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(Translation) Auditor's Report To the Shareholders of Thanulux Public Company Limited and Subsidiaries I have review the consolidated balance sheet as of March 31, 2000 and the related consolidated statements of income, changes in shareholders' equity and cash flows for the 3-month period then ended of Thanulux Public Company Limited and Subsidiaries, including the financial statements of Thanulux Public Company Limited. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my review. I conducted my review in accordance with Auditing Standards the part of review . Those Standards require that I had to plan and perform the review to obtain sufficient assurance about whether the financial statements are free of material misstatement. The review had its limit. I mainly interviewed the company's personal which based on the analytical method of financial analysis. This performance is less assurance than general accepted auditing standards. So I can not provide my opinion for this financial statement. I can not find anything which caused me not to believe this financial statement in the significant of general accepted accounting principles, from my review. I had audited, as general accepted auditing standards, the financial statement as of December 31, 1999 of Thanulux Public Company Limited and Subsidiaries and financial statement of Thanulux Public Company Limited. I had submitted without condition for the report as of February 26, 2000 on the balance sheet as of December 31, 1999 showed the comparison which was a part of my audited financial statement. I do not have any auditing performance after the said report. (Mr. Natee Sangudomlert) Certified Public Accountant auditors No. 300 Bangkok April 28, 2000 Thanulux Public Company Limited and Subsidiaries Notes to The Consolidated Financial Statements For the quarter 1 ending March 31, 2000 ---------------------------------------------------------------------------------- 1. Principles of Consolidated Financial Statements The company's financial statements include those of Thanulux Public Company Limited's ended December 31, 1999. Related transactions have been eliminated from the consolidated financial statements. One subsidiary is Thanulux Kabinburi Company Limited of which the Company holds 99.99% of the paid-up capital. Minority shareholders' equity in subsidiaries consists of the percentage of their owner ship and corresponding operating income. 2. Basis of Consolidated Financial Statements Part of the company's assets, liabilities, income and expenses includes those of subsidiaries and associated companies. Therefore, these financial statements show the results of the mentioned balances in accordance with policy of setting the usual business price by all such companies. 3. Significant Accounting Policies 3.1 Recognition of revenues The company recognizes sales revenues when the products are delivered to the customers. 3.2 Fixed assets Fixed assets are stated at cost less depreciation. Depreciation is calculated by the straight-line method at the highest rate allowed by law (except for land which shows no depreciation) As for the subsidiaries' assets obtained since October 1, 1996, depreciation is calculated at 10% per year. 3.3 Inventories Finished goods and raw materials are estimated at the lower average cost or net realized value. Work in process is stated at cost. 3.4 Other supplies Other supplies are stated at cost. 3.5 Investments in common shares of subsidiaries and other companies which classified as follows - Marketable securities are the securities for trading which show fair value. The company acknowledges the altered value to be the separated item of shareholders' equity and will record in the financial statements, when the company sells the securities. - The investment of unlisted securities are general securities which show the cost value. - The cost of disposed investments are average cost. - Investments in subsidiaries and associated companies are booked under the equity method. 3.6 Accounts in foreign currencies Transactions in foreign currencies are converted into Baht at the exchange rate on the dates of the transactions. Assets and liabilities denominated in foreign currencies at the end of the year are converted into Baht at the average exchange rate on the last day of the accounting year. Exchange gains or losses arising from transactions are included in the income statements. 3.7 Allowance for doubtful accounts The uncollectable account receivings were recorded on the basis of the company's experience. 3.8 Deferred charges, consist of deferred computer programs, defer within 3 years. 3.9 Allowance for loss from impairment of assets, consider the identification which persuade to believe to be impairment of assets by the difference of the refolded estimated value which is lower than the book value of the assets. 4. Short-term Loans Consolidated Related parties (Unit : Baht 1,000) Amount Policy for setting the As of Mar. 31, 2000 cost of borrowing Loan receivable Related companies cost of borrowing Ramasorn Thaveekarn Co., Ltd. 84,000 Interest rate plus 1-2% The company only Related parties (Unit : Baht 1,000) Amount Policy for setting the As of Mar. 31, 2000 cost of borrowing Loan receivable Subsidiaries Thanulux Kabinburi Co., Ltd. 56,000 Cost of borrowing interest rate plus 1-2% Related companies Ramasorn Thaveekarn Co., Ltd. 84,000 " Total 140,000 The company has loaned a sum of Baht 140.0 million to 2 companies at the interest rate per year of 10.0%, without guarantee. 5. Investments in Securities Consolidated As of March 31, 2000, we had, securities in 9 listed companies which had total market price as Baht 71,182,260.75 (total cost = Baht 53,575,224.94) - for selling, securities in 43 non-listed companies which had total net cost as Baht 150,424,024.48 general investment (this amount had included allowance for loss from decreasing registered capital Baht 1,950,000.00 and allowance for loss from impairment of investment = Baht 18,843,728.35). The securities in non-listed companies had lost Baht 1,100,565.50 from impairment of investment in this period. There were 3 companies which the capital were not fully paid for the amount of Baht 750,000.00. Investments-Related parties Consolidated at March 31, 2000 (Unit : 1,000) Company Name Type of Relationship Paid-up % of Investment Divid Marketend Business Share capital Investment Cost Equity price method method As of Mar.31 - Securities for trading Related companies People's Garment Public Co., Ltd. Garment Co-Director 72,000 13.78 9,920 - - 17,364 I.C.C. International Public Co., Ltd. Cosmetics and Co-Director 290,634 1.68 26,767 - - 33,759 Apparel Thai Wacoal Public Co., Ltd. Ladies's Lingerie Co-Director 120,000 0.93 8,461 - - 8,381 Far East Advertising Public Co. Ltd. Advertising Co-Shareholder 25,000 0.35 505 - - 932 Textile Prestige Public Co., Ltd. Embroidery Lace Co-Shareholder 108,000 0.35 285 - - 865 Saha Pathana Inter-Holding Public Investment Co-Director 494,034 0.33 6,836 - - 8,109 Co., Ltd. O.C.C. Public Co., Ltd. Consumer Products Co-Shareholder 60,000 0.13 41 - - 122 Sahapathanapibul Public Co., Ltd. Consumer Products Co-Shareholder 275,875 0.07 495 - - 930 Total 53,310 - - 70,462 Add Unrealized gain for marketable securities 17,152 - - - Total securities for trading 70,462 - - 70,462 - General investments P.T. Mesapro International Garment and Co-Director US$ 800 19.00 3,817 - - - Leatherware Thai Hamilton Co. Ltd. Garment Co-Director 20,000 19.00 12,236 - - - Thai Monster Co., Ltd. Garment Co-Director 20,000 19.00 5,549 - - - Total Way Image Co., Ltd. Leatherware Co-Director 20,000 19.00 7,132 - - - Thai Nakamura Label Co., Ltd. Label Co-Shareholder 20,000 19.00 3,800 - - - Puning Xie Zhong Garment Co. Ltd. Garment Co-Director US$ 2,400 18.00 6,311 - - - International Commercial Apparel Co-Director HK$ 1,000 18.00 1,302 - - - Coordination (Hong Kong) Ltd. International Leather Fashion Leatherware Co-Director 50,000 18.00 8,810 - - - Corp., Ltd. SSDC (Tigertex) Co., Ltd. Dyeing Co-Director 270,000 17.85 54,698 - - - Woven Fabric Champ Ace Co., Ltd. Garment Co-Director 40,000 15.00 6,000 - - - S.T. G.C. Co., Ltd. Reserch and Co-Director 2,500 13.00 325 - - - Development Thai Takaya Co., Ltd. Jeans Co-Director 30,000 11.00 3,300 - - - Thai Poron Co., Ltd. Garment Co-Director 20,000 10.00 2,000 - - - Thai Gunze Co., Ltd. Garment Co-Shareholder180,000 8.00 17,280 - - - Ascot International Co., Ltd. Knitwear Co-Shareholder 21,000 7.62 1,600 - - - Grand Star Industry Co., Ltd. Cloth Co-Shareholder 20,000 7.50 1,500 - - - Belle Maison (Thailand) Co., Ltd. Direct Sale Co-Shareholder 35,000 7.00 * 2,450 - - - Thai Le Jour Co., Ltd. Garment Co-Shareholder 20,000 5.00 1,000 - - - Saha Info Technology Co., Ltd. Information Co-Shareholder 5,000 5.00 * 250 - - - Technology Thai Shikibo Co., Ltd. Cotton Yarn Co-Shareholder237,500 4.81 11,425 - - - Thai Staflex Co., Ltd. Powernet Co-Shareholder 60,000 4.00 2,400 - - - Treasure Hill Co., Ltd. Golf Course Co-Shareholder200,000 4.00 6,300 - - - Sunrise Garment Co., Ltd. Garment Co-Shareholder 10,000 3.50 385 - - - Value Added Textile Co., Ltd. Embroidery Co-Shareholder 50,000 3.00 67 - - - Thai Janome Co., Ltd. Sewing Machine Co-Shareholder 88,000 2.00 1,760 - - - Sahapat Properties Co., Ltd. Land Development Co-Shareholder 20,000 1.00 200 - - - Thai Itokin Co., Ltd. Garment Co-Director 100,000 1.00 1,411 - - - Racha Uchino Co., Ltd. Cotton Towels Co-Director 81,000 0.49 163 - - - Total general investments 163,471 - - - Less allowance loss from impairment of investments 16,536 - - - Total general investments 146,935 - - - Total investments 217,397 - - 70,462 Investments-Others - Securities for trading comprise : Public Limited Companies As of Mar. 31, 2000 % of Investment Investment 1. Thai Toray Textile Mill 0.50 265,320.00 Add Unrealized gain for marketable securities 454,680.00 Total securities for trading 720,000.00 Investments-Others - General investments comprise : Limited Companies % of Investment Investment 1. Thai Pleats 12.50 1,000,000.00 2. Make Up Technique Institute 12.00 30.00 3. Builton (Thailand) 10.00 * 250,000.00 4. Miwaki SDN. BHD. 10.00 368,900.00 5. Pan Asia Leather 10.00 10,000.00 6. Osoth Inter Laboratories 3.13 88,125.00 7. H & B Intertex 5.00 2,000.00 8. The International Knitting Mills 3.75 1,500,000.00 9. Eastern Rubber 2.50 450,300.00 10. Sunlots Enterprise 2.19 3,500.00 11. Khonkaen Vithes Suksa 1.67 1,000,000.00 12. Thanara 1.25 750.00 13. Adventage Footwear 0.63 2,312.50 14. Sigma Holding 0.46 120,000.00 15. Praram 9 Hospital 0.25 1,000,000.00 Total investments 5,795,917.50 Less allowance for loss from impairment of investments 2,308,055.00 Total general investments 3,487,862.50 Total investments-Others 4,207,862.50 * The companies do not require fully pay for their sales share values. Investment in debt securities The company invests Baht 20.0 million in five year period debenture with gradually matured condition which redeem on November 15, 2004. The interest rate will be, fix at 9.5% per year for the first through third year, and "MLR" of Siam Commercial Bank Public Company Limited. The company only As of March 31, 2000, we had, securities in 9 listed companies which had total market price as Baht 71,182,260.75 (total cost = Baht 53,575,224.94) - for selling, securities in 39 non-listed companies which had total ntet cost as Baht 185,398,724.48 general investment (this amount had included allowance for loss from decreasing registered capital Baht 1,950,000.00 and allowance for loss from impairment of investment = Baht 18,843,728.35). The securities in non-listed companies had lost Baht 1,057,965.50 from impairment of investment in the period. There were 3 companies which the capital were not fully paid for the amount of Baht 750,000.00. The company only at March 31, 2000 Company Name Type of Relationship Paid-up % of Investment Divid Marketend Business Share capital Investment Cost Equity price method method As of Mar.31 - Securities for trading Related companies People's Garment Public Co., Ltd. Garment Co-Director 72,000 13.78 9,920 - - 17,364 I.C.C. International Public Co., Ltd. Cosmetics and Co-Director 290,634 1.68 26,767 - - 33,759 Apparel Thai Wacoal Public Co., Ltd. Ladies's Lingerie Co-Director 120,000 0.93 8,461 - - 8,381 Far East Advertising Public Co. Ltd. Advertising Co-Shareholder 25,000 0.35 505 - - 932 Textile Prestige Public Co., Ltd. Embroidery Lace Co-Shareholder 108,000 0.35 285 - - 865 Saha Pathana Inter-Holding Public Investment Co-Director 494,034 0.33 6,836 - - 8,109 Co., Ltd. O.C.C. Public Co., Ltd. Consumer Products Co-Shareholder 60,000 0.13 41 - - 122 Sahapathanapibul Public Co., Ltd. Consumer Products Co-Shareholder 275,875 0.07 495 - - 930 Total 53,310 - - 70,462 Add Unrealized gain for marketable securities 17,152 - - - Total securities for trading 70,462 - - 70,462 - General investments Subsidiary company Thanulux Kabinburi Co., Ltd. Garment Co-Director 35,000 99.99 34,999 10,062 - - Related Companies P.T. Mesapro International Garment and Co-Director US$ 800 19.00 3,817 - - - Leatherware Thai Hamilton Co. Ltd. Garment Co-Director 20,000 19.00 12,236 - - - Thai Monster Co., Ltd. Garment Co-Director 20,000 19.00 5,549 - - - Total Way Image Co., Ltd. Leatherware Co-Director 20,000 19.00 7,132 - - - Thai Nakamura Label Co., Ltd. Label Co-Shareholder 20,000 19.00 3,800 - - - Puning Xie Zhong Garment Co. Ltd. Garment Co-Director US$ 2,400 18.00 6,311 - - - International Commercial Apparel Co-Director HK$ 1,000 18.00 1,302 - - - Coordination (Hong Kong) Ltd. International Leather Fashion Leatherware Co-Director 50,000 18.00 8,810 - - - Corp., Ltd. SSDC (Tigertex) Co., Ltd. Dyeing Co-Director 270,000 17.85 54,698 - - - Woven Fabric Champ Ace Co., Ltd. Garment Co-Director 40,000 15.00 6,000 - - - S.T. G.C. Co., Ltd. Reserch and Co-Director 2,500 13.00 325 - - - Development Thai Takaya Co., Ltd. Jeans Co-Director 30,000 11.00 3,300 - - - Thai Poron Co., Ltd. Garment Co-Director 20,000 10.00 2,000 - - - Thai Gunze Co., Ltd. Garment Co-Shareholder180,000 8.00 17,280 - - - Ascot International Co., Ltd. Knitwear Co-Shareholder 21,000 7.62 1,600 - - - Grand Star Industry Co., Ltd. Cloth Co-Shareholder 20,000 7.50 1,500 - - - Belle Maison (Thailand) Co., Ltd. Direct Sale Co-Shareholder 35,000 7.00 * 2,450 - - - Thai Le Jour Co., Ltd. Garment Co-Shareholder 20,000 5.00 1,000 - - - Saha Info Technology Co., Ltd. Information Co-Shareholder 5,000 5.00 * 250 - - - Technology Thai Shikibo Co., Ltd. Cotton Yarn Co-Shareholder237,500 4.81 11,425 - - - Thai Staflex Co., Ltd. Powernet Co-Shareholder 60,000 4.00 2,400 - - - Treasure Hill Co., Ltd. Golf Course Co-Shareholder200,000 4.00 6,300 - - - Sunrise Garment Co., Ltd. Garment Co-Shareholder 10,000 3.50 385 - - - Thai Janome Co., Ltd. Sewing Machine Co-Shareholder 88,000 2.00 1,760 - - - Sahapat Properties Co., Ltd. Land Development Co-Shareholder 20,000 1.00 200 - - - Thai Itokin Co., Ltd. Garment Co-Director 100,000 1.00 1,411 - - - Racha Uchino Co., Ltd. Cotton Towels Co-Director 81,000 0.49 163 - - - Total general investments 198,403 10,062 - - Less allowance loss from impairment of investments 16,493 - - - Total general investments 181,910 10,062 - - Total investments 253,372 10,062 - 70,462 Investments-Others - Securities for trading comprise : Public Limited Companies As of Mar. 31, 2000 % of Investment Investment 1. Thai Toray Textile Mill 0.50 265,320.00 Add Unrealized gain for marketable securities 454,680.00 Total securities for trading 720,000.00 Investments-Others - General investments comprise : Limited Companies % of Investment Investment 1. Thai Pleats 12.50 1,000,000.00 2. Make Up Technique Institute 12.00 30.00 3. Builton (Thailand) 10.00 * 250,000.00 4. Miwaki SDN. BHD. 10.00 368,900.00 5. Osoth Inter Laboratories 3.13 88,125.00 6. H & B Intertex 5.00 2,000.00 7. The International Knitting Mills 3.75 1,500,000.00 8. Eastern Rubber 2.50 450,300.00 9. Khonkaen Vithes Suksa 1.67 1,000,000.00 10. Sigma Holding 0.46 120,000.00 11. Praram 9 Hospital 0.25 1,000,000.00 Total investments 5,779,355.00 Less allowance for loss from impairment of investments 2,291,492.50 Total general investments 3,487,862.50 Total investments-Others 4,207,862.50 * The companies do not require fully pay for their sales share values. Investment in debt securities The company invests Baht 20.0 million in five year period debenture with gradually matured condition which redeem on November 15, 2004. The interest rate will be, fix at 9.5% per year for the first through third year, and "MLR" of Siam Commercial Bank Public Company Limited. 6. Earnings Appropriation The company's earnings appropriation shall be recorded upon approval from the shareholders' meeting. 7. Provident Fund The company has set up a provident fund under the Provident Fund Act B.E. 2530 (1987) on February 1, 1993. Contributions are made by the company and the employees as stipulated. The company has appointed a Provident Fund Manager to manage the said fund according to the ministerial regulations. 8. Earnings per Share Earnings per share is calculated by dividing net income by the number of shares outstanding. 9. Debentures The company issued debentures as the resolution of the 25th ordinary shareholders meeting on 26 April, 1999. The issue of named certificate, unsecured and unsubordinated debenture will be 300,000 units-par value Baht 1,000 per unit, issued on 9 August 1999 3 years period debenture. The interest will be MLR + 0.25, paidevery 6 months-on 9 February (more)