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CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES REPORT AND CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED 30th JUNE, 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 subsidiaries and its joint ventures as at 30th June, 2000, the related consolidated statements of earnings for the three-month and six-month periods ended 30th June, 2000, and the consolidated statements of retained earnings, changes in shareholders' equity and cash flows for the six-month period ended 30th June, 2000, and the separate financial statements of CH. Karnchang Public Company Limited for the same periods. These financial statements are the responsibility of the Company's, its subsidiaries' and its joint ventures' managements as to their correctness and the completeness of the presentation. My responsibility is to issue a 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 subsidiaries' 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. With regard to the financial statements for the three-month and six-month periods ended 30th June, 2000, I draw attention to a joint venture's having construction machinery and equipment of which the net book value as included in the consolidated financial statements was Baht 281 million (before provision for impairment loss). The construction project of that joint venture will be completed in 2000 and the joint venture recorded a provision for loss on impairment of assets on items which it was expected would not 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 Transit Authority of Thailand, and the result of the bid is not known at this stage. The consolidated financial statements of CH. Karnchang Public Company Limited, its subsidiaries and its joint ventures and the separate financial statements of CH. Karnchang Public Company Limited for the year ended 31st December, 1999, 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 which the Company has 35 percent of profit sharing 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 cost of land belonging to that subsidiary company. That auditor also drew attention to the effect of the economic environment on 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 an integral part of the financial statements which that auditor audited and reported on. The consolidated statements of earnings for the three-month and six-month periods ended 30th June, 1999 and the consolidated statements of retained earnings, changes in shareholders' equity and cash flows for the six-month period ended 30th June, 1999 of CH. Karnchang Public Company Limited, its subsidiaries and its joint ventures and the separate financial statements of CH. Karnchang Public Company Limited, as presented herein for comparative purposes, formed an integral part of the interim financial statements which were reviewed by the aforementioned auditor who reported, under his report dated 3rd August, 1999, that except for the Company's not setting up a provision for doubtful debt against amounts due from related joint ventures of Baht 409 million and a joint venture's, which the Company has 59.99 percent of profit sharing, setting up unadequte provision for doubtful debt of approximately Baht 95.2 million, he was not aware of any material modifications that should be made to the interim financial statements in order for them to be in accordance with the generally accepted accounting principles. He also drew attention to various matters discussed in his report. Ruth Chaowanagawi Certified Public Accountant (Thailand) No. 3247 Ernst & Young Office Limited Bangkok : 2nd August, 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 30th June 31st December 30th June 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 5,582,311 4,055,912 2,800,133 1,421,788 Short-term investments 3 126,946 202,421 236 602 Investment in marketable securities 816 977 816 977 Trade accounts receivable - net 4 989,355 945,051 638,431 658,135 Accounts receivable and loans to subsidiary, associated and related companies and joint ventures - net 5, 15 615,325 599,298 917,563 744,920 Construction contract in progress - net 36,134 2,367,463 38,150 - Inventories, supplies for construction - net 36,702 68,012 3,925 21,162 Advance payment to subcontractors - net 522,248 100,359 10,598 24,856 Other current assets Prepaid expenses 22,711 85,149 7,941 5,628 Accrued income 12,986 14,133 12,954 14,264 Refundable input tax - net 105,858 126,814 - - Unbilled input tax 91,865 83,252 10,113 13,070 Other current assets 79,030 25,722 12,634 6,860 TOTAL CURRENT ASSETS 8,222,287 8,674,563 4,453,494 2,912,262 INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES 6 - - 1,026,517 1,146,232 INVESTMENT IN ASSOCIATED COMPANY 7 133,568 180,728 133,568 180,728 INVESTMENTS IN RELATED AND OTHER COMPANIES 8 1,113,255 1,982,803 1,015,523 1,803,887 PROPERTY, PLANT AND EQUIPMENT - NET 1,178,162 1,483,365 387,378 439,357 INVESTMENT IN LAND 155,780 155,780 132,766 132,766 ADVANCE PAYMENT FOR PROJECT - NET 143,490 128,265 - - WITHHOLDING TAX DEDUCTED AT SOURCE 249,519 275,932 161,920 161,919 OTHER ASSETS 43,549 16,672 21,924 6,483 TOTAL ASSETS 11,239,610 12,898,108 7,333,090 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 30th June 31st December 30th June 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 3,596,959 3,079,640 1,172,564 882,382 Notes payable - financial institutions 110,579 200,000 100,000 200,000 Accounts and notes payable 1,030,618 764,326 345,265 470,774 Unsecured debentures 10 400,000 - 400,000 - Current portion of long-term loans 12 696,685 3,630,064 108,600 - Accounts payable and loans from subsidiary and related companies and joint ventures 9, 15 653,118 747,450 76,078 45,814 Advance received from contractor and deferred construction revenue 1,958,033 1,405,584 498,400 497,713 Retentions for construction 145,478 195,641 63,185 93,344 Provision for loss from construction 129,148 134,127 - - Other current liabilities Accrued interest 32,583 26,507 15,398 7,937 Accrued income tax 114,158 34,577 - - Accrued expenses 59,679 56,967 1,700 28,125 Unbilled output tax 116,437 120,277 88,448 93,144 Other current liabilities 75,067 51,695 49,609 14,214 TOTAL CURRENT LIABILITIES 9,118,542 10,446,855 2,919,247 2,333,447 LONG-TERM LOANS FROM RELATED COMPANIES 11 486,323 522,645 - - LONG-TERM LOANS - net of current portion 12 391,400 262,118 391,400 240,000 SECURED DEBENTURES 13 500,000 - 500,000 - PROVISION FOR LOSS FROM DOUBTFUL DEBTS OF SUBSIDIARIES AND JOINT VENTURES 273,147 272,303 - - PROVISION FOR LOSS ON INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES 6 - - 3,245,370 3,056,840 TOTAL LIABILITIES 10,769,412 11,503,921 7,056,017 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 30th June 31st December 30th June 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) (2,218,643) (2,238,447) (2,213,143) (2,232,947) Unrealized loss on change in value of investments (1,078,726) (182,648) (1,078,726) (182,648) Total equity attributable to Company's shareholders 277,073 1,153,347 277,073 1,153,347 Minority interest - Equity attributable to minority shareholders of subsidiaries 193,125 240,840 - - TOTAL SHAREHOLDERS' EQUITY 470,198 1,394,187 277,073 1,153,347 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 11,239,610 12,898,108 7,333,090 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 THREE-MONTH PERIODS ENDED 30th JUNE (Thousand Baht, except earnings per share expressed in Baht) CONSOLIDATED THE COMPANY ONLY Note 2000 1999 2000 1999 (Restated) (Restated) REVENUES Revenues from construction services 1,180,217 2,493,352 265,880 622,745 Sales of construction materials 44,629 39,372 56,480 162,598 Project management income 14,941 16,975 25,398 21,463 Rental income 10,393 9,999 10,217 14,799 Transportation income 2,166 10,933 2,962 11,792 Other income Interest income 20,021 63,192 15,357 41,274 Gain on exchange - 65,036 1,052 377 Share of profit of subsidiaries, associated companies and joint ventures - 4,035 28,901 - Other income 48,116 10,499 15,567 18,342 TOTAL REVENUES 1,320,483 2,713,393 421,814 893,390 EXPENSES Costs of construction services and sales of construction materials 876,631 2,304,049 258,186 658,957 Selling and administrative expenses 171,421 148,738 65,972 75,325 Share of loss of subsidiaries, associated companies and joint ventures 14,475 - - 82,810 Directors' remuneration 5,325 5,900 5,325 5,900 Interest expenses 95,305 209,919 52,855 64,388 Loss on exchange 33,522 - - - Other expenses 28,884 55,405 28,402 34,157 TOTAL EXPENSES 1,225,563 2,724,011 410,740 921,537 EARNINGS (LOSS) BEFORE INCOME TAX 94,920 (10,618) 11,074 (28,147) CORPORATE INCOME TAX 14 (85,070) (29,378) 5,270 (15,775) EARNINGS (LOSS) BEFORE MINORITY INTERESTS 9,850 (39,996) 16,344 (43,922) MINORITY INTERESTS 6,494 (3,926) - - NET EARNINGS (LOSS) FOR THE PERIOD 16,344 (43,922) 16,344 (43,922) BASIC EARNINGS PER SHARE Net earnings (loss) (Baht) 0.16 (0.42) 0.16 (0.42) 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 EARNINGS FOR THE SIX-MONTH PERIODS ENDED 30th JUNE (Thousand Baht, except earnings per share expressed in Baht) CONSOLIDATED THE COMPANY ONLY Note 2000 1999 2000 1999 (Restated) (Restated) REVENUES Revenues from construction services 2,573,650 5,284,431 676,287 1,363,922 Sales of construction materials 153,427 152,868 146,711 336,588 Project management income 30,431 35,409 50,975 48,072 Rental income 19,802 23,165 24,509 29,855 Transportation income 7,260 24,438 8,644 25,832 Other income Interest income 33,721 102,169 27,893 49,455 Gain on exchange - 110,255 2,190 377 Share of profit of subsidiaries, associated companies and joint ventures - - - 577 Other income 94,186 16,509 39,034 24,220 TOTAL REVENUES 2,912,477 5,749,244 976,243 1,878,898 EXPENSES Costs of construction services and sales of construction materials 2,054,102 4,706,907 652,455 1,424,790 Selling and administrative expenses 324,650 268,512 132,259 124,443 Share of loss of subsidiaries, associated companies and joint ventures 47,160 12,336 3,471 - Directors' remuneration 5,325 5,900 5,325 5,900 Interest expenses 238,467 452,984 92,188 137,439 Loss on exchange 25,600 - - - Other expenses 60,218 99,364 59,736 73,124 TOTAL EXPENSES 2,755,522 5,546,003 945,434 1,765,696 EARNINGS BEFORE INCOME TAX 156,955 203,241 30,809 113,202 CORPORATE INCOME TAX 14 (148,333) (108,913) (11,005) (36,179) EARNINGS BEFORE MINORITY INTERESTS 8,622 94,328 19,804 77,023 MINORITY INTERESTS 11,182 (17,305) - - NET EARNINGS FOR THE PERIOD 19,804 77,023 19,804 77,023 BASIC EARNINGS PER SHARE Net earnings (Baht) 0.19 0.73 0.19 0.73 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 SIX-MONTH PERIODS ENDED 30th JUNE (Thousand Baht) CONSOLIDATED THE COMPANY ONLY Note 2000 1999 2000 1999 (Restated) (Restated) RETAINED EARNINGS - UNAPPROPRIATED (more)