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FINANCIAL STATEMENTS AND ACCOUNTANTS' REVIEW REPORT CH. KARNCHANG PUBLIC CO., LTD, SUBSIDIARIES AND JOINT VENTURES SECOND QUARTER ENDED JUNE 30, 1999 AND 1998 Accountants' Review Report To the Shareholders of CH. Karnchang Public Co., Ltd. We have made a review of the consolidated balance sheets of CH. Karnchang Public Company Limited, subsidiaries and joint ventures as at June 30, 1999 and 1998, the related consolidated statements of income and consolidated statements of cash flows for the three-month and six-month periods, consolidated statements of retained earnings and statements of changes in shareholders'equity for the six-month periods then ended and the financial statements of CH. Karnchang Public Co.,Ltd. for the same periods then ended in accordance with standards established by the Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information principally consists of obtaining an understanding of the systems 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 takes as a whole. Accordingly, we do not express such an opinion. As discussed in Note 6 to the financial statements, the parent company has accounts receivable from the related joint venture, which are overdue over 1 year in the approximate amount of Baht 409.07 million. The company did not record the allowance for doubtful account for the said amount because the company expected to be paid in the future. If the company does not receive the payment, profit for period ended June 30, 1999 and asset should be decreased by the same amount. As discussed in Note 6 to the financial statements. The joint venture which the company has 59.99% of profit sharing has an account receivable from additional construction work in the approximate amount of Baht 101.8 million which the payment is during the negotiation with account receivable. The said construction work was completed in 1998. The joint venture had recorded the allowance for doubtful account in the amount of Baht 5.10 million. The joint venture should set up allowance for doubtful account for the total uncollectable amount. Based on our review, except for the effects to the financial statements of matters described in the third and the forth paragraphs, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We draw attention to the following notes to financial statements as follows: As discussed in Note 13 to the financial statements. Deferred expenses of one subsidiary company in the approximate amount of Baht 79.6 million included in the consolidated financial statements which included in accounts receivable from subsidiary companies in the company's financial statements. The deferred expenses are incurred from the bidding of MRTA concession project. If the company is not success on this concession, the said amount has to be written off. As discussed in Note 1 to the financial statements. The operations of CH. Karnchang Public Company Limited, subsidiaries and joint ventures have been affected and will continue to be affected for the foreseeable future by the economic condition in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on the financial statements can not presently be determined. Supot Singhasaneh Certified Public Accountant Registrative number 2826 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 audit such financial statements are those generally accepted and applied in Thailand. CH. KARNCHANG PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES BALANCE SHEETS AS AT JUNE 30, 1999 AND 1998 (UNAUDITED) Amounts : Thousand Baht Consolidated CH. Karnchang Public Co., Ltd. ASSETS 1999 1998 1999 1998 CURRENT ASSETS Cash in hand and at banks 5,218,051 4,472,386 2,288,483 1,148,058 Short - term investments 223,624 883,508 590 255,428 Investment in marketable securities 4,462 6,620 4,462 6,620 Accounts receivable - net 1,650,135 2,626,632 1,171,506 1,880,581 Accounts receivable and loan to subsidiary, related companies and joint ventures 641,369 590,336 900,371 1,193,900 Construction contract in progress 4,048,145 2,697,683 49,543 105,592 Inventories,supplies for construction and construction in progress 95,671 234,140 3,369 44,690 Advance payment to subcontractors 137,691 362,409 53,124 76,751 Other current assets 465,639 500,161 94,132 125,195 Total Current Assets 12,484,787 12,373,875 4,565,580 4,836,815 Notes receivable-finance companies - 147,821 - - Investments in subsidiary companies and joint ventures - - 1,354,380 1,379,687 Investments in related and other companies 2,804,851 2,234,872 2,569,299 2,092,776 Property, plant and equipment-net 1,785,417 2,368,856 458,002 500,176 Investment on land 202,732 326,018 174,600 282,947 Other assets 635,280 682,554 175,558 113,345 Total Assets 17,913,067 18,133,996 9,297,419 9,205,746 See notes to financial statements CH. KARNCHANG PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES BALANCE SHEETS AS AT JUNE 30, 1999 AND 1998 (UNAUDITED) Amounts : Thousand Baht Consolidated CH. Karnchang Public Co., Ltd. LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998 1999 1998 CURRENT LIABILITIES Bank overdrafts and loans from banks 3,018,469 3,341,421 1,069,210 1,336,886 Notes payable - finance companies 200,000 300,000 200,000 300,000 Accounts and notes payable 1,239,709 2,313,067 752,345 1,191,301 Current portion of long-term liabilities 4,873,640 3,166,437 770,025 256,675 Accounts payable and loans from related companies and joint ventures 1,345,212 1,056,371 49,504 3,618 Advance received from contractor and deferred construction revenue 1,355,993 1,923,301 153,325 390,276 Retentions for construction 209,920 188,390 86,770 54,804 Accrued interest expense 72,059 107,011 51,210 76,196 Accrued output tax 158,946 250,125 110,877 173,063 Other current liabilities 115,185 93,521 36,010 36,887 Total Current Liabilities 12,589,133 12,739,644 3,279,276 3,819,706 Liabilities under discounted notes receivable - 565,807 - - Long-term loans 272,734 903,349 100,000 770,025 Other liabilities - - 1,116,913 854,887 Total Liabilities 12,861,867 14,208,800 4,496,189 5,444,618 MINORITY INTEREST IN SUBSIDIARY COMPANIES 199,823 164,068 - - SHAREHOLDERS' EQUITY Share capital Authorized 105,000,000 ordinary shares, Baht 10 par value 1,050,000 1,050,000 1,050,000 1,050,000 Issued and fully paid 105,000,000 ordinary shares, Baht 10 par value 1,050,000 1,050,000 1,050,000 1,050,000 Premium on share 2,436,000 2,436,000 2,436,000 2,436,000 Retained earnings Appropriated to legal reserve 88,442 78,047 82,942 72,547 Unappropriated 873,013 595,666 878,513 601,166 Unrealized gain (loss) on change in investment value 403,922 (398,585) 353,775 (398,585) Total Shareholders' Equity 4,851,377 3,761,128 4,801,230 3,761,128 Total Liabilities and Shareholders' Equity 17,913,067 18,133,996 9,297,419 9,205,746 See notes to financial statements CH. KARNCHANG PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES STATEMENTS OF INCOME FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) Consolidated CH. Karnchang Public Co., Ltd. Amounts : Thousand Baht 1999 1998 1999 1998 Except net loss per share REVENUES Construction activities income 2,493,352 3,135,671 622,745 961,519 Sale of construction material 39,372 114,920 162,598 178,610 Management income 16,975 23,579 21,463 40,311 Rental income 9,999 31,876 14,799 32,146 Transportation income 10,933 11,289 11,792 11,428 Interest income 63,192 125,417 41,274 32,870 Gain (loss) from sale of investment 654 (58,060) 654 (58,060) Gain (loss) on exchange rate 65,036 (169,420) 377 - Share of net loss by equity method - - (94,588) (514,928) Other incomes 9,845 10,201 17,688 7,831 Total Revenues 2,709,358 3,225,473 798,802 691,727 EXPENSES Cost of construction activities 2,149,074 3,064,884 529,847 886,889 Cost of sale construction material 157,347 138,148 130,665 138,148 Administrative expenses 156,898 213,326 76,559 100,698 Interest expense 209,919 292,924 64,388 104,607 Directors' remuneration 5,900 - 5,900 - Other expenses 68,744 32,325 47,496 30,182 Total Expenses 2,747,882 3,741,607 854,855 1,260,524 Loss before income tax (38,524) (516,134) (56,053) (568,797) Income tax 29,378 36,375 15,7 - Net loss from operation (67,902) (552,509) (71,828) (568,797) (Less) Minority interest in net profit (3,926) (16,288) - - Net loss (71,828) (568,797) (71,828) (568,797) Net loss per share (Baht) (Note 4 ) (0.68) (5.42) (0.68) (5.42) See notes to financial statements CH. KARNCHANG PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES STATEMENTS OF INCOME FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) Consolidated CH. Karnchang Public Co., Ltd. Amounts : Thousand Baht 1999 1998 1999 1998 Except net profit(loss) per share REVENUES Construction activities income 5,284,431 6,435,133 1,363,922 1,621,345 Sale of construction material 152,868 223,445 336,588 336,394 Management income 35,409 46,520 48,072 78,063 Rental income 23,165 49,249 29,855 73,115 Transportation income 24,438 28,030 25,832 28,497 Interest income 102,169 170,323 49,455 46,488 Gain from sale of investment 654 10,039 654 10,039 Gain on exchange rate 110,255 261,071 377 - Share of net profit (loss) by equity method - - (2,738) 102,392 Other incomes 15,855 37,070 23,566 16,969 Total Revenues 5,749,244 7,260,880 1,875,583 2,313,302 EXPENSES Cost of construction activities 4,412,832 5,803,358 1,165,605 1,601,234 Cost of sale construction material 298,817 290,264 262,295 290,264 Administrative expenses 284,796 411,733 126,708 183,601 Interest expense 452,984 557,977 137,439 206,165 Directors' remuneration 5,900 - 5,900 - Other expenses 112,703 59,021 86,463 56,878 Total Expenses 5,568,032 7,122,353 1,784,410 2,338,142 Income (loss) before income tax 181,212 138,527 91,173 (24,840) Income tax 108,913 140,487 36,179 - Net profit (loss) from operation 72,299 (1,960) 54,994 (24,840) (Less) Minority interest in net profit (17,305) (22,880) - - Net profit (loss) 54,994 (24,840) 54,994 (24,840) Net profit (loss) per share (Baht) (Note 4 ) 0.52 (0.24) 0.52 (0.24) See notes to financial statements CH. KARNCHANG PUBLIC COMPANY LIMITED, SUBSIDIARIES AND JOINT VENTURES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1999 AND 1998 (UNAUDITED) Consolidated CH. Karnchang Public Co., Ltd. Amounts : Thousand Baht 1999 1998 1999 1998 ORDINARY SHARE CAPITAL Beginning balance 1,050,000 1,050,000 1,050,000 1,050,000 Increase during period - - - - Decrease during period - - - - Ending balance 1,050,000 1,050,000 1,050,000 1,050,000 PREMIUM ON SHARE CAPITAL Beginning balance 2,436,000 2,436,000 2,436,000 2,436,000 Increase during period - - - - Decrease during period - - - - Ending balance 2,436,000 2,436,000 2,436,000 2,436,000 APPROPRIATED RETAINED EARNINGS Beginning balance 88,442 78,047 82,942 72,547 Increase during period - - - - Decrease during period - - - - Ending balance 88,442 78,047 82,942 72,547 UNAPPROPRIATED RETAINED EARNINGS Beginning balance 818,019 620,506 823,519 626,006 Increase during period - Net profit (loss) 54,994 (24,840) 54,994 (24,840) Decrease during period - Transfer to legal reserve - - - - - Payment of dividend - - - - Ending balance 873,013 595,666 878,513 601,166 UNREALIZED GAIN (LOSS) ON CHANGE IN INVESTMENT VALUE Beginning balance - - - - Increase during period 403,922 (398,585) 353,775 (398,585) Decrease during period - - - - Ending balance 403,922 (398,585) 353,775 (398,585) Total Shareholders' Equity 4,851,377 3,761,128 4,801,230 3,761,128 See notes to financial statements (more)