SET Announcements

Company Limited Insurance business Shareholders Baht 200,000,000 8 8 General Investments - at cost BHP Steel (Thailand) Company Produce and distribute Limited lysaght metal sheet Shareholders Baht 2,500,000,000 18 18 The Preferred Shares - Subordinated Debentures of Thai Farmers Bank Plc. Fund manager Shareholders Baht 40,000,000,000 0.25 - Fund Space Imaging, Inc. Satellite photography Shareholders USD 216,116,127 0.8 0.8 - 14 - In Thousand Baht Investment - At Cost Investment - At Equity Dividend 1999 1998 1999 1998 1999 1998 Associated Companies - At Equity Saxon (Thailand) Company Limited 5,000 5,000 78,439 126,274 54,967 39,976 Castrol (Thailand) Company Limited 19,600 19,600 316,214 339,416 142,086 19,598 Thai Fiber Optic Company Limited 40,000 40,000 - 1,234 - - Ericsson Thai Network Company Limited 5,000 5,000 6,528 10,644 3,998 5,922 Lao soft Drink Company Limited 25,715 25,715 22,606 31,971 5,340 9,702 Loxley Aluminium and Engineering Company Limited 16,135 16,135 - - - - Newspager Corporation Limited 98,746 98,746 26,192 36,871 - - Thai Cellulose Products Company Limited 46,800 46,800 - - - - Lao Brewery Company Limited 129,480 129,480 116,520 128,560 26,670 63,146 BHP Steel Building Product (Thailand) Company Limited 20,875 20,875 89,342 92,075 7,515 - Houay Ho Power Company Limited 254,234 254,234 410,271 392,829 - - Thai Flying Service Company Limited - 16,875 - 13,429 - - Others 91,140 92,807 21,427 19,533 780 - Total 752,725 771,267 1,087,539 1,192,836 241,356 138,344 Grand Total 1,901,169 1,881,911 2,363,063 2,326,798 241,356 138,344 Related and Other Companies Available - for - sale securities - at fair value in 1999 and at the lower of the aggregate cost or the aggregate market value in 1998 Thai Telephone and Telecommunication Public Company Limited 1,753,873 1,753,873 - - Phatra Insurance Public Company Limited 35,621 35,621 13,061 14,530 Others 13,787 13,788 360 - Total 1,803,281 1,803,282 13,421 14,530 Less allowance for impairment in value of available - for - sale securities ( 726,952) (1,130,532) Net 1,076,329 672,750 General Investments - at cost BHP Steel (Thailand) Company Limited 450,000 450,000 - - The Preferred Shares - Subordinated Debentures of Thai Farmers Bank Plc. Fund 100,000 - 7,926 - Space Imaging, Inc. - 51,133 - - Others 113,232 87,371 974 150 Total 663,232 588,504 8,900 150 Less allowance for impairment in value of general investments ( 20,000) ( 10,000) Net 643,232 578,504 - 15 - The Company accounted for its investment in Loxley Hitachi Cable Engineering Company Limited and investment 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 reducing to 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 cost of the investments. The Company accounted for its investment in Thai Flying Service Company Limited by the equity method. Subsequently in 1998, the Company had not excercised the right to acquire the increasing in the company's authorized share capital which effected the percentage of shareholding in the said company reducing to less than 20%. As a result, the Company changed the accounting method for this investment to the cost method by using the outstanding balance of investment under the equity method as the cost of investment. As at September 30, 1999, investments in marketable securities held as available-for-sale securities which are classified as long-term investments are valued at fair value, based on the latest bid price from the Stock Exchange of Thailand. The difference between the book value and fair value of the available-for-sale securities is recorded as a separate component of capital deficiency in the balance sheets. As at September 30, 1999, such investments were valued at the lower of the aggregate cost or aggregate market value which the aggregate market value of the available-for-sale securities was lower than the aggregate cost by approximately Baht 727 million. The value adjustment was recorded as "Lower from change in value of available-for- sale securities" as part of "Capital Deficiency" in the balance sheets. 8. LOANS TO RELATED COMPANIES Consolidated These consist of: In Thousand Baht Interest Rate Amount Objective 1999 1998 1999 1998 Short - Term Loans L.B.L. Algamate Partnership Ltd. For operations MOR MOR 238,850 184,850 Multimedia Telephony, Inc. (Philippines) For operations PHIBOR+2.5% PHIBOR+2.5% 93,666 91,537 Others 36,630 25,230 Total Short-Term Loans 369,146 301,617 Less Allowance for Doubtful Accounts ( 10,400) ( - ) Short-Term Loans - Net 358,746 301,617 - 16 - In Thousand Baht Interest Rate Amount Objective 1999 1998 1999 1998 Long-Term Loans Thai Telephone and Telecommunication Public Company Limited For operations MLR+0.5% MLR+0.5% 375,000 375,000 LoxComm B.V. Co., Ltd. For operations 15.00% - 37,489 - Thai Cellulose Products Company Limited For operations - MOR+1% - 10,400 Total Long-Term Loans 412,489 385,400 Less Allowance for Doubtful Accounts ( - ) ( 10,400) Long-Term Loans - Net 412,489 375,000 The Company These consist of: In Thousand Baht Interest Rate Amount Objective 1999 1998 1999 1998 Short-Term Loans L.B.L Algamate Partnership Ltd. For operations MOR MOR 238,850 184,850 Multimedia Telephony, Inc. (Philippines) For operations PHIBOR+2.5% PHIBOR+2.5% 93,666 91,537 Others 67,095 42,901 Total Short-Term Loans 399,611 319,288 Less Allowance for Doubtful Accounts ( 10,400) ( - ) Short-Term Loans - Net 389,211 319,288 Long-Term Loans Thai Telephone and Telecommunication Public Company Limited For operations MLR+0.5% MLR+0.5% 375,000 375,000 Loxley Broadcast and Media Company Limited For operations - 15.25% - 18,469 Thai Cellulose Products Company Limited For operations - MOR+ 1% - 10,400 Total Long-Term Loans 375,000 403,869 Less Allowance for Doubtful Accounts ( - ) ( 28,869) Long-Term Loans - Net 375,000 375,000 - 17 - 9. SHORT-TERM LOANS AND ADVANCE FROM RELATED COMPANIES Consolidated These consist of: In Thousand Baht Interest Rate Amount Objective 1999 1998 1999 1998 Short-Term Loans Asia Pacific Post Co., Ltd. For operations - 16.00% - 20,028 C.T.W. Bata Co., Ltd. For operations MOR+1% 15-16.75% 9,000 5,500 Advance Loxley Utilities Services Co., Ltd. and Siripong Construction Partnership Ltd. Joint Venture For operations - - 6,976 16,157 Other 2,452 - Total 18,428 41,685 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. 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. - 18 - 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. As at September 30, 1999, the provision amounted to approximately Baht 1,564.9 million (including a provision for the period ended September 30, 1999 of approximately Baht 270.8 million). Because the redemption period will be effect in the near future, in consideration thereon, the Company had appointed the financial advisors to provide assistance relating to the debt restructuring on these ECD. Currently, there are in the process of negotiation the conditions of debt restructuring plan, as to which the company's financial advisor and the Company submitted to the Steering Commitee of Bondholders. As at September 30, 1999, the eventual outcome of the debt restructuring plan cannot be presently determined. However, the Management believes that the debt restructuring plan will be successful and beneficial to the Company because the Company have already been allowed by the bondholders to postpone the repayment on dued bond interests totalling approximately of Baht 280.1 million. - 19 - 11. GAIN (LOSS) ON EXCHANGE RATE The Company and subsidiaries derived a net gain (loss) on repayment and collection of its foreign currency liabilities and assets during the three-month and nine-month periods ended September 30, 1999 and on the translation of the net liabilities outstanding at September 30, 1999 (using the exchange rates prevailing on September 30, 1999) totalling loss approximately Baht 1,095.7 million and Baht 1,107.3 million, respectively for the interim consolidated financial statements and Baht 1,091.0 million and Baht 1,107.6 million, respectively for the company interim financial statements and a net gain (loss) on repayment and collection of its foreign currency liabilities and assets during the three-month and nine-month periods ended September 30, 1998, and on the translation of the net liabilities outstanding at September 30, 1998 (using the exchange rates prevailing on September 30, 1998) totalling gain approximately Baht 671.7 million and Baht 1,688.4 million, respectively for the interim consolidated financial statements and Baht 669.2 million and Baht 1,683.3 million, respectively for the company interim financial statements. These gains/losses were presented separately in the Statements of Income for the three-month and nine-month periods ended September 30, 1999 and 1998. 12. AGREEMENTS As at September 30, 1999 and 1998: a) A subsidiary has the joint venture agreement with a party comprising IBM Thailand Corporation Co., Ltd., Loxley International Co., Ltd. and IBM Worldtrade Corporation Co., Ltd., to supply the turnkey system for the "Taxation Computerized Project" to the Revenue Department. The total contract price is Baht 1,814 million in which the subsidiary is liable in respect of a 44.738% share of the prospective profit/loss incurred. As at August 27, 1998, the said joint venture agreement had been cancelled. The net loss which belongs to the subsidiary of approximately Baht 37 million was recorded as expense in that period. - 20 - b) A subsidiary has an agreement with the Telephone Organization of Thailand (TOT) for the latter to allow the subsidiary to provide paging services within an agreed period. By virtue of this agreement, the subsidiary is committed to transfer the ownership of communication network to TOT which subsequently grant right to use the network over the term of the license to the subsidiary. In this connection, the subsidiary has to pay compensations to TOT amounted to Baht 1 million per annum. Additionally, the subsidiary was required to provide a bank guarantee of Baht 141.7 million to TOT to guarantee its performance. A portion of banks guarantees was collateralized by the pledge of fixed deposit account approximately Baht 18.7 million. c) Two subsidiaries together with the Communication Authority of Thailand (CAT) have entered into an agreement to invest in the computer database services project. By virtue of this agreement, the subsidiaries are committed to supply, install, control and maintenance all tools and equipment as agreed in the agreement. In addition, the subsidiaries must transfer the ownership of such tools and equipment to CAT at the first day on which service be rendered. This agreement shall be in effect for a period of ten (10) years commencing from the first day on which service be rendered, without cancellation right except for those specified in the agreement. During the period of agreement, the subsidiaries have the right to charge service fee and other fees from the users as stipulated in the agreement. d) A subsidiary with the Communication Authority of Thailand (CAT) have entered into an agreement to invest in the satellite transmission services project. By virtue of this agreement, the subsidiary is committed to supply, install, control and maintenance all tools and equipment as agreed in the agreement. In addition, the subsidiary must transfer the ownership of such tools and equipment to CAT at the first day on which service be rendered. The agreement shall be in effect for a period at twenty-two (22) years commencing from the first day on which service be rendered or twelve (12) months subsequently date of an agreement, which ever is occurrence, without cancellation right except for those specified in the agreement. During the period of agreement, the subsidiary has the right to charge service fee and other fees from the users as stipulated in the agreement. e) A subsidiary had entered into a joint venture agreement with a foreign government to set up a telecommunication system and provide related services in agreed area. Under the terms of the agreement, the subsidiary is committed to supply, install, control and maintenance all communication network. In addition, the subsidiary must transfer the ownership of such communication network to that foreign government at the expiry date of the agreement. - 21 - f) A subsidiary entered into a call service center agreement with certain local companies. The term of this agreement is for a period of five (5) years commencing from August 19, 1997, without cancellation right except for those specified in the agreement, the subsidiary has the right to charge service fee as stipulated in the agreement. g) A subsidiary entered into a distribute on-line charitable lotteries and award prizes agreement with the Thai Government Lottery Office (GLO). Under the terms of the agreement, the subsidiary is committed to supply and install distribute on- line lottery equipment and shall have to comply with certain conditions and restrictions as specified in the agreement. The subsidiary, however, has not yet started the commercial operations due to certain legal issues. Currently, the subsidiary is in the process of consulting this issue with its legal advisor. The outcome of this matter cannot be presently determined. Therefore, the ability to commence its commercial operations and also the realization of carrying amount of the investment in this subsidiary are uncertain. 13. COMMITMENTS AND CONTINGENT LIABILITIES As at September 30 : a) The Company and subsidiaries had unused letters of credit of approximately Baht 466 million (Baht 428 million for the Company) in 1999 and Baht 406 million (Baht 192 million for the Company) in 1998. b) The Company and subsidiaries were contingently liable to their customers for the tender guarantees. These tender guarantees were covered by the banks' letters of guarantee totalling approximately Baht 562 million (Baht 305 million for the Company) in 1999 and Baht 699 million (Baht 318 million for the Company) in 1998. c) The Company had commitments under the contracts with certain banks whereby the Company and subsidiaries committed to buy certain foreign currencies at the forward rates at the amount equivalent to approximately Baht 166 million in 1999 and Baht 335 million in 1998. 14. RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1998 interim financial statements have been reclassified to conform with the 1999 interim financial statement presentation. - 22 - 15. THE COMPUTER REMEDIATION PLAN FOR THE YEAR 2000 (UNAUDITED/UNREVIEWED) In the processing of the Company's data for management and commercial operations, the Company had already completed the remediation project to solve the year 2000 problems in 1998. The Company, however, still faces risks that other companies with whom the Company does business may be unsuccessful in their computer remediation projects to solve the year 2000 problems within the time limit. The Company, however, expects that the impact, if any, will not be significant to the Company's operations.