Total cost of mobile phone and pager service networks Cost of Cost of pager Cost of Datanet and Datanet mobile phone service tools and tools and networks networks equipment equipment At 31 December 1999 Cost 37,596 1,275 787 39,658 Less: Accumulated amortisation (11,876) (547) (423) (12,846) Net book amount 25,720 728 364 26,812 For the six-month period ended 30 June 2000 Opening net book amount 25,720 728 364 26,812 Additions 4,742 29 56 4,827 Transfers 43 - - 43 Amortisation charge (1,966) (67) (30) (2,063) Closing net book amount 28,539 690 390 29,619 At 30 June 2000 Cost 42,381 1,304 843 44,528 Less: Accumulated amortisation (13,842) (614) (453) (14,909) Net book amount 28,539 690 390 29,619 7 Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements (continued) Company Million Baht Cost of mobile phone networks At 31 December 1999 Cost 37,596 Less: Accumulated amortisation (11,876) Net book amount 25,720 For the six-month period ended 30 June 2000 Opening net book amount 25,720 Additions 4,742 Transfers 43 Amortisation charge (1,966) Closing net book amount 28,539 At 30 June 2000 Cost 42,381 Less: Accumulated amortisation (13,842) Net book amount 28,539 8 Other assets Consolidated - Million Baht Deferred Goodwill charges Others Total At 31 December 1999 Cost 1,164 757 160 2,081 Less: Accumulated amortisation (352) (222) - (574) Net book amount 812 535 160 1,507 For the six-month period ended 30 June 2000 Opening net book amount 812 535 160 1,507 Additions - 17 (15) 2 Write-offs, net - (125) - (125) Amortisation charge (57) (61) - (118) Closing net book amount 755 366 145 1,266 At 30 June 2000 Cost 1,164 612 145 1,921 Less: Accumulated amortisation (409) (246) - (655) Net book amount 755 366 145 1,266 Company - Million Baht Deferred charges Others Total At 31 December 1999 Cost 568 106 674 Less: Accumulated amortisation (199) - (199) Net book amount 369 106 475 For the six-month period ended 30 June 2000 Opening net book amount 369 106 475 Additions 16 3 19 Transfer 1 - 1 Write-offs, net (125) - (125) Amortisation charge (33) - (33) Closing net book amount 228 109 337 At 30 June 2000 Cost 422 109 531 Less: Accumulated amortisation (194) - (194) Net book amount 228 109 337 9 Long-term debentures Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Current portion of long-term debentures 308 - 308 - 308 - 308 - Long-term debentures - Third parties 10,766 1,230 10,766 1,230 - Related companies (Note 19) 53 270 53 270 10,819 1,500 10,819 1,500 Total long-term debentures 11,127 1,500 11,127 1,500 As at 31 December 1999, long-term debentures represented 1.5 million units of Baht 1,000 each of unsubordinated and unsecured debentures, amounting to Baht 1,500 million. The long-term debentures bear interest at the fixed rate of 8.25% per annum throughout the terms of the debentures, payable on a semi-annual basis commencing from the issuing dates. During the second quarters of year 2000, the Company has early redeemed 0.3 million units of the long-term debentures amounting to Baht 335 million and incurred a penalty of Baht 12 million. The remaining 0.3 million units and 0.9 million units of debentures will be redeemed on 18 February 2001 and 5 March, 2002 respectively. On 20 March 2000, the Company issued additional 8 million units of Baht 1,000 each of unsubordinated, unsecured and amortised debentures, amounting to Baht 8,000 million. Such debentures bear interest at the fixed rate of 6.50% per annum throughout the terms of debentures, payable on a semi-annual basis commencing from the issuing date. The debentures will be redeemed by 4 equal installments, commencing the eighteenth month after the issuing date until 20 March 2003. On 31 March 2000, the Company issued additional 2 million units at Baht 1,000 each of unsubordinated and unsecured debentures, amounting to Baht 2,000 million. Such debentures bear interest at the fixed rate of 6.25% per annum throughout the terms of debentures, payable on a quarterly basis commencing from the issuing date. The debentures will be entirely redeemed on 31 March 2003. The maturity of long-term debentures are as follows: Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Later than 1 year and not later than 2 years 4,842 1,500 4,842 1,500 Later than 2 years and not later than 5 years 5,977 - 5,977 - 10,819 1,500 10,819 1,500 9 Long-term debentures (continued) The carrying amounts and fair values of long-term debentures are as follows: Consolidated Company 30 June 2000 30 June 2000 Carrying amounts Fair values Carrying amounts Fair values Million Baht Million Baht Million Baht Million Baht Long-term debentures 11,127 11,322 11,127 11,322 The fair values are based on discounted cash flows using a discounted rate based upon the borrowing rate, which the directors expect would be available to the Group and the Company at the balance sheet date. 10 Long-term liabilities Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Current portion of long-term liabilities Loans from finance companies - 1,032 - 1,032 Obligations under finance leases - 1 - 1 - 1,033 - 1,033 Long-term liabilities Loans from finance companies - 2,391 - 2,391 Loans from bank 20 - - - Obligations under finance leases 1 1 1 1 21 2,392 1 2,392 Total long-term liabilities 21 3,425 1 3,425 Weighted average effective interest rates: - Long-term loans from finance companies - 6.67% - 6.67% - Long-term loan from bank 6.23% - - - Long-term loans of the Group and the Company, which carry floating interest rate, are as follows: Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Total long-term loans 20 3,423 - 3,423 10 Long-term liabilities (continued) The maturity of long-term liabilities (excluding obligations under finance leases) are as follows: Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Later than 1 year and not later than 2 years 4 1,032 - 1,032 Later than 2 years and not later than 5 years 16 1,315 - 1,315 Later than 5 years - 44 - 44 20 2,391 - 2,391 As at 31 December 1999, long-term loans represent unsecured loans from foreign finance companies equivalent to US$ 91 million, carrying interest at rates between LIBOR (London Inter Bank Offer Rate) and LIBOR plus 1.25% per annum. On 7 April 2000, the Company has fully paid all foreign long-term loans amounting to USD 42 million and incurred a penalty of Baht 1 million. On 18 April 2000, the Company's subsidiary utilised Baht 20 million of their unsecured credit totalling Baht 250 million from a bank. This loan is denominated in Thai Baht. This loan bears interest at BIBOR plus 2.35% per annum. The term of repayment is five equal semi-annual installments in the years 2002 to 2004. Borrowing facilities The Group and the Company have the following undrawn committed borrowing facilities: Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Floating interest rate Expiring within one year 4,900 3,842 4,900 3,842 Expiring beyond one year 3,236 840 1,059 485 8,136 4,682 5,959 4,327 The undrawn committed borrowing facilities have been arranged to support financing of the Group's and the Company's activities. The facilities expiring beyond one year are facilities subject to review at various dates. The carrying amounts and fair values of long-term liabilities (excluding obligations under finance leases) are as follows: Consolidated Company 30 June 2000 30 June 2000 Carrying amounts Fair values Carrying amounts Fair values Million Baht Million Baht Million Baht Million Baht Long-term liabilities 20 20 - - The fair values of long-term liabilities (excluding obligations under finance leases) approximate their carrying amounts as at 30 June 2000. 11 Share capital and premium Number of Share Share shares capital premium Total Million Million Baht Million Baht Million Baht 1 January 1999 234 2,340 2,295 4,635 Issue of shares, registered on 19 February 1999 36 360 7,920 8,280 31 December 1999 270 2,700 10,215 12,915 1 January 2000 270 2,700 10,215 12,915 30 June 2000 270 2,700 10,215 12,915 At the extraordinary meeting of the Company's shareholders held on 10 February 1999, the shareholders passed a resolution to approve the issuance of 36 million ordinary shares to sell specifically to Singapore Telecom International Pte Ltd. at Baht 230 per share. The issuance of the new shares was registered with the Ministry of Commerce on 19 February 1999. 12 Minority interests Consolidated 30 June 2000 Million Baht Beginning balance 159 Share of net profit in subsidiaries to minority interests - Dividend received - Ending balance 159 13 Compensation income Following the introduction of Value Added Tax ("VAT") in 1992, the Thai cabinet of ministers required on 7 January 1992 all state enterprises including the telecommunication operators to absorb Value Added Tax on service charges to their customers. Accordingly the Telephone Organization of Thailand (the "TOT") requested the Company on 16 January 1992 to absorb such VAT during the years 1992 to 1997. However, certain operators, operating under concession agreements from the TOT, made legal claims requesting the TOT to compensate those operators for the VAT absorbed. In 1998 the TOT was ordered, in arbitration, to compensate an operator for the VAT on service charges absorbed by the that operator and such compensation was realized as part of the Company's revenue which was subject to the revenue sharing fees paid to TOT. Following this award at arbitration, in 1999 the Company requested the TOT to compensate the Company on a similar basis for VAT absorbed by the Company for the period 1992 to 1997. On 4 May 2000, the Company received a notification of compensation of VAT from the TOT of Baht 953 million and related interest income of Baht 79 million. The Company received full cash settlement of Baht 1,032 million, net of revenue sharing fees, from the TOT on 8 May 2000. The Company had not recorded a receivable or recognized any revenues in respect of this compensation in the periods ending on or before 31 March 2000 as collection was considered to be remote. 14 Earnings per share Basic earnings per share is calculated by dividing the net income attributable to shareholders for the period by the weighted average number of paid-up ordinary shares in issue during the period. For the three-month periods ended 30 June Consolidated Company 2000 1999 2000 1999 Net income attributable to shareholders (Million Baht) 2,302 786 2,302 786 Weighted average number of paid-up ordinary shares in issue (Million shares) 270 270 270 270 Basic earnings per share (Baht) 8.53 2.91 8.53 2.91 For the six-month periods ended 30 June Consolidated Company 2000 1999 2000 1999 Net income attributable to shareholders (Million Baht) 3,392 1,221 3,392 1,221 Weighted average number of paid-up ordinary shares in issue (Million shares) 270 260 270 260 Basic earnings per share (Baht) 12.56 4.69 12.56 4.69 15 Financial instruments The principal financial risks faced by the Group are interest rate risk and currency exchange risk. The Group borrows at both fixed and floating rates of interest to finance its operations. Capital expenditures are mainly made in foreign currencies. The Group, in terms of approved policy limit of Shin Corporations Public Co., Ltd., enters into various types of foreign exchange contracts to hedge transaction risk both for short-term and long-term currency exposures. Short-term foreign currency exposures relate to trade imports, short-term foreign borrowings and interest flows on long-term foreign borrowings. Long-term foreign currency exposure relates to long-term foreign borrowings. The currency exchange risks of the Group occurs in various currency combinations, but mostly in United States dollars because the Group involves in transactions in different countries. The Group hedging policy is to hedge currency risk, mostly based on the net exposure and the structure of the revenues. The Group focuses more on hedging when the revenues are received in local currency whereas it will do less when the revenues are received in foreign currency as such income can reduce risks from the foreign currency obligations. The management regularly analyses interest rate and currency exposures and re-evaluates forex management strategies. Trading for speculative purposes is prohibited. Objectives and significant terms and conditions To manage the risks arising from fluctuations in currency exchange and interest rates, the Group makes use of the following derivative financial instruments: 15 Financial instruments (continued) Interest rate swaps The Group has entered into interest rate swap contracts that entitle it to obtain interest at floating rates on notional principal amounts and is obliged to pay interest at fixed rates on the same amounts. The interest rate swaps allow the Group to protect fluctuations of floating interest rates in the future. Under interest rate swaps, the Group agrees with other parties to exchange, at specified intervals, the difference between fixed rates and floating rates calculated by reference to the agreed notional principal amounts. At 31 December 1999, the fixed interest rates vary from 5.43% to 5.94% and the floating rates are linked to LIBOR. The remaining terms and notional principal amounts of the outstanding interest rate swap contracts at 30 June 2000 and 31 December 1999 are: Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Not later than 1 year - 649 - 649 Later than 1 year and not later than 5 years - 1,407 - 1,407 - 2,056 - 2,056 In May 2000, the Company settled all interest rate swap contracts due to early termination of the foreign loans and gained Baht 11 million. Forward foreign exchange contracts Forward foreign exchange contracts are entered into to manage exposure of fluctuations in foreign currency exchange rates on specific transactions. At 30 June 2000, the settlement dates on open forward contracts ranged between 3 days to 6 months (as at 31 December 1999 : 3 months to 9 months). The amounts to be paid and received and contractual exchange rates of the outstanding contracts are: Consolidated Company 30 June 31 December 30 June 31 December 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht The amounts to be paid US$ 27 million (Baht 37.775 - Baht 39.375/US$) 1,060 - 1,060 - 1,060 - 1,060 - The amounts to be received US$ 53 million (Baht 36.43 - Baht 39.175/US$) - - 2,070 - US$ 57 million (Baht 36.43 - Baht 39.175/US$) 2,222 - - - DEM 4 million (Baht 21.445/DEM) 79 - 79 - JPY 100 million (Baht 0.35/JPY) 37 - 37 - US$ 47 million (Baht 37.21 - Baht 39.35/US$) - 1,773 - 1,773 DEM 6 million (Baht 21.40/DEM) - - - 118 (more)