2005 for the analogue NMT. This accounting policy was adopted in the three-month period ended 30 September 1999 (refer to note 2). Previously, the costs of mobile phone networks under concession agreements were amortised over the remaining concession agreement period. Deferred charges: Deferred charges represent commitment fees of long-term loans, costs of long-term leases of spaces for stations, expenditures relating to the increase of power of electricity at base stations, costs of additional supplementary equipment for the operation of pager networks other than those specified in the concession agreement and which have been transferred to the Telephone Organisation of Thailand, cost of computer software, and expenditures relating to the improvement project of mobile phone service network. The following amortisation methods are used: - Commitment fees of long-term loans are amortised over the period of each loan agreement. - Costs of long-term leases for base stations are amortised over the period of each lease agreement. - Expenditures relating to the increase of power of electricity at base stations are amortised over the remaining period of the concession agreement. - Costs of additional supplementary equipment for the pager network, other than those specified in the concession agreement and that have not been transferred to the Telephone Organistion of Thailand, are amortised over a period of five years. - Cost of computer software is amortised over a period of ten years. - Expenditures relating to the improvement project of mobile phone service network are amortised over a period of five years. 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) m) Foreign currencies Transactions denominated in foreign currencies are translated into Baht at the rates of exchange ruling on the transaction dates. Realised gains and losses on exchange are recognised as income or expense as incurred. Monetary assets and liabilities at the balance sheet date denominated in foreign currencies are translated into Baht at the rates of exchange ruling at that date. Unrealised gains and losses on exchange are recognised in the statements of income as incurred. n) Financial instruments Financial instruments carried on the balance sheet include cash and bank balances, investments, trade receivables, trade creditors, leases and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The Group trades financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which mainly comprise forward foreign currency contracts and interest rate swaps, are recorded in the financial statements on the contract date. The purpose of these instruments is to reduce risk. Forward foreign exchange contracts protect the Group from movements in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Forward contract transactions are recorded as forward contracts receivable and forward contracts payable. Premiums or discounts are amortised in the statements of income on the straight-line basis over the contracts period. o) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of net assets of the acquired subsidiary/associate's net assets at the date of acquisition. Goodwill on acquisitions is reported in the balance sheet as an intangible asset and is amortised on a straight line basis over a period of 15 years. The gain or loss on disposal of an entity includes the unamortised balance of goodwill relating to the disposed entity. p) Segment reporting The segmental reporting has been prepared based on the Group's method of internal reporting, which desegregates business by service or product. q) Earnings per share Basic consolidated earnings per share is calculated by dividing the consolidated net earnings after considering minority interests in subsidiaries, attributable to shareholders by the weighted average number of ordinary shares in issue during the period. Basic company earnings per share is calculated by dividing the company's earnings by the weighted average number of ordinary shares in issue during the period. Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 2. Prior period adjustment Accounting for cost of mobile telephone networks under concession agreements The principal operation of the Group and the company is the operation of mobile telephone services, including the provision of airtime services and trading and support functions for the distribution, maintenance and repair of mobile telephones. This business is operated under concession from the Telephone Organisation of Thailand for a concession period, as amended, of 25 years commencing from March 1990. The concession agreement with the Telephone Organisation of Thailand is a Build Transfer Operate ("BTO") concession. Under the terms of the concession agreement ownership of the system equipment, including tools, equipment and other assets acquired by the company for the operation of the Cellular 900 MHz system, vests with the Telephone Organisation of Thailand on completion of equipment installation. The company is entitled to use the system equipment in its operations over the concession period. The company is required to pay the Telephone Organisation of Thailand an annual fee determined as the greater of a specified percentage of mobile telephone service charges or a minimum fee. The company uses 2 systems to provide mobile telephone services: a Nordic Mobile Telephone ("NMT") analogue system and a Global System for Mobile ("GSM") digital system. The cost of this system equipment is presented as cost of mobile phone networks under concession agreements under other assets in the balance sheet. Previously the company has amortised the cost of such equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2015. In the three-month period ended 30 September 1999, the company's management has reviewed its accounting for the cost of such mobile telephone networks and now amortises such cost over the period the underlying systems equipment assets are expected to contribute revenue and cash to the business. The company's management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement. Therefore, the cost of mobile telephone network equipment for the NMT analogue system is amortised on a straight line basis over a period of 10 years not exceeding year 2005, and for the GSM digital system is amortised on a straight line basis over a period of 10 years not exceeding the concession period. Regular reviews are conducted on network carrying values in consideration of global developments in the wireless telecommunications industry. This basis of amortisation has been applied with effect from the commencement of use of the NMT analogue and GSM digital networks. The effects on the consolidated and company balance sheets at 30 September 1999 have been to reduce the net book value of mobile telephone networks by Baht 5,331.33 million (1998 : Baht 3,620.14 million) and to reduce consolidated and company retained earnings brought forward at 1 January 1999 by Baht 4,035.40 million (1998 : Baht 2,519.90 million). The effects on the consolidated and company results for the three-month and nine-month periods ended 30 September 1999 are to increase amortisation expense in the same amounts by Baht 431.08 million and Baht 1,295.93 million respectively (1998 : for three-month period ended 30 September Baht 399.71 million; nine-month period ended 30 September Baht 1,100.24 million). Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 3. Financial information by segment The business operations of the Group, as reflected in the interim consolidated financial statements, are classified into three major segments as follows: 1) the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM network 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading pagers, and providing pagers for rent 3) trading mobile phones, rendering repair services for mobile phones and providing mobile phones for rent. Financial information by business segment for the periods ended 30 September are shown as follows: Consolidated For the three-month period ended 30 September 1999 Mobile phone Pager service Distribution service and sales cellular phones Total Million Baht Million Baht Million Baht Million Baht Revenue-services 4,225.62 319.40 14.54 4,559.56 Revenue-sales - 53.66 1,616.98 1,670.64 Total revenues 4,225.62 373.06 1,631.52 6,230.20 Segment result 1,576.14 225.25 554.44 2,355.83 Selling and administrative expenses (1,087.77) Operating income 1,268.06 Other income 265.23 Finance cost Interest income 40.71 Interest expenses (143.04) Net result of investment in associate 2.82 Income before tax 1,433.78 Tax (549.39) Group income 884.39 Minority interest - Net income 884.39 Total assets, excluding investment in associate 36,436.09 1,492.55 1,847.30 39,775.94 Investment in associate 130.98 - - 130.98 Consolidated total assets 36,567.07 1,492.55 1,847.30 39,906.92 Consolidated total liabilities 17,832.30 338.42 1,003.81 19,174.53 Depreciation charge 133.84 12.74 8.15 154.73 Amortisation charge 916.78 36.06 1.64 954.48 Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 3. Financial information by segment (continued) Consolidated For the nine-month period ended 30 September 1999 Mobile phone Pager service Distribution service and sales cellular phones Total Million Baht Million Baht Million Baht Million Baht Revenue-services 11,984.56 998.31 72.36 13,055.23 Revenue-sales - 188.25 4,880.40 5,068.65 Total revenues 11,984.56 1,186.56 4,952.76 18,123.88 Segment result 4,392.61 745.02 1,642.90 6,780.53 Selling and administrative expenses (3,069.78) Operating income 3,710.75 Other income 311.72 Finance cost Interest income 185.30 Interest expenses (608.53) Net result of investment in associate 8.87 Income before tax 3,608.11 Tax (1,477.29) Group income 2,130.82 Minority interests (19.81) Net income 2,111.01 Total assets, excluding investment in associate 36,436.09 1,492.55 1,847.30 39,775.94 Investment in associate 130.98 - - 130.98 Consolidated total assets 36,567.07 1,492.55 1,847.30 39,906.92 Consolidated total liabilities 17,832.30 338.42 1,003.81 19,174.53 Depreciation charge 374.86 38.01 23.86 436.73 Amortisation charge 2,751.09 106.94 4.87 2,862.90 Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 3. Financial information by segment (continued) Consolidated For the three-month period ended 30 September 1998 Mobile phone Pager service service and sales Total Million Baht Million Baht Million Baht Revenue-services 3,248.23 342.43 3,590.66 Revenue-sales - 48.90 48.90 Total revenues 3,248.23 391.33 3,639.56 Segment result 806.19 263.09 1,069.28 Selling and administrative expenses (925.46) Operating income 143.82 Other income 602.17 Finance cost Interest income 107.35 Interest expenses (311.60) Net result of investment in associate 1.68 Income before tax 543.42 Tax (367.26) Group income 176.16 Minority interests (32.76) Net income 143.40 Total assets, excluding investment in associate 35,856.61 1,296.93 37,153.54 Investment in associate 69.67 - 69.67 Consolidated total assets 35,926.28 1,296.93 37,223.21 Consolidated total liabilities 26,409.82 373.00 26,782.82 Depreciation charge 106.88 15.98 122.86 Amortisation charge 815.36 30.08 845.44 Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 3. Financial information by segment (continued) Consolidated For the nine-month period ended 30 September 1998 Mobile phone Pager service service and sales Total Million Baht Million Baht Million Baht Revenue-services 10,457.06 1,056.27 11,513.33 Revenue-sales - 165.06 165.06 Total revenues 10,457.06 1,221.33 11,678.39 Segment result 3,572.45 826.57 4,399.02 Selling and administrative expenses (2,708.45) Operating income 1,690.57 Other income 1,388.93 Finance cost Interest income 351.18 Interest expenses (911.42) Net result of investment in associate 5.27 Income before tax 2,524.53 Tax (1,264.59) Group income 1,259.94 Minority interests (80.27) Net income 1,179.67 Total assets, excluding investment in associate 35,856.61 1,296.93 37,153.54 Investment in associate 69.67 - 69.67 Consolidated total assets 35,926.28 1,296.93 37,223.21 Consolidated total liabilities 26,409.82 373.00 26,782.82 Depreciation charge 304.10 48.14 352.24 Amortisation charge 2,248.82 88.00 2,336.82 The company operates exclusively in Thailand. Thus, no geographic segment information is provided. Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 4. Trade accounts receivable Trade accounts receivable as at 30 September comprise: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Trade accounts receivable - Third parties 3,906.47 3,651.79 3,382.35 3,471.95 - Related companies 62.08 40.54 63.13 39.32 Total trade accounts receivable 3,968.55 3,692.33 3,445.48 3,511.27 Less: Allowance for doubtful accounts (248.57) (487.32) (209.10) (406.50) Trade accounts receivable, net 3,719.98 3,205.01 3,236.38 3,104.77 Trade accounts receivable - related companies as at 30 September comprise: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Parent company - 0.15 - 0.06 Subsidiaries - - 4.52 0.02 Other related companies 62.08 40.39 58.61 39.24 Total trade accounts receivable - related companies 62.08 40.54 63.13 39.32 Certain debtors with settlement problems are included in the above trade accounts receivable. The Group has set up provisions to account for these debtors. The outstanding balances can be aged as follows: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Overdue 3-6 months 270.79 423.39 223.04 395.41 Overdue 6-9 months 169.41 494.99 162.96 492.67 Overdue 9-12 months 52.14 118.56 52.13 115.93 Overdue 12 months 44.93 25.68 36.61 5.68 537.27 1,062.62 474.74 1,009.69 Allowance for doubtful accounts 248.57 487.32 209.10 406.50 The directors are of the opinion that allowance for doubtful debts overdue more than 3 months of the Group in conjunction with deposits received from these customers (presented in balance sheet as deposits from customers) and bank guarantees received from dealers is sufficient to cover the bad debt risk. Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 5. Amounts due from related companies Amounts due from related companies as at 30 September comprise: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Parent company - 8.62 - 8.62 Subsidiaries - - 19.84 0.11 Related companies 5.84 114.06 0.07 95.60 5.84 122.68 19.91 104.33 Less: Allowance for doubtful accounts (0.37) (0.37) (0.37) (0.37) Total amounts due from related companies, net 5.47 122.31 19.54 103.96 6. Other current assets Other current assets as at 30 September comprise: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Other receivables 407.64 330.84 391.46 325.26 Prepaid expenses 87.88 185.53 85.81 181.49 Others 177.35 83.54 144.66 80.76 Total other current assets 672.87 599.91 621.93 587.51 7. Forward and swap contracts receivable As at 30 September, the Group has the following financial instruments: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Contracts receivable 7,121.19 4,952.82 7,034.54 4,952.82 Contracts payable (6,631.12) (4,317.88) (6,544.53) (4,317.88) 490.07 634.94 490.01 634.94 Less: Current portion (371.36) (114.24) (371.30) (114.24) Total forward and swap contracts receivable, net 118.71 520.70 118.71 520.70 Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 8. Long-term investments Long-term investments as at 30 September comprise: Consolidated The Company 1999 1998 1999 1998 Million Baht Million Baht Million Baht Million Baht Subsidiaries - - 3,156.37 856.38 Associate 130.98 69.67 130.98 69.67 Other company - - - - Total long-term investments 130.98 69.67 3,287.35 926.05 Notes to the interim Consolidated and Company financial statements for the three-month and the nine-month periods ended 30 September 1999 and 1998 8. Long-term investments (continued) The Company - 30 September 1999 (Million Baht) Accumulated share of net result of Nature of Investment investments Nature of business relationship Paid-up capital portion (%) Cost in subsidiaries Equity Dividend Subsidiaries (more)