However, BTSC has the policy to remain as the majority shareholder in the subsidiaries so that the marketing activities of various projects could be carried out more efficiently with BTSC. As of 31 December 2009, BTSC had invested a total amount of Baht 3,213 million. Additional Baht 1,738 million will become due by 9 September 2010. Related Party Transaction 1. Related Party Transaction of the Company 1.1 Related transactions between the Company and its related parties under the financial statements as of December 31, 2009 are as follows: (1) Person who may have conflict of interest: Nuvo Line Agency Co., Ltd. Relationship : - Mr. Keeree's Group is the major shareholder of the Company and Nuvo Line Agency Co., Ltd. Mr. Keeree's Group directly holds 31.31% of the paid-up capital of the Company and 13 indirectly holds 80% of the paid-up capital of Nuvo Line Agency Co., Ltd. at the time of entering into the transaction. - Pacific Harbor Advisors Pte, Ltd. is the shareholder of both the Company and Nuvo Line Agency Co., Ltd. At the time of entering into the transaction, Pacific Harbor Advisors Pte, Ltd. directly held 12.70% of the paid-up capital of the Company and directly held 20% of the paid-up capital of Nuvo Line Agency Co., Ltd. Transaction : The Company entered into the Project Management Consultancy Services Agreement with Nuvo Line Agency Co., Ltd., under which the Company charges the consultancy fee in the amount of Baht 100 million for the development of Paholyothin condominium units, which re-develop the unfinished structure in phase 1. The Company will be the consultant for the management of the designs and construction, project's service management related to planning and management of phase 1 of the project. Value of the transaction : As at the end of December 31, 2009, there were items recorded in the account as follows: - Advances Payment from Nuvo Line Agency Co., Ltd.: Baht 1.43 million - Unearned Income from Nuvo Line Agency Co., Ltd.: Baht 87.22 million Necessity : This transaction is an ordinary transaction. The service fees that the Company shall receive from Nuvo Line Agency Co., Ltd. are consistent with the rate used in market price. (2) Person who may have conflict of interest : BTS Assets Co., Ltd. (formerly named as Uni Holding Co., Ltd.) Relationship : - BTS Assets Co., Ltd. is a subsidiary of BTSC. - Mr. Keeree is the Executive Chairman of BTSC. Transaction : The Company is the contractor under the Design and Build contract (Turnkey basis) having the total contract sum of Baht 2,200 million. Value of the transaction : As at the end of December 31, 2009, there were items recorded in the account as follows: - Trade Account Receivable: Baht 68.58 million - Unbilled Receivables: Baht 33.30 million - Retention Receivable: Baht 1.96 million - Advance received from employer: Baht 296.56 million Necessity : This transaction has been conducted under general trading conditions since August 2008, before BTSC acquired shares in BTS Assets Co., Ltd. in May 2009 and, therefore, causing BTS Assets Co., Ltd. to be person who may have conflict of interest with the Company. 1.2 Related transactions with outstanding debts occurred a long time in the past and the Company has evaluated that the debtors are not capable of servicing debts in full and the Company is in the process of debt service demand. However, the Company has already made allowance for doubtful debt sufficient for the expected losses. (1) Person who may have conflict of interest : EGV Co., Ltd. Relationship : Mr. Keeree is a director and a major shareholder in EGV Co., Ltd. Transaction : In the past, the Company had provided loan to EGV Co., Ltd. and EGV Co., Ltd. used such loan to purchase shares in ITV Public Company Limited and the Company had pledged these shares as collateral to the Company's debt. Such Company's creditor submitted the application for debt payment under the Company's rehabilitation plan and now is pending the hearing of the final order of the Central Bankruptcy Court. 14 Value of the transaction : As at the end of December 31, 2009, the outstanding debt before the deduction of allowance for doubtful debt was Baht 10.87 million, but the net book value of such debt was Baht zero. (2) Person who may have conflict of interest : Saraburi Property Co., Ltd. Relationship : - Saraburi Property Co., Ltd. is an affiliate of the Company - Mr. Keeree is a director and a major shareholder in Saraburi Property Co., Ltd. Transaction : In the past, the Company provided loan to Saraburi Property Co., Ltd. with the interest at the same rate as the cost to the Company. Saraburi Property Co., Ltd. used such loan to purchase the land and mortgaged such land as collateral for the Company's debt. Later, such land was transferred as debt repayment to the Company's creditors, both prior to and in accordance with the Company's rehabilitation plan. Value of the transaction : As at the end of December 31, 2009, the outstanding debt before the deduction of allowance for doubtful debt was Baht 498.65 million, with the net book value of Baht 4.57 million. (3) Person who may have conflict of interest : Hwa Kay Thai (Thailand) Co., Ltd. Relationship : - Hwa Kay Thai (Thailand) Co., Ltd. was formerly a subsidiary of the Company. - A close relative of Mr. Keeree is a director in Hwa Kay Thai (Thailand) Co., Ltd. Transaction : In the past, Muangthong Assets Co., Ltd. and PrannaKeeree Assets Co., Ltd. (formerly named as Muang Thong Lakeside Restaurant Co., Ltd.), both the subsidiaries of the Company, provided loan to Hwa Kay Thai (Thailand) Co., Ltd. Value of the transaction : As at the end of December 31, 2009, the outstanding debt of Muangthong Assets Co., Ltd. and of PrannaKeeree Co., Ltd. before the deduction of allowance for doubtful debt, was Baht 14.55 million, and Baht 38.69 million respectively, with the net book value of Baht zero. (4) Person who may have conflict of interest : Bangkok Land Public Company Limited Relationship : A close relative of Mr. Keeree is a director and a major shareholder in Bangkok Land Public Company Limited Transaction : In the past, Muangthong Assets Co., Ltd., a subsidiary of the Company, provided an advance payment to Bangkok Land Public Company Limited. Value of the transaction : As at the end of December 31, 2009, the outstanding debt before the deduction of allowance for doubtful debt was Baht 1.05 million, with the net book value of Baht zero. 1.3 Related transactions occurred a long time in the past in which the subsidiaries are the debtors and there are outstanding debts. (1) Person who may have conflict of interest : Mr. Keeree Kanjanapas Relationship : Mr. Keeree is the Chairman of the Board and major shareholder of the Company. Transaction : Mr. Keeree granted interest-free loans to many subsidiaries to be used as expenditures of the subsidiaries during the rehabilitation of the Company from 2001 to 2005. Value of the transaction : The outstanding debt as at the end of December 31, 2009, is in the total of Baht 0.5 million. (2) Person who may have conflict of interest : Changklan Way Co., Ltd. Relationship : - The Company holds 15.15% shares in Changklan Way Co., Ltd. 15 - A close relative of Mr. Keeree Kanjanapas is a director and major shareholder in Changklan Way Co., Ltd. Transaction : - Muangthong Assets Co., Ltd. owes Changklan Way Co., Ltd. for the hotel management fee. - PrannaKeeree Assets Co., Ltd. (formerly named as Muang Thong Lakeside Restaurant Co., Ltd.) owes to Changklan Way Co., Ltd. for the advance payment. Value of the transaction : - Muangthong Assets Co., Ltd. owes Changklan Way Co., Ltd. for the hotel management fee. The outstanding debt as at December 31, 2009, was in the total of Baht 2.25 million. This transaction occurred a long time ago. - PrannaKeeree Assets Co., Ltd. (formerly named as Muang Thong Lakeside Restaurant Co., Ltd.) owes Baht 0.48 million to Changklan Way Co., Ltd. for the advance payment. This transaction occurred a long time ago. 2. Related Transaction of BTSC (1) Person who may have conflict of interest : Makha Trading Co., Ltd. Relationship : Mr. Keeree is a shareholder of Makha Trading Co., Ltd. Transaction : - Repayment of the loan (in part of interest) from Makha Trading Co., Ltd. to Nuvo Line Co., Ltd. Such borrowing occurred while Makha Trading Co., Ltd. was a shareholder of Nuvo Line Co., Ltd. Value of the transaction : As at the end of December 31, 2009, there were items recorded in the account as follows: - Accrued interest payable Baht 5.2 million - Repayment of Loan Baht 21.96 million. Necessity : BTSC considered such debt amounts to be due in the future when determining the purchase price of shares in Nuvo Line Co., Ltd. (2) Person who may have conflict of interest : KTC Media Co., Ltd. Relationship : Mr. Kavin Kanjanapas is a director of KTC Media Co., Ltd. Transaction : The deposit for the purchase of cars from VGI, the deposit of the lease of cars from VGI and BTS Assets Co., Ltd., and expenses for VGI's office renovation Value of the transaction : As at the end of December 31, 2009, there were items recorded in the account as follows: - Trade Account Receivable Baht 0.4 million - Other Account Receivable Baht 0.48 million - Trade Account Payable Baht 0.11 million Necessity : Such amounts of debts are minimal and the audit committee has reviewed and approved BTSC's financial statement. (3) Person who may have conflict of interest : X-Technology Co., Ltd. Relationship : X-Technology Co., Ltd. was a shareholder in POV Media Co., Ltd. before VGI has purchased shares in POV Media Co., Ltd. Transaction : This transaction occurred before the purchase of POV Media Co., Ltd. by VGI 16 Value of the transaction : As at the end of December 31, 2009, there was a trade account payable in the amount of Baht 1.39 million. Necessity : Such amounts of debts are minimal and the audit committee has reviewed and approved BTSC's financial statement. Policy and Trend of Related Transactions The Company may need to enter into related transactions in the future. However, the Company will use the general trading conditions and at the market price that can be compared with the price and terms given to other third parties. The Company will also comply with the relevant regulations of the Stock Exchange of Thailand, and the laws on securities and exchange. If there are any related transactions between the Company or subsidiaries and the person who may have conflict of interest or conflict of any kinds, the Company will request the Audit Committee to review and give comment on the necessity and appropriateness of such transaction. Moreover, if the Audit Committee does not possess expertise to review such transaction, the Company will involve the independent expert or the Company's auditor to provide the opinion on such transaction, so that the Board of Directors or the shareholder, as the case may be, can use such comment to support their decision making. The Company will disclose the related transactions in the financial statements as audited by the Company's auditor, and in the annual report of the Company. Contingencies and Commitments As of December 31, 2009, the Company had contingencies and commitments: 1. Capital commitments a) The Company had outstanding commitments of approximately Baht 976.9 million in respect of the construction contracts of low-cost residential housing projects of which the Company had already entered into agreements with contractors. b) The Company and its subsidiary had outstanding commitments of approximately Baht 907.7 million in respect of agreements of consultation, design and construction projects. c) The Company had outstanding commitments of approximately Baht 1,820.9 million in respect of a construction project with its subsidiary. d) A subsidiary had outstanding commitments not exceeding HKD 3.9 million in respect of an agreement of project consultation. 2. Operating lease commitments a) The Company entered into leasehold agreements for the period of 30 years, as from 1 July 1997 and 1 December 1997. The monthly rental charges are Baht 200,000 and Baht 500,000, respectively and will be increased by 5% each year of the lease period. b) The subsidiary had an outstanding commitment of approximately Baht 5.8 million in respect of a 21-year land and building lease agreement. 3. Service commitments a) On 29 April 2008, the Company entered into a service agreement with an associate, which is to furnish the Company and its subsidiaries with consultation and hotel business management-related services. Under the conditions of the agreement, the Company is to pay service fees at Baht 1.4 million monthly. The fees for the three- month and nine-month periods ended 31 December 2009 amounted to approximately Baht 4.1 million and Baht 12.2 million, respectively. b) During 2008, a subsidiary entered into service agreements with an associate, which is to furnish the subsidiary with royalty and hotel business management - related services. The subsidiary is to pay service fees at a rate as stipulated in the agreements. The fees for the 17 three-month and nine-month periods ended 31 December 2009 amounted to approximately Baht 0.3 million and Baht 1.5 million, respectively. 4. Guarantees a) The Company has guaranteed a bank credit facility of its subsidiary amounting to Baht 65 million. b) As at 31 December 2009, there were bank guarantees totaling Baht 201 million issued by a bank on behalf of the Company to the National Housing Authority for the low-cost residential housing projects. As of December 31, 2009, BTSC had contingencies and commitments: 1. Capital commitments a) As at 31 December 2009, the Company had capital commitments of Baht 243.2 million and EUR 1.9 million (31 March 2009: Baht 262.7 million and EUR 1.1 million) in respect of change and improvement of signaling system for train operation. In addition, the Company had commitments of USD 0.9 million (31 March 2009: USD 1.6 million) in respect of advisory services about the changing of signaling system with an overseas company. b) As at 31 December 2009, the Company had capital commitments of USD 42.5 million and Baht 26 million in respect of an acquisition of 12 new trains and their transportation fee, respectively (31 March 2009: USD 49.1 million and Baht 26 million). c) As at 31 December 2009, the Company had capital commitments of EUR 0.5 million and Baht 3.9 million in respect of radio upgrade project for signaling system in train operation (31 March 2009: EUR 1.4 million and Baht 6.1 million). d) As at 31 December 2009, the Company had capital commitments of SGD 0.5 million in respect of an acquisition of an Integrated Ticketing Machine (31 March 2009: SGD 0.7 million). e) As at 31 December 2009, the Company had capital commitments of EUR 0.5 million and SGD 0.5 million (31 March 2009: EUR 0.5 million and SGD 0.5 million) in respect of an acquisition of equipment for the operation of electric trains and commitments of EUR 0.7 million (31 March 2009: EUR 0.7 million and Baht 10.1 million) in respect of improvements to BTS stations. f) As at 31 December 2009, the Company was committed to pay a creditor a total of Baht 950 million in relation to a land acquisition. Subsequently, on 28 January 2010, the Company had transferred the eligible right of land acquisition to a subsidiary (as discussed in Note 22 to interim financial statements). g) As at 31 December 2009, the subsidiary (Uni Holding Company Limited) had an outstanding commitment of Baht 1,731.2 million relating to a turnkey construction contract with a related party and had outstanding commitments relating to its construction and developing project amounting to Baht 2.1 million. h) As at 31 December 2009, the subsidiary (Bangkok Smartcard System Company Limited) had an outstanding commitment of SGD 3.5 million and CNY 7 million relating to development costs for common ticket system. i) As at 31 December 2009, the subsidiary (Nuvo Line Agency Company Limited) had an outstanding commitment of Baht 36.8 million relating to construction costs and design expenses for its real estate project. 2. Commitments under maintenance contract As at 31 December 2004, the Company entered into a ten-year maintenance contract executed after the termination of the existing contracts for spare parts of an elevated mass transit system with the same contractor. Under the contract, the Company has capital commitments in respect of the cost of maintenance and spare supply services fees in relation to the project over a period of 10 years. The amount to be paid for the first year is approximately Baht 195.7 million and EUR 1.7 million and in the future years the amount to be paid will be adjusted upwards with reference to the consumer price index. During the three-month and nine-month periods ended 31 December 2009, the Company paid the maintenance and spare supply service fees amounting to Baht 178.1 million and EUR 1.5 million (For the year ended 31 March 2009: Baht 238.4 million and EUR 2.1 million). 18 3. Guarantees a) As at 31 December 2009, there were outstanding bank guarantees of Baht 37.5 million (31 March 2009: Baht 37.5 million) to the BMA, Baht 28.2 million (31 March 2009: Baht 23.6 million) to the Metropolitan Electricity Authority, and Baht 24.5 million to an unrelated company issued by a bank on behalf of the Company as required in respect of certain performance bonds under the concession agreement. In addition, the Company has Letter of Guarantee issued by a bank on behalf of the Company of EUR 0.5 million, and Letter of Credit facilities of USD 49.1 million from a local commercial bank in respect of trains acquisition of the Company. The Company has pledged deposits at financial institution amounting to Baht 338.5 million to secure these bank guarantees and credit facilities (31 March 2009: Baht 338.5 million). b) As at 31 December 2009, the subsidiary had outstanding bank guarantee of approximately Baht 78.6 million issued by banks on behalf of the subsidiary to the Company in respect of certain performance bonds as required under the concession agreement. The subsidiary has pledged deposits at financial institution amounting to Baht 78.6 million to secure the bank guarantee. 4. Commitments under long-term contracts a) On 11 August 2008, the subsidiary (Uni Holding Company Limited) entered into a hotel management agreement with an overseas company in which it committed to pay fees based on hotel operating revenues at certain percentage and comply with certain conditions as specified in the agreements. The agreement is for a period of fifteen years and at present, the hotel is in the construction process. b) On 3 August 2009, the subsidiary (Uni Holding Company Limited) entered into a technical assistant agreement relating to hotel construction with an overseas company in which the subsidiary committed to pay fees of USD 0.5 million. c) On 3 August 2009, the subsidiary (Uni Holding Company Limited) entered into a hotel management agreement with an overseas company in which it committed to pay fees based on hotel operating revenues at certain percentage and comply with certain conditions as specified in the agreements. The agreement is for a period of twenty years with an option to renew for a further ten years. At present, the hotel is in the preparation process for its construction. d) On 29 September 2009, the subsidiary (Uni Holding Company Limited) entered into an advisory agreement relating to retain and manage hotel business with a related company. The subsidiary committed to pay fees of Baht 8.1 million. e) On 31 December 2009, the subsidiaries (Uni Holding Company Limited and Bangkok Smartcard System Company Limited) had committed to pay fees of Baht 7.1 million relating to service agreements. 5. Commitments under the concessions a) The Company entered into a concession for marketing and advertising services management of (more)