Interest paid (132,815,303) (180,573,859) (154,419,292) (231,718,500) Deferred financing charges paid (281,625) (2,668,867) (281,625) (2,668,867) Proceeds from increase in share capital - 4,028,424,392 - 4,028,424,392 Issue of shares to minority interests - 44,400,000 - - Dividend paid (158,812,500) (105,393,750) (158,812,500) (105,393,750) Dividend paid to minority interests (11,805,000) (23,787,403) - - Net cash (outflow) inflow from financing activities (811,259,245) 2,113,669,470 (517,335,620) 2,123,213,647 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 307,252,045 1,351,595,973 (15,139,676) 982,054,561 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 3) 1,591,564,228 240,446,691 1,187,297,595 205,243,034 EXCHANGE TRANSLATION - (478,436) - - CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 3) 1,898,816,273 1,591,564,228 1,172,157,919 1,187,297,595 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 NOTE 1 - ECONOMIC ENVIRONMENT AND BASIS OF PRESENTATION The operations of Berli Jucker Public Company Limited (" the Company ") and its subsidiaries may continue to be affected for the foreseeable future by the economic condition in Thailand and the Asia Pacific Region in general. The consolidated and the Company only financial statements reflect the management's current assessment of the impact of the current economic conditions on the financial position of the Company and its subsidiaries. However, actual results could differ from the management estimates. The consolidated and the Company only financial statements have been presented in accordance with the Ministerial Regulation No. 7 (B.E. 2539), under the Public Company Limited Act B.E. 2535 and in conformity with generally accepted accounting principles practiced in Thailand. NOTE 2 - BASIS OF CONSOLIDATION The Group comprises Berli Jucker Public Company Limited and its subsidiaries. Principles of Consolidation The accompanying consolidated financial statements for the years ended December 31, 1999 and 1998 include the accounts of the Company, and its five wholly owned and fourteen majority-owned subsidiaries in 1999 and its six wholly owned and fourteen majority-owned subsidiaries in 1998. Significant intercompany transactions and accounts are eliminated from the consolidated financial statements. Companies in which the Group has shareholdings of between 20% and 50% are classified as associated companies. The equity method of accounting is adopted for associated companies so as to reflect the Group's share of its profits less losses and net assets in these companies in the financial statements. Investments of less than 20% in other companies are accounted for by the cost method under which dividends declared during the year are included in the consolidated statements of income. Profits or losses on sale of investments are determined by the specific identification method. The assets of acquired subsidiaries and associates are accounted for at their fair value on the date of acquisition. The difference between these fair values and the original cost of the assets is dealt with under property, plant and equipment for subsidiaries and as part of the equity investment in associates for associated companies. The excess of acquisition costs over the fair value of the net assets of subsidiary and associated companies at their date of acquisition is eliminated against retained earnings. NOTE 3 - BASIS FOR PREPARATION OF THE STATEMENTS OF CASH FLOWS Cash and Cash Equivalents Cash and cash equivalents shown in the statements of cash flows as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Cash on hand and at banks 474,078,490 1,672,714,714 373,044,654 1,194,586,575 Deposits with financial institutions 669,455,843 - - - Bills of exchange 800,000,000 - 800,000,000 - Bank overdrafts (44,718,060) (81,150,486) (886,735) (7,288,980) Cash and Cash Equivalents 1,898,816,273 1,591,564,228 1,172,157,919 1,187,297,595 NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable Accounts 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 the receivables outstanding at the balance sheet date. Lease Receivable from a Related Party The lease receivable from a related party is carried in the balance sheets at the total of the minimum lease payments due under this lease, less unearned interest attributable to future periods. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined on the first-in, first-out basis or average cost basis. Investments in Related Parties and Other Companies In accordance with the regulations of the Stock Exchange of Thailand, investments in subsidiary and associated companies are accounted for on the equity basis so as to incorporate the Company's share of its profits less losses and net assets in these companies in the financial statements. The excess of acquisition costs over the fair value of the net assets of subsidiary and associated companies at their date of acquisition is eliminated against retained earnings. Investments of less than 20% in other companies are accounted for on the cost method under which dividends declared during the year are included in the statements of income. Profits or losses on sales of investments are determined by the specific identification method. Property, Plant and Equipment Property, plant and equipment are stated at cost net of accumulated depreciation and amortization. Depreciation and amortization are computed by the straight-line method at the rates of 3-5% for buildings and construction and 10-20% for land improvements and equipment. Leaseholdings are amortized at the rate of 10% or over the related lease term, whichever is shorter. Deferred Income Tax The Company accounts for deferred income tax by including the income tax effects of all revenues and expenses recorded in the calculation of net income for the year, regardless of when they are recognized for tax purposes. The tax effects of timing differences are reported as deferred income tax in the balance sheets. Long-term Lease Deferred Income Long-term lease premiums received in advance are booked as deferred income and are dealt with under other liabilities in the balance sheets. Income is recognized on a straight-line basis over the duration of the lease. Income recognizable within one year is dealt with as part of other current liabilities. Retirement Benefits The Company and its affiliated companies operate various defined contribution and defined benefit retirement plans for employees. Provisions for the obligations of the Company and its affiliated companies under defined benefit plans are established by reference to expected final employee benefits, length of employee service and staff turnover rates. Revenue Recognition Revenue from sale of goods is recognized at the date of delivery to customers, while revenue from work on contracts is recognized in proportion to work completed and billed. Unbilled costs of work on contracts in process are included in inventories. Revenue from long-term installment sales is recognized in the period of sale, while interest on installment contracts is recognized as revenue on the basis of installments due during the year. Unearned interest on installment contracts is deducted from accounts receivable in the financial statements. Foreign Currency Accounts Foreign currency transactions during the year are translated into Baht at the rates of exchange prevailing on the relevant transaction dates. Assets and liabilities denominated in foreign currencies at the end of the year are translated into Baht at the rates of exchange prevailing at the balance sheets date or at the relevant forward contract rates. Gain or loss on translation is included in the statements of income. Foreign currency financial statements are translated for the purpose of consolidation using the following rates: a. Assets and liabilities are translated at the rates of exchange prevailing on the balance sheet date. b. Revenues and expenses are translated at average rate. c. Items in the statements of retained earnings and shareholders' equity are translated at the rates prevailing on the dates of the transactions. Translation adjustments in respect of foreign currency financial statements are reported as a separate component of equity. Basic Earnings Per Share Basic earnings per share are computed by dividing net income for the year by the weighted average number of shares outstanding during the year. NOTE 5 - TRANSACTIONS WITH RELATED PARTIES Significant transactions arising in the course of ordinary business between the Company and related parties during 1999 and 1998 were as follows: (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Transactions with subsidiary companies (Eliminated in consolidated financial statements) Sales of goods - - 206,313,400 10,544,524 Purchases of goods - - 1,932,951,750 2,151,863,806 Dividend income - - 82,195,000 60,703,597 Interest income - - 84,399,561 104,207,630 Other income - - 970,477 - Interest expense - - 705,598 585,824 Selling and administrative expenses - - 8,877,807 - Transactions with associated companies Dividend income 14,699,874 6,744,916 14,699,874 6,744,916 Interest income 13,778,619 11,901,362 13,778,619 11,901,362 Interest expense - 1,016,031 - 1,016,031 Business transactions between the Company and related parties are conducted during the ordinary course of business; the price of goods sold is based upon normal profit margins over the cost of the related goods and services, and interest rates are based on the Company's cost of borrowing and market rates. In 1999, the Company disposed of an investment in a subsidiary to a wholly owned subsidiary of the Company in the amount of Baht 117,175,520. The Company incurred a loss on disposal of the investment under the cost method in the amount of Baht 9,258,345. At December 31, 1999 and 1998 the outstanding balances with related parties were as follows: (Amounts in Baht) Consolidated. Company 1999 1998 1999 1998 Accounts receivable - related parties Subsidiary Companies Berli Jucker (Myanmar) Ltd. - - 917,364 5,193,941 Rubia Industries Ltd. - - 2,303,798 - Siam Snack Co., Ltd. - - 4,821,542 - Polipharm Co., Ltd. - - - 1,723,755 Thai-Scandic Steel Co, Ltd. - - 133,312 13,200 Thai Glass Industries PCL - - 15,655,916 121,162,679 Berli Prospack Co., Ltd. - - 6,754 - Berli Jucker Specialties Ltd. (Former name: Tropicwood Co., Ltd.) - - 32,569,467 - Ganong Ltd. - - 29,391 - Cellox Paper Co., Ltd. - - 254,860 4,035,449 Total - - 56,692,404 132,129,024 Accounts payable - related parties Subsidiary Companies Polipharm Co., Ltd. - - - 219,001 Siam Snack Co., Ltd. - - 5,857,752 61,409,222 Rubia Industries Ltd. - - 24,525,263 92,940,626 Thai Glass Industries PCL - - 144,278,318 - Thai Flourspar & Minerals Co., Ltd. - - - 2,644,657 Berli Jucker Specialties Ltd. (Former name: Tropicwood Co., Ltd.) - - 14,188 - Cellox Paper Co., Ltd. - - 4,371,813 38,818,184 Total - - 179,047,334 196,031,690 Lease receivable from a related party - current portion - - 31,500,000 36,000,000 - non-current portion - - - 31,500,000 The lease receivable from a related party represents amounts outstanding under a five year finance lease for machinery and equipment entered into with Cellox Paper Co., Ltd. in November 1995. The lease carries interest at 12% per annum. (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Short-term loans and advances to related parties Subsidiary Companies Polipharm Co., Ltd. - - - 26,813,568 Siam Snack Co., Ltd. - - 3,927,127 36,597,933 Cosma Ltd. - - 535,540 405,625 Rubia Industries Ltd. - - 79,808,614 69,339,592 Ganong Ltd. - - 17 49 Thai Sancella Co., Ltd. - - 4,476,400 4,558,900 Marble & Stones Co., Ltd. - - 22 - Thai-Scandic Steel Co., Ltd. - - 75,803,668 203,984,023 Berli Jucker Specialties Ltd. (Former name: Tropicwood Co., Ltd.) (net of allowance for doubtful account of Baht 9 million) - - 189,150,190 20,286,190 Thai Glass Industries PCL. - - 358,031,126 267,920,920 Thai Flourspar & Minerals Co., Ltd. - - 1,183,780 - Cellox Paper Co., Ltd. - - 2,154,737 660,188 Agri-Systems (Thailand) Co., Ltd. - - 35,854,703 31,647,638 Thai Klinipro Co., Ltd. - - 30,064,726 393 Berli Prospack Co., Ltd. - - 8,294,901 37,130,521 Rubia Investments Ltd. - - 231,788 - Associated Companies BJT Water Co., Ltd. 3,816,905 3,914,398 3,816,905 3,914,398 Beston Food (Shanghai) Co., Ltd. 9,714,573 6,953,000 9,714,573 6,953,000 Pacific Leisure (Thailand) Ltd. Group - 127,619 - 127,619 Other Companies Pathum Thani Water Co., Ltd. 153,680,000 105,485,000 153,680,000 105,485,000 Prospack Co., Ltd. Group 112,024 131,832 - - Total 167,323,502 116,611,849 966,728,817 815,825,557 (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Short-term loans and advances from related parties Subsidiary Company Montana Co., Ltd. - - 5,263,642 4,792,965 Associated Companies Pacific Leisure (Thailand) Ltd. Group 12,050 - - - Other Companies J.N.P.A. Co., Ltd. 17,241,100 17,241,100 17,241,100 17,241,100 Reime Jarlso AS - 2,920,000 - - Prospack Co., Ltd. Group 9,938 114,000 - - Total 17,263,088 20,275,100 22,504,742 22,034,065 NOTE 6 - ACCOUNTS RECEIVABLE Accounts receivable as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Accounts receivable - trade 2,877,329,723 2,739,897,001 1,083,957,498 1,481,884,377 Installment receivables 266,471,364 346,935,550 266,471,364 346,935,550 Less : Unearned interest on installment contracts (41,602,820) (56,780,932) (41,602,820) (56,780,932) 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) Total 2,951,664,505 2,857,419,113 1,185,891,488 1,630,415,671 Accounts receivable as at December 31, classified by age, can be summarized as follows: (Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Less than 6 months 2,880,078,951 2,783,283,031 1,119,559,498 1,582,350,594 Over 6 months to 12 months 58,993,080 92,719,344 45,935,503 64,910,104 Over 12 months 163,126,236 154,049,244 143,331,041 124,778,297 Total 3,102,198,267 3,030,051,619 1,308,826,042 1,772,038,995 NOTE 7 - INVENTORIES Inventories as at December 31, consisted of the following: ((Amounts in Baht) Consolidated Company 1999 1998 1999 1998 Finished products 750,069,148 812,352,266 425,159,204 530,668,714 Work in process 52,890,130 48,633,554 7,797,960 - Raw materials and packing materials 478,331,060 372,735,697 595,082 1,539,390 Assemblies and spare parts 171,931,456 147,757,209 6,090,065 2,106,663 Other materials 40,823,768 31,022,533 - - Merchandise in transit 102,074,198 54,165,761 15,176,488 19,409,907 Total 1,596,119,760 1,466,667,020 454,818,799 553,724,674 Less : Allowance for slow - moving inventories (54,309,383) (63,079,091) (21,521,367) (31,381,262) Inventories - net 1,541,810,377 1,403,587,929 433,297,432 522,343,412 NOTE 8 - INVESTMENTS IN RELATED PARTIES AND OTHER COMPANIES Investments in related parties and other companies as at December 31, consisted of the following: (Amounts in Baht) Consolidated Company Cost method Equity method Subsidiary Companies Type of Business Group Shareholding 1999 1998 1999 1998 1999 1998 Berli Jucker (Myanmar) Ltd. Import & export 100.00% - - 2,075,748 2,075,748 - - Montana Co., Ltd. Sales of cosmetics 100.00% - - 500,000 500,000 3,994,708 3,710,343 and machinery Polipharm Co., Ltd. Manufacture of 100.00% in 1998 - - - 12,950,000 - 70,543,989 pharmaceuticals Siam Snack Co., Ltd. Manufacture of 100.00% - - 170,041,650 170,041,650 178,072,423 197,145,465 (Renamed Berli Jucker snack foods Foods Ltd.in February 2000) Rubia Investments Ltd. Investment vehicle 100.00% - - 753,700,000 380,000,000 712,550,348 369,743,748 Cosma Ltd. Dormant 100.00% - - 100,000 100,000 202,302 198,534 (A subsidiary holds 98.00%) Rubia Industries Ltd. Manufacture of 99.70% - - 19,255,700 19,255,700 255,011,408 257,247,623 soap, cosmetics & confectionery Berli Jucker Specialties Ltd. Sales of chemicals 98.30% - - 4,304,288 4,304,288 1,420,144 2,192,391 (Former name: Tropicwood Co., Ltd.) Thai Glass Industries PCL. Manufacture of 97.95% in 1999 - - 2,880,099,651 3,003,760,185 3,262,328,852 2,945,235,483 glass containers (A subsidiary holds 2.86% in 1999) and 97.89% in 1998 Thai Flourspar & Minerals Co., Ltd. Manufacture of 95.00% - - 1,900,000 1,900,000 17,007,856 19,916,168 calcium carbonate Cellox Paper Co., Ltd. Manufacture of (Renamed Berli Jucker paper products 85.77% in 1999 (A Cellox Ltd. subsidiary holds in February 2000) 9.83% in 1999) - - 509,599,055 506,098,430 748,542,624 659,073,634 and 75.48% in 1998 Thai-Scandic Steel Co., Ltd. Manufacture of 97.03% of - - 160,500,000 - 163,955,048 - galvanized steel (A subsidiary holds ordinary shares 56.14% in 1999 and structures in 1999 100% in 1998) (Amounts in Baht) Consolidated Company Cost method Equity method Subsidiary Companies Type of Business Group Shareholding 1999 1998 1999 1998 1999 1998 Thai Klinipro Co., Ltd. Manufacture of 51.00% - - 51,000,000 51,000,000 80,849,416 79,735,529 surgical gowns Berli Prospack Co., Ltd. Manufacture of 50.00% - - 60,950,280 113,000,280 58,488,916 80,834,852 plastic containers Associated Companies BJC Marine Resources Dormant 50.00% 14,823,689 15,869,167 15,376,500 16,376,500 14,823,689 15,869,167 Development Co., Ltd. Thai-Swiss Metal Works Co., Ltd. Dormant 50.00% 300 300 300 300 300 300 ADAT Sales (Thailand) Ltd. Travel 48.32% 3,007,098 1,718,12 - - - - Thai-Pacific Foods Ltd. Dormant 47.33% - - - - - - BJT Water Co., Ltd. Consultancy and 35.00% 25,244,204 13,409,988 17,500,000 7,000,000 25,244,204 13,409,988 management service (more)