Management Discussion and Analysis Quarter 3

1. Financial status 1.1 Assets (1) Components of assets As of March 31, 2004 (based on the consolidated financial statements), the Company's total assets was 5,855.2 million Baht, a rise of 647.5 million Baht or 12.4 percent from 5,207.7 million Baht as of September 30, 2003. This increase was mainly due to the rise of current assets at 674.4 million Baht, but was partly off set by the decrease of non-current assets at 26.8 million Baht. Current assets that were rising substantially included cash and cash equivalents which were growing from 1,104.5 million Baht as of September 30, 2003 to 1,540.9 million Baht as of March 31, 2004 (based on the consolidated financial statements), or an increase of 436.4 million Baht or 39.5 percent thereby reflecting the increased operating profit; accounts receivable net which were growing by 69.2 million Baht to 204.0 million Baht as of March 31, 2004 (based on the consolidated financial statements) due to the higher sales volume which, in turn, resulted in the increase of account receivables net; and accrued incomes which were growing by 210.3 million Baht to be 628.4 million Baht as of March 31, 2004 (based on the consolidated financial statements) in consequence of the increased accrued incomes from UBC Group. Normally, UBC Group pays the revenue sharing under the Joint Operation Agreements around June every year. Therefore, the accrued incomes from UBC Group as of March 31, 2004 were the accumulated figures for a 9-month period, and those as of September 30, 2003 were the accumulated figures for a 3-month period. The amount of other current assets was also increasing by 32.2 million Baht to 53.6 million Baht as of March 31, 2004 (based on the consolidated financial statements) in consequence of the rise of 9.6 million Baht in advance, 16.4 million Baht in prepaid expense and 4.5 million Baht in undue input tax. Meanwhile, the non-current assets that were dropping substantially included property, plant and equipment-net which were dropping at 23.1 million Baht to 2,064.3 million Baht as of March 31, 2004 (based on the consolidated financial statements) following the depreciation expenses of 117.6 million Baht despite the fact that some assets amounting to 96.2 million Baht were transferred to the Company during this period. Other non- current assets were dropping by 3.1 million Baht to 50.7 million Baht as of March 31, 2004 (based on the consolidated financial statements) mainly as a result of the decrease by 4.3 million Baht in other accrued incomes in consequence of the receipt of payment of accrued incomes from the TV Pool and other parties. As of September 30, 2003, the Company's total assets were 5,207.7 million Baht or an increase by 375.1 million Baht or 7.8 percent from 4,832.6 million Baht as of September 30, 2002. This increase was a direct result of an increase of non-current assets which rose at 347.6 million Baht. The rise of the non-current assets was a result of an increase of property, plant and equipment- net since, during the year, the Company purchased/accepted transfer of operating assets worth 540.8 million Baht, most of which was a new operation building which it received from a new contractor as a previous contractor was sued for bankruptcy and therefore were unable to continue the work. The other part was a result of the assets it received from the expansion of five regional radio stations and tools and equipments resulting from a renovation of Studio 1 built for live telecast. In addition, the Company also accepted a transfer of 31.6 million Baht worth of assets under the Joint Operation Agreements during the year. Yet, these assets were partially set off due to an increase of depreciation expenses. With regard to current assets, there was a slight change. The increasing current assets were cash and cash equivalents which rose from 86.8 million Baht as of September 30, 2002 to 1,104.5 million Baht as of September 30, 2003, or 1,172.5 percent increase accounting for 1,017.7 million Baht. The reason was because the Company switched its short-term investments, which was longer than three-month term deposit, to savings and short-term deposits (categorized as cash and cash equivalents). The restricted cash increased from 445.7 million Baht as of September 30, 2002 to 534.4 million Baht as of September 30, 2003 or a rise by 88.7 million Baht or 19.9 percent. This was because the Company had had an obligation to maintain deposits with a bank twice the amount its employees owed the Bank so that the employees would receive special rates for home loans. The Company's accrued incomes rose from 336.7 million Baht as of September 30, 2002 to 418.1 million Baht as of September 30, 2003 or 81.4 million Baht increase, which accounted for 24.2 percent. The accrued incomes consisted of (1) accrued incomes from joint operations; (2) accrued incomes from airtime rentals and advertisements and (3) accrued interests. The accrued incomes from joint operation with UBC Group rose from 305.3 million Baht as of September 30, 2002 to 328.8 million Baht as of September 30, 2003 due to a continued rise of shared incomes from the UBC Group since the group would submit shared incomes around third quarter of the next fiscal year. In addition, the accrued incomes from airtime rentals and advertisements rose from 18.5 million Baht as of September 30, 2002 to 79.2 million Baht as of September 30, 2003 due to an increase of the Company's operating incomes. The major declining current assets were resulted from short-term investments which fell from 1,778.3 million Baht as of September 30, 2002 to 724.9 million Baht as of September 30, 2003 or a decline of 1,053.4 million Baht or 59.2 percent. This was a result of a change of short-term investments to cash and cash equivalents as explained earlier. Account receivables-net went down from 222.8 million Baht as of September 30, 2002 to 134.8 million Baht as of September 30, 2003, or a decline by 88.0 million Baht or 39.5 percent due to the Company's higher efficiency in debt collection. Prepaid expenses went down from 15.1 million Baht as of September 30, 2002 to 13.1 million Baht as of September 30, 2003 or a decline of 2.0 million Baht or 13.5 percent due to a fall of advanced payment for movies. Other current assets also fell from 41.0 million Baht as of September 30, 2002 to 21.4 million Baht as of September 30, 2003 or a decline by 19.6 million Baht or 47.8 percent due to a fall of other advanced payments since the Company had reducing obligations to pay contractors under a contract agreement to purchase tools and equipment. Comparison of the total assets as of September 30, 2001 with those as of September 30, 2002 can reflect that the Company's total assets fell from 6,014.8 million Baht as of September 30, 2001 to 4,832.6 million Baht as of September 30, 2002, which was a decline by 1,182.2 million Baht or 19.7 percent. The decline reflected the fact that in 2002, the Company had to appropriate an additional 1,500 million Baht to the Ministry of Finance from its retained earnings, which was an additional appropriation aside from the normal remittance of approximately 60 percent of its net profit each year. The result was its current assets went down from 4,422.5 million Baht as of September 30, 2001 to 2,974.6 million Baht as of September 30, 2002, or a decline by 1,447.9 million Baht or 32.7 percent. (2) Liabilities As of March 31, 2004 (based on the consolidated financial statements), the Company's total liabilities was 1,798.0 million Baht, a rise from 1,331.5 million Baht as of September 30, 2003 by 466.5 million Baht or 35.0 percent as a result of the increase in current liabilities by 471.1 million Baht. However, such increase was partially set off by the decrease in non-current liabilities by 4.6 million Baht. Current liabilities that were increasing substantially included accrued appropriation to the Ministry of Finance which was growing from 469.0 million Baht as of September 30, 2003 to 829.8 million Baht as of March 31, 2004 (according to the consolidated financial statements), a rise of 360.8 million Baht or 76.9 percent mainly due to the improved operating results which thereby caused an increase in the amount of the appropriation which had to be remitted to the Ministry of Finance at approximately 60 percent of annual net profit. The accrued appropriation to the Ministry of Finance as of March 31, 2004 was an accumulated outstanding amount for the first 6 months of 2004 combined with the previous outstanding amount for the fiscal year of 2003 which was not yet remitted to the Ministry of Finance. The accrued appropriation to the Ministry of Finance as of September 30, 2003 was an accumulated outstanding amount for the fiscal year of 2003 only. The accrued expenses were growing from 182.0 million Baht as of September 30, 2003 to 315.8 million Baht as of March 31, 2004 (based on the consolidated financial statements, a rise of 133.8 million Baht or 73.5 percent due mainly to the increase in advertisement commission by 50.4 million Baht in line with the increased sales volume and partly to the increase in accrued annual bonus to employees in the amount of 52.7 million Baht which the Company can pay bonus only after an approval of the Ministry of Finance. As of March 31, 2004, the Company did not yet obtain such approval and thus bonus had not been paid to employees yet. In the meantime, other current liabilities were dropping from 119.1 million Baht as of September 30, 2003 to 87.6 million Baht as of March 31, 2004 (based on the consolidated financial statements), a decline of 31.5 million Baht or 26.4 percent owing to the Company made the repayment to its other creditors. Non-current liabilities that reduced substantially included deferred income net which was dropping from 333.0 million Baht as of September 30, 2003 to 315.6 million Baht as of March 31, 2004 (based on the consolidated financial statements), a decline of 17.4 million Baht or 5.2 percent. However, such reduction in the non-current liabilities was partly added up by the increase in provision for retirement benefits by 10.7 million Baht in accordance with the employment period of each of the employees. As of September 30, 2003, the Company's total liabilities were 1,331.5 million Baht, a rise from 1,270.9 million Baht as of September 30, 2002 or an increase of 60.6 million Baht or 4.8 percent due to the increase in current liabilities of 67.4 million Baht. However, this increase was partially set off by a decline of 6.8 million Baht worth of non-current liabilities. Current liabilities that were increasing substantially included advance received, which rose from 28.3 million Baht as of September 30, 2002 to 44.8 million Baht as of September 30, 2003, a rise of 16.5 million Baht or 58.3 percent. This was a result of an increase in advertisement incomes from television business resulting in more advances received from advertisement agencies. In addition, the Company tried to reduce its debt collection period by giving discounts to customers who paid earlier. As a result, some customers agreed to pay the Company in advance. Other current liabilities rose from 90.5 million Baht as of September 30, 2002 to 119.1 million Baht as of September 30, 2003, an increase of 28.6 million Baht or 31.6 percent due to the delivery of a new operation building from a new contractor as well as the transfer of assets from the five regional radio stations in their network expansion and the delivery of tools and equipment from the renovation of Studio 1 that was completed. As a result, the Company's other payables purchase of property, plants and office equipment were growing from 48.7 million Baht as of September 30, 2002 to 95.1 million Baht as of September 30, 2003, an increase of 46.4 million Baht or 95.3 percent. This increase was partially set off by a decline of royalty fees from 7.6 million Baht as of September 30, 2002 to 0.6 million Baht as of September 30, 2003, which reflected a drop of 7.0 million Baht or 92.1 percent. The non-current liabilities that were reducing substantially included deferred revenues-net which went down from 352.5 million Baht as of September 30, 2002 to 333.0 million Baht as of September 30, 2003, a decline by 19.5 million Baht or 5.5 percent. These deferred incomes were a result of the booking of transferred assets under Joint Operation Agreements. During the year, the Company accepted the transferred assets worth 31.6 million Baht under the Joint Operation Agreements which were however set off by the asset disposal and depreciation expenses under the Joint Operation Agreements worth 1.7 million Baht and 49.3 million Baht, respectively. A comparison of the Company's total liabilities as of September 30, 2002 with those as of September 30, 2001 results in a slight decline by 11.5 million Baht or 0.9 percent from 1,282.4 million Baht as of September 30, 2001, as a result of an increase of 76.1 million Baht worth of current liabilities. However, such decline was added up by a decline of 87.5 million Baht in non- current liabilities. 1.2 Liquidity The net increase in the Company's cash and cash equivalents was 436.4 million Baht for the six-month period ending March 31, 2004 (based on the consolidated financial statements), and 1,017.8 million Baht for the year ending September 30, 2003. For the years ending September 30, 2002 and 2001, the net decrease in the Company's cash and cash equivalents accounted for 384.2 million Baht. Details of the Company's cash flow are as follows: (1) Cash flow from operating activities For the six-month period ending March 31, 2004 (based on the consolidated financial statements, the net cash flow from operating activities reflected a net cash inflow of 409.5 million Baht, which is a rise from 225.4 million Baht from the six-month period ending March 31, 2003 mainly as a result of the following: ? Increase of net profit worth 538.4 million Baht compared to an increase of net profit worth 318.8 million Baht for the six-month period ending March 31, 2003 ? Increase of accrued expenses worth 133.8 million Baht compared to a decline of accrued expense worth 7.1 million Baht for the six- month period ending March 31, 2003 ? Increase of short-term loan worth 2.4 million Baht of Panorama Worldwide Co., Ltd. from the zero amount for the six-month period ending March 31, 2003 The increase of net cash flow from operating activities as stated above was partly set off by the following: ? Increase of account receivables worth 65.6 million Baht compared to an increase of account receivables worth 45.1 million Baht for the six-month period ending March 31, 2003 ? Increase of accrued incomes worth 210.3 million Baht compared to an increase of accrued incomes worth 198.4 million Baht for the six- month period ending March 31, 2003 ? Increase of other current assets worth 32.2 million Baht compared to an increase of other current assets worth 13.7 million Baht for the six-month period ending March 31, 2003 ? Decline of trade accounts payable worth 4.4 million Baht compared to an increase of trade accounts payable worth 32.0 million Baht for the six-month period ending March 31, 2003 ? Decline of other current liabilities worth 65.8 million Baht compared to a decline of other current liabilities worth 41.8 million Baht for the six-month period ending March 31, 2003 For the year ending September 30, 2003, net cash flow from operating activities following the change of the operating assets and liabilities of the Company reflected a net cash inflow of 906.4 million Baht, an increase from 781.3 million Baht from the year ending September 30, 2002 as a result of the following: ? Increase of net profit worth 766.1 million Baht compared to an increase of net profit worth 746.5 million Baht for the year that ending September 30, 2002 ? Decline of accounts receivable worth 201.7 million Baht compared to an increase of account receivables worth 43.2 million Baht for the year ending September 30, 2002 ? Decline of prepaid expenses worth 2.0 million Baht compared to an increase of prepaid expenses of 2.1 million Baht for the year ending September 30, 2002 ? Decline of other current assets worth 19.6 million Baht as compared to a decline of other current assets worth 26.1 million Baht for the year ending September 30, 2002 ? Decline of other assets worth 1.7 million Baht as compared to an increase of other assets worth 5.0 million Baht for the year ending September 30, 2002 ? Decline of joint operation receivables worth 37.3 million Baht as compared to an increase of joint operation receivables worth 39.0 million Baht for the year ending September 30, 2002 ? Increase of prepaid incomes worth 45.7 million Baht as compared to a decline of prepaid incomes worth 3.9 million Baht for year that ending September 30, 2002 ? Increase of accounts payable worth 1.2 million Baht as compared to a decline of accounts payable worth 11.2 million Baht for the year ending September 30, 2002 ? Increase of other liabilities worth 5.4 million Baht as compared to an increase of other liabilities worth 3.0 million Baht for the year ending September 30, 2002 The increase of net cash flow from operating activities following the change of the operating assets and liabilities of the Company was partly set off by the following: ? Increase of accrued incomes worth 81.3 million Baht as compared to an increase of accrued incomes worth 27.4 million Baht for the year ending September 30, 2002 ? Increase of movie copyrights and production cost worth 36.6 million Baht as compared to an increase of accrued incomes worth 40.2 million Baht for the year ending September 30, 2002 ? Decline of accrued expenses worth 11.4 million Baht as compared to an increase of accrued expenses worth 35.1 million Baht for the year ending September 30, 2002 Net cash flow from operating activities following the change of the operating assets and liabilities of the Company for the year ending September 30, 2002 reflected a net cash inflow of 781.3 million Baht, a rise of 1.8 percent from 767.3 million Baht from the year ending September 30, 2001. (2) Cash flow from investing activities For the six-month period ending March 31, 2004 (based on the consolidated financial statements), the cash flow from investing activities of the Company reflected a net cash inflow from investing activities of 21.8 million Baht as a result of the decrease of 73.5 million Baht in the Company's short-term investment. The Company also earned cash inflow of 1.0 million Baht from its disposal of assets, part of which was used in its investment of 52.8 million Baht in property, plant and equipment. For the years ending September 30, 2003 and 2002, the Company's net cash flow from investing activities reflected the net cash inflow from investing activities of 547.9 million Baht and 687.6 million Baht respectively, while its net cash flow from investing activities for the year ended September 30, 2001 reflected a net cash outflow from investing activities of 1,169.3 million Baht. For the years ending September 30, 2003 and 2002, the Company's short-term investment was increasing by 964.7 million Baht and 1,124.2 million Baht respectively, while for the year ending September 30, 2001, the Company's short-term investment dropped to 1,090.5 million Baht. The Company's investments in property, plant and equipment rose from 80.1 million Baht for the year ending September 30, 2001 to 411.0 million Baht and 445.6 million Baht for the years ending September 30, 2002 and 2003 respectively. In 2002, the Company purchased equipment to develop its television network in order to resolve certain blind spots. In 2003, the Company expanded its five regional radio stations and built a new operation building. The Company also purchased broadcasting equipment and renovated Studio 1 for live telecast. (3) Cash flow from financing activities For the six-month period ending March 31, 2004 (based on the consolidated financial statements), the Company's cash flow from financing activities reflected a net cash inflow from financing activities of 5.1 million Baht which was a cash inflow from the Company's investment as a minority shareholder in Panorama Worldwide Co., Ltd. For the years ending September 30, 2001, 2002 and 2003, the Company's net cash flow from financing activities reflected the net cash outflow from financing activities of 253.9 million Baht, 1,853.1 million Baht and 436.5 million Baht respectively. These amounts were wholly remitted to the Ministry of Finance. Normally, the Company had to remit approximately 60.0 percent of its annual net profit to the Ministry of Finance. In 2002, the Company remitted an additional sum 1,500 million Baht out of its retained earnings to the Ministry of Finance. As of September 30, 2003, the Company had cash and cash equivalents worth 1,104.5 million Baht. When such amount was combined with the net cash inflow from operating activities during the first six-month ended March 31, 2004 (based on the consolidated financial statements) of 409.5 million Baht, the net cash inflow from investing activities of 21.8 million Baht and the net cash inflow from financing activities of 5.1 million Baht, as of March 31, 2004, the Company (more)