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FINANCIAL STATEMENTS AND ACCOUNTANTS REVIEW REPORT SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES FIRST QUARTER ENDED MARCH 31, 1999 AND 1998 Accountants Review Report To the Shareholders of Sansiri Public Company Limited: We have made a review of the consolidated balance sheet of Sansiri Public Company Limited and subsidiaries as at March 31, 1999, and the related consolidated statements of income and deficit, changes in shareholders equity and cash flows for the three month period then ended, and the financial statements of Sansiri Public Company Limited for the same period then ended , 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. As at March 31, 1999, the net value of property development in the consolidated and the Companys financial statements, which is presented at cost, less provision for known loss, in the amount of Baht 1,561.02 million and Baht 791.51 million, respectively, is expected to be higher than net sales or net realizable value. However, current economic conditions in Thailand have affected the property industry. We have not been able to satisfy ourselves on the value of the property development in the financial statements. The fair value may be lower than the value presented in the financial statements and, if so, this would require the values to be adjusted and disclosed in accordance with generally accepted accounting principles. This may also affect the collectability of receivables from subsidiaries. Furthermore, in April 1999, the Company transferred the property development for rent with a book value of Baht 702.18 million in settlement of debts to a bank at an assessed value of Baht 372.95 million. As at March 31, 1999, the Company has not recorded a provision for loss on devaluation of property of Baht 329.23 million, resulting in cost being overstated for the property development for rent and under recorded net loss in the same amount. In the transferring of property development for rent to settle debts, the Company will have profit resulting from debts restructuring in the amount of approximately Baht 74 million. As at March 31, 1999, the Company has outstanding receivables, loans to subsidiaries with 99 percent of shareholding and interest receivable of Baht 600.95 million in the Companys financial statements which may prove to be uncollectible. The Company has not set up allowance for doubtful receivables due to the fact that the Sansiri group was in the process of restructuring debts. The effects of the allowance for doubtful accounts on the financial statements have not been determined. However, in order to comply with generally accepted accounting principles, the Company should provide allowance for doubtful accounts. Because of the significant effects on the 1999 financial statements of the matters as described in the third and fourth paragraphs, the financial statements referred to above do not present fairly in conformity with generally accepted accounting principles. We draw attention to Notes 1, 2 and 3 to the financial statements as follows: 1) The operations of the Company, which have been affected by the economic conditions in Thailand and the Asia Pacific Region in general, have resulted in a net operating loss for the three month period ended March 31, 1999. Current liabilities exceed current assets, as presented in the financial statements. The Company is also in default of principal and interest on bank overdrafts, loans and interest receivable which have not yet been negotiated with financial institutions as described in Note 15 to the financial statements. In addition, for the three month period ended March 31, 1999, most subsidiaries have the same problem as the parent company regarding going concern, devaluation of property development which may be lower than presented in the financial statements. These uncertainties will further affect the companies operations. The financial statements for the three month period ended March 31, 1999 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. 2) For the three-month period ended March 31, 1999, the Company has loans to subsidiaries resulting from converting interest payable into promissory notes amounting to Baht 91.44 million, which are without interest. The financial statements for the three month period ended March 31, 1998, shown for comparative purposes, were also reviewed by us. Our report is subject to the effects of such adjustments, if any, as might have been required had the outcome of the uncertainties as a going concern, provision for loss on property development and the collectability of receivables from subsidiaries. Supot Singhasaneh Certified Public Accountant Registration Number 2826 KPMG Audit (Thailand) Limited Bangkok, May 12, 1999 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. The standards, procedures and practices to review such financial statements are those generally accepted and applied in Thailand. SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT MARCH 31,1999 AND 1998 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company ASSETS 1999 1998 1999 1998 CURRENT ASSETS Cash on hand and at banks 56,910 44,263 38,442 30,378 Short - term investments : fixed deposits 7,604 84,758 2,427 50,665 Short - term investments : others 58,355 156,612 330 122,387 Accounts, notes receivable and unbilled completed work 19,975 647,823 25,212 342,473 Work in progress 3,761 - - - Loans to related parties - net - 5,000 552,460 511,351 Property development for sales - net 27,013 1,825,357 11,943 1,307,473 Advance payment for construction 36,458 77,514 29,309 35,668 Accrued income and interest recievable 480 - 26,540 40,498 Advances and others 15,285 23,947 10,996 20,520 Total Current Assets 225,841 2,865,274 697,659 2,461,413 INVESTMENTS IN RELATED PARTIES - NET - 20,000 539,277 97,738 PROPERTY DEVELOPMENT FOR RENT - NET 2,036,647 2,378,887 779,566 1,128,184 LAND UNDER DEVELOPMENT FOR SALE AND RENT - NET 866,656 1,057,204 37,548 8,198 LEASEHOLD, BUILDING AND EQUIPMENT - NET 477,521 506,383 470,644 498,771 OTHER ASSETS Deferred charges 1,186 62,918 379 25,922 Deposits 30,540 32,337 26,571 28,465 Withholding tax and others 38,513 10,861 27,837 10,826 Total Other Assets 70,239 106,116 54,787 65,213 Total Assets 3,676,904 6,933,864 2,579,481 4,259,517 See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT MARCH 31, 1999 AND 1998 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998 1999 1998 CURRENT LIABILITIES Bank overdrafts and loans from financial institutions 918,012 1,118,716 725,700 857,605 Accounts payable - construction 66,295 87,044 21,499 30,795 Margin loans for purchasing securities - 2,315 - - Current portion of long-term debts 752,582 1,412,880 413,885 844,840 Construction retention 52,456 87,722 39,928 44,371 Loan from related company - - 2,000 - Advance received from customers and unearned income 20,035 124,621 7,994 80,503 Accrued income taxes - 37,570 - 26,994 Interest payable 461,704 271,207 311,026 204,852 Other current liabilities 31,923 75,002 24,137 53,828 Total Current Liabilities 2,303,007 3,217,077 1,546,169 2,143,788 DEFERRED LEASEHOLD REVENUE 784,651 816,569 - - LONG-TERM DEBTS - 996,090 - 772,388 OTHER LIABILITIES 30,785 32,456 468,442 110,099 Total Liabilities 3,118,443 5,062,192 2,014,611 3,026,275 MINORITY INTEREST - 5 - - SHAREHOLDERS' EQUITY Share capital Authorized share capital 331,299,126 and 64,550,000 ordinary shares, Baht 10 par value in 1999 and 1998, respectively 3,312,991 645,500 3,312,991 645,500 Issued and paid-up share capital 75,987,506 and 64,550,000 ordinary shares, fully paid in 1999 and 1998, respectively 759,875 645,500 759,875 645,500 Premium on share capital 956,613 987,863 956,613 987,863 Surplus on land revaluation 621,590 641,220 621,590 - Retained earnings (Deficit) Appropriated to legal reserve 11,279 11,279 11,279 11,279 Unappropriated (1,784,487) (411,400) (1,784,487) (411,400) Equity in parent company held by subsidiaries (6,409) (2,795) - - Total Shareholders' Equity 558,461 1,871,667 564,870 1,233,242 Total Liabilities and Shareholders' Equity 3,676,904 6,933,864 2,579,481 4,259,517 See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED) (Amounts in Thousand Baht Consolidated The Company Except Loss per Share) 1999 1998 1999 1998 REVENUES Revenues from project sales 65,829 685,224 15,734 476,138 Revenues from leasehold right 7,980 7,980 - - Revenues from business management 20,263 3,792 13,249 21,487 Rental income 9,206 15,324 8,759 15,613 Interest and dividend income 309 4,946 4,637 6,838 Gain on sale of investment 316 - 316 - Gain on exchange rate - 68,003 - 68,003 Revenues from contract cancellation 6,659 - - - Other income 1,036 416 321 184 Total Revenues 111,598 785,685 43,016 588,263 EXPENSES Cost of sales and services 54,775 888,601 13,049 668,248 Leasehold and development cost written off 5,112 5,112 - - Selling and administrative expenses 60,556 132,338 34,520 108,637 Loss on asset transfer in settlement of debts 12,267 - - - Interest expenses 67,479 85,361 49,653 75,965 Total Expenses 200,189 1,111,412 97,222 852,850 Loss before net result from investments in subsidiaries (88,591) (325,727) (54,206) (264,587) Net result from investments in subsidiaries - - (34,385) (61,134) Net Loss before minority interest (88,591) (325,727) (88,591) (325,721) Add minority interest in net loss - 6 - - Net loss (88,591) (325,721) (88,591) (325,721) Loss per share (Baht) (Note 4) (1.25) (5.05) (1.25) (5.05) See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF DEFICIT FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company 1999 1998 1999 1998 UNAPPROPRIATED DEFICIT Beginning balance (1,695,896) (85,679) (1,695,896) (85,679) Less Appropriation: - legal reserve - - - - - dividend - - - - Net loss for the periods (88,591) (325,721) (88,591) (325,721) Total unappropriated deficit (1,784,487) (411,400) (1,784,487) (411,400) Appropriated retained earnings: Legal reserve 11,279 11,279 11,279 11,279 Total appropriated retained earnings 11,279 11,279 11,279 11,279 Total Deficit (1,773,208) (400,121) (1,773,208) (400,121) See notes to financial statements (More)