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SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company 1999 1998 1999 1998 Share capital Ordinary share capital Beginning balance 697,375 645,500 697,375 645,500 Addition(deduction) during the periods 62,500 - 62,500 - Ending balance 759,875 645,500 759,875 645,500 Premium on share capital Beginning balance 987,863 987,863 987,863 987,863 Addition(deduction) during the periods (31,250) - (31,250) - Ending balance 956,613 987,863 956,613 987,863 Surplus on land revaluation Beginning balance 641,220 641,220 - - Addition(Deduction) during the periods (19,630) - 621,590 - Ending balance 621,590 641,220 621,590 - Retained earnings (Deficit) Appropriated - legal reserve Beginning balance 11,279 11,279 11,279 11,279 Addition(deduction) during the periods - - - - Ending balance 11,279 11,279 11,279 11,279 Unappropriated Beginning balance (1,695,896) (85,679) (1,695,896) (85,679) Deduction during the periods - net loss (88,591) (325,721) (88,591) (325,721) Ending balance (1,784,487) (411,400) (1,784,487) (411,400) Equity in parent company held by subsidiaries Beginning balance (6,804) (3,076) - - Addition during the periods (103) (153) - - Deduction during the periods - allowance for diminution in value 498 434 - - Ending balance (6,409) (2,795) - - Total shareholders' equity 558,461 1,871,667 564,870 1,233,242 See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 1999 and 1998 (UNAUDITED) (Amounts in Thousand Baht) Consolidated The Company 1999 1998 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES : Net loss (88,591) (325,721) (88,591) (325,721) Adjustments to reconcile net loss to net cash provided by (used in) operating activities : Depreciation and amortization 17,297 84,935 7,884 58,371 Allowance for doubtful debts (491) - (491) - Allowance for diminution in value of short term investments 498 434 - - Allowance for diminution in value of property development for sales (27,865) - (2,134) - Allowance for diminution in value of land under development 15,395 - - - Leasehold revenue amortization (7,980) (7,980) - - Gain on exchange rate - (2,338) - (2,338) Gain on sale of short term investments - others (574) - (194) - Gain on disposal of assets (122) (9) (122) (2) Loss on assets transferred in settlement of debts 12,267 - - - Share of net loss in subsidiaries - - 34,385 61,134 DECREASE( INCREASE) IN OPERATING ASSETS Short-term investments-fixed deposit with commitment 320 - (457) - Accounts, notes receivable and unbilled completed work 8,186 (312,998) (3,038) (185,566) Work in progress (1,897) - - - Property development for sale 71,218 790,265 12,279 620,375 Advance payment for construction 25,169 (11,017) - 1,629 Other current assets 28,612 957 11,005 (1,268) Other assets (35,841) (58,323) (16,369) (40,988) INCREASE (DECREASE) IN OPERATING LIABILITIES Accounts payable - construction (13,053) (14,459) (2,800) (11,237) Construction retention (28,021) 2,399 (1,282) (638) Advance received from customers and unearned income (11,041) (4,644) (13,299) (5,722) Accrued income taxes - 6,940 - - Other current liabilities 56,875 65,763 44,202 45,845 Other liabilities 1,331 32,456 757 31,690 Net cash provided by operating activities 21,692 246,660 (18,265) 245,564 See notes to financial statements (Amounts in Thousand Baht) Consolidated The Company 1999 1998 1999 1998 CASH FLOWS FROM INVESTING ACTIVITIES : Short term investments - others (57,350) (153,716) 194 (119,604) Loans to related parties - - 3,800 (16,400) Property development for rent - (15,889) - (188) Proceed from sales of equipment 283 30 283 23 Payment on purchase of equipment (264) (5,271) (64) (112) Net cash provided by (used in) investing activities (57,331) (174,846) 4,213 (136,281) CASH FLOWS FROM FINANCING ACTIVITIES : Loans from finance institutions - 1,900 - 1,899 Margin loans for purchasing securities (2,315) - - - Loan from related company - - 2,000 - Long - term debts (211) (98,985) (211) (142,363) Share capital 31,250 - 31,250 - Minority interest - (6) - - Equity in parent company held by subsidiaries (103) (153) - - Net cash provided by (used in) financing activities 28,621 (97,244) 33,039 (140,464) Net increase(decrease) in cash and cash equivalent (7,018) (25,430) 18,987 (31,181) Cash and cash equivalent as at January 1, 1999 and 1998 (26,237) 31,317 (43,336) 35,326 Cash and cash equivalent as at March 31, 1999 amd 1998 (33,255) 5,887 (24,349) 4,145 SUPPLEMENTARY CASH FLOWS INFORMATION : Cash paid during the periods: Interest expenses 2,212 78,736 - 55,091 Income taxes 840 - 721 - See notes to financial statements SANSIRI PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999 AND 1998 (UNAUDITED) NOTE 1 - ECONOMIC ENVIRONMENT AND BASIS OF PRESENTATION As from the second half of 1997, certain Asia Pacific countries, including Thailand, have been experiencing economic difficulties relating to currency devaluation and slowdown in growth. Accordingly, the Thai government sought assistance from the International Monetary Fund to alleviate the economic crisis and improve the economy over time. The financial statements reflect the assessment of the possible impact of this economic situation on the financial position of Sansiri Public Company Limited and its subsidiaries. In addition, the ultimate effect on the entitys financial position of these uncertainties can not presently be determined. The financial statements of Sansiri Public Company Limited and subsidiaries for the three - month period ended March 31,1999 and 1998 have been presented 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 and 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 were not successful in implementing the improvement plans. NOTE 2 - RELATED PARTY TRANSACTIONS The Company has significant transactions with its related parties. The financial statements reflect the effects of these transactions on the basis determined by the companies concerned which is under normal business basis. The following significant transactions are between the Company and related parties for the three - month periods ended March 31, 1998 and 1999 are as follows. (Amounts : Thousand Baht) 1999 1998 Subsidiaries Subsidiaries Related companies Receivable from service and commission 19,329 8,395 120 Advances 2,630 1,654 - Loans to subsidiaries 552,460 511,351 - Interest receivable 26,540 40,498 - Interest payable 27 - - Payable from transferring investment to repay debts 400 - - Loan from subsidiary 2,000 - - Interest income 4,500 3,995 - Revenue from business management 377 7,134 120 Rental income 461 398 - Service income 660 - - Interest expense 27 - - Expenses 54 - - The Company charges interest to subsidiaries at the rate of 9-16.75% per annum. As at March 31, 1999, loans to subsidiaries resulting from converting interest payable into promissory notes amount to Baht 91.44 million and are without interest. NOTE 3 - BASIS FOR CONSOLIDATION The consolidated financial statements of Sansiri Public Company Limited and subsidiaries are prepared in accordance with generally accepted accounting principles, on a going concern basis, and Ministerial Regulation No.7 (B.E.2539) dated October 25, 1996. The consolidated financial statements for the three-month period ended March 31,1999 consisted of the financial statements of the parent company, Sansiri Public Company Limited, and the 99% subsidiary companies held by the parent company which are Chanachai Limited, Sanpinyo Limited, Prakarn Limited, Jainad Limited and Sansiri Property Plus Limited (Formerly : Plus Property Management Limited) The consolidated financial statements for the three-month period ended March 31,1998 consisted of the financial statements of the parent company, Sansiri Public Company Limited, and the 99% subsidiary companies held by the parent company which are Chanachai Limited, Sanpinyo Limited, Prakarn Limited and Jainad Limited. The financial statements for the three-month period ended March 31, 1999 of two subsidiary companies, which are Chanachai Limited and Jainad Limited, were reviewed by an auditor whose accountants review report stated that except for the effects on the financial statements in relation to devaluation of property development. The financial statements for the three-month period ended March 31, 1998 of two subsidiary companies, which are Jainad limited and Chanachai Limited, were reviewed by an auditor whose accountants review report stated that subject to the effects on the financial statement of such adjustments, if any, as might have been required had the outcome of the uncertainties as a going concern and ability to repayment on loan to related parties and interest receivable, respectively. All significant inter company transactions are eliminated in preparing the consolidated financial statements. NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues and Expenses Recognition Revenues and expenses are recognized on an accrual basis. Revenue and cost of construction in progress are recognized on the percentage of completion method which is based on the actual development cost against the total estimated development costs, not included cost of land. Deferred leasehold rights is recognized as revenue over the period of lease agreement. Leasehold and development cost is recognized as expenses over the period of lease agreement. Interest income is recognized on accrual basis, with the exception for overdue interest income which is expected to be uncollectable, is recognized as it received. Dividend income is recorded on the date as it accrued. Gain (loss) on sale of securities is recognized on the date of sales. Investments in Securities Investment in securities are stated at fair value. Unrealized gains or losses arising on the revaluation of securities are reflected in the statement of income. Cost of sales on securities is determined by moving average method. Allowance for Doubtful Accounts Allowance for doubtful accounts is an estimate of those accounts receivable which are expected to be uncollectable. Cost of Property Development Cost of property development is stated at the lower of cost or net realizable value which consists of acquisition cost of land and leasehold rights, development expenses and direct expenses of projects including interest expenses during the construction period which occurred from loans for land and development project. Leasehold development and cost of property development are net from cost of sales and expenses. Investments in Related Parties Investments in subsidiaries are accounted for by the equity method. Deficit on investments is presented as other liability. Investment in related company is stated at cost, net of allowance for devaluation. Land under Development for Sales and Rent Land for development which is to be developed in the future for sales and rent is stated at cost including cost of land and related expenses and interest expenses. In 1998, two subsidiary companies entered into the lease agreements for a period of two years which will expired in November , 2000. Land under development of parent and subsidiary companies was revalued (see Note 8 to financial statements). Leasehold, Building and Equipment Leasehold, building and equipment are stated at cost. Leasehold right is amortized according to the period of leasehold agreement. Depreciation is computed by the straight-line method over the estimated useful lives of 5-20 years. Interest Capitalization Interest expenses related to financing the construction and project expenses have been capitalized as project costs up to the completion of construction or which development of projects are suspended. Deferred Charges Deferred charges are presented in other assets which consists of deferred interest on hire - purchase of vehicles which are amortized by the straight-line method according to the period of contracts. Business taxes and promotion expenses are amortized by percentage of completion method. Foreign Currency Transactions Foreign currency transactions during the periods are translated at the approximate rates of exchange ruling on the transaction dates. Foreign currency balances at the balance sheet dates are translated at the exchange rates ruling on that date unless such assets or liabilities are covered by forward exchange contract, in that case, the forward exchange contract rate is used. Exchange gains and losses are included in determining income. Income Taxes Income taxes are calculated on accounting profit and income taxes are paid based on installment method. The difference between the financial statements carrying amounts and income taxes paid in each period are recognized as deferred income taxes or accrued income taxes in the balance sheets. Loss per share Loss per share are computed by dividing the net loss by the weighted average number of fully paid shares outstanding and by the number of share outstanding at the end of the periods for 1999 and 1998, respectively. (More)