SET Announcements

Valuation of Investments 1. As at June 30, 1999 and 1998, investment in Bangkok Expressway Public Company Limited. The parent company invested in the said company at cost in the approximate amount of Baht 1,992.6 million and Baht 2,284.3 million, respectively. This investment was valued at market price in approximate amount of Baht 2,346.4 million and Baht 1,885.7 million, respectively. In 1998, net realizable value was lower than cost. The company set up the allowance for devaluation of the mentioned security in amount of Baht 398.6 million and presented net unrealized loss deduction under the shareholders' equity. Subsidiary company had this investment at cost in the approximate amount of Baht 140.4 million, carried a market value in approximate amount of Baht 231.6 million and Baht 162.4 million, respectively. Investment in Bangkok Expressway Public Company Limited was recorded in fair value in 1999 and in the lower of cost or net realizable value in 1998. The company recorded investment in Bangkok Expressway Public Company Limited in fair value according to generally accepted accounting principles applied for financial statements of fiscal year 1999. 2. As at June 30, 1999 and 1998, investment in Nava Finance and Securities Public Co.,Ltd., in approximate amount of Baht 27.3 million. According to the report of Office of the Auditor General on the financial statements for the year ended December 31, 1998, dated April 1, 1999, reported with qualifications regarding inadequacy of the allowance for doubtful debt. Since Bank of Thailand has instruction to the company dated May 17, 1998 to devalue its share capital from Baht 10.00 to Baht 0.01 par value and then increase the capital and change the board of directors. In addition, the Financial Institutions Rehabilitation Fund subscribed the additional capital and it also merged by transferring assets and liabilities. The company therefore considered to set up the allowance for devaluation of the whole mentioned security. 3. As at June 30, 1998, investments in Tokyu Merchandise Development Co., Ltd. and Tokyu Department Store (Thailand) Co., Ltd., totalling cost in approximate amount of Baht 17.1 million, as at July 31, 1996, had a deficit greater than the amount of issued share capital. The company has considered to set up allowance for devaluation of the said investment. In the forth quarter of 1998, the company sold its investment in both companies to Tokyu Department Store (Japan) Co.,Ltd. at cost. Selling Investment In 1998, according to the minute of the executive board of directors meeting, no 1/1998 held on 15 January 1998, the management's resolution was pass to sell a portion of its investments in Bangkok Expressway Public Company Limited and investment in Nava Finance and Securities Public Co.,Ltd. in the first quarter of 1998 and approving by directors in the second quarter of 1998 which is resulting the gain on sale in the amount of Baht 10.04 million, after net off loss from selling of investment in Nava Finance and Securities Public Co.,Ltd. in the amount of Baht 75.1 million. Pledged Investments As at June 30, 1999 and 1998, in consolidated financial statements, investments in related companies in approximate amounts of Baht 502.2 million and Baht 500.2 million, respectively, were pledged to secure construction for joint ventures and related company, and as a collateral for loans from banks and financial institutions for related company. As at June 30, in the company's financial statements, subsidiaries company and Joint Ventures which had liability balances at the end of period were presented as other liabilities comprise: Percentage of share Holding by Parent Company Dividend Business or Percentage of profit sharing Equity Method or profit sharing Classification Relationship (Amounts : Thousand Baht) in joint venture 1999 1998 payment - Joint Venture Phuket Consortium Consists of CH. Karnchang Public Co., Ltd., Thames Water International (Thailand) Co., Ltd., Index International Group Co., Ltd., and Trio Consultant Co., Ltd. 93.00 2,745 1,357 - Construction Co - director - Bangkok Metro Co., Ltd. 79.94 10,551 - - Public Utility concession Co - director - Joint Venture BBCD Bilfinger and Berger Bauaktiengesellschaft, CH. Karnchang Public Co., Ltd., Dyckerhoff + Widmann AG 35.00 1,103,617 838,403 - Construction Co - director - Joint Venture BCKT (Bilfinger and Berger Bauaktiengesellschaft, CH. Karnchang Public Co., Ltd., Kumagai Gumi Co., Ltd., and Tokyu Construction Co., Ltd.) 25.00 - 15,127 - Construction Co - director Total Other Liabilities 1,116,913 854,887 - NOTE 12 - PROPERTY, BUILDING AND EQUIPMENT - NET In the second quarter of 1999, the company sold equipments for construction to a subsidiary company in amount of Baht 16 million which the payment is separated into 36 installments. Each of the first to the thirty fifth installments are Baht 450,000 and the thirty sixth installment is Baht 250,000, starting from May, 1999. The company delivered the whole assets on May 4, 1999 but will transfer the ownerships to the subsidiary when it paid fully price of the received fixed assets already as the contract dated April 30, 1999. The company had gain from sale of the said fixed assets in the approximate amount of Baht 7 million. As at June 30, 1999, certain vehicles of the parent company, the ownerships were registered under the name of a subsidiary and are not being transferred to the company. As at June 30, 1999 and 1998 most equipments and vehicles of joint ventures which the company has 59.99% and 35% of profit sharing were registered under the name of participants or related companies or subcontractors. For the subcontractor, the joint venture informed that the assets were registered under the name of subcontractor in order to have convenience for its operation. However, this subcontractor confirmed that these assets are belong to the joint venture. Machinery, equipment and vehicles of the joint ventures with the value according to the company's proportion in the approximate amount of Baht 5.6 million, and Baht 102.4 million, respectively, have not yet been registered as joint venture assets. The joint venture which the company has 25% of profit sharing had made land rental contract with other company for plant of producing supplies for construction purpose. Rental period is shorter than project life. When the rental contract period is due, the joint venture can renew the said rental contract as mentioned in the contract. NOTE 13 - OTHER ASSETS In the second quarter of 1999, the company amortized deferred expense in amount of Baht 13.34 million which incurred since 1994 to 1997 for bidding the power purchase concession project generated by waterpower from Num Ngum dam. Expenses from the amortization are included in statement of income. As at June 30, 1999 and 1998, the withholding tax which was prepaid no more than 3 years for the company's financial statements in the amount of Baht 161.9 million and Baht 80.2 million, respectively and in the consolidated financial statements in the amount of Baht 250.4 million and Baht 206.8 million, respectively, have not yet be requested for refund by the parent company, subsidiaries, and joint ventures. As at June 30, 1999, the consolidated financial statements included deferred expense in the approximate amount of Baht 79.6 million incurred from biding MRTA concession project which the bidding result can not be determined at this moment. NOTE 14 - BANK OVERDRAFTS AND LOAN FROM BANKS As at June 30, bank overdrafts and loans from banks are as follows: - The parent company, certain loans are foreign currency issued in promissory note in amount of USD 5 million with interest rate of 7.8125% per annum. The company has fully insured against the risk from exchange rates. Bank overdrafts and loan from banks of parent company are secured by claims in receipt from construction and company's directors. - Two limited partnerships in 1999 and 1998 are secured by claims in receipt from construction, and pledged by securities of related company, partners and directors of the company. - A joint venture which the company has 35% of profit sharing had loan contracts with domestic commercial banks and foreign banks in the amount of Baht 1,150 million, and foreign currency in amount of USD 38.57 million and Yen 8,981.66 million in the 1999, and the amount of Baht 950 million and foreign currency in amount of USD 88.40 million and Yen 1,333 million in 1998. The joint venture has insured against the risk from exchange rates in the approximate amount of USD 31.37 million and USD 7.8 million in the 1999 and 1998, respectively. Certain of the mentioned loans are guaranteed by the parent company, participants and letter of consent from joint venture that bank may deduct any delinquent payment of fees, interest and principal from the discount sale of the promissory notes issued by employer. NOTE 15 - LIABILITIES UNDER DISCOUNTED NOTES RECEIVABLE Liabilities under discounted note receivables of the joint venture which the company has 35% of profit sharing incurred from the discounted of notes receivable from the employer with 4 Banks, the issuance date on these notes receivable are varied. NOE 16 - LONG-TERM LOANS As at June 30, long term loans are as follows: - In 1999 and 1998, the parent company has a long-term loan from foreign financial institutions in the amounts of USD 30 million and USD 40 million, respectively, with interest rate SIBOR + 1% per annum. The company made an agreement to secure the risk from exchange rate of the whole loan on August 30, 1996 and May 12, 1997. The repayment will be made in semi - annually basis starting from August 1997. Each of the first four installments are USD 5 million. The remaining amount of repayments is due within 1 year after. And the long-term loan in amount of Baht 100 million is promissory note which is due in 1999. The company postponed its repayment by cancelling and issuing new promissory notes which will be due in 2000 with interest rate of MLR+1.5% per annum. - The joint venture which the company has 59.99% of profit sharing had a long-term loans from local commercial banks, by transferring the right of the claim for receipt of repayment from the employer according to the construction agreement to the bank as collateral of the said loan. Certain loans are guaranteed by the participants which is comprised of: In the approximate amount of Baht 750 million in 1998 with interest rate of MLR, MLR+0.5% ,the repayment of principle will be made on a monthly basis in approximate amount of Baht 100 million per installment, starting from July 1998. Since October 1998, joint venture had repaid the principal on monthly basis in amount of 55% of monthly actual received of billings from the employer which is less than Baht 100 million. The repayment would be completed within June 1999. In the amount of Baht 300 million in 1998 with interest rate of MRR+3.75%, the repayment was on a monthly basis, in the amount of Baht 30 million per installment, starting from August 1998. And in the amount of Baht 706.70 million and Baht 1,200 million in 1999 and 1998, respectively with interest rate of MLR, the repayment was on a monthly basis in the amount at least 50% of construction work received each month, but not less than Baht 100 million, starting from October 1998 or when the joint venture has received revenue from the employer to totalling not less than 55% of the contract price whatever is earlier, starting from December 1998. The joint venture changed conditions of loan repayment to be on monthly basis and in amount not less than 20% of construction work received each month, started in January 1999, or when joint venture has received revenue from employer not less than Baht 3,300 million whatever is earlier. The joint venture has to repay at least in amount of Baht 1,000 million within February 2000 and repay the rest of principal in amount of Baht 200 million within June 2002. The condition for repayment can be changed, depend on the ability of employer's work payment in the future. - A joint venture which the company has 35% of profit sharing has long-term loans from a local commercial bank in the amount of Baht 688 million in 1999 and 1998 which the repayment is separated into 4 installments according to the agreement. The repayment of all loan was postponed to November, 1999. And from a finance and securities company in the amount of Baht 533.97 million and Baht 573.97 million in 1999 and 1998, respectively. In 1999 the repayment schedule have been changed to be made in September 1999 and October 1999 in the approximate amount of Baht 106.79 million and Baht 427.18 million, respectively. Long-term loans of this joint venture have been guaranteed by the participants. - In 1999, a joint venture which the company has 25% of profit sharing had a long term loan from a local commercial bank in the amount of Baht 500 million with interest rate of MLR. The repayment of principal was on a monthly basis in the amount 20 % of construction revenue received each month, but not less than Baht 35 million, starting from November 1999, by transferring the right of the claim for receipt of repayment from the employer for only Baht currency portion according to the construction agreement with the bank as collateral of the said loan and guaranteed by the participants In the 1999 and 1998, the current portion of long-term loan included current portion of discounted notes receivable in approximate amounts of Baht 3,299.71 million and Baht 1,252 million respectively, of the joint venture which the company has 35% of profit sharing is presented under current liabilities. NOTE 17 - INCOME AND COST OF CONSTRUCTION ACTIVITIES In consolidated financial statements of 1999 and 1998, the construction income of a joint venture which the company has 25% of profit sharing have included gain from exchange rate arising from increasing of the exchange rate which was identified in the contracts of foreign currency income portion in the approximate amount of Baht 114.9 million and Baht 80.4 million, respectively which included unrealized gain from exchange rate in amount of Baht 33.60 million and Baht 18.86 million, respectively. The project value of the said joint venture consists of Baht and Yen currency portions, the value of project will vary in accordance with foreign exchange rate. If using the exchange rate identified in construction contract in translation, the project value was lower than the revised budget cost. When using the exchange rate as at June 30, 1999 in translation, the project value is still higher than estimated budget cost. In 1999 The parent company revised the construction contract price and the project cost. Consequently, the company had to reduce net construction activity income in amount of Baht 93.81 million. The joint venture which the company has 59.99% of profit sharing has revised the project cost. Consequently, the company had to reduce net construction activity income in amount of Baht 32.9 million. The joint venture which the company has 35% of profit sharing revised the construction contract price and the project cost. Consequently, the joint venture had to increase net construction activity income in amount of Baht 60.27 million due to its additional contract from the Expressway and Rapid Transit Authority of Thailand. In 1998 The parent company had made the adjustment to reduce the construction income in approximate amount of Baht 93 million, according to the cost overrun arising from increase in costs of construction materials, wages, subcontractors together with construction plan of project delayed because of the reserve structure in the construction area. The project which the company has already estimated and realized the whole loss in 1997 because the estimation of total contract cost exceeded the total contract revenue, also incurred additional cost in the amount of Baht 90 million. The joint venture which the company has 35%, 50% and 59.99% of profit sharing revised the project cost to be in line with the current economic situation, resulting the joint venture adjusted by decreasing the construction activity income in amount of Baht 483.73 million, Baht 25.08 million and Baht 120.03 million, respectively. The joint ventures which the company has 25% and 59.99% of profit sharing had additional project value and revised project cost, resulting the joint ventures adjusted by decreasing the construction activity income in amount of Baht 76.71 million and Baht 10.43 million, respectively. NOTE 18 - ESTIMATION OF COST OF CONSTRUCTION ACTIVITIES The joint venture which the company has 35% of profit sharing has revised its cost of construction by increasing from the previous estimation. The additional cost of project is additional construction value from the employer which in the first quarter of 1999, there was uncertainty of negotiation. NOTE 19 - GAIN (LOSS) FROM CURRENCY EXCHANGE The company recorded gain (loss) from currency exchange for the 6 month periods ended June 30, as follows: Consolidated CH. Karnchang Public Co., Ltd. (Amounts : Thousand Baht) 1999 1998 1999 1998 Gain (Loss) from currency exchange - Realized 16,670 44,536 377 (7,260) - Unrealized 93,585 216,535 - (2,710) Total 110,255 261,071 377 (9,970) As at June 30, the company, subsidiaries and joint ventures had net liabilities in foreign currencies equivalent to USD currency as follows: Amounts : Thousand US Dollar 1999 1998 CH. Karnchang Public Co., Ltd. 36,110 47,875 CH. Karnchang Public Co., Ltd. Subsidiary Companies and Joint Ventures 83,542 97,490 In 1999 and 1998, the company secured the risk of exchange rate for long term loans in the amount of USD 35.6 million and USD 47.9 million, respectively. In 1999 and 1998, the company, subsidiaries and joint ventures had a contract to secure the risk from exchange rate in the amount of USD 46.6 million and USD 56.5 million, respectively. (more)