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- 3 - 2.7 Deferred right to use property Deferred right to use property is amortized by the remaining periods of concession or by the straight-line method based on the estimated useful lives of assets in 5-20 years. 2.8 Deferred pictures rental, plays and copyright charges Pictures rental are amortized by the straight-line method according to the period specified in the agreement or portion of pictures transmission as specified in the agreement or according to the right as obtained for transmission. Plays charges are amortized by the straight-line method in 5 years. Copyright charges are amortized by the straight-line method according to the period specified in the agreement. 2.9 Deferred expenses Deferred transfer charges on advertising right agreement are amortized by the straight-line method according to the period specified in the agreement. Other deferred expenses are amortized by the straight- line method with in 5 years. 2.10 Goodwill Goodwill is amortized by the straight-line method in 5 years. 2.11 Earnings per share Earnings per share is calculated by dividing the net income by the number of issued and paid-up share capital at the end of the period. 2.12 Foreign currency transactions Foreign currency transactions are recorded in Baht at the rate prevailing at the date of transaction. Outstanding foreign currency assets and liabilities at the balance sheet date are converted at the rates of exchange in effect at that date. Gains or losses on exchange rates are credited or charged to current operations during the period. - 4 - 3. SHORT-TERM LOANS TO RELATED PARTIES (THOUSAND BAHT) CONSOLIDATED THE COMPANY INTEREST RATE ( % ) 1998 1997 1998 1997 1998 1997 LOANS TO -SUBSIDIARIES 1. THE BANGKOK ENTERTAINMENT CO., LTD. - - 800,000 946,828 10.00 8.50 2. YOU & I CORPORATION CO., LTD. - - 75,176 48,000 10.00-11.50 8.50 3. 3 MEDIA CO., LTD. - - 15,340 13,500 10.00 8.50 4. BEC STUDIO CO., LTD. - - 207 100 10.00-11.50 8.50 5. BEC INTERNATIONAL DISTRIBUTION CO., LTD. - - 1,289 1,000 10.00-11.50 8.50 6. BEC NEWS BUREAU CO., LTD. - - 207 100 10.00-11.50 8.50 7. BANGKOK CABLE TELEVISION SYSTEMS CO., LTD. - - 69,647 40,900 10.00-11.50 8.50 8. BANGKOK SATELLITE & TELECOMMUNICATION CO., LTD. - - 1,583 500 10.00-11.50 8.50 9. SATELLITE BROADCASTING SYSTEM CO., LTD. - - 100 - 11.50 - 10. SATELLITE TV BROADCASTING CO., LTD. - - 200 - 11.50 - TOTAL SHORT-TERM LOANS TO SUBSIDIARIES - - 963,749 1,050,928 -RELATED PARTIES 1. INFO BIZ CO., LTD. 24,375 20,800 24,375 20,800 12.50 12.50 2. INFO PACIFIC CORPORATION LTD. 17,825 15,000 17,825 15,000 12.50 12.50 3. BANGKOK TELEMEDIA-NETWORK SERVICE CO., LTD. 250 - 250 - 11.50 - 4. ITC INFORMATION TECHNOLOGY CENTER CO., LTD. - 3,600 - 3,600 - 12.50 TOTAL SHORT-TERM LOANS TO RELATED PARTIES 42,450 39,400 42,450 39,400 TOTAL 42,450 39,400 1,006,199 1,090,328 - 5 - 4. 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 1,493,913 1,030,803 2. RUNGSIROJVANIT CO., LTD. 99.99 99.99 35,000 35,000 763,146 447,244 3. NEW WORLD PRODUCTION CO., LTD. 99.99 99.99 59,999 59,999 660,538 439,796 4. ARIYAWATANA CO., LTD. 99.99 99.99 42,997 42,997 544,180 358,842 5. YOU & I CORPORATION CO., LTD. 99.99 99.99 34,999 34,999 (4,920) 41,787 6. 3 MEDIA CO., LTD. 99.99 99.99 30,000 30,000 14,650 5,253 7. BEC STUDIO CO., LTD. 99.99 99.99 5,000 5,000 5,897 5,441 8. BEC INTERNATIONAL DISTRIBUTION CO., LTD. 99.99 99.99 5,000 5,000 7,754 9,539 9. BEC NEWS BUREAU CO., LTD. 99.99 99.99 5,000 5,000 5,895 5,439 10. BANGKOK CABLE TELEVISION SYSTEMS CO., LTD. 99.99 99.99 5,000 5,000 (55,751) (30,555) 11. BANGKOK SATELLITE & TELECOMMUNICATION CO.,LTD. 99.99 99.99 25,000 25,000 30,222 27,643 12. SATELLITE BROADCASTING SYSTEM CO., LTD. 99.99 99.99 1,000 1,000 1,085 1,018 13. SATELLITE TV BROADCASTING CO., LTD. 99.99 99.99 1,000 1,000 733 693 TOTAL INVESMENTS IN SUBSIDIARIES 549,994 549,994 3,467,342 2,342,943 ASSOCIATE 1. CVD ENTERTAINMENT PUBLIC COMPANY LIMITED 20.00 - 328,847 - 319,116 - TOTAL 878,841 549,994 3,786,458 2,342,943 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 March 31, 1998 is equal to Baht 162 million. - 6 - (THOUSAND BAHT) TYPE OF BUSINESS RELATIONSHIP PAID-UP CAPITAL DIVIDENDS 1998 1997 1998 1997 SUBSIDIARIES 1. THE BANGKOK ENTERTAINMENT Broadcasting Thai common 300,000 300,000 - - CO., LTD. TV Channel 3 shareholders/ directors 2. RUNGSIROJVANIT CO., LTD. Sourcing and Producing common 5,000 5,000 - - TV Programs and shareholders/ Sell air time directors 3. NEW WORLD PRODUCTION Sourcing and Producing common 5,000 5,000 - - CO., LTD TV Programs shareholders/ Sell air time directors 4. ARIYAWATANA CO., LTD. Sourcing and Producing common 1,000 1,000 - - TV Programs shareholders/ Sell air time directors 5. YOU & I CORPORATION Producing Radio common 35,000 35,000 - - CO., LTD. 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 - 7 - ASSOCIATE 1. CVD ENTERTAINMENT PUBLIC Producing video tape common 360,000 - - - COMPANY LIMITED and lazer disc, shareholders/ distributing and directors renting video tape 5. DEPOSITS WITH FINANCIAL INSTITUTIONS Deposits with financial institutions are the exchange of promissory notes issued by the financial institutions which were ordered to close their operations permanently by the Finance Ministry. The promissory notes are replaced by promissory notes issued by Krungthai Thanakit Public Company Limited and the certificates of deposit issued by Krungthai Bank Public Company Limited. Such promissory notes and certificates of deposit are forbidden to redeem before 3-5 years of maturity. They are as follows : (MILLION BAHT) CONSOLIDATED THE COMPANY 1998 1997 1998 1997 Promissory notes 280.09 - 94.32 - Certificates of deposit 71.05 - - - TOTAL 351.14 - 94.32 - 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. - 8 - 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. The significant transactions with related parties are as follows : (THOUSAND BAHT) 1998 1997 Loans extended 42,450 39,400 Interest receivable 4,294 6,116 Purchase office equipments 552 1,353 Interest income 1,307 1,214 Expenses 3,549 1,321 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, profit and assets shown in the financial statements are related to the aforementioned industrial segment and geographical area. - 9 - 9. COMMITMENTS As at March 1998 and 1997, the subsidiary has commitments from the letters of guarantee issued by commercial banks amounting to Baht 21.27 million and Baht 39.25 million, respectively. 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 specified in the agreement. - 10 - 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. 11. OTHER On March 27, 1998, the Board of Directors' Meeting was held and approved to invest in BEC-TERO Entertainment Company Limited ordinary shares amount of 599,995 shares at Baht 10 per share totalling Baht 5.99 million equivalent to the proportion of 59.99 percent. At present it is under the process of investment in such company.