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FINANCIAL STATEMENTS AND ACCOUNTANT'S REVIEW REPORT SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES SECOND QUARTER ENDED JUNE 30, 1998 AND 1997 Accountants' Review Report To the Shareholders of Sansiri Public Company Limited We have made a review of the consolidated balance sheets of Sansiri Public Company Limited and subsidiaries as at June 30, 1998 and 1997, and the related consolidated statements of income for the three-month and six- month periods and consolidated statements of retained earnings, statement of changes in shareholders equity for the six-month periods then ended and consolidated statement of cash flow for the three-month and six-month periods ended June 30, 1998 and the financial statements of Sansiri Public Company Limited for the same periods in accordance with standards established by the Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information consists principally of obtaining an understanding of the systems for the preparation of interim financial information, 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, we do not express such an opinion. The operations of the Company, which have been affected by the economic condition in Thailand and the Asia Pacific Region in general , have resulted in gross and net operating loss for the six-month period ended June 30, 1998 as presented in the financial statements and may incur more loss on property development for sale and from devaluation on property development for rent in the accounting period of 1998, which cannot presently be estimated. The Company was also default in principal and interest on loans as described in Note 12 to financial statements. In addition, for the six-month period ended June 30,1998, two subsidiaries have the same problem as the parent company regarding the going concern, devaluation on property development and the ability to get repayment on loans and interest from related parties as described in Note 3 to financial statements. The said uncertainties will affect further the Companys operation. The financial statements for the six- month period ended June 30, 1998 have been prepared based on a going concern basis, the companies ability to continue its business as going concern depends on the success of improvement plans being implemented to increase revenues, to reduce cost, negotiate to extend repayment of debts and restructuring debts, etc. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets amounts or classification of liabilities that might be necessary if the companies are not successful in implementing the improvement plans. As at June 30, 1998 in consolidated and the Company s financial statements, the Company has accounts receivable, loans to related parties and interest receivable, the repayment of which is uncertain as described in Notes 6 and 7 to financial statements. The Company does not set up allowance for doubtful debt, as the management believed that the company will not sustain the loss from the said transactions. However the result is still not known. Based on our review, subject to the effects of such adjustments, if anya, as might have been required had the outcome of the uncertainty as mentioned in the third and fourth paragraphs been known, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Supot Singhasaneh Certified Public Accountant Peat Marwick Suthee Limited Bangkok, July 30, 1998 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company ASSETS 1998 1997 1998 1997 CURRENT ASSETS Cash on hand and at banks 161,513 108,831 76,833 107,786 Short - term investments - fixed deposits - 120,001 - 120,001 Short - term investments- others 3,121 360,187 3,021 328,618 Accounts, notes receivable and unbilled completed work - net 370,311 350,702 70,172 248,972 Loans to related parties 5,000 5,000 511,351 177,636 Property development for sales - net 1,278,259 2,499,536 806,036 1,916,057 Advance payment for construction 75,543 92,549 35,003 47,587 Interest receivable - - 40,498 39,879 Prepaid expenses 2,122 18,243 2,099 17,980 Advances and others 28,265 16,693 23,140 12,312 Total Current Assets 1,924,134 3,571,742 1,568,153 3,016,828 NOTES RECEIVABLE - FINANCIAL INSTITUTION - 25,000 - - INVESTMENTS IN RELATED PARTIES - NET 18,643 20,000 89,846 121,821 PROPERTY DEVELOPMENT FOR RENT - NET 2,054,686 2,222,120 778,961 1,102,286 LAND UNDER DEVELOPMENT FOR SALE AND RENT 1,057,204 415,984 8,198 8,198 LEASEHOLD, BUILDING AND EQUIPMENT - NET 499,458 527,530 492,269 518,387 OTHER ASSETS Deferred charges 38,163 111,342 6,168 67,633 Deposits 30,157 31,588 26,226 27,140 Withholding tax and others 10,849 32,603 10,826 15,983 Total Other Assets 79,169 175,533 43,220 110,756 Total Assets 5,633,294 6,957,909 2,980,647 4,878,276 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997 1998 1997 CURRENT LIABILITIES Bank overdrafts and loans from financial institutions 1,098,121 1,798,631 835,741 1,101,214 Accounts payable - construction 146,459 90,129 41,515 64,182 Margin loans for purchasing securities 2,315 2,315 - - Current portion of long-term debts 578,344 4,999 49,034 4,999 Construction retention 88,762 57,085 44,669 48,906 Advance received from customers and unearned income 46,929 61,633 24,923 41,619 Accrued income taxes 37,570 62,926 26,994 35,958 Interest payable 343,569 42,575 257,115 30,682 Other current liabilities 63,318 32,000 42,000 23,145 Total Current Liabilities 2,405,387 2,152,323 1,321,991 1,350,705 DEFERRED LEASEHOLD REVENUE 808,590 840,508 - - LONG-TERM DEBTS 992,541 2,190,412 770,904 1,717,486 OTHER LIABILITIES 32,961 29,713 132,854 63,734 Total Liabilities 4,239,479 5,212,956 2,225,749 3,131,925 MINORITY INTEREST 1 8 - - SHAREHOLDERS' EQUITY Share capital Authorized share capital 94,550,000 and 64,550,000 ordinary shares, Baht 10 par value in 1998 and 1997, respectively 945,500 645,500 945,500 645,500 Issued and paid-up share capital 67,478,045 and 64,550,000 ordinary shares, fully paid in 1998 and 1997, respectively 674,780 645,500 674,780 645,500 Premium on share capital 987,863 987,863 987,863 987,863 Surplus on land revaluation 641,220 - - - Retained earnings (Deficit) Appropriated - legal reserve 11,280 11,280 11,280 11,280 Unappropriated (919,025) 101,708 (919,025) 101,708 Equity in parent company held by subsidiary (2,304) (1,406) - - Total Shareholders' Equity 1,393,814 1,744,945 754,898 1,746,351 Total Liabilities and Shareholders' Equity 5,633,294 6,957,909 2,980,647 4,878,276 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE THREE - MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company except earnings(loss) per share) 1998 1997 1998 1997 REVENUES Revenues from project sales 535,771 163,648 405,734 129,863 Revenues from leasehold right 7,979 7,980 - - Revenues from business management 29,399 21,850 18,147 20,879 Rental income 12,149 15,478 12,493 15,576 Interest and dividend income 10,472 21,555 7,302 23,695 loss on sales of investment - (2,799) - (2,799) Gain on exchange rate 239 - 239 - Other income 5,760 355 1,957 24 Total Revenues 601,769 228,067 445,872 187,238 EXPENSES Cost of sales and services 678,049 135,200 542,325 105,268 Leasehold and development cost written off 5,111 5,111 - - Selling and administrative expenses 184,143 48,822 147,295 39,945 Loss on restructuring debts 162,323 - 162,323 - Interest expenses 79,772 32,055 71,129 25,102 Directors' remuneration - 1,024 - 1,024 Total Expenses 1,109,398 222,212 923,072 171,339 Profit (loss) before net result from investments in subsidiaries and income taxes (507,629) 5,855 (477,200) 15,899 Net result from investments in subsidiaries - - (30,425) (10,868) Income taxes - (5,694) - (4,870) Net profit (loss) before minority interest (507,629) 161 (507,625) 161 Add net loss of minority interest 4 - - - Net profit (loss) (507,625) 161 (507,625) 161 Earnings (loss) per share (Baht) (Note 4) (7.80) 0.01 (7.80) 0.01 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE SIX- MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company except earnings(loss) per share) 1998 1997 1998 1997 REVENUES Revenues from project sales 1,220,995 244,231 881,872 187,733 Revenues from leasehold right 15,959 15,959 - - Revenues from business management 33,191 45,665 39,634 45,094 Rental income 27,473 30,010 28,106 30,206 Interest and dividend income 15,418 33,873 14,140 39,811 Gain on sale investment - 4,725 - 4,725 Gain on exchange rate 68,242 - 68,242 - Other income 6,176 1,910 2,141 1,176 Total Revenues 1,387,454 376,373 1,034,135 308,745 EXPENSES Cost of sales and services 1,566,650 198,664 1,210,573 151,681 Leasehold and development cost written off 10,223 10,223 - - Selling and administrative expenses 316,481 105,340 255,932 80,001 Loss from restructuring debts 162,323 - 162,323 - Interest expenses 165,133 44,998 147,094 33,216 Directors' remuneration - 1,024 - 1,024 Total Expenses 2,220,810 360,249 1,775,922 265,922 Profit (loss) before net result from investments in subsidiaries and income taxes (833,356) 16,124 (741,787) 42,823 Net result from investments in subsidiaries - - (91,559) (28,037) Income taxes - (14,384) - (13,046) Net profit (loss) before minority interest (833,356) 1,740 (833,346) 1,740 Add net loss of minority interest 10 - - - Net profit (loss) (833,346) 1,740 (833,346) 1,740 Earnings (loss) per share (Baht) (Note 4) (12.85) 0.03 (12.85) 0.03 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS (DEFICIT) FOR THE SIX - MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company 1998 1997 1998 1997 UNAPPROPRIATED RETAINED EARNINGS : Beginning balance (85,679) 99,968 (85,679) 99,968 Less Appropriation: legal reserve - - - - dividend - - - - Net profit (loss) for the periods (833,346) 1,740 (833,346) 1,740 Total unappropriated retained earnings (deficit) (919,025) 101,708 (919,025) 101,708 APPROPRIATED RETAINED EARNINGS : Legal reserve 11,280 11,280 11,280 11,280 Total appropriated retained earnings 11,280 11,280 11,280 11,280 Total Retained Earnings(Deficit) (907,745) 112,988 (907,745) 112,988 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY FOR THE SIX - MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company 1998 1997 1998 1997 Share capital Ordinary share capital: Beginning balance 645,500 645,500 645,500 645,500 Addition(deduction) during the periods 29,280 - 29,280 - Ending balance 674,780 645,500 674,780 645,500 Premium on share capital Premium on share capital: Beginning balance 987,863 987,863 987,863 987,863 Addition(deduction) during the periods - - - - Ending balance 987,863 987,863 987,863 987,863 Surplus on land revaluation Beginning balance 641,220 - - - Addition(Deduction) during the periods - - - - Ending balance 641,220 - - - Retained earnings (Deficit) Appropriated - legal reserve: Beginning balance 11,280 11,280 11,280 11,280 Addition(deduction) during the periods - - - - Ending balance 11,280 11,280 11,280 11,280 Unappropriated: Beginning balance (85,679) 99,968 (85,679) 99,968 Addition (Deduction) during the periods-net profit (loss) (833,346) 1,740 (833,346) 1,740 Ending balance (919,025) 101,708 (919,025) 101,708 Equity in parent company held by subsidiary Beginning balance (3,076) - - - Addition during the periods (311) (4,406) - - Deduction during the periods - allowance for devaluation 1,083 3,000 - - Ending balance (2,304) (1,406) - - Total Shareholders' Equity 1,393,814 1,744,945 754,898 1,746,351 (More)