SET Announcements

Tor.7/2547 June 17, 2004 Re : Clarification on non-compliance with the Accounting Standards To : President The Stock Exchange of Thailand Reference : Letter of the Securities and Exchange Commissions No. Chor. 821/2547 dated 16 June 2004 According to the referred letter, the Securities and Exchange Commission (SEC) requested that the Company amend its financial statements ending as of 31 December 2003 and 1st Quarter financial statements ending as of 31 March 2004 regarding accounting recording's non-compliance with accounting standards, the details of which were duly aware of, Loxbit Plc, Loxley's subsidiary, provided the following clarification: 1. On the issue of investment recording of 10,000 shares in LoxServe Co., Ltd. valued at Baht 255 million, which the SEC deemed a problem debt restructuring transaction and which requires to comply with the Accounting Standards No. 34, - the Company would like to clarify in details that such transaction was not a problem debt restructuring, but one of the transactions in merging LoxServe Co., Ltd. and CS Plc. - first, the Company would like to provide detailed steps for such merger, as follows: Pre-Merger Chart PA's Shareholding Structure LOXBIT = 41% SINGTEL, ZESIGER, CITICAP, AND OTHER = 59% LOXSERV's Shareholding Structure PA = 65% CAT = 35% Post-Merger Chart PA's Shareholding Structure LOXBIT = 100% LOXSERV's Shareholding Structure PA = 3% CAT AND OTHERS = 3% CS Loxinfo = 94% CS Loxinfo's ShareholdING Structure SINGTEL, ZESIGER, CITICAP, AND OTHERS = 100% - From the above charts, the steps and main conditions for merger were that the two companies must pay up loan between the companies and their shareholders and must issue capital increased shares at the par value of Baht 10. LoxServe Co., Ltd. issued 24.5 million shares at the value of Baht 245 million to CS Plc. (Currently its number of shares are 245 million shares at the par value of Baht 1) and CS Plc. issued same number of shares with the same value to Point Asia Dot Com (Thailand) Ltd. This proved that LoxServe is not a company with financial problem, as such, this was not a case of problem debt restructuring transaction. - However, on the date of merger, PA had an outstanding loan extended to LoxServe Co., Ltd. in the sum of Baht 500 million. Therefore, LoxServe Co., Ltd. applied Baht 245 million to pay such loan and the outstandin g loan was reduced to Baht 255 million. PA's Board of Directors at that time, comprising Singtel, Zesiger, Citicap and Loxbit Plc., resolved that PA subscribed for 10,000 shares issued from capital increase at the total price including premium being Baht 255 million. This was to be in compliance with the merger conditions. The Board of Directors were of the opinion that the value of CS Plc.'s shares is higher than premium which PA spent for subscribing shares in LoxServe Co., Ltd. (CS Plc.'s IPO price was Baht 9 while its par value was Baht 1. The IPO price increased by approximately 200% of the investment value in LoxServe Co., Ltd.) 2. As regards the issue which the SEC advised that Loxbit Plc. prepared consolidated financial statements by recording the reversal of capital deficiency loss from investment of Baht 320 million investment proceeds in LoxServe Co., Ltd. in such a way that the Company has never realized loss incurred from capital deficincy from such investment proceeds, The Company would like to clarify that Loxbit Plc. realized and recorded Baht 320 million resulting from capital deficiency of LoxServe Co., Ltd. in its 2001 and 2002 through PA's consolidated financial statements which are in line with the general accepted accounting principles. Please be informed accordingly. Yours sincerely, Loxley Public Company Limited (Mr. Dhongchai Lamsam) President Copy : Mr. Vichien Thamtrakul, KPMG Phoomchai Audit Limited