News Detail: [STRD] Progress of Operating Results and the Rehabilitation PlanSymbol: STRD Headline: Progress of Operating Results and the Rehabilitation Plan Time: 12 Apr 2004 13:59:00 (TRANSLATION) STRD 72 /2004 April 8, 2004 Re: Report on the Progress of Financial Restructuring, Operating Results and the Rehabilitation Plan of Sino-Thai Resources Development Public Company Limited Attention to:President The Stock Exchange of Thailand Sino-Thai Resources Development Public Company Limited (the "Company") in coordination with Phillip Securities (Thailand) Public Company Limited (the "Financial Advisor") would like to report on the progress of financial restructuring, its operating results and the rehabilitation plan during October 1, 2003 to March 31, 2004 as follows: September 2003 The company raised its capital by issuing new 5,000,000 shares at par value of Baht 10.00 each and allocated to two individuals at Baht 3.40 per share each. The company registered the changing of its paid-up capital from Baht 150 million to Baht 200 million. Money raised form the additional capital has been used for the company's working capital. November 2003 The Company reported its operating results for 9 months ended September 30, 2003 with net profits of Baht 184.74 million, resulted from Baht 87.90 million profits from transfer of assets and Baht 108.60 million profit from debt restructuring. The actual operating results were Baht 3.56 million loss, including Baht 8.20 million reserved for asset devaluation. December 2003 Mr. Vichai Limpanyakul, Mrs. Karanjana Manathampaiboon, Mrs. Suladda Asawapayukkul, Mrs. Jintana Surapanich and Mr. Kitti Cheevakittigul, together as a group, had made a tender offer to purchase 14,801,000 shares of the company, or 74.01 per cent of the company's paid up capital. The group announced its intention to take over the company's business. January 2004 The tender offeror offered to purchase 5,199,000 shares of the company, or 25.99 per cent of the issued shares at Baht 10.00 per share. February 2004 -Shareholders submitted their intention to sell 650,000 shares accounted for 3.25 per cent of the issued shares. The offeror purchased all the shares -The company moved its head office -The company appointed new directors to replace the resigned directors Comparison of the Company's actual performance for the year 2003 with the projection under the rehabilitation plan in compliance with the Stock Exchange of Thailand requirements to refrain from the grounds of delisting are as follows: Summary of actual performance for the year 2003 For the year 2003, the Company recorded total revenues of Baht 130.74 million, Baht 36.85 million lower than the projection or 21.99% due to the exceptionally low revenue from tin ore sales because, in the first quarter, the Company sold 2 tin dredges and 3 tug boats. The Company also relocated its tin dressing plant from No. 10 Soi Sapanhin, Ra-ngang district, Amphur Muang, Phuket to 46/11 Mu 6 Thepkasatthree Road, Ratsada district, Amphur Muang, Phuket. Thus, output of tin ore had decreased, resulting the tin ore sales down to Baht 19.11 million in the year 2003. Sale revenue from the construction stone business was also lower than projected due to the Company's reduction on its processing in order to improve the quarry area, and also to repair and replace deteriorated parts and equipment, and in the process, reduced the Company's inventories. Since the Company liquidated its 2 tin dredges, therefore, it has no revenue from dredge rental. In addition, the Company completed a loan restructuring with one of its bankers on March 27, 2003 which freed the Company from its obligation of Baht 186.00 million loan plus Baht 53.80 million accrued interest. Therefore, the Company profits from this asset transfer for Baht 87.90 million and from debt restructuring for Baht 108.60 million. However, there were Baht 9.88 million reserved for asset devaluation and the Baht 26.87 million loss on asset devaluation. From the previous reasons, the Company's performance for the year 2003 was reported with a net profit of Baht 152.90 million, Baht 49.32 million or 47.60 per cent higher than Baht 103.62 million forecasted in the projections. Explanation on the significant variance of the actual performance and projection Revenue from Tin Ore The company forecasted revenue from sales of tin ore to be Baht 124.42 million. However, the actual revenue from sales of tin ore was recorded at Baht 19.11 million, a decline in production, resulting from the selling of 2 dredges and 3 tug boats along with the relocation of the Company's tin dressing plant; from No. 10 Soi Sapanhin, Ra-ngang district, Amphur Muang, Phuket to No. 46/11 Mu 6 Thepkasatthree Road, Ratsada district, Amphur Muang, Phuket. Revenue from Construction Stones Revenue from construction stones of Baht 12.29 million was lower than the Baht 26.27 million projected by 68.13 per cent. The main reason was the reduction in processing quantity in order to improve the quarry area including the renewal of its deteriorated equipment, and in the process, also reduced the Company's inventories. Thus, resulting in the lower than projected revenue form construction stone sales. Other Income Other income of Baht 98.73 million was Baht 38.70 million lower than projected by 28.16 per cent. Major portion of the revenues were from asset transfer on debt repayment such as the Baht 87.90 million on land and building. In addition, the Company also recorded Baht 8.11 million revenue from selling of the 2 tin dredges and 3 tug boats. Cost of Sales and other expenses The Company's cost of sales on tin ore for the year 2003 was lower than projected corresponding to the decline in sales volume. However, when compared with the revenue from tin ore sales, the Company's cost of tin ore sold was higher than its revenue because the Company recorded costs of parts, equipment and relocation of tin dressing plant and its branch in the cost of sales. For the construction stone business, the cost of sales was also higher than its revenue because most of the costs are fixed. Thus, with lower construction stone sales than projected, the average sale price would be lower than the average cost. Selling and administrative expenses were recorded at Baht 10.44 million in the vicinity of the Baht 12.44 million projected. In addition, the Company recorded Baht 9.99 million reserved for assets devaluation for the year 2003. COMPARISON OF THE ACTUAL PERFORMANCE BY QUARTER FOR THE QUARTER OF 2002 AND 2003 Revenue from Tin Ore Period SALES (Baht '000) QUANTITY (Habs) 2002 2003 2002 2003 Q1 - 2,894 - 328 Q2 7,915 3,553 973 397 Q3 13,197 6,306 1,628 697 Q4 5,952 6,357 751 643 Total 27,064 19,110 3,352 2,065 Revenue from Construction Stone Period SALES (Baht '000) QUANTITY (Tons) 2002 2003 2002 2003 Q1 5,379 1,677 75,862 22,523 Q2 3,327 2,476 46,309 24,909 Q3 3,653 4,096 46,482 54,486 Q4 2,911 4,021 41,083 52,127 Total 15,270 12,292 209,736 154,045 Summary of the actual performance and projection For the year 2003 ended December 31, 2003 (Unit: Baht thousand) Item Actual Forecasted Variance (audited) (reviewed) Amount % Revenues Revenues from Tin Ore 19,110 124,416 (105,306) (84.64) Revenues from Construction Stone 12,292 38,556 (26,264) (68.12) Revenues from Dredge Rental - 4,620 (4,620) N.M. Other Income * 99,341 137,426 (38,085) (27.71) Total Revenues 130,743 305,108 (174,275) (57.14) Cost and Expenses Cost of Sales-Tin Ore 19,990 113,369 (93,379) (82.37) Cost of Sales Construction Stone 16,315 32,430 (16,115) (49.69) Selling & Administrative Expenses 10,436 12,436 (2,000) (16.08) Interest Expenses 2,542 3,611 (1,069) (29.60) Director's Remuneration 305 400 (95) (23.75) Other Expenses ** 36,857 882 35,975 4,078.80 Total Cost and Expenses 86,445 163,128 (76,683) (47.01) Earning (loss) before tax 44,298 141,890 (97,592) (68.87) Income tax (38,310) 38,310 N.M. Net Operating Profit (Loss) *** 44,298 103,580 (59,282) (57.23) Extraordinary item Gain from debt restructuring 108,601 - 108,601 N.M. Net Profit (Loss) 152,898 103,580 49,319 47.61 Remark: * Other income comprised of reversed transactions of allowance on doubtful debt, Gain on selling of assets and Gain on transferring of assets for debt repayment. **Other expenses consisted of allowance for devaluation of assets. Development of business operations The concession for tin mining permit number 17996/12345 covering area of 18,855 rai 1 ngan 59 square wah was expired on February 20, 2004. For the concession permit number 17997/12563 covering area of 7,064 rai 2 ngan 66 square wah which will be expired on August 13, 2004, the company had surrendered its permit to the Department of Primary Industry and Mines on December 25, 2003, due to Phuket provincial promotion as a tourist destination together with local public sentiment against offshore tin mining. The company is studying to get offshore tin reserve for future mining to replace the expired license area. For the construction stone business, the company is in process of expanding its customer base for local customer and for government construction projects in the area. At the same time, the company is trying to cut down on its production cost. In addition, the company is developing its construction stone products to have more value added. The company is also looking into investment in energy business and will report on its progress accordingly. Please be informed accordingly. Yours sincerely, Sino-Thai Resources Development Public Company Limited (Mr.Umyos Huvanadana) Managing Director Phillip Securities (Thailand) Public Company Limited (Mr. Ong Teong Hoon) (Mr. Vikit Kachonnarongvanich) Executive Director Executive Director