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Management Discussion and Analysis
The editorial pagination was fully implemented in the third quarter of 1999, followed by the r.o.p. ad booking and classified pagination systems in the last quarter of the year. Work flow changed as a result of the new pagination systems, cutting printing deadlines significantly. Thailand Tatler, as the only remaining magazine, was still being published until December 1999. As it is the intention of Post Publishing to consolidate the magazine business within its joint venture company, Tatler was passed to its new publisher in January 2000.
The Y2K projects were carried out as planned. The result was that none of the companys systems were affected, continuing to function into the year 2000 without any problems. To date, the company has not been subjected to any Y2K problems, caused by either its own systems or those of any third parties, that have had any significant impact on its operations.
Results of Operation Net profit after tax increased considerably, from Baht 11.5 million in 1998 to Baht 103.3 million in 1999. Better profitability was due to increased advertising revenue for the Bangkok Post and reduced newsprint and overhead costs. The total advertis ing revenue in 1999 went up 10.7% from the previous year. Publication sales rose 2.5% from the year before, mainly in the agent and news-stand sales area. In 1999, the cover price of the Bangkok Post remained at Baht 20 a copy, while Student Weekly continued to sell for just Baht 7. One-year subscription fees for the Bangkok Post remained at Baht 3,950, with premiums added throughout the year, as competition from other English papers became stronger.
Other revenue was mainly in the form of interest earned from cash reserves, which, unfortunately, dropped in line with deposit rates. Under the guidance of the investment committee, about 30% of this was invested in medium-term securities, such as CAPS and blue-chip debentures.
The cost of goods sold was Baht 572 million in 1999, a reduction of Baht 35 million from the previous year. The cost of newsprint was Baht 22 million less than the year before as a result of the combination of lower priced imports and the US$ exchange rate. The balance of Baht 13 million saved stemmed from the bad debt provision and a reduced number of staff in various departments.
Selling and administration expenses also decreased, down from Baht 302 million in 1998 to Baht 289 million the following year. The Baht 13 million saved was not only the result of less staff, but also of lower depreciation and reduced capital spending.
Interest expenses, mainly from the shareholders loan in the joint- venture companies, HFP and HFP/ACP, came to Baht 2.3 million.
The effective tax rate for the whole group was 27.6%. It was lower than the previous year because the joint-venture s losses had been carried forward from the year before. These will con- tinue to effect the tax rate until mid 2000.
Liquidity The companys financial position remains strong with a debt-free balance sheet and substantial cash reserves. At the end of 1999, the company had a cash surplus of more than Baht 300 million, an increase of about Baht 100 million from December 1998. The increase in cash reserves was mainly from the year s operational profit. Capital expenditure was kept at a reasonable level, with most capital spending being allocated to IT-related projects, in- cluding payments to the pagination software supplier. Working capital had reduced overall, with about a Baht 20 million reduction in trade receivables. The number of days of outstanding sales had shortened, while bad debts were reduced substantially. On the newsprint inventory, holdings increased, as the company bought long to hedge costs. The price of newsprint was at its lowest level averaging in 1999, US$ 450 per tonne c.i.f.
With the improvement of liquidity and better profits in 1999, an interim dividend to shareholders at Baht 1.50 per share, or a to- tal of Baht 75 million, was approved in December 1999, and the payment was made on January 14, 2000. It is anticipated that the liquidity of the company and group will strengthen further as the countrys economy gradually improves. The year 2000 is expected to be another good year for the company and group.
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©
The Post Publishing Public Co., Ltd.2000 |