SET Announcements

REF: CK-07-0000-AFD-L-0149 May 15th, 2007 Subject: Declaration of Operating Result of the three-month Ended March 31, 2007 Compared with the three-month Ended March 31, 2006 Attention: President The Stock Exchange of Thailand The operating result of CH.Karnchang Public Company Limited, Subsidiaries and joint ventures for the three-month period as of March 31, 2007 reached the profit decreased by 95.6% compared with the same fiscal year due to the following factors: 1. In 2006. the company had gained on the sales of short term investment amount 1,000 million baht whereas in the first quarter of 2007, the company has not this transaction. 2. The company has increased the share of loss from investments accounted for under equity method from associated companies in the amount of 195.4 million Baht. Because the company was increased the sharing investment in Pathum Thani Water Company Limited or associated company which was restructured the organization of the group companies and was increased the net loss. The company was effected to share of loss from investments accounted for under equity method from associated company. The company would like to report the effect from the change in accounting policy for investment in subsidiaries, joint ventures and investment in associated companies as follow: In the three month period ended Mach 31,2007, the company changed its accounting policy regarding investment in subsidiaries, joint ventures and investment in associated companies so that the separate financial statements, was changed from equity method report to cost method report in order to comply with TAS 44. Thus the company restated its financial statement by using the historical cost as the cost of the investment in subsidiaries, joint ventures and investment in associated companies of the separate financial statements. This adjustment caused the net income on the separate financial statement to differ from thatreported in the consolidated financial statement. The company had net profit of Baht 35.5million for the three month period ended March 31, 2007, according to the consolidated financial statement. However, the separate financial statement over the same period showed a net loss of Baht 34.6 million. Therefore, the company would like to clarify the additional information as follows: 1. The effect from the restating of income statement on the separate financial statement for the quarter ended March 31, 2007 and 2006, compare with the consolidated financial statement in the same period were shown net lossincreased of Baht 70.2 million (Baht 0.06 per share) and net profit increased by Baht 81.6 million (Baht 0.07 per share) respectively. This is because the consolidated financial statement has already included the performance of subsidiaries,joint ventures and associated companies in proportion to the investment while the separate financial statement has excluded share of profit/loss from investment, recorded by using equity method. 2. The effect from the restating to Balance Sheets on the separate financial statement ended March 31, 2007, such as investment in subsidiaries and jointventure include investment in associated companies increased by Baht 165.3 million resulting in decreasing of balance forward retained earnings by Baht 171.5 million.The cumulative effectof the accounting policy has been presented under the heading of "Cumulative effect of the change in accounting policy for Investments in subsidiaries, joint ventures and associated companies" in the separate financial statement in the statement of changes in shareholders equity. However, the change of accounting policy affects only investment in subsidiaries, joint ventures and investment in associated companies in the separate financial statement. It did not have any effect on the consolidated financial statement or business fundamentals. For your consideration. Sincerely yours, ( Mr.Plew Trivisvavet ) ( Mr.Prasert Marittanaporn ) Directors