SET Announcements

Increase in minority interest in net income of subsidiaries 28,260,665 14,587,349 - - Excess of investments over net assets - ( 2,599,731) - - Increase in fixed assets ( 277,677,821) ( 211,910,253) ( 60,622,769) ( 48,904,540) Cash dividends from associated companies 364,623,281 227,510,166 364,623,281 227,510,166 Proceeds from increase in share capital of subsidiaries 138,442,979 - - - Proceeds from sales of investments 40,175,809 151,796,500 11,320,809 284,596,500 Proceeds from sales of fixed assets 56,238,297 31,558,482 17,840,146 7,864,413 Net Cash Provided by Investing Activities 45,476,089 268,465,068 60,128,107 301,805,732 CASH FLOWS FROM FINANCING ACTIVITIES: (Decrease) increase in loans from financial institutions ( 75,973,042) ( 651,790,122) 8,226,928 ( 230,143,590) Increase in loan from director 2,188,962 11,394,340 - - Decrease in long-term loans ( 16,664,000) ( 44,879,382) - - Decrease in loans from related companies ( 33,084,173) ( 82,707,191) - - Net Cash Provided by (Used in) Financing Activities ( 123,532,253) ( 767,982,355) 8,226,928 ( 230,143,590) NET INCREASE (DECREASE) IN CASH ( 204,993,323) 682,632,444 ( 194,273,142) 511,932,234 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,662,895,584 980,263,140 1,515,167,341 1,003,235,107 CASH AND CASH EQUIVALENTS AT END OF YEAR 1,457,902,261 1,662,895,584 1,320,894,199 1,515,167,341 - 4 - In Baht Consolidated The Company 1999 1998 1999 1998 (Restated) (Restated) Supplemental Disclosures of Cash Flows Information: Cash and cash equivalents consisted of: Cash on hand and at banks (excluded collateralized fixed deposits) 449,750,474 444,101,088 101,442,883 159,227,323 Short-term investments 1,320,363,466 1,512,306,683 1,222,952,726 1,366,887,264 Bank overdrafts ( 312,211,679) ( 293,512,187) ( 3,501,410) ( 10,947,246) 1,457,902,261 1,662,895,584 1,320,894,199 1,515,167,341 Cash paid during the years for: Interest 166,161,695 623,592,909 31,434,444 408,323,847 Corporate income tax and withholding taxes deducted at sources 74,531,452 62,875,614 13,524,079 22,404,030 See accompanying Notes to Financial Statements. (With Mr. Vichien Thamtrakul's report dated February 18, 2000) LOXLEY PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 1. GENERAL Loxley Public Company Limited was incorporated in 1939, and subsequently was listed on the Stock Exchange of Thailand in 1994. The registered office of the Company is located at 102 Na Ranong Road, Klong Toey, Bangkok, Thailand. The Company engages in its core business of trading, including turnkey contract sales of telecommunication equipment and other items. Active subsidiaries mainly engage in their core businesses of computer and internet sales and services. The employees of the Company at the end of the years numbered 1,178 in 1999 and 1,410 in 1998. 2. EFFECT OF ECONOMIC CRISIS The accompanying financial statements for the year ended December 31, 1999 have been prepared in conformity with the accounting assumptions for a going concern and include the effects of the economic crisis to the extent they are known and can be estimated. Starting from the middle of 1997, the operations of the Company and subsidiaries have been affected and continue to be affected by the volatility in Baht currency and adverse economic conditions in Thailand. In addition, a subsidiary had submitted the letter to terminate the commercial operations agreement with a government enterprise because the said government enterprise cannot comply with certain conditions in that agreement. This subsidiary is in the process of seeking the recovery of compensation for this project through legal action. However, the subsidiary had already wrote - off the losses on that project in full. Even though, during the past year up to 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) Negotiating the debt restructuring of Euro Convertible Bonds with the bondholders. c) Reducing the holding of investments in non-core businesses. d) Establishing control procedures with the aim to improve productivity as well as implementing various cost reduction programs. - 2 - 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 change in foreign currency exchange system has greatly increased the burden on foreign liabilities in terms of Baht currency, especially, the liabilities from Euro Convertible Bonds (ECD) (Note 6.13). Because the redemption period will begin in the near future, the Company has appointed financial advisors to provide assistance relating to the debt restructuring of these ECD. The Company is still in the process of negotiating the conditions in the proposal submitted by the Steering Committee of Bondholders. The eventual outcome of such negotiation cannot be presently determined. In order to favor the negotiation of this debt restructuring, the Steering Committee of bondholders extended the repayment of bond interest, totalling approximately of U.S. Dollars 6.8 million (equivalent to Baht 256.8 million), to one hundred and eighty (180) days commencing from October 7, 1999. Moreover, as shown in the accompanying financial statements for the year ended December 31, 1999, certain subsidiaries have negative financial ratios such as current ratio and debt to equity ratio, etc. Therefore, the Company's continued operation as a going concern is dependent upon a) success in the debt restructuring plan b) the ability to operate successfully and to generate sufficient funds to meet the debts as well as being able to generate a sufficient amount of taxable income that will fully utilize the deferred income tax. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of the assets or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 3. PRINCIPLES OF CONSOLIDATION The consolidated financial statements included the accounts of Loxley Public Company Limited and the following subsidiaries owned directly and indirectly by the Loxley Public Company Limited or the companies over which Loxley Public Company Limited has control. - 3 - Percentage of Shareholding As at December 31 1999 1998 Direct Indirect Direct Indirect Subsidiaries 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 - 74 - Loxley Comware Company Limited 70 - 70 - Loxley Newtech Company Limited 67 - 67 - Societed Commercial Lao Company Limited 67 - 67 - Loxley Pacific Company Limited 63 - 63 - 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 - 99 Open Systems Integrator Company Limited - 92 - 83 Loxley Video Post (Bangkok) Company Limited - 74 - 74 Netone Network Solution Company Limited - 67 - 98 Loxley Information Holding Limited - 67 - - - 4 - Percentage of Shareholding As at December 31 1999 1998 Direct Indirect Direct Indirect PointAsia Dot Com Company Limited (not yet started principal commercial operations) - 67 - - Hutchison Telecommunications (Thailand) Company Limited - 55 - 55 Loxley Information Company Limited - - - 65 Loxley Information Services Company Limited - - - 65 Companies Over Which Loxley Public Company Limited Has Control Loxley Trading Company Limited 50 - 50 - Loxley Property Development Company Limited 40 - 40 - North - East Asia Telephone and Telecommunication Company Limited - 49 - 44 Loxley Information Company Limited - 43 - - Loxley Information Services Company Limited - 43 - - Significant intercompany transactions with the above subsidiaries have already been eliminated. In August 1997, a subsidiary purchased all of the common shares of Hutchison Telecommunications (Thailand) Company Limited (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, 1999, the unamortized balance amounted to approximately Baht 62.3 million. - 5 - 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 December 31, 1999, the unamortized balance amounted to approximately Baht 32.6 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. However, in the third quarter of 1999, the Company wrote-off the unamortized balance of approximately Baht 47.6 million as expense in the consolidated financial statements because this excess of investment over net assets had no further benefit. During the third quarter of 1999, Loxley Information Holding Company Limited (LIH), a subsidiary of Loxley Business Information Technology Company Limited (LOXBIT), sold out its additional increase in share capital amounting to Baht 7.3 million to the third parties for Baht 138.4 million. Subsequently, LOXBIT sold a portion of investment in common shares of LIH to the third parties, which effected the percentage of shareholding of LOXBIT in LIH reducing to 66.67%. During the fourth quarter of 1999, LIH additionally increased share capital amounting to Baht 0.8 million, and sold its to LOXBIT Baht 38.0 million. Consequently, the percentage of shareholding of LOXBIT in LIH increased from 66.67% to 67.77%. As a result, the equity in net assets of LOXBIT in LIH was increased by approximately Baht 76.9 million. Since the Company directly holds 99.99% of share in LOXBIT, therefore, the Company recognized this effect and presented as "Premium on capital in equity of subsidiary" as part of "Shareholders' Equity" in the balance sheets. 4. ACCOUNTING CHANGE 4.1 Starting from January 1, 1999, the Company adopted Statement No. 40 issued by the Institute of Certified Accountants and Auditors of Thailand, which prescribes that all available - for - sale securities classified as long-term investment be measured at fair value and the changes in the fair value of those investments will be reported as a separate component of shareholders' equity in the balance sheets. This accounting standard becomes effective for financial statements covering periods beginning on or after January 1, 1999. (Before January 1, 1999, the Company valued said investments at the lower of the aggregate cost or the aggregate market value). - 6 - 4.2 The Company and subsidiaries, in compliance with the Accounting Standard Interpretation No.4 governing the accounting for expenditures, previously recorded as assets, of pre-operating and operating enterprises, issued by the Institute of Certified Accountants and Auditors of Thailand dated January 20, 2000 (effective for financial statements covering periods ended on or after December 31, 1999), wrote-off certain deferred charges which were considered not asset items according to such interpretation, to their previous years' operations. These deferred charges include, among others, pre-operating expenses and deferred financing fees. The effects of the restatement are as follows: In Thousand Per Share Data Baht Baht Ordinary Diluted Decrease net loss for the year ended December 31, 1999 6,748 0.17 0.13 Increase net income for the year ended December 31, 1998 7,727 0.19 0.15 Increase deficit at January 1, 1999 72,877 1.82 1.43 Increase deficit at January 1, 1998 80,604 2.01 1.59 5. SIGNIFICANT ACCOUNTING POLICIES Income and Cost Recognition Sales are recognized when delivery has taken place and transfer of risks and rewards has been completed. Service income is principally recognized based on services rendered. Income on turnkey contract sales that require installation over a period of time is recognized on the percentage of completion method. Related costs on such contract sales are recognized as incurred. 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 average cost or net realizable value, whichever is lower. The Company values material of the projects at the average cost. - 7 - Investments 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 Company's 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 equals to 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 purposes are accounted for by the cost method. Gains or losses on investments will be recognized when the investments are disposed, or when they are considered to be impaired in value. 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 "Shareholders' Equity" in the balance sheets. 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 as follows; No. of Years Buildings and improvements 20 Furniture, fixtures and office equipment 5 Tools and equipment 5 Equipment held for lease 5 Transportation equipment 5 The communication network for providing paging service, which is committed to transfer the ownership to the Telephone Organization of Thailand, is amortized as expense by the straight-line method over the remaining concessionary period, not exceeding fifteen (15) years. The tools and equipment for providing the satellite transmission service, which is committed to transfer the ownership to the Communication Authority of Thailand, is amortized as expense by the straight-line method over the condition period specified in the agreement, not exceeding twenty (20) years. - 8 - The tools and equipment for providing the computer database service, which is committed to transfer the ownership to the Communication Authority of Thailand, is amortized as expense by straight-line methed over the remaining concessionary period, not exceeding ten (10) years. Deferred Income Tax The Company has adopted the practice of recognizing the income tax effects of transactions in the period in which they enter into the determination of net income, regardless of when they are recognized for tax purposes. Accordingly, the income tax applicable to revenues and expenses which are not currently allowable and deductible for income tax purposes is set up as a deferred income tax in the balance sheets. This will be allocated to future periods when such revenues and expenses provided for are actually incurred and considered allowable and deductible for income tax purposes. 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 balance sheet 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 currency 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. 6. OTHER INFORMATION 6.1 Related Party Transactions A portion of sales of products and services, fees and 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 which arose in the ordinary course of business. Account balances with these related companies at December 31, 1999 and 1998 were shown separately in the balance sheets. - 9 - Significant transactions during 1999 and 1998 which included in the accompanying consolidated and the Company's financial statements consist of: In Thousand Baht Consolidated The Company 1999 1998 1999 1998 Sales of products and services 104,921 161,981 284,342 250,694 Fees and other income 65,441 19,271 118,390 36,128 Cost of sales and services 70,425 228,377 184,129 340,993 Selling and Administrative Expenses 12,028 11,188 63,528 5,139 6.2 Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing the net income (loss) by the weighted average number of fully paid-up shares outstanding during the years. The Company presents diluted earnings (loss) per share by dividing the net income (loss), adjusted for interest expense and other related expenses from convertible bonds, by the weighted average number of potential dilutive ordinary shares outstanding during the years. Consolidated For the years ended December 31 Amount No. of Shares Earnings (loss) per Share (In Thousand Baht) (Shares) (In Baht) 1999 1998 1999 1998 1999 1998 Basic earnings (loss) per share Net income (loss) attributable to ordinary shareholders (815,691) 1,271,867 40,000,000 40,000,000 (20.39) 31.80 Effects of potential dilutive ordinary shares - Euro convertible bonds 569,676 (1,214,751) 10,790,000 10,790,000 Diluted earnings (loss) per share Earnings of ordinary share deemed to have been converted into ordinary shares (246,015) 57,116 50,790,000 50,790,000 ( 4.84) 1.12 - 10 - The Company For the years ended December 31 Amount No. of Shares Earnings (loss) per Share (In Thousand Baht) (Shares) (In Baht) 1999 1998 1999 1998 1999 1998 Basic earnings (loss) per share Net income (loss) attributable to ordinary shareholders (775,783) 1,317,527 40,000,000 40,000,000 (19.39) 32.94 Effects of potential dilutive ordinary shares - Euro convertible bonds 569,676 (1,214,751) 10,790,000 10,790,000 Diluted earnings (loss) per share Earnings of ordinary share deemed to have been converted into ordinary shares (206,107) 102,776 50,790,000 50,790,000 ( 4.06) 2.02 6.3 Short-Term Investments This account included the fixed deposit pledge as collateral for the banks guarantees issued by the same banks amounting to approximately Baht 18.7 million. 6.4 Accounts Receivable - Trade and others These consist of : In Baht Consolidated The Company 1999 1998 1999 1998 Receivables from related companies 112,551,751 134,536,007 326,633,369 324,929,552 Less allowance for doubtful accounts ( 30,372,755) - ( 53,815,283) - Receivables from Related Companies - Net 82,178,996 134,536,007 272,818,086 324,929,552 Receivables from other companies 2,449,381,531 2,005,937,673 1,326,159,190 972,176,420 Less allowance for doubtful accounts ( 257,055,366) ( 296,298,474) ( 184,824,466) ( 217,000,000) Receivables from other companies - Net 2,192,326,165 1,709,639,199 1,141,334,724 755,176,420 As at December 31, 1999, the Company and subsidiaries had certain overdue accounts receivable-trade. The aging receivables were as follows: - 11 - In Million Baht Consolidated The Company Over 3 months to 6 months 121 93 Over 6 months to 12 months 169 87 Over 12 months 769 525 Total 1,059 705 (more)