SET Announcements

- 2 - Percentage of Shareholding As at December 31 1997 1996 Direct Indirect Direct Indirect Loxley Comware Company Limited 70 - 70 - Loxley Pacific Company Limited 70 - 70 - Open Systems Integrator Company Limited 83 67 Loxley Newteck Company Limited 67 - 67 - Societe Commercial Lao Company Limited 67 - 67 - Loxley Information Company Limited 65 - 65 - Loxley Information Services Company Limited 65 - 65 - Loxley Broadcast and Media Company Limited 60 - 60 - Loxley Infra Company Limited 60 - 60 - Loxley Pagephone Company Limited 55 - 55 - LoxData Company Limited 52 - 52 - Loxley Satellite Communications Company Limited (not yet started principal commercial operations) 51 - 51 - Professional Computer Company Limited - 99 - 99 Loxley Intergraph (Thailand) Company Limited - 50 40 - Dynamic Integrator Corporation Company Limited - 50 - 40 Hutchison Telecommunications (Thailand) Company Limited - 55 55 - TNT Logistics (Thailand) Ltd. - - 51 - L Wave Company Limited - - 99 - Companies Over Which Loxley Public Company Limited Has Control Loxley Trading Company Limited 50 - 50 - Loxley Energy Company Limited (not yet started principal commercial operations) 45 - 45 - Loxley Property Development Company Limited 40 - 40 - - 3 - Percentage of Shareholding As at December 31 1997 1996 Direct Indirect Direct Indirect North - East Asia Telephone and Telecommunication Company Limited - 49 - 49 Loxley Video Post (Bangkok) Company Limited - 31 - 31 Significant intercompany transactions with the above subsidiari es have already been eliminated. In May 1994, the Company additionally invested in the share capital of Hutchison Telecommunications (Thailand) Limited (Hutchison) resulting in an increase in the percentage of shareholdings from 45% to 55% . At the date of the acquisition of the shares in Hutchison, the Company had to pay for the additional share capital exceeding the net assets value of that subsidiary. As a result, the Company recorded the Excess of Investment Over Net Assets as part of Other Assetswhich is being amortized as expense over a period of approximately 12 years. As at December 31, 1996, the unamortized balance amounted to approximately Baht 26.4 million. Since the Companys shareholding in Hutchison Telecommunications (Thailand) Limited (Hutchison) increased from 45% to 55% in May 1994, as aforementioned, the Company has to change the method of accounting for the realization of the existing capital deficiency of this company, as well as for any portion which subsequently occurred. Such change is as follows: - At the time the Companys shareholding in Hutchison was 45%, the Company accounted for the investment by the equity method under which the Company did not recognize its share of the capital deficiency in the financial statements. - When the Companys shareholding in Hutchison had reached 55%, the financial statements of such company are consolidated with those of the Company. In this connection, the Company is required to recognize all of the capital deficiency of Hutchison in the consolidated financial statements which included the portion applicable to the minority interest totalling Baht 60.4 million. - 4 - The Company recorded such an amount as a deferred charge and presented it as part of Other Assets which was amortized to expense by the straight-line method over a period of approximately 12 years. In addition, if the operations of Hutchison reports net profits, the minoritys share in the net income will be treated as a deduction from the unamortized balance. In 1996 Hutchison, however, increased its share capital to clear up its capital deficiency. As a result, the Company transferred the unamortized balance of a capital deficiency applicable to the minority interest to talling approximately Baht 35.8 million to off-set with the in cremental of the minoritys share arising from such an increased share capital. In August 1997, a subsidiary purchased all of the common shares of Hutchison from the Company and other shareholders. The subsidiary had to pay for the share capital exceeding the net assets value of Hutchison. As a result, the subsidiary recorded the Excess of Investment Over Net Assets as part of Other Assets which is being amortized as expense over a period of 8 years. As at December 31, 1997, the unamortized balance amounted to approximately Baht 83.1 million. The Company has included the financial statements of Loxley Trading Company Limited, in which the Company invested 50% of the shareholding in May 1994, for consolidation since it had control over the investee. At the date of the acquisition of the shares in Loxley Trading Company Limited, the Company had to pay for the share capital exceeding the net assets value of that subsidiary.As a result, the Company recorded the Excess of Investment Over Net Assets as part of Other Assets which is being amortized as anexpense over a period of 15 years. As at December 31, 1997, the unamortized balance amounted to approximately Baht 39.6 million. In respect of including the financial statements of Loxley Trading Company Limited for consolidation, the Company is required to recognize all of the capital deficiency of that subsidiary in the consolidated financial statements, which included the port ion applicable to the minority interest totalling Baht 27 million. The Company recorded such amounts as a deferred charge and presented it as part of Other Assets which was amortized to expense over a period of 15 years. However, such balance was cleared up in 1995 by the allocation of the minoritys share in net income subsequently occurred of Loxley Trading Company Limited. During the third quarter of 1996, the Company invested 90% in the share capital of Loxley Utilities Services Company Limited. In this connection, the Company had to pay for the share capital exceeding the net assets value of that subsidiary. As a result, the Company recorded the Excess of Investment Over Net Assets as part of Other Assets which is being amortized as expense over a period of 15 years. As at December 31, 1997, the unamortized balance amounted to approximately Baht 53.6 million. - 5 - 3.SIGNIFICANT ACCOUNTING POLICIES Allowance for Doubtful Accounts The Company and subsidiaries provide allowance for doubtful accounts equal to the estimated collection losses that may be incurred in the collection of all receivables. The estimated losses are based on historical collection experience coupled with a review of the current status of the existing receivables. Inventories The Company and subsidiaries value their merchandise inventories at the lower of average cost or market. Investment in Shares The Company accounts for its investments in shares of associated companies for consolidated financial statements and investments in shares of subsidiaries and associated companies for the Companys financial statements by the equity method. In case of the subsidiary and/or associated company reports net loss, the Company will discontinue applying the equity method when the balance of investment in such subsidiary and/or associated company is reduced to zero and shall not recognize for additional losses. The Company will resume applying the equity method only after the subsidiary and/or associated company subsequently reports net income, and its share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended. Investments in shares of other related companies held for long-term purpose are accounted for by the cost method. Gains or losses on investments will be recognized when the investments are dis posed of. Depreciation and Amortization The Company and subsidiaries depreciate their property and equipment by the straight-line method over the estimated useful lives of the assets ranging from five (5) to twenty-five (25) years. Tool and equipment that committed to transfer the ownership to the parties under the agreements discussed in Note 4.15, are amortized by the straight-line method over the period of the agreements. Deferred underwriting fee for issuing Euro Convertible Bonds are amortized by the straight-line method over a period of five (5) years. - 6 - Translation of Foreign Currency Financial Statements The financial statements of foreign subsidiaries have been prepared in the currency (reporting currency) of countries where they are domiciled. For consolidation purposes, these financial statements have been translated into Thai Baht as follows: (a) all assets and liabilities - at the current bank rates at the balancesheet dates, except for intercompany balances which are translated at the rates prevailing at the transaction dates; and (b) revenues and expenses - at average exchange rates. Gain or loss on translation is presented as Cumulative Translation Adjustment under shareholders equity in the balance sheets. Foreign Currency Transactions The Company and subsidiaries record foreign currencies transactions into Baht based on the exchange rates prevailing at the transaction dates. Balances of assets and liabilities denominated in foreign currency at the balance sheet dates are translated into Baht at the prevailing exchange rates as of those dates or at the forward rates for those covered by forward exchange contracts.Gains or losses from the translation are credited to or charged against current operations. Income and Cost Recognition Income on turnkey contract sales that requires installation over a period of time is recognized on the percentage of completionethod. Related costs on such contract sales are recognized as incurred. Earnings (Loss) per Share Earnings (Loss) per share is computed by dividing the net income (loss) by the number of fully paid-up share capital at the balance sheet dates. The Company does not present the fully diluted earnings per share for comparison purpose due to basic earnings per share is loss per share in 1997 and the computed result of the decrease in fully diluted earnings per share was immaterial in 1996. 4. OTHER INFORMATION 4.1 Related Party Transactions A portion of sales of products and services, fees, other income, costs of sales and services and selling and administrative expenses are represented by transactions with their subsidiaries, associated and other related companies. These companies are related through common shareholdings and/or directorships. The accompanying financial statements and consolidated financial statements reflect the effects of these transactions based on the basis deter mined by the companies concerned. Account balances with these related companies at December 31, 1997 and 1996 were shown separately in the consolidated balance sheets. - 7 - As at December 31, 1997 and 1996, significant transactions which included in the accompanying consolidated and the Companys financial statements consist of: In Thousand Baht Consolidated The Company 1997 1996 1997 1996 Sales of products and services 82,177 578,766 472,260 749,443 Fees and other income 96,701 55,148 118,702 162,941 Cost of sales and services 373,073 650,981 683,138 850,021 Selling and Administrative Expenses - - 6,094 137,070 4.2 Change in the method of accounting for income taxes Effective January 1, 1997, the Company adopted the generally accepted practice of providing for deferred income tax resulting from timing differences in reporting revenues and expenses for financial reporting purposes compared to income tax reporting purposes. Accordingly, the income tax applicable to revenues and expenses which are not currently allowance and deductible for income tax purposes is set up as Deferred Income Tax in the 1997 balancesheet. This will be allocated to future periods when such revenues and expenses provided for are actually incurred and considered allowance and deductible for income tax purposes. As a result of this deferment, net loss for the year ended December 31, 1997 decreased by totalling approximately Baht 1,757.6 million representing income tax applicable to the current years timing differences (amounted to approximately Baht 1,680 million) and cumulative income tax applicable to timing differences of prior years up to December 31, 1996. (amounted to approximately Baht 77.6 million) The financial statements of subsidiaries included in this financial statements did not include any adjustment effect from the change in the method of accounting for income tax. The Management, however, believes that the effect on this matter was not material to the financial statements. - 8 - 4.3 Accounts Receivable - Trade and others These consist of : In Baht Consolidated The Company 1997 1996 1997 1996 Receivables from related companies 200,227,826 623,130,112 413,610,150 767,246,763 Less allowance for doubtful accounts (21,756,955) - (103,296,955) - Receivables from Related Companies - Net 178,470,871 623,130,112 310,313,195 767,246,763 Receivables from other companies 2,806,616,734 2,714,823,668 1,083,297,247 1,017,774,969 Less allowance for doubtful accounts (230,402,504) (39,385,095) (81,703,045) (20,000,000) Receivables from other companies - Net 2,576,214,230 2,675,438,573 1,001,594,202 997,774,969 4.4 Inventories These consist of: In Baht Consolidated The Company 1997 1996 1997 1996 Merchandise inventories 851,804,173 959,582,377 582,221,609 635,659,319 Project material 992,868,733 845,073,339 945,389,272 699,918,913 Goods in transit 11,315,136 22,533,077 11,315,136 19,765,986 Total 1,855,988,042 1,827,188,793 1,538,926,017 1,355,344,218 Less allowance for decline in value (39,078,576) (53,289,682) (30,000,000) (42,922,825) Net 1,816,909,466 1,773,899,111 1,508,926,017 1,312,421,393 (More)