F/S Q3/98

FINANCIAL STATEMENTS AND ACCOUNTANTS' REVIEW REPORT SINO-THAI ENGINEERING AND CONSTRUCTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES THIRD QUARTER ENDED SEPTEMBER 30, 1998 AND 1997 Accountants' Review Report To the Shareholders of Sino-Thai Engineering and Construction Public Company Limited: We have made a review of the consolidated balance sheets of Sino-Thai Engineering and Construction Public Company Limited and subsidiaries as at September 30, 1998 and 1997, and the related consolidated statements of income, changes in shareholders' equity (deficit) and retained earnings (deficit) for the three-month periods and nine-month periods then ended, and consolidated statements of cash flow for the three-month period and nine-month period ended September 30, 1998, and the separate financial statements of Sino-Thai Engineering and Construction 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 system 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 financial statement of Sino-Thai Construction Services Company Limited and Sino-Thai Resources Development Public Company Limited and Siam Dimension Stone Company Limited which are included in the consolidated financial statements for the three-month period and nine-month period ended September 30, 1998, are based on the financial information reviewed by the same auditor. We stated that was subject to the effects of such adjustments, if any, as might have been required had the outcome of the uncertainty regarding the going concern been known resulting from the affect from economic conditions. The financial statements of Sino-Thai Construction Services Company Limited and Sino-Thai Resources Development Public Company Limited and Siam Dimension Stone Company Limited which are included in the consolidated financial statements for the three-month period and nine-month period ended September 30, 1997, of which the assets amounting to 16.59% of total consolidated assets and revenues amounting to 9.84% of total consolidated revenues had not been audited or reviewed by the auditors in accordance with standards established by The Institute of Certified Accountants and Auditors of Thailand. As described in Note 5 to the consolidated financial statements, the Company record investments in associated companies and joint ventures by the equity method. The Company's share of profit (loss) from its investments in associated companies and joint ventures for the three-month period and nine- month period ended September 30, 1998 amounting to approximately Baht (112.03) million and Baht (103.90) million respectively are based on the financial information obtained from the management of the associated companies and joint ventures. The Company's share of profit (loss) from its investments in subsidiaries and associated companies for the three-month period and nine-month period ended September 30, 1997 amounting to approximately Baht (135.28) million and Baht (113.59) million respectively are based on the financial information obtain from the management which had not been audited or reviewed by the auditors in accordance with standards established by The Institute of Certified Accountants and Auditors of Thailand. As described in Note 1 to the financial statements, as at September 30, 1998, the Company's current liabilities exceeded current assets by approximately Baht 407.72 million. The company has default the loan contract due to the unability to maintain the financial ratio. Accordingly, the lender may has a right to call in debts immediately. At present, the Company is negotiating the restructure of its loans. The operations of the Company have been affected and will continue to be affected for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on stated values or reclassification of assets and liabilities at the balance sheet date cannot presently be determined. As described in Note 1 to the financial statements, the Company is undertaking negotiations with the lender to restructure the foreign currency long-term loan including the need to maintain the financial ratio. The lender has the right to call in debts immediately and, in accordance with generally accepted accounting principles, long-term loans amounting to approximately Baht 3,355.27 million should be reclassified to current liabilities in the balance sheet. As described in Note 5 to the financial statements, in 1997 the Company did not record unrealized holding loss on non-current marketable securities which resulted in overstatement of total assets and shareholders' equity in the amount of Baht 203.75 million each. Subject to the effects of any adjustments to the financial statements for 1998 which might have been determined to be necessary as described in the third, sixth and seventh paragraphs and except for the effects to the financial statements for 1998 and 1997 which might have been determined to be necessary as described in the fifth paragraph and except for the effects to the financial statements for 1997 as described in the fourth and eighth paragraphs, 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. Nirand Lilamethwat Certified Public Accountant Peat Marwick Suthee Limited Bangkok, November 11, 1998 SINO-THAI ENGINEERING AND CONSTRUCTION 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 in hand and at banks (Notes 4 and 6) 642,773 774,776 613,663 743,353 Short-term investment Notes receivable - financial institutes 511 46,475 - - Investment in listed securities (Note 4) 140,716 164,677 140,611 164,464 Accounts receivable - net (Notes 4 and 7) 1,278,304 2,155,086 1,203,645 1,969,368 Due from related companies - net (Notes 4 and 5) 57,386 103,426 61,560 103,200 Retentions receivable - net (Note 4) 244,806 261,489 240,798 257,809 Inventories (Note 4) 268,679 457,778 - - Other current assets Advances to suppliers 48,636 32,617 48,636 32,617 Withholding corporate tax 102,729 113,485 102,729 113,485 Others 80,491 56,433 46,465 35,638 Total Current Assets 2,865,031 4,166,242 2,458,107 3,419,934 INVESTMENTS AND LOANS (Notes 4 and 5) Joint ventures 89,454 - 89,454 - Related companies 367,915 593,299 689,972 857,820 Other companies 283,163 623,956 248,963 554,255 EXCESS OF COST OVER BOOK VALUE OF INVESTMENT 75,427 86,066 - - PROPERTY, PLANT AND EQUIPMENT - NET (Note 4) 1,825,303 1,925,811 1,459,264 1,487,258 OTHER ASSETS Loans and advances to directors and employees 7,683 37,247 4,157 33,430 Condominiums 98,083 126,780 98,083 126,780 Advance payments on condominiums 29,079 53,945 29,079 53,945 Withholding corporate tax 283,759 142,985 283,759 142,985 Others (Note 4) 45,203 96,922 36,324 35,692 Total Assets 5,970,100 7,853,253 5,397,162 6,712,099 _____________________ _____________________ Director Director See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION 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 (DEFICIT) 1998 1997 1998 1997 CURRENT LIABILITIES Bank overdrafts and loans from financial institutes (Notes 4 and 6) 915,786 948,349 827,312 778,162 Accounts payable 979,041 1,315,087 842,869 1,019,912 Due to related companies (Note 5) 4,512 33,656 5,821 37,777 Long-term loans in default (Note 9) 147,000 - - - Advance received on contracts 292,482 742,662 289,017 505,345 Other current liabilities Accrued interest payable 136,586 122,548 136,586 122,548 Deferred value added tax 58,497 98,284 58,497 98,284 Provision for contingent cost 83,201 - 83,201 - Others 81,006 117,365 52,260 59,711 Total Current Liabilities 2,698,111 3,377,951 2,295,563 2,621,739 LONG-TERM LOANS (Note 9) 3,355,265 3,229,445 3,355,265 3,112,445 OTHER LIABILITIES Allowance for decline in investment (Note 5) 80,075 - 80,075 - Hire purchase creditors 70,961 93,573 70,961 93,573 Others 3,022 3,347 3,022 3,347 Total Liabilities 6,207,434 6,704,316 5,804,886 5,831,104 EXCESS OF BOOK VALUE OVER COST OF INVESTMENT (Notes 2 and 5) - 55,216 - 55,216 MINORITY INTERESTS 76,944 173,333 - - SHAREHOLDERS' EQUITY (DEFICIT) Share capital, Baht 10 par value Authorized shares capital Preference shares 7,000,000 shares 70,000 70,000 70,000 70,000 Ordinary shares 68,000,000 shares 680,000 680,000 680,000 680,000 Issued and fully paid Preference shares 7,000,000 shares 70,000 70,000 70,000 70,000 Ordinary shares 23,000,000 shares 230,000 230,000 230,000 230,000 Paid-in capital Premium on share capital 486,000 486,000 486,000 486,000 Surplus on revaluation 929,174 929,174 834,565 834,565 Retained earnings (Deficit) Appropriated - legal reserve 56,163 56,163 48,565 48,565 Unappropriated (1,840,515) (850,949) (1,832,917) (843,351) Loss on non-current marketable securities (Note 4) (245,100) - (243,937) - Total Shareholders' Equity (Deficit) (314,278) 920,388 (407,724) 825,779 Total Liabilities and Shareholders' Equity (Deficit) 5,970,100 7,853,253 5,397,162 6,712,099 _____________________ _____________________ Director Director See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION 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 earnings (loss) per share) 1998 1997 1998 1997 REVENUES (Notes 4 and 5) Revenues from construction and sales 1,333,457 1,518,787 1,073,569 1,358,534 Other income Gain (loss) on exchange rate 295,085 (15,020) 280,155 (15,020) Others 40,066 9,338 43,021 7,334 Total Revenues 1,668,608 1,513,105 1,396,745 1,350,848 EXPENSES (Note 4) Costs of construction and cost of sales 1,207,931 1,477,300 1,012,523 1,343,703 Selling and administrative expenses 82,266 116,792 66,621 49,998 Doubtful accounts 135,142 - 135,142 - Company's share of (profit) loss from its investments in subsidiaries and associated companies and joint ventures 112,031 24,378 8,932 135,283 Loss on current marketable securities 16,169 288,458 16,169 288,458 Directors' remuneration 138 160 120 110 Interest expense 99,945 119,323 90,691 112,746 Total Expenses 1,653,622 2,026,411 1,330,198 1,930,298 Net income (loss) before minority interests and income tax 14,986 (513,306) 66,547 (579,450) Minority interests in subsidiaries' net (income) loss 3,314 27,287 - - Net income (loss) before income tax and loss on currency exchange under managed float system 18,300 (486,019) 66,547 (579,450) Income tax - - - - Net income (loss) before loss on currency exchange under managed float system 18,300 (486,019) 66,547 (579,450) Loss on currency exchange under managed float system (Notes 4 and 8) - (1,038,707) - (945,276) Extraordinary items : Gain of debts restructuring (Note 10) 56,753 - 8,506 - Net income (loss) 75,053 (1,524,726) 75,053 (1,524,726) Earnings (Loss) per share (Baht) (Note 4) Net income (loss) before loss on currency exchange under managed float system 0.61 (16.20) 2.22 (19.31) Loss on currency exchange under managed float system - (34.62) - (31.51) Extraordinary items : Gain of debts restructuring 1.89 - 0.28 - Net income (loss) 2.50 (50.82) 2.50 (50.82) See notes to financial statements SINO-THAI ENGINEERING AND CONSTRUCTION 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 (Note 4 and 5) Revenues from construction and sales 3,877,650 4,692,741 3,527,974 4,265,694 Other income Gain (loss) on exchange rate 777,977 (38,877) 727,104 (38,877) Others 161,733 75,291 147,159 53,931 Total Revenues 4,817,360 4,729,155 4,402,237 4,280,748 EXPENSES (Note 4) Costs of construction and cost of sales 3,624,367 4,140,421 3,359,931 3,776,878 Selling and administrative expenses 238,825 347,951 201,679 222,590 Doubtful accounts 150,602 - 144,891 - Company's share of (profit) loss from its investments in subsidiaries and associated companies and joint ventures 103,899 14,562 (27,458) 113,592 Loss on current marketable securities 22,775 304,747 22,775 304,747 Directors' remuneration 458 2,465 360 2,330 Interest expense 312,005 284,745 284,152 265,082 Total Expenses 4,452,931 5,094,891 3,986,330 4,685,219 Net income (loss) before minority interests and income tax 364,429 (365,736) 415,907 (404,471) Minority interests in subsidiaries' net (income) loss 3,231 (1,696) - - Net income (loss) before income tax and loss on currency exchange under managed float system 367,660 (367,432) 415,907 (404,471) Income tax - - - - Net income (loss) before loss on currency exchange under managed float system 367,660 (367,432) 415,907 (404,471) Loss on currency exchange under managed float system (Notes 4 and 8) - (1,038,707) - (945,276) Extraordinary items : Gain of debts restructuring (Note 10) 56,753 56,392 8,506 - Net income (loss) 424,413 (1,349,747) 424,413 (1,349,747) Earnings (Loss) per share (Baht) (Note 4) Net income (loss) before loss on currency exchange under managed float system 12.26 (12.25) 13.87 (13.48) Loss on currency exchange under managed float system - (34.62) - (31.51) Extraordinary items : Gain of debts restructuring 1.89 1.88 0.28 - Net income (loss) 14.15 (44.99) 14.15 (44.99) See notes to financial statements (More)