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 31 March 2000 and the related consolidated and company statements of income, changes in shareholders' equity, retained earnings, and cash flows for the three-month period then ended. 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 review. The interim consolidated and company financial statements (before restatement) of Advanced Info Service Public Company Limited for the three-month period ended 31 March 1999, presented herewith for comparative purpose, were reviewed by another independent auditor whose report dated 26 April 1999, expressed that he was not aware of any material modifications that should be made to those interim financial statements for them to be in conformity with generally accepted accounting principles. I conducted my review 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 review, 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 to the interim consolidated and company financial statements, during the third and fourth quarters of the year 1999, the Company and a subsidiary have changed their accounting policies in respect of: (a) accounting for the cost of mobile phone networks under concession agreements; (b) accounting for the cost of Datanet tools and equipment under concession agreement and (c) 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 consolidated and company financial statements for the three-month period ended 31 March 1999 have been restated. I have reviewed the adjustments, detailed in Note 2, relating to the restatement of the consolidated and company financial statements for the three-month period ended 31 March 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 28 April 2000 Consolidated Company (Unaudited) (Audited) (Unaudited) (Audited) 31 March 31 December 31 March 31 December 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 ASSETS Current assets Cash on hand and at banks 2,858,813 880,982 2,561,638 525,851 Short-term investments 4,574,356 2,810,131 3,094,225 2,352,920 Trade accounts receivable, net 4 4,090,633 3,848,346 3,541,914 3,430,142 Amounts due from related companies, net 18 1,072 548 2,391 2,093 Inventories, net 1,057,355 939,473 - - Advances to suppliers 3,061,579 - 3,061,493 - Other current assets 1,141,809 1,090,626 1,076,381 1,028,223 Total current assets 16,785,617 9,570,106 13,338,042 7,339,229 Non-current assets Long-term investments, net 5 60,000 - 4,199,389 3,825,618 Property and equipment, net 6 1,913,484 1,974,811 1,667,456 1,778,747 Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, net 7 28,717,818 26,812,222 27,644,539 25,720,430 Other assets, net 8 1,349,305 1,507,023 360,828 475,145 Total non-current assets 32,040,607 30,294,056 33,872,212 31,799,940 Total assets 48,826,224 39,864,162 47,210,254 39,139,169 The notes to the interim consolidated and company financial statements on pages 11 to 38 are an integral part of these interim financial statements. Consolidated Company (Unaudited) (Audited) (Unaudited) (Audited) 31 March 31 December 31 March 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 20,000 1,950,000 - 1,950,000 Trade accounts payable 2,814,169 2,324,113 1,725,137 1,683,336 Current portion of long-term debentures 9 500,000 - 500,000 - Current portion of long-term liabilities 10 1,582,058 1,033,127 1,582,058 1,033,127 Amounts due to and loans from related companies 18 129,311 135,047 73,057 693,480 Forward and swap contracts payable, net 16,612 57,450 15,906 57,227 Accrued concession fee 1,773,942 953,231 1,773,942 953,231 Other current liabilities 4,762,677 4,518,769 3,997,562 3,614,102 Total current liabilities 11,598,769 10,971,737 9,667,662 9,984,503 Non-current liabilities Long-term forward and swap contracts payable, net - 24,565 - 24,565 Long-term debentures 9 10,969,000 1,500,000 11,000,000 1,500,000 Long-term liabilities 10 506 2,391,869 506 2,391,869 Deposits from customers 3,641,962 3,450,606 4,085,720 3,871,811 Total non-current liabilities 14,611,468 7,367,040 15,086,226 7,788,245 Total liabilities 26,210,237 18,338,777 24,753,888 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 11 2,700,000 2,700,000 2,700,000 2,700,000 Premium on share capital 11 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 9,041,366 7,951,421 9,041,366 7,951,421 Minority interests 12 159,621 158,964 - - Total shareholders' equity 22,615,987 21,525,385 22,456,366 21,366,421 Total liabilities and shareholders' equity 48,826,224 39,864,162 47,210,254 39,139,169 The notes to the interim consolidated and company financial statements on pages 11 to 38 are an integral part of these interim financial statements. Consolidated Company (Restated) (Restated) 31 March 31 March 31 March 31 March 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Revenues Revenues from services and equipment rentals 5,683,917 4,198,093 5,251,376 3,792,710 Sales 2,057,662 1,655,803 - - Net gain on exchange 97,558 - 97,046 - Other operating income 141,351 139,634 119,934 118,469 Total revenues 7,980,488 5,993,530 5,468,356 3,911,179 Expenses Cost of services and equipment rentals 3,372,576 2,542,172 3,240,764 2,432,247 Cost of sales 1,329,255 1,130,445 - - Selling and administrative expenses 1,219,305 1,046,070 726,453 585,044 Net loss on exchange - 72,241 - 70,923 Interest expenses 121,860 276,955 129,957 273,816 Directors' remuneration - 285 - 270 Total expenses 6,042,996 5,068,168 4,097,174 3,362,300 Operating income 1,937,492 925,362 1,371,182 548,879 Share of net profit in subsidiaries - - 373,771 196,454 Income before tax 1,937,492 925,362 1,744,953 745,333 Income tax (846,889) (470,442) (655,008) (309,497) Income before minority interests 1,090,603 454,920 1,089,945 435,836 Share of net profit in subsidiaries to minority interests 12 658 19,084 - - Net income for the period 1,089,945 435,836 1,089,945 435,836 Baht Baht Baht Baht Basic earnings per share 13 Income before minority interests 4.04 1.82 4.04 1.74 Share of net profit in subsidiaries to minority interests - (0.08) - - Net income for the period 4.04 1.74 4.04 1.74 The notes to the interim consolidated and company financial statements on pages 11 to 38 are an integral part of these interim financial statements. Consolidated Company (Restated) (Restated) 31 March 31 March 31 March 31 March 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 11 - 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 11 - 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 2 Change in amortisation period for cost of mobile phone networks under concession agreements - (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 - (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 - 871,643 - 871,643 Net income for the period 1,089,945 - 1,089,945 - Adjustments 2 Change in amortisation period for cost of mobile phone networks under concession agreements - (432,988) - (432,988) 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 - (2,819) - (2,819) Ending balance 9,041,366 5,637,196 9,041,366 5,637,196 Minority interests 12 159,621 343,393 - - Total shareholders' equity 22,615,987 19,395,589 22,456,366 19,052,196 The notes to the interim consolidated and company financial statements on pages 11 to 38 are an integral part of these interim financial statements. Consolidated Company (Restated) (Restated) 31 March 31 March 31 March 31 March 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 2 Change in amortisation period for cost of mobile phone networks under concession agreements - (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 - (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 - 871,643 - 871,643 Net income for the period 1,089,945 - 1,089,945 - Adjustments 2 Change in amortisation period for cost of mobile phone networks under concession agreements - (432,988) - (432,988) 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 - (2,819) - (2,819) Unappropriated retained earnings at end of the period 9,041,366 5,637,196 9,041,366 5,637,196 Appropriated retained earnings: Legal reserve 500,000 500,000 500,000 500,000 Retained earnings at end of the period 9,541,366 6,137,196 9,541,366 6,137,196 The notes to the interim consolidated and company financial statements on pages 11 to 38 are an integral part of these interim financial statements. Consolidated Company (Restated) (Restated) 31 March 31 March 31 March 31 March 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from operating activities: Net income for the period 1,089,945 435,836 1,089,945 435,836 Adjusted by: Depreciation charge 6 167,499 136,350 148,707 115,101 Amortisation of costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements 7 1,010,329 901,383 962,650 860,018 Amortisation of deferred charges 8 45,876 19,461 25,171 16,535 Doubtful accounts and bad debts 105,192 199,069 81,816 173,821 Provisions for obsolete inventories and diminution in value of finished goods 55,796 86,259 - - Amortisation of forward and swap premiums 35,480 45,814 36,398 45,601 (Gain) on disposal of fixed assets (285) (712) (38) (92) Loss on write-off deferred charges 8 96,330 - 96,330 - Loss on write-off fixed assets 6 168,762 - 168,762 - Unrealised loss (gain) on foreign exchange rate (21,139) 102,539 (27,331) 100,707 Realised loss (gain) on foreign exchange rate (12,875) 382,560 (12,875) 382,560 Amortisation of goodwill 8 28,915 13,368 - - Share of net profit in subsidiaries - - (373,771) (196,454) Share of net profit in subsidiaries to minority interests 658 19,084 - - Net income before changes in operating assets and liabilities 2,770,483 2,341,011 2,195,764 1,933,633 Changes in operating assets and liabilities (Excluding the effects of acquisition and disposal) (Increase) in trade accounts receivable (342,956) (430,443) (189,065) (250,475) Decrease (increase) in amounts due from related (more)