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CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2000 Report of Independent Auditor To The Board of Directors and Shareholders of CH. Karnchang Public Company Limited I have audited the accompanying consolidated balance sheet of CH. Karnchang Public Company Limited, its subsidiaries and its joint ventures as at 31 December 2000, the related consolidated statements of earnings, retained earnings, changes in shareholders' equity and cash flows for the year then ended, and the separate financial statements of CH. Karnchang Public Company Limited for the same period. These financial statements are the responsibility of the management of the Company, its subsidiaries and its joint ventures as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of the Company as of 31 December 1999 and for the year then ended, as presented herein for comparative purposes, were audited by another auditor who, under the 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 of approximately Baht 92.3 million 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. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CH. Karnchang Public Company Limited, its subsidiaries and its joint ventures and of CH. Karnchang Public Company Limited as at 31 December 2000, the results of their operations, and cash flows for the year then ended, in accordance with generally accepted accounting principles. Without qualifying my opinion to the aforementioned financial statements, 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 168 million (before provision for impairment loss). The construction project of that joint venture 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 and Rapid Transport 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 the Expressway and Rapid Transport Authority of Thailand, and the result of the bid is not known at this stage. Ruth Chaowanagawi Certified Public Accountant (Thailand) No. 3247 Ernst & Young Office Limited Bangkok : 19 February 2001 CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES BALANCE SHEETS AS AT 31 DECEMBER 2000 AND 1999 (Unit : Baht) Consolidated The Company Only Note 2000 1999 2000 1999 ASSETS CURRENT ASSETS Cash in hand and at banks 5 6,466,397,471 4,055,912,090 2,934,090,977 1,421,787,831 Short-term investments 5 137,257,453 202,420,442 237,907 601,711 Investments in marketable securities 825,000 977,125 825,000 977,125 Trade accounts receivable - net 6 828,645,710 945,051,382 606,691,972 658,134,638 Accounts receivable and loans to subsidiary, associated and related companies and joint ventures - net 7, 27 664,899,594 599,297,948 811,089,593 744,919,518 Construction contract in progress - net 8 551,454,007 2,367,462,505 54,966,871 - Inventories and supplies for construction - net 9 22,731,587 68,012,247 2,484,986 21,162,069 Advance payment to subcontractors - net 464,423,203 100,358,794 42,674,198 24,856,451 Other current assets Prepaid expenses 15,660,524 85,148,567 6,974,933 5,627,810 Accrued income 80,974,691 14,133,301 80,974,691 14,263,923 Refundable input tax - net 188,865,458 126,813,719 11,867,310 4,614,340 Unbilled input tax 66,701,554 83,252,514 6,857,536 13,069,962 Withholding tax deducted at source 42,153,384 5,588,976 - - Loans to directors 49,204,557 - - - Other current assets 18,976,385 20,132,503 2,613,447 2,246,126 TOTAL CURRENT ASSETS 9,599,170,578 8,674,562,113 4,562,349,421 2,912,261,504 INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES 10 - - 1,169,989,785 1,146,231,478 INVESTMENT IN ASSOCIATED COMPANY 11 26,418,468 180,727,917 26,418,468 180,727,917 INVESTMENTS IN RELATED AND OTHER COMPANIES - net 12 663,455,723 1,982,802,859 604,823,996 1,803,886,771 PROPERTY, PLANT AND EQUIPMENT - net 13 843,101,639 1,483,364,505 254,809,397 439,356,814 INVESTMENTS IN LAND - net 14 155,779,735 155,779,735 132,765,798 132,765,798 MRTA INITIAL SYSTEM PROJECT COSTS 181,897,365 - - - ADVANCE PAYMENT FOR PROJECT - net - 128,265,484 - - WITHHOLDING TAX DEDUCTED AT SOURCE 82,496,541 275,932,381 - 161,919,435 OTHER ASSETS 65,617,439 16,672,291 62,914,511 6,483,160 TOTAL ASSETS 11,617,937,488 12,898,107,285 6,814,071,376 6,783,632,877 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) AS AT 31 DECEMBER 2000 AND 1999 (Unit : Baht) Consolidated The Company Only Note 2000 1999 2000 1999 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts and loans from banks 15 3,605,991,764 3,079,640,207 899,679,450 882,382,327 Notes payable - financial institutions 168,420,000 200,000,000 80,000,000 200,000,000 Trade accounts payable and notes payable 1,316,757,203 764,325,747 249,773,606 470,773,872 Unsecured debentures 17 400,000,000 - 400,000,000 - Current portion of long-term loans 19 1,115,649,889 3,630,064,225 184,000,000 - Accounts payable and loans from subsidiary, related companies and joint ventures 16, 27 626,879,699 747,450,430 831,927,849 45,814,261 Advance received from employers and deferred construction revenue 8 1,611,330,579 1,405,583,503 327,285,802 497,713,138 Retentions for construction 117,700,692 195,640,631 51,493,473 93,343,614 Provision for loss from construction 127,462,133 134,127,269 - - Other current liabilities Accrued interests 21,583,753 26,506,925 15,821,737 7,936,584 Corporate income tax payable 55,014,480 34,577,387 3,726,925 3,795,528 Accrued expenses 32,040,615 56,966,701 10,985,186 600,000 Unbilled output tax 105,829,737 120,276,814 91,060,646 93,143,602 Other payables 32,031,469 7,340,464 14,196,574 5,852,040 Other current liabilities 103,434,117 44,354,625 60,302,483 32,091,590 TOTAL CURRENT LIABILITIES 9,440,126,130 10,446,854,928 3,220,253,731 2,333,446,556 LONG-TERM LOANS FROM RELATED COMPANIES 18, 27 314,781,751 522,644,604 - - LONG-TERM LOANS - net of current portion 19 1,485,594,117 262,118,058 266,000,000 240,000,000 SECURED DEBENTURES 20 500,000,000 - 500,000,000 - PROVISION FOR LOSS FROM DOUBTFUL DEBTS OF SUBSIDIARIES AND JOINT VENTURES 272,838,050 272,302,862 - - PROVISION FOR LOSS ON INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES 10 - - 3,445,497,677 3,056,839,745 TOTAL LIABILITIES 12,013,340,048 11,503,920,452 7,431,751,408 5,630,286,301 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) AS AT 31 DECEMBER 2000 AND 1999 (Unit : Baht) Consolidated The Company Only Note 2000 1999 2000 1999 SHAREHOLDERS' EQUITY Share capital Registered 105,000,000 ordinary shares of Baht 10 each 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000 Issued and fully paid share capital 105,000,000 ordinary shares of Baht 10 each 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000 Premium on share capital 2,436,000,000 2,436,000,000 2,436,000,000 2,436,000,000 Retained earnings (deficit) Appropriated - statutory reserve 21 88,442,063 88,442,063 82,942,063 82,942,063 Unappropriated (deficit) (2,681,170,875) (2,238,447,317) (2,675,670,875) (2,232,947,317) Unrealized loss on changes in value of investments (1,510,951,220) (182,648,170) (1,510,951,220) (182,648,170) Total equity attributable to Company's shareholders (Capital deficit) (617,680,032) 1,153,346,576 (617,680,032) 1,153,346,576 Minority interest - Equity attributable to minority shareholders of subsidiaries 222,277,472 240,840,257 - - TOTAL SHAREHOLDERS' EQUITY (CAPITAL DEFICIT) (395,402,560) 1,394,186,833 (617,680,032) 1,153,346,576 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 11,617,937,488 12,898,107,285 6,814,071,376 6,783,632,877 0 0 0 0 The accompanying notes are an integral part of the financial statements. DIRECTORS CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES STATEMENTS OF EARNINGS FOR THE YEARS ENDED 31 DECEMBER 2000 AND 1999 (Unit : Baht) Consolidated The Company Only Note 2000 1999 2000 1999 REVENUES Revenues from construction services 22 5,334,424,587 7,915,837,725 1,391,976,812 2,318,368,474 Sales of construction materials 298,349,806 490,575,896 229,236,625 539,991,456 Project management income 58,435,615 73,286,827 206,431,573 101,485,519 Rental income 32,579,987 46,417,753 44,289,947 79,363,297 Transportation income 11,423,210 38,554,936 15,733,957 41,108,204 Other income Interests income 59,554,694 142,034,856 52,172,124 77,773,402 Gain on disposal of fixed assets 161,596,104 - 36,296,466 7,798,549 Gain on exchange 23 - - 3,725,403 6,677,217 Other income 89,810,185 57,178,200 56,752,733 45,132,366 TOTAL REVENUES 6,046,174,188 8,763,886,193 2,036,615,640 3,217,698,484 EXPENSES Cost of construction services and sales of construction materials 4,733,236,064 8,500,971,857 1,311,131,460 2,361,679,844 Selling and administrative expenses 742,410,418 475,358,696 325,812,137 249,946,109 Directors' remuneration 25 8,635,060 7,300,000 6,185,000 7,300,000 Share of loss of subsidiary, associated companies and joint ventures 154,309,450 77,743,732 482,036,755 2,156,761,405 Provision for doubtful debts - 855,766,773 - 729,180,098 Provision for loss from construction - 160,889,826 - - Loss from impairment of investment - 65,007,431 - 63,291,431 Loss from impairment of property, plant and equipment - 213,336,221 - 73,859,768 Loss from impairment of investment in land - 46,112,953 - 41,834,203 Interest expenses 448,005,773 831,822,728 219,305,353 224,418,528 Loss on exchange 23 130,021,889 57,072,685 - - Other expenses 136,605,251 141,249,296 104,615,144 125,327,340 TOTAL EXPENSES 6,353,223,905 11,432,632,198 2,449,085,849 6,033,598,726 LOSS BEFORE INCOME TAX (307,049,717) (2,668,746,005) (412,470,209) (2,815,900,242) CORPORATE INCOME TAX 26 (145,531,659) (228,607,733) (30,253,349) (78,741,436) LOSS BEFORE MINORITY INTERESTS (452,581,376) (2,897,353,738) (442,723,558) (2,894,641,678) MINORITY INTERESTS 9,857,818 2,712,060 - - NET LOSS FOR THE YEAR (442,723,558) (2,894,641,678) (442,723,558) (2,894,641,678) BASIC EARNINGS PER SHARE Net loss (4.22) (27.57) (4.22) (27.57) 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. CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED 31 DECEMBER 2000 AND 1999 (Unit : Baht) Consolidated The Company Only Note 2000 1999 2000 1999 RETAINED EARNINGS - UNAPPROPRIATED BALANCE - beginning of year, as previously reported (deficit) (2,238,447,317) 818,018,761 (2,232,947,317) 823,518,761 CUMULATIVE EFFECT OF THE CHANGE IN ACCOUNTING POLICY FOR DEFERRED EXPENSES 4 - (63,396,504) - (63,396,504) CUMULATIVE EFFECT OF THE CHANGE IN METHOD OF ACCOUNTING FOR INVESTMENT 4 - (98,427,896) - (98,427,896) BALANCE - beginning of year, as restated (deficit) (2,238,447,317) 656,194,361 (2,232,947,317) 661,694,361 NET LOSS FOR THE YEAR (442,723,558) (2,894,641,678) (442,723,558) (2,894,641,678) TOTAL RETAINED EARNINGS - unappropriated (deficit) (2,681,170,875) (2,238,447,317) (2,675,670,875) (2,232,947,317) RETAINED EARNINGS - APPROPRIATED STATUTORY RESERVE 21 88,442,063 88,442,063 82,942,063 82,942,063 TOTAL RETAINED EARNINGS - appropriated 88,442,063 88,442,063 82,942,063 82,942,063 TOTAL RETAINED EARNINGS (DEFICIT) (2,592,728,812) (2,150,005,254) (2,592,728,812) (2,150,005,254) 0 0 0 0 The accompanying notes are an integral part of the financial statements. CH. KARNCHANG PUBLIC COMPANY LIMITED, ITS SUBSIDIARIES AND ITS JOINT VENTURES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED 31 DECEMBER 2000 AND 1999 (Unit : Baht) Consolidated The Company Only Note 2000 1999 2000 1999 SHARE CAPITAL ORDINARY SHARE Balance - beginning of the year 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000 Balance - end of the year 1,050,000,000 1,050,000,000 1,050,000,000 1,050,000,000 PREMIUM ON SHARE CAPITAL Balance - beginning of the year 2,436,000,000 2,436,000,000 2,436,000,000 2,436,000,000 Balance - end of the year 2,436,000,000 2,436,000,000 2,436,000,000 2,436,000,000 RETAINED EARNINGS APPROPRIATED - statutory reserve 21 Balance - beginning of the year 88,442,063 88,442,063 82,942,063 82,942,063 Balance - end of the year 88,442,063 88,442,063 82,942,063 82,942,063 UNAPPROPRIATED Balance - beginning of the year, as previously reported (deficit) (2,238,447,317) 818,018,761 (2,232,947,317) 823,518,761 Cumulative effect of the change in accounting policy for deferred expenses 4 - (63,396,504) - (63,396,504) Cumulative effect of the change in method of accounting for investment 4 - (98,427,896) - (98,427,896) Balance - beginning of the year, as restated (deficit) (2,238,447,317) 656,194,361 (2,232,947,317) 661,694,361 Increase during year (442,723,558) (2,894,641,678) (442,723,558) (2,894,641,678) Balance - end of the year (deficit) (2,681,170,875) (2,238,447,317) (2,675,670,875) (2,232,947,317) UNREALIZED LOSS ON CHANGES IN INVESTMENT VALUE Balance - beginning of the year (182,648,170) - (182,648,170) - Increase during year (1,328,303,050) (182,648,170) (1,328,303,050) (182,648,170) Balance - end of the year (1,510,951,220) (182,648,170) (1,510,951,220) (182,648,170) TOTAL EQUITY ATTRIBUTABLE TO COMPANY'S SHAREHOLDERS (617,680,032) 1,153,346,576 (617,680,032) 1,153,346,576 MINORITY INTEREST - EQUITY ATTRIBUTABLE TO MINORITY SHAREHOLDERS OF SUBSIDIARIES Balance - beginning of the year 240,840,257 154,988,872 - - Increase during year - 85,851,385 - - Decrease during year (18,562,785) - - - Balance - end of the year 222,277,472 240,840,257 - - TOTAL SHAREHOLDERS' EQUITY (CAPITAL DEFICIT) (395,402,560) 1,394,186,833 (617,680,032) 1,153,346,576 (more)