AUDITOR'S REPORT ON REVIEW OF INTERIM FINANCIAL STATEMENTS To the Shareholders of Advanced Info Service Public Company Limited I have reviewed the accompanying consolidated and company balance sheets of Advanced Info Service Public Company Limited as at 30 September 2000 and the related consolidated and company statements of income for the three-month and nine-month periods ended 30 September 2000 and 1999, and the consolidated and company statements of changes in shareholders' equity, retained earnings, and cash flows for the nine-month periods ended 30 September 2000 and 1999. These financial statements are the responsibility of the Company's management. My responsibility is to issue a report on these financial statements based on my reviews. I conducted my reviews in accordance with the auditing standard applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not performed an audit, and, accordingly, I do not express an audit opinion. Based on my reviews, nothing has come to my attention that causes me to believe that the consolidated and company financial statements referred to above are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. As explained in Note 2.1 to the interim consolidated and company financial statements, during the fourth quarter of the year 1999, the Company and a subsidiary have changed their accounting policies in respect of: (a) accounting for the cost of Datanet tools and equipment under concession agreement; and (b) accounting for the change in status of investment in associate to be investment in subsidiary, to reflect a change in the reporting unit. The Company and the Group have accounted for these changes retrospectively. Accordingly, the interim consolidated and company financial statements for the three-month and nine-month periods ended 30 September 1999 have been restated. I have reviewed the adjustments, detailed in Note 2.1, relating to the restatement of the interim consolidated and company financial statements for the three-month and nine- month periods ended 30 September 1999, and found that the adjustments have been appropriately made. I have audited the consolidated and company financial statements of Advanced Info Service Public Company Limited for the year ended 31 December 1999 in accordance with generally accepted auditing standards and expressed an unqualified opinion on those statements in my report dated 4 February 2000. The consolidated and company balance sheets as at 31 December 1999, presented for comparative purpose, are components of the Company's financial statements which I have audited and issued a report thereon as stated above, and I have not performed any other auditing procedures subsequent to the date of that report. PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok 2 November 2000 Advanced Info Service Public Company Limited Balance Sheets As at 30 September 2000 and 31 December 1999 Consolidated Company (Unaudited) (Audited) (Unaudited) (Audited) 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 ASSETS Current assets Cash on hand and at banks 1,256,472 880,982 933,722 525,851 Short-term investments 12,781,973 2,810,131 11,102,918 2,352,920 Trade accounts receivable, net 4 4,555,321 3,848,346 4,151,750 3,430,142 Amounts due from related companies, net 20 1,631 548 436 2,093 Inventories, net 1,292,832 939,473 - - Forward contracts receivable, net 155,160 - 152,849 - Advances to suppliers 1,840,670 - 1,840,670 - Other current assets 831,768 1,090,626 723,783 1,028,223 Total current assets 22,715,827 9,570,106 18,906,128 7,339,229 Non-current assets Long-term investments, net 5 - - 4,568,226 3,825,618 Property and equipment, net 6 1,881,879 1,974,811 1,635,207 1,778,747 Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, net 7 30,939,663 26,812,222 29,746,274 25,720,430 Other assets, net 8 1,247,766 1,507,023 360,490 475,145 Total non-current assets 34,069,308 30,294,056 36,310,197 31,799,940 Total assets 56,785,135 39,864,162 55,216,325 39,139,169 The notes to the interim consolidated and company financial statements on pages 12 to 44 are an integral part of these interim financial statements. Advanced Info Service Public Company Limited Balance Sheets As at 30 September 2000 and 31 December 1999 Consolidated Company (Unaudited) (Audited) (Unaudited) (Audited) 30 September 31 December 30 September 31 December 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term loans from banks 9 2,049,960 1,950,000 2,029,960 1,950,000 Trade accounts payable 2,848,496 2,324,113 1,811,044 1,683,336 Current portion of long-term debentures 10 2,308,000 - 2,308,000 - Current portion of long-term liabilities 11 1,045 1,033,127 1,045 1,033,127 Amounts due to and loans from related companies 20 207,033 135,047 68,099 693,480 Forward contracts payable, net - 57,450 - 57,227 Accrued concession fee 4,105,063 953,231 4,105,063 953,231 Other current liabilities 5,537,215 4,518,769 4,865,211 3,614,102 Total current liabilities 17,056,812 10,971,737 15,188,422 9,984,503 Non-current liabilities Long-term forward and swap contracts payable, net - 24,565 - 24,565 Long-term debentures 10 8,822,763 1,500,000 8,822,763 1,500,000 Long-term liabilities 11 150,000 2,391,869 - 2,391,869 Deposits from customers 3,897,444 3,450,606 4,506,575 3,871,811 Total non-current liabilities 12,870,207 7,367,040 13,329,338 7,788,245 Total liabilities 29,927,019 18,338,777 28,517,760 17,772,748 Shareholders' equity Share capital Authorised share capital 5,000,000 5,000,000 5,000,000 5,000,000 Issued and fully paid-up share capital 12 2,700,000 2,700,000 2,700,000 2,700,000 Premium on share capital 12 10,215,000 10,215,000 10,215,000 10,215,000 Retained earnings Appropriated - Legal reserve 500,000 500,000 500,000 500,000 Unappropriated 13,283,565 7,951,421 13,283,565 7,951,421 Minority interests 13 159,551 158,964 - - Total shareholders' equity 26,858,116 21,525,385 26,698,565 21,366,421 Total liabilities and shareholders' equity 56,785,135 39,864,162 55,216,325 39,139,169 The notes to the interim consolidated and company financial statements on pages 12 to 44 are an integral part of these interim financial statements. Advanced Info Service Public Company Limited Statements of Income (Unaudited) For the three-month periods ended 30 September 2000 and 1999 Consolidated Company (Restated) (Restated) 30 September 30 September 30 September 30 September 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Revenues Revenues from services and equipment rentals 6,721,588 4,602,890 6,342,383 4,229,308 Sales 2,462,550 1,670,641 - - Net gain on exchange 366,619 148,606 375,979 160,519 Other operating income 256,249 126,494 196,314 98,491 Total revenues 9,807,006 6,548,631 6,914,676 4,488,318 Expenses Cost of services and equipment rentals 3,745,914 2,763,665 3,581,084 2,646,226 Cost of sales 1,626,819 1,135,154 - - Selling and administrative expenses 1,278,248 1,072,472 705,091 601,211 Interest expenses 208,513 142,777 207,242 142,777 Directors' remuneration 573 1,340 550 1,340 Total expenses 6,860,067 5,115,408 4,493,967 3,391,554 Operating income 2,946,939 1,433,223 2,420,709 1,096,764 Share of net profit in subsidiaries - - 354,819 229,553 Income before tax 2,946,939 1,433,223 2,775,528 1,326,317 Income tax 1,006,537 550,719 835,298 444,249 Income before minority interests 1,940,402 882,504 1,940,230 882,068 Share of net profit in subsidiaries to minority interests 13 172 436 - - Net income for the period 1,940,230 882,068 1,940,230 882,068 Baht Baht Baht Baht Basic earnings per share 15 Income before minority interests 7.19 3.27 7.19 3.27 Share of net profit in subsidiaries to minority interests - - - - Net income for the period 7.19 3.27 7.19 3.27 The notes to the interim consolidated and company financial statements on pages 12 to 44 are an integral part of these interim financial statements. Advanced Info Service Public Company Limited Statements of Income (Unaudited) For the nine-month periods ended 30 September 2000 and 1999 Consolidated Company (Restated) (Restated) 30 September 30 September 30 September 30 September 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Revenues Revenues from services and equipment rentals 18,541,554 13,180,253 17,342,028 11,993,933 Sales 6,934,558 5,068,701 - - Net gain on exchange 627,203 86,900 647,890 86,777 Compensation income 14 1,031,570 - 1,031,570 - Other operating income 593,059 415,462 467,056 353,323 Total revenues 27,727,944 18,751,316 19,488,544 12,434,033 Expenses Cost of services and equipment rentals 10,544,788 7,929,882 10,098,977 7,591,946 Cost of sales 4,587,062 3,490,728 - - Selling and administrative expenses 3,648,054 3,109,340 2,071,372 1,769,377 Interest expenses 512,387 608,534 518,741 604,233 Directors' remuneration 1,013 3,760 960 3,730 Total expenses 19,293,304 15,142,244 12,690,050 9,969,286 Operating income 8,434,640 3,609,072 6,798,494 2,464,747 Share of net profit in subsidiaries - - 1,092,609 717,833 Income before tax 8,434,640 3,609,072 7,891,103 3,182,580 Income tax 3,101,908 1,486,507 2,558,959 1,079,024 Income before minority interests 5,332,732 2,122,565 5,332,144 2,103,556 Share of net profit in subsidiaries to minority interests 13 588 19,009 - - Net income for the period 5,332,144 2,103,556 5,332,144 2,103,556 Baht Baht Baht Baht Basic earnings per share 15 Income before minority interests 19.75 8.05 19.75 7.98 Share of net profit in subsidiaries to minority interests - (0.07) - - Net income for the period 19.75 7.98 19.75 7.98 The notes to the interim consolidated and company financial statements on pages 12 to 44 are an integral part of these interim financial statements. Advanced Info Service Public Company Limited Statements of Changes in Shareholders' Equity (Unaudited) For the nine-month periods ended 30 September 2000 and 1999 Consolidated Company (Restated) (Restated) 30 September 30 September 30 September 30 September 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Share capital Beginning balance 2,700,000 2,340,000 2,700,000 2,340,000 Increase during the period 12 - 360,000 - 360,000 Decrease during the period - - - - Ending balance 2,700,000 2,700,000 2,700,000 2,700,000 Premium on share capital Beginning balance 10,215,000 2,295,000 10,215,000 2,295,000 Increase during the period 12 - 7,920,000 - 7,920,000 Decrease during the period - - - - Ending balance 10,215,000 10,215,000 10,215,000 10,215,000 Retained earnings Appropriated retained earnings Legal reserve Beginning balance 500,000 500,000 500,000 500,000 Increase during the period - - - - Decrease during the period - - - - Ending balance 500,000 500,000 500,000 500,000 Unappropriated retained earnings Beginning balance - as previously reported - 9,241,774 - 9,241,774 Adjustments Change in amortisation period for cost of mobile phone networks under concession agreements 2.2 - (4,035,398) - (4,035,398) Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement 2.1 - (5,016) - (5,016) Beginning balance - as restated - 5,201,360 - 5,201,360 Beginning balance 7,951,421 - 7,951,421 - Net income for the period - as previously reported - 2,111,013 - 2,111,013 Net income for the period 5,332,144 - 5,332,144 - Adjustments Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement 2.1 - (7,457) - (7,457) Ending balance 13,283,565 7,304,916 13,283,565 7,304,916 Minority interests 13 159,551 343,319 - - Total shareholders' equity 26,858,116 21,063,235 26,698,565 20,719,916 The notes to the interim consolidated and company financial statements on pages 12 to 44 are an integral part of these interim financial statements. Advanced Info Service Public Company Limited Statements of Retained Earnings (Unaudited) (continued) For the nine-month periods ended 30 September 2000 and 1999 Consolidated Company (Restated) (Restated) 30 September 30 September 30 September 30 September 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Unappropriated retained earnings: Beginning balance - as previously reported - 9,241,774 - 9,241,774 Adjustments Change in amortisation period for cost of mobile phone networks under concession agreements 2.2 - (4,035,398) - (4,035,398) Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement 2.1 - (5,016) - (5,016) Beginning balance - as restated - 5,201,360 - 5,201,360 Beginning balance 7,951,421 - 7,951,421 - Net income for the period - as previously reported - 2,111,013 - 2,111,013 Net income for the period 5,332,144 - 5,332,144 - Adjustments Change in status of investment in associate to be investment in subsidiary, net of change in Amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement 2.1 - (7,457) - (7,457) Unappropriated retained earnings at end of the period 13,283,565 7,304,916 13,283,565 7,304,916 Appropriated retained earnings: Legal reserve 500,000 500,000 500,000 500,000 Retained earnings at end of the period 13,783,565 7,804,916 13,783,565 7,804,916 The notes to the interim consolidated and company financial statements on pages 12 to 44 are an integral part of these interim financial statements. Advanced Info Service Public Company Limited Statements of Retained Earnings (Unaudited) (continued) For the nine-month periods ended 30 September 2000 and 1999 Consolidated Company (Restated) (Restated) 30 September 30 September 30 September 30 September 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from operating activities: Net income for the period 5,332,144 2,103,556 5,332,144 2,103,556 Adjusted by: Depreciation charge 6 493,630 439,356 434,387 374,863 Amortisation of costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements 7 3,183,334 2,738,178 3,034,581 2,607,120 Amortisation of deferred charges 8 75,383 96,725 40,561 76,950 Doubtful accounts and bad debts 369,725 412,911 284,086 339,369 Provisions for obsolete inventories and diminution in value of finished goods 41,241 20,302 - - Amortisation of forward and swap premiums 92,142 74,536 110,628 74,535 (more)