(ADD1) F/S Q3/98

SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Share capital Preference shares Beginning balance 70,000 70,000 70,000 70,000 Increase during period - - - - Decrease during period - - - - Ending balance 70,000 70,000 70,000 70,000 Ordinary shares Beginning balance 230,000 230,000 230,000 230,000 Increase during period - - - - Decrease during period - - - - Ending balance 230,000 230,000 230,000 230,000 Paid-in capital Premium on ordinary share Beginning balance 486,000 486,000 486,000 486,000 Increase during period - - - - Decrease during period - - - - Ending balance 486,000 486,000 486,000 486,000 Surplus on revaluation Beginning balance 929,174 929,174 834,565 834,565 Increase during period - - - - Decrease during period - - - - Ending balance 929,174 929,174 834,565 834,565 Retained earnings Appropriated - legal reserve Beginning balance 56,163 56,163 48,565 48,565 Increase during period - - - - Decrease during period - - - - Ending balance 56,163 56,163 48,565 48,565 Unappropriated Beginning balance (1,915,568) 673,777 (1,907,970) 681,375 Increase during period 75,053 - 75,053 - Decrease during period - (1,524,726) - (1,524,726) Ending balance (1,840,515) (850,949) (1,832,917) (843,351) Loss on non-current marketable securities Beginning balance (147,648) - (146,485) - Increase during period - - - - Decrease during period (97,452) - (97,452) - Ending balance (245,100) - (243,937) - Total Shareholders' Equity (Deficit) (314,278) 920,388 (407,724) 825,779 See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Share capital Preference shares Beginning balance 70,000 70,000 70,000 70,000 Increase during period - - - - Decrease during period - - - - Ending balance 70,000 70,000 70,000 70,000 Ordinary shares Beginning balance 230,000 230,000 230,000 230,000 Increase during period - - - - Decrease during period - - - - Ending balance 230,000 230,000 230,000 230,000 Paid-in capital Premium on ordinary share Beginning balance 486,000 486,000 486,000 486,000 Increase during period - - - - Decrease during period - - - - Ending balance 486,000 486,000 486,000 486,000 Surplus on revaluation Beginning balance 929,174 929,174 834,565 834,565 Increase during period - - - - Decrease during period - - - - Ending balance 929,174 929,174 834,565 834,565 Retained earnings Appropriated - legal reserve Beginning balance 56,163 56,143 48,565 48,565 Increase during period - 20 - - Decrease during period - - - - Ending balance 56,163 56,163 48,565 48,565 Unappropriated Beginning balance (2,264,928) 498,798 (2,257,330) 506,396 Increase during period 424,413 - 424,413 - Decrease during period - (1,349,747) - (1,349,747) Ending balance (1,840,515) (850,949) (1,832,917) (843,351) Loss on non-current marketable securities Beginning balance (257,799) - (256,636) - Increase during period 12,699 - 12,699 - Decrease during period - - - - Ending balance (245,100) - (243,937) - Total Shareholders' Equity (Deficit) (314,278) 920,388 (407,724) 825,779 See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS (DEFICIT) FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Unappropriated retained earnings (deficit) Balance at the beginning of period (1,915,568) 673,777 (1,907,970) 681,375 Net income (loss) 75,053 (1,524,726) 75,053 (1,524,726) Total Unappropriated Retained Earnings (Deficit) (1,840,515) (850,949) (1,832,917) (843,351) Appropriated retained earnings Legal reserve 56,163 56,163 48,565 48,565 Total Retained Earnings (Deficit) (1,784,352) (794,786) (1,784,352) (794,786) SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS (DEFICIT) FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Unappropriated retained earnings (deficit) Balance at the beginning of period (2,264,928) 498,798 (2,257,330) 506,396 Net income (loss) 424,413 (1,349,747) 424,413 (1,349,747) Total Unappropriated Retained Earnings (Deficit) (1,840,515) (850,949) (1,832,917) (843,351) Appropriated retained earnings Legal reserve 56,163 56,163 48,565 48,565 Total Retained Earnings (Deficit) (1,784,352) (794,786) (1,784,352) (794,786) See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIOD AND NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY Three-month Nine-month Three-month Nine-month CASH FLOWS PROVIDED BY OPERATING ACTIVITIES Net income 75,053 424,413 75,053 424,413 Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities Doubtful accounts 140,852 153,782 135,141 144,891 Depreciation and deferred charges written off 36,056 84,124 28,432 78,574 Gain of debts restructuring (48,247) (48,247) - - (Gain) loss on sales of fixed assets (848) (4,762) 751 (226) Amortization of excess of book value over cost (50,054) (53,495) (50,054) (53,495) Companies' share of (profit) loss from its investment in subsidiaries and associated companies and joint ventures 78,487 53,990 8,932 (27,458) Net unrealized (gain) loss from recovery in market for current - marketable securities 37 (35,444) 37 (35,444) (Gain) loss on sales of condominiums (4,348) 13,456 (4,348) 13,456 Loss on disposal of fixed assets - 1,628 742 1,628 Unrealized gain on exchange (324,342) (736,780) (277,505) (722,798) Contingent cost 8,942 52,459 8,942 52,459 Loss on non-current marketable securities - 10,000 - 10,000 Loss on devaluation of market price of condominiums 8,863 8,863 8,863 8,863 Changes in operating assets and liabilities (Increase) decrease in operating assets Accounts receivable 271,083 803,340 305,826 771,123 Due from related companies 78,209 (25,864) 60,557 (4,735) Retentions receivable (30,775) (48,960) (30,631) (48,744) Inventories 55,180 41,520 - - Loans and advances to directors and employees 11,561 10,564 12,082 10,004 Other current assets (9,009) (134,891) (13,219) (136,032) Increase (decrease) in operating liabilities Accounts payable (261,049) (328,346) (284,091) (318,259) Liabilities under trust receipts 106,629 90,024 (15,239) (31,843) Due to related companies 21,384 (5,862) (16,722) (33,180) Advance received on contracts (121,839) (265,512) (47,766) (159,037) Other current liabilities 75,784 42,516 62,834 25,899 Allowance for consolidated financial statements - (31,931) - - Net Cash Provided (used) by Operating Activities 117,609 70,585 (31,383) (29,941) See notes to financial statements (Amounts in thousand Baht) CONSOLIDATED THE COMPANY Three-month Nine-month Three-month Nine-month CASH FLOWS PROVIDED BY INVESTING ACTIVITIES (Increase) decrease in short-term investment 39 (218) 39 (193) Decrease in investments 176,185 196,685 212,305 238,306 Cash payment on purchase of fixed assets (34,766) (7,074) (25,026) (42,555) Cash from sale of fixed assets 4,909 4,699 948 3,067 (Increase) decrease in condominiums 8,147 (7,116) 8,147 (7,116) (Increase) decrease in advance payments on condominiums (2,330) 24,865 (2,330) 24,865 (Increase) decrease in other assets 1,930 26,116 1,541 (1,943) Net Cash Provided by Investing Activities 154,114 237,957 195,624 214,431 CASH FLOW PROVIDED BY FINANCING ACTIVITIES Decrease in notes receivable - finance institutes 41,110 41,110 - - Decrease in short-term loans (229,773) (326,995) (107,464) (4,105) Decrease in due from related companies 225,358 561,682 254,465 392,280 Increase in long-term loans - 30,000 - - Decrease in other liabilities (28) (262) (28) (262) Decrease in minority interests (3,314) (30,031) - - Net Cash Provided by Financing Activities 33,353 275,504 146,973 387,913 NET INCREASE IN CASH AND CASH EQUIVALENTS 305,076 584,046 311,214 572,403 CASH AND CASH EQUIVALENTS AS AT BEGINNING OF PERIOD (Notes 4 and 6) 117,150 (161,820) 141,916 (119,273) CASH AND CASH EQUIVALENTS AS AT END OF PERIOD (Notes 4 and 6) 422,226 422,226 453,130 453,130 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash paid during the period Interest expense 213,787 251,008 206,197 221,376 Income tax 31,962 102,782 31,918 102,729 See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) NOTE 1 - GOING CONCERN Since 1997, certain Asia Pacific countries, including Thailand, have been experiencing economic difficulties relating to currency devaluation and slowdown in growth. Accordingly, the Thai government sought assistance from the International Monetary Fund to alleviate the economic crisis and improve the economy over time. The financial statements for the three-month period and nine-month period ended September 30, 1998 have been presented on a going concern basis which assumes that the Company will continue in operation. The validity of the assumption is dependent upon the Company's ability to meet its financial requirements and success of future operations. If the Company were unable to continue in operation, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for any additional liabilities that might arise and to consider the classification of these assets and liabilities. The significant effect of currency devaluation, as mentioned above, has caused the Company's financial ratios to be not in accordance with conditions of a loan contract. Accordingly, the lender had a right to call in debts immediately as at August 20, 1998, and on September 4, 1998, the lender announced the call of such debt. The Company has appointed a financial consultant to produce a financial restructuring plan. Whilst the management and the financial consultant are producing a financial restructuring plan, there is no guarantee for a success. Such planning may include the extension to repay loan principle for several years and to pay interest at a lower rate. NOTE 2 - BASIS OF CONSOLIDATION 2.1 Basis of Consolidated Financial Statements The consolidated financial statements of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries are prepared in accordance with generally accepted accounting principles and the regulations of the Stock Exchange of Thailand. 2.2 Principles for Preparation of Consolidated Financial Statements The financial statements are presented in compliance with Commerce Ministerial Regulation No. 7 (B.E.2539) issued by the Ministry of Commerce under the Public Limited Company Act B.E. 2535. The statements of cash flows for the three-month period and nine-month period ended September 30, 1997 were not shown for the comparative purposes with the statements of cash flows for the three- month period and nine-month period ended September 30, 1998 due to the inadequate information. The consolidated financial statements for the three-month periods and nine-month periods ended September 30, 1998 and 1997 consist of the financial statements of Sino-Thai Engineering and Construction Public Company Limited and the financial statements of subsidiaries and subsidiaries of subsidiaries as follows: Percentage of Consolidated Consolidated Percentage of shares holding total assets total revenue 1998 1997 1998 1997 1998 1997 Subsidiaries held by the Company Sino-Thai Construction Services Company Limited 99.99 99.99 7.44 10.12 7.58 9.36 Sino-Thai Resources Development Public Company Limited 51.16 51.16 6.08 6.47 1.22 0.48 Subsidiaries of subsidiaries held indirectly (held by Sino-Thai Resources Development Public Company Limited) Siam Dimension Stone Company Limited 35.81 35.81 The financial statements for the three-month periods and nine-month periods ended September 30, 1998 and 1997 of Siam Dimension Stone Company Limited in which Sino-Thai Resources Development Public Company Limited holds 70% shares are included in consolidation as the parent company can exercise influence over such company's operating and financial policies. All significant intercompany transactions and accounts are eliminated in preparing the consolidated financial statements. 2.3 The Excess of Book Value Over Cost of Investment and the Excess of Cost Over Book Value of Investment The excess of book value over cost of investment at acquisition was fully amortized on that date and reflected in the consolidated retained earnings. The excess of cost over book value of investment at acquisition is amortized by the straight-line method over a period of 10 years. (More)