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3.11 Pre-operating expenses and deferred charges Pre-operating expenses and deferred charges are amortized on the straight-line method over a period of 1 - 5 years. As of December 31, 1998, due to the company has suspended the development for an indefinite period, the pre-operating expense and deferred charges of Baht 84.16 million in the consolidated financial statements and Baht 42.99 million in the company's financial statements were amortized. "REVIEWED" 3.12 Deferred income tax The Company adopts the generally accepted practice of providing for deferred income tax resulting from time difference between accounting and taxable income. The time difference arise primarily from the accounting income being recognized on the percentage of completion method where as the taxable income are recognized according to the instalment payments dued. 3.13 Foreign currency transaction Foreign currency transactions during the year are converted into Baht at the rates ruling on the transaction dates. Assets and liabilities in foreign currencies at the end of period are converted into Baht at the bank buying and selling rate on the consolidated balance sheet date. Gain or loss from translation are included in determining earnings. 3.14 Provident fund Under Provident Fund Act. (B.E. 2530) the Company set up a new employee provident fund scheme in October 1994. This fund is managed by an approved finance company. Each employee contributes a fixed percentage of the gross salary and the company contributes an amount depending on employee of services. The company had been approved to temporary stop the payment contribute into the provident fund from October 1, 1997 to December 31, 1999, by the registrar of the provident fund on November 26, 1997. 3.15 Loss per share Loss per share is determined by dividing net loss by the weighted average number of shares outstanding. "REVIEWED" 4. SHORT-TERM INVESTMENT - FINANCIAL INSTITUTIONS In the consolidated financial statements, short - term investment are consisted of fixed deposit at bank and short-term promissory notes of local financial institutions with interest at the rate of 5.00% - 6.00% per annum in 1999 and 4.50% - 6.00% per annum in 1998. In the company's financial statements, short-term investment are consisted of fixed deposit at banks with interest at the rate of 5.00% per annum in 1999 and fixed deposit at bank and short-term promissory notes of local financial institutions with interest at the rate of 5.50% - 6.00% per annum in 1998. Fixed deposit at bank are used as guarantee for letter of guarantee from bank to the Metroprolitan Electricity Authority and for customers' housing loan. 5. REAL ESTATE DEVELOPMENT COST In 1998 consolidated financial statement, to enable a subsidiary company to transfer the title deed to the individual customer when the payments are made, the Company has divided some of the big lots of land into small lots by using a middle man. All of the small divided lots which are not transferred are used to replace the previous mortgage with a local bank. The latest appraisal of the real estate development assets was on December 31, 1995 for Baht 2,175.50 million for the consolidated financial statements and Baht 986.40 million for the company's financial statements, the value is expected to be higher than the present market value. The company has not set up the allowance for the impairment in value of the said assets, because the management believe that it is temporary situation. The company is in the process to appraisal the real estate development assets. The company expects that the appraisal shall be finished in the fourth quarter of year 1999. 6. INVESTMENTS As of June 30, 1999 and December 31, 1998, the aggregated cost of investments in related and other companies was higher than the aggregated book value, based on the latest unaudited and reviewed the interim financial statement, by Baht 60.83 million and Baht 65.26 million respectively. 7. LAND BANK The latest appraisal of a part of land bank was on December 31, 1995 for Baht 788.90 million for the consolidated financial statements and Baht 37.40 million for the company's financial statements, the value is expected to be higher than the present market value. The company has not set up the allowance for the impairment in value of the said assets, because the management believe that it is temporary situation. The company is in the process to appraisal the real estate development assets. The company expects that the appraisal shall be finished in the fourth quarter of year 1999. 8. PROPERTY, PLANT AND EQUIPMENT The latest appraisal of a part of property, plant and equipment was on December 31, 1995 for Baht 52.30 million for the consolidated and company's financial statements, the value is expected to be higher than the present market value. The company has not set up the allowance for the impairment in value of the said assets, because the management believe that it is temporary situation. The company is in the process to appraisal the real estate development assets. The company expects that the appraisal shall be finished in the fourth quarter of year 1999. 9. OTHER ASSETS - DEPOSIT - LAND Under other assets, in the consolidated financial statements and in the company's financial statement, as of June 30, 1999, the contract to purchase land is dued, the payment has not been made and the company is in the process of getting further extension. "REVIEWED" 10. OTHER ASSETS - OTHERS Under the other assets, in the consolidated financial statements and in the company's financial statements, included promissory notes (amounted to Baht 3.93 million and Baht 2.64 million respectively) of a financial institution which was ordered to cease its operation on December 8,1997 by the Ministry of Finance. The said promissory notes are not able to change to the negotiable certificate of deposit and being hold for liquidation settlement. As of June 30, 1999, promissory notes of Baht 2.69 million and Baht 1.86 million and as of December 31, 1998, promissory notes of Baht 3.12 million and Baht 2.16 million respectively have been pledged to secure customers' housing loans. As of December 31, 1998, the company had the saving deposit at bank approximately Baht 1.58 million which are pledged to secure loan from bank. 11. BANKS OVERDRAFTS AND LOANS FROM FINANCIAL INSTITUTIONS In the consolidated financial statements The company and its subsidiaries have credit lines with local banks amounted to Baht 42.73 million which are secured by the mortgage of land development. Notes payable are short - term and callable promissory notes of local financial institutions with interest at the rate of 11.25% - 21.00% per annum in 1999 and 14.25% - 21.00% per annum in 1998, which are secured by the mortgage land bank, land development together with the guarantee by a director. The subsidiary company has short-term promissory notes of a local financial institution which was ordered to cease its operation on December 8, 1997 by the Ministry of Finance amounted to Baht 24.98 million As of June 30, 1999 and December 31, 1998, short-term promissory note of Baht 103.62 million and Baht 74.98 million respectively have not been paid and are overdued. The company is in the process of getting further payment extension. Loans are loans from several local financial institutions. In 1999, interest are at the rate of 9.50% - 15.00% per annum and are secured by the mortgage of land development together with the guarantee by a director. In 1998, interest are at the rate of 12.25%-18.00% per annum and are secured by saving and fixed deposit at bank and the mortgage of land development together with the guarantee by a director. As of June 30, 1999 and December 31, 1998, loans of Baht 180.10 million and Baht 97.03 million respectively are overdued and have not been paid. The company is in the process of negotiate and getting payment extension. In the company's financial statements The company has credit lines with a local bank amounted to Baht 17.73 million, which are secured by the mortgage of land development. Notes payable are short - term promissory notes of a local financial institution with interest at the rate of 11.25% per annum in 1999 and 14.25% per annum in 1998, which are secured by the mortgage of land bank. As of June 30, 1999, short-term promissory notes of Baht 28.65 million have not been paid and are overdued. The company is in the process of getting further payment extension. Loans are loans from a local financial institution. In 1999, interest are at the rate of 15.00% per annum and are secured by saving deposit at bank and the mortgage of land development, a related company's land development together with the guarantee by a director. In 1998, interest are at the rate of 15.75% per annum and are secured by saving deposit at bank and the mortgage of land development, a related company's land development together with the guarantee by a director. As of June 30, 1999 and December 31, 1998, loans of Baht 97.03 million are overdued and have not been paid. The company is in the process of negotiate and getting payment extension. 12. CURRENT PORTION OF LONG-TERM BOND According to the resolution of the extraordinary meeting of the shareholders on June 6, 1994, the company had issued a 4 year 8.00% non-convertible bond, totalling Baht 500 million, par value of Baht 1,000.00 each. Interest shall be paid semi-annully, the company has not made any payment when the bond became dued on June 15, 1998, and is in the process to restructure the debts. 13. LONG-TERM LOANS In the consolidated financial statements Long-term loans are loans from local banks, local financial institutions and a foreign financial institution with interest at the rate of 9.50% - 15.00% per annum in 1999 and 12.25% - 18.00% per annum in 1998. These loans are repayable from 1998 to 1999. The repayable of these loans depends upon the release of mortgage by the company for transfer of land to the customers. These loans are secured by the mortgage of land, land development, land bank and plant. As of June 30, 1999 and December 31, 1998, long-term loans of Baht 1,140.00 million and Baht 699.29 million respectively have not been paid and are overdued. The company is in the process of getting further payment extension. In the company's financial statements Long-term loans are loans from local financial institutions and a foreign financial institution comprised of four agreements with interest at the rate of 9.75% - 12.75% per annum in 1999 and 12.50%-18.00% per annum in 1998. These loans are repayable from 1998 to 1999. The repayable of these loans depends upon the release of mortgage by the company for the transfer of land to the customers. These loans are secured by the mortgage of land development, a related company's land development. As of June 30, 1999 and December 31, 1998, long-term loans of Baht 333.72 million and Baht 255.66 million respectively have not been paid and are overdued. The company is in the process of getting further payment extension. 14. LOSS (GAIN) FROM THE CANCELLED CONTRACTS As of June 30, 1999 and 1998, the company and its subsidiaries had cancelled some of the sale contracts, which the sales and cost of sales from those contracts had been recognized up to March 31, 1999 and 1998 and the company had recorded the amount seized from the cancelled contracts. 15. RELATED PARTY TRANSACTIONS As of June 30, 1999 and 1998, the company and is subsidiaries have the related party transactions as follows : MILLION BAHT FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD CONSOLIDATED THE COMPANY ONLY CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 1999 1998 1999 1998 Management fee - - 1.97 1.84 - - 4.08 2.52 Interest income - - 13.02 15.43 - - 26.11 31.00 Interest expense - - 0.30 2.53 - - 0.66 5.41 Management fee income was management and administration fee income from certain related companies which engage in real estate business. The business transactions as reflected in the interim financial statements were not differed from the unrelated parties. 16. COMMITMENT AND CONTINGENT LIABILITIES As of June 30, 1999 and December 31, 1998, the company and its subsidiaries have the commitment and contingent liabilities as follows : MILLION BAHT CONSOLIDATED THE COMPANY ONLY 1999 1998 1999 1998 16.1 Commitment under the contracts to invest in the development projects until completion 6.72 26.18 0.42 19.75 16.2 Commitment under the contract to purchase of land 4.50 27.60 4.50 27.60 16.3 Contingent liabilities as a guarantor for customers'housing loans of the company and related companies 29.79 30.52 28.96 29.56 16.4 Contingent liabilities to bank for letters of guarantee 9.20 9.83 5.74 5.79 16.5 Contingent liabilities for guarantee of related companies's credit facilities - - 1,307.69 1,307.69 "UNAUDITED" "REVIEWED" 17. SUBSEQUENCE EVENT At the 3rd/1999, Broad of Director Meeting hold on August 9, 1999, had approved a resolution as follow : 17.1 To increase the autorized share capital from Baht 550 million to Baht 6,937.5 million by issued 638.75 million common share. 17.2 Have unanimously given the ratification to the Memorandum of Understanding regarding debt restructuring, the capital increase plan and the financial supporting plan from Lehman Brothers Holding Inc. 17.3 To held the 3rd/1999 Extra-shareholder Meeting on September 14, 1999 to approve the issues proposed by the Company Board of Director. 18. CHANGE OF THE COMPANY'S NAME In the consolidated financial statements, on July 3, 1998 and July 20, 1998, the shareholders had resolution to change the company's name from Noble Property Management Company Limited to S&P Property Management Company Limited. These special resolution were registered with the Ministry of Commerce on July 29, 1998. 19. THE YEAR 2000 AFFECT TO THE COMPANY The company anticipate to have no problem with the Y2K because the company is upgrading the present system and replacing with the new system with the estimated cost of Baht 635,000. The company expects that the work shall be finished in 1999. By the year 2000, the company may face the uncertainty causing by the affect from the Y2K problem occur from other companies which the company deal business with. The company expects that the affect to the company will be immaterial. 20. RECLASSIFICATION OF ACCOUNTS Certain accounts in 1998 were reclassified to conform with the 1999 interim financial statements presentation.