FINANCIAL STATEMENTS QUARTER 3 (AS OF JUN 30,2000) - PL

PHATRA LEASING PUBLIC COMPANY LIMITED INTERIM FINANCIAL STATEMENTS FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JUNE 30, 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 June 30, 2000, and the related statements of income for the three-month and nine-month periods ended June 30, 2000, the statements of changes in shareholders' equity, retained earnings and cash flows for the nine-month period ended June 30, 2000. 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. The interim financial statements of Phatra Leasing Public Company Limited for the three-month and nine-month periods ended June 30, 1999 which are presented for comparative purposes, were reviewed by Mr. Prasit Musikabhantu, the then auditor in my firm. 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 June 30, 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 July 13, 2000 PHATRA LEASING PUBLIC COMPANY LIMITED BALANCE SHEETS JUNE 30, 2000 AND SEPTEMBER 30, 1999 A S S E T S In Thousand Baht June 30, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" CURRENT ASSETS Cash on hand and in banks (Note 3) 31,058 41,844 Leasing receivables under operating lease contracts (Notes 3 and 4) 50,959 59,762 Less allowance for doubtful accounts ( 36,086) ( 36,086) Leasing receivables under operating lease contracts - net 14,873 23,676 Receivables under finance lease contracts - net of unearned interest income (Notes 3 and 5) 154,697 199,664 Less allowance for doubtful accounts ( 84,263) ( 84,263) Receivables under finance lease contracts - net 70,434 115,401 Other current assets Prepaid expenses (Note 3) 19,888 25,995 Others (Note 3) 12,639 12,739 Total Current Assets 148,892 219,655 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 June 30, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" PROPERTY AND EQUIPMENT - Net (Note 10) 1,275,090 1,170,458 PROPERTY FORECLOSED - Net 42,543 49,372 OTHER ASSETS Deferred income tax - net (Note 7) 164,048 191,146 Other receivables - net 2,515 5,281 Others 16,157 15,096 Total Other Assets 182,720 211,523 TOTAL ASSETS 1,651,490 1,653,253 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated July 13, 2000) PHATRA LEASING PUBLIC COMPANY LIMITED BALANCE SHEETS JUNE 30, 2000 AND SEPTEMBER 30, 1999 LIABILITIES AND SHAREHOLDERS' EQUITY In Thousand Baht June 30, 2000 September 30, 1999 "Unaudited" "Reviewed" "Audited" CURRENT LIABILITIES Bank overdrafts and loans from financial institutions (Note 3) 67,020 62,948 Accounts payable - trade 12,093 22,285 Current portion of long-term loans (Notes 3 and 9) 102,055 342,080 Short-term loans from and payables to related companies (Note 3) 106,677 293,650 Other current liabilities Rental income received in advance (Note 3) 3,459 4,259 Accrued interest expense (Note 3) 1,470 2,446 Others (Note 3) 7,875 5,610 Total Current Liabilities 300,649 733,278 DEBENTURES (Note 8) 350,000 - LONG-TERM LOANS FROM RELATED COMPANIES - Net (Notes 3 and 9) 281,228 236,537 ADVANCE RECEIVED FROM LESSEES FOR EXERCISING PURCHASE OPTION (Notes 3 and 10) 78,150 68,053 Total Liabilities 1,010,027 1,037,868 - 2 - In Thousand Baht June 30, 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 173,747 147,669 Total Shareholders' Equity 641,463 615,385 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,651,490 1,653,253 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated July 13, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999 In Thousand Baht Three months ended Nine months ended June 30, June 30, June 30, June 30, 2000 1999 2000 1999 REVENUES Rental income from operating lease contracts (Note 3) 153,561 163,156 473,359 530,755 Income from finance lease contracts (Note 3) 1,256 4,336 5,177 17,529 Other income Gain on sales of assets held for lease and property foreclosed 9,764 3,453 25,662 6,588 Penalty income from delay payment 769 2,653 3,888 6,372 Others 1,054 1,768 3,143 6,524 Total Revenues 166,404 175,366 511,229 567,768 COSTS AND EXPENSES Direct rental costs 106,189 116,487 326,680 371,286 Interest expense (Note 3) 17,048 25,420 53,257 103,457 General and administrative expenses (Note 3) 18,179 15,348 54,090 49,918 Directors' remuneration 1,196 144 1,526 354 Total Costs and Expenses 142,612 157,399 435,553 525,015 INCOME BEFORE INCOME TAX 23,792 17,967 75,676 42,753 Income Tax ( 8,740) ( 5,492) ( 27,098) ( 12,997) NET INCOME 15,052 12,475 48,578 29,756 Earnings per Share (Baht) 0.50 0.42 1.62 0.99 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated July 13, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE NINE-MONTH PERIODS ENDED JUNE 30, 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 48,578 29,756 Dividends (Note 11) ( 22,500) - Balance, end of period 173,747 131,728 TOTAL SHAREHOLDERS' EQUITY 641,463 596,944 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated July 13, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE NINE-MONTH PERIODS ENDED JUNE 30, 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 48,578 29,756 Dividends (Note 11) ( 22,500) - Total Unappropriated Retained Earnings, End of period 173,747 131,728 APPROPRIATED RETAINED EARNINGS Legal reserve 11,716 9,216 TOTAL RETAINED EARNINGS 185,463 140,944 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated July 13, 2000) "UNAUDITED" "REVIEWED" PHATRA LEASING PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999 In Thousand Baht 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 48,578 29,756 Reconciliations of net income to net cash provided by (used in) operating activities: Depreciation and amortization 290,920 338,607 Reversal of provision for loss on decline in value of assets held for lease ( 1,536) ( 3,791) Gain on sales of assets held for lease and property foreclosed ( 25,662) ( 6,588) Income from operation before change in operating assets and liabilities 312,300 357,984 Decrease (increase) in operating assets Leasing receivables under operating lease contracts 8,803 6,664 Receivables under finance lease contracts 26,418 114,391 Receivables under hire-purchase contracts - 602 Prepaid expenses and other current assets 4,597 1,568 Property foreclosed ( 1,760) ( 6,319) Deferred income tax 27,098 13,163 Other assets ( 1,909) 3,325 Increase (decrease) in operating liabilities Accounts payable-trade ( 10,191) 6,803 Income tax payable - ( 6,811) Other current liabilities 489 ( 11,832) Advance received from lessees for exercising purchase option 10,097 ( 7,746) Net Cash Provided by Operating Activities 375,942 471,792 "UNAUDITED" "REVIEWED" - 2 - In Thousand Baht 2000 1999 CASH FLOWS FROM INVESTING ACTIVITIES: Increase in property and equipment (524,437) (211,497) Proceeds from sales of assets held for lease and property foreclosed 188,445 159,013 Net Cash Used in Investing Activities (335,992) ( 52,484) CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in loans from financial institutions - (242,966) Decrease in short-term loans from and payables to related companies (186,974) ( 52,182) Increase in debentures 350,000 - Decrease in long-term loans from related companies (195,334) (151,368) Payment of dividends ( 22,500) - Net Cash Used in Financing Activities ( 54,808) (446,516) NET DECREASE IN CASH AND CASH EQUIVALENTS ( 14,858) ( 27,208) Cash and Cash Equivalents at Beginning of Period 38,896 73,890 CASH AND CASH EQUIVALENTS AT END OF PERIOD 24,038 46,682 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash and cash equivalents consist of: Cash on hand and in banks 31,058 47,667 Bank overdrafts ( 7,020) ( 985) Net 24,038 46,682 Cash paid during the period for: Interest expense 53,256 99,836 Income tax 294 7,506 See accompanying Notes to Interim Financial Statements. (With Mr. Vichien Thamtrakul's report dated July 13, 2000) PHATRA LEASING PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS JUNE 30, 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 standards 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 nine-month periods ended June 30, 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 June 30, 2000 and September 1999 and for the three-month and nine-month periods ended June 30, 2000 and 1999 were as follows: In Thousand Baht June 30,2000 September 30,1999 Balance Sheets Cash in banks 30,362 41,140 Leasing receivables under operating lease contracts - 33 Receivables under finance lease contracts - net 90 837 Prepaid expenses 17,022 24,197 Other current assets 376 592 Investment in associated company 245 245 Bank overdrafts and loans from financial institutions 7,016 2,944 Current portion of long-term loans 102,055 342,080 Short-term loans from and payables to related companies 106,677 293,650 Rental income received in advance 623 125 Accrued interest expense 1,470 2,446 Other current liabilities 383 104 Long-term loans from related companies 281,228 236,537 Advances received from lessees for exercising purchase option 1,158 1,232 - 3 - In Thousand Baht Three months ended Nine months ended June 30, June 30, June 30, June 30, 2000 1999 2000 1999 Statements of Income Rental income from operating lease contracts 54,282 48,639 156,728 144,554 Income from finance lease contracts 67 203 252 604 General and administrative expenses 84 49 259 298 Interest expense 11,422 25,420 42,502 103,457 4. LEASING RECEIVABLES UNDER OPERATING LEASE CONTRACTS The 94 leasing receivables under operating lease contracts which may be uncollectible as at June 30, 2000, categorized by aging schedules, are as follows: In Thousand Baht Over 3 months to 6 months 3,779 Over 6 months to 12 months 12,607 Over 12 months 14,136 Total 30,522 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 amounting to approximately Baht 36.1 million. 5. RECEIVABLES UNDER FINANCE LEASE CONTRACTS In Thousand Baht June 30, 2000 September 30, 1999 Receivables under finance lease contracts (including portion due (more)