FINANCIAL STATEMENTS AND AUDITORS REPORT BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES DECEMBER 31, 1997 AND 1996 Auditors Report To the Shareholders of Berli Jucker Public Company Limited: We have examined the consolidated balance sheet of Berli Jucker Public Company Limited and subsidiaries as at December 31, 1997 and the related consolidated statements of income, changes in shareholders equity, retained earnings and cash flows for the year then ended, and the separate financial statements of Berli Jucker Public Company Limited for the same period. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. Without qualifying our opinion, we draw attention to Note 1 to the financial statements. 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 the financial statements cannot presently be determined. The audits of the financial statements of certain consolidated subsidiary and associated companies for the years ended December 31, 1997 and 1996 were not complete as at the reporting date for each respective year. The aggregate amounts involved in the financial statements concerned were not material to either the consolidated or separate financial statements of the Company. The aggregate unaudited balances amounted to 0.23% (1996 : 0.51%) of consolidated total assets; 0.35% (1996 : 0.68%) of consolidated total revenues; 1.76% (1996 : 1.60%) of consolidated net income in respect of the share of profits less losses of associated companies; and 1.09% (1996 : 2.86%) of the Companys net income in respect of the equity accounted for profits less losses of subsidiaries and associates dealt with in the Companys separate financial statements. The consolidated financial statements of Berli Jucker Public Company Limited and subsidiaries for the year ended December 31, 1996, and the separate financial statements of Berli Jucker Public Company Limited for the same period, shown for comparative purpose, were examined by another auditor of our firm whose reports dated February 24, 1997 expressed a qualified opinion subject to the effects, if any, of the immaterial and unaudited amounts for 1996 of certain subsidiary and associated companies as explained in the third paragraph. In our opinion, the financial statements referred to above present fairly the consolidated financial position of Berli Jucker Public Company Limited and subsidiaries as at December 31, 1997, and the consolidated results of their operations, changes in shareholders equity, retained earnings and cash flows for the year then ended, and the separate financial position and results of operations, changes in shareholders equity, retained earnings and cash flows of Berli Jucker Public Company Limited for the same period, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Nirand Lilamethwat Certified Public Accountant Peat Marwick Suthee Limited Bangkok, February 26,1998 BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 1997 AND 1996 (Amounts in Baht) Consolidated Company ASSETS 1997 1996 1997 1996 CURRENT ASSETS Cash on hand and at banks 186,963,864 191,442,287 78,661,956 146,262,372 Short-term investments Deposits with financial institutions 131,121,777 273,072,916 130,000,000 50,000,000 Others - 20,642,406 - 20,642,406 Accounts receivable 2,996,369,616 2,689,694,756 1,945,622,892 2,012,370,116 Less: Allowance for doubtful accounts (164,627,730) (124,551,790) (142,430,324) (111,194,301) Accounts receivable - net (Notes 4, 5 and 6) 2,831,741,886 2,565,142,966 1,803,192,568 1,901,175,815 Short-term loans and advances to related parties (Note 5) 228,063,464 18,706,873 502,588,540 285,913,071 Lease receivable from a related party current portion (Notes 4 and 5) - - 36,000,000 123,500,000 Inventories (Notes 4 and 7) 1,833,677,948 1,655,712,573 1,014,471,065 971,194,732 Other current assets Deferred income tax - current (Note 4) 105,947,347 108,765,246 109,702,115 101,039,351 Others 198,422,924 196,905,412 106,480,408 78,802,479 Total Current Assets 5,515,939,210 5,030,390,679 3,781,096,652 3,678,530,226 LEASE RECEIVABLE FROM A RELATED PARTY (Notes 4 and 5) - - 67,500,000 103,500,000 INVESTMENTS AND LOANS Loans to other companies 4,300,000 6,100,000 - - Investments in related parties (Notes 2, 4 and 8) 108,721,660 85,514,912 3,313,603,729 2,932,042,950 Investments in other companies (Notes 2, 4 and 8) 179,661,766 122,451,766 179,611,766 122,401,766 PROPERTY, PLANT AND EQUIPMENT - NET (Notes 4 and 9) 6,680,819,006 6,142,782,647 876,665,501 930,317,068 OTHER ASSETS Terminated currency swap receivable (Note 11) 455,430,000 - 455,430,000 - Deferred income tax (Note 4) - - 103,504,786 42,300,000 Others (Note 10) 83,992,228 85,666,403 8,712,614 9,121,773 Total Assets 13,028,863,870 11,472,906,407 8,786,125,048 7,818,213,783 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 1997 AND 1996 (Amounts in Baht) Consolidated Company LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996 1997 1996 CURRENT LIABILITIES Bank overdrafts and loans from financial institutions 593,677,950 202,817,846 269,425,922 60,575,569 Accounts and notes payable 1,562,761,646 967,128,419 533,783,688 446,533,744 Accounts payable - related parties (Note 5) - - 415,140,860 390,484,719 Current portion of long-term liabilities (Note 11) 1,628,770,778 768,324,388 1,205,460,000 293,257,143 Short-term loans and advances from related parties (Note 5) 12,534,125 2,500 8,640,664 8,165,034 Other current liabilities Accrued expenses 502,197,646 776,904,479 291,664,786 507,088,304 Deferred income 96,393,489 86,016,501 95,939,489 81,642,096 Others 263,105,611 128,629,765 40,493,572 40,264,978 Total Current Liabilities 4,659,441,245 2,929,823,898 2,860,548,981 1,828,011,587 LOANS FROM DIRECTORS AND EMPLOYEES 9,992,720 8,436,279 7,634,383 6,076,238 LONG-TERM LIABILITIES (Note 11) 2,582,810,553 2,664,170,347 2,037,935,207 2,144,442,857 OTHER LIABILITIES Long-term lease deferred income (Notes 4 and 12) 128,615,089 131,424,423 128,615,089 131,424,423 Deferred income tax - non-current (Note 4) 404,485,497 447,737,128 - - Staff retirement benefits (Notes 4 and 16) 226,825,895 41,000,000 138,015,952 41,000,000 Others (Note 13) 17,829,995 17,364,828 47,292,230 41,039,494 Total Liabilities 8,030,000,994 6,239,956,903 5,220,041,842 4,191,994,599 MINORITY INTERESTS 1,432,779,670 1,606,730,320 - - SHAREHOLDERS' EQUITY Share capital Authorized share capital 57,750,000 ordinary shares, Baht 10 par value 577,500,000 577,500,000 577,500,000 577,500,000 Issued and fully paid-up share capital 57,750,000 ordinary shares 577,500,000 577,500,000 577,500,000 577,500,000 Paid-in capital Premium on share capital 733,580,249 733,580,249 733,580,249 733,580,249 Donated surplus (Note 14) 36,867,563 36,867,563 36,867,563 36,867,563 Retained earnings Appropriated Legal reserve 116,037,737 116,037,737 57,750,000 57,750,000 Reserve for business expansion 87,400,944 87,400,944 85,000,000 85,000,000 Unappropriated 2,021,021,426 2,074,943,418 2,081,710,107 2,135,632,099 Loss from translation of foreign currency financial statements (6,324,713) (110,727) (6,324,713) (110,727) Total Shareholders' Equity 3,566,083,206 3,626,219,184 3,566,083,206 3,626,219,184 Total Liabilities and Shareholders' Equity 13,028,863,870 11,472,906,407 8,786,125,048 7,818,213,783 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (Amounts in Baht) Consolidated Company 1997 1996 1997 1996 REVENUES Sales (Notes 4 and 5) 10,615,013,885 10,129,394,139 6,624,590,751 6,497,702,158 Other income Share of profits less losses of subsidiary and associated companies (Notes 2 and 4) (6,051,632) 10,987,827 291,315,314 381,527,276 Interest income (Note 5) 94,542,330 48,844,424 79,637,332 63,025,857 Others (Note 5) 70,466,811 79,786,434 128,686,880 138,668,410 Total Revenues 10,773,971,394 10,269,012,824 7,124,230,277 7,080,923,701 EXPENSES Cost of sales (Note 5) 7,642,144,722 7,148,320,188 5,159,442,469 5,063,432,297 Selling and administrative expenses 1,646,316,230 1,612,909,684 1,087,316,594 1,125,478,485 Interest expense (Note 5) 386,674,095 324,856,449 305,415,828 232,941,239 Loss (gain) on foreign exchange (Note 4) 260,895,073 (13,823,574) 182,549,651 (12,072,596) Directors' remuneration 1,725,000 2,075,000 1,125,000 1,275,000 Other expenses Currency swap cost 61,150,359 11,508,401 9,101,690 - Total Expenses 9,998,905,479 9,085,846,148 6,744,951,232 6,411,054,425 Net income before income tax 775,065,915 1,183,166,676 379,279,045 669,869,276 Income tax (Notes 4 and 15) 220,822,016 327,544,853 (5,181,293) 59,454,021 Net income before minority interests 554,243,899 855,621,823 384,460,338 610,415,255 Less : Minority interests in net income (169,783,561) (245,206,568) - - Net income 384,460,338 610,415,255 384,460,338 610,415,255 Earnings per share (Note 4) 6.66 10.57 6.66 10.57 Exceptional item : Foreign exchange loss (gain) (Note 4) Foreign exchange loss (gain) - company 182,549,651 (12,072,597) 182,549,651 (12,072,597) - related parties 78,345,422 (1,750,977) 37,383,066 670,543 Foreign exchange loss (gain) before income tax 260,895,073 (13,823,574) 219,932,717 (11,402,054) Income tax (81,697,548) 4,958,668 (54,764,895) 3,621,779 Minority interests (14,029,703) 1,084,631 - - Net foreign exchange loss (gain) 165,167,822 (7,780,275) 165,167,822 (7,780,275) See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (Amounts in Baht) Consolidated Company 1997 1996 1997 1996 Share capital Ordinary shares Beginning balance 577,500,000 577,500,000 577,500,000 577,500,000 Increase in this year - - - - Ending balance 577,500,000 577,500,000 577,500,000 577,500,000 Paid-in capital Premium on share capital Beginning balance 733,580,249 733,580,249 733,580,249 733,580,249 Increase in this year - - - - Ending balance 733,580,249 733,580,249 733,580,249 733,580,249 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 116,037,737 115,899,017 57,750,000 57,750,000 Increase in this year - 138,720 - - Ending balance 116,037,737 116,037,737 57,750,000 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 2,074,943,418 1,679,975,702 2,135,632,099 1,740,525,663 Increase in this year 384,460,338 610,415,255 384,460,338 610,415,255 Decrease in this year (438,382,330) (215,447,539) (438,382,330) (215,308,819) Ending balance 2,021,021,426 2,074,943,418 2,081,710,107 2,135,632,099 Loss from translation of foreign currency financial statements Beginning balance (110,727) (110,727) (110,727) (110,727) Increase in this year (6,213,986) - (6,213,986) - Ending balance (6,324,713) (110,727) (6,324,713) (110,727) Total Shareholders' Equity 3,566,083,206 3,626,219,184 3,566,083,206 3,626,219,184 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (Amounts in Baht) Consolidated Company 1997 1996 1997 1996 Unappropriated retained earnings Beginning balance 2,074,943,418 1,679,975,702 2,135,632,099 1,740,525,663 Less: Adjustments to opening balance of retained earnings provision for staff retirement benefits for prior year (Note 16) (114,628,106) - (114,628,106) - Retained earnings after adjustments 1,960,315,312 1,679,975,702 2,021,003,993 1,740,525,663 Less appropriations of earnings: Legal reserve (138,720) - Dividend for 1996 and 1995 (161,700,000) (138,600,000) (161,700,000) (138,600,000) Cost of investment in excess of net assets of subsidiary and associated companies eliminated against retained earnings (104,304,224) (7,408,819) (104,304,224) (7,408,819) Net income for the year 384,460,338 610,415,255 384,460,338 610,415,255 Less: Dividend for 1997 and 1996 (57,750,000) (69,300,000) (57,750,000) (69,300,000) Unappropriated retained earnings at end of year 2,021,021,426 2,074,943,418 2,081,710,107 2,135,632,099 Appropriated retained earnings Legal reserve 116,037,737 116,037,737 57,750,000 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 203,438,681 203,438,681 142,750,000 142,750,000 Retained earnings at end of year 2,224,460,107 2,278,382,099 2,224,460,107 2,278,382,099 See notes to financial statements BERLI JUCKER PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (Amounts in Baht) Consolidated Company 1997 1996 1997 1996 OPERATING ACTIVITIES Profit before tax 775,065,915 1,183,166,676 379,279,045 669,869,276 Add : Interest expense 386,674,095 324,856,449 305,415,828 232,941,239 Currency swap cost 61,150,359 11,508,401 9,101,690 - Less : Dividend income - (55,200) - (55,200) Share of profits less losses in subsidiary and associated companies 6,051,632 (10,987,827) (291,315,314) (381,527,276) Interest income (94,542,330) (48,844,424) (79,637,332) (63,025,857) Profit before investment/finance income and expense 1,134,399,671 1,459,644,075 322,843,917 458,202,182 Allowance for doubtful accounts 40,075,940 22,824,940 31,236,023 18,492,798 Depreciation and amortization (Note 9) 740,997,720 792,143,410 123,204,933 119,051,832 Deferred charges written off 14,521,553 16,529,970 - - Book value of property, plant and equipment written off 1,381,495 7,711,328 8,348 1,410,758 Gain on disposal of property, plant and equipment (2,757,116) (5,499,552) (1,484,450) (3,793,526) Gain on disposal of investments (67,675) - (67,675) - Provision for staff retirement benefits 18,073,303 29,000,000 9,942,826 29,000,000 Loss on conversion of foreign currency borrowings 87,555,697 47,849,400 61,888,740 40,740,000 (INCREASE) DECREASE IN WORKING CAPITAL Accounts receivable (285,882,743) (154,261,430) 66,747,224 (214,356,778) Inventories (130,723,961) (167,553,548) (43,276,333) (216,234,544) Other current assets (31,547,333) (46,962,122) (27,672,997) (2,062,721) Loans to other companies 1,800,000 1,800,000 - - Other assets 7,286,456 (1,862,895) (95,000) 81,800 Accounts and notes payable 556,293,572 (77,400,794) 87,249,944 117,278,608 Accounts payable - related parties - - 24,656,141 40,285,353 Accrued expenses (132,100,465) 128,656,026 (152,026,318) 105,036,075 Other current liabilities 17,986,365 68,223,614 16,578,542 34,408,228 Loans from directors and employees 1,556,441 1,157,789 1,558,145 1,165,086 Long-term lease deferred income (2,809,334) (4,909,333) (2,809,334) (4,909,333) Other liabilities (746,473) 1,245,306 (746,474) 1,245,306 Net cash inflow from operating activities 2,035,293,113 2,118,336,184 517,736,202 525,041,124 See notes to financial statements (More)