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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 NINE-MONTH PERIODS ENDED 30 SEPTEMBER 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 30 September 2000, the related consolidated statements of earnings for the three-month and nine-month periods ended 30 September 2000, and the consolidated statements of retained earnings, changes in shareholders' equity and cash flows for the nine-month period ended 30 September 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 nine-month periods ended 30 September 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 215 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 48 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 31 December 1999, were audited in accordance with generally accepted auditing standards by another auditor who, under his report dated 18 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. 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 31 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 nine-month periods ended 30 September 1999 and the consolidated statements of retained earnings, changes in shareholders' equity and cash flows for the nine-month period ended 30 September 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 2 November 1999, that except for the Company's not setting up a provision for doubtful debt against amounts due from related joint ventures of Baht 555.6 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 101.8 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 : 2 November 2000 CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES BALANCE SHEETS (Unit : Thousand Baht) Consolidated The Company Only Note 30 September 2000 31December1999 30September2000 31December1999 (Unaudited (Audited) (Unaudited (Audited) but reviewed) but reviewed) ASSETS CURRENT ASSETS Cash in hand and at banks 3 5,661,150 4,055,912 2,944,661 1,421,788 Short-term investments 3 144,361 202,421 237 602 Investment in marketable securities 849 977 849 977 Trade accounts receivable - net 4 574,497 945,051 614,488 658,135 Accounts receivable and loans to subsidiary, associated and related companies and joint ventures - net 5, 15 612,479 599,298 759,652 744,920 Construction contract in progress - net 73,557 2,367,463 77,528 - Inventories and supplies for construction - net 32,193 68,012 7,722 21,162 Advance payment to subcontractors - net 501,334 100,359 9,460 24,856 Other current assets Call in arrears of subsidiary 90,200 - - - Prepaid expenses 18,973 85,149 5,891 5,628 Accrued income 15,230 14,133 15,094 14,264 Refundable input tax - net 157,172 126,814 - - Unbilled input tax 51,912 83,252 7,937 13,070 Withholding tax deducted at source 47,906 5,589 - - Other current assets 34,902 20,133 7,462 6,860 TOTAL CURRENT ASSETS 8,016,715 8,674,563 4,450,981 2,912,262 INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES 6 - - 1,092,179 1,146,232 INVESTMENT IN ASSOCIATED COMPANY 7 69,797 180,728 69,797 180,728 INVESTMENTS IN RELATED AND OTHER COMPANIES 8 707,295 1,982,803 644,902 1,803,887 PROPERTY, PLANT AND EQUIPMENT - NET 987,544 1,483,365 335,842 439,357 INVESTMENT IN LAND 155,780 155,780 132,766 132,766 ADVANCE PAYMENT FOR PROJECT - NET 168,502 128,265 - - WITHHOLDING TAX DEDUCTED AT SOURCE 224,658 275,932 140,816 161,919 OTHER ASSETS 90,263 16,672 61,205 6,483 TOTAL ASSETS 10,420,554 12,898,108 6,928,488 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) (Unit : Thousand Baht) Consolidated The Company Only Note 30 September2000 31December1999 30 September2000 31 December 1999 (Unaudited (Audited) (Unaudited (Audited) but reviewed) but reviewed) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts and loans from banks 3,636,613 3,079,640 1,064,126 882,382 Notes payable - financial institutions 111,474 200,000 100,000 200,000 Accounts and notes payable 396,010 764,326 262,489 470,774 Unsecured debentures 10 400,000 - 400,000 - Current portion of long-term loans 12 923,280 3,630,064 121,300 - Accounts payable and loans from subsidiary and related companies and joint ventures 9, 15 590,966 747,450 590,826 45,814 Advance received from contractor and deferred construction revenue 2,298,461 1,405,584 489,762 497,713 Retentions for construction 117,215 195,641 52,770 93,344 Provision for loss from construction 127,892 134,127 - - Other current liabilities Accrued interest 31,170 26,507 6,293 7,937 Income tax payable 51,348 34,577 6,010 - Accrued expenses 56,488 56,967 4,524 28,125 Unbilled output tax 104,194 120,277 88,217 93,144 Other current liabilities 146,294 51,695 74,596 14,214 TOTAL CURRENT LIABILITIES 8,991,405 10,446,855 3,260,913 2,333,447 LONG-TERM LOANS FROM RELATED COMPANIES 11 402,602 522,645 - - LONG-TERM LOANS - net of current portion 12 479,256 262,118 328,700 240,000 SECURED DEBENTURES 13 500,000 - 500,000 - PROVISION FOR LOSS FROM DOUBTFUL DEBTS OF JOINT VENTURES 272,838 272,303 - - PROVISION FOR LOSS ON INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES 6 - - 3,337,287 3,056,840 TOTAL LIABILITIES 10,646,101 11,503,921 7,426,900 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) (Unit : Thousand Baht) Consolidated The Company Only 30 September2000 31 December1999 30 September2000 31 December 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) (2,604,071) (2,238,447) (2,598,571) (2,232,947) Unrealized loss on changes in value of investments (1,468,783) (182,648) (1,468,783) (182,648) Total equity attributable to Company's shareholders (Capital deficit) (498,412) 1,153,347 (498,412) 1,153,347 Minority interest - Equity attributable to minority shareholders of subsidiaries 272,865 240,840 - - TOTAL SHAREHOLDERS' EQUITY (Capital deficit) (225,547) 1,394,187 (498,412) 1,153,347 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 10,420,554 12,898,108 6,928,488 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 30 SEPTEMBER 2000 AND 1999 (Unit : 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 688,281 1,394,656 287,034 534,854 Sales of construction materials 73,505 11,701 40,210 134,390 Project management income 13,487 16,274 130,538 22,961 Rental income 6,716 8,928 9,989 26,531 Transportation income 1,954 8,845 3,508 9,618 Other income Interest income 15,258 18,683 11,046 8,205 Gain on exchange - - 1,235 - Other income 107,237 14,412 14,647 7,559 TOTAL REVENUES 906,438 1,473,499 498,207 744,118 EXPENSES Costs of construction services and sales of construction materials 805,828 1,795,254 266,800 585,925 Selling and administrative expenses 180,773 412,099 112,314 66,866 Share of loss of subsidiaries, associated company and joint ventures 63,770 43,172 402,359 1,107,567 Directors' remuneration 820 - 820 - Interest expenses 108,046 198,410 61,432 51,244 Loss on exchange 109,941 77,865 - 6,419 Other expenses 45,027 - 23,398 25,928 TOTAL EXPENSES 1,314,205 2,526,800 867,123 1,843,949 LOSS BEFORE INCOME TAX (407,767) (1,053,301) (368,916) (1,099,831) CORPORATE INCOME TAX 14 25,731 (51,722) (16,512) (5,324) LOSS BEFORE MINORITY INTERESTS (382,036) (1,105,023) (385,428) (1,105,155) GAIN OF MINORITY INTERESTS (3,392) (132) - - NET LOSS FOR THE PERIOD (385,428) (1,105,155) (385,428) (1,105,155) BASIC EARNINGS PER SHARE Net loss (Baht) (3.67) (10.53) (3.67) (10.53) Number of ordinary shares 105 million shares 105 million shares 105 million shares 105 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 NINE-MONTH PERIODS ENDED 30 SEPTEMBER 2000 AND 1999 (Unit : 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 3,261,931 6,679,087 963,321 1,898,776 Sales of construction materials 226,932 164,569 186,921 470,978 Project management income 43,918 51,683 181,513 71,033 Rental income 26,518 32,093 34,498 56,386 Transportation income 9,214 33,283 12,152 35,450 Other income Interest income 48,979 120,852 38,939 57,660 Gain on exchange - 32,390 3,425 - Other income 201,423 30,609 53,681 31,779 TOTAL REVENUES 3,818,915 7,144,566 1,474,450 2,622,062 EXPENSES Costs of construction services and sales of construction materials 2,859,930 6,502,161 919,255 2,010,715 Selling and administrative expenses 505,423 680,611 244,573 191,309 Share of loss of subsidiaries, associated company and joint ventures 110,930 55,508 405,830 1,106,990 Directors' remuneration 6,145 5,900 6,145 5,900 Interest expenses 346,513 651,394 153,620 188,683 Loss on exchange 135,541 - - 6,042 Other expenses 105,245 99,052 83,134 99,052 TOTAL EXPENSES 4,069,727 7,994,626 1,812,557 3,608,691 LOSS BEFORE INCOME TAX (250,812) (850,060) (338,107) (986,629) CORPORATE INCOME TAX 14 (122,602) (160,635) (27,517) (41,503) LOSS BEFORE MINORITY INTERESTS (373,414) (1,010,695) (365,624) (1,028,132) LOSS (GAIN) OF MINORITY INTERESTS 7,790 (17,437) - - NET LOSS FOR THE PERIOD (365,624) (1,028,132) (365,624) (1,028,132) BASIC EARNINGS PER SHARE Net loss (Baht) (3.48) (9.79) (3.48) (9.79) Number of ordinary shares 105 million shares 105 million shares 105 million shares 105 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 NINE-MONTH PERIODS ENDED 30 SEPTEMBER 2000 AND1999 (Unit: Thousand Baht) Consolidated The Company Only Note 2000 1999 2000 1999 (Restated) (Restated) RETAINED EARNINGS - UNAPPROPRIATED (Deficit) 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 METHOD OF ACCOUNTING FOR INVESTMENT 2 - (98,428) - (98,428) (more)