Notes to the financial statements form an integral part of these statements
UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED
STATEMENT OF CASH FLOWS
THE YEAR ENDED DECEMBER 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
profit (loss) before extraordinary items 4,195,740 (185,946,431)
Items to reconcile net income to cash flows
from operating activities
Depreciation 240,968,241 245,161,489
Allowance for doubtful accounts 5,669,180 -
Amortization of other assets 144,365 144,365
Profit on sale of property, plant and equipment (505,778) (20,632,302)
Equity in undistributed net loss of associated
companies 25,641,640 33,507,137
Unrealized gain on exchange (4,467,232) (4,557,601)
Profit on sale of investment from associated companies (6,741,792) -
Allowance for diminution in value of investments 4,910,390 10,710,182
Income from operations before changes in operating
assets and liabilities 269,814,754 78,386,839
OPERATING ASSETS (INCREASE) DECREASE
Short - term investments (37,201,110) (7,665,601)
Accounts receivable (34,878,187) (2,898,270)
Realized gain on the application of the managed
float exchange system 11,677,841 -
Unrealized gain on the application of the managed
float exchange system 8,142,749 -
Accounts receivables-net (15,057,597) (2,898,270)
Receivables from and short - term loans 16,080 168,377
Inventories (92,933,148) 100,392,932
Other accounts receivable 3,781,747 (29,615,117)
Deposits - (45,127,650)
Deposit used as collateral (25,000,000) -
Other current assets (5,472,408) 11,297,324
Other assets 8,932,161 25,254,558
THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
THE YEAR ENDED DECEMBER 31,
1997 1996
OPERATING LIABILITIES INCREASE (DECREASE)
Accounts payable (5,405,276) 42,804,558
Realized loss on the application of the managed
float exchange system (15,854,358) -
Unrealized loss on the application of the managed
float exchange system (2,335,080) -
Accounts payable-net (23,594,714) 42,804,558
Accrued dividends - 44,775
Accrued income tax - (9,022,871)
Accrued expenses (624,377) 19,262,891
Other current liabilities 16,622,191 (2,684,144)
cash provided by operating activities 99,283,579 180,598,601
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in associated and other companies
(increase) 22,994,000 -
Proceeds from sale of property, plant and equipment 505,782 33,067,289
Payment for property, plant and equipment (170,465,242) (204,397,503)
cash used by investing activities (146,965,460) (171,330,214)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdrafts and loans from financial institutions
increase (decrease) 57,956,586 (17,425,778)
Realized gain on the application of the managed
float exchange system (11,936,690) -
Unrealized gain on the application of the managed
float exchange system (84,819,634) -
Bank overdrafts and loans from financial institutions-net (38,799,738) (17,425,778)
Long-term debt increase 517,920,000 32,162,220
Unrealized loss on the application of the managed
float exchange system (430,720,000) -
Long-term debt-net 87,200,000 32,162,220
Dividends paid - (24,000,000)
Net cash used by financing activities 48,400,262 (9,263,558)
UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED
STATEMENT OF CASH FLOWS (CONTINUED)
THE YEAR ENDED DECEMBER 31,
1997 1996
Cash and cash equivalents increase 718,381 4,829
Cash and cash equivalents increase at January 1, 172,515 167,686
Cash and cash equivalents as at December 31, BAHT 890,896 172,515
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
1 Cash paid during the year for:
Interest BAHT 95,782,403 96,449,888
Income tax BAHT - 9,022,871
Cash and cash equivalents consist of cash in hand and at banks.
Notes to the financial statements form an integral part of these statements
THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1. ASIA ECONOMIC TURMOIL
Many Asia-Pacific countries, including Thailand are experiencing severe economic
difficulties relating to currency devaluations, volatile stock markets, and slowdown in
growth. The country+ s unstable economy has to a certain extent affected and may continue to
affect the operations of the Company, recoverability of the Company+s assets and the ability
the Company to maintain or pay its debts as they mature.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1 Revenue recognition
Sales are recognized as revenue when goods are shipped to customers.
2.2 Investments in securities
2.2.1 Listed securities are shown at aggregate cost or aggregate market value,
whichever is the lower.
2.2.2 The market value for listed securities is the closing price at The Stock
Exchange of Thailand on the last business day of the year.
2.2.3 Cost of securities sold during the year is calculated by the first-in, first-out
method.
2.3 Allowance for doubtful accounts is based on management+s evaluation of specific
accounts which are considered uncollectible.
2.4 Finished goods are stated at the lower of cost or market value. Cost is determined on
average cost basis.
materials and supplies are calculated on an average cost basis.
2.5 Investments in related parties are stated at cost.
Investments in associated companies are presented by the equity method, except for
certain investments which are stated at cost (see note 6)
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2.6 In 1996 land was appraised at current market value, based on the Independent
Appraisor+s Report. The revaluation surplus is shown as part of shareholders+ equity as
unrealized increment per land appraisal.
Property, plant and equipment are stated at cost.
Depreciation is calculated by the straight-line method, based on the estimated useful
lives of the assets as follows:
Buildings 20 years
Machinery 8 - 15 years
Tools 5 years
Office furniture and fixtures 5 years
Vehicles 5 years
Office improvement 5 years
2.7 Deferred charges are amortized in accordance with the realization principle, over 5
years.
2.8 Other assets consisted of the concession fee stated at cost, after deducting amortization
based on the concession period.
2.9 Excess of cost over book value of investments in associated companies is regarded as
goodwill and will be amortized by the straight-line method within 10 years.
2.10 Foreign currency transactions
2.10.1 Foreign currency assets and liabilities at the year-end are translated into Baht
the prevailing rates at that date. Profit (loss) on exchange is recognized in
profit and loss statement .
Loss on exchange in connection with assets and liabilities denominated in
foreign currencies outstanding as from July 2, 1997 upon the introduction of
managed float exchange system of the Baht by the Ministry of Finance is
presented as a loss from the application of the managed float exchange system
shown as an extraordinary item in the profit and loss account.
2.10.2 For the quarter and nine-month period ended September 30, 1997, loss on
translation of assets and liabilities in foreign currency was recorded as deferred
loss on the managed float system and presented as a deduction from
shareholders+ equity in the interim financial statements for such period and
amortized by an average over 5 years, in accordance with the instruction of
Revenue Department No. 72/1997 which was not in conformity with
generally accepted accounting principles.
3 -
2.10.3 In the presentation of the financial statements for the year ended December 31,
1997, the Company has changed the method of accounting for such loss on
translation of assets and liabilities in foreign currency from being deferred as
mentioned in Note 2.10.2 to being recognized as expense in the profit and loss
statement in order to be in accordance with generally accepted accounting
principles. The adjustments have been made for the related transactions in the
quarter and nine-month period ended September 30, 1997 for this change to
new method.
2.11 Borrowing costs are capitalized to the extent that the Company has incurred borrowing
cost on assets that required a period of time to get them ready for their intended use.
2.12 Net profit (loss) per share are calculated by the average number of ordinary shares
outstanding at the end of year.
2.13 Use of accounting estimates
Preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities and disclosure of
contingent assets and liabilities. The actual results may differ from such estimates
2.14 Certain reclassifications have been made in the financial statements for the year ended
December 31, 1996 to conform to classifications used in the financial statements for
year ended December 31, 1997.
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