Beginning balance 500,000 500,000 500,000 500,000 Add: Addition during period - - - - Appropriated retained earnings at end of period 500,000 500,000 500,000 500,000 Total retained earnings 7,817,388 5,435,773 7,817,388 5,435,773 The notes to the interim financial statements on pages 15 to 48 form an integral part of the financial statements Auditor's report page 1 Consolidated statements of cash flows and Company statements of cash flows for the three-month periods ended 30 September 1999 and 1998 Consolidated The Company 1999 1998 1999 1998 Restated Restated Notes Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from operating activities: Net income for the period 884,386 143,402 884,386 143,402 Adjusted by: Depreciation charge 154,725 122,863 133,837 106,880 Increase in provision for obsolete fixed assets 328 - - - Amortisation of costs of mobile phone and pager service networks under concession agreements 10 910,017 822,866 878,047 792,786 Amortisation of deferred charges 11 18,345 13,421 12,617 13,421 Increase in allowance for doubtful accounts 88,525 251,698 70,796 293,129 Amortisation of forward and swap premiums/(discounts) (3,377) 7,458 (3,377) 7,458 (Gain) on disposals of fixed assets (1,898) (194) (41) (4) Unrealised loss (gain) on foreign exchange rate 65,591 (655,348) 65,591 (655,348) Amortisation of goodwill 11 26,109 9,150 - - Amortisation of negative goodwill (1,099) - - - Net result of investments in subsidiaries - - (229,049) (39,985) Net result of investment in associate (2,822) (1,678) (2,822) (1,678) Minority interests in subsidiaries - 32,756 - - Changes in current assets and liabilities Decrease (increase)in accounts receivable (291,797) 207,689 (264,271) 148,741 Decrease (increase) in amounts due from related companies 4,579 (31,313) (16,187) (31,536) Decrease (increase) in forward contracts receivable (342,118) 487,956 (342,061) 487,956 Decrease in inventories 86,422 12,670 - - (Increase) in other current assets (140,848) (7,947) (124,986) (20,160) Increase (decrease) in trade accounts and notes payable (842,207) 935,509 (556,315) 952,718 Increase (decrease) in amounts due to related companies 100,048 (7,542) 6,196 (2,171) (Decrease) in forward contracts payable (78,643) - (78,643) - Increase in accrued concession fee 753,179 572,265 753,179 572,265 Increase in other current liabilities 1,046,990 504,655 741,118 460,382 (Increase) in other assets (31,145) (17,075) (24,974) (17,192) Increase in deposits from customers 97,183 60,263 163,055 78,480 Net cash receipts from operating activities 2,500,473 3,463,524 2,066,096 3,289,544 The notes to the interim financial statements on pages 15 to 48 form an integral part of the financial statements Auditor's report page 1 Consolidated statements of cash flows and Company statements of cash flows for the three-month periods ended 30 September 1999 and 1998 (continued) Consolidated The Company 1999 1998 1999 1998 Restated Restated Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from investing activities: Proceeds from disposales of fixed assets 5,728 918 - 201 Purchases of property and equipment (150,495) (234,987) (131,060) (228,987) Cash invested in cost of mobile phone and pager service networks under concession agreements (1,369,457) (2,153,021) (1,325,310) (2,136,005) Net cash (payments in) investing activities (1,514,224) (2,387,090) (1,456,370) (2,364,791) Cash flow from financing activities: Increase in short-term loans from financial institutions - 471,937 - 471,937 Repayments of short-term bonds (634,200) - (634,200) - Repayments of long-term loans - (1,000,000) - (1,000,000) Increase (decrease) in long-term liabilities 224,354 (924,366) 224,354 (261,367) Net cash (payments in) financing activities (409,846) (1,452,429) (409,846) (789,430) Increase (decrease) in cash and cash equivalents 576,403 (375,995) 199,880 135,323 Cash and cash equivalents, beginning balance 4,885,543 4,479,466 4,401,396 3,778,791 Cash and cash equivalents, ending balance 5,461,946 4,103,471 4,601,276 3,914,114 The notes to the interim financial statements on pages 15 to 48 form an integral part of the financial statements Auditor's report page 1 Consolidated statements of cash flows and Company statements of cash flows for the nine-month periods ended 30 September 1999 and 1998 Consolidated The Company 1999 1998 1999 1998 Restated Restated Notes Baht'000 Baht'000 Baht'000 Baht'000 Cash flow from operating activities: Net income for the period 2,111,013 1,179,667 2,111,013 1,179,667 Adjusted by: Depreciation charge 436,731 352,235 374,864 304,095 Increase in provision for obsolete fixed assets 2,128 - - - Amortisation of costs of mobile phone and pager service networks under concession agreements 10 2,702,430 2,260,285 2,607,120 2,172,315 Amortisation of deferred charges 11 93,445 49,084 76,950 49,050 Increase in allowance for doubtful accounts 412,701 626,544 339,369 625,598 Increase (decrease) in provision for obsolete inventories 20,302 (63) - - Amortisation of forward and swap premiums 74,536 16,635 74,536 16,635 Prepaid income tax written-off - 1,964 - 1,964 Loss (gain) on disposals of fixed assets 5,187 (1,144) 3,405 (396) Fixed assets for donation - 228 - 228 Unrealised loss (gain) on foreign exchange rate 56,664 (1,588,282) 56,664 (1,588,282) Amortised of goodwill 11 67,022 27,449 - - Amortised of negative goodwill (3,298) - - - Net result of investments in subsidiaries - - (716,425) (92,951) Net result of investment in of associate (8,865) (5,269) (8,865) (5,269) Minority interests in subsidiaries 19,805 80,266 - - Changes in current assets and liabilities (Increase) in accounts receivable (1,051,861) (427,981) (791,877) (467,903) Decrease in amounts due from related companies 12,183 133,992 194,742 96,881 Decrease (increase) in forward contracts receivable (385,453) 1,155,886 (385,395) 1,155,886 Decrease (increase) in inventories (231,543) 23,406 - - Decrease (increase) in other current assets (238,144) 50,179 (297,507) 42,434 Increase (decrease) in trade accounts and notes payable (4,629,710) 1,368,020 (4,380,437) 1,359,936 Increase (decrease) in amounts due to related companies 100,509 (71,757) 28,475 (8,535) (Decrease) in forward contracts payable (20,778) - (20,778) - Increase in accrued concession fee 2,114,952 1,725,323 2,114,952 1,725,323 Increase in other current liabilities 962,637 339,470 546,541 285,399 (Increase) in other assets (104,549) (223,208) (77,151) (224,095) Increase in deposits from customers 238,280 141,502 392,059 167,688 Net cash receipts from operating activities 2,756,324 7,214,431 2,242,255 6,795,668 The notes to the interim financial statements on pages 15 to 48 form an integral part of the financial statements Auditor's report page 1 Consolidated statements of cash flows and Company statements of cash flows for the nine-month periods ended 30 September 1999 and 1998 (continued) Consolidated The Company 1999 1998 1999 1998 Restated Restated Notes Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from investing activities: Cash invested in long-term investments - subsidiary 24 (949,600) - (949,600) - Proceeds from disposals of fixed assets 8,101 3,580 - 1,035 Purchases of property and equipment (381,307) (642,358) (322,421) (626,133) Cash invested in cost of mobile phone and pager service networks under concession agreements (2,283,741) (6,685,995) (2,206,240) (6,661,722) Net cash (payments in) investing activities (3,606,547) (7,324,773) (3,478,261) (7,286,820) Cash flow from financing activities: Increase (decrease) in short-term loans from financial institutions (814,689) 471,937 (627,130) 471,937 Repayments of short-term bonds (744,300) (2,110,000) (744,300) (2,110,000) Receipts from long-term loans 1,500,000 2,000,000 1,500,000 2,000,000 Repayments of long-term loans (2,000,000) (1,000,000) (2,000,000) (1,000,000) Increase (decrease) in long-term liabilities (4,428,211) 332,242 (4,428,211) 995,241 Dividend paid 21 - (257,400) - (257,400) Proceeds from share capital 18 360,000 - 360,000 - Proceeds from share premium 18 7,920,000 - 7,920,000 - Net cash receipts from (payments in) financing activities 1,792,800 (563,221) 1,980,359 99,778 Increase (decrease) in cash and cash equivalents 942,577 (673,563) 744,353 (391,374) Cash and cash equivalents, beginning balance 4,519,369 4,777,034 3,856,923 4,305,488 Cash and cash equivalents, ending balance 5,461,946 4,103,471 4,601,276 3,914,114 The notes to the interim financial statements on pages 15 to 48 form an integral part of the financial statements Auditor's report page 1 Consolidated statements of cash flows and Company statements of cash flows for the three-month and nine-month periods ended 30 September 1999 and 1998 (continued) Supplemental disclosures of cash flow information Cash and cash equivalents Cash and cash equivalents included in cash flow statements for the three-month and nine-month periods ended 30 September comprise: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Cash on hand and balance with banks 1,496.87 208.16 1,330.93 173.80 Short-term investments 3,965.07 3,895.31 3,270.34 3,740.31 Total cash and cash equivalents 5,461.94 4,103.47 4,601.27 3,914.11 Interest expenses and income tax paid during the periods For the three-month periods ended 30 September Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Interest expenses 142.91 272.02 142.91 272.02 Income tax 9.58 327.56 9.58 315.32 For the nine-month periods ended 30 September Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Interest expenses 825.14 937.89 694.18 878.09 Income tax 1,537.96 58.23 1,441.45 8.71 The notes to the interim financial statements on pages 15 to 48 form an integral part of the financial statements Auditor's report page 1 Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 1. Summary of significant accounting policies The principle accounting policies adopted in the preparation of the interim consolidated and company financial statements are as follows: a) Basis for preparation of the interim consolidated and company financial statements The interim consolidated and company financial statements are prepared in accordance with generally accepted accounting principles in Thailand and the regulations of the Stock Exchange of Thailand. The interim consolidated and company financial statements for the three-month and nine-month periods on pages 2 to 48 are unaudited and have been prepared from the accounting records of the company. In the opinion of management, these interim financial statements present fairly the financial positions and the results of its operations in conformity with generally accepted accounting principles. These interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 1998. The interim consolidated accounts incorporate the accounts of Advanced Info Service Public Company Limited and its subsidiaries ("the Group") by eliminating intercompany balances, related transactions, investments in subsidiaries, and share capital of the subsidiaries. Interim consolidated financial statements The interim consolidated financial statements include the interim financial statements for the three-month and nine-month periods ended 30 September 1999 and 1998 of the Group and the equity in its associate. The results of the subsidiaries and associate are accounted from their effective date of acquisition. Consolidated statements of cash flows include statements of cash flows of subsidiaries from their effective date of acquisition. The cash flow effects of acquisition and disposal of subsidiaries during the period are presented as changes of assets and liabilities of the acquired or disposed subsidiaries, together with the separate disclosure of the amounts of related assets or liabilities. Investments in subsidiaries Subsidiaries are companies in which Advanced Info Service Public Company Limited (directly or indirectly) holds more than 50% of the issued share capital, or companies whose financial and operating policies are controlled by Advanced Info Service Public Company Limited. Investments in associates Investments in associate undertakings are accounted for by the equity method of accounting. An associated undertaking is an undertaking in which the Group holds between 20% and 50% of the voting rights and exercises significant influence, but does not control the undertaking. Provision is recorded for long-term impairment in value. Equity accounting involves recognising the Group's share of the associate's profit or loss for the period in the statement of income. The Group's interest in the associate is carried in the balance sheet at an amount that reflects its share of the net assets of the associate and includes goodwill on the acquisition. Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 1. Summary of significant accounting policies (continued) b) Revenue recognition Revenue from equipment sales is recognised when goods are delivered to customers. Revenue from equipment rentals is recognised over the period and at the rate prescribed by each agreement. Revenue from the provision of mobile phone and pager services is recognised when services are rendered to customers. c) Cash and cash equivalents For the purposes of the cash flow statements, cash and cash equivalents comprise cash in hand and deposits held at banks, as defined in the Thai Accounting Standard with respect to the preparation of the statement of cash flows, which is in line with the definition prescribed in the regulation relating to the financial statements issued under the Ministerial Regulation No. 7 (B.E. 2539) under the Public Company Limited Act B.E. 2535. Cash and cash equivalents, therefore, represents cash at banks and short-term investments with original maturities of three months or less. d) Pension obligations and employee benefits The Group operates a provident fund under a defined contribution plan, where the assets are held in a separate trustee-administered fund. The provident fund is funded by payments from employees and by the relevant Group companies. The Group's contributions to the provident fund are charged to the statement of income in the related period. e) Allowance for doubtful accounts The Group's management estimates the allowance for doubtful accounts based on the ending balance of accounts receivable. The estimate encompasses the consideration of past collection experience and other factors, such as changes in the composition and volume of the receivable, the relationship of the allowance to the receivable, and the local economic conditions. f) Inventories Inventories comprise pager and mobile phone stocks and spares used for repairs and servicing. Inventories are stated at the lower of cost and net realisable value. Cost is determined as follows: Pagers - Moving average method Mobile phones - First-in, first-out (FIFO) method Spare parts (pagers, phones) - Moving average method Net realisable value is the estimated selling price in the ordinary course of business less costs of completion and selling expenses. A provision is made for obsolete, slow-moving or defective inventories when necessary. g) Related companies Companies are considered to be related if one company has the ability to control or exercise significant influence over the other company in making financial and operating decisions, or most of the shareholders or executive management of both companies are the same people or relatives. Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 1. Summary of significant accounting policies (continued) h) Property and equipment Property and equipment are recorded at cost. The property and equipment, except land, are presented in the balance sheet at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line method to write off the cost of each asset to its residual value over its estimated useful life as follows: Acquisition date Years Buildings and improvements - 5, 20 Leasehold rights - lease period Leasehold building improvements - lease period Tools and equipment - 5 Furniture, fixtures and office equipment before 1 January 1999 5, 10 1 January 1999 onward 5 Pagers and mobile phones for rent - 2 - 5 Vehicles (including vehicles under finance leases) - 5 The Group's policy is to review asset values annually and to adjust depreciation schedules to match estimated useful lives. Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and are taken into account in determining operating profit. i) Accounting for leases - where the Group is the lessee Leases of property and equipment, where the Group assumes substantially all the benefits and risks of ownership, are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges in order to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payable. The interest element of the finance charge is charged to the income statement over the lease period. The property and equipment acquired under finance leasing contracts are depreciated over the useful life of the asset. Leases of assets, under which all the risks and benefits of ownership are effectively retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any penalty payment required of the lessor is recognised as an expense in the period in which the termination takes place. j) Long-lived assets The Group annually evaluates the carrying value of long-lived assets to be held and used, including goodwill and other intangible assets, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated recoverable value of such assets is separately identifiable and is less than its carrying value. In that event, a loss is recognised based on the amount by which the carrying value exceeds the higher of the net selling price of the long-lived assets or the recoverable value derived from the value of the asset in use. Value in use is determined primarily using anticipated cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of are recorded at net selling price, which is reduced by the estimated costs of disposal. Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 1. Summary of significant accounting policies (continued) k) Computer software development costs Generally, costs associated with developing computer software programmes are recognised as an expense as incurred. However, costs that are clearly associated with an identifiable and unique product which will be controlled by the Group and has a probable benefit exceeding the cost beyond one year, are recongised as an intangible asset. Expenditure which enhances and extends the benefits of computer software programmes beyond their original specifications and lives is recognised as a capital improvement and added to the original cost of the software. Computer software development costs recognised as assets are amortised using the straight-line method over their useful lives, not exceeding 10 years. Costs associated with the maintenance of existing computer software programmes and for modifications for the Year 2000 are expensed as incurred. l) Intangible assets Cost of mobile phone and pager networks under concession agreements: The costs of mobile phone and pager networks under concession agreements represent costs of certain equipment and other assets which have been or have to be transferred to the Telephone Organisation of Thailand. The costs of networks under concession agreements are amortised as expense on a straight-line method over a period of 10 years for the digital system and the straight-line method not exceeding year (more)