) ANNUAL FINANCIAL STATEMENTS

4. RECEIVABLES UNDER FINANCE LEASE CONTRACTS - Net In Baht 1998 1997 Receivables under finance lease contracts (including portion due within one year from September 30, 1998 amounting to Baht 150,246,992) 364,239,963 767,411,193 Less Unearned interest income (including portion due within one year from September 30, 1998 amounting to Baht 18,344,124) (28,765,644) (61,921,162) Net 335,474,319 705,490,031 - 5 - The 100 receivables under finance lease contracts which may be uncollectible as at September 30, 1998, categorized by aging sche dules, were as follows: In Thousand Baht Over 3 months to 6 months 17,591 Over 6 months to 12 months 41,468 Over 12 months 32,778 Total 91,837 The Company provided allowance for doubtful accounts covering r eceivables under finance lease contracts equal to the estimated l osses that may be incurred in the collection of receivables amoun ted to approximately Baht 83.7 million. 5. INVESTMENT IN ASSOCIATED COMPANY - At Cost In Baht Percentage of Companys Name Business Relation Holding (%) Investment Dividend Associated Company Sarathi Co., Ltd. Car driving service Shareholder 47 245,000 - 6. PROPERTY AND EQUIPMENT - At Cost In Baht 1998 1997 Assets held for lease under operating lease contracts (mainly transportation equipment) (Note 12) 2,382,690,723 2,628,031,166 Office condominium (including land) 113,211,596 113,211,596 Furniture, fixtures and office equipment 16,987,544 17,613,946 Transportation equipment 17,986,553 15,148,406 Assets held for future lease and assets in transit for future lease 4,304,545 336,306 Advance payment for condominium - 6,000,000 Total 2,535,180,961 2,780,341,420 Less : accumulated depreciation (1,103,641,783) (959,483,232) allowance for decline in value of assets held for lease (14,554,756) - Property and Equipment - Net 1,416,984,422 1,820,858,188 - 6 - Depreciation charges for the years ended September 30, 1998 and 1997 amounted to approximately Baht 534.8 million and Baht 525.0 million, respectively. 7. PROPERTY FORECLOSED Land 40,430,855 17,340,855 Transportation equipment 24,239,233 53,466,838 Condominiums 5,227,066 - Total 69,897,154 70,807,693 Less accumulated depreciation (15,044,090) (31,022,626) Net 54,853,064 39,785,067 Depreciation charges for the years ended September 30, 1998 and 1997 amounted to approximately Baht 8.8 million and Baht 4.6 mil lion, respectively. 8. BANK OVERDRAFT AND LOANS FROM FINANCIAL INSTITUTIONS In Baht 1998 1997 Bank overdraft 495,754 3,112,700 Notes payables - 738,648,000 Loan from bank 242,966,529 - Total 243,462,283 741,760,700 As at September 30, 1998, the Company has overdraft line and ot her credit facilities with a related local bank totalling Baht 1, 601 million, which bear interest at the rates specified in the ag reements. 9. SHORT-TERM LOANS FROM AND PAYABLES TO RELATED COMPANIES In Baht 1998 1997 Notes payables 344,000,000 380,000,000 Insurance premium payable 3,705,124 - Accrued interest on short-term loans 1,047,226 1,880,288 Accrued interest on long-term loans 4,093,151 1,164,383 Total 352,845,501 383,044,671 - 7 - As at September 30, 1998, the Company has credit facilities wit h two related insurance companies totalling Baht 500 million whic h bear interest at market rate. The above short-term loans are a valed by various local banks and a financial institution. 10. LONG-TERM LOANS FROM RELATED COMPANIES In Baht 1998 1997 Loans from banks 803,447,398 820,900,000 Loan from an insurance company 10,000,000 100,000,000 Total 813,447,398 920,900,000 Less portion due within one year 412,687,398 820,900,000 Net 400,760,000 100,000,000 In August 1995, the Company entered into the syndicated loans a greement with various foreign banks amounting to US$ 50 million w hich bears interest at SIBOR plus 1.5% p.a. On August 11, 1998, the Company entered into loan and credit fa cilities agreement with a related local bank (Note 8) totalling B aht 1,352 million which bears interest at the rate specified in t he agreement and is repayable in installments at the amounts indi cated in the agreement commencing from August 1998. These loans are used to repay the outstanding syndicated loans with various f oreign banks amounting to USD 32.25 million in August 1998. The loan agreement contains certain conditions and restrictions which include, among others, maintaining certain financial ratios, et c.. In 1998, the Company entered into a loan agreement with a relat ed local bank (Note 8) amounting to Baht 49 million which bears i nterest at the rate specified in the agreement. This loan is rep ayable in monthly installments at equal amounts commencing from O ctober 1998. Loan from a related insurance company amounted to Baht 100 mill ion in 1997 were avaled by two local banks. The loan was schedul ed to be repaid during December 1998 to November 1999 which bears interest at market rate. During the year, the Company repaid th e loan amounting to Baht 90 million and the outstanding balance o f Baht 10 million (avaled by a local bank) will be repayable in N ovember 1999. - 8 - 11. EMPLOYEES PROVIDENT FUND The Company established a contributory employees provident fund for its employees in accordance with the terms and conditions pr escribed in the Ministerial Regulation No. 162 (B.E. 2526) issued under the Revenue Code Governing Provident Funds. Membership is voluntary upon attaining permanent status. The Company contribu tes to the fund monthly at a certain percentage of the employees basic salaries. On June 26, 1990, the provident fund was registered with the Mi nistry of Finance as a juristic entity under the provisions of th e Provident Fund Act B.E. 2530. The Ministry of Finance also app roved the transfer of the cumulative amount of the contributory e mployees provident fund to the registered fund. The fund is mana ged by a Fund Manager in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issue d under the Provident Fund Act. B.E. 2530. Total contributions of the Company for the years ended Septembe r 30, 1998 and 1997 amounted to Baht 1,324,132 and Baht 1,206,003 , respectively. 12. ASSETS HELD FOR LEASE As at September 30, 1998 and 1997, the Company had a schedule b y years of minimum future rentals for the next five years of asse ts held for operating lease as follows: In Thousand Baht Year ending September 30 1998 1997 1998 - 807,831 1999 639,374 563,214 2000 386,554 288,235 2001 180,559 73,220 2002 58,707 1,414 2003 275 - Total 1,265,469 1,733,914 Under the provisions of certain lease agreements, the lessees h ave an option to purchase the leased assets upon the expiration o f the lease terms. In this connection, the lessees are required to pay the sums as guarantee for exercising the purchase option i n advance. - 9 - As at September 30, 1998 and 1997, unguaranteed residual value of assets held for lease under finance lease contracts amounted t o approximately Baht 38.2 million and Baht 48.4 million, respecti vely. 13. RESERVE FUND This represents the reserve which the Company appropriates unde r the provisions of the Limited Public Company Act which require the Company to approprate at least 5% of its annual net income af ter deduction of the deficit brought forward (if any) as reserve fund until the reserve reaches 10% of authorized share capital. The reserve is not available for dividend distribution. 14. CONTINGENT LIABILITY As at September 30, 1998, the Company was contingently liable f or letters of guarantee issued by a local bank amounting to appro ximately Baht 0.3 million. 15. RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1997 financial statements were reclassi fied to conform with the 1998 financial statements presentation. 16. COMPUTER REMEDIATION PLAN FOR THE YEAR 2000 (UNAUDITED) The Company has modified the existing computer system to solve the year 2000 problems commencing from June 1998. As at Septembe r 30, 1998, approximately 30% of the remediation project was comp leted. The Company expects to complete the project in March 1999 . The cost of the computer remediation project in the year 1998 is not significant. In addition, most part of the Companys compu ter is in compliance with the Year 2000 compliant as confirmed in writing by the suppliers. The Company mainly communicates to ot her companies on a documentation basis so there is no effect to t he computer system linkage. But the Company still faces risks th at other companies with whom the Company does business may be uns uccessful in their computer remediation project within the time l imit. However, the Company expects that the impact, if any, will not be significant to the Companys operations. 17. SEGMENT FINANCIAL INFORMATION The Company does not present the segment financial information in the financial statements since the Company engages in only the business on leasing assets under lease agreements. - 10 - 18. UNCERTAINTIES OF ECONOMIC SITUATION Many Asia Pacific countries and Thailand are encountering with severe economic difficulties relating to currency devaluations an d slowdown in growth. The operations of the Company has been sig nificantly affected, and will continue to be affected for the for eseeable future, by the regions unstable economy. As a result, there are significant uncertainties that may affect future operat ions, the recoverability of the Companys assets and the Companys ability to repay its debts as they mature. The ultimate outcome of this matter cannot presently be determined. The financial sta tements do not include any adjustment that might result from thes e uncertainties. Related effects will be reported in the financi al statements as they become known and estimable.