Management s Discussion and Analysis on the Company s Operating Results Based on the Financial Statements for the Period between October 1- December 31, 2004 Overview of the Company and its Subsidiary Result of Operations Unit : Mn Baht Oct-Dec 04 Oct-Dec03 D D Differences D Bt Mn % Operating Revenues 823 646 177 27 - Television 519 414 105 25 - Radio 117 93 24 26 - Joint Operations 187 139 48 35 EBITDA(1) 309 278 31 11 Net Profit 159 237 -78 -33 EPS (Baht) 0.24(2) 0.40(3) -0.16 -40 (1) EBITDA is calculated from Earnings before Interest Expense and Tax and added by depreciation of operating assets (excluding assets under the Joint Operation Agreements) and amortization of leasehold right. (2) EPS calculation is based on 687 million of common shares. (3) EPS calculation is based on 600 million of common shares. Television Business Regarding the television program improvements, the Company has continuously increased the proportion of self-produced and/or time sharing programs while reducing the programs under air time rental arrangement. Therefore, the Company was able to increase its own advertising airtime space and its revenue. Moreove with the proactive marketing strategy along with the application of the Tailor-made concept, Cross Media Strategy, and Integrated Marketing Communication (IMC), The Company revenues have constantly increased. The company revenues for the period between October 1 - December 31, 2004 generating from television business were 519 million Baht, which were 105 million Baht or 25% increase from television revenues for the same period last year. The increase in television revenue was mainly a result of the increase in revenue from projects amounting to 153 million Baht, which was 122 million Baht or 394% rise. The special projects include OTOP, Image for Bank for Agriculture and Agricultural Cooperatives, Public Relation for Government Performance A-Generation. In addition as a result of reducing the programs under the airtime rental arrangement, advertising revenues increased to 303 million Baht, which were 10 million Baht or 3% increase, while airtime rental revenues has reduced. Unit : Mn Baht Oct-Dec 2004 Oct-Dec 2003 Differences Bt Mn % Television Revenues Airtime rentals 54 84 -30 -36 Advertisement income 303 293 10 3 Project income 153 31 122 394 Other operating income 9 6 3 50 Total 519 414 105 25 Radio Business In the period during October 1 December 31, 2004, revenues from radio business rose to 117 million Baht, which was 24 million Baht or 26% increase from the radio revenues as reported in the same period of 2003. The main contribution to this increase was from the advertising revenue accounting for 98 million Baht, which was 10 million Baht or 11% increase, compared to the advertising revenue generated in the same period last year. The reasons were that the company has increased advertising space especially on the programs that broadcast simultaneously on both central and regional radio stations (nationwide network radio programs). The Company has also increased its advertising rate and reduced promotion on its nationwide network radio programs. In addition, the Company gained the project income, which comes from the special projects such as OTOP, Image for Bank for Agriculture and Agricultural Cooperatives, Public Relation for Government performance, A-Generation, etc. Unit : Mn Baht Oct-Dec 04 Oct-Dec 03 Differences Bt Mn % Radio Revenues Airtime rentals 3 5 -2 -40 Advertisement income 98 88 10 11 Project income 15 - 15 - Other operating income 1 - 1 - Total 117 93 24 26 Business under Joint Operations The revenues from business under Joint Operations mainly consist of 2 parts: revenue sharing under the Joint Operation Agreements, and deferred income from transferred assets. In the period during October 1 December 31, 2004, the total revenue from business under Joint Operations Agreements accounting for 187 million Baht, which was 48 million Baht or 35% increase. The reason for the increase was from the increased of revenue sharing under Joint Operations Agreements with UBC group since UBC group has reported higher revenue this year, the revenue sharing under the Joint Operations Agreements is 6.5% of UBC group's total revenues (before any expenses) Unit : Mn Baht Oct-Dec 04 Oct-Dec 03 Differences Bt Mn % Revenue sharing under the Joint Operation Agreements BEC 16 15 1 7 UBC (including UBCC) 160 110 50 45 Others - 1 -1 -100 Total 176 126 50 40 Deferred income from 11 13 -2 -15 transferred asstes Total revenues from Joint 187 139 48 35 Operations EBITDA For the period between October 1- December 31, 2004, the Company's EBITDA was 309 million Baht, which was 31 million Baht or 11% increase. This is because the Company's revenue has increased dramatically as stated earlier. However, the Company also incurred significant amount of operating expenses, which mainly are expenses relating to its employees. Moreover, during the period between October 1 - December 31, 2004, there were a large amount of extraordinary expenses. These include expenses relating to the privatization and IPO of the Company, including money paid for ESOP shares for selected employees who requested the Company to pay for their shares (following the Cabinet's resolution of April 7, 2004). Such expenses also refer to expenses paid to third party consultant for MCOT TV project and HR consultant. The total amount of the extraordinary expenses is approximately 79 million Baht. Net Profit The Company reported net profit of 159 million Baht for the period between October 1- December 31, 2004, which was 78 million Baht or 33% decrease. The decrease in the net profit attributes to the payment of corporate income tax of 90 million Baht that the Company required to pay after the transformation into a Public Company. The Company also incurred higher depreciation expense of 15 million Baht with the new building being transferred.