limited as at 31 December 2006 and 2005 and the results of their operations and cash flows for the years then ended in accordance with generally accepted accounting principles.

Siraporn Ouaanunkun Certified Public Accountant (Thailand) No. 3844 Ernst & Young Office Limited Bangkok: 27 February 2007

ANNUAL REPORT 2006 PRANDA JEWELRY

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES BALANCE SHEETS AS AT 31 DECEMBER 2006 AND 2005

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2006 AND 2005

(Unit: Baht)

(Unit: Baht) The Company Only

Consolidated Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade accounts and notes receivable Related parties Unrelated parties Less : Allowance for doubtful accounts Trade accounts and notes receivable - net Short - term loans and amounts due from related parties Inventories - net Other current assets Value added tax refundable Others TOTAL CURRENT ASSETS NON-CURRENT ASSETS Restricted financial institutions deposits Investments accounted for under equity method Other long-term investments Advances for investment Loans and amounts due from related parties Property, plant and equipment - net Land held for development - net Leasehold rights - net Goodwill - net Other non-current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS

2006

389,164,244 6

7 6 8

9 10 11 6 6 12 13 14 15

2005

374,076,103

2006

215,624,658

Note

2005

254,777,589

14,681,238 766,061,177 (54,689,029) 726,053,386 20,327,584 1,695,555,589

10,958,333 659,789,413 (60,906,613) 609,841,133 31,229,593 1,466,635,534

882,777,954 285,532,694 (44,726,656) 1,123,583,992 117,605,576 789,467,157

667,895,923 217,964,301 (43,597,494) 842,262,730 173,910,335 715,266,207

11,521,525 67,195,400 2,909,817,728

4,769,323 49,683,608 2,536,235,294

2,504,684 15,345,183 2,264,131,250

15,682,373 2,001,899,234

7,864,397 55,762,710 15,056,903 1,795,977 560,216,530 421,729,189 40,365,538 68,391,766 22,709,741 1,193,892,751 4,103,710,479

12,689,880 53,920,606 15,001,566 6,146,160 556,996,243 354,329,189 43,024,167 79,042,681 23,719,267 1,144,869,759 3,681,105,053

7,191,100 420,448,634 14,702,377 24,031,203 97,565,427 449,189,705 421,729,189 154,602 11,110,711 1,446,122,948 3,710,254,198

9,216,467 345,798,235 14,637,852 28,767,009 79,345,982 446,309,800 354,329,189 525,637 9,965,950 1,288,896,121 3,290,795,355

The Company Only

Consolidated

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Trade accounts and notes payable Related parties Unrelated parties Total trade accounts and notes payable Current portion of long-term loans Amounts due to related parties Other current liabilities Corporate income tax payable Accrued interest expenses Accrued expenses Advance received for goods Others TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provision for loss on investment accounted for under equity method Long-term loans - net of current portion Other non-current liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES

2006

2005

2006

2005

179,133,971

73,959,133

72,000,000

4,995,426 356,142,053 361,137,479 128,909,600 21,696,508

4,324,876 205,808,041 210,132,917 146,181,868 23,607,249

4,507,255 257,925,418 262,432,673 128,000,000 335,049

2,118,064 85,132,952 87,251,016 128,000,000 3,220,619

37,523,922 4,429,557 80,237,862 20,707,491 16,355,270 850,131,660

39,741,457 3,354,041 84,975,611 37,670,559 15,336,360 634,959,195

18,402,724 3,377,369 31,264,337 18,892,442 2,699,232 537,403,826

25,411,208 3,137,633 32,011,496 36,198,787 5,835,277 321,066,036

442,216,641 5,288,065 447,504,706 1,297,636,366

573,110,952 7,892,613 581,003,565 1,215,962,760

16,968,803 429,770,000 446,738,803 984,142,629

42,437,923 557,770,000 600,207,923 921,273,959

17 6

10 17

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

ANNUAL REPORT 2006 PRANDA JEWELRY

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2006 AND 2005

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

(Unit: Baht)

(Unit: Baht) The Company Only

Consolidated Note SHAREHOLDERS' EQUITY Share capital Registered 400 million ordinary shares of Baht 1 each Issued and fully paid-up 358,413,740 ordinary shares of Baht 1 each (2005: 319,920,030 ordinary shares of Baht 1 each) Paid-in capital Share premium Revaluation surplus on land Cash receipts from shares subscription Translation adjustment Retained earnings Appropriated - statutory reserve Unappropriated EQUITY ATTRIBUTABLE TO THE COMPANY'S SHAREHOLDERS MINORITY INTEREST - equity attributable to minority shareholders of subsidiaries TOTAL SHAREHOLDERS' EQUITY TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

2006

2005

2006

400,000,000

358,413,740

319,920,030

358,413,740

319,920,030

692,091,493 209,302,882 40,276,320 13,582,610

622,802,815 202,996,742 30,976,369

692,091,493 209,302,882 40,276,320 13,582,610

622,802,815 202,996,742 30,976,369

40,000,000 1,372,444,524 2,726,111,569

40,000,000 1,152,825,440 2,369,521,396

40,000,000 1,372,444,524 2,726,111,569

40,000,000 1,152,825,440 2,369,521,396

79,962,544 2,806,074,113 4,103,710,479

95,620,897 2,465,142,293 3,681,105,053

2,726,111,569 3,710,254,198

2,369,521,396 3,290,795,355

12 20

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

DIRECTORS

Note

2005

REVENUES Sales Other income Interest income Gain on exchange Others Reversal allowance for impairment loss on land held for development - net Share of income from investments accounted for under equity method TOTAL REVENUES EXPENSES Cost of sales Selling and administrative expenses Loss on exchange Share of loss from investments accounted for under equity method TOTAL EXPENSES INCOME BEFORE INTEREST EXPENSES AND CORPORATE INCOME TAX INTEREST EXPENSES CORPORATE INCOME TAX INCOME AFTER CORPORATE INCOME TAX NET LOSS ATTRIBUTABLE TO MINORITY INTEREST NET INCOME FOR THE YEAR EARNINGS PER SHARE Basic earnings per share Net income Weighted average number of ordinary shares (shares) Diluted earnings per share Net income Weighted average number of ordinary shares (shares)

The Company Only

Consolidated

2006

2005

2006

2005

4,075,521,505

3,490,928,840

3,134,224,526

2,652,184,493

4,222,090 46,079,082

4,601,098 27,978,406 27,909,253

19,061,061 55,993,998

16,666,794 27,153,128 65,510,342

67,400,000

4,441,585 4,197,664,262

10,337,855 3,561,755,452

8,484,095 3,285,163,680

2,761,514,757

2,717,831,526 847,679,699 110,377,507

2,266,716,460 834,547,952 -

2,360,587,106 296,920,272 122,604,503

1,973,504,558 290,923,482 -

3,675,888,732

3,101,264,412

2,780,111,881

65,675,129 2,330,103,169

521,775,530 (54,602,312) (50,316,318) 416,856,900 15,410,939 432,267,839

460,491,040 (46,098,295) (57,802,718) 356,590,027 820 356,590,847

505,051,799 (43,298,162) (29,485,798) 432,267,839 432,267,839

431,411,588 (35,774,991) (39,045,750) 356,590,847 356,590,847

1.29

1.13

1.29

1.13

334,125,598

314,564,999

334,125,598

314,564,999

1.16

0.98

1.16

0.98

372,296,363

364,146,940

372,296,363

364,146,940

The accompanying notes are an integral part of the financial statements. ANNUAL REPORT 2006 PRANDA JEWELRY

ANNUAL REPORT 2006 PRANDA JEWELRY

62 ANNUAL REPORT 2006 PRANDA JEWELRY ANNUAL REPORT 2006 PRANDA JEWELRY

202,996,742 202,996,742 6,306,140 209,302,882

541,786,830 81,015,985 622,802,815 69,288,678 692,091,493

274,911,150 45,008,880 319,920,030 38,493,710 358,413,740

13,582,610

(17,393,759) -

30,976,369 -

(824,791) -

31,801,160 -

Translation adjustment

88,802,022 95,620,897 (15,658,353) 79,962,544

- 356,590,847 - (207,449,469) 40,000,000 1,152,825,440 - 432,267,839 - (212,648,755) 40,000,000 1,372,444,524

541,786,830 81,015,985 622,802,815 69,288,678 692,091,493

274,911,150 45,008,880 319,920,030 38,493,710 358,413,740

Share premium

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

Balance - as at 31 December 2004 Increase in share capital Unrealised items in income statements Translation adjustment Net income for the year Dividend paid (Note 21) Balance - as at 31 December 2005 Increase in share capital (Note 19) Cash receipts from shares subscription (Note 20) Unrealised items in income statements Increase in revaluation surplus on land (Note 12) Translation adjustment Net income for the year Dividend paid (Note 21) Balance - as at 31 December 2006

Issued and paid-up share capital

6,306,140 209,302,882

202,996,742 -

40,276,320

9,756,320 (9,756,320)

Revaluation Cash receipts from surplus on land shares subscription

THE COMPANY ONLY

(Unit: Baht)

(17,393,759) 13,582,610

(824,791) 30,976,369 -

31,801,160 -

Translation adjustment

(824,791) 356,590,847 (207,449,469) 2,369,521,396 107,782,388 40,276,320 6,306,140 (17,393,759) 432,267,839 (212,648,755) 2,726,111,569 - 356,590,847 - (207,449,469) 40,000,000 1,152,825,440 - 432,267,839 - (212,648,755) 40,000,000 1,372,444,524

2,104,936,264 116,268,545

Total

(15,658,353) 2,806,074,113

6,306,140 (17,393,759) 432,267,839 (212,648,755)

88,802,022 2,465,142,293 107,782,388 40,276,320

(824,791) 356,590,847 (207,449,469)

2,111,755,139 116,268,545

Total

40,000,000 1,003,684,062 -

Retained earnings Appropriated Unappropriated

6,818,875 -

Minority interest equity attributable to minority shareholders of subsidiaries

40,000,000 1,003,684,062 -

Retained earnings Appropriated Unappropriated

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued) FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

40,276,320

9,756,320 (9,756,320)

Share Revaluation Cash receipts from premium surplus on land shares subscription

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

Balance - as at 31 December 2004 Increase in share capital Unrealised items in income statements Translation adjustment Net income for the year Dividend paid (Note 21) Minority interest - equity attributable to minority shareholders of subsidiaries Balance - as at 31 December 2005 Increase in share capital (Note 19) Cash receipts from shares subscription (Note 20) Unrealised items in income statements Increase in revaluation surplus on land (Note 12) Translation adjustment Net income for the year Dividend paid (Note 21) Minority interest - equity attributable to minority shareholders of subsidiaries Balance - as at 31 December 2006

Issued and paid-up share capital

CONSOLIDATED

(Unit: Baht)

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES CASH FLOWS STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES CASH FLOWS STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

(Unit: Baht)

(Unit: Baht) Consolidated 2006

Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by (paid from) operating activities:Depreciation and amortisation Write-off equipment Amortisation of goodwill Allowance for impairment loss on equipment Reversal allowance for impairment loss on land held for development Amortised discounted value of government bond Allowance for doubtful accounts (reversal) Allowance for stock obsolescences Share of (income) loss from investments accounted for under equity method Gain on disposal of equipment Unrealised (gain) loss on exchange Net loss attributable to minority interest Income from operating activities before changes in operating assets and liabilities Operating assets (increase) decrease Trade accounts and notes receivable Amounts due from related parties Inventories Other current assets Other non-current assets Operating liabilities increase (decrease) Trade accounts and notes payable Amounts due to related parties Accrued interest expenses Accrued expenses Corporate income tax payable Advance received for goods Other current liabilities Other non-current liabilities Net cash flows from operating activities

432,267,839

61,807,006 1,400,025 8,596,271 681,678 (67,400,000) (64,525) (6,217,584) 17,823,933 (4,441,585) (319,381) 48,367,883 (15,410,939)

The Company Only 2005

356,590,847

60,520,633 758,347 9,027,800 535,016 (64,525) 4,426,328 9,951,489 (10,337,855) (486,936) (2,814,885) (820)

2006

432,267,839

35,618,591 136,705 681,678 (67,400,000) (64,525) 1,129,162 18,360,000 (8,484,095) (230,620) 62,500,628 -

Consolidated

2005

356,590,847

33,742,128 629,853 535,016 (64,525) 723,268 8,800,000 65,675,129 (205,024) (22,871,670) -

477,090,621

428,105,439

474,515,363

443,555,022

(155,792,224) 13,325,179 (245,120,587) (24,263,994) 854,197

(71,818,686) (21,602,973) (335,076,588) (17,633,902) 4,886,117

(333,870,261) (71,018,464) (92,560,950) (2,167,494) (1,300,090)

(202,610,030) 9,215,414 (109,320,473) (2,325,294) (133,413)

151,004,562 (1,910,741) 1,075,516 (4,737,749) (2,217,535) (16,963,068) 1,381,015 (2,604,548) 191,120,644

71,797,311 22,859,955 (238,692) 4,972,107 23,269,452 23,214,818 (15,992,579) 4,082,105 120,823,884

175,181,657 (2,885,570) 239,736 (747,159) (7,008,484) (17,306,345) (2,773,939) 118,298,000

18,276,482 2,319,450 (455,100) 5,458,719 13,987,568 22,036,875 3,167,111 203,172,331

2006 Cash flows from investing activities Decrease in restricted financial institutions deposits or has maturity period of more than 3 months (Increase) decrease in loans to related parties Decrease in advances for investment Payment for investment in subsidiary companies Acquisition of property, plant and equipment Increase in leasehold rights Proceeds from sales of property, plant and equipment Net cash flows used in investing activities Cash flows from financing activities Increase (decrease) in bank overdrafts and short-term loans from financial institutions Repayment of long-term loans Cash receipts from (payment of capital to) minority interest of subsidiary from investment in subsidiary Minority interest in loss of subsidiary before acquisition Proceeds from increase in share capital Cash receipts from shares subscription Dividend paid Net cash flows used in financing activities Translation adjustment Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

The Company Only 2005

2006

2005

3,820,063 (61,855,078) 621,665 (57,413,350)

37,003,858 1,717,948 (92,698,569) (14,450,000) 812,085 (67,614,678)

1,019,947 (7,685,000) 2,317,014 (259,090) (32,777,008) 523,253 (36,860,884)

39,994,973 (14,829,241) (79,111,245) (44,663,253) 512,454 (98,096,312)

105,174,838 (147,630,384)

(16,524,050) (92,687,180)

72,000,000 (128,000,000)

(126,210,000)

(247,414) 107,782,388 40,276,320 (212,648,755) (107,293,007) (11,326,146) 15,088,141 374,076,103 389,164,244 -

7,218,092 (8,693,250) 116,268,545 (207,449,469) (201,867,312) (542,323) (149,200,429) 523,276,532 374,076,103 -

107,782,388 40,276,320 (212,648,755) (120,590,047) (39,152,931) 254,777,589 215,624,658 -

116,268,545 (207,449,469) (217,390,924) (112,314,905) 367,092,494 254,777,589 -

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

ANNUAL REPORT 2006 PRANDA JEWELRY

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES CASH FLOWS STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005 (Unit: Baht)

1. CORPORATE INFORMATION Consolidated

Supplemental cash flows information:Cash paid during the year for Interest Corporate income tax Non cash transactions:The conversion of the Company's related trade accounts receivable to become investment in subsidiary The conversion of the Company's amount due from related party to become investment in subsidiary The conversion of the Company's loan to related party to become investment is subsidiary Increase in revaluation surplus on land The conversion of the Company's related trade accounts receivable to become loans to related companies Investment in subsidiary paid by the Company's trade accounts receivable Loan to related company paid by the Company's trade accounts receivable Goodwill and minority interest of subsidiary

The Company Only

Pranda Jewelry Public Company Limited ("The Company") is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the manufacture and distribution of jewelry and its registered address is 28 Soi Bangna-Trad 28, Bangna Subdistrict, Bangna District, Bangkok 10260.

2006

2005

2006

2005

49,786,301 36,497,937

46,547,793 32,073,511

43,058,425 50,979,521

36,230,092 25,058,182

5,622,282

5,028,731

6,306,140

98,119,080 6,306,140

15,110,262

93,052,595

40,765,108

2,355,425 90,278,000

16,804,801 -

2. BASIS OF PREPARATION The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547. 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. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

3. BASIS OF CONSOLIDATION 3.1 The consolidated financial statements include the financial statements for the years ended 31 December 2006 and 2005 of Pranda Jewelry Public Company Limited and the following subsidiary companies:

Company's name

Nature of business

Assets as a Revenues as a percentage percentage to the to the consolidated total Percentage of Country of consolidated total assets revenues for the year shareholding incorporation as at 31 December ended 31 December

2006

2005

Percent Percent

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

ANNUAL REPORT 2006 PRANDA JEWELRY

Held by the Company Primagold International Co., Ltd. Distribution of jewelry Manufacture and distribution Crystaline Co., Ltd. of jewelry Pranda Lodging Co., Ltd. Dormitory rental Pranda North America, Inc. Distribution of jewelry H.GRINGOIRE s.a.r.l. Distribution of jewelry Pranda UK Ltd. Distribution of jewelry Pranda Singapore Pte. Limited Holding company Pranda Vietnam Co., Ltd. Manufacture and distribution of jewelry Pranda (Guangzhou) Co., Ltd. Manufacture and distribution of jewelry Pranda & Kroll GmbH & Co. KG Distribution of jewelry

2006

2005

2006

2005

Percent

9.36

8.94

9.86

11.40

3.12 0.78 10.21 4.75 8.21 1.41

3.20 0.84 7.55 6.34 8.31 1.49

5.13 0.31 35.83 3.41 8.74 0.10

6.12 0.34 26.00 5.31 10.19 0.28

100

96 83 100 100 100 100

96 Thailand 83 Thailand 100 U.S.A. 100 France 100 United Kingdom 100 Singapore

100

Vietnam

1.53

1.41

0.21

0.20

100 51

China Germany

0.83 6.07

0.73 5.65

0.62 5.24

0.22 2.72

Thailand

ANNUAL REPORT 2006 PRANDA JEWELRY

Company's name

Percentage of indirect shareholding

Nature of business

Held by subsidiary companies Crystaline North America, Inc. (100 percent held by Pranda North America, Inc.) Pranda Acceptance Sdn. Bhd. (100 percent held by Pranda Singapore Pte. Limited)

3.3 The financial statements of the subsidiary companies incorporated overseas are translated into Thai Baht at the closing average exchange rate for assets and liabilities, and at the monthly average exchange rate applying during the year for revenues and expenses. The resultant differences have been shown under the caption of "Translation adjustment" in shareholders' equity. 3.4 Material balances between the Company and its subsidiary companies, significant intercompany transactions, and intercompany profit on inventories outstanding as at the balance sheet date have been eliminated from the consolidated financial statements. 3.5 Investments in the subsidiary companies as recorded in the Company's books of account are eliminated against the equity of the subsidiary companies.

Country of incorporation

2006

2005

Percent

Distribution of jewelry

100

U.S.A.

Distribution of jewelry (Ceased its operation in 2000)

100

Malaysia

4. ADOPTION OF NEW ACCOUNTING STANDARD

3.2 The financial statements of the subsidiary companies included in the consolidated financial statements, are as follows:

Assets which included in the consolidated total assets

For the year ended 31 December Revenue which included in Net earnings (loss) included in the consolidated total revenues the consolidated net earnings

31 December 2006 31 December 2005 2006 2005 2006 2005 Million Percent Million Percent Million Percent Million Percent Million Percent Million Percent Baht Baht Baht Baht Baht Baht Subsidiary companies which the financial statements were audited by the Company's auditor Primagold International Co., Ltd. Crystaline Co., Ltd.

384 128 512

9.36 3.12 12.48

329 118 447

8.94 3.20 12.14

414 9.86 223 5.31 637 15.17

406 11.40 218 6.12 624 17.52

18 4.17 0.5 0.12 18.5 4.29

12 7 363 189 926

1 15 33 (32) 10

18 8 26

5.04 2.24 7.28

32 63 337 195 419

0.78 1.53 8.21 4.75 10.21

31 52 306 233 278

0.84 1.41 8.31 6.34 7.55

34 249 1,329

0.83 6.07 32.38

27 208 1,135

0.73 5.65 30.83

13 0.31 9 0.21 367 8.74 143 3.41 1,504 35.83

0.34 0.20 10.19 5.31 26.00

26 0.62 8 0.22 220 5.24 97 2.72 2,282 54.36 1,602 44.98

0.23 3.47 7.64 (7.41) 2.31

0.5 0.14 0.5 0.14 (24) (6.72) (56) (15.69) (9) (2.52)

(25) (5.79) (12) (3.36) (16) (3.70) (2) (0.56) (14) (3.25) (102) (28.57)

Subsidiary company which the financial statements were prepared by the management of the subsidiary and not audited by its auditor Pranda Singapore Pte. Limited (included the financial statements of Pranda Acceptance Sdn. Bhd.)

ANNUAL REPORT 2006 PRANDA JEWELRY

In this regard, the Company has elected to adopt the change in 2007. Adoption of the change in 2007 will necessitate the restatement of the Company's 2006 separate financial statements to be presented for comparative purposes along with the financial statements for 2007. The restatement will have the effect of decreasing net income in the separate income statement for 2006 by approximately Baht 81 million (Baht 0.24 per share) and decreasing net worth in the balance sheet at 31 December 2006 by approximately Baht 27 million.

5. SIGNIFICANT ACCOUNTING POLICIES

Subsidiary companies which the financial statements were audited by their auditors Pranda Lodging Co., Ltd. Pranda Vietnam Co., Ltd. Pranda UK Ltd. H.GRINGOIRE s.a.r.l. Pranda North America, Inc. (included the financial statements of Crystaline North America, Inc.) Pranda (Guangzhou) Co., Ltd. Pranda & Kroll GmbH & Co. KG

In October 2006, the Federation of Accounting Professions issued Notification No. 26/2006 regarding Accounting Standard No. 44 "Consolidated Financial Statements and Accounting for Investments in Subsidiaries" (Amendment No. 1), under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method rather than the equity method. Entities which are not ready to adopt the cost method in 2006 can continue to use the equity method through the end of 2006 and adopt the cost method as from 1 January 2007.

1.41

1.49

0.10

10 0.28

4 0.93

2.80

1.41

1.49

0.10

10 0.28

4 0.93

2.80

5.1 Revenue recognition a) Sales of goods Sales of goods are recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced value, excluding value added tax, of goods supplied after deducting discounts. b) Rental and service income Rental income is recognised based on accrual basis. Service revenue is recognised when services have been rendered taking into account the stage of completion. c) Interest income Interest income is recognised as interest accrues based on the effective rate method. 5.2 Cash and cash equivalents Cash and cash equivalents consist of cash on hand, cash at bank, and all highly liquid investments with an original maturity of three months or less and not subject to withdrawal restrictions. 5.3 Trade accounts receivable Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging. 5.4 Inventories Finished goods and work in process are valued at the lower of standard cost (which approximates actual cost) and net realisable value. Standard cost includes all production costs and attributable factory overheads. Raw materials are valued at the lower of average cost and net realisable value. ANNUAL REPORT 2006 PRANDA JEWELRY

5.5 Investments a) Investments in debt securities, expected to be held to maturity, are recorded at amortised cost. b) Investments in non-marketable equity securities, which the Company classifies as other investments, are stated at cost net of allowance for loss on diminution in value (if any). c) Investments in subsidiary companies in the separate financial statements and investments in associated companies are accounted for under the equity method. Under this method, the investment is initially recorded at cost, and each subsequent year the Company adjusts the value of investment to incorporate the Company's proportionate share of the operating results of the subsidiary. Losses in excess of the cost of investments in subsidiaries (in the separate financial statements of the Company) and associates, are presented as non-current liabilities in the balance sheets under the caption "Provision for loss on investment accounted for under equity method". 5.6 Property, plant and equipment/Depreciation Land is stated at revalued amount. Plant and equipment are stated at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). Land is initially recorded at cost on the acquisition date, and subsequently revalued by an independent professional valuer to its fair value. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at the balance sheet date. Differences arising from the revaluation are dealt with in the financial statements as follows: - When the carrying amount of land is increased as a result of a revaluation, the increase is credited directly to equity under the heading of "Revaluation surplus on land". However, a revaluation increase will be recognised as income to the extent that it reverses a revaluation decrease of land previously recognised as an expense. - When carrying amount of land is decreased as a result of a revaluation, the decrease is recognised as an expense in the income statement. However, a revaluation decrease is to be charged directly against the related "Revaluation surplus on land" to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of land. Any excess amount is to be recognised as an expense in the income statement. Depreciation of plant and equipment is calculated by reference to their cost on a straight-line basis (although for certain assets of some subsidiary companies, a declining balance method is used) over the following estimated useful lives: Land improvements Buildings Leasehold improvements Machinery Furniture, fixtures and equipment Motor vehicles

period of lease

20 years 14, 20 years (5 - 39 years) 5 - 10 years 3 - 10 years 3 - 6 years

Depreciation is included in determining income. No depreciation is provided on land and assets under installation and construction in progress. The revaluation surplus on land can neither be offset against deficit nor used for dividend payment.

ANNUAL REPORT 2006 PRANDA JEWELRY

5.7 Leasehold rights Leasehold rights are stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straight-line basis over the period of the lease (15-30 years). Amortisation is included in determining income. 5.8 Goodwill Goodwill, of an overseas subsidiary company, presented as an asset in the consolidated financial statements and is recognised as expense in the income statement within 10 years, by the straight-line basis. 5.9 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the Company's operations. 5.10 Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the exchange rate ruling on the balance sheet date. Gains and losses on exchange rate are included in determining income. 5.11 Impairment of assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, the Company makes an estimate of the asset's recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An asset's recoverable amount is the higher of fair value less costs to sell and value in use. If there is subsequently any indication that previously recognised impairment losses may no longer exist or may have decreased, the Company will make another estimate of the asset's recoverable value, compare this with the book value, and reverse previously recognised impairment to reflect the change in recoverable value. 5.12 Employee benefits Salary, wages, bonus and contributions to the social security fund and provident fund are recognised as expenses when incurred. 5.13 Income tax The Company and its subsidiary companies (in Thailand) calculate income tax in the accounts based on the taxable profits determined in accordance with tax legislation. Overseas subsidiary companies calculate income tax in accordance with tax rate regulated in tax law of those countries. 5.14 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

ANNUAL REPORT 2006 PRANDA JEWELRY

6. RELATED PARTY TRANSACTIONS During the years, the Company and its subsidiaries had significant business transactions with related parties, which have been concluded on commercial terms and based agreed upon in the ordinary course of business between the Company and those companies, but without written agreements. Below is a summary of those transactions:

The balances of the accounts as at 31 December 2006 and 2005 between the Company and those related companies are as follows: (Unit: Million Baht) The Company Only

Consolidated

Consolidated 2006 Transactions with subsidiary companies (eliminated from the consolidated financial statements) Sales Purchases of goods and raw materials Loan interest income Interest income on overdue payment Service income Management income Service fees Transactions with associated companies Sales

The Company Only

2005

2006

2005

1,935

1,364

167 8 7 37 14 10

112 7 6 42 18 20

Purchases of goods and raw materials Service income Transactions with related companies Sales

405 1

179 -

364 1

147 -

Purchases of goods and raw materials

ANNUAL REPORT 2006 PRANDA JEWELRY

(Unit: Million Baht) Pricing Policy

Normal business price closed as charged to other customers Standard cost or market price Per loan agreement Interest rate at 7.5% p.a. Cost plus margin Agreed between the parties Agreed between the parties Normal business price closed as charged to other customers Market price Cost plus margin

Accounts receivable - related parties Subsidiary companies Primagold International Co., Ltd. Crystaline Co., Ltd. Pranda UK Ltd. H.GRINGOIRE s.a.r.l. Crystaline North America, Inc. Pranda North America, Inc. Pranda Vietnam Co., Ltd. Pranda (Guangzhou) Co., Ltd. Pranda & Kroll GmbH & Co. KG Total accounts receivable - subsidiary companies Associated company P.T. Pranda SCL Indonesia Related companies KSV Brand GmbH PT. Gold Martindo Total accounts receivable - related companies Total accounts receivable - related parties

2006

2005

2006

2005

141.0 6.9 271.2 103.2 183.1 101.8 8.9 4.4 54.7 875.2

122.1 6.5 264.0 93.3 120.9 26.2 7.8 3.5 12.7 657.0

2.3

2.8

2.3

2.8

7.1 5.3 12.4 14.7

8.1 8.1 10.9

5.3 5.3 882.8

8.1 8.1 667.9

Normal business price closed as charged to other customers Market price

ANNUAL REPORT 2006 PRANDA JEWELRY

(Unit: Million Baht)

Short-term loans and amounts due from related parties Loans granted Subsidiary companies Primagold International Co., Ltd. Crystaline Co.,Ltd Pranda Singapore Pte. Limited Pranda (Guangzhou) Co., Ltd. H.GRINGOIRE s.a.r.l. Total loans granted to subsidiary companies Related company PT. Gold Martindo Amounts due from related parties Subsidiary companies Crystaline North America, Inc. Pranda North America, Inc. Pranda (Guangzhou) Co., Ltd. H.GRINGOIRE s.a.r.l. Others Total amounts due from subsidiary companies Related companies PT. Gold Martindo KSV Brand GmbH Others Total amounts due from related companies Related companies Directors Total short-term loans and amounts due from related parties Advances for investment Subsidiary companies Pranda Vietnam Co., Ltd. Pranda (Guangzhou) Co., Ltd. Total advances for investment

ANNUAL REPORT PRANDA JEWELRY

Consolidated

The Company Only

2006

2005

The average balances for the year ended 31 December 2006

50.0 6.5 1.2 2.7 60.4

50.0 3.1 96.1 149.2

50.0 2.2 0.1 2.0 91.2

12.0

9.6

12.0

9.6

10.6

3.6 8.3 30.7 1.2 0.5 44.3

6.2 4.4 1.7 1.8 0.9 15.0

2005

38.7 2.0 41.6

3.2

(Unit: Million Baht)

Interest Policies 2006

5.5%, 7.0% 6.55% 5.0% 4.0% 5.0%

5.0%

2005

5.5% 4.0% 5.0%

5.0%

The average balances for the year ended 31 December

Interest Policies

Consolidated

The Company Only

2006

2005

2006

2005

2006

2005

2006

7.5% Interest free loan

Loans and amounts due from related parties Loans granted Subsidiary companies Crystaline Co., Ltd. Pranda Singapore Pte. Limited Total loans granted to subsidiary companies Related company PT. Gold Matindo

6.5 6.5

6.2 6.2

6.5

26.9 5.7

1.8

6.1

1.8

6.1

4.1

3.9

Amounts due from Subsidiary companies Crystaline Co., Ltd. Primagold International Co., Ltd. Pranda Singapore Pte. Limited Total amounts due from subsidiary companies Total loans and amounts due from related parties

1.8

6.1

28.4 60.9 89.3 97.6

23.5 42.2 1.3 67.0 79.3

2005

5.0%

ANNUAL REPORT 2006 PRANDA JEWELRY

These loans are unsecured and repayable on demand. 0.9 0.9

17.2 1.5 18.7

0.9 0.9

0.1 0.1

7.4

2.9

20.3

31.2

117.6

173.9

17.6 6.4 24.0

21.4 7.4 28.8

During 2006, movements of loans to related parties and short-term loans to related parties were as follow: (Unit: Million Baht) The Company Only

Consolidated 2006 Accounts payable - related parties Subsidiary companies Primagold International Co., Ltd. Crystaline Co., Ltd. Pranda North America, Inc. Pranda (Guangzhou) Co., Ltd. Total accounts payable - subsidiary companies Associated companies KZ - Pranda Co., Ltd. P.T. Pranda SCL Indonesia Total accounts payable - associated companies Total accounts payable - related parties Amounts due to related parties Subsidiary companies Crystaline North America, Inc. Pranda North America, Inc. Others Total amounts due to subsidiary companies Associated company P.T. Pranda SCL Indonesia Related company KSV Brand GmbH Total amounts due to related parties

5.0 5.0 5.0

2006

2005

1.1 3.2 4.3 4.3

0.2 0.4 0.1 2.7 3.4 1.1 1.1 4.5

(Unit: Baht) The Company Only During the year

2005

0.5 0.1 0.2 0.2 1.0 1.1 1.1 2.1

0.1 0.1 0.1 0.3

2.7 0.5 3.2

21.7

9.4

21.7

14.2 23.6

0.3

3.2

Balance as at 1 January 2006 Loans to related parties Subsidiary companies Primagold International Co., Ltd. Crystaline Co.,Ltd. Pranda (Guangzhou) Co., Ltd. Pranda Singapore Pte. Limited H.GRINGOIRE s.a.r.l. Related company PT. Gold Martindo

50,000,000 3,045,825 6,147,390 96,125,331 15,709,655

Increase

Unrealised Balance gain (loss) on as at exchange 31 December 2006

Decrease

8,000,000 (1,500,000) 1,185,000 12,498,640 (108,623,971) -

(349,163) 393,905 -

50,000,000 6,500,000 2,696,662 7,726,295 -

(1,927,013)

13,782,642

In 2006, the Company converted its accounts receivable, amounts due from and loans granted to an overseas subsidiary company, H.GRINGOIRE s.a.r.l., to become investment in that subsidiary company, as described in Note 10 to the financial statements. Directors and management's remuneration In 2006 the Company paid salaries, bonus and meeting allowances to their directors and management totaling Baht 28 million (2005: Baht 33 million). Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 28.3 to the financial statements.

ANNUAL REPORT 2006 PRANDA JEWELRY

7. TRADE ACCOUNTS AND NOTES RECEIVABLE

8. INVENTORIES

The outstanding balances of trade accounts and notes receivable as at 31 December 2006 and 2005 are aged, based on due date, as follows:

Consolidated

(Unit: Thousand Baht) Consolidated Trade accounts receivable Trade accounts receivable - related parties - unrelated parties 2006 Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total Less: Allowance for doubtful accounts Total

10,884

2005 6,142

Total

2006

2005

2006

2005

465,858

383,113

476,742

389,255

Finished goods Work in process Raw material Total Less: Allowance for stock obsolescence

Inventories - net 2,153 84 93 1,467 14,681 14,681

4,816 10,958 10,958

188,795 25,748 18,625 67,035 766,061 (54,689) 711,372

157,753 37,452 30,834 50,637 659,789 (60,906) 598,883

190,948 25,832 18,718 68,502 780,742 (54,689) 726,053

162,569 37,452 30,834 50,637 670,747 (60,906) 609,841

(Unit: Baht) The Company Only

2006

2005

2006

2005

1,098,084,160 301,882,108 453,740,338 1,853,706,606 (158,151,017) 1,695,555,589

987,874,640 211,354,729 409,356,650 1,608,586,019 (141,950,485) 1,466,635,534

255,555,576 284,565,701 387,656,501 927,777,778 (138,310,621) 789,467,157

279,567,628 197,256,834 358,392,366 835,216,828 (119,950,621) 715,266,207

9. RESTRICTED BANK DEPOSIT These represent the Company and its subsidiaries' deposit with banks, pledged to secure the guarantee issued by local banks and an overseas bank for electricity usage and for the lawsuit brought against an overseas customer of the Company.

10. INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD These represent investments in ordinary shares in the following subsidiary and associated companies.

(Unit: Thousand Baht) The Company Only Trade accounts receivable Trade accounts receivable - related parties - unrelated parties

Not yet due Past due Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Total Less: Allowance for doubtful accounts Total

(Unit: Thousand Baht) Total

2006

2005

2006

2005

2006

2005

304,937

247,410

140,657

79,771

445,594

327,181

252,610 89,263 110,713 125,255 882,778 (8,093) 874,685

182,748 95,558 107,043 35,137 667,896 (8,093) 659,803

99,231 7,933 1,078 36,634 285,533 (36,634) 248,899

83,905 12,366 6,418 35,504 217,964 (35,504) 182,460

351,841 97,196 111,791 161,889 1,168,311 (44,727) 1,123,584

266,653 107,924 113,461 70,641 885,860 (43,597) 842,263

Two overseas subsidiaries have pledged some of their accounts receivable of approximately Baht 155 million (2005: Baht 136 million) to secure loans granted to them by bank and financial institution. During 2006, sales by two overseas subsidiary companies, Pranda North America, Inc. and Crystaline North America, Inc. to two significant customers totaled USD 37 million or approximately Baht 1,411 million, equivalent to 94 percent of their net sales (2005: sales to two significant customers totaled USD 20 million, or approximately Baht 808 million, equivalent to 87 percent of the net sales of the subsidiaries).

ANNUAL REPORT 2006 PRANDA JEWELRY

Investments in associated companies

Consolidated Shareholding Currency percentage

Paid-up capital

Associated companies KZ-Pranda Co., Ltd. - Cost - Accumulated share loss P.T.Pranda SCL Indonesia - Cost - Accumulated share income - Translation adjustment Total investments in associated companies

2006

2005

4,000

Carrying amounts of investments 2006

2005

3,600 (3,600) -

39,409 24,599 (8,245) 55,763 55,763

39,409 20,157 (5,645) 53,921 53,921

2006 %

2005 %

Million Baht

Million Rupiah Indonesia

ANNUAL REPORT 2006 PRANDA JEWELRY

Investments in subsidiary companies (Unit: Thousand Baht) The Company Only Shareholding Currency percentage

Paid-up capital 2006 Subsidiary companies Pranda North America, Inc. Crystaline North America, Inc. (holding by Pranda North America, Inc.) - Cost - Accumulated share income - Translation adjustment H.GRINGOIRE s.a.r.l. - Cost - Accumulated share loss - Translation adjustment Pranda UK Ltd. - Cost - Accumulated share loss - Translation adjustment Pranda Vietnam Co., Ltd. - Cost - Accumulated share loss - Translation adjustment Pranda Singapore Pte. Limited Pranda Acceptance Sdn. Bhd. (Holding by Pranda Singapore Pte. Limited) - Cost - Accumulated share loss - Translation adjustment

ANNUAL REPORT 2006 PRANDA JEWELRY

1.893

0.5

1.5

2006 %

2005

1.893

0.5

1.5

Thousand USD

Million EUR

Million Pound

Million USD

Million SGD

100

(Unit: Thousand Baht)

Carrying amounts of investments

2005 %

100

2006

120,283 13,512 (33,283) 100,512

217,235 108,464 (198,747) (166,306) 29,111 24,794 47,599 (33,048) 28,973 (14,514) 9,504 23,963 48,180 (20,428) 5,652 33,404

53,681 (23,372) 9,495 39,804

Paid-up capital 2006

2005

120,283 3,407 (18,811) 104,879

28,973 (47,549) 9,186 (9,390) 48,180 (35,786) 8,995 21,389

The Company Only Shareholding Currency percentage

2005

2006 %

Carrying amounts of investments

2005 %

2006

2005

Primagold International Co., Ltd. - Cost - Accumulated share loss

100

100 Million Baht

100

100,000 (43,124) 56,876

100,000 (60,732) 39,268

Crystaline Co., Ltd. - Cost - Accumulated share loss

100

100 Million Baht

96,000 (34,874) 61,126

96,000 (35,303) 60,697

Pranda Lodging Co., Ltd. - Cost - Accumulated share loss

50 Million Baht

41,125 (7,848) 33,277

41,125 (8,423) 32,702

0.850

0.844 Million USD

100

34,281 (51,268) 18 (16,969)

34,022 (26,864) (885) 6,273

2.89

2.89 Million EUR

48,725 (17,923) (6,914) 23,888 403,480

48,725 (1,742) (3,611) 43,372 303,360

16,969 420,449

42,438 345,798

Pranda (Guangzhou) Co., Ltd. - Cost - Accumulated share loss - Translation adjustment Pranda & Kroll GmbH & Co. KG - Cost - Accumulated share loss - Translation adjustment Total Provision for loss on investment in accounted for under equity method Total investments in subsidiary companies

53,681 (27,771) 11,308 37,218

ANNUAL REPORT 2006 PRANDA JEWELRY

On 15 December 2006, a meeting of the Company's Board of Directors passed a resolution to increase investments in an overseas subsidiary company, H.GRINGOIRE s.a.r.l. by the conversion of trade accounts receivable, amounts due from and loans granted to that subsidiary company, amounting to USD 2.6 million and EUR 0.3 million, or approximately Baht 108.8 million to increase the registered share capital in this subsidiary company by EUR 2.4 million. As a result, the Company's shareholding in that company remains unchanged at 100 percent. Subsequently, on 28 December 2006, the Extraordinary General Meeting of the shareholders of H.GRINGOIRE s.a.r.l. passed a resolution to approve the transfer of the additional registered share capital amounting to EUR 2.4 million to offset the accumulated deficit as at 31 December 2005 of this company. As a result, the registered share capital of this subsidiary company and the Company's shareholding in that company remains unchanged. In 2005, an overseas subsidiary company, Pranda (Guangzhou) Co., Ltd., was approved to increase its authorised share capital by USD 425,000. As a result, the subsidiary company had its registered share capital of USD 850,000 and the Company paid the additional capital amounting to USD 518,500, or approximately Baht 21 million. As at 31 December 2005, the paid-up capital of this subsidiary company was USD 843,500, or approximately Baht 34 million. During the year 2006, the Company paid the remaining additional capital of this subsidiary company amounting to USD 6,500 or approximately Baht 0.3 million. As at 31 December 2006, the paid-up capital of this subsidiary company was USD 850,000, or approximately Baht 34.3 million. As a result, the Company's shareholding in that company remains unchanged at 100 percent.

11. OTHER LONG-TERM INVESTMENTS

Consolidated 2006 Held-to-maturity Government bonds Other long-term investments Total other long-term investments

14,677,377 379,526 15,056,903

2005

14,612,852 388,714 15,001,566

(Unit: Baht) The Company Only 2006

2005

14,677,377 25,000 14,702,377

14,612,852 25,000 14,637,852

The Company has pledged some of its Government bonds to secure performance bonds as required in the normal course of its business.

12. PROPERTY, PLANT AND EQUIPMENT (Unit: Baht) Consolidated Revaluation basis

Cost basis

Investments in associated companies Land

Land improvement

Building

Leasehold improvement Machinery

Furniture, fixtures and equipment

Assets under installation and under construction

Motor vehicles

Total

(Unit: Thousand Baht)

Paid-up capital 2006 2005 Associated company KZ-Pranda Co., Ltd. - Cost - Accumulated share loss Total investment in associated company

Currency

9 Million Baht

The Company only Shareholding percentage 2006 2005 % %

Carrying amounts of investments 2006 2005

3,600 (3,600) -

The share of income from investment in an associated company incorporated overseas as included in the consolidated income statements has been calculated from the financial statements prepared by that Company's management but not audited by its auditor. However, the management believes that there would be no material difference if those financial statements had been to be audited by its auditor. During 2006 and 2005, the Company received no dividend income from its investments in subsidiary and associated companies.

ANNUAL REPORT 2006 PRANDA JEWELRY

Cost / Revalued amount: As at 31 December 2005 261,848,659 7,371,759 353,472,674 20,283,313 112,495,704 380,530,321 Additions 465,168 1,112,824 8,273,759 25,969,556 Disposals (408,336) (8,966,564) Transferred in/(out) 9,773,789 7,406,755 4,507,696 Revaluations 6,306,140 Translation adjustment - (3,448,761) (628,435) (1,238,377) (3,534,710) As at 31 December 2006 268,154,799 7,371,759 360,262,870 20,767,702 126,529,505 398,506,299 Accumulated depreciation: As at 31 December 2005 - 4,780,404 199,855,606 9,719,933 83,911,965 289,674,546 Depreciation for the year 364,069 17,639,760 1,179,919 9,165,117 28,276,989 Depreciation on disposals (147,800) (7,585,141) Translation adjustment - (1,897,556) (156,653) (668,863) (2,858,627) As at 31 December 2006 - 5,144,473 215,597,810 10,743,199 92,260,419 307,507,767 Allowance for impairment loss: As at 31 December 2005 9,875,115 Increase during the year 681,678 As at 31 December 2006 - 10,556,793 Net book value: 31 December 2005 261,848,659 2,591,355 153,617,068 10,563,380 28,583,739 80,980,660 31 December 2006 268,154,799 2,227,286 144,665,060 10,024,503 34,269,086 80,441,739 Depreciation for the year 2005 (Baht 25.5 million included in manufacturing cost, and the balance in selling and administrative expenses) 2006 (Baht 27.4 million included in manufacturing cost, and the balance in selling and administrative expenses)

20,225,328 12,360,832 1,168,588,590 1,480,259 24,553,512 61,855,078 (924,700) (60,349) (10,359,949) - (21,688,240) 6,306,140 (372,821) (216,652) (9,439,756) 20,408,066 14,949,103 1,216,950,103 13,774,778 2,372,890 (924,699) (299,857) 14,923,112

601,717,232 58,998,744 (8,657,640) (5,881,556) 646,176,780

9,875,115 681,678 10,556,793

6,450,550 5,484,954

12,360,832 14,949,103

556,996,243 560,216,530 58,445,702 58,998,744

ANNUAL REPORT 2006 PRANDA JEWELRY

(Unit: Baht) The Company Only Revaluation basis

Land

13. LAND HELD FOR DEVELOPMENT

Cost basis Land improvement

Building

Machinery

Furniture, fixtures and equipment

Cost / Revalued amount: As at 31 December 2005 254,708,659 7,371,759 282,177,967 89,536,902 224,278,177 Additions 108,218 7,428,118 11,069,772 Disposals (266,687) (4,632,001) Transferred in/(out) 7,713,602 7,406,755 2,095,896 Revaluations 6,306,140 As at 31 December 2006 261,014,799 7,371,759 289,999,787 104,105,088 232,811,844 Accumulated depreciation: As at 31 December 2005 - 4,780,404 163,624,348 67,072,321 179,908,424 Depreciation for the year 364,069 13,605,188 8,027,649 11,628,782 Depreciation on disposals (116,346) (4,413,354) As at 31 December 2006 - 5,144,473 177,229,536 74,983,624 187,123,852 Allowance for impairment loss: As at 31 December 2005 9,875,115 Increase during the year 681,678 As at 31 December 2006 - 10,556,793 Net book value: 31 December 2005 254,708,659 2,591,355 118,553,619 22,464,581 34,494,638 31 December 2006 261,014,799 2,227,286 112,770,251 29,121,464 35,131,199 Depreciation for the year 2005 (Baht 19.1 million included in manufacturing cost, and the balance in selling and administrative expenses) 2006 (Baht 21.0 million included in manufacturing cost, and the balance in selling and administrative expenses)

Assets under Motor installation and under vehicles construction

Total

12,577,055 9,968,685 1,060,350 13,110,550 (468,000) (60,349) - (17,216,253) 13,169,405 5,802,633

880,619,204 32,777,008 (5,427,037) 6,306,140 914,275,315

9,048,792 1,466,539 (467,999) 10,047,332

424,434,289 35,092,227 (4,997,699) 454,528,817

9,875,115 681,678 10,556,793

3,528,263 3,122,073

9,968,685 5,802,633

446,309,800 449,189,705 33,371,094 35,092,227

In December 2001, the company arranged for an independent professional valuer to appraise the value of land, which showed the fair market value of the land to be approximately Baht 203 million higher than its book value. The company recorded the land at the revalued amount and credited the surplus of Baht 203 million directly to equity, under the heading of "Revaluation surplus on land" in the balance sheet. Subsequently in 2006, the Company arranged for an independent professional valuer to appraise the value of land. The basis of the revaluation was "Market approach", and the newly revaluation was totaling Baht 209 million higher than its book value. The Company recorded the land at the revalued amount and credited the increase surplus, by Baht 6 million directly to equity, under the heading of "Revaluation surplus on land" in the balance sheet. Had the land been presented at cost in the financial statements, its book value as of 31 December 2006 would have been Baht 51.7 million. As at 31 December 2006, the Company has certain building, machinery, equipment and motor vehicles items which have been fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 233 million (2005: Baht 228 million).

ANNUAL REPORT 2006 PRANDA JEWELRY

The Company has mortgaged land with structures thereon and equipment with a total net book value as at 31 December 2006 of approximately Baht 399 million as collateral for short-term and long-term credit facilities granted by commercial banks.

The Company's land held for development is land for future projects. This balance is stated at cost, covering the cost of land, land improvements and other related capitalised expenses and interest less allowance for impairment loss if the carrying value is less than the recoverable amount. As at 31 December 2006 and 2005, the balances of land held for development consist of the following:(Unit: Thousand Baht) 2006 Land Capitalised interest Land improvement Less: Allowance for impairment loss Total

503,374 156,017 7,990 667,381 (245,652) 421,729

2005 503,374 156,017 7,990 667,381 (313,052) 354,329

In December 2001, the Company arranged for an independent professional valuer to appraise of the value of the land held for development, the results of which showed that its fair value was approximately Baht 313 million lower than its net book value. Impairment loss was recognised in the income statement for the year 2001. Subsequently in 2006, the Company arranged for an independent professional valuer to appraise the value of land held for development. The basis of the revaluation was "Market approach". The newly fair market value was totaling Baht 422 million higher than its book value. The Company recorded the reversal previously recognised impairment loss and net of the decrease of the fair value of land held for development totaled Baht 67 million in the income statement for the year 2006. Movements in the allowance for impairment loss during the year 2006 is summarised below: (Unit: Thousand Baht) Balance as at 1 January 2006 Record as other income in income statement Reversal allowance for impairment loss Increase in allowance for impairment loss Reversal allowance for impairment loss - net Balance as at 31 December 2006

313,052 68,000 (600) 67,400 245,652

The Company has mortgaged land held for development with a total net book value as at 31 December 2006 of approximately Baht 422 million as collateral for short-term and long-term credit facilities granted by commercial banks.

ANNUAL REPORT 2006 PRANDA JEWELRY

14. LEASEHOLD RIGHTS (Unit: Baht) The Company Only

Consolidated

Leasehold rights Additions Less: Accumulated amortisation Translation adjustment Leasehold rights - net Amortisation expenses included in the income statements for the year

2006

2005

2006

2005

64,781,303 (24,389,137) (26,628) 40,365,538

50,331,303 14,450,000 (21,736,204) (20,932) 43,024,167

4,947,126 (4,792,524) 154,602

4,947,126 (4,421,489) 525,637

2,652,933

2,074,931

371,035

371,034

A local subsidiary company has mortgaged leasehold rights with a total net book value as at 31 December 2006 of approximately Baht 25 million as collateral for short-term and long-term credit facilities granted by commercial banks.

15. GOODWILL This represents goodwill of an overseas subsidiary, Pranda & Kroll GmbH & Co. KG, as a resultant from that subsidiary received the transfer of operation from a partner in the value higher than the net book value of the transferred assets. (Unit: Baht) Consolidated

Goodwill Less: Accumulated amortisation Translation adjustment Goodwill - net Amortisation expenses included in the income statements for the year

2006

2005

90,278,000 (17,624,071) (4,262,163) 68,391,766

90,278,000 (9,027,800) (2,207,519) 79,042,681

8,596,271

9,027,800

16. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS As at 31 December 2006 and 2005, the outstanding balances of bank overdrafts and short-term loans from financial institutions as follows: Consolidated

Bank overdrafts Promissory notes Short-term loans from financial institutions Total

ANNUAL REPORT 2006 PRANDA JEWELRY

2006

2005

26,831,049 78,000,000 74,302,922 179,133,971

24,792,592 8,000,000 41,166,541 73,959,133

(Unit: Baht) The Company Only 2006 72,000,000 72,000,000

2005 -

The credit facilities and promissory notes of the Company are secured by the mortgage of the Company's land with structures thereon, land held for development and guaranteed by its directors. Bank overdrafts and promissory note of a local subsidiary company are secured by the mortgage of a part of leasehold rights in shopping malls of the subsidiary, and guaranteed by the Company, and the subsidiary's directors. Short-term loans of an overseas subsidiary company are secured by some of the subsidiary's accounts receivable Short-term loans of an overseas subsidiary company are secured by some of the subsidiary's accounts receivable and some of its motor vehicle and guaranteed by the Company.

17. LONG-TERM LOANS The outstanding balances of long-term loans as at 31 December 2006 and 2005 are as follows:

Consolidated 2006 The Company 17.1 Baht loan, to refinance restructured debt 557,770,000 - Interest rate The first year, interest rate at MLR less 2% per annum The second year to fifth year, interest rate at MLR less 1% per annum The sixth year to ninth year, interest rate at MLR per annum - Repayable quarterly as from October 2002 to January 2011 The local subsidiary company Primagold International Co., Ltd. 17.2 Baht loan 10,000,000 - Interest rate The first year to third year, interest rate at MLR less 1% per annum The fourth year to sixth year, interest rate at MLR less 0.5% per annum The seventh year to twelfth year, interest rate at MLR per annum - Repayable monthly as from January 2007 to December 2017 The overseas subsidiary companies Pranda & Kroll GmbH & Co. KG 17.3 Euro loans 1,604,540 - Interest rate at 5.4% and 6.7% per annum - Repayable within five years H.GRINGOIRE s.a.r.l. 17.4 Euro loans 1,751,701 - No stipulated repayment term Total 571,126,241 Less: Current portion of long-term loans (128,909,600) Long-term loans-net of current portion 442,216,641

(Unit: Baht) The Company Only

2005

2006

2005

685,770,000

557,770,000

685,770,000

10,000,000

21,225,480

2,297,340

719,292,820 (146,181,868) 573,110,952

557,770,000 (128,000,000) 429,770,000

685,770,000 (128,000,000) 557,770,000

ANNUAL REPORT 2006 PRANDA JEWELRY

The long-term loan of the Company was granted by a local commercial bank under the loan agreement dated 16 September 2002 for the purpose of refinancing its outstanding balance of restructured debt under the debt restructuring agreement (dated 18 September 2000). The loan agreement stipulates various conditions which the Company must comply. The long-term loan of the Company is secured by the mortgage of land with structures thereon, and land held for development, and by the guarantee of the Company's directors. The long-term loan of a local subsidiary was granted by a local commercial bank. Such loan is secured by the mortgage part of its leasehold rights, and by the guarantee of its directors. The long-term loans of an overseas subsidiary, Pranda & Kroll GmbH & Co. KG, amounting to EUR 34,000 (2005: EUR 0.4 million), were granted by the financial institutions in Germany. Such loans are secured by some of its trade accounts receivable and some of its motor vehicle. The long-term loan of an overseas subsidiary, H.GRINGOIRE s.a.r.l, amounting to EUR 37,000 (2005: EUR 47,000), was granted by a financial institution in France. Such loan is unsecured.

18. WARRANTS On 3 April 2002, the Company received approval from the Office of the Securities and Exchange Commission to offer 200 million warrants to purchase ordinary shares to the Company's shareholders in proportion to their shareholding, in a ratio of 1 warrant per 1 existing ordinary share. No value is to be charged for the warrants upon issue. The warrants have an exercise price of Baht 2.80 per share and are exercisable at the ratio of 1 warrant per 1 ordinary share. However, 15,000 warrants were not offered to some shareholders thus the Company has 199,985,000 outstanding warrants. The warrants' period is 5 years and is exercisable every month with the first exercise date on the last business day of May 2002 until 2 May 2007. The Stock Exchange of Thailand has set the warrants to be traded on the Stock Exchange of Thailand commencing from 20 May 2002. During the year 2006, the warrant holders have exercised their rights to purchase 52,878,110 ordinary shares. As at 31 December 2006, there is 27,186,860 warrants remained unexercised.

21. DIVIDENDS (Unit: Baht) Approved by

Total dividends

Final dividends on 2005 net income

Annual General Meeting of the Shareholders on 20 April 2006

212,648,755

0.65

Final dividends on 2004 net income

Annual General Meeting of the Shareholders on 25 March 2005

207,449,469

0.65

22. STATUTORY RESERVE Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside to a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.

23. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income 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 income for the year by the total sum of the weighted average number of ordinary shares in issue during the year and the weighted average number of ordinary shares that would need to be issued to convert all dilutive potential ordinary shares (warrants) into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued. Reconciliation between basic earnings per share and diluted earnings per share is presented below: For the years ended 31 December

19. SHARE CAPITAL During the year 2006, the Company registered an increase in its issued and paid up share capital to approximately Baht 358 million with the Ministry of Commerce due to the exercise of warrants to purchase 38,493,710 ordinary shares of Baht 1 each totaling approximately Baht 38 million. The share premium increased by Baht 69 million as a result of such share issuance.

20. CASH RECEIPTS FROM SHARES SUBSCRIPTION In December 2006, the holders of 14,384,400 PRANDA-W exercised warrants to purchase 14,384,400 ordinary shares at an exercise price of Baht 2.80 each. The Company received payment of the additional share capital amounting to Baht 40,276,320 in December 2006. As at 31 December 2006, the Company separately presented cash received from the increase in share capital amounting to Baht 40,276,320 in the balance sheet under the caption "Cash receipts from shares subscription". The Company registered the increase in share capital with the Ministry of Commerce on 8 January 2007. The Stock Exchange of Thailand approved the additional ordinary shares as listed securities on 11 January 2007.

ANNUAL REPORT 2006 PRANDA JEWELRY

Dividend per share

Weighted average number of ordinary shares

Net income 2006

2006

2005

(Thousand Baht) (Thousand Baht)(Thousand Baht) (Thousand Baht) Basic earnings per share Net income Effect of dilutive potential ordinary shares Warrants Diluted earnings per share Net income of ordinary shareholders assuming the conversion of warrants to ordinary shares

432,268

356,591

334,125

314,565

38,171

49,582

432,268

356,591

372,296

364,147

Earnings per share 2006

2005

(Baht)

1.29

1.13

1.16

0.98

ANNUAL REPORT 2006 PRANDA JEWELRY

24. PROMOTIONAL PRIVILEGES 24.1 The Company has received promotional privileges from the Board of Investment for the manufacture of jewelry for its factory located in the Suranaree Industrial Estate Zone in Nakorn Rachasima province, pursuant to the promotion certificate No.1010/2544 issued on 10 January 2001, under certain significant conditions. Significant privileges of the Company are as follow: a) Exemption from corporate income tax for a period of eight years from the date the promoted operations commenced generating revenues (1 January 2003). b) Exemption from income tax on dividends paid from the income of the operations on which corporate income tax is exempted throughout the corporate income tax exemption period. c) 50% reduction of corporate income tax on income derived from the promoted operations for a period of 5 years after the tax-exemption period ends. d) Allowance permitting five percent on the increment in export income over that of the preceding year to be generating revenues. The Company's operating revenues for the years are below shown divided according to promoted and non-promoted operations.

Promoted operations 2006 Sales Domestic sales Export sales Total sales

2005

(Unit: Baht) Total

Non-promoted operations 2006

- 448,882,767 1,998,477,528 1,696,287,180 686,864,231 1,998,477,528 1,696,287,180 1,135,746,998

2005

2006

2005

Details 3.2 50% reduction of corporate income tax on income derived from the promoted operations for a period of 5 years after the tax-exemption period ends. 3.3 Exemption of import duty on machinery as approved by the board. 3.4 Exemption of import duty on raw materials and significant supplies used in export production. 4. Date of first earning operating income

Granted

Non-granted

Granted

Granted for a period from 21 July 2004 to 20 July 2008 25 May 2004

Granted for a period of five year from the first import date Waiting for open operation approval

25. PROVIDENT FUND In 2006, the Company and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company contributed to the fund monthly, at the rate of 3 percent of basic salary. The fund, which is managed by TMB Bank Public Company Limited, will be paid to employees upon termination in accordance with the fund rules. During the year 2006, the Company contributed Baht 4.8 million to the fund.

26. NUMBER OF EMPLOYEES AND RELATED COSTS

448,266,730 448,882,767 448,266,730 507,630,583 2,685,341,759 2,203,917,763 955,897,313 3,134,224,526 2,652,184,493

24.2 A subsidiary company (Crystaline Co., Ltd.) was granted promotional privileges from the Board of Investment, subject to certain imposed conditions. Significant privileges are as follow:

Non-granted

Consolidated

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

The Company Only

2006

2005

4,247 764,977

3,741 653,470

2006 2,905 462,231

2005 2,555 392,942

27. FINANCIAL INFORMATION BY SEGMENT Details 1. Certificate No. 2. Promotional privileges for

3. The significant privileges are 3.1 Exemption of corporate income tax for net income from promotional privileges and exemption of income tax on dividends paid from the income of the operations throughout the period in which the corporate income tax is exempted.

ANNUAL REPORT 2006 PRANDA JEWELRY

5036/2547 Manufacturing of jewelry

1384(4)/2549 Manufacturing of jewelry for its factory located in the Suranaree Industrial Estate Zone in NakornRachasima province

Non-granted

8 years

The Company's and the subsidiary companies' operations involve a major industry segment, the manufacture and distribution of jewelry which is carried on in both Thailand and overseas, while a subsidiary company carries a business of dormitory rental in Thailand. The financial information of the Company and its subsidiary companies by industry and geographical segment, as of and for the years ended 31 December 2006 and 2005 are as follows:

ANNUAL REPORT 2006 PRANDA JEWELRY

(Unit: Million Baht) The consolidated financial statements for the years ended 31 December The manufacturing and distribution of Jewelry Dormitory Rental Domestic

Sales - net

Overseas

Domestic

Eliminate

2006

2005

2006

2005

2006

2005

3,849

3,322

2,365

1,654

991

883

368

335

Total

2005

2006

2005

(2,138) (1,485)

4,076

3,491

(1)

1,358

1,224

2006

Gross profit Share of profit from investments accounted for under equity method Other income Reversal allowance for impairment loss on land held for development - net Selling and administrative expenses Gain (loss) on exchange Interest expenses Corporate income tax Minority interest Net income for the year

4 31

10 22

(76)

(91)

4 51

10 33

67 (472) (125) (57) (41) 446

(462) 28 (49) (48) 441

(423) 15 (13) (9) (27)

(427) (10) (9) (79)

(12) 1

59 15 15 12

66 13 (6)

67 (848) (110) (55) (50) 15 432

(835) 28 (46) (57) 357

Property, plant and equipment - net Other assets Total assets

485 4,125 4,610

483 3,605 4,088

48 1,390 1,438

46 1,201 1,247

27 15 42

29 12 41

(1) (1,986) (1,694) (1,986) (1,695)

560 3,544 4,104

557 3,124 3,681

The Company and its subsidiaries have applied the pricing policies described in Note 6 to the financial statements set the transfer prices.

28. COMMITMENTS AND CONTINGENT LIABILITIES 28.1 Capital commitments As at 31 December 2006, the Company had capital commitments of approximately Baht 2.8 million, relating to acquisition of computer program and the improvement of building. 28.2 Operating lease commitments The Company and its subsidiary companies have entered into several lease and service agreements in respect of the lease of factory, office building space, motor vehicles, and equipment. Future minimum rentals payable under these leases as at 31 December 2006 are as follows:

ANNUAL REPORT 2006 PRANDA JEWELRY

Million Baht Payable within: 1 year 2 to 5 years Thereafter

15.9 28.0 27.9

28.3 Guarantees 28.3.1 The Company has issued guarantees to secure bank credit facilities of its subsidiary companies. As at 31 December 2006, there were outstanding balances of Baht 80 million and EUR 0.7 million, totaling approximately Baht 111.3 million. 28.3.2 As at 31 December 2006, there were outstanding bank guarantees of approximately Baht 188.3 million (The Company only: Baht 183.4 million) issued by the banks on behalf of the Company and its subsidiaries in respect of certain performance bonds as required in the normal course of business.

29. FINANCIAL INSTRUMENTS 29.1 Financial risk management The Company's financial instruments, as defined under Thai Accounting Standard No. 48 "Financial Instruments: Disclosure and Presentations", principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, and short-term and long-term loans. The financial risks associated with these financial instruments and how they are managed is described below. Credit risk The Company and its subsidiaries are exposed to credit risk primarily with respect to trade accounts receivable, loans, notes and other receivable. The Company and its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and therefore do not expect to incur material financial losses. In addition, the Company and its subsidiaries do not have high concentration of credit risk since they have a large customer base. The maximum exposure to credit risk is limited to the carrying amounts of receivables, loans, other receivables and notes receivable as stated in the balance sheet. Interest rate risk The Company and its subsidiaries' exposure to interest rate risk relates primarily to its cash at banks, bank overdrafts, short term loan and long-term borrowings. However, since most of financial assets and liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the interest rate risk is expected to be minimal. Foreign currency risk The Company and its subsidiaries' exposure to foreign currency risk arises mainly from trading transactions and borrowings that are denominated in foreign currencies. The Company and its subsidiaries seek to reduce this risk by entering into forward exchange contracts when they consider appropriate. Generally, the forward contracts mature within one year.

ANNUAL REPORT 2006 PRANDA JEWELRY

The balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2006 are summarised below.

Foreign currency

US dollar Euro Pound

Financial assets

Financial liabilities

Average exchange rate as at 31 December 2006

(Million)

(Baht per 1 foreign currency unit)

29.1 0.2 1.9

4.1 -

36.09 47.46 70.83

The Company has entered into forward exchange contracts to sell foreign currency to prevent the foreign currency risk derived cash receipt from customers. The contracts which remained outstanding on 31 December 2006 is summarised below. Foreign currency

US dollar

Sold amount

Contractual exchange rate sold (Baht per 1 foreign currency unit)

7,727,724

35.214 - 36.466

An overseas subsidiary company, Pranda UK Ltd., has entered into forward exchange contracts to buy foreign currency. The outstanding contracts as at 31 December 2006 is summarised below.

Foreign currency US dollar

Bought amount

Contractual exchange rate bought (Pound per 1 foreign currency unit)

2,000,000

0.527

29.2 Fair values of financial instruments Since the majority of the Company and its subsidiaries' financial instruments are short-term in nature or bear floating interest rates, their fair value is not expected to be materially different from the amounts presented in the balance sheets.

ANNUAL REPORT 2006 PRANDA JEWELRY

A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm's length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument.

30. SUBSEQUENT EVENTS 30.1 On 15 January 2007, a meeting of the Company's Board of Directors No.1/2007 passed a resolution to propose payment of dividend of Baht 0.30 per share, or a total of approximately Baht 111.8 million, to the shareholders in respect of the retained earnings as at 31 December 2005. The share register of the Company will be closed on 29 January 2007. The dividend will be paid on 12 February 2007. Such dividend will be paid and recorded in the first quarter of 2007. 30.2 On 21 February 2007, a meeting of the Company's Board of Directors No.5/2007 passed a resolution to establish a new company in India, to be named "Pranda Jewelry India Pvt. Ltd." with the registered share capital of USD 22,000, the Company's shareholding at 51 percent or equivalent to USD 11,220 or approximately Baht 0.4 million. 30.3 On 27 February 2007, a meeting of the Company's Board of Directors passed a resolution to propose that the Annual General Meeting of the Shareholders to be held on 3 April 2007 adopt a resolution to pay of a dividend of Baht 0.65 per share, to the shareholders in respect of the 2006 net income. The share register of the Company will be closed on 16 March 2007. The dividend will be paid on 23 April 2007. Such dividend will be paid and recorded after it is approved by the Annual General Meeting of the Company's shareholders.

31. RECLASSIFICATION Certain amounts in the financial statements for the year ended 31 December 2005 have been reclassified to conform to the current year's classification, with no effect on previously reported net income or shareholders' equity.

32. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorised for issue by the Company's Board of Directors on 27 February 2007.

ANNUAL REPORT 2006 PRANDA JEWELRY

4,500

Comparative Sales 4,076

4,000 3,491

3,500

3,323

3,000 2,615 2,507

2,500 2,281

2,246

2,243

2,245

2000

2001

2,187

2,062

2,000

1,500

1,000

500

1996

1997

1998

1999

2002

2003

2004

2005

2006 Unit : Million Baht