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CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES REPORT AND CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD OF THREE MONTHS ENDED 31st MARCH, 2000 Report of Independent Auditor To The Board of Directors and Shareholders of CH. Karnchang Public Company Limited I have reviewed the accompanying consolidated balance sheet of CH. Karnchang Public Company Limited, its subsidiary companies and its joint ventures and the balance sheet of CH. Karnchang Public Company Limited as at 31st March, 2000, the related statements of earnings, retained earnings, changes in shareholders' equity and cash flows for the period of three months ended 31st March, 2000. These financial statements are the responsibility of the Company's, its subsidiary companies' and its joint ventures' managements as to their correctness and the completeness of the presentation. My responsibility is to report on these financial statements based on my review. I conducted my review in accordance with the auditing standard applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of the Company's, its subsidiary companies' and its joint ventures' personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not performed an audit and, accordingly, I do not express an audit opinion. Based on my review, nothing has come to my attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. I draw attention to the financial statements for the period of three months ended 31st March, 2000 that a joint venture had construction machinery and equipment of which the net book value as included in the consolidated financial statements was Baht 341 million (before provision for impairment loss). The construction project of that joint venture will be completed in 2000. The joint venture recorded a provision for loss on impairment of assets on items which were not expected to be used, and would be disposed of at a price lower than net book value. The Company's share of this provision in proportion to its investment was Baht 49 million. However, the joint venture has entered a bid for a new project with the Expressway & Rapid Transit Authority of Thailand and the machinery and equipment could be used on this new project. The joint venture is in the process of proposing a bid price and negotiating with Expressway & Rapid Authority of Thailand, and the result of the bid is not known at this stage. The consolidated financial statements for the year ended 31st December, 1999 of CH. Karnchang Public Company Limited, its subsidiary companies and its joint ventures and the financial statements of CH. Karnchang Public Company Limited for the year then ended were audited, in accordance with generally accepted auditing standards by another auditor who, under his report dated 18th February, 2000, expressed a qualified opinion on those financial statements, excepting the effects of any adjustments which might have been necessary had he been able to satisfy himself as to the determination of the provisions for impairment of the fixed assets of a joint venture and the other fixed assets of a subsidiary which was acquired by the Company in 1999, amounting to approximately Baht 375.9 million and Baht 172.12 million, respectively, and as to the proper evidence regarding the cost of land belonging to that subsidiary company. That auditor also drew his attention to the effect of the economic environment to the ongoing activities of the Company, its subsidiaries and its joint ventures. The balance sheet as at 31st December, 1999, as presented herein for comparative purposes, formed a part of the financial statements which is audited and reported by that auditor. The statements of earnings, retained earnings, changes in shareholders' equity and cash flows for the period of three months ended 31st March, 1999, as presented herein for comparative purposes, were reviewed by the aforementioned auditor who, under his report dated 7th May, 1999, reported that except for the Company's not setting up Baht 409 million provision for doubtful debt, he was not aware of any material modifications that should be made to the financial statements in order for them to be in accordance with the generally accepted accounting principles. He also drew his attention to various matters as discussed in his report. Ruth Chaowanagawi Certified Public Accountant (Thailand) No. 3247 Ernst & Young Office Limited Bangkok : 4th May, 2000 CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES BALANCE SHEETS (THOUSAND BAHT) CONSOLIDATED THE COMPANY ONLY As at As at As at As at 31st March 31st December 31st March 31st December Note 2000 1999 2000 1999 (Unaudited/ (Audited) (Unaudited/ (Audited) but reviewed) but reviewed) ASSETS CURRENT ASSETS Cash in hand and at banks 3 4,915,463 4,055,912 2,440,642 1,421,788 Short-term investments 3 97,559 202,421 236 602 Investment in marketable securities 878 977 878 977 Trade accounts receivable - net 4 986,563 945,051 658,072 658,135 Accounts receivable and loans to subsidiary, associated and related companies and joint ventures -net 5, 13 582,908 572,392 778,552 744,920 Construction contract in progress - net 55,020 2,367,463 26,199 - Inventories, supplies for construction - net 40,452 68,012 2,798 21,162 Advance payment to subcontractors - net 86,031 88,570 14,298 24,856 Other current assets Prepaid expenses 18,004 77,645 9,081 5,628 Accrued interest income 4,025 38,122 - - Accrued income 15,349 14,264 15,359 14,264 Refundable input tax - net 113,518 125,314 - - Unbilled input tax 55,276 73,462 11,065 13,070 Other current assets 66,116 39,712 5,603 6,860 TOTAL CURRENT ASSETS 7,037,162 8,669,317 3,962,783 2,912,262 INVESTMENTS IN SUBSIDIARY COMPANIES AND JOINT VENTURES 6 - - 1,066,829 1,146,232 INVESTMENT IN ASSOCIATED COMPANY 7 148,043 180,728 148,043 180,728 INVESTMENTS IN RELATED AND OTHER COMPANIES 8 1,222,973 1,982,803 1,115,690 1,803,887 PROPERTY, PLANT AND EQUIPMENT - net 1,320,024 1,483,365 407,854 439,357 INVESTMENT IN LAND 155,780 155,780 132,766 132,766 ADVANCE PAYMENT FOR PROJECT 137,466 128,265 - - WITHHOLDING TAX DEDUCTED AT SOURCES 281,160 281,521 161,919 161,919 OTHER ASSETS 11,699 16,672 6,490 6,483 TOTAL ASSETS 10,314,307 12,898,451 7,002,374 6,783,634 The accompanying notes are an integral part of the financial statements. CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES BALANCE SHEETS (Continued) (THOUSAND BAHT) CONSOLIDATED THE COMPANY ONLY As at As at As at As at 31st March 31st December 31st March 31st December Note 2000 1999 2000 1999 (Unaudited/ (Audited) (Unaudited/ (Audited) but reviewed) but reviewed) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts and loans from banks 3,310,636 3,079,640 1,059,595 882,382 Notes payable - finance institutions 200,000 200,000 200,000 200,000 Accounts and notes payable 709,738 781,405 468,833 470,774 Current portion of long-term liabilities 10 683,949 3,630,064 45,900 - Accounts payable and loans from subsidiary, related companies and joint ventures 9, 13 674,481 1,072,504 91,289 70,882 Advance received from contractor and deferred construction revenue 1,723,977 1,397,734 494,011 472,645 Retentions for construction 145,433 195,374 58,445 93,344 Provision for loss from construction 131,665 144,237 - - Other current liabilities Accrued interest expense 20,030 40,052 7,265 7,937 Accrued income tax 73,882 30,761 12,390 - Accrued expenses 14,901 25,002 3,326 28,125 Unbilled output tax 118,740 117,474 92,059 93,144 Other current liabilities 195,802 90,055 5,146 14,214 TOTAL CURRENT LIABILITIES 8,003,234 10,804,302 2,538,259 2,333,447 LONG-TERM LOANS FROM RELATED COMPANIES 504,279 165,541 - - LONG-TERM LOANS - net of current portion 10 454,100 262,118 454,100 240,000 SECURED DEBENTURES 11 500,000 - 500,000 - PROVISION FOR LOSS ON DOUBTFUL DEBT FROM SUBSIDIARYCOMPANIES AND JOINT VENTURES 282,627 272,303 - - PROVISION FOR LOSS ON INVESTMENTS 6 - - 3,143,866 3,056,840 TOTAL LIABILITIES 9,744,240 11,504,264 6,636,225 5,630,287 The accompanying notes are an integral part of the financial statements. CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES BALANCE SHEETS (Continued) (THOUSAND BAHT) CONSOLIDATED THE COMPANY ONLY As at As at As at As at 31st March 31st December 31st March 31st December 2000 1999 2000 1999 (Unaudited/ (Audited) (Unaudited/ (Audited) but reviewed) but reviewed) SHAREHOLDERS' EQUITY Share capital Registered, issued and fully paid 105,000,000 ordinary shares of Baht 10 each 1,050,000 1,050,000 1,050,000 1,050,000 Premium on share capital 2,436,000 2,436,000 2,436,000 2,436,000 Retained earnings (deficit) Appropriated - statutory reserve 88,442 88,442 82,942 82,942 Unappropriated (deficit) (2,234,988) (2,238,447) (2,229,488) (2,232,947) Unrealized loss on change in investment value (973,305) (182,648) (973,305) (182,648) Total equity attributable to Company's shareholders 366,149 1,153,347 366,149 1,153,347 Minority interest - Equity attributable to minority shareholders of subsidiary companies 203,918 240,840 - - TOTAL SHAREHOLDERS' EQUITY 570,067 1,394,187 366,149 1,153,347 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 10,314,307 12,898,451 7,002,374 6,783,634 0 0 0 0 The accompanying notes are an integral part of the financial statements. DIRECTORS (UNAUDITED/BUT REVIEWED) CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES STATEMENTS OF EARNINGS FOR THE PERIOD OF THREE MONTHS ENDED 31st MARCH (Thousand Baht, except earnings per share expressed in Baht) CONSOLIDATED THE COMPANY ONLY Note 2000 1999 2000 1999 (Restated) (Restated) EARNINGS REVENUES Revenues from construction services 1,393,433 2,791,079 410,407 741,177 Sales of construction material 108,798 113,496 90,231 173,990 Management income 15,490 18,434 25,577 26,609 Rental income 9,409 13,166 14,292 15,056 Transportation income 5,094 13,505 5,682 14,040 Other income Interest income 13,700 38,977 12,536 8,181 Gain on exchange rate 7,922 45,219 1,138 - Share of profit of subsidiary, associated companies and joint ventures - - - 83,387 Other incomes 72,711 6,010 23,467 5,878 TOTAL REVENUES 1,626,557 3,039,886 583,330 1,068,318 EXPENSES Costs of construction services and sales of construction materials 1,177,471 2,402,858 394,269 765,833 Selling and administrative expenses 153,229 119,774 66,288 49,118 Share of loss of subsidiary, associated companies and joint ventures 32,685 16,371 32,372 - Provision for doubtful debts - related parties 26,641 - - - Interest expenses 143,162 243,065 39,333 73,051 Other expenses 31,334 43,959 31,334 38,967 TOTAL EXPENSES 1,564,522 2,826,027 563,596 926,969 EARNINGS BEFORE INCOME TAX 62,035 213,859 19,734 141,349 CORPORATE INCOME TAX 12 (63,263) (79,535) (16,275) (20,404) EARNINGS (LOSS) BEFORE MINORITY INTERESTS (1,228) 134,324 3,459 120,945 MINORITY INTERESTS 4,687 (13,379) - - NET EARNINGS FOR THE PERIOD 3,459 120,945 3,459 120,945 BASIC EARNINGS PER SHARE (Baht) Net earnings 0.03 1.15 0.03 1.15 Number of ordinary shares 105 105 105 105 million shares million shares million shares million shares The accompanying notes are an integral part of the financial statements. (UNAUDITED/BUT REVIEWED) CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES STATEMENTS OF RETAINED EARNINGS FOR THE PERIOD OF THREE MONTHS ENDED 31st MARCH (Thousand Baht) CONSOLIDATED THE COMPANY ONLY Note 2000 1999 2000 1999 (Restated) (Restated) RETAINED EARNINGS - UNAPPROPRIATED BALANCE - beginning of period, as previously reported (deficit) (2,238,447) 818,019 (2,232,947) 823,519 CUMULATIVE EFFECT OF THE CHANGE IN ACCOUNTING POLICY FOR DEFERRED EXPENSES 2 - (63,397) - (63,397) CUMULATIVE EFFECT OF THE CHANGE IN ACCOUNTING FOR INVESTMENT 2 - (98,428) - (98,428) BALANCE - beginning of period, as restated (deficit) (2,238,447) 656,194 (2,232,947) 661,694 NET EARNINGS FOR THE PERIOD 3,459 120,945 3,459 120,945 TOTAL RETAINED EARNINGS - unappropriated (deficit) (2,234,988) 777,139 (2,229,488) 782,639 RETAINED EARNINGS - APPROPRIATED STATUTORY RESERVE 88,442 88,442 82,942 82,942 TOTAL RETAINED EARNINGS - appropriated 88,442 88,442 82,942 82,942 TOTAL RETAINED EARNINGS (DEFICIT) (2,146,546) 865,581 (2,146,546) 865,581 The accompanying notes are an integral part of the financial statements. (UNAUDITED/BUT REVIEWED) CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD OF THREE MONTHS ENDED 31st MARCH (Thousand Baht) CONSOLIDATED THE COMPANY ONLY Note 2000 1999 2000 1999 (Restated) (Restated) SHARE CAPITAL ORDINARY SHARE Balance - beginning of the period 1,050,000 1,050,000 1,050,000 1,050,000 Balance - end of the period 1,050,000 1,050,000 1,050,000 1,050,000 PREMIUM ON SHARE CAPITAL Balance - beginning of the period Balance - end of the period 2,436,000 2,436,000 2,436,000 2,436,000 RETAINED EARNINGS 2,436,000 2,436,000 2,436,000 2,436,000 APPROPRIATED - statutory reserve Balance - beginning of the period 88,442 88,442 82,942 82,942 Balance - end of the period 88,442 88,442 82,942 82,942 UNAPPROPRIATED Balance - beginning of the period, as previously reported (deficit) (2,238,447) 818,019 (2,232,947) 823,519 Cumulative effect of the change in accounting policy for deferred expenses 2 - (63,397) - (63,397) Cumulative effect of the change in accounting for investment 2 - (98,428) - (98,428) Balance - beginning of the period, as restated (deficit) (2,238,447) 656,194 (2,232,947) 661,694 Increase during period 3,459 120,945 3,459 120,945 Balance - end of the period (deficit) (2,234,988) 777,139 (2,229,488) 782,639 UNREALIZED GAIN (LOSS) ON CHANGE IN INVESTMENT VALUE Balance - beginning of the period (182,648) - (182,648) - Increase during period (790,657) 737,304 (790,657) 619,862 Balance - end of the period (973,305) 737,304 (973,305) 619,862 TOTAL EQUITY ATTRIBUTABLE TO COMPANY'S SHAREHOLDERS 366,149 5,088,885 366,149 4,971,443 MINORITY INTEREST - EQUITY ATTRIBUTABLE TO MINORITY SHAREHOLDERS OF SUBSIDIARY COMPANIES Balance - beginning of the period 240,840 154,989 - - (more)