REVIEW REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS PADAENG INDUSTRY PUBLIC COMPANY LIMITED We have reviewed the consolidated balance sheet of Padaeng Industry Public Company Limited and its subsidiaries and the balance sheet of Padaeng Industry Public Company Limited as at September 30, 2000, and the related consolidated and Company's statements of income for the quarters and nine-month periods ended September 30, 2000 and 1999, and the consolidated and Company's statements of changes in shareholders' equity, retained earnings and cash flows for the nine-month periods ended September 30, 2000 and 1999. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. Our responsibility is to report on these financial statements based on our reviews. We conducted our reviews in accordance with the Standard on Auditing applicable to review engagements. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit in accordance with generally accepted auditing standards, and accordingly, we do not express an opinion. Based on our reviews, nothing has come to our attention that causes us to believe that the financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. As described in Note 18 to the interim financial statements, a subsidiary company has uncertainty related to the recoverability of assets for sale as at September 30, 2000, amounting to Baht 123.5 million or 2.53% of the total consolidated assets as at September 30, 2000. However, on October 24, 2000 such subsidiary company entered into the Agreement to Sell with a local company to sell its assets for sale. - 2 - As described in Note 9 to the interim financial statements, the Company has uncertainty related to the recoverability of the compensation which was paid to a company amounting to Baht 40.9 million because the Company submitted its concession application for approval, and the outcome of which is not known at this time. As described in Note 13.4 to the interim financial statements, the Company received the notice of decision of the Board of Tax Appeal to pay the income tax, penalties and surcharge. The Company has submitted an appeal to the Central Taxation Court which declined the Company's appeal on May 29, 2000 and the Company has submitted an appeal to the Supreme Court, the result of such appeal is not known at this time. The Company has not made any provision for this contingent liability in the 2000 interim financial statements. We have previously audited, in accordance with generally accepted auditing standards, the consolidated financial statements of Padaeng Industry Public Company Limited and its subsidiaries and the financial statements of Padaeng Industry Public Company Limited for the year ended December 31, 1999, and expressed an unqualified opinion in our report dated February 10, 2000, with the emphasis of a matter paragraphs describing the uncertainty regarding the Company's ability to continue as a going concern, uncertainty related to recoverability of assets for sale, deferred exploration expenditure and special project license fee, the Company 's investment in a subsidiary, compensation paid to a company and contingent liability due to the income tax assessment. The consolidated and the Company's balance sheets as at December 31, 1999, presented herein for comparison, have been derived from such financial statements which we have audited and reported on. We have not performed any other audit procedures subsequent to such report date. As described in Note 3 to the interim financial statements for the quarter and nine-month period ended September 30, 2000, the Company and subsidiaries have complied with new Accounting Standards. The significant change is in respect of the presentation of the interim financial reports. In addition, the Company adopted IAS 37, Provision, Contingent Liabilities and Contingent Assets in respect of environmental restoration costs. Nachalee Boonyakarnkul Certified Public Accountant (Thailand) BANGKOK Registration No. 3126 November 3, 2000 DELOITTE TOUCHE TOHMATSU JAIYOS PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS CONSOLIDATED THE COMPANY ONLY "UNAUDITED" "RESTATED" "UNAUDITED" "RESTATED" AS AT AS AT AS AT AS AT SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, 2000 1999 2000 1999 Note Baht Baht Baht Baht ASSETS CURRENT ASSETS Cash in hand and at banks 207,245,493 398,269,162 142,835,575 335,184,787 Deposit at bank used as collateral 4.1 200,000 11,554,589 - - Trade accounts and notes receivable - net 5 282,912,227 250,412,696 277,437,313 246,226,037 Short-term loans and advances to related companies 15 2,031,359 693,346 2,947,519 1,620,430 Inventories - net 1,082,933,339 712,418,284 1,078,311,770 704,975,002 Withholding tax 18,503,436 18,606,514 667,331 649,334 Account receivable - Revenue Department 52,471,240 55,621,072 51,830,619 55,234,785 Other receivables 2,407,684 1,946,138 2,386,888 1,850,084 Prepayment for financial advisory fee - 9,345,826 - 9,345,826 Other current assets 10,138,676 6,844,333 7,065,902 5,138,363 Total Current Assets 1,658,843,454 1,465,711,960 1,563,482,917 1,360,224,648 LONG-TERM DEPOSIT AT FINANCIAL INSTITUTION 6 30,054,136 30,054,136 - - INVESTMENTS AND LOANS Investments in related companies 7.1 - - 369,738,083 372,035,797 Other securities 8 14,451,626 14,451,626 14,451,626 14,451,626 Loans and advances 15 - - - 8,000,000 Total Investments and Loans 14,451,626 14,451,626 384,189,709 394,487,423 PROPERTY, PLANT AND EQUIPMENT NET 2,848,110,054 3,003,419,924 2,848,512,622 3,002,961,743 OTHER ASSETS Assets for sale 18 123,500,004 123,500,004 - - Other 9 243,465,000 249,366,330 77,495,829 83,055,635 TOTAL ASSETS 4,918,424,274 4,886,503,980 4,873,681,077 4,840,729,449 See notes to the interim financial statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (CONTINUED) CONSOLIDATED THE COMPANY ONLY "UNAUDITED" "RESTATED" "UNAUDITED" RESTATED AS AT AS AT AS AT AS AT SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, 2000 1999 2000 1999 Note Baht Baht Baht Baht LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Bank overdrafts and loans from financial institutions 366,385,807 251,657,174 330,246,948 215,365,158 Trade accounts and notes payable 414,379,524 187,563,936 500,300,452 273,641,132 Current portion of long-term loans 10 828,193,212 1,757,400,278 711,943,212 1,582,400,278 Short-term loans and advances from related companies 15 121,127,065 107,815,968 - - Other current liabilities Accrued interest 53,159,531 42,550,805 10,305,134 12,450,425 Accrued electricity expenses 111,312,817 119,107,092 111,312,817 119,107,092 Provision for guarantee expenses of a subsidiary 17 - - 115,607,587 174,357,587 Other 69,686,326 93,335,407 68,963,722 90,385,787 Total Current Liabilities 1,964,244,282 2,559,430,660 1,848,679,872 2,467,707,459 LOANS FROM A RELATED COMPANY 15 - - 8,000,000 9,879,959 LONG TERM LOANS 10 520,756,362 949,153,349 520,756,362 949,153,349 PROVISION FOR ENVIRONMENTAL RESTORATION 3,20 65,876,099 71,647,141 65,876,099 71,647,141 OTHER LIABILITIES 1,443,547 2,937,283 1,443,547 2,937,283 TOTAL LIABILITIES 2,552,320,290 3,583,168,433 2,444,755,880 3,501,325,191 PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (CONTINUED) CONSOLIDATED THE COMPANY ONLY " UNAUDITED " "RESTATED" "UNAUDITED" "RESTATED" AS AT AS AT AS AT AS AT SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, 2000 1999 2000 1999 Note Baht Baht Baht Baht LIABILITIES AND SHAREHOLDERS' EQUITY (CONTINUED) SHAREHOLDERS' EQUITY SHARE CAPITAL 11 Authorized share capital 226,000,000 ordinary shares of Baht 10.00 each 2,260,000,000 2,260,000,000 2,260,000,000 2,260,000,000 Issued and paid-up share capital 226,000,000 ordinary shares of Baht 10.00 each, fully paid 2,260,000,000 2,260,000,000 150,899,993 ordinary shares of Baht 10.00 each, fully paid 1,508,999,930 1,508,999,930 PREMIUM ON SHARE CAPITAL 1,128,971,765 866,121,740 1,128,971,765 866,121,740 RETAINED EARNINGS (DEFICIT) Appropriated Legal reserve 98,200,000 98,200,000 98,200,000 98,200,000 Reserve for business expansion 1,969,000,000 1,969,000,000 1,969,000,000 1,969,000,000 Unappropriated (deficit) (3,093,484,533) (3,141,137,539) (3,027,246,568) (3,102,917,412) TOTAL COMPANY SHAREHOLDERS' EQUITY 2,362,687,232 1,301,184,131 2,428,925,197 1,339,404,258 MINORITY INTEREST 3,416,752 2,151,416 - - TOTAL SHAREHOLDERS' EQUITY 2,366,103,984 1,303,335,547 2,428,925,197 1,339,404,258 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 4,918,424,274 4,886,503,980 4,873,681,077 4,840,729,449 See notes to the interim financial statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE QUARTERS ENDED SEPTEMBER 30, "UNAUDITED" CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Note Baht Baht Baht Baht Restated Restated REVENUES Sales 1,348,608,027 1,081,308,222 1,346,265,832 1,078,785,305 Other income Interest income 811,058 1,493,863 393,361 966,096 Equity in undistributed net income of subsidiary companies - - 453,902 1,983,618 Other 884,792 4,351,245 883,141 4,352,324 Total Revenues 1,350,303,877 1,087,153,330 1,347,996,236 1,086,087,343 EXPENSES Cost of sales 1,091,429,618 834,832,074 1,090,629,677 833,814,045 Environmental restoration expenses 3,20 1,743,202 1,922,525 1,743,202 1,922,525 Selling and administrative expenses 121,917,096 53,203,193 124,896,157 71,713,931 Loss on exchange rate 99,587,655 203,755,802 99,587,655 203,414,268 Depreciation of residue pond 5,630,591 21,021,393 5,630,590 21,021,393 Interest expenses 56,178,809 80,674,489 56,227,138 82,624,318 Directors' remuneration 170,000 370,979 170,000 370,979 Other expenses 1,469,693 1,100,977 1,469,693 1,100,977 Total Expenses 1,378,126,664 1,196,881,432 1,380,354,112 1,215,982,436 Net income (loss) before minority interest and the result of operations of a subsidiary which ceased its operations (27,822,787) (109,728,102) (32,357,876) (129,895,093) Minority interest in net (income) loss of subsidiary companies (312,399) (214,991) - - Net income (loss) before the result of operations of a subsidiary which ceased its operations (28,135,186) (109,943,093) (32,357,876) (129,895,093) Net income (loss) of a subsidiary which ceased its operations 18 (19,055,660) (25,068,647) - - NET INCOME (LOSS) (47,190,846) (135,011,740) (32,357,876) (129,895,093) BASIC EARNINGS (LOSS) FOR THE QUARTER PER SHARE BAHT (0.28) (0.89) (0.20) (0.86) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING SHARES 165,919,994 150,899,993 165,919,994 150,899,993 See notes to the interim financial statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, "UNAUDITED" CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Note Baht Baht Baht Baht Restated Restated REVENUES Sales 3,727,473,792 3,156,538,971 3,719,225,205 3,150,384,560 Other income Interest income 3,139,141 6,327,218 2,068,510 3,692,466 Amount to be adjusted for provision for guarantee of a subsidiary previously estimated 17 - 1,151,000 - 22,315,677 Equity in undistributed net income of subsidiary companies - - - 8,472,913 Other 1,105,906 5,010,855 1,104,255 5,021,447 Total Revenues 3,731,718,839 3,169,028,044 3,722,397,970 3,189,887,063 EXPENSES Cost of sales 2,957,502,603 2,514,183,114 2,955,021,630 2,511,099,081 Environmental restoration expenses 3,20 5,229,606 5,767,574 5,229,606 5,767,574 Selling and administrative expenses 287,149,775 185,785,283 280,248,415 207,891,160 Loss on exchange rate 160,859,737 197,689,997 160,859,737 197,689,997 Mutual separation plan expenses 1 32,873,212 - 32,873,212 - Residue pond written off - 10,510,423 - 10,510,423 Depreciation of residue pond 16,891,773 28,028,524 16,891,773 28,028,524 Interest expenses 187,258,962 239,647,169 187,495,422 246,764,828 Directors' remuneration 2,016,590 1,207,774 2,016,590 1,207,774 Equity in undistributed net loss of subsidiary companies - - 2,297,714 - Other expenses 3,793,027 3,249,394 3,793,027 3,249,394 Total Expenses 3,653,575,285 3,186,069,252 3,646,727,126 3,212,208,755 Net income (loss) before minority interest and the result of operations of a subsidiary which ceased its operations 78,143,554 (17,041,208) 75,670,844 (22,321,692) Minority interest in net (income) loss of subsidiary companies (1,265,336) 296,840 - - Net income (loss) before the result of operations of a subsidiary which ceased its operations 76,878,218 (16,744,368) 75,670,844 (22,321,692) Net income (loss) of a subsidiary which ceased its operations 18 (29,225,212) (46,899,571) - - NET INCOME (LOSS) 47,653,006 (63,643,939) 75,670,844 (22,321,692) BASIC EARNINGS (LOSS) FOR THE NINE - MONTH PERIOD PER SHARE BAHT 0.29 (0.42) 0.46 (0.15) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING SHARES 165,919,994 150,899,993 165,919,994 150,899,993 See notes to the interim financial statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, "UNAUDITED" Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated UNAPPROPRIATED RETAINED EARNINGS (DEFICIT) Brought forward (deficit) before adjustment (3,069,490,398) (3,222,202,601) (3,031,270,271) (3,210,798,168) Adjustment for environmental restoration expense 3,20 (71,647,141) (63,957,042) (71,647,141) (63,957,042) Brought forward (deficit) after adjustment (3,141,137,539) (3,286,159,643) (3,102,917,412) (3,274,755,210) Net income (loss) for the nine-month period 47,653,006 (63,643,939) 75,670,844 (22,321,692) Total unappropriated retained earnings (deficit) (3,093,484,533) (3,349,803,582) (3,027,246,568) (3,297,076,902) APPROPRIATED RETAINED EARNINGS Legal reserve 98,200,000 98,200,000 98,200,000 98,200,000 Reserve for business expansion 1,969,000,000 1,969,000,000 1,969,000,000 1,969,000,000 TOTAL APPROPRIATED RETAINED EARNINGS 2,067,200,000 2,067,200,000 2,067,200,000 2,067,200,000 TOTAL RETAINED EARNINGS (DEFICIT) (1,026,284,533) (1,282,603,582) (960,046,568) (1,229,876,902) See notes to the interim financial statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, "UNAUDITED" Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated SHARE CAPITAL Ordinary shares Brought forward 1,508,999,930 1,508,999,930 1,508,999,930 1,508,999,930 Increase (decrease) in the period 751,000,070 - 751,000,070 - Carried forward 2,260,000,000 1,508,999,930 2,260,000,000 1,508,999,930 Premium on share capital Brought forward 866,121,740 866,121,740 866,121,740 866,121,740 Increase (decrease) in the period 262,850,025 - 262,850,025 - Carried forward 1,128,971,765 866,121,740 1,128,971,765 866,121,740 RETAINED EARNINGS (DEFICIT) Appropriated Legal reserve Brought forward 98,200,000 98,200,000 98,200,000 98,200,000 (more)