financial report ais
TRANSCRIPT
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Advanced Info Service Public Company Limited
and its Subsidiaries
Financial statements for the year ended
31 December 2014
andIndependent Auditor’s Report
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Independent Auditor’s Report
To the Shareholders of Advanced Info Service Public Company Limited
I have audited the accompanying consolidated and separate financial statements of Advanced Info ServicePublic Company Limited and its subsidiaries (the “Group”), and of Advanced Info Service Public Company
Limited (the “Company”), respectively, which comprise the consolidated and separate statements offinancial position as at 31 December 2014, the consolidated and separate statements of income,
comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a
summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated and Separate Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated and separatefinancial statements in accordance with Thai Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated and separate financialstatements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on these consolidated and separate financial statements based on
my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards requirethat I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated and separate financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my auditopinion.
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Opinion
In my opinion, the consolidated and separate financial statements present fairly, in all material respects, thefinancial position of the Group and the Company, respectively, as at 31 December 2014 and their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.
(Charoen Phosamritlert)Certified Public AccountantRegistration No. 4068
KPMG Phoomchai Audit Ltd.Bangkok
5 February 2015
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of financial position
Assets Note 2014 2013 2014 2013
Cur rent assets
Cash and cash equivalents 6 14,258,066,402 11,473,120,876 1,679,292,348 3,964,630,780
Specifically-designated bank deposits 7 3,709,327,905 3,781,141,127 - -
Current investments 8 1,542,448,983 1,576,941,592 - -
Trade accounts receivable 5,9 10,415,388,789 10,264,184,371 9,944,049,122 11,529,604,208
Other receivables 5,10 5,900,650,118 4,851,425,229 1,987,196,143 1,205,237,858
Short-term loans to related parties 5 95,000,000 - 35,589,760,000 35,386,900,000
Inventories 11 2,519,497,229 2,864,932,209 52,163,408 80,021,810
Other current assets 686,131,869 153,136,150 140,976,544 -
Total current assets 39,126,511,295 34,964,881,554 49,393,437,565 52,166,394,656
Non-cu rr ent assets
Investments in associate 12 - - - -
Investments in subsidiaries 13 - - 7,912,145,488 7,912,143,008
Other long-term investments 8 58,399,310 104,360,750 46,999,310 93,160,750
Property, plant and equipment 14 60,702,586,423 35,922,236,163 1,103,188,064 1,580,204,790
Intangible assets under
the Agreements for operations 3(b),15 8,738,038,803 20,499,802,732 8,738,038,803 20,491,416,123
Goodwill 16 34,930,692 34,930,692 - -
Spectrum license 17 12,624,410,361 13,600,648,306 - -
Other intangible assets 18 2,504,683,294 2,178,034,730 112,532,688 159,337,759
Swap and forward contracts receivable 37 568,880,941 653,397,782 568,880,941 653,397,782
Deferred tax assets 19 1,441,855,941 3,557,332,641 667,900,342 3,216,666,321
Other non-current assets 5 550,265,957 510,084,969 999,138,724 671,294,457
Total non-current assets 87,224,051,722 77,060,828,765 20,148,824,360 34,777,620,990
Total assets 126,350,563,017 112,025,710,319 69,542,261,925 86,944,015,646
Consolidated Separate
financial statements financial statements
(in Baht)
31 December 31 December
The accompanying notes are an integral part of these financial statements.
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of financial position
Liabilities and equity Note 2014 2013 2014 2013
Current liabiliti es
Short-term loans from financial institutions 20 - 4,000,000,000 - 4,000,000,000
Trade accounts payable 5,21 11,903,114,252 11,718,205,683 1,285,824,610 1,621,377,526
Other payables 5,22 11,188,941,077 9,536,172,211 2,824,131,920 4,925,418,639
Short-term loan from related parties 5 - - - 4,400,000,000
Current portion of long-term borrowings 20 2,571,630,615 5,303,408,757 2,560,792,322 5,297,776,745
Current portion of spectrum license payable 17 3,656,250,000 3,656,250,000 - -
Accrued revenue sharing expenses 1 5,130,156,868 3,534,750,009 4,989,582,697 3,394,175,838
Unearned income - mobile phone service 2,183,175,400 1,599,664,604 628,770,725 1,134,085,114
Advanced receipts from customers 3,709,327,905 2,985,927,727 - -
Income tax payable 2,195,545,817 2,816,611,446 - 1,923,263,743
Other current liabilities 367,976,407 340,245,305 330,908,064 304,012,947
Total current liabilities 42,906,118,341 45,491,235,742 12,620,010,338 27,000,110,552
Non-curr ent liabil ities
Long-term borrowings 20 34,478,291,366 15,354,770,702 12,869,374,320 15,339,346,797
Employee benefit obligations 23 1,499,743,034 1,361,376,034 406,012,895 767,853,695
Spectrum license payable 17 - 3,656,250,000 - -
Other non-current liabilities 601,655,751 269,491,753 33,268,900 55,861,060
Total non-current liabilities 36,579,690,151 20,641,888,489 13,308,656,115 16,163,061,552
Total liabilities 79,485,808,492 66,133,124,231 25,928,666,453 43,163,172,104
Equity
Share capital 24
Authorised share capital 4,997,459,800 4,997,459,800 4,997,459,800 4,997,459,800
Issued and paid-up share capital 2,973,095,330 2,973,095,330 2,973,095,330 2,973,095,330
Additional paid-in capital
Premium on ordinary shares 24 22,372,276,085 22,372,276,085 22,372,276,085 22,372,276,085
Retained earnings
Appropriated
Legal reserve 25 500,000,000 500,000,000 500,000,000 500,000,000
Unappropriated 20,710,294,423 19,729,332,548 17,742,315,443 17,928,485,775
Other components of equity 26 194,732,371 173,403,605 25,908,614 6,986,352
Equity attributable to owners
of the Company 46,750,398,209 45,748,107,568 43,613,595,472 43,780,843,542
Non-controlling interests 114,356,316 144,478,520 - -
Total equity 46,864,754,525 45,892,586,088 43,613,595,472 43,780,843,542
Total liabilities and equity 126,350,563,017 112,025,710,319 69,542,261,925 86,944,015,646
31 December 31 December
financial statements financial statements
(in Baht)
Consolidated Separate
The accompanying notes are an integral part of these financial statements.
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of income
Note 2014 2013 2014 2013
Revenues
Revenues from rendering of services and
equipment rentals 5 125,396,923,290 127,816,101,491 62,030,056,662 106,024,435,809
Revenue from sale of goods 5 23,331,862,141 18,995,274,129 8,379,611 516,324,259
Construction income from the Agreements
for operations 3(b) 600,261,701 3,766,442,977 600,261,701 3,639,599,320
Total revenues 149,329,047,132 150,577,818,597 62,638,697,974 110,180,359,388
Costs
Cost of rendering of services and
equipment rentals 32 (45,206,190,813) (43,136,095,291) (27,065,167,097) (37,444,665,645)
Revenue sharing expense 1 (14,593,801,827) (24,273,347,402) (14,593,801,827) (22,864,248,043)
Cost of sale of goods (23,148,015,893) (17,760,269,921) (8,295,132) (515,767,375)
Construction cost from the Agreements
for operations 3(b) (600,261,701) (3,766,442,977) (600,261,701) (3,639,599,320)
Total costs (83,548,270,234) (88,936,155,591) (42,267,525,757) (64,464,280,383)
Gross profit 65,780,776,898 61,641,663,006 20,371,172,217 45,716,079,005
Sell ing and admin istrati ve expenses
Selling expenses 32 (6,219,705,961) (4,331,356,643) (647,636,036) (1,819,177,988)
Administrative expenses 32 (12,640,674,559) (10,545,060,955) (4,727,020,237) (8,735,287,401)
Total selling and administrative expenses (18,860,380,520) (14,876,417,598) (5,374,656,273) (10,554,465,389)
Profit from sales, services and
equipment rentals 46,920,396,378 46,765,245,408 14,996,515,944 35,161,613,616
Investment income 5,13,29 370,107,076 548,204,710 24,132,238,049 9,544,154,772
Other operating income 30 329,786,099 322,552,869 857,938,259 627,814,405 Share of loss of associate 12 (3,625,000) - - -
Impairment loss of assets 13,16 (11,972,822) - - (216,000,000)
Net foreign exchange gain (loss) 188,934,345 (233,001,951) 16,760,622 57,558,526
Management benefit expenses 5 (183,866,171) (163,084,715) (183,076,171) (162,774,715)
Finance costs 5,33 (1,526,869,915) (1,002,278,159) (902,333,098) (1,017,269,330)
Profit before income tax expense 46,082,889,990 46,237,638,162 38,918,043,605 43,995,097,274
Income tax expense 34 (10,079,716,669) (10,007,635,247) (4,052,010,256) (7,347,112,959)
Profit for the year 36,003,173,321 36,230,002,915 34,866,033,349 36,647,984,315
Profit attributable to:
Owners of the Company 36,033,165,556 36,274,127,624 34,866,033,349 36,647,984,315
Non-controlling interests (29,992,235) (44,124,709) - -
Profit for the year 36,003,173,321 36,230,002,915 34,866,033,349 36,647,984,315
Earnings per share 35
Basic earnings per share 12.12 12.20 11.73 12.33
Diluted earning per share 12.12 12.20 11.73 12.33
Consolidated Separate
financial statements financial statements
(in Baht)
For the year ended 31 December For the year ended 31 December
The accompanying notes are an integral part of these financial statements.
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of comprehensive income
Note 2014 2013 2014 2013
Profit for the year 36,003,173,321 36,230,002,915 34,866,033,349 36,647,984,315
Other comprehensive income
Net change in fair value of available-for-sale
investments 2,428,205 2,863,186 - -
Other comprehensive income for the year,
net of income tax 2,428,205 2,863,186 - -
Total comprehensive income for the year 36,005,601,526 36,232,866,101 34,866,033,349 36,647,984,315
Total comprehensive income attributable to:
Owners of the Company 36,035,572,060 36,276,953,775 34,866,033,349 36,647,984,315
Non-controlling interests (29,970,534) (44,087,674) - -
Total comprehensive income for the year 36,005,601,526 36,232,866,101 34,866,033,349 36,647,984,315
(in Baht)
Consolidated Separate
financial statements financial statements
For the year ended 31 December For the year ended 31 December
The accompanying notes are an integral part of these financial statements.
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of changes in equity
Issued and Fair value Total equity
paid-up Reserve for Gain on changes in Total other attributable to Non-
share Share Legal share-based dilution of available-for-sale components owners of controlling Total
Note capital premium reserve Unappropriated payment investment investments of equity the Company interests equity
Year ended 31 December 2013
Balance at 1 January 2013 2,973,095,330 22,372,276,085 500,000,000 17,344,196,146 - 161,186,663 2,404,439 163,591,102 43,353,158,663 188,692,640 43,541,851,303
Transactions with owners, recorded directly in equity
Share-base payment transaction 26 - - - - 6,986,352 - - 6,986,352 6,986,352 - 6,986,352
Cash returned from liquidation of subsidiaries - - - - - - - - - (610) (610)
Dividends to owners of the Company 5,36 - - - (33,888,991,222) - - - - (33,888,991,222) (125,836) (33,889,117,058)
Total transactions with owners, recorded directly in equity - - - (33,888,991,222) 6,986,352 - - 6,986,352 (33,882,004,870) (126,446) (33,882,131,316)
Comprehensive income for t he year
Profit - - - 36,274,127,624 - - - - 36,274,127,624 (44,124,709) 36,230,002,915
Other comprehensive income - - - - - - 2,826,151 2,826,151 2,826,151 37,035 2,863,186
Total comprehensive income for the year - - - 36,274,127,624 - - 2,826,151 2,826,151 36,276,953,775 (44,087,674) 36,232,866,101
Balance at 31 December 2013 2,973,095,330 22,372,276,085 500,000,000 19,729,332,548 6,986,352 161,186,663 5,230,590 173,403,605 45,748,107,568 144,478,520 45,892,586,088
(in Baht)
Consolidated financial statements
Retained earnings Other components of equity
The accompanying notes are an integral part of these financial statements.7
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of changes in equity
Issued and Fair value Total equity
paid-up Reserve for Gain on changes in Total other attributable to Non-
share Share Legal share-based dilution of available-for-sale components owners of controlling Total
Note capital premium reserve Unappropriated payment investment investments of equity the Company interests equity
Year ended 31 December 2014
Balance at 1 January 2014 2,973,095,330 22,372,276,085 500,000,000 19,729,332,548 6,986,352 161,186,663 5,230,590 173,403,605 45,748,107,568 144,478,520 45,892,586,088
Transactions with owners, recorded directly in equity
Contributi ons by and distributi ons to owner of the Company
Share-base payment transaction 26 - - - - 18,922,262 - - 18,922,262 18,922,262 - 18,922,262
Dividends to owners of the Company 5,36 - - - (35,052,203,681) - - - - (35,052,203,681) (149,190) (35,052,352,871)
Total contributi ons by and distributi ons to owner of the Company - - - (35,052,203,681) 18,922,262 - - 18,922,262 (35,033,281,419) (149,190) (35,033,430,609)
Changes in ownership in terests in subsidiari es
A cq ui sit io n o f n on -co nt ro ll in g i nter es ts wit ho ut a ch an ge in co nt ro l - - - - - - - - - (2,480) (2,480)
Total changes in ownership interests in subsidiaries - - - - - - - - - (2,480) (2,480)
Total transactions with owners, recorded directly in equity - - - (35,052,203,681) 18,922,262 - - 18,922,262 (35,033,281,419) (151,670) (35,033,433,089)
Comprehensive income for t he year
Profit - - - 36,033,165,556 - - - - 36,033,165,556 (29,992,235) 36,003,173,321
Other comprehensive income - - - - - - 2,406,504 2,406,504 2,406,504 21,701 2,428,205
Total comprehensive income for the year - - - 36,033,165,556 - - 2,406,504 2,406,504 36,035,572,060 (29,970,534) 36,005,601,526
Balance at 31 December 2014 2,973,095,330 22,372,276,085 500,000,000 20,710,294,423 25,908,614 161,186,663 7,637,094 194,732,371 46,750,398,209 114,356,316 46,864,754,525
Retained earnings Other components of equity
(in Baht)
Consolidated financial statements
The accompanying notes are an integral part of these financial statements.8
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of changes in equity
Other components
of equity
Issued and Reserve for
paid-up Share Legal share-based
Note share capital premium reserve Unappropriated payment Total equity
Year ended 31 December 2013
Balance at 1 January 2013 2,973,095,330 22,372,276,085 500,000,000 15,169,492,682 - 41,014,864,097
Transactions with owners, recorded directly in equity
Share-base payment transaction 26 - - - - 6,986,352 6,986,352
Dividends to owners of the Company 5,36 - - - (33,888,991,222) - (33,888,991,222)
Total transactions with owners, recorded directly in equity - - - (33,888,991,222) 6,986,352 (33,882,004,870)
Comprehensive income for the year
Profit - - - 36,647,984,315 - 36,647,984,315
Total comprehensive income for the year - - - 36,647,984,315 - 36,647,984,315
Balance at 31 December 2013 2,973,095,330 22,372,276,085 500,000,000 17,928,485,775 6,986,352 43,780,843,542
(in Baht)
Separate financial statements
Retained earnings
The accompanying notes are an integral part of these financial statements.9
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of changes in equity
Other components
of equity
Issued and Reserve for
paid-up Share Legal share-based
Note share capital premium reserve Unappropriated payment Total equity
Year ended 31 December 2014
Balance at 1 January 2014 2,973,095,330 22,372,276,085 500,000,000 17,928,485,775 6,986,352 43,780,843,542
Transactions with owners, recorded directly in equity
Share-base payment transaction 26 - - - - 18,922,262 18,922,262
Dividends to owners of the Company 5,36 - - - (35,052,203,681) - (35,052,203,681)
Total transactions with owners, recorded directly in equity - - - (35,052,203,681) 18,922,262 (35,033,281,419)
Comprehensive income for the year
Profit - - - 34,866,033,349 - 34,866,033,349
Total comprehensive income for the year - - - 34,866,033,349 - 34,866,033,349
Balance at 31 December 2014 2,973,095,330 22,372,276,085 500,000,000 17,742,315,443 25,908,614 43,613,595,472
Separate financial statements
Retained earnings
(in Baht)
The accompanying notes are an integral part of these financial statements.10
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of cash flows
Note 2014 2013 2014 2013
Cash flows fr om operati ng activities
Profit for the year 36,003,173,321 36,230,002,915 34,866,033,349 36,647,984,315
Adjustments for
Depreciation 6,224,630,590 3,037,080,038 496,367,600 607,516,902
Amortisation of intangible assets 12,697,121,500 13,504,064,271 11,354,678,791 11,111,915,640
Impairment loss of assets 3,14,15 11,972,822 - - 216,000,000
Investment income 5,13,29 (370,107,076) (548,204,710) (24,132,238,049) (9,544,154,772)
Finance costs 5,33 1,526,869,915 1,002,278,159 902,333,098 1,017,269,330
Doubtful accounts and bad debts expense 9 1,240,096,982 786,761,009 37,392,229 359,749,826
Share-based payment transaction 26 18,922,262 6,986,352 18,922,262 6,986,352
Allowance for obsolete, decline in value
and write-off inventories 60,996,823 72,978,456 2,341,242 14,139,273
Loss on disposals and write-off of assets 864,996,826 562,133,543 834,544,090 556,336,656
Unrealised (gain) loss on exchange 19,719,184 (3,342,575) (37,711,641) (20,246,438) Share of loss of associate 12 3,625,000 - - -
Income tax expense 34 10,079,716,669 10,007,635,247 4,052,010,256 7,347,112,959
Cash provided by operation before changes in
operating assets and liabilities 68,381,734,818 64,658,372,705 28,394,673,227 48,320,610,043
Changes in operating assets and liabilities
Specifically-designated bank deposits 71,813,222 (83,289,728) - -
Trade accounts receivable (1,402,917,732) (2,968,007,766) 1,542,974,551 (2,311,658,520)
Other receivables (293,262,059) (989,977,626) 180,562,435 45,227,749
Inventories 284,438,157 (1,511,529,346) 25,517,160 177,101,062
Other current assets (392,022,582) (74,169,116) - 23,791,727
Swap and forward contracts (receivable) payable (24,199,251) (8,053,509) (24,756,405) (8,054,636)
Other non-current assets (40,180,987) (8,380,164) (327,844,267) (241,377,526)
Trade accounts payable 880,463,011 474,589,788 121,040,262 (1,596,514,056)
Other payables 1,530,805,592 2,135,419,423 (2,048,496,459) (2,174,492,655)
Accrued revenue sharing expenses 1,595,406,859 (1,319,943,269) 1,595,406,859 (512,347,632)
Unearned income - mobile phone service 583,510,796 (99,680,385) (505,314,389) (791,705,677)
Advanced receipts from customers 723,400,178 189,893,206 - -
Other current liabilities 190,894,611 66,508,915 190,892,751 137,501,526
Other non-current liabilities 84,478,109 91,621,954 (363,647,909) (69,153,440)
Cash generated from operating activities 72,174,362,742 60,553,375,082 28,781,007,816 40,998,927,965
Income tax paid (9,353,964,849) (9,224,648,109) (4,124,735,021) (6,878,534,223)
Net cash from operating activities 62,820,397,893 51,328,726,973 24,656,272,795 34,120,393,742
For the year ended 31 December For the year ended 31 December
Consolidated Separate
financial statements financial statements
(in Baht)
The accompanying notes are an integral part of these financial statements.
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Advanced Info Service Public Company Limited and its Subsidiaries
Statement of cash flows
Note 2014 2013 2014 2013
Cash flows from investing activi ties
Interest received 372,803,497 558,886,730 1,015,193,520 1,316,239,515
Purchase of property, plant, equipment
and computer software (31,731,849,208) (23,013,592,746) (281,229,371) (513,837,398)
Sale of property and equipment 27,409,559 15,618,332 236,965,039 41,228,357
Purchase of intangible assets under
the Agreements for operations (830,272,648) (5,446,556,296) (830,272,648) (5,158,865,300)
Payment of spectrum license (3,656,250,000) - - -
Net increase in short-term loans
to subsidiaries and associate (95,000,000) - (202,860,000) (16,081,900,000)
Net (increase) decrease in other investments 8 82,882,254 (230,973,505) 46,161,440 -
Additional investment in subsidiaries
and associate 13 (3,625,000) - (2,480) (1,135,000,000)
Dividend received 5 10,000,000 - 22,852,750,810 8,215,574,164 Net cash from (used in) investing activities (35,823,901,546) (28,116,617,485) 22,836,706,310 (13,316,560,662)
Cash f lows from f inancing activities
Interest paid (1,229,812,193) (959,556,015) (918,388,407) (995,143,957)
Other finance costs paid (124,185,478) (20,384,781) (11,680,623) (14,392,840)
Finance lease principal payments (35,511,069) (29,829,880) (25,549,603) (23,876,887)
Net increase (decrease) in short-term loans
from financial institutions (4,000,000,000) 4,000,000,000 (4,000,000,000) 4,000,000,000
Net increase (decrease) in short-term loans
from subsidiaries - - (4,400,000,000) 4,400,000,000
Increase in long-term borrowings 21,600,400,000 7,812,480,000 - 7,812,480,000
Decrease in from long-term borrowings (5,370,463,286) (8,485,647,730) (5,370,463,286) (8,486,147,730)
Cash returned paid to non-controlling interests
from liquidation of subsidiaries - (610) - -
Acquisition of non-controllong interests (2,480) - - -
Dividend paid (35,052,352,871) (33,889,117,058) (35,052,203,681) (33,888,991,222)
Net cash used in financing activities (24,211,927,377) (31,572,056,074) (49,778,285,600) (27,196,072,636)
Net increase (decrease) in cash and
cash equivalents 2,784,568,970 (8,359,946,586) (2,285,306,495) (6,392,239,556)
Cash and cash equivalents at 1 January 11,473,120,876 19,833,022,300 3,964,630,780 10,356,825,174
Effect of exchange rate changes on
balances held in foreign currencies 376,556 45,162 (31,937) 45,162
Cash and cash equivalents at 31 December 14,258,066,402 11,473,120,876 1,679,292,348 3,964,630,780
Supplemental disclosures of cash flow inf ormati on
Non-cash transactions
Outstanding debts arising from investment in property,
plant and equipment, intangible assets under
the Agreements for operations and spectrum license 10,781,561,867 11,528,914,889 128,246,485 585,507,328
financial statements financial statements
For the year ended 31 December For the year ended 31 December
(in Baht)
Consolidated Separate
The accompanying notes are an integral part of these financial statements.
12
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Note Contents
1 General information
2 Basis of preparation of the financial statements
3
Changes in accounting policies4 Significant accounting policies5 Related parties6 Cash and cash equivalents7 Specifically-designated bank deposits8 Other investments
9 Trade accounts receivable10 Other receivables11 Inventories12 Investments in associate
13 Investments in subsidiaries14 Property, plant and equipment
15
Intangible assets under the Agreements for operations16 Goodwill17 License for operation right in spectrum of telecommunication
18 Other intangible assets19 Deferred tax
20 Interest-bearing liabilities21 Trade accounts payable
22 Other payables23 Employee benefit obligations24 Share capital
25 Legal reserve
26 Other components of equity
27
Segment information28 Revenue of the Company under the NBTC’s regulation
29 Investment income
30 Other operating income
31 Provident fund
32 Expenses by nature
33 Finance costs
34 Income tax expense
35 Earnings per share
36 Dividends
37 Financial instruments
38
Commitments with non-related parties39 Contingent liabilities
40 Significant events, commercial disputes and litigation
41 Events after the reporting period
42 Thai Financial Reporting Standards (TFRS) not yet adopted
43 Reclassification of accounts
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These notes form an integral part of the financial statements.
The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in
the Thai language. These English language financial statements have been prepared from the Thai
language statutory financial statements, and were approved and authorised for issue by the Board ofDirectors on 5 February 2015.
1 General information
Advanced Info Service Public Company Limited “the Company”, is incorporated in Thailand and hasits registered office at 414 Phaholyothin Road, Phayathai, Bangkok, Thailand.
The Company was listed on the Stock Exchange of Thailand in November 1991.
Intouch Holdings Public Company Limited is a major shareholder, holding 40.45% (2013: 40.45%) ofthe share capital of the Company and is incorporated in Thailand. SingTel Strategic Investments Pte
Ltd. is a shareholder holding 23.32% (2013: 23.32%) of the share capital of the Company and isincorporated in Singapore.
The major principal business operations of the Company and its subsidiaries (“the Group”) are
summarised as follows:
1) The operation of a 900-MHz CELLULAR TELEPHONE SYSTEM as the operator. TheCompany has been granted permission from TOT Public Company Limited (“TOT”), under theAgreement for operation dated 27 March 1990, to operate and service of Cellular Mobile
Telephone, either analog (NMT) or Digital GSM, 900 MHz frequency nationwide, parallel operationfor 25 years since 1 October 1990, being the first commercial operating date of service. The
Agreement ends on 30 September 2015. The Company is obliged to comply with various
conditions and pay revenue sharing in accordance with the Agreement.
Under the Agreement, the Company shall be entitled to immediately transfer the ownership rightof its tools and equipment or assets for operating the 900-MHz Cellular System to TOT when the
installation has been completed and the Company shall pay TOT annual revenue sharing inaccordance with the Agreement at the percentage of annual revenues and any benefit from the
mobile phone service prior to deducting any expenses and any tax or the minimum annual revenuesharing stipulated in the Agreement. The Agreement does not specify a minimum cumulativeamount over the term of the Agreement. The percentages of the service revenues and minimumannual revenue sharing for each year are as follows:
Year Percentage of
revenues
Minimum annual revenue sharing
(in million Baht)
1 - 5 15 13 to 1476 - 10 20 253 to 484
11 - 15 25 677 to 965
16 - 20 30 1,236 to 1,46021 -25 30 1,460
2) The operation of a DATAKIT VIRTUAL CIRCUIT SWITCH as the operator. Advanced Datanetwork Communications Co., Ltd. (“ADC”), an indirect subsidiary, has been granted permissionfrom TOT Public Company Limited (“TOT”), under the Agreement dated 19 September 1989, for
rendering services for DATAKIT VIRTUAL CIRCUIT SWITCH in the area of the MetropolitanTelephone Exchange.
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Under the Agreement, ADC shall be entitled to immediately transfer the ownership right of its
tools and equipment or assets for operation of DATAKIT System to TOT when the installationhas been completed and ADC shall pay TOT annual revenue sharing in accordance with the
Agreement at the percentage of annual revenues and any benefit from service of DATAKIT
VIRTUAL CIRCUIT SWITCH prior to deducting any expenses and any tax or the minimumannual revenue sharing stipulated in the Agreement.
ADC and TOT have mutually agreed to amend the Agreement and signed the SupplementalAgreement on 25 September 1997 to extend the validity period from 10 years to 25 years (suchvalidity period shall be ended on 24 September 2022) and waive the collection of annual revenue
sharing under the agreements effective from 25 September 1997. ADC issued 10.75 millionordinary shares at a par value of Baht 10 (11.23% of total shares) to TOT on 17 March 1998 inconsideration of such waiver. As at 31 December 2014, TOT owns 48.12% of ADC’s total shares(2013: 48.12%).
3) The operation of a 1800-MHz CELLULAR TELEPHONE SYSTEM as the operator. Digital
Phone Company Limited (“DPC”), a subsidiary, had been granted permission from CAT TelecomPublic Company Limited (“CAT”), under the Agreement for operation dated 19 November 1996(“the Agreement”), to operate and service Cellular Mobile Telephone: Digital PCN (PERSONAL
COMMUNICATION NETWORK) 1800, frequency between 1747.9 MHz to 1760.5 MHz and1842.9 MHz to 1855.5 MHz, nationwide. DPC started the operation commencing from 28 May
1997, ending 15 September 2013 and DPC was obliged to comply with various conditions and payrevenue sharing in accordance with the Agreement.
Under the Agreement, DPC was entitled to immediately transfer the ownership right of itsmachineries, all equipment and tools or assets for operation to CAT upon installation completion
and DPC paid CAT the annual revenue sharing at the percentage of annual revenues and any benefit in according with the accrual basis from the mobile phone service prior to deducting any
expenses and any tax and fees which the minimum revenue sharing must accumulate, over theterm of the Agreement, not less than Baht 5,400 million as follows:
Year Percentage of
revenues
Minimum annual revenue sharing (in million Baht)
1 25 92 - 9 20 60 to 320
10 - 14 25 350 to 650
15 - 16 30 670
As at 31 December 2014, DPC paid the revenue sharing to CAT in a total amount of Baht 15,853million (2013: Baht 15,853 million).
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The Agreement expired on 15 September 2013. Thus, on 16 August 2013, The National Broadcast
and Telecommunication Commission (“NBTC”) has announced a temporary customer protectionmeasure after the Agreement expired to assign the operator to provide continuing services to the
subscribers for up to a further 1 year commencing from the Agreement expiration date. The
operator must comply with the rules and conditions set forth in the announcement. On 17 July2014, the National Council for Peace and Order (“NCPO”) has announced an order No. 94/2557“Suspension the implementation of the Act on Organization to Assign Radio Frequency and toRegulate the Broadcasting and Communications Services” to instruct NBTC to postpone anauction for spectrum licenses for 1 year commencing from the Order date. During the postpone period, the operator has to comply with the NBTC’s announcement on 16 August 2013 to provide
continuing services to the subscribers. The application of those rules and conditions has yet to beclarified in detail by NBTC (including expenses that may be deducted in arriving at a notional profit payable to the State). Consequently, the outcome of complying with this extension on DPCand the Group is, currently, uncertain.
4) The operation of a 2.1-GHz CELLULAR TELEPHONE SYSTEM as the operator. Advanced
Wireless Network Co., Ltd. (“AWN”), a subsidiary, has been granted permission from the Officeof the National Broadcasting and Telecommunications Commission (“NBTC”), under the licensecertificate (“License”) dated 7 December 2012, to operate and service Cellular Mobile Telephone,
frequency between 1950 MHz to 1965 MHz and 2140 MHz to 2155 MHz, nationwide inaccordance with the license certificate no. NBTC/FREQ/TEL/55/1. AWN started the operation
commencing from 7 December 2012, ending 6 December 2027 and AWN is obliged to complywith various conditions and pay fees within the time period as specified in the License.
Details of the Company’s subsidiaries and associate as at 31 December were as follows:
Country of Ownership interestName of the entities Type of business incorporation (%)
2014 2013
Advanced Internet Revolution Co., Ltd. On liquidation process Thailand 99.99 99.99
Advanced DatanetworkCommunications Co., Ltd. *(* Indirect subsidiary)
Service provider ofonline datacommunications servicevia telephone land lineand optical fiber
Thailand 51.00 51.00
Advanced Contact Center Co., Ltd. Service provider of callcenter
Thailand 99.99 99.99
Digital Phone Co., Ltd. Service provider of digitalmobile phone system in1800 MHz frequency
Thailand 98.55 98.55
Advanced Magic Card Co., Ltd. Distributor of cash card business
Thailand 99.99 99.99
Advanced Mpay Co., Ltd. Service provider ofelectronic payment andcash card
Thailand 99.99 99.99
AIN GlobalComm Co., Ltd. Service provider of
international telephoneservice/gateway
Thailand 99.99 99.99
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Country of Ownership interestName of the entities Type of business incorporation (%)
2014 2013Advanced Wireless Network Co., Ltd. Service provider of
cellular telephonenetwork in 2.1-GHzfrequency, distributor ofhandsets and internationaltelephone service
Thailand 99.99 99.99
Super Broadband Network Co., Ltd. Network operator andtelecom service operatori.e. internet (ISP),international & nationalinternet gateway,International PrivateLeased Circuit (IPLC),
Internet Protocol VirtualPrivate Network (IPVPN), voice over IP, andIP Television
Thailand 99.99 99.99
Wireless Device Supply Co., Ltd. Importer and distributorof handset and accessories
Thailand 99.99 99.99
Mobile Broadband Business Co., Ltd.(* Indirect subsidiary)
Completed the process ofliquidation on 28February 2014
Thailand - -
Advanced Mobile Broadband Co., Ltd.(* Indirect subsidiary) Completed the process ofliquidation on 28February 2014
Thailand - -
Fax Lite Co., Ltd. Operate in land and building rental andservice, and relatedfacilities
Thailand 99.98 99.97
MIMO Tech Co., Ltd. Operate IT, contentaggregator, andoutsourcing service for billing and collection
Thailand 99.99 99.99
Advanced Broadband NetworkCo., Ltd.
Currently not start theoperation
Thailand 99.98 99.97
Associate
Information Highway Co., Ltd. Transmission network provider
Thailand 29.00 -
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2 Basis of preparation of the financial statements
(a) Statement of compliance
The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS);
guidelines promulgated by the Federation of Accounting Professions (“FAP”); and applicable rulesand regulations of the Thai Securities and Exchange Commission.
The FAP has issued the following new and revised TFRS relevant to the Group’s/Company’soperations and effective for accounting periods beginning on or after 1 January 2014:
TFRS Topic
TAS 1 (revised 2012) Presentation of Financial Statements
TAS 7 (revised 2012) Statement of Cash Flows
TAS 12 (revised 2012) Income Taxes
TAS 17 (revised 2012) Leases
TAS 18 (revised 2012) Revenue
TAS 19 (revised 2012) Employee Benefits
TAS 21 (revised 2012) The Effects of Changes in Foreign Exchange Rates
TAS 24 (revised 2012) Related Party Disclosures
TAS 28 (revised 2012) Investments in Associates
TAS 31 (revised 2012) Interests in Joint Ventures
TAS 34 (revised 2012) Interim Financial Reports
TAS 36 (revised 2012) Impairments of Assets
TAS 38 (revised 2012) Intangible Assets
TFRS 2 (revised 2012) Share-based Payment
TFRS 5 (revised 2012) Non-current Assets held for Sale and Discontinued Operations
TFRS 8 (revised 2012) Operating Segments
TFRIC 1 Changes in Existing Decommissioning, Restoration and Similar
Liabilities
TFRIC 4 Determining whether an Arrangement contains a Lease
TFRIC 10 Interim Financial Reporting and Impairment
TFRIC 12 Service Concession Arrangements
TFRIC 13 Customer Loyalty Programmes
TFRIC 17 Distributions of Non-cash Assets to Owners
TFRIC 18 Transfers of Assets from Customers
TIC 15 Operating Leases-Incentives
TIC 27 Evaluating the Substance of Transactions Involving the Legal
Form of a LeaseTIC 29 Service Concession Arrangements – Disclosure
TIC 32 Intangible Assets-Web Site Costs
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The initial application of these new and revised TFRS has resulted in changes in certain of the
Group’s/Company’s accounting policies. The effects of these changes, where such effects areconsidered material to the financial statements, are disclosed in note 3.
In addition to the above new and revised TFRS, the FAP has issued a number of other new and revisedTFRS which are effective for financial statements beginning on or after 1 January 2015 and have not been adopted in the preparation of these financial statements. Those new and revised TFRS that arerelevant to the Group’s/Company’s operations are disclosed in note 42.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the followingmaterial items in the statements of financial position:
- derivative financial instruments are measured at fair value;
- financial instruments at fair value through profit or loss are measured at fair value;
-
available-for-sale financial assets are measured at fair value.
(c) Functional and Presentation currency
The financial statements are presented in Thai Baht, which is the Group/Company’s functionalcurrency. All financial information presented in Thai Baht has been rounded in the notes to thefinancial statements to the nearest million unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of
assets, liabilities, income and expenses. Actual results may differ from estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which estimates are revised and in any future periodsaffected.
Information about significant areas of estimation uncertainty and critical judgements in applyingaccounting policies that have the most significant effect on the amount recognised in the financialstatements is included in the following notes:
Note 4(s) Current and deferred taxation Note 9 Allowance for doubtful accounts
Note 11 Allowance for obsolete inventories Note 14 Utilisation of property, plant and equipment Note 15 Utilisation of intangible asset under the Agreement for operations Note 13, 16 Key assumptions used in discounted cash flow projections Note 18 Utilisation of intangible assets
Note 23 Measurement of employee benefit obligations Note 37 Valuation of financial instruments
Note 39, 40 Provisions and contingencies / Significant events, commercial disputes andlitigation
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3 Changes in accounting policies
(a) Overview
From 1 January 2014, consequent to the adoption of new and revised TFRS as set out in note 2, theGroup/Company has changed its accounting policies in the following areas having a material effect onthe Group’s/Company’s financial statements:
· Accounting for service concession arrangements
A description of the nature and effect of these changes in accounting policy are included in notes 3(b) below:
(b) Accounting for service concession arrangements
From 1 January 2014, the Group/Company has adopted TFRIC 12 - Service concession arrangements.
TFRIC 12 gives guidance on the accounting by operators for public-to-private service concession
agreements under which the grantor controls and regulates the services provided; to whom they are provided; and at what price; and also controls any significant residual interest in the related
infrastructure at the end of the agreement term. The operator recognises its interest in the concessionas either a financial asset or an intangible asset arising from the concession agreement, depending oncriteria set out in TFRIC 12, and not as property, plant and equipment. The Group’s/Company’saccounting policy for service concession arrangements is as follows:
The Group/Company recognises an intangible asset arising from the Agreements for operation when ithas a right to charge for usage of infrastructure of the Agreements for operation. An intangible asset
received as consideration for providing construction or upgrade services in the Agreements for
operation is measured at fair value upon initial recognition. Subsequent to initial recognition theintangible asset is measured at cost, which includes capitalised borrowing costs, less accumulatedamortisation and accumulated impairment losses.
Revenue relating to construction or upgrade services under the Agreements for operation is recognised
based on the stage of completion of the work performed. Operation or service revenue is recognised inthe period in which the services are provided by the Group/Company. When the Group/Company provides more than one service in the Agreements for operation, the consideration received is
allocated by reference to the relative fair values of the services delivered.
The Group/Company has recognised no profit margin on such revenues because the (i) model of theAgreements for operation is not designed to generate profits from the infrastructure construction, but
from the service rendering; (ii) the way the Group/Company manages the constructions is highly based on outsourced services and; (iii) there are no profit margins on the infrastructure construction inthe Group’s/Company’s business and operations. Management believes that any gains on theseoperations are irrelevant and, accordingly, no amounts in addition to the effective costs have beenconsidered as a part of revenues. Therefore, construction revenues and costs are presented in the
statements of income in the same amounts.
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The effects of the change are recognised retrospectively in the financial statements. The impact of the
change on the financial statements is as follows:
Consolidated Separate
financial statements financial statements
Statement of income for the
year ended 31 December 2014 2013 2014 2013(in million Baht)
Increase in construction income from theAgreements for operation 600 3,766 600 3,640
Increase in construction cost from theAgreements for operation (600) (3,766) (600) (3,640)
Profit (loss) - - - -
4 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in thesefinancial statements except as explained in note 3, which addresses change in accounting policies.
(a) Basis of consolidation
The consolidated financial statements relate to the Company and its subsidiaries (together referred toas the “Group”).
Business combinations
The Group/Company applies the acquisition method for all business combinations other than those
with entities under common control.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefitsfrom its activities. In assessing control, the Group/Company takes into consideration potential voting
rights that currently are exercisable. The acquisition date is the date on which control is transferred tothe acquirer. Judgment is applied in determining the acquisition date and determining whether control
is transferred from one party to another.
Goodwill is measured as the fair value of the consideration transferred including the recognised
amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fairvalue) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition
date.
Consideration transferred includes the fair values of the assets transferred, liabilities incurred by theGroup/Company to the previous owners of the acquiree, and equity interests issued by theGroup/Company. Consideration transferred also includes the fair value of any contingentconsideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination. If a business combination results in the termination of pre-existing relationships between the Group/Company and the acquiree, then the lower of the termination amount, as containedin the agreement, and the value of the off-market element is deducted from the consideration
transferred and recognised in other expenses.
When share-based payment awards exchanged (replacement awards) for awards held by the acquiree’s
employees (acquiree’s awards) relate to past services, then a part of the market-based measure of theawards replaced is included in the consideration transferred. If they require future services, then thedifference between the amount included in consideration transferred and the market-based measure ofthe replacement awards is treated as post-combination compensation cost.
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A contingent liability of the acquiree is assumed in a business combination only if such a liability
represents a present obligation and arises from a past event, and its fair value can be measuredreliably.
The Group/Company measures any non-controlling interest at its proportionate interest in theidentifiable net assets of the acquiree.
Transaction costs that the Group/Company incurs in connection with a business combination, such aslegal fees, and other professional and consulting fees are expensed as incurred.
Acquisitions from entities under common control
Business combinations of entities or businesses under common control are accounted for using amethod similar to the pooling of interest method and in accordance with the Guideline issued in 2009
by the FAP.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power,directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefitsfrom its activities. The financial statements of subsidiaries are included in the consolidated financialstatements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed where necessary to align them with the
policies adopted by the Group. Losses applicable to non-controlling interests in a subsidiary areallocated to non- controlling interests even if doing so causes the non- controlling interests to have adeficit balance.
Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-
controlling interests and the other components of equity related to the subsidiary. Any surplus ordeficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in
the previous subsidiary, then such interest is measured at fair value at the date that control is lost.Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
Associate
Associate is the entity in which the Group has significant influence, but not control, over the financialand operating policies. Significant influence is presumed to exist when the Group holds between 20%and 50% of the voting power of another entity.
Investment in associate is accounted for in the consolidated financial statements using the equity
method (equity-accounted investees) and is recognised initially at cost. The cost of the investmentincludes transaction cost.
The consolidated financial statements include the Group’s share of profit or loss and othercomprehensive income of equity accounted investees from the date that significant influencecommences until the date that significant influence ceases. When the Group’s share of losses exceedsits interest in an equity accounted investee, the Group’s carrying amount of that interest is reduced to
zero and recognition of further losses is discontinued except to the extent that the Group has anobligation or has made payments on behalf of the investee.
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Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements. Unrealised losses areeliminated in the same way as unrealised gains, but only to the extent that there is no evidence ofimpairment.
(b) Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currency (Thai Baht) ofthe Group entities at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated tothe functional currency at the foreign exchange rates ruling at that date. Foreign exchange differencesarising on translation are recognised in profit or loss.
Non-monetary assets and liabilities measured at cost in foreign currencies are translated to thefunctional currency using the foreign exchange rates ruling at the dates of the transactions.
(c) Derivative financial instruments
The Group/Company uses financial instruments to manage exposure to fluctuations in foreigncurrency exchange and interest rates. These instruments, which mainly comprise forward foreigncurrency contracts and cross currency swap agreements, are recorded in the financial statements onthe contract date. The purpose of these instruments is to manage risk.
Forward foreign exchange contracts protect the Group/Company from fluctuations in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Forward contractsare recorded as forward contracts receivable and payable on inception, and are translated at the yearend exchange rate. Unrealised gains or losses on transactions are recognised in profit and loss.Premiums or discounts are amortised in the statement of income on a straight-line basis over thecontract period.
Interest rate derivatives help the Group/Company to better manage effects from fluctuations infloating interest rates. Any differential to be received or paid on an interest rate derivative isrecognised as a component of interest income or expense over the period of such instrument. Gains orlosses of early termination of interest rate derivatives or on repayment of the borrowing are charged to profit or loss.
(d)
Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits andhighly liquid short-term investments with original maturities of three month or less.
(e) Trade and other accounts receivable
Trade and other accounts receivable are stated at their invoice value less allowance for doubtfulaccounts.
The allowance for doubtful accounts is assessed primarily on analysis of payment histories and futureexpectations of customer payments. Bad debts are written off when incurred.
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(f) Inventories
Inventories comprise mobile phones, refill cards, sim cards, premiums and spare parts used for repairsand services.
Inventories are stated at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing theinventories to their present location and condition. Cost is calculated as follows:
Finished goods - moving weighted average methodSpare parts (mobile phones and network) - moving weighted average methodDatanet equipment - first-in, first-out (FIFO) method
Net realisable value is the estimated selling price in the ordinary course of business less the estimatedcosts to complete and to make the sale.
An allowance is made for all deteriorated, changed, obsolete and slow-moving inventories.
(g) Investments
Investments in associate and subsidiaries
Investments in subsidiaries in the separate financial statements of the Company are accounted for
using the cost method less impairment losses. Investment in associate in the consolidated financialstatements is accounted for using the equity method.
Investments in other debt and equity securities
Fixed deposit at bank is presented as part of current investment with maturities over three months, notexceeding one year.
Debt securities and marketable equity securities held for trading are classified as current assets and are
stated at fair value, with any resultant gain or loss recognised in profit or loss.
Debt securities that the Group/Company has the positive intent and ability to hold to maturity areclassified as held-to-maturity investments. Held-to-maturity investments are stated at amortised cost
less any impairment losses. The difference between the acquisition cost and redemption value of suchdebt securities is amortised using the effective interest rate method over the period to maturity.
Debt securities and marketable equity securities, other than those securities held for trading orintended to be held to maturity, are classified as available-for-sale investments. Available-for-sale
investments are, subsequent to initial recognition, stated at fair value, and changes therein, other thanimpairment losses and foreign currency differences on available-for-sale monetary items, are
recognised directly in equity. Impairment losses and foreign exchange differences are recognised in profit or loss. When these investments are derecognised, the cumulative gain or loss previouslyrecognised directly in equity is recognised in profit or loss. Where these investments are interest-
bearing, interest calculated using the effective interest method is recognised in the profit or loss.
Equity securities which are not marketable are stated at cost less any impairment losses.
The fair value of financial instruments classified as held-for-trading and available-for-sale is
determined as the quoted bid price at the reporting date.
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Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount
together with the associated cumulative gain or loss that was reported in equity is recognised in profit
or loss.
If the Group/Company disposes of part of its holding of a particular investment, the deemed cost ofthe part sold is determined using the FIFO method applied to the carrying value of the total holding ofthe investment.
(h) Property, plant and equipment
Recognition and measurement
Owned assets
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributableto bringing the assets to a working condition for their intended use, the costs of dismantling and
removing the items and restoring the site on which they are located, and capitalised borrowing costs.Purchased software that is integral to the functionality of the related equipment is capitalised as partof that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined bycomparing the proceeds from disposal with the carrying amount of property, plant and equipment, andare recognised net in profit or loss. When revalued assets are sold, the amounts included in therevaluation reserve are transferred to retained earnings.
Leased assets
Leases in terms of which the Group/Company substantially assumes all the risk and rewards ofownership are classified as finance leases. Property, plant and equipment acquired by way of financeleases is capitalised at the lower of its fair value and the present value of the minimum lease paymentsat the inception of the lease, less accumulated depreciation and impairment losses. Lease paymentsare apportioned between the finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are charged directlyto profit or loss.
Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carryingamount of the item if it is probable that the future economic benefits embodied within the part willflow to the Group/Company, and its cost can be measured reliably. The carrying amount of thereplaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment
are recognised in profit or loss as incurred.
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Depreciation
Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other
amount substituted for cost, less its residual value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of eachcomponent of an item of property, plant and equipment. The estimated useful lives are as follows:
Buildings and building improvements 5, 20 years
Leasehold building improvements 5, 10 years
Computer, tools and equipment 2 - 20 years
Furniture, fixtures and office equipment 2-5 years
Communication equipment for rental 3 years
Communication equipment for major
corporate customer rental Over period of rental agreement
Vehicles 5 years
No depreciation is provided on freehold land or assets under construction and installation.
Depreciation methods, useful lives and residual values are reviewed at each financial year-end andadjusted if appropriate.
(i) Intangible assets
Assets under the Agreements for operations
Assets under the Agreements for operations represent the cost of certain equipment and other assetswhich have been or have to be transferred to the grantor of the Agreements of operations and arestated at cost less accumulated amortisation and impairment losses.
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. Themeasurement of goodwill at initial recognition is described in note 4(a). Subsequent to initialrecognition, goodwill is measured at cost less accumulated impairment losses. In respect of equity-
accounted investees, the carrying amount of goodwill is included in the carrying amount of theinvestment, and an impairment loss on such an investment is not allocated to any asset, including
goodwill, that forms part of the carrying amount of the equity-accounted investee.
License for operation right in spectrum of telecommunication
License for operation right in spectrum of telecommunication represents the acquisition cost of licenseto operate a mobile phone system under 2.1-GHz.
The operation right
The operation right represents the acquisition cost of certain rights and obligations to operate a mobile phone system.
Other intangible assets
Other intangible assets that are acquired by the Group/Company, which have finite useful lives, aremeasured at cost less accumulated amortisation and accumulated impairment losses.
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Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied inthe specific asset to which it relates. All other expenditure, including expenditure on internallygenerated goodwill and brands, is recognised in profit or loss as incurred.
Amortisation
Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residualvalue.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives ofintangible assets, other than goodwill, from the date that they are available for use, since this most
closely reflects the expected pattern of consumption of the future economic benefits embodied in theasset.
The estimated useful lives are as follows:
Assets under the Agreements for operations
- Mobile phone network digital system 10 years not exceeding the remaining period of the Agreement for operations
- Datanet tools and equipments 10 years not exceeding the remaining period of the Agreement for operations
- Computer system under the Agreement for
operation of 1800-MHz operation
5 years not exceeding the remaining period of the Agreement for operations
Software licences and software development costs 5, 10 years
License for operation right in spectrum of
telecommunication
Over the period of the license
The operation right Over the period of the Agreement for operations
No amortisation is provided on advance payment and assets under construction of the assets under theAgreements for operations.
Amortisation methods, useful lives and residual values are reviewed at each financial year-end and
adjusted if appropriate.
(j) Other assets
Deferred charges
Deferred charges represent commitment fees for long-term loans, costs of long-term leases of spacefor base stations, expenditures relating to the increase of power of electricity at base stations andexpenditures relating to the improvement project of mobile phone service network and are stated atcost less accumulated amortisation and impairment losses.
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Amortisation
Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual
value.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of
intangible assets, other than goodwill, from the date that they are available for use, since this mostclosely reflects the expected pattern of consumption of the future economic benefits embodied in theasset. The estimated useful lives for the current and comparative periods are as follows:
Commitment fees of long-term loans Over the loan agreement period
Bond issuing cost Over the debentures period
Costs of long-term leases for base stations Over the lease agreement period
Expenditures relating to the increase of powerof electricity at base stations
Over the remaining period of the Agreementof operation period
Expenditures relating to the improvement projectof mobile phone service network
4 years
Operation right of the datanet service 10 years not exceeding the remaining periodof the Agreement for operations
(k) Impairment
The carrying amounts of the Group’s/Company’s assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, the assets’recoverable amounts are estimated. For goodwill and intangible assets that have indefinite usefullives or are not yet available for use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unitexceeds its recoverable amount. The impairment loss is recognised in profit or loss.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly inequity and there is objective evidence that the value of the asset is impaired, the cumulative loss thathad been recognised directly in equity is recognised in profit or loss even though the financial assethas not been derecognised. The amount of the cumulative loss that is recognised in profit or loss isthe difference between the acquisition cost and current fair value, less any impairment loss on thatfinancial asset previously recognised in profit or loss.
Calculation of recoverable amount
The recoverable amount of held-to-maturity securities and receivables carried at amortised cost iscalculated as the present value of the estimated future cash flows discounted at the original effectiveinterest rate. Receivables with a short duration are not discounted.
The recoverable amount of available-for-sale financial assets is calculated by reference to the fair
value.
The recoverable amount of a non-financial asset is the greater of the assets’ value in use and fair valueless costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset. For an asset that does not generate cash inflows largely
independent of those from other assets, the recoverable amount is determined for the cash-generatingunit to which the asset belongs.
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Reversals of impairment
An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverableamount can be related objectively to an event occurring after the impairment loss was recognised in
profit or loss. For financial assets carried at amortised cost and available-for-sale financial assets thatare debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assetsthat are equity securities, the reversal is recognised in other comprehensive income.
An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indicationsthat the loss has decreased or no longer exists. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount. An impairment loss is reversedonly to the extent that the asset’s carrying amount does not exceed the carrying amount that wouldhave been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(l) Interest-bearing liabilities
Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges.Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with anydifference between cost and redemption value being recognised in profit or loss over the period of the
borrowings on an effective interest basis.
(m) Trade and other accounts payable
Trade and other accounts payable are stated at cost.
(n) Employee benefits
Provident fund
The Group/Company had provident funds which is a defined contribution plan. The fund’s asset ofthe provident fund is separated from the Group’s/Company’s asset and has been managed by alicensed fund manager. The provident fund receives a cash contribution from employee and therelated Group/Company. The contribution expenditure of the provident fund is recognised as expense
in profit or loss as accrued.
Employee benefit obligations and long-term service award
The obligation in respect of post-employment benefits that provide compensation according to laborlaw and long-term service award are recognised in the financial statements based on calculations by a
qualified actuary using the projected unit credit method.
The Group/Company recognised all actuarial gain and loss arising from employee benefit obligations
in other comprehensive income and all expenses related to employee benefit obligations in profit orloss.
Termination benefits
Termination benefits are recognised as an expense when the Group/Company is committeddemonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate
employment before the normal retirement date, or to provide termination benefits as a result of anoffer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies arerecognised as an expense if the Group/Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If
benefits are payable more than 12 months after the reporting period, then they are discounted to their present value.
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Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as
the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profitsharing plans if the Group/Company has a present legal or constructive obligation to pay this amountas a result of past service provided by the employee, and the obligation can be estimated reliably.
(o) Provisions
A provision is recognised if, as a result of a past event, the Group/Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects current market assessments of the time valueof money and the risks specific to the liability. The unwinding of the discount is recognised as finance
cost.
(p) Revenue
Revenue excludes value added tax and is arrived at after deduction of trade discounts and volume
rebates.
Sale of goods and services rendered
Revenue is recognised in profit or loss when the significant risks and rewards of ownership have beentransferred to the buyer. No revenue is recognised if there is continuing management involvementwith the goods or there are significant uncertainties regarding recovery of the consideration due,
associated costs or the probable return of goods. Service income is recognised as services are provided. Revenue from mobile phone and call center services are recognised when services are
rendered to customers. Revenue from rendering voice/data communications via telephone linenetwork services is recognised when service is rendered.
Rental income
Rental income from rental equipment is recognised in profit or loss on a straight-line basis over theterm of the lease. Lease incentives granted are recognised as an integral part of the total rental
income.
Service concession arrangements
Revenue relating to construction or upgrade services under a service concession arrangement is
recognised based on the stage of completion of the work performed. Operation or service revenue isrecognised in the period in which the services are provided by the Group/Company. When the
Group/Company provides more than one service in a service concession arrangement, theconsideration received is allocated by reference to the relative fair values of the services delivered.
Investments
Revenue from investments comprises dividend and interest income from investments and bank
deposits.
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Dividend income
Dividend income is recognised in profit or loss on the date the Group’s/Company’s right to
receive payments is established.
Interest income
Interest income is recognised in profit or loss as it accrues.
(q) Finance costs
Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions andcontingent consideration, losses on disposal of available-for-sale financial assets, fair value losses on
financial assets at fair value through profit or loss, impairment losses recognised on financial assets(other than trade receivables), and losses on hedging instruments that are recognised in profit or loss.
Borrowing costs that are not directly attributable to the acquisition, construction or production of aqualifying asset are recognised in profit or loss using the effective interest method.
(r) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight line basis over theterm of the lease. Lease incentives received are recognised in profit or loss as an integral part of thetotal lease expense, over the term of the lease.
Contingent lease payments are accounted for by revising the minimum lease payments over theremaining term of the lease when the lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group/Company determines whether such an arrangement is orcontains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependenton the use of that specified asset. An arrangement conveys the right to use the asset if the arrangementconveys to the Group/Company the right to control the use of the underlying asset.
At inception or upon reassessment of the arrangement, the Group/Company separates payments andother consideration required by such an arrangement into those for the lease and those for other
elements on the basis of their relative fair values. If the Group/Company concludes for a finance leasethat it is impracticable to separate the payments reliably, an asset and a liability are recognised at anamount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using theGroup’s/Company’s incremental borrowing rate.
(s) Income tax
Income tax expense for the year comprises current and deferred tax. Current and deferred tax arerecognised in profit or loss except to the extent that they relate to a business combination, or items
recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, usingtax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable inrespect of previous years.
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Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
tax is not recognised if it is probable that they will not be utilised in the foreseeable future.
The measurement of deferred tax reflects the tax consequences that would follow the manner in whichthe Company expects, at the end of the reporting period, to recover or settle the carrying amount of itsassets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they adjust, using tax rates enacted or substantively enacted at the reporting date.
In determining the amount of current and deferred tax, the Group/Company takes into account the
impact of uncertain tax positions and whether additional taxes and interest may be due. The
Group/Company believes that its accruals for tax liabilities are adequate for all open tax years based
on its assessment of many factors, including interpretations of tax law and prior experience. This
assessment relies on estimates and assumptions and may involve a series of judgements about future
events. New information may become available that causes the Group/Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact
tax expense in the period that such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be
available against which the temporary differences can be utilised. Deferred tax assets are reviewed at
each reporting date and reduced to the extent that it is no longer probable that the related tax benefitwill be realised.
(t) Earnings per share
The Group/Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of theCompany by the weighted average number of ordinary shares outstanding during the period, adjustedfor own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinaryshareholders and the weighted average number of ordinary shares outstanding, adjusted for own sharesheld, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and
share options granted to employees.
(u) Segment reporting
Segment results that are reported to the Group’s CEO (the chief operating decision maker) includeitems directly attributable to a segment as well as those that can be allocated on a reasonable basis.
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5 Related parties
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or
are controlled by, or are under common control with the Company, including holding companies,subsidiaries and fellow subsidiaries are related parties of the Company. Individuals owning, directly
or indirectly, an interest in the voting power of the Company that gives them significant influence overthe enterprise, key management personnel, including directors and officers of the Company and closemembers of the family of these individuals and companies associated with these individuals alsoconstitute related parties.
In considering each possible related party relationship, attention is directed to the substance of therelationship, and not merely the legal form.
During the year, the Group/Company has entered into a number of transactions with related parties,the terms of which are negotiated in the ordinary course of business and according to normal tradeco