service networks and Datanet tools and equipment under concession agreements 7 2,063,221 1,813,347 1,966,248 1,729,073 Amortisation of deferred charges 8 60,603 73,186 32,857 66,654 Doubtful accounts and bad debts 207,818 325,332 163,473 268,573 Provisions for obsolete inventories and diminution in value of finished goods 81,564 86,445 - - Amortisation of forward and swap premiums 111,762 80,093 118,579 77,911 Loss (gain) on disposal of fixed assets (3,238) 2,178 4,747 3,563 Loss on write-off deferred charges 8 125,217 - 125,217 - Loss on write-off fixed assets 6 170,455 - 168,763 - Unrealised gain on foreign exchange rate (16,623) (21,763) (25,917) (20,589) Realised loss (gain) on foreign exchange rate (107,218) 187,218 (107,218) 187,218 Amortisation of goodwill 8 57,064 38,043 - - Amortisation of bond issuing cost 5,053 - 5,053 - Share of net profit in subsidiaries - - (737,789) (488,280) Share of net profit in subsidiaries to minority interests 415 18,573 - - Net income before changes in operating assets and liabilities 6,474,949 4,108,217 5,393,763 3,286,509 Changes in operating assets and liabilities (Excluding the effects of acquisition and disposal) (Increase) in trade accounts receivable (523,544) (700,375) (549,205) (476,015) Decrease (increase) in amounts due from related companies (2,299) 7,604 1,273 160,927 (Increase) in forward contracts receivable (45,765) (26,478) (44,815) (26,478) (Increase) in inventories (320,842) (384,089) - - (Increase) in advances to suppliers (1,892,739) - (1,892,739) - Decrease (increase) in other current assets 319,909 (124,240) 340,272 (191,614) Increase (decrease) in trade accounts payable 26,837 (1,640,432) (206,349) (1,682,766) Increase (decrease) in amounts due to related companies (21,997) 23,560 27,791 45,379 (Decrease) increase in forward contracts payable (60,492) 1,937 (51,021) 1,937 Increase in accrued concession fee 1,990,704 1,361,773 1,990,704 1,361,773 Increase (decrease) in other current liabilities 1,134,382 (200,190) 1,287,715 (270,472) (Increase) in other assets (834) (71,782) (18,689) (54,497) Increase in deposits from customers 314,355 196,513 414,979 229,005 Net cash receipts from operating activities 7,392,624 2,552,018 6,693,679 2,383,688 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 Cash Flows (Unaudited) (continued) For the six-month periods ended 30 June 2000 and 1999 Consolidated Company (Restated) (Restated) 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Notes Baht'000 Baht'000 Baht'000 Baht'000 Cash flows from operating activities 7,392,624 2,552,018 6,693,679 2,383,688 Cash flows from investing activities: Cash invested in long-term investment in subsidiary 18 - (949,600) - (949,600) Dividend received from a subsidiary 5 - - 350,000 - Proceeds from disposals of fixed assets 3,105 19,645 1,569 17,261 Purchases of property and equipment (433,227) (338,012) (342,330) (300,607) Cash invested in cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements (5,142,011) (2,961,388) (5,057,026) (2,889,836) Net cash payments from investing activities (5,572,133) (4,229,355) (5,047,787) (4,122,782) Cash flows from financing activities: Repayment in short-term loans from banks (1,930,000) (1,005,540) (1,950,000) (817,982) Receipts (repayments) of loans from related companies - - (650,000) 50,000 Receipts from long-term debentures, net 9,956,299 1,500,000 9,956,299 1,500,000 Receipts from long-term liabilities 20,000 1,713,322 - 1,713,322 Proceeds from capital increase - 8,280,000 - 8,280,000 Repayments of short-term debentures - (110,100) - (110,100) Repayments of long-term debentures (334,550) (2,000,000) (334,550) (2,000,000) Repayments of long-term liabilities (3,316,484) (6,331,674) (3,316,484) (6,331,674) Net cash receipts from financing Activities 4,395,265 2,046,008 3,705,265 2,283,566 Net increase in cash and cash equivalents 6,215,756 368,671 5,351,157 544,472 Cash and cash equivalents, beginning balance 3,691,113 4,587,748 2,878,771 3,856,923 Cash and cash equivalents, ending balance 9,906,869 4,956,419 8,229,928 4,401,395 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 Cash Flows (Unaudited) (continued) For the six-month periods ended 30 June 2000 and 1999 Supplemental disclosures of cash flow information Cash and cash equivalents Cash and cash equivalents included in the consolidated and company statements of cash flows for the six- month periods ended 30 June 2000 and 1999 comprise: Consolidated Company (Restated) (Restated) 30 June 30 June 30 June 30 June 2000 1999 2000 1999 Million Bah t Million Baht Million Baht Million Baht Cash on hand and at banks 1,042 2,437 722 2,219 Short-term investments 8,865 2,519 7,508 2,182 Total cash and cash equivalents 9,907 4,956 8,230 4,401 Interest expenses and income tax Interest expenses and income tax paid during the six-month periods ended 30 June 2000 and 1999 comprise: Consolidated Company (Restated) (Restated) 2000 1999 2000 1999 Million Baht Million Baht Million Baht Million Baht Interest expenses 212 617 212 551 Income tax 1,985 1,649 1,459 1,432 Non-cash investing activities for the six-month periods ended 30 June 2000 and 1999 in the consolidated statements of cash flows Additions to investments in property and equipment for general business operation, which are included in property and equipment, and additions to investments in mobile phone and pager service networks and Datanet tools and equipment, which are included in costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, for the six-month periods ended 30 June 2000 and 1999 were approximately Baht 5,245 million and Baht 1,198 million respectively. Outstanding debts in the consolidated balance sheets as at 30 June 2000 and 1999 relating to the aforesaid investments were approximately Baht 835 million and Baht 1,847 million respectively. Non-cash investing activities for the six-month periods ended 30 June 2000 and 1999 in the Company's separate statements of cash flows Additions to investments in property and equipment for general business operation, which are included in property and equipment, and additions to investments in mobile phone networks, which are included in costs of mobile phone networks under concession agreements, for the six-month periods ended 30 June 2000 and 1999 were approximately Baht 5,069 million and Baht 1,090 million respectively. Outstanding debts in the company balance sheets as at 30 June 2000 and 1999 relating to the aforesaid investments were approximately Baht 809 million and Baht 1,820 million respectively. 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 Notes to the Interim Consolidated and Company Financial Statements (Unaudited) For the six-month periods ended 30 June 2000 and 1999 1 Accounting policies The interim consolidated and company financial statements are prepared in accordance with the accounting principles generally accepted in Thailand. However, the primary statements (i.e. balance sheets, statements of income, changes in shareholders' equity, retained earnings and cash flows) are presented in the full format as prescribed by the Ministerial Regulation No. 7 (B.E. 2539) in accordance with the Securities and Exchange Commission's and the Stock Exchange of Thailand's requirements, rather than in the condensed format as required by Thai Accounting Standard No. 41, "Interim Financial Reporting." The accounting policies used in the preparation of the interim financial statements are consistent with those used in the annual financial statements for the year ended 31 December 1999. During the period, the Company and its subsidiaries ("the Group") have adopted a new accounting policy relating to the short-term investment in marketable debt security, which is as follow: Investment in marketable debt security - for sale Investment in marketable debt security, which is classified as available-for-sale security, is carried at fair value. Fair value of marketable debt security is calculated by reference to Stock Exchange quoted bid price at the close of business on the balance sheet date. Increases/decreases in the carrying amount are credited/charged against revaluation reserve on investment in available-for- sale security in shareholders' equity. A review for impairment is carried out when there is a factor indicating that such investment might be impaired. If the recoverable amount of the investment is less than its carrying value, impairment loss is charged to the statement of income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of income. On disposal of a revalued investment, amounts in revaluation reserve relating to that investment are reversed to the statement of income. When disposing of part of the Group's holding of a particular investment in marketable debt security, the carrying amount of the disposed part is determined from the weighted average carrying amount of the total holding of the investment. Costs that incur unevenly during the financial year are recognised or deferred in the interim report only if it would be also appropriate to recognise or defer such costs at the end of the financial year. Income tax expense is recognised based on the best estimate of the weighted average annual income tax rate expected for the full financial year. These interim financial statements should be read in conjunction with the 1999 annual financial statements. 2 Adjustments Accounting for cost of mobile phone networks under concession agreements The Company uses 2 systems to provide mobile phone 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 agreement under non-current assets in the balance sheet. Previously the Company amortised the cost of such equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2015. On 1 July 1999, the Company's management reviewed its accounting for the cost of such mobile phone networks and has amortised such cost over the period the underlying systems equipment assets are expected to contribute revenue and cash to the business. The Company's management has considered that this presents more fairly the economic substance and benefits expected to flow from the use of these assets under the terms of the concession agreement. 2 Adjustments (continued) Therefore, the cost of mobile phone 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 remaining period of concession agreement. 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 as at 30 June 1999 and consolidated and company statements of income for the three-month and six-month periods then ended are as follows: Restated Consolidated Company Million Baht Million Baht Balance sheets Decrease in net book value of mobile phone networks 4,900 4,900 Decrease in retained earnings brought forward at 1 January 1999 4,035 4,035 Statements of income for three-month period ended 30 June 1999 Increase in amortisation expense 432 432 Statements of income for six-month period ended 30 June 1999 Increase in amortisation expense 865 865 Accounting for cost of Datanet tools and equipment under concession agreement and accounting for the change in status of investment in associate to be investment in subsidiary Datanet operating right, which is owned by Advanced Datanetwork Communications Co., Ltd., formerly "Shinawatra Datacom Co., Ltd.", ("the subsidiary") represents project tools and equipment acquired for the Telephone Organization of Thailand ("TOT"), dated 19 September 1989. Under the terms of the concession agreement the ownership of the system equipment, including tools, vests with the TOT on completion of equipment installation. The subsidiary is entitled to operate the DATAKIT VIRTUAL CIRCUIT SWITCH system over the concession period. Previously the subsidiary amortised the cost of such tools and equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2022. During the fourth quarter of the year 1999, the subsidiary's management reviewed its accounting for the cost of such system equipment and has amortised such cost over the period the underlying system equipment assets are expected to contribute revenue and cash to the business. The subsidiary's management has considered that this presents more fairly the economic substance and benefits expected to flow from the use of these assets under the terms of the concession agreement. Therefore, the cost of the system equipment, including tools, is amortised on a straight-line basis over a period of 10 years not exceeding the remaining period of concession agreement. This basis of amortisation has been applied with effect from the commencement of use of Datanet equipment. On 29 October 1999, the Company increased its interest in the subsidiary, which formerly was an associate, by 40.08% of the total share capital. As a result, the Company has 67.95% interest, causing a change in status to be a subsidiary. Therefore, the financial statements of the subsidiary have been consolidated with the Company since 29 October 1999. 2 Adjustments (continued) The net effects resulting from the above changes on the consolidated and company balance sheets as at 30 June 1999 and consolidated and company statements of income for the three- month and six-month periods then ended are as follows: Restated Consolidated Company Million Baht Million Baht Balance sheets Decrease in net book value of Datanet tools and equipment 54 - Decrease in investments in subsidiaries - 10 Decrease in minority interests 44 - Decrease in retained earnings as at 1 January 1999 5 5 Statements of income for the three-month period ended 30 June 1999 Increase in amortisation expense 9 - Decrease in net income 2 2 Decrease in net profit in a subsidiary to minority interests 7 - Statements of income for the six-month period ended 30 June 1999 Increase in amortisation expense 17 - Decrease in net income 5 5 Decrease in net profit in a subsidiary to minority interests 12 - 3 Financial information by segment The business operations of the Group, as reflected in the interim consolidated financial statements, are classified into four 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 of mobile phones, rendering repair services for mobile phones and providing mobile phones for rent 4) the operations of data network 3 Financial information by segment (continued) Financial information by business segment for the periods ended 30 June are shown as follows: Consolidated For the three-month period ended 30 June 2000 Mobile phone Pager sales Mobile phone Datanet services And services sales services Group Million Baht Million Baht Million Baht Million Baht Million Baht Revenues from services and equipment rentals 5,744 300 44 48 6,136 Sales - 61 2,347 6 2,414 Compensation income 1,032 - - - 1,032 Other operating income 82 11 23 (1) 115 Total revenues 6,858 372 2,414 53 9,697 Operating expenses Cost of sales and services and equipment rentals (3,277) (152) (1,572) (56) (5,057) Selling and administrative expenses (648) (171) (330) (2) (1,151) Operating income 2,933 49 512 (5) 3,489 Finance cost Net gain on exchange 163 Interest income 80 Interest expenses (182) Income before tax 3,550 Income tax (1,248) Income before minority interests 2,302 Share of net profit in subsidiaries to minority interests - Net income for the period 2,302 Consolidated total assets 45,633 1,206 3,077 644 50,560 Consolidated total liabilities 23,845 278 1,357 162 25,642 Depreciation charge 139 9 10 1 159 Amortisation charge 1,127 35 (3) 19 1,178 3 Financial information by segment (continued) Consolidated For the six-month period ended 30 June 2000 Mobile phone Pager sales Mobile phone Datanet Services and services sales services Group Million Baht Million Baht Million Baht Million Baht Million Baht Revenues from services and equipment rentals 10,992 611 99 118 11,820 Sales - 117 4,343 12 4,472 Compensation income 1,032 - - - 1,032 (more)