financial highlights
Unit: Million Baht 1999
1998
18,327.77
14,881.13
6,885.88
224.98
25,872.69
17,449.47
Gross Profit
9,282.82
5,289.26
Net Profit
2,750.06
1,446.52
Total Assets
39,864.16
38,079.39
Total Liabilities
18,338.78
27,000.54
Total Shareholder’s Equity
21,525.38
11,078.85
1999
1998
Net Profit Margin
10.63%
8.29%
Return on Equity
12.78%
13.06%
Return on Assets
6.90%
3.80%
10.37
6.18
-
-
81.18
47.35
Operational Results Revenues from Services and Equipment Rentals Sales Total Revenue
Financial Ratios
Net income for the year per share (Baht) Dividend per share (Baht) Book Value per share (Baht) As of December 31, 1999
1
message from the chairmen
Dear Shareholders: Year of 1999 marked an early phase of economic recovery for Thailand after being hit with severe crisis, which had crippled businesses since 1997. It was also a remarkable year for Advanced Info Service Public Company Limited (AIS) for that it had achieved its target of 1,000,000 mobile subscribers base. The number of subscribers had continuously increased since March 1999. Total new subscriber addition for the year was 250,900, bringing the balance of accumulated subscribers to 1,230,200 as at the end of the year. In addition, 1999 was also the year when significant adjustment had taken place to further strengthen the Company’s financial position and to lift the Company’s standard to the international level—a strong telecommunication player from Singapore became our strategic partner. The operational performance for the period ending on 31 December 1999 can be summarized as follows : Operating Results and Net Profit Effective management, expense control, preservation of premium network and service quality, customer satisfaction, and continuous innovation of new products—all of which had significantly contributed to a remarkable improvement in 1999 performance compared to 1998. Total revenue was Baht 25.873 billion, increased from Baht 17.449 billion in 1998—Baht 8.424 billion—or 48.28% growth year-on-year. Net profit of Baht 2.750 billion, after an adjustment of change in amortization cost of mobile phone network under concession agreements, increased from Baht 1.446 billion in 1998—Baht 1.304 billion—or 90.18% growth. Mobile Phone Network Development The Cellular 900 and Digital GSM network superiority has widely been regarded, not only as the broadest geographical coverage in Thailand, but also as the most effective round-the-clock service. Throughout 1999, AIS has continuously invested in network development, both in coverage area expansion and in service quality enhancement using new technology. Ninety-three base stations have been added to the Cellular 900 network, while two hundred seventy-four base stations have
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been added to the Digital GSM network. The balances as at the end of 1999 were 29 telephone exchanges and 1,475 base stations for Cellular 900 network and 17 telephone exchanges and 1,573 base stations for Digital GSM network. We have also inspected and prepared our mobile network and computer systems in compliance with the requirement for the year 2000. Market Development As the leader in the network service provider market, AIS commands a market share of 48% and has a total of 1,230,200 subscribers in Cellular 900 and Digital GSM. AIS has also introduced prepaid mobile phone service in Digital GSM system under the commercial name of “One-2-Call!” The new service is to target new customers who have a need to limit usage. Furthermore, AIS has extended international roaming agreements to cover 60 countries on 117 networks, compared to 47 countries on 81 networks originally in 1998. GSM subscribers can now automatically use mobile phones across USA. New value-added services have also been added for Cellular 900 increasing from 16 services in 1998 to 24 services in 1999. And for Digital GSM, there are a total of 41 value-added services in 1999, up from 28 services in 1998. Service Quality Development AIS is fully aware of the importance of service quality and after-sale service. The new service under the name of “Services on the Net” has been implemented where customer can check service fees and outstanding balance and make payments via internet. Beginning in 1998, AIS has also established “Priority Care Center” and “Minute Plus” project to ensure the best care of the existing subscribers. Customer service branches have been revamped with modern facilities to provide convenience to customers, while customer service personnel has undergone “The AIS Way” training program in order to provide the highest standard of service quality. In addition, AIS has appointed countrywide service representatives extending services throughout the country to provide convenience and reach out to the customers even in remote areas. Liberalizati on AIS is closely monitoring every step of the telecommunication liberalization process—frequency allocation act, radio and television broadcasting act, telecommunication act, and revenue conversion currently under the Government’s consideration. We are confident to inform that AIS is ready for the telecommunication liberalization, which is expected to materialize in the near future. We would like to thank all of you—shareholders, customers, business partners, and staffs—for continuing support and taking part in our outstanding performance achievement. With our clear business policy together with our high-capacity personnel, AIS should be able to maintain the leading position in telecommunication sector.
Mr. Paiboon Limpahayom (Ph.D.)
Mr. Somprasong Boonyachai
Chairman of the Board of Director
Chairman of the Executive Committee Wireless Communication
3
leadership by capitalizing on new opportunities The dynamic marketing strategies of AIS have successfully broadened
The key factor ensuring Advance Info Service Plc. (AIS) to maintain its leadership in Thailand’s mobile phone business is the Company’s dynamic marketing strategy to capitalize on new opportunities. To create as well as respond to consumers’ fast-changing needs and demands, AIS continuously expands its mobile phone networks, constantly improves its service and cutting edge technology.
its market base through product and network development and by creating an appeal to specific segments of target consumers, from businessmen and small business owners to the young generation and teenagers. AIS network coverage is extensive and efficient, while various services in addition to receiving and making calls are conveniently in place. Currently, AIS offers Cellular 900, Digital GSM, and prepaid One-2-Call! systems. It is our mission to expand our services to the full range of wireless communications. Mobile telephones no longer communicate solely with sound but are equipped to send and receive the latest news and information vital to businesses and everyday life in this information age. The next step in product development at AIS is characterized by variety and personalized services. Infrastructural installations are well on their way to accommodate internet connections and complete non-voice applications. These new developments will ensure state-of-the-art services and the greatest benefits for subscribers. With the management team of highly-qualified professionals in various fields, AIS has attained remarkable achievements in all aspects. Despite the economic crisis and intense competition, AIS has gained wider market expansion, stronger financial status. To guarantee the
4
5
leadership by capitalizing on new opportunities
Company the edge in business operations, AIS has successfully undertaken organization restructuring. The Company is confident that it will continue to lead the way in Thailand’s wireless communications business.
L e a d i n g E d g e N e t w o r k Two of the most important aspects of wireless communications business are highly-efficient equipment and extensive AIS has continued to develop comprehensive networks nationwide. By the end of 1999, the Company has expanded its Cellular 900 network by setting up 29 mobile telephone exchanges and 1,475 base stations. The Digital GSM system is supported by 17 exchanges and 1,543 base stations. Additionally, AIS mobile telephone services will soon be connected to the internet.
network. The engineering arm of AIS is therefore constantly improving and developing new technologies, especially in basic network expansion, to enhance maximum sound quality and coverage. Subscribers can enjoy greater convenience, i.e. better connections and sound quality while communicating in areas with transmission deficiency. More and more buildings have been equipped with GSM signal enhancement for better connections. By the end of 1999, AIS has expanded its Cellular 900 network to 29 mobile telephone exchanges and 1,475 base stations. The Digital GSM system
6
is supported by 17 telephone exchanges and 1,543 base stations. With 200 million US dollars set aside, the Company is also planning to develop and expand the network to accommodate new subscribers and new technologies. AIS mobile telephone services will soon be connected to the internet.
Q u a l i t y P r o d u c t AIS’s market share of 48% is its testimony of on-going development in all aspects. New services are frequently introduced
The AIS international roaming feature is well-received by subscribers who use the mobile telephone during their foreign travel. As of 1999, this feature covers 60 countries and 117 networks worldwide. In the US, for instance, international roaming is available to AIS subscribers in almost all states.
such as the prepaid “One-2-Call!� service, which has proved to be very popular among target consumers, and the international roaming feature which caters to subscribers involved in international business. As of 1999, this feature covers 60 countries and 117 networks worldwide. In the US, for instance, international roaming is available to AIS subscribers in virtually all states. 7
Other brand new services are also in the making. AIS is gearing up for non-voice applications to meet demands in information transfer via the internet including Mobile Commerce. In response to the rapidly increasing needs of the information age, new technologies will soon be available such as SIM ToolKits, Mobile Banking, and WAP, allowing subscribers to surf the internet via the mobile phone no matter where or when. “One-2-Call!”, the prepaid service, was introduced in 1999 to expand AIS customer base. The service has proved to be very popular among target consumers— teenagers, the young generation, and other subscribers who use their mobile telephones minimally.
B e t t e r S e r v i c e Recognizing the importance of both product quality and subscriber support in mobile telephone business, AIS has established the AIS Priority Call Center and AIS Priority Care Center nationwide to
8
leadership by capitalizing on new opportunities
Recognizing the importance of after-sale services in mobile telephone business, AIS has established the AIS Priority Call Center and AIS Priority Care Center to provide comprehensive assistance to subscribers in Bangkok and other provinces nationwide.
provide comprehensive assistance to subscribers in Bangkok and in other provinces throughout the country. Furthermore, AIS has developed internet services known as “Service on the Net” via www.ais900.com to provide convenient communication access between the Company and dealers as well as between subscribers and AIS. “Service on the Net” offers a variety of services such as mobile telephone registration, telephone charge record, payment via the net, outstanding payment check, etc. 9
leadership by capitalizing on new opportunities
R e a d y f o r L i b e r a l i z a t i o n AIS is confident in its strengths in all aspects—a well-qualified team of management and operations experts, extensive network coverage nationwide, constantly-updated products and services of international standards, and strong strategic partner such as Singapore Telecom International Pte Ltd. When concession amendment and the master plan in telecommunications development take effect to make way for market liberalization, the Company is ready to compete with new operators in the business. In 1999, AIS formed strategic partnership with Singapore Telecom International Pte Ltd. (STI) in order to develop and consolidate its cellular telephone business, increasing its competitive edge for the coming market liberalization. STI now holds 20% of AIS.
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With years of experience and superb expertise, AIS knows inside out the Thai market—the culture and behavior of the Thai consumers. At the same time, we are always on top of the latest telecommunications technologies. Backed by more than one million subscribers, AIS has every reason to believe that, after market liberalization, the Company will emerge, as always, the ultimate leader in telecommunications business in Thailand.
time chart
Advanced Info Service Plc.
April 24, 1986
Advanced Info Service Plc. (AIS) was established with registered
capital of Baht 5 million to run a computer rental business. March 27, 1990 AIS was granted an exclusive 20-year concession by the Telephone Organization of Thailand (TOT) to operate a mobile telephone services using 900 MHz. October 1, 1990 AIS launched its first services of cellular 900 MHz with analogue system. November 5, 1991 AIS was registered a public company and listed on the Stock Exchange of Thailand. June 1992 The Company acquired Shinawatra DataCom Co., Ltd. (SDC) who was granted by TOT a 10-year concession to operate a data communication network from its parent company, SHIN. In September 1997, the concession agreement was changed to join venture agreement, resulting TOT owns 23.5% stake of SDC. The Company acquired Shinawatra Paging Co., Ltd. (SPG) who was granted by TOT a 15-year concession to operate the nationwide paging service “Phonelink” from SHIN. April 29, 1993 The Company increased its paid-up capital from Baht 750 million to Baht 780 million. October 1994 The Company launched new service of cellular 900 MHz called “Digital GSM” (Global System Mobile Communications) November 16, 1994 The Company increased its registered capital from Baht 1,000 million to Baht 5,000 million and paid-up capital from Baht 780 million to Baht 2,340 million September 20, 1996 AIS was granted by TOT to extend its concession periods from 20 years to 25 years. However, TOT could grant license to new operators as well. December 20, 1998 The Company acquired investment in Shinawatra Wireless Marketing Co., Ltd. (SWM), importer and distributor of cellular 900 mobile phone, from its parent company in order to reorganize business structure of the Group. In March 2, 1999 SWM has changed its name to Advanced Wireless Marketing Co., Ltd. (AWM). 11
time chart
Advanced Info Service Plc.
February 19, 1999 The Company increased its paid-up capital from Baht 2,340 million to Baht 2,700 million by issuing 36 million new shares for Private Placement to Singapore Telecom International Pte Ltd. (STI). This was to strengthen financial status of the Company as well as enhance the competitive capability after liberalization of the telecommunication industry in the near future. The Company acquired additional 40% stake of Shinawatra Paging Co., Ltd. from Thai Page Pte Ltd., the affiliate of STI Group, resulting the Company’s shareholding in SPG up to 100% . March 2, 1999 Shinawatra Paging Co., Ltd. and Shinawatra Wireless Marketing Co., Ltd. has changed its name to Advanced Paging Co., Ltd. (APG) and Advanced Wireless Marketing Co., Ltd. (AWM) respectively. June 1999 The Company launched a new service “One-2-Call!” which is prepaid Digital GSM mobile phone service. September 1999 The Company has changed the Company’s auditor from KPMG Audit (Thailand) Co., Ltd. to PricewaterhouseCoopers ABAS Ltd. effective as of the third quarter of 1999. October 1999 The Company acquired additional 40% stake of Shinawatra DataCom Co., Ltd. (SDC) from STI, resulting the Company’s shareholding in SDC up to 68%. Recently, SDC has changed its name to Advanced Datanetwork Communications Co., Ltd. since February 23, 2000.
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Subsidiary and Associated Companies
The Company and its subsidiaries, in which it holds more than 10% stake Company
Business
Registered
Par Value
Paid-Up
% of
Capital
(Baht per
Capital
Investment
(Million
Share)
(Million
Share)
Advanced Info Service Plc.
Service provider of
Head Office : 414 Phaholyothin Road
cellular phone networks for
Samsennai, Phayathai, Bangkok
NMT 900 and Digital GSM
Baht)
270
10
2,700
-
24
10
240
99.99
35
10
350
99.99
45.752
10
457.52
67.95
0.10
10
1
49.00
Tel. (662) 299-5000 Fax. (662) 299-5719 Branch: 1291/1 Phaholyothin Road Samsennai, Phayathai, Bangkok Tel. (662) 299-6000 Fax. (662) 299-6005 Advanced Wireless Marketing Co., Ltd.
Importer and distributor of
414 Phaholyothin Road
cellular phones and
Samsennai, Phayathai, Bangkok
accessories, and provider
Tel. (662) 299-5000
of NMT 900 and Digital
Fax. (662) 299-5470
GSM phone rental service
Advanced Paging Co., Ltd.
Service provider of the
1291/1 Phaholyothin 9
digital paging system
Samsennai, Phayathai, Bangkok
network, trading of pagers
Tel. (662) 299-6000
and providing pager for
Fax. (662) 299-6446
rent under the name of “Phonelink�
Advanced Data Network
Service provider of
Communications Co., Ltd.
nationwide voice/data
500 Amarin Tower, 17/F, Ploenchit Road
communications via
Lumpini, Pathumwan, Bangkok
telephone line network
Tel. (662) 256-9461 to 80 Fax. (662) 256-9922 Data Network Solutions Co., Ltd.
Service provider of high-
500 Amarin Tower, 17/F, Ploenchit Road
speed data
Lumpini, Pathumwan, Bangkok
communications network
Tel. (662) 256-9461 to 80 Fax (662) 256-9922
As of February 29, 2000
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Other Reference Persons Security Registrar
Thailand Securities Depository Co., Ltd. 62 Ratchadapisek Road, Kwaeng Klongtoey, Khet Klongtoey, Bangkok Tel. (662) 359-1200 to 01 Fax. (662) 359-1259
Auditor
Mr. Prasan Chuapanich
CPA. No. 3051
Mr. Suchart Luengsurasawat
CPA. No. 2807
Miss Nangnoi Charoenthaveesub CPA. No. 3044 PricewaterhouseCoopers ABAS Ltd. 179/74-80 Bangkok City Tower, 15/F South Sathorn Road, Bangkok 10120 Tel. (662) 286-9999, 344-1000 Fax. (662) 286-5050 Financial Advisor for Bond Offering
SCB Advisory Co., Ltd. 111-B SCB Park Plaza, West Tower I, 11/F 18 Ratchadapisek Road, Lardyao, Chatuchak Bangkok 10900 Tel. (662) 937-5059
Bond Registrar
Siam Commercial Bank Public Company Limited 9 Ratchadapisek Road, Lardyao, Chatuchak Bangkok 10900 Tel. (662) 544-3866 - 76
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Report of the Audit Committee
To the Shareholders of Advanced Info Service Public Company Limited The Audit Committee has conducted its responsibilities in compliance with Charter of the Audit Committee approved by the Board of Directors. Meeting of the Audit Committee has been held quarterly through the preceding year to review financial statements of the Company and its subsidiaries before submitting to the Board of Directors. The recommendations were conducted on subject matters related to audit results of the internal auditing control systems and comprehensive plans of Internal Audit Office by using a mean of business risk assessments. The Audit Committee has also discussed regarding the disclosure of significant information technologies of the Company and also given particular advise with respect to management procedures where upon a kind cooperation of the Company’s Management, external auditors and internal auditors has fully met. In our opinion, the Company’s operation performance presents good corporate governance with transparency, integrity and ethics, including sufficient internal controls measurement. The financial statements are prepared in conformity with appertaining laws and regulations to disclose an appropriate and adequate information. There are no significant weaknesses found in the internal control systems. The Audit Committee proposed the Board of Directors to consider approval for the appointment of PricewaterhouseCoopers ABAS Ltd. as the Company’s Auditors for the accounting year of 2000.
Suphadej Poonpipat Chairman of Audit Committee, April 3, 2000
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Nature of business
Advanced Info Service Plc., “the Company,” operates Nordic Mobile Telephone (NMT) and Digital Global System Mobile (GSM) telephone services through 900 MHz frequency under concession agreements with the Telephone Organization of Thailand (TOT) dated March 27, 1990 and Memorandum of Agreements attached thereto. The Company has to pay a revenue sharing of 15% of its gross service revenue to TOT in the first 5 years. The rate shall be increased by 5% every subsequent 5-year throughout the 25-year concession period, with a cap of 30% or the minimum amount as stipulated in the agreement for year 16-25. Such concession is a “build-transfer-operate” (BTO) type under which the Company shall make investment and assume responsibilities for fund raising and the costs in connection therewith. After installation, the entire system shall fall into the ownership of TOT, and the Company shall be entitled to use the system for the operation of NMT and Digital GSM mobile phone services under the concession agreements. Mobile phone services can be divided into 2 systems as followed: ●
The NMT system transmits radio signals through ultra high frequency (UHF). This means in any period of time, it can provide service to only one pair of speakers within one channel 905-915 MHz for reception and 950-960 MHz for transmission. The Company has opted for this system during the initial stage of mobile phone service and has installed mobile switching centers and base stations extensively throughout the country. Later, when the Digital GSM with higher efficiency and more advanced features has been introduced, the Company has segmented subscriber base and marketed the products according to their requirements. That is, the NMT is positioned to serve subscribers with basic service needs who live outside Metropolitan areas and require nationwide coverage.
●
The Digital GSM transmits signals through Time Division Multiple Access (TDMA). This special technique enables one pair of frequencies (reception/transmission) to accommodate conversation of subscribers up to 8 access lines at the same time or 8 times more than the NMT. The digital GSM is a well-recognized system with services provided in over 60 countries around the world. The frequencies between 897.5 - 905 MHz are used for reception while the frequencies between 942.5950 MHz are used for transmission. In the future, mobile phone will advance to the third generation, to which Digital GSM system can easily be enhanced. The advancement will bring change to the services. There will not be only voice transmission, but also data transmission, which transmits in high quantity at high-speed. The new services will include of data transmission in the forms of multimedia and Internet/Intranet applications. In addition, the new mobile phones will be of the same standard throughout the world, and they will be light and small. Digital GSM subscribers will be those who live in Bangkok and other Metropolitan areas who require advanced telecommunication technology.
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Investment in other firms: Advanced Wireless Marketing Co., Ltd. (AWM) AWM has a registered capital of Baht 240 million, all of which is fully paid. Advanced Info Service Plc. holds 100% stake. AWM, formerly known as Shinawatra Telewiz Co., Ltd., distributes NMT and Digital GSM mobile phones under a franchise system. The Company’s name has been changed to Shinawatra Wireless Marketing Co., Ltd. on December 25, 1997, and subsequently to Advanced Wireless Marketing Co., Ltd. on March 2, 1999. AWM is now an importer and distributor of NMT, Digital GSM mobile phones, and other telecommunication equipment. AWM also operates phone rental service, after-sale service and repair center, sale of refill cards for “One-2-Call!” mobile phones and I-Station (Internet Counter) at Bangkok (Don Muang) International Airport. Advanced Paging Co., Ltd. (APG) APG has a registered capital of Baht 350 million, all of which is fully paid. Advanced Info Service Plc. holds 100% stake. APG, formerly known as Shinawatra Paging Co., Ltd., operates “Digital Display Paging” service under the name of “Phonelink” under a BTO concession from TOT. The concession period is 15 years from June 12, 1990 to June 11, 2005. “Phonelink” is the first nationwide paging service that sends messages in texts. There are additional value-added services, such as “Express Link to Phonelink” “Short Message to Phonelink” “Voice Mail Plus” “Voice & Fax Mail Plus” “Stock Broadcast” “Stock Package” “Stock Tracking” and “Moneylink”. Advanced DataNetwork Communication Co., Ltd. (ADC) ADC has a registered capital of Baht 457.52 million, all of which is fully paid. Advanced Info Service Plc. holds 67.95%, while TOT and others hold 23.50% and 8.55% of its outstanding shares respectively. ADC is formerly known as Shinawatra Datacom Co., Ltd. The name has been changed to ADC on February 23, 2000. ADC has been granted a concession by TOT to operate On-line Data Communication service via telephone lines under the name of “Datanet.” The services include linking computers at different premises, linking ATMs, and linking banks’ online computer system. The services have commenced in 1990. ADC provides links in forms of Point-to-Point, Point-to-Multipoint, X.25, Frame Relay and ATM. Major customers include banks, oil tanks, airlines, transportation and trading businesses. Currently ADC commands 11% market share; while the TOT, the market leader, has 60% market share. So far, ADC has a backbone network capable of providing services nationwide. Data Network Solutions Co., Ltd. (DNS) DNS has a registered capital of Baht 1 million, all of which is fully paid. Advanced Info Service Plc. holds 49%, while Bangkok Telecom Engineering Co., Ltd. holds the other 51% stake. Originally DNS was established to provide On-line Data Communication in the provincial areas, as ADC was restricted by the concession agreement to provide service only in Bangkok. However in September 1997, TOT granted ADC a permission to operate nationwide. As such, DNS is currently providing service only to existing subscribers and selling equipment not related to the service.
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Shareholding Structure of the Group Company
Shin Corporations Plc.
Advanced Info Service Plc.
Advanced Wireless Marketing Co., Ltd.
Advanced Paging Co., Ltd.
Advanced Data Network Communications Co., Ltd.
Data Network Solutions Co., Ltd.
Shin Satellite Plc.
C.S. Communications Co., Ltd.
C.S. Satellite Phone Co., Ltd.
Shenington Investments Pte Ltd.
Cambodia Shinawatra Ltd.
Lao Telecommunications Co., Ltd.
As of February 29, 2000
18
Teleinfo Media Co., Ltd.
SC Matchbox Co., Ltd.
IT Applications Service Co., Ltd.
Shinawatra Information Technology Co., Ltd.
AD Venture Co., Ltd.
Merry International Investment Corp.
Structure of income of the group of Companies (Unit: Million Baht) Product/Service
Operator
% of
1999
1998
Holding
Mobile Telephone Service Advanced Info Service Plc.
(Restated) Revenue
%
Revenue
%
-
16,687.92
66.19
13,323.79
88.20
99.99
6,747.88
26.76
Distributor of Mobile
Advanced Wireless Marketing
Phones
Co., Ltd. (AWM)
-
-
Paging Service and
Advanced Paging Co., Ltd. (APG)
99.99
1,607.09
6.37
1,619.45
10.72
On-line Data
Advanced Data Network
67.95
170.76
0.68
162.86
1.08
communications Service
Communications Co., Ltd. (ADC)
25,213.65
100.00
Distributor of Pagers
via Telephone Line
Data Network Solutions Co., Ltd. (DNS)
49.00
Total
15,106.10 100.00
As of December 31, 1999
Note
1. The Company holds 99.99% of AWM shares since December 20, 1998 and consolidates into the Company’s financial statement in 1999. 2. The Company holds 99.99% of APG shares since February 19, 1999 3. The Company holds 67.95 of ADC and 49.00% of DNS since October 20, 1999 respectively.
Major Events of the Company in 1999 January 1999: *
Standard & Poor’s changed the Company’s credit rating from BBB to BBB-, in line with the country’s credit rating.
February 1999: *
The Company’s shareholders meeting passed the following resolutions: 1. Approval of increase in paid-up capital from Baht 2,340 million to Baht 2,700 million by issuing 36 million new shares for private placement to Singapore Telecom International Pte Ltd. (STI) at a price of Baht 230 per share. Proceeds are for expansion of mobile phone network. 2. Approval of amendment to the Company’s Articles of Association to allow foreigners to hold shares of the Company up to 49.99%. 3. Approval of purchase of 40% of ordinary shares of Advanced Paging Co., Ltd. (formerly known as Shinawatra Paging Co., Ltd.) at Baht 67.83 per share, total equivalent to Baht 949.60 million, from Thai Page Pte Ltd., which is an affiliated company of STI.
*
STI acquired 18.63% stake of the Company and the Company acquired additional 40% stake in APG, bringing the Company’s shareholding in APG up to 100%.
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July 1999: *
The Company launched a new service “One-2-Call!” which is prepaid Digital GSM mobile phone. The service can be activated instantly with neither registration nor monthly fee, and refill cards can conveniently be purchased at various outlets. “One-2-Call!” is position to target young customers.
September 1999: *
The Extraordinary General Meeting of Shareholders passed a resolution to change the Company’s auditor from KPMG Audit (Thailand) Co., Ltd. to PricewaterhouseCoopers ABAS Ltd. effective as of the third quarter of 1999.
*
Change in accounting policy. Previously the Company has previously amortized the cost of NMT and GSM mobile telephone network equipment over the remaining period of the concession agreement, commencing from the date of equipment installation to September 2015. Under the new accounting policy, such cost is amortized over the period the underlying systems equipment assets are expected to contribute revenue and cash to the business. The cost of mobile telephone network equipment for the NMT system is amortized on a straight-line basis over a period of 10 years, not exceeding year 2005. Digital GSM system is amortized on a straight line basis over a period of 10 years, not exceeding the concession period. The Company’s management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement.
October 1999: *
The Board of Directors Meeting passed a resolution for the Company to purchase 18,339,386 ordinary shares of Advanced DataNetwork Communications Co., Ltd. (ADC), formerly known as Shinawatra Datacom Co., Ltd.; and 49,000 ordinary shares of Data Network Solutions Co., Ltd. (DNS) for the total price of Baht 281 million from Singapore Telecom International Pte Ltd., one of the Company’s major shareholders. The Company foresees that Thailand’s telecommunication is moving into information technology phase, whereby data communications show an increasing trend in addition to the current, pure voice communications. Moreover the “Datanet” business (the online data communications service via telephone line of ADC and DNS) has a great potential to grow and to add value to the Company. Besides, the purchase also enhances synergy behind strategic moves of ADC and DNS. The transaction accounts for 1.22 percent of the existing assets of the Company. It is regarded as relevant transaction according to Cl. 9 of SET’s Announcement on the Disclosure of Relevant Transactions of Listed Companies under which the Company has to report to SET on the transactions without seeking shareholders meeting’s approval.
December 1999: *
The Company’s shareholders meeting passed the following resolutions: 1. To cancel the remaining portion of the approved, but not issued, unsecured bonds in the amount of Baht 3.5 billion. Previously upon the resolution of Extraordinary General Meeting of Shareholders No. 2/1997 on October 16, 1997, the issuance of up to Baht 5.0 billion of unsecured bonds was approved. The rationale for the cancellation was that details and conditions of approved, but not issued, bonds were not in line with the current bond market. 2. To approve the issuance and offer for sale of unsecured bond to investors in an amount not exceeding Baht 10.0 billion and/or equivalent in other currencies, with maturity not exceeding 10 years from the date of issue. The bonds were to be offered domestically and/or internationally to the public and/or institutional investors in whole or in part which could be single or multiple offerings. In case that there was redemption, within the amount approved the Company can replace it with an additional bond of the same nature and under the conditions and amount as stipulated. Additional restrictions and conditions of the bond (such as face value, per-unit offered price, interest rate, appointment of bondholders’ representatives, allocation method, offering details, early redemption, an account to be established to receive the proceeds from the sale of the bond, and listing in one or more of the securities exchange markets) shall be considered and decided by the Executive Committee and/or person assigned by the Board of Directors.
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*
The shareholders meeting approved establishment of fund for foreign investors (Thai Trust Fund) and granted the Fund to invest or possess the shares of the Company at the ratio not exceeding 2.5% of the total issued shares (around 6.75 million of the 270 million paid-up shares). The purpose is to support foreign investment in the Stock Exchange of Thailand. The foreign investors shall be entitled to all monetary benefits, while the management control still remains with the Thai management.
January 2000: *
The Company was ranked by “Asia Money” an Asian well-renowned financial magazine, as Thailand’s No.2 “Overall Best Managed Company” for 1999, second only to its parent company, Shin Corporations Plc. which was ranked the first. The methodology was that the 176 fund management community was asked to rate which companies in Thailand perform best in a series of criteria: corporate strategy, management of financial accounts, reliable forecasting, treatment of minorities, access to senior management, and investor relations.
February 2000: *
The Securities Exchange Commission and Stock Exchange of Thailand approved the Company’s Thai Trust Fund, and trading of the units commenced.
March 2000: *
The Company offered for sale of Baht 8.0 billion, 3-year, unsecured, un-subordinated debentures to institutional and retail investors. Interest rate is 6.5% p.a. payable semi-annually on September 20 and March 20 of every year and calculated based on outstanding balance of principal. The principal is to be repaid in 4 equal installments (25% of the face value) commencing on September 20, 2001.
21
Industry Situation & Competition
Industry Situation and Competition Telecommunication Industry Structure Telecommunication industry in Thailand is under controlled by two main organizations, the Communications Authority of Thailand (CAT) and the Telephone Organization of Thailand (TOT) which are responsible by the Ministry of Transportation and Communication. Nevertheless, frequency control and management are under the Post and Telegraph department’s responsibility. Not only taking care and control telecommunication industry, but TOT also provides fixed line telephone service for domestic as well as frontier countries surrounding Thailand while CAT provides international telephone service. Moreover, both TOT and CAT also provide mobile phone service but network coverage is limited. Being realized that telecommunication is one of the most important factors for Thai economy development, Thai government offered the opportunities to the private sector by providing concession to the high potential organizations. The objectives are to encourage advancement of basic telecommunication service and reduce investment burden of the government. Under concession agreement, a concessionaire has to provide of build the infrastructure and transfer these properties to the originate state owned enterprise after concession expiry. Furthermore, a concessionaire has to pay the installment of revenue sharing on percentage basis during concession period. However, the payment must excess the guarantee minimal payment stated in the agreement otherwise the concessionaire need to pay at the minimal charge. To ensure the fair rate for mobile user, the CAT and TOT under control the tariff rate, deposit fee and other fees charged to a mobile subscriber. During the concession period, a network operator will gain its revenue from registration fee, monthly fee and airtime charge. Currently, there is no charge for mobile phone incoming call except for the international roaming usage. Presently, the concession, issued by TOT, CAT and the Post and Telegraph department for telecommunication services including fixed line telephone, mobile phone, and pager, are concluded as following
Type of Service
Concession Originator
Fixed Line TA
TOT
TT&T
TOT
Mobile Phone
22
TAC
CAT
ADVANC (The Company)
TOT
Type of Service
Concession Originator
Pager Worldpage
TOT
Phonelink
TOT
Hutchison Pagephone
TOT
Paclink
CAT
Easycall
CAT
Post Tel
The post and Telegraph Dept.
Mobile phone industry Prior to the outbreak of economic crisis in Asia, Thailand was experiencing a remarkable economic growth enabling broad expansion in the mobile phone industry. During the economic crisis from 1997 to 1998, the growth of mobile phone users declined from 19% in 1997 to 11% in 1998. However, the number of users per 100 people (penetration rate) increased from 3.2 % in 1997 to 3.6 % in 1998.
Mobile Phone Penetration Rate in 1998
Country
Mobile Phone’s Penetration Rate (%)
Hong Kong
44.0
Japan
30.9
Korea
30.3
Singapore
29.8
Taiwan
21.0
Malaysia
10.6
Thailand
3.6
Philippine
2.4
China
2.0
Indonesia
0.5
India
0.1
Source : Taiwan Cellular Sector, July 9, 1999 by Credit Suisse First Boston
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In 1999, the mobile phone industry growth rate was at its peak of 22%. The penetration rate was at 4.4 access line per 100 people, which was still low compared to other countries of comparable economic development. The low penetration implies high growth potential for mobile phone usage, especially when fueled by the following factors. *
Bangkok’s traffic congestion made mobile phone a necessity for everyday life.
*
Provincial and national economic recovery enhanced purchasing power and increased market demand.
*
Insufficiency of fixed line telephones, especially in the provincial areas.
*
The launch of prepaid mobile phone service allowed penetration to cost-conscious, limited-budget, or low-usage customers. Market growths of prepaid mobile phone in Asia and Europe had been 700% and 170% respectively. (Source : Thai Cellular by Lehman Brothers, November 19, 1999)
*
Market segmentation and effective distribution channels improved services and reach to target groups - sale of prepaid mobile phones and refill cards in convenience stores and gas stations.
*
Increase in functionality and value-added services helped improve sale of mobile phones.
*
Continuous decline in handset price: 20-25% in 1999 and likely to continue in 2000
Although near-term demand for mobile phones may have been affected by the economic downturn, the Company expects the above factors to bring about a satisfactory demand growth in the long run. The penetration rate is expected to reach 8% by 2004-2005.
Market & Competitive Environment Currently there are five mobile phone operators providing services on seven systems: 1. TOT : NMT-470 (analog) 2. CAT : AMPS-800 (analog) and CDMA-800 (digital) 3. Total Access Communications Plc. (TAC) : WorldPhone 800 (Analog) and PCN-1800 (Digital) 4. Advanced Info Service Plc. (the Company) : NMT-900 and Digital GSM 5. Digital Phone Co., Ltd. (DPC) : PCN-1800 via network of TAC
24
Comparison of Mobile Telephone Service in Thailand
System
1. System Operator
NMT 900
Advanced Info
Digital GSM
Advanced Info
AMPS 800
1. Communication
PCN 1800
NMT 470
1.Total Access
Telephone
Service Plc.
Service Plc.
Authority of
Communications
Organization of
(The Company)
(The Company)
Thailand (CAT)
Plc.
Thailand (TOT)
2. Total Access
2. SAMART
Communications
Corporation Plc.
Plc. 2. Radio base station coverage radius
3. Portability
City: 0.5-4.0 km.
City: 0.8-5.0 km.
City: 0.5-4.0 km.
City: 10-1.5 km.
Province/Highway:
Province/Highway:
Province/Highway:
Province/Highway:
20-35 km.
20-35 km.
20-35 km.
10 km.
Portable
Portable
Portable
Portable
16 km.
Large, briefcaselike or car mount
4. Quality of Voice
Good
Very Good
Good
Very Good
Inferior
5. Phone Number
None
None
None
None
Sufficient
Service/Coverage
Nationwide:
Nationwide:
Nationwide:
Nationwide:
Nationwide:
Areas
76 provinces and
76 provinces and
76 provinces
76 provinces with
76 provinces
main highways
main highways
limitations 6.
emphasis in major districts
7. Network Expansion
Sufficient to
Continuous
Expansion limited
coverage 8. International
-
Roaming 9. Handset Price
Expansion limited
No expansion
maintain call quality expansion for wider by budget constraint by budget
More than
constraint -
Less than GSM
-
PCN1800 Bt. 8,900-15,500
Bt. 11,900-59,000
Bt. 6,900-25,900
Bt. 9,600-39,900
Bt. 55,000-65,000
12 brands
15 brands
10 brands
7 brands
9 brands
(excluding registration fee and deposit) 10. Brands of Handsets available in Thailand Source : Company’s Information
25
Market research has suggested that in 1999 demand for analog NMT system mobile phone was declining, while the demand for Digital GSM was moving upward. In term of market share, The Company and TAC, the two market leaders, command 48% and 43% market shares respectively. This is attributed to extensive network coverage and effective distribution channels, which could accommodate such rapid growth in market demand. The other operators have relatively small subscriber bases and, even worse, are financially limited in terms of investment. Their competitiveness is thus limited. Among these small operators, Digital Phone Company Limited (DPC) is the most prominent player controlling around 145,000 subscribers as at December 1999. However, DPC is still facing limitation in network expansion in Bangkok and, thus, needs to depend on TAC’s network. Market Share at end of 1999 (excluding PCT)
Operators
Approximate Market Share (%)
ADVANC
48
TAC
43
DPC
6
Others
3
Total
100
Source : Company’s information
Competition from related industry Even after the 4.1-million fixed line telephone project completed, mobile phone industry is still on the go. Unlike a mobile phone, a fixed line has several limitations, for instances, *
Accessibility Despite the 4.1-million fixed line telephone project, the service still does not cover every area due to the geographical inaccessibility. Mobile phone, on the other hand, has many media, for instance, microwave, fiber optics, and satellite, to deploy in different landscape or environment. These technical alternatives give a mobile phone superior accessibility all over the region.
*
Response time Fixed line installation normally proceeds with a very slow speed. Thus, it is difficult to promptly reponse to users’ need.
*
Portability & Convenience Subscribers can bring a mobile phone anywhere, use it whenever they need to, making it convenient to use.
*
Coverage area In spite of the coming of PCT by Telecom Asia, the situation is unpredictable. Taking an example from PCT in Japan where subscribers were decreasing from 7.1 million to 5.6 million. Even though PCT has a price advantage, its network quality, and coverage area (restricted only in metropolis and vicinities) render PCT competitive only in a small arena.
26
Key success factor for service operators *
Coverage area is one of the most important factors. The fact that the rate of a mobile phone/user in upcountry is as low as 1.8% (vs. 16.6% in BKK, as of 1999) implies the promising, expandable target in the future.
*
Network quality is the necessity to efficiently respond to customer based expansion. It affects, as a result, the quality of usage i.e. amount of dropped calls, ease of incoming/ outgoing calls.
*
Financial stability is a resource to facilitate a service operator to continuously expand its network.
*
Marketing strategies that serve customer’s need, for instance, variety of services / product, after sales services and price, must answer to users’ requirements.
*
Overall service standard, for example, responsiveness, accessibility, prompt response to problem solving and services quality. With an equal amount of investment, The Company has larger coverage area than its competitors, thanks to the qualification of Frequency 900. Its solid financial status, in addition, enhances further network expansion to increase customer satisfaction as well as prepare for multiplying customer base. Customer care programs, i.e. Priority Call Center, Priority Care Center, Minute Plus, as well as any newly developed value added services, are arranged to continuously serve its subscribers.
Opportunities and threats Opportunities 1. When compared with other countries, both of the fixed line and mobile phone penetration rates in Thailand are very low, especially in upcountry. Moreover, fixed line service is deficient, yielding room for growth for mobile phone industry. 2. In the past, a mobile phone was a product primarily for high to upper-medium income group. Nowadays, however, the lower price of handset and new product, Prepaid, expand the industry’s customer base. 3. The increasing demand of International Roaming accounts for the increase in revenue. 4. From technology development, a mobile phone is not limited to only voice communication. In the near future, a mobile phone will become a medium to data communication, as well as Internet integration. Threats According to the 8th National Economic and Social Development Plan, telecommunications liberalization will render the market more competitive. However, the plan is proceeding with a slow pace. Newcomers, moreover, will face several obstacles (high investment, market knowledge, lead-time for network installment) Therefore, any impacts from newcomers should not affect in a near future.
27
Shareholders and Management3
Shareholders
Shareholders’ Name
1. Shin Corporations Plc.
Number of shares
% of Shareholding
109,300,000
40.48
2. Singtel Strategic Investments Pte Ltd.
50,300,000
18.63
3. Chase Nominees Limited 1
10,853,374
4.02
4. HSBC (Singapore) Nominees Pte Ltd.
9,279,810
3.44
5. State Street Bank and Trust Company, Boston
8,393,444
3.11
6. Thailand Securities Depository Company Limited for Depositors
6,175,233
2.29
7. HSBC Bank Plc.
4,419,846
1.64
8. The Bank of New York (Europe) Ltd.
4,215,822
1.52
9. Bankers Trust Company
3,475,273
1.29
10. The Bank of New York Nominee Ltd.
2,886,513
1.07
As of December 8, 1999
Note: 1. Shin Corporations Plc. is a holding company, which have the major shareholders as follows: 1.1
Shinawatra family 36.88%,
1.2
Ample Rich Investment Ltd. which is a holding company, 100% owned by Shinawatra family,
1.3
Singapore Telecom International Pte Ltd. which is a holding company and a consulting firm in technical and management or telecommunications business. This company is 100% owned by Singapore Telecom Mobile Pte Ltd.
2. As of December 8, 1999, Thailand Securities Depository Company Limited - for Depositor appeared on the share registration book. This was due to the fact that non-Thai shareholders exceeded the Company’s restriction which stated that aggregate amount of shares held by non-Thais shareholders must not exceed one half of the total issued shares of the Company. Thus, Share Registrar has registered such share under Thailand Securities Depository Company Limited for Depositors in order to avoid infringement of law and the Company’s restriction.
28
Management Team Board of Directors
Executive Committee
Audit Committee
Management
Mr. Paiboon Limpaphayom, (Ph.D.)Chairman of the Board of Directors Mr. Withu Ruksvanichpongs
Vice Chairman of the Board of Directors
Mr. Boonklee Plangsiri
Director
Mr. Somprasong Boonyachai
Director
Mrs. Siripen Sitasuwan
Director
Mr. Allen Lew Yoong Keong
Director
Mr. Chow Wing Keung Lucas
Director
Mr. Suphadej Poonpipat
Independent Director
Mr. Vithit Leenutaphong
Independent Director
Mr. Arun Churdboonchart
Independent Director
Mr. Somprasong Boonyachai
Chairman of the Executive Committee
Mr. Boonklee Plangsiri
Executive Committee
Mr. Arak Chonlatanon
Executive Committee
Mrs. Siripen Sitasuwan
Executive Committee
Mr. Allen Lew Yoong Keong
Executive Committee
Mr. Suphadej Poonpipat
Chairman of the Audit Committee
Mr. Vithit Leenutaphong
Audit Committee
Mr. Arun Churdboonchart
Audit Committee
Mr. Somprasong Boonyachai
Chairman of the Executive CommitteeWireless Communications
Mr. Allen Lew Yoong Keong
Chief Operating Officer
Mr. Vikrom Sriprataks
Senior Executive Vice President - Engineering
Mrs. Suwimol Kaewkoon
Senior Executive Vice President - Service Operation
Miss Yingluck Shinawatra
Executive Vice President - Service Operation
Mr. Sukit Teerawatanawit
Vice President - Asset and Data Network
Mr. Wichian Mektrakarn
Vice President - Technical
Mr. Wutiporn Chaipayorm
Vice President - Transmission Project Manager
Mr. Weerawat Kiattipongthaworn
Vice President - Metropolitan Operation and Maintenance
Mrs. Arpattra Sringkarrinkul
Vice President - Information System Support
Mr. Walan Norasetpakdi
Vice President - Wireless Controller
Col. Prawat Nigarnkul
Assistant Vice President - Site Acquisition and Maintenance
Mr. Vorachat Herabat
Assistant Vice President - Metropolitan Operation
Mr. Annop Petchariya
Assistant Vice President - Upcountry Operation
Mr. Pattarasak Uttamayodhin
Assistant Vice President - Human Resource
Mrs. Suvimon Kulalert
Assistant Vice President - Internal Audit
Mr. Somchai Lertsuthiwong
Assistant Vice President - Business Relation
Mr. Supoch Vathitphund
Acting Assistant Vice President - Legal
Mrs. Wilai Keangpradoo
Public Relation Manager
Mr. Attapol Sariddipantawat
System Support Manager
Mrs. Walaiporn Khajeenikorn
Administration and Purchasing Manager
Miss Sansanee Gumpalanuwat
Accounting Manager
Miss Sunitaya Shinawatra
Finance Manager
29
Remuneration for Directors and Management Team
Total Director’s Remuneration in 1999 composed of: Total salary
27,480,000
Total bonus
4,675,800
Baht
900,000
Baht
33,055,800
Baht
Total Salary
40,747,200
Baht
Total bonus
6,469,900
Baht
-
Baht
47,217,100
Baht
Total Salary
36,126,000
Baht
Total Bonus
6,298,500
Baht
900,000
Baht
43,324,500
Baht
Total Allowance Total Remuneration
Baht
Total Executive Committees’ Remuneration in 1999 composed of:
Total Allowance Total Remuneration Total Top 15 Management’s Remuneration in 1999 composed of:
Total Allowance Total Remuneration
30
Related Companies and Related Transactions
Related Companies 1. OAI Assets Co., Ltd. Company’s Profile Nature of Business
Rental of office space in Shinawatra Tower 2
Major Shareholders
Shinawatra family: 100%
Directors
1. Mrs. Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern
Relationship with ADVANC
Major shareholder of ADVANC’s parent company holds 100% in OAI Assets Co., Ltd.
Size of Transaction
The Company and its subsidiaries pay rental and service fee for office space at the rate of Baht 450-800 per square meter. Total rented space is 14,686.32 square meter and total rental fee amounting to Baht 134.68 million.
2. Worth Supplies Co., Ltd. Company’s Information Nature of Business
Office space rental
Major Sharehlders
Shinawatra family: 100%
Directors
1. Miss Pranee Vejchaplukpitak 2. Mrs. Busaba Damapong 3. Mrs. Kanchanapa Honghern 4. Mr. Chanon Suwasin 5. Mr. Surathian Chaktharanon
Relationship with ADVANC
The major shareholder of ADVANC’s parent company holds 100% in Worth Supplies Co., Ltd.
Size of Transaction
The Company and its subsidiaries pay for rental and service fee for office space as the following: 1. Maisson Maneeya Tower: 1 Phaholyothin Soi 9, Samsennai, Payathai, Bangkok, at the rate of Baht 200-360 per square meter. Total rented space was 1,634 square meters, of which the agreement has been cancelled since June 1999. 2. Chiang Mai Branch: 115-116 Tah-Pae Road, Chiang-Mai, at the rate of Baht 100-360 per square meters. Total rented space is 1,954.4 square meters, and total rental fee was Baht 18.10 million.
31
3. P.T. Corporations Co., Ltd. Company’s Information Nature of Business
Office space and warehouse rental
Major Shareholders
Shinawatra family: 100%
Directors
1. Mrs. Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern
Relationship with ADVANC
The major shareholder of ADVANC’s parent company holds 100% in P.T. Corporations Co., Ltd.
Size of Transaction
The Company and its subsidiaries pay rental fee at the rate of Baht 147-420 per square meter. Total warehouse space rented is 3,797.58 square meters, and the total rental fee is Baht 21.32 million.
4. UpCountry Land Co., Ltd. Company’s Information Nature of Business
Land rental for ADVANC’s switching centers and base stations in upcountry.
Major Shareholders
Shinawatra family: 100%
Directors
1. Mr. Surathian Chaktharanon 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern
Relationship with ADVANC
The major shareholder of ADVANC’s parent company holds 100% in UpCountry Land Co., Ltd.
Size of Transaction
The Company pays monthly fixed rental and service fees for 88 locations, totaling Baht 83.65 million.
5. SC Asset Co., Ltd. Company’s Information Nature of Business
Rental of office space in Shinawatra Tower 1
Major Shareholders
Mr. Bhanapot Damapong: 66.67%
Directors
1. Mr. Bhanapot Damapong 2. Mr. Surathian Chaktharanon 3. Mrs. Busaba Damapong 4. Mrs. Duangruetai Kasisopa 5. Miss Boonchou Rianpradub
Relationship with ADVANC
Chairman of the Board of ADVANC’s parent company holds 66.67% in SC Asset Co., Ltd.
Size of Transaction
The Company pays rental fee at the rate of Baht 170 per square meter, totaling Baht 35.86 million.
6. SC Office Park Co., Ltd. Company’s Information Nature of Business
Rental of office space in Shinawatra Tower 1
Major Shareholders
Shinawatra family: 100%
Directors
1. Mrs. Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern
Relationship with ADVANC
The major shareholder of ADVANC’s parent company holds 100% in SC Office Park Co., Ltd.
Size of Transaction
The Company and subsidiaries pays rental fee at the rate of Baht 250-460 per square meter. The total rental space is 8,831.5 square meters, totaling Baht 17.64 million.
32
7. OAI Leasing Co., Ltd. Company’s Information Nature of Business Major Shareholders
Automobile Rental 1. Shinawatra family: 45% 2. SC Asset Co., Ltd.: 55%
Directors
1. Mrs. Potjaman Shinawatra 2. Mrs. Busaba Damapong 3. Mr. Chanon Suwasin 4. Mrs. Kanchanapa Honghern
Relationship with ADVANC
The major shareholder of ADVANC’s parent company holds 45% in OAI Leasing Co., Ltd.
Size of Transaction
The Company pays for automobile purchase and rentals, totaling of Baht 34.73 million.
8. Singapore Telecommunication Pte Ltd. Company’s Information Nature of Business
Telecommunication service provider and Investment Holding
Major Shareholders
Temasek Holdings (Private) Ltd.: 79.38%
Directors
1. Koh Boon Kwee 2. Wong Hung Khim 3. BG Lee Hsien Yang 4. Paul Chan Kwai Wah 5. Lim Ho Kee 6. MG Lim Chuan Poh 7. Quek Poh Hual 8. Seah Kian Peng 9. Jaspal Singh 10. Keith Tay Ah Kee
Relationship with ADVANC
Parent company of ADVANC’s major shareholder
Size of Transaction
1. The Company pays for International Roaming fee, amounting to Baht 334.84 million. 2. Accounts receivable, amounting to Baht 37.50 million.
9. Singapore Telecom International Pte Ltd. Company’s Information Nature of Business
Holding company and providing technical and management consultant for telecommunication businesses
Major Shareholders
Singapore Telecom Mobile Pte Ltd.: 100%
Directors
1. BG Lee Hsien Yang 2. Chua Sock Koong
Relationship with ADVANC
Singapore Telecom International Pte Ltd. is in the same group company as a major shareholder of the ADVANC.
Size of Transaction
The Company bought 18,339,386 ordinary shares of ADC (formerly know as Shinawatra Datacom Co., Ltd.) and 49,000 ordinary shares of DNS from Singapore Telecom International Pte Ltd. at a total price of Baht 281 million. Such transactions are accounted for 1.22% of the accounting value of tangible assets of the Company - regarded as related transactions according to SET’s Announcement on the Principle and Method of Revealing Related Transactions of Listed Companies (Cl. 9). The Company is required only to report to SET
33
the agreements on the transactions without having to seek approval of the shareholders meeting. As financial consultant, SCB Advisory Service Co., Ltd. is of the opinion that the Thai telecommunication business is entering the information era. The “Datanet” has a great potential to grow and to add value to the Company. Using discounted cash flow method, the Company assessed the value of the shares with various assumptions agreed upon by the sellers and the buyers. The share value results obtained from such method are different from those obtained by calculation of book value of each company. Using the book value according to the purchase portion, ADC is worth Baht 191 million, and DNS is Baht 6 million, resulting in goodwill of Baht 82 million and Baht 2 million. The consultant is of the opinion that “Datanet” business is related to the Company’s business, the selling price is agreed upon by both parties, and such transactions do not require any resolution from the shareholders meeting. Size of Transaction
The Company pays for technical consulting and management fee, totaling Baht 14.09 million.
10. Shin Corporations Public Company Limited (SHIN) Company’s Information Nature of Business Major Shareholders
Holding company Mrs. Potjaman Shinawatra: 25.00% Pol. Col Thaksin Shinawatra (Ph.D.): 11.875% Ample Rich Investment Pte Ltd.: 11.875%
Directors
1. Mr. Bhanapot Damapong 2. Mr. Paiboon Limpaphayom (Ph.D.) 3. Mr. Boonklee Plangsiri 4. Mrs. Siripen Sitasuwan 5. Mr. Paron Isarasena Na Ayudhaya 6. Mr. Lee Shin Koi 7. Mr. Olarn Chaiprawat, (Ph.D.) 8. Mr. Thanong Bidaya, (Ph.D.) 9. Mr. Sirin Nimmanheminda
Relationship with ADVANC
Shin Corporations Plc. is the ADVANC’s major shareholder
Size of Transaction
SHIN sold its shares in Advanced Wireless Marketing Co., Ltd. (AWM) (formerly known as Shinawatra Wireless Marketing) to the Company totaling of 23,999,997 shares or 99.99% amounting to Baht 600 million on a condition that three fourth of the non-related party in the shareholders’ meeting vote approving the transaction as the transaction was a related transaction pertaining to Rules and Regulations of the SET.
Comments of Independent Directors
The independent directors agreed with resolution of the Board of Directors of the Company and Merill Lynch Phatra Securities Co., Ltd, the independent financial advisor that the selling price of Baht 600 million was a fair price and reasonable on financial aspect considered from Discounted Cashflow Analysis Method and Market Comparison Method.
Size of Transaction
1. The Company and its subsidiaries paid for management and consulting fee of Baht 75 million. 2. The Company paid interest on bond amount to its parent company of Baht 41.59 million.
34
Transactions between The Company, its subsidiaries and its associated companies 1. Advanced Wireless Marketing Co., Ltd. Company’s Information Nature of Business
Distributor of 900-MHz and GSM mobile phones and “Telewiz” franchise operator
Major Shareholders
Advanced Info Service Plc.: 99.99%
Directors
1. Mr. Somprasong Boonyachai 2. Mr. Boonklee Plangsiri 3. Mr. Arak Chonlatanon 4. Mrs. Siripen Sitasuwan 5. Mr. Allen Lew Yong Keong
Relationship with ADVANC Size of Transaction
ADVANC’s subsidiary The Company pays Baht 41.14 million for Bill Collection Service. Creditor - marketing, commission fee and others amount to Baht 11.64 million.
2. Shin Satellite Plc. Company’s Information Nature of Business
Leasing of Satellite transponders
Major Shareholders
Shin Corporations Plc.: 51.53% (As of February 29, 2000)
Directors
1. Mr. Paron Isarasena na Ayudhaya (Ph.D.) 2. Mr. Rianchai Reuwilaisook 3. Mr. Dumrong Kasemset (Ph.D.) 4. Mr. Boonklee Plangsiri 5. Mr. Arak Chonlatanon 6. Mrs. Siripen Sitasuwan 7. Miss Nongluck Pianainitisart (Eng.D.) 8. Mr. Kowit Vorapipatana (Ph.D.) 9. Mrs. Nilaya Malakul Na Ayudhaya 10. Mrs. Charintorn Vongspootorn
Relationship with ADVANC
Major stake held by the same parent company
Size of Transaction
The Company paid for satellite transponders lease of Baht 114.63 million.
3. Shinawatra Information Technology Co., Ltd. Company’s Information Nature of Business
Distributor of computer peripherals and telecom equipment
Major Shareholders
Shin Corporations Plc.: 99.99%
Directors
1. Mr. Boonklee Plangsiri 2. Mr. Somkiat Paloprakarn 3. Mrs. Busaba Damapong 4. Mr. Arak Chonlatanon 5. Mrs. Siripen Sitasuwan 6. Miss Jurairat Romlumdoun
Relationship with ADVANC
Major stake held by the same parent company
Size of Transaction
1. The Company paid for consulting and management fee (Computer System), amounting to Baht 17.64 million. 2. The Company purchased the Computer Software amounting to Baht 15 million.
35
4. SC Matchbox Co., Ltd. Company’s Information Nature of Business
Designing, Advertising and Publishing Services
Major Shareholders
Shin Corporations Plc.: 74.96%
Directors
1. Mr. Bhanapot Damapong 2. Mr. Arak Chonlatanon 3. Mr. Sanchai Tuewprasertkul 4. Mr. Songsak Pramesuk 5. Mr. Chatchai Sanoerkam 6. Mr. Niwat Boonsong 7. Mr. Banpot Boonyanit
Relationship with ADVANC
Major stake held by the same parent company
Size of Transaction
1. The Company paid for advertisement amounting to Baht 459.95 million. 2. Accounts payable of the Company amounting to Baht 109.81 million.
5. Teleinfo Media Co., Ltd. (formerly known as Shinawatra Directories Co., Ltd.) Company’s Information Nature of Business
Publisher and nationwide distributor of White and Yellow Pages directories.
Major Shareholders
1. Shin Corporations Plc.: 50.99% 2. Telephone Organization of Thailand: 49%
Directors
1. Mr. Niwat Boonsong 2. Mr. Somchai Sinjananurak 3. Mr. Surachart Kukasemrat 4. Miss Jurairat Romlumdoun 5. Miss Yingluck Shinawatra 6. Mr. Somboon Kuptimanus 7. Mr. Pongpan Manoros 8. Mr. Wichian Naksrinuan 9. Mr. Pisit Tumrongsiriwat 10. Mrs. Tipawan Wuitsan 11. Mr. Sayan Tinsumran
Relationship with Company
Major stake held by the same parent company
Size of Transaction
The Company paid for marketing service amounting to Baht 17.83 million.
The Opinion of Independent Director and Audit Committee on Related Company Transactions Independent Director and Audit Committee have considered the related companies and related company transactions in the part of expenses and have stated that the above transactions are in the normal course of business of the Company. The Company has continuously performed an appropriate price in conformity with the market situation and did not have the significant effect on its revenue and assets. As per other related company transactions shown in the Company’s financial statement as in the Note 39 - Related companies transactions the Audit Committee has stated that during the year the Company has performed the normal course of business with related companies. All prices for products and services agreed by all parties are in line with prices charged to or paid by other unrelated companies and under normal business terms and conditions.
36
Risk Factors
Risk Factors can be classified into 4 categories as follows: Risks involving Technology and Operation Risk from loss of management Success in business operation can be attributed to dedication and managerial skills of the Company’s management. Thus, loss of management team can adversely affect the business operation. However, the Company will continue to train and develop new management team to mitigate such risk. Risk from change in technology In the long run the analog NMT system will be replaced by the digital GSM system. Many manufactures has already ceased production of the analog NMT mobile phones and begun concentrating on the production of digital GSM which is more sophisticated and can easily evolve to the Third Generation. In the near term, however, such technological change shall not affect the Company because many subscribers, mostly in provincial areas, still only require mobile phones with basic functions, and analog NMT can still satisfy their requirements. Moreover, the Company has already signed contracts with overseas manufacturers for supply of parts and equipment to ensure that the service on this system can continue for another 10 years without shortage of equipment. Substitute product to digital GSM is not likely to emerge because most of major manufacturers around the world are developing the Third Generation mobile phone based on digital GSM platform. Therefore, the Company’s development-to-date of digital GSM system will be a good stepping-stone into new technologies in the future. Development of the Third Generation mobile phones requires significant investments, and the new technology is developed by overseas market leaders/manufacturers. Thus, such new technology may not immediately suit the Thai market because there may be only limited group of customers who require such high technology. Therefore, market readiness and financial feasibility should be closely considered before the introduction of new, leading-edge technology to the Thai market.
37
Risk from unsuccessful bill collections Currently the Company bills customers in the Post-paid Program on monthly basis. As such, the Company is subject to risk of incurring bad debts due unsuccessful bill collections. However, the Company has implemented a number of measures to mitigate such risk. For instance, all customer accounts are closely monitored by a computer system; any account with excessive overdue payments will be suspended. Moreover, the “Fraud Management” system has been implemented to detect unusual usage and take action before hand to avoid bad debts. The Company’s new product “One-2-Call!” is a prepaid program, which airtime and service fees are paid in advance through refill card. Therefore, it’s automatically free of bad debt problem. Risks from competition Competition with new operators & alternative services At present, there are 5 mobile phone service operators, but the Company and Total Access Communications Plc. (TAC) have a combined market share of 91% of the total mobile phone service market in Thailand. This is because both the Company and TAC have wide network coverage and high capacity covering the entire area of Bangkok and other densely populated areas countrywide. Despite the risk of competition coming from new operators, the barriers to entry can be summarized as follow. *
Investment in network layout and expansion to the size comparable to the Company’s and TAC’s
*
Time required for network development to achieve the standard set by the Company’s
*
Large subscriber base provide the Company with competitive edge with respect to economies of scale
*
Radio frequency limitation is still an obstacle for newcomers
*
Persuading subscribers to switch from one system to another is quite a difficult task due to expenses incurred (i.e. new handset, registration fee, etc.) In addition, brand loyalty has already been built since the Company has provided quality service for a many years.
Apart from the 5 existing service providers, the 2 other alternative services worth considering are PCT of Telecom Asia Plc. (TA), officially launched toward the end of 1999, and the 1900 MHz frequency digital phone service jointly developed by TOT and CAT. PCT is not likely to be a substitute of mobile phones due to the following reasons. *
Limitation on reception/transmission base stations. Much higher investment is required to extend coverage, PCT currently only covers Bangkok.
*
Technical limitation on “slow hand-off speed” limits PCT from being in a vehicle traveling at a high speed.
*
Sharing of the same number with fixed-line telephone at home disables concurrent use of PCT and fixed-line.
The development of the digital 1900 MHz system has not been significantly carried out. A great amount of time and capital expenditure are required to build a network, comparable to digital GSM of the Company in terms of coverage and capacity. Financial and Economic Risk Interest Rate Risk On December 31, 1999, the Company’s long-term liabilities can be divided into two parts: Baht 1,500 billion long-term debentures and USD 90.77 million long-term loans. The Company’s Thai Baht debentures having fixed interest rate implies no exposure to interest rate fluctuation. As of December 31, 1999, 61.29% of the outstanding balance of long-term loans denominated in foreign currencies have been swapped from floating interest rate (referenced to LIBOR) to a fixed rate. As such, the Company has satisfactorily reduced the risk from interest rate fluctuation.
38
Foreign Exchange Rate Risk *
Risks associated with repayment of foreign currency-denominated loans As of December 31, 1999, USD 62.45 million or approximately 68.8% of USD 90.77 million long-term loans has been hedged at an average rate of Baht 38.15 per US dollar. Although currently there is not much fluctuation in the foreign exchange rate, the Company still closely monitors it to limit foreign exchange risk exposure.
*
Risks associated with investment Due to rapid change in technology, the Company must constantly invest in new technology which is denominated in foreign currencies; hence being exposed to fluctuation in the foreign exchange rate. Any depreciation of Thai Baht against foreign currencies implies automatic increase in investments. To avoid such risk, agreements with suppliers are made in such way that payments shall be made at an exchange rate, agreed upon in advance. Alternatively, hedging instruments are also used. In addition, the fluctuation in the foreign exchange rates reflects stability of macroeconomics, which affects all operators, not only the Company. The fact that the Company has a policy to raise funds locally, in stead of borrowing foreign loans, can also to some extent alleviate risk from foreign exchange fluctuation.
Economic Risk Mobile phones can be considered as consumer products. Hence the country’s economic condition directly impacts the demand of mobile phones. For instance, during economic contraction, consumer’s purchasing power declines. To counter this, the Company introduced a new product “One-2-Call!,” a prepaid mobile phone service which handsets and service fee are less expensive, so that consumers with lower incomes can afford the service. Moreover, introduction of new value-added services should also increase the Company’s service revenue. Risk associated to amendment of laws, regulations, and government’s policies The Government has a commitment to the World Trade Organization (WTO) to liberalize telecommunications industry by the year 2006. The fact that the Company operates under a concession granted by the Telephone Organization of Thailand (TOT) forces the Company to review its position for the new competitive environment. Under the new telecommunications Master Plan, an independent regulatory body has to be established in order to manage the allocation of the radio, television, and telecommunications frequencies. The body must also act as the monitor, rule maker and amend relevant laws relating to all telecommunications landscape. Such tasks must be accomplished by October 10, 2000 before the Government Organization Act; Telegraph & Telephone Act of 1934; Telephone Organization of Thailand Act of 1955; Communications Authority of Thailand Act of 1976; and other telecommunication, radio, television and communication radios acts are repealed under the new constitutions.
39
As a result, the Company and other service operators under the concessions granted by TOT, CAT and Post & Telegraph Department must convert revenue sharing agreements in order to comply with telecommunications liberalization. Methodology for the revenue conversion to arrive at the Government compensations is to discount future revenue sharing, as stipulated in the concession agreements, back to present using Net Present Value (NPV) calculation for the period of the remaining concession lives and the same discount rate for all operators. This is to eliminate the concession fees and create plain-level field for free competitions. However, such compensation calculation is still a subject of dispute among the Government agencies. The Ministry of Transport & Communications is of the opinion that the concessionaires should only have to include in the calculation the concession fees for up to 2006 because after liberalization there should not be any such fee involved. The concept that the existing concessionaires having to pay concession fees after the liberalization implies unfair competitions. On the other hand, the Ministry of Finance has employed Thailand Development and Research Institute (TDRI) to conduct research. TDRI suggests that the concessionaires are still obliged to compensate for all concession fees, as stipulated in the agreements, even after liberalization because their concession agreements are not appertaining to “monopolized with the state” and that all of those existing agreements have already been amended and no longer engaged with any protection. Thus, they cannot be attributable to use as a basis for refusal to pay concession fees after liberalization. The differences between the two ministries have caused a delay in revenue conversion process. However, the State Enterprise Policy Commission (SEPC) is in favor of the Finance Ministry to use TDRI’s proposal, and the concessionaires must calculate the compensations based on the assumption that payment of concession fees carries on until the end of the concession lives. However, the payments of the compensations can be extended to 10-15 years after the liberalization instead of before, and discounts in service fees given to the consumers can be deducted from the compensations. After the SEPC has agreed on such conditions, the methodology still needs approval from the Cabinet. Subsequently revenue conversion committee shall be established to map out detail frameworks and act as the arbitration between the state enterprises and the concessionaires. To date, it is still unclear as to how such task will be accomplished. Analysis of risk associated with revenue conversion under the framework of SEPC indicates that the Company should not be greatly affected even if it decides to proceeds with the revenue concession process. The ability to postpone the compensation payment to 10-15 years matches the remaining life of the Company’s concession, which is 15 years. Also the service-fee-discount deduction from the compensation gives the Company a competitive advantage because it enables the Company to compete with new operators in terms of pricing during the time of liberalization. Given the principle of liberalization, all policies should be within the framework to promote fair competition. Although the concession agreement between TOT and the Company has been amended in 1996 to lift market protection and allow new operators to enter the market, but it does not mean that the state can set forth new terms and conditions differing from those stipulated in the original concession agreement. In case that the Company is of the opinion that the revenue conversion will have more adverse effects than the original one, it may refuse to proceed with the conversion process. The fact that the revenue conversion procedures are still unclear, the impact to the Company should not be felt in the next 3 years.
40
Apart from the revenue conversion issue, the industry liberalization still has many implications. Policy on allocation of frequency, which is a scarce resource, and policy on granting permission to the operators to use public utilities for business operation in case that they must set up system or network or install cables through public places are still to be carefully considered. Another important issue is the tariff structure, which should be revised to be more in line with operation costs. The revised tariff structure may introduce an entire new airtime-charging scheme, differing from the present one where the operators can charge airtime for outgoing calls only. The new scheme may allow the operators to charge for both in and outgoing calls. All of these issues must be resolved with clearly defined terms and conditions prior to the liberalization of the telecommunications industry. In summary, the liberalization should not have a significant impact on the Company’s business operation. Although the liberalization may attract new entrants, there are a number of barriers to entry - building up customer base and investments, time for network development, market distribution channels, and most importantly law, rules, regulations and the Government’s policies that are currently still unclear. Risks of the parent company holding shares in other company operating same business Shin Corporations Plc. (SHIN), the Company’s parent company, is likely to hold shares in Digital Phone Co., Ltd. (DPC) which is another mobile phone service operator, similar to the Company but using different frequency. It is possible that SHIN may change some of its policies to support DPC’s business, which may affect the Company in terms of personnel and market competition. However, the Company has taken action to mitigate such risks. In terms of personnel, the Company constantly provides training to employees to be able to work in substitution of one another in a “process-oriented” work environment. In terms of marketing, the Company does not expect adverse effects, but in stead, increase in distribution channels and more efficient customer services. That is because it is likely that both the Company’s and DPC’s dealers will jointly sell the products of both companies giving customers more choices. Also the Company’s customers who use dual-band handsets will be able to roam on both systems, thus further enhancing the communications. Moreover, the Company also is confident about its product image and its quality service that will bring about customer satisfaction.
41
Other Factors Affecting Investment
Litigation As of December 31, 1999, The Company and its subsidiaries have a total of 11 pending court cases which composes of 7 cases that the Company and/or its subsidiaries are the plaintiff such that the claim amount being Baht 2,390,005.38 and 4 cases that the Company and/or its subsidiaries are the defendant such that the claim amount being Baht 771,238.75. All 11 cases took place in the normal course of business, the claim amount involved is not significant to have and impact on the Company and/or its subsidiaries’ daily normal business operation. Obligation to issue share in the future -None-
42
Terms and Conditions of the Debentures
Debenture of Advanced Info Service Public Company Limited No. 8 Due 2001 Type of Instruments
Unsecured, unsubordinated debentures without a trustee.
Type of Debenture
Specified name of Debentureholder.
Term
2 years from Issue Date.
Principal Amount
THB 500,000,000 (Five hundred million Baht).
Share Amount
500,000 Units (Five hundred thousand units).
Face Value
THB 1,000 (One thousand Baht).
Issue Price
THB 1,000 (One thousand Baht).
Issue Date
February 18, 1999
Maturity Date
February 18, 2001
Interest
8.25% p.a.
Interest Payment
Payable on semi-annual basis.
Security
None.
Early Redemption Right of Issuer
None.
Early Redemption Right of Debenture holders
None.
Debentureholder (s)
Private placement to specific investors and/or qualified investors in accordance with the Notification No. Gor Jor. 32/2540, clause 9.(2)
Transfer Restriction
All transfers of Debenture and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 32/ 2537, clause 9.(2).
Debenture of Advanced Info Service Public Company Limited No. 9 Due 2002 Type of Instruments
Unsecured, unsubordinated debentures without a trustee.
Type of Debenture
Specified name of Debentureholder.
Term
3 years from Issue Date.
Principal Amount
THB 1,000,000,000 (One billion Baht).
Share Amount
1,000,000 Units (One million units).
Face Value
THB 1,000 (One thousand Baht).
Issue Price
THB 1,000 (One thousand Baht).
Issue Date
March 5, 1998.
Maturity Date
March 5, 2001.
Interest
8.25% p.a.
Interest Payment
Payable on semi-annual basis
Security
None.
Early Redemption Right of Issuer
None.
Early Redemption Right of Debenture holders
None.
43
Debentureholder (s)
Private placement to specific investors and/or qualified investors in accodance with the Notification No. Gor Jor. 32/2540, clause 9.(2).
Transfer Restriction
All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 32/ 2537, clause 9.(2).
Debenture of Advanced Info Service Public Company Limited No. 1/2543 Due 2003 Type of Instruments
Unsecured, unsubordinated, amortizing debentures with a trustee.
Type of Debenture
Specified name of Debentureholder.
Term
3 years from Issue Date.
Principal Amount
THB 8,000,000,000 (Eight billion Baht).
Share Amount
8,000,000 Units (Eight million units).
Face Value
THB 1,000 (One thousand Baht).
Issue Price
THB 1,000 (One thousand Baht).
Issue Date
March 20, 2000.
Maturity Date
March 20, 2003.
Interest
6.50% p.a.
Interest Payment
Payable on semi-annual basis on September 20 and March 20 of every year
Principal Repayment
Repayment begins on 18th month in 4 equal installments (25% of the face value) scheduled as followed: * September 20, 2001 * March 20, 2002 * September 20, 2002 * March 20, 2003
Procedures for interest payment and principal repayment
* The registrar will close the debentureholder registration book to halt ownership transfers 14 days prior to the sched uled dates for interest payments, principal repayments, and debenture redemption, whichever applicable. * Interest payments and principal repayments will be done via checks payable to the names of the debentureholders as of the date that the registrar closes the registration book or via money transfers to the accounts specified by the debentureholders on the date that the registrar closes the registration book.
Procedures for debenture redemption
Debentureholders have to return the debentures to the registrar on the redemption date. The Company will pay the outstanding principals and last interest payments via checks or via money transfers to the debentureholders as of that date.
Security
None.
The Registrar and the Trustee
Siam Commercial Bank Plc.
Debenture’s secondary market
The Company intends to register the debentures in the Thai Bond Dealing Center. In case that intention does not materialize, Citicorp Finance and Securities (Thailand) Ltd. and Siam Commercial Bank Plc. will act as the middle person between the debentureholders who want to sell and the interested parties who want to buy and settle a price that are agreed upon by both parties.
44
Management Discussion and Analysis
Operation & financial status in the past Capital, liquidity, assets, profit and operation of the three main business: 1. Operation of 900 MHz Cellular NMT and Digital GSM mobile phone services; sale, rental and repair of mobile phones 2. Operation of Digital Display Paging service; sale and rental of page phones 3. Operation of data communication through Datakit Virtual Circuit Switch Group 1: sale, rental and repair of mobile phones; Group 2 and Group 3 are the services operated through affiliated companies AWM and APG ADC and DNS respectively. Mobile phone
Mobile phone
Page phone sale
Data
Service
sale & rental
& service
communication through leased line
1998
Incomes from service & rental Incomes from sales Total incomes Note:
1999
1998
13,327.58 16,701.25
1999
1998
1,360.55
1998
1999
-
112.50
-
-
6,690.07
215.24
276.17
-
0.17
13,327.58 16,701.25
-
6,802.57
1,619.45
1,636.72
162.86
183.88
-
1,404.21
1999
162.86
183.71
1. On October 29, 1999, the Company increased its investment in ADC in order to hold more than 50%. Therefore, ADC has become a subsidiary company. For the purpose of financial statements comparison, the items are rearranged. 2. On October 29, 1999, the Company invested in 49% of ordinary shares of DNS. Therefore, DNS’s incomes in November and December were included in the consolidated financial statement 1999.
From the above structure, the incomes from NMT and Digital GSM mobile phone affect the capacity for income generation and cash flow of the Company, accounted for 66% of the total revenue in 1999. The Company intends to maintain the debt to equity ratio at lower than 2 to 1. However, the new method of appropriation of the costs of mobile phone network resulted in the profit from 1998 and 1999 in the balance sheet, after adjustment for comparison, being reduced to Baht 1,515.50 million and Baht 1,757.05 million respectively. The accumulated profit at the beginning of the financial period reduced to Baht 2,519.90 million and Baht 4,035.40 million respectively. As a result, the debt to equity ratio, based on the consolidated financial statement, after adjustment for comparison, was at 0.85 and 2.44 at the end of 1999 and 1998 respectively.
45
If such debt to equity ratio is based on the financial statement before adjustment of changing method of amortization period, it will be at 0.72 and 1.99 at end of year 1999 and 1998 respectively. Such ratio is regarded as low, taking into account the impact produced by the change in exchange rate in 1997. It is low because the Company hedged the risks by buying foreign currencies with the forwards and swap at the rate of 83 % of total loans in foreign currencies. In 1997, the Company entered the impact produced by the change in exchange rate (net from income tax) as cost at Baht 1,239.79 million. Such entry was made according to accounting standard set by the Association of Certified Accountants and Auditors of Thailand even if the amount was not in cash. The Company still avoids the risks of exchange rate. At the end of 1999, the Company hedged 69% of its foreign loans. At the end of 1999, the debt to ratio went down to 0.85, because the Company issued 36 million ordinary shares to increase its capital. Such shares was sold to Singapore Telecom International Pte Ltd. at Baht 230 per share in the first quarter of the year. Therefore, the shareholder’s equity in the balance sheet increased by Baht 8,280 million. The proceeds from the sale of such shares were mostly used in the repayment of loan. As a result, the loans in consolidated financial statement reduced from Baht 12,646.9 million at the end of 1998 to Baht 4,925 million at the end of 1999. From the time of establishment, the Company has been recognized as leading private firm by financial institutions. This is because the Company has never defaulted on payment of principal or interest. The Company has earned trust from foreign governments and foreign financial institutions. For example, the Bank for Export of Finland and the Bank for Export of Australia offered long-term loans of USD 47.71 million and USD 12.99 million respectively. In 1997, it was the fist time that any private firm in Thailand was offered clean loan. The liquidity, current ratio increased from 0.50 time in 1998 to 0.87 time in 1999, because the Company repaid loan and paid for the equipment in 1999. As the Company has to make large invest in mobile phone network. Therefore, assessment of assets based on income generation will show that the rating is not too high. The ratio of returns on asset was at 3.80 in 1998 and it increased to 6.90 in 1999. However, the assessment of assets based on account receivable will show that the rating is quite high. Based on the past 3 years’ records, the Company’s bad debts were only 1% to 3%, except in 1998 the bad debts were 5% due to the economic crisis. In 1999, the average collection period was 50 days, which was in accord with the standard set by the Company. However, it was reduced from 79 days in 1998. The extended period was due to severe economic impact from 1997 to 1999. To reduce such impact, the Company adopted strict measures for dealing with subscribers who were in arrears with payments, such as suspension of service. So far, the Company has divided customers into different categories and segments, and changed the conditions of service suspension accordingly. Moreover, the Company invested in intelligent database for better categorization and segmentation of customers and management of asset quality. For example, subscribers who do not pay the bills on time will get reminders.
46
Major cost of the Company are variable costs which mainly is the concession fee to TOT at the rate of 20% of revenue before expenses and tax for 1998 and such sum must not be less than minimum payment. From 1996 to 1999, the Company paid TOT the concession fee at the rate higher than the minimum payment. The Company’s fixed costs are costs of sale of mobile phones and page phones, plant & equipment for operation of datanet under concession agreement, rental of signal communication link with TOT, station rental, maintenance of mobile phone and page phone networks, mobile phones and page phones. The Companies group’s gross profit margin increased from 35.01% in 1998 to 36.82% in 1999. This is because the group reduced the rental of signal communication link with TOT and used its own link more. Therefore, the fixed costs had reduced. The net profit has changed according to the gross profit.
Significant change Assets The value of inventories was Baht 683.60 million and Baht 939.47 million at the end of 1998 and 1999 respectively, compared with Baht 66.1 million at the end of 1997. This is because the inventories of AWM, which is importer and distributor of mobile phones, were included in the consolidated financial statement, commencing at the end of 1998. Therefore, from 1998 the inventories include AWM’s mobile phones and equipments and APG’s page phones which were included in the consolidated financial statement prepared earlier. In 1998 and 1999, the Company increased the investments in subsidiary and associated companies as follows: *
Advanced Wireless Marketing Co., Ltd. (AWM) On December 22, 1998, the Company has acquired an AWM’s ordinary shares from SHIN in the amount of Baht 600 million. As a result, the Company holds 99.99% of shares in AWM. AWM is an importer and distributor of NMT and Digital GSM mobile phones and also operate phone rental service after-sale service and repair center. Now, it has a fully paid-up capital of Baht 240 million.
*
Advanced Paging Co., Ltd. (APG) On February 1999, the Company bought Baht 949.6 million of APG’s ordinary shares from Thai Page Private Ltd., which is an affiliated company of STI. As a result, the Company holds 99.99% of shares in APG instead of 60%. APG’s main activities are Digital Display Paging service, sale, and rental of page phones. Now, its has a fully paid-up capital Baht 350 million.
*
Advanced Datanetwork Communications Co., Ltd. (ADC) On October 20, 1999, the Company board of directors approved the purchase of 18,339,386 ordinary shares of ADC at the price of Baht 14.89 per share, totaling Baht 273.1 million. As a result, the Company’s shareholding in ADC increased from 27.86 % to 67.95%. ADC’s main business is DATANET which is data communication through leased line. At present, it has a fully paid-up capital of Baht 457.52 million.
*
Data Network Solution Co., Ltd. (DNS) On October 20, 1999, the Company board of directors approved the purchase of 49,000 ordinary shares of DNS at the price of Baht 163.15 per share, totaling Baht 8 million. As a result, the Company’s shareholding in DNS is 49%. DNS’s main business is DATANET which is data communication through leased line. It is in joint operation with ADC. At present, DNS has a fully paid-up capital of Baht 1 million.
47
The Company has invested in Baht 1,501.13 million and Baht 2,731.73 million in affiliated and subsidiary companies by the end of 1998 and 1999 respectively. *
From the third quarter of 1999, the Company changed the amortization period for cost of mobile phone network. Previously, the cost of mobile phone networks are amortized as expense on the straight-line method on remaining concession period - from the day of equipment installation until September 2015. With the new method, the cost of mobile phone networks are amortized on the straight-line method over a period of 10 years not exceeding year 2005 for the analogue system and the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital GSM system. Such new method of amortization affected the consolidated balance sheets for 1998 and 1999, that is, the assets decrease by Baht 2,519 million and Baht 4,035 million respectively. The net profit and accumulated profit brought forward also decrease. It affected the overall performance in 1999, that is, the amortization increased by Baht 1,757.05 million. Such changes are non-cash items.
*
Other information: *
Cash and bank deposit decrease from Baht 2,099.22 million at the end of 1998 to Baht 880.98 million at the end of 1999. It was due to repayment of loan in the first quarter of 1999.
*
Net account receivable and notes receivable increased from Baht 3,064.39 million at the end of 1998 to Baht 3,848.35 million at the end of 1999. It was due to higher revenue from service charge and success in reduction of average collection period from 79 days in 1998 to 50 days in 1999.
*
The costs of mobile phone and page phone network, plant and equipment for Datanet operation under concession agreement increased from Baht 26,096.20 million at the end of 1998 to Baht 26,812.20 million at the end of 1999. It was due to additional investment in construction of networks in the provincial areas.
*
Net value of goodwill increased from Baht 292.8 million at the end of 1998 to Baht 812.25 million at the end of 1999. It was due to inclusion of the values of goodwill of APG and ADC, in which the Company made additional investments in the first and fourth quarter of 1999.
Liabilities & shareholder’s equity *
Account payable and notes payable decreased from Baht 6,745.85 million in 1998 to Baht 2,324.11 million in 1999. It was due to large amounts of loan repayments in 1999.
*
Debentures, long and short-term loans decreased from Baht 12,646.9 million at the end of 1998 to Baht 4,925.00 million at the end of 1999. It was due to repayment of loans by the proceeds from increasing capital of 36 million shares.
*
Accrued Concession fee increased from Baht 655.11 million at the end of 1998 to Baht 953.23 million at the end of 1999. It was due to higher revenue. Normally, the Company shall first pay the minimum amount to TOT as set forth under the concession agreement. Payments shall be made in 4 equal installments in January, April, July and October of every year. Then, the difference shall be paid to TOT in November of every year.
*
Other current liabilities increased from Baht 2,947.13 million at the end of 1998 to Baht 4,518.77 million in 1999. They included main items such as accrued income taxes, circuit rental expenses and other expenses. The increase was due to higher accrued circuit rental and other expenses.
*
In January 1999, STI and SHIN signed an agreement to jointly hold shares in the Company. As a result, SHIN’s shareholding in the Company reduced from 54.57% to 41.87%. STI’s shareholding in the Company is done through purchase from SHIN 14.3 million ordinary shares of the Company at the price of Baht 230 per share and purchase of 36 million capital raising ordinary shares of the Company at the same price of Baht 230 each, totaling Baht 11,569 million as approved by the shareholders extraordinary meeting. After purchase of shares, STI hold 18.63% stake in the Company’s registered capital. The effects on the balance sheets are as follows:
*
The paid-up capital increased by Baht 360 million, from Baht 2,340 million at the end of 1998 to Baht 2,700 million at the end of 1999. It was due to issuance of 36 million capital raising ordinary shares (par value of Baht 10 per share) in the first quarter of 1999.
*
The premium on share capital increased by Baht 7,920 million from Baht 2,295 million at the end of 1998 to Baht 10,215 million at the end of 1999. It was due to issuance of capital raising ordinary shares at the par value of Baht 10 per share for sale at Baht 230 each.
48
Incomes & expenditures *
Incomes from mobile phones and page phone services increased by 23%, to Baht 18,327.77 million in 1999. It was due to improved economy after the crisis in 1997. The subscribers of mobile phone increased to 611,000 for NMT, 596,000 for Digital GSM, and 23,200 for prepaid phones. The number of all subscribers was 1,230,200 at the end of 1999.
*
Incomes from sale and costs of sale increased from Baht 224.98 million and Baht 253.59 million in 1998 to Baht 6,885.88 million and Baht 4,708.60 million in 1999. This was because the Company consolidated income statement of AWM, which is importer and distributor of mobile phones for Shinawatra Group, in which the Company holds 100% of equity stake, commencing form the first quarter of 1999 despite purchase of AWM’s ordinary shares at the end of December 1988. Before 1999, incomes from sale and costs of sale in the income statement meant the incomes from sale and costs of sale of Phonelink page phones of APG which is the affiliated company.
*
Under the concession agreement dated March 27, 1990 between the Company and TOT; and the concession agreement dated December 19, 1989 between APG and TOT, the Company and APG must pay annual concession fee to TOT based on the revenue from mobile phone and page phone services or the minimum amount fixed under the agreements. Since March 1, 1997, the fee has been waived by TOT for APG, provided that APG gave discount rates of pager service charging to its customers. Therefore, the effects on APG’s financial statement are not too significant, because the fee and discount rates tend to compensate for each other.
*
The costs of service and equipment rental increased in 1998 because of the higher cost of mobile phone network and the amortization of costs due to the change in foreign currency exchange system in 1997.
Cash flow statement *
Normally, the nature of business of the Company need to use large investment. In 1998 and 1999, The Company had made additional investment in mobile network to increase the capacity for mobile phone service. The net cash earned from activities to the value of Baht 6,654.66 million in 1998 and Baht 6,765.28 million in 1999 was insufficient. Therefore, the Company sought cash funding Baht 2,572.70 million and Baht 1,554.07 million from financial institution in 1998 and 1999 respectively.
*
The interest coverage ratio was at 5.63 times in 1998 and increased to 13.01 times in 1999. It was due to loan repayments before maturity date in 1999.
*
Ability to make repayment on cash basis = cash flow from operation + interest payment/ (interest payment + principal + dividend) = 0.62 times in 1999, a decrease from 1.19 times in 1998. It was due to loan repayments of Baht 11,379* million in 1999 and Baht 5,132 million in 1998. Such sums belong to cash flow from financing activities.
* Baht 3,600 million of loan repayments in such period was made voluntarily before maturity.
49
Non-Recurring Transaction *
In January 1999, the Company issued 36 million capital raising ordinary shares by private placement to STI at Baht 230 per share
*
The Company operates mobile phone service under concession granted by TOT. The concession term of 20 years was extended to 25 years, effective from 1990. In the balance sheet, the costs of mobile phone network are shown as “the costs of mobile phone network under concession agreement” under assets, but in the past, the Company was to amortize such costs throughout the remaining term of the concession - from the date of installation of equipment until September 2015. The management examined the entries of the costs of mobile phone network and decided that from September 1999, the financial statement shall show such sums as the costs of system’s life service - the assets expected to generate incomes and cash flow for the Company. The new method of amortization reflects such returns on such assets under the terms and conditions of the concessions far better than the previous method. Therefore, the costs of mobile phone network will be amortized on the straight-line method over the period of 10 years not exceeding year 2005 for the analogue system and on the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital system.
Restructuring of company’s shareholding with the group SHIN reduced the shareholding in the Company to less than 50%. Therefore, the Company is not SHIN’s subsidiary company since March 31, 1999. Affiliated company’s effects on financial status and performance The performance of the Company and affiliated companies will be in the same line. For the past 3 years, the revenue of subsidiary companies (after inter-company transactions elimination) came to 15% of the consolidated revenue of the
Com-
pany and its subsidiary companies. The subsidiary companies which generate most of the income are AWM and APG. The operation of ADC and DNS affects the Company’s operation by less than 1% of the consolidated revenue.
50
Directors Report 1999
Name
Position
Advanced Info
Advanced
Advanced
Advanced
Data Network
Service Plc.
Paging
Wireless
Datanetwork
Solutions
Co., Ltd.
Marketing
Communications
Co., Ltd.
Co., Ltd.
Co., Ltd.
Mr. Paiboon Limpaphayom (Ph.D.)
Chairman of The Board
-
-
-
-
-
Mr. Vithu Rakvanichapongs
Vice Chairman of the Board
-
-
-
-
-
Director and Executive
-
-
1
-
1
Communication
-
-
-
-
1
Director and Executive
-
-
-
-
1
-
-
-
-
-
Mr. Chow Wing Keung Lucas Director
-
-
-
-
-
Mr. Suphadej Poonpipat
-
-
-
-
-
Audit Committee
-
-
-
-
-
Mr. Arun Churdboonchart
Audit Committee
-
-
-
-
-
Mr. Arak Chonlatanon
Executive Committee
-
-
-
-
-
Mr. Boonklee Plangsiri
Committee Mr. Somprasong Boonyachai
Director and Chairman of the Executive Committee - Wireless
Mrs. Siripen Sitasuwan
Committee Mr. Allen Lew Yoong Keong
Director and Executive Committee Chairman of the Audit Committee
Mr. Vithit Leenutaphong
As of December 31, 1999
51
Directors and Management Team
Name - Surname
Mr. Paiboon Limpaphayorm (Ph.D.)
Age
58
Position
Chairman of the Board of Director
Shareholding Status (%)
None
Relationship with Management
None
Education
Ph.D. (Electrical Engineering) Iowa State University
Experience
1988 - 1992
Managing Director - Telephone Organization of Thailand
1992 - 1993 1993 - 1998
Advisor - Telephone Organization of Thailand Director and Executive Committee Shin Corps. Group
1999 - Present Chairman of the Board - Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Withu Rukvanichapongs
Age
60
Position
Vice Chairman of the Board of Director
Shareholding Status (%)
None
Relationship with Management
None
Education
M.A. of Engineering, USA
Experience
1992 - Present Senior Executive Vice President of Telephone Organization of Thailand
Illegal Record during past 10 years
None
Name - Surname
Mr. Boonklee Plangsiri
Age
48
Position
Director and Executive Committee
Shareholding Status (%)
None
Relationship with Management
None
Education
M.A. of Computer Engineering, University of Illinois, USA, Oregon State University, USA
Experience
1993 - 1994
President of Shinawatra Group
1995 - 1996
Vice Chairman (Operation) - Shinawatra Group
1997 - Present Director, Executive Committee - Shin Corporations Plc., Advanced Info Service Plc., Shin Satellite Plc. 1999 - Present Chairman of the Executive Committee Shin Corporations Plc. Illegal Record during past 10 years
52
None
Name - Surname
Mr. Somprasong Boonyachai
Age
45
Position
Director, Chairman of the Executive Committee Wireless Communication
Shareholding Status (%)
None
Relationship with Management
None
Education
Master of Engineering, Asian Institute of Technology (AIT)
Experience
1991 - 1992
IMA Manager, Report to General Manager, IBM Thailand
1992 - 1993
Executive Vice President (Operation 4) Shinawatra Group
1993
President - Advanced Info Service Plc.
1993 - 1994
President - Shinawatra Satellite Plc.
1994 - 1995
President - Advanced Info Service Plc.
1995 - 1996
Senior President - Advanced Info Service Plc.
1997 - 1998
Vice Chairman of the Executive Committee Wireless Communication
1999 - Present Chairman of the Executive Committee - Wireless Communication, President - Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mrs. Siripen Sitasuwan
Age
51
Position
Director and Executive Committee
Shareholding Status (%)
None
Relationship with Management
None
Education
M.B.A. Wichita State University, Wichita Kansas, USA
Experience
1991 - 1993 1994 - 1998
Executive Vice President - Finance Shinawatra Group Executive Committee - Chief Finance Officer of the Shinawatra Group
1999 - Present Chief Finance Officer of Shin Corporations Plc., Director and Executive Committee Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Allen Lew Yoong Koeng
Age
44
Position
Director and Executive Committee
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, Massachusettes Institute of Technology, USA
Experience
1980 - 1993
Singapore Telecom
1994 - 1995
General Manager - Singapore Telecom
1996 - 1999
COO - Singapore Telecom International Pte Ltd.
1999 - Present Director, Executive Committee Advanced Info Service Plc., Chief Operating Officer - Advanced Info Service Plc. Illegal Record during past 10 years
None
53
Name - Surname
Mr. Chow, Wing Keung Lucas
Age
46
Position
Director
Shareholding Status (%)
None
Relationship with Management
None
Education
University of Aston Packard
Experience
1998
Operation Manager of Hewlette
1998 - 1999
Group Director of Total Quality
Present
Director - Advanced Info Service Plc.
Illegal Record during past 10 years
None
Name - Surname
Mr. Suphadej Poonpipat
Age
49
Position
Independent Director and Chairman of the Audit Committee
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, University of Wisconsin, USA
Experience
1990 - Present President and Chief Executive Officer National Securities Plc. 1998 - Present Chairman of the Audit Committee Advanced Info Service Plc.
Illegal Record during past 10 years
None
Name - Surname
Mr. Vithit Leenutaphong
Age
44
Position
Independent Director and Audit Committee
Shareholding Status (%)
None
Relationship with Management
None
Education
MBA, University of Southern California, USA
Experience
Executive Director - Yontrakit Group Executive Director - Thai Yarnyon Co., Ltd. Executive Director (Sale and Marketing) - Yontrakit Group
Illegal Record during past 10 years
None
Name - Surname
Mr. Arun Churdboonchart
Age
58
Position
Independent Director and Audit Committee
Shareholding Status (%)
None
Relationship with Management
None
Education
BBA, California State University, Long Beach, California, USA Diploma (Private Sector) - Thailand National Defense College
54
Experience
Executive Director - Tritip Complex Group
Illegal Record during past 10 years
None
Name - Surname
Mr. Vikrom Sriprataks
Age
46
Position
Senior Executive Vice President - Engineering
Shareholding Status (%)
None
Relationship with Management
None
Education
Engineering, Chulalongkorn University
Experience
1981 - 1990
Ericsson Telephone Corp. Far East AB.
1992 - 1994
General Manager - Advanced Info Service Plc.
1998 - Present Senior Executive Vice President (Engineering) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mrs. Suvimol Kaewkoon
Age
44
Position
Senior Executive Vice President (Service Operation) - Advanced Info Service Plc.
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, Asian Institute of Management, Manila Phillipines
Experience
1988
Management Trainee / PSA. Group
1993 - 1994
President - Shinawatra Telewiz
1995 - Present Senior Executive Vice President (Service Operation) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Miss Yingluck Shinawatra
Age
32
Position
Executive Vice President - Service Operation
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, Kentucky State University
Experience
1991 - 1994
Manager - Shinawatra Directories Co., Ltd.
1995 - 1996
General Manager - Shinawatra Directories Co., Ltd.
1997 - 1998
Vice President - Shinawatra Directories Co., Ltd.
1999 - Present Executive Vice President (Service Operation) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Sukit Tirawatanawit
Age
55
Position
Vice President - Asset and Data Network
Shareholding Status (%)
None
Relationship with Management
None
Education
Engineering, Chulalongkorn University
Experience
1992 - 1994
Telephone Organization of Thailand
1994 - 1996
Vice President - Shinawatra International Co., Ltd.
1996 - 1997
Vice President (Engineering Network) Advanced Info Service Plc.
1997 - Present Vice President (Asset and Data Network) Advanced Info Service Plc. Illegal Record during past 10 years
None
55
Name - Surname
Mr. Wichian Mektrakarn
Age
46
Position
Vice President - Technical
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree in Electrical Engineering, California Polytechnic State University Pomona, USA
Experience
1992 - 1994
Engineering Manager - Shinawatra Satellite Plc.
1995 - 1996
Manager of Mobile Phone Office Advanced Info Service Plc.
1997 - 1998
Vice President - Network Operation and Maintenance, Metropolitan Area
1999 - Present Vice President (Technical) - Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Vuthiporn Chaipayom
Age
52
Position
Vice President - Transmission Management Project
Shareholding Status (%)
None
Relationship with Management
None
Education
MINI MBA, Thammasat University MINI MBA, Chulalongkorn University
Experience
1991 - 1993
Chief Electronics Repair Center Telephone Organization of Thailand
1993 - 1994
Chief of Office of Telecommunications Department Telephone Organization of Thailand
1995 - 1997
Vice President (Network Operation and Maintenance, Metro Area) - Advanced Info Service Plc.
1997 - Present Vice President (Transmission Management Project) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Weerawat Kiattipongthaworn
Age
39
Position
Vice President - Metropolitan Operation and Maintenance
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, University of Michigan
Experience
1983
Engineer - Communications Authority of Thailand
1990 - 1999
Shinawatra Group
Present
Vice President (Metropolitan Operation and Maintenance) - Advanced Info Service Plc.
Illegal Record during past 10 years
56
None
Name - Surname
Mrs. Arpattra Sringkarrinkul
Age
44
Position
Vice President - Information System Support
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree in Computer, Rochastor Institute of Technology, New York, USA
Experience
1990 - 1991
Engineering Manager (Industrial Production) IBM (Thailand) Co., Ltd.
1992 - 1993
Industrial Education Manager - IBM (Thailand)
1994 - 1996
General Manager (Computer Service) Shinawatra Computer and Communication Plc.
1998 - 1999
Vice President (Operation) - Advanced Info Service Plc.
1999 - Present Vice President (Information System Support) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Walan Norasetpakdi
Age
38
Position
Vice President - Wireless Controller
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, Commerce and Accountancy, Thammasat University
Experience
1991 - 1993
Finance and Accounting Manager Advanced Info Service Plc.
1993 - 1994
Finance and Accounting Senior Manager Advanced Info Service Plc.
1994 - 1996
Assistant Vice President (Finance and Administration) Advanced Info Service Plc.
1997 - 1998
Assistant Vice President (Wireless Controller) Advanced Info Service Plc.
1999 - Present Vice President (Wireless Controller) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Col. Prawat Nigarnkul
Age
49
Position
Assistant Vice President - Site Acquisition and Maintenance
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, Georgia Institute of Techonology
Experience
1995 - 1997
Senior Manager Special Project Shinawatra Computer and Communication Plc.
1997 - Present Assistant Vice President (Site Acquisition and Maintenance) - Advanced Info Service Plc. Illegal Record during past 10 years
None
57
Name - Surname
Mr. Warachat Herabat
Age
48
Position
Assistant Vice President - Metropolitan Operation
Shareholding Status (%)
None
Relationship with Management
None
Education
MBA, Marketing Tulane University, USA
Experience
1992 - 1994 1994 - 1995
Administration Manager - Advanced Info Service Plc. Assistant Vice President (Administration) Advanced Info Service Plc.
1996 - Present Assistant Vice President (Metropolitan Operation) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Annop Petchariya
Age
44
Position
Assistant Vice President - Upcountry Operation
Shareholding Status (%)
None
Relationship with Management
None
Education
Bachelor of Electrical Engineering
Experience
1978 - 1994
IBM (Thailand) Co., Ltd.
1994 - 1996
Upcountry Manager - Advanced Info Service Plc.
1996 - Present Assistant Vice President (Upcountry Operation) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Pattarasak Uttamayodhin
Age
40
Position
Assistant Vice President - Human Resource
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, University of Southern of California, USA
Experience
1993 - 1997
First Assistant Vice President (Administration) Multi - Credit Corporation of Thailand Plc.
1997 - 1998
Human Resource Manager Wireless Communications Service Co., Ltd.
1998 - 1999
Head of Human Resouces Consultant Thailand Productivity Institute
1999 - Present Assistant Vice President (Human Resource) Advanced Info Service Plc. Illegal Record during past 10 years
58
None
Name - Surname
Mrs. Suvimon Kulalert
Age
39
Position
Assistant Vice President - Internal Audit
Shareholding Status (%)
None
Relationship with Management
None
Education
Master Degree, Oklahoma City University, USA
Experience
1981 - 1985
Certified Public Accountant
1987 - 1991
Assistant Accounting Manager - TCC Group
1991 - 1994
Corporate Accounting Manager - Shinawatra Group
1995 - Present Assitant Vice President (Internal Audit) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Somchai Lertsuthiwong
Age
38
Position
Assistant Vice President - Business Relation
Shareholding Status (%)
None
Relationship with Management
None
Education
MBA, Chulalongkorn University
Experience
1996 - 1997
Automatic Post Office Project Manager Shinawatra Information Technology Co., Ltd.
1998 - Present Assistant Vice President (Business Relation) Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mr. Supoch Vathitphund
Age
49
Position
Acting Assistant Vice President - Legal
Shareholding Status (%)
None
Relationship with Management
None
Education
Bachelor of Law - Thammasat University
Experience
1975
Bank of Ayudhaya Plc.
1981
Lawyer - Thammasan Legal Office
Present
Acting Assistant Vice President (Legal) Advanced Info Service Plc.
Illegal Record during past 10 years
None
Name - Surname
Mrs. Wilai Keangpradoo
Age
40
Position
Public Relation Manager
Shareholding Status (%)
None
Relationship with Management
None
Education
Master of Arts Mass Communication, Chulalongkorn University
Experience
1983 - 1988
Public Relation - Thai Airways Domestic Airline
1988 - 1993
Media Relation Section Manager Thai Airways International Co., Ltd.
1996 - 1998
Public Relations Manager - Shin Corporations Plc.
1999 - Present Public Relations Manager Advanced Info Service Plc. Illegal Record during past 10 years
None
59
Name - Surname
Mr. Attapol Sariddipantawat
Age
35
Position
System Support Manager
Shareholding Status (%)
None
Relationship with Management
None
Education
MBA, Kasetsart University
Experience
1995 - 1997
Finance and Administration Manager Shin Corporations Plc.
1998 - Present System Support Manager Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Mrs. Walaiporn Khajeenikorn
Age
40
Position
Administration and Purchasing Manager
Shareholding Status (%)
None
Relationship with Management
None
Education
MBA, Dhurakij Bandit University
Experience
1996 - 1997
Purchasing and Inventory Control Manager Advanced Info Service Plc.
1997
Purchasing Manager - Advanced Info Service Plc.
1998 - Present Administration and Purchasing Manager Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Miss Sansanee Gumpalanuwat
Age
43
Position
Accounting Manager
Shareholding Status (%)
None
Relationship with Management
None
Education
MS (Accounting) - Thammasat University
Experience
1995 1996 - 1997
Senior Finance Specialist - Shin Corporations Plc. Senior Finance and Accounting Manager Advanced Wireless Marketing Co., Ltd
1997 - Present Accounting Manager - Advanced Info Service Plc. Illegal Record during past 10 years
None
Name - Surname
Miss Sunitaya Shinawatra
Age
39
Position
Finance Manager
Shareholding Status (%)
None
Relationship with Management
None
Education
MBA, North Texas State University, USA
Experience
1994
Finance and Accounting Manager Advanced Info Service Plc.
1995 - Present Finance Manager - Advanced Info Service Plc. Illegal Record during past 10 years
60
None
Financial Statements
61
Auditor’s Report
TO THE SHAREHOLDERS OF ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED I have audited the accompanying consolidated and company balance sheets of Advanced Info Service Public Company Limited as at 31 December 1999, and the related consolidated and company statements of income, changes in shareholders’ equity, retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Companys’ management. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated and company financial statements (before restatement) of Advanced Info Service Public Company Limited for the year ended 31 December 1998 presented herewith for comparative purposes, were audited by another auditor whose report dated 10 February 1999, expressed an unqualified opinion on those statements. I conducted my audit in accordance with generally accepted auditing standards in Thailand. Those standards require that I plan and perform the audit to obtain 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 principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position of Advanced Info Service Public Company Limited as at 31 December 1999 and the consolidated and company results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles in Thailand.
62
As explained in Note 3 to the consolidated and company financial statements, during the year 1999, the Company and a subsidiary have changed their accounting policies in respect of: (a) accounting for the cost of mobile phone networks under concession agreements; (b) accounting for the cost of Datanet tools and equipment under concession agreement and (c) accounting for the change in status of investment in associate to be investment in subsidiary, to reflect a change in the reporting unit. The Company and the Group have accounted for these changes retrospectively. Accordingly the consolidated and company financial statements for the year ended 31 December 1998 have been restated. I have audited the adjustments, detailed in Note 3, relating to the restatement of the consolidated and company financial statements for the year ended 31 December 1998, and found that the adjustments have been appropriately made. I draw attention to Note 40 to the consolidated and company financial statements which is marked “unaudited�. Information regarding the Year 2000 issue as presented in this note has not been subjected to auditing procedures, and, accordingly, I express no opinion on it.
PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok 4 February 2000
63
Balance Sheets Advanced Info Service Public Company Limited As at 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated Baht
Baht
1998 Restated
Baht
Baht
ASSETS Current Assets Cash on hand and at banks
4
880,981,901
2,099,223,691
525,850,888
1,690,915,056
Short-term investments
5
2,810,130,757
2,488,523,707
2,352,919,560
2,166,007,771
Trade accounts receivable, net
6
3,848,345,836
3,064,391,826
3,430,142,410
2,749,419,588
Amounts due from and loans to 7
548,159
17,648,364
2,093,329
214,277,318
Inventories, net
related companies, net
8
939,472,853
683,559,225
-
-
Other current asset
9
1,090,625,816
558,395,217
1,028,222,526
446,565,756
9,570,105,322
8,911,742,030
7,339,228,713
7,267,185,489
-
160,544,852
-
160,544,852
Total Current Assets Non-Current Assets Long-term forward and swap contracts receivable, net
17
Long-term investments, net
10
-
-
3,825,617,841
1,607,449,056
Property and equipment, net
11
1,974,811,317
1,954,142,351
1,778,747,098
1,750,073,217
12
26,812,222,245
26,096,159,306
25,720,430,223
24,984,234,332
Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, net Other assets, net Total Non-Current Assets Total Assets
64
13
1,507,022,850
956,801,422
475,145,345
457,091,531
30,294,056,412
29,167,647,931
31,799,940,507
28,959,392,988
39,864,161,734
38,079,389,961
39,139,169,220
36,226,578,477
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
1,950,000,000
814,688,647
1,950,000,000
627,130,000
LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Short-term loans from banks Trade accounts payable
14
2,324,113,183
6,745,856,643
1,683,336,062
5,936,803,452
Current portion of long-term liabilitie
20
1,033,126,793
4,419,468,419
1,033,126,793
4,419,468,419
related companies
15
135,046,813
30,887,579
693,480,365
14,360,102
Short-term debentures
16
-
2,000,000,000
-
2,000,000,000
Amounts due to and loans from
Forward and swap contracts payable, net
17
Accrued concession fee Other current liabilities
18
57,450,350
76,706,115
57,227,095
76,706,115
953,231,105
655,112,199
953,231,105
655,112,199
4,518,768,739
2,947,128,934
3,614,101,988
2,632,774,949
10,971,736,983
17,689,848,536
9,984,503,408
16,362,355,236
17
24,564,860
-
24,564,860
-
Long-term debentures
19
1,500,000,000
2,000,000,000
1,500,000,000
2,000,000,000
Long-term liabilities
20
2,391,868,726
4,227,455,113
2,391,868,726
4,227,455,113
Deposits from customers
21
Total Current Liabilities Non-Current Liabilities Long-term forward and swap contracts payable, net
Total Non-Current Liabilities Total Liabilities
3,450,606,377
3,083,240,092
3,871,811,093
3,300,408,562
7,367,039,963
9,310,695,205
7,788,244,679
9,527,863,675
18,338,776,946
27,000,543,741
17,772,748,087
25,890,218,911
Shareholders’ Equity Share capital 5,000,000,000
5,000,000,000
5,000,000,000
5,000,000,000
Issued and paid-up share capital
Authorised share capital 22
2,700,000,000
2,340,000,000
2,700,000,000
2,340,000,000
Premium on share capital
22
10,215,000,000
2,295,000,000
10,215,000,000
2,295,000,000
Retained earnings Appropriated - Legal reserve
23
Unappropriated Minority interests Total Shareholders’ Equity
24
500,000,000
500,000,000
500,000,000
500,000,000
7,951,421,133
5,201,359,566
7,951,421,133
5,201,359,566
158,963,655
742,486,654
-
-
21,525,384,788
11,078,846,220
21,366,421,133
10,336,359,566
39,864,161,734
38,079,389,961
39,139,169,220
36,226,578,477
Total Liabilities and Shareholders’ Equity
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
65
Statements of Income Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
18,327,768,540
14,881,128,031
16,701,245,081
13,327,584,009
6,885,884,121
224,976,672
-
-
Revenues Revenues from services and equipment rentals Sales Net gain on exchange Other operating income
25
Total Revenues
-
1,773,932,350
-
1,753,066,816
659,034,636
569,436,685
506,666,477
482,667,269
25,872,687,297
17,449,473,738
17,207,911,558
15,563,318,094
Expenses Cost of services and equipment 11,222,235,367
9,563,260,582
10,750,141,776
9,190,498,846
Cost of sales
rentals
26
4,708,594,735
253,586,510
-
-
Selling and administrative expenses
4,344,823,235
3,252,628,351
2,396,658,719
2,437,376,371
108,653,881
-
118,993,916
-
Net loss on exchange Interest expenses
27
718,286,932
1,216,858,571
717,647,239
1,167,328,796
Directors’ remuneration
28
5,060,000
720,000
5,000,000
660,000
21,107,654,150
14,287,054,014
13,988,441,650
12,795,864,013
4,765,033,147
3,162,419,724
3,219,469,908
2,767,454,081
Total Expenses Operating income
29
Share of net profit in subsidiaries Income before tax Income tax
30
-
-
987,568,785
129,379,554
4,765,033,147
3,162,419,724
4,207,038,693
2,896,833,635
1,995,711,939
1,591,291,692
1,456,977,126
1,450,315,292
2,769,321,208
1,571,128,032
2,750,061,567
1,446,518,343
19,259,641
124,609,689
-
-
2,750,061,567
1,446,518,343
2,750,061,567
1,446,518,343
10.44
6.71
10.37
6.18
to minority interests
(0.07)
(0.53)
-
-
Net income for the year
10.37
6.18
10.37
6.18
Income before minority interests Share of net profit in subsidiaries to minority interests
24
Net income for the year Basic earnings per share Income before minority interests
31
Share of net profit in subsidiaries
66
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
Statements of Changes in Shareholders’ Equity Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
2,340,000,000
2,340,000,000
2,340,000,000
2,340,000,000
360,000,000
-
360,000,000
-
-
-
-
-
2,700,000,000
2,340,000,000
2,700,000,000
2,340,000,000
2,295,000,000
2,295,000,000
2,295,000,000
2,295,000,000
7,920,000,000
-
7,920,000,000
-
Share Capital Beginning balance Increase during the year
22
Decrease during the year Ending balance Premium on Share Capital Beginning balance Increase during the year
22
Decrease during the year
-
-
-
-
10,215,000,000
2,295,000,000
10,215,000,000
2,295,000,000
500,000,000
500,000,000
500,000,000
500,000,000
Increase during the year
-
-
-
-
Decrease during the year
-
-
-
-
500,000,000
500,000,000
500,000,000
500,000,000
Ending balance Retained Earnings Appropriated retained earnings Legal reserve Beginning balance
Ending balance
23
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
67
Statements of Changes in Shareholders’ Equity (Continued) Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
9,241,773,863
6,533,401,796
9,241,773,863
6,533,401,796
(4,035,398,425)
(2,519,895,717)
(4,035,398,425)
(2,519,895,717)
(5,015,872)
(1,264,856)
(5,015,872)
(1,264,856)
5,201,359,566
4,012,241,223
5,201,359,566
4,012,241,223
Unappropriated. retained earnings Beginning balance-as previously reported Adjustments
3
Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Beginning balance-as restated Net income for the year As previously reported Net income for the year Adjustments
-
2,965,772,067
-
2,965,772,067
2,750,061,567
-
2,750,061,567
-
-
(1,515,502,708)
-
(1,515,502,708)
3
Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Less: Dividends
32
Ending balance Minority interests Total
68
24
-
(3,751,016)
-
(3,751,016)
7,951,421,133
5,458,759,566
7,951,421,133
5,458,759,566
-
(257,400,000)
-
(257,400,000)
7,951,421,133
5,201,359,566
7,951,421,133
5,201,359,566
158,963,655
742,486,654
-
-
21,525,384,788
11,078,846,220
21,366,421,133
10,336,359,566
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
Statements of Retained Earnings Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
9,241,773,863
6,533,401,796
9,241,773,863
6,533,401,796
(4,035,398,425)
(2,519,895,717)
(4,035,398,425)
(2,519,895,717)
(5,015,872)
(1,264,856)
(5,015,872)
(1,264,856)
5,201,359,566
4,012,241,223
5,201,359,566
4,012,241,223
Unappropriated retained earnings: Beginning balance-as previously reported Adjustments
3
Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Beginning balance-as restated Net income for the year As previously reported Net income for the year Adjustments
-
2,965,772,067
-
2,965,772,067
2,750,061,567
-
2,750,061,567
-
-
(1,515,502,708)
-
(1,515,502,708)
3
Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Less: Dividends
32
-
(3,751,016)
-
(3,751,016)
7,951,421,133
5,458,759,566
7,951,421,133
5,458,759,566
-
(257,400,000)
-
(257,400,000)
7,951,421,133
5,201,359,566
7,951,421,133
5,201,359,566
Unappropriated retained earnings at end of the year Appropriated retained earnings: Legal reserve Retained earnings at end of the year
23
500,000,000
500,000,000
500,000,000
500,000,000
8,451,421,133
5,701,359,566
8,451,421,133
5,701,359,566
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
69
Statements of Cash Flows Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
2,750,061,567
1,446,518,343
2,750,061,567
1,446,518,343
Cash flows from operating activities : Net income for the year Adjusted by : Depreciation charge
11
599,236,020
484,985,439
515,801,518
418,729,060
Provision for obsolete fixed assets
11
10,446,194
-
-
-
12
3,716,634,027
3,170,262,530
3,537,661,087
3,012,871,880
Amortisation of costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Amortisation of deferred charges
13
Doubtful accounts and bad debt
103,337,347
76,392,042
90,534,804
76,343,343
611,086,487
766,995,153
485,160,365
710,946,544
Loss on write-off inventories and provisions for obsolete inventories and diminution in value of finished goods Amortisation forward and swap premiums Loss (gain) on disposals of fixed assets
89,758,720
7,642,038
-
-
86,523,094
46,290,723
87,460,396
44,731,624
2,909,857
(1,601,843)
5,662,358
(58,608)
170,000,000
-
170,000,000
-
38,670,393
(1,937,113,058)
45,549,824
(1,936,048,683)
119,471,369
(718,374,141)
119,471,369
(718,374,141)
95,371,246
36,598,815
-
-
(37,110,360)
-
-
-
-
-
(987,568,785)
(129,379,554)
19,259,641
124,609,689
-
-
8,375,655,602
3,503,205,730
6,819,794,503
2,926,279,808
(1,397,702,852)
(221,336,927)
(1,181,183,550)
(206,055,717)
17,100,205
72,544,966
212,183,989
36,567,036
145,460,396
1,482,403,309
146,287,928
1,482,403,309
(345,324,549)
12,467,298
-
-
Loss from write-off cost of mobile phone service networks Unrealised loss (gain) on foreign exchange rate Realised loss (gain) on foreign exchange for loans Amortisation of goodwill
13
Write-down of negative goodwill to be other operating income Share of net profit in subsidiaries Share of net profit in subsidiaries to minority interests Net income before changes in operating assets and liabilities Changes in operating assets and liabilities (Excluding the effects of acquisition and disposal) (Increase) in trade accounts receivable Decrease in amounts due from related companies Decrease in forward and swap contracts receivable Decrease (increase) in inventories Decrease (increase) in other current assets Increase (decrease) in trade accounts payable
70
(698,075,011)
155,021,733
(745,212,756)
146,599,799
(1,630,262,838)
1,680,435,861
(1,468,799,524)
1,614,614,413
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
Statements of Cash Flows (Continued) Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Consolidated Notes
Company
1999
1998
1999
Restated
1998 Restated
Baht
Baht
Baht
Baht
104,159,234
(57,482,621)
29,120,263
4,985,872
5,309,096
(692,913,068)
5,085,840
(692,913,068)
Increase (decrease) in amounts due to related companies Increase (decrease) in forward and swap contracts payable Increase (decrease) in accrued concession fee
298,118,906
(213,484,830)
298,118,906
(213,484,830)
Increase in other current liabilities
1,661,334,480
1,041,269,814
1,034,927,302
964,129,008
(Increase) in other assets
(133,241,285)
(199,679,021)
(108,588,618)
(202,045,043)
362,752,809
92,204,092
571,402,530
129,306,562
6,765,284,193
6,654,656,336
5,613,136,813
5,990,387,149
(Increase) in loans to related companies
-
(45,500,000)
-
(50,000,000)
Increase in loans from related companies
-
-
650,000,000
-
(1,228,037,858)
(323,670,687)
(1,230,600,000)
(651,508,848)
Increase in deposits from customers Cash flows from operating activities Cash flows from investing activities
Cash invested in long-term investments in subsidiaries, net of cash acquired
38
Proceeds from disposals of fixed assets Purchases of property and equipment
27,214,866
6,091,382
18,023,766
1,906,008
(957,260,994)
(588,831,453)
(871,299,855)
(562,130,007)
(7,057,909,344)
(8,510,570,220)
(6,899,046,147)
(8,412,923,309)
(9,215,993,330)
(9,462,480,978)
(8,332,922,236)
(9,674,656,156)
Cash invested in cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Net cash (payments) to investing activities Cash flows from financing activities Increase in short-term loans from banks
1,068,341,353
678,450,000
1,255,900,000
678,450,000
Receipts from short-term debentures
-
2,000,000,000
-
2,000,000,000
Receipts from long-term debentures
1,500,000,000
2,000,000,000
1,500,000,000
2,000,000,000
Receipts from long-term liabilities
2,084,293,871
3,283,401,578
2,084,293,871
3,283,401,578
Proceeds from capital increase
8,280,000,000
-
8,280,000,000
-
Repayments of short-term debentures
(2,000,000,000)
(2,130,000,000)
(2,000,000,000)
(2,130,000,000)
Repayments of long-term debentures
(2,000,000,000)
(1,000,000,000)
(2,000,000,000)
(1,000,000,000)
Repayments of long-term liabilities
(7,378,560,827)
(2,001,747,516)
(7,378,560,827)
(1,338,747,516)
Dividends paid
22
-
(257,400,000)
-
(257,400,000)
Net cash receipts from financing activities
32
1,554,074,397
2,572,704,062
1,741,633,044
3,235,704,062
Net (decrease) in cash and cash equivalents
(896,634,740)
(235,120,580)
(978,152,379)
(448,564,945)
4,587,747,398
4,822,867,978
3,856,922,827
4,305,487,772
3,691,112,658
4,587,747,398
2,878,770,448
3,856,922,827
Cash and cash equivalents - beginning balance Cash and cash equivalents - ending balance
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
71
Statements of Cash Flows (Continued) Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
Supplemental disclosures of cash flow information Cash and cash equivalents Cash and cash equivalents included in cash flow statements for the years ended 31 December 1999 and 1998 comprise: Consolidated
Company
1999
1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
880.98
2,099.22
525.85
1,690.92
Short-term investments
2,810.13
2,488.53
2,352.92
2,166.00
Total cash and cash equivalents
3,691.11
4,587.75
2,878.77
3,856.92
Cash on hand and at banks
Interest expenses and income tax Interest expenses and income tax paid during the years ended 31 December 1999 and 1998 comprise:
Consolidated
Company
1999
1998
1999
Restated
Interest expenses Income tax
Million Baht
Million Baht
870.91 1,676.28
1998 Restated
Million Baht
Million Baht
1,299.32
864.65
1,173.57
390.00
1,451.60
326.30
Non-cash investing activities in 1999 and 1998 in consolidated statements of cash flows Additions to investments in property and equipment for general business operation, which are included in property and equipment, and additions to investments in mobile phone and pager service networks and Datanet tools and equipment, which are included in costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, were approximately Baht 5,235.12 million in 1999 and Baht 8,397.67 million in 1998. Outstanding debts in the balance sheets relating to the aforesaid investments, were approximately Baht 1,140.49 million in 1999 and Baht 3,920.49 million in 1998. Non-cash investing activities in 1999 and 1998 in the company’s separate statements of cash flows Additions to investments in property, plant and equipment for general business operation, which are included in property, and equipment, and additions to investments in mobile phone networks, which are included in costs of mobile phone networks under concession agreements, were approximately Baht 4,989.52 million in 1999 and Baht 8,273.32 million in 1998. Outstanding debts in the balance sheets relating to the aforesaid investments, amounting to approximately Baht 1,139.67 million in 1999 and Baht 3,920.49 million in 1998.
72
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
Notes to the Consolidated and Company Financial Statements Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998
1 GENERAL INFORMATION Advanced Info Service Public Co., Ltd. (“the Company”) is a public company limited and is incorporated and domiciled in Thailand. The address of its registered office is as follows: 414 Shinawatra Tower 1, Phaholyothin Road, Phayathai, Bangkok 10400 The Company is listed on the Stock Exchange of Thailand. The principal business operations of the Company and its subsidiaries (“the Group”) are summarised as follows: 1) The operation of a 900-MHz CELLULAR TELEPHONE SYSTEM under a concession granted from the Telephone Organization of Thailand (“TOT”), under the agreement dated 27 March 1990, trading mobile phones, rendering repair services for mobile phones and providing mobile phones for rent. 2) The operation of a DIGITAL DISPLAY PAGING SYSTEM under a concession granted from TOT, under the agreement dated 19 December 1989, trading pagers and providing pagers for rent. 3) The operation of a DATAKIT VIRTUAL CIRCUIT SWITCH under a concession granted from TOT, under the agreement dated 19 September 1989, rendering services for data network. Under the above agreements made with TOT, the Company, Advanced Paging Co., Ltd. and Shinawatra Datacom Co., Ltd. have to pay annual fees to TOT based on certain percentage of certain service income or at the minimum fees as specified in those agreements, whichever is higher. However, under the letter dated 4 March 1997 from TOT, no annual fee for the operations of pager service will be charged to Advanced Paging Co., Ltd. as from 1 March 1997 since the fee has been waived by TOT, while the said subsidiary has to reduce fee of pager service charging to its customers. Under the joint venture agreement between Shinawatra Datacom Co., Ltd. and TOT dated 25 September 1997, TOT has extended the period of the service agreement to 25 years and waived annual fee under the agreements effective from 25 September 1997, in exchange for annual fee, the subsidiary has issued the additional 10.75 million ordinary shares at the par value of Bht 10 each to TOT on 17 March 1998. In addition, the Company and the subsidiaries, according to the concessions, have to transfer their ownership of certain equipment and other assets procured by the Company and the subsidiaries for the operations of a 900 MHz CELLULAR TELEPHONE SYSTEM, DIGITAL DISPLAY PAGING SYSTEM and DATAKIT VIRTUAL CIRCUIT SWITCH to TOT upon completion of equipment installation. 2 SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below: 2.1 Basis of preparation The consolidated and company financial statements are prepared in accordance with and comply with generally accepted accounting principles in Thailand. The consolidated and company financial statements are prepared under the historical cost convention.
The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.
73
2.2 Consolidation Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the financial and operating policies, have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made for minority interests. A list of the Group’s principal subsidiaries is set out in Note 10. The financial effect of the acquisition of subsidiaries is shown in Note 38. 2.3 Investments in subsidiaries Investments in subsidiary undertakings are accounted for in the non-consolidated financial statements by the equity method of accounting. These are undertakings over which the Company has over 50% of the voting rights, and over which the Company exercises control. Provisions are recorded for impairment in value (if any). Equity accounting involves recognising in the income statement the Company’s share of the subsidiaries’ profit or loss for the year. The Company’s interest in the subsidiary is carried in the balance sheet an amount that reflects its share of the net assets of the subsidiary and includes goodwill on the acquisition. Where a subsidiary undertaking is acquired and held exclusively with a view to be subsequently disposed in the near future; or a subsidiary undertaking operates under severe long-term restrictions that significantly impair its ability to transfer funds to the Group, the interest in the subsidiary undertaking is accounted for in the consolidated and company financial statements by using the cost method of accounting. 2.4 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of net assets of the acquired subsidiary undertaking at the date of acquisition. Goodwill on acquisitions is reported in the consolidated balance sheet as an intangible asset and is amortised using the straight-line method over its estimated useful life. Goodwill arising on acquisitions of the Group is amortised over a maximum period of 15 years. The carrying amount of goodwill is reviewed annually and written down for impairment where it is considered necessary. 2.5 Revenue recognition Revenue from equipment sales is recognised when goods are delivered to customers. Revenue from equipment rentals is recognised over the period and at the rate prescribed by each agreement. Revenues from the provision of mobile phone and pager services are recognised when services are rendered to customers. Revenue from rendering voice/data communications via telephone line network services is recognised when service is rendered and billed. Interest income is recognised on an accrual basis unless collectibility is in doubt. 2.6 Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and deposits held at banks, as defined in the Thai Accounting Standard with respect to the preparation of the statement of cash flows, which is in line with the definition prescribed in the regulation relating to the financial statements issue under the Ministerial Regulation No. 7 (B.E. 2539) under the Public Company Limited Act B.E. 2535. Cash and cash equivalents, therefore, represents cash at banks and short-term investments with original maturities of three months or less.
74
2.7 Trade accounts receivable Trade accounts receivable are carried at anticipated realisable value. An estimate is made for doubtful accounts receivable based on a review of all outstanding amounts at every month end. Bad debts are written off during the year in which they are identified. 2.8 Allowance for doubtful accounts The Group’s management estimates the allowance for doubtful accounts based on the ending balance of accounts receivable. The estimate encompasses the consideration of past collection experience and other factors, such as changes in the composition and volume of the receivable, the relationship of the allowance to the accounts receivable, and the local economic conditions. 2.9 Pension obligations and employee benefits The Group operates a provident fund under a defined contribution plan, which the assets are held in a separate trustee-administered fund. The provident fund is funded by payments from employees and the relevant group companies. The Group’s contributions to the provident fund are charged to the statement of income in the related period. 2.10 Inventories Inventories comprise pager and mobile phone stocks and spare parts used for repairs and services. Inventories are stated at the lower of cost or net realisable value. Cost is determined as follows: Pager
- Moving weighted average method
Mobile phones
- First-in, first-out (FIFO) method
Spare parts (pagers, phones)
- Moving weighted average method
Datanet equipment
- First-in, first-out (FIFO) method
Net realisable value is the estimated selling price in the ordinary course of business less costs of completion and selling expenses. A provision is made for obsolete, slow-moving or defective inventories when necessary. 2.11 Related companies Companies are considered to be related if one company has the ability to control or exercise significant influence over the other company in making financial and operating decisions, or most of the shareholders or executive management of both companies are the same people or relatives. 2.12 Property and equipment Property and equipment are recorded at cost. The property and equipment, except land, are stated in the balance sheet at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line method to write off the cost of each asset to its residual value over its estimated useful life as follows: Acquisition date
Years
Buildings and improvements
-
5, 20
Leasehold rights
-
lease period
Leasehold building improvements
-
5, 10
Tools and equipment Furniture, fixtures and office equipment
before 1 January 1999 1 January 1999 onward
5 5, 10 5
Pagers and mobile phones for rent
-
2-5
Vehicles (including vehicles under finance leases)
-
5
75
2.12 Property and equipment (continued) The Group’s policy is to review asset values annually and to adjust depreciation schedules to match estimated useful lives. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from the sale of the asset less any costs of disposal. Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and are taken into account in determining operating income. 2.13 Accounting for leases - where the Group is the lessee Leases of property and equipment, where the Group assumes substantially all the benefits and risks of ownership, are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges in order to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payable. The interest element of the finance charge is charged to the income statement over the lease period. The property and equipment acquired under finance leasing contracts are depreciated over the useful life of the asset. Leases of assets, under which all the risks and benefits of ownership are effectively retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any penalty payment required of the lessor is recognised as an expense in the period in which the termination takes place. 2.14 Long-lived assets The Group annually evaluates the carrying value of long-lived assets to be held and used, including goodwill and other intangible assets, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated recoverable value of such assets is separately identifiable and is less than its carrying value. In that event, a loss is recognised based on the amount by which the carrying value exceeds the higher of the net selling price of the long-lived assets or the recoverable value derived from the value of the asset in use. Value in use is determined primarily using anticipated cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of are recorded at net selling price, which is reduced by the estimated costs of disposal. 2.15 Computer software development costs Generally, costs associated with developing computer software programmes are recognised as an expense as incurred. However, costs that are clearly associated with an identifiable and unique product which will be controlled by the Group and has a probable benefit exceeding the costs beyond one year, are recognised as an intangible asset. Expenditure which enhances and extends the benefits of computer software programmes beyond their original specifications and lives is recognised as a capital improvement and added to the original cost of the software. Computer software development costs recognised as assets are amortised using the straight-line method over their estimated useful lives, not exceeding 10 years. Costs associated with the maintenance of existing computer software programmes and for modifications for the Year 2000 are expensed as incurred.
76
2.16 Intangible assets Cost of mobile phone and pager networks and Datanet tools and equipment under concession agreements The costs of mobile phone and pager networks and Datanet tools network and equipment under concession agreements represent costs of certain equipment and other assets which have been or have to be transferred to TOT. The costs of mobile phone networks under concession agreements are amortised as expense on the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital system and the straight-line method over a period 10 years not exceeding year 2005 for the analogue system. The cost of Datanet tools and equipment under concession agreement is amortised as expense on the straight-line method over the period of 10 years not exceeding the remaining concession period. This accounting policy was adopted in 1999 (refer to Note 3). Previously, the costs of mobile phone networks and Datanet tools and equipment under concession agreements were amortised over the remaining concession period. Cost of pager network under concession agreement are amortised on the straight-line method over the remaining concession period until year 2005. Deferred charges Deferred charges represent commitment fees of long-term loans, costs of long-term leases of spaces for base stations, expenditures relating to the increase of power of electricity at base stations, costs of additional supplementary equipment for the operation of pager networks other than those specified in the concession agreement and which have been transferred to TOT, cost of computer software, expenditures relating to the improvement project of mobile phone service network and license fees from the joint venture agreement between the subsidiary and TOT. The following amortisation methods are used: -
Commitment fees of long-term loans are amortised over the period of each loan agreement.
-
Costs of long-term leases for base stations are amortised over the period of each lease agreement.
-
Expenditures relating to the increase of power of electricity at base stations are amortised over the remaining period of the concession agreements.
-
Costs of additional supplementary equipment for the pager network, other than those specified in the concession agreement and that have not been transferred to TOT, are amortised over a period of five years.
-
Cost of computer software is amortised over a period of ten years.
-
Expenditures relating to the improvement project of mobile phone service network are amortised over a period of five years.
-
License fees are amortised over the period of concession agreement.
2.17 Foreign currencies Transactions denominated in foreign currencies are translated into Baht at the rates of exchange ruling on the transaction dates. Realised gains and losses on exchange are recognised as income or expense as incurred. Monetary assets and liabilities at the balance sheet date denominated in foreign currencies are translated into Baht at the rates of exchange ruling at that date. Unrealised gains and losses on exchange are recognised in the income statement as incurred. 2.18 Financial instruments Financial instruments carried on the balance sheet include cash and bank balances, investments, trade receivables, trade creditors, leases and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The Group uses financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which mainly comprise forward foreign currency contracts and interest rate swap agreements, are recorded in the financial statements on the contract date. The purpose of these instruments is to reduce risk.
77
Forward foreign exchange contracts protect the Group from fluctuations in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Forward contract transactions are recorded as forward contracts receivable and forward contracts payable. Premiums or discounts are amortised in the statement of income on a straight-line basis over the contract period. Interest rate swap agreements protect the Group from fluctuations in floating interest rates. Any differential to be paid or received on an interest rate swap agreement is recognised as a component of interest revenue or expense over the period of the agreement. Gains and losses on early termination of interest rate swaps or on repayment of the borrowing are charged to the income statement. Disclosures about financial instruments to which the Group is a party are provided in Note 34. 2.19 Segment reporting The segmental reporting has been prepared based on the Group’s method of internal reporting, which desegregates business by service or product. 2.20 Earnings per share Basic consolidated earnings per share is calculated by dividing the consolidated net earnings after considering minority interests in subsidiaries, attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Basic company earnings per share is calculated by dividing the Company’s net earnings by the weighted average number of ordinary shares in issue during the year. 2.21 Comparatives Where necessary, comparative figures have been adjusted or reclassified to conform with changes in presentation in the current year. In particular, the comparatives have been adjusted or extended to take into account the requirements of the following revised or new accounting standards which the Group implemented in 1999, in advance of their effective dates: TAS 44 - Consolidated Financial Statements and Accounting for Investment in Subsidiaries TAS 47 - Related Party Disclosures TAS 48 - Financial Instruments: Presentation and Disclosure In 1999, the Group implemented the new Thai Accounting Standards, namely: TAS 32 - Property, Plant and Equipment TAS 33 - Borrowing Costs TAS 35 - Presentation of Financial Statements TAS 36 - Impairment of Assets TAS 37 - Revenue Recognition TAS 38 - Earnings Per Share TAS 39 - Net Profit or Loss for the Period, Fundamental Errors and Accounting Changes There are no changes in accounting policy that affect operating income resulting from the adoption of the above standards in these financial statements, as the Group was already following the recognition and measurement principles in those standards. 3 ADJUSTMENTS Accounting for cost of mobile phone networks under concession agreements The Company uses 2 systems to provide mobile phone services: a Nordic Mobile Telephone (“NMT”) analogue system and a Global System for Mobile (“GSM”) digital system. The cost of this system equipment is presented as cost of mobile phone networks under concession agreements under other assets in the balance sheet.
78
Previously the Company amortised the cost of such equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2015. On 1 July 1999, the Company’s management reviewed its accounting for the cost of such mobile phone networks and now amortises such cost over the period the underlying systems equipment assets are expected to contribute revenue and cash to the business. The Company’s management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement. Therefore, the cost of mobile phone network equipment for the NMT analogue system is amortised on a straight-line basis over a period of 10 years not exceeding year 2005, and for the GSM digital system is amortised on a straight-line basis over a period of 10 years not exceeding the concession period. Regular reviews are conducted on network carrying values in consideration of global developments in the wireless telecommunications industry. This basis of amortisation has been applied with effect from the commencement of use of the NMT analogue and GSM digital networks. The effects on the consolidated and company balance sheets as at 31 December 1999 and 1998 and consolidated and company statements of income for the years then ended are as follows: Consolidated
Company
1999
1998
1999
1998
Restated
Restated
Million Baht
Million Baht
Million Baht
Million Baht
5,792.45
4,035.40
5,792.45
4,035.40
4,035.40
2,519.90
4,035.40
2,519.90
1,757.05
1,515.50
1,757.05
1,515.50
Balance sheets Decrease in net book value of mobile phone networks Decrease in retained earnings brought forward at 1 January Statements of income Increase in amortisation expense
Accounting for cost of Datanet tools and equipment under concession agreement and accounting for the change in status of investment in associate to be investment in subsidiary Datanet operating right, which is owned by Shinawatra Datacom Co., Ltd. (“the subsidiary”) represents project tools and equipment acquired for the contract with TOT, dated 19 September 1989. Under the terms of the concession agreement the ownership of the system equipment, including tools, vests with TOT on completion of equipment installation. The subsidiary is entitled to operate the DATAKIT VIRTUAL CIRCUIT SWITCH system over the concession period. Previously the subsidiary amortised the cost of such tools and equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2022. During the year, the subsidiary’s management has reviewed its accounting for the cost of such system equipment and now amortises such cost over the period the underlying system equipment assets are expected to contribute revenue and cash to the business. The subsidiary’s management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement. Therefore, the cost of the system equipment, including tools, is amortised on a straight-line basis over a period of 10 years not exceeding the remaining period of concession agreement. This basis of amortisation has been applied with effect from the commencement of use of Datanet equipment.
79
On 29 October 1999, the Company increased its interest in the subsidiary, which formerly was an associate, by 40.08% of the total share capital. As a result, the Company has 67.95% interest, causing a change in status to be a subsidiary. Therefore, the financial statements of the subsidiary are consolidated with the Company’s from 29 October 1999 onward. The net effect resulting from the above changes on the consolidated and company balance sheets as at 31 December 1999 and 1998 and consolidated and company statements of income for the years then ended are as follows: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
(70.95)
(37.67)
-
-
Balance sheets Decrease in net book value of Datanet tools and equipment Decrease in investments in subsidiaries Decrease in minority interests’
-
-
(11.50)
(5.02)
(53.93)
(32.15)
-
-
(5.02)
(1.26)
(5.02)
(1.26)
Decrease in retained earnings as at 1 January Statements of income Increase in amortisation expense Decrease in net income
33.28
30.64
-
-
(11.50)
(3.76)
(11.50)
(3.76)
(21.78)
(15.59)
-
-
1998
1999
Decrease in net profit in subsidiaries to minority interests 4 CASH ON HAND AND AT BANKS Consolidated 1999
Company Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
54.72
68.10
2.97
2.96
Deposits held at call with banks
826.26
2,031.12
522.88
1,687.96
Total cash on hand and at banks
880.98
2,099.22
525.85
1,690.92
Cash on hand
The weighted average effective interest rates of deposits held at call with banks were between 2.57% and 2.66% (1998: 3.88% - 5.55%). The Group’s fixed deposits amounting to Baht 41.33 million (1998: Baht 17.80 million) have been pledged with a bank in respect of bank guarantees.
80
5 SHORT-TERM INVESTMENTS Short-term investments represent fixed deposits with banks and other financial institutions and investments in bills of exchange with duration within 1 year. Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
2,665.13
2,208.52
2,352.92
2,066.01
Fixed deposits with local and foreign banks Fixed deposits with other finance companies Investments in bills of exchange Total short-term investment
-
280.00
-
100.00
145.00
-
-
-
2,810.13
2,488.52
2,352.92
2,166.01
1998
1999
6 TRADE ACCOUNTS RECEIVABLE, NET Consolidated 1999
Company Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
4,085.82
3,401.78
3,578.49
3,059.43
42.34
30.06
84.35
23.87
4,128.16
3,431.84
3,662.84
3,083.30
Trade accounts receivable: Third parties Related companies Total trade accounts receivable Less: Allowance for doubtful accounts Total trade accounts receivable, net
(279.81)
(367.45)
(232.70)
(333.88)
3,848.35
3,064.39
3,430.14
2,749.42
Trade accounts receivable - related companies as at 31 December comprise: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Parent company
-
0.42
-
-
Subsidiaries
-
-
46.72
0.38
42.34
29.64
37.63
23.49
42.34
30.06
84.35
23.87
Other related companies
Million Baht
Million Baht
Total trade accounts receivablerelated companies
Certain debtors with settlement problems are included in the above trade accounts receivable. The Group has set up provisions to account for these debtors. The outstanding balances can be aged as follows: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
Overdue 3 - 6 months
239.42
303.69
218.42
275.16
Overdue 6 - 12 months
190.91
453.16
189.69
444.88
36.31
34.96
24.51
31.88
Over 12 months Allowance for doubtful accounts
466.64
791.81
432.62
751.92
(279.81)
(367.45)
(232.70)
(333.88)
81
The directors are of the opinion that allowance for doubtful debts overdue more than 3 months of the Group in conjunction with deposits received from these customers (presented in balance sheet as deposits from customers) and bank guarantees received from dealers are sufficient to cover the bad debt risk. 7 AMOUNTS DUE FROM AND LOANS TO RELATED COMPANIES, NET Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Parent company
-
5.69
-
5.69
Subsidiaries
-
-
1.98
208.15
0.92
12.33
0.48
0.81
Other related companies
Million Baht
Million Baht
Total amounts due from and loans to related companies Less: Allowance for doubtful accounts
0.92
18.02
2.46
214.65
(0.37)
(0.37)
(0.37)
(0.37)
0.55
17.65
2.09
214.28
1998
1999
Total amounts due from and loans to related companies, net 8 INVENTORIES, NET Consolidated 1999
Company Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
Finished goods
873.54
626.65
-
-
Supplies and spare parts
134.07
107.27
-
-
1,007.61
733.92
-
-
(68.14)
(50.36)
-
-
939.47
683.56
-
-
1998
1999
Total inventories Less: Provisions for obsolete inventories and diminution in value of finished goods Total inventories, net 9 OTHER CURRENT ASSETS
Consolidated 1999
Company Restated
Million Baht
Million Baht
Million Baht
Million Baht
Other receivables
661.78
301.98
660.40
256.34
Prepaid expenses
173.23
135.96
168.90
125.82
Others
255.62
120.46
198.92
64.41
1,090.63
558.40
1,028.22
446.57
Total other current assets
82
1998 Restated
10 LONG-TERM INVESTMENTS, NET Consolidated
Company
1999
1998
1999
1998
Restated
Restated
Million Baht
Million Baht
Million Baht
Million Baht
Subsidiaries
-
-
3,825.62
1,607.45
Other company, net
-
-
-
-
Total long-term investments, net
-
-
3,825.62
1,607.45
Investments in subsidiaries Company 1999
1998 Restated
Million Baht
Million Baht
1,501.13
849.62
111.34
(21.80)
1,612.47
827.82
Opening balance Cost Accumulated share of net profit/(loss) in subsidiaries Opening net book amount - as previously reported Adjustment (Note 3) Change in amortisation period for cost of Datanet tools and equipment under concession agreement Opening net book amount - as restated
(5.02)
(1.26)
1,607.45
826.56
987.57
129.38
Share of net profit in subsidiaries Acquisitions (Note 38)
1,230.60
651.51
Closing net book amount
3,825.62
1,607.45
Company - 31 December 1999 Accumulated share of profit/ (loss) in Country of Nature of business
Nature of
Paid-up capital
incorporation relationship (Million Baht)
Investment
Cost
subsidiaries
Equity
Dividend
portion (%)
(Million Baht)
(Million Baht)
(Million Baht)
(Million Baht)
Subsidiaries Advanced Paging Co., Ltd.
Service provider of digital
(formerly “Shinawatra
paging system network,
Paging Co., Ltd.”)
trading of pagers and providing
Thailand
Shareholder
350.00
99.99
1,703.36
227.70
1,931.06
-
Thailand
Shareholder
240.00
99.99
600.00
885.37
1,485.37
-
Thailand
Shareholder
457.52
67.95
420.37
(18.66)
401.71
-
Thailand
Shareholder
1.00
49.00
8.00
(0.52)
7.48
-
2,731.73
1,093.89
3,825.62
-
pagers for rent Advanced Wireless Marketing Co., Ltd. Importer and distributor (formerly “Shinawatra Wireless Marketing Co., Ltd.”)
of cellular phones, related accessories and cellular phone rental service provider
Shinawatra Datacom Co., Ltd.
Service provider of voice/data communications via telephone line
Data Network Solution Co., Ltd.
Service provider of voice/data communications via telephone line
Company - 31 December 1998 (Restated)
Subsidiaries Advanced Paging Co., Ltd.
Service provider of digital
Thailand
Shareholder
350.00
59.99
753.76
136.59
890.35
-
Thailand
Shareholder
240.00
99.99
600.00
-
600.00
-
Thailand
Shareholder
457.52
27.87
147.37
(30.27)
117.10
-
1,501.13
106.32
1,607.45
-
paging system network, trading of pagers and providing pagers for rent Advanced Wireless Marketing Co., Ltd. Importer and distributor of cellular phones, related accessories and cellular phone rental service provider Shinawatra Datacom Co., Ltd.
Service provider of voice/data communications via telephone line
83
Investment in other company Percentage of holding by the Group and the Company 1999
1998 Restated
Unlisted company Fonepoint (Thailand) Co., Ltd.
Nature of business
Percent
Percent
Service provider of cellular phones
17.80
17.80
Consolidated
Company
1999
1998
1999
1998
Restated
Restated
Million Baht
Million Baht
Million Baht
Million Baht
17.20
17.20
17.20
17.20
(17.20)
(17.20)
(17.20)
(17.20)
-
-
-
-
Other company: Unlisted company Investment, at cost Less: Provision for change in fair value of investment Total investment in other company, net
11 PROPERTY AND EQUIPMENT, NET Consolidated 1999 Million Baht Leasehold
Land
Furniture,
Pagers and
Assets under
Assets
fixtures
mobile
construction
purchased
and
Buildings and
Leasehold
building
Tools and
and office
phones for
improvements
rights
improvements
equipment
equipment
rent
Vehicles
installation
Total
under finance property and leases
equipment
At 31 December 1998 Cost Less: Accumulated depreciation
10.97
52.34
42.72
112.51
2,040.62
682.04
73.81
55.26
133.37
4.77
3,208.41
-
(11.98)
(30.41)
(42.15)
(741.64)
(363.48)
(39.09)
(21.57)
-
(2.15)
(1,252.47)
Provision for obsolete fixed assets Net book amount
-
-
-
-
-
-
(1.80)
-
-
-
(1.80)
10.97
40.36
12.31
70.36
1,298.98
318.56
32.92
33.69
133.37
2.62
1,954.14
1,954.14
Year ended 31 December 1999 Opening net book amount
10.97
40.36
12.31
70.36
1,298.98
318.56
32.92
33.69
133.37
2.62
Acquisition of subsidiary (Note 38)
-
-
-
-
-
5.56
-
-
-
-
5.56
Additions
-
0.25
1.73
35.22
581.52
88.28
29.87
21.54
83.55
-
841.96 (187.05)
Transfers Disposals, net Depreciation charge
-
(2.61)
-
-
2.61
-
-
-
(187.05)
-
(2.52)
(4.72)
-
(3.73)
(5.98)
(2.08)
(1.84)
(8.96)
-
(0.29)
(30.12)
-
(3.06)
(5.03)
(16.75)
(411.33)
(125.12)
(27.23)
(9.83)
-
(0.88)
(599.23)
-
(2.60)
-
-
-
(7.52)
(0.33)
-
-
-
(10.45)
8.45
27.62
9.01
85.10
1,465.80
277.68
33.39
36.44
29.87
1.45
1,974.81
Additional provision for obsolete fixed assets Closing net book amount
At 31 December 1999 Cost Less: Accumulated depreciation
8.45
42.41
44.31
141.72
2,607.80
771.24
92.65
65.73
29.87
4.24
3,808.42
-
(12.19)
(35.30)
(56.62)
(1,142.00)
(486.04)
(57.13)
(29.29)
-
(2.79)
(1,821.36)
-
(2.60)
-
-
-
(7.52)
(2.13)
-
-
-
(12.25)
8.45
27.62
9.01
85.10
1,465.80
277.68
33.39
36.44
29.87
1.45
1,974.81
Provision for obsolete fixed assets Net book amount
84
Company 1999 Million Baht Furniture, and
Assets under
Assets
fixtures
construction
purchased
Total
and
under finance
property and
Vehicles
installation
leases
equipment
2,653.82
Leasehold Land
Buildings and
building
Tools and
and office
improvements
improvements
equipment
equipment
At 31 December 1998 Cost Less: Accumulated depreciation Net book amount
2.52
26.06
86.65
1,930.68
434.25
40.87
128.02
4.77
-
(5.19)
(24.49)
(675.15)
(182.64)
(14.13)
-
(2.15)
(903.75)
2.52
20.87
62.16
1,255.53
251.61
26.74
128.02
2.62
1,750.07
1,750.07
Year ended 31 December 1999 Opening net book amount
2.52
20.87
62.16
1,255.53
251.61
26.74
128.02
2.62
Additions
-
0.26
31.02
596.26
25.85
17.48
84.34
-
755.21
Transfers
-
(2.61)
-
2.61
-
-
(187.05)
-
(187.05)
Disposals, net
(2.52)
(4.72)
(3.69)
(2.71)
(1.13)
(8.62)
-
(0.29)
(23.68)
Depreciation charge
-
(1.75)
(13.38)
(420.99)
(71.26)
(7.54)
-
(0.88)
(515.80)
Closing net book amount
-
12.05
76.11
1,430.70
205.07
28.06
25.31
1.45
1,778.75
At 31 December 1999 Cost
-
16.12
111.76
2,525.63
457.16
48.29
25.31
4.24
3,188.51
Less: Accumulated depreciation
-
(4.07)
(35.65)
(1,094.93)
(252.09)
(20.23)
-
(2.79)
(1,409.76)
Net book amount
-
12.05
76.11
1,430.70
205.07
28.06
25.31
1.45
1,778.75
12 COST OF MOBILE PHONE AND PAGER SERVICE NETWORKS AND DATANET TOOLS AND EQUIPMENT UNDER CONCESSION AGREEMENTS Consolidated Million Baht Total cost of mobile phone and pager service networks and
At 31 December 1998 Cost Less: Accumulated amortisation Previously reported Adjustments (Note 3) Accumulated amortisation - as restated Net book amount Year ended 31 December 1999 Opening net book amount - as restated Additions Transfers Write-offs Amortisation charge Closing net book amount At 31 December 1999 Cost Less: Accumulated amortisation Net book amount
Cost of mobile
Cost of pager
Cost of Datanet
Datanet tools and
phone networks
service networks
tools and equipment
equipment
33,401.97
1,194.23
709.02
35,305.22
(4,382.34) (4,035.40)
(418.05) -
(335.60) (37.67)
(5,135.99) (4,073.07)
(8,417.74) 24,984.23
(418.05) 776.18
(373.27) 335.75
(9,209.06) 26,096.16
24,984.23 4,234.31 187.06 (147.50) (3,537.67) 25,720.43
776.18 80.77 (129.10) 727.85
335.75 78.08 (0.02) (49.87) 363.94
26,096.16 4,393.16 187.06 (147.52) (3,716.64) 26,812.22
37,596.75 (11,876.32) 25,720.43
1,275.00 (547.15) 727.85
787.09 (423.15) 363.94
39,658.84 (12,846.62) 26,812.22
85
Company Million Baht Cost of mobile phone networks
At 31 December 1998 Cost
33,401.97
Less: Accumulated amortisation Previously reported
(4,382.34)
Adjustments (Note 3)
(4,035.40)
Accumulated amortisation - as restated
(8,417.74)
Net book amount
24,984.23
Year ended 31 December 1999 Opening net book amount - as restated
24,984.23
Additions
4,234.31
Transfers
187.06
Write-offs
(147.50)
Amortisation charge
(3,537.67)
Closing net book amount
25,720.43
At 31 December 1999 Cost
37,596.75
Less: Accumulated amortisation
(11,876.32)
Net book amount
25,720.43
13 OTHER ASSETS Consolidated Million Baht Goodwill
Deferred charges
Others
Total
At 31 December 1998 Cost Less: Accumulated amortisation Net book amount
548.98
637.10
146.03
1,332.11
(256.19)
(119.12)
-
(375.31)
292.79
517.98
146.03
956.80
292.79
517.98
146.03
956.80
Year ended 31 December 1999 Opening net book amount Additions
614.83
120.54
13.56
748.93
Amortisation charge
(95.37)
(103.34)
-
(198.71)
Closing net book amount
812.25
535.18
159.59
1,507.02
Cost
1,163.81
757.64
159.59
2,081.04
Less: Accumulated amortisation
(351.56)
(222.46)
-
(574.02)
812.25
535.18
159.59
1,507.02
At 31 December 1999
Net book amount
86
Company Million Baht Deferred charges
Others
Total
463.73
102.18
565.91
(108.82)
-
(108.82)
354.91
102.18
457.09
Opening net book amount
354.91
102.18
457.09
Additions
104.44
4.15
108.59
Amortisation charge
(90.53)
-
(90.53)
Closing net book amount
368.82
106.33
475.15
At 31 December 1998 Cost Less: Accumulated amortisation Net book amount Year ended 31 December 1999
At 31 December 1999 Cost Less: Accumulated amortisation Net book amount
568.17
106.33
674.50
(199.35)
-
(199.35)
368.82
106.33
475.15
1998
1999
14 TRADE ACCOUNTS AND NOTES PAYABLE Consolidated 1999
Company Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
2,311.17
5,197.12
1,673.20
4,451.01
12.94
130.51
10.14
67.56
2,324.11
5,327.63
1,683.34
4,518.57
-
1,418.23
-
1,418.23
2,324.11
6,745.86
1,683.34
5,936.80
1998
1999
Trade accounts payable Third parties Related companies Notes payable - third parties Total trade accounts and notes payable
Trade accounts payable - related companies as at 31 December comprise: Consolidated 1999
Company
Restated Million Baht
Million Baht
Parent company
-
Subsidiaries
-
Other related companies
1998 Restated
Million Baht
Million Baht
31.46
-
11.95
-
2.39
44.24
12.94
99.05
7.75
11.37
12.94
130.51
10.14
67.56
Total trade accounts payable - related companies
87
15 AMOUNTS DUE TO AND LOANS FROM RELATED COMPANIES Consolidated
Company
1999
1998
1999
Restated Million Baht
Million Baht
Parent company
-
Subsidiaries
-
Other related companies
1998 Restated
Million Baht
Million Baht
13.00
-
12.98
-
669.81
0.05
135.05
17.89
23.67
1.33
135.05
30.89
693.48
14.36
Total amounts due to and loans from related companies 16 SHORT-TERM DEBENTURES As at 31 December 1998, short-term debentures represented 2 million units of Baht 1,000 each of unsecured debentures amounting to Baht 2,000 million. The short-term debentures carried interest at the fixed rate of 12% per annum throughout the term of the debentures and were redeemed on 11 October 1999. The interest on the debentures was payable on a semi-annual basis commencing from the issuing date on 12 October 1998. During the second and the third quarters of year 1999, the Company early redeemed partial of such debentures amounting to Baht 744.30 million, incurring a penalty of Baht 13.65 million. Debenture holders as at 31 December comprise: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
-
102.80
-
102.80
-
20.10
-
20.10
-
1,877.10
-
1,877.10
-
2,000.00
-
2,000.00
1998
1999
A major shareholder of a parent company Directors of a related company and the Company Other Total
17 FORWARD AND SWAP CONTRACTS RECEIVABLE/ (PAYABLE) Consolidated 1999
Company Restated
Million Baht
Contracts receivable Contracts payable Less: Current portion
Million Baht
1998 Restated
Million Baht
Million Baht
3,759.23
7,008.04
3,755.98
7,008.04
(3,841.24)
(6,924.21)
(3,837.77)
(6,924.21)
(82.01)
83.83
(81.79)
83.83
57.45
76.71
57.23
76.71
(24.56)
160.54
(24.56)
160.54
Total forward and swap contracts receivable/(payable), net
88
18 OTHER CURRENT LIABILITIES Consolidated 1999
Company 1998
1999
Restated
Income tax payable Accrued transmission fee Accrued expenses Others Total other current liabilities
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
1,952.81
1,637.80
1,427.16
1,421.78
799.26
456.72
799.26
456.72
1,520.11
644.84
1,142.81
549.64
246.59
207.77
244.87
204.63
4,518.77
2,947.13
3,614.10
2,632.77
19 LONG-TERM DEBENTURES As at 31 December 1999, long-term debentures represent 1.5 million units of Baht 1,000 each of unsecured debentures amounting to Baht 1,500 million. The long-term debentures bear interest at the fixed rate of 8.25% per annum throughout the term of the debentures, payable on a semi-annual basis commencing from the issuing dates. The 0.5 million units and 1 million units of debentures will be redeemed on 18 February 2001 and 5 March 2002 respectively. As at 31 December 1998, long-term debentures represented 2 million units of Baht 1,000 each of unsecure debentures, totalling Baht 2,000 million. The debentures carried interest at the average MLR (Minimum Loan Rate) of two commercial banks, payable on a semi-annual basis commencing from the issuing date. The debentures were repayable during 26 January 2001 through 12 June 2001. On 19 February 1999, the Company early redeemed such debentures before their due date without incurring any penalty. Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
-
2,000.00
-
2,000.00
A major shareholder of a parent company A major shareholder of a related 270.00
-
270.00
-
Others
company
1,230.00
-
1,230.00
-
Total
1,500.00
2,000.00
1,500.00
2,000.00
89
20 LONG-TERM LIABILITIES Consolidated
Company
1999
1998
1999
Restated Million Baht
1998 Restated
Million Baht
Million Baht
Million Baht
1,032.16
296.17
1,032.16
296.17
-
4,122.46
-
4,122.46
Current portion of long-term liabilities Loans from finance companies Loans from banks Obligations under finance leases
0.97
0.84
0.97
0.84
1,033.13
4,419.47
1,033.13
4,419.47
2,391.09
1,892.13
2,391.09
1,892.13
Long-term liabilities Loans from finance companies Loans from banks Obligations under finance leases Total long-term liabilities
-
2,333.29
-
2,333.29
0.78
2.04
0.78
2.04
2,391.87
4,227.46
2,391.87
4,227.46
3,425.00
8,646.93
3,425.00
8,646.93
6.67%
6.88%
6.67%
6.88%
Weighted average effective interest rates: - Long-term loans from finance companies and banks
Long-term loans of the Group and the Company, which carry floating interest rate, were as follows: Consolidated
Company
1999
1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
3,423.25
8,644.05
3,423.25
8,644.05
Total long-term loans (floating interest rate)
The maturity of long-term liabilities (excluding obligations under finance leases) are as follows: Consolidated
Company
1999
1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
Later than 1 year and not later than 2 years
1,032.16
2,969.21
1,032.16
2,969.21
Later than 2 years and not later than 5 years
1,314.94
1,071.21
1,314.94
1,071.21
Later than 5 years
43.99
185.00
43.99
185.00
2,391.09
4,225.42
2,391.09
4,225.42
Long-term loans represent unsecured loans from foreign finance companies and foreign banks equivalent to US$ 90.78 million (1998: US$ 234.32 million), carrying interest at rates between LIBOR (London Inter Bank Offer Rate) and LIBOR plus 1.25% per annum (1998: LIBOR - LIBOR plus 1.25% per annum). The Company is required to comply with certain terms and conditions as specified in the loan agreements. The Group has in place certain forward exchange contracts, principal only swaps and interest rate swaps to cover these loans.
90
Borrowing facilities The Group and the Company have the following undrawn committed borrowing facilities: Consolidated 1999
Company 1998
1999
1998
Restated
Restated
Million Baht
Million Baht
Million Baht
Million Baht
3,842.13
2,636.76
3,842.13
2,636.76
Floating interest rate Expiring within one year Expiring beyond one year
840.00
2,112.80
485.00
1,842.80
4,682.13
4,749.56
4,327.13
4,479.56
The undrawn committed borrowing facilities have been arranged to support financing of the Group’s and the Company’s activities. The facilities expiring beyond one year are facilities subject to review at various dates. 21 DEPOSITS FROM CUSTOMERS Consolidated 1999
Company 1998
1999
1998
Restated
Restated
Million Baht
Million Baht
Million Baht
Million Baht
105.13
129.27
588.23
427.58
3,345.48
2,953.97
3,283.58
2,872.83
3,450.61
3,083.24
3,871.81
3,300.41
Deposits from customers Related companies Third parties Total deposits from customers
Deposits from customers - related companies as at 31 December comprise: Consolidated 1999
Company 1998
1999
1998
Restated
Restated
Million Baht
Million Baht
Million Baht
Million Baht
Parent company
-
129.27
-
129.27
Subsidiary
-
-
483.10
-
105.13
-
105.13
298.31
105.13
129.27
588.23
427.58
Total
Other related company Total deposits from customers -related companies 22 SHARE CAPITAL AND PREMIUM
Number of
Share
Share
Shares
capital
premium
Million
Million Baht
Million Baht
Million Baht
1 January 1998
234
2,340.00
2,295.00
4,635.00
31 December 1998
234
2,340.00
2,295.00
4,635.00
1 January 1999
234
2,340.00
2,295.00
4,635.00
Issue of shares, registered on 19 February 1999 31 December 1999
36
360.00
7,920.00
8,280.00
270
2,700.00
10,215.00
12,915.00
At the extraordinary meeting of the Company’s shareholders held on 10 February 1999, the shareholders passed a resolution to approve the issuance of 36,000,000 ordinary shares to sell specifically to Singapore Telecom International at Baht 230 per share. The issuance of the new shares was registered with the Ministry of Commerce on 19 February 1999.
91
23 LEGAL RESERVE Consolidated
Company
1999
1998
1999
Restated
Beginning balance Appropriation during the year Ending balance
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
500.00
500.00
500.00
500.00
-
-
-
-
500.00
500.00
500.00
500.00
Under the Public Companies Act, the Company is required to set aside as a statutory reserve at least 5 percent of its net income after accumulated deficit brought forward (if any) until the reserve is not less than 10 percent of the registered capital. The reserve is non-distributable. 24 MINORITY INTERESTS Consolidated 1999
1998 Restated
Beginning balance before adjustments
Million Baht
Million Baht
774.64
289.36
-
293.39
Adjustments (Note 3) Change in status of investment in associate to be investment in subsidiary before change in amortisation period for cost of Datanet tools and equipment under concession agreement Change in amortisation period for cost of Datanet tools and equipment under concession agreement
(32.15)
(5.76)
Beginning balance - as restated
742.49
576.99
-
107.52
6.61
-
19.26
109.02
-
41.98
-
(26.39)
(609.40)
(66.63)
158.96
742.49
Additions: The subsidiary has issued the additional ordinary shares to TOT (Note 1) Acquisition of investment in subsidiary (Note 38) Share of net profit in subsidiaries (before change in amortisation period for cost of Datanet tools and equipment under concession agreement) Change in status of investment in associate to be investment in subsidiary Change in amortisation period for cost of Datanet tools and equipment under concession agreement Disposals of interests to the Compan Ending balance 25 OTHER OPERATING INCOME Consolidated 1999
Company 1998
1999
Restated
Interest income
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
231.36
446.48
200.38
370.86
Gains on disposals of property and equipment
92
3.95
1.67
-
0.29
Others
423.72
121.29
306.29
111.52
Total other operating income
659.03
569.44
506.67
482.67
26 COST OF SERVICES AND EQUIPMENT RENTALS Included in cost of services and equipment rentals for the year ended 31 December 1998 was transmission expense for the prior years to 31 December 1997 charged from TOT in the amount of Baht 492.5 million. 27 INTEREST EXPENSES Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
392.75
741.62
392.11
692.09
0.46
0.69
0.46
0.69
- short-term debentures
165.91
100.84
165.91
100.84
- long-term debentures
137.02
321.51
137.02
321.51
Interest expenses - short-term and long-term loans - finance leases
- others Total interest expenses
22.15
52.20
22.15
52.20
718.29
1,216.86
717.65
1,167.33
28 DIRECTORS' REMUNERATION During the year ended 31 December 1999 the remuneration of the directors amounted to Baht 5.06 million (1998 : Baht 0.72 million), which did not exceed amounts which had been approved by the annual general meetings of the shareholders of the Company and the subsidiaries. The directors’ remuneration represents meeting fees and gratuities. 29 OPERATING INCOME The following expenditures, classified by nature, have been charged in arriving at operating income: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
599.23
484.99
515.80
418.73
3,716.63
3,170.26
3,537.66
3,012.87
95.37
36.60
-
-
(37.11)
-
-
-
Depreciation on property and equipment (Note 11) Amortisation of intangible assets - Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements (Note 12) - Positive goodwill (included in “Selling and administrative expenses”) - Write-down of negative goodwill (included in “Other operating income”) - Deferred charges (included in “Selling and administrative expenses”) Staff costs
103.33
76.39
90.53
76.34
1,110.59
909.58
633.30
454.45
93
30 INCOME TAX Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
4,765.03
3,162.42
4,207.04
2,896.83
-
-
(987.57)
(129.38)
Operating income
4,765.03
3,162.42
3,219.47
2,767.45
Tax calculated at a tax rate of 30%
1,429.51
948.73
965.84
830.24
566.20
658.47
491.14
620.08
Income before tax Less: Share of net profit in subsidiaries
Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses
-
(15.91)
-
-
Income tax
1,995.71
1,591.29
1,456.98
1,450.32
31 EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net income attributable to shareholders by the weighted average number of ordinary shares in issue during the year Consolidated 1999
Company 1998
1999
Restated
Net income attributable to shareholders
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
2,750.06
1,446.52
2,750.06
1,446.52
265.17
234.00
265.17
234.00
Weighted average number of ordinary shares in issue Basic earnings per share
Baht
Baht
Baht
Baht
10.37
6.18
10.37
6.18
32 DIVIDEND PER SHARE Dividends payable are not accounted for until they have been ratified at the annual general meeting. At the annual general meeting of the Company’s shareholders held on 29 April 1998, the shareholders resolved to declare a dividend for the year ended 31 December 1997 of Baht 1.10 per share, totalling Baht 257.4 million. The dividend was distributed to the shareholders on 25 May 1998. 33 PROVIDENT FUND The Company has established a contributory registered provident fund, in accordance with the Provident Fund Act B.E. 2530. The registered provident fund plan was approved by the Ministry of Finance on 23 July 1990 and subsequently amended the provident fund’s name on 21 January 1993. Under the plan, the employees must contribute 3% - 7% of their basic salaries, to be matched by the Company. The Company appointed a fund manager to manage the fund in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issued under the Provident Fund Act B.E. 2530.
94
34 FINANCIAL INSTRUMENTS The principal financial risks faced by the Group are interest rate risk and currency exchange risk. The Group borrows at both fixed and floating rates of interest to finance its operations. Purchases are mainly made in foreign currencies. The Group, in terms of approved policy limit of Shin Corporation Public Company Limited, enters into various types of foreign exchange contracts to hedge transaction risk both for short-term and long-term currency exposures. Short-term foreign currency exposures relate to trade imports, short-term foreign borrowings and interest flows on long-term borrowings. Long-term foreign currency exposure relates to long-term foreign borrowings. The currency exchange risks of the Group occurs in various currency combinations, but mostly in United States dollars because the Group involves in transactions in different countries. The Group hedging policy is to hedge currency risk, mostly based on the net exposure and the structure of the revenues. The Group focuses more on hedging when the revenues are received in local currency whereas it will do less when the revenues are received in foreign currency as such income can reduce risks from the foreign currency obligations. The management regularly analyses interest rate and currency exposures and re-evaluates forex management strategies. Trading for speculative purposes is prohibited. Objectives and significant terms and conditions To manage the risks arising from fluctuations in currency exchange and interest rates, the Group makes use of the following derivative financial instruments: Interest rate swaps The Group has entered into interest rate swap contracts that entitle it to obtain interest at floating rates on notional principal amounts and is obliged to pay interest at fixed rates on the same amounts. The interest rate swaps allow the Group to protect fluctuations of floating interest rates in the future. Under interest rate swaps, the Group agrees with other parties to exchange, at specified intervals, the difference between fixed rates and floating rates calculated by reference to the agreed notional principal amounts. At 31 December 1999 the fixed interest rates vary from 5.43% to 5.94% (1998: 5.43% to 6.34%) and the floating rates are linked to LIBOR. The remaining terms and notional principal amounts of the outstanding interest rate swap contracts at 31 December were: Consolidated 1999
Company 1998
1999
Restated
Not later than 1 year
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
649.06
2,530.91
649.06
2,530.91
1,407.21
2,915.37
1,407.21
2,915.37
2,056.27
5,446.28
2,056.27
5,446.28
Later than 1 year and not later than 5 years
95
Forward foreign exchange contracts Forward foreign exchange contracts are entered into to manage exposure of fluctuations in foreign currency exchange rates on specific transactions. At 31 December 1999 the settlement dates on open forward contracts ranged between 3 months and 9 months (1998 : 1 month to 1 year). The amounts to be received and contractual exchange rates of the outstanding contracts were: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
1,788.03
-
1,788.03
-
-
3,144.23
-
3,144.23
135.85
-
-
-
-
-
132.38
-
1,923.88
3,144.23
1,920.41
3,144.23
USD 47.49 million (Baht 37.21 - Baht 39.35/USD) USD 74.79 million (Baht 37.35 - Baht 43.15/USD) DEM 6.36 million (Baht 20.44 - Baht 21.40/DEM) DEM 6.19 million (Baht 21.40/DEM) Principal only swaps Principal only swap contracts are entered into to manage exposure of fluctuations in foreign currency exchange rates on specific transactions. At 31 December 1999 the settlement dates on open principal only swap contracts ranged between 9 months and 2 years and 3 months (1998 : 3 months to 1 year and 3 months). The amounts to be received and contractual exchange rates of the outstanding contracts were: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
1,917.36
-
1,917.36
-
-
2,479.25
-
2,479.25
1,917.36
2,479.25
1,917.36
2,479.25
USD 49.96 million (Baht 38.28 - Baht 38.42/USD) USD 64.50 million (Baht 36.88 - Baht 39.59/USD)
Cross currency swaps Cross currency swap contracts are entered into to manage exposure to fluctuations in foreign currency exchange rates and interest rates on specific transactions. At 31 December 1998 the settlement dates on open cross currency swap contracts ranged between 1 month and 2 years. The amounts to be received and contractual exchange rates and interest rates of the outstanding contracts were: Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
-
1,300.73
-
1,300.73
-
1,300.73
-
1,300.73
USD 50.68 million (Baht 25.30 - Baht 25.93/USD and interest rates between 9.68% and 10.935%)
During the first quarter of 1999 the Company had shortened some cross currency swaps due to foreign loan prepayment.
96
35 COMMITMENTS - As at 31 December 1999 the Group and the Company have commitments in respect of the construction and installation of mobile phone networks, which have not been completed, and purchases of property and equipment as follows: Consolidated
Company
Million
Million
1,064.03
1,064.03
15.27
15.27
698.78
698.78
17.06
17.06
0.56
-
38.11
38.11
Construction and installation of mobile phone networks Thai Baht US Dollars Japanese Yen Deutsche Mark Singapore Dollars Property and equipment Thai Baht
- The Group has commitments under letters of credit with overseas suppliers amounting to approximately Baht 59.45 million (1998: Baht 20.37 million) on a consolidated basis and Baht 20.36 million (1998: Nil) on a company basis. - The Group has entered into lease and related service agreements for office spaces, cars, and base stations for periods ranging from 4 months to 17 years with options to renew. As at 31 December 1999 the Group is committed to pay for rental and related services in respect of the agreements as follows: Consolidated
Company
Million
Million
- Third parties
171.86
154.36
- Related companies
100.56
143.24
- Third parties
148.09
137.10
- Related companies
257.56
257.37
Payment due - within 1 year
- within 2 to 5 years
- over 5 years - Third parties - Related companies
0.01
0.07
470.06
470.10
- The Company’s subsidiary has entered into a Data Broadcast via satellite agreement with TOT for a period of 5 years with option to renew. The subsidiary is committed to pay rental cost at Baht 35,000 per site per month for the master network and Baht 6,000 per site per month for the remote network as set out in the agreement. - The Company has entered into agreements with a related company under which the related company provides consulting and management services and other central services for a twelve-month period. The company is committed to pay for such services under these agreements amounting to approximately Baht 6.25 million per month (1998 : Baht 10.32 million per month).
97
36 BANK GUARANTEES As at 31 December 1999, the Group has commitments with local banks relating to letters of guarantee issued by the banks in respect of custom duties, electricity use and other transactions in the ordinary course of business amounting to approximately Baht 4,448.93 million (1998 : Baht 4,136.16 million) on a consolidated basis and Baht 4,338.04 million (1998 : Baht 3,964.82 million) on a company basis. 37 FINANCIAL INFORMATION BY SEGMENT The business operations of the Group, as reflected in the consolidated financial statements, are classified into four major segments as follows: 1) the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM network 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading pagers, and providing pagers for rent 3) trading of mobile phones, rendering repair services for mobile phones and providing mobile phones for rent 4) the operations of data network Financial information by business segment for the years ended 31 December are shown as follows: Consolidated 1999
Revenue - services Revenue - sales
Mobile phone
Pager sales &
Mobile phone
services
services
sales
Datanet service
Group
Million Baht
Million Baht
Million Baht
Million Baht
Million Baht
16,687.92
1,356.78
112.48
170.59
18,327.77
-
250.31
6,635.40
0.17
6,885.88
Total revenues
16,687.92
1,607.09
6,747.88
170.76
25,213.65
Segment result
5,937.78
1,015.63
2,274.30
55.11
Selling and administrative expenses
9,282.82 (4,458.54)
Operating income
4,824.28
Other income
427.67
Finance cost Interest income
231.36
Interest expenses
(718.28)
Income before tax
4,765.03
Income tax
(1,995.71)
Group income
2,769.32
Minority interests
(19.26)
Net income
98
2,750.06
Consolidated total assets
36,071.18
1,309.43
1,896.55
587.00
39,864.16
Consolidated total liabilities
16,617.45
371.16
1,250.14
100.03
18,338.78
Depreciation charge
515.80
46.87
32.57
4.00
599.24
Amortisation charge
3,715.66
130.15
6.44
54.25
3,906.50
Consolidated 1998
Revenue - services Revenue - sales
Mobile phone
Pager sales &
Mobile phone
services
services
sales
Datanet service
Group
Million Baht
Million Baht
Million Baht
Million Baht
Million Baht
13,323.79
1,394.47
-
162.86
14,881.12
-
224.98
-
-
224.98
Total revenues
13,323.79
1,619.45
-
162.86
15,106.10
Segment result
4,133.30
1,088.87
-
67.09
Selling and administrative expenses
5,289.26 (3,253.35)
Operating income
2,035.91
Other income
1,896.89
Finance cost Interest income
446.48
Interest expenses
(1,216.86)
Income before tax
3,162.42
Income tax
(1,591.29)
Group income
1,571.13
Minority interests
(124.61)
Net income
1,446.52
Consolidated total assets
34,703.64
1,425.35
1,400.10
550.30
38,079.39
Consolidated total liabilities
25,882.50
417.27
626.26
74.51
27,000.54
Depreciation charge
418.73
63.54
-
2.71
484.98
Amortisation charge
3,133.95
119.56
-
39.43
3,292.94
38 ACQUISITIONS In December 1998, the Group acquired an additional 14.10% of share capital of Shinawatra Datacom Co., Ltd. Consolidated 1998 Million Baht
Purchase consideration
51.51
Fair value of net assets acquired
(66.63)
Negative goodwill
(15.12)
99
No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition. The book value of assets and liabilities acquired on the additional acquisition of Shinawatra Datacom Co., Ltd. were as follows: Restated Million Baht
Cash on hand and at banks
36.38
Short-term investments
32.00
Trade accounts receivable, net
9.06
Amounts due from related companies
5.29
Inventories, net
0.13
Other current assets
1.53
Equipment, net
10.42
Other assets
452.36
Trade accounts payable
(15.27)
Amounts due to related companies
(0.34)
Accrued expenses
(41.35)
Deposits from customers
(17.66)
Fair value of net assets
472.55
Interest acquired
14.10%
Fair value of net assets acquired
66.63
In December 1998, the Group acquired 99.99% of the share capital of Advanced Wireless Marketing Co., Ltd. Consolidated 1998 Million Baht
Purchase consideration Fair value of net assets acquired
600.00 (621.99)
Negative goodwill
(21.99)
Purchase consideration
600.00
Less: Cash and cash equivalents of subsidiary Cash flow on acquisition, net of cash and cash equivalents acquired
(327.84) 272.16
No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition.
100
The book value of assets and liabilities acquired on the acquisition of Advanced Wireless Marketing Co., Ltd. were as follows: Million Baht
Cash on hand and at banks Short-term investments Trade accounts receivable, net Amounts due from related companies Inventories, net
327.32 0.52 234.39 1.80 637.54
Other current assets
93.23
Equipment, net
87.24
Deferred charges, net
59.05
Other assets
311.52
Loans from banks
(187.56)
Trade accounts payable and accrued expenses
(638.77)
Short-term loans and advances from related companies
(213.74)
Other current liabilities
(90.55)
Fair value of net assets acquired
621.99
In February 1999 the Group acquired an additional 40% of share capital of Advanced Paging Co., Ltd. Consolidated 1999 Million Baht
Purchase consideration Fair value of net assets acquired Positive goodwill
949.60 (418.20) 531.40
No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition. The book value of assets and liabilities acquired on the additional acquisition of Advanced Paging Co., Ltd. were as follows: Million Baht
Cash on hand and at banks
42.83
Short-term investments
220.00
Trade accounts receivable, net
130.47
Amounts due from related companies
11.97
Inventories, net
43.28
Other current assets
54.14
Equipment, net
514.58
Other assets
360.17
Trade accounts payable
(25.39)
Amounts due to related companies Deposits from customers Accrued expenses
(4.68) (56.07) (117.12)
Other current liabilities
(128.69)
Fair value of net assets
1,045.49
Interest acquired Fair value of net assets acquired
40% 418.20
101
In October 1999, the Group acquired an additional 40.08 % of share capital of Shinawatra Datacom Co., Ltd. Consolidated 1999 Million Baht
Purchase consideration Fair value of net assets acquired Positive goodwill
273.00 (191.34) 81.66
No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition. The book value of assets and liabilities acquired on the acquisition of Shinawatra Datacom Co., Ltd. were as follows: Million Baht
Cash on hand and at banks Trade accounts receivable, net Other current assets Equipment, net
64.18 8.88 6.25 13.31
Other assets
479.45
Trade accounts payable
(17.10)
Deposits from customers
(14.96)
Accrued expenses
(62.61)
Fair value of net assets Interest acquired Fair value of net assets acquired
477.40 40.08% 191.34
In October 1999, the Group acquired 49% of share capital of Data Network Solutions Co., Ltd. Consolidated 1999 Million Baht
Purchase consideration Fair value of net assets acquired Positive goodwill Purchase consideration Less: Cash on hand and at banks of subsidiary Cash flow on acquisition, net of cash on hand and at banks acquired
8.00 (6.35) 1.65 8.00 (2.56) 5.44
No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition.
102
The book value of assets and liabilities acquired on the acquisition of Data Network Solutions Co., Ltd. were as follows: Million Baht
Cash on hand and at banks
2.56
Trade accounts receivable, net
12.64
Other current assets
1.48
Equipment, net
5.56
Other assets
0.84
Other current liabilities
(5.51)
Other liabilities
(4.61)
Fair value of net assets
12.96
Interest acquired
49%
Fair value of net assets acquired
6.35
39 RELATED COMPANY TRANSACTIONS During the year, the Group has entered into a number of transactions with related companies. The terms of such transactions are negotiated on an arms length market value basis in the ordinary course of business and according to normal trade conditions. On 19 February 1999 Shin Corporation Public Company Limited ceased to hold in excess of 50% of the share capital of the Company. Therefore, Shin Corporation Public Company Limited ceased to be treated as the parent company in the first quarter ended 31 March 1999. Significant related company transactions are summarised as follows: a) Sales of goods and services Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
Advanced Wireless Marketing Co., Ltd.
-
-
12.50
-
Others
-
-
0.83
0.31
-
-
13.33
0.31
153.94
-
153.94
-
7.42
12.45
6.06
10.39
161.36
12.45
160.00
10.39
161.36
12.45
173.33
10.70
-
-
86.57
-
Service income Subsidiaries
Related companies Singapore Telecom Mobile Pte Ltd. Others Total service income Sales of prepaid cards Subsidiary Advanced Wireless Marketing Co., Ltd.
103
b) Purchases of services Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
-
101.99
-
101.82
Advanced Wireless Marketing Co., Ltd.
-
-
43.96
-
Others
-
-
4.76
2.35
-
-
48.72
2.35
Rental and other service expenses Parent company Subsidiaries
Related companies Shin Satellite Public Co., Ltd.
114.63
127.08
114.63
127.08
SC Asset Co., Ltd
35.86
12.33
27.27
12.33
Tele Info Media Co., Ltd
17.83
-
17.83
-
Upcountry Land Co., Ltd.
83.65
82.44
83.65
82.44
OAI Leasing Co., Ltd. OAI Asset Co., Ltd. Others Total rental and other service expenses
34.73
29.53
28.13
29.53
134.68
102.35
108.37
102.35
87.22
332.83
49.56
270.44
508.60
686.56
429.44
624.17
508.60
788.55
478.16
728.34
446.72
21.53
47.75
7.62
Advertising expenses Related companies SC Matchbox Co., Ltd. Other
13.23
-
-
-
459.95
21.53
47.75
7.62
-
150.34
-
150.34
Shin Corporation Public Co., Ltd.
75.00
-
75.00
-
Singapore Telecom International Pte Ltd.
15.30
10.00
-
-
Shinawatra Information Technology Co., Ltd.
17.64
-
8.90
-
107.94
10.00
83.90
-
107.94
160.34
83.90
150.34
Parent company
-
16.58
-
16.58
Subsidiaries
-
-
3.66
-
Shin Corporation Public Co., Ltd.
41.59
-
41.59
-
A major shareholder of related companies
79.09
387.31
79.09
387.31
4.61
2.72
4.61
2.72
125.29
390.03
125.29
390.03
125.29
406.61
128.95
406.61
Total advertising expenses Consulting and management fees Parent company Related companies
Total consulting and management fees Interest expenses
Related companies
Directors of related companies Total interest expenses
104
c) Purchases of property, equipment and computer software Consolidated 1999
Company 1998
1999
Restated Million Baht
Million Baht
Parent company
-
Subsidiaries
-
Related companies
1998 Restated
Million Baht
Million Baht
65.00
-
65.00
-
4.76
19.07
25.22
5.19
24.31
3.99
25.22
70.19
29.07
88.06
d) Purchases of cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Consolidated 1999
Company 1998
1999
Restated Million Baht
Million Baht
1998 Restated
Million Baht
Million Baht
Related companies Shinawatra Information Technology Co., Ltd. Others
-
138.17
-
137.74
-
4.63
-
4.63
-
142.80
-
142.37
e) Outstanding balance arising from sales/purchases of goods/services and loan to/from related companies Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
Parent company
-
0.42
-
-
Subsidiaries
-
-
46.72
0.38
37.50
23.13
37.50
23.13
Trade accounts receivable
Related companies Singapore Telecom Mobile Pte Ltd. Others
4.84
6.51
0.13
0.36
42.34
29.64
37.63
23.49
42.34
30.06
84.35
23.87
Parent company
-
5.69
-
5.69
Subsidiaries
-
-
1.98
158.16
0.55
11.96
0.11
0.43
0.55
17.65
2.09
164.28
-
-
-
50.00
0.55
17.65
2.09
214.28
Total trade accounts receivable Amounts due from and loan to related companies Amounts due from related companies
Related companies Loan to related company Subsidiary Advanced Wireless Marketing Co., Ltd. Total amounts due from and loan to related companies
105
Loan to a subsidiary represented loan with interest at the approximate minimum rate of bank overdraft and minimum rate of bank lending of 5 major commercial banks in Thailand. The rates were determined by Group Finance and were applied to the Group. The intercompany borrowing rate would be vary by adding margin which would be different according to the tenor of each borrowing. Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
Parent company
-
Subsidiaries
-
31.46
-
11.95
-
2.39
44.24
SC Matchbox Co., Ltd.
3.10
74.80
-
-
Shin Satellite Public Co., Ltd.
1.31
11.14
1.31
11.14
Others
8.53
13.11
6.44
0.23
Trade accounts payable
Related companies
12.94
99.05
7.75
11.37
12.94
130.51
10.14
67.56
-
13.00
-
12.98
Advanced Paging Co., Ltd.
-
-
11.12
-
Others
-
-
8.69
-
-
-
19.81
-
Total trade accounts payable Amounts due to and loans from related companies Amounts due to related companies Subsidiaries
Related companies Singapore Telecom International Pte Ltd. SC Matchbox Co., Ltd. Pager Sales Co., Ltd.
20.29
-
6.20
-
106.67
1.92
10.58
-
-
13.14
-
-
8.09
2.83
6.89
1.38
135.05
17.89
23.67
1.38
135.05
30.89
43.48
14.36
Advanced Paging Co., Ltd.
-
-
250.00
-
Advanced Wireless Marketing Co., Ltd.
-
-
400.00
-
-
-
650.00
-
135.05
30.89
693.48
14.36
Others
Loans from related companies Subsidiaries
Total amounts due to and loans from related companies
106
The loans from Advanced Paging Co., Ltd. and Advanced Wireless Marketing Co., Ltd. were provided interest rate at the short-term market rate quoted by the Banks that approved short-term credit line for the Company. The applied borrowing rate would be the rate that the Company would get if the Company borrowed from the commercial banks at that specific period. Consolidated 1999
Company 1998
1999
Restated
1998 Restated
Million Baht
Million Baht
Million Baht
Million Baht
-
-
483.10
298.31
105.13
129.27
105.13
129.27
105.13
129.27
588.23
427.58
Deposits from customers, net Subsidiary Advanced Wireless Marketing Co., Ltd. Related company Shin Corporation Public Co., Ltd. Total deposits from customers, net 40 YEAR 2000 ISSUE (This note is unaudited) The Group completed modifications of the computer systems to deal with the Year 2000 issue in 1999. Although the Group fully completed the modifications on its computer systems, the Group remains exposed to the risk that other companies with which the Group transacts with might not be the Year 2000 compliant. This might have an effect on the Group’s operations. To date the Group has not experienced any Year 2000 problems relating to the Group’s own systems or third parties’ systems. Total expenses of modifications incurred by the Group in 1999 for the Year 2000 project was Baht 30.46 million (1998: Nil).
107
Check List
Page Message from the Chairman Subsidiary and Associated Companies The Company and its Subsidiary Other Reference Persons Message from the Chairman
13 13 14 2-3
Report of the Audit Committee
15
Nature of Business
16
The Shareholdering structure of the Group Company
18
Major Event of the Company in 1999
19
Industry Situation and Competition
22
Shareholders and Management
28
Shareholders
28
Management Team
29
Remuneration for Director and Management Team
30
Related Companies and Related Transaction
108
2
31
Related Companies
31
Transaction between the Company, its subsidiaries and its associated Companies
35
The Opinion of Independent Director and Audit Committee on Related Company Transactions
36
Risk Factors
37
Other Factor Affecting Investment
42
Litigation
42
Obligations to issue share in the future
42
Terms and Conditions of Debentures
43
The Management Discussion and Analysis
45
Directors Report 1999
51
Financial Statements
61