FINANCIAL STATEMENTS AND AUDITOR'S REPORT BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES DECEMBER 31, 1999 AND 1998 Auditor's Report To the Shareholders of Berli Jucker Public Company Limited: I have audited the consolidated balance sheets of Berli Jucker Public Company Limited and subsidiaries as at December 31, 1999 and 1998 and the related consolidated statements of income, changes in shareholders' equity, retained earnings and cash flows for each of the years then ended, and the separate financial statements of Berli Jucker Public Company Limited for each of the years then ended. The Company's management are responsible for the correctness and completeness of information presented in these financial statements. 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 in Thailand. 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 audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Berli Jucker Public Company Limited and subsidiaries at December 31, 1999 and 1998 and the consolidated results of their operations and their cash flows for each of the years then ended, and the separate financial position and results of its operations and cash flows of Berli Jucker Public Company Limited for each of the years then ended, in conformity with generally accepted accounting principles in Thailand. Nirand Lilamethwat Certified Public Accountant Registration Number 2316 KPMG Audit (Thailand) Limited Bangkok, February 23, 2000 BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company ASSETS 1999 1998 1999 1998 CURRENT ASSETS Cash on hand and at banks 474,078,490 1,672,714,714 373,044,654 1,194,586,575 Short-term investments Deposits with financial institutions 669,455,843 - - - Bills of exchange 800,000,000 - 800,000,000 - Others 19,607 - 19,607 - Accounts receivable 3,102,198,267 3,030,051,619 1,308,826,042 1,772,038,995 Less: Allowance for doubtful accounts (150,533,762) (172,632,506) (122,934,554) (141,623,324) Accounts receivable - net (Notes 4, 5 and 6) 2,951,664,505 2,857,419,113 1,185,891,488 1,630,415,671 Short-term loans and advances to related parties - net (Note 5) 167,323,502 116,611,849 966,728,817 815,825,557 Lease receivable from a related party current portion (Notes 4 and 5) - - 31,500,000 36,000,000 Inventories - net (Notes 4 and 7) 1,541,810,377 1,403,587,929 433,297,432 522,343,412 Other current assets Deferred income tax - current (Note 4) 134,517,754 145,968,804 103,722,415 122,626,843 Accrued income 30,757,933 12,967,034 104,383,329 71,126,351 Others 174,927,608 143,053,295 62,210,985 64,015,010 Total Current Assets 6,944,555,619 6,352,322,738 4,060,798,727 4,456,939,419 LEASE RECEIVABLE FROM A RELATED PARTY (Notes 4 and 5) - - - 31,500,000 INVESTMENTS Investments in related parties (Notes 2, 4 and 8) 75,186,424 67,020,561 5,546,718,128 4,745,753,378 Investments in other companies (Notes 2, 4 and 8) 220,915,579 201,115,579 220,865,579 201,065,579 PROPERTY, PLANT AND EQUIPMENT - NET (Notes 4 and 9) 6,963,460,501 7,274,274,731 810,632,136 832,516,783 OTHER ASSETS Terminated currency swap receivable (Note 11) 455,430,000 455,430,000 455,430,000 455,430,000 Deferred income tax (Note 4) - - 128,592,668 105,738,865 Others (Note 10) 64,074,436 109,899,703 6,508,114 7,217,368 Total Assets 14,723,622,559 14,460,063,312 11,229,545,352 10,836,161,392 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998 1999 1998 CURRENT LIABILITIES Bank overdrafts and loans from financial institutions 372,718,060 708,167,552 886,735 79,648,980 Accounts and notes payable 1,556,885,338 1,374,877,632 432,427,124 374,216,666 Accounts payable - related parties (Note 5) - - 179,047,334 196,031,690 Current portion of long-term liabilities (Note 11) 118,211,627 118,871,952 - - Short-term loans and advances from related parties (Note 5) 17,263,088 20,275,100 22,504,742 22,034,065 Other current liabilities Accrued expenses 590,257,794 521,614,016 173,778,395 237,593,218 Others 480,673,896 218,722,851 210,692,010 129,492,923 Total Current Liabilities 3,136,009,803 2,962,529,103 1,019,336,340 1,039,017,542 LOANS FROM DIRECTORS AND EMPLOYEES 5,581,930 7,846,404 5,553,190 7,776,404 LONG-TERM LIABILITIES (Note 11) 2,580,125,616 2,595,001,366 1,940,839,388 1,940,768,965 OTHER LIABILITIES Long-term lease deferred income (Notes 4 and 12) 117,396,422 123,005,756 117,396,422 123,005,756 Deferred income tax - non-current (Note 4) 294,822,504 315,314,896 - - Staff retirement benefits (Note 4) 222,963,047 258,701,213 99,817,837 129,595,829 Others (Note 13) 13,872,548 251,487,394 52,459,419 85,199,204 Total Liabilities 6,370,771,870 6,513,886,132 3,235,402,596 3,325,363,700 MINORITY INTERESTS 358,707,933 435,379,488 - - SHAREHOLDERS' EQUITY Share capital (Note 14) Authorized share capital 158,812,500 ordinary shares, Baht 10 par value 1,588,125,000 1,588,125,000 1,588,125,000 1,588,125,000 Issued and fully paid-up share capital 158,812,500 ordinary shares 1,588,125,000 1,588,125,000 1,588,125,000 1,588,125,000 Paid-in capital Premium on share capital 3,751,379,641 3,751,379,641 3,751,379,641 3,751,379,641 Donated surplus (Note 15) 36,867,563 36,867,563 36,867,563 36,867,563 Retained earnings Appropriated Legal reserve 218,743,245 116,873,210 158,812,500 57,750,000 Reserve for business expansion 87,400,944 87,400,944 85,000,000 85,000,000 Unappropriated 2,420,412,203 2,036,926,265 2,482,743,892 2,098,450,419 Loss from translation of foreign currency financial statements (Note 4) (108,785,840) (106,774,931) (108,785,840) (106,774,931) Total Shareholders' Equity 7,994,142,756 7,510,797,692 7,994,142,756 7,510,797,692 Total Liabilities and Shareholders' Equity 14,723,622,559 14,460,063,312 11,229,545,352 10,836,161,392 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 REVENUES (Notes 4 and 5) Sales 11,131,770,047 10,446,777,367 5,276,543,486 5,855,273,992 Other income Share of profits less losses of subsidiary and associated companies (Notes 2 and 16) 12,365,681 48,871,529 488,434,458 207,966,809 Interest income 86,813,074 126,389,233 135,785,464 214,421,535 Gain (loss) on foreign exchange (Note 4) 16,273,023 (148,262,266) (3,355,668) (170,188,110) Others 56,269,971 67,399,190 200,340,178 178,410,170 Total Revenues 11,303,491,796 10,541,175,053 6,097,747,918 6,285,884,396 EXPENSES (Note 5) Cost of sales 8,047,350,856 7,871,225,990 4,106,155,097 4,558,808,935 Selling and administrative expenses 1,831,799,179 1,612,008,128 935,865,436 1,020,087,097 Interest expense 253,540,645 336,561,402 154,758,584 228,297,144 Directors' remuneration 4,183,333 4,375,000 3,783,333 3,775,000 Other expenses Currency swap cost 132,335,465 182,445,083 131,235,465 169,758,205 Other financing expenses (income) (Note 17) 27,132,504 (142,202,541) 27,132,504 (142,202,541) Loss (gain) on disposal of investments 2,532,954 (59,273,351) 2,532,954 688,070 Loss on diminution in value of assets - 17,000,000 - - Total Expenses 10,298,874,936 9,822,139,711 5,361,463,373 5,839,211,910 Net income before income tax 1,004,616,860 719,035,342 736,284,545 446,672,486 Income tax (Notes 4 and 18) 287,469,610 118,455,002 43,174,807 31,857,125 Net income before minority interests and extraordinary items 717,147,250 600,580,340 693,109,738 414,815,361 Less : Minority interests in net income (24,037,512) (93,181,670) - - Net income before extraordinary items 693,109,738 507,398,670 693,109,738 414,815,361 Extraordinary items: Provision for loss on suspension of subsidiary business segment (net of income tax of Baht 39.7 million) (Note 19) - (92,583,309) - - Net income 693,109,738 414,815,361 693,109,738 414,815,361 Basic earnings per share (Note 4) Net income before extraordinary items 4.36 4.69 4.36 3.83 Extraordinary items - (0.86) - - Net income 4.36 3.83 4.36 3.83 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Share capital Ordinary shares Beginning balance 1,588,125,000 577,500,000 1,588,125,000 577,500,000 Increase in this year - 1,010,625,000 - 1,010,625,000 Ending balance 1,588,125,000 1,588,125,000 1,588,125,000 1,588,125,000 Paid-in capital Premium on share capital Beginning balance 3,751,379,641 733,580,249 3,751,379,641 733,580,249 Increase in this year - 3,017,799,392 - 3,017,799,392 Ending balance 3,751,379,641 3,751,379,641 3,751,379,641 3,751,379,641 Donated surplus Beginning balance 36,867,563 36,867,563 36,867,563 36,867,563 Increase in this year - - - - Ending balance 36,867,563 36,867,563 36,867,563 36,867,563 Retained earnings Appropriated Legal reserve Beginning balance 116,873,210 116,037,737 57,750,000 57,750,000 Increase in this year 101,870,035 835,473 101,062,500 - Ending balance 218,743,245 116,873,210 158,812,500 57,750,000 Reserve for business expansion Beginning balance 87,400,944 87,400,944 85,000,000 85,000,000 Increase in this year - - - - Ending balance 87,400,944 87,400,944 85,000,000 85,000,000 Unappropriated Beginning balance 2,036,926,265 2,021,021,426 2,098,450,419 2,081,710,107 Increase in this year 693,109,738 414,815,361 693,109,738 414,815,361 Decrease in this year (309,623,800) (398,910,522) (308,816,265) (398,075,049) Ending balance 2,420,412,203 2,036,926,265 2,482,743,892 2,098,450,419 Loss from translation of foreign currency financial statements Beginning balance (106,774,931) (6,324,713) (106,774,931) (6,324,713) Increase in this year (2,010,909) (100,450,218) (2,010,909) (100,450,218) Ending balance (108,785,840) (106,774,931) (108,785,840) (106,774,931) Total Shareholders' Equity 7,994,142,756 7,510,797,692 7,994,142,756 7,510,797,692 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Unappropriated retained earnings Beginning balance 2,036,926,265 2,021,021,426 2,098,450,419 2,081,710,107 Less appropriations of earnings: Legal reserve (101,870,035) (835,473) (101,062,500) - Dividend for 1998 and 1997 (79,406,250) (57,750,000) (79,406,250) (57,750,000) Cost of investment in excess of net assets of subsidiary and associated companies eliminated against retained earnings (48,941,265) (292,681,299) (48,941,265) (292,681,299) Net income for the year 693,109,738 414,815,361 693,109,738 414,815,361 Less: Dividend for 1999 and 1998 (79,406,250) (47,643,750) (79,406,250) (47,643,750) Unappropriated retained earnings at end of year 2,420,412,203 2,036,926,265 2,482,743,892 2,098,450,419 Appropriated retained earnings Legal reserve 218,743,245 116,873,210 158,812,500 57,750,000 Reserve for business expansion 87,400,944 87,400,944 85,000,000 85,000,000 Appropriated retained earnings at end of year 306,144,189 204,274,154 243,812,500 142,750,000 Retained earnings at end of year 2,726,556,392 2,241,200,419 2,726,556,392 2,241,200,419 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 OPERATING ACTIVITIES Profit before tax 1,004,616,860 719,035,342 736,284,545 446,672,486 Add : Interest expense 253,540,645 336,561,402 154,758,584 228,297,144 Currency swap cost 132,335,465 182,445,083 131,235,465 169,758,205 Less : Dividend income (1,925,000) - (1,925,000) - Share of profits less losses in subsidiary and associated companies (12,365,681) (48,871,529) (488,434,458) (207,966,809) Interest income (86,813,074) (126,389,233) (135,785,464) (214,421,535) Profit before investment/finance income and expense 1,289,389,215 1,062,781,065 396,133,672 422,339,491 Allowance for doubtful accounts (19,969,435) 17,004,776 (18,688,770) 8,193,000 Depreciation and amortization (Note 9) 674,497,469 717,077,780 119,002,756 116,272,085 Provision for loss on diminution in value of assets - 17,000,000 - - Deferred charges written off 726,737 19,639,871 - - Book value of property, plant and equipment written off 3,011,316 4,206,319 41,909 2,390,824 Gain on disposal of property, plant and equipment (8,100,058) (6,651,477) (5,860,672) (3,240,353) Loss (gain) on disposal of investments 2,532,954 (59,273,351) 2,532,954 688,070 Provision for staff retirement benefits 49,402,891 104,799,910 19,593,349 50,931,468 (Gain) loss on conversion of foreign currency borrowings (8,937,157) (130,128,139) 70,423 (97,166,242) (INCREASE) DECREASE IN WORKING CAPITAL Accounts receivable (128,187,449) (33,682,003) 463,212,953 173,583,897 Inventories (155,119,602) 430,090,019 89,045,980 492,127,653 Other current assets (37,795,201) 42,667,592 (18,654,387) (16,609,700) Loans to other companies - 4,300,000 - - Other assets (691,340) 642,635 119,727 (9,200) Accounts and notes payable 202,428,110 (188,602,571) 58,210,458 (159,567,022) Accounts payable - related parties - - (16,984,356) (219,109,170) Accrued expenses 3,855,457 (73,649,146) (43,501,317) (66,463,327) Other current liabilities 60,065,274 (50,040,256) 81,199,087 (6,940,138) Loans from directors and employees (2,264,474) (2,146,316) (2,223,214) 142,021 Long-term lease deferred income (5,609,334) (5,609,333) (5,609,334) (5,609,333) Staff retirement benefits (82,587,196) (72,924,592) (49,371,341) (59,351,591) Other liabilities (37,614,846) 34,869,040 (37,400,896) 34,455,090 Net cash inflow from operating activities 1,799,033,331 1,832,371,823 1,030,868,981 667,057,523 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 INCOME TAX PAID (208,045,398) (97,008,693) (66,679,089) (30,465,081) INVESTING ACTIVITIES Purchases of short-term investments (19,607) - (19,607) - Loans and advances to related parties (35,383,528) (150,528,962) (114,432,583) (272,843,616) Purchases of investments in related parties (net of cash and cash equivalents acquired) (16,773,955) (1,677,690,475) (590,473,956) (1,785,559,056) Purchases of investments in other companies (54,800,000) (23,350,000) (54,800,000) (23,350,000) Purchases of property, plant and equipment (527,077,866) (933,486,976) (110,426,368) (78,822,039) Deferred charges paid (2,904,053) (7,099,592) - - Disposal of investments in related parties (net of cash and cash equivalents disposed) 19,551,743 144,801,421 131,173,523 103,560,000 Disposal of investments in other companies 36,058,750 1,896,187 36,058,750 1,896,187 Disposal of property, plant and equipment 19,659,468 27,227,759 19,127,022 7,548,201 Interest received 72,587,587 113,461,093 122,986,897 202,370,282 Dividend received 16,624,818 7,332,918 98,812,374 67,448,513 Net cash outflow from investing activities (472,476,643) (2,497,436,627) (461,993,948) (1,777,751,528) FINANCING ACTIVITIES Net decrease in borrowings (239,682,214) (1,529,616,965) (73,780,000) (1,712,016,000) Gain on currency swap contracts received 2,515,423 288,052,284 1,420,000 312,909,000 Currency swap cost paid (270,378,026) (405,166,362) (131,462,203) (166,322,628) (more)