ANNUAL FINANCIAL STATEMENTS (AS OF SEPTEMBER 30,2000)

period whether the carrying amount of such deferred income tax, which is recorded in the balance sheet will be fully utilized. The Company recorded a tax benefit arising from loss carryforward which management believes to be utilized in the succeeding fiscal years amounting to Baht 8 million as part of deferred income tax account as at September 30, 2000 and 1999. Earnings per Share Earnings per share is determined by dividing the net income by the weighted-average number of shares outstanding during the years. (30 million shares in 2000 and 1999). 4. 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 financial statements. Significant account balances and transactions with the related companies, arising from transactions in the normal course of business as of and for the years ended September 30, 2000 and 1999 are as follows: In Baht Note 2000 1999 Balance sheets Cash in bank (mainly represented Thai Farmers Bank Public Co., Ltd.) 5,891,760 41,139,965 Leasing receivables under operating lease contracts - 33,259 Receivables under finance lease contracts- net 1,293,019 2,448,212 Prepaid expenses (mainly represented prepaid insurance - Muang Thai Insurance Co., Ltd.) 20,787,754 21,244,721 Other current assets 233,085 592,295 Investment in associated company 7 245,000 245,000 Bank overdrafts and loans from financial institution 10 3,220,461 2,943,842 Current portion of long-term loans 13 42,125,409 342,080,218 Short-term loans from and payables to related companies 11 4,656,988 293,650,371 Rental income received in advance 88,318 125,017 Accrued interest expense 73,141 2,446,077 Other current liabilities 398,263 104,286 Long-term loans from related companies 13 119,671,998 236,536,512 Advances received from lessees for exercising purchase option 1,157,669 1,231,501 NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 In Baht Note 2000 1999 Statements of Income Rental income from operating lease contracts (mainly represented Thai Farmers Bank Public Co., Ltd.) 222,021,358 193,483,756 Income from finance lease contracts 322,475 753,323 Interest expense (mainly represented Thai Farmers Bank Public Co., Ltd.) 51,540,779 125,793,067 General and administrative expenses 349,829 353,200 5. LEASING RECEIVABLES UNDER OPERATING LEASE CONTRACTS The 96 receivables under operating lease contracts which may be uncollectible as at September 30, 2000, categorized by aging schedules, were as follows: In Thousand Baht Over 3 months to 6 months 3,858 Over 6 months to 12 months 12,588 Over 12 months 13,572 Total 30,018 The Company provided allowance for doubtful accounts covering leasing receivables under operating lease contracts equal to the estimated losses that may be incurred in the collection of receivables amounted to approximately Baht 36.1 million. 6. RECEIVABLES UNDER FINANCE LEASE CONTRACTS - Net In Baht 2000 1999 Receivables under finance lease contracts (including portion due within one year from September 30, 2000 amounting to Baht 103,125,207) 210,276,136 211,131,806 Less Unearned interest income (including portion due within one year from September 30, 2000 amounting to Baht 11,752,638) ( 25,853,633) ( 11,467,889) Net 184,422,503 199,663,917 The 60 receivables under finance lease contracts which may be uncollectible as at September 30, 2000, categorized by aging schedules, were as follows: In Thousand Baht Over 3 months to 6 months 5,260 Over 6 months to 12 months 34,638 Over 12 months 37,305 Total 77,203 The Company provided allowance for doubtful accounts covering receivables under finance lease contracts equal to the estimated losses that may be incurred in the collection of receivables amounted to approximately Baht 84.3 million. NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 7. INVESTMENT IN ASSOCIATED COMPANY - At Cost In Baht Percentage of Company's Name Business Relation Holding (%) Investment Dividend Associated Company Sarathi Co., Ltd. Car driving service Shareholder 49 245,000 - 8. PROPERTY AND EQUIPMENT - At Cost In Baht Balance as at Movement During the Year Balance as at October 1, September 30, Note 1999 Addition Deduction Transfer 2000 Cost Assets held for lease under operating lease contracts (mainly transportation equipment) 15 2,010,957,618 666,616,380 ( 609,984,737) ( 156,415,478) 1,911,173,783 Office condominium (including land) 90,684,564 - - - 90,684,564 Furniture, fixtures and office equipment 39,089,416 1,154,141 ( 221,094) - 40,022,463 Transportation equipment 3,019,394 9,583,700 ( 4,505,700) 5,881,729 13,979,123 Assets held for future lease 12,857,553 25,291,589 - ( 12,857,553) 25,291,589 Total 2,156,608,545 702,645,810 ( 614,711,531) ( 163,391,302) 2,081,151,522 Accumulated Depreciation Assets held for lease under operating lease contracts (mainly transportation equipment) ( 948,218,502) ( 351,324,001) 461,220,626 125,502,157 ( 712,819,720) Office condominium ( 7,703,820) ( 1,892,858) - - ( 9,596,678) Furniture, fixtures and office equipment ( 17,287,411) ( 3,187,974) 219,441 - ( 20,255,944) Transportation equipment ( 2,276,653) ( 1,428,667) 486,367 ( 3,770,763) ( 6,989,716) Total ( 975,486,386) ( 357,833,500) 461,926,434 121,731,394 ( 749,662,058) Allowance for decline in value of assets held for lease ( 10,663,855) - 1,988,615 - ( 8,675,240) Property and Equipment - Net 1,170,458,304 1,322,814,224 Depreciation charge of property and equipment for the years ended September 30, 2000 and 1999 amounted to approximately Baht 357.8 million and Baht 424.4 million, respectively. 9. PROPERTY FORECLOSED In Baht Balance as at Movement During the Year Balance as at October 1, September 30, 1999 Addition Deduction Transfer 2000 Cost Office condominium 5,227,066 1,703,666 - - 6,930,732 Land 40,430,855 236,354 - - 40,667,209 Transportation equipment 26,783,477 541,390 ( 66,363,936) 87,278,738 48,239,669 Total 72,441,398 2,481,410 ( 66,363,936) 87,278,738 95,837,610 Accumulated Depreciation Office condominium ( 196,087) ( 136,026) - - ( 332,113) Transportation equipment ( 19,073,238) ( 3,515,365) 46,633,860 ( 61,110,082) ( 37,064,825) Total ( 19,269,325) ( 3,651,391) 46,633,860 ( 61,110,082) ( 37,396,938) Allowance for decline in value ( 3,800,000) - - - ( 3,800,000) Property Foreclosed - Net 49,372,073 54,640,672 Depreciation charge of property foreclosed for the years ended September 30, 2000 and 1999 amounted to approximately Baht 3.7 million and Baht 6.2 million, respectively. NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 10. BANK OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTION In Baht 2000 1999 Bank overdrafts Thai Farmers Bank Public Co., Ltd. 3,220,461 2,943,842 Other - 4,356 Note payable - 60,000,000 Total 3,220,461 62,948,198 As at September 30, 2000, the Company has overdraft line and other credit facilities with a related local bank totalling Baht 550 million and other local banks totalling Baht 400 million, which bear interest at the rates specified in the agreements. 11. SHORT-TERM LOANS FROM AND PAYABLES TO RELATED COMPANIES In Baht 2000 1999 Short-term loans Muang Thai Life Assurance Co., Ltd. - 180,000,000 Phatra Insurance Public Co., Ltd. - 104,000,000 Insurance premium payable Muang Thai Insurance Co., Ltd. 4,656,988 7,920,063 Accrued interest on short-term loans Muang Thai Life Assurance Co., Ltd. - 1,235,616 Phatra Insurance Public Co., Ltd. - 494,692 Total 4,656,988 293,650,371 As at September 30, 2000, the Company has credit facilities with two related insurance companies totalling Baht 500 million which bear interest at market rate. 12. DEBENTURES On December 13, 1999, the Company issued the unsecured, name registered, unsubordinated and no-trustee debentures with face value of Baht 1,000 per unit for 350,000 units. The offering price is Baht 1,000 per unit totalling Baht 350 million by offering to the specific investors as specified in the Notification of Securities Exchange Commission. The said debentures are mature on December 13, 2001 and bear interest at the fixed rate of 8% p.a.. Interest will be paid semi-annually on June 13 and December 13 of each year. On September 7, 2000, the Company issued the unsecured, name registered, unsubordinated and no-trustee debentures with face value of Baht 1,000 per unit for 400,000 units. The offering price is Baht 1,000 per unit totalling Baht 400 million by offering to the specific investors as specified in the Notification of Securities Exchange Commission. The said debentures are mature on September 7, 2003 and bear interest at the fixed rate of 7.75% p.a.. Interest will be paid semi-annually on March 7 and September 7 of each year. In connection with the terms of the rights and responsibilities of the debentures issuer. The Company, as the issuer, has to comply with certain restrictions and conditions as stipulated therein such as maintaining a certain financial ratio, etc.. NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 13. LONG-TERM LOANS FROM RELATED COMPANIES In Baht 2000 1999 Loan from bank Thai Farmers Bank Public Co., Ltd. 161,797,407 568,616,730 Loan from an insurance company Muang Thai Life Assurance Co., Ltd. - 10,000,000 Total 161,797,407 578,616,730 Less portion due within one year ( 42,125,409) (342,080,218) Net 119,671,998 236,536,512 The Company entered into loan and credit facilities agreement with a related local bank (Note 10). The loan bears interest at the rate specified in the agreement and is repayable in installments at the amounts indicated in the agreement. The loan agreement contains certain conditions and restrictions which include, among others, maintaining certain financial ratios, etc.. 14. EMPLOYEES' PROVIDENT FUND The Company established a contributory employees' provident fund for its employees in accordance with the terms and conditions prescribed 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 contributes to the fund monthly at a certain percentage of the employees' basic salaries. On June 26, 1990, the provident fund was registered with the Ministry of Finance as a juristic entity under the provisions of the Provident Fund Act B.E. 2530. The Ministry of Finance also approved the transfer of the cumulative amount of the contributory employees' provident fund under the Ministerial Regulation No. 162 (B.E. 2526) to the registered fund. The fund is managed by a Fund Manager in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issued under the Provident Fund Act. B.E. 2530. Total contributions by the Company for the years ended September 30, 2000 and 1999 amounted to Baht 1,440,660 and Baht 1,367,038, respectively. 15. ASSETS HELD FOR LEASE As at September 30, 2000 and 1999, the Company had a schedule by years of minimum future rentals for the next five years of assets held for operating lease as follows: In Thousand Baht Year ending September 30 2000 1999 2000 - 520,840 2001 525,700 320,500 2002 397,645 188,655 2003 270,799 76,259 2004 106,450 1,295 2005 2,676 - Total 1,303,270 1,107,549 NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 Under the provisions of certain lease agreements, the lessees have an option to purchase the leased assets upon the expiration of the lease terms. In this connection, the lessees are required to pay the sums in advance as guarantee for exercising the purchase option. As at September 30, 2000 and 1999, unguaranteed residual value of assets held for lease under finance lease contracts amounted to approximately Baht 19.3 million and Baht 23.7 million, respectively. 16. LEGAL RESERVE This represents the reserve which the Company has appropriated under the provisions of the Limited Public Company Act which requires the Company to appropriate at least 5% of its annual net income after deduction of the deficit brought forward (if any) as legal reserve until the reserve reaches 10% of authorized share capital. The reserve is not available for dividend distribution. 17. DIVIDENDS At the ordinary shareholders' meeting on January 24, 2000, the shareholders approved the payment of dividends amounting to Baht 22.5 million (Baht 0.75 per share for 30 million shares). 18. COMMITMENT AND CONTINGENT LIABILITY As at September 30, 2000, the Company a) Was contingently liable for letters of guarantee issued by a local bank amounting to approximately Baht 1.6 million. b) Had various lease agreements covering its vehicles for a period of three (3) years and four (4) years commencing from various dates. The annual rental charges totalling approximately Baht 2.2 million. 19. RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1999 financial statements were reclassified to conform with the 2000 financial statement presentation. 20. 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. 21. UNCERTAINTIES OF ECONOMIC SITUATION 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. The accompanying financial statements do not include any adjustment that might result from these uncertainties. PHATRA LEASING PUBLIC COMPANY LIMITED