PRANDA : Annual Report 2007 by orapan kokong

Contents 2 4 11 22 25 28 30 36 47 48 50 53 56 60 61 62 63

Message from Chairman The Board of Directors and Top Management Good Corporate Governance Report Outlook of The Overall Jewelry Market

General Information Brief History Nature of Business Shareholder and Management Structure Risk Factors Related Party Transactions Social Accountability Highlight of Company Operation Management Discussion and Analysis The Audit Committee没s Report Report of the Board of Director没s Responsibilities to Financial Report Report of Independent Auditor

Financial Statements

Message from Chairman

Mr. Prida Tiasuwan The Board Chairman / Acting Chairman of Executive Directors

To all shareholders The world economy was in the doldrums in 2007 largely because of the sub-prime mortgage crisis in the United States and the historic high oil prices, resulting in a severe decline of consumer confidence in the world economies. In addition, the global jewelry industry has been suffering from a sharp rise in prices of raw materials both for gold and silver, Thailandûs Jewelry Industry losing the benefit of the Generalized System of Preferences (GSP) from the United States and facing continued appreciation of the baht against the US dollar. However, Thailandûs jewelry industry has still fortunately managed to fine-tune and retain its competitiveness in the world market as indicated by a steady growth of exports over the previous year. The export growth is attributed to the fact that Thailand, fully supported by the government, is currently the worldûs key jewelry exporter, the trading hub of international gems, the major manufacturing base of the worldûs jewelry, with a long history of conventional know-how, expertise in jewelry production, and rich in the large number of highly skilled craftsmen.

Annual Report 2007

Pranda Jewelry Public Company Limited itself is one of the forerunners of Thailandûs jewelry exporters. The Company is committed to producing world class quality jewelry, at the right price and has a current production capacity of over 8 Million pieces per year. The Company has set a key mission as follows :1) To manufacture the best jewelry products at an affordable price range of US$6-$250. 2) To produce quality jewelry for the worldûs leading brands, whilst protecting the confidentiality of customers designs and marketing plans. 3) To develop the Companyûs own specialist brands and distribute to the key regions of the world. 4) To build job security for the Companyûs employees, trade partners and consistently reasonable returns to the shareholders. To achieve the above objectives, the Company has adopted a strategy of marketing and production risk diversification, resulting in the Company having a customer base spread across the world

from the United States, to Europe, Asia and the Middle East. The Company currently also has established distribution companies of its own in six countries which are responsible for providing services to customers in each region. At the same time the Company has diversified production risk covering all ranges of products by having established seven factories in four countries, Thailand, Vietnam, Indonesia and China, as well as a high security state-of-the-art design and product development center in Bangkok with a team of over 200 designers and product development specialists. The Company has also developed its own specialist brands, including, Prima Gold, Prima Diamond, Prima Art, Century Gold, Cai, and ESSE In 2007, the Company expanded the markets both in and outside Thailand through capital increases in subsidiaries to be used as their working capital as follows :● Increased the capital in Primagold International Company Limited by 100 million baht, raising the registered capital to 200 million baht. Pranda Jewelry Public Company Limited controls 100% in PrimaGold International. ● Increased the capital in Pranda & Kroll GmbH & Co. KG by 2.4 million euros or about 116 million baht, raising the Companyûs investment in Pranda & Kroll GmbH & Co. KG to about 164 million baht. Pranda Jewelry Public Company Limited holds 51% in the venture. The Company always understands that the shareholders play a critical role in supporting the Companyûs business growth, and set aside a dividend payment to the shareholders for the sixth consecutive year. Average dividend payment to the shareholders for the last six years is about 9.5% a year. In 2007, the Company paid the shareholders dividends from the Companyûs net profit earned in 2006 and also retained earnings from 2005 worth a total of 364 million baht reflecting 0.95 baht per share. The dividend yield is about 14.25% a year.

profit of 1,307 million baht. and operating profit of 440 million baht and net profit was 406 million baht. The Company had also successfully maintained its strong balance sheet as reflected by the Companyûs Debt to Equity Ratio which dropped to as low as 0.54 times, and Times-Interest-Earned of 8.59 times. As part of a long term plan to penetrate the rapidly growing consumer markets in the East, the Company will during 2008 increase the expansion of its own brands into China, India, Vietnam, and Malaysia. At the same time also to expand the Western marketing base more into the United Kingdom, Germany, and Russia while maintaining the existing client base in the United States. In 2007 The Company won the first runner-up award for participating in a work performance competition under the çPhilosophy of Sufficiency Economyé for large-scaled enterprises which run their business according to the Sufficiency Economy Philosophy organized by the Office of The Royal Development Projects Board of the Prime Ministerûs Office. This important award confirms the Companyûs thorough understanding of the Sufficiency Economy Philosophy, that is, çmoderationé çrationalityé and çself-immunityé which is a crucial factor behind the Companyûs financial stability and encourages the Company to participate in creating the well being of society, the environment, and the country as a whole. Last but not least, on behalf of the Company, we would like to thank all shareholders, employees at all levels and related parties in the Company who have given thorough trust and support both directly and indirectly to the Company. The Companyûs Board of Directors promises to abide by the principle of the Good Corporate Governance as the norm in running our business to create economic added value to all related parties. Above all, we thank you all for your unwavering support in our efforts to meet these ideals.

In 2007, the Company had generated total sales of 4,359 million baht. representing an increase of 6.96%, with gross

(Mr. Prida Tiasuwan) Board Chairman

Pranda Jewelry Public Company Limited

The Board of Directors and Top Management

12 34

Annual Report 2007

1 Mr. Prida Tiasuwan

2 Mrs. Prapee Sorakraikitikul

The Board Chairman / Acting Chairman of Executive Directors

Director / President / Nomination and Remuneration Director / Finance and Risk Management Director

Present Position :

ë Chairman of Board of Pranda Group, 5 companies ë Director of Pranda Group, 6 companies ë Law reform Commission member ë Vice Chairman International Colored Gemstone Association ë Board Chairman of Social Venture Network Asia (Thailand) or SVN Asia (Thailand) ë Advisor to the Thai Gem and Jewelry Traders Association ë Advisor to the Thai Gem and Jewelry Manufacturers Association ë Director of Duang Pratheep Foundation

ë ë ë ë ë ë ë

Previous Position :

ë Vice President of Thai Gem and Jewelry Traders Association for two times ë Director of The Thai Chamber of Commerce for two times ë Director of Thailand - US Business Council ë Director of Listed Companies Association Education :

ë ë ë

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)

Chairman of Board of Pranda Group, 4 companies Director of Pranda Group in 4 companies Vice president of the Thai Gem and Jewelry Business Traders Association Vice president of the Thai 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

Previous Position :

Director of the Thai Gold Card Importer & Exporter Association

Education :

ë ë

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)

3 Mrs. Sunanta Tiasuwan

4 Mr. Pramote Tiasuwan

Director / Corporate Finance Chairman / Finance and Risk Management Chairman / Nomination and Remuneration Director / Corporate Secretary

Director / Senior Vice President / Nomination and Remuneration Director / Finance and Risk Management Director

Present Position :

ë ë ë ë

Chairman of Board of Pranda Group, 1 company Director of Pranda Group, 9 companies Vice president of the Listed Companies Association Audit Committee of Eastern Star Real Estate Public Company Limited

Previous Position :

ë Former secretary - general of the Listed Companies

ë ë

Ordinary National Diploma in Business Studies from Westminster University, England Director Certificate Program, Class 22/2002 of the Thai Institute of Directors Association (IOD)

Director of the Gem and Jewelry Industry Club of the Federation of Thai Industries

Education :

Association

Education :

Director of Pranda Group, 4 companies

Previous Position :

ë ë ë

Ordinary National Diploma in Technology. (Mechanical Engineers) From Willesden College of Technology, London England Director Certificate Program, Class 46/2004 Director Accreditation Program (DAP), Class 16/2004 Finance for Non-Finance Program, Class 12/2004 of the Thai Institute of Directors Association (IOD)

Pranda Jewelry Public Company Limited

The Board of Directors and Top Management

56 78

Annual Report 2007

5 Mrs. Pranee Khunprasert

6 Mrs. Panidda Tiasuwan

Director / Senior Vice President / Nomination and Remuneration Director / Finance and Risk Management Director

Director / Vice President of Production Management / Nomination and Remuneration Director / Finance and Risk Management Director

Present Position :

ë ë

Chairman of Board of Pranda Group, 1 company Director of Pranda Group, 2 companies

Education :

ë ë

Business Studies Course from Ealing Technical College, London, England Director Accreditation Program (DAP), Class 26/2004 of the Thai Institute of Directors Association (IOD)

Chairman and Director of Pranda Group, 1 company

Education :

ë ë

Amatayanukul school and language study in England Director Accreditation Program (DAP), Class 25/2004 of the Thai Institute of Directors Association (IOD)

7 Lt.Jg. Anan Panananda R.T.N.

8 Mr. Verachai Tantikul

Independent Director / Chairman of the Audit Committee / Chairman of the Nomination and Remuneration Director

Independent Director / Audit Committee

Present Position :

ë ë ë

Retired Government Officer Director of the Thai - German Ceramic Industry Public Company Limited Advisor of A.J. Plus Public Company Limited

Previous Position :

ë ë ë ë ë ë ë ë

Deputy Director - General of Customs Department Director of the Sports Authority of Thailand Director of the Rubber Replanting Aid Fund Director of Mutual Fund Securities Public Company Limited Director of ACL Bank Public Company Limited Advisor to Deputy Finance Minister Advisor to Finance Minister Advisor to Deputy Prime Minister

Education :

ë ë ë ë ë ë

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)

Present Position :

ë ë ë ë ë ë ë ë

Advisor, the Law of SCG Company Limited Advisor to and Sukhumvit Asset Management Coûs 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 :

ë ë ë ë ë

Director General, the Treasury Department Director General, the Excise Department Deputy Permanent Secretary, Ministry of Finance Inspectors - General, Ministry of Finance Deputy Director - General, the Revenue Department

Education :

ë ë ë ë ë ë

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)

Pranda Jewelry Public Company Limited

The Board of Directors and Top Management

9 10 11

Annual Report 2007

9 Mrs. Sarita Bunnag

10 Ms. Pittaya Tiasuwan

Independent Director / Audit Committee

Vice President of Stones Management / Finance and Risk Management Director

Present Position :

ë ë

Associate Professor (Level 9), Department of Banking and Finance, Faculty of Commerce & Accountancy Chulalongkorn University Independent Director and Chairman of the Audit Committee of Asian Seafoods Cold Storage Public Company Limited

Education :

ë ë ë ë

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)

Present Position :

Director of Pranda Group, 1 company

Previous Position :

Director of Pranda Jewelry Public Company Limited

Education :

ë ë ë

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)

11 Mr. Decha Nuntanajaroenkul Vice President of Marketing and Sales

Previous 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.

Pranda Jewelry Public Company Limited

Annual Report 2007

PRANDA = Pranda Jewelry Plc. PMG = Primagold International Co., Ltd. KZ - PRANDA = KZ - Pranda Co. Ltd. P.SCL = P.T. Pranda SCL Indonesia HGG = H.Gringoire s.a.r.l. P.UK = Pranda UK Ltd. P.Guangzhou = Guangzhou Pandgda Zhubao Shoushi Youxian Gongsi

CTL = Crystaline Co., Ltd. PNA = Pranda North America, Inc. P.Sing = Pranda Singapore Pte Ltd. Pranda & Kroll = Pranda & Kroll GmbH Co. KG

PLG = Pranda Lodging Co., Ltd. CNA = Crystaline North America, Inc. P.VN = Pranda Vietnam Co.,Ltd. P.India = Pranda Jewelry Pvt. Ltd.

Note : X = Chairman ❍ = President / = Director // = Executive Chairman ● = Acting Chairman of Executive Committee # due to retire on year 2007 * Report only of directors of subsidiaries which contribute over 10% of total revenues including * PNA, * CNA

Details of Directors and Executives

Good Corporate Governance Report

Good Corporate Governance Report The Board of Directors is responsible for the good corporate governance of the Company with commitment to ensure its compliance with good corporate governance as a state by Thailandûs government agencies and to upgrade the corporate governance according to International Standards as well as provide support to activities that promote the good corporate governance on constante basis. The aims is to instill confidence in the shareholders of the Company investors and stakeholders that the Company is truly run according to efficient, transparent, assessable and fair administration and management to all parties in its bid to create added value and strengthen sustainable growth for the Company. The Company always pays attention to the operational outcome and promotes corporate governance among its executives and employees at all levels as well as encourages all employees to realize their responsibilities and abide by the code of conduct in order to bring about the good corporate governance culture in the Company. Such performance enabled the Company to achieve the çGoodé rating on the corporate governance with total 79 marks in 2005. The rating reflects the Companyûs determination and intention to good corporate governance development on constant basis.

Having realized the importance of good corporate governance and transparency in operations of the employees at all levels, the Company has developed the core values of the Pranda Group to reflect the Companyûs belief that the organizations survival will rest on the behavior and performance of the Company personnel. Therefore, the organizational culture which supports sustainable growth, the Company believes, must require the sense of cooperation and collectiveness throughout the organization, the sense of mutual perception and understanding of regulations which everybody totally agrees as the core value that propels the organization to the accomplishment as targeted. From the outset, representatives from all divisions of the Company and subsidiaries have played a key part in brainstorming session in quest of the core values, the crucial driver for Company achievement, in compliance with the Company vision and mission in which everybody participates. The core value includes :-

1. Teamwork Meaning : the coordination, cooperation and unification to inspire one another in oder to promote participation of workers at all levels to ensure the achievement of business target.

2. Continuous Improvement Meaning : To have the vision create opportunities and to understand the importance of continuous improvement and development in order to bring about the better results both in the level of personnel, performance and throughout the Company to ensure its compliance with the customerûs requirements and changing market environments.

3. Stakeholder Focus The Company won the çfirst runner-upé award from participating in a work performance competition under the çPhilosophy of Sufficiency Economyé for the large-scaled enterprises which run their business according to the Sufficiency Economy philosophy organized by the Office of the Royal Development Projects Board of the Prime Ministerûs Office.

Meaning : To pay interest, care, fair treatment, and transparency in working by focusing on all stakeholders ranging from the shareholders, employees, clients, trade partners, creditors, competitors, to community and society. Such principles are clearly demonstrated in the Company motto çTeamwork, Continuous Development, Value Creation and Virtue Protection.ûû

The award well reflects the Companyûs compliance with the Sufficiency Economy philosophy of His Majesty the King Bhumibol Adulyadej which has been followed for more than 30 consecutive years. The Companyûs business philosophy includes çmoderate growth,é çbusiness rationalityé and çbusiness immunizationé

Pranda Jewelry Public Company Limited

Good Corporate Governance Report In December 2007, the Company amended the çpolicy on the corporate governanceé document to çCorporate Governance : CG Manualé and posted these important policies and amendments on Corporate Governance onto the Pranda website (www.pranda.co.th) to upgrade and clarify the amendment so that all could understand and follow çGood Corporate Governance princples.é The Company has therefore prepared the çReport on Good Corporate Governanceé for 2007 as follows :

Policy on the Good Corporate Governance The Board of Directors has recognized the importance on following the best practices of good corporate governance through. 1) Appointing directors and management with good leadership quality, vision and a strong sense of responsibility. 2) Having an administration structure which provides control mechanisms and counterbalances in place to ensure that the Companyûs administration and management are run on a transparent, fair, and explicit basis. 3) To acknowledge and pay respect to equitable treatment of the shareholders. 4) To take responsibility for all stakeholders who are considered the crucial factor in creating added value to the Companyûs shareholders in the long term. The Company has determined that its policies on the best practices of good corporate governance comply with the philosophy of Sufficiency Economy of His Majesty the King Bhumibol Adulyadej for sustainable development. The Company has also abided by the best practices of the good corporate governance as stated by the Stock Exchange of Thailand in the amendments for the listed companies to upgrade standards of the corporate governance to meet international standards. The Company has established the policy on good corporate governance by dividing the policy into five sections as follows : 1. Responsibilities of the Board of Directors 2. The rights of shareholders, equitability of shareholders and the role of all stakeholders 3. Information disclosure and transparency 4. Controls and risk management 5. Ethics

Annual Report 2007

Section 1 : Responsibilities of the Board ë Leadership and Vision The Board of Directors as the shareholdersû representative have participated in adopting the principals of good corporate governance and managing the Company to ensure its compliance with the laws, objective and regulations. The Board has applied the philosophy of the Sufficiency Economy in running business by setting vision, mission, strategy, targets and business plan of the Company according to the principle of çGrowth moderation,é çBusiness Rationalityé and çBusiness Immunizationé. The three components are operated under masterfulness are ethical practices in business with detail as follows :Vision : To be the çWorld-Class Mass Brand Produceré Mission : 1) To manufacture the best jewelry products at affordable price range of US$6-250. 2) To produce quality jewelry to the worldûs leading Brands. 3) To develop the Companyûs own brands and distribute to the key regions of the world. 4) To build up job security to the Companyûs employees, trade partners and consistently reasonable returns to the shareholders. 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 Companyûs 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 as well as focusing on participation in seminars and courses pertaining knowledge and development, and skill developnent of the Board of Directors. The Companyûs directors who have gone through training courses and seminars organized by IOD are as follows :

COURSE

Director 1.Mr. Prida Tiasuwan 2. Mrs. Sunanta Tiasuwan 3. Mrs. Panidda Tiasuwan 4. Mrs. Prapee Sorakraikitikul 5. Mrs. Pranee Khunprasert 6. Mr. Pramote Tiasuwan 7. Lt.Jg.Anan Panananda R.T.N. 8. Mr. VerachaiTantikul 9. Mrs. Sarita Bunnag

Director Certificate Program (DCP)

Director Accreditation Program (DAP) ✓ (Class 37/2005)

Audit Committee Program (ACP)

Finance for Non-Finance Program (FN)

✓ (Class22/2002) ✓ (Class 25/2004) ✓ (Class 17/2002) ✓ (Class 26/2004) ✓ (Class 46/2004)

✓ (Class 16/2004)

✓ (Class12/2004)

✓ (Class 23/2004) ✓ (Class 37/2003) ✓ (Class 22/2002)

ë Counterbalance of Non-Management Directors The Board of Directors comprises 9 members as follows : Directors who hold management positions 5 Non-management directors 4 composed of three independent directors representing not less than one/third or 33.33% of total directors. An Independent director is the person who is truly independent from the major shareholders, executives and related parties, and capable of performing duty to protect the interest of all shareholders on equal basis. The Company has clearly specified the components of the Board of Directors and shown them in the Good Corporate Governance Manual which has been disseminated through the Companyûs website. The Company has also defined çthe independent directoré in compliance with the principles of the good corporate governance of the Stock Exchange of Thailand and the best practices of the Securities and Exchange Commission. Related details are made available on the topic of çManagement and Shareholder Structureé on the Page 43 ë Position Separation or Combination The Company has completely separated the position of the Board Chairman out of the President position. The Board Chairman will not be the same person as the Companyûs President to ensure the checks and balances and to prevent overlapping authority. The role and responsibilities of the two positions have been clearly stated as follows : The Board Chairman will act as the strategy leader and encourage all the Board of Directors to participate in the meeting, supervise and support the execution of the mission of the management through the President. His/her duty should not overlap with

✓ (Class 1/2004)

routine administration or daily business management which will be handled by the President. Although the Board Chairman is not an independent director, the Company Board of Director structure comprises one/third of the total directors, the ratio which is considered enough to create checks and balances in the administration. The President is held responsible for taking care mainly of Company administration and management and ensuring the Company compliance with vision, mission, strategy and policies set by the Board of Directors. ë Remuneration of Directors and Management Remuneration of directors and management is made transparent and offered at a proper rate compared with the industryûs offer and according to contributions of each member of the Board of Directors. Remuneration of the Board of Directors will be subject to the shareholderûs meeting, while remuneration of the high-ranking management is offered according to principles and policies imposed by the Board of Directors based on operating performance of the Company through consideration and approval of the Selection Committee. Compensation to high-ranking executives is based on the policy of the Board of Directors in compliance with the Companyûs operating results whereby Key Performance Indicator: KPI is set to measure their performance each year. The compensation payment would generally be in the form of salary. Compensation both of directors and executives in 2007 has been demonstrated on topic of çShareholder and Management Structureé on page 45.

Pranda Jewelry Public Company Limited

Good Corporate Governance Report 毛 Meeting of the Board of Directors The Board of Directors requires regular meetings every quarter and has set the meeting没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 interests. The Company may call an additional meeting if needed. Invitation letters enclosed with the meeting没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. Records of the attendance of each director are detailed as follows :

ATTENDANCE/MEETING Board of Directors

Executive Directors

28/28 28/28 28/28 28/28 28/28 28/28 28/28 28/28 28/28

8/8 8/8 8/8 8/8 8/8 8/8

Audit Committee

Selection Remuneration Committee

Name 1. Mr. Prida Tiasuwan 2. Mrs. Prapee Sorakraikitikul 3. Mrs. Sunanta Tiasuwan 4. Mrs. Pranee Khunprasert 5. Mr. Pramote Tiasuwan 6. Mrs. Panidda Tiasuwan 7. Lt.Jg.Anan Panananda R.T.N. 8. Mr. Verachai Tantikul 9. Mrs. Sarita Bunnag 10. Ms. Pittaya Tiasuwan 11. Mr. Decha Nuntanajaroenkul 12. Mr. Len Biggs - Mr. Eugene S. Davis (Resigned on September 13, 2007)

4/4 4/4 4/4 8/8 8/8

1/1 1/1 1/1 1/1 1/1 1/1 1/1

Finance and Risk Management Committee 2/2 2/2 2/2 2/2 2/2 2/2

1/1

2/2 18/18

Note : 1) Eight executive director members are those in No.1 - 6 and 10 - 11. 2) Three Audit Committee members are those in No.7, 8 and 9. 3) Six Selection and remuneration Committee members are those in No.2 - 7 and two advisors from No.1 and 10. 4) Six finance directors are those in No.2 - 6 and 10 and two advisors in No.1 and 12. 5) Number shown in table means the number of attendances at the meeting of the directors while they are in office.

Annual Report 2007

2/2

ë Sub-Committees The 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 to support the Companyûs administration and management. The Companyûs sub-committees include Executive Directors composed of six directors out of the total eight members, with the rest having not held the position of the Companyûs Board of Directors. Audit Committee composed of three independent directors. In 2007, 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 committeeûs meeting would be held occasionally as appropriate. Finance and Risk Management Committee composed of five directors of the Company, and one member chosen from person outside who is knowledgeable and specialized in the industry. ë The Board of Directorûs Report The Board of Directors is held responsible for financial statement of the Company and separated financial statements as well as financial information as appeared in the annual report. Such financial statements have been prepared according to generally-accredited accounting standards in Thailand and sufficient information disclosure has been provided at the note to the Company financial statements. The Board of Directors have also promoted the maintenance of efficient internal control systems including financial information appeared in the annual report to ensure the rationality of the accounting information records and adequacy of accuracy and completeness to preserve the Company assets as to prevent the administration and management from any irregularity The Board has also assigned the Audit Committee to take charge of the Company financial report and internal control system to ensure the factual account of accuracy and credibility and disclose management discussions and analysis (MD&A) enclosed with the quarterly and yearly financial statements. Report of the Board of Directors and the Audit Committee appears in the annual report in 2007 at page 61 and page 60.

ë Directorship Term The Company has provided the terms for holding office by the Board of Directors with details appeared on topic çShareholder and Management Structureé on page 40. ë Succession Plan Board of Directors have determined the succession plan of the Company Board Chairman and high-ranking executives to nurture confidence to related parties, be it the shareholders, customers, as well as employees, that the Company would be run according to the steady and sustainable growth policy under the business ethics. ë Evaluation of the Companyûs Board of Directors The Company has determined the evaluation process of the Board of Directors in 2007 by using the evaluation form of the Stock Exchange of Thailand as the guideline to develop its own evaluation form to be used as the framework in auditing responsibilities and functions of the Companyûs Board of Directors on constant basis. Evaluation process could be divided into contents of the evaluation in compliance with the best practices of good corporate governance as follows :- 1) Structure and qualification of the Board of Directors. 2) Roles, duties and responsibilities of the Board of Directors. 3) The meeting of the Board of Directors. 4) Function of the Board of Directors. 5) Relationship with management division. 6) Self-development of the Board of Directors and management development. 7) Strategy and Business planning. 8) Risk management and internal control. 9) Supervision to prevent the conflict of interest. 10) Monitoring of financial report and operating results. ë Director and Management Development The Company has promoted training and upgrading knowledge to related parties such as the Directors, the Audit Committee, Management and the Companyûs Secretary to improve the performance about the best practice of good corporate governance. Newly appointed Directors would also be provided adequate information of the Company, relevant regulations and information about the Companyûs business before taking office. They would also be offered training and knowledge development on a continuous basis to perform and take charge of the Companyûs corporate governance. Program Company directors have attended seminars and trainings with the Thai Institute of Directors Association (IOD) as shown on page 13.

Pranda Jewelry Public Company Limited

Good Corporate Governance Report ë The Company Secretary The Company Secretary is a person appointed by the Board of Directors to take care of activities pertaining to the meetings of the Board of Directors and the shareholders, as well as other activities of the Board of Directors and help ensure the Board of Directors and the Company to comply with the legal requirements and relevant regulations. The Company Secretary is also held responsible for supporting the corporate governance to confirm to the best practices of the good corporate governance. Details about the components and property as well as of the Company Secretary are made available on the topic çManagement and shareholder Structureé on page 44.

Section 2 : Equitable Treatment of Shareholders and roles to Stakeholders ë 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 all shareholders equally as they are in effect the business owners. It has well preserved the basic rights the shareholders deserve including the rights to attend the shareholderûs meeting, the rights to grant proxy to others to attend the meeting and vote on his/her behalf, the rights to vote for election or removal of individual directors, the rights to vote for appointment or remuneration of the auditors, the rights to receive dividend and the rights to express opinions and inquiries at the shareholderûs meeting. At the meeting, the Company has authorized Thailand Securities Depository Co., Ltd as the share registrar to deliver invitation letters enclosed with minutes of the previous meetings, annual report, documents to supplement decision making in each agenda, explanations and information of the independent directors, steps to attend the meeting, special regulations relating to the shareholderûs meeting, the meeting venue, business response envelope, and proxy form to all shareholders at least seven days before the meeting. Such information is also made available through the Company website at www.pranda.co.th The Company had held the 2006 annual ordinary shareholderûs meeting on April 3, 2007 at the club building of the Company at 14.00 p.m. and allowed the shareholders to start registration to attend the meeting from 12.00 noon onwards. Eight directors attended the meeting with two directors on leave. At the meeting, there were a total of 77 shareholders and proxy holders representing a total of 166,304,572 shares or about 42.85% of the Companyûs

Annual Report 2007

issued shares totaling 388,127,280 shares. After the Board Chairman had informed the resolutions of the first agenda, there were more two shareholders and proxy holders attending the meeting. As a result, the meeting was attended by a total of 79 attendances representing 166,404,572 shares or 42.87%. Prior to the beginning of the meeting, the Board Chairman clearly explained how to vote and count the votes, and during the meeting all shareholders would be given equal rights to express opinions and inquiries. In voting in each agenda, the ballot paper would be used so that it could be examined later. The Company has put down the minutes and the voting records in each agenda in detail and handed in the minutes of the 2006 annual shareholderû meeting to the Stock Exchange of Thailand within 14 days after the meeting held and disseminated through the Companyûs website to get informed all the shareholders. More importantly, the Company has acknowledged the rights and equality of the shareholders, be it the rights to attending the meeting, the rights to vote, and the rights to receive various benefits. The Company has hence specified the guidelines for the best practices every year, be it about the procedures which allow the shareholders to present their own agenda, the nomination of the candidates to the Board of Directors and questions ahead of the shareholderûs meeting in advance through the Companyûs website during October 31-December 31 of the year or until the Company receives written documents from the shareholders during that period. The Company would reveal to all shareholders through the channel of the Stock Exchange of Thailand rationale behind the consideration of the Board of Directors to include or exclude the agenda proposal of the shareholders at the meeting.

The Company has also facilitated the shareholders who attend the meeting on equal basis whereby at the ordinary shareholdersû meeting the Company has provided them the shuttle buses and arranged appropriate food and refreshment to the shareholders who attend the meeting. In addition, the shareholders are invited to visit and observe the Companyûs operations which offer them the first-hand look at the production and the business administration of the Company. ë 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 Companyûs executives and subsidiaries or people outside such as shareholders, trade partners, creditors, clients, competitors the public and surrounding environment. The Company has prescribed to çthe Code of Conduct and Accountabilities of Management and Employees of the Companyé with detail appeared in çthe Good Corporate Governance Manualé within the Ethics section. Detailed information is available through the Companyûs website at www.pranda.co.th The Company has treated all stakeholders as follows :ë Shareholders : The Company has set aside dividend to each shareholder in compliance with the Companyûs policy under which the Company is obliged to pay dividend at not over than 60% of the net profit. Over the past five years, the Company has paid the shareholders dividend at average 46.05 - 59.63% of the annual net profit. ë Employees : The Company has established provident fund for the financial security and welfare of the Company employees. It also passes through Thai Labor Standard award (TLS 8001-2003) from the Department of Labor Protection and Welfare, the Ministry of Labor, which ensures the workerûs safety during working, as well as provides advice to employees both about their personal living and how to adjust themselves to society and organization. ë Customers : The Company continues to expand the customer base whilst retaining existing customers through effective measures to control the quality of the Company products so that they meet international standards and unsurpassed services.

ë Trade Partners : The Company has honored agreements and Creditors committed to trade partners and creditors to provided accurate, complete and correct financial information, as well as underlined good relationship with them to secure confidence and creditability in the Company financial status both to trade partners and creditors. ë Competitors : The Company has sets out its policy, relating to competitors in the corporate governance manual Ethics section to comply with the rules of fair competition world standards relating to the principles of fair trade competition without violating confidentiality or encroaching on the trade secrets of the competitors through the means of fraudulence. The Company has fully abided by the principle of business ethics. Last year, as a result the Company saw no legal disputes with any competitors about the trade competition. ë Society and : The Company has throughout the years Environment operated many social activities such providing support to childrenûs education, promoting good relationship with the neighboring communities as well as other public activities. The Company has also promoted and campaigned to stimulate the good sense of social accountability with details appeared on topic of çSocial Accountabilityé on page 50. ë Shareholderûs Meeting The Company has held one shareholderûs ordinary meeting in four months since the Companyûs closing book, and would call an extraordinary meeting of the shareholders as appropriate. The Company has held the 2006 annual shareholderûs meeting on April 3, 2007 and delivered documents to the shareholders to supplement their decision-making in each agenda. The meeting was carried out according to the best guidelines of the shareholderûs meeting and relevant legal requirements as follows :

Pranda Jewelry Public Company Limited

Good Corporate Governance Report The Board will provide the answers to all questions. Company Directors and sub-committee members will also participated in the meeting, followed by an invitation for shareholders to visit and observe the Factory and Administration offices in order to give them the first-hand look at the Company operations.

Prior to the Meeting The Company has sent out invitation letters prior to the meeting, and posted details on the Company website 30 days prior the meeting date. The Company has also authorized Thailand Securities Depository Co., Ltd. as the Companyûs share registrar who would be responsible for delivering the invitation letters enclosed with details of the agenda, opinions of the Companyûs Board of Directors, reports of the previous meetings, annual report with the supplementary documents for the meeting, proxy forms, and steps to attend the meeting. Invitation letters with related documents would be sent to the shareholders prior to the meeting at least 7 days prior to the meeting and announced in the newspapers for three consecutive days before the meeting to inform the shareholders in advance. In addition, the Company would allow minority shareholders to propose their own agendum, nominate candidates for the Company Directors as well as submit their questions during the months of October to December prior to the meeting every year through the Companyûs website www.pranda.co.th. In 2007, no single shareholder proposed their own agenda. Shareholdersû Meeting The Company has set the venue and time of the meeting which is deemed most convenient for attendance and provided officials to facilitate the shareholders starting from registration to the meeting. Registration starts at least one hour prior to the meeting and is allowed until the end of the meeting. Souvenirs and food as well as refreshments are also offered to those attending. At the meeting, the Board Chairman will act as the meeting chairman and clearly inform results of the votes on each agenda through ballot papers. During the meeting shareholders would be allowed to freely and equally ask the questions or express opinion.

Annual Report 2007

After the Meeting The Company will deliver detailed minutes of the shareholders to the Stock Exchange of Thailand within 14 days and disseminated the report on the Companyûs website as well as pictures taken during the shareholdersû meeting. The meeting has been organized according to the Annual General Meeting (AGM) standards of Thai Investors Association, Listed Companies Association, and the Securities and Exchange Commission. The meeting is measured from the following procedures: the procedure before the shareholderûs meeting, the procedure during the meeting, and the procedure after the meeting, and special marks of 110. The Company receives > 90 marks for the 2006 annual meeting which is classified as çexcellenté rating.

Section 3 : Transparency information ë Relationship with Investors The Company has acknowledged the importance of disclosing information both on finance and non-finance as well as information which may affect the prices of the Companyûs securities and decision-making of the shareholders, investors and other stakeholders such as creditors, trade partners, etc. in the manner of accuracy, adequacy, punctuality, transparency, and equality. 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 website www.pranda.co.th. The Company has also set up investor relations section to provide information services to investors, shareholders, analysts, and the public. Interested investors could contact the Company at e-mail address : ir@pranda.co.th or through Dusit Jongsuthamanee at telephone at (66) 2361 3311 ext 515.

In addition, the Companyûs 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 1.1 Information Disclosure Reports (Form 56-1). 1.2 The Companyûs financial statement and annual report. 1.3 Resolutions of the shareholderûs 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 Companyûs website : www.pranda.co.th 5. Media, publications, and others. In 2007, the Company has disseminated information through the media as follows : three times in the newspapers, five times in the magazines and 12 times through television and radio. 6. Analyst Meeting. Fifteen analyst meetings have been held in 2007. 7. Investor relations newsletters published both in Thai and English version have also been disseminated to financial analysts and those who are interested through electronic mailing systems to explain the Companyûs operating performance and future business direction as well as questions and answers on the issues in the public interest relating to the Companyûs operation through the Companyûs website already stated. The Companyûs Meeting with Thai and Foreign Investors and Analysts

ë To participate in Thailand Focus 2007 held by the Stock Exchange of Thailand together with Phatra Securities Public Company Limited and Merrill Lynch on September 12 - 14 at Plaza Athenee Bangkok Hotel to offer opportunities for foreign investors and analysts to get informed the Companyûs operational strategies, business directions and the Companyûs operating results from the Companyûs high-ranking executives.

ë To participate in Company Visit 2007 scheme held by the Stock Exchange of Thailand and Thai Investors Association (TIA) on October 11, 2007 at Pranda Jewelry Public Company Limited, Nakhon Ratchasima branch and on October 31, 2007 at Pranda Jewelry Public Company Limited, Bangkok to offer opportunities for investors to get informed the Company administration and operations as well as underline relationship between the Companyûs executives and investors who may become shareholders or investors in the future.

ë To participate in Shareholdersû Day held by the Stock Exchange of Thailand on August 25 - 26, 2007 at The Esplanade, Ratchadapisek Road to offer opportunities for the Companyûs minority shareholders to get informed updated information of the Company and inquire directly the Companyûs executives.

Pranda Jewelry Public Company Limited

Good Corporate Governance Report Section 4 : Internal Control and Risk Management ë 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 hence clearly stated and written to ensure optimized utilization of the Companyûs 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. On February 27, 2008, the Companyûs Board of Directors has answered the adequacy assessment form about the internal control of the Company and subsidiaries. Details of the assessment form cover 1. Organization and environment 2. Risk management 3. Operation control of management 4. Information and communication system 5. Monitoring System The assessment form which covers five components mentioned above appears on topic of çShareholder and Management Structureé on page 45. ë Risk Management The Company has stressed the importance of risk management whereby the Companyûs Board of Directors has assigned the finance risk management committee to specify the extent and policy in risk management and team up with the Board of Directors to arrange the meeting of the entire organization every six months to decide and appraise risks which may arise both from internal and external factors of the business. In June and December, 2007, the Company has prepared reports on the risk assessment of each division of the Company in order to specify the preventive measures and risk management as well as the guidelines in managing and administering the risk to acceptable level. The Company has specified the risk which may affect operations such as the sales and production risk, human resource risk, financial risk, planning and information risk, the risk from market liberalization. More details are provided on topic of the çRisk Factorsûû on page 47.

Annual Report 2007

Section 5 : Ethics ë Ethical Practices The Company has set the çcode of conduct for the management and employeesé as announced on December 22, 2000 as part of the corporate governance policy which would be used as directions and the best practices for the Companyûs Board of Directors, executives, and all employees to strictly abide by. These business ethics takes into account mainly the principles of effectiveness and efficiency, 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. The Companyûs business ethics cover the content as follows :1. Responsibility of management to shareholders. 2. Responsibility of management to customers. 3. Responsibility of management to employees. 4. Responsibility of management to the Trade Partners and Creditors. 5. Responsibility of management to the trade competition. 6. Responsibility of management to the public. 7. Responsibility of employees to the Company. ë Inside Information Control and Securities Acquisition The Company has set a policy on inside information control and securities purchase or acquisition at the good corporate governance manual on the Ethics section on topic of the insider information and the Companyûs securities acquisition as follows : Inside Information ë The Board of Directors, sub-committees, executives and employees at all levels must protect inside information and confidential documents to outsiders for their personals interests or anybodyûs gains. ë They must not reveal confidential information of the Company such as information about the partners of contract to other people except that they have given an approval by the Company and the partners of contract.

ë The Senior person at all levels is held directly responsible for controlling and preventing inside information and important messages of the Company from leakage to outsiders prior to due consent and official announcement. Any violations will be subject to the disciplinary measures and regulations of the Company. Securities Acquisition and Disposal ë The Board of Directors and Management are held responsible for reporting the securities holding to the Securities and Exchange Commission according to the Article 59 of The Securities and Exchange Act B.E. 2535, and submitting report to the Board of Directors every time they sell or buy securities. A change of amount of share holding of the Board of Directors and executives in 2007 appears on topic of çManagement and Shareholder Structureé on page 40. ë Personnel at all levels and their families who are accessible to confidential company information are prohibited from trading shares or inviting others to buy, sell, and offer to sell or buy the Companyûs shares either by themselves or through the brokers. Any violations will be subject to disciplinary penalty and/or legal action as appropriate. ë Interrelated Transactions The Company and subsidiaries adhere to the policy to treat the interrelated transactions as the normal business and trade practices for the greatest benefit to the Company. The Audit Committee or the Companyûs auditors will consider and examine the appropriateness of prices and the rationality of transactions, while the Board of Directors must handle the transactions in compliance with the Securities and Exchange Act, regimes, announcements, orders, or regulations of the Stock Exchange of Thailand as well as the principles about the information disclosure of interrelated transactions, acquisitions or disposal of important assets of the Company as stated by the accounting standards prescribed by the Accounting and Auditor Association of Thailand (AAAT).

ë Conflict of Interest To prevent conflict of interest, the Board of Directors have closely supervised any transactions which might produce conflict of interest, clearly and fully specifying policy and steps of approval for interrelated transactions as well as information disclosure, and policies and measures to prevent management and related parties to abuse the Companyûs inside information for their personal gains as follows :ë In case there were transactions which might cause the conflict of interest, the interconnected and interrelated transactions will be sent the Audit Committee to re-examine and provide opinions according to the criteria of the Stock Exchange of Thailand and the Securities and Exchange Commission before being submitted to the Board of Directors for approval. ë The Company has specified that any transactions that the Companyûs Directors, management or related parties who have the vested interest in the transactions with the Company, have to declare their vested interest in that issue for consideration and related Directors and executives will be banned from attending the meeting particularly during the consideration period. ë They have to disclose information about transactions which may cause the contradiction of interest or interconnected transactions or interrelated items in compliance with the said criteria. ë The Company requires the disclosure of business-related information or enterprises in which the Directors and high-ranking management share interests every three month to be used as information in controlling and supervising the transactions which may cause the contradiction of interest and checklist base in the disclosure of business information and related businesses on the notes to financial statement.

Pranda Jewelry Public Company Limited

Outlook of The Overall Jewelry Market

Thailandรปs gems and jewelry exports topped US$ 5,382.2 million in 2007, with export values of the sector ranking 5th of the countryรปs largest exports. The industryรปs shipments grew substantially by up to 46.72% compared with 13.48% growth in a year before which fetched the country US$ 3,668.29 million.

Given the export performance of Thailandรปs fine jewelry, a key component of the gems and jewelry industry, the fine jewelry exports generated the country US$2,107.37 million in 2007, a growth of 21.21% from US$1,738.55 million in 2006 which grew only 2.81% from a year earlier.

A surge of the gems and jewelry shipments in 2007 was mainly driven by a robust increase of unwrought gold which soared by 197.73% from US$508.27 million in 2006 to US$1,513.30 million in 2007, and a significant increase in prices of gold, a key raw material for costume accessories. In addition, the continued rise of gold prices have prompted local traders who accumulated gold to discharge their inventories more to foreign markets to take profits over the last two consecutive years.

Million US Dollar 6000

Export Structure of Thailandรปs

Gems and

5,382.2 5000

Jewelry Products 4000 3,668.3 3,232.7 3000 2,645.6 2,107.4 2000 1,691.0 1,275.3

Gems and jewelry Fine jewelry Gold jewelry Silver jewelry

1000

1,140.2 797.4 461.4

2004

505.7 2005

1,738.6 1,127.4

1,214.8

569.6

786.7

2006

2007

Source : The Export promotion Department, Commerce Ministry

Annual Report 2007

Top 20 Export Destinations of Thailand没s Fine Jewelry Products Number Country 1 The United States 2 The United Kingdom 3 Germany 4 Hong Kong 5 Australia 6 France 7 The Untied Arab Emirates 8 Denmark 9 Italy 10 Japan 11 Israel 12 The Netherlands 13 Switzerland 14 Canada 15 Spain 16 Saudi Arabia 17 Turkey 18 Russia 19 India 20 Belgium Total 20 items Others Total values

2004 557.66 147.77 86.95 31.07 30.51 47.55 28.97 9.98 32.56 58.94 42.52 14.03 22.19 18.24 21.99 11.00 7.22 8.25 1.63 11.51

Value : US$ Million 2005 2006 811.52 767.11 145.03 197.47 102.19 96.57 51.93 56.98 38.42 51.10 54.51 57.64 42.56 43.44 17.20 30.43 41.34 40.49 81.84 72.51 48.00 48.20 16.59 26.37 30.39 20.36 18.40 22.88 22.21 20.04 11.75 11.00 11.74 15.07 12.43 13.15 4.31 15.92 12.87 13.81

2007 825.12 214.29 119.42 113.56 85.96 78.47 78.44 71.49 66.30 61.36 46.17 33.97 33.23 30.37 25.10 17.99 16.34 15.87 15.83 15.16

2004 12.66 22.27 1.63 0.92 49.54 14.04 3.22 30.47 14.97 5.91 22.69 54.56 -32.53 18.67 64.20 124.36 36.65 50.89 160.43 -9.30

Change (%) 2005 2006 45.52 -5.47 -1.86 36.16 17.52 -5.50 67.17 9.72 25.95 32.99 14.65 5.74 46.89 2.08 72.29 76.93 26.95 -2.06 38.86 -11.40 12.87 0.41 18.27 58.91 36.93 -33.00 0.87 24.33 1.01 -9.76 6.81 -6.42 62.49 28.37 50.65 5.79 164.09 269.26 11.83 7.29

2007 7.56 8.52 23.66 99.28 68.23 36.13 80.56 134.95 63.76 -15.38 -4.20 28.80 63.21 32.75 25.24 63.54 8.45 20.73 -0.56 9.82

1,190.6 84.8 1,275.32

1,575.2 115.8 1,691.00

1,964.4 142.9 2,107.37

13.57 48.71 15.38

32.31 36.59 32.59

21.22 21.09 21.21

1,620.5 118.0 1,738.55

2.88 1.95 2.81

Source : The Export promotion Department, Commerce Ministry Given the top five markets of Thailand没s fine jewelry Markets - The United States, the United Kingdom, Germany, Hong Kong and Australia, it could be summarized as follows :-

Pranda Jewelry Public Company Limited

Outlook of The Overall Jewelry Market

The United States : In 2007, the US market remained the largest market and still promised strong growth potential for Thailandûs fine jewelry exports, despite the United States was struggling from economic slowdown because of the subprime mortgage crisis. The US market imported Thai gold jewelry worth a total of US$421.52 million in 2007, a drop of 15.30%, with the Thai products ranking 3rd in the US gold jewelry market, controlling 9.11% market share. Meanwhile, the US market imported the Thai silver jewelry worth US$375.68 million in 2007, a rise of 51.59% over the previous year. The Thai silver products controlled 27.86% market share, ranking 2nd in the US market.

Australia : Australia was another country which reported strong import growth of the Thai jewelry products in 2007 mainly driven by the Thai-Australia Free Trade Agreement (FTA) which took effect several years ago. In 2007, Thailand shipped gold jewelry worth of US$54.77 million to Australian market, representing an increase of 42.37%. Thai gold jewelry controlled 13.49% market share and was ranked No. 2 in this market. Silver export also saw a remarkable increase in the Australian market in a previous year, rising by 130.61% to US$28.64 million. The products controlled 44.07% market share and was the market leader.

The United Kingdom : The market also promised strong growth potential, despite the export values of the gold jewelry from Thailand to this market fell 3.30% to US$130.81 million. The Thai gold jewelry captured 5.52% of UKûs market share, ranking 8th. However, the Thai silver jewelry export grew in 2007 substantially to US$69.68 million, controlling 37.02% of the UK market. The Thai silver jewelry is the market leader in the UK.

In conclusion, Thailandûs fine jewelry exports had healthily recovered in 2007 after a slow growth in a year earlier. The Pranda Jewelry Public Company Limited itself also reported a strong growth on a par with the industryûs performance thanks to strong production bases which span in seven strategic locations in four countries, as well as extensive domestic marketing network, and especially the sophisticated product design and development center cover 250 people which is set to develop new and innovative products that meet varying taste and different requirements of consumers in each market.

Germany : The market had demonstrated a robust growth in a previous year, with the gold jewelry export from Thailand increasing by 11.22% to US$49.81 million, controlling 18.70% of the Germanyûs gold jewelry market share. Thailand was the second largest player in the Germanyûs gold jewelry business. For silver jewelry, shipments of the Thai products were totaled US$63.46 million, a strong rise of 23.42% over a year before. The Thai silver products were also ranked No. 1 in this market, controlling 28.66% market share. Hong Kong : the shipments of Thai jewelry to this market experienced a leap-frogging growth in 2007, with the gold jewelry exports valued at US$93.07 million, a rise of 85.84%, controlling 3.32% market share. Thailandûs silver jewelry exports also reported a robust growth in this market in 2007, increasing outstandingly by 221.46% to US$15.85 million. The Thai silver products controlled 3.17% market share, ranking 6th in this market.

Annual Report 2007

General Information Pranda Jewelry Public Company Limited At Bangkok. Jewelry producer and export Registration : 0107537001986 Head Office : 28 Soi Bangna-Trad 28, Bangna Sub-district Bangna District, Bangkok 10260 Thailand. Telephone (66) 2361 3311, (66) 2393 8779 Fax (66) 2361 3088, (66) 2398 2143 Registered Capital THB 400 Million Paid Capital THB 395.75 Million Home Page: www.pranda.co.th Responsible Person : Mrs. Prapee Sorakraikitikul E-mail : prapee@pranda.co.th

Pranda Jewelry Public Company Limited At Korat.

Pranda Vietnam Co., Ltd. Producer and distributor of silver jewelry for exports and distribution under owned brands No.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 USD 1.5 Million Paid Capital USD 1.5 Million 100% of Holding Responsible Person : Mr. Santiparp Riyai E-mail : santiparp@pranda.com.vn

Guangzhou Pangda Zhubao Shoushi Youxian Gongsi (Pranda Guangzhou Co., Ltd.)

Jewelry producer and export Branch Office : 332-333 Suranaree Industrial Zone, Muang Nakhonratchasima, 30000 Thailand. Telephone (66) 044 212 593-4 Fax (66) 044 212 685 Responsible Person : Mr. Somsak Sriruengmon E-mail : somsak_s@pranda.co.th

Jewelry producer for distribution in China. No. 22nd Chao YangShang Ave, DaPing, ShaTou, Panyu, Guangzhou, Guangdong, China 511400 Telephone (86) 20 846 63051 Fax (86) 20 348 11631 Registered Capital USD 0.850 Million Paid Capital USD 0.850 Million 100% of Holding Responsible Person : Mr. Winai Pornpitaksit E-mail : winai_p@pranda.co.th

Investment in other company In Year 2007 which the Company没s Shareholding Exceeded 10% of Paid Capital to be Product Base and Distribution Base as follow :-

P.T. Pranda SCL Indonesia

Production Base Crystaline Co., Ltd. Producer and exporter of costume jewelry No. 22 Soi Bangna-Trad 28, Bangna Sub-district, Bangna District, Bangkok 10260 Telephone (66) 2746 9580-5 Fax (66) 2399 4878 Registered Capital THB 100 Million Paid Capital THB 100 Million 96% of Holding Home Page : www.crystaline.com Responsible Person : Mr. Chartchai Teekaveerakit E-mail : chartchai@crystaline.com

Producer of jewelry for export and domestic market under Julia and Batik Silver brands JL.I Gusit Ngurah Rai No.1, Jakarta 13420, Indonesia Telephone 62 21 819 9280-2 Fax 62 21 819 9223 Registered Capital IDR 4,000 Million Paid Capital IDR 4,000 Million 50% of Holding Responsible Person : Mr. Johnny Salmon E-mail : pranscl@cbn.net.id

Pranda Jewelry Public Company Limited

General Information Distribution Base Primagold International Co., Ltd. Distributor of 99.9% and 96.5% gold jewelry diamond and jewelry under owned brands No. 1093/64 12th Floor, Central City Bangna Tower, Bangna-Trad Rd., Bangna Sub-district, Bangna District, Bangkok 10260 Telephone (66) 2745 6111 Fax (66) 2745 6117 Registered Capital THB 200 Million Paid Capital THB 200 Million 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 USD 2,000 Paid Capital USD 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.) Distributor of costume Jewelry and silver 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 USD 25,000 Paid Capital USD 25,000 100% of Holding Responsible Person : Ms. Maureen Kelley E-mail : mkelley@cna-corp.com

Annual Report 2007

H.GRINGOIRE s.a.r.l. Distributor 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 EUR 1.893 Million Paid Capital EUR 1.893 Million 100% of Holding Responsible Person : Mrs. Francoise Betschart E-mail : h.gringoire@libertysurf.fr

Pranda UK Limited Distributor of gold, silver jewelry, and costume jewelry under Cristalina brand in England and Europe. No. Sighal House West 1 Armfield Close West Molesey Surrey KT8 2RT, United Kingdom Telephone 44 (1) 0208 979 3896 Fax 44 (1) 0208 783 2010 Registered Capital GBP 0.5 Million Paid Capital GBP 0.5 Million 100% of Holding Responsible Person : Mr. John Warren E-mail : johnwarren@pranda.co.uk

Pranda Singapore Pte. Limited Joint Venture firm in Indonesia. 163 Penang Road # 02-01 Winsland HouseII, Singapore 238463 Telephone (65) 6533 2611 Fax (65) 6532 5092 Registered Capital SGD 3.0 Million Paid Capital SGD 3.0 Million 100% of Holding Responsible Person : Mrs. Sunanta Tiasuwan E-mail : sunanta@pranda.co.th

Pranda & Kroll GmbH & Co. KG Producer and Distributor of Jewelry. No. Wildpfad 23-75180 Pforzheim Germany Telephone 49 (0) 7231 154 47-0 Fax 49 (0) 7231 154 47-25 Registered Capital EUR 5.34 Million Paid Capital EUR 5.34 Million 51% of Holding Home Page : www.kroll-schmuck.de Responsible Person : Mr. Gregor Kroll E-mail : gregor.kroll@pranda-kroll.de

KSV Brand GmbH (held through Pranda & Kroll GmbH & Co. KG) Distributor of jewelry under owned brands Friedrichstr. 22-75180 Pforzheim Germany Telephone 49 (0) 7231 566 15-0 Fax 49 (0) 7231 566 1525 Registered Capital EUR 25,000 Paid Capital EUR 25,000 51% of Holding Home Page : www.ksv-brand.de Responsible Person : Mr. Gregor Kroll E-mail : gregor.kroll@pranda-kroll.de

Pranda Lodging Co., Ltd. Property rental / Properties Head Office : 28 Soi Bangna-Trad 28, Bangna Sub-district Bangna District, Bangkok 10260 Thailand. Telephone (66) 2361 3311, (66) 2393 8779 Fax (66) 2361 3088, (66) 2398 2143 Registered Capital THB 50 Million Paid Capital THB 50 Million 83% of Holding Responsible Person : Mrs. Panidda Tiasuwan E-mail : panidda@pranda.co.th

Reference Persons Pranda Jewelry Private Limited Distributor of gold and silver jewelry in India No. 610, The Corporate Centre-Nirmal Lifestyles, L.B.S. Road, Mulund (West), Mumbai-400080, India Telefax (91-22) 2568 2121, 2569 2121 Registered Capital INR 1 Million Paid Capital INR 1 Million 51% of Holding Responsible Person : Mr. Vinod Tejwani E-mail : vinod@gunjan.biz

Official Registrar : 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 : (66) 2596 9000, (66) 2596 9302-11 Fax : (66) 2832 4994-6

Auditor :

Supported 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 THB 30 Million Paid Capital THB 9 Million 40% of Holding Responsible Person : Mr. K.C. Lee E-mail : kclee@koreazinc.co.kr

Ernst & Young Office Limited 33rd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road (Near Queen Sirikit没s National Convention Centre) Klongtoey, Bangkok 10110, Thailand Tel : (66) 2264 0777, (66) 2661 9190 Fax : (66) 2264 0789-90, (66) 2661 9192

Law Consultant : White & Case (Thailand) Limited 22nd Floor, Mercury Tower, 540 Ploenchit Road, Lumpini Sub-district, Pathumwan District, Bangkok 10330 Tel : (66) 2264 8000 Fax : (66) 2657 2222

Pranda Jewelry Public Company Limited

Brief History 2007

○

2006

ë The Company was awarded the çfirst runner-upé award from

ë Primagold International launched ç Siam Pannaraié designer

participating in the work performance competition under the Philosophy of Sufficiency Economy for large-scaled enterprises which run their business according to the Sufficiency Economy Philosophy organized by the Office of The Royal Development Projects Board of the Prime Ministerûs Office. ë The Company increased its investment in Primagold International Company Limited by 100 million baht, raising Primagold Internationalûs registered and paid-up capital to 200 million baht. Pranda Jewelry Public Company Limited controls 100% in Primagold International. ë The Company raised the investment in Pranda & Kroll GmbH & Co. KG Limited by 2.4 million euros or about 116 million baht, raising Pranda & Kroll GmbH & Co. KGûs registered and paid-up capital to 5.34 million euros. Pranda Jewelry Public Company Limited holds 51% in the venture. ë Pranda & Kroll GmbH & Co. KG has taken over KSV Brand GmbH, which operates the distribution of jewelry products under Christ, Cai, Merri, and Michael Schumacher brands. ë Pranda Jewelry Public Company Limited has formed a joint venture with Gunjan Jewels Pvt. Ltd., to set up çPranda Jewelry Pvt. Ltd.é In India to distribute the gold and silver jewelry under its own brand in India. Pranda Jewelry Public Company Ltd. holds 51% of the shares. ë Pranda Jewelry Public Company Limited won Thai Labor Standard award (TLS 8001-2003) from the Department of Labor Protection and Welfare, the Ministry of Labor. ë Primagold International Company Limited, the distributor of pure gold jewelry products under çPRIMA GOLDé brand won the çHot 2007 Awardé at the 38th Bangkok Gems & Jewelry Fair.

Collection and received çThe Hot Design Awardé at the 37th Bangkok Gems & Jewelry Fair. ë Pranda & Kroll (Germany) launch a new brand çCaié, at the Inhorgenta Fair, Munich, Germany. ë 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. ë PRANDA SCL (Indonesia) expanded capacity in response to increased overseas demand from 450 workers to 700 workers , an increase of over 50%.

○

Annual Report 2007

○

2005 ë 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. ë Primagold International Company Limited signed a joint venture deal with Tomei Gold & Jewelry Holding to distribute çPRIMA GOLDé products in Malaysia. ë 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. ë 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 çPranda & Kroll GmbH & Co. KGé in Germany to distribute gold and silver jewelry products in Germany and Europe including the new Eastern European member states. ○

○

2004

ë The company awarded The Prime Minister Award for the

ë 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. ë Primagold International Company Limited launched gold jewelry with 96.5% purity under çCentury Goldé brand with the first retail outlet opened at the Mall Department Store, Bangkhae. Expanded to seven branches within the same year. ○

○

warrants (2 May, 2002 to 2007) to existing shareholders ○

○

Customs Department, Finance Ministry with çfast tracké benefits on imported raw materials. ○

○

ë Expanded business by establishing its own distribution bases in overseas markets under Pranda North America, Inc. (Rhode Island USA), Crystaline North America, Inc. and H. Gringoire s.a.r.l. (Paris) ○

○

1990 ë Pranda registered and traded on the Stock Exchange of Thailand (SET) under trading symbol çPrandaé ë Invested in setting up production base under çCrystaline Co., Ltd.é ○

○

1984 ë Expanded business by establishing production base and

and co-invested in LG Pranda (now operated under the name of KZ-Pranda) to import and distribute silver and gold products. ○

○

1992

ë Expanded the foreign market for çPrima Gold Internationalé ○

○

1996 ○

○

çPRIMA GOLDé and domestic distribution launched ○

ë The company was awarded the Gold Card exporter from the ○

○

(Korat) and Established a new distribution base in the United Kingdom under çPranda UK Ltd.é

2000 ○

○

ë Established a new production base to Nakhon Ratchasima

○

ë The Company offered 200,000,000 units of the five-year ○

○

1994

2002 ○

○

ë Established product and brand development center under

Limited by 50 million baht raising the registered capital to 100 million baht in which the company holds 100% stake. ○

○

1993

ë Established a new production base to China under çPranda Guangzhoué ë Increased investment in Primagold International Company ○

○

2003

○

Best Exporter from the Department of Export Promotion, the Commerce Ministry

○

1995

changed company name to çPranda Jewelryé ○

○

1973 ë Commenced export trading operations under çPranda Designé ○

○

ë Established foreign production bases çPranda Vietnam and çPranda SCLé (Indonesia) ë Set up Pranda Singapore Pte. Limited to invest in Malaysia and Indonesia ë Invested in establishing Pranda Lodging Company Limited to provide accommodation services to the companyûs employees

Pranda Jewelry Public Company Limited

Nature of Business countries including Thailand, Indonesia, Vietnam and China with production capacity of over 8.23 million pieces a year to cover a wide range of product prices. 2 Design and Product Development Base handled by highly skilled and creative designer team and worldclass skilled model makers who are in charge of developing the product designs for leading brands of customers and the Companyûs own brands. 3 Distribution Base The Company currently distributes through its subsidiaries and agents both in Thailand and foreign countries to diversify the marketing risk and to expand the market base. The current distribution base covers key regions around the world e.g. the United States, the United Kingdom, Germany, France, Italy, Spain, Indonesia, Japan, China, Vietnam, India and Thailand. Types of distribution channel include distributors, retailers, modern trades, own-retail shops, and franchise business. 4 Brand Development Base Responsible for the development of the Companyûs own brands and licensed brands including marketing planning, and brand management, as well as strategic planning with the objective to increase value and maximize the brand equity for brands under Pranda Group.

Pranda Jewelry Public Company Limited (çPRANDAé) was founded in 1973 initially as Pranda Design Company Limited which was later officially renamed to Pranda Jewelry Limited on April 27, 1984. It had listed its ordinary shares on the Stock Exchange of Thailand on July 6, 1990 and converted into a Public Company Limited on June 3, 1994. Pranda Jewelry Public Company Limited has currently registered capital of 400 million baht with 395.75 million baht paid up. Pranda Jewelry Public Company Limitedû headquarters are located at No. 28 Soi Bangna - Trad 28, Bangna, Bangkok 10260. The Company is a manufacturer and distributor of genuine jewelry, currently one of Thailandûs major jewelry exporters with a customer base spanning the key regions of the world from North America, to Europe and Asia. Pranda Jewelry Public Company Limited has a vision to become The çWorld-Class Mass Brand Produceré and has an established balanced management structure to achieve this aim as follows : 1 Production Base for affordable and quality jewelry products that meet economies of scale which bring about the appropriateness of the production cost and product quality. The Company has also well diversified its production risk by setting up seven production facilities in four

Trademarks of Pranda Group of Companies

Prestigious 24K gold jewelry of 99.9% purity in unique designs. ○

○

Superior diamond jewelry for modern working women. ○

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Art of gold handcrafted from 99.9% pure gold. ○

○

Creative designed 96.5% gold jewelry for modern lifestyle. ○

Annual Report 2007

○

Marcasite jewelry for elegant women.

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Glittering costume jewelry for todayûs fashion. ○

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Designer collections of 18K gold jewelry from France. ○

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Indonesian trusted name for gold jewelry. ○

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Modern, innovative, and sensible 18 K gold jewelry with real diamond. ○

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Distinctive western sterling silver jewelry inspired by traditional Batik motif. ○

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Young and modern sterling silver jewelry for women in active lifestyle. ○

○

European designed sterling silver jewelry for career women on the move. ○

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Wedding bands in gold and platinum with custom-made precision. ○

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Pranda Jewelry Public Company Limited

Nature of Business

Annual Report 2007

Core Business Structure of Pranda Jewelry Public Company Limited

Pranda Jewelry Public Company Limited

Nature of Business

Revenue Structure of Pranda Jewelry Public Company Limited and Subsidiaries The revenue structure of Pranda Jewelry Public Company Limited and its subsidiaries broken down to domestic sales and exports (after deduction of inter-related Company transaction items).

2007 † Revenue from exports Revenue from domestic sales Total

Million Baht 3,675 684 4,359

2006 % 84.31 15.69 100

Million Baht 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

% 85.50 14.50 100

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

% of holding

Pranda Jewelry Plc.

Type of Revenue

2007

2006

2005

2004

ML. Baht % ML. Baht % ML. Baht % ML. Baht % 1,589 35.75 1,199 28.57 1,288 36.16 1,233 36.72

Jewelry producer and export.

Subsidiaries-Domestic

Primagold International Co., Ltd.

100

Crystaline Co., Ltd.

Subsidiaries-Overseas Pranda North America, Inc. 100 Crystaline North America, Inc. H. Gringoire s.a.r.l.

100

Pranda U.K. Limited

100

Pranda Vietnam Co., Ltd.

100

Guangzhou Pangda Zhubao 100 Shoushi Youxian Gongsi Pranda & Kroll GmbH 51 & Co. KG Pranda Jewelry Pvt. Ltd. 51 (India) Sales Revenue Pranda Lodging Co., Ltd. 83 Returns on investments -

from joint ventures Other Revenues Tatal Revenues

Annual Report 2007

Distributor of 99.9% and 96.5% gold jewelry, diamond and jewelry under own brands Producer and exporter of costume jewelry. Distributor of gold jewelry in the USA and Canada. Distributor of costume jewelry and silver jewelry in the USA and Canada. Distributor of gold jewelry under H. Gringoire trademark in France and Europe. Distributor of gold, silver jewelry and costume jewelry under Cristalina brand in England and Europe. Producer and distributor of sliver jewelry for export and distribution under owned brands Jewelry Producer for distribution in China. Producer and distributor of jewelry. Distributor of gold and silver jewelry in India

}

Property rental / Properties -

382

8.59

413

9.84

405

11.37

326

9.70

200

4.50

220

5.24

217

6.09

204

6.08

1,380 31.05 1,501 35.76

921

25.86

983

29.27

168

3.78

136

3.24

185

5.19

199

5.93

322

7.25

352

8.39

363

10.19

366

10.90

0.25

0.17

0.22

0.33

1.10

0.71

0.22

0.03

245

5.51

218

5.19

2.70

0.29

4,359 98.07 4,076 97.12 3,491 14 0.31 12 0.29 12 3 0.07 4 0.10 10

98..00 0.34 0.28

3,323 6 7

98.96 0.18 0.21

69 4,445

1.38 100

22 3,358

0.65 100

1.55 100

106 4,198

2.53 100

49 3,562

Significant Changes and Developments in 2007 Distribution Base Expansion The Company increased its investment in Primagold International Company Limited by 100 million baht, raising Primagold Internationalûs registered and paid-up capital to 200 million baht. The capital increase aims to expand the market for own brands including Prima Gold, Prima Diamond, Prima Art, and Century Gold both in domestic and foreign countries. The Company raised the investment in Pranda & Kroll GmbH & Co. KG Limited by 2.4 million euros to expand the market for the groupûs leading brands and the subsidiaryûs own brands such as Christ, Cai, Merri, Michael Schumacher, POMPOOS in Germany and Europe notably through the chain stores, leading department stores and TV channels. Pranda Jewelry Public Company Limited has set up a new subsidiary in India, named Pranda Jewelry Private Limited with initial registered capital of US$ 22,000. Pranda Jewelry Public Company Limited holds 51% stake in the joint venture Company with India-based Gunjan Jewels Pvt. Ltd taking the remaining 49%. Expected benefit is to open and expand the markets for its own brands including Prima Gold, Prima Art, and Cai in India. Pranda & Kroll GmbH & Co. KG, has taken over KSV Brand GmbH, which operates the distribution of jewelry products under Christ, Cai, Merri, Michael Schumacher brands. The investment is expected to help enable the Company to expand the market to Germany and Europe under its own brands. Capital Structure The Company has issued and paid-up capital of 395.75 million baht and retained earnings of 1,454 million baht, with shareholderûs equity totaling 2,879 million baht. Current liabilities of 1,127 and non-current liabilities of 424 baht. In total, the Company has total liabilities of 1,551 million baht. Based on total liabilities and shareholderûs equity, the Companyûs debt-to-equity ratio was equivalent to 0.54 times. The above figures well represent the Companyûs established financial structure. In addition the Company reported Times Interest Earned equivalent to 8.59 times that reflects relatively low financial risk of the groupûs enterprises.

Industry Outlook and Future Competition The worldûs economy was trapped in the doldrums in 2007 mainly thanks to the sub-prime mortgage crisis in the United States and the historic high oil prices. In addition in the domestic market, the countryûs political situation has yet to show signs of stability and the baht became stronger against the US dollar. These events resulted in a world-wide loss of consumer confidence and a reduction consumerû spending. The global jewelry industry has been suffering from a historic sharp rise in prices of raw materials notably of gold. Thailandûs jewelry industry has also lost the benefit of the Generalized System of Preferences (GSP) from the United States which is the key export market for Thailandûs jewelry. Stiffer price competition in Thailandûs jewelry industry is rampant particularly driven by the cheaper products from China and India. The Thai jewelry industry therefore needs to upgrade its products to middle and high-end quality particularly to leading International Brand customers to offset price competition, and expand its marketing bases more to Europe, and Asia to prevent reliance on any particular markets. The Company has anticipated such risk factors and the competition outlook and has implemented preventive measures to offset these eventualities. Pranda Group has adopted a risk diversification strategy in production by setting up seven production facilities in four countries in the region enabling the Group to access the most competitive manufacturing base for any particular product. In distribution strategy, the Company has currently established distribution outlets in six countries to support all of our major customer regions. In addition, the Company has been developing its own specialist brands as a strategy to reduce reliance only on any one or more markets. Pranda Jewelry Public Company Limited

Shareholder and Management Structure Shareholder The first 10 major shareholders with number of shares and percentage of shareholding as at closing book dated December 29, 2007.

Name of Shareholder 1. 2. 3. 4. 5. 6. 7.

Thai NVDR Co., Ltd. Mr. Prida Tiasuwan FORTIS GLOBAL CUSTODY SERVICES N.V. Ms. Pittaya Tiasuwan Mrs. Panidda Tiasuwan MELLON BANK, N.A. CITIBANK NOMINEE SINGAPORE PTE LTD-UBS AG LONDON BRANCH-SNS IPB CLIENT SEG 8. Mrs. Pranee Khunprasert 9. Mrs. Prapee Sorakraikitikul 10. Pranda Holding Co., Ltd. 11. Others No of Shares paid up Thai Shareholder Foreign Shareholder

As at December 28, 2007 No. of Shares % Total Shares 79,699,525 26,102,320 23,000,000 17,176,560 15,956,460 15,629,000 14,917,300

20.14 6.60 5.81 4.34 4.03 3.95 3.77

14,736,560 14,015,560 13,900,000 160,615,305 395,748,590

3.72 3.54 3.51 40.59 100

283,529,115 112,219,475

71.64 28.36

çUpdated information of the Companyûs shareholders is made available for investors at the Companyûs website : www.pranda.co.th prior to the annual ordinary meeting of the shareholders.é

ë Group of major shareholders which has a significant impact on the formulation of management policies - None -

ë The name of any shareholders which conceals true identity Ordinary shareholders of PRANDA through Thai NVDR Co., Ltd. As at March 16, 2007

Major Shareholder 1. RAFFLES NOMINEES (PTE) LIMITED 2. RAFFLES NOMINEES (PTE) LIMITED A/C 1 3. PICTET & CIE 4. SOCIETE GENERALE BANK & TRUST, SINGAPORE BRANCH 5. MR. RUDOLF STRITT 6. MR. PETER JOHN EDMONDSON No of Shares paid up Note : According to information from www.set.or.th

Annual Report 2007

No. of Shares

% Total Shares

37,329,225 29,682,000 2,741,600 800,000 555,400 400,000 71,508,225

9.62 7.65 0.71 0.21 0.14 0.10 18.43

Organization Chart of Pranda Jewelry Public Company Limited (As at December 31, 2007)

Pranda Jewelry Public Company Limited

Shareholder and Management Structure The Companyûs Management Structure Management structure comprises the Board of Directors and the sub-committees including the Executive Directors, the Audit Committee, the Selection and Remuneration Committee and Finance and Risk Management Committee whose scope of responsibilities and functions could be summarized as follows :-

The authorized directors are composed of Mrs. Sunanta Tiasuwan or Mrs. Prapee Sorakraikitikul or Mrs. Panidda Tiasuwan who would sign together with Mr. Pramote Tiasuwan or Mrs. Pranee Khunprasert with the Companyûs emblems.

The Board of Directors The Companyûs Board of Directors as at December 31, 2007 is composed of knowledgeable, competent and experienced persons who would play a critical role to the Company, totaling 9 directors. Qualifications of the directors are fully compliant with the good corporate governance with details as follows :Executive director 5 Non-executive director 4 composed of three independent directors at the ratio of not less than one third or representing 33.33% of the total Board of Directors members. Independent directors are those who are free and independent from the major shareholders, management and related parties and fully capable of taking in charge of protecting the interest of all shareholders oh a fair and equal basis.

Name of the Companyûs Board Directors NO. 1 2 3 4 5 6 7 8 9 10

Name Mr. Mrs. Mrs. Mrs. Mr. Mrs. Lt. Jg. Mr. Mrs. Mr.

Prida Tiasuwan Prapee Sorakraikitikul Sunanta Tiasuwan Pranee Khunprasert Pramote Tiasuwan Panidda Tiasuwan Anan Panananda R.T.N. Verachai Tantikul Sarita Bunnag Eugene S. Davis

Position Chairman Director Director Director Director Director Independent Director Independent Director Independent Director Director

Date of office1 3 April, 20072 3 April, 20072 20 April, 2006 25 March 2005 3 April, 20072 25 March, 2005 3 April, 20072 25 March 2005 3 October, 20063 20 April, 20064

Note : 1. Date in office is the term for holding office by the whole panel of directors according the term stipulated in the Companyûs regulations. 2. The 2006 annual shareholdersû meeting in 2006 held on April 3, 2007 had resolutions to re-appoint the following directors including Mr. Prida Tiasuwan, Mrs. Prapee Sorakraikitikul, Mr. Pramote Tiasuan and Lieut. Anan Panananda R.N. 3. The meeting of the Board of Directors appointed new director, namely Mrs. Sarita Bunnag to replace the one resigned. Lieut. Olarn Krairiksh in capacity of the Companyûs director resigned on July 6, 2006. 4. Mr. Eugene S. Davis resigned from the Companyûs director on August 13, 2007.

Annual Report 2007

Name of the advisor to the Companyûs Board of Directors. Pittaya Tiasuwan

ë Scope of Responsibilities of the Board of Directors 1. To determine the groupûs vision, mission, strategy and policies and supervise the Companyûs operations to ensure the compliance with the relevant laws, objectives, Group of Companyûs regulations and the resolutions of the shareholders. 2. To nominate one or many directors to take responsibilities on the Board of Directorûs behalf. 3. To determine and modify authorized directors and impose conditions deemed appropriate to protect the Companyûs 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 appoint the Companyûs advisors. 6. To endorse the appointment of high-ranking executives. 7. To consider and monitor the performance of operations as follows :7.1 To monitor the progress of the implementation of the Groupûs strategies covering action plans which may affect the achievement of the Groupûs strategies or bring about significant change to the Groupûs strategies. 7.2 To monitor the operation in comparison to the goal or execute the projection at least once a quarter. In case the performance fails to achieve the target as projected, discussions are needed to be held to correct it. The target should cover all aspects both in the short term and in the long run including the performance index and comparison with other competitors. 8. Human resource management. 8.1 To cooperate with the management division to consider and endorse the Companyûs vision and strategies relating to human resources and human resource development. 8.2 To cooperate with the management division to approve remuneration strategies of the Group, consider and approve other remuneration plans based on the operating performance to create incentive to the employment and retain high qualified and potential personnel. 8.3To supervise the transparency, appropriateness and usefulness of the criteria, approaches and processes of the organization in selecting, removing or dismissing board of director, executives directors and high-ranking executives to ensure that the Company possesses the Board of Directors who are fully qualified, knowledgeable, properly competent and experienced in executing the Groupûs operations to achieve maximum efficiency and achievement.

8.4 To ensure the effective procedures of the Group in appraising the performance of high-ranking executives through comparison with the quarterly and yearly target which has been collectively agreed. 9. To take care of the completeness on issues as follows :9.1 To verify and endorse vision, mission, strategies, policies, target, business plans and budget, as well as ensure the good communication to employees of the Company at all levels. 9.2 To report annual financial responsibility to ensure confidence of shareholders that they have been provided accurate and correct financial report. 9.3 To monitor the performance of the Group all the time to ensure confidence that the directors and management division could perform according to laws and the said policies. 9.4 To supervise the internal audit process in the key control role. 9.5 To closely take care of the risk management. 9.6 To ensure the transparency of management process and clarity of inter-connected transactions between associated enterprises as well as ensure the report to the Board of Directors on the regular basis. 9.7 To ensure the efficiency in control system, provide accurate, complete and credible information, comply with the policies, regulations, laws and other governing regulations, protect assets, and ensure optimal use of the Companyûs resources. 9.8 To provide counterbalance of the management and/or the major shareholders as deemed appropriate through weighing up the proportion or number of independent directors in the Board of Directors. 9.9 To ensure the adequacy of information delivery process to the Board of Directors so that they could fully and perfectly perform their duties and responsibilities as designated. 9.10 To ensure the completeness of documents for the meeting and disseminate them prior to the meeting date, to ensure the completeness of the minutes and make sure that the minutes would not be subject to any changes or amendments after they were already endorsed. 9.11 To monitor problem and conflict of interest that may arise. 9.12 To ensure that the Company has appropriate and efficient communication system to all stakeholders of the Company and the public as well as monitor the performance of such system. 9.13 To protect and promote the Companyûs reputation.

Pranda Jewelry Public Company Limited

Shareholder and Management Structure 10. To set and determine scope of responsibility of the sub-committees as follows :10.1 To appoint the sub-committees as deemed appropriate and necessary so as to support the performance of the Board of Directors, the executive directors, the audit committee, the selection and remuneration committee and the finance and risk management committee. 10.2 To consider and approve the roles and responsibilities of the sub-committees as well as any change of their components. 11. To evaluate the performance of the Board of Directors as follows :11.1 To determine criteria and approaches in appraising the performance of the Board of Directors and assess their effectiveness on regular basis. 11.2 The selection committee is required to appraise their own performance every year as well as announce their performance on the Companyûs corporate governance in annual report. 12. To authorize the Board chairman to supervise the operations to ensure its compliance with the above-mentioned role and responsibility in an efficient and effective manner.

Terms for Holding Office and Appointment of the Directors 1. 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. Directors who have to be removed from his tenure in the first year and the second year after the Companyûs registration are required to draw lots to find who would be subject to removal. In the following years, directors who hold office for the longest period are to be removed. Removed directors could be re-appointed in the following years.

2. Apart from being removed or retired by rotation, the directors could be out of office as follows :(1) Die (2) Resign (3) Lack qualifications or attributes which are against the public Company law. (4) Resolution of the shareholdersû meeting with votes of not less than three/fourth of the shareholders who attend the meeting or have voting rights, and own combined shares of not less than a half of the shares held by the shareholders who attend the meeting and have voting rights. (5) The courtûs sanctions. 3. Any directors who want to resign from their positions must submit a resignation letter to the Company. Resignation will take effect from the date the resignation is submitted to the Board of Directors. However, the resignation is also taken valid if he/she personally informs the registrar. 4. In case any director positions are left vacant because of other factors than resignation or removal by rotation, existing directors are required to choose any persons who fully meet qualifications according to the public Company law to replace the outgoing directors at the following meeting of the Board of Directors except that the term of directors have less than two months left. Persons who replace the outgoing directors will stay in the office equivalent to the remaining term of the directors he/she replaces. 5. The shareholdersû meeting may pass the resolutions to remove any directors form their positions they hold prior to the expiry of their term, but that could be done with votes of not less three/fourth of the total shareholders who attend the meeting and have voting rights and own total combined shares of not less than a half of shares held by the shareholders attending the meeting and having voting rights at the meeting.

Report of the shareholding of the Companyûs directors in 2006 and 2007 as follows :No. 1 2 3 4 5 6 7

Name Mr. Mrs. Mrs. Mr. Mrs. Lt. Jg. Mrs.

Prida Prapee Panidda Pramote Pranee Anan Sunanta

Tiasuwan Sorakraikitikul Tiasuwan Tiasuwan Khunprasert Panananda R.T.N Tiasuwan

No. of Shares (Shares) 28 Dec 2007 26,102,320 14,015,560 15,956,460 13,400,560 14,736,560 231,000 5,820,500

Change of No. of 29 Dec 2006 shares during the period 16,862,320 9,240,000 8,832,780 5,182,780 13,691,780 2,264,680 11,900,560 1,500,000 14,133,360 603,200 201,000 30,000 7,810,500 (1,990,000)

Note : 1) an increase of the number of shares arising from the acquisition of more shares and an exercise of rights to convert warrants into common stocks. 2) A fall in the number of shares arising from the disposal of securities.

Annual Report 2007

Executive Directors Eight executive directors are composed of six directors of the Company, with the remaining two members chosen from persons who are knowledgeable and specialized in the industry. Name of the Board of Directors is as follows :1. Mr. Prida Tiasuwan Acting chairman of the executive directors 2. Mrs. Prapee Sorakraikitikul President 3. Mrs. Sunanta Tiasuwan Chairman of Corporate Finance 4. Mr. Pramote Tiasuwan Senior Vice President 5. Mrs. Pranee Khunprasert Senior Vice President 6. Mrs. Panidda Tiasuwan Vice President - Production Management 7. Ms. Pittaya Tiasuwan Vice President - Stones Management 8. Mr. Decha Nuntanajaroenkul Vice President - Marketing and Sales

ë Scope of Responsibilities of the Board of Directors 1. To consider and determine the Companyûs goal and business strategy, to supervise the Companyûs operation to ensure the compliance with the Companyûs vision, mission, strategy, and policies of the Board of Directors, laws, conditions, rules and regulations of the Company. 2. To set the guideline for the Companyûs business operation, development and expansion to ensure the compliance with vision, mission, strategy, policies and resolutions of the Companyûs Board of Directors. 3. To appoint the Companyûs executives to perform their duties at all positions except the appointment of high-ranking executives which needs prior approval of the Companyûs Board of Directors and to delegate power to any persons to perform duties and responsibilities on their behalf as appropriate. 4. To determine working procedures of the Companyûs employees without violating or running against the regulations and related laws. 5. To consider and approve the position structure and salary structure as well as other fringe benefits of the Companyûs employees as well as endorse the management structure from the division level onwards. 6. To consider and screen the Companyûs quarterly and yearly performance and budget as well as asset management prior to being submitted to the Companyûs Board of Directors for consideration. 7. To consider and approve the annual budgeting plan and supervise and monitor, as well as appraise the performance to ensure the compliance with policy, target, and budgeting plan as approved and consider and approve bonuses and other rewards to the employees and other benefits to boost the morale of the Companyûs employees. 8. To ensure the appropriateness and effectiveness of the Companyûs internal control system through cooperation with the Audit Committee.

9. To empower the Chairman of the Board of Directors to supervise and ensure the efficient compliance with duties and responsibilities as mentioned above.

Audit Committee The Board of Directors, having acknowledged the importance of good and effective internal control, has considered and appointed the Audit Committee since January 29, 1999 as a key instrument of the Board of Directors in supervising and controlling the Companyûs administration to ensure it meets widely accepted standards of accuracy, transparency, effective internal control system, as well as creditable and useful reporting systems both to investors and related parties. The Audit Committeeûs nomination is fully compliant with criteria and requirements of the Stock Exchange of Thailand. They would be allowed to independently 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 Companyûs regulations under which the Companyûs internal audit and internal control department will re-examine the adequacy of the Companyûs internal audit and internal control system and submit their results directly to the Audit Committee. The present Audit Committee is composed of three members, all of them are the independent directors and at least one director is required to have knowledge, understanding or experience in accounting or finance. Their term of office is set once a year. Name of the Audit Committee :1. Lt. Jg. Anan Panananda R.T.N Chairman 2. Mr. Verachai Tantikul Independend Director 3. Mrs. Sarit Bunnag Independend Director and expert in accounting and finance

Pranda Jewelry Public Company Limited

Shareholder and Management Structure ë Scope of Responsibilities of the Audit Committee 1. To review the Companyûs financial report to ensure its accuracy and adequacy, reading the reports of the Companyûs internal auditors and balance sheet before being forwarded to the shareholderûs meeting. 2. To ensure that the Company has come up with efficient and effective internal control and internal audit system. 3. To ensure the Companyûs compliance with the laws on securities and the Stock Exchange, regulations of the Stock Exchange and/or laws relevant to the Companyûs businesses. 4. To consider, nominate, propose the appointment, and propose remuneration of the Companyûs 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 losses or damages to the Company. 6. To prepare report on the Audit Committee and disclose it in the Companyûs annual report. Such report must be signed by Chairman of the Audit Committee.

ë Scope of responsibilities of the Selection and Remuneration Committee 1. To propose criteria and guidelines in selecting the Companyûs Board of Directors, finance and risk management committee, independent committee and high-ranking executives and propose criteria and guideline for their remunerations and compensations. 2. To nominate, select and propose quality and qualified persons as the Companyûs high-ranking executives to the Board of Directors for approval of appointment and compensation payment. 3. To propose criteria, methods and steps of performance evaluation for high-ranking executives to the Board of Directors. 4. To assess the performance of the Companyûs Board of Directors, finance and risk management committee and high-ranking executives as assigned by the Board of Directors. 5. To consider and improve the Companyûs policy and compensation management procedures to ensure its compliance with the labor market. 6. To empower the chairman of the selection and remuneration committee to ensure their performance complies efficiently and effectively with the power, role and responsibilities mentioned above.

Selection and Remuneration Committee The Companyûs Board of Directors has approved the appointment of the selection and remuneration committee since May 12, 2004. The selection and remuneration committee is composed of six members, one of whom is the independent director and would act as the chairman. Name of the selection and remuneration committee :1. Lt. Jg. Anan 2. Mrs. Prapee 3. Mrs. Sunanta 4. Mr. Pramote 5. Mrs. Pranee 6. Mrs. Panidda

Panananda R.T.N Sorakraikitikul Tiasuwan Tiasuwan Khunprasert Tiasuwan

Chairman Director Director Director Director Director

Name of advisors to the Selection and Remuneration Committee 1. Mr. Prida Tiasuwan Advisor 2. Ms. Pittaya Tiasuwan Advisor

Annual Report 2007

ë Conditions of the selection and nomination of the Companyûs directors as imposed in the Companyûs regulations could be summarized as follows :1. Directors of the Company are not mandatory to be the Companyûs shareholders. 2. The Companyûs 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 as stated in Thai laws. 3. To allow the shareholdersû 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/her voting rights in full according to the number of shares held (3.1) to nominate one or several persons as directors, but many must 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 requirements 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 Companyûs directors, the Company has realized the importance of the monitoring and counterbalance systems. The Company has therefore determined the component of the Board of Director which should be composed of three independent directors, representing one/third of the Companyûs Board of Directors. The selection criteria for çindependent directorsûû are determined as follows :1. They should not be the Companyûs workers, staff, advisors or those who have dominant power over the Company, subsidiaries, associated companies or those who hold over than 1% 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 Companyûs executives. (B) The Companyûs 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. 2. They should not be the Companyûs employee, staff, advisors or person who holds dominant authority over the Company, subsidiaries and associated firm or persons who may have the conflict of interests. 3. They should not be a person who share the same bloodline or legitimate relationship with the person who may have the conflict of interests. They should not also 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. 4. They should be able to perform their roles and express independent comments about the Companyûs operations.

Finance and Risk Management Committee The Finance and Risk Management Committee is composed of six members including five directors of the Company and one who is chosen from persons who are knowledgeable and specialized in the industry. The Companyûs Board of Directors has approved the appointment of the finance committee since May 12, 2004. The Finance Committee is composed of six members, five of whom are the Companyûs Board of Directors and another one chosen from persons who is knowledgeable, specialized in business. Name of the Finance and Risk Management Committee :1. Mrs. 2. Mrs. 3. Mr. 4. Mrs. 5. Mrs. 6. Ms.

Sunanta Prapee Pramote Pranee Panidda Pittaya

Tiasuwan Sorakraikitikul Tiasuwan Khunprasert Tiasuwan Tiasuwan

Chairman Director Director Director Director Director

Advisors of the finance and risk management committee are composed of 1. Mr. Prida 2. Mr. Len

Tiasuwan Biggs

Advisor Advisor

Scope of Responsibilities of the Finance and Risk Management Committee 1. To seek funding according to resolutions of the meeting of the Board of Directors to be used as the working capital of the Group. 2. To analyst the potential investment projects, risk and benefits and anticipated gains to be submitted to the Companyûs Board of Directors for approval. 3. To control, supervise and analyze performance of the subsidiaries and potential investment projects for the Board of Directorsû consideration and improvement. 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 of the Finance and Risk Management Committee to supervise and ensure the compliance with those responsibilities and duties in manner of maximum efficiency and effectiveness.

Pranda Jewelry Public Company Limited

Shareholder and Management Structure Executives Name of executives as at December 31, 20071 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 President - Production Management 5. Ms. Pittaya Tiasuwan Vice President - Stones Management 6. Mr. Decha Nuntanajaroenkul Vice President - Marketing and Sales 7. Mr. Thanes Panjakrid Accounting and Finance Manager Note : 1çExecutivesé 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 position equivalent to the four executives including those who hold management positions in accounting or finance division from division managers or equivalent onwards.

The Companyûs Secretary : Mrs. Sunanta Tiasuwan The Companyûs secretary is the person appointed by the Companyûs Board of Directors to arrange the meetings of the Companyûs Board of Directors, shareholders and other activities of the Companyûs Board of Directors in order to help the Companyûs Board of Directors and the Company comply with the relevant laws and regulations as well as to ensure the Companyûs corporate governance meets the good corporate governance standards. 1. Components and qualifications 1.1 The secretary should have at least basic knowledge about laws and regulations of the supervisory body about the public Company laws, and laws about securities and the Stock Exchange of Thailand.

Annual Report 2007

1.2 The secretary should have thorough knowledge and understanding in the principles of the good corporate governance and the best practices in the corporate governance issues. 1.3 The secretary should have knowledge in the Companyûs business and ability in good communications. 2. Role and responsibilities of the Companyûs secretary 2.1 To provide preliminary advice and recommendations pertaining to legal, regulatory, and governance issues and practices related to the Board and Board Committees and monitor to ensure the compliance with the said rules and regulations on the accurate and regular basis as well as report changes which are deemed significant to the directors. 2.2 To inform the resolutions and policy of the Board of Directors and the shareholders to relevant executives and monitor their performance according to the resolutions and policy. 2.3 To undertake arrangements for meetings of the Board, related Board Committees and the Shareholders. Ensuring that the meetings conform to relevant laws and regulations, the Bankûs articles of associations, individual Board and Committees charters, and best practices. 2.4 To record minutes of the shareholdersû meeting and the Board of Directorsû meeting and monitor the compliance with the resolutions of the shareholdersû meeting and the Board of Directorûs meeting. 2.5 To ensure the disclosure of information and report in part of her/his responsibilities to supervisory agency in compliance with the laws, regulations and the Companyûs policy on information disclosure. 2.6 To contact and communicate with the shareholders and look after the shareholders deemed as appropriate about the rights of the shareholders and the Companyûs information. 2.7 To collect important documents such as the directors registration, the meeting invitation letter, minutes of the Board of Directorsû meeting and the Companyûs annual report as well as the invitation letter for the shareholdersû meeting and minutes of the shareholdersû meeting. 2.8 To manage the secretariat office to serve as the center for corporate records such as the juristic person register, the memorandum and articles of associations, the shareholder register, and business licenses. 2.9 To take care of the Board of Directorsû activities.

ë Remuneration of Directors and Management of the Company ë Remuneration to executives. Remuneration in the form of cash during January 31, 2007 to December 31, 2007. (A) Remuneration to directors

(Unit : Million Baht) Salary / Bonus Positionûs Allowance Total

Item

Name of directors

1 2 3 4

Mr. Prida Tiasuwan Lt.jg. Anan Panananda R.T.N. Mr. Verachai Tantikul Mrs. Sarita Bunnag Total remuneration to directors

4.88 4.88

0.81 0.72 0.72 2.25

4.88 0.81 0.72 0.72 7.13

Note : Five remaining directors are not entitled to receive remuneration in item (A) but are made eligible to receive compensation in item (B) (B) Remuneration of the Companyûs executive directors and management

Executive directors and management

Type

No. (person)

Amount (Million Baht)

Salary and bonus

19.06

Note : 1. five directors are entitled to receive remuneration in this item. 2. Such compensation excludes compensation of the accounting and finance manager. ë Other remunerations At present, the Companyûs executives are entitled to receive only salary and bonus as remuneration, without any other benefits and revenues.

Inside Information Control The Company has determined principles of the best practice and responsibilities for executives and the use of insider information by the Companyûs employees that can be summarized as follows :They (the Companyûs executives and employees) must not abuse power and responsibilities for the sake of personal interests or anybodyûs 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 Companyûs inside information which has yet to be publicized and could affect the Companyûs share prices, and not trade the Companyûs shares for personal gains or that of any others.

Internal Control The Company has given importance of the efficiency of the internal control that is considered instrumental to ensure more efficient performance and operation as well as prevent any potential losses arising from the operation and help curb any irregularities of the management and employees. The internal control system could be summed up as follows :1. Organization and Environment The Company has set the clear and assessable business goal whereby put the goal into review from time to time and the organizationûs structure would be clearly elaborated together with scope of responsibilities of personnel and executives in writing. The Company has set the principles of responsibilities of management and employees to all stakeholders in writing while executed the administration and operation in compliance with Thai Labor Standard (TLS 8001-2003) to the extent that the Company has won such award. The award well confirms the Companyûs good care to the Companyûs employees throughout the operations, which covers safety, sanitation and appropriate working social environments.

Pranda Jewelry Public Company Limited

Shareholder and Management Structure 2. Risk Management The Company has executed every six months assessing the risks, be it from the internal or external factors. It has also conducted analysis and appraises the risks in each department in order to determine preventive measures and appropriate risk management approaches as well as closely monitors the incident which may be the cause of the risk factors and manage the measures to reduce the risk to appropriately safe level. 3. Management Control The Company has clearly imposed the scope of responsibilities and authority of the management division at all levels in written statement. Duties and responsibilities of those who have approval authorities, those who record the accounting and information and those who take care of and protect the Companyรปs assets have been clearly separated to ensure counterbalance. In case the transactions are executed with related parties, the Company has in place the measures as well as processes of approval according to the size or scale of the transactions. Each approval of the transactions needs to make sure that no person who may have the vested interest participates in the approval. 4. Information and Communication System The Company has developed the process in preparing information and guideline about the information disclosure to the related parties, be it the directors, executives or related parties. Information available should be updated, easy to understand and cover important contents to support and supplement discretion of the related parties. More importantly, information must be ensured that it is stored in the safe place and easily recalled for re-examination. 5. Monitoring system The Company has its own internal audit division in place which will be held responsible for executing the audit to make sure that

the operation, business plan and financial activities of the Company are run according to the guidelines and optimal efficiency. The internal audit division will also take charge of inspecting the compliance with the laws relating to the enterprises. And in its best bit to ensure the independence, performance and counterbalance, the Board of Directors requires the internal audit reports directly in the auditing report to the Audit Committee. As part of the Companyรปs goal, the Company has set up independent unit in charge specially of reporting the performance in comparison with the monthly target. The performance will be subject to revision every six months. On February 28, 2008, the Audit Committee produced an has internal audit appraisal form for all directors to consider and respond. The appraisal found that the Company has sufficient and appropriate internal control system on five above-mentioned components, namely the organization and environment, risk management, management control, information and communication and monitoring system.

Dividend Policy The Company has policy to pay dividend at the rate of not more than 60% of the annual net profit from separate financial statements The Companyรปs Board of Directors would consider first the operating profit, working capital and investment capital in tangible assets, financial conditions, and legal reserves as stated by laws both for present and the future. The Companyรปs 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 Companyรปs operating performance, financial conditions, and capital requirement considered by the Board of Directors and endorsed by the shareholders.

60.00% 59.63% 58.36%

The graphic display the rate of dividend payment in

comparison to net profit

57.35% 50.00%

over the last four years. 46.05% 40.00%

0.00% 2003

Annual Report 2007

2004

2005

2006

Risk Factors Risk factors that affected the industry The purchasing power of the US consumers has been substantially reduced because of the sub prime mortgage crisis, delivering a setback to Thailandûs jewelry industry which heavily relies on the US market. In addition, the prices of raw materials for jewelry production, gold, silver, and gems, have risen increasing the end price of jewelry products at a time when the consumersû purchasing power was already under pressure. Thailandûs jewelry industry has now lost the Generalized System of Preferences (GSP) from the United States, while price competition has been getting intensified from China and India, and the baht continues being strong against the US dollar. Having anticipated such challenges, the Company has pursued a policy to expand production bases across the Asian region, establishing five factories in four countries, Thailand, Indonesia, Vietnam & China to capitalize on the existing strong points of each nation. In addition, the Company has upgraded production techniques to reduce reliance on key raw materials resulting in a substantial reduction of material costs making the overall production costs steady and stable to a satisfactory level. The Company has also diversified marketing risk by expanding distribution through the its own channels and regional distribution bases covering over 40 different countries and is also committed to developing its own specialist brands into Internationally.

Risk factors that affected the Companyûs Operations. 1. Risk Factors on Sales and Production Intensive competition in the jewelry market and rapidly changing trends have prompted the Companyûs Trade customers to require a greater variety of design, faster delivery, and premium quality at more affordable price ranges. To cope with this change, the Company has its own product design and development center established which is responsible especially for developing products to accommodate the exacting and varying requirements of the customers. The Company has also upgraded production techniques to cut lead times on production, making faster product deliveries to customers thus reducing their inventory and has a spread of production bases across Thailand, Indonesia, Vietnam & China, each with skilled and long experienced craftsmen, allowing the Company to have many manufacturing options leading as a consequence the Company to retain its quality products at competitive prices.

2. Human Resource Risk By nature the number of experienced, skilled and creative craftsmen in the jewelry industry is relatively limited. The Company has therefore developed an efficient process of selecting potential employees who are capable of adapting themselves to the organizationûs culture, and ready to learn the techniques required to be skilled craftsmen after extensive training. The Company has also pursued a policy to develop an excellent working environment, appropriate welfare benefits, and reasonable and fair returns based on their individual performance. 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 total raw materials) and sales on the credit basis to foreign customers, the Company could be subject either to gain or loss from foreign exchange. The Company has well realized such exposure arising from the foreign exchange fluctuation, thus hedging with forward contracts, foreign exchange put options and providing a hedge against foreign currency obligations. 3.2 Credit Risk arising from overdue payment of general accounting receivables and accounting receivables of related companies. The Company has a set policy to be strictly careful of extending credit lines both to existing and new clients, taking into account thoroughly their operating results, financial status, financial liquidity, and thorough strict credit checks. The Company has also developed debt monitoring and collection process and reviews the credit lines of the customers on the regular basis. 4. Risk Factors on Business Planning and Information As a result of information technology advancement and growing contact with customers through the Internet, the Company has realized its information network is probably subject to accessibility by the outsiders who are not related or authorized to the Companyûs information system which may later result in damages and losses to the Companyûs important database which is used routinely run the Companyûs administration. In a bid to curb such a risk, the Company has installed firewall systems to prevent access from unauthorized users and set policies to efficiently control the access into the Companyûs information network, as well as state-of-the-art backup information system.

Pranda Jewelry Public Company Limited

Related Party Transactions Related Party Transactions as of December 31, 2007 could be summarized as follows :1. Transactions with subsidiaries and related persons Related person/juristic person Mr. Gregor Kroll is the shareholder both of Pranda & Kroll & Co. KG and KSV Brand GmbH, holding 49% each in both companies.

Item

Value

Necessity and rationality

Pranda & Kroll GmbH & Co. KG, the 25,000 The Audit Committee sees the deal Companyûs subsidiary has taken over KSV Euro or reasonable, as it will help offset the Brand GmbH which operates the approximately marketing risk for the Company and distribution of jewelry products under its 1.16 million expand more into European market own brands. baht through its own brands.

2. Transactions between the Company and subsidiaries Related person/juristic person Pranda Holding Co., Ltd. holds 7% stake in the tenant. Forward Freeland Co., Ltd. holds 7% in the tenant Artico Crafts Co., Ltd. Holds 3% in the tenant

Annual Report 2007

Item

Value

The tenant which is a subsidiary of the 10.80 lesser wants to rent a dormitory with million baht the lesser. ë Information on the dormitory to be rented 25, 27 Soi Bangna - Trad 28, Bangna - Trad Rd., Bangna, Bangkok 10260. ë Size of the building : 8,025 square meters. ë Rental period 3 years start from the first operating day. The tenant is entitled to renew the contract for three year - term under which the lesser will raise the rental rate by 10% of the renewed contract or not less than inflation rate in three years. ë Rental rate : 300,000 baht per 8,025 square meters per month.

Necessity and rationality The Board of Directors sees it reasonable, as such juristic persons have enough management expertise and the rent itself will benefit the tenants which are the Companyûs employees who will be taken care and obtain good services at the market price. The service provider itself has transparency in operation. The Company will thus focus mainly in its production, which is its core business.

For transactions which are executed on the general trade basis between the Company and subsidiaries, and affiliates, please take a look at the financial remark No.6.

Necessity and rationalization The interrelated items occurring among the Company, its affiliates and subsidiaries are business items which 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 interrelated items The interrelated items that occurred and 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 would be refrained from voting on such issues.

Policies and trends on making the future inter - related items The future interrelated items of the Company shall be implemented in the normal business practice as usual without a special treatment and transfers of interests among the Company, the affiliates and persons of vested interest. Nevertheless, the Audit Committee or the Company没s auditors or independent experts would audit and provide opinions on the appropriateness of the prices and rationalization of making the items.

They would also 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 has to ensure the compliance with the laws on securities and the Stock Exchange of Thailand (SET) and regulations, notices, orders or requirements of the SET as well as the compliance with the requirements on data disclosure of information on making the interrelated items and acquiring or disposal of the important assets of the Company or its affiliates according to 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 Audit Committee would provide opinions on the necessity and appropriateness of such items. In case the Audit Committee had no expertise in considering the interrelated items that may happen, the Company would ask an independent specialist or the auditor of the Company to give opinions on the interrelated items for supplementing decision of the Board of Directors or the shareholders as the case may be. The Company would reveal the interrelated items in the remarks supplementing the financial statement that had been audited by the Company没s auditor.

Pranda Jewelry Public Company Limited

Social Accountability Pranda Jewelry Public Company Limited holds the steadfast belief that the strength of the Company stems from the continued policy of following the principals of good Corporate Governance which benefits all society, as well as providing generate reasonably good returns to all stakeholders including shareholders, clients, and employees. During 2007, the Company had pursued social activities in different fields as follows :

ë To support the jewelry manufacturing skills as to develop the design capability of university students in Thailand Student Fashion Project Award 2007 scheme.

Youth Promotion

ë Having acknowledged that education is the best foundation for the sustainable development of the underprivileged to create self reliance and to be able to contribute to the well being of their family, the Company each year has allocated budget and resources to support education in partnership with the Golden Jubilee Royal Goldsmith College and the Bangkok Arts and Crafts College to arrange vocational education in the çBilateral Education Programé and in cooperation 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. The Company has operated the program for the 8th consecutive year.

ë To team up with the Golden Jubilee Royal Goldsmith College and Schools for the Deaf to arrange and develop educational media about jewelry manufacturing profession to the deaf under the initiative of Her Royal Highness Princess Maha Chakri Sirindhorn. ë Pranda Group has cooperated co-sponsored activities of the çArt for Allé Arts Camp held by Chulalongkorn Universityûs Faculty of Arts and other five partners as well as Primagold International Company Limited for disabled children, giving them an opportunity to learn and develop their artistic skills together with normal children.

Annual Report 2007

ë Pranda Group through Primagold International Company Limited holds a jewelry design contest under çBAJ 2007 Bangkok International Art and Jewelry Contest 2007é to develop the jewelry design capability of university students and the general public to vie for the trophy of HRH Princess Sirivannavari Nariratana.

ë To organize activities under çPranda Helps Brothersûû project, as well as to develop playgrounds and to donate sports kits and educational tools to students of Tao Mor school in Chanthaburi province.

ë To offer educational equipment, stationary, souvenirs and gifts as well as snacks to children on çThe National Children Dayé to Pongployanusorn School, Sri-iamnusorn School, and Wat Bangna Nai School.

ë To allow education institutes and other private and public units to observe and visit the Company.

Relationship with Nearby Communities ë To co-sponsor community sport activities and to provide sports kits to Wanthong Community, Wat Pongploy Community and Rungsawang Community in a bid to underscore good relationship between the Company and nearby communities and encourage their residents to make use of their leisure and stay away from drugs. ë To co-sponsor various activities such as the ones on the National Children Day held by Bangna Police Station.

Social Contribution Activities ë To participate in çAll togetheré energy conservation program held by the Energy Conservation Center of Thailand, the Department of Alternative Energy and Efficiency Development, and the Faculty of Engineering at Chulalongkorn University. ë 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. ë To participate in blood donation on regular basis to the Thai Red Cross Society every three months. ë To donate money, products and survival kits to the needy people who suffer from crisis on different occasions such as the flood victims in many provinces.

Pranda Jewelry Public Company Limited

Social Accountability Promotion and Campaign for Sense of Social Accountabilities

ë To participate in the fund raising activities for the consumer protection institutes, and the Foundation for Consumers to find new effective ways to protect consumers. ë 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 roles in environmental and social responsibilities.

ë To encourage the companyûs executives and employees to adopt the Sufficiency Economy philosophy of His Majesty the King as the norm both in working and living for the sake of happiness and peace of the Country. ë To jointly celebrate the 60 th anniversary of His Majesty the Kingûs accession to the throne by wearing a yellow T-shirt with the royal emblem every Monday. ë To organize activities on the Celebrations on the Auspicious Occasion of His Majesty the Kingûs 80th Birthday Anniversary. ë To participate in çEconomic Strength and Fairnessé seminar of the National Economic and Social Development Board (NESDB).

Annual Report 2007

ë 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.

Highlight of Company Operation Unit : Million Baht Total Assets Total Liabilities Shareholders没 Equity Total Revenues Total Sales Cost of Sales Gross Margin Operating Expenses Profit from Operation Interest Expenses Net profit for the year

2007 4,431 1,552 2,879 4,445 4,359 3,052 1,307 867 440 51 406

2006 4,104 1,298 2,806 4,198 4,076 2,718 1,358 848 510 55 432

2005 3,681 1,216 2,465 3,562 3,491 2,267 1,224 835 389 46 356

2004 3,303 1,191 2,112 3,358 3,323 2,174 1,149 723 426 50 362

Unit : Million Baht Basic earning per share Basic book value per share

2007 1.04 7.24

2006 1.29 8.16

2005 1.13 7.52

2004 1.37 8.00

2007 6.96% 29.98% 11.65% 10.08% 9.30% 2.84 1.40 0.81 12.23% 14.34% 8.59 0.54 0.35

2006 16.75% 33.31% 14.03% 12.51% 10.61% 3.42 1.43 1.60 14.23% 15.86% 9.34 0.46 0.32

2005 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

2004 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

Sales Growth Gross Margin EBITDA / Sales EBIT / Sales Net Profit / Sales Current Ratio (x) Quick Ratio (x) Inventory Turnover (x) ROCE Return on Shareholders没 Equity (ROE) Time Interest Earned (x) Debt to Equity Ratio (x) Debt to Asset Ratio (x)

Pranda Jewelry Public Company Limited

Highlight of Company Operation Million BHT 4,500

4,359

4,076

4,000 3,491

3,500 3,323

Chart of Sales

3,000 2,500 2,000 1,500 1,000 500 0 2004

Gross Margin Operation Profit Net Income

2005

2006

Year

2007

Million BHT 1,400

1,358 1,307

1,224

1,200 1,149

1,000

Chart of Profitability

800 600

510 426

440

432

400 362

406

389 356

200 0 2004

Tatal Liabilities Equity

2005

2006

2007

Year

Million BHT 3,000 2,500

Chart of

2,000

Liabilities and Equity

1,500

2,879

2,806 2,465 2,112 1,552

1,191

1,216

1,298

1,000 500 0 2004

Annual Report 2007

2005

2006

2007

Year

(Time : X) 10 9

D/E TIE

9.34 8.52

8.59

8.46

8 7 6

Chart of

Capital Structure

4 3 2 1 0

0.56

0.49

2004

0.54

0.46

2005

2006

2007

Year

ROE ROCE

25%

20% 17.20% 15.86% 15.02%

15%

14.23%

14.11%

12.23%

11.82%

10%

Chart of Return

14.34%

5% 0% 2004

2005

2006

2007

Year

Million BHT

EPS BV

10 8.16

8.00

7.52

7.24

Chart of

Corporate Value

2 1.37 1.13

1.29 1.04

0 2004

2005

2006

2007

Year

Pranda Jewelry Public Company Limited

Management Discussion and Analysis Pranda Jewelry Public Company Limited (Plc) had changed its accounting policy for recording investments in subsidiaries and associated companies in separate financial statements from the equity method to the cost method, in compliance with the notifications of the Federation of Accounting Professions. The change in accounting policy resulted in the difference of 9.1 million baht or 2.30% between the separated financial statements for the period ended December 31, 2007 which posted net profit of 396 million baht and the consolidated statements which posted net profit of 406 million baht. The difference of the net profits in the two financial statements stemmed mainly from the fact that the net profit in consolidated statements had combined operating results of subsidiaries companies and associated companies according to the investment ratio of the Company, while the net profits presented in separate income statements recognized only the accounts related to investments in subsidiaries and associated companies whereby the income recognition from the investments in subsidiaries and associated companies would be realized only once the Company has received dividend payment from those subsidiaries and associated companies. The Company would like to submit the managementûs discussion and analysis on the financial performance for the period ended December 31, 2007 of the çConsolidated Financial Statementsé as follows :-

production base of the world. Succession of expertise and jewelry production culture, a mass of highly skilled craftsmen and governmentûs promotions and supports also play a crucial contribution to the industryûs growth. The Company, having fully realized such challenges, has throughout the years executed strategy to ensure growth in the manner not only of quality and sustainability whereby concentrating upon collaborations with promising international brands both in production and design. The Company; moreover, aims to manufacture and expand its own brands particularly into markets which have relatively high purchasing power such as China, India and Dubai, etc. As a result of the execution of such strategies, the Company has managed steady growth as reflected by the Companyûs sales which rose 6.96% or 284 million baht in 2007. On top of that, the Company has effectively controlled sales and administration expenses, resulting in a marginal increase of expense by only 2.30% in 2007, together with effective and smart exchange rate risk management with forward contracts which helped cut foreign exchange loss up to 68 million baht or 61.82% Nonetheless, given the bottom line, the Company posted a net profit of 6.17% to 406 million baht from 432 million baht. However, it should be noted that the strong net profit in 2006 was due to special items arising from the land price re-appraisal which resulted in a reduction of allowance for impairment loss on land held for development by 67.4 million baht which was recognized as revenue in this item.

1. Operation of the Company and subsidiaries Despite the worldûs economy in 2007 had experienced a significant slowdown from a year earlier thanks to the USûs subprime mortgage crisis and the all-time highs of all prices which have shaken drastically the confidence of consumers in the worldûs economic conditions and prospect. Worse ever, the worldûs jewelry industry has been suffering severely from a sharp rise in prices of raw materials both for gold and silver, the US authorities had cut generalized system of preferences (GSP) privileges for Thai gold jewelry and the baht continues being strong against the US dollar. However, Thailandûs gems and jewelry industry remained capable of adjusting itself and retaining competitiveness in the world market as evidenced by the steady growth of the industry over a year earlier. The growth was mainly attributed to the fact that Thailand is currently the worldûs leading jewelry exporter and operates the world-class gem trading base and the jewelry

Annual Report 2007

1.1 Income analysis Sales income The Company and subsidiaries had recorded sales revenue of 4,359 million baht in 2007, a surge of 283 million baht or 6.96% from a year earlier 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 incomes The Company and subsidiaries had generated revenues from services provided mainly to the affiliated companies such as consultation fee, new product development charge, as well as interest income from bank, and interest charge on loans to related companies.

1.2 Cost of Sales and Sales and Administration Expense Analysis Cost of sales was 3,052 million baht in 2007, an increase of 335 million baht or 12.31% due to sales growth and a change in marketing mix. Sales and administration expenses were 867 million baht, a rise of only 19 million baht or 2.30% because of compliance with control expenses policy. 1.3 Income Statement Analysis. The company and subsidiaries posted net profits of 406 million baht, a decrease of 27 million baht or 6.17%. However, the Company in 2006 had registered special item from the land price re-appraisal, raising its revenue from reversal allowance for impairment loss on land held for development worth up to 67.4 million baht which was recognized as revenue.

2. Financial Status Analysis 2.1 Assets ë Asset Compositions Comparative Balance Sheet for the year 2007 and 2006 (Unit : Thousand baht)

Balance Sheet Cash and cash equivalents Accounts Receivable - net Short-term loans and loans to related companies Inventories - net Other current assets Total Current Assets Total Non-Current Assets Total Assets

December 31, 2007 490 1,001 26 1,623 65

% 11.06% 22.59% 0.59% 36.63% 1.47%

December 31, 2006 389 726 20 1,696 79

% 9.48% 17.69% 0.49% 41.33% 1.92%

3,205 1,226 4,431

72.33% 27.67% 100.00%

2,910 1,194 4,104

70.91% 29.09% 100.00%

ë Assetûs Quality The Company and subsidiaries had total assets worth of 4,431 million baht for the period ended December 31, 2007, a rise of 327 million baht or 7.97% from the same period in a year earlier. Current assets increased 295 million baht mainly as a result of a significant rise of cash and cash equivalents which amounted to 101 million baht and Accounts Receivable worth 275 million baht mostly from those with payment due date of not over three months which rose 183 million baht. The company had separated the period of Account Receivables in the Note of Financial Statements No. 7.

2.2 Liquidity Ratio ë Cash Flow Composition The company and subsidiaries had the cash flows from operating activities worth of 528 million baht increased from a year earlier because of a sharp reduction of inventories due to fulfilled product delivery to customers and the deferred payment to accounts payable. The cash flows from investment activities increased from a year before because of higher investment in financial institutions deposits and renovation in manufacturing bases and distribution bases. The cash flows from financing activities was also higher than a year earlier as a result of repayment of short-term loan and special dividend payment to shareholders.

Pranda Jewelry Public Company Limited

Management Discussion and Analysis Details of the cash flow in each activity are as follow :Comparative Statement of Cash Flow for 2007 and 2006 (Unit : Million Baht)

Statements of Cash Flows Cash flow from operations Cash flow from investments Cash flow from financing Difference from currency translation Net cash Cash at the beginning of the period Cash at the end of the period

ë Liquidity The Company and subsidiaries reported a drop of liquidity ratio in 2007 to 2.84 times from 3.42 times largely because of a significant rise of the Account Payable to 642 million baht from 361 million baht. However, given the Companyûs cash conversion cycle, it would be found that the cash management efficiency of the Company was higher as indicated by the cash conversion cycle which decreased to 108 days from 164 days in a year earlier. ë Ability to Pay Short-Term Debts The Company and subsidiaries had short-term liabilities worth of 1,127 million baht and a short-term asset worth 3,205 million baht. This could be implied that the Company has sufficient liquidity to completely settle all short-term liabilities. 2.3 Capital Expenditure ë Year-to-date Capital Expenditure. The company had made the investment of 87.75 million baht which would be divided into three categories as follows :1. 49.51 million baht was invested in the production facilities of Pranda Jewelry, Crystaline, Pranda Vietnam and Pranda Guangzhou in order to increase their production capacities and replace the existing machines. 2. 16.46 million baht was invested in the distribution bases such as Prima Gold International, Pranda UK Ltd, H.Gringoire s.a.r.l., Pranda & Kroll, and Pranda Jewelry Pvt.Ltd. in order to serve more customers and distribute merchandise to cover more markets. 3. 4.64 million baht was invested in developing by Pranda Lodging Co., Ltd. in Nakhon Ratchasima factory as to accommodate increased workers.

Annual Report 2007

December 31, 2007 528 (108) (334) (4) 81 389 470

December 31, 2006 191 (57) (107) (11) 15 374 389

4. 17.14 million baht was invested to purchase a plot of land and building for Pranda North America, Inc in order to accommodate its future expansion. ë Investment Plans The Companyûs joint venture firm in India has successfully registered on August 8, 2007 under Pranda Jewelry Private Limited with registered capital of US$$ 22,000 or about one million rupees. The Company holds 51% in the joint venture, accounting for US$$ 11,220 or approximately 0.4 million baht. The Company had already paid share capital on December 7, 2007. And following the meeting of the Board of Directors on March 26, 2007, the Board of Directors had resolved to increase the capital in three subsidiaries. The Company would like therefore to inform results of the capital increase as at December 31, 2007 as follows :1. Locally - based subsidiary firm. Primagold International Company Limited was approved to raise its capital in the amount of 100 million baht. The Company still retains the 100% stake of Primagold International Company Limited. Proceeds from the capital increase was slated to be used as the working capital to support business growth of Primagold International Company Limited. And on June 22, 2007, the Company had already transferred the new capital to the subsidiary, raising its registered capital to 200 million baht. 2. Oversea Subsidiary firm. Pranda (Guangzhou) Co., Ltd. Increased the registered capital in the amount of US$$ 1,350,000 or about 50 Million baht. The Company still retains the whole holding of Pranda (Guangzhou) Co.Ltd, with proceeds of the capital increase to be used as working capital for market

expansion of Pranda (Guangzhou) notably into the United States, England, Germany and Japan. The Companyûs Chinese subsidiary firm also plans to expand the market in China, the mainland, both through wholesaling system and distribution of its own brand, esse, the silver jewelry. Target customers are mainly among those aged between 25 - 35 years both through its own distribution channel and 40 franchised outlets throughout China. The new capital which was expected to be paid up in the fourth quarter of 2007 was yet to be paid as at December 31, 2007, as Pranda (Guangzhou) Co., Ltd. is still in the process to ask for permission from Chinese authorities. Money transfer was likely in the second quarter of 2008. 3. Increasing capital in Pranda & Kroll GmbH & Co. KG by one million euros or about 47 million baht. As a result, Pranda & Kroll GmbH & Co. KG had maintained investment budget of 1,974,500 euro or approximately 95 million baht. After the recapitalization, the Company still retains holding ratio in Pranda & Kroll GmbH & Co. KG at 51%. The new capital would be mainly used to accommodate the sales growth of Pranda & Kroll GmbH & Co. KG particularly from the chain stores, Germanyûs leading department stores and those from TV channels. On March 30, the Company has already transferred the new capital to the German partnership.

ë Liabilities The Company and subsidiaries had total liabilities of 1,551 million baht, up 253 million baht or 19.56% over 2006 in which current liabilities increased 277 million baht mainly due to a rise of trade account payables worth 281 million baht, and non-current liabilities dropped by 24 million baht because the long-term loans under which the repayment is made on the quarterly basis would fully be settled in March 2013. 3. Critical factors that may affect companyûs operation or financial status in the future. The marketûs liberalization both on the bilateral and multilateral level is expected to trigger intensifying competition in the future. In contrast, the free trade should also offer greater opportunities for the Group to expand the market which meets the Companyûs mass production concept and affordable price range from $ 5 - $ 250 a piece as well as a variety of products. However, the price swing of raw materials may defer customersû buying decisions, while exchange rate fluctuation may affect the Companyûs bottom line. Future Projects : None

Remuneration of the Auditor 2.4 Sources of Fund ë Capital Structure Boosted by consistently profitable operations, the Company and its subsidiaries reported its retained earnings increased from 1,412 million baht to 1,454 million baht or up by 2.94%. Moreover, non-current liabilities of the Company and subsidiaries were only 1,551 million baht, resulting in the debt-to-equity (D/E) ratio standing at 0.54 times for the period. That could be concluded that the financial structure of the Company and subsidiaries were established and strong. ë Shareholdersû Equity The Company has raised its registered capital and issued new warrants since 2002 which were due to be exercised on May 2, 2007. During the first six months of the year ended September 30, 2007, warrants (PRANDA-W) in amount of 22,950,450 were exercised as at May 2, 2007, with 4,236,410 warrants outstanding. Such warrants were deprived of status as listed securities in the Stock Exchange of Thailand since May 3, 2007. The Company had registered and paid-up capital worth of 395,748,590 baht as of December 31, 2007 and retained earnings of 1,454 million baht.

Auditing fee The Company and subsidiaries paid auditing fee to - The Companyûs auditors in the past fiscal year totaling 2,100,000 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 800,000 Baht. Non-audit fee The Company and subsidiaries had no fee of other services to - The Companyûs 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.

Pranda Jewelry Public Company Limited

The Audit Committeeûs Report The Audit Committee of Pranda Jewelry Public Company Limited is composed of three members, 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 Companyûs regulations. The Audit Committee is held responsible for ensuring the Companyûs good corporate governance, strengthening the Companyûs administration efficiency, and increasing values to the Company, which will eventually bring the Company to achieve its business goal and target. In 2007, 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 Companyûs financial statement and related items of the Company and subsidiaries. The committee would listen to all useful suggestions to ensure accuracy, completeness and creditability of the financial reports as well as better efficiency of the organizationûs internal controls. In such meetings, there were no executives of the Company attending. Results of each meeting would be digested and summarized before being submitted to the Board of Directors for acknowledgement and improvement. Last yearûs collective meetings could be summed up as follows :1. The Companyûs 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 Companyûs internal control systems. The Audit Committee has considered and reviewed the annual internal auditing plan focusing mainly on the Companyûs 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 of the enterprises, and has then thoroughly considered and reviewed the potential risks which could affect the enterpriseûs business and goals. 4. Compliance with the regulations and laws of the Stock Exchange of Thailand. The Company has given full importance to ensure the good corporate governance and the compliance with the laws which are relevant to the Companyûs business such as the code of revenue department and the customs formalities. 5. The appointment of the Companyûs auditors and the auditorsû remuneration for 2008. The Audit Committee would present the names of auditors for further approval at the shareholdersû ordinary meeting. The Audit Committee, having considered the above information, has 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 2007

Report of the Board of Directorûs Responsibilities to Financial Report The Board of Directors of Pranda Jewelry Public Company Limited is held responsible for ensuring accuracy and completeness of consolidated and separate financial statements of Pranda Jewelry Public Company Limited as well as relevant information in the annual report. Such financial statements would be commissioned in compliance with generally recognized accounting standards, and adequate disclosure of important information in the clarifications of the financial statements for the greatest benefit to shareholders, investors, stakeholders and all related parties. The Companyûs Board of Directors has arranged appropriate effective internal systems for good control and proper risk measurement as well as good monitoring and appraisal processes to ensure confidence that the accounting information is accurate, complete, transparent and adequate to preserve the Companyûs assets and prevent any potential irregularities or actions which may run against international principles. The Board of Directors has appointed the Audit Committee which is composed of Directors who are not the Companyûs executives to take responsibility for verifying the Companyûs accounting policy, the quality of the financial report, and re-examining the internal control and internal audit systems, risk management, compliance with the laws and regulations of the Stock Exchange of Thailand as well as reviewing the disclosure of interconnected information. The Audit Committee has already provided comments in the annual report under Report of the Audit Committee. Consolidated and separated financial statements of the Company have been audited by Ernst & Young Office Limited. The Companyûs Board of Directors have supported and provided information and relevant documents for the auditors to verify and express opinions as prescribed by the auditing standards. The auditors have provided comments in the annual report under Financial Statement and Auditorûs Report. The Board of Directors found the overall internal control system of the Company satisfactory and sufficient to create sensible confidence that the consolidated and separated financial statements of the Company as of December, 31, 2007 have enough creditability and fully comply with the generally recognized accounting practices.

(Mr. Prida Tiasuwan) Chairman

(Mrs. Prapee Sorakraikitikul) Managing Director

Pranda Jewelry Public Company Limited

Financial Report of Statements Independent Auditor To the Shareholders of Pranda Jewelry Public Company Limited I have audited the accompanying consolidated financial statements balance sheets of Pranda Jewelry Public Company Limited and its subsidiaries as at 31 December 2007 and 2006, the related consolidated statements of income, changes in shareholders没 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没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 for the year ended 31 December 2007, of a local subsidiary company, Pranda Lodging Co., Ltd., and 9 overseas subsidiaries, comprising Pranda Vietnam Co., Ltd., Pranda UK Ltd., H.GRINGOIRE s.a.r.l., Pranda (Guangzhou) Co., Ltd., Pranda & Kroll GmbH & Co. KG, which incorporated the financial statements of another subsidiary, KSV Brand GmbH 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 2007 of Baht 1,532 million, and total revenues and net loss for the year then ended of Baht 2,216 million and Baht 25 million, respectively (2006 : a local subsidiary company and 7 overseas subsidiaries with total assets of Baht 1,329 million, total revenues of Baht 2,282 million and net loss of Baht 14 million). These subsidiaries financial statements were audited by other auditors, as discussed in note 2.2.3 to the financial statements. Their reports have already been furnished to me. My opinion on the consolidated financial statements, insofar as it relates to the amounts included for those subsidiaries, is based solely on the reports of such 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 subsidiaries and of Pranda Jewelry Public Company Limited as at 31 December 2007 and 2006 and the results of their operations and cash flows for the years then ended in accordance with generally accepted accounting principles. Without qualifying my opinion on the above financial statements, I draw attention to the matter as discussed in Note 4 to the financial statements whereby, effective 1 January 2007, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements from the equity method to the cost method. The Company has thus restated the separate financial statements as at 31 December 2006 and for the year then ended to reflect this accounting change.

Ernst & Young Office Limited Bangkok : 28 February 2008

Annual Report 2007

(Siraporn Ouaanunkun) Certified Public Accountant (Thailand) No. 3844

Financial Statements PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS AS AT 31 DECEMBER 2007 AND 2006 Consolidated financial statements

Note ASSETS CURRENT ASSETS Cash and cash equivalents Short-term investments - deposits at financial institute 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 - net Inventories - net Other current assets Value added tax refundable Others TOTAL CURRENT ASSETS NON-CURRENT ASSETS Restricted bank deposits Investments in subsidiaries - net Investment in associates - net Other long-term investments Advances for investment Loans and amounts due from related parties - net 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

2007

2006

(Unit : Baht)

Separate financial statements

2007

2006 (Restated)

470,345,103

389,164,244

292,888,297

215,624,658

20,000,000

6,810,800 1,058,808,503 (64,820,887) 1,000,798,416

14,681,238 873,444,642 882,777,954 766,061,177 320,052,456 285,532,694 (54,689,029) (68,306,684) (44,726,656) 726,053,386 1,125,190,414 1,123,583,992

6 8

25,418,056 20,327,584 1,622,799,252 1,695,555,589

131,372,705 786,144,834

100,618,456 789,467,157

8,552,785 11,521,525 1,629,483 2,504,684 56,541,673 67,195,400 21,518,505 15,345,183 3,204,455,285 2,909,817,728 2,378,744,238 2,247,144,130 9 10 11 12 6 6 13 14 15 16

10,837,957 58,269,268 15,135,396 573,435,189 421,729,189 38,016,202 62,347,793 46,603,642

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

611,045,279 14,766,901 22,490,033 46,315,530 440,013,407 421,729,189 14,895,569

7,191,100 394,992,925 14,702,377 24,031,203 97,565,427 449,189,705 421,729,189 154,602 11,110,711

1,226,374,636 1,193,892,751 1,571,255,908 1,420,667,239 4,430,829,921 4,103,710,479 3,950,000,146 3,667,811,369

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

Pranda Jewelry Public Company Limited

Financial Statements PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2007 AND 2006 (Unit : Baht)

Consolidated financial statements Separate financial statements

LIABILITIES AND SHAREHOLDER没S 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 Long-term loans - net of current portion Long-term loan from related party Other non-current liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES

Note

2007

2006

2007

2006 (Restated)

134,215,469

179,133,971

46,480,000

72,000,000

22,293,675 619,837,494 642,131,169 157,761,721 36,130

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

9,384,173 476,780,724 486,164,897 156,420,000 467,337

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

34,330,585 2,648,968 92,920,429 12,348,605 50,972,280 1,127,365,356

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

15,337,440 2,648,968 27,188,687 12,021,365 4,651,720 751,380,414

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

420,440,713 2,403,568 1,198,642 424,042,923

442,216,641 5,288,065 447,504,706

401,345,000 401,345,000

429,770,000 429,770,000

1,551,408,279 1,297,636,366

1,152,725,414

967,173,826

18 6

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

Annual Report 2007

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2007 AND 2006 (Unit : Baht)

Consolidated financial statements Separate financial statements

Note SHAREHOLDERSû EQUITY Share capital Registered 400 million ordinary shares of Baht 1 each Issued and fully paid-up 395,748,590 ordinary shares of Baht 1 each (2006 : 358,413,740 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 COMPANYûS SHAREHOLDERS MINORITY INTEREST - equity attributable to minority shareholders of subsidiaries TOTAL SHAREHOLDERSû EQUITY TOTAL LIABILITIES AND SHAREHOLDERSû EQUITY

2007

2006

2007

2006 (Restated)

400,000,000

395,748,590

358,413,740

395,748,590

358,413,740

759,294,223 209,302,882 10,464,096

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

759,294,223 209,302,882 -

692,091,493 209,302,882 40,276,320 -

20 13 21

40,000,000 40,000,000 40,000,000 40,000,000 1,413,934,552 1,372,444,524 1,392,929,037 1,360,553,108 2,828,744,343 2,726,111,569 2,797,274,732 2,700,637,543 50,677,299 79,962,544 2,879,421,642 2,806,074,113 2,797,274,732 2,700,637,543 4,430,829,921 4,103,710,479 3,950,000,146

3,667,811,369

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

○

DIRECTORS ○

○

Pranda Jewelry Public Company Limited

Financial Statements PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit : Baht)

Consolidated financial statements Separate financial statements

Note REVENUES Sales Other income Interest income Others Reversal allowance for impairment loss on land held for development - net Share of income from investments in associates TOTAL REVENUES EXPENSES Cost of sales Selling and administrative expenses Loss on exchange 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)

14 11

2007

2006 (Restated) 4,359,239,650 4,075,521,505 3,185,939,769 3,134,224,526

Annual Report 2007

2007

12,963,963 70,174,279

4,222,090 46,079,082

15,943,490 88,353,521

19,061,061 55,993,998

2,947,822

67,400,000 4,441,585

67,400,000 -

4,445,325,714

4,197,664,262

3,290,236,780

3,276,679,585

3,052,455,542 2,717,831,526 2,451,981,489 2,360,587,106 867,190,952 847,679,699 321,324,413 296,920,272 42,141,749 110,377,507 49,863,857 122,604,503 3,961,788,243 3,675,888,732 2,823,169,759 2,780,111,881

483,537,471 (51,160,028) (56,737,545) 375,639,898 29,969,929

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

467,067,021 (38,823,170) (31,748,123) 396,495,728 -

496,567,704 (43,298,162) (29,485,798) 423,783,744 -

405,609,827

432,267,839

396,495,728

423,783,744

1.04

1.29

1.01

1.27

390,887,124

334,125,598

390,887,124

334,125,598

1.03

1.16

1.01

1.14

394,505,455

372,296,363

394,505,455

372,296,363

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

2006

Pranda Jewelry Public Company Limited

759,294,223

395,748,590

209,302,882

358,413,740 692,091,493

67,202,730

37,334,850

40,276,320

209,302,882

- (40,276,320)

6,306,140 -

202,996,742

69,288,678

38,493,710

319,920,030 622,802,815

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

Balance - as at 31 December 2005 Increase in share capital Cash receipts from shares subscription (Note 21) Unrealised items in income statements Increase in revaluation surplus on land (Note 13) Translation adjustment Net income for the year Dividend paid (Note 29) Minority interest - equity attributable to minority shareholders of subsidiaries Balance - as at 31 December 2006 Increase in share capital (Note 20) Unrealised item in income statements Transtation adjustment Net income for the year Dividend paid (Note 29) Minority interest - equity attributable to minority shareholders of subsidiaries Balance - as at 31 December 2007

Cash receipts Issued and paid-up Share Revaluation from shares share capital premium surplus on land subscription

10,464,096

(3,118,514) -

13,582,610

(17,393,759) -

30,976,369

Translation adjustment

(Unit : Baht)

40,000,000 1,413,934,552

- 405,609,827 - (364,119,799)

40,000,000 1,372,444,524

- 432,267,839 - (212,648,755)

50,677,299

(29,285,245)

79,962,544

(15,658,353)

2,879,421,642

(29,285,245)

(3,118,514) 405,609,827 (364,119,799)

64,261,260

2,806,074,113

(15,658,353)

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

40,276,320

107,782,388

Minority interest equity attributable Retained earnings to minority Total Appropriated Unappropriated shareholders of subsidiaries 40,000,000 1,152,825,440 95,620,897 2,465,142,293

CONSOLIDATED FINANCIAL STATEMENTS

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDER没S EQUITY FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

Annual Report 2007 209,302,882 209,302,882

358,413,740 692,091,493 358,413,740 692,091,493

395,748,590 759,294,223

67,202,730 -

40,276,320

209,302,882

- (40,276,320) -

209,302,882

358,413,740 692,091,493

37,334,850 -

6,306,140 -

69,288,678 -

202,996,742

319,920,030 622,802,815

38,493,710 -

202,996,742

Revaluation Cash receipts surplus on land from shares subscription

319,920,030 622,802,815

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

Balance - as at 31 December 2005 - as previously reported Cumulative effect of change in accounting policy for investments in subsidiaries and associates (Note 4) Balance - as at 31 December 2005 - as restated Increased in share capital Cash receipts from shares subscription (Note 21) Unrealised item in income statement Increase in revaluation surplus on land (Note 13) Net income for the year (restated) Dividend paid (Note 29) Balance - as at 31 December 2006 - as restated Balance - as at 31 December 2006 - as previously reported Cumulative effect of change in accounting policy for investments in subsidiaries and associates (Note 4) Balance - as at 31 December 2006 - as restated Increased in share capital (Note 20) Net income for the year Dividend paid (Note 29) Balance - as at 31 December 2007

Issued and paid-up Share share capital premium

(Unit : Baht)

(13,582,610)

13,582,610

(30,976,369)

30,976,369

(3,407,321)

(34,383,690) -

6,306,140 423,783,744 (212,648,755)

107,782,388 40,276,320

(11,891,416)

(25,474,026) 64,261,260 396,495,728 (364,119,799) 40,000,000 1,392,929,037 2,797,274,732

- 396,495,728 - (364,119,799)

40,000,000 1,360,553,108 2,700,637,543

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

40,000,000 1,360,553,108 2,700,637,543

- 423,783,744 - (212,648,755)

40,000,000 1,149,418,119 2,335,137,706

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

Translation Retained earnings Total adjustment Appropriated Unappropriated (Restated) (Restated) (Restated)

SEPARATE FINANCIAL STATEMENTS

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDER没S EQUITY (Continued) FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

Financial Statements

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES CASH FLOWS STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 (Unit : Baht)

Consolidated financial statements Separate financial statements

2007 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 - net Amortised discounted value of government bond Allowance for doubtful accounts (reversal) Allowance for stock obsolescences (reversal) Share of income from investments in associates Gain on disposal of equipment Unrealised 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

2006

2007

2006 (Restated)

405,609,827

432,267,839

396,495,728

423,783,744

68,383,036 4,034,001 8,545,069 1,259,895

61,807,006 1,400,025 8,596,271 681,678

38,121,686 260,457 1,259,895

35,618,591 136,705 681,678

(64,524) 10,131,858 (1,654,793) (2,947,836) (1,019,818) 923,211 (29,969,929)

(67,400,000) (64,525) (6,217,584) 17,823,933 (4,441,585) (319,381) 48,367,883 (15,410,939)

(64,524) 29,580,028 (1,218,510) 340,060 -

(67,400,000) (64,525) 1,129,162 18,360,000 (230,620) 62,500,628 -

463,229,997

477,090,621

464,774,820

474,515,363

(284,332,962) (155,792,224) (4,178,404) 13,325,179 74,992,157 (245,120,587) 13,622,467 (24,263,994) (24,065,016) 854,197

(93,303,779) (333,870,261) 8,329,944 (71,018,464) 3,322,323 (92,560,950) (5,298,121) (2,167,494) (3,955,973) (1,300,090)

280,993,690 (21,660,378) (1,780,589) 12,682,567 (3,193,337) (8,358,886) 34,033,782 (4,089,423)

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

223,732,224 132,288 (728,401) (4,075,650) (3,065,284) (6,871,077) 1,369,260 -

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

527,895,665

191,120,644

584,362,574

118,298,000

The accompanying notes are an integral part of the financial statements. Pranda Jewelry Public Company Limited

Financial Statements PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES CASH FLOWS STATEMENTS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

(Unit : Baht)

Consolidated financial statements Separate financial statements

2007 Cash flows from investing activities Increase in short-term investments - deposits at financial institute Decrease (increase) in restricted financial institutions deposits or has maturity period of more than 3 months Decrease (increase) in loans to related parties Decrease in advances for investment Payment for investments in subsidiaries Acquisition of property, plant and equipment Proceeds from sales of 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 Cash receipts from long-term loans Repayment of long-term loans Cash receipts from (payment of capital to) minority interest of subsidiaries 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 Supplemental cash flows information : Cash paid during the year for Interest Corporate income tax Non cash transactions : The conversion of the Company没s related trade accounts receivable to become investment in subsidiary The conversion of the Company没s amount due from related party to become investment in subsidiary The conversion of the Company没s loan to related party to become investment is subsidiary Increase in revaluation surplus on land Annual Report 2007

2007

2006 (Restated)

(20,000,000)

(2,973,560) (87,752,171) 2,557,438 (108,168,293)

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

7,191,100 7,196,663 (147,181,646) (31,176,906) 2,255,393 (181,715,396)

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

(44,918,502) 105,174,838 157,887,375 28,839,174 (148,219,286) (176,469,558)

(25,520,000) 72,000,000 146,745,000 (146,750,000) (128,000,000)

684,684 (247,414) 64,261,260 107,782,388 - 40,276,320 (364,119,799) (212,648,755) (334,424,268) (107,293,007) (4,122,245) (11,326,146) 81,180,859 15,088,141 389,164,244 374,076,103 470,345,103 389,164,244

64,261,260 107,782,388 40,276,320 (364,119,799) (212,648,755) (325,383,539) (120,590,047) 77,263,639 (39,152,931) 215,624,658 254,777,589 292,888,297 215,624,658

46,610,088 57,991,282

49,786,301 36,497,937

39,551,571 34,810,718

43,058,425 50,979,521

68,870,708

5,622,282

5,028,731

6,306,140

98,119,080 6,306,140

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

2006

PRANDA JEWELRY PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 1. CORPORATE INFORMATION Pranda Jewelry Public Company Limited (çThe Companyé) 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. 2. BASIS OF PREPARATION 2.1 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. 2.2 Basis of consolidation 2.2.1 The consolidated financial statements include the financial statements of Pranda Jewelry Public Company Limited and the following subsidiary companies : Country of Percentage Nature of business incorporation of shareholding

2007

Companyûs name Held by the Company Primagold International Co., Ltd. Crystaline Co., Ltd. Pranda Lodging Co., Ltd. Pranda North America, Inc. H.GRINGOIRE s.a.r.l. Pranda UK Ltd.

2006

Assets as a percentage to the consolidated total assets as at 31 December

Revenues as a percentage to the consolidated total revenues for the year ended 31 December

2007

2006

Percent Percent Percent Percent

Distribution of jewelry Manufacture and distribution of jewelry Dormitory rental Distribution of jewelry Distribution of jewelry 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 Manufacture and distribution of jewelry Pranda Jewelry Private Limited Distribution of jewelry

2006

Percent Percent

Thailand

100

8.78

9.36

8.66

9.86

Thailand Thailand U.S.A. France United Kingdom Singapore

96 83 100 100

2.87 0.77 11.19 5.08

3.12 0.78 10.21 4.75

4.57 0.31 31.34 3.87

5.31 0.31 35.83 3.41

100 100

8.08 1.33

8.21 1.41

7.11 0.04

8.74 0.10

Vietnam

100

1.65

1.53

0.27

0.21

China

100

1.04

0.83

1.06

0.62

Germany India

51 51

51 -

6.25 0.52

6.07 -

5.60 0.29

5.24 -

Pranda Jewelry Public Company Limited

Financial Statements Companyûs name

Nature of business

Held by subsidiary companies Crystaline North America, Inc. (Held by Pranda North America, Inc.) Distribution of jewelry Pranda Acceptance Sdn. Bhd. Distribution of jewelry (Held by Pranda Singapore Pte. Limited) (Ceased its operation in 2000) KSV Brand GmbH (Held by Pranda & Kroll GmbH & Co. KG) Distribution of jewelry

Country of incorporation

Percentage of indirect shareholding 2007 Percent

2006 Percent

U.S.A.

100

Malaysia

100

Germany

100

2.2.2 During 2007, the Company and the subsidiary company invested in ordinary shares of the following subsidiaries : 2.2.2.1 On 21 February 2007, a meeting of the Companyûs Board of Directors No.5/2007 passed a resolution to incorporate a new company in India, to be named çPranda Jewelry India Pvt. Ltd.é with the registered share capital of Indian Rupee 1 million or approximately USD 22,000, the Companyûs shareholding at 51 percent or equivalent to USD 11,220 or approximately Baht 0.4 million. Subsequently, this subsidiary company was incorporated on 8 August 2007 and changed its name to be çPranda Jewelry Private Limitedé. In the fourth-quarter of the current year, the Company paid for its shares in this subsidiary company. 2.2.2.2 On 26 March 2007, a meeting of the Companyûs Board of Directors No.9/2007 passed a resolution to increase investments in subsidiaries as follows : a) In March 2007, the Company increased investments in partnership, Pranda & Kroll GmbH & Co. KG, located in Federal Republic of Germany, for additional amount of Euro 1 million, or approximately Baht 47 million. As a result, the Companyûs total investment in this partnership is Euro 1,974,500, or approximately Baht 95 million, and its percentage shareholding remains at 51 percent. b) In June 2007, the Company purchased all newly issued ordinary shares of a local subsidiary company, Primagold International Co., Ltd., of 10 million ordinary shares, at a par value of Baht 10 each, totaling Baht 100 million, causing total investment in this subsidiary company is Baht 200 million. The Companyûs shareholding in that company remains at percentage of 100. 2.2.2.3 On 26 July 2007, a meeting of the Companyûs Board of Directors No.16/2007 passed a resolution to approve its subsidiary company, Pranda & Kroll GmbH & Co. KG, to acquire all business of KSV Brand GmbH, incorporated in Federal Republic of Germany, of Euro 25,000 or equivalent to Baht 1.2 million with the shareholding at 100 percent. 2.2.2.4 On 20 September 2007, a meeting of the Companyûs Board of Directors No.19/2007 passed a resolution to increase investments in partnership, Pranda & Kroll GmbH & Co. KG, located in Federal Republic of Germany, for additional amount of Euro 1.4 million by the conversion of its trade accounts receivable of USD 2 million, or approximately Baht 69 million. As a result, the Companyûs total investment in this partnership is Euro 3,419,900, or approximately Baht 164 million, and its percentage shareholding remains at 51 percent.

Annual Report 2007

2.2.3 The financial statements of the subsidiary companies included in the consolidated financial statements are as follows : Assets included in the consolidated total assets 31 December 2007 31 December 2006

For the year ended 31 December Revenue included in the Net income (loss) included in consolidated total revenues the consolidated net income 2007

2006

2007

2006

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 Companyûs auditor Primagold International Co., Ltd. 389 8.78 384 9.36 385 8.66 414 9.86 7 1.72 18 4.17 Crystaline Co., Ltd. 127 2.87 128 3.12 203 4.57 223 5.31 2 0.49 0.5 0.12 516 11.65 512 12.48 588 13.23 637 15.17 9 2.21 18.5 4.29 Subsidiary companies which the financial statements were audited by their auditors Primagold International Co., Ltd. 34 0.77 32 0.78 14 0.31 13 0.31 1 0.23 Pranda Vietnam Co., Ltd. 73 1.65 63 1.53 12 0.27 9 0.21 13 3.20 15 3.47 Pranda UK Ltd. 358 8.08 337 8.21 316 7.11 367 8.74 33 7.64 H.GRINGOIRE s.a.r.l. 225 5.08 195 4.75 172 3.87 143 3.41 (17) (4.19) (32) (7.41) Pranda North America, Inc. 496 11.19 419 10.21 1,393 31.34 1,504 35.83 44 10.84 10 2.31 (included the financial statements of Crystaline North America, Inc.) Pranda (Guangzhou) Co., Ltd. 46 1.04 34 0.83 47 1.06 26 0.62 (26) (6.40) (25) (5.79) Pranda & Kroll GmbH & Co. KG 277 6.25 249 6.07 249 5.60 220 5.24 (38) (9.36) (16) (3.70) (included the financial statements of KSV Brand GmbH) Pranda Jewelry Private Limited 23 0.52 - 13 0.29 (1) (0.25) 1,532 34.58 1,329 32.38 2,216 49.85 2,282 54.36 (25) (6.16) (14) (3.25) Subsidiary company which the financial statements was prepared by the management of the subsidiary and not audited by its auditor Pranda Singapore Pte. Limited 59 1.33 58 1.41 2 0.04 4 0.10 2 0.49 4 0.93 (included the financial statements of Pranda Acceptance Sdn. Bhd.) 59 1.33 58 1.41 2 0.04 4 0.10 2 0.49 4 0.93 2.2.4 The financial statements of overseas subsidiary companies are translated into Thai Baht at the closing average exchange rate for assets and liabilities, and at monthly average exchange rates applying during the year as to revenues and expenses. The resultant differences have been shown under the caption of çTranslation adjustmenté in shareholdersû equity. 2.2.5 Material balances, significant intercompany transactions, and intercompany profit on inventories outstanding as at the balance sheet date between the Company and its subsidiary companies have been eliminated from the consolidated financial statements. 2.2.6 Investments in the subsidiary companies as recorded in the Companyûs books of account are eliminated against the equity of the subsidiary companies. 2.3 The separate financial statements, which present investments in subsidiaries and associates presented under the cost method, have been prepared solely for the benefit of the public. Pranda Jewelry Public Company Limited

Financial Statements 3. ADOPTION OF NEW ACCOUNTING STANDARDS The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, 38/2550 and 62/2550 regarding Accounting Standards. The notifications mandate the use of the following new Accounting Standards. a) Accounting Standards which are effective for the current year TAS 44 (revised 2007) Consolidated Financial Statements and Separate Financial Statements TAS 45 (revised 2007) Investments in Associates TAS 46 (revised 2007) Interests in Joint Ventures These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2007. During the first quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements in order to comply with the revised Thai Accounting Standards No. 44 and 45 as discussed in Note 4 However, the revised Thai Accounting Standards No.46 is not relevant to the Companyûs business. b) Accounting Standards which are not effective for the current year TAS 25 (revised 2007) Cash Flow Statements TAS 29 (revised 2007) Leases TAS 31 (revised 2007) Inventories TAS 33 (revised 2007) Borrowing Costs TAS 35 (revised 2007) Presentation of Financial Statements TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors TAS 41 (revised 2007) Interim Financial Reporting TAS 43 (revised 2007) Business Combinations TAS 49 (revised 2007) Construction Contracts TAS 51 Intangible Assets These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The management has assessed the effect of these revised accounting standards and believes that they will not have any significant impact on the financial statements for the year in which they are initially applied, except for the following accounting standard. TAS 43 (revised 2007) çBusiness Combinationsé TAS 43 (revised 2007) does not require the Company to amortise goodwill acquired in a business combination. Such goodwill is instead to be tested for impairment, and measured at cost less accumulated impairment losses. This accounting standard applies to goodwill arising from business combinations for which the agreement date is on or after 1 January 2008. Previously recognised goodwill can be accounted for prospectively, with the Company discontinuing the amortisation of the goodwill and instead testing for impairment, as from the beginning of the first fiscal year starting on or after 1 January 2008. 4. CHANGE IN ACCOUNTING POLICY FOR RECORDING INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES IN THE SEPARATE FINANCIAL STATEMENTS During the first quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries and associates in the separate financial statements from the equity method to the cost method, in compliance with Accounting Standard No. 44 (Revised 2007) regarding çConsolidated Financial Statements and Separate Financial Statementsé, under which investments in subsidiaries and associates are to be presented in the separate financial statements under the cost method. In this regard, the Company has restated the previous periodûs separate financial statements as though the investments in subsidiaries and associates had originally been recorded using the cost method. The change has the effect of decreasing net income in the separate income statements for the year ended 31 December 2007 and 2006 by Baht 9.1 million (Baht 0.02 per share) and Baht 8.5 million (Baht 0.02 per share), respectively. The cumulative effect of the change in accounting policy has been presented under the heading of çCumulative effect of the change in accounting policy for investments in subsidiaries and associatesé in the separate statements of changes in shareholdersû equity. Such change in accounting policy affects only the accounts related to investments in subsidiaries and associates in the Companyûs separate financial statements, with no effect to the consolidated financial statements.

Annual Report 2007

5. SIGNIFICANT ACCOUNTING POLICIES 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 an 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 on an accrual basis based on the effective rate method. 5.2 Cash and cash equivalents Cash and cash equivalents consist of cash on hand, cash at banks, 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 and are charged to production costs whenever consumed. 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) Investment in associates are accounted for in the consolidated financial statements using the equity method. d) Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost 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 appraiser to its fair value. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the balance sheet date. Differences arising from the revaluation are dealt with in the financial statements as follows : ë 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 çRevaluation surplus on landé. 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. ë 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 çRevaluation surplus on landé 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.

Pranda Jewelry Public Company Limited

Financial Statements 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

20 years 14, 20 years period of lease (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. 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 Goodwil Goodwill of an overseas subsidiary company is presented as an asset in the consolidated financial statements and is amortised to expenses in the income statement over 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没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 rates ruling on the balance sheet date. Gains and losses on exchange 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没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没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没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 Salaries, wages, bonus and contributions to the social security fund and provident fund are recognised as expenses when incurred.

Annual Report 2007

5.13 Income tax The Company and its subsidiaries (in Thailand) calculate income tax in the accounts based on the taxable profits determined in accordance with tax legislation. Overseas subsidiaries calculate income tax in accordance with tax rates mandated by the tax laws 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. 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 : (Unit : Million Baht)

Consolidated financial statements 2007 2006 Transactions with subsidiaries (eliminated from the consolidated financial statements) Sales Purchases of goods and raw materials Interest income Interest income on overdue payment Services income Management income Service expenses Transactions with associated companies Sales Purchases of goods and raw materials Service income Service expenses Transactions with related companies Sales Interest income

Separate financial statements 2007 2006

1,597

1,935

218 4 4 37 11 7

167 8 7 37 14 10

423 1 2

405 1 -

344 1 2

364 1 -

Transfer 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 Cost plus margin Normal business price closed as charged to other customers Per loan agreement

Pranda Jewelry Public Company Limited

Financial Statements The balances of the accounts as at 31 December 2007 and 2006 between the Company and those related companies are as follows : (Unit : Million Baht)

Consolidated financial statements 2007 2006 Trade accounts receivable - related parties Subsidiaries 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 Pranda Jewelry Private Limited Total trade accounts receivable - subsidiaries Associated company P.T. Pranda SCL Indonesia Related companies PT. Gold Martindo KSV Brand GmbH Gunjan Jewels Pvt Ltd. Total trade accounts receivable - related companies Total trade accounts receivable - related parties

Annual Report 2007

Separate financial statements 2007 2006

58.0 11.0 283.4 161.5 162.0 107.0 9.1 8.6 48.0 18.6 867.2

141.0 6.9 271.2 103.2 183.1 101.8 8.9 4.4 54.7 875.2

2.8

2.3

2.8

2.3

3.7 0.3 4.0

5.3 7.1 12.4

3.1 0.3 3.4

5.3 5.3

6.8

14.7

873.4

882.8

(Unit : Million Baht)

Consolidated financial statements

Separate financial statements

2007 2006 Short-term loans and amounts due from related Loans granted Subsidiaries 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 subsidiaries Related companies PT. Gold Martindo Forward Freeland Co., Ltd. Total loans granted to related companies Amounts due from related parties Subsidiaries Crystaline North America, Inc. Pranda North America, Inc. Pranda (Guangzhou) Co., Ltd. H.GRINGOIRE s.a.r.l. Pranda & Kroll GmbH & Co. KG Pranda Jewelry Private Limited Others Total Less : Allowance for doubtful accounts Total amounts due from subsidiaries - net Associated company P.T. Pranda SCL Indonesia Related company PT. Gold Martindo Related parties Directors Total short-term loans and amounts due from related parties - net

2007

2006 (Restated)

The average balances for the year ended 31 December 2007 2006

Interest policies 2007

2006

parties

50.0 1.2 51.2

50.0 6.5 1.2 2.7 60.4

50.0 3.6 1.1 0.8 -

50.0 2.2 0.1 2.0 91.2

12.9 12.9

12.0 12.0

12.9 12.9

12.0 12.0

12.8 1.3

10.6 -

5.3 8.4 64.0 1.6 1.7 0.6 0.7 82.3 (17.0) 65.3

3.6 8.3 30.7 1.2 0.1 0.4 44.3 (17.0) 27.3

0.5

1.5

0.9

1.5

0.9

10.5

7.4

25.4

20.3

131.4

100.6

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

5.0% 6.0%

5.0% -

Pranda Jewelry Public Company Limited

Financial Statements (Unit : Million Baht)

Consolidated financial statements 2007 2006 Advances for investment Subsidiaries Pranda Vietnam Co., Ltd. Pranda (Guangzhou) Co., Ltd. Total advances for investment Loans and amounts due from related parties Loans granted Subsidiaries Pranda Singapore Pte. Limited Less : Allowance for doubtful accounts Total loans granted to subsidiaries - net Related company PT. Gold Martindo Total loans granted to related parties Amounts due from Subsidiaries Crystaline Co., Ltd. Primagold International Co., Ltd. Total amounts due from subsidaries Total loans and amounts due from related parties - net These loans are unsecured and repayable on demand.

Annual Report 2007

Separate financial statements 2007

2006

The average balances for Interest policies the year ended 31 December 2007 2006 2007 2006

16.5 6.0 22.5

17.6 6.4 24.0

6.2 (6.0) 0.2

6.5 6.5

6.3

6.5

Interest free loan

1.8 1.8

0.2

1.8 8.3

0.5

4.1

5.0%

32.4 13.7 46.1

28.4 60.9 89.3

1.8

46.3

97.6

5.0%

(Unit : Million Baht)

Consolidated financial statements 2007 2006 Trade accounts payable - related parties Subsidiaries Primagold International Co., Ltd. Crystaline Co., Ltd. Pranda North America, Inc. Pranda (Guangzhou) Co., Ltd. Pranda & Kroll GmbH & Co. KG Total trade accounts payable - subsidiaries Associated company P.T. Pranda SCL Indonesia Related company Gunjan Jewels Pvt Ltd. Total trade accounts payable - related parties Amounts due to related parties Subsidiaries Pranda UK Ltd. Pranda North America, Inc. Pranda & Kroll GmbH & Co. KG Crystaline North America, Inc. Total amounts due to subsidiaries Associated company P.T. Pranda SCL Indonesia Total amounts due to related parties Long-term loan from related party Related company Gunjan Jewels Pvt Ltd. Total long-term from related party

Separate financial statements 2007 2006

0.1 4.8 0.9 5.8

0.2 0.4 0.1 2.7 3.4

21.9

5.0

3.6

1.1

0.4

22.3

5.0

9.4

4.5

0.2 0.1 0.2 0.5

0.1 0.1 0.1 0.3

21.7

0.5

0.3

2.4

Such long-term loan is interest free and unsecured.

Pranda Jewelry Public Company Limited

Financial Statements During 2007, movements of loans to related parties were as follow : Separate financial statements During the year Balance Unrealised as at Increase Decrease loss on 1 January 2007 exchange Loans to related parties Subsidiaries Primagold International Co., Ltd. Crystaline Co., Ltd. Pranda (Guangzhou) Co., Ltd. Pranda Singapore Pte. Limited Related company PT. Gold Martindo

(Unit : Million Baht)

Balance as at 31 December 2007

50.0 6.5 2.7 7.7

(6.5) (2.7) -

(0.3)

50.0 7.4

13.8

(0.9)

12.9

Directors and management没s remuneration In 2007, the Company paid salaries, bonus and meeting allowances to their directors and management totaling Baht 26 million (2006 : Baht 28 million). Guarantee obligations with related parties The Company has outstanding guarantee obligations with its related parties, as described in Note 30.3 to the financial statements. 7. TRADE ACCOUNTS AND NOTES RECEIVABLE The outstanding balances of trade accounts and notes receivable as at 31 December 2007 and 2006 are aged, based on due date, as follows : (Unit : Thousand Baht) Consolidated financial statements Trade accounts receivable Trade accounts receivable - related parties - unrelated parties Total 2007 2006 2007 2006 2007 2006 Age of receivables Not yet due 667 10,884 519,539 465,858 520,206 476,742 Past due Up to 3 months 2,014 2,153 371,445 188,795 373,459 190,948 3 - 6 months 2,584 84 64,841 25,748 67,425 25,832 6 - 12 months 6 93 39,501 18,625 39,507 18,718 Over 12 months 1,540 1,467 63,482 67,035 65,022 68,502 Total 6,811 14,681 1,058,808 766,061 1,065,619 780,742 Less : Allowance for doubtful accounts (64,821) (54,689) (64,821) (54,689) 6,811 14,681 993,987 711,372 1,000,798 726,053 Total

Annual Report 2007

Separate financial statements Trade accounts receivable Trade accounts receivable - related parties - unrelated parties 2007 2006 2007 2006 Age of receivables 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 2007

2006

268,466

304,937

104,380

140,657

372,846

445,594

197,470 102,433 105,318 199,758 873,445 (25,094)

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

139,790 22,636 10,033 43,213 320,052 (43,213)

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

337,260 125,069 115,351 242,971 1,193,497 (68,307)

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

848,351

874,685

276,839

248,899

1,125,190

1,123,584

Two overseas subsidiaries have pledged some of their trade accounts receivable of approximately 170 million (2006 : Baht 155 million) to secure loans granted to them by financial institutions. During 2007, sales by two overseas subsidiaries, Pranda North America, Inc. and Crystaline North America, Inc., to two significant customers totaled USD 37 million, or approximately Baht 1,270 million, equivalent to 92 percent of their net sales (2006 : sales to two significant customers totaled USD 37 million, or approximately Baht 1,411 million, equivalent to 94 percent of the net sales of the subsidiaries). 8. INVENTORIES

(Unit : Baht)

Consolidated financial statements 2007

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

Separate financial statements

2006

2007

1,037,593,650 1,098,084,160 294,377,009 301,882,108 446,743,790 453,740,338 1,778,714,449 1,853,706,606 (155,915,197) (158,151,017) 1,622,799,252 1,695,555,589

2006

273,633,423 255,555,576 278,479,093 284,565,701 372,342,939 387,656,501 924,455,455 927,777,778 (138,310,621) (138,310,621) 786,144,834

789,467,157

9. RESTRICTED BANK DEPOSITS The outstanding balances as at 31 December 2007 represent the subsidiaries没 deposit with banks, pledged to secure the short-term loans from an overseas bank and the guarantee issued by local banks for electricity usage. The outstanding balances as at 31 December 2006 represent the Company and its subsidiaries没 deposit with banks, pledged to secure the guarantee issued by local banks and an overseas bank for electricity and for the lawsuit brought against an overseas customer of the Company.

Pranda Jewelry Public Company Limited

Financial Statements 10. INVESTMENTS IN SUBSIDIARIES These represent investments in ordinary shares in the following subsidiaries.

Paid-up capital 2007

Company没s name Pranda North America, Inc. Crystaline North America, Inc. (held by Pranda North America, Inc.) 2 H.GRINGOIRE s.a.r.l. 1.893 Pranda UK Ltd. 0.5 Pranda Vietnam Co., Ltd. 1.5 Pranda Singapore Pte. Limited Pranda Acceptance Sdn. Bhd. (held by Pranda Singapore Pte. Limited) 3 Primagold International Co., Ltd. 200 Crystaline Co., Ltd. 100 Pranda Lodging Co., Ltd. 50 Pranda (Guangzhou) Co., Ltd. 0.85 Pranda & Kroll GmbH & Co. KG KSV Brand GmbH (held by Pranda & Kroll GmbH & Co. KG) 5.34 Pranda Jewelry Private Limited 1 Total Less : Provision for impairment of investments Total investments in subsidiaries - net

Separate financial statements Shareholding Currency percentage

2006

2007 2006

(Unit : Thousand Baht)

Cost 2007

2006 (Restated)

Percent Percent

2 1.893 0.5 1.5

Thousand USD Million EUR Million GBP Million USD

100 100 100 100

120,283 217,235 28,973 48,180

3 100 100 50 0.85

Million SGD Million Baht Million Baht Million Baht Million USD

100 100 96 83 100

53,681 200,000 96,000 41,125 34,281

53,681 100,000 96,000 41,125 34,281

2.89 -

Million EUR Million Indian Rupee

51 51

51 -

164,341 48,725 436 1,004,535 788,483 (393,490) (393,490) 611,045

394,993

During 2007 and 2006, no dividend income was received from its investments in subsidiaries. On 26 March 2007, a meeting of the Company没s Board of Directors No.9/2007 passed a resolution to increase its investments in an overseas subsidiary company, Pranda (Guangzhou) Co., Ltd. The subsidiary company is increased its capital by USD 1,350,000, or approximately Baht 50 million. The Company没s shareholding in that company remains at percentage of 100. The Company will record investment account in this subsidiary company after it registers the increase capital.

Annual Report 2007

11. INVESTMENTS IN ASSOCIATES 11.1 Details of associates :

Company没s name KZ-Pranda Co., Ltd. - Cost - Accumulated share loss

Consolidated financial statements Shareholding Country of percentage Nature of business incorporation 2007 2006 Percent Percent Import and distribution of raw Thailand materials-precious metals 40 40

P.T. Pranda SCL Indonesia Manufacture and distribution (held by the subsidiary company) of jewelry - Cost - Accumulated share income - Translation adjustment

(Unit : Thousand Baht)

Investments value 2007 2006

3,600 (2,751) 849

3,600 (3,600) -

39,409 26,698 (8,687) 57,420

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

58,269

55,763

Indonesia 50

Total

Separate financial statements (Unit : Thousand Baht) Shareholding Provision for Carrying amounts percentage Cost impairment of based on cost Nature of business Country of incorporation 2007

Company没s name KZ-Pranda Co., Ltd.

2006

investments method - net 2007 2006 2007 2006 2007 2006

Percent Percent Import and distribution Thailand 40 40 3,600 3,600 (3,600) (3,600) of raw materialsprecious metals

(Unit : Thousand Baht)

Company没s name P.T. Pranda SCL Indonesia KZ-Pranda Co., Ltd. Total

Consolidated financial statements Share of income from investments in associates during the year ended 31 December 2007 2006 2,099 4,442 849 2,948 4,442

During 2007 and 2006, the Company and its subsidiaries received no dividend income from its investments in associated companies.

Pranda Jewelry Public Company Limited

Financial Statements The share of income from investment in an associated company incorporated in overseas as included in the consolidated income statements has been calculated from the financial statements prepared by that Company没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. 11.2 Summarised financial information of associates : (Unit : Million Baht)

Company没s name KZ-Pranda Co., Ltd. P.T. Pranda SCL Indonesia

Paid-up capital Total assets Total liabilities Total Net income as at Currency as at as at revenues for the 31 December 31 December 31 December for the year ended year ended 31 December 31 December 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 9 9 Million Baht 101 41 99 44 2,193 1,395 6 2 4,000 4,000 Million 235 247 150 156 282 256 4 9 Rupiah Indonesia

12. OTHER LONG - TERM INVESTMENTS

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

(Unit : Baht)

Consolidated financial statements 2007 2006 14,741,901 14,677,377 393,495 379,526

Separate financial statements 2007 2006 14,741,901 14,677,377 25,000 25,000

15,135,396

14,766,901

15,056,903

14,702,377

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

Annual Report 2007

Pranda Jewelry Public Company Limited

Land improvement Building

Leasehold improvement Machinery Furniture, fixtures and equipment

Consolidated financial statements Cost basis

Cost / Revalued amount : As at 31 December 2006 268,154,799 7,371,759 360,262,870 20,767,702 126,529,505 398,506,299 Additions 3,106,840 - 15,474,149 - 8,669,346 30,193,540 Disposals - (3,011,025) (21,733,349) Transferred in/(out) - 26,221,065 - (666,196) 3,628,827 Translation adjustment - (1,599,218) (325,952) (759,689) (1,047,344) As at 31 December 2007 271,261,639 7,371,759 400,358,866 20,441,750 130,761,941 409,547,973 Accumulated depreciation : As at 31 December 2006 - 5,144,473 215,597,810 10,743,199 92,260,419 307,507,767 Depreciation for the year 288,031 18,814,120 2,055,028 10,989,916 31,277,898 Depreciation on disposals - (2,319,065) (17,055,282) Translation adjustment (999,269) (86,374) (676,077) (715,117) As at 31 December 2007 - 5,432,504 233,412,661 12,711,853 100,255,193 321,015,266 Allowance for impairment loss : As at 31 December 2006 10,556,793 Increase during the year 1,259,895 As at 31 December 2007 11,816,688 Net book value : 31 December 2006 268,154,799 2,227,286 144,665,060 10,024,503 34,269,086 80,441,739 31 December 2007 271,261,639 1,939,255 166,946,205 7,729,897 30,506,748 76,716,019 Depreciation for the year 2006 (Baht 27.4 million included in manufacturing cost, and the balance in selling and administrative expenses) 2007 (Baht 31.6 million included in manufacturing cost, and the balance in selling and administrative expenses)

Land

Revaluation basis

13. PROPERTY, PLANT AND EQUIPMENT

Assets under installation and under construction

Total

14,949,103 10,175,791

5,484,954 8,159,635

14,923,112 2,428,932 (3,298,978) (121,107) 13,931,959

58,998,744 65,853,925

560,216,530 573,435,189

10,556,793 1,259,895 11,816,688

646,176,780 65,853,925 (22,673,325) (2,597,944) 686,759,436

20,408,066 14,949,103 1,216,950,103 5,108,352 25,199,944 87,752,171 (3,298,982) (201,590) (28,244,946) - (29,183,696) (125,842) (587,970) (4,446,015) 22,091,594 10,175,791 1,272,011,313

Motor vehicles

(Unit : Baht)

Annual Report 2007

Land improvement Building Machinery

Furniture, fixtures and equipment Assets under installation and under construction Total

(Unit : Baht)

35,092,227 37,795,968

5,802,633 449,189,705 6,786,108 440,013,407

3,122,073 4,379,983

454,528,817 37,795,968 (8,909,585) 483,415,200 - 10,556,793 - 1,259,895 - 11,816,688

10,047,332 1,516,871 (2,060,728) 9,503,475

13,169,405 5,802,633 914,275,315 2,774,785 11,220,529 31,176,906 (2,060,732) (201,590) (10,206,926) - (10,035,464) 13,883,458 6,786,108 935,245,295

Motor vehicles

Separate financial statements Cost basis

Cost / Revalued amount : As at 31 December 2006 261,014,799 7,371,759 289,999,787 104,105,088 232,811,844 Additions 132,324 7,943,600 9,105,668 Disposals - (2,964,959) (4,979,645) Transferred in/(out) 7,072,833 28,721 2,933,910 As at 31 December 2007 261,014,799 7,371,759 297,204,944 109,112,450 239,871,777 Accumulated depreciation : As at 31 December 2006 5,144,473 177,229,536 74,983,624 187,123,852 Depreciation for the year 288,031 13,995,941 10,081,338 11,913,787 Depreciation on disposals - (2,121,888) (4,726,969) As at 31 December 2007 5,432,504 191,225,477 82,943,074 194,310,670 Allowance for impairment loss : As at 31 December 2006 10,556,793 Increase during the year 1,259,895 As at 31 December 2007 11,816,688 Net book value : 31 December 2006 261,014,799 2,227,286 112,770,251 29,121,464 35,131,199 31 December 2007 261,014,799 1,939,255 105,979,467 26,169,376 33,744,419 Depreciation for the year 2006 (Baht 21.0 million included in manufacturing cost, and the balance in selling and administrative expenses) 2007 (Baht 24.0 million included in manufacturing cost, and the balance in selling and administrative expenses)

Land

Revaluation basis

Financial Statements

In December 2001, the Company arranged for an independent professional valuer to appraise the value of land. The result 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 çRevaluation surplus on landé in the balance sheet. Subsequently in 2006, the Company arranged for an independent professional valuer to reappraise the value of land. The basis of the revaluation was çMarket approaché, and the new revaluation was totaling Baht 209 million higher than book value. The Company recorded the land at the revalued amount and credited the surplus, of Baht 6 million directly to equity, under the heading of çRevaluation surplus on landé in the balance sheet. Had the land been presented at cost in the financial statements, its book value as of 31 December 2007 would have been Baht 52 million. As at 31 December 2007, the Company has certain plant and equipment items which have been fully depreciated but are still in use. The original cost of those assets amounts to approximately Baht 260 million (2006 : Baht 233 million). The Company and its subsidiaries have pledged their assets amounting to approximately Baht 378 million (2006 : Baht 399 million) as collateral against credit facilities received from commercial banks (The Company only : Baht 363 million, 2006 : Baht 399 million). 14. LAND HELD FOR DEVELOPMENT The Companyûs 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 2007 and 2006, the balances of land held for development consist of the following : (Unit : Thousand Baht)

Land Capitalised interest Land improvement Less : Allowance for impairment loss Total

Consolidated/Separate financial statements 2007 2006 503,374 503,374 156,017 156,017 7,990 7,990 667,381 667,381 (245,652) (245,652) 421,729

421,729

In December 2001, the Company arranged for an independent professional valuer to appraise of the value of the land held for development. The results 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 reappraise the value of land held for development. The basis of the revaluation was çMarket approaché. The new fair market value was a total of Baht 422 million higher than book value. The Company recorded the reversal of the previously recognised impairment loss and net of the decrease in the fair value of land held for development totaling Baht 67 million in the income statement for the year 2006. The Company has mortgaged land held for development with a total net book value as at 31 December 2007 of approximately Baht 422 million (2006 : Baht 422 million) as collateral against credit facilities received from commercial bank.

Pranda Jewelry Public Company Limited

Financial Statements (Unit : Baht)

15. LEASEHOLD RIGHTS

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

Consolidated financial statements 2007 2006 64,781,303 64,781,303 (26,747,133) (24,389,137) (17,968) (26,628) 38,016,202 40,365,538 2,357,996

2,652,933

Separate financial statements 2007 2006 4,947,126 4,947,126 (4,947,126) (4,792,524) 154,602 154,602

371,035

A local subsidiary company has mortgaged leasehold rights with a total net book value as at 31 December 2007 of approximately Baht 30 million (2006 : Baht 25 million) as collateral for credit facilities received from commercial banks. 16. GOODWILL This represents goodwill of an overseas subsidiary company, Pranda & Kroll GmbH & Co. KG, arising from that subsidiary companyรปs receipt of the transfer of operations from a partner in the value higher than the net book value of the transferred assets. (Unit : Baht)

Consolidated financial statements

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

2007 90,278,000 (26,169,140) (1,761,067) 62,347,793

2006 90,278,000 (17,624,071) (4,262,163) 68,391,766

8,545,069

8,596,271

17. BANK OVERDRAFTS AND SHORT - TERM LOANS FROM FINANCIAL INSTITUTIONS (Unit : Baht) Consolidated Separate financial statements financial statements 2007 2006 2007 2006 Bank overdrafts 54,213,215 26,831,049 Promissory notes 50,480,000 78,000,000 46,480,000 72,000,000 Short-term loans from financial institutions 29,522,254 74,302,922 Total 134,215,469 179,133,971 46,480,000 72,000,000 Bank overdrafts and promissory notes of the Company are secured by the mortgage of the Companyรปs land with structures thereon and land held for development, and guaranteed by its directors. Bank overdrafts and promissory notes of a local subsidiary company are secured by the mortgage of a part of the leasehold rights in shopping malls of the subsidiary, and guaranteed by the Company, and directors of the Company and that subsidiary company. Short-term loans of an overseas subsidiary company are secured by some of the subsidiaryรปs accounts receivable. Short-term loans of an overseas subsidiary company are secured by deposit with bank, some of the subsidiaryรปs accounts receivable and guaranteed by the Company and the subsidiaryรปs director.

Annual Report 2007

(Unit : Baht)

18. LONG - TERM LOANS Consolidated financial statements 2007 2006 The Company 18.1 Baht loan, to refinance restructured debt - Interest rate In first year, MLR less 2% per annum In second year to fifth years, MLR less 1% per annum In sixth year, MLR less 0.5% per annum In seventh year to ninth years, MLR per annum - Repayable quarterly from October 2002 to January 2011 18.2 Baht loan - Interest rate In first year to fifth years, MLR less 1% per annum In sixth year to seventh years, MLR less 0.5% per annum - Repayable quarterly from June 2007 to January 2013 The local subsidiary company Primagold International Co., Ltd. 18.3 Baht loan - Interest rate In first year to third years, MLR less 1% per annum In fourth year to sixth years, MLR less 0.5% per annum In seventh year to twelfth years, MLR per annum - Repayable monthly from January 2007 to December 2017 The overseas subsidiaries Pranda & Kroll GmbH & Co. KG 18.4 Euro loans - Interest 5.4% per annum - Repayable in April 2009 Pranda North America, Inc. 18.5 USD loan - Interest 7.25% per annum - Repayable monthly from July 2007 to June 2022 H.GRINGOIRE s.a.r.l. 18.6 Euro loans - No stipulated repayment term Total Less : Current portion of long-term loans Long-term loans - net of current portion

Separate financial statements 2007 2006

429,770,000 557,770,000 429,770,000 557,770,000

127,995,000

- 127,995,000

9,090,400

10,000,000

656,533

1,604,540

10,690,501

1,751,701

578,202,434

571,126,241

557,765,000

557,770,000

(157,761,721) (128,909,600) (156,420,000) (128,000,000) 420,440,713

442,216,641 401,345,000 429,770,000

Pranda Jewelry Public Company Limited

Financial Statements 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 the outstanding balance of the Companyûs restructured debt under the debt restructuring agreement (dated 18 September 2000). The loan agreement stipulates various conditions with which the Company must comply. The long-term loans of the Company were secured by the mortgage of land with structures thereon, and land held for development, and by the guarantee of the Companyûs directors. On 21 March 2007, the Company has entered into the loan agreement with a local commercial bank for the purpose of increasing investments in its subsidiaries and acquiring machinery and equipment for its manufacturing. As at 31 December 2007, the long-term credit facilities of the Company which have not yet been drawn down amounted to Baht 153.3 million. These loans are secured by the same collateral of loan agreement dated 16 September 2002. Long-term loan of a local subsidiary company was granted by a local commercial bank. Such loan was secured by the mortgage of part of its leasehold rights, and by the guarantee of its directors. Long-term loans of an overseas subsidiary company, Pranda & Kroll GmbH & Co. KG, amounting to EUR 13,000 (2006 : EUR 34,000), were granted by a financial institutions in Germany. Such loans were secured by some of its trade accounts receivable and by the guarantee of the Company. Long-term loan of an overseas subsidiary company, Pranda North America, Inc., amounting to USD 317,000, was granted by the financial institution in the United States of America. Such loan was for the purpose of acquiring land and building and it was secured by the acquired land and building. 19. 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 Companyûs 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, and thus the Company has 199,985,000 outstanding warrants. The warrants had a term of 5 years and were exercisable every month, from the first exercise date on the last business day of May 2002 until 2 May 2007. The Stock Exchange of Thailand approved the trading of the warrants on the Stock Exchange of Thailand, commencing from 20 May 2002. On 2 May 2007, the Companyûs warrants (PRANDA-W) were expired. During the year 2007, the warrant holders exercised their rights to purchase 22,950,450 ordinary shares. As at 2 May 2007, there were 4,236,410 warrants remain unexercised. These warrants were delisted on the Stock Exchange of Thailand commencing from 3 May 2007. 20. SHARE CAPITAL During the year 2007, the Company registered an increase in its issued and paid up share capital to approximately Baht 396 million with the Ministry of Commerce due to the exercise of warrants to purchase 37,334,850 ordinary shares of Baht 1 each totaling approximately Baht 37 million. The share premium increased by Baht 67 million as a result of such share issuance. 21. CASH RECEIPTS FROM SHARES SUBSCRIPTION In December 2006, the holders of PRANDA-W warrants exercised them to purchase 14,384,400 ordinary shares at an exercise price of Baht 2.80 each. The Company received payment for 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 çCash receipts from share subscriptioné. 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 2007

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.

Consolidated financial statements For the year ended 31 December Weighted average number

Net income 2007 2006

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 dilutive potential ordinary shares

of ordinary shares Earnings per share 2007 2006 2007 2006

(Thousand (Thousand (Thousand (Thousand Baht) Baht) Shares) Shares)

(Baht)

405,610

432,268

390,887

334,125

1.04

1.29

3,618

38,171

405,610

432,268

394,505

372,296

1.03

1.16

Pranda Jewelry Public Company Limited

Financial Statements Separate financial statements For the year ended 31 December Weighted average number of ordinary shares Earnings per share 2007 2006 2007 2006

Net income 2007 2006

(Thousand Baht) (Thousand Baht) (Thousand Shares) (Thousand Shares)

(Baht)

(Restated)

396,496

423,784

390,887

334,125

3,618

38,171

396,496

423,784

394,505

372,296

(Baht) (Restated)

1.01

1.27

1.01

1.14

24. CORPORATE INCOME TAX Part of the Company没s operations has been granted promotional privileges from the Board of Investment, including exemption from corporate income tax on profits for a period of eight years, commencing as from the date of first earnings operating income (1 January 2003). Corporate income tax of the Company was calculated on net income before income tax from operations without BOI promotional privileges for the periods, after adding back expenses and deducting income which are disallowable for tax computation purposes. Corporate income tax of the local subsidiaries were calculated on net income before income tax for the periods, after adding back expenses and deducting income which are disallowable for tax computation purposes. Corporate income tax of the overseas subsidiaries, were calculated in accordance with the accounting standards and/ or tax law of that company没s country of domicile. 25. PROMOTIONAL PRIVILEGES 25.1 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, subject to certain imposed conditions. Significant privileges of the Company are as follows : 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 of the increment in export income over that of the preceding year to be deductible from taxable income for a period of ten years from the date the promoted operations commenced generating revenues.

Annual Report 2007

The Company没s operating revenues for the years are below shown divided according to promoted and non - promoted operations. (Unit : Baht)

Promoted operations 2007 2006 Sales Domestic sales Export sales Total sales

1,994,879,070 1,998,477,528

Non-promoted operations 2007 2006 543,608,126 647,452,573

Total 2007

2006

448,882,767 543,608,126 448,882,767 686,864,231 2,642,331,643 2,685,341,759

1,994,879,070 1,998,477,528 1,191,060,699 1,135,746,998 3,185,939,769 3,134,224,526

25.2 A subsidiary company (Crystaline Co., Ltd.) was granted promotional privileges from the Board of Investment, subject to certain imposed conditions. Significant privileges are as follows : Details 1. Certificate No. 2. Promotional privileges for

5036/2547 Manufacturing of jewelry

3. The significant privileges are 3.1 Exemption from corporate income tax on net income from the Non - granted promoted operations and exemption from income tax on dividends paid from the income of the operations throughout the period in which corporate income tax is exempted. 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 from import duty on machinery approved by the Board of Investment. 3.4 Exemption from import duty on raw materials and significant supplies used in export production. 4. Date of first earning operating income

1384(4)/2549 Manufacturing of jewelry for its factory located in the Suranaree Industrial Estate Zone in Nakorn Rachasima province 8 years

Non - granted

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 approval to commence operation

26. 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 contribute 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 2007, the Company contributed Baht 6.7 million to the fund (2006 : Baht 4.8 million).

Pranda Jewelry Public Company Limited

Financial Statements 27. NUMBER OF EMPLOYEES AND RELATED COSTS Consolidated financial statements 2007 2006 4,388 4,247 802,945 764,977

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

Separate financial statements 2007 2006 3,034 2,905 499,608 462,231

28. FINANCIAL INFORMATION BY SEGMENT The Company没s and the subsidiaries没 operations involve a single major industry segment, the manufacture and distribution of jewelry which is carried on in both Thailand and overseas, while a subsidiary company carries on dormitory rental in Thailand. The financial information of the Company and its subsidiaries by industry and geographical segment, as of and for the years ended 31 December 2007 and 2006 are as follows : (Unit : Million Baht)

The consolidated financial statements for the years ended 31 December The manufacturing Dormitory and distribution of Jewelry Rental Eliminated Total Domestic Overseas Domestic 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 3,905 3,849 2,307 2,365 - (1,853) (2,138) 4,359 4,076 930 991 377 368 (1) 1,307 1,358

Sales - net Gross profit Share of income from investments in associates Other income 113 83 Reversal allowance for impairment loss on land held for development - net 67 Selling and administrative expenses (502) (472) Gain (loss) on exchange (50) (125) Interest expenses (50) (57) Corporate income tax (36) (41) Minority interest Net income for the year 405 446 Property, plant and equipment - net Other assets Total assets

2 25

4 31

1 (69)

(76)

3 83

4 51

(434) (423) 8 15 (9) (13) (21) (9) (52) (27)

(14) -

(12) 1

83 8 30 53

59 15 15 12

(867) (42) (51) (57) 30 406

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

468 485 77 48 4,442 4,125 1,582 1,390 4,910 4,610 1,659 1,438

28 15 43

27 15 42

(2,181) (1,986) (2,181) (1,986)

573 560 3,858 3,544 4,431 4,104

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

Annual Report 2007

29. DIVIDENDS Dividends of the retained earnings as at 31 December 2005 Dividends in respect of the 2006 net income Total Dividends in respect of the 2005 net income

(Unit : Baht)

Approved by The meeting of the Company没s Board of Directors No. 1/2007 on 15 January 2007 The Annual General Meeting of the Shareholders of the Company on 3 April 2007 The Annual General Meeting of the Shareholders of the Company on 20 April 2006

Total dividends

Dividend per share

111,838,692

0.30

252,281,107 364,119,799

0.65 0.95

212,648,755

0.65

30. COMMITMENTS AND CONTINGENT LIABILITIES 30.1 Capital commitments As at 31 December 2007, the Company had capital commitments of approximately Baht 2.8 million, relating to acquisition of computer programs and building renovation. 30.2 Operating lease commitments The Company and its subsidiaries have entered into several lease and service agreements in respect of the lease of factories, office building space, motor vehicles, and equipment. Future minimum rentals payable under these leases as at 31 December 2007 are as follow : Payable within : 1 year 2 to 5 years Thereafter

Million Baht 16.0 23.6 8.5

30.3 Guarantees 30.3.1 The Company has issued guarantees to secure bank credit facilities of its subsidiaries. As at 31 December 2007, there were outstanding balances of Baht 100 million UK Pound 1 million and EUR 0.7 million, totaling approximately Baht 202 million. 30.3.2 As at 31 December 2007, there were outstanding bank guarantees of approximately Baht 1.7 million, USD 9.5 million and UK Pound 77,000, totaling approximately Baht 328 million (The Company only : Baht 322 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. 31. FINANCIAL INSTRUMENTS 31.1 Financial risk management The Company and its subsidiaries没 financial instruments, as defined under Thai Accounting Standard No. 48 莽Financial Instruments : Disclosure and Presentations茅, 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.

Pranda Jewelry Public Company Limited

Financial Statements 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 concentrations 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没 exposure to interest rate risk relates primarily to cash at banks, bank overdrafts, short term loans and long-term borrowings. However, since most of the 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 Foreign currency risk is the risk for which a valuation of financial instrument can be volatile depends on a foreign currency exchange rate volatility. The Company and its subsidiaries没 exposure to foreign currency risk arises mainly from trading transactions and borrowings that are denominated in foreign currencies. The Company seeks to reduce this risk by entering into forward exchange contracts when it considers appropriate. Generally, the forward contracts mature within one year.

The balances of financial assets and liabilities denominated in foreign currencies as at 31 December 2007 are summarised below.

Foreign currency US dollar Euro UK Pound

Financial assets (Million) 32.5 1.6 3.9

Financial liabilities (Million) 13.5 0.1 0.1

Average exchange rate as at 31 December 2007 (Baht per 1 foreign currency unit) 33.77 49.33 67.42

The Company has entered into forward exchange contracts to sell foreign currency to hedge the foreign currency risk associated with cash receipts from customers. The contracts which remained outstanding on 31 December 2007 are summarised below.

Sold amount Foreign currency US dollar Euro

Annual Report 2007

4,745,883 234,180

Contractual exchange rate sold (Baht per 1 foreign currency unit) 33.365 - 34.280 48.310 - 48.790

In addition, as at 31 December 2007, there are various outstanding foreign currency sell put options under agreements with a local bank, whereby the Company has obligations to purchase US dollars totaling USD 1.2 million, with the amounts dependent on movement in the value of the Baht, per the conditions stipulated in the agreements, at rate Baht 34.250 per USD 1. These contracts mature within the first quarter of 2008. 31.2 Fair values of financial instruments Since the majority of the Company and its subsidiariesû 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. A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an armûs 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. 32. SUBSEQUENT EVENTS On 28 February 2008, a meeting of the Companyûs Board of Directors No. 3/2008 passed a resolution to propose that the Annual General Meeting of the Shareholders to be held on 18 April 2008 adopt a resolution to pay of a dividend of Baht 0.55 per share, to the shareholders in respect of the 2007 net income. The share register of the Company will be closed on 31 March 2008. The dividend will be paid on 8 May 2008. Such dividend will be paid and recorded after it is approved by the Annual General Meeting of the Companyûs shareholders. 33. RECLASSIFICATION In addition to the change in accounting policy as mentioned in Note 4, which affects the previously reported net income and shareholderûs equity, certain other amounts in the financial statements for the year ended 31 December 2006 have been reclassified to conform to the current yearûs classification but with no effect to previously reported net income or shareholderûs equity other than from the change in accounting policy. 34. APPROVAL OF FINANCIAL STATEMENTS These financial statements were authorised for issue by the Companyûs Board of Directors on 28 February 2008.

Pranda Jewelry Public Company Limited