CONSOLIDATED FINANCIAL STATEMENTS Q2/2542

FINANCIAL STATEMENTS AND ACCOUNTANTS' REVIEW REPORT SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES SECOND QUARTER ENDED JUNE 30, 1999 AND 1998 Accountants' Review Report To the Shareholders of Sino-Thai Engineering and Construction Public Company Limited: We have made a review of the consolidated balance sheet of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries as at June 30, 1999, and the related consolidated statements of income, changes in shareholders' equity deficit, retained earnings (deficit) and cash flows for the three-month period and six-month period then ended and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited for the same period, in accordance with standards established by The Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. The financial statement of Sino-Thai Resources Development Public Company Limited which is included in the consolidated financial statements for the three-month period and six-month period ended June 30, 1999, are based on the financial information reviewed by the same auditor in our report dated July 22, 1999. We stated that was because of the significance of the uncertainty of the Company to continue as a going concern, we are not able to report whether there are any material modifications should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. As shown in the financial statements for the period in 1999, the Company incurred loss brought forward amount of Baht 1,883.30 million. The Company loss for the current period in the amount of Baht 168.02 million as at June 30, 1999, the Company's current liabilities exceeded current assets amounting to approximately Baht 3,149.35 million and total liabilities exceeded total assets amounting to approximately Baht 474.48 million. The company has default the loan contract due to the unability to maintain the financial ratio. Accordingly, the lender may has a right to call in debts immediately. At present, the Company is negotiating the restructure of its loans. The operations of the Company have been affected and may continue to be influenced for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. These factors will probably cause a doubt that the Company will have a problem to continue as a going concern. The financial statements are prepared in accordance with generally accepted accounting principles and on a going concern basis, therefore, it does not include any adjustment relating to recoverability and classification of recorded assets amount or the amounts and classification of liabilities that may be necessary should the Company be unable to continue in existence. Under generally accepted accounting principles, the Company is required to estimate the recoverable amount of its land when circumstances or events indicate their value may be impaired. If the estimated recoverable amount is less than the carrying value of the assets, an impairment loss is recognized in the income statement. As discussed in Note 10, the Company appraised the revalue of its land, resulting in surplus on revaluation of Baht 834.57 million in 1996. Those companies are currently in the process of land appraisal by an independent apprasiser to obtain the present value. Therefore, we were not able to satisfy ourselves by reviewing the value of these land which is presented less than in the financial statements for further adjustment and disclosure in accordance with generally accepted accounting principles. Because of the results of the uncertainty of the Company to continue as a going concern as described in the third and fourth paragraphs, and since we were not able to review the carrying value of land, as discussed in the fifth paragraph, which might have a significant effect on the financial statements, we are not able to report whether there are any material modifications should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. The financial statements of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries and the separate financial statements of Sino-Thai Engineering and Construction Public Company Limited for the period ended June 30, 1998, shown for comparative purposes, were reviewed by ourselves. In our report dated August 10, 1998 we express a qualified report on those financial statements except for the effects on the financial statement, if the financial statements of subsidiaries and associated companies had been reviewed, and subject to the outcome of the uncertainty about the Company's ability to continue as a going concern. Presently, those uncertainties are still existing, and except for the effects on the financial statement. The Company has not set up a provision for such accounts receivable amounting to approximately Baht 80.72 million and the Company did not reclassified long-term loans to current liabilities, the Company has default the loan contract due to the unability to maintain the financial ratio. Accordingly, the lender may has a right to call in debts immediately. . Nirand Lilamethwat Certified Public Accountant Registration Number 2316 KPMG Audit (Thailand) Limited Bangkok, August 3, 1999 The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. The standards, procedures and practices to review such financial statements are those generally accepted and applied in Thailand. SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT JUNE 30, 1999 AND 1998 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY ASSETS 1999 1998 1999 1998 CURRENT ASSETS Cash in hand and at banks (Notes 4 and 6) 919,937 335,751 893,208 309,419 Temporary investments (Notes 4 and 7) 109,014 140,791 109,010 140,687 Notes receivable - financial institutes 2,845 41,621 - - Accounts receivable - net (Notes 4 and 8) 1,211,505 1,723,613 1,131,348 1,645,658 Due from related parties - net (Notes 4 and 5) 82,336 132,610 91,444 119,425 Short-term loans to related parties (Note 5.4) 82,029 - 155,004 - Retentions receivable - net (Note 4) 288,026 214,030 284,698 210,167 Inventories - net (Note 4) 166,367 323,859 - - Other current assets - net (Note 4 ) Advances to suppliers 41,623 58,465 41,623 58,465 Withholding corporate tax 38,927 70,811 38,747 70,811 Others 45,331 93,571 39,454 55,334 Total Other Current Assets 125,881 222,847 119,824 184,610 Total Current Assets 2,987,940 3,135,122 2,784,536 2,609,966 INVESTMENTS AND LOANS (Notes 4 and 5) Joint ventures 9,735 344,175 9,735 344,175 Related parties 291,244 521,681 356,184 814,756 Other parties 370,823 414,955 336,623 380,755 Total Investments and Loans 671,802 1,280,811 702,542 1,539,686 PROPERTY, PLANT AND EQUIPMENT - NET (Notes 4 and 10) 1,726,297 1,846,443 1,435,064 1,479,511 OTHER ASSETS - NET (Note 4) Excess of cost over book value of investment (Note 2) 67,447 78,087 - - Loans and advances to directors and employees 16,337 26,300 10,207 17,795 Condominiums 85,215 110,746 85,215 110,746 Advance payments on condominiums - 26,750 - 26,750 Withholding corporate tax 415,516 283,759 411,881 283,759 Others 113,153 49,089 90,166 40,023 Total Other Assets 697,668 574,731 597,469 479,073 Total Assets 6,083,707 6,837,107 5,519,611 6,108,236 _________________________________ _________________________________ Director Director See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT JUNE 30, 1999 AND 1998 (UNAUDITED) (Amounts in thousand Baht) CONSOLIDATED THE COMPANY LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIT 1999 1998 1999 1998 CURRENT LIABILITIES Bank overdrafts and loans from financial institutes (Note 4) 980,753 1,171,498 816,440 969,631 Accounts payable 1,070,475 1,270,918 1,021,112 1,142,048 Due to related parties (Note 5) 3,373 15,445 3,856 22,543 Current portion of long-term loans (Note 9) - 24,500 - - Current portion of hire purchase creditors 23,233 23,233 23,233 23,233 Long-term loans in default (Note 9) 3,292,076 - 3,145,077 - Short-term loans from directors 6,322 - - - Advance received on contracts 373,661 414,320 371,988 336,783 Other current liabilities Accrued interest payable 457,574 58,631 421,115 58,631 Deferred value added tax 61,904 75,780 61,904 75,780 Provision for contingent cost 24,281 74,259 24,281 74,259 Others 61,125 65,895 44,877 50,098 Total Other Current Liabilities 604,884 274,565 552,177 258,768 Total Current Liabilities 6,354,777 3,194,479 5,933,883 2,753,006 LONG-TERM LOANS (Note 9) - 3,742,625 - 3,620,125 OTHER LIABILITIES Allowance for decline in investment (Note 5) 26,153 5,680 26,153 14,486 Hire purchase creditors 30,222 52,840 30,222 52,840 Others 3,333 3,050 3,832 3,050 Total Other Liabilities 59,708 61,570 60,207 70,376 Total Liabilities 6,414,485 6,998,674 5,994,090 6,443,507 EXCESS OF BOOK VALUE OVER COST OF INVESTMENT (Note 2) - 50,054 - 50,054 MINORITY INTERESTS 67,853 80,258 - - See notes to financial statements (Amounts in thousand Baht) CONSOLIDATED THE COMPANY LIABILITIES AND SHAREHOLDERS' EQUITY DEFICIT 1999 1998 1999 1998 SHAREHOLDERS' EQUITY DEFICIT Share capital, Baht 10 par value Authorized shares capital Preference shares 7,000,000 shares 70,000 70,000 70,000 70,000 Ordinary shares 68,000,000 shares 680,000 680,000 680,000 680,000 Issued and fully paid Preference shares 7,000,000 shares 70,000 70,000 70,000 70,000 Ordinary shares 23,000,000 shares 230,000 230,000 230,000 230,000 Paid-in capital Premium on share capital 486,000 486,000 486,000 486,000 Surplus on revaluation (Note 10) 910,413 929,174 834,565 834,565 Retained earnings (Deficit) Appropriated - legal reserve 56,163 56,163 48,565 48,565 Unappropriated (2,038,591) (1,915,568) (2,030,993) (1,907,970) Loss on non-current marketable securities (Note 4) (112,616) (147,648) (112,616) (146,485) Total Shareholders' Equity Deficit (398,631) (291,879) (474,479) (385,325) Total Liabilities and Shareholders' Equity Deficit 6,083,707 6,837,107 5,519,611 6,108,236 _________________________________ _________________________________ Director Director See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 1999 AND 1998 (Amounts in thousand Baht (UNAUDITED) Except Basic Earnings (Loss) per Share) CONSOLIDATED THE COMPANY 1999 1998 1999 1998 REVENUES (Notes 4, 5.6 and 12) Revenues from construction and sales 931,400 1,360,529 895,434 1,321,695 Other income Company 's share of profit (loss) from its investments in subsidiaries and associated companies and joint ventures 13,272 (5,863) 9,219 (10,584) Gain (loss) on exchange rate 72,262 (314,801) 67,458 (313,008) Others 20,167 71,259 15,789 86,543 Total Revenues 1,037,101 1,111,124 987,900 1,084,646 EXPENSES (Notes 4, 5 and 12) Costs of construction and cost of sales 786,854 1,334,682 747,365 1,309,638 Selling and administrative expenses 73,085 82,588 61,322 88,803 Loss on current marketable securities 77,054 27,651 77,054 27,658 Doubtful accounts (30,507) - (23,263) - Directors' remuneration 150 150 150 130 Interest expense 98,060 111,964 90,986 103,773 Total Expenses 1,004,696 1,557,035 953,614 1,530,002 Net income (loss) before minority interests and income tax 32,405 (445,911) 34,286 (445,356) Minority interests in subsidiaries' net income (loss) 1,881 555 - - Net income (loss) before income tax 34,286 (445,356) 34,286 (445,356) Income tax - - - - Net income (loss) 34,286 (445,356) 34,286 (445,356) Basic earnings (loss) per share (Baht) (Note 4) 1.14 (14.85) 1.14 (14.85) See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1999 AND 1998 (Amounts in thousand Baht (UNAUDITED) Except Basic Earnings (Loss) per Share) CONSOLIDATED THE COMPANY 1999 1998 1999 1998 REVENUES (Notes 4, 5.6 and 12) Revenues from construction and sales 1,883,769 2,544,193 1,768,587 2,454,405 Other income Company 's share of profit (loss) from its investments in subsidiaries and associated companies and joint ventures 15,974 8,132 (26,552) 36,390 Gain (loss) on exchange rate (15,309) 482,892 (15,037) 446,949 Others 36,477 121,659 37,600 104,138 Total Revenues 1,920,911 3,156,876 1,764,598 3,041,882 EXPENSES (Notes 4, 5 and 12) Costs of construction and cost of sales 1,664,058 2,416,436 1,553,880 2,347,408 Selling and administrative expenses 141,886 165,950 119,808 144,806 Loss on current marketable securities 77,850 6,599 77,850 6,607 Doubtful accounts (9,903) 6,068 (20,416) - Directors' remuneration 293 320 270 240 Interest expense 220,206 212,060 201,228 193,461 Total Expenses 2,094,390 2,807,433 1,932,620 2,692,522 Net income (loss) before minority interests and income tax (173,479) 349,443 (168,022) 349,360 Minority interests in subsidiaries' net income (loss) 5,457 (83) - - Net income (loss) before income tax (168,022) 349,360 (168,022) 349,360 Income tax - - - - Net income (loss) (168,022) 349,360 (168,022) 349,360 Basic earnings (loss) per share (Baht) (Note 4) (5.60) 11.65 (5.60) 11.65 See notes to financial statements (More)