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29 พฤศจิกายน 2543

ANNUAL FINANCIAL STATEMENTS (AS OF SEPTEMBER 30,2000)

PHATRA LEASING PUBLIC COMPANY LIMITED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999 AND REPORT OF CERTIFIED PUBLIC ACCOUNTANT EXPRESSED IN Thai Baht REPORT OF CERTIFIED PUBLIC ACCOUNTANT To the Shareholders of Phatra Leasing Public Company Limited I have audited the balance sheet of Phatra Leasing Public Company Limited as of September 30, 2000, and the related statements of income, changes in shareholders' equity, retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The financial statements of Phatra Leasing Public Company Limited for the year ended September 30, 1999, which are presented for comparative purposes, were audited by Mr. Prasit Musikabhantu, who at that time the auditor in my firm and in whose report dated November 16, 1999, expressing an unqualified opinion on those financial statements. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Phatra Leasing Public Company Limited as of September 30, 2000, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. 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 September 30, 2000 and 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 November 1, 2000 BALANCE SHEETS SEPTEMBER 30, 2000 AND 1999 A S S E T S In Baht Note 2000 1999 CURRENT ASSETS Cash on hand and in banks 4 6,634,745 41,844,353 Leasing receivables under operating lease contracts 4,5 47,662,352 59,761,592 Less allowance for doubtful accounts ( 36,085,963) ( 36,085,963) Leasing receivables under operating lease contracts - net 11,576,389 23,675,629 Receivables under finance lease contracts - net of unearned interest income 4,6 184,422,503 199,663,917 Less allowance for doubtful accounts ( 84,262,867) ( 84,262,867) Receivables under finance lease contracts - net 100,159,636 115,401,050 Other current assets Prepaid expenses 4 22,819,819 25,995,126 Others 4 13,598,761 12,738,856 Total Current Assets 154,789,350 219,655,014 INVESTMENTS IN SHARES Associated company 4,7 245,000 245,000 Other company - net of allowance for impairment in value of investment of Baht 5,000,000 in 2000 and Baht 3,000,000 in 1999 - 2,000,000 Total Investments in Shares 245,000 2,245,000 PROPERTY AND EQUIPMENT - Net 8 1,322,814,224 1,170,458,304 PROPERTY FORECLOSED - Net 9 54,640,672 49,372,073 OTHER ASSETS Deferred income tax net 158,623,756 191,145,521 Other receivables - net of allowance for doubtful accounts of Baht 55,992,404 in 2000 and Baht 57,931,393 in 1999 2,033,061 5,281,440 Others 17,526,507 15,096,055 Total Other Assets 178,183,324 211,523,016 TOTAL ASSETS 1,710,672,570 1,653,253,407 The accompanying notes are an integral part of these financial statements. BALANCE SHEETS SEPTEMBER 30, 2000 AND 1999 LIABILITIES AND SHAREHOLDERS' EQUITY In Baht Note 2000 1999 CURRENT LIABILITIES Bank overdrafts and loans from financial institution 4,10 3,220,461 62,948,198 Accounts payable - trade 35,062,805 22,284,683 Current portion of long - term loans 4,13 42,125,409 342,080,218 Short - term loans from and payables to related companies 4,11 4,656,988 293,650,371 Other current liabilities Rental income received in advance 4 2,971,387 4,259,187 Value added tax payable - 1,372,843 Accrued interest expense 4 10,549,800 2,446,077 Others 4 10,782,916 4,236,886 Total Current Liabilities 109,369,766 733,278,463 DEBENTURES 12 750,000,000 - LONG-TERM LOANS FROM RELATED COMPANIES - Net 4,13 119,671,998 236,536,512 ADVANCES RECEIVED FROM LESSEES FOR EXERCISING PURCHASE OPTION 4,15 75,762,990 68,052,840 Total Liabilities 1,054,804,754 1,037,867,815 SHAREHOLDERS' EQUITY Share capital common share; Baht 10 par value Authorized, issued and fully paid-up - 30,000,000 shares 300,000,000 300,000,000 Premium on share capital 156,000,000 156,000,000 Retained earnings Appropriated for legal reserve 16 15,000,000 11,716,172 Unappropriated 184,867,816 147,669,420 Total Shareholders' Equity 655,867,816 615,385,592 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,710,672,570 1,653,253,407 The accompanying notes are an integral part of these financial statements. STATEMENTS OF INCOME FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999 In Baht Note 2000 1999 REVENUES Rental income from operating lease contracts 3,4 618,415,462 696,022,397 Income from finance lease contracts 3,4 10,515,417 20,751,518 Other income Gain on sales of assets held for lease and property foreclosed 29,740,487 16,470,426 Penalty income from delay payment 3,028,970 8,985,343 Others 6,155,200 7,655,719 Total Revenues 667,855,536 749,885,403 COSTS AND EXPENSES Direct rental costs 426,638,617 487,753,703 Interest expense 4 71,420,060 125,793,067 General and administrative expenses 4 72,764,730 76,367,205 Directors' remuneration 1,528,140 1,248,000 Total Costs and Expenses 572,351,547 691,161,975 Income Before Income Tax And Tax Benefit Arising From Loss Carryforward 95,503,989 58,723,428 Income Tax ( 32,521,765) ( 18,525,855) Income Before Tax Benefit Arising From Loss Carryforward 62,982,224 40,197,573 Tax Benefit Arising From Loss Carryforward - 8,000,000 NET INCOME 62,982,224 48,197,573 Earnings per Share 2.10 1.61 The accompanying notes are an integral part of these financial statements. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999 In Baht Note 2000 1999 Common Share Capital Balance, beginning of year 300,000,000 300,000,000 Addition - - Balance, end of year 300,000,000 300,000,000 Premium on Share Capital Balance, beginning of year 156,000,000 156,000,000 Addition - - Balance, end of year 156,000,000 156,000,000 Retained Earnings Appropriated Legal Reserve Balance, beginning of year 11,716,172 9,216,172 Addition 16 3,283,828 2,500,000 Balance, end of year 15,000,000 11,716,172 Unappropriated Balance, beginning of year 147,669,420 101,971,847 Addition 62,982,224 48,197,573 Dividends 17 ( 22,500,000) - Legal reserve 16 ( 3,283,828) ( 2,500,000) Balance, end of year 184,867,816 147,669,420 TOTAL SHAREHOLDERS' EQUITY 655,867,816 615,385,592 The accompanying notes are an integral part of these financial statements. STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999 In Baht Note 2000 1999 UNAPPROPRIATED RETAINED EARNINGS Brought forward from prior year 147,669,420 101,971,847 Less appropriated net income of prior year Dividends 17 ( 22,500,000) - Legal reserve 16 ( 3,283,828) ( 2,500,000) Net income for the year 62,982,224 48,197,573 Total Unappropriated Retained Earnings 184,867,816 147,669,420 APPROPRIATED RETAINED EARNINGS Legal Reserve 15,000,000 11,716,172 TOTAL RETAINED EARNINGS 199,867,816 159,385,592 The accompanying notes are an integral part of these financial statements. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 30, 2000 AND 1999 In Baht 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 62,982,224 48,197,573 Reconciliations of net income to net cash provided by (used in) operating activities: Depreciation and amortization 371,267,458 445,736,320 Reversal of provision for doubtful accounts ( 1,917,557) - Provision for impairment in value of investment 2,000,000 3,000,000 Provision for decline in value of property foreclosed - 3,800,000 Reversal of provision for loss on decline in value of assets held for lease ( 1,988,615) ( 3,890,901) Gain on sales of assets held for lease and property foreclosed ( 29,740,487) ( 16,470,426) Income from operating activities before changes in operating assets and liabilities 402,603,023 480,372,566 Decrease (increase) in operating assets Leasing receivables under operating lease contracts 12,099,240 7,354,632 Receivables under finance lease contracts 15,241,414 93,739,786 Prepaid expenses and other current assets 2,315,403 3,565,376 Property foreclosed ( 7,801,789) ( 4,353,712) Deferred income tax 32,521,765 10,691,660 Other assets ( 3,311,600) ( 10,563,476) Increase (decrease) in operating liabilities Accounts payable trade 12,778,122 15,879,385 Income tax payable - ( 6,810,904) Other current liabilities 11,989,110 ( 13,696,859) Advances received from lessees for exercising purchase option 7,710,150 ( 11,043,952) Net Cash Provided by Operating Activities 486,144,838 565,134,502 CASH FLOWS FROM INVESTING ACTIVITIES: Increase in property and equipment (702,645,810) (372,625,030) Proceeds from sales of assets held for lease and property foreclosed 219,331,807 249,488,228 Net Cash Used in Investing Activities (483,314,003) (123,136,802) CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in loans from financial institutions ( 60,000,000) 60,000,000 Decrease in short-term loans from and payables to related companies (288,993,383) (212,161,659) Increase in debentures 750,000,000 - Decrease in long-term loans from related companies (416,819,323) (324,830,667) Payment of dividends ( 22,500,000) - Net Cash Used in Financing Activities ( 38,312,706) (476,992,326) NET DECREASE IN CASH AND CASH EQUIVALENTS ( 35,481,871) ( 34,994,626) Cash and Cash Equivalents at Beginning of Year 38,896,155 73,890,781 CASH AND CASH EQUIVALENTS AT END OF YEAR 3,414,284 38,896,155 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION: Cash and cash equivalents consist of: Cash on hand and in banks 6,634,745 41,844,353 Bank overdrafts ( 3,220,461) ( 2,948,198) Net 3,414,284 38,896,155 Cash paid during the year for: Interest expense 62,294,723 129,967,013 Income tax 391,328 7,617,409 The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000 AND 1999 1. GENERAL Phatra Leasing Public Company Limited was incorporated in Thailand on September 28, 1987. The Company had changed its status to be a public company on January 25, 1994, and subsequently was listed on the Stock Exchange of Thailand on August 15, 1996. The Company engages in leasing services to corporate entities. The employees of the Company at the end of the years numbered 60 in 2000 and 54 in 1999. The registered office of the Company is located at 252/6 29th Floor, Muang Thai Phatra Complex, Rachadaphisek Road, Huaykwang, Bangkok 10320. 2. BASIS FOR FINANCIAL STATEMENT PRESENTATION The Company maintains its official accounting records in Thai Baht and prepares its statutory 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 statutory Thai language financial statements which are issued for domestic reporting purposes. 3. 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 collections. 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. NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 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 the impairment loss is taken up. The Company has not adjusted the investment in shares of associated company to the equity method and has not prepared the consolidated financial statements of the Company and associated company 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 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. Impairment of Assets Investments, property and equipment and other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset exceeds its recoverable amount. In case that the carrying value of an asset exceeds its recoverable amount, the Company recognizes the impairment loss in the statement of income. The reversal of impairment losses recognized in prior years is recorded as other income when there is an indication that the impairment losses recognized for assets no longer exist or are decreased. Such a reversal should not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the assets in prior years. 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 had 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 the 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 the management. Foreign Currency Transactions Transactions in foreign currencies throughout the years are recorded in Baht at the rates prevailing at the date of transactions. Outstanding assets and liabilities denominated in foreign currencies at the balance sheet dates are converted into Baht at the prevailing bank rates as of those dates. Gains or losses arising from translation of transactions in foreign currencies are credited or charged to current operations. NOTES TO FINANCIAL STATEMENTS (Continued) SEPTEMBER 30, 2000 AND 1999 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 (more)