BEC
World Plc.
Consolidated Financial Statements for the year 2007
Management Discussion and Analysis :
Business Environment
:
Following the tragic
incident at the New Year Eve, advertising expenditure through
television during the first quarter of 2007 had dropped around
5% when compares with the previous quarter, and when major
changes incurred at the other channels at the beginning of
the second quarter the industry's data as reported by Nielsen
Media Research (NMR) seems even more strange as the report
does not show any improvement despite the fact that the 2nd
quarter normally is the better quarter, but the 2nd quarter
ad-spending was 9% worsen year-on-year. However, the industry
had recovered during the 2nd half of the year as ad-spending
increased every month since the beginning of the 3rd quarter
showing growth quarter-on-quarter. Even NMR reported that
"Uniliver" the largest advertiser in the industry
had substantially cut its ad-spending through out the last
quarter of the year but the industry still shows 5% year-on-year
growth pushed the TV ad-spending in 2007 up slightly higher
than that of the prior year at 53.5 billions, but still lower
than the whole ad-spending growth which is reported at 2.5%.
TV still has 58% share of the total ad-spending. On the brighter
side, the industry is recovering and is more diversified which
should be a strong base for future growth.
Structure Changes
:
In 2007, the BEC World
group was almost unchanged except that now we have "Major
Group" as our minority partner in "Thai Ticket"
and we had disposed of all our shares in "SMBT Publishing"
to the major shareholders, and we also had brought the shares
of "BEC-Tero Exhibitions" from our partners increasing
our stake in that company to 99.9%, and we also set up a joint
venture with "Senario" to stage "Cats"
here in Bangkok.
Operating Results
:
Due to the change in accounting for investments, from
the equity method to cost method in separate (the company
only) financial statements of the company, the reported profit
as shown in the separate statements is difference from that
shown in the consolidated statement. This MD&A will discuss
those numbers shown in the consolidated statement in order
to avoid confusion.
BEC World group was able
to made Baht 2,252 millions as its net profit for the year
2007, higher than that of the last year by Baht 609 millions,
up 37 percent, as the advertising income increased continuously
since the last quarter of 2005, from the higher utilization
rate of our commercial air-time, from expansion of our super-prime
slot and from air-time rate increases on certain day parts,
while our costs of services were lower down as we had reduced
the number of local dramas whereas the concerts and shows
businesses are profitable and the selling expenses were slightly
increased. Therefore, our operating margin and growth rate
of our profit had improved substantially.
Revenues :
Our advertising income in the last quarter of 2007 was
in line with the industry, it increased higher than the previous
quarter and also higher year on year. BEC World's performance
was better than the industry as its year on year growth in
the fourth quarter is 26.9% and 14.9% higher for the whole
year; the increase came from higher utilization rate of our
commercial air-time, from expansion of our super-prime slot
and from air-time rate increases on certain day parts. The
revenue from concerts and shows in 2007 are also higher than
the prior year.
Costs and Operating
Expenses :
Costs of services were lower down as we had reduced the number
of local dramas. Costs of concerts and shows increased in
line with the revenue but at a lower rate. The selling and
administration expenses were slightly increased, only at 2.6%.
Financial positions
:
Our total assets
increased when compared with balances at the end of the previous
year as cash and short term investment of our cash increased
in line with the improved profit. Our liabilities increased
as corporate income tax is higher. Our shareholders' equity
increased because of higher profit. BEC World's financial
positions are strong as usual.
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