19 August 1998
REVIEW F/S AND CONSOLIDATED F/S JUNE 30, 1998
5. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATE (THOUSAND BAHT) % HOLDING COST METHOD EQUITY METHOD 1998 1997 1998 1997 1998 1997 SUBSIDIARIES 1. THE BANGKOK ENTERTAINMENT CO., LTD. 99.99 99.99 299,999 299,999 1,153,261 1,232,356 2. RUNGSIROJVANIT CO., LTD. 99.99 99.99 35,000 35,000 848,257 530,187 3. NEW WORLD PRODUCTION CO.,LTD. 99.99 99.99 59,999 59,999 720,361 494,035 4. ARIYAWATANA CO.,LTD. 99.99 99.99 42,997 42,997 592,373 413,490 5. YOU & I CORPORATION CO.,LTD. 99.99 99.99 34,999 34,999 (31,453) 39,481 6. 3 MEDIA CO., LTD. 99.99 99.99 30,000 30,000 19,799 3,389 7. BEC STUDIO CO., LTD. 99.99 99.99 5,000 5,000 6,044 5,570 8. BEC INTERNATIONAL DISTRIBUTION CO., LTD. 99.99 99.99 5,000 5,000 6,004 10,454 9. BEC NEWS BUREAU CO., LTD. 99.99 99.99 5,000 5,000 6,042 5,568 10. BANGKOK CABLE TELEVISION SYSTEMS CO., LTD. 99.99 99.99 5,000 5,000 (63,217) (36,853) 11. BANGKOK SATELLITE & TELECOMMUNICATION CO., LTD. 99.99 99.99 25,000 25,000 31,014 28,337 12. SATELLITE BROADCASTING SYSTEM CO., LTD. 99.99 99.99 1,000 1,000 1,107 1,038 13. SATELLITE TV BROADCASTING CO., LTD. 99.99 99.99 1,000 1,000 732 710 14. BEC-TERO ENTERTAINMENT CO., LTD. 59.99 - 8,116 - 6,260 - TOTAL INVESMENTS IN SUBSIDIARIES 558,110 549,994 3,296,584 2,727,762 ASSOCIATE 1.CVD ENTERTAINMENT PUBLIC COMPANY LIMITED 20.00 - 328,847 - 304,055 - TOTAL 886,957 549,994 3,600,639 2,727,762 The financial statements of CVD Entertainment Public Company Limited are based on financial data prepared by the management of such company without any review of auditors. The Company's portion recorded in the consolidated financial statements and the Company only is immaterial. The Company invested in stocks of CVD Entertainment Public Company Limited which is listed company in the Stock Exchange of Thailand amount of 7.20 million shares. The market value as at June 30 , 1998 is equal to Baht 50.40 million. The Company invested in BEC-TERO Entertainment Company Limited of 599,995 ordinary shares at Baht 10 each with the acquisition expenses of Baht 2.12 million, totalling investments of Baht 8.12 million. -8- (THOUSAND BAHT) TYPE OF BUSINESS RELATIONSHIP PAID-UP CAPITAL DIVIDENDS 1998 1997 1998 1997 SUBSIDIARIES 1.THE BANGKOK ENTERTAINMENT Broadcasting radio and common 300,000 300,000 399,999 - CO., LTD. Thai TV Channel 3 shareholders/ directors 2.RUNGSIROJVANIT CO., LTD. Sourcing, Producing common 5,000 5,000 - - TV programs and shareholders/ Sell air time directors 3. NEW WORLD PRODUCTION Sourcing, Producing common 5,000 5,000 - - CO., LTD. TV programs and shareholders/ Sell air time directors 4. ARIYAWATANA CO., LTD. Sourcing, Producing common 1,000 1,000 - - TV programs and shareholders/ Sell air time directors 5. YOU & I CORPORATION CO., LTD. Producing radio common 35,000 35,000 - - programs and shareholders/ Operating radio stations directors 6. 3 MEDIA CO., LTD. Sourcing and common 30,000 30,000 - - Sell air time and shareholders/ Electronics advertising directors media services 7. BEC STUDIO CO., LTD. ( * ) Producing programs common 5,000 5,000 - - and Studio services shareholders/ directors 8. BEC INTERNATIONAL Sourcing and Producing common 5,000 5,000 - - DISTRIBUTION CO., LTD. TV programs shareholders/ directors 9. BEC NEWS BUREAU CO., LTD.( * ) Producing news common 5,000 5,000 - - programs shareholders/ directors 10. BANGKOK CABLE TELEVISION Pay TV operator common 5,000 5,000 - - SYSTEMS CO., LTD. (*) shareholders/ directors 11. BANGKOK SATELLITE & Satellite uplink- common 25,000 25,000 - - TELECOMMUNICATION downlink services shareholders/ CO., LTD. ( * ) directors 12. SATELLITE BROADCASTING Satellite uplink- common 1,000 1,000 - - SYSTEM CO., LTD.( * ) downlink services shareholders/ directors 13. SATELLITE TV BROADCASTING Satellite uplink- common 1,000 1,000 - - CO., LTD. ( * ) downlink services shareholders/ directors 14. BEC-TERO ENTERTAINMENT Sourcing and Producing common ` 10,000 - - - CO., LTD. TV programs and Sell air shareholders/ time Producing and Pro- shareholders/ moting songs for concert ASSOCIATE 1.CVD ENTERTAINMENT PUBLIC Producing video tape common 360,000 - 3,240 - COMPANY LIMITED and lazer disc, shareholders/ distributing and directors renting video tape * NOT YET OPERATING -9- 6. DIVIDENDS PAYMENT AND DIRECTORS' REMUNERATION On February 25, 1998, the Board of Directors' Meeting was held and approved to pay dividends at Baht 6.00 per share to the shareholders of 200 million shares, totalling Baht 1,200 million. On April 29, 1998, the Ordinary General Shareholders' Meeting for 1998 was held and approved to pay such proposed dividends and directors' remuneration amounting to Baht 12 million by fixing the payment date for dividends on May 20, 1998. On March 18, 1997, the Board of Directors' Meeting was held and approved to pay dividends at Baht 5.42 per share to the shareholders of 200 million shares, totalling Baht 1,084 million. On April 29, 1997, the Ordinary General Shareholders' Meeting for 1997 was held and approved to pay such proposed dividends and directors' remuneration amounting to Baht 12 million by fixing the payment date for dividends on May 7, 1997. 7. TRANSACTIONS WITH RELATED PARTIES The Company and subsidiaries have certain transactions of assets, liabilities, revenues and expenses arose from transactions with the related parties through the common shareholders and/or directors. Such transactions incur in normal business at market price which are comparable to the business transactions with others. The effects of these transactions were reflected in the accompanying financial statements on the bases mutually determined by the Company and subsidiaries and parties concerned. -10- The significant transactions with related parties for the six month periods are as follows : (THOUSAND BAHT) 1998 1997 Loans 49,475 46,452 Interest receivable 446 350 Purchase of office equipments 4,858 2,719 Trade accounts payable 1,614 - Accounts payable-assets 2,037 - Interest income 2,774 2,501 Cost of sales 1,468 - Expenses 9,353 7,644 8. FINANCIAL INFORMATION BY SEGMENT The Company and its subsidiaries are engaged in the business of procurement of moving pictures, plays, producing television programmes and selling air time for advertisement through channel 3 color Thai TV station. Besides these, some subsidiaries are granted the right for operation through TV and radio stations, and generated income from selling of advertisement and services, selling of video wall equipment. As mentioned in the preceding paragraph, the Company and its subsidiaries operate in one industrial segment, that is business of entertainment and one geographical area, Thailand. All revenues, income and assets shown in the financial statements are related to the aforementioned industrial segment and geographical area. 9. COMMITMENTS As at June 1998 and 1997 , the subsidiary has commitments from the letters of guarantee issued by commercial banks amounting to Baht 22.10 million and Baht 20.68 million, respectively. -11- 10. GENERAL DATA 10.1 A subsidiary has made an agreement for joint operation of color TV transmission with the Mass Communication Organization of Thailand dated April 28, 1978 as amended the first time on September 13, 1982, the second time on July 16, 1987 and the third time on May 2, 1989. The subsidiary is granted the right for joint operation of Channel 3 color Thai TV station's transmission until March 25, 2020. All property created or procured for the operation under this agreement shall be transferred to the Mass Communication Organization of Thailand on the date the subsidiary creates or procures. The subsidiary has the right to use such property. Under the above agreement, the subsidiary shall pay annual compensation to the Mass Communication Organization of Thailand as nspecified in the agreement. 10.2 A subsidiary has made an agreement to lease air time for program and advertisement with the Mass Communication Organization of Thailand dated January 25, 1990 as amended on September 22, 1994. The subsidiary is granted the right to operate program and advertise through an MCOT FM radio station, at 105.5 MH frequency in Bangkok until January 31, 2020. To be consistent with the term of the agreement for joint operation of color TV transmission as amended, it is agreed that if the agreement for joint operation of color TV transmission is terminated before its term for whatever reason, this agreement shall be deemed terminated. Under the above agreement, the subsidiary shall pay the monthly air time and other expenses to the Mass Communication Organization of Thailand as specified in the agreement. -12- 11. RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1997 financial statements have been reclassified to conform with the presentation of 1998 financial statements. 12. THE PREPARATION TO SOLVE THE PROBLEM OF YEAR 2000 In order to solve the problem of year 2000, the Company starts to change the computer systems or programme by planning to purchase its new version of main hardware and software for operating system which can solved the problem of year 2000. The Company hired an outside expert to upgrade all operating systems for back office including the replacement the obsoleted PC with the estimated expenses Baht 10 million. The Company expects no significant effect to its operations or financial status. Although the Company expects that the computer systems or programme can be upgraded in time before the year 2000, it may have some risk due to other enterprises which the Company deals with who are unable to upgrade their computer systems in time. However,the Company expects that such affection is immaterial to its operation.