SET Announcements

Total 3,168,218,017 326,544,888 ( 230,495,033) 3,264,267,872 Less accumulated depreciation (1,121,439,747) 119,694,229 ( 273,049,279) (1,274,794,797) Property and Equipment - Net 2,046,778,270 446,239,117 ( 503,544,312) 1,989,473,075 - 21 - The Company In Baht Balance as at Balance as at January 1, Movement During the Year December 31, 1999 Addition Deduction 1999 At Appraised Value Land - at cost 48,072,500 - - 48,072,500 Revaluation increment in land 205,481,500 - - 205,481,500 Land - at appraised value 253,554,000 - - 253,554,000 At Cost Land 5,123,993 - - 5,123,993 Buildings and improvements 463,856,641 22,566,612 ( 11,828,785) 474,594,468 Furniture, fixtures and office equipment 382,493,382 31,487,877 ( 28,532,385) 385,448,874 Equipment held for lease 39,996,205 4,057,438 ( 133,853) 43,919,790 Transportation equipment 38,021,977 3,879,721 ( 2,557,763) 39,343,935 Construction in progress 63,000 17,104,900 ( 11,798,849) 5,369,051 Total 1,183,109,198 79,096,548 ( 54,851,635) 1,207,354,111 Less accumulated depreciation ( 514,680,703) 22,726,652 ( 113,254,702) ( 605,208,753) Property and Equipment - Net 668,428,495 101,823,200 ( 168,106,337) 602,145,358 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 an 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' Equity" in the balance sheets. The "Revaluation Increment in Land" is not available for dividend distributions. - 22 - Depreciation charges which were included as part of costs and expenses for the years ended December 31, amounted to approximately Baht 273 million (Baht 113.3 million for the Company) in 1999 and Baht 277.2 million (Baht 116.9 million for the Company) in 1998. 6.9 Other Assets These consist of: In Baht Consolidated The Company 1999 1998 1999 1998 Deferred income tax 1,696,988,141 1,358,845,791 1,696,988,141 1,356,894,545 Excess of investments over net assets of subsidiaries - net (Note 3) 95,597,845 162,322,716 - - Withholding taxes deducted at sources - net 102,267,098 90,427,933 53,524,715 40,000,707 Refundable deposits guarantee and others 91,546,729 380,985,030 28,440,396 22,225,628 Total 1,986,399,813 1,992,581,470 1,778,953,252 1,419,120,880 6.10 Bank Overdrafts and Loans From Financial Institutions These consist of: In Baht Consolidated The Company 1999 1998 1999 1998 Bank overdrafts 312,211,678 293,512,187 3,501,410 10,947,245 Short-term loans from local and foreign banks 923,046,400 842,893,100 535,046,400 384,559,200 Acceptances payable and liabilities under trust receipts 211,056,553 396,357,094 203,720,810 347,155,281 Promissory notes 84,000,000 56,000,000 - - Total 1,530,314,631 1,588,762,381 742,268,620 742,661,726 - 23 - As at December 31, 1999 and 1998, the Company and subsidiaries had overdraft and loan facilities with various financial institutions totalling Baht 2,749 million (Baht 775 million for the Company) and Baht 2,737 million (Baht 717 million for the Company), respectively. In 1999, the local loans bear interest at the rates ranging from 7% - 28% p.a. and the foreign loan bears interest at the rates ranging from 1.5% - 2.9% p.a.. 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.. 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. 6.11 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 15.75% 15.75% - 33,477 C.T.W. Bata Co., Ltd. For operations 12.75% 12.75% 9,000 4,500 Advance Loxley Utilities Services Co., Ltd. and Siripong Construction Partnership Ltd. Joint Venture For operations - - 6,310 10,918 Others 5,358 4,857 Total Short-Term Loans and Advance from Related Companies 20,668 53,752 - 24 - 6.12 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 tranch 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 tranch 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 subsidiary had negotiated with the lender bank for changing the repayment conditions of this loan, and had been approved to extend to twenty - six (26)months commencing from July 31, 1998 for repayment of principal, while interest expense is repayable in monthly installments. 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 October 2000 and September 2000, respectively. These long-term loans are guaranteed by the mortgage of machinery and operating equipment of subsidiary. Up to December 31, 1999, the subsidiary defaulted on repayment of loans already due totalling Baht 58.5 million. The subsidiary recorded these loans totalling Baht 66 million as "current portion of long-term loans" in the consolidated financial statements. 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 from January 1998. These long-term loans are guaranteed by another subsidiary. The subsidiary fully repaid this loan in 1999. - 25 - 6.13 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 the early 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, depending 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. 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. - 26 - Since 1996, the market prices of 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 for the premium to be paid to the bondholders at the time redemption must be made at the rate of 80% of the total premium to be paid in case all bondholders exercise the redemption right at the early maturity date, spread over the period of the right by applying the straight-line method. However, in the fourth quarter of 1999, the Company provided for the premium to be paid on ECD 1 at the rate of 100% because the redemption period will be effect in the near future. As at December 31, 1999, the provision amounted to approximately Baht 1,744.3 million (including a provision for the year ended December 31, 1999 of approximately Baht 582.6 million). Because the redemption period will begin in the near future, the Company had appointed the financial advisors to provide assistance relating to the debt restructuring on these ECD. In order to favor the negotiation of the debt restructuring plan, 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. The Steering Committee of Bondholders had submitted a proposed debt restructuring plan to the Company, and the management of the Company generally agreed with this proposal. However, the Company is still in the process of negotiation of certain conditions in the proposal. The Company expects that the relevant agreements will be finalized and signed in the near future. 6.14 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 6.9 million (Baht 5.5 million for Company) in 1999 and Baht 12.1 million (Baht 7.5 million for the Company) in 1998. - 27 - 6.15 Legal Reserve The legal reserve 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 legal reserve 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. 6.16 Fees and Other Income These consist of: In Baht Consolidated The Company 1999 1998 1999 1998 Gains on disposal of investments 18,533,468 132,775,846 2,118,467 188,399,765 Interest income 169,456,125 273,999,703 148,214,261 247,342,447 Dividend, fees, service income and others 141,614,618 467,765,191 174,849,434 240,380,796 Total 329,604,211 874,540,740 325,182,162 676,123,008 6.17 Other expenses These consist of: In Baht Consolidated The Company 1999 1998 1999 1998 Provision for bonds redemption (Note 6.13) 582,633,445 391,420,126 582,633,445 391,420,126 Penalty fee paid to the government agency - 141,557,947 - 141,557,947 Provision for doubtful accounts 303,449,705 14,192,723 9,018,086 14,192,723 Others 1,612,213 96,230,966 583,417 21,770,472 Total 887,695,363 643,401,762 592,234,948 568,941,268 - 28 - 6.18 Gain (Loss) on Exchange Rates The Company and subsidiaries derived a net gain (loss) on repayment and collection of its foreign currency liabilities and assets during the years ended December 31, 1999 and 1998 and on the translation of the net liabilities outstanding at December 31, 1999 and 1998 (using the exchange rates prevailing on December 31, 1999 and 1998) totalling approximately Baht 286.3 million (loss) and Baht 2,247.3 million (gain), respectively for the consolidated financial statements and Baht 292.6 million (loss) and Baht 2,241.8 million (gain), respectively for the company financial statements. These gain/losses were presented separately in the Statements of income for the years ended December 31, 1999 and 1998. 6.19 Segment Financial Information Details of financial data by segments for 1999 and 1998 were as follows: Consolidated financial statements In Million Baht Information Industrial and Technology Consumer Products Trading Others Total 1999 1998 1999 1998 1999 1998 1999 1998 Net sales 3,773 4,486 3,178 3,445 218 177 7,169 8,108 Cost of sales (2,576) (3,332) (2,678) (2,924) ( 140) ( 124) (5,394) ( 6,380) Gross profit 1,197 1,154 500 521 78 53 1,775 1,728 Operating profit 156 170 171 171 206 312 533 653 Dividend income from investments in other companies 26 16 Central expenses ( 355) ( 201) Interest expense ( 427) ( 565) Directors' remuneration ( 4) ( 4) Other expenses ( 888) ( 643) Equity in results of operations of associated companies - net 309 261 Gain (loss) on exchange rates ( 285) 2,247 Corporate income tax 304 ( 472) Minority interest in net income of subsidiaries ( 29) ( 20) Net income (loss) ( 816) 1,272 Fixed assets- net 1,028 962 26 20 936 1,065 1,989 2,047 Other assets 12,062 10,533 Total assets 14,051 12,580 - 29 - The Company Financial Statements In Million Baht Industrial and Information Consumer Technology Products Trading Others Total 1999 1998 1999 1998 1999 1998 1999 1998 Net sales 1,634 2,246 820 1,151 81 70 2,535 3,467 Cost of sales (1,332) (1,947) ( 636) ( 952) ( 49) ( 43) (2,017) (2,942) Gross profit 302 299 184 199 32 27 518 525 Operating profit 63 ( 14) 98 30 205 346 366 362 Dividend income from investments in other companies 26 16 Central expenses ( 355) ( 201) Interest expense ( 292) ( 342) Directors' remuneration ( 2) ( 2) Other expenses ( 593) ( 569) Equity in results of operations of subsidiaries and associated companies-net 27 239 Gain (loss) on exchange rates ( 293) 2,242 Corporate income tax 340 ( 428) Net income (loss) ( 776) 1,317 Fixed assets - net 70 30 14 11 518 627 602 668 Other assets 10,835 9,274 Total assets 11,437 9,942 The Company and subsidiaries operates in two major businesses, Information Technology and Industrial and Consumer Products Trading. Operating profit of each segment was determined by deducting costs and operating expenses from the total revenues. Central expenses, interest expense, directors' remuneration, other expenses and corporate income tax were exclusive from segment operating profit calculation. Fixed assets of each segment were assets used in those segments' operations. Other assets consisted mainly of cash on hand and at banks, inventories and investment in stocks. - 30 - 6.20 Agreements As at December 31, 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 the consolidated financial statements. 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 communications 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 at the rates as stipulated in the agreement. Additional, 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) A subsidiary and 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 of twenty-two (22) years commencing from the first day on which service be rendered or twelve (12) months subsequently date of an agreement, whichever 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. - 31 - d) 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. 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. f) A subsidiary entered into a call service center agreement with certain local companies. The term of this agreement for a period of five (5) years commencing from August 19, 1998, 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. This agreement shall be in effect for a period of ten (10) years, without cancellation right except for those specified in the agreement. During the period of the agreement, the subsidiary has the right to charge service fee from distribution the said lottery as stipulated in the agreement. However, in November 1999, the subsidiary had submitted the letter to terminate the said agreement because GLO cannot comply with certain conditions in that agreement. The subsidiary is in the process of seeking recovery of compensation for this project through legal action. However, the subsidiary had already wrote - off the losses on that project in full. - 32 - 6.21 Commitments and Contingent Liabilities a) As at December 31, 1999 the Company had terminal station space agreements for a period of three (3) years commencing from December, 1999. Total annual rental is approximately Baht 16.7 million. b) The Company and subsidiaries had unused letters of credit of approximately Baht 415.8 million ( Baht 367.9 million for the Company) as at December 31, 1999 and Baht 161.9 million (Baht 134.9 million for the Company) as at December 31, 1998. c) The Company and subsidiaries were contingently liable to their customers for (more)