True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
1.
Basis of preparation
These interim consolidated and Company financial statements are prepared in accordance with Thai generally accepted accounting principles
under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the
financial reporting requirements of the Securities and Exchange Commission. The primary financial statements (i.e. balance sheets, statements
of income, changes in shareholders’ equity and cash flows) are prepared in the full format as required by the Securities and Exchange
Commission. The notes to the financial statements are prepared in a condensed format according to Thai Accounting Standard No. 41,
“Interim Financial Reporting” and additional notes are presented as required by the Securities and Exchange Commission under the Securities
and Exchange Act, B.E. 2535.
An English version of the consolidated and Company interim financial statements have been prepared from the interim financial statements that are
in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory interim
financial statements shall prevail.
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 2005.
Where necessary, comparative figures have also been adjusted to conform with the changes in presentation in the current period.
Costs that incur unevenly during the financial year are anticipated or deferred in the interim report only if it would be also appropriate to
anticipate or defer such costs at the end of the financial year.
Income tax expense is recognised based on 30% of taxable profit for the six-month period ended 30 June 2006.
These interim financial statements should be read in conjunction with the 2005 annual financial statements.
2.
Financial position
As at 30 June 2006, the Company has a deficiency of capital of Baht 887.78 million. However, in July 2006, the Company received a
subscription amounting to Baht 3,345.74 million (Note 25).
3.
Trade accounts receivable, net
Receivable from TOT
Billed customers
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
1,245.14
1,116.38
6,599.39
6,204.20
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
1,245.14
1,116.38
4,048.80
3,856.43
9
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
Receivable from related parties (Note 5)
Less: Allowance for doubtful accounts
Trade accounts receivable, net
662.01
8,506.54
(2,146.65)
6,359.89
1,236.74
8,557.32
(1,921.61)
6,635.71
1,587.54
6,881.48
(1,597.86)
5,283.62
676.94
5,649.75
(1,442.58)
4,207.17
10
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
3.
Trade accounts receivable, net (Continued)
Outstanding trade accounts receivable as at 30 June 2006 and 31 December 2005 can be analysed as follows:
Current
Less than 3 months
3 - 6 months
6 - 12 months
More than 12 months
Less: Allowance for doubtful accounts
Trade accounts receivable, net
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
4,646.18
5,310.95
1,078.52
938.91
623.80
535.26
633.58
552.49
1,524.46
1,219.71
8,506.54
8,557.32
(2,146.65)
(1,921.61)
6,359.89
6,635.71
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
3,757.26
2,957.27
533.03
564.82
434.38
321.65
609.63
116.77
1,547.18
1,689.24
6,881.48
5,649.75
(1,597.86)
(1,442.58)
5,283.62
4,207.17
Trade accounts receivable included receivables under negotiation with TOT and CAT amounting to Baht 250.77 million.
4.
Acquisitions
In December 2005, the Group acquired the additional 2.12% equity interest in UBC at the consideration of Baht 418.24 million.
On 6 January 2006 and 16 March 2006, the Group completed acquisitions of shares of MKSC World Dot Com Company Limited (“MKSC”),
and United Broadcasting Corporation Public Company Limited (“UBC”), resulting in the Group’s equity interest in MKSC and UBC
becoming 99.99% and 98.33%, respectively. The Group is being under the process of determining the fair value of identifiable assets and
liabilities of MKSC and UBC in accordance with Thai Accounting Standard No. 43, “Business Combination”. The goodwill arising from the
acquisitions recorded in the interim financial statements is based on preliminary assessment and would be adjusted when the fair value exercise
is completed.
Details of net assets acquired and goodwill are as follows:
Total
Baht Million
Purchased consideration:
Cash paid
Cash paid previous year
Total purchased consideration
Fair value of net assets acquired
Goodwill
11,842.10
418.24
12,260.34
1,308.14
10,952.20
11
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
4.
Acquisitions (Continued)
The resulting goodwill of Baht 10,952.20 million, goodwill from acquisitions of MKSC and UBC will be amortised on a straight-line basis over ten
years and fourteen years, respectively.
Cash and cash equivalents
Trade accounts receivable
Inventories
Income tax deducted at source
Claimable value added tax
Loan to related party
Other current assets
Property, plant and equipment, net
Other non-current assets:
- Intangible assets, net
- Other non-current assets
Trade accounts payable
Unearned income
Accrued expenses
Other current liabilities
Long-term borrowings
Other non-current liabilities
Minority interest in subsidiaries
Cash and cash equivalents acquired
Less: cash paid for directly attributed acquisition costs
Net cash outflow from the acquisitions
Total
Baht Million
3,153.20
253.58
43.72
177.68
39.52
25.88
152.33
1,126.70
247.73
16.11
(527.89)
(590.05)
(1,101.63)
(322.07)
(804.09)
(468.01)
(114.57)
1,308.14
3,153.20
(11,842.10)
(8,688.90)
As a result of the acquisitions, UBC became a subsidiary of the Group. The detail of net assets acquired in respect of changing in the status
from investment in associate to subsidiary are as follows:
Cash and cash equivalents
Trade accounts receivable
Inventories
Income tax deducted at source
Claimable value added tax
Total
Baht Million
2,079.66
121.88
26.09
107.16
26.48
12
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
Other current assets
Property, plant and equipment, net
Other non-current assets:
- Intangible assets, net
- Other non-current assets
Trade accounts payable
Unearned income
Accrued expenses
Other current liabilities
Long-term borrowings
Other non-current liabilities
Minority interest in subsidiaries
Cash and cash equivalents acquired
Less: cash paid for directly attributed acquisition costs
Net cash inflow from changing in status
94.17
746.98
164.98
7.66
(309.33)
(368.45)
(716.17)
(210.17)
(521.85)
(314.02)
(54.49)
880.58
2,079.66
2,079.66
13
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
5.
Related party transactions
The following material transactions were carried out with related parties:
i)
Sales of goods and services
For the six-month periods ended
Sales of goods:
Subsidiaries
Joint ventures
Associates
Related companies:
CP Group of companies
Sales of services:
Subsidiaries
Joint ventures
Associates
Related companies:
CP Group of companies
NEC Corporation (Thailand) Co., Ltd.
Consolidated
30 June
30 June
2006
2005
Baht Million
Baht Million
-
0.10
-
-
17.51
4.71
30 June
2006
Baht Million
0.27
0.01
95.40
95.50
-
Company
-
14.44
14.72
-
3,608.30
0.15
3,630.67
30 June
2005
Baht Million
896.59
0.28
-
1.50
898.37
39.96
429.06
-
2,133.87
0.16
2,603.05
-
818.29
0.01
818.30
916.79
6.11
772.49
15.91
0.03
1.42
0.15
924.47
2.66
0.16
791.25
Sales to the related companies were carried out on commercial terms and conditions and at market prices.
Sales to a subsidiary were carried out at market price, net of the agreed discounted rate.
CP Group of companies are the major shareholders of the Company.
The Groups holds a 9.62% equity interest in NEC Corporation (Thailand) Co., Ltd.
ii) Purchases of goods and services
For the six-month periods ended
Purchases of goods:
Subsidiaries
Joint ventures
Related companies:
CP Group of companies
NEC Corporation (Thailand) Co., Ltd.
Consolidated
30 June
30 June
2006
2005
Baht Million
Baht Million
-
2.66
25.27
1.09
29.02
-
Company
30 June
2006
Baht Million
30 June
2005
Baht Million
0.17
101.79
0.18
268.75
0.49
0.16
5.13
5.46
24.88
1.09
127.94
0.16
5.13
274.53
14
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
5.
Related party transactions (Continued)
ii) Purchases of goods and services (Continued)
For the six-month periods ended
Purchases of services:
Subsidiaries
Joint ventures
Associates
Related companies:
CP Group of companies
NEC Corporation (Thailand) Co., Ltd.
Consolidated
30 June
30 June
2006
2005
Baht Million
Baht Million
-
151.14
-
328.37
7.75
487.26
106.76
20.71
Company
30 June
2006
Baht Million
-
74.02
0.15
201.64
30 June
2005
Baht Million
667.41
13.69
789.59
2.20
10.63
54.64
0.59
736.33
29.58
0.15
832.15
Purchases from related companies were carried out on commercial terms and conditions and at the actual cost plus margin.
iii) Outstanding balances arising from sales and purchases of goods and services
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Receivables from related parties:
(included in “Trade accounts
receivable”)
Subsidiaries
Joint ventures
Associates
Related companies:
CP Group of companies
NEC Corporation (Thailand) Co., Ltd.
Total
Less: Allowance for doubtful accounts
Receivable, net
Receivables from related parties:
(included in “Other current assets”)
Subsidiaries
Related companies:
CP Group of companies
NEC Corporation (Thailand) Co., Ltd.
-
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
70.42
1.78
93.16
90.03
1,563.08
21.47
0.07
589.80
0.01
662.01
(0.35)
661.66
1,053.54
0.01
1,236.74
(0.39)
1,236.35
2.91
0.01
1,587.54
1,587.54
-
0.06
0.56
0.62
2.95
0.01
676.94
676.94
0.07
0.56
0.63
657.50
16.28
0.20
1.00
-
0.56
0.56
0.56
1.56
15
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
5.
Related party transactions (Continued)
iii) Outstanding balances arising from sales and purchases of goods and services (Continued)
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Payables to related parties:
(included in “Trade accounts payable”)
Subsidiaries
Joint ventures
Associates
Related companies:
CP Group of companies
NEC Corporation (Thailand) Co., Ltd.
-
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
63.50
1.33
46.35
27.03
75.04
2.66
142.53
19.56
3.65
96.59
502.15
6.02
474.25
6.63
21.61
52.45
2.66
563.28
5.97
3.65
512.11
-
iv) Loans to related parties
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Current
Total
25.88
25.88
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
-
40.00
40.00
150.00
150.00
Movements of short-term loans to related parties can be analysed as follows:
For the six-month period ended 30 June 2006
Opening net book value
Addition
Acquisition of subsidiaries (Note 4)
Loan repayment during the period
Closing net book value
Consolidated
Company
Baht Million
Baht Million
-
150.00
40.00
25.88
25.88
(150.00)
40.00
On 1 May 2005, the Company entered into the Shareholder Loan Agreement with a subsidiary, True Fleet Management Company
Limited (“TFM”). According to the agreement, the Company will provide loan facility of Baht 1,192.00 million to TFM. The loan is
16
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
unsecured and carries interest at the fixed rate of 6.0% per annum. The related interest income for the six-month period ended 30 June
2006 was Baht 1.13 million.
The loan in the consolidated is unsecured loan to a joint venture, KSC Commercial Internet Company Limited which carries interest at
the rate of fixed deposit of Siam Commercial Bank plus fixed percentage per annum.
17
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
5.
Related party transactions (Continued)
v) Loans to a subsidiary (included in “Investments in subsidiaries, joint ventures and associates”)
Company
Non-current
Total
30 June
2006
Baht Million
6,000.00
6,000.00
31 December
2005
Baht Million
6,000.00
6,000.00
In 2004, the Company entered into the Shareholder Loan Facility Agreement with BITCO in accordance with the Sponsor Support
Agreement. The Company has to provide cash loans to BITCO amounting to Baht 6,000.00 million. The loans carry interest at
Minimum Lending Rate quoted by Bangkok Bank Public Company Limited. The maturity date will be on 31 December 2011. The
related interest income for the six-month period ended 30 June 2006 was Baht 193.41 million (2005: Baht 158.16 million).
vi)
Loans from a related party
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Loans from Kreditanstalt fuer Wiederaufbau (“KfW”)
Current
Non-current
Total
653.83
5,573.16
6,226.99
366.48
6,296.80
6,663.28
Movements of loans from KfW can be analysed as follows:
Consolidated
Baht Million
For the six-month period ended 30 June 2006
Opening net book value
Amortisation of debt issuance cost
Currency translation
Closing net book value
6,663.28
47.38
(483.67)
6,226.99
The loans are presented net of unamortised debt issuance cost of Baht 289.02 million.
The related interest expenses were Baht 205.54 million and Baht 146.08 million for the six-month periods ended 30 June 2006 and 2005,
respectively. The loans are presented in the balance sheet as part of borrowings (Note 12).
18
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
5.
Related party transactions (Continued)
vii) Interest receivable and interest payable arising from loans to and loans from related parties
Interest receivable:
(included in “Other current assets”)
Subsidiaries
Interest payable:
(included in “Accrued expenses”)
Related company:
Kreditanstalt fuer Wiederaufbau
6.
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
-
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
-
1.26
1.26
586.41
586.41
2.33
2.33
-
396.04
396.04
-
Other current assets
Advances to contractors
Value added tax pending for receipt
of tax invoices
Subscriber acquisition cost, net
Interest receivable
Regulatory cost
Film and program rights (Note 9)
Others
Total
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
748.55
630.22
375.09
93.48
46.49
414.33
204.43
778.89
2,661.26
260.92
66.64
64.90
442.49
416.49
1,881.66
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
73.36
62.71
45.91
0.20
624.71
-
51.03
1.17
434.56
-
103.95
848.13
94.31
643.78
19
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
7.
Investments in subsidiaries, joint ventures and associates
Subsidiary undertakings
Name of subsidiaries
Asia DBS Public Company Limited (89.99%)
Asia Wireless Communication Co., Ltd. (99.99%)
Bangkok Inter Teletech Public Company Limited (82.86%)
Chachoengsao sky Network Co., Ltd. (99.99%)**
Cineplex Co., Ltd. (96.76%)*
Click TV Co., Ltd. (96.76%)*
IBC Symphony Co., Ltd. (96.76%)*
Internet KSC Co., Ltd. (91.05%)*
Internet Knowledge Service Center Co., Ltd. (56.93%)*
Internet Shopping Mall Co., Ltd. (58.10%)*
K.I.N. (Thailand) Co., Ltd. (99.99%)
MKSC World Dot Com Co., Ltd. (91.08%)*
Online Advertising Goldsite Co., Ltd. (58.10%)*
R & R COMMUNICATION CO., LTD. (99.99%)**
Red Media Co., Ltd. (96.76%)*
Samut Pakan Media Corporation Co., Ltd. (82.81%)**
Satellite Service Co., Ltd. (94.02%)*
Business
DBS system operator
PCT operator
Holding company
Telecommunication services
Program production
Interactive TV business
Dormant
Distributor
Non-government telecommunication
Training services and distributor
Holding company
Internet services and distributor
Publication
Telecommunication services
Dormant
Telecommunication services
Sale and rental of equipment related to
Pay Television
Song Dao Co., Ltd. (82.80%)
Retail services
Sky office Co., Ltd. (99.99%)**
Telecommunication and Internet services
Tele Engineering and Services Co., Ltd. (99.99%)
Construction and distributor
Telecom Equipment Manufacturing Co., Ltd. (59.99%)
Telecom equipment manufacturer
Telecom Holding Co., Ltd. (99.99%)
Holding company
Telecom International Co., Ltd. (99.99%)
Holding company
Telecom KSC Co., Ltd. (34.39%)*
Non-government telecommunication
Telecom Training and Development Co., Ltd. (99.99%)
Training service
True Digital Entertainment Co., Ltd. (99.99%)
Online game
True Distribution and Sales Co., Ltd. (82.70%)
Retail services
True Fleet Management Co., Ltd. (99.99%)
Rental services
True Internet Co., Ltd. (99.99%)
Internet solution provider
True Lifestyle Retail Co., Ltd. (99.99%)
Internet café and related services
True Money Co., Ltd. (99.99%)
Payment service center and electronic card
services
True Move Co., Ltd. (82.76%)
Cellular operator
True Multimedia Co., Ltd. (91.08%)
NON-POTS and multimedia services
True Properties Co., Ltd. (99.99%)
Rental services
True Touch Co., Ltd. (99.99%)
Call center services
UBC Cable Network Public Company Limited (95.81%)*
Pay television via cable system
UBC Fantasia Co., Ltd. (49.35%)*
Artist management and related business
United Broadcasting Corporation Public Company Limited (95.28%)* Pay Television
Wire & Wireless Co., Ltd. (87.50%)
Construction and distributor
International Broadcasting Corporation
(Cambodia) Co., Ltd. (67.73%)*
Dormant
K.I.N. (Thailand) Co., Ltd. (99.99%)
Holding company
Nilubon Co., Ltd. (99.99%)
Holding company
TA Orient Telecom Investment Co., Ltd. (99.99%)
Holding company
Telecom Asia (China) Co., Ltd. (99.99%)
Communication
Telecom International China Co., Ltd. (99.99%)
Communication
Country of
incorporation
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Cambodia
British Virgin Island
British Virgin Island
British Virgin Island
British Virgin Island
British Virgin Island
* new acquisition
** newly established subsidiaries with no activities
20
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
7.
Investments in subsidiaries, joint ventures and associates (Continued)
Joint ventures
Name of joint ventures
Asia Infonet Co., Ltd. (“AI”) (65.00%)
KSC Commercial Internet Co., Ltd. (“KSC”)
(37.83%)
True Internet Data Center Co., Ltd.
(“TIDC”) (70.00%)
BeboydCg Company Limited (“Bboyd”) (70.00%)
Business
Internet services provider
Country of incorporation
Thailand
Internet services provider
Thailand
Internet Data Center
Production of music
Thailand
Thailand
On 14 June 2006, True Digital Entertainment Co., Ltd. (“TDE”), a subsidiary of the Company, made an investment of Baht 19.99 million in
BeboydCg Company Limited (“Bboyd”) representing 70.00% equity interest. Bboyd engages in production of music for advertising media
and animation. The Group is being under the process of determining the fair value of identifiable assets and liabilities of Bboyd in accordance
with Thai Accounting Standard No. 43, “Business Combination”. The Group recorded this investment at cost in the interim financial
statements.
Associate undertakings
Name of associate
NC True Co., Ltd. (“NC True”) (40.00%)
Business
Developer and service
provider of online game
Country of incorporation
Thailand
On 4 November 2005, K.I.N. (Thailand) Limited (“K.I.N.”), a subsidiary of the Company, entered into the Share Purchase Agreement to
purchase shares in UBC with MIH (UBC) Holding B.V. (“MIH”). Pursuant to the said Share Purchase Agreement, K.I.N. purchased
231,121,441 common shares of UBC from MIH, representing 30.58% of total issued shares of UBC at the price of USD 0.649 per share (par
value is Baht 3.00 per share), totaling USD 150.00 million. As a result, the Company indirectly owned 69.11% equity interest in UBC and
UBC became a subsidiary of the Company.
Subsequently, K.I.N acquired additional 208,445,964 shares from the market, representing 27.59% of total issued shares of UBC at the price of
Baht 26.50 per share. As a result, the Group owned 98.33% of UBC’s equity interest. The Group accounted for UBC as a subsidiary and has fully
consolidated UBC and its subsidiaries since January 2006 (Note 4). UBC was delisted from the SET on 11 April 2006.
On 4 November 2005, True Multimedia Co., Ltd. (“TM”), a subsidiary of the Company, entered into the Share Purchase Agreement to
purchase shares in MKSC World Dot Com Co., Ltd. (“MKSC”) with M-WEB Thailand Holdings B.V. (“M-WEB Holdings”) and MWEB
Thailand Limited (“MWEB Thailand”). Pursuant to said Share Purchase Agreement, on 6 January 2006, TM purchased all 20,000 common
shares of MKSC at par value of Baht 10 per share, representing a 100% equity interest in MKSC, from M-WEB Holdings and MWEB
Thailand, including the taking of the assignment of the two sellers’ rights as the creditors under the loan, in the aggregate amount of USD
10,628,000. As a result, the Company indirectly owned 91.08% equity interest in MKSC and MKSC became a subsidiary of the Company. The
Group accounted for MKSC as a subsidiary and has fully consolidated MKSC and its subsidiaries since January 2006 (Note 4).
21
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
Movements of investments in subsidiaries, joint ventures and associates can be summarised as follows:
For the six-month period ended 30 June 2006
Opening net book value
Additions
Dividends received
Change in status of investment
Share of results
Closing net book value
Consolidated
Company
Baht Million
Baht Million
4,035.97
20.00
(3,994.74)
(15.07)
46.16
15,467.57
178.98
(149.50)
(858.90)
14,638.15
22
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
8. Capital expenditure and commitments
Consolidated
Property, plant and equipment
NonNetwork
Baht
Million
For the six-month period ended 30 June 2006
Opening net book value
Additions
Acquisitions of subsidiaries (Note 4)
Change in status of investment (Note 4)
Disposals
Reclassifications
Depreciation charge
Impairment charge
Closing net book value
Network
Baht
Million
8,233.45
1,187.71
96.59
55.82
(121.42)
(2,689.55)
(870.28)
5,892.32
Total
Baht
Million
63,741.71
3,849.86
1,030.11
691.16
(21.07)
879.54
(5,509.45)
(2.10)
64,659.76
71,975.16
5,037.57
1,126.70
746.98
(142.49)
(1,810.01)
(6,379.73)
(2.10)
70,552.08
Company
Property, plant and equipment
NonNetwork
Baht
Million
For the six-month period ended 30 June 2006
Opening net book value
Additions
Disposals
Reclassifications
Depreciation charge
Closing net book value
615.86
182.11
(11.81)
(15.81)
(129.82)
640.53
Network
Baht
Million
24,770.97
182.99
(768.75)
(80.73)
(2,815.15)
21,289.33
Consolidated
Baht Million
Capital commitments
As at 30 June 2006
As at 31 December 2005
8,993.02
9,235.45
Total
Baht
Million
25,386.83
365.10
(780.56)
(96.54)
(2,944.97)
21,929.86
Company
Baht Million
498.82
657.33
23
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
9.
Intangible assets
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Current (included in “Other current
assets” (Note 6))
Non-current
Total
204.43
17,197.29
17,401.72
-
2,529.38
2,529.38
Goodwill
Baht Million
For the six-month period ended 30 June 2006
Opening net book value
Additions
Acquisitions of subsidiaries (Note 4)
Change in status of investment (Note 4)
Reclassification
Amortisation charge
Closing net book value
843.24
10,952.20
2,883.07
(645.40)
14,033.11
Goodwill
Baht Million
For the six-month period ended 30 June 2006
Opening net book value
Additions
Disposals
Reclassification
Amortisation charge
Closing net book value
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
107.21
(29.24)
77.97
1,241.28
1,241.28
Consolidated
Other intangible
assets
Baht Million
1,686.14
378.76
247.73
164.98
1,866.44
(975.44)
3,368.61
Company
Other intangible
assets
Baht Million
1,022.99
120.00
(0.97)
153.95
(132.66)
1,163.31
1,130.20
1,130.20
Total
Baht Million
2,529.38
378.76
11,199.93
3,048.05
1,866.44
(1,620.84)
17,401.72
Total
Baht Million
1,130.20
120.00
(0.97)
153.95
(161.90)
1,241.28
10. Short-term borrowings
In this quarter, a subsidiary borrowed amounting to Baht 933.35 million from foreign financial institution. This loan carries interest at the
LIBOR plus a fixed percentage per annum. The loan is secured by investment in another subsidiary held by the said subsidiary. The loan
repaid on 6 July 2006.
24
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
11. Long-term trade account payable
This account represents trade account payable pertaining to the supply and installation of the PCT project.
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Long-term trade account payable
Current (included in “Trade accounts payable”)
Non-current
Total
143.63
143.63
-
143.63
143.63
Movements of long-term trade account payable can be analysed as follows:
Consolidated
Baht Million
For the six-month period ended 30 June 2006
Opening net book value
Closing net book value
143.63
143.63
Long-term trade account payable was totally paid on 14 July 2006.
12. Borrowings
The Group’s borrowings are denominated in Thai Baht, United States Dollar and Japanese Yen.
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
Current
- Banks and financial institutions
- Finance leases
- Debentures
Total current
Non-current
- Banks and financial institutions
- Finance leases
4,840.74
804.02
4,340.41
9,985.17
2,368.66
429.06
4,355.60
7,153.32
50,177.35
1,199.47
53,038.60
639.12
Company
30 June
2006
Baht Million
31 December
2005
Baht Million
1,100.00
-
-
200.00
-
4,340.41
5,440.41
3,988.95
4,188.95
20,771.46
21,751.86
25
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
- Debentures
- Suppliers credit
Total non-current
14,471.16
3,754.37
69,602.35
17,375.76
3,930.80
74,984.28
14,471.16
3,754.37
38,996.99
16,722.64
3,930.80
42,405.30
Total borrowings
79,587.52
82,137.60
44,437.40
46,594.25
26
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
12. Borrowings (Continued)
Movements of borrowings can be analysed as follows:
Consolidated
Baht Million
For the six-month period ended 30 June 2006
Opening net book value
Acquisitions of subsidiaries (Note 4)
Additions of borrowings
- principal
- non-cash finance leases
- interest
Repayments of borrowings
Change in status of investment (Note 4)
Amortisation of debt issuance costs
Currency translation
Closing net book value
Company
Baht Million
82,137.60
804.09
263.14
157.56
3.76
(3,736.44)
521.85
180.37
(744.41)
79,587.52
46,594.25
3.76
(2,035.90)
55.48
(180.19)
44,437.40
Secured liabilities
Borrowings include secured liabilities being loans under finance leases and loans from banks and financial institutions of Baht 76.64 billion
(2005: Baht 78.05 billion) and Baht 40.69 billion (2005: Baht 42.67 billion) in the consolidated and Company financial statements,
respectively. The bank borrowings are secured with certain available-for-sale securities, shares of subsidiaries, network equipment, and land
and building of the Group, guaranteed by a subsidiary of the Group. Finance lease liabilities are effectively secured as the rights to the leased
assets revert to the lessor in the event of default.
On 29 June 2006, the Group entered into the Facility Agreement with a group of financial institutions to receive loan facilities at the amount of
US Dollars 200.00 million and Baht 3,842.30 million. The loans are secured against investments and certain assets of a group of subsidiaries.
The loans carry interest at the reference rate THBFIX and LIBOR plus fixed percentage per annum for the first twelve months and then plus
varied margins depend on certain conditions as stipulated in the agreement. The first repayment will be due on 29 June 2008 and the final
repayment will be due on 29 June 2013. Under the terms and conditions of the loan agreement, the Group must comply with certain conditions
as stipulated in the agreement.
On 6 July 2006, the Group had drawdown the aforementioned loans to repay the existing debentures and short-term borrowings.
Borrowings include secured loans of Baht 6.23 billion (2005: Baht 6.66 billion) from a related company Kreditanstalt fuer Wiederaufbau
(“KfW”) which is a preference shareholder (Note 5).
13. Other current liabilities
27
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
Other payables
Output VAT pending tax invoices
Income tax payable
Others
Total
Consolidated
30 June
31 December
2006
2005
Baht Million
Baht Million
905.17
1,274.58
334.18
208.35
498.56
68.55
565.22
403.64
2,303.13
1,955.12
Company
30 June
31 December
2006
2005
Baht Million
Baht Million
499.34
609.79
52.68
51.66
187.47
226.32
739.49
887.77
28
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
14. Share capital, premium and discount on share capital
At 31 December 2005
Issues of common shares
Conversion of preferred shares
At 30 June 2006
Number of
shares
Million
4,094.75
3.06
4,097.81
Preferred
shares
Baht
Million
6,994.06
(0.24)
6,993.82
Common
shares
Baht
Million
33,953.39
30.68
0.24
33,984.31
Share
premium
(discount)
Baht Million
6,667.13
(15.35)
6,651.78
Total
Baht Million
47,614.58
15.33
47,629.91
The total authorised number of shares is 4,713.47 million shares (2005: 4,677.42 million shares) with a par value of Baht 10 per share (2005:
Baht 10 per share). All issued shares are fully paid.
During January and February 2006, the total 3,067,401 units of equity warrants under the ESOP 2003 project were exercised by the
Company’s directors and senior executives at the exercise price of Baht 5.20 per share. The Company completed the registration of 3,067,401
paid-up common shares with the Ministry of Commerce on the relevant dates.
On 31 March 2006, which was the exercise date, the qualified shareholders exercised the purchase rights of KfW of 23,751 shares. The
Company completed the registration of the conversion of the preference shares into the common shares with the Ministry of Commerce on 12
April 2006.
On 28 April 2006, the Company issued 17,345,474 units of equity warrants to purchase the Company’s common shares to directors and
employees at executive level (“ESOP 2005 Project”). One unit of warrant will be entitled to purchase one common share at the exercise price
of Baht 9.73 per share. The warrants will expire on 27 April 2011.
15. Consolidated segment information
The Group revised segment information presentation for more clearly understanding and to be in line with the management regular reviews of
the Group’s operation. The Group divided its business into three main categories, i.e. Wireline, Wireless and Pay-TV, each mainly consisted
of the following:
 Wireline
-
 Wireless
 Pay-TV
-
to install and provide services of 2.6 million fixed lines including public telephone and related value added services,
data service, multimedia services, Non-POTS and broadband service, PCT, internet service and providing vehicle and
building rental service and other services;
to provide cellular telephone services, sales of handsets and accessories, and other supporting services in the group;
to provide pay television services both via cable and satellite platform, rental and trading of related equipment and other
relating services to the pay television business.
For the six-month period ended 30 June 2006
29
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
Baht Million
Wireline
Revenues:
Gross segment revenues
Inter-segment revenues
Revenues
Segment results
Unallocated costs
Operating profit
12,260.21
(1,530.63)
10,729.58
2,777.36
Wireless
11,157.40
(363.82)
10,793.58
(493.76)
Pay-TV
4,198.54
(33.92)
4,164.62
647.70
Eliminate
(224.24)
Group
Consolidated
27,616.15
(1,928.37)
25,687.78
2,707.06
(1,816.76)
890.30
30
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
15. Consolidated segment information (Continued)
For the six-month period ended 30 June 2005
Baht Million
Wireline
Revenues:
Gross segment revenues
Inter-segment revenues
Revenues
Segment results
Unallocated costs
Operating profit
Wireless
12,044.01
(504.06)
11,539.95
2,984.68
11,699.71
(0.01)
11,699.70
226.80
Pay-TV
Eliminate
-
-
Group
Consolidated
23,743.72
(504.07)
23,239.65
3,239.15
(1,766.61)
1,472.54
27.67
16. Cost of providing services
Cost of providing services includes major operating and administrative expenses directly related to the provision of telephone and other
services.
For the six-month periods ended
Depreciation and amortisation
Revenue sharing
Network operating expenses
Total
Consolidated
30 June
30 June
2006
2005
Baht Million
Baht Million
6,476.06
6,167.16
5,190.70
4,791.73
5,862.70
3,544.90
17,529.46
14,503.79
Company
30 June
2006
Baht Million
2,962.00
1,823.30
1,319.85
6,105.15
30 June
2005
Baht Million
3,196.57
2,143.65
1,320.66
6,660.88
17. Operating results
The following expenditures classified by nature, have been charged in arriving at operating results.
Consolidated
For the six-month periods ended
Amortisation of goodwill
30 June
2006
Baht Million
645.40
30 June
2005
Baht Million
265.46
Company
30 June
2006
Baht Million
29.24
30 June
2005
Baht Million
29.24
31
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
Doubtful accounts
Impairment charge
Other operating assets written-off (reversal)
302.75
2.10
0.54
562.33
-
151.46
-
(20.84)
171.20
-
(0.76)
(0.69)
18. Basic and diluted earnings (loss) per share
Basic earnings (loss) per share are calculated by dividing the net profit (loss) attributable to common shareholders (after deduction of dividend
of preferred shares amounting to Baht 346.82 million) by the weighted average number of common shares outstanding during the period
(2006: 3,397.98 million shares, 2005: 3,394.57 million shares).
For the calculation of diluted earnings per share, the net profit adjusted for the dividend of preferred shares of Baht 346.82 million and the
weighted average number of shares assuming conversion of all dilutive potential common shares, the effect of 699.40 million shares of
convertible preferred shares and 113.43 million units weighted average number of stock options on an as-if-converted method. For the sixmonth periods ended 30 June 2006 and 2005, there were no potentially dilutive common equivalent shares.
32
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
19. Cash flows from operating activities
Reconciliation of loss before minority interest to cash flows from operating activities:
For the six-month periods ended
Loss before minority interest
Add: Interest expense
Income tax
Profit before interest and income tax
Adjustments for:
Depreciation and amortisation
(Gain) loss on disposals of
property, plant and equipment
Doubtful accounts (Note 17)
Impairment charge (Note 17)
Other operating assets written-off
(reversal) (Note 17)
Unrealised (gain) loss on foreign exchange
Gain on repayment of borrowings
Gain from disposal of investment in other
company
Share of results in subsidiaries,
joint ventures and associates
Changes in operating assets and liabilities
- Trade accounts receivable
- Short-term investment - trading securities
- Inventories
- Other current assets
- Other non-current assets
- Trade accounts payable
- Accrued expenses and
other current liabilities
- Other non-current liabilities
Cash generated from operations
Less: Interest paid
Income tax paid
Net cash from operating activities
Consolidated
30 June
30 June
2006
2005
Baht Million
Baht Million
(1,013.43)
(876.36)
2,869.17
2,457.86
339.58
99.75
2,195.32
1,681.25
Company
30 June
2006
Baht Million
(986.82)
1,310.77
70.55
394.50
30 June
2005
Baht Million
(818.26)
1,362.23
543.97
8,394.47
7,452.34
3,163.32
3,386.70
(119.41)
302.75
2.10
(134.98)
562.33
0.37
151.46
10.99
171.20
0.54
(1,321.88)
-
-
(20.84)
77.97
(370.24)
-
(0.96)
-
(0.76)
(186.18)
(0.69)
(34.29)
(370.24)
-
15.07
(188.21)
858.90
1,325.64
369.61
125.17
(50.25)
(273.84)
(41.15)
582.95
(824.55)
(121.14)
(320.97)
2,401.08
17.14
(54.03)
(482.19)
(413.07)
446.78
21.12
10,649.35
(3,056.75)
(503.52)
7,089.08
340.08
(25.68)
10,470.59
(2,477.80)
(369.08)
7,623.71
-
1.43
313.36
(47.93)
10.73
(348.86)
111.60
12.06
(440.75)
(276.04)
(111.62)
(29.60)
3,813.04
(1,371.38)
(250.16)
2,191.50
3,900.97
(1,326.22)
(224.37)
2,350.38
33
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
20. Interest in joint ventures
The Group has 65.00% interest in a joint venture, Asia Infonet Co., Ltd. (“AI”) which operates as an Internet provider; and a 70.00% interest in
True Internet Data Center Co., Ltd. (“TIDC”) which engages in providing internet data center services. On 6 January 2006, the acquisition of
MKSC was completed resulting the Group has 66.41% of its equity interest in KSC Commercial Internet Co., Ltd. (“KSC”) of which invested
by MKSC, which jointed control with CAT Telecom Public Company Limited (“CAT”) and accounted for as a joint venture. The joint
venture operates as an Internet provider. The following amounts represent the Group’s share of the assets and liabilities and revenues and
expenses of the joint ventures included in the consolidated balance sheets and statements of income:
30 June 2006
KSC
Cash and cash equivalents
Other current assets
Non-current assets
Property, plant and equipment, net
Intangible assets, net
Total assets
AI
TIDC
(157.89)
(157.89)
(185.16)
(0.82)
(185.98)
Net assets (liabilities)
16.65
Proportionate interest in joint
venture capital commitments
Proportionate interest in joint
venture contingent liabilities
TIDC
(5.80)
(163.96)
(1.16)
(165.12)
(4.99)
(4.99)
(104.58)
80.47
(25.41)
81.80
nil
nil
nil
nil
nil
6.31
2.11
0.25
1.71
0.25
For the six-month periods ended
Profit (loss) before interest
and income tax
Financial income (expense)
Income tax
AI
Baht Million Baht Million Baht Million Baht Million Baht Million
63.02
8.71
16.01
49.63
5.37
94.16
54.28
13.33
39.73
20.67
4.22
2.02
1.30
24.63
2.47
11.65
16.39
55.59
25.72
58.26
1.49
0.04
0.02
174.54
81.40
86.27
139.71
86.79
Current liabilities
Non-current liabilities
Total liabilities
Revenues
31 December 2005
(5.80)
-
30 June 2006
30 June 2005
KSC
Baht
Million
216.96
AI
Baht
Million
34.65
TIDC
Baht
Million
8.51
AI
Baht
Million
75.35
TIDC
Baht
Million
8.94
16.05
(0.39)
(28.95)
0.12
(7.49)
0.03
(132.69)
0.11
(8.41)
(9.50)
-
-
-
-
Profit (loss) after income tax
15.66
(28.83)
(7.46)
(140.99)
(9.50)
Depreciation and amortisation
2.31
5.48
8.50
6.34
7.52
34
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
21. Collateral
Under the terms of various agreements, the Company’s and certain subsidiaries’ assets have been pledged and/or mortgaged as collateral with
the contracted parties, details of which are as follows:
Carrying Value at 30 June 2006 and 31 December 2005
Consolidated
Company
Mortgaged Value
Fixed and savings deposits
Investment in shares of subsidiaries
and associate
Land, building and machinery
2006
Baht
Million
1,991.24
2005
Baht
Million
9,141.28
14,960.84
1,033.06
4,073.79
1,073.86
2006
Baht
Million
1,266.48
2005
Baht
Million
-
2006
Baht
Million
1,523.69
1,196.48
-
2005
Baht
Million
1,795.43
-
In addition, the Group and the Company’s rights to operate network assets are used as collateral for borrowings (Note 12).
22. Contingencies
The bank guarantees provided by banks and contingent liabilities of the Group are as follows:
Consolidated
As at 30 June 2006
As at 31 December 2005
Baht Million
842.62
577.93
Company
Baht Million
64.09
46.66
23. Financial instruments - forward foreign exchange contracts
The Group’s policy is to enter into a interest rate swap contract and forward foreign exchange contracts for 100% of short-term loans
anticipated in each month the following six months.
The net fair values of the Group’s interest rate swap contract and open forward foreign exchange contract as at 30 June 2006 are favourable
and unfavourable amounting to Baht 166.46 million and Baht 708.22 million, respectively.
35
True Corporation Public Company Limited
Notes to the Interim Consolidated and Company Financial Statements (Unaudited)
For the six-month periods ended 30 June 2006 and 2005
24. Litigation and Arbitration disputes
Dispute in relation to the access charge
On 21 August 2002, the Company filed an arbitration claim regarding a dispute arising from the wireline concession between the Company
and TOT. The terms of the wireline concession provided that the Company is entitled to additional consideration from TOT if TOT provides
or allows any third parties to provide “special services” over the network. TOT allowed CAT and other mobile telecommunications service
providers to use this network for mobile telecommunications services and obtained access charges from CAT and the other mobile
telecommunications service providers. The arbitral tribunal granted an award on 17 January 2006 as follows:
1.
The Company is entitled to benefits derived from TOT’s provisions of special services on the Company’s network or from TOT’s
permission for others to provided special services on the Company’s network.
2.
With respect to benefits from the beginning until 22 August 2002, TOT must pay the Company the sum of Baht 9,175.82 million plus
interest at the rate of 7.5% per annum from 22 August 2002. The payment must be made within 60 days from the receipt of the arbitral
award.
3.
As from 23 August 2002, TOT must pay to the Company 50% of the benefit derived by TOT from the portion accessing to the
Company’s network.
The Company has not received the payment from TOT according to the arbitral award which was due on
is taking steps to enforce the payment.
20 April 2006. The Company
On 20 April 2006, TOT filed a motion in the Administrative Court for an order to withdraw the arbitral award. Currently, the case is being processed
under the Administrative Court.
Litigation of subsidiaries
In March 2005, a major agency of certain subsidiaries whose contract had been terminated, filed a civil lawsuit claiming damages up to
maximum of Baht 300.00 million from the said subsidiaries, based on alleged breach of the CMDU subscription agreements. The ultimate
outcome of this case is presently unable to determine, accordingly, no provision for possible liability has been made in these interim financial
statements.
25. Post balance sheet events
1.
Pursuant to the resolution of the Extraordinary General Meeting of the Shareholders No. 3/2547 dated 23 September 2004, which
approved the allotment of 800.00 million of new common shares. On 6 July 2006, the Company made the second offering of the 402.00
million new common shares on a private placement. After the completion of the offering, the Company’s paid-up share capital increased
by Baht 4,020.00 million from Baht 40,978.13 million to Baht 44,998.13 million. The Company completed the registration of 402.00
million paid-up common shares with the Ministry of Commerce on 12 July 2006. The Company received a subscription amounting to
Baht 3,345.74 million.
2.
The Company’s Audit Committee approved these interim financial statements for issue on 8 August 2006.
36
True Corporation Public Company Limited
Interim Financial Statements (Unaudited)
30 June 2006