PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY Baht Baht Baht Baht Unappropriated Retained Earnings (Deficit) Brought forward (deficit) (2,907,698,333) (689,302,198) (2,907,698,333) (689,302,198) Less: Appropriation for the prior year - - - - Legal reserve - - - - Dividend - - - - Net loss for the year (314,504,268) (2,218,396,135) (303,099,835) (2,218,396,135) Total unappropriated retained earnings (deficit) (3,222,202,601) (2,907,698,333) (3,210,798,168) (2,907,698,333) 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) (1,155,002,601) (840,498,333) (1,143,598,168) (840,498,333) Notes to the consolidated and equity method financial statements form an integral part of these statements PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ON EQUITY METHOD 1998 1997 1998 1997 Baht Baht Baht Baht CASH FLOWS FROM OPERATING ACTIVITIES Net profit (loss) (314,504,268) 96,046,262 (303,099,835) (385,586,092) Items to reconcile net profit (loss) to net cash: Equity in undistributed net profit of associated companies (40,602) (8,888,520) - (8,888,520) Equity in undistributed net (profit) loss of subsidiary and associated companies - - 653,939,098 812,777,877 Provision for obsolete inventories (227,496) (401,779) (227,496) (401,779) Depreciation and depletion 413,706,774 415,731,540 330,881,970 331,413,759 Provision for guarantee and expenses 37,969,000 - 292,140,525 - Deferred charges written off 32,765,115 33,651,273 32,479,547 23,386,650 Provision for doubtful debts-trade accounts and notes receivable (6,910,406) 52,801,221 40,761,047 - Loss (gain) on disposal of property, Plant and equipment 1,746,227 (1,269,105) (1,469,280) (1,317,899) Provision for short term loans and advances to related companies 1,743,530 - 1,743,530 - Written off property, plant and equipment - 140,376,396 - 140,376,396 Write off other assets 118,437,585 35,073,911 56,168,004 35,073,911 Withholding tax written off 6,964,406 - 5,879,307 - Provision for decline in value of other assets 74,932,723 - - - Premium on forward contract written off 16,599,212 - 16,599,212 - Investment in related companies written off 22,695,000 - 5,000,000 - Loss (gain) on exchange rate (439,441,836) (45,283,131) (337,604,605) 11,548,175 Loss from diminution in value of asset 817,472,242 - - - Minority interest in net (loss) (4,648,002) (16,773,913) - - Profit (loss) from operations before changes in operating assets and liabilities 779,259,204 701,064,155 793,191,024 958,382,478 Operating assets (increase) decrease Deposits at banks used as collateral (8,000,000) (3,554,589) - - Deposits at financial institutions used as collateral 97,000,000 (97,000,000) 50,000,000 (50,000,000) Trade accounts and notes receivable 65,932,549 40,163,802 22,679,494 (34,969,655) Short-term loans and advances to related companies 1,347,249 1,048,226 1,903,539 458,272 Inventories 611,338,601 (407,746,747) 440,016,723 (373,317,706) Withholding tax (3,556,765) (6,325,210) (2,336,597) (217,475) Accounts receivable Revenue Department (40,980,219) (12,899,373) (46,051,068) (12,681,753) Other receivables 38,033,309 (11,348,725) 31,367,419 (3,821,700) Other current assets 2,792,723 28,033,890 (739,070) 9,968,847 PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ON EQUITY METHOD 1998 1997 1998 1997 Baht Baht Baht Baht Operating liabilities increase (decrease) Trade accounts and notes payable (152,165,506) 35,704,735 (105,124,702) 88,612,950 Short-term loans and advance from directors and employees - 10,000,000 - - Short-term loans and advance from related companies (21,134,243) 19,664,349 - - Deposits from export sales (503,987,903) 512,572,440 (503,987,903) 512,572,440 Accrued interest expenses (72,987,259) (2,946,570) (63,787,844) 22,069,518 Accrued electricity expenses 4,337,344 42,577,530 4,337,344 42,577,530 Forward contract payable 53,151,485 - 53,151,485 - Other current liabilities 25,114,916 54,673,754 25,368,610 (2,758,763) Extraordinary item Realized profit on the application of the managed float exchange system (net from unrealized profit amounting to Baht 34,936,650) - 347,814 - 347,814 Net cash provide by (used in) Operating activities 875,495,485 904,029,481 699,988,454 1,157,222,797 CASH FLOWS FROM INVESTING ACTIVITIES Long term deposits at financial institutions (increase) - (30,054,136) - - Investment in related companies and other companies (increase) decrease (17,694,999) 228,484,815 - 133,780,716 Loans to related companies (increase) decrease - - (176,143,769) (122,507,694) Purchase of property, plant and equipment (69,700,173) (140,370,086) (78,257,096) (106,990,886) Proceeds on sales of property, plant and equipment 3,178,768 12,742,082 2,229,394 12,663,561 Other assets (increase) decrease (15,130,499) 76,258,778 (2,035,163) (4,575,996) Net cash provided by (used in) investing activities (99,346,903) 147,061,453 (254,206,634) (87,630,299) PADAENG INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, CONSOLIDATED THE COMPANY ON EQUITY METHOD 1998 1997 1998 1997 Baht Baht Baht Baht CASH FLOWS FROM FINANCE ACTIVITIES Bank overdrafts and loans from financial institutions increase (decrease) (476,849,023) 53,458,849 (273,108,388) 29,796,506 Cash receipts share capital 65,304,350 - 65,304,350 - Cash receipts premium on share capital 26,121,740 - 26,121,740 - Loans from related companies increase - - 14,600,000 5,400,000 Minority interest (increase) - 6,749,999 - - Long-term loans increase (decrease) (509,105,806) (443,985,248) (450,355,807) (382,243,301) Extraordinary item Realized loss on the application of the manage float exchange system (net from unrealized loss amounting to Baht 1,753,352,801) - (533,920,213) - (533,920,213) Net cash provided by (used in) financing activities (894,528,739) (917,696,613) (617,438,105) (880,967,008) Effects from exchange rate in cash and cash equivalents increase (decrease) (10,567,832) - (10,514,229) - Net increase (decrease) in cash equivalents (128,947,989) 133,394,321 (182,170,514) 188,625,490 Cash and cash equivalents as at January 1 294,319,651 160,925,330 286,065,933 97,440,443 Cash and cash equivalents as at December 31 165,371,662 294,319,651 103,895,419 286,065,933 Notes to the consolidated and equity method financial statements form an integral part of these statements