SET Announcements

LOXLEY PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO INTERIM FINANCIAL STATEMENTS MARCH 31, 1999 AND 1998 "UNAUDITED", "REVIEWED" 1.IMPACT OF ECONOMIC CRISIS The operations of the Company and subsidiaries have been affected and continue to be affected to the date of this report by the volatility in Baht currency and adverse economic conditions in Thailand. Even though, during the year 1998 upto the present, the volatility in Baht currency was changed for the better, interest rates were lowered and more credit was provided by the financial institutions to the private sector, the general deterioration of the economies of countries in this region caused the slow recovery of the economy in Thailand. Management of the Company has developed plans and implemented certain measures to cushion the impact of the crisis. Among others, these include : a) reviewing the viability of certain investment projects. b) reducing the holding of investments in non-core businesses. c) establishing control procedures with the aim to improve productivity as well as implementing various cost reduction programs. The operations of the Company and subsidiaries have been affected, and may continue to be affected, for the foreseeable future by the adverse economic conditions in Thailand and Asia Pacific. The ultimate effect, which may be material, of these uncertainties on the recorded amounts of assets and liabilities at the balance sheet dates cannot presently be determined, and accordingly the financial statements do not include any adjustment that might result from these uncertainties. Related effects will be reported in the financial statements as they become known and estimable. 2.PRINCIPLES OF CONSOLIDATION The interim consolidated financial statements included the accounts of Loxley Public Company Limited and the following subsidiaries owned directly and indirectly by Loxley Public Company Limited or the companies over which Loxley Public Company Limited has control as follows: - 2 - Percentage of Shareholding As at March 31 1999 1998 Direct Indirect Direct Indirect Subsidiary Companies Loxley Business Information Technology Company Limited 99 - 99 - Loxley Myanmar Company Limited (not yet started principal commercial operations) 99 - 99 - Loxley Wireless Company Limited 99 - 99 - Jago Company Limited (not yet started principal commercial operations) 99 - 99 - Loxley Energy Company Limited (not yet started principal commercial operations) 99 - 99 - Loxley Utilities Services Company Limited 90 - 90 - Loxley Broadcast and Media Company Limited 74 - 60 - Loxley Comware Company Limited 70 - 70 - Loxley Newteck Company Limited 67 - 67 - Societed Commercial Lao Company Limited 67 - 67 - Loxley Pacific Company Limited 63 - 70 - Loxley Infra Company Limited 60 - 60 - Loxley Pagephone Company Limited 55 - 55 - Loxley Satellite Communications Company Limited (not yet started principal commercial operations) 51 - 51 - Professional Computer Company Limited - 99 - 99 LoxData Company Limited - 99 52 - Netone Network Solution Company Limited - 98 - 98 Open Systems Integrator Company Limited - 92 - 83 Loxley Video Post (Bangkok) Company Limited - 74 - 31 Loxley Information Company Limited - 65 - 65 Loxley Information Services Company Limited - 65 - 65 Hutchison Telecommunications (Thailand) Company Limited - 55 - 55 - 3 - Percentage of Shareholding As at March 31 1999 1998 Direct Indirect Direct Indirect Companies Over Which Loxley Public Company Limited Has Control Loxley Trading Company Limited 50 - 50 - Loxley Property Development Company Limited 40 - 40 - Loxley Intergraph (Thailand) Company Limited - - - 50 Dynamic Integrator Corporation Company Limited - - - 50 North - East Asia Telephone and Telecommunication Company Limited - 49 - 49 Significant intercompany transactions with the above subsidiaries have already been eliminated. 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 March 31, 1999, the unamortized balance amounted to approximately Baht 70.1 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 an expense over a period of 15 years. As at March 31, 1999, the unamortized balance amounted to approximately Baht 35.3 million. 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 March 31, 1999, the unamortized balance amounted to approximately Baht 48.6 million. - 4 - The Company accounts for its investments in shares of associated companies for the interim consolidated financial statements and investments in shares of subsidiaries and associated companies for the Company's interim 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 because the Company did not have contingent liabilities or guarantees for subsidiaries and/or associated companies. 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. 3. EARNINGS (LOSS) PER SHARE Primary earnings (loss) per share is computed by dividing the net income (loss) by the weighted average number of fully paid-up share capital outstanding during the periods. The Company presents fully diluted earnings per share for comparison by dividing the net income adjusted with interest expense and related other expenses from convertible bonds by the weighted average number of fully paid-up share capital outstanding during the period (included common share equivalent from convertible bonds) for the period 1998. However, the Company does not present fully diluted earnings per share for the period 1999 due to primary earnings per share is loss per share. 4. 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 interim financial statements reflect the effects of these transactions which arose in the ordinary course of business. Account balances with these related companies at March 31, 1999 and 1998 were shown separately in the balance sheets. Significant transactions during the three-month periods ended March 31, 1999 and 1998 which included in the financial statements consist of: In Thousand Baht Consolidated The Company 1999 1998 1999 1998 Sales of products and services 27,619 53,470 53,032 131,669 Fees and other income 1,176 28,264 9,326 33,027 Costs of sales and services 14,867 34,374 50,355 56,589 Selling and administrative expenses 1,729 - 14,757 2,266 - 5 - 5. ACCOUNTS RECEIVABLE - TRADE AND OTHERS As at March 31, 1999, the Company and subsidiaries had overdue accounts receivable-trade. The aging receivables were as follows: In Million Baht Consolidated The Company Over 3 months to 6 months 237 147 Over 6 months to 12 months 184 105 Over 12 months 657 463 Total 1,078 715 The Company and subsidiaries set up allowance for doubtful accounts for the period ended March 31, 1999 amounting to approximately Baht 296.9 million (Baht 217 million for the Company). Based on historical collection experience, the management believes that the allowance for doubtful accounts is adequate. - 6 - 6. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED, RELATED AND OTHER COMPANIES These consisted of: Consolidated Percentage Fully Paid up Of Holding Nature of Business Relationship Share Capital 1999 1998 Associated Companies - At Equity Loxley CSR Insulation Company Produce and distribute Limited glasswool material Shareholders Baht 275,000,000 - 50 Saxon (Thailand) Company Limited Blending castrol lubricants Shareholders Baht 10,000,000 50 50 Castrol (Thailand) Company Limited Distribute lubricants branded castrol Shareholders Baht 40,000,000 49 49 Thai Fiber Optic Company Limited Optic Cable Shareholders Baht 100,000,000 40 40 Ericsson Thai Network Company Limited Outside plant services Shareholders Baht 15,000,000 33 33 Lao Soft Drink Company Limited Produce and sale soft drink in Lao Shareholders Kip 1,383,452,576 30 30 Loxley Aluminium and Engineering Design and installation Company Limited glass and aluminium Shareholders Baht 54,000,000 30 30 Newspager Corporation Limited Sale and service of pager in USA Shareholders USD 4,896,895 27 27 Thai Cellulose Products Company Manufacturing of sodium Limited carboxy methyl cellulose Shareholders Baht 180,000,000 26 26 Lao Brewery Company Limited Produce and sale beer in Lao Shareholders Kip 13,640,021,581 26 26 BHP Steel Building Product (Thailand) Produce and Company Limited distribute lysaght metal sheet Shareholders Baht 83,500,000 25 25 Thai Flying Service Aviation Company Limited business Shareholders Baht 30,000,000 25 25 Houay Ho Power Company Limited Hydropower Shareholders USD 50,000,000 20 20 Related and Other Companies -At Cost BHP Steel (Thailand) Company Limited Produce and distribute lysaght metal sheet Shareholders Baht 2,500,000,000 18 18 Thai Telephone and Telecommunication Public Telephone service Company Limited concession Shareholders Baht 11,250,000,000 13 13 Phatra Insurance Public Company Limited Insurance business Shareholders Baht 200,000,000 8 8 The Preferred Shares - Subordinated Debentures of Thai Farmers Bank Plc. Fund Fund manager Shareholders Baht 40,000,000,000 0.25 - - 7 - In Thousand Baht Investment - At Cost Investment - At Equity Dividend 1999 1998 1999 1998 1999 1998 Associated Companies - At Equity Loxley CSR Insulation Company Limited - 137,500 - 8,434 - - Saxon (Thailand) Company Limited 5,000 5,000 103,470 160,722 - - Castrol (Thailand) Company Limited 19,600 19,600 372,903 307,808 - - Thai Fiber Optic Company Limited 40,000 40,000 - 15,022 - - Ericsson Thai Network Company Limited 5,000 5,000 10,585 17,537 - - Lao Soft Drink Company Limited 25,715 25,715 26,834 44,468 5,340 9,702 Loxley Aluminium and Engineering Company Limited 16,135 16,135 - - - - Newspager Corporation Limited 98,746 98,746 34,454 32,057 - - Thai Cellulose Products Company Limited 46,800 46,800 - - - - Lao Brewery Company Limited 129,480 129,480 120,172 175,595 26,670 47,752 BHP Steel Building Product (Thailand) Company Limited 20,875 20,875 96,927 95,085 - - Thai Flying Service Company Limited 16,875 16,875 13,651 15,892 - - Houay Ho Power Company Limited 254,234 254,234 376,728 387,462 - - Others 92,807 92,807 23,549 16,455 - - Total 771,267 908,767 1,179,273 1,276,537 32,010 57,454 Related and Other Companies -At Cost BHP Steel (Thailand) Company Limited 450,000 450,000 - - Thai Telephone and Telecommunication Public Company Limited 1,753,873 1,753,873 - - Phatra Insurance Public Company Limited 35,621 35,621 - - The Preferred Shares - Subordinated Debentures of Thai Farmers Bank Plc. Fund 100,000 - 2,411 - Others 174,312 158,681 150 150 Total 2,513,806 2,398,175 2,561 150 Less Provision for declining in value of long - term investments -Listed securities (1,037,793) ( 124,570) -Other securities ( 20,000) - Net 1,456,013 2,273,605 (more)