SET Announcements

- 12 - As at December 31, 1997, the aggregate market value of investments in listed securities was lower than the aggregate cost by approximately Baht 1,068 million. The Company did not set up a provision for loss on decline in value of these investments since the Company believes that the decline in market price of stocks in the Stock Exchange of Thailand at the end of year, caused by economic crisis, was merely temporary which characterized by the increase in market price of the stock during the period subsequent to the balance sheet date. As of March 25, 1998, the aggregate market value of such investments was lower than the aggregate cost by approximately Baht 162.8 million. The Company accounted for the investments in Loxley Hitachi Cable Engineering Company Limited and investments in Thai Telephone and Telecommunication Public Company Limited by the equity method. Subsequently in 1997 and 1996, the Company sold a portion of investments which effected the percentage of shareholding in the said companies reduced to be less than 20%. As a result, the Company changed the accounting method for these investments to the cost method by using the outstanding balance of investments under the equity method as the cost of the investments. 4.6 Property and Equipment These consist of: In Baht Consolidated The Company 1997 1996 1997 1996 At Appraised Value - Net of historical cost Land 205,481,500 - 205,481,500 - At Cost Land 89,542,552 88,246,360 53,196,493 53,196,493 Buildings and improvements 1,058,021,694 906,630,209 453,259,986 304,149,089 Furniture, fixtures and office equipment 987,551,800 656,441,783 382,876,186 360,506,817 Tool and equipment 114,110,727 112,997,125 - - Equipment held for lease 24,491,933 22,087,462 25,445,346 25,198,571 Transportation equipment 67,081,206 79,833,879 44,355,357 53,380,210 Communication network (Note 4.15) 508,336,779 652,847,451 - - Construction in progress 29,744,932 76,747,324 971,632 55,780,918 Total 3,084,363,123 2,595,831,593 1,165,586,500 852,212,098 - 13 - In Baht Consolidated The Company 1997 1996 1997 1996 Less accumulated depreciation (911,034,042) (667,215,824) (420,561,145) (321,758,037) Land, Property and Equipment - net 2,173,329,081 1,928,615,769 745,025,355 530,454,061 In 1997, the Company appraised its land, previously recorded at cost amounting to approximately Baht 48.1 million, at appraised value totalling approximately Baht 253.6 million. The Company appraised the said land based on the information guidelines provided by a independent appraiser. The revaluation increment in land, totalling approximately Baht 205.5 million, was credited to Revaluation Increment in Land which was shown under Shareholders Equiy in the balance sheets. The Revaluation Increment in Land is not available for dividend distributions. Depreciation charges which were included as part of costs and expenses for the years ended December 31, amounted to approximately Baht 264.7 million (Baht 114.6 million for the Company) in 1997 and Baht 233.5 million (Baht 90.5 million for the Company) in 1996. 4.7 Other Assets These consist of: In Baht Consolidated The Company 1997 1996 1997 1996 Deferred income tax (Note 4.2) 1,757,576,157 - 1,757,576,157 - Excess of investment over net assets of subsidiaries - net (Note 2) 181,319,983 132,127,586 - - Deferred underwriting fees for issuing Euro convertible bonds - net 89,813,283 122,833,521 89,813,283 122,833,521 Income taxes deducted at sources 77,785,814 61,539,413 37,961,125 36,805,218 Refundable deposits and others 400,886,567 122,644,256 31,689,458 38,947,872 Total 2,507,381,804 439,144,776 1,917,040,023 198,586,611 - 14 - 4.8 Bank Overdrafts and Loans From Financial Institutions These consist of: In Baht Consolidated The Company 1997 1996 1997 1996 Bank overdrafts 354,370,456 203,267,732 4,815,283 10,488,186 Short-term loans payable to local and foreign banks 1,291,374,537 480,300,000 549,870,000 - Acceptances payable and liabilities under trust receipts 476,986,580 526,546,544 411,308,871 364,440,162 Promissory notes 178,000,000 233,000,000 - - Total 2,300,731,573 1,443,114,276 965,994,154 374,928,348 As at December 31, 1997 and 1996, the Company and subsidiarieshad overdraft and loan facilities with various banks totalling Bath 6,054 million (Baht 3,707 million for the Company) and Baht 4,584 million (Baht 2,993 million for the Company) respectively. In 1997, the local loans bear interest at the rates ranging from 9-28% p.a. and the foreign loan bears interest at the rate of 1.3-1.4% p.a.. In 1996, the local loans bear interest at the rates ranging from 8.5-20% p.a. and the foreign loan bears interest at the rate of 1.3% p.a.. Under the terms of the agreements covering the Companys and subsidiaries liabilities under trust receipts, imported merchandises have been released to the Company and subsidiaries in trust for the banks. The Company and subsidiaries are accountable to the banks for the trusted merchandises or its sales proceeds. 4.9 Long-Term Loans In March 1994, a subsidiary entered into a loan agreement with a local bank to obtain a loan facility of Baht 400 million which is separated into two (2) equal tranches amounting to Baht 200 million each in U.S. currency equivalent to Baht and Baht currency. The first tranche of the loan in U.S. currency bears interest at the rate of 2% p.a. over the Singapore Interbank Offered Rate (SIBOR), while the second tranche bears interest at the Minimum Loan Rate (MLR) announced by a local bank. the loan is repayable in thirty-two(32) quarterly installments commencing two (2) years after the drawndown date. The loan is collateralized by the mortgage of the subsidiarys land and premises. Subsequently in May 1997, the subsidiary entered into an agreement to convert the U.S. Dollar loan to Baht currency at an agreed exchange rate amounting to Baht 178.8 million, and to change the rate of interest to bear at the Minimum Loan Rate (MLR) announced by the lending bank. - 15 - In October 1994 and September 1995, a subsidiary entered into the loan agreements with a local bank to obtain a loan facility of Baht 60 million and Baht 15 million, respectively. The loans shall be repayable in installments up to April 2001 and September 2000, respectively. These long-term loans are guaranteed by the mortgage of machinery and operating equipment. In December 1997, a subsidiary entered into the loan agreements with a local bank to obtain a loan facility of Baht 50 million. The loan shall be repayable in monthly installments commencingin January 1998. These long-term loans are guaranteed by the subsidiary. 4.10 Euro Convertible Bonds During the second quarter of 1995, the Company offered the Euro-Convertible Bonds in the foreign countries with a total face value of U.S. Dollars 100 million (divided into 100,000 bonds at U.S. Dollars 1,000 principal amount) (ECD 1), or equivalent to Baht 2,455 million contingent on the exchange rate fixed at the time of conversion or redemption. The bonds bear interest at the rate of 3.5% p.a. and will be due for redemption on April 20, 2005.However, the bondholders, pursuant to the stipulated conditions in the prospectus, may exercise their conversion rights at any time from July 20, 1995 up to March 20, 2005 at the conversion price of Baht 500 per share, or put redemption option at prior maturity on April 20, 2000 at the price with premium totalling U.S.Dollars 1,310 per share. In addition, the Company, pursuant to the stipulated conditions in the prospectus, may mandatorily redeem allor some of the bonds at any time from May, 1998 to April 20, 2000 at the price with premium totalling U.S. Dollars 1,237 per share or U.S. Dollars 1,310 per share, depend upon the period of redemption. During the second quarter of 1996, the Company offered another Euro-Convertible Bond in the foreign countries with a total face value of U.S. Dollars 105 million (divided into 105,000 bonds at U.S. Dollars 1,000 principal amount) (ECD 2), or equivalent to Baht 2,646 million contingent on the exchange rate fixed at the time of conversion. The bonds bear interest at the rate of 2.5% p.a. and will be due for redemption on April 4, 2001. However, the bondholders, pursuant to the stipulated conditions in the prospectus, may exercise their conversion rights at any time from July 4, 1996 up to March 4, 2001 at the conversion price of Baht 450 per share. In addition, the Company, pursuant to the stipulated conditions in the prospectus, may mandatorily redeem all or some of the bonds at any time from April 1999 to April 3, 2001 at the price with premium totalling U.S.Dollars 1,210 per share in 2000 and U.S. Dollars 1,272 per share in 2001. - 16 - In respect of the issuance of the bonds referred to above, at the extra ordinary shareholders meetings held on January 11, 1995 and March 18, 1996, the shareholders approved the increase in the Companys authorized share capital from Baht 400 million (divided into 40,000,000 shares at Baht 10 par value) to Baht 460 million (divided into 46,000,000 shares at the same par value) and finally to Baht 520 million (divided into 52,000,000 shares at the same par value). The increased share capital of 12,000,000 shares will be issued to the convertible bondholders who will later exercise their conversion rights. The Company registered the resolution of the increase share capital with the Ministry of Commerce on January 27, 1995 and March 20, 1996, respectively. Since 1996, the market prices of the stock including the Companys shares, in the Stock Exchange of Thailand have declined continuously. Consequently, the bondholders may not exercise their conversion rights as much as that of the Companys estimate. Accordingly, the Company set up a policy to provide a provision for the premium to be paid to the bondholders at the time redemption be made at the rate of 80% of total premium to be paid in case of all bondholders exercise the redemption right at prior maturity date, spread over the period of the right by applying the straight-line method. The Management believes that such provision is adequate since the present market price of the Companys share srepresents the price during the period that the Securities Exchange of Thailand is unusually in declining circumstances and the redemption period will be in effect in next two (2) years for ECD 1 and next three (3) years for ECD 2, respectively. As at December 31, 1997, the provision amounted to approximately Baht 1,015.4 million (including a provision for the year ended December 31, 1997 of approximately Baht 712.3 million). 4.11 Employees Provident Fund The Company and certain subsidiaries have a contributory provident fund covering substantially all employees. Membership is compulsory upon attaining permanent employment status. The employees contribute 5% of their basic salaries to the fund on a monthly basis. The Company and certain subsidiaries set up monthly reserve for the fund based on a certain percentage of the employees basic salaries depending on the length of employment. The provisions made during the years, which were charged to operations, amounted to Baht 19.6 million (Baht 14.8 million for Company) in 1997 and Baht 13.8 million (Baht 11.3 million for the Company) in 1996. 4.12 Reserve Fund The reserve fund represents the accumulated appropriation setup by the Company in compliance with the provisions of the Limited Public Company Act which require the appropriation for reserve fund of at least 5% of annual net income after deduction of the deficit brought forward (if any). The appropriation ceases when the reserve reaches 10% of the Companys authorized share capital. The reserve is not available for dividend distribution. - 17 - 4.13 Fees and Other Income These consist of: In Baht Consolidated The Company 1997 1996 1997 1996 Gains on disposal of investments 237,110,714 1,107,568,708 250,624,958 878,398,623 Gain on exchange rates 173,179,578 - 173,179,578 - Interest income 252,247,800 247,434,513 203,857,907 232,267,961 Dividend, fees, service income and others 339,946,607 535,011,440 206,750,997 538,057,069 Total 1,002,484,699 1,890,014,661 834,413,440 1,648,723,653 4.14 Segment Financial Information Details of financial data by segments for 1997 and 1996 were as follows: Consolidated financial statements In Million Baht Information Industrial and Technology Consumer Products Trading Others Total 1997 1996 1997 1996 1997 1996 1997 1996 Net sales 5,645 5,311 3,625 3,244 349 389 9,619 8,944 Cost of sales (4,083) (3,797) (3,134) (2,802) (388) (413) (7,605) (7,012) Gross profit 1,562 1,514 491 442 (39) (24) 2,014 1,932 Operating profit 179 413 19 39 377 1,212 575 1,664 Dividend income from investment in other companies 41 71 Central expenses (297) (750) Interest expense (548) (353) Directors remuneration (8) (11) Other expenses (712) (303) Equity in results of operations of associated companies - net (64) 387 Corporate income tax 258 (244) (More)