FINANCIAL STATEMENTS QUARTER 1 BY PL

PHATRA LEASING PUBLIC COMPANY LIMITED INTERIM FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 AND REPORT OF CERTIFIED PUBLIC ACCOUNTANT EXPRESSED IN Thai Baht REPORT OF CERTIFIED PUBLIC ACCOUNTANT To The Board of Directors of Phatra Leasing Public Company Limited I have made a review of the balance sheet of Phatra Leasing Public Company Limited as at December 31, 1999, and the related statement of income, changes in shareholders' equity, retained earnings and cash flows for the three- month period then ended. The interim financial statements of Phatra Leasing Public Company Limited for the three- month period ended December 31, 1998, which are presented for comparative purpose, were reviewed by Mr. Prasit Musikabhantu, an auditor of my firm. The review was made in accordance with standards established by the Institute of Certified Accountants and Auditors of Thailand. A review of interim financial statements consists principally of obtaining an understanding of the system for the preparation of interim financial statements, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion. Based on my review, I am not aware of any material modifications that should be made to the accompanying 1999 and 1998 interim financial statements for them to be in conformity with generally accepted accounting principles. - 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 December 31, 1999, deferred income tax account included future tax benefit arising from loss carryforward amounting to Baht 5.3 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 February 8, 2000 "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 A S S E T S In Thousand Baht 1999 1998 CURRENT ASSETS Cash on hand and in banks (Note 2) 46,428 72,252 Short-term investment in promissory notes (Note 2) - 41,366 Leasing receivables under operating lease contracts - net (Notes 2 and 3) 20,516 27,217 Receivables under finance lease contracts - net (Notes 2 and 4) 92,393 199,329 Other current assets (Note 2) Prepaid expenses 21,189 26,837 Others 13,330 12,114 Total Current Assets 193,856 379,115 INVESTMENTS IN SHARES - At Cost Associated company (Notes 2 and 5) 245 245 Other company - net 2,000 5,000 Total Investments in Shares 2,245 5,245 PROPERTY AND EQUIPMENT - Net (Note 6) 1,139,083 1,290,808 PROPERTY FORECLOSED - Net (Note 7) 45,285 59,887 OTHER ASSETS Deferred income tax - net 184,088 198,631 Other receivable - net 5,051 6,028 Others 18,107 13,448 Total Other Assets 207,246 218,107 TOTAL ASSETS 1,587,715 1,953,162 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 8, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 LIABILITIES AND SHAREHOLDERS' EQUITY In Thousand Baht 1999 1998 CURRENT LIABILITIES Bank overdrafts and loans from financial institutions (Notes 2 and 8) 60,967 160,191 Accounts payable - trade 10,653 5,953 Current portion of long-term loans (Notes 2 and 11) 80,071 541,531 Short-term loans from and payables to related companies (Notes 2 and 9) 111,771 263,829 Other current liabilities Rental income received in advance (Note 2) 4,488 8,276 Accrued interest expense (Note 2) 1,622 8,276 Income tax payable - 6,811 Others (Note 2) 5,074 8,097 Total Current Liabilities 274,646 1,002,964 DEBENTURES (Note 10) 350,000 - LONG-TERM LOANS FROM RELATED COMPANIES - Net (Notes 2 and 11) 263,957 301,841 ADVANCE RECEIVED FROM LESSEES FOR EXERCISING PURCHASE OPTION (Notes 2 and 13) 67,716 73,738 Total Liabilities 956,319 1,378,543 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 reserve fund (Note 14) 11,716 9,216 Unappropriated 163,680 109,403 Total Shareholders' Equity 631,396 574,619 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,587,715 1,953,162 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 8, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 In Thousand Baht 1999 1998 REVENUES Rental income from operating lease contracts (Notes 1 and 2) 163,552 193,188 Income from finance lease contracts (Notes 1 and 2) 2,332 7,224 Other income Gain on sales of assets 4,211 370 Others 3,021 4,710 Total Revenues 173,116 205,492 COSTS AND EXPENSES Direct rental costs 111,337 133,882 General and administrative expenses (Note 2) 19,084 15,136 Interest expense (Note 2) 19,371 45,771 Directors' remuneration 144 66 Total Costs and Expenses 149,936 194,855 INCOME BEFORE INCOME TAX 23,180 10,637 INCOME TAX ( 7,169) ( 3,206) NET INCOME 16,011 7,431 Earnings per Share (Baht) 0.53 0.25 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 8, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 In Thousand Baht 1999 1998 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 Reserve Fund (Note 14) 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 Addition - net income 16,011 7,431 Balance, end of period 163,680 109,403 TOTAL SHAREHOLDERS' EQUITY 631,396 574,619 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 8, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 In Thousand Baht 1999 1998 UNAPPROPRIATED RETAINED EARNINGS: Brought forward from previous period 147,669 101,972 Net income for the period 16,011 7,431 Total Unappropriated Retained Earnings, End of Period 163,680 109,403 APPROPRIATED RETAINED EARNINGS Reserve fund (Note 14) 11,716 9,216 TOTAL RETAINED EARNINGS 175,396 118,619 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 8, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998 In Thousand Baht 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 16,011 7,431 Reconciliations of net income to net cash provided by (used in) operating activities: Depreciation and amortization 99,614 123,021 Reversal of provision for loss on decline in value of assets for lease - ( 2,495) Gain on sales of assets for lease and property foreclosed ( 4,211) ( 370) Decrease in leasing receivables under operating lease contracts 3,159 3,813 Decrease in receivables under finance lease contracts 14,789 39,773 Decrease in prepaid expenses and other current assets 4,214 3,348 Increase in property foreclosed ( 1,629) ( 7,320) Decrease in deferred income tax 7,058 3,206 Increase in other assets ( 4,086) ( 3,536) Decrease in accounts payable - trade ( 11,632) ( 452) Decrease in other current liabilities ( 1,130) ( 1,363) Decrease in advances received from lessees for exercising purchase option ( 336) ( 5,359) Net Cash Provided by Operating Activities 121,821 159,697 CASH FLOWS FROM INVESTING ACTVITIES: Purchases of property and equipment ( 112,545) ( 54,592) Proceeds from sales of assets for lease and property foreclosed 63,757 76,489 Net Cash Provided by (Used in) Investing Activities ( 48,788) 21,897 - 2 - "UNAUDITED" "REVIEWED" In Thousand Baht 1999 1998 CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in loans from financial institutions ( 234,588) ( 147,722) Increase (decrease) in short-term loans from and payables to related companies ( 181,880) 984 Increase in debentures 350,000 - Net Cash Used in Financing Activities ( 66,468) ( 146,738) NET INCREASE IN CASH AND CASH EQUIVALENTS 6,565 34,856 Cash and Cash Equivalents at Beginning of Year 38,896 73,891 CASH AND CASH EQUIVALENTS AT END OF YEAR 45,461 108,747 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash and cash equivalents consist of: Cash on hand and in banks 46,428 72,252 Short-term investment in promissory notes - 41,366 Bank overdrafts ( 967) ( 4,871) 45,461 108,747 Cash paid during the period for: Interest expense 20,631 38,133 Income tax 112 531 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 8, 2000) PHATRA LEASING PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 "UNAUDITED" "REVIEWED" 1. SIGNIFICANT ACCOUNTING POLICIES Income Recognition The Company recognizes the income from long-term leases in conformity with the Accounting Standard No. 29 "Accounting for Long-Term Leases", which is applied to individual contracts since the dates on which the contracts are entered into. Rental income from operating lease contracts is recognized based on the term of the lease. Income from finance lease contracts is recognized over the installment periods based on the sum-of-the-digits method as the installments fall due irrespective of actual collection. Income from operating lease contracts and income from finance lease contracts for lessees who have not paid rentals for more than three months will be recognized as income on accrual basis only for three months. Allowance for Doubtful Accounts The Company provides allowance for doubtful accounts equal to the estimated losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience and a review of the current status of existing receivables. Investments Investments in shares of the associated and other companies which are held for long-term purpose are valued at cost. Allowance for decline in value of investments will be provided in the accounts when there is an impairment. The Company has not adjusted the investment in shares of associated company to the equity method since the effect is not material. Depreciation The Company depreciates its property and equipment, except assets held for operating lease and those held for future lease, by the straight-line method over the estimated useful lives of the assets as follows: No. of Years Office condominium 7 and 40 Furniture, fixtures and office equipment 5 Transportation equipment 5 - 2 - The Company will depreciate assets held for future lease upon starting of the lease. The Company depreciates assets held for operating lease by the straight-line method on the original cost less estimated residual value over the term of the lease. Allowance for Decline in Value of Assets Held for Operating Lease The Company provides allowance for decline in value of assets held for operating lease for those lessees who have not paid rental for more than three months equal to the estimated loss from recoverable amount of assets based on the average market value less estimated discount determined by management. Allowance for Decline in Value of Property Foreclosed The Company provides allowance for decline in value of property foreclosed equal to the estimated loss from recoverable amount of assets based on the average market value determined by management. Deferred Income Tax The Company has adopted the practice of recognizing the income tax effects of transactions in the period in which they enter into the determination of net income, regardless of when they are recognized as income or expenses for tax purposes. Accordingly, the income taxes applicable to income which is not currently taxable and expenses which are not currently tax deductible including the future tax benefit arising from loss carryforwards are set up as a deferred income tax in the balance sheets. This will be allocated to future periods when the expenses provided for are actually incurred and considered deductible for income tax purposes, or the income is recognized for tax purposes, or the tax benefit arising from loss carryforwards is utilized. Deferred income tax on recognition of tax benefit arising from loss carryforwards is taken up only in the case that the Company can assure beyond a reasonable doubt that the future operating results will generate sufficient taxable income available against which the deferred income tax arising from loss carryforwards can be utilized in the succeeding fiscal years. In this connection, it is the Company's practice to determine at every accounting period whether the carrying amount of such deferred income tax, which is recorded in the balance sheet, will be fully utilized. Consequently, the Company recorded a tax benefit arising from loss carryforward which management believes to be utilized in the succeeding fiscal years amounting to Baht 5.3 million as part of deferred income tax account at December 31, 1999. - 3 - Earnings per Share Earnings per share is determined by dividing the net income by the weighted-average number of shares outstanding during the periods (30 million shares). 2. 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 with the related companies, arising from transactions in the normal course of business, as of December 31, 1999 and 1998 and for the three-month periods then ended were as follows: In Thousand Baht 1999 1998 Cash in bank 45,526 71,547 Short-term investment in promissory notes - 41,366 Leasing receivables under operating lease contracts 48 907 Receivables under finance lease contracts- net 582 6,004 Prepaid expenses 19,778 24,286 Other current assets 1,588 259 Investment in associated company 245 245 Bank overdraft and loans from financial institution 962 156,546 Current portion of long-term loans 80,071 541,531 Short-term loans from and payables to related companies 111,771 263,829 Rental income received in advance 223 150 Accrued interest expense 165 8,276 Other current liabilities 94 732 Long-term loans from related companies-net 263,957 301,841 - 4 - In Thousand Baht 1999 1998 Advances received from lessees for exercising purchase option 1,232 1,926 Rental income from operating lease contracts 51,947 47,941 Income from finance lease contracts 106 224 General and administrative expenses 75 199 Interest expense 17,127 45,771 3. LEASING RECEIVABLES UNDER OPERATING LEASE CONTRACTS The 102 leasing receivables under operating lease contracts which may be uncollectible as at December 31, 1999, categorized by aging schedules, were as follows: In Thousand Baht Over 3 months to 6 months 4,602 Over 6 months to 12 months 12,729 Over 12 months 15,104 Total 32,435 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. 4. RECEIVABLES UNDER FINANCE LEASE CONTRACTS - Net In Thousand Baht 1999 1998 Receivables under finance lease contracts (including portion due within one year from December 31, 1999 amounting to Baht 89.2 million) 186,090 306,788 Less Unearned interest income (including portion due within one year from December 31, 1999 amounting to Baht 4.9 million) ( 9,434) ( 23,196) Allowance for doubtful accounts ( 84,263) ( 84,263) Net 92,393 199,329 - 5 - The 63 receivables under finance lease contracts which may be uncollectible as at December 31, 1999, categorized by aging schedules, were as follows: In Thousand Baht Over 3 months to 6 months 5,637 Over 6 months to 12 months 38,442 Over 12 months 37,362 Total 81,441 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. 5. INVESTMENT IN ASSOCIATED COMPANY - At Cost In Thousand Baht Percentage of Company's Name Business Relation Holding (%) Investment Dividend Associated Company Sarathi Co., Ltd. Car driving service Shareholder 49 245 - 6. PROPERTY AND EQUIPMENT - At Cost In Thousand Baht Balance as at Balance as at October Movement During the Period 1, 1999 Addition Deduction 31, 1999 Assets held for lease under operating lease contracts (mainly transportation equipment) (Note 13) 1,989,415 123,856 134,615 1,978,656 Office condominium (including land) 113,211 - - 113,211 Furniture, fixtures and office equipment 16,562 221 - 16,783 Transportation equipment 24,562 2,100 - 26,662 Assets held for future lease and assets in transit for future lease 12,858 2,290 12,858 2,290 Total 2,156,608 128,467 147,473 2,137,602 Less :accumulated depreciation ( 975,486) ( 987,855) allowance for decline in value of assets held for lease ( 10,664) ( 10,664) Property and Equipment - Net 1,170,458 1,139,083 - 6 - Depreciation charges for the three-month periods ended December 31, 1999 and 1998 amounted to approximately Baht 96.7 million and Baht 118.3 million, respectively. 7. PROPERTY FORECLOSED In Thousand Baht Balance as at Balance as at October Movement During the Period December 1, 1999 Addition Deduction 31, 1999 Land 40,431 - - 40,431 Transportation equipment 26,783 9,344 19,995 16,132 Condominium 5,227 - - 5,227 Total 72,441 9,344 19,995 61,790 Less : accumulated depreciation ( 19,269) ( 12,705) allowance for decline in value ( 3,800) ( 3,800) Net 49,372 45,285 Depreciation charges for the three-month periods ended December 31, 1999 and 1998 amounted to approximately Baht 1.1 million and Baht 0.9 million, respectively. 8. BANK OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTIONS In Thousand Baht 1999 1998 Bank overdrafts 967 4,871 Note payable 60,000 155,320 Total 60,967 160,191 9. SHORT-TERM LOANS FROM AND PAYABLES TO RELATED COMPANIES In Thousand Baht 1999 1998 Short-term loans 104,000 254,000 Insurance premium payable 7,264 4,868 Accrued interest on short-term loans 507 4,961 Total 111,771 263,829 - 7 - (more)