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Notes to the financial statements form an integral part of these statements. BEC WORLD PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, BAHT THE GROUP THE COMPANY ONLY 1998 1997 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net Income 1,307,253,889 1,867,961,600 1,307,253,889 1,867,961,600 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED (USED) FROM OPERATING ACTIVITIES : Depreciation 64,710,275 57,294,950 8,334,875 6,196,394 Amortization of right to use property 132,120,037 116,225,725 - - Amortization of transfer charges on advertising right agreement - 8,614,286 - - Amortization of pictures rental, plays, picture products and copyright charges 484,781,094 395,832,497 204,768,267 165,459,385 Amortization of goodwill 12,651,685 12,332,905 - - Amortization of expenses 4,184,572 3,959,661 - - Bad debts 3,426,350 - - - Allowance for doubtful debts 9,310,702 10,717,813 462,071 711,862 (Gain) loss on assets disposal 284,966 125,388 (4,544) (54,882) Loss on unused assets 382,405 188,833 - - Loss on permanent diminishing value 1,001,193 - - - of securities (Gain) loss on exchange rate (10,224,510) 32,195,780 (8,533,800) 16,783,091 Company's portion in net income of subsidiaries - - (789,649,873) (1,251,089,446) Company's portion in net loss of associate 54,583,788 5,640,160 54,583,788 5,640,160 (Decrease) increase in minority interest (13,534,441) 668,861 - - (INCREASE) DECREASE IN OPERATING ASSETS Trade accounts and notes receivable 62,961,095 57,608,242 1,194,254 (3,094,678) Inventories (1,207,741) 838,940 - - Interest receivable 47,934,673 (50,569,435) 25,312,572 (27,471,858) Other current assets (15,393,001) 9,262,544 (7,339,147) 2,838,253 Deposit on pictures copyright (32,343,786) - (12,388,593) - Other assets (37,398,422) (20,090,427) (981,537) (4,819,850) INCREASE (DECREASE) IN OPERATING LIABILITIES Accounts payable 16,109,532 68,562,061 38,298,676 90,047,708 Income tax payable 239,988,996 (87,711,215) 125,916,512 (25,967,973) Notes to the financial statements form an integral part of these statements. BEC WORLD PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, BAHT THE GROUP THE COMPANY ONLY 1998 1997 1998 1997 INCREASE (DECREASE) IN OPERATING LIABILITIES (CONTINUED) Other current liabilities (33,380,690) 34,413,113 (6,445,155) 4,060,342 Increase in minority interest 3,159 - - - ADJUSTMENT FROM THE TRANSLATION OF SUBSIDIARY'S FINANCIAL STATEMENTS (174,753) - - - NET CASH PROVIDED FROM OPERATING ACTIVITIES 2,298,031,067 2,524,072,282 940,782,255 847,200,108 CASH FLOWS FROM INVESTING ACTIVITIES (Increase) decrease in deposits with financial institutions (859,483,845) 3,989,635,553 (157,214,658) 3,263,723,802 (Increase) decrease in fixed deposit with banks 719,214,870 (3,812,554,318) 496,182,026 (2,346,615,887) Increase in investments in subsidiaries (2,131,158) - (8,116,158) - Increase in investments in associate - (328,847,535) - (328,847,535) Increase in long-term deposit with financial institutions (3,940,622) (347,196,004) - (94,317,695) Purchase of equipments (17,835,278) (85,599,281) (5,662,269) (18,367,079) Proceeds from equipment disposal 936,805 346,684 4,545 58,798 Proceeds from copyright disposal 184,593 - - - Increase in pictures rental, picture products, plays and copyright charges (841,696,547) (704,551,257) (375,201,075) (323,477,665) (Increase) decrease in short-term loans to related parties (5,025,004) (3,050,034) (98,705,872) 94,836,434 Increase in right to use property (50,212,094) (117,694,724) - - Proceeds from dividends 3,240,000 - 403,238,934 - NET CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES (1,056,748,280) (1,409,510,916) 254,525,473 246,993,173 CASH FLOWS FROM FINANCING ACTIVITIES Decrease in bank overdrafts and loans from financial institutions (763,993) (8,698,776) - - Increase (decrease) in advance from directors 2,042,528 (28,100,000) - - Increase in loans from other companies 10,000,000 - Repayment of long-term lease payable (222,387) - - - Dividends payment (1,200,000,000) (1,084,000,000) (1,200,000,000) (1,084,000,000) NET CASH USED IN FINANCING ACTIVITIES (1,188,943,852) (1,120,798,776) (1,200,000,000) (1,084,000,000) Notes to the financial statements form an integral part of these statements. BEC WORLD PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, BAHT THE GROUP THE COMPANY ONLY 1998 1997 1998 1997 NET INCREASE (DECREASE) IN CASH ON HAND AND AT BANKS 52,338,935 (6,237,410) (4,692,272) 10,193,281 CASH ON HAND AND AT BANKS AS AT JANUARY 1 81,914,249 88,151,659 15,039,655 4,846,374 CASH ON HAND AND AT BANKS AS AT DECEMBER 31 134,253,184 81,914,249 10,347,383 15,039,655 ADDITIONAL DISCLOSURE ITEMS TO CASH FLOWS STATEMENTS : CASH PAID DURING THE YEAR FOR : Interest expenses 177,988 1,369,898 - - Income tax 415,236,582 931,549,597 121,577,082 294,425,312 Purchase of investments in subsidiaries (BEC-TERO Entertainment Company Limited) Cash on hand 5,985,000 - - - Share subscription receivable 4,000,000 - - - 9,985,000 - - - Goodwill 2,125,208 - - - Minority interest (3,994,050) - - - Investment in purchasing subsidiary 8,116,158 - - - Cash on hand of subsidiary as at April 1 (5,985,000) - - - Cash paid in purchasing 2,131,158 - - - Notes to the financial statements form an integral part of these statements. BEC WORLD PUBLIC COMPANY LIMITED AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 1. BASIS OF PREPARATION CONSOLIDATED FINANCIAL STATEMENTS 1.1 The consolidated financial statements included the financial statements of BEC World Public Company Limited and its subsidiaries as follows : % HOLDING 1998 1997 SUBSIDIARIES HOLDING BY COMPANY 1. THE BANGKOK ENTERTAINMENT CO., LTD. 99.99 99.99 2. RUNGSIROJ VANIT CO., LTD. 99.99 99.99 3. NEW WORLD PRODUCTION CO., LTD. 99.99 99.99 4. ARIYAWATANA CO., LTD. 99.99 99.99 5. YOU & I CORPORATION CO., LTD. 99.99 99.99 6. 3 MEDIA CO., LTD. 99.99 99.99 7. BEC STUDIO CO., LTD.99.9999.99 8. BEC INTERNATIONAL DISTRIBUTION CO., LTD. 99.99 99.99 9. BEC NEWS BUREAU CO., LTD. 99.99 99.99 10. BANGKOK CABLE TELEVISION SYSTEM CO., LTD. 99.99 99.99 11. BANGKOK SATELLITE & TELECOMMUNICATION CO., LTD. 99.99 99.99 12. SATELLITE BROADCASTING SYSTEM CO., LTD. 99.99 99.99 13. SATELLITE TV BROADCASTING CO., LTD. 99.99 99.99 14. BEC-TERO ENTERTAINMENT CO., LTD. 59.99 - SUBSIDIARY HOLDING BY BEC INTERNATIONAL DISTRIBUTION CO., LTD. 1. TVB 3 NETWORK CO., LTD. 59.99 59.99 SUBSIDIARY HOLDING BY BEC-TERO ENTERTAINMENT CO.,LTD. 1. B E C - TERO (YANGON) COMPANY LIMITED 99.80 - - 2 - 1.2 Inter-company balances and transactions have been eliminated in the consolidated financial statements. 1.3 The difference between book value of subsidiaries and cost of investments was shown under goodwill. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1 Revenues and expenses recognition Revenues and expenses are recorded on an accrual basis. 2.2 Allowance for doubtful accounts The Company provides allowance for doubtful accounts based on the percentage on aging of the outstanding receivables, of which the percentage on each group of accounts receivable is different. 2.3 Inventories Inventories for sale are stated at cost or net realizable value, whichever is the lower. Cost is calculated by the weighted average method. Programmes which are not on the air are stated at cost and will be treated as cost of sale after transmission. 2.4 Investments in subsidiary, associate and other companies Investments in subsidiaries and associate are stated by equity method and investments in other companies are stated at cost. 2.5 Investments in land Investments in land are stated at cost. - 3 - 2.6 Equipments Equipments are stated at cost. Depreciation is calculated by the straight-line method based on the estimated useful lives of assets in 5-10 years. 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, picture products, 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. Picture products are amortized to cost by the ratio of revenues received based on the estimated total revenues. 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 which are fully amortized in 1997. Other deferred expenses are amortized by the straight-line method from 3 to 5 years. 2.10 Goodwill Goodwill is amortized in 5 years. -4- 2.11 Earnings per share Earnings per share are calculated by dividing the net income by the number of issued and paid-up share capital at the end of the year. 2.12 Foreign currency transactions Foreign currency transactions are recorded in Baht at the rate ruling on the date of transaction. Outstanding foreign currency assets and liabilities at the balance sheet date are converted to Baht 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 year. For preparation of the consolidated financial statements, the financial statements denominated in foreign currencies are converted to Baht based on the following exchange rates : - Assets and liabilities were translated by the average of exchange rates at the ended of the year. - Shareholders' equity was translated by the exchange rates in effect at that date. The adjustment from translation of financial statements in foreign currencies was shown under Shareholders' Equity. 3. QUALITY OF ASSETS The Company has invested and carried on business with the companies which become default as at December 31, 1998 as follows : 3.1 Trade accounts receivable which become default can be classified according to the aging as follows: -5- (BAHT) AGING CONSOLIDATED THE COMPANY ONLY Over 2 to 3 months 3,559,794 902,000 Over 3 to 6 months 9,643,691 - Over 6 to 12 months 1,979,510 - Over 12 months 23,643,964 796,950 Total 38,826,959 1,698,950 Allowance for doubtful accounts 41,000,981 2,173,933 3.2 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 Krung Thai Thanakit Public Company Limited and the certificates of deposit issued by Krung Thai Bank Public Company Limited. Such promissory notes and certificates of deposit are forbidden to redeem before 3-5 years of maturity. No provision is made due to the Government guarantee. (BAHT) CONSOLIDATED THE COMPANY ONLY 1998 1997 1998 1997 Promissory notes 280,093,786 280,093,786 94,317,695 94,317,695 Certificates of deposit 71,042,840 67,102,218 - - TOTAL 351,136,626 347,196,004 94,317,695 94,317,695 -6- 4. SHORT-TERM LOANS TO RELATED PARTIES (BAHT) CONSOLIDATED THE COMPANY ONLY INTEREST RATE ( % ) 1998 1997 1998 1997 1998 1997 LOANS TO -SUBSIDIARIES 1. THE BANGKOK ENTERTAINMENT CO., LTD. - - 800,000,000 800,000,000 10.00-12.25 8.50-10.00 2. YOU & I CORPORATION CO., LTD. - - 46,256,145 57,176,041 6.75-15.25 8.50-11.50 3. 3 MEDIA CO., LTD. - - 5,000,000 24,232,964 6.75-12.25 8.50-11.50 4. BEC STUDIO CO., LTD. - - - 206,847 - 8.50-11.50 5. BEC INTERNATIONAL DISTRIBUTION CO., LTD. - - 1,421,367 1,289,425 6.75-12.25 8.50-11.50 6. BEC NEWS BUREAU CO., LTD. - - - 206,847 - 8.50-11.50 7. BANGKOK CABLE TELEVISION SYSTEMS CO., LTD. - - 79,445,244 64,446,812 6.75-12.25 8.50-11.50 8. BANGKOK SATELLITE & TELECOMMUNICATION CO., LTD. - - - 1,582,952 - 8.50-11.50 9. SATELLITE BROADCASTING SYSTEM CO., LTD. - - - 100,000 - 11.50 10. SATELLITE TV BROADCASTING CO., LTD. - - - 200,000 - 11.50 11. BEC-TERO ENTERTAINMENT CO., LTD. - - 11,000,000 - 6.75-15.25 - TOTAL SHORT-TERM LOANS TO SUBSIDIARIES - - 1,043,122,756 949,441,888 -RELATED PARTIES 1. INFO BIZ CO., LTD. 27,421,528 24,374,692 27,421,528 24,374,692 12.50-14.75 12.50 2. INFO PACIFIC CORPORATION LTD. 20,053,510 17,825,342 20,053,510 17,825,342 12.50-14.75 12.50 3. BANGKOK TELEMEDIA - NETWORK SERVICE CO., LTD. - 250,000 - 250,000 - 11.50 TOTAL SHORT-TERM LOANS TO RELATED PARTIES 47,475,038 42,450,034 47,475,038 42,450,034 TOTAL 47,475,038 42,450,034 1,090,597,794 991,891,922 (More)