FINANCIAL STATEMENTS QUARTER 1/2543

2000/481/4619 AUDITOR' S REVIEW REPORT To The Shareholders and Board of Directors of Thantawan Industry Public Company Limited I have reviewed the accompanying balance sheet of Thantawan Industry Public Company Limited at March 31, 2000, and the related statements of income, changes in shareholder's equity, retained earnings, and cash flows for the three-month periods ended March 31, 2000 and 1999. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. My responsibility is to issue a report on these financial statements based on my review. I conducted my review in accordance with generally accepted auditing standards applicable to review engagements. This Standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not perfomed an audit and, accordingly, I do not express an audit opinion. Based on my review, nothing has come to our attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. I have previously audited, in accordance with generally accepted auditing standards, the financial statements for the year ended December 31, 1999 of Thantawan Industry Public Company Limited; and in my report dated February 11, 2000, I expressed an unqualified opinion on those financial statements and without qualifying my opinion, I draw attention to Note 7, the Company is seeking approval from shareholders of the Company for transactions with a related company on the payment of compensation to the use of land, the entering into lease agreements covering land with building and 4 land plots, The keeping of advance payment on the purchase of land with building as stipulated in the agreement dated December 29, 1997, and the purchase of land with building and 4 land plots at the amount at Baht 85 million. The Company set date of the extraordinary meeting of shareholders on February 28, 2000, in order to comply with the announcement of the Stock Exchange of Thailand Concerning Criteria, Method, and Disclosure of Cross Related Transaction of Listed Companies. The balance sheet as at December 31, 1999 presented herewith for comparative purposes only, was a part of the audited financial statements and I have already reported. I have not performed any audit procedure since that date. In the second quarter of 1999, the company had changed the method of valuation of investment in marketable equity/debt securities from the lower of aggregate cost or market to the fair value, in order to conform with the application of new accounting standard. (Mr. Pichai Dachanapirom) Certified Public Accountant Registration No. 2421 Dharmniti Auditing Company Limited Bangkok, Thailand May 5, 2000 "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS ASSETS In Thousand Baht As at March As at December 31, 2000 31, 1999 CURRENT ASSETS Cash in hand and at banks 146,998 114,338 Short-term investments Deposits with financial institutions (Note 12) 9,349 9,348 Trade accounts and notes receivable, net (Notes 1.3 and 3) 81,869 99,387 Inventories-net (Notes 1.4 and 4) 80,330 85,571 Other current assets Other receivable - refundable deposit for machine acquisition (Note 8) 19,822 - Refundable value added tax 3,822 8,992 Tax card - 1,535 Subsidy for export tax 3,956 4,027 Others 2,279 1,691 Total current assets 348,425 324,889 LONG-TERM INVESTMENTS, Net (Notes 1.2, 5 and 12) 150 150 PROPERTY, PLANT AND EQUIPMENT, Net (Notes 1.5, 6 and 12) 124,713 126,855 OTHER ASSETS Advance payments for assets acquisition (Notes 2 and 7) 20,500 20,500 Deposit for machine acquisition (Note 8) - 18,525 Deferred charges, net (Note 1.6) 4,227 4,124 Others 271 293 Total other assets 24,998 43,442 TOTAL ASSETS 498,286 495,336 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts (Notes 9 and 12) 20,902 2,204 Trade accounts payable - Related parties (Note 2) 598 537 - Others 81,343 93,104 Accrued expenses (Note 2) 20,978 24,497 Other current liabilities Accrued income tax 4,106 10,963 Others 3,500 4,318 Total current liabilities 131,427 135,623 SHAREHOLDERS' EQUITY Share capital Authorized share capital 10,000,000 shares Baht 10 par value 100,000 100,000 Issued and fully paid-up share capital 8,000,000 shares, Baht 10 par value 80,000 80,000 Paid-in capital Premium on share capital 136,800 136,800 Retained earnings Appropriated - legal reserve (Note 11) 10,000 10,000 Unappropriated 140,059 132,913 Total shareholders' equity 366,859 359,713 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 498,286 495,336 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated May 5, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 REVENUES Sales 191,542 156,958 Other income Subsidy for export tax income - 2,054 Sales of scrap 2,205 2,314 Interest income 577 2,288 Gain on exchange rate 1,575 - Others 889 1,950 Total revenues 196,788 165,564 EXPENSES Cost of sales (Note 2 ) 144,759 109,019 Selling and administrative expenses (Note 2) 41,598 34,940 Interest expense 35 5 Directors' remuneration - - Total expenses 186,392 143,964 INCOME BEFORE INCOME TAX 10,396 21,600 INCOME TAX (3,250) (6,894) NET INCOME 7,146 14,706 EARNINGS PER SHARE (Note 1.9) Net income 0.89 1.84 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated May 5, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 Ordinary share capital Beginning balance 80,000 80,000 Additions - - Ending balance 80,000 80,000 Premium on share capital Beginning balance 136,800 136,800 Additions - - Ending balance 136,800 136,800 Retained earnings Appropriated Legal reserve Beginning balance 10,000 7,656 Additions - - Ending balance 10,000 7,656 Unappropriated Beginning balance 132,913 121,508 Additions - net income 7,146 14,706 Ending balance 140,059 136,214 Total Shareholders' Equity 366,859 360,670 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated May 5, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 Unappropriated retained earnings Beginning balance 132,913 121,508 Net income for the period 7,146 14,706 Total unappropriated retained earnings 140,059 136,214 Appropriated retained earnings Legal reserve 10,000 7,656 Total Retained Earnings 150,059 143,870 Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated May 5, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE - MONTH PERIODS ENDED MARCH 31, 2000 AND 1999 In Thousand Baht 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net income 7,146 14,706 Add (less) Adjustments to reconcile net income to net cash provided by operating activities Loss (gain) on disposal of equipment (89) - Allowance for doubtful accounts (reversal) (148) 685 Unrealized loss on exchange rate 195 129 Depreciation 4,583 4,870 Deferred charges written off 973 1,071 Net income from operations before changes of operating assets and liabilities 12,660 21,461 (Increase) decrease in operating assets Accounts receivable (2,141) (109) Inventories 5,242 (11,489) Other current assets 6,188 (7,559) Other assets 17,471 (1,218) Increase (decrease) in operating liabilities Trade accounts payable - Related companies 60 422 - Others (11,971) 17,019 Accrued expenses (3,519) (5,389) Income tax payable (6,856) (6,590) Other current liabilities (818) (598) Net cash provided by operating activities 16,316 5,950 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of equipment 89 - Advance payment for machine acquisition - (20,378) Purchases of fixed assets (2,441) (5,793) Net cash provided by (used) in investing activities (2,352) (26,171) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in loans from financial institutions 20,000 - Net cash provided by (used) in financing activities 20,000 - Net increase (decrease) in cash and cash equivalents 33,964 (20,221) Cash and cash equivalents at beginning of period 112,237 157,362 Cash at bank pledged as collateral at beginning of period (Note 12) 1,153 1,000 Cash at bank pledged as collateral at end of period (Note 12) (1,153) (1,000) Cash and cash equivalents at end of period 146,201 137,141 SUPPLEMENTARY INFORMATION 1) Cash and cash equivalents consist of Cash in hand and at banks 146,998 74,753 Add Deposits with financial institutions 1,258 66,100 Less Bank overdrafts (902) (2,711) Cash at banks pledged as collateral (1,153) (1,000) Cash and cash equivalents 146,201 137,142 2) Cash payment during the period Interest expense 34 5 Income tax 10,104 13,467 3) In 1999, Company had reclassified investment in negotiable certificate of deposit of Baht 8.09 million from long-term investment to be short-term investment since it will due within one year Notes to interim financial statements form an integral part of these statements. (See auditor's review report dated May 5, 2000) "UNAUDITED" "REVIEWED" THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED NOTES TO INTERIM FINANCIAL STATEMENTS AS AT MARCH 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 Revenues recognition Revenues from sales of goods are recognized at the date of delivery to customers. 1.2 Investments Since the second quarter of 1999, the Company's investment is stated as follows: - Short-term investment in equity/debt securities classified as trading securities is stated at the fair value. - Long-term investment in equity securities, non-marketable securities being held to be general investment is stated at cost. - Investment in long-term note receivable from finance company is stated at cost. - The cost of short-term and long-term investment which are sold during the period, are determined by weighted average. Before the second quarter of 1999, investments in listed securities are stated at the lower of aggregate cost or market. Allowance for reduction in market price due to temporary market fluctuations, if any, is treated as deduction from the shareholder's equity. Losses from permanent decline in value of investment are reflected in the statement of income. Investments in other securities and long-term note receivable-financial institution are stated at cost. 1.3 Trade accounts and notes receivable Trade accounts and notes receivable are shown net of allowance for doubtful accounts which is an estimate of those amounts which may prove to be uncollectible based on historical collection experience and a review of the current status of existing receivable. 1.4 Inventories Inventories are stated at the lower of average cost or net realizable value. 1.5 Property plant and equipment Property plant and equipment are stated at cost net of accumulated depreciation. Depreciation and amortization are computed by the straight-line method at the rates of 5% for buildings and 10-20% for equipments. 1.6 Deferred charges Mould is amortized to expense over a period of 2 years. 1.7 Accounts in foreign currencies Accounts in foreign currencies occurred during the period are translated into Baht at the rates of exchange prevailing on the date of the transactions. Assets and liabilities in foreign currencies at the end of the period are translated into Baht at the rates of exchange prevailing at that date. Gain or loss on translation is included in the statement of income. 1.8 Cash and cash equivalents Cash and cash equivalents consist of cash on hand and at bank and short-term investment in promissory notes which are not due over 3 months deducted by bank overdrafts and cash at bank pledged as collateral. 1.9 Earnings per share Earnings per share is computed by dividing net income for the period by the number of shares outstanding at the end of the period. 2. TRANSACTIONS WITH RELATED PARTIES The Company has transactions with related parties. The financial statements reflect the effect of these transactions on the basis determined by the companies concerned under their policy over sale/purchase of goods which are stated that they will be compared with market price or fair value. Significant transactions occurred between the company and related parties for the three - month period ended March 31, 2000 and 1999 as follows : In Thousand Baht 2000 1999 Purchase made by the company to related parties 1,484 2,589 Rental, land compensation fee and service expenses paid to related parties 2,165 870 At March 31, 2000 and December 31, 1999 the outstanding balances with related parties are as follows : In Thousand Baht As at March As at December 31, 2000 31, 1999 Advance payments for assets acquisition paid to related party - Sunflower Enterprise Co.,Ltd. 20,500 20,500 Accounts payable - related parties Flower International Company Limited 598 537 Accrued rental and service fee expenses Sunflower Enterprise Co.,Ltd. 11 4 Sun Tower Co.,Ltd. 1 7 3. TRADE ACCOUNTS AND NOTES RECEIVABLE Trade accounts and notes receivable consisted of : In Thousand Baht As at March As at December 31, 2000 31, 1999 Domestic accounts receivable 8,668 10,480 Foreign accounts receivable 72,685 88,669 Domestic post-dated cheques 551 576 Foreign post-dated cheques 2,549 2,373 84,453 102,098 Less Allowance for doubtful accounts (2,584) (2,711) Trade accounts and notes receivable - net 81,869 99,387 As at March 31, 2000 and December 31, 1999 the company has overdued accounts receivable of 18 and 12 accounts, respectively which are aging as follows : In Thousand Baht As at March As at December 31, 2000 31, 1999 Over 3 months to 6 months 405 465 Over 6 months to 12 months 67 - Over 12 months 2,605 2,732 Total 3,077 3,197 4. INVENTORIES (more)