CONSOLIDATED FINANCIAL STATEMENTS 2000

THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES AUDITOR'S REPORT AND FINANCIAL STATEMENTS AS AT DECEMBER 31, 2000 AND 1999 AUDITOR'S REPORT To The Shareholders of THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED I have audited the consolidated balance sheet of THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES as at December 31, 2000, and the related consolidated statement of income, consolidated statement of changes in shareholders' equity and consolidated statement of retained earnings for the year then ended. And I have audited the parent financial statements of THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED for the period of December 31, 2000 and 1999, and the statements of cash flows for the years then ended. These financial statements are the responsibility of the Company's management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on the financial statements based on my audits. Except for the matters mentioned in the third and forth paragraphs, I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain the reasonable assurance about 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 principle used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. As mentioned in notes to the financial statement no.8.1, as at December 31, 2000 and 1999, investments in five and four companies, respectively of associated and other companies are recognized as investments in subsidiaries in accordance with the Thai Accounting Standard no. 44 Consolidated Financial Statement and Accounting for Investments in Subsidiaries. Since the Company is able to control such companies through the majority committee thereof, the Company recognized the investments in subsidiaries of which invested in subsidiaries under the equity method. Equity gains/losses of three subsidiaries as mentioned in note 8.1.2, for the year ended December 31, 2000, were calculated from the financial statements reviewed by other auditor and a subsidiary as mentioned in note 8.1.3 calculated from financial statements audited by other auditor and a subsidiary as mentioned in note 8.1.1 calculated from the financial statements prepared by the management which were not audited by other auditor. The consolidated balance sheet as at December 31, 2000, include the total assets of subsidiaries and investments in subsidiaries under equity method equivalent to 16.65 per cent of total assets of consolidated balance sheet and 3.78 per cent of total assets of the parent balance sheets. Loss (Gain) from - 2 - investments in such subsidiaries under equity method for the year ended 2000, amounting to Baht (0.34) million, were shown in the consolidated statement of income which include equity (gain) loss in the parent financial statements for the years ended 2000 and 1999, amount of Baht 9.18 million and Baht (47.13) million, respectively. I was unable to sufficiently examine in evidence, regarding to bank overdrafts and loans from 4 banks and long - term loans from a financial institution including interest rate and other activities that the Company dealing with. As at December 31, 2000, I have not received confirmation request replied by the banks and financial institution total amount of Baht 1,573.68 million for the consolidated financial statements and with the same amount for the parent financial statements equivalent to 95.36 per cent of bank overdrafts, short - term and long - term loans from financial stitutions for the consolidated financial statements and 98.20 per cent for the parent financial statements. I was unable to apply other auditing procedures satisfactory in the accurancy of the amount of bank overdrafts and loans including related interest and other transaction which may results with banks and financial institutions. In my opinion, except for the effect of adjustment on the investment in subsidiaries company under equity method, the financial statements of subsidiaries company mentioned in the third paragraph, have been audited by us and I received confirmation request from the banks and financial institution mentioned in the fourth paragraph as scope limitation by circumstances, the financial statements referred to the above present fairly, in all material respects, the financial position of the THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES as at December 31, 2000, the consolidated results of its operation for the year then ended and the financial position of THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED as at December 31, 2000 and 1999, the results of its operation and cash flows for the years then ended in conformity with generally accepted accounting principles. I draw your attention to the following notes to financial statements: (1) As stated in notes to financial statements no. 1, the effect of adverse economic crisis in Thailand and overall Asia Pacific region resulting from the currency devaluation and the economic slowdown. The business engaged in real estate in which the Company operating, have been severely affected from the above situation and may continue to be affected for the foreseeable future. (2) As stated in notes to financial statements no.10, the Company has temporarily suspended the project under construction - factory expansion having the investment value amount of Baht 157.75 million in 2000, for the consolidated financial statements amount of Baht 157.75 million and Baht 367.95 million in 2000 and 1999, respectively, for the parent financial statements due to the economic fluctuation and slowdown in the real estate business. However, the Company expects to take benefit in the future when the economic is recovered. - 3 - (3) As shown in the financial statements, the Company had excess of current liabilities over current assets for the consolidated financial statement as at December 31, 2000, amount of Baht 1,047.42 million and the parent financial statements as at December 31, 2000 and 1999, amount of Baht 1,086.04 million and Baht 635.51 million, respectively. The Company has incurred loss for several consecutive years with total deficit for the year 2000, amount of Baht 812.49 million for the consolidated financial statement and the parent financial statements as at December 31, 2000 and 1999 amount of Baht 812.49 million and Baht 541.81 million, respectively, resulting in the outstanding balance of shareholders' equity and minority interest in subsidiary in the consolidated financial statements in 2000, showed amount of Baht 378.61 million and in 2000 and 1999, shareholders' equity in the parent financial statements had outstanding balance amount of Baht 165.67 million and Baht 517.68 million, respectively. The Management, however, expects the Company will have better future operation. (4) As stated in notes to financial statements no. 14, regarding to long - term liabilities, the Company entered into additional memorandum of understanding on such agreement and the Company has defaulted on debt repayment. The Company was sued for defaulted on debt repayment divided into the principal amount of Baht 1,139.58 million and the consolidated accrued interest expenses approximately amount of 135.79 million as at December 31, 2000. The lawsuit has not been finalized yet and the management expects that the case is negotiable. (5) As stated in note 21.2, the Company was sued for defaulted on debt repayment by six financial institutions of Baht 1,603.24 million. The lawsuit has not been finalized yet and the management expects that the case is negotiable. (6) As stated in notes to financial statements no. 26.2, in second quarter in 2000, the Company changed accounting practices for investment in subsidiary companies under Accounting Standard no. 44 by taking financial statements of all companies under control by the parent company including in the consolidated financial statements thought having voting right loss than half changing from taking from the Company that the parent having shareholding more than 50 per cent of registered capital. The Company had made retroactive adjustment in the financial statements in 1999 by showing accumulated change. The results from changing such accounting policy cause the consolidated financial statements as at December 31, 2000, increase in assets and liabilities amount of Baht 822.48 million and Baht 518.63 million, respectively, increase in minority interest amount of Baht 221.21 million and decrease in net loss amount of Baht 1.23 million, the parent financial statements as at December 31, 2000 and 1999, increase and decrease amount of Baht 0.18 million and Baht 1.05 million, decrease and increase in net loss amount of Baht 1.23 million and Baht 0.22 million, respectively. - 4 - The aforementioned notes to financial statements no.1 to 5 may possibly be affected to the continuity of company's operation. These financial statements have been prepared as the Company's going concern. Therefore, the financial statements do not include any adjustment of assets and liabilities that might be arise from the uncertainties which cannot be presently determined. Office of D I A International Auditing (Mrs. Vilairat Rojnuckarin) C.P.A. (Thailand) Registration No. 3104 February 27, 2001 THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS AS AT DECEMBER 31, 2000 AND 1999 Consolidated (Baht) Parent Company Note 2000 2000 Baht 1999 Assets (Adjustment) Current assets Cash in hand and at banks 24,014,638.99 12,311,315.84 7,997,908.06 Short - term investments 5 87,565,936.23 794,600.00 36,461,954.47 Accounts and notes receivable 6 435,745,541.50 446,573,229.44 327,557,947.50 Less Allowance for doubtful accounts (28,131,933.79) (28,131,933.79) (28,131,933.79) Accounts and notes receivable - net 407,613,607.71 418,441,295.65 299,426,013.71 Inventories 7 562,216,983.10 473,244,546.69 463,353,379.60 Other current assets Advance for share subscribtion 0.00 10,000,000.00 0.00 Advance 4,277,847.29 4,277,847.29 3,746,036.11 Share receivable 1,234,950.00 0.00 0.00 Revenue Department - receivable 254,235.23 0.00 4,461,477.17 Refundable custom tax 2,389,521.87 2,389,521.87 2,510,522.67 Prepaid expenses 4,688,170.18 4,688,170.18 6,002,569.43 Others 6,285,715.25 2,438,943.82 1,381,056.86 Total current assets 1,100,541,605.85 928,586,241.34 825,340,918.08 Investments : Investments in subsidiaries 8.1 0.00 82,402,915.85 81,581,564.92 Investments in associated companies 8.2 192,600.00 192,600.00 192,600.00 Investments in other companies 8.3 2,000,000.00 2,000,000.00 2,000,000.00 Investment in debt securities 8.4 44,438,064.69 44,438,064.69 0.00 Deposits with commitment 9 30,000,000.00 30,000,000.00 30,000,000.00 Property, plant and equipment - net 10 1,430,226,713.98 1,088,279,199.24 1,287,803,854.97 Other assets Deposit 11 1,623,717.45 1,512,232.87 773,400.00 Others 12 6,699,345.09 2,890,994.73 3,967,212.42 Total assets 2,615,722,047.06 2,180,302,248.72 2,231,659,550.39 The consolidated financial statements for the year ended December 31, 1999, have not been prepared due to insufficient information. Notes to financial statements are parts of these financial statements. - 2 - THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (CONTINUE) AS AT DECEMBER 31, 2000 AND 1999 Consolidated (Baht) Parent Company Note 2000 2000 Baht 1999 Liabilities and shareholders' equity (Adjustment) Current liabilities Bank overdrafts and loans from bank 13 510,657,082.00 462,952,389.67 421,620,545.53 Accounts payable 216,151,274.69 213,305,156.09 213,119,369.51 Current portion of long - term debt due at call 14 1,139,577,800.00 1,139,577,800.00 0.00 Current portion of long - term debt 14 4,369,733.66 0.00 781,066,600.00 Other loan payables 61,178,750.00 0.00 10,000,000.00 Other current liabilities Accrued expenses 202,286,461.66 195,456,229.02 33,970,795.22 Others 13,741,750.12 3,335,863.18 1,072,936.84 Total current liabilities 2,147,962,852.13 2,014,627,437.96 1,460,850,247.10 Payable and loan from director 50,898,011.25 0.00 0.00 Long - term liabilities 14 31,732,423.59 0.00 253,129,400.00 Other liabilities 6,516,863.58 0.00 0.00 Total liabilities 2,237,110,150.55 2,014,627,437.96 1,713,979,647.10 - 3 - THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (CONTINUE) AS AT DECEMBER 31, 2000 AND 1999 Consolidated (Baht) Parent Company Note 2000 2000 Baht 1999 (Adjustment) Shareholders' equity Share capital Authorized share capital 50,000,000 common shares of Baht 10 each 500,000,000.00 500,000,000.00 500,000,000.00 Issued and paid-up capital 32,000,000 common shares of Baht 10 each 320,000,000.00 320,000,000.00 320,000,000.00 Premium on share capital 498,800,000.00 498,800,000.00 498,800,000.00 Appraisal surplus of land 129,239,012.23 127,515,676.00 207,515,676.00 Unrealized gain (loss) from changing fair value of investments 15 (152,375.00) (152,375.00) 1,173,000.00 Retained earnings (Deficit) Appropriated Legal reserve 32,000,000.00 32,000,000.00 32,000,000.00 Unappropriated (812,488,490.24) (812,488,490.24) (541,808,772.71) Total shareholders' equity 167,398,146.99 165,674,810.76 517,679,903.29 Minority interest of subsidiaries 211,213,749.52 0.00 0.00 Total shareholders' equity and minority interest of subsidiaries 378,611,896.51 165,674,810.76 517,679,903.29 Total liabilities and shareholders' equity 2,615,722,047.06 2,180,302,248.72 2,231,659,550.39 The consolidated financial statements for the year ended December 31, 1999, have not been prepared due to insufficient information. Notes to financial statements are parts of these financial statements. THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Consolidated (Baht) Parent Company 2000 2000 Baht 1999 (Adjustment) Revenues Sales 1,689,316,771.51 1,577,591,283.15 1,259,048,899.71 Other income 60,900,428.95 40,686,790.85 37,679,604.28 Total revenues 1,750,217,200.46 1,618,278,074.00 1,296,728,503.99 Expenses Cost of sales 1,362,128,324.41 1,301,629,345.49 1,160,969,202.24 Unappropriated net (gain) loss of subsidiaries 0.00 9,178,649.07 (47,127,661.81) Selling and administrative expenses 308,582,107.65 241,258,245.82 199,499,436.31 Loss on foreign exchange rate 124,378,897.58 124,378,897.58 17,970,505.26 Loss from impairment of assets 0.00 0.00 23,545,375.13 Loss from non refundable deposits 0.00 0.00 45,284,230.58 Directors' remuneration 240,000.00 240,000.00 240,000.00 Total expenses 1,795,329,329.64 1,676,685,137.96 1,400,381,087.71 Profit (Loss) before interest and corporate income tax (45,112,129.18) (58,407,063.96) (103,652,583.72) Interest expenses (224,627,699.13) (212,272,653.57) (147,056,606.95) Corporate income tax (598,314.41) 0.00 0.00 Profit (Loss) and minority interest (270,338,142.72) (270,679,717.53) (250,709,190.67) Loss (Profit) of minority interest (341,574.81) 0.00 0.00 Net profit (loss) (270,679,717.53) (270,679,717.53) (250,709,190.67) Basic earnings (loss) per share (8.46) (8.46) (7.83) The consolidated financial statements for the year ended December 31, 1999, have not been prepared due to insufficient information. Notes to financial statements are parts of these financial statements. THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Consolidated (Baht) Parent Company Note 2000 2000 Baht 1999 Share capital (Adjustment) Common shares Beginning of the period 320,000,000.00 320,000,000.00 320,000,000.00 End of the period 320,000,000.00 320,000,000.00 320,000,000.00 Paid-in capital Premium on share capital Beginning of the period 498,800,000.00 498,800,000.00 498,800,000.00 End of the period 498,800,000.00 498,800,000.00 498,800,000.00 Appraisal surplus of land Beginning of the period 207,515,676.00 207,515,676.00 266,102,532.00 Increase during the period 1,723,336.23 0.00 0.00 Decrease during the period (80,000,000.00) (80,000,000.00) (58,586,856.00) End of the period 129,239,012.23 127,515,676.00 207,515,676.00 Unrealized gain (loss) from changing fair value of investments 15 (152,375.00) (152,375.00) 1,173,000.00 Retained earnings (Deficit) Appropriated Legal reserve Beginning of the period 32,000,000.00 32,000,000.00 32,000,000.00 End of the period 32,000,000.00 32,000,000.00 32,000,000.00 Unappropriated Beginning of the period (541,808,772.71) (541,808,772.71) (291,099,582.04) Net profit (loss) (270,679,717.53) (270,679,717.53) (250,709,190.67) End of the period (812,488,490.24) (812,488,490.24) (541,808,772.71) Total shareholders' equity 167,398,146.99 165,674,810.76 517,679,903.29 The consolidated financial statements for the year ended December 31, 1999, have not been prepared due to insufficient information. Notes to financial statements are parts of these financial statements. THE UNION MOSAIC INDUSTRY PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Consolidated (Baht) Parent Company Note 2000 2000 Baht 1999 (Adjustment) (more)