REPORT OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS PADAENG INDUSTRY PUBLIC COMPANY LIMITED We have audited the consolidated balance sheets of Padaeng Industry Public Company Limited and subsidiaries and the balance sheets of Padaeng Industry Public Company Limited as at December 31, 2000 and 1999, and the related consolidated and the Companys statements of income, changes in shareholders equity, retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Companys management as to their correctness and completeness of the presentation. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance as to 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. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated and the Companys financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Padaeng Industry Public Company Limited and subsidiaries and of Padaeng Industry Public Company Limited as at December 31, 2000 and 1999 and the result of operations, the changes in shareholders equity and the cash flows for the years then ended in accordance with generally accepted accounting principles. As described in Note 13 to the financial statements, the Company still 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. Nachalee Boonyakarnkul Certified Public Accountant (Thailand) BANGKOK Registration No. 3126 January 31, 2001 DELOITTE TOUCHE TOHMATSU JAIYOS PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated ASSETS CURRENT ASSETS Cash in hand and at banks 391,901,824 398,269,162 324,068,412 335,184,787 Deposits at banks used as collateral 4.1 200,000 11,554,589 - - Trade accounts and notes receivable - net 5 345,492,096 250,412,696 341,616,908 246,226,037 Short-term loans and advances to related companies 19 2,019,224 693,346 2,947,519 1,620,430 Inventories - net 6 1,264,721,647 712,418,284 1,264,641,287 704,975,002 Withholding tax 7,716,033 18,606,514 679,894 649,334 Account receivable - Revenue Department 15,257,153 55,621,072 14,634,093 55,234,785 Other receivables 7 1,505,153 1,946,138 1,252,799 1,850,084 Prepayment for financial advisory fee - 9,345,826 - 9,345,826 Forward contract receivable - net 15,018,000 - 15,018,000 - Other current assets 8 6,933,011 6,844,333 7,073,911 5,138,363 Total Current Assets 2,050,764,141 1,465,711,960 1,971,932,823 1,360,224,648 LONG-TERM DEPOSIT AT A FINANCIAL INSTITUTION 9 30,054,136 30,054,136 - - INVESTMENTS AND LOANS Investments in related companies 10.1 - - 357,351,924 372,035,797 Other securities 11 10,010,000 14,451,626 10,010,000 14,451,626 Loans and advances 19 - - - 8,000,000 Total Investments and Loans 10,010,000 14,451,626 367,361,924 394,487,423 PROPERTY, PLANT AND EQUIPMENT - NET 12 2,787,010,509 3,003,419,924 2,787,677,693 3,002,961,743 OTHER ASSETS Assets for sale 22.1 12,500,004 123,500,004 - - Other 13 230,210,793 249,366,330 64,085,383 83,055,635 TOTAL ASSETS 5,120,549,583 4,886,503,980 5,191,057,823 4,840,729,449 Notes to the financial statements form an integral part of these statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Bank overdrafts and loans from financial institutions 14.2 574,035,903 251,657,174 574,035,903 215,365,158 Trade accounts and notes payable 261,720,217 187,563,936 347,641,145 273,641,132 Current portion of long-term loans 14 723,225,558 1,757,400,278 723,225,558 1,582,400,278 Short-term loans and advances from related companies 19 124,198,021 107,815,968 - - Other current liabilities Accrued interest expense 57,044,194 42,550,805 12,163,000 12,450,425 Accrued electricity expenses 122,533,864 119,107,092 122,533,864 119,107,092 Provision for guarantee expenses of a subsidiary 21 - - - 174,357,587 Provision for tax penalty 17.4 32,170,000 - 32,170,000 - Other 97,767,278 93,335,407 95,590,243 90,385,787 Total Current Liabilities 1,992,695,035 2,559,430,660 1,907,359,713 2,467,707,459 LOANS FROM RELATED COMPANIES 19 - - 8,000,000 9,879,959 LONG TERM LOANS 14 529,018,532 949,153,349 529,018,532 949,153,349 PROVISION FOR RESTORATION EXPENSE 29 69,765,617 71,647,141 69,765,617 71,647,141 OTHER LIABILITIES - 2,937,283 - 2,937,283 TOTAL LIABILITIES 2,591,479,184 3,583,168,433 2,514,143,862 3,501,325,191 PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (CONTINUED) AS AT DECEMBER 31, Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated LIABILITIES AND SHAREHOLDERS EQUITY (CONTINUED) SHAREHOLDERS EQUITY SHARE CAPITAL 15 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 - Issued and paid-up share capital 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) (2,930,146,217) (3,141,137,539) (2,779,257,804) (3,102,917,412) TOTAL COMPANY SHAREHOLDERS EQUITY 2,526,025,548 1,301,184,131 2,676,913,961 1,339,404,258 MINORITY INTEREST 3,044,851 2,151,416 - - TOTAL SHAREHOLDERS EQUITY 2,529,070,399 1,303,335,547 2,676,913,961 1,339,404,258 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 5,120,549,583 4,886,503,980 5,191,057,823 4,840,729,449 Notes to the financial statements form an integral part of these statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated REVENUES Sales 5,309,374,809 4,444,454,499 5,298,903,574 4,436,060,868 Other income Interest income 4,349,266 8,040,308 2,904,414 4,916,604 Adjustment to the provision for guarantee of a subsidiary 21 - 1,151,000 96,857,587 22,315,677 Equity in undistributed net income of subsidiary companies - - - 9,607,453 Other 1,727,946 8,148,430 1,726,295 8,159,440 Total Revenues 5,315,452,021 4,461,794,237 5,400,391,870 4,481,060,042 EXPENSES Cost of sales 4,217,143,871 3,510,187,137 4,214,071,624 3,506,320,740 Restoration expenses 28 6,972,808 7,690,099 6,972,808 7,690,099 Selling and administrative expenses 491,492,661 258,193,497 399,319,649 290,857,524 Loss on exchange rate 166,072,043 26,360,030 166,072,043 23,639,034 Early retirement plan 1 32,892,322 - 32,892,322 - Residue pond written off 3.6 - 36,227,795 - 36,227,795 Depreciation of residue pond 3.6 - 49,049,915 - 49,049,915 Loss on disposal of marketable securities - 69,893,608 - 69,893,608 Withholding tax expenses 11,165,906 - - - Interest expenses 233,677,748 310,012,479 234,009,557 318,712,795 Directors remuneration 3,554,603 1,691,774 3,554,603 1,691,774 Equity in undistributed net loss of subsidiary companies - - 14,683,873 - Exploration cost written off - 701,269 - 701,269 Other expenses 5,155,782 4,437,691 5,155,783 4,437,691 Total Expenses 5,168,127,744 4,274,445,294 5,076,732,262 4,309,222,244 Net income before minority interest and the result of operations of a subsidiary which ceased its operations 147,324,277 187,348,943 323,659,608 171,837,798 Minority interest in net (income) loss of subsidiary companies (893,435) 133,079 - - Net income before the result of operations of a subsidiary which ceased its operations 146,430,842 187,482,022 323,659,608 171,837,798 Net income (loss) of a subsidiary which ceased its operations 22.1 64,560,480 (42,459,918) - - NET INCOME 210,991,322 145,022,104 323,659,608 171,837,798 BASIC EARNINGS PER SHARE BAHT 1.27 0.96 1.95 1.14 WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES OUTSTANDING SHARES 165,919,994 150,899,993 165,919,994 150,899,993 Notes to the financial statements form an integral part of these statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY FOR THE YEARS ENDED DECEMBER 31, 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 in the year 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 in the year 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 Carried forward 98,200,000 98,200,000 98,200,000 98,200,000 Reserve for business expansion Brought forward 1,969,000,000 1,969,000,000 1,969,000,000 1,969,000,000 Carried forward 1,969,000,000 1,969,000,000 1,969,000,000 1,969,000,000 Unappropriated (deficit) Brought forward before adjustment (3,069,490,398) (3,222,202,601) (3,031,270,271) (3,210,798,168) Adjustment for environmental restoration expense 28 (71,647,141) (63,957,042) (71,647,141) (63,957,042) Brought forward after adjustment (3,141,137,539) (3,286,159,643) (3,102,917,412) (3,274,755,210) Increase (decrease) in the year 210,991,322 145,022,104 323,659,608 171,837,798 Carried forward (2,930,146,217) (3,141,137,539) (2,779,257,804) (3,102,917,412) UNREALISED LOSS ON NON-CURRENT MARKETABLE SECURITIES Brought forward - (85,501,228) - (85,501,228) Increase (decrease) in the year - 85,501,228 - 85,501,228 Carried forward - - - - TOTAL COMPANY SHAREHOLDERS EQUITY 2,526,025,548 1,301,184,131 2,676,913,961 1,339,404,258 MINORITY INTEREST Brought forward 2,151,416 2,284,495 - - Increase (decrease) in the year 893,435 (133,079) - - Carried forward 3,044,851 2,151,416 - - TOTAL SHAREHOLDERS 2,529,070,399 1,303,335,547 2,676,913,961 1,339,404,258 EQUITY Notes to the financial statements form an integral part of these statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, Note CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated UNAPPROPRIATED RETAINED EARNINGS (DEFICIT) Brought forward before adjustment (3,069,490,398) (3,222,202,601) (3,031,270,271) (3,210,798,168) Adjustment for environmental restoration expense 28 (71,647,141) (63,957,042) (71,647,141) (63,957,042) Brought forward after adjustment (3,141,137,539) (3,286,159,643) (3,102,917,412) (3,274,755,210) Net income for the year 210,991,322 145,022,104 323,659,608 171,837,798 Total unappropriated retained earnings (deficit) (2,930,146,217) (3,141,137,539) (2,779,257,804) (3,102,917,412) 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) (862,946,217) (1,073,937,539) (712,057,804) (1,035,717,412) Notes to the financial statements form an integral part of these statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ONLY 2000 1999 2000 1999 Baht Baht Baht Baht Restated Restated CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) 210,991,322 145,022,104 323,659,608 171,837,798 Items to reconcile net income (loss) to net cash: Equity in undistributed net (income) loss of subsidiary companies - - 14,683,873 (9,607,453) Allowance for obsolete inventories 17,127,052 5,963,050 17,127,052 5,963,050 Allowance for diminution of inventories 21,670,000 - 21,670,000 - Depreciation 364,930,069 389,636,665 363,808,003 389,074,380 Deferred charges written off 16,415,735 15,046,685 16,415,735 15,046,685 Adjustment to the provision for guarantee of a subsidiary - (1,151,000) (96,857,587) (22,315,677) Inventories written off 2,245,741 - - - Property, plant and equipment written off 17,357,148 36,309,783 17,357,148 36,309,783 Other assets written off 6,691,130 713,566 6,691,130 - Withholding tax written off 11,165,906 - - - Deferred financial advisory fee written off 9,345,826 - 9,345,826 - Amortization of deferred interest on hire purchase - 834,127 - 834,127 Exploration cost written off - 701,269 - 701,269 Amortization of premium on forward contracts 130,140 7,513,844 130,140 7,513,844 Allowance for doubtful debts-trade accounts and notes receivable (reversal) (10,765,414) (29,168,206) (12,240,511) (28,520,536) Allowance for short-term loans and advances to related companies (reversal) - (200,000) (80,341,254) - Allowance for diminution in value of investment 4,441,626 - 4,441,626 - Accrued fee receivable written off - 4,982,076 - 4,982,076 Loss on disposal of marketable securities - 69,893,608 - 69,893,608 Loss (gain) on disposal of property, plant and equipment (1,013,225) 25,218 (645,772) 226,929 Loss (gain) on disposal of assets for sale (106,424,397) - - - Loss (gain) on exchange rate 106,475,033 20,918,038 84,975,270 23,639,034 Loss from diminution in value of asset - 729,032 - 729,032 (more)