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of Baht 108.87 Million. 5. Long term Investment ( Accounting policy 2.5 ) Million Baht 1999 1998 Fuel Pipeline Transportation Ltd. 181.75 133.00 Auchan Chiang Mai Co.,Ltd. 30.00 30.00 Total 211.75 163.00 Less Loss from impairment of assets 181.75 - Total 30.00 163.00 6. Investments in Associated Companies ( Accounting Policy 2.6 ) Company Type of Business Relationship Paid -up Share Investment Dividend share holding (Million Baht) capital Ratio As of 31 December (Million Baht) (%) Cost Method Equity Method 1999 1998 1999 1998 Associated company The Bangchak Green Retail Business Share holding 1.00 49.00 0.49 0.49 22.78 20.27 Net Co.,Ltd. and Service The Bangchak Green TransportationShare holding 0.10 49.00 0.05 0.05 3.13 2.86 Line Co.,Ltd. and Service Mongkhol Chaipattana Retail BusinessShare holding 3.00 48.98 - 1.47 - 1.87 - Co.,Ltd. and Service The Bangchak Power Power GenerationShare holding 40.00 39.99 16.00 16.00 16.18 15.57 Co.,Ltd. and Steam Production - Total 16.54 18.01 42.09 40.57 - The Company sold its total investment in The Mongkol Chaipattana Co.,Ltd. on April 2,1999. Furthermore, The Bangchak Power Co., Ltd. was dissoluted on November 9,1999. As of December 31,1999 ,the Company realized earnings from The Bangchak Green Net , The Bangchak Green Line and The Bangchak Power in the amounts of Baht 2.51 million , Baht 0.26 million and Baht 0.62 million, respectively. 7. Tariff Prepayment An advance payment of transportation cost (Tariff Prepayment) was made to Fuel Pipeline Transportation Ltd. (FPT) as financial assistance in accordance with the Memorandum of Understanding of June 14, 1996. Following this, the Company, together with the other FPT creditors resolved on March 3 ,1999 to restructure the FPT loan. Prior to the loan restructure , the amount owed as Tariff Prepayment was Baht 245.80 million, of this,Baht 48.75 million was converted to capital stock (preferred stock) on April 30 ,1999. The balance of the debt will be repaid through the monthly deductions of the oil transportation cost , commencing from March 2000. 8. Transaction with the related parties for the year ended December 31,1999 Million Baht Account receivable - Related parties 111.82 94.35 Account payable - Related parties 14.29 14.19 Sales - Fuel product 1,007.41 733.24 Transportation management fee 59.44 52.64 Throughput fee 83.66 77.30 Franchise fee - Lemon Green ( Minimart ) 6.00 1.23 9. Property, Plant and Equipment - Net ( Accounting Policies 2.7 and 2.8 ) Million Baht Dec 31,98 Increase Decrease Dec 31,99 Accumulated Net Book Value Depreciation Land 1,344.78 - - 1,344.78 - 1,344.78 Buildings 467.01 19.31 - 486.32 189.60 296.72 Piers, Dykes, Fences 196.12 44.67 0.03 240.76 122.66 118.10 Machineries, equipments and refinery plants 18,561.70 219.26 7.42 18,773.54 8,505.03 10,268.51 Marketing and office equipments 1,546.46 1,419.72 24.07 2,942.11 583.41 2,358.70 Platinum Catalyst 213.75 - - 213.75 - 213.75 Vehicles 366.14 4.34 14.63 355.85 174.70 181.15 Construction Work in Progress 3,353.69 313.96 1,690.35 1,977.30 - 1,977.30 Total 26,049.65 2,021.26 1,736.50 26,334.41 9,575.40 16,759.01 Included in the construction work in progress of Baht 1,977.30 million is interest expense of Baht 68.05 million. For the year , the total depreciation is Baht 927.71 million , of which Baht 558.50 is booked as cost of product , and Baht 369.21 million as administrative expenses. 10. Intangible Assets ( Accounting Policy 2.9 ) The details of which are as follows :- Million Baht First cost Accumulated Amortization Net Book Value 1999 1998 1999 1998 1999 1998 Leasehold 1,612.99 1,475.01 381.06 235.74 1,231.93 1,239.27 Software License 61.15 59.15 21.79 7.10 39.36 52.05 Total 1,674.14 1,534.16 402.85 242.84 1,271.29 1,291.32 11. Deferred income tax ( Accounting Policy 2.7 ) The company calculates income tax payable in accordance with the Revenue Code which permits the deduction of the income tax withheld against both the income tax payable and the deferred income tax pursuant to the accounting policy 2.10. The income tax expense for the year ended December 31, 1999 and 1998 comprised the following :- Million Baht 1999 1998 Income tax under Revenue Code - 13.91 Deferred income Tax 1,501.87 (3.63) Total income tax 1,501.87 10.28 Deferred Income tax Deferred tax assets 100.43 1586.54 12. Bank overdrafts and loans from financial institutions Bank overdrafts and loans from financial institutions were Baht 7,839.12 million , most of this is Baht 4,902.27 million ( USD 130 million ) short term loans from financial institution overseas with interest rates of LIBOR plus an agreed margin. 13. Long - Term Loans ( Accounting Policy 2.12 ) Million Baht 1999 1998 Foreign loan International Bank for Reconstruction and Development 1,398.98 1,208.90 Local loan Government Saving Bank 4,250.00 5,000.00 Debenture 1,370.00 540.00 Total Long term Loan 7,018.98 6,748.90 Less Current portion of long-term loan 2,467.35 1,063.57 Balance 4,551.63 5,685.33 Foreign loan Foreign loan comprised of the USD 85 million loan with the balance of USD 4.44 million which will be due for the final repayment in May 2000. This loan carries an interest rate of 5.54 percent per annum. Also included is a USD 60 million loan which is in the process of being drawndown with amount already withdrawn of USD 32.66 million. The repayment period of this loan is 12 years with the first repayment on February 1,2001. The repayment of both the principle and the interest will be semi-annually with interests rates ranging form 5.54 to 8.53 percent per annum Local Loan Local loan is the loan from Goverment Saving Bank , the pricipal will be paid within 3-5 years with the interest rate ranging from 8.00-11.75 % per annum. Debentures The company issued unsecured ,unsubordinated registered debenture with the holders name , as follows : In 1998, the debentures were issued in 2 placements, totalling 540,000 units with face value unit of Baht 1,000 for a total of Baht 540 million.The interest rate vary from 11.125 to 11.50 % per annum. Maturity Date Due of interest Paid No. 1 Dec.1 , 2001 Jun 1 and Dec 1 in each year No. 2 Dec.4 , 2001 Jun 4 and Dec 4 in each year In 1999, the debentures were issued in 3 placements , totalling 830,000 units with face value unit of Baht 1,000 for a total of Baht 830 million.The interest rate vary from 10.50 to 11.50 % per annum. Maturity Date Due of interest Paid No. 1 Jan. 21 , 2002 Jan 21 and Jul 21 in each year No. 2 Mar. 17 , 2002 Mar 17 and Sep 17 in each year No. 3 Apr. 1 , 2002 Apr 1 and Oct 1 in each year 14. Sales ( Accounting Policy 2.1 ) Million Baht 1999 1998 Sales - Fuel Products 38,113.38 34,102.82 Return on Business Investment 224.03 200.58 Total 38,337.41 34,303.40 15. Gain (Loss) from foreign exchange fluctuations Million Baht 1999 1998 Realized gain (Loss) from foreign exchange fluctuations 4.49 793.92 Unrealized gain (Loss) from foreign exchange fluctuations (34.26) 1,062.84 Total (29.77) 1,856.76 In this period , the total loss from foreign exchange fluctuations of the Company is amount of Baht 29.77 Million. The details of which are as follows ; Million Baht Gain (Loss) from foreign exchange fluctuations 1999 1998 Included in Cost of goods sold 116.85 1,482.62 Included in Profit and loss Statement (146.62) 428.14 Total (29.77) 1,856.76 16. Interest Expense ( Accounting Policy 2.8 ) For the year ,the total interest is Baht 1,169.72 million , of which Baht 68.05 million is recorded as cost of work in progress and Baht 1,101.67 million as expense. 17. Risk Management ( Accounting Policy 2.12.3 ) 17.1 Foreign Currency Risk Management As of December 31,1999, to minimize foreign exchange risk exposure, a forward foreign exchange contract was obtained for USD 20.11 million.The premium on the forward contract will be amortized over the period of the contract. 17.2 Oil Price Risk Management As of December 31,1999, the Company has an agreement guaranteeing the sale price of oil product of 1.58 million barrels, so as to reduce the risk of changes in the oil price. 18. Reclassification of Account The classification of items in financial statement for the year ended December 31,1998 were reclassified to conform with those in 1999, which do not affect net profit or shareholders equity previously reported except those stated in Note 3. 19. Cash and cash equivalence Cash and cash equivalence is statements of cash flow comprised Million Baht 1999 1998 Cash on hand and at banks 690.09 772.09 Short-term investments 180.60 173.39 Total 870.69 945.48 20. Contingent Liabilities As of December 31 ,1999 and 1998 the Companys contingent liabilities consisted of : 20.1 Obligations Bank guarantees issued by the banks on behalf of the Company as of December 31,1999 and 1998 at the amount of Baht 139.01 and 162.69 million. 20.2 Allegation The Ministry of Finance(the first defendant) was alleged in a land right transgression case (The claim for damages,which was filed with the civil court, amounts to Baht 1,055 million). The land in question ,which is located at the pier of the Refinery,was leased from the Ministry of Finance. The Company,as the lessee of land owned by the Ministry of Finance,was alleged as the fifth defendant along with the Ministry of Finance. According to the Companys Legal Office opinion,regardless as to the outcome of the case, the Company would not be liable for any losses associated with the above mentioned claim as it is protected under a lease agreement. The case is being appealed with the civil court. 21. Accounting Practice for Year 2000 Problem (Office of the Auditor General as the independent auditor responsible for financial statements did not audit the information disclosed in this note) The Company initiated the programe in solving the year 2000 (Y2K) computer problem which was completed during the year 1999 with a total cost of Baht 39.70 million. After the balance sheet date until Febuary 18,2000, there has not been any affects from the Y2K problem. Nevertheless any potential problems related to Y2K is being closely monitor.