- 6 - 7. INVESTMENTS IN RELATED COMPANIES 7.1 Investments in subsidiaries and associated companies COMPANYS NAMES TYPE OF PAID-UP OWNERSHIP INVESTMENT INVESTMENT BUSINESS CAPITAL (%) COST METHOD EQUITY METHOD DIVIDENDED Baht 1999 1998 1999 1998 1999 1998 Baht Baht Baht Baht Baht Baht SUBSIDIARY COMPANIES Padaeng Poongsan Metals Co., Ltd. Manufactures and 250,000,000 61.98 - - - - - - distribute Non- Ferrous Industrial and blank coins Padaeng Properties Co., Ltd. Real Estate 320,000,000 100 320,000,000 320,000,000 207,667,194 235,837,238 - - Puthep Co., Ltd. Explore and Produce gold Mineral. 234,814,100 100 252,490,972 252,490,972 162,737,564 241,734,857 - - Padaeng Industry (Laos) Co., Ltd. Explore Various prime mineral 5,000,000 100 - 5,000,000 - 5,000,000 - - Padaeng International Mining Co., Ltd. Explore minerals in Vietnam 100,000 100 100,000 100,000 100,000 100,000 - - Sila Enterprise Co., Ltd. Produce rock 15,000,000 55 8,250,000 8,250,000 5,503,631 3,745,148 - - South East Asia Metals Co., Ltd. Distribute various basic metal and 200,000,000 100 - - 152,934,021 135,383,742 - - others by products Total investment in subsidiary companies 580,840,972 585,840,972 528,942,410 621,800,985 - - ASSOCIATED COMPANIES Padaeng Siam Industry Co., Ltd. Distribute acid and chemical products 2,500,000 50 1,250,000 1,250,000 1,491,468 1,465,721 - - Total investment in associated companies 1,250,000 1,250,000 1,491,468 1,465,721 - - Total investment in related companies 582,090,972 587,090,972 530,433,878 623,266,706 - - /7 - 7 - 7.2 The investment in Padaeng Industry (Laos) Co., Ltd. referred to in Note 7.1 to the equity method interim financial statements are shown at cost, as there is no available information from that company to be consolidated and accounted for by the equity method and the investment is not material to the Companys consolidated financial statements. For the year ended December 31, 1998, the Company has written off investment in Padaeng Industry (Laos) Co., Ltd. because the management believe that there is a decline, other than temporary, in the value of such investment. 7.3 The Company has an investment in Puthep Company Limited amounting to Baht 162 million at March 31, 1999, which is presented as part of investments in subsidiary companies by the equity method as referred to in Note 7.1. The interim financial statements for the quarter ended March 31, 1999 do not include any adjustments which may arise, because the outcome of the exploration of subsidiary has not yet been known. /8 - 8 - 8. INVESTMENT IN SECURITY AVAILABLE FOR SALE AND OTHER SECURITIES COMPANYS NAMES TYPE OF PAID-UP OWNERSHIP INVESTMENT INVESTMENT BUSINESS CAPITAL (%) COST METHOD EQUITY METHOD DIVIDENDED Baht 1999 1998 1999 1998 1999 1998 Baht Baht Baht Baht Baht Baht Security available for sale National Fertilizer Public Co., Ltd. Canal Produce 4,744,561,390 2.65 125,737,100 - 125,737,100 - - - and distribute fertiliazer Less Unrealized loss on security available for sale (93,045,454) - (93,045,454) - - - Total security available for sale 32,691,646 - 32,691,646 - - - Other securities Asia Investment (1995) Co., Ltd. Explore and US$ 200,000 20.00 1,018,200 1,018,200 1,018,200 1,018,200 - - Produce Zinc Asean Potash Holding Co., Ltd. Produce and 395,967,000 2.52 10,010,000 10,010,000 10,010,000 10,010,000 - - distribute Potash mineral mineral Millennium Gold Corporation Explore and CAN $ 9,917,857 7.56 4,441,626 4,441,626 4,441,626 4,441,626 - - Co., Ltd. Gold mineral Canal National Fertilizer Public Co., Ltd. Produce and 4,744,561,390 2.65 - 125,737,100 - 125,737,100 - - distribute Fertilizer Less Unrealized loss on non-current marketable security - (27,662,162) - (27,662,162) - - - 98,074,938 - 98,074,938 - - Total investment in other companies 15,469,826 113,544,764 15,469,826 113,544,764 - - /9 - 9 - 9. OTHER ASSETS Other assets as at March 31, consist of the following: CONSOLIDATED THE COMPANY 1999 1998 1999 1998 Baht Baht Baht Baht Start-up cost (net) 14,089,125 21,704,703 14,089,125 21,704,703 Excess of development stage expenses over revenues (net) 11,441,712 41,271,630 11,343,111 22,149,638 Assets and data from other companies (net) 308,551 719,952 308,551 719,952 Deposits and installment payments for condominium units 74,932,723 42,499,250 - - Less Provision for diminution of deposits and installment payment for condominium units (74,932,723) - - - 25,839,388 106,195,535 25,740,787 44,574,293 Deposits 7,049,342 6,625,750 3,752,415 3,178,484 Financial advisory fees - 13,462,233 - 13,462,233 Special prospect license fee 17,411,960 27,798,892 - - Exploration expenditures 145,143,493 215,932,026 - - Others 11,572,887 64,175,606 10,519,086 53,679,756 181,177,682 327,994,507 14,271,501 70,320,473 207,017,070 434,190,042 40,012,288 114,894,766 Baht 75 million deposits and installment payments for condominium units as at March 31, 1999, as shown above, is of a subsidiary company. Construction of such condominium units was suspended due to the countrys unstable economy and decline in the real estate property market, a full valuation provision has been be provided against such amount. The consolidated interim financial statements as at March 31, 1999, include exploration expenditures of a subsidiary that have been deferred and will be written off as expenses when the outcome of the mineral area exploration are known. As at March 31, 1999, the mineral exploration expenditures and special prospect license fee of Puthep Co., Ltd., amounting to Baht 162 million have been deferred. The Company is currently searching for the joint venture partners to provide funding for continuation of exploration. There is uncertainty as related to recoverability of such deferred expenditure which is dependent upon the successful result of future exploration, the result of which is not known at this time. /10 - 10 - 10. LONG-TERM LOANS Long-term loans as at March 31, consist of the following: CONSOLIDATED THE COMPANY 1999 1998 1999 1998 Baht Baht Baht Baht Long-term loans - The Company 2,673,995,114 1,378,053,150 2,673,995,114 1,378,053,150 - A subsidiary 232,500,000 311,250,000 - - 2,906,495,114 1,689,303,150 2,673,995,114 1,378,053,150 Less Current portion of long-term loans - (680,305,125) - (680,305,125) Long-term liabilities subject to restructuring - The Company (2,673,995,114) - (2,673,995,114) - - A subsidiary (232,500,000) (311,250,000) - - - 697,748,025 - 697,748,025 The Company entered into Override and Supplementary Agreement dated October 7, 1998 with its lenders and other parties. The agreement provided for amendments of repayment terms which are divided into two parts. The funds for the Tranche A principal repayment were to be from the sales of the increased capital to Western Metals Limited. The funds for the Tranche B principal repayment were to be from the operating income. However, on February 24, 1999, Western Metal Limited rescinded its subscription agreement in accordance with Override and Supplementary Agreement which cause the Company has not complied with the Override and Supplementary Agreement for Tranche A principal repayment. The Company is currently negotiating the Tranche A repayment with the lenders, which will take time to revised agreement. Therefore, for the quarter ended March 31, 1999, the revised agreement has not been completed for the Company to sign off on it. However, the Company was unable to comply with the conditions for Override and Supplementary Agreement the lender can terminate the agreement and call for repayment of total loan. As at March 31, 1999, the long-term loans of Baht 2,673,995,114 has been reclassified as long-term liabilities subject to restructuring which are shown under the current liabilities. /11 - 11 - 11. DISCLOSURE OF FINANCIAL INSTRUMENTS According to a letter received from The Stock Exchange of Thailand dated October 21, 1998, the Company is required to use the International Accounting Standard (IAS) No. 32- Presentations and Disclosure of Financial Instruments as a guideline for disclosure of the Companys financial instruments both on- balance sheet and off-balance sheet. 11.1 Significant Assets and Liabilities in Foreign Currencies Assets and liabilities of the Company and subsidiaries in foreign currencies as at March 31, 1999 are as follows: Term of CONSOLIDATED THE COMPANY receipt/ payment AMOUNT AMOUNT days USD Baht USD Baht Cash at banks - 61,151 2,296,481 55,827 2,096,550 Accounts receivable-foreign 30 1,847,549 69,383,047 1,847,549 69,383,047 Trust receipt 5,215,812 197,113,372 5,215,812 197,113,372 Accounts Payable 30-60 769,940 29,097,186 769,940 29,097,186 Accrued interest expenses 180 840,607 31,767,807 188,765 7,133,699 Long-term liabilities subject to restructuring 42,316,000 1,599,185,114 42,316,000 1,599,185,114 Short-term loans and advances from related companies 2,859,097 108,049,556 - - As at March 31, 1998: Term of CONSOLIDATED THE COMPANY receipt/ payment AMOUNT AMOUNT days USD Baht USD Baht Cash at banks - 2,088,051 80,518,683 2,082,926 80,278,035 Accounts receivable-foreign 30 1,855,998 71,532,009 1,855,998 71,532,009 Trust receipt 6,577,486 258,341,250 6,405,310 251,612,479 Accounts Payable 30-60 3,420,919 133,691,906 3,420,919 133,691,906 Accrued interest expenses 180 874,730 34,188,361 350,873 13,715,661 Long-term loans 180 4,500,000 175,863,150 4,500,000 175,863,150 Loans to subsidiaries 180 - - 14,614,412 571,141,469 Loans from banks 120-360 45,975,000 1,796,735,183 45,975,000 1,796,735,183 Loans from related companies 17,473,509 858,740,123 - - Foreign currency amounts are translated at the exchange rate as at March 31, 1999, and represent the Baht equivalent of commitments to purchase US dollar. 11.2 Risk Management The companys policy on risk management of loan liabilities in foreign currencies is to use financial instruments purchased in the financial markets. For hedging purposes, the company has entered into forward exchange contracts to cover loan commitments in foreign currencies. /12 (More)