NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER

Transcription

1 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2002 AND 2001

2 Report of Independent Auditor To The Board of Directors and Shareholders of Nawarat Patanakarn Public Company Limited I have audited the accompanying consolidated balance sheets of Nawarat Patanakarn Public Company Limited and its subsidiaries as at 31 December 2002 and 2001, and the related consolidated statements of earnings, changes in shareholders equity and cash flows for the years then ended ; and the separate financial statements of Nawarat Patanakarn Public Company Limited for the same period. 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 audits provide 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 Nawarat Patanakarn Public Company Limited and its subsidiaries and of Nawarat Patanakarn Public Company Limited as at 31 December 2002 and 2001 and the results of their operations and cash flows for the years then ended in accordance with generally accepted accounting principles

3 I draw attention to the following uncertainties pertaining to the financial statements for the years ended 31 December 2002 and 2001: a) As discussed in Note 12 to the financial statements, a subsidiary company, in which the Company holds 52.57% of shares and which is incorporated in The Union of Myanmar, owns a hotel and apartment project with a net book value, as at the balance sheet date, of approximately Baht 341 million (31 December 2001 : Baht 539 million). The subsidiary company has already commenced operating this project after postponing commencement of its business because of the financial and economic crisis, but has suffered operating losses and has a significant capital deficit. However, the Company believes that the book value of the hotel and apartment project is not higher than its fair value. Whether the project is stated at its fair value depends on the success of this subsidiary company s business in the future, on adequate financial support being provided by the Company, and on the recovery of regional economies. b) As at the balance sheet date, the Company has obligations in respect of its guarantee of the loans of another company as described in Note 24 to the financial statements. Ernst & Young Office Limited Bangkok : 14 February 2003 Narong Puntawong Certified Public Accountant (Thailand) No

4 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES BALANCE SHEETS AS AT 31 DECEMBER 2002 AND 2001 (Unit : Baht) Consolidated Note ASSETS CURRENT ASSETS Cash and deposits at financial institutions 279,573, ,434,424 Trade accounts receivable - net 6 339,535,253 1,082,400,831 Trade accounts receivable - related parties 6, 15 30,998,272 7,445,189 Unbilled receivables - net 6 331,405, ,678,592 Retention receivables ,562, ,698,777 Loans and advances to related parties - net 15 23,059,545 22,982,527 Inventories 7 115,047,339 74,000,621 Other current assets Withholding income tax 95,844, ,931,221 Others 136,880, ,615,029 TOTAL CURRENT ASSETS 1,579,907,528 2,261,187,211 NON - CURRENT ASSETS Investments accounted for under equity method Investments in subsidiary and associated companies 8 9,503,222 4,957,148 Investments in joint ventures Investments in other long - term investments, net , ,046 Deposits at financial institutions placed as collateral 5 238,210, ,870,979 Performance retentions and advances for machinery and equipment - net Hotel and apartment building and equipment - net ,841, ,874,875 Property, plant and equipment - net ,061, ,733,147 Assets not used in operations 14 35,539,694 43,272,108 Other non - current assets Advances for construction - net 12 85,138,623 22,775,313 Others 31,124,229 32,286,777 TOTAL NON - CURRENT ASSETS 1,184,554,458 1,288,897,393 TOTAL ASSETS 2,764,461,986 3,550,084,604 The accompanying notes are an integral part of the financial statements.

5 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2002 AND 2001 (Unit : Baht) Consolidated Note LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts, trust receipts and loans from financial institutions 16 69,634, ,947,181 Trade accounts payable 362,188, ,573,166 Trade accounts payable - related parties 15 28,382,866 2,582,939 Current portion of long - term loans ,346, ,250,000 Current portion of accrued interest under debt restructuring agreement 24,127,528 26,242,804 Current portion of hire purchase creditors 12,341,723 10,337,484 Loans and advances from related parties ,365, ,245,398 Other short - term loans - 38,000,000 Other current liabilities Accrued interest 93,893,351 80,943,099 Advances received from construction 215,174, ,436,653 Advances received from other company 15,887,850 - Accrued expenses 51,828,324 81,982,057 Output tax suspend 73,414,882 75,943,057 Others 1,794,691 2,938,940 TOTAL CURRENT LIABILITIES 1,339,381,405 1,348,422,778 NON - CURRENT LIABILITIES Hire purchase creditors - net of current portion 13,753,031 17,565,565 Long - term loans, net of current portion ,346, ,693,570 Accrued interest under debt restructuring agreement - net of current portion 177,543, ,693,538 Convertible debentures ,386, ,386,700 Reserve for loss of investments accounted for under equity method Reserve for loss of subsidiary company Reserve for loss of joint ventures Other non - current liabilities 56,535,616 57,368,178 TOTAL NON - CURRENT LIABILITIES 834,566, ,707,551 TOTAL LIABILITIES 2,173,947,437 2,321,130,329 The accompanying notes are an integral part of the financial statements.

6 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2002 AND 2001 (Unit : Baht) Consolidated Note SHAREHOLDERS' EQUITY Share capital Registered ,078,217 ordinary shares of Baht 10 each (2001 : 381,250,000 ordinary shares of Baht 10 each) 3,820,782,170 3,812,500,000 Issued and fully paid 181,250,000 ordinary shares of Baht 10 each 1,812,500,000 1,812,500,000 Premium on common stocks 950, ,000 Currency translation differences 26,841,514 12,733,180 Retained earnings Appropriated - statutory reserve 20 50,000,000 50,000,000 Deficit (1,299,776,965) (647,228,905) TOTAL SHAREHOLDERS' EQUITY 590,514,549 1,228,954,275 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,764,461,986 3,550,084, The accompanying notes are an integral part of the financial statements. BUSINESS REORGANISATION PLAN ADMINISTRATOR

7 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES EARNINGS STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2002 AND 2001 (Unit : Baht) Consolidated Note REVENUES Construction, sales and service income 2,175,592,637 2,215,327,431 Other income Interest income 42,522,515 16,221,465 Rental fee reduction given by lessor 12 47,467,747 - Others 94,234,698 62,972,389 TOTAL REVENUES 2,359,817,597 2,294,521,285 EXPENSES Cost of construction, sales and service 1,912,671,821 2,110,120,327 Selling and administrative expenses 257,268, ,844,268 Other expenses Doubtful debts 6 713,357,733 8,770,980 Doubtful debt in respect of performance retentions and advances for machinery and equipment ,500,000 Loss on impairment of assets ,000,000 44,303,770 Loss (gain) on exchange 9,431,578 (36,664,054) Share of loss from investments accounted for under equity method Share of loss from subsidiary company - - Share of loss (profit) from associated company (4,546,075) 42,840 Share of loss (profit) from joint ventures - - TOTAL EXPENSES 2,988,183,190 2,856,918,131 LOSS BEFORE INTEREST EXPENSES AND INCOME TAX (628,365,593) (562,396,846) INTEREST EXPENSES (23,410,711) (32,936,155) CORPORATE INCOME TAX (771,756) - NET LOSS FOR THE YEAR (652,548,060) (595,333,001) EARNINGS PER SHARE Basic earnings per share Net loss 28 (3.60) (3.28) Weighted average numbers of share (shares) 181,250, ,250,000 Diluted earnings per share Net loss 28 (3.60) (3.28) Weighted average numbers of share (shares) 228,188, ,188,670 The accompanying notes are an integral part of the financial statements.

8 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2002 AND 2001 (Unit : Baht) Consolidated CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES : Net loss (652,548,060) (595,333,001) Adjustments to reconcile net loss to net cash from (used in) operating activities :- Depreciation 192,093, ,518,828 Amortization of leasehold right 2,586,996 2,586,996 Increase in doubtful debts 713,357,733 8,770,980 Loss on impairment of assets 100,000,000 44,303,770 Doubtful debts in respect of performance retentions and advances for machinery and equipment - 537,500,000 Share of loss from subsidiary company - - Share of (profit) loss from associated company (4,546,074) 42,840 Share of (profit) losses from joint ventures - Rental fees reduction given by lessor (47,467,747) - Gain from increase in fair value of other long - term investments (8,228) (2,913) Gain on disposal of equipment (1,710,209) (7,557,016) Gain on disposal of assets not use in operation (4,267,586) - Unrealised loss (gain) on exchange (3,433,562) 2,181, ,056, ,011,788 Decrease (increase) in operating assets : Trade accounts receivable 14,458,569 11,695,051 Inventories (41,046,718) 65,509,628 Unbilled receivables 189,272,729 (181,782,931) Retention receivables (123,908,759) (22,847,632) Other current assets 106,364,769 1,664,376 Increase (decrease) in operating liabilities : Trade accounts payable 73,493,921 (10,815,227) Advances received from construction (10,874,297) 82,210,661 Accrued expenses and other current liabilities (4,984,004) (32,273,132) Other non - current liabilities (832,562) 1,766,896 Net cash from operating activities 496,000, ,139,478 The accompanying notes are an integral part of the financial statements.

9 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES STATEMENTS OF CASH FLOWS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2002 AND 2001 (Unit : Baht) Consolidated CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Increase in deposits at financial institutions placed as collateral (59,339,512) (34,918,192) Increase in loans and advances to related parties (5,115,869) (7,353,311) Increase in investment in associated company - (4,999,988) Increase in investment in a joint venture - - Increase in other long - term investment - (100,000) Decrease (increase) in hotel and apartment building and equipment 67,111,490 (30,099,168) Proceeds from disposal of equipment 2,644,804 15,469,558 Acquisition of property, plant and equipment (141,021,578) (137,300,967) Proceed from disposal of assets not used in operations 12,000,000 - Decrease (increase) in other non - current assets (13,733,232) 20,025,591 Net cash used in investing activities (137,453,897) (179,276,477) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Settlements of bank overdrafts, trust receipts and loans from financial institutions (55,312,986) (68,440,260) Increase (decrease) in other short - term loan (38,000,000) 38,000,000 Settlement of long - term loans (107,250,000) (57,750,000) Decrease in accrued interest under debt restructuring (18,264,914) (4,151,018) Increase (decrease) in hire purchase creditors (1,808,295) 11,593,407 Increase in loans and advances from related parties 20,120,478 7,814,112 Net cash used in financing activities (200,515,717) (72,933,759) Increase in currency translation differences 14,108,334 10,704,683 Net increase (decrease) in cash and cash equivalents 172,139,225 (91,366,075) Cash and cash equivalents at beginning of year 107,434, ,800,499 Cash and cash equivalents at end of year 279,573, ,434,424 Supplemental cash flows information Cash paid during year for :- Interest expense 20,929,578 30,394,396 Income tax 36,297,900 25,240,069 The accompanying notes are an integral part of the financial statements.

10 The Company Only ,748,848 99,283, ,043,944 1,081,440, ,700, ,839, ,067, ,678, ,274, ,698, ,431, ,322, ,820,745 73,908,719 94,371, ,556,699 86,264, ,307,022 2,529,724,703 3,272,035,371 12,931,217 7,970,181 16,365,340 12,961, , , ,210, ,870, ,443, ,733,147 35,539,694 43,272, ,786,788 28,017, ,412, ,952,472 3,293,136,792 4,010,987,843

11 The Company Only ,194,238 82,772, ,090, ,247,185 28,382,866 4,061, ,346, ,250,000 24,127,528 26,242,804 12,341,723 10,337,484 66,877,300 35,186,340-38,000,000 40, , ,548, ,436,653 15,887,850-66,864,020 76,592,847 73,414,882 75,943,057 1,397,245 2,933, ,513, ,127,807 13,753,031 17,565, ,346, ,693, ,543, ,693, ,386, ,386, ,019, ,714,428 30,295,706 29,415,119 23,763,649 24,436,841 1,815,109,156 1,782,905,761 2,702,622,243 2,782,033,568

12 The Company Only ,820,782,170 3,812,500,000 1,812,500,000 1,812,500, , ,000 26,841,514 12,733,180 50,000,000 50,000,000 (1,299,776,965) (647,228,905) 590,514,549 1,228,954,275 3,293,136,792 4,010,987,

13 The Company Only ,049,167,160 2,204,760,146 96,552,723 49,178, ,595,766 63,260,389 2,239,315,649 2,317,199,383 1,815,751,411 2,109,537, ,293, ,052, ,357,733 8,770, ,500, ,698,488 (23,061,725) 182,998, ,233,294 (4,546,075) 42,840 (523,271) 2,538,294 2,878,029,655 2,887,614,398 (638,714,006) (570,415,015) (13,834,054) (24,917,986) - - (652,548,060) (595,333,001) (3.60) (3.28) 181,250, ,250,000 (3.60) (3.28) 228,188, ,188,670

14 The Company Only (652,548,060) (595,333,001) 161,069, ,906,307 2,586,996 2,586, ,357,733 8,770, ,500, ,998, ,233,294 (4,546,074) 42,840 (523,271) 2,538, (8,228) (2,913) (1,710,209) (7,557,016) (4,267,586) - 21,593,372 (19,835,145) 418,002, ,850,636 54,785,621 17,154,355 (40,912,026) 65,601, ,610,921 (181,782,931) (120,620,395) (22,847,632) 149,770, ,473 18,242,599 (1,245,636) (85,501,016) 82,210,661 2,014,992 (53,141,913) (673,192) 1,607, ,720, ,911,069

15 The Company Only (59,339,512) (34,918,192) (83,279,661) (44,324,438) - (4,999,988) (2,000,000) - - (100,000) - - 2,644,804 15,469,558 (140,301,125) (137,300,967) 12,000,000-11,230,524 7,888,476 (259,044,970) (198,285,551) (46,577,770) (53,499,865) (38,000,000) 38,000,000 (107,250,000) (57,750,000) (18,264,914) (4,151,018) (1,808,295) 11,593,407 31,690,960 1,163,584 (180,210,019) (64,643,892) ,465,762 (88,018,374) 99,283, ,301, ,748,848 99,283,086 25,660,553 29,692,277 36,297,900 25,240,069

16 NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED 31 DECEMBER 2002 AND 2001 (Unit : Baht) CONSOLIDATED AND THE COMPANY ONLY Currency Issued and Premium on translation fully paid capital common stock differences Statutory reserve Deficit Total Balance - as of 31 December ,812,500, ,000 2,028,497 50,000,000 (51,895,904) 1,813,582,593 Currency translation differences ,704, ,704,683 Net loss for the year (595,333,001) (595,333,001) Balance - as of 31 December ,812,500, ,000 12,733,180 50,000,000 (647,228,905) 1,228,954,275 Currency translation differences ,108, ,108,334 Net loss for the year (652,548,060) (652,548,060) Balance - as of 31 December ,812,500, ,000 26,841,514 50,000,000 (1,299,776,965) 590,514,549 0 The accompanying notes are an integral part of the financial statements.

17 1. GENERAL INFORMATION NAWARAT PATANAKARN PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Nawarat Patanakarn Public Company Limited ( the Company ) was incorporated as a limited company under the Thai Laws in 1976, and the Company registered the change of its status to a public company under the Public Limited Companies Act in The Company operates its business in Thailand and its principal activity is the provision of construction services. The Company s registered address is No. 2/3, Bangna Towers A, 18 th -19 th Floor, Moo 14, Bangna- Trad Road, Km. 6.5 Bangkaew, Bangplee, Samutprakarn. 2. RESTRUCTURING OF DEBTS During 2000, the Company was ordered into rehabilitation by the Central Bankruptcy Court. During that period, the Company completed the restructuring of its debts with its financial institution creditors towards the end of that year. The court-appointed plan administrator expects the Company s business to be operating normally in the near future. 3. BASIS OF CONSOLIDATION 3.1 The consolidated financial statements included the financial statements for the year of Nawarat Patanakarn Public Company Limited, its subsidiary companies and its jointly controlled joint ventures, as follows :- Country of Equity Entities incorporation interest Percent Subsidiary companies: Meeyahta International Hotel Limited Myanmar Myanmar NWR Co., Ltd Myanmar 100 Joint venture: (proportionate consolidation): NWR, ITD, CNT & AS Joint venture Thailand 25 C.E.S - Nawarat Joint Venture Thailand 50 Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited Thailand

18 Country of Equity Entities incorporation interest Percent Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited (project 2 E) Thailand 51 Italian - Thai - Nawarat Patanakarn Joint Venture Thailand 100 Joint Venture of Vianini Lavori S.p.A., Nawarat Patanakarn Public Company Limited, Vianini - Thai Construction and Development Co., Ltd. Thailand 99 Joint Venture of International Quality Assurance Laboratory Co., Ltd. and Nawarat Patanakarn Public Company Limited Thailand Percent Percent Total assets of subsidiary companies and joint ventures as a percentage to the consolidated total Total revenues of subsidiary companies and joint ventures as a percentage to the consolidated total The financial statements of the subsidiary companies incorporated in overseas are translated to Thai Baht at the closing exchange rate as to assets and liabilities, and at the average exchange rate as to revenues and expenses. The resultant difference has been shown under the caption of Currency translation differences in the shareholders equity. 3.3 Intercompany balances and transactions, the Company s investments in subsidiary companies and joint ventures and share capital of the subsidiary companies, and joint ventures equity have been eliminated from the consolidated financial statements. 4. SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting standards pronounced by the Institute of Certified Accountants and Auditors of Thailand which are effective under the Accounting Act B.E Significant accounting policies adopted by the Company, its subsidiaries and joint ventures are summarized below :

19 4.1 Revenues Revenues from construction contracts are recognised on the basis of percentage of completion. The recognised revenues, which have not yet been due as per contracts, have been presented under the caption of Unbilled receivable in the balance sheets. 4.2 Trade accounts receivable and allowance for doubtful debts Trade accounts receivable are stated at net realisable value. Allowance for doubtful debts is provided for the estimated collection losses that may be incurred in collection of receivables. The allowance is based on collection experience and current status of receivables outstanding at the balance sheet date. 4.3 Inventories Inventories are valued at the lower of cost (first-in, first-out method) and net realisable value. 4.4 Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and provision for impairment. Depreciation is calculated by reference to their costs on a straightline basis over the estimated useful lives as follows :- Land improvements - 5 years Leasehold right - Period of lease Building and constructions - 5, 20 years Hotel and apartment building - 30 years Leasehold buildings improvements - 10 years Tools, machinery and equipment - 5 years Office equipment, furniture and fixtures - 5, 10 years Hotel equipment and furniture - 10 years Vehicles - 5 years No depreciation is provided for land and constructions in progress

20 4.5 Foreign currencies Foreign currencies transactions incurred during the year are translated into Baht at the rates of exchange ruling on the transaction dates. Monetary assets and liabilities denominated in foreign currency outstanding at the balance sheet date are translated into Baht at the rates ruling on the balance sheet date. Exchange gains and losses are included in determining earnings. 4.6 Investments Investments in subsidiary and associated companies and investments in joint ventures (in the separate financial statements of the Company) are stated under equity method. The investments are adjusted to incorporate the Company s proportionate share of the operating results in the subsidiary and associated companies and joint ventures. Long - term investments in non - marketable equity securities, which the Company classifies as other long - term investments, are carried at cost, net of allowance for impairment. The Company recognises loss on impairment of investments in the earnings statements when the fair value of the investment in lower than the cost. 4.7 Earnings per share Basic loss per share is determined by dividing net loss for the year by the weighted average number of ordinary shares in issue during the year. Diluted loss per share is calculated by dividing net loss for the year, after adjusting for the effect of transactions relating to dilutive potential ordinary shares, by the weighted average number of ordinary shares in issue during the year plus the weighted average number of ordinary shares to be issued for conversion of dilutive potential ordinary shares into ordinary shares. 4.8 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from these estimates

21 5. DEPOSITS AT FINANCIAL INSTITUTIONS PLACED AS COLLATERAL As at 31 December 2002, the Company has pledged its deposits and negotiable certificates of deposit of totaling Baht million (2001 : Baht million) as collateral to secure bank guarantees granted and issued by banks for project loan facilities. As at 31 December 2002 and 2001, the Company has pledged and transferred rights over bank deposits of Baht million as collateral to secure loan repayment under the debt restructuring plan. Since the Company is currently operating under the rehabilitation plan, there are several limitations on the repayment of certain loans and interest to the financial institution creditors in accordance with the conditioned stipulated in the rehabilitation plan. 6. TRADE ACCOUNTS RECEIVABLE / UNBILLED RECEIVABLES Aging of the outstanding balances of trade account receivables as at the balance sheet date was as follow :- (Unit : Thousand Baht) Consolidated The Company only Trade accounts receivable Current receivables 220, , , ,175 Past due receivables Less than 3 months 189, , , , months 56, ,991 56, , months 409,655 31, ,655 31,214 More than 12 months 643, , , ,692 Total 1,519,781 1,483,592 1,475,290 1,482,631 Less : Allowance for doubtful accounts (1,180,246) (401,191) (1,180,246) (401,191) Trade account receivables - net 339,535 1,082, ,044 1,081,440 Trade accounts receivable - related parties Current receivables 25,225 6,745 48,636 34,196 Past due receivables Less than 3 months 839-1, months , months 4,234-4,234 - More than 12 months 1,851 1, , ,484 Total 32,149 8, , ,231 Less : Allowance for doubtful accounts (1,151) (1,151) (6,392) (6,392) Net 30,998 7, , ,

22 As at 31 December 2001, the balance of provision for doubtful accounts for unbilled receivables was Baht 10.4 million. Subsequently in 2002, the Company wrote off such amount. As at 31 December 2002, the Company has an amount of approximately Baht 860 million receivable from the joint venture of Premier Enterprise Public Company Limited and Pate Engineers, Inc./ Lockwood, Andrews and Newnam, Inc. in respect of construction work subcontracted by that joint venture. Under the subcontracting agreement the joint venture assigned its rights over the construction income receivable from the project owner to the Company. Based on the Company s estimations, the construction income receivable from the project owner is significantly less than the amount receivable from this joint venture. Thus, the Company has to collect the remaining amount of this receivable, when due, from this joint venture, and/or either or all participants, in addition to the amount to be collected from the project owner. In addition, one of the participants, Premier Enterprise Public Company Limited ( Premier ) has undergone business rehabilitation in accordance with the Bankruptcy Law. Under the rehabilitation plan of Premier, it was agreed it would issue Baht million of its shares at par value, in partial repayment of the outstanding debt. For these reasons, the Company has set aside an allowance for doubtful debt for most of the above balance in this year. During the year, a trade account receivable with an outstanding balance of approximately Baht million entered into business rehabilitation, whereby it agreed to settle the debt through a cash payment of Baht 6.76 million and the issue and transfer of Baht million ordinary shares (as discussed in Note 10). During 2001, a trade account receivable with an outstanding balance of approximately Baht million entered into business rehabilitation, whereby it agreed to issue and transfer approximately Baht million of ordinary shares in partial repayment of debt (as discussed in Note 10). The remaining debt of approximately Baht million is to be paid 7 years after the Central Bankruptcy Court accepts the debtor s debt restructuring plan. As the Company had already recorded a full allowance for doubtful accounts for this account receivable, its therefore reversed from this allowance for doubtful accounts an amount equal to the value of the ordinary shares received

23 7. INVENTORIES (Unit : Thousand Baht) Consolidated The Company Only Finished goods 58,895 19,270 58,895 19,270 Works in process 6,970 3,018 6,970 3,018 Raw materials and supplies 49,182 51,713 48,956 51,621 Total 115,047 74, ,821 73, INVESTMENT IN SUBSIDIARY AND ASSOCIATED COMPANIES/RESERVE FOR LOSS OF SUBSIDIARY COMPANY (Unit : Thousand Baht) Paid up Percentage of Investments Nature of business capital shareholding As at 31 December Percent Investment in associated company Utility Business Alliance Water treatment 10 Company Limited construction Million Baht 50 5,000 5,000 Accumulated share of profit (loss) 4,503 (43) Investment in associated company (Consolidated) 9,503 4,957 Investment in subsidiary company Myanmar NWR 500,000 Company Limited Not yet operate Kyats 100 3,013 3,013 Accumulated share of profit Investments in subsidiary company 3,428 3,013 Total investments in associated and subsidiary companies (The Company Only) 12,931 7,970 Reserve for loss of subsidiary company Meeyahta International Hotel and apartment 1,750,000 Hotel Limited operations Kyats ,141 19,141 Accumulated share of loss (1,002,160) (832,855) Total reserve for lo ss of subsidiary company (The Company Only) (983,019) (813,714) - 7 -

24 - 8 -

25 The computation of the equity interest of the Company in some joint ventures for the periods under report is examined by other auditors or based on financial information provided by the management of those joint ventures, and not reviewed by their auditor. However, such amounts are not significant to the financial statements. 9. INVESTMENTS IN JOINT VENTURES/RESERVE FOR LOSSES OF JOINT VENTURES (Unit : Thousand Baht) Joint ventures Nature of business Percentage of profit sharing As at 31 December Percent C.E.S - Nawarat Joint Venture Construction but ceased operation 50 23,758 23,758 Accumulated share of loss (23,569) (23,569) Total Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited Accumulated share of profit Construction 99-9,014-8,945 Total 9,014 8,945 Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited (project 2 E) Accumulated share of profit Construction 51-3,778-3,828 Total 3,778 3,828 NWR, ITD, CNT & AS Joint Venture Accumulated share of profit Construction 25 2,000 1, Total 3,384 - Investments in joint ventures 16,365 12,962 Italian - Thai - Nawarat Patanakarn Joint Venture Construction but ceased operation 100 5,272 5,272 Accumulated share of loss (6,460) (6,455) Total (1,188) (1,183) Joint Venture of Vianini Lavori S.p.A., Nawarat Patanakarn Public Company Limited, Vianini - Thai Construction and Development Co., Ltd. Accumulated share of loss Construction 99 - (27,611) - (26,728) Total (27,611) (26,728) Joint Venture of International Quality Assurance Laboratory Co., Ltd. and Nawarat Patanakarn Public Company Limited Accumulated share of loss Construction 82 - (1,497) - (1,502) Total (1,497) (1,502) NWR, ITD, CNT & AS Joint Venture Construction Accumulated share of loss - (2) - 9 -

26 Total - (2) Reserve for losses of joint ventures (30,296) (29,415) The computation of the equity interest of the Company in some joint ventures for the periods under report is examined by other auditors or based on financial information provided by the management of those joint ventures, and not reviewed by their auditor. However, such amounts are not significant to the financial statements. 10. OTHER LONG - TERM INVESTMENTS As at the balance sheet date, other long - term investments were as follows :- (Unit : Thousand Baht) Percentage of Cost shareholding Sarin Property Company Limited , ,417 SG Star Properties Ltd ,762 - Other companies , ,917 Less : Allowance for loss on impairment of investments (171,544) (135,790) Other long - term investments, net In settlement of debt the Company received Baht million in ordinary shares (3,576,186 ordinary shares of Baht 10 each) from SG Star Properties Ltd. this year, and Baht million in ordinary shares (13,541,655 ordinary shares of Baht 10 each) from Sarin Property Company Limited in 2001, in accordance with the business rehabilitation plans of the respective companies. However, for prudent reasons, the Company set aside full provision for losses on impairment of the investments received in the year under which the settlement was made

27 11. PERFORMANCE RETENTIONS AND ADVANCES FOR MACHINERY AND EQUIPMENT These represent receivables from a joint venture for performance retentions and advances for machinery and equipment. The outstanding balance as at the balance sheet date was as follows : (Unit : Thousand Baht) Performance retentions 433, ,700 Advances for machinery and equipment - 103, , ,500 Less : Allowance for doubtful accounts (433,700) (537,500) Net - - In 2001, a major participant in this joint venture entered into the process of business rehabilitation in accordance with Bankruptcy Law, and for prudent reasons, the Company set aside a full provision for doubtful debt against the above receivables. Subsequently in 2002, the Company reclassified advances of Baht million to this joint venture and the related provision for doubtful debt to trade accounts receivable. 12. HOTEL AND APARTMENT BUILDING AND EQUIPMENT Hotel and apartment Machinery and Hotel equipment building equipment and furniture Office equipment, furniture and Motor Constructions in (Unit : Thousand Baht) fixtures vehicles progress Total Cost : 31 December ,222 69,037 56, ,760 5, ,449 Acquisitions Transferred in (out) (50,813) (28,432) - 28, (50,813) Currency translation differences (21,682) (981) (1,377) (701) (623) (143) (25,507) 31 December ,727 39,624 56,332 28,313 25,137 5, ,898 Accumulated depreciation : 31 December ,723 68,443 4, , ,503 Depreciation for the year 24, , ,920 Transfer in (out) (1,390) (27,942) - 27, (1,390) Currency translation differences (445) (978) (77) (685) (618) - (2,803) 31 December ,460 39,622 9,774 28,237 25, ,230 Provision for impairment : 31 December , ,072 Additional set up during the year 100, ,000 Currency translation difference (4,245) (4,245) 31 December , ,827 Net book value :

28 31 December , , , , December , , , ,841 Depreciation (included in earnings statements) , ,920 This represents the hotel and apartment building and equipment of a subsidiary company, of which its 52.57% shares held by the Company, under a 30 year lease agreement entered with Myanmar Railways (commencing in 1999). After temporarily ceased business activities due to the economic crisis, in 2001 the subsidiary had commenced operating its business but suffered an operating losses and had a significant capital deficit. For this reason, in this year the Company has set aside an additional provision of Baht 100 million for impairment of the above assets. The Company s management believes that the book value of this project, as at the balance sheet date, is not higher than fair value. A condition of the investment in the project was that the subsidiary company had to transfer its rights over the property to the lessor after the end of the lease agreement, and to pay an annual lease rent for the premises of USD 910,152 which shall be subject to revision every 5 years plus USD 35,000 and 2% per annum of the gross receipt or turnover of this project. Such fees are to be offset against construction receivable from Myanmar Railways, which is presented as Advances for construction in the consolidated balance sheet. The agreement is renewable for a period of 10 years. The subsidiary company s management is currently negotiating to reduce the rental and revise the conditions of the agreement. In August 2001, the subsidiary company received a written notice from the lessor agreeing to allow it to pay the aforementioned annual land rental fee beginning from the date of commencement of its hotel operations, suggesting the subsidiary company would not have to pay rental fees of approximately Baht million previously recorded in its accounts as payable to the lessor. However because at that time the Company was of the opinion that the substance of the said notice was not clear, for prudent reasons the Company did not reverse the rental transactions in the consolidated financial statements and subsequently asked the subsidiary to write seeking clarification from the government agency of the Union of Myanmar as to when rental would start to be charged. In May 2002, the subsidiary company received a letter from that government agency concerning when rent would start to be charged. For this reason, the Company has made an adjustment to reflect the reduction in rental fees granted by the lessor, under the caption "Other income", in the current year s consolidated earnings statement

29 13. PROPERTY, PLANT AND EQUIPMENT Building Land and Office improvemen t and land construction Tool, and equipmen and leasehold Consolidated Land right improvemen Cost : machiner y t, furniture Constructions leasehold building and and Motor in ts equipmen t (Unit : Thousand Baht) fixtures vehicles progress Total 31 December ,862 72,155 44,146 1,496,816 83, ,571 13,303 2,113,031 Acquisitions ,856 4,729 87,793 1,542 94,166 Disposals - (2,587) - (5,340) (483) (5,217) - (13,627) Transferred in (out) ,312 9, (12,108) - 31 December ,862 70,192 46,560 1,547,504 87, ,147 2,737 2,240,426 Accumulated depreciation : 31 December ,834 16,463 1,202,838 75, ,440-1,589,547 Depreciation for the year - 4,532 4, ,379 2,763 31, ,173 Depreciation for disposals (4,494) (394) (5,217) - (10,105) 31 December ,366 20,595 1,316,723 78, ,590-1,740,615 Provision for impairment : 31 December , , December , ,750 Net book value : 31 December ,862 56,321 27, ,228 7,206 83,131 13, , December ,862 49,826 25, ,031 9, ,557 2, ,061 Depreciation (included in earnings statements) , ,

30 (Unit : Thousand Baht) Building Land and Office improvemen t construction Tool, and equipmen t, and land and leasehold machiner y furniture Constructio ns leasehold building and and Motor in The Company Only Land right improvemen equipmen fixtures vehicles progress Total ts t Cost : 31 December ,862 72,155 44,146 1,496,816 80, ,571 13,303 2,110,457 Acquisitions ,856 4,269 87,533 1, ,302 Disposals - (2,587) - (5,340) (483) (5,217) - (13,627) Transferred in (out) ,312 9, (12,108) - 31 December ,862 70,192 46,560 1,547,504 84, ,887 2,737 2,237,132 Accumulated depreciation : 31 December ,834 16,463 1,202,838 73, ,440-1,586,974 Depreciation for the year - 4,532 4, ,379 2,700 31, ,070 Depreciation for disposals (4,494) (394) (5,217) - (10,105) 31 December ,366 20,595 1,316,723 75, ,550-1,737,939 Provision for impairment : 31 December , , December , ,750 Net book value : 31 December ,862 56,321 27, ,228 7,205 83,131 13, , December ,862 49,826 25, ,031 8, ,337 2, ,443 Depreciation (included in earnings statements) , ,069 Some buildings are located on land leased under several lease agreements with lease terms of 3 years to 18 years. The Company has mortgaged part of its land as collateral to secure part of shortterm loans and credit facilities granted by a financial institution. Provision for impairment

31 In 2001, the Company set aside provisions of approximately Baht 55.8 million for impairment of machinery and equipment

32 14. ASSETS NOT USED IN OPERATIONS Most of assets not use in operations receive from account receivable repayment. The Company records cost of these assets based on independent appraiser that appraised these assets during 1999 using the Market Comparison Approach. The Company believes that fair value is not material different from the book value. The Company has mortgaged most of its land not used in its operations to secure credit facilities and bank guarantees granted by banks. 15. RELATED PARTY TRANSACTIONS During the year, the Company, its subsidiary and joint ventures had significant business transactions with related parties (related by way of common shareholders and/or directors). Such transactions are summarized as follow :- Business transactions Construction, sales and service income Cost of construction, sales and service Interest income Interest expenses Pricing and lending policy Market price Market price Interest at 3.25% % per annum Interest at 3.25% % per annum (Unit : Thousand Baht) Consolidated The Company Only Transactions with related parties Construction, sales and service income 56,604 16,651 69,629 16,651 Cost of construction 108,664 3, ,664 3,024 Interest income 5,174 6,624 7,169 6,624 Interest expenses 932 1,250 1,691 1,250 Loans and advances to the parties (Average during the year) 124, , , ,515 Loans and advances from the parties (Average during the year) 265, ,142 56,775 35,

33 (Unit : Thousand Baht) Consolidated The Company Only Transactions with subsidiary company (eliminated from the consolidated financial statements) Interest income ,665 34,355 Loans and advances to the party (Average during the year) , ,579 In 2001, the Company and its subsidiary company agreed that the Company would collect interest on the long outstanding expenses which the Company advanced for payments of goods and services of the subsidiary s project, and interest for the delay in payment. These interest amounts were calculated at MLR plus 1% per annum. The outstanding balances of the related party transactions have been shown in the balance sheets under the following captions :- Consolidated (Unit : Thousand Baht) The Company Only Trade accounts receivable - related parties Meeyahta International Hotel Limited , ,326 Joint Venture of Vianini Lavori S.p.A., Dragados Y Construcciones S.A. And Nawarat Patanakarn Public Company Limited 4,234 4,234 4,234 4,234 Joint Venture of International Quality Assurance Laboratory Co., Ltd. and Nawarat Patanakarn Public Company Limited 1,851 1,851 10,281 10,281 NWR, ITD, CNT & AS Joint Venture 12,017 2,484 16,022 3,312 Others 14, , Total 32,149 8, , ,231 Less : Provision for doubtful accounts (1,151) (1,151) (6,392) (6,392) Trade accounts receivable - related parties, net 30,998 7, , ,

34 (Unit : Thousand Baht) Consolidated The Company Only Loans and advances to related parties Meeyahta International Hotel Limited , ,491 Concorde Yachts International Co., Ltd. 95,657 90,618 95,657 90,618 Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited (project 2E) 21,602 21, Joint Venture of Vianini Lavori S.p.A., Nawarat Patanakarn Public Company Limited, Vianini - Thai Construction and Development Co., Ltd ,673 50,097 International Quality Assurance Laboratory Co., Ltd. 1,121 1, Total Less : Provision for doubtful accounts 118,980 (95,920) 113,864 (90,881) 949,354 (121,922) 884,206 (116,883) Loans and advances to related parties - net 23,060 22, , ,323 Retention receivable eivable Joint Venture of Vianini Lavori S.p.A., Dragados Y Construcciones S.A. And Nawarat Patanakarn Public Company Limited 10,675 15,675 10,675 15,675 Trade accounts payable - related parties Utility Business Alliance Co., Ltd. 26,438 2,568 26,438 2,568 Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited ,494 Joint Venture of Vianini Lavori S.p.A., Dragados Y Construcciones S.A. And Nawarat Patanakarn Public Company Limited 1,945-1,945 - Trade accounts payable - related parties 28,383 2,583 28,383 4,062 Loans and advances from related parties Premier International Company Limited 31,490 32, Premier Enterprise Public Company Limited 33,458 34, Serge Pun & Assosiates Ltd. 58,302 59, Serge Pun & Assosiates (Myanmar) Ltd 100, , Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Public Company Limited (project 2E) 14,952 14,527 30,514 29,646 Vianini Lavori S.p.A., Vianini - Thai Construction and Development Co., Ltd. Joint Venture Nawarat Patanakarn Plc ,689 5,540 Joint Venture of Vianini Lavori S.p.A., Nawarat Patanakarn Public Company Limited, Vianini - Thai Construction and Development Co., Ltd. 11,128 11, NWR, ITD, CNT & AS Joint Venture 23,005-30,674 - Loans and advances from related parties 273, ,245 66,877 35,

35 16.BANK OVERDRAFTS, TRUST RECEIPTS AND LOANS FROM FINANCIAL INSTITUTIONS Baht million of the loans from a financial institution is secured by the assignment of rights to benefits under an insurance policy covering part of the Company s assets and a loan of Baht 5.77 million is secured by the mortgage of part of the Company s land. 17.CURRENT PORTION OF LONG - TERM LOANS/LONG - TERM LOANS (Unit : Thousand Baht) Consolidated and the Company Only A loan of Baht 165 million payable in 24 unequal, monthly installments, commencing January 2002, carries interest at the fixed deposit rate plus 2% per annum for the first year and at MLR in the following year ,250 A loan of Baht million payable in 4 periods at 25% of principal each, semi-annual installments, commencing June 2003, carries interest at the fixed deposit rate plus 2% per annum for the first year and at MLR for the following year. 234, ,693 Total 234, ,943 Less : Current portion of long - term loans (117,346) (107,250) Long - term loans, net 117, ,693 Under the loan agreements, there are certain normal practice and restrictions, such as limitation on working capital, priority of principal and interest repayment. The Company has pledged and transferred right over bank deposits of Baht million as collateral to secure loan repayment under the debt restructuring plan

36 18. CONVERTIBLE DEBENTURES On 27 December 2001, the Company arranged for the issue of Baht million of convertible debentures, comprising 4,693,867 units at an offer price of Baht 100 each. These convertible debentures were issued in accordance with the debt restructuring agreement entered into with the Company s creditor financial institutions. The conditions of these convertible debentures, provide the Company with an option to make early redemption at the end of each calendar year subsequent to the conversion date. However, after the end of the fourth year from the conversion date, the convertible debenture holders may convert such debentures to ordinary shares at a conversion ratio of 1 convertible debenture to 10 ordinary shares at Baht 10 per share. The debenture holders may first exercise this option on the fifteenth day after a four years and fifteen days after the date of issue, and again every six months thereafter. The Company is to arrange for the issue of ordinary shares within 45 days of the last day of each half - year period in which creditors exercise their conversion rights. In cases where the Company is unable to fully redeem the convertible debentures or the holders do not exercise their conversion rights on the redemption date, the convertible debentures will be converted into ordinary shares at a conversion price of Baht 10 each, with 45 days of their maturity date. For the first until the fourth year from the conversion date, these convertible debentures bear interest at the rate of 0.01 percent per annum, to be paid every year - end, commencing Subsequently they bear interest at MLR per annum, to be paid on a monthly basis. 19. SHARE CAPITAL During the year, in response to a petition made by the plan administrator on the Company s behalf, the Central Bankruptcy Court issued an order permitting the Company to proceed with the increase of its registered share capital from Baht 3,812,500,000 (381,250,000 ordinary shares of Baht 10 each) to Baht 3,820,782,170 (382,078,217 ordinary shares of Baht 10 each) through the issue of 828,217 ordinary shares of Baht 10 each. The new issue of ordinary shares will be offered to the Company s management, employees and consultant at a price of Baht 5 per share. The Company registered the increase in its share capital with the Ministry of Commerce on 7 August STATUTORY RESERVE According to the Public Limited Companies Act B.E. 2535, the Company is required to set aside a statutory reserve of at least 5 percent of its net profit after deducting accumulated deficit brought forward (if any) until the reserve reaches 10 percent of its registered share capital

37 21. EMPLOYEES AND RELATED COSTS Consolidated The Company Only Number of employees at end of year 1,655 1,714 1,581 1,684 Employment expenses for the year (Million Baht) 22. FINANCIAL INFORMATION BY SEGMENT The Company and its joint ventures' operations principally involve construction contracting, the sale of piles, and services such as the lease of machinery and a subsidiary which is incorporated in The Union of Myanmar, and is engaged in the apartment and hotel business. Financial segment information for the year is as follows :- (Unit : Million Baht) Construction Apartment and hotel Eliminated items Total Construction, sales and service 2,155 2, ,176 2,215 income Operating loss (624) (579) (187) (115) 7 16 (804) (678) Other income (77) (37) Interest expenses (13) (27) (87) (34) (23) (33) Exchange gain (loss) (23) (10) 37 Net loss (470) (469) (190) (133) 7 7 (653) (595) Property, plant and equipment (285) (190) 785 1,007 Total assets 3,416 4, (1,379) (1,315) 2,764 3, FOREIGN CURRENCY LIABILITIES Outstanding foreign currency liabilities which were not hedged against foreign exchange rate risks as at the balance sheet date were as follow :- Currencies Thousand Thousand DEM 6 10 USD 2,274 4,415 Certain liabilities amounting to USD 1.6 million represents an advance received from construction