Report to SET

Clarifications on company’s performances in the second quarter and first-half of 2003

Attached are a copy each of Thai and English version of the unaudited interim financial statements (both consolidated and on the company only) of Padaeng Industry Public Company Limited for the second quarter and six-month period ended 30 June 2003 together with clarifications on the company’s performances during the said periods for the SET’s information as follows:

With a total volume of 53,857 MT of Zn sold, the company increased its sales volume by 2% and the turnover by 2.4% up to Bt2,270m. However, this progression had been badly handicapped during the month of June by the decline in zinc metal consumption by the steel galvanizing industry.

In this period, the company consumed more expensive imported concentrates reflecting the lower treatment charges on the international market.

Compared to the first 6 months of 2002, on an average basis, LME declined in 2003 by $8 per MT (YTD $780) and the Thai Baht was 1.7% stronger against the USD. Both external factors were impacting negatively our performance on a YTD basis but also quarter to quarter.

The company faced higher overheads and provisions namely higher electricity and fuel oil cost in Tak, provision for early mutual retirement plan and provision on inventories

Delay to April of the annual maintenance of the smelter and further shutdowns of the roaster affected the results of the 2nd quarter. In the month of June, previously written off receivables have been partly taken back for a total of Bt20.8m.

On a YTD basis, the operating margin of the Company showed a Bt23.9m profit compared to Bt44.7m the previous year. Our subsidiaries reported a loss (equity method) of Bt7.4m that is reducing the profit before financial cost to Bt16.5m (or Bt14.8m on a consolidated basis).

After deduction of financial expenses of Bt20.3m, the net loss of the Company amounts to Bt3.8m and is Bt22.4m lower than the performance achieved one year ago. The Consolidated statement shows a loss of Bt5.9m compared to a gain of Bt15.0m the year before.