SET Announcements

- 17 - As at December 31, 1998 and 1997, the Company and subsidiaries had overdraft and loan facilities with various financial institutions totalling Bath 2,737 million (Baht 717 million for the Company) and Baht 6,054 million (Baht 3,707 million for the Company), respectively. In 1998, the local loans bear interest at the rates ranging from 9% - 28% p.a. and the foreign loan bears interest at the rates ranging from 2.1% - 2.3% p.a.. In 1997, the local loans bear interest at the rates ranging from 9% - 28% p.a. and the foreign loan bears interest at the rates ranging from 1.3% - 1.4% p.a.. Under the terms of the agreements covering the Company's and subsidiaries' liabilities under trust receipts, imported merchandises have been released to the Company and certain subsidiaries in trust for the banks. The Company and the said subsidiaries are accountable to the banks for the trusted merchandises or its sales proceeds. 4.10 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 subsidiary's land and construction thereon. 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. Subsequently in August 1998, the subsidiany had negotiated with lender bank for changing the repayable condition, of this loan and had approved to extend to twenty six months commeneing from July 17, 1998 for repayable principle loans while interest expense repayable in monthy installment. 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 of subsidiary. - 18 - 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 commencing in January 1998. These long-term loans are guaranteed by the subsidiary. As at December 31, 1998, the outstanding of loan amounted to approximately Baht 16.7 million. 4.11 Short-Term Loans and Advance from Related Companies Consolidated These consist of: In Thousand Baht Interest Rate Amount Objective 1998 1997 1998 1997 Short-Term Loans Asia Pacific Post Co., Ltd. For operations 15.75% 15.75% 33,477 17,177 C.T.W. Bata Co., Ltd. For operations 12.75% - 4,500 - Advance Loxley Utilities Services Co., Ltd. and Siripong Construction Partnership Ltd. Joint Venture For operations - - 10,918 - Others 4,857 496 Total Short-Term Loans and Advance from Related Companies 53,752 17,673 4.12 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. after withholding tax 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 all or 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. - 19 - 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. after withholding tax 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. In respect of the issuance of the bonds referred to above, at the extraordinary shareholders meetings held on January 11, 1995 and March 18, 1996, the shareholders approved the increase in the Company's 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 Company 's 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 Company's 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 Company's shares represents 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 one (1) years for ECD 1 and next two (2) years for ECD 2, respectively. As at December 31, 1997, the provision amounted to approximately Baht 1,139.6 million (including a provision for the year ended December 31, 1998 of approximately Baht 391.4 million). Moreover, the Company had appointed the financial advisor to perform the debt restructuring on these ECD. - 20 - 4.13 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 12.1 million (Baht 7.5 million for Company) in 1998 and Baht 19.6 million (Baht 14.8 million for the Company) in 1997. 4.14 Reserve Fund The reserve fund represents the accumulated appropriation set up 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 Company's authorized share capital. The reserve is not available for dividend distribution. 4.15 Fees and Other Income These consist of: In Baht Consolidated The Company 1998 1997 1998 1997 Gains on disposal of investments 132,775,846 237,110,714 188,399,765 250,624,958 Interest income 272,862,030 252,247,800 247,342,447 203,857,907 Dividend, fees, service income and others 467,765,191 339,946,607 240,380,796 206,750,997 Total 873,403,067 829,305,121 676,123,008 661,233,862 - 21 - 4.16 Other expenses These consist of: In Baht Consolidated The Company 1998 1997 1998 1997 Provision for bonds redemption (Note 4.12) 391,420,126 712,282,339 391,420,126 712,282,339 Penalty fee paid to the government agency 141,557,947 - 141,557,947 - Amortization for under writer fee 33,511,020 33,619,196 33,511,020 33,619,196 Others 110,423,689 29,982 35,963,195 7,181 Total 676,912,782 745,931,517 602,452,288 745,908,716 4.17 Exchange Gain (Loss) Arising from Change in Foreign Currency Exchange System As a result of the change in the foreign currency exchange system to the managed float system effective from July 2, 1997, the Company and subsidiaries derived a net gain on repayment and collection of its foreign currency liabilities and assets for the year ended December 31, 1998 and for the six-month period ended June 30, 1997 and on the translation of the net liabilities as at December 31, 1998 and June 30, 1997 (using the exchange rates prevailing on) totalling approximately Baht 2,247.3 million and Baht 173.2 million for consolidated financial statements and Baht 2,241.8 million and Baht 173.2 million for the company financial statements. This gain was presented separately in the Statements of Income for the years ended December 31, 1998 and 1997, while losses for the year ended December 31, 1998 and for the last six-month period ended December 31, 1997 from translation of the net liabilities outstanding at December 31, 1997 (using the exchange rates prevailing on December 31, 1997) totalling approximately Baht 3,355.1 million for the consolidated financial statements and Baht 3,209.1 million for the company financial statements. The Company and subsidiaries recorded this exchange loss and presented as "Extraordinary Item" in the 1997 statement of income in accordance with the Announcement No. 002/2540 -2542 dated September 19, 1997 issued by the Institute of Certified Accountants and Auditors of Thailand. - 22 - 4.18 Segment Financial Information Details of financial data by segments for 1998 and 1997 were as follows: Consolidated financial statements In Million Baht Information Industrial and Technology Consumer Products Trading Others Total 1998 1997 1998 1997 1998 1997 1998 1997 Net sales 4,486 5,645 3,445 3,625 177 349 8,108 9,619 Cost of sales (3,332) (4,083) (2,924) (3,134) ( 124) ( 388) ( 6,380) ( 7,605) Gross profit 1,154 1,562 521 491 53 ( 39) 1,728 2,014 Operating profit 170 179 171 19 328 203 669 401 Dividend income from investments in other companies 16 41 Central expenses ( 201) ( 263) Interest expense ( 565) ( 548) Directors' remuneration ( 4) ( 8) Other expenses ( 677) ( 746) Equity in results of operations of associated companies - net 261 ( 64) Gain on exchange rates 2,247 173 Corporate income tax ( 462) 258 Minority interest in net income of subsidiaries ( 20) ( 24) Income (loss) before extraordinary item and cumulative effect of accounting change 1,264 ( 780) Extraordinary item - ( 3,355) Cumulative effect of accounting change - 78 Net income (loss) 1,264 ( 4,057) Fixed assets- net 962 1,025 20 19 1,065 1,129 2,047 2,173 Other assets 10,607 12,571 Total assets 12,654 14,744 (More)