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FINANCIAL STATEMENTS AND ACCOUNTANTS'REVIEW REPORT SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES THIRD QUARTER ENDED SEPTEMBER 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 September 30, 1998 and 1997, and the related consolidated statements of income for the three-month and nine-month periods and the consolidated statements of retained earnings (deficit), statement of changes in shareholders' equity for the nine-month periods then ended and the consolidated statement of cash flow for the three-month and nine-month periods ended September 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 a gross and net operating loss for the nine-month period ended September 30, 1998. Current liabilities exceed current assets, as presented in the financial statements, and more losses may arise on property development for sale, which cannot presently be estimated. The Company is also in default of principal and interest on loans as described in Note 12 to the financial statements. In addition, for the nine-month period ended September 30, 1998, two subsidiaries have the same problem as the parent company regarding going concern, devaluation of property development, land under development and the ability to obtain repayment on receivables, loans and interest receivables from related parties as described in Note 3 to the financial statements. These uncertainties will further affect the Company's operations. The financial statements for the nine-month period ended September 30, 1998 have been prepared on a going concern basis. The companies' ability to continue business as going concerns depends on the success of improvement plans being implemented to increase revenues, to reduce costs, negotiate the extension of repayment of debts and restructuring debts, etc. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or classification of liabilities that might be necessary if the companies are not successful in implementing the improvement plans. As at September 30, 1998 property development for rent and land under development in the consolidated and the Company's financial statements amounting to Baht 2,167.39 million and Baht 787.16 million, respectively, were stated at cost, and consist of acquisition cost of land, construction cost, related expenses and interest expenses which have been capitalized as project costs. However, at present the country is experiencing economic difficulties and because of the economic crisis the market value of the property may be lower than the cost which is shown in the balance sheet. As at September 30, 1998 in the consolidated and the Company]s financial statements, There are receivables, loans to related parties and interest receivable, the repayment of which is uncertain as described in Note 2 to the financial statements. The Company has not set up allowance for doubtful debt, as the management believe that the Company will not sustain any loss from these transactions. However, the result is still not known. We draw attention to Note 2 to the financial statements. As at September 30, 1998 loans to subsidiaries resulting from converting interest payable into promissory notes amount to Baht 96.07 million and are without interest. Based on our review, subject to the effects on the 1998 financial statements of such adjustments, if any, as might have been required had the outcome of the uncertainties as mentioned in the third to fifth 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, November 12, 1998 SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT SEPTEMBER 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 56,909 279,604 9,768 222,016 Short - term investments - fixed deposits 3,482 - 1,970 - Short - term investments - others 430 46,948 330 46,795 Account, note receivables and unbilled completed work - net 122,075 281,688 34,085 153,221 Loans to related parties 5,000 5,000 559,298 413,751 Property development for sales - net 325,310 2,560,299 55,673 1,906,761 Advance payment for construction 68,564 75,583 29,921 38,858 Interest receivable - - 10,482 43,445 Prepaid expenses 1,447 16,496 1,423 16,496 Advances and others 51,827 19,091 25,701 12,667 Total Current Assets 635,044 3,284,709 728,651 2,854,010 INVESTMENTS IN RELATED PARTIES - NET 18,643 20,000 193 130,743 PROPERTY DEVELOPMENT FOR RENT - NET 2,050,715 2,306,468 778,961 1,136,000 LAND UNDER DEVELOPMENT FOR SALES AND RENT 901,681 415,984 8,198 8,198 LEASEHOLD, BUILDING AND EQUIPMENT - NET 491,382 520,137 484,130 511,515 OTHER ASSETS Deferred charges 10,844 112,238 3,648 72,067 Deposits 31,135 31,957 27,286 27,887 Withholding tax and others 11,353 3,534 10,826 219 Total Other Assets 53,332 147,729 41,760 100,173 Total Assets 4,150,797 6,695,027 2,041,893 4,740,639 See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT SEPTEMBER 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 945,249 1,388,834 718,166 1,113,557 Account payables - construction 130,001 64,518 35,286 23,270 Margin loans for purchasing securities 2,315 2,315 - - - Current portion of long-term debts 291,781 1,179,248 9,998 799,121 Construction retention 82,769 76,899 42,634 43,677 Advance received from customers and unearned income 42,370 83,515 22,722 56,829 Accrued income tax 37,570 43,014 26,994 26,994 Interest payable 307,197 104,609 212,067 71,187 Other current liabilities 44,267 43,399 23,983 30,879 Total Current Liabilities 1,883,519 2,986,351 1,091,850 2,165,514 DEFERRED LEASEHOLD REVENUE 800,610 832,528 - - - LONG-TERM DEBTS 630,289 1,105,761 413,652 772,443 OTHER LIABILITIES 32,472 29,076 369,366 56,774 Total Liabilities 3,346,890 4,953,716 1,874,868 2,994,731 MINORITY INTEREST - 12 - - 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 69,737,506 and 64,550,000 ordinary shares, fully paid in 1998 and 1997, respectively 697,375 645,500 697,375 645,500 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 (1,529,493) 101,265 (1,529,493) 101,265 Equity in parent company held by subsidiaries (4,338) (4,609) - - Total Shareholders' Equity 803,907 1,741,299 167,025 1,745,908 Total Liabilities and Shareholders' Equity 4,150,797 6,695,027 2,041,893 4,740,639 See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE THREE - MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht Consolidated The Company except loss per share) 1998 1997 1998 1997 REVENUES Revenues from project sales 188,344 293,608 52,216 197,837 Revenues from leasehold rights 7,980 7,980 - - Revenues from business management 24,570 18,989 17,063 18,777 Rental income 11,999 15,618 12,434 15,716 Interest and dividend income 10,266 11,855 69,911 16,364 Gain (loss) on sale of investments 4,235 - - - Gain (loss) on exchange rate (86) 9,257 (86) (2,473) Revenues from contract cancellation 39,938 - 2,600 - Other income 2,982 1,172 973 1,035 Total Revenues 290,228 358,479 155,111 247,256 EXPENSES Cost of sales and services 309,704 241,538 85,417 171,662 Leasehold and development costs written off 5,112 5,112 - - Selling and administrative expenses 120,947 90,494 31,209 78,531 Loss on asset transfer in settlement of debts 340,549 - 244,516 - Interest expenses 124,385 27,498 76,381 20,827 Directors' remuneration - - - - - - Total Expenses 900,697 364,642 437,523 271,020 Loss before net result from investments in subsidiaries and income taxes (610,469) (6,163) (282,412) (23,764) Net result from investments in subsidiaries - - - (328,056) 16,293 Income taxes - 5,719 - 7,028 Net loss before minority interest (610,469) (444) (610,468) (443) Add minority interest in net loss 1 1 - - Net loss (610,468) (443) (610,468) (443) Loss per share (Baht) (Note 4) (8.95) (0.01) (8.95) (0.01) See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE NINE- MONTH PERIODS ENDED SEPTEMBER 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 1,359,158 537,839 899,349 385,570 Revenues from leasehold rights 23,939 23,939 - - - Revenues from business management 57,761 64,654 56,697 63,871 Rental income 39,472 45,628 40,540 45,922 Interest and dividend income 25,684 45,728 84,051 56,175 Gain on sale of investments 4,235 4,275 - 4,275 Gain (loss) on exchange rate 68,156 8,288 68,156 (3,442) Revenues from contract cancellation 90,119 - 37,339 - - Other income 9,158 3,532 3,114 2,661 Total Revenues 1,677,682 733,883 1,189,246 555,032 EXPENSES Cost of sales and services 1,876,354 437,710 1,295,990 323,343 Leasehold and development costs written off 15,335 15,335 - - Selling and administrative expenses 437,428 197,358 287,141 157,563 Loss on asset transfer in settlement of debts 502,872 - 406,839 - Interest expenses 289,518 72,495 223,475 54,044 Directors' remuneration - 1,024 - 1,024 Total Expenses 3,121,507 723,922 2,213,445 535,974 Profit (loss) before net result from investments in subsidiaries and income taxes (1,443,825) 9,961 (1,024,199) 19,058 Net result from investments in subsidiaries - - (419,615) (11,743) Income taxes - (8,665) - (6,018) Net profit (loss) before minority interest (1,443,825) 1,296 (1,443,814) 1,297 Add minority interest in net loss 11 1 - - Net profit (loss) (1,443,814) 1,297 (1,443,814) 1,297 Earnings (loss) per share (Baht) (Note 4) (21.80) 0.02 (21.80) 0.02 See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS (DEFICIT) FOR THE NINE - MONTH PERIODS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company 1998 1997 1998 1997 UNAPPROPRIATED RETAINED EARNINGS (DEFICIT) : Beginning balance (85,679) 99,968 (85,679) 99,968 Less Appropriation: legal reserve - - - - dividend - - - - Net profit (loss) for the periods (1,443,814) 1,297 (1,443,814) 1,297 Total unappropriated retained earnings (deficit) (1,529,493) 101,265 (1,529,493) 101,265 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) (1,518,213) 112,545 (1,518,213) 112,545 See notes to financial statements (More)