FINANCIAL STATEMENTS QUARTER 2 (AS OF MARCH 31,2000)

PHATRA LEASING PUBLIC COMPANY LIMITED INTERIM FINANCIAL STATEMENTS FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 (With Comparative Balance Sheet as at September 30, 1999) AND REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT EXPRESSED IN Thai Baht REVIEW REPORT OF CERTIFIED PUBLIC ACCOUNTANT To The Board of Directors of Phatra Leasing Public Company Limited I have reviewed the balance sheet of Phatra Leasing Public Company Limited as at March 31, 2000, and the related statements of income for the three-month and six-month periods ended March 31, 2000, the statements of changes in shareholders' equity, retained earnings and cash flows for the six-month period ended March 31, 2000. The interim financial statements of Phatra Leasing Public Company Limited for the three-month and six-month periods ended March 31, 1999 which are presented for comparative purposes, were reviewed by Mr. Prasit Musikabhantu, an auditor in my firm. These financial statements are the responsibility of the Company's management as to their correctness and 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 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 company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit in accordance with generally accepted auditing standards. Accordingly, I do not express such an opinion. Based on my review, nothing has come to my attention that causes me to believe that the financial statements referred to above are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. The financial statements of Phatra Leasing Public Company Limited for the year ended September 30, 1999, were audited by Mr. Prasit Musikabhantu in accordance with generally accepted auditing standards and in whose report dated November 16, 1999, expressing an unqualified opinion on those financial statements. The balance sheet as at September 30, 1999, presented herein for comparative purposes, is a part of such audited financial statements. I have not performed any auditing procedures subsequent to that report date. - 2 - The operations of the Company have been affected, and may continue to be affected for the foreseeable future, by the adverse economic conditions in Thailand and in the Asia Pacific region, including the volatile foreign exchange rates, slowdown in economic growth and the general deterioration of the economies of countries in the Asia Pacific region. Further, it is not possible to determine the future effect that a continuation of the economic crisis may have on the Company's liquidity and earnings. As of March 31, 2000 and September 30,1999 deferred income tax account included future tax benefit arising from loss carryforward amounting to Baht 8 million. Management strongly believes that the future tax benefit arising from loss carryforward can be utilized in the succeeding fiscal years. However, there are uncertainties that the above economic conditions may affect future operations and the adequacy of taxable income available against which such deferred income tax can be utilized. The accompanying financial statements do not include any adjustment that might result from these uncertainties. VICHIEN THAMTRAKUL C.P.A. (THAILAND) Registration No. 3183 Bangkok April 28, 2000 PHATRA LEASING PUBLIC COMPANY LIMITED BALANCE SHEETS MARCH 31, 2000 AND SEPTEMBER 30, 1999 A S S E T S In Thousand Baht March 31, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" CURRENT ASSETS Cash on hand and in banks (Note 3) 7,458 41,844 Leasing receivables under operating lease contracts (Notes 3 and 4) 54,614 59,762 Less allowance for doubtful accounts ( 36,086) ( 36,086) Leasing receivables under operating lease contracts - net 18,528 23,676 Receivables under finance lease contracts - net (Notes 3 and 5) 163,287 199,664 Less allowance for doubtful accounts ( 84,263) ( 84,263) Receivables under finance lease contracts - net 79,024 115,401 Other current assets Prepaid expenses (Note 3) 21,412 25,995 Others (Note 3) 14,159 12,739 Total Current Assets 180,581 219,655 INVESTMENTS IN SHARES Associated company (Notes 3 and 6) 245 245 Other company - net 2,000 2,000 Total Investments in Shares 2,245 2,245 - 2 - In Thousand Baht March 31, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" PROPERTY AND EQUIPMENT - Net (Note 10) 1,200,468 1,170,458 PROPERTY FORECLOSED - Net 42,862 49,372 OTHER ASSETS Deferred income tax - net (Note 7) 172,788 191,146 Other receivables - net 5,236 5,281 Others 16,390 15,096 Total Other Assets 194,414 211,523 TOTAL ASSETS 1,620,570 1,653,253 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated April 28, 2000) PHATRA LEASING PUBLIC COMPANY LIMITED BALANCE SHEETS MARCH 31, 2000 AND SEPTEMBER 30, 1999 LIABILITIES AND SHAREHOLDERS' EQUITY In Thousand Baht March 31, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" CURRENT LIABILITIES Bank overdrafts and loans from financial institutions (Note 3) 66,646 62,948 Accounts payable - trade 59,992 22,285 Current portion of long-term loans (Notes 3 and 9) 82,650 342,080 Short-term loans from and payables to related companies (Note 3) 108,469 293,650 Other current liabilities Rental income received in advance (Note 3) 3,249 4,259 Accrued interest expense (Note 3) 8,514 2,446 Others (Note 3) 6,640 5,610 Total Current Liabilities 336,160 733,278 DEBENTURES (Note 8) 350,000 - LONG-TERM LOANS FROM RELATED COMPANIES - Net (Notes 3 and 9) 241,886 236,537 ADVANCE RECEIVED FROM LESSEES FOR EXERCISING PURCHASE OPTION (Notes 3 and 10) 66,114 68,053 Total Liabilities 994,160 1,037,868 - 2 - In Thousand Baht March 31, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" SHAREHOLDERS' EQUITY Share capital - common share; Baht 10 par value Authorized, issued and fully paid-up - 30,000,000 shares 300,000 300,000 Premium on share capital 156,000 156,000 Retained earnings Appropriated for legal reserve 11,716 11,716 Unappropriated 158,694 147,669 Total Shareholders' Equity 626,410 615,385 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,620,570 1,653,253 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated April 28, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht Three months ended Six months ended March 31, March 31, March 31, March 31, 2000 1999 2000 1999 REVENUES Rental income from operating lease contracts (Note 3) 156,245 174,411 319,798 367,598 Income from finance lease contracts (Note 3) 1,588 5,969 3,920 13,193 Other Income Gain on sales of assets for lease and property foreclosed 11,687 2,766 15,897 3,136 Penalty income from delay payment 1,199 1,991 3,119 3,719 Others 988 1,773 2,090 4,756 Total Revenues 171,707 186,910 344,824 392,402 COSTS AND EXPENSES Direct rental costs 109,154 120,917 220,491 254,799 General and administrative expenses (Note 3) 16,868 19,433 35,953 34,570 Interest expense (Note 3) 16,838 32,266 36,209 78,037 Directors' remuneration 144 144 288 210 Total Costs and Expenses 143,004 172,760 292,941 367,616 INCOME BEFORE INCOME TAX 28,703 14,150 51,883 24,786 Income Tax ( 11,188) ( 4,300) ( 18,358) ( 7,505) NET INCOME 17,515 9,850 33,525 17,281 Earnings per Share (Baht) 0.58 0.33 1.12 0.58 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated April 28, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 Common Share Capital Balance, beginning of period 300,000 300,000 Addition - - Balance, end of period 300,000 300,000 Premium on Share Capital Balance, beginning of period 156,000 156,000 Addition - - Balance, end of period 156,000 156,000 Retained Earnings Appropriated Legal Reserve Balance, beginning of period 11,716 9,216 Addition - - Balance, end of period 11,716 9,216 Unappropriated Retained Earnings Balance, beginning of period 147,669 101,972 Net income for the period 33,525 17,281 Dividends (Note 11) ( 22,500) - Balance, end of period 158,694 119,253 TOTAL SHAREHOLDERS' EQUITY 626,410 584,469 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated April 28, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 UNAPPROPRIATED RETAINED EARNINGS Brought forward from prior period 147,669 101,972 Net income for the period 33,525 17,281 Dividends (Note 11) ( 22,500) - Total Unappropriated Retained Earnings, End of period 158,694 119,253 APPROPRIATED RETAINED EARNINGS Legal reserve 11,716 9,216 TOTAL RETAINED EARNINGS 170,410 128,469 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated April 28, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE SIX-MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 33,525 17,281 Reconciliations of net income to net cash provided by (used in) operating activities: Depreciation and amortization 196,438 233,452 Reversal of provision for loss on decline in value of assets held for lease ( 1,258) ( 2,749) Gain on sales of assets held for lease and property foreclosed ( 15,897) ( 3,136) Decrease in leasing receivables under operating lease contracts 5,147 7,140 Decrease in receivables under finance lease contracts 21,231 84,691 Decrease (increase) in prepaid expenses and other current assets 3,163 ( 779) Increase in property foreclosed ( 1,741) ( 4,576) Decrease in deferred income tax 18,358 7,671 Decrease (increase) in other assets ( 4,712) 3,798 Increase in accounts payable-trade 37,708 22,600 Decrease in income tax payable - ( 6,811) Increase (decrease) in other current liabilities 6,088 ( 10,814) Decrease in advances received from lessees for exercising purchase option ( 1,939) ( 5,955) Net Cash Provided by Operating Activities 296,111 341,813 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (318,960) (139,314) Proceeds from sales of assets held for lease and property foreclosed 136,528 122,225 Net Cash Used in Investing Activities (182,432) ( 17,089) "UNAUDITED" "REVIEWED" - 2 - In Thousand Baht 2000 1999 CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in loans from financial institutions (254,081) (238,966) Increase (decrease) in short-term loans from and payables to related companies (185,182) 78,989 Increase in debentures 350,000 - Decrease in long-term loans from related companies - (226,384) Payment of dividends ( 22,500) - Net Cash Used in Financing Activities (111,763) (386,361) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,916 ( 61,637) Cash and Cash Equivalents at Beginning of Period 38,896 73,890 CASH AND CASH EQUIVALENTS AT END OF PERIOD 40,812 12,253 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash and cash equivalents consist of: Cash on hand and in banks 47,458 13,175 Bank overdrafts ( 6,646) ( 922) Net 40,812 12,253 Cash paid during the period for: Interest expense 29,833 86,188 Income tax 195 7,350 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated April 28, 2000) PHATRA LEASING PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS MARCH 31, 2000 AND 1999 (REVIEWED) AND SEPTEMBER 30, 1999 (AUDITED) 1. BASIS FOR INTERIM FINANCIAL STATEMENTS The accompanying interim financial statements have been prepared in accordance with the Accounting Standards No. 41 "The Interim Financial Statements" and the announcements of the Stock Exchange of Thailand. The accompanying interim financial statements have been prepared to provide an update on the latest complete set of annual financial statements by focusing on new activities, events and circumstances and does not duplicate information previously reported. Accordingly, the accompanying interim financial statements should be read in conjunction with the financial statements for the year ended September 30, 1999. The Company maintains its official accounting records in Thai Baht and prepares its interim financial statements in the Thai language in conformity with financial accounting standards in Thailand, which may not conform with generally accepted accounting principles in other countries. The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. Accordingly, these financial statements are not designed for those who are not informed about Thai accounting principles and practices. For the convenience of the reader, an English translation of financial statements has been prepared from the interim Thai language financial statements which are issued for domestic reporting purposes. 2. SIGNIFICANT ACCOUNTING POLICIES The accompanying interim financial statements have been prepared in accordance with the accounting standard issued by the Institute of Certified Accountants and Auditors of Thailand. The significant accounting policies applied by the Company for the preparation of the accompanying interim financial statements for the three-month and six-month periods ended March 31, 2000 are the same as those adopted in the preparation of the Company's financial statements for the year ended September 30, 1999. 3. TRANSACTIONS WITH RELATED COMPANIES The Company has certain transactions with its related companies. These companies are related through common shareholdings and/or management. The effects of these transactions are reflected in the accompanying interim financial statements. - 2 - Significant account balances with the related companies, arising from transactions in the normal course of business, as of March 31, 2000 and September 1999 and for the three-month and six-month periods ended March 31, 2000 and 1999 were as follows: In Thousand Baht March 31, 2000 September 30, 1999 Balance Sheets Cash in banks 46,758 41,140 Leasing receivables under operating lease contracts 100 33 Receivables under finance lease contracts - net 234 837 Prepaid expenses 18,428 24,197 Other current assets 453 592 Investment in associated company 245 245 Bank overdrafts and loans from financial institutions 6,641 2,944 Current portion of long-term loans 82,650 342,080 Short-term loans from and payables to related companies 108,469 293,650 Rental income received in advance 127 125 Accrued interest expense 76 2,446 Other current liabilities 392 104 Long-term loans from related companies 241,886 236,537 Advances received from lessees for exercising purchase option 1,158 1,232 - 3 - In Thousand Baht Three months ended Six months ended March 31, March 31, March 31, March 31, 2000 1999 2000 1999 Statements of Income Rental income from operating lease contracts 50,499 47,974 102,445 95,914 Income from finance lease contracts 79 178 185 401 General and administrative expenses 100 50 175 249 Interest expense 7,666 32,266 24,793 78,037 4. LEASING RECEIVABLES UNDER OPERATING LEASE CONTRACTS The 100 leasing receivables under operating lease contracts which may be uncollectible as at March 31, 2000, categorized by aging schedules, are as follows: In Thousand Baht Over 3 months to 6 months 4,055 (more)