ANNUAL FINANCIAL STATEMENTS

2001/101/4619 REPORT OF THE AUDITOR To The Shareholders and Board of Directors of Thantawan Industry Public Company Limited I have audited the balance sheets of Thantawan Industry Public Company Limited as at December 31, 2000 and 1999 and the related statements of income, changes in shareholders' equity, retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Thantawan Industry Public Company Limited as at December 31, 2000 and 1999, and its results of its operations, its changes in shareholders' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. 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 February 9, 2001 THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2000 AND 1999 ASSETS Baht 2000 1999 CURRENT ASSETS Cash in hand and at banks 62,975,903 114,337,825 Short-term investments Deposits with financial institutions (Note 14) 9,706,218 9,347,888 Trade accounts and notes receivable, net (Notes 2.4 and 4) 78,538,641 99,386,726 Inventories, net (Notes 2.5 and 5) 82,559,805 85,571,364 Other current assets Refundable value added tax 26,500,823 8,992,437 Tax card 877,766 1,535,123 Subsidy for export tax 2,110,576 4,027,291 Others 8,182,078 1,690,467 Total current assets 271,451,810 324,889,121 LONG-TERM INVESTMENTS, Net (Notes 2.3 and 6 ) 68 150,000 PROPERTY, PLANT AND EQUIPMENT, Net (Notes 2.6, 7 and 14) 221,568,187 126,854,662 OTHER ASSETS Advance payments for assets acquisition (Notes 3 and 8) - 20,500,000 Deposit for machine acquisition (Note 9) 29,110,474 18,525,000 Deferred charges, net (Note 2.7) 1,875,659 4,124,366 Others 529,473 292,804 Total other assets 31,515,606 43,442,170 TOTAL ASSETS 524,535,671 495,335,953 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts (Notes 10 and 14) 2,519,154 2,204,442 Trade accounts payable - Related parties (Note 3) 441,615 537,226 - Others 97,187,216 93,103,818 Accrued expenses (Note 3) 20,861,528 24,497,197 Other current liabilities Accrued income tax 11,153,864 10,962,832 Others 2,296,993 4,317,222 Total current liabilities 134,460,370 135,622,737 SHAREHOLDERS' EQUITY Share capital Authorized share capital 10,000,000 shares Baht 10 par value 100,000,000 100,000,000 Issued and fully paid-up share capital 8,000,000 shares, Baht 10 par value 80,000,000 80,000,000 Paid-in capital Premium on share capital 136,800,000 136,800,000 Retained earnings Appropriated - legal reserve (Note 12) 10,000,000 10,000,000 Unappropriated 163,275,301 132,913,216 Total shareholders' equity 390,075,301 359,713,216 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 524,535,671 495,335,953 Notes to financial statements form an integral part of these statements. (See auditor's report dated February 9, 2001) THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Baht 2000 1999 REVENUES Sales 754,052,935 665,420,301 Other income Subsidy for export tax income 2,345,576 5,821,700 Sales of scrap 9,955,547 8,256,467 Interest income 1,690,192 5,105,997 Gain on exchange rate 8,278,905 611,384 Reverse of allowance for devalue of inventories 464,974 3,166,630 Reverse of allowance for doubtful accounts 81,964 1,005,455 Others 3,005,843 1,975,402 Total revenues 779,875,936 691,363,336 EXPENSES Cost of sales (Note 3) 565,295,685 498,898,047 Selling and administrative expenses (Note 3) 158,166,365 153,381,811 Interest expense 145,341 305,938 Directors' remuneration - - Total expenses 723,607,391 652,585,796 INCOME BEFORE INCOME TAX 56,268,545 38,777,540 INCOME TAX (17,906,460) (11,028,385) NET INCOME 38,362,085 27,749,155 EARNINGS PER SHARE (Note 13) Net income 4.80 3.47 Notes to financial statements form an integral part of these statements. (See auditor's report dated February 9, 2001) THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Baht 2000 1999 Ordinary share capital Beginning balance 80,000,000 80,000,000 Additions - - Ending balance 80,000,000 80,000,000 Premium on share capital Beginning balance 136,800,000 136,800,000 Additions - - Ending balance 136,800,000 136,800,000 Retained earnings Appropriated Legal reserve Beginning balance 10,000,000 7,655,732 Additions - 2,344,268 Ending balance 10,000,000 10,000,000 Unappropriated Beginning balance 132,913,216 121,508,329 Additions - net income 38,362,085 27,749,155 Deduction - Legal reserve - (2,344,268) - Dividend (8,000,000) (14,000,000) Ending balance 163,275,301 132,913,216 Total Shareholders' Equity 390,075,301 359,713,216 Notes to financial statements form an integral part of these statements. (See auditor's report dated February 9, 2001) THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Baht 2000 1999 Unappropriated retained earnings Beginning balance 132,913,216 121,508,329 Less Appropriations of earnings for prior year - Legal reserve - (2,344,268) - Dividend (8,000,000) (14,000,000) Net income for the year 38,362,085 27,749,155 Total unappropriated retained 163,275,301 132,913,216 Appropriated retained earnings Legal reserve 10,000,000 10,000,000 Total Retained Earnings 173,275,301 142,913,216 Notes to financial statements form an integral part of these statements. (See auditor's report dated February 9, 2001) THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Baht 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net income 38,362,085 27,749,155 Add (less) Adjustments to reconcile net income to net cash provided by operating activities Loss (gain) on disposal of equipment (130,664) 5,154 Allowance for doubtful accounts (reversal) (81,964) (1,005,455) Unrealized loss (gain) on exchange rate (1,276,007) 639,960 Loss on impairment of long - terms investment 150,000 - Allowance for devalue of inventories (reversal) (464,974) (3,166,630) Depreciation 19,174,362 19,369,775 Deferred charges written off 3,572,144 4,617,461 Net income from operations before changes of operating assets and liabilities 59,304,982 48,209,420 (Increase) decrease in operating assets Accounts receivable 22,166,432 (20,975,975) Inventories 3,476,533 (28,689,025) Other current assets (21,425,925) 4,701,753 Other assets (1,560,106) (4,443,010) Increase (decrease) in operating liabilities Trade accounts payable - Related companies (95,611) (175,750) - Others 4,205,443 39,869,297 Accrued expenses (3,650,123) (646,759) Income tax payable 191,032 (31,869,728) Other current liabilities (2,088,195) 1,662,660 Net cash provided by (used in) operating activities 60,524,462 7,642,883 CASH FLOWS FROM INVESTING ACTIVITIES Increase in deposits with financial institutions (356,059) - Proceeds from disposal of fixed assets 131,051 8,738 Advance payment for machine acquisition (29,110,474) (18,525,000) Proceeds from refund of advance payment for machine acquisition 18,525,000 - Purchases of fixed assets (93,388,274) (20,098,179) Net cash provided by (used in) investing activities (104,198,756) (38,614,441) CASH FLOWS FROM FINANCING ACTIVITIES Dividend payment (8,000,000) (14,000,000) Net cash provided by (Used in) financing activities (8,000,000) (14,000,000) Net increase (decrease) in cash and cash Equivalents (51,674,294) (44,971,558) Cash and cash equivalents at beginning of year 112,237,160 157,362,168 Cash at bank pledged as collateral at beginning of year (Note 14) - 1,000,000 Cash at bank pledged as collateral at end of year (Note 14) - (1,153,450) Cash and cash equivalents at end of year 60,562,866 112,237,160 SUPPLEMENTARY INFORMATION 1) Cash and cash equivalents consist of Cash in hand and at banks 62,975,903 114,337,825 Add Deposits with financial institutions 106,117 1,257,227 Less Bank overdrafts (2,519,154) (2,204,442) Cash at banks pledged as collateral - (1,153,450) Cash and cash equivalents 60,562,866 112,237,160 2) Cash payment during the year Interest expense 145,341 305,938 Income tax 17,715,522 31,869,633 3) In 1999, the 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. 4) In 2000, the Company acquired assets from a related company and paid by the advance payment of Baht 20.5 million as discussed in Note 8. Notes to financial statements form an integral part of these statements. (See auditor's report dated February 9, 2001) THANTAWAN INDUSTRY PUBLIC COMPANY LIMITED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 1. GENERAL INFORMATION a) Address and legal status The company has registered to be a limited public company under the Public Company Limited Act with the Ministry of Commerce on December 1, 1994 and its head office is located at 143-144, Moo 8, Soi Kangwal 2, Phetkasem Road, Omyai, Sampran, Nakornpratom, Thailand. b) Nature the Company's operations The Company's operations are produce and export plastic products. c) Name of parent company The parent company of the Company is Sunflower Company Limited. d) Number of employees As at December 31, 2000 the number of employees of the Company is approximately 1,097 persons. e) Supplemental disclosures of expense information Supplemental disclosures of expense information for the years ended December 31, 2000 and 1999 are as follows: In Thousand Baht 2000 1999 Depreciation 19,174 19,369 Amortization 3,572 4,618 Employee benefit costs 140,606 150,786 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis for preparation of financial statements The financial statements of the Company are prepared in accordance with generally accepted accounting principles and accounting standards prescribed in Accounting Act and presented according to the regulation of the Ministry of Commerce for Public Company Limited. 2.2 Revenues recognition Revenues from sales of goods are recognized at the date of delivery to customers. 2.3 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. 2.4 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. 2.5 Inventories Inventories are stated at the lower of average cost or net realizable value. 2.6 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 as follows Years Land improvements 5 Building and improvement 5 - 20 Machinery and equipment 5 - 10 Others 5 2.7 Deferred charges Mould is amortized to expense over a period of 2 years. 2.8 Accounts in foreign currencies Accounts in foreign currencies occurred during the year 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 year 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. 2.9 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. 3. 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 years ended December 31, 2000 and 1999 as follows : , In Thousand Baht 2000 1999 Purchase made by the company to related parties 5,917 7,300 Rental, land compensation fee and service expenses paid to related parties 2,461 9,972 Purchase of property, plant from related parties 85,000 - At December 31, 2000 and 1999, the outstanding balances with related parties are as follows : In Thousand Baht 2000 1999 Advance payments for assets acquisition paid to related party - Sunflower Enterprise Co.,Ltd. - 20,500 Accounts payable - related parties Flower International Company Limited 415 537 Sun Tower Co.,Ltd. 26 - Sunflower Enterprise Co.,Ltd. 0.8 - Accrued rental and service fee expenses Sunflower Enterprise Co.,Ltd. 0 4 Sun Tower Co.,Ltd. 30 7 4. TRADE ACCOUNTS AND NOTES RECEIVABLE Trade accounts and notes receivable consisted of : In Thousand Baht 2000 1999 Domestic accounts receivable 11,741 10,480 Foreign accounts receivable 67,939 88,669 Domestic post-dated cheques 672 576 Foreign post-dated cheques 816 2,373 (more)