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M PICTURES
Annual Report 2008
To the Shareholders The past 2008 is considered the year of big change of M. Pictures Entertainment Public Co., Ltd., as it merged with M. Pictures Co., Ltd. with Major Ciniplex Group Public Co., Ltd. as the major shareholder, engaged in the business of importing the movies copyright from abroad to come in for managing the right for the movie theatres on the basis of profit sharing, as well as sale of copyright to manufacturers of DVD, VCD, Blu-Ray, and to free television, cable television. Having M. Pictures Co., Ltd. merged in is considered significant business restructuring of the company with the growth of income from 116% in 2007. Income structure of the company in 2008, having 77% derives from the business of movies copyright, 16% came from sports business, 2% was from database management, and 1% came from news business. During 2008, the company made adjustment on business strategies, management, and services in order to meet the customer’s requirement to their ultimate satisfaction.
(Mr.Tirachai Vutitum) Chairman of Board
Although during 3rd quarter of 2008, there started to be the sight of economic recession caused by collapse of financial sector in U.S.A. which was spreading the adverse affect to global economy, coupled with the unrest problem within the country resulting in illiquidity and an affect on business operation in general. The company’s adjustment by placing the stress on entertainment business of movies which is the entertaining media of low cost, and which will be the early selection of the consumers. Other than that, the company also strives for the business opportunity which will enable the company to meet the requirements of the consumers in full scale and to be able to start the operation in 2009 onwards. Board of directors and I would like to take this opportunity to express our appreciation to you all; the shareholders, the investors, business alliance and supporters, and thanks to all the executives and employees behind the success for cooperation and hearts in performing your duties with responsibilities bringing about the success smoothly in all respects.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
3
Over the past 2008. the Audit Committee conducted the review of work planning, objectives, and internal work procedure, as well as auditing performance of internal auditors to be properly and in conformity with scope of authority, duty and objectives of internal audit, assessing the sufficiency of the internal control system and the subsidiaries in detail, and ensuring the introduction of good supervising principle for practice within the organization, overseeing to have in place risk assessment and administration properly. In addition, review also conducted on work performance according to requirements of related laws, and inter-related items / list of conflict of interest for practice and revelation of data properly, participating in making consideration, discussion, exchange of views with the auditors, the internal auditors, and management of the company for reviewing the quality of financial report, and result of audits. In this nexus, the Audit Committee has already reviewed financial report for 2008 of the company prior to submission to Board of Directors. The Audit Committee is of opinion that the company has in place efficient internal control, that is the company realizes the significance of audit and control of all aspects for internal affairs to be sufficiently and properly carried out, thus there is no material shortcoming found herein.
(Mr. Wiraphon Duangsungnoen) Chairman of Audit Committee
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
4
M PICTURES
Annual Report 2008
As of 31 January 2008 there are 9 Directors of the company as follows :
1
2
3
1. Mr.Tirachai
Vutitum
Chairman of the board
2. Mr.Vicha
Poolvaraluck
Vice Chairman of the board
3. Mr.Padet
Hongfa
Director, Chief Executive Officer
4. Mr.Chattaphum
Khantiviriya
Director
4
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
6
7
5. Mr.Suraphong Triamchanchai*
8
9
Director
6. Mr.Virat
Udomsinwatana Director
7. Mr.Wirapol
Duangsungnoen Independent Director and Chairman of the Audit Committee
8. Mr.Suthep
Dansiriviroj
Independent Director and Audit Committee
9. Mr.Arun
Eamsureya
Independent Director and Audit Committee
* Resignation tendered in March 2009 M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
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6
M PICTURES
Annual Report 2008
The Consolidated Performance of M Picture Entertainment Plc & the Subsidiary Companies During 2006-2008
% Change
31 Dec 2008
31 Dec 2007
31 Dec 2006
Total Assets
604.2
138.3
Total Liabilities
395.1
Shareholder’s Equity
Financial Statements Information
(Unit : Mil.Baht)
2008 - 2007
2007 - 2006
164.9
336.9
(16.1)
136.4
203.7
189.7
(33.0)
209.1
1.9
(38.8)
10,905.3
104.9
Registered Capital
360.0
158.3
432.8
127.4
(63.4)
Paid - up Capital
360.0
120.0
342.8
200
(65.0)
Total Revenues
288.8
119.3
401.8
142.1
(70.3)
Total Expensed
479.2
157.4
544.4
204.4
(71.1)
Net Profit (Loss)
(224.2)
(41.8)
(118.2)
(436.4)
(64.6)
Earnings (Loss) per share (Baht)
(0.66)
(0.27)
(0.34)
(144.4)
(20.6)
FINANCIAL RATIO
(Unit : Mil.Baht)
Return on Total Revenue
(80.6)%
(35.0)%
(29.4)%
Return on Shareholder’s Equity
(107.3)%
(2,200)%
(304.6)%
Return on Total Assets
(57.1)%
(30.2)%
(71.7)%
Debt to Equity Ratio
1.89
72.52
5.24
Book Value per Share (Baht)
0.58
0.02
(0.11)
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business Invests in companies in the media business, focusing on marketing management services of news and sports, through radio and television. The Company is presently making live broadcast of the FA Cub Football match for 2007-2008 (the contract will terminate in June 2008), the live broadcast of the German Bundesliga football match, and the Italian Calcio Series A football match, whereby the live broadcast contract will expire in May 2008. Company Registration No. 0107544000124 Authorized capital (Baht) 360,000,000 (as at 7 February 2008) Paid-up capital (Baht) 360,000,000 Par value (Baht) 1 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business To carry out the Business of managing copyrights of movies, both Thai and foreign movies to play in movie theatres, to make into VCD and DVD, and to television broadcast both cable TV and free TV Company Registration No. 015548154744 Authorized capital (Baht) 100,000,000 Paid-up capital (Baht) 100,000,000 Par value (Baht) 100 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding 99.99%
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
7
8
Annual Report 2008
M PICTURES
Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business Engages in the marketing management services, as well as advertising media business, by providing rental of program production equipment,as ewll as acts as agent for the sale of advertising media. Company Registration No. 0105538027090 Authorized capital (Baht) 100,000,000 Paid-up capital (Baht) 100,000,000 Par value (Baht) 100 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding 99.99% Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business Engages in news business, which is broadcast via various types of media channels such as television, radio,technology such as mobile phones It Presently operates the Radio Hour News Program for the Public Relations Department TV station, and provides news reporting services on mobile phones through the SMS system, both in Thai and English under the name of “Smart News.” Company Registration No. 0105539043587 Authorized capital (Baht) 60,000,000 Paid-up capital (Baht) 60,000,000 Par value (Baht) 100 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding 99.99%
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business Specializes in providing fully integrated services related to Customer Relationship Management (CRM), as well as marketing management services to clients in the Asian region. Having major clients e.g. Honda Automobile (Thailand) Co., Ltd. and Dumex Ltd. etc. Company Registration No. 0105544004357 Authorized capital (Baht) 10,000,000 Paid-up capital (Baht) 7,000,000 Par value (Baht) 100 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding 80% Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business The Company has temporarily ceased its business operation. Company Registration No. 0105540025651 Authorized capital (Baht) 70,000,000 Paid-up capital (Baht) 70,000,000 Par value (Baht) 100 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding 70% Head Office Location 97/11 EGV Metropolis Building 5th Floor, Ratdamri Road, Lumpini, Patumwan, Bangkok. Type of Business The Company has temporarily ceased its business operation. Company Registration No. 0105544085080 Authorized capital (Baht) 30,000,000 Paid-up capital (Baht) 30,000,000 Par value (Baht) 100 Telephone 02-2505370 Facsimail 02-2504960, 02-2504961 % of shares holding 99.99% * Remarks Presently the company has already ceased the business operation under Clauses 3 – 7 M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
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10
Annual Report 2008
M PICTURES
62, Ratchadaphisek road, Khlong Toei Sub-district, Khlong Toei District, Bangkok. Telephone 02-2292800 Facsimail 02-3591262-3 SECURITIES REGISTRATION OFFICE Capital Market Institute Building 2nd Floor, 2/7, Village No. 4, North Park Project, Vibhavadee Rangsit Road, Km 27, Thung Song Hong Sub-district, Lak Si District, Bangkok, Telephone 02-5969000 Facsimail 02-8324994-5
PricewaterhouseCoopers ABAS Limited. 15th Floor Bangkok City Tower 179/74-80 South Sathorn Road Bangkok 10120 Telephone 02-6709002-6 Facsimail 02-6709027-8
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
11
Revenue of the company group categorized by each company (Unit : Mil.Baht)
% of 2008 holding 2008 Mil.Baht %
Company 1. M Picture Entertainment Plc.
% of 2007 holding 2007 Mil.Baht %
75.78 26.24
2. M Picture Co., Ltd.
99.99 213.86 74.06
3. TV Forum Co., Ltd.
99.99
4.45
1.54
4. Dream Media Co., Ltd.
99.99
2.21
5. Incenplus (Thailand) Co., Ltd.
80.00
6. Traffic Corner Radio Co., Ltd. 7. Otop Plus Co., Ltd.
% of 2006 holding 2006 Mil.Baht %
93.59 78.44 -
-
164.13 40.85
-
-
-
-
99.99
14.81 12.41
99.99
0.77
99.99
16.99 14.24
99.99 120.03 29.87
6.18
2.14
80.00
2.30
1.92
-
-
-
70.00
0.70
0.24
70.00
1.92
1.61
70.00
2.17
0.54
99.99
0.52
0.18
99.99
0.01
0.01
99.99
0.48
0.12
50.65 12.61
Total Revenue
303.70 105.17
129.62 108.63
429.68 106.95
Less Connected Transactions
(14.93) (5.17)
(10.30) (8.63)
(27.91) (6.95)
Total Income
288.77 100.00
119.32 100.00
401.77 100.00
Table Comparing Performance of the Company Group Total net profit (Loss)
Company 1. M Pictures Entertainment Plc. 2. M Picture Co., Ltd. 3. TV Forum Co., Ltd. 4. Dream Media Co., Ltd. 5. Incenplus (Thailand) Co., Ltd. 6. Traffic Corner Radio Co., Ltd. 7. Otop Plus Co., Ltd. Total Net Profit (Loss) Less Share of loss on investments accounted for under equity method Connected transactions Net loss attributable to minority interest Total Net Profit (Loss)
2008
2007
(98.23) (75.12) (9.30) (7.36) (1.51) (1.34) (1.93) (194.79) (29.61) (224.40) 0.18 (224.22)
(47.63) (48.80) 0.95 (2.60) (2.08) (1.60) (101.76) 59.86 (41.90) 0.14 (41.76)
(Unit : Mil.Baht)
% Change (106.24) (100) 80.94 (874.74) 41.92 35.58 (20.63) (91.42) (149.47) (435.56) (28.57) (436.93)
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
12
Annual Report 2008
M PICTURES ☺ M Pictures Entertainment Plc. (Previous name) Traffic Corner Holdings Public Company Limited (“the Company”) was established on November 5, 2001 with an initial registered capital of Baht 15 million. The objective of the Company is to invest in mass media companies, especially marketing management of sports events and news programs on radio and television. The Company was listed on the Market for Alternative Investment (“MAI”) on June 5, 2002 and the SET granted approval for the Company’s shares to be traded on the Main Board on January 2, 2003. During the past five years, the Company had made subsequent changes in its registered capital and paid-up capital as well as major shareholders. Major changes include a change of major shareholder in July 2006 when Mr. Suraphong Triamchanchai, the existing shareholder, sold 58 million ordinary shares or 16.92% of the paid-up capital (342.77 million shares at that time) to Pol. Gen. Ruamnakorn Tubtimtongchai; a reduction of paid-up registered capital in March 2007 from Bt. 342,774,695 to Bt. 30,000,000 through a pro rata decrease of 312,774,695 shares, with a par value of Bt. 1 per share; and a capital increase from Bt. 30,000,000 to Bt. 120,000,000 by rights issue of 90,000,000 new ordianry shares to the existing shareholders at the subscription ratio of 1 existing ordinary share to 3 new ordinary shares at the offering price of Bt. 1 per share. September 2007, the Company’s shareholders meeting approved an increase of the registered capital to Bt. 158,250,000 via issuance of 38,250,000 new ordinary shares by way of private placement to two persons at the offering price of Bt. 1.83 per share. However, since the said persons have not yet exercised their right to purchase the shares, the registered capital remains at Bt. 120,000,000. In addition, in January 2008, the Company’s shareholders meeting approved the capital reduction by cancelling 38,250,000 authorised but unissued shares with a par value of Baht 1 each from the existing registered capital of Baht 158,250,000 to be the new registered capital of Baht 120,000,000 divided into 120,000,000 ordinary shares with a par value of Baht 1 each.; and a capital increase from Bt. 120,000,000 to Bt. 360,000,000 by rights issue of 240,000,000 new ordinary shares to the existing shareholders at the subscription ratio of 1 existing ordinary share to 2 new ordinary shares at the offering price of Baht 1.79 per share. “with the purpose to use the money as current fund and for making investment in M Pictures Co., Ltd. by M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
exchange the new ordinary shares for shares of M Picutres Co., Ltd. for the price of 1.84 Baht� The company made investment in the business relating to information technology, in entertainment media through movie theatres, television, radio, and special activities, as well as press media through small companies. Purchasing of the copyright for distribution of the right in the movies to the movie theatres, manufacturers of VCD, DVD, Blu-Ray, Free TV, Cable TV, Pay TV and/or Pay Digital Cable TV. Presently the money the company has available is for making investments in 6 companies 1) M Pictures Co., Ltd. (Investment on February 2008) 2) TV Forum Co., Ltd.* 3) Dream Media Co., Ltd.* 4) Incenplus (Thailand) Co., ltd.* 5) Traffic Corner Radio Co., Ltd.* 6) Otop Plus Co., Ltd.* *Remarks : At the present time, the company reduces its performance in sports media by cease of business operation in Clause 3 - Clause 6
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
13
14
Annual Report 2008
M PICTURES 1.1 M PICTURES ENTERTAINMENT PLC - (MPIC) Invests in companies engaged in the media business, by focusing on the marketing management services of news and sports through the radio and television. The Company also produces football programs in conjunction with the TV stations Channels 3, 7, 9, and 11, both TV program and broadcast of international football matches such as the Premier Football League, FA Cup from the United Kingdom, and National Football Team of the United Kingdom, Calcio Series A Football, Italy, and Bundesliga Football, Germany. And entering into movie business in the 3rd quarter of the year 2008 by purchasing the rights in Thai movie “Bitter Sweet BOY POD the Short Film” The copyright expired in May 2008 with no renewal 1.2 M PICTURES CO., LTD. (MP) Is engaged in movie business by being the importer of copyrights of foreign movies by purchasing copyrights of movies from various movie festivals and managing such rights for maximum benefits i.e. distributing the rights to movie cinemas, producers and manufacturers of VCD, DVD, Blue Ray, and additionally distributing the rights to Free TV, Cable TV and Pay Digital Cable TV 1.3 TV FORUM CO., LTD. (“TVF”) Engages in the business of marketing management services and advertising media by renting program production equipment, and acting as agent in selling advertising media. The company ceased operation temporarily since December 2008 onwards 1.4 DREAM MEDIA CO., LTD. (“DREAM”) Engages in the broadcast of news via various media channels such as radio, technological media, including mobile phones. Currently acts as the operator of “Top of the Hour News” program for the Department of Public Relations radio station, as well as provides news reports on mobile phones through the SMS system, both in Thai and English, under the name of “Smart News.” The company ceased operation temporarily since February 2006 onwards 1.5 INCENPLUS (THAILAND) CO., LTD. (“ICPT”) Engages in the business of fully integrated client relationship management (CRM) which includes providing marketing management services to clients throughout the Asian region, with clients such as Honda Automobile (Thailand) Co., Ltd. and Dumex Ltd. The company ceased operation temporarily since November 2008 onwards M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
15
1.6 TRAFFIC CORNER RADIO CO., LTD (“TCR”) Engages in the entertainment media business via radio through the F.M. and A.M. frequency radio stations across the country. It has presently shifted its business activity by returning all frequency signals to the original owners, and has temporarily ceased its radio business activities since 2003. 1.7 OTOP PLUS CO., LTD. (“OTP”) Engages in the business of manufacturing OTOP products which was the idea of the former major shareholder and director of the Company. However, in view of the change in major shareholder structure of the Company since end of December 2006, the Company has temporarily ceased its operation
M PICTURES ENTERTAINMENT PLC. Registered Capital and Paid - Up THB 360,000,000
99.99%
M PICTURES CO., LTD. Registered Capital and Paid - Up 100 Mill. Baht
99.99%
TV FORUM CO., LTD.*
99.99%
DREAM MEDIA CO., LTD.*
Registered Capital Registered Capital and Paid - Up and Paid - Up 100 Mill. Baht 60 Mill. Baht
80.00%
70.00%
99.99%
INCENPLUS (THAILAND) CO., LTD*
TRAFFIC CORNER RADIO CO., LTD.*
OTOPPLUS CO., LTD.*
Registered Capital and Paid - Up 7 Mill. Baht
Registered Capital and Paid - Up 70 Mill. Baht
Registered Capital and Paid - Up 30 Mill. Baht
* The company has already ceased its operation completely
The company strives to become the leader in supply of right in the movies for management by showing them through the theatres and by giving permission of the rights on remuneration basis to home entertainment, business operators who manufacture movie media, VCD, DVD and Blu-Ray, for distribution, including giving the right for remuneration to Free TV, Cable TV, broadcasting the movies under the right of the company in order to meet the requirements and stimulating consumption of movie media of the consumers in every group, and importantly, to increase the value, and better result of operation of the company.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
16
Annual Report 2008
M PICTURES
In 2008, the Company invested in 80% of Incenplus (Thailand) Co., Ltd.’s shares, which is a company engaged in database management. The purpose of the investment was to add value to the Company’s existing business of marketing management, as well as to generate increased revenue from the new business activity. But as the operation result was not as aimed, the company therefore stopped such business operation. By the end of 2007, the company deemed that the business of movie media had the tendency to grow up better, the company thus planned to adjust the direction of business operation from sports media to movie media instead by managing the movies under the company’s right to be showing through the movie theatres in the networks of Major Cineplex, EGV and SF, including the theatres of other trade partners, as well as giving the right on remuneration basis to the operators of Home Entertainment business who are the manufacturers of movie media, such as VCD, and DVD, etc. The company has the policy in advertising, PR the movies under the right of the company to be known and popular increasingly”
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
“As at present, work units in State Sector has the policy to promote and to be opened widely for private enterprise, or new operators to have the opportunity for business operation, the type of TV and radio media. This is significant factor creating much more acute competition drastically, due to additional new operators coming into the business, especially those fully equipped for giving full scale service, both in management and fund, are advantageous highly. However, such aforementioned affect as one of significant factors failed the company’s operation in sports media in the past to achieve the goal anticipated. Thus the company stopped sports business, and as the company deemed that it had good chance to grow in the movie business, the company then adjusted and changed the plan for doing business from sports media to movies media instead. Although the company just steps into the movie business, the company is strongly confident that it has potentiality in market competition, having good opportunity and good channels in business management together with support on the aspects of data, communication, and market channels by group of companies, such as advertising media, movie theatres, etc, which enable the company to access the requirements and meet the demand of the consumers better, as well as increasing more potential customers”
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
17
18
Annual Report 2008
M PICTURES
☺ “Holding the shares in M. Pictures Co., Ltd. in ratio of 99.99% in February 2008, the M. Pictures Co., Ltd. planned to adjust the direction of business operation from sports media to movie media instead by managing the movies under the company’s right to be showing through the movie theatres in the networks of Major Cineplex, EGV and SF, including the theatres of other trade partners, as well as giving the right for remuneration to the operators of Home Entertainment business who manufacture movie media, such as VCD, and DVD, etc. The company has the policy in advertising, and PR the movies under the right of the company to be known and popular increasingly” The company’s policy is to add more value to the existing assets by increasing the collaboration between the company and M. Pictures Co., Ltd. in management of right in the movies of M. Pictures Co., Ltd. to the ultimate value and benefit. The company has laid down stronger business measures, as well as seeking supporters in order for reducing risk of loss on operating result. Other than that, group of companies also has the policy for expanding business operation of M. Pictures Co., Ltd. by seeking more channels to disseminate the movies under the right of the company. On 25 February 2009, the Board of Directors meeting, No. 3/2552 passed the resolution for M. Pictures Entertainment (Public) Co., Ltd. to raise the fund for buying the business of MVD Co., Ltd. (“MVD”) (Former name “Pacific Marketing and Entertainment Group Co., Ltd’”) for expanding movie business base of the company, as MVD is the company operating the business of supplying movie copyright for manufacturers of DVD, VCD, Blue-Ray regarded as businesses with the same objectives as those of the company who can support the business of the company in the future. In this nexus, the company sets up the goal to become the leader of home entertainment market within 2010"
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
1. Risk from renewal of concession contracts/radio and TV rental contracts The Company is not entitled to own radio and TV frequency according to the existing law. Therefore, it has to rent air time for its programs. This causes risk from renewal of concession contracts and rental contracts from owners of radio and TV frequency, as well as hinders the business expansion. The Company already returned the radio frequency to be managed by the owner itself. Moreover, the National Broadcasting and Television Commission, an independent authority that supervises, grants license of broadcasting and television business, and ensures free and fair competition, will give opportunities for the private entities and new entrepreneurs to own radio and TV stations. This may intensify the competition due to emergence of new players in the business. Entrepreneurs that provide a fully integrated service and have management and financial readiness will have more advantages. However, as the company did not achieve the goal stipulated in operating result of sports media in the past, the company therefore ceased the sports media operation, coupled with the company seeing that it had better opportunity to grow up in movie business, the company therefore adjusted the business operation from sports media to movie media instead in 2009, risk factor is therefore out of question. 2. Risk from operating result is subject to industry of movies market Despite slowdown of the economy in Thailand, which adversely affects many business types as a whole, the business of the company is the category of entertainment, which is one out of many choices to release the consumers’ tension. The result of economic problems therefore has the lease affect on the company’s business. Risk from movie business operation therefore is low. 3. Risk from tender of sports items As the company’s policy is changed to aiming at movie entertainment business, and reducing its role in sports business. As there is no more tender for sports item therefore no more risk is caused from this side. 4. Risk from the preference of the consumers During the end of 2008, the company studied and surveyed the requirements and the taste of media consumption of the consumers in the market, and found that such requirements have changed all the time, depending on the age of the consumers and the influence of the environment, and it also came to the knowledge that more consumers prefer consuming the movies, the company therefore planned to expand the scope of operating M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
19
20
Annual Report 2008
M PICTURES
movie business to become broader. However, the company were well aware that the movies the right for which owned by the company presently may not be popular in the market, therefore in 2009, the company supplied the movies with more varieties to comply with the demand of the movie consumers of all kinds, as well as to push the company’s movies for dissemination through more channels, and as the Company is expert in business of media kind originally, as well as having the relationship with group of movie business operating companies that can promote and support the company’s business, therefore the company has not much risk from this side. 5. Risk from rate of exchange Some of the Company’s expense is in US dollar i.e. license fee of sports programs which is paid by installments as stated in the contract. However, advertising revenue from live broadcasting is in Thai baht, hence exchange risk. Depreciation of the baht may result in greater payment of license fee. “However, the payment term for the copyright is near to the period of time the company receives the income, this enable the company to pay the outstanding debt, coupled with the company having already ceased the operation of sports business. Since there is no more sports copyright buying, the company will not face risk from such matter. Risk from rate of exchange in another case is in the event the company is the importer of the movies and foreign currency has to be applied, both Dollars and Euro currencies. Economy and political stability have affect on the value of the money, which is the risk that fluctuates the currencies. Under this point, the company is well aware of the decrease of risk by planning the operation of the new business, namely selection of the movies to be corresponding with the market demand, and has negotiated for obtaining the copyright of the quality movies on the price level properly that can compensate for the loss of profit due to the unfavorable rate of currency that may occur” 6. Risk from not receiving the dividend “As of 31 December 2008, Consolidated Financial Statements of the merging companies has accrued loss in the amount of 348 million Baht. With such amount of loss, the company is unable to pay the dividend to the shareholders. However, the company are well aware of the significance of the shareholders’ expectation for good operating result, the company therefore adjusted and changed the direction of business operation from sports media to movie media which has market to support it widely, as well as the company also having strong group of companies that are capable of supporting and promote the operation of business of the company well and potentially. With such business plan the company anticipates the reduction of loss, or even on the accrued profit that enable the company to pay the dividend in the following years. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
☺ Name list of the shareholders, holding share 0.5% up ( Information as of 12 February 2009 ) At 12 February, 2008 1. Major Cineplex Group Plc.
Shares
%
146,920,114
40.81
2. Mr.Virat
Udomsinwatana
24,416,800
6.78
3. Ms.Supatra
Paiboolayaphanupong
15,761,000
4.38
9,289,111
2.58
4. The NVDR Co., Ltd. 5. Mr.Padet
Hongfa
7,600,000
2.11
6. Mr.Sushin
Sathitpattanapan
7,477,900
2.08
7. Ms.Tharn
Mettriya
7,000,000
1.94
8. Ms.Kannika
Talomsin
4,521,500
1.26
9. Mr.Chairat
Saetang
4,000,000
1.11
10. Mr.Srisak
Suephakdee
3,990,000
1.11
11. Ms.Kamolrat
Ongveerayuth
3,812,000
1.06
12. Ms.Napassorn
Suntornmanokul
3,735,100
1.04
13. Mr.Suchai
Lerdpraiwalaya
3,291,000
0.91
14. Mr.Suparach
Chotisingha
3,100,000
0.86
15. Ms.Thiparat
Sakornsuksrireuk
2,900,000
0.81
16. Ms.Sasithorn
Ongvasith
2,739,400
0.76
17. Ms.Supotjanee
Panompaitoon
2,700,000
0.75
18. Ms.Umaporn
Boonyamanokul
2,600,100
0.72
19. Mr.Jenwit
Rungkitthavornsatien
2,300,000
0.64
20. Ms.Veerawan
Udomsin
2,015,000
0.56
99,830,975
12.80
360,000,000
100.00
Others Total
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
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M PICTURE
Annual Report 2008
Company Name*/
Company
Name
Subsidiaries
MPIC
MP
TV
DREAM
ICPT
TCR
OPT
1. Mr.Tirachai
Vutithum
X
-
-
-
-
-
-
2. Mr.Vicha
Poolvaraluck
/, //
-
-
-
-
-
-
Triamchanchai
/, //
-
-
-
-
-
-
/, //, X**
/
/
/
/
/
/
/, //
/
/
/
/
/
/
*3. Mr.Suraphong 4. Mr.Padet
Hongfa
5. Mr.Chattaphum Khantiviriya 6. Mr.Virat
Udomsinwatana
/
-
-
-
-
-
-
7. Mr.wirapol
Duangsungnoen
x*
-
-
-
-
-
-
8. Mr.Suthep
Dansiriviroj
/
-
-
-
-
-
-
9. Mr.Arun
Eamsureya
/
-
-
-
-
-
-
//, ///
/
/
/
/
/
/
10. Mr.Sirichai
Chuacharoensiri
Remark : Company and subsidiary company profile as at 28 February 2009 * Resigned / = Director // = Executive Director /// = Executive X = Chairman of the Board X* = Chairman of the Audit Committee X** = Chief of Executive Board Name of Company / Subsidiaries MP M Pictures Co., Ltd. TVF TV FORUM Co., Ltd. DREAM Dream Media Co., Ltd. ICPT Incenplus (Thailand) Co., Ltd. TCR Traffic Corner Radio Co., Ltd. OTP Otopplus Co., Ltd.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
Age (year)
58
No. of Share (x)***
-
Relationship between Executive
-
Highest Education
• Docter of Philosophy Honorary Degree in Continuing Education Ramkumhaeng University
Thai Institute of Diector’s Training (IOD)
• Directors Accreditation Program (DAP) 2004
Work Experience (Past five year) Present
• Chairman of the board, M Pictures Entertainment Plc.
Present
• Adviser to Executive Committee of Royal Thaiarmy Radio and Television
Present
• Honour Academic Committee Member of Ramkumhaeng University council
Present
• Honour Academic Committee Member of Rattana Bandit University
Present
• Vice President, The Rattana Bandit University
Present
• Honour Academic Committee Member of Chiangrai College
Present
• President, Thai Soccer player Foundation of Thailand
Present
• Adviser to governor Bangkok (Mr.Apirak Kosayothin) • Member of The National Legistative Assembly, Thailand • Adviser to Ministry • Adviser to Chairman, The Airports of Thailand Public Company Limited • Executive Committee Aeronautical Radio of Thailand LTD. • Bangkok Deputy governor • Adviser to vice-premier • Advisor of the Committee on Communication of the Senate • Adviser to Sport Authority of Thailand • Director, Sport Authority of Thailand • President of The Sports Association of Bangkok • Representative, Thai Football Foundation • Representative, Thai Rugby Foundation • Independent Directoe, Thai Airways International PCL. • Vice President, Thailand University Games • Chairman receive of University Bangkok 2007
Legal record in the last 10 years
Non
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
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M PICTURE
Annual Report 2008
Age (year) No. of Share (x)*** Relationship between Executive Highest Education Thai Institute of Diector’s Training (IOD) Work Experience (Past five year) Present 1995 - Present 20036 - Present 2003 - Present Legal record in the last 10 years
46 • Master Degree of business Administration, United States International University of Sandiego, USA • Bachelor Degree of Business Administration, Chulalongkorn University • Directors Certification Program (DCP) 29/2003 • • • •
Age (year) No. of Share (x)*** Relationship between Executive Highest Education Thai Institute of Diector’s Training (IOD) Work Experience (Past five year) Resign on Mar, 09
2003 - 2006 2003 - 2006 2002 - 2003 2001 - 2002 1994 - 2000 Legal record in the last 10 years
Age (year) No. of Share (x)*** Relationship between Executive Highest Education Thai Institute of Diector’s Training (IOD) Work Experience (Past five year) Present 2008 - 2006 Legal record in the last 10 years
Vice Chairman of the board, M Pictures Entertainment Plc. Chief of Executive Board, Major Cineplex Group PLC. Director, Siam Future Development PLC Director, California WOW Xperience PLC. Non
42 • Master Degree Martic de marketing, Sorbornne University, Paris • Bachelor Degree of Arts / fucutty of Journalism and Mass Communication Thammasat University • • • • • • • •
Director of M Pictures Entertainment Plc. Director, Chief Executive Officer, Thailand Privilage Card Co., Ltd. Consultant of Insight Info Co., Ltd. President & Chief Executive Officer, Traffic Corner Holdings Public Co.,Ltd. Group Chief of Executive Board, Traffic Corner Holdings Public Co.,Ltd. Group Executive Committee, Traffic Corner Holdings Public Co.,Ltd. Group Chief Operating Officer, Traffic Corner Holdings Public Co.,Ltd. Group COO, Traffic Corner co.,Ltd Non
62 7,600,000 Share (2.11%) • Bechelor Degree of Bank and Financial Pitman College, London, England • Directors Certification Program (DCP) 30/2003 • Director, Chief Executive officer, M Pictures Entertainment Plc. • Vice of Chief Executive Officer and Managing Director of VCD Entertainment Plc. Non
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Age (year)ุ
48
No. of Share (x)***
-
Relationship between Executive
-
Highest Education
Annual Report 2008
• Master Degree of Business Administration, Kasetsart University • Bechelor degree of Accounting, Chulalongkorn Univesity
Thai Institute of Diector’s Training (IOD)
• Company Secretary Program (CSP) 9/2005 • Audit Committee Program (ACP) 8/2005 • Directors Certification Program (DCP) 2008
Work Experience (Past five year) Present
• Director,M Pictures Entertainment Plc.
2007 - Present
• Chief Financial Officer, Major Cineplex Group PLC.
2006 - 2006
• Chief Financial Office, RS Public Company Limited
1995 - 2006
• Chief Financial Officer, Major Cineplex Group PLC.
Age (year)
45
No. of Share (x)***
24,416,800 Share (6.78%)
Relationship between Executive Highest Education
• Master Degree in Commerce and Accounting, Chulalongkorn University • Bechelor Degree in Engineering (Power Engineering) Chiang Mai University
Thai Institute of Diector’s Training (IOD)
-
Work Experience (Past five year) Present
• Directors of M. Pictures Entertainment (Public) Co., Ltd.
2007 - Present
• Secretary of Thai Stainless Development Association (TSSDA)
2005 - 2007
• Treasurer, Thai Stainless Development Association (TSSDA)
2006 - Present
• Chairman of directors, Box Assets Co., Ltd.
2006 - Present
• Executive Director, Radio Star Co., Ltd.
2003 - Present
• Chairman of directors, O.H.K. Marketing Co., Ltd.
2003 - 2007
• President of executives, Box Office Entertainment Co., Ltd.
1996 - Present
• Managing Partner, Ohiapsengchiangokim Ltd., Part.
1994 - Present
• Executive Director, Seven Sinergy Co., Ltd.
1992 - Present
• Chairman of directors, O.H.K. International Co., Ltd.
Legal record in the last 10 years
Non
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
25
M PICTURE
Annual Report 2008
26
Age (year)
66
No. of Share (x)***
-
Relationship between Executive
-
Highest Education Thai Institute of Diector’s Training (IOD)
• MPA (Master of Public Administration) thammasat University • Audit Committee Program (ACP) 11/2006 • Directors Certification Program (DCP) 67/2005 • Directors Accreditation Program (DAP) 44/2005 • Finance for Non-Finance Program (FN) 22/2005
Work Experience (Past five year) 2005 - Present
• Indipendent Director and Chairman Audit Committee, M Pictures Entertainment Plc. • Director, M Pictures Entertainment Plc.
Present
• Advisor to the Committee on Public Participation, Senate.
Present
• Honorary Advisor to the Committee on Telecommunication,Senate.
Present
• Advisor to the Government Public Relation Department (on the Foreign Public relations)
2000 - 2001
• Director - General PRD, Prime Minister Office.
1998 - 2000
• Inspector General, Prime Minister Office.
1996 -1998
• Deputy Director - General PRD, Prime Minister Office. Secretary,the Goverment public Relations Department (PRD) Pirme Minister Office
1993 - 1996
• Second Secretary (Information) Royal Thai Embassy Riyadh, The Kingdom of Saudi Arabia
1977 - 1984
• First Secretary (Information) Royal Thai Embassy Kuala Lumper, Malaysia
1972 - 1975
• Minister Counsellor (Information) Royal Thai Embassy Phnom Penh, The Kingdom of Cambodia
Legal record in the last 10 years
Non
☺
Age (year)
61
No. of Share (x)***
-
Relationship between Executive
-
Highest Education
• Bachelor Degree in Accounting Thammasat University
Thai Institute of Diector’s Training (IOD)
• Directors Accreditation Program (DAP) 32/2005 • Directors Certification Program (DCP) 60/2005
Work Experience (Past five year) Present
• Audit Committee, M Pictures Entertainment Plc. • Director, Traffic corner Holdings Public Co., Ltd.
2007 - Present
• Director, SUPREME THAI Co., Ltd.
2006 - Present
• Director, Inter FarEast (HK) Co.,Ltd.
2006 - Present
• Director / CFO, Inter FarEast Engineering PCL.
1996 - 2005
• SVP, Business / Credit Development Division
Legal record in the last 10 years
Non
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
Age (year)
48
No. of Share (x)***
-
Relationship between Executive
• M.B.A. Newhamshier College, USA
Highest Education
• Economic, Thammasat University Thai Institute of Diector’s Training (IOD)
-
Work Experience (Past five year)) Present
• Audit Committee, M Pictures Entertainment Plc. Director, Traffic Corner Holdings Public Co.,Ltd.
2004 - Present
• CEO, Shanghai Food Co.,Ltd.
1995 - Present
• Vice President, A.E.H. Co.,Ltd.
1994 - 2005
• Vice President, A.S.A. Real Estate Co.,Ltd.
1991 - 1995
• Executive Committee, Better Living Properties Co.,Ltd.
1997 - 1990
• Marketing Director Altex Co.,Ltd. Non
Legal record in the last 10 years
Age (year)
51
No. of Share (x)***
-
Relationship between Executive
-
Highest Education
• Master Degree of Business Administration Kasetsart university • Bachelor Degree of Business Administration (Finance and Banking), Thammasat University
Thai Institute of Diector’s Training (IOD)
-
Work Experience (Past five year) Present
• Chief Financial Officer, M Pictures Entertainment Plc.
2007 - 2008
• Advisor of Silverstone Co.,Ltd.
1999 - 2006
• Director of Thannapa Communication Co., Ltd. Director of Thanasirikit (2003) Co., Ltd.
1996 - 1998
• Chief Financial Officer, United Standard Terminal Plc. Mitrphol Warehouse Co., Ltd.
1999 - 1998
• Director, Reumphol Nakornsawan Industry Co.,Ltd.
1993 - 1997
• Director and Assistant Vice President, Ruamphol Nakornsawan Industry Co., Ltd.
Legal record in the last 10 years
Non
Update on February 2009
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
27
28
M PICTURE
Annual Report 2008
Management Structure as at 31 December, 2008
* The company has already ceased its operation completely
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
As at 31 December, 2008
☺
M PICTURE PICTURESENTERTAINMENT ENTERTAINMENTPUBLIC PUBLICCOMPANY COMPANYLIMITED LIMITED
29
Annual Report 2008
30
M PICTURES The Company’s Directors consists of 3 committees namely, the Board of Directors, the Audit Committee, and the Nomination and Remuneration Committee. Each committee has its scope of work authority and consists of the following : THE COMPANY’S BOARD OF DIRECTORS
1. 2. 3. 4. 5. 6. 7.
Mr.Tirachai Vutitum Mr.Vicha Poolvaraluck Mr.Padet Hongfa Mr.SuraphongTriamchanchai Mr.Chattaphum Khantiviriya Mr.Virat Udomsinwatana Mr.Wirapol Duangsungnoen
Chairman of the board Vice Chairman of the board Director, Chairman of the Executive Committee Director Director, Executive Committee Director Independent Dirctor and Chairman of the Audit Committee 8. Mr.Suthep Dansiriviroj Independent Dirctor and Audit Committee 9. Mr.Arun Eamsureya Independent Dirctor and Audit Committee Mr.Sirichai Chuacharoensiri served as Secretary to the Company’s Board of Directors
29 April 2008 29 February 2008 1 October 2008 29 April 2008 19 March 2008 29 April 2008 30 April 2007 29 February 2008 19 March 2008
Directors authorized to sign to bind the Company consist of Mr.Vicha Poolvaraluck, Mr.Suraphong Triamchanchai, Mr.Padet Hongfa, Mr.Chattaphum Khantiviriya two of these four directors together sign and affix the Company’s common seal From the above Board of Directors’ structure, the Company’s ratio of non executive to executive directors is 6 to 9 which is more than half of the total number of directors, including 3 independent directors. ROLE AND RESPONSIBILITIES OF THE COMPANY’S BOARD OF DIRECTORS
The Company’s Board of Directors’ important role and responsibilities are as follows : • To perform its duty in overseeing the Company’s business operation, that it is in line with the law, the Company’s objectives, the Articles of Association, and the shareholders’ resolution, with honesty, integrity, and caution • To set the Company’s strategy, direction, and operational plan, and supervise that the management performs in accordance with the Company’s policy and objectives in the most efficient manner • To consider important issues such as investment in new projects, acquisition and disposal of assets in line with SET regulations, as well as other regulations • To review the performance results, the financial report, audit of accounts, and to follow up on the management’s performance M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. • To consider issues, and make proposals for the shareholder’s meeting approval, with caution and prudence • To oversee and ensure that problems with regard to conflict of interest do not arise amongst the Company’s stakeholders • To supervise and ensure that the operation proceeds in line with good code of ethics The Company’s Board of Directors has set up committees to study and screen projects/work plans in accordance with the Company’s Board of Directors’ policy, which are the Audit Committee and the Executive Committee THE AUDIT COMMITTEE
As of 31 December 2008, the Audit Committee consisted of 3 directors as follows : 1. Mr.Wirapol Duangsungnoen Independent Dirctor and Chairman of the Audit Committee 2. Mr.Suthep Dansiriviroj Independent Dirctor and Audit Committee 3. Mr.Arun Eamsureya Independent Dirctor and Audit Committee Mr. Mangkorn Larpcharoenjing served as Secretary to the Audit Committee The Audit Committee’s term lasts 3 years, and the directors have undergone the following training from the Thai Institute of Directors’ Association - (IOD) : 1. Mr.Wirapol Duangsungnoen Independent Dirctor and Chairman of the Audit Committee has undergone training programs : Finance for Non-Finance Directors Class 22/2005 (FN) Director Accreditation Program Class 44/2005 (DAP) Director Certification Progr Class 67/2005 (DCP) Audit Committee Program Class 11/2006 (ACP) 2. Mr.Suthep Dansiriviroj Audit Committee has undergone training programs : Director Accreditation Program Class 32/2005 (DAP) Director Certification Program Class 60/2006 (DCP) 3. Mr.Arun Eamsureya Audit Committee has undergone training programs : Non ROLE AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
• Reviews that the Company’s financial report is correct, and with sufficient amount of information disclosure • Reviews and ensures that the Company’s internal control and internal audit systems are appropriate and effective • Reviews and ensures that the Company abides by the SEC and SET rules and regulations, or other regulations related to the Company’s business • Considers, selects, and proposes the appointment and remuneration of the Company’s financial auditor • Considers, reviews, and provides comments including the comprehensive and accurate disclosure of Company information in the event of inter related transactions or those that may give rise to conflicts of interest M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
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Annual Report 2008
M PICTURES • Reviews and ensures that the Company has appropriate and effective risk management systems • Reviews and comments on the internal audit plan, the performance of the Internal Audit Department, and coordinates with the financial auditor • In performing its work responsibilities, the Audit Committee is authorized to invite the relevant management, executives, or staff of the Company toprovide comments during the meeting, or submit the required relevant documents as deemed appropriate • Prepares the Audit Committee’s report on corporate governance • Reports the Audit Committee’s performance results to the Company’s Board of Directors at least 4 times per year • Has the authority to hire consultants or outside parties according to the Company’s regulations to provide comments or give advice as deemed necessary • Undertakes other activities which have been assigned by the Company’s Board of Directors on case by case basis Nomination and Remuneration Committee appointing the Company’s director / independent director / executive As at 31st December 2008, the Company’s selection committee consists of 3 persons as below: 1. Mr.Wirapol Duangsungnoen 2. Mr.Suthep Dansiriviroj 3. Mr.Chattaphum Khantiviriya Selection of person to be a director / exeuvtive, the Company has set up a specific committee to select potential candidates for the position of Company Director. However, the Board of Directors will select individuals on the basis of their knowledge, capability, experience, and vision, which complement the Company’s business. Directors must possess certain qualifications and must not possess certain qualifications as outlined in the Article 68 of the 1992 Public Company Act, and according to the regulations of the SEC and the SET. Proposals will be made to the shareholders’ meeting in accordance with the Company’s articles of association for consideration and appointment based on the following criteria: 1. Is an individual with complete qualification as required by the SEC and the SET 2. Is an individual with no business ties, benefits, or interests, whethe directly or indirectly vis a vis the financial and management of the Company, its subsidiaries, and associated companies 3. The Company’s policy is for the Independent Director to declare other relationships/links which could affect his independent role such as not accepting the appointment of representatives in order to preserve the interests of the directors and major shareholders 4. Appointment by Company’s Board of Directors’ resolution and /or Shareholders’ meeting by : M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. 4.1 At each Annual General meeting, one out of three directors must retire from office. If the number of directors can not be divided into three equal parts then the number of directors closest to one out of three must retire from office. Directors who are to retire from office the first or second year after the Company registration date must drawlots as to who will leave. As for latter years, the director who has been in the position longest must retire from office In this connection. directors who have retired from office may be elected to resume the position again in the future. 4.2 The Shareholders’ meeting can elect a director in accordance with the following criteria and procedures : 4.2.1 1 shareholder has an equivalent vote to one share, and has 1 vote 4.2.2 Each shareholder must make use of all his votes as per clause number 4.2.1 in the election of 1 or many individuals as directors. He cannot, however, divide his votes, no matter how big or small the amount, amongst different individuals 4.2.3 Individuals who receive the highest votes will be elected as directors in accordance with the number of directors required, or the number of directors to be elected at that meeting. In the event that equal votes have been received, which exceed the number of directors required or to be elected at that time, the Chairman of the meeting will cast the final deciding vote 4.3 At the shareholders’ meeting, a resolution may be adopted for any director to retire from office prior to the completion of his term, with votes of not less than three quarters received from the number of shareholders present and entitled to vote, and with the combined number of shares of not less than half of the total number of shares held by the shareholders present and entitled to vote 4.4 In the event that the position of director becomes vacant due to other reasons besides completion of term, the Board of Directors may nominate at the following Board of Directors’ meeting an individual who possesses the qualifications, and does not have the qualifications specified in Article 68 of the 1992 Public Company Act, after having received no less than three quarters of the remaining directors’ votes in order to assume the position, with the exception that the previous director’s remaining term is less than two months. The new director may assume office only for the remaining tenor of his predecessor’s term. “Independent directors means fully qualified persons with independence as prescribed by the Stock Exchange of Thailand, namely: 1. Holding shares not exceeding 5% of paid up capital of the company and subsidiaries 2. Being a director not participating in administration, not an employee, or advisor receiving salary regularly from the company, subsidiaries or major share holder. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
33
34
Annual Report 2008
M PICTURES 3. Being a director, not interested person whether directly or indirectly, both on financial and work administration aspects of the company, and subsidiaries 4. Being a director not relating or next of kin of any executive or major shareholder 5. Being a director not appointed as representative for retaining the benefit of the company’s directors, major shareholders, or shareholders related to the major shareholders Real independence of the independent directors indicates good management of the company, and the company performs strictly according to the foregoing rules and direction about the independent directors appointed by the company Most importantly, the independent directors can perform their duties, and give their comments, or report work results assigned to them independently, regardless of any benefit concerning the assets and positions, and fall under no influence of any group, nor being under no coercing circumstances not to give their comments. BOARD OF DIRECTORS’ MEETING
The Company’s Board of Directors schedules meetings in advance throughout the year, and holds at least 8 meetings a year. Additional meetings may be held to consider various important issues as urgently required and as deemed appropriate. Each meeting agenda consists of the consideration of the Company’s policy, new investment projects, quarterly financial statements, as well as the financial report, and follow up of the Company’s performance. The Secretary to the Board of Directors is responsible for confirming each meeting date, or making a new appointment date in the case of postponement from the original date, or calling an urgent meeting, and will also prepare and dispatch supporting documents to the directors. Each meeting generally lasts about 2 hours, and every director can freely express his opinions, and propose operational guidelines. Moreover, the Secretary to the Company’s Board of Directors’ duty is to take notes, and prepare the minutes of the meeting within 14 days, and to send the minutes which have been endorsed by the Company’s Board of Directors, as well as file all minutes and supporting documents related to the Directors’ meeting, ready for any review to be undertaken by the Board of Directors, shareholders, financial auditor, and related parties. In 2008, the following meetings were held : Board of Directors Meeting 11 times Audit Committee Meeting 4 times Shave Holders Meeting 3 times
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC. In this connection, the following directors and executives attended the meetings Name - Last Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)
Mr.Tirachai Mr.Vicha Mr.Suraphong Mr.Padet Mr.Chattaphum Mr.Virat Mr.Wirapol Mr.Suthep Mr.Arun Mr.Anont Dr.Wijit Mr.Worathep Mr.Suwit Mr.Sirichai Mr. Mangkorn Miss Jintana Ms.Thanyarath Mrs.Umaporn
Vutitum Poolvaraluck(1) (7) Triamchanchai (1) (10) Hongfa (11) (13) Khantiviriya (5) Udomsinwatana (9) Duangsungnoen (8) Dansiriviroj (2) Eamsureya (6) Asvanund (5) (12) Techkasem (4) Wongvitavas (3) Wannasirisook (3) (14) Chuacharoensiri (15) Larpcharoenjing Kanjanopas Toomngern Julsan
Company Directors
Audit Directors
11/11 10/11 7/11 1/11 9/11 9/11 11/11 8/11 4/11 7/11 1/11 1/11 1/11 -
4/4 3/4 3/4 4/4 4/4 4/4 4/4 -
Shareholders General/Extraordinary meeting Number 2 Annual Number 1
Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend
become the Company’s director, executive director, effective from 29th February 2008. become a member of audit committee and independent director, effective from 29th February 2008 resign from the Company’s director, effective from 12th March 2008 resign from the chairman of audit committee and independent director, effective from 19th March 2008 become the Company’s director, executive director, effective from 19th March 2008 become a member of audit committee and independent director, effective from 9th March 2008 appointed as the Company’s vice president, effective from 19th March 2008 appointed as the chairman of audit committee and independent director, effective from19th March 2008 become the Company’s director, effective from 29th April 2008 resign from the chief executive officer and the president of executive directors, effective from 1st October 2008 appointed as the chief executive officer and the president of executive directors, effective from 1st October 2008 resign from the Company’s director, effective from 4th December 2008 become the Company’s director, effective from 4th December 2008 resign from the vice president: finances, effective from 1st December 2008 become the vice president: finances, effective from 17th December 2008
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Attend Attend Attend Attend Attend Attend Attend Attend Attend
Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend Attend
35
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M PICTURES
Annual Report 2008
EXECUTIVE TEAM
As of 31 December 2008, Executive team of Group of Companies consists of 5 directors as follows : 1. Mr.Padet Hongfa Chief Executive Officer 2. Mr.Sirichai Chuacharoensiri Chief Financial Officer 3. Ms.Chanphen Singhanutta Human Resources and General Affairs Manager 4. Mr. Chanchai Tienngam Marketing Manager 5. Mr. Rujipant Chuenchitr Accounting Manager THE DIRECTORS AND THE MANAGEMENT TEAM’S AUTHORIZED SCOPE OF WORK The Company has authorized financial approval limits for executives according to different types of transaction as follows : • Management Having power to approve limit amount of not more than 10 million Baht Managerial level has no power to approve any financial amount. For any project that is above the THB 10 million limit, this must be proposed to the Board of Directors for approval. In practice, however, any investments or negotiation of rights beneficial to the Company’s business will be reported to the Board of Directors by the Management team prior to taking any action, even if the transaction value is within the approved authority limit of the Executive Committee
The company oversees usage of internal information by stipulating a policy as follows : • Executives including their spouses, children under legal age, are prohibited from buying and selling shares of the company. In case an information comes to the knowledge of an executive about an adverse affect on purchase and sale of the company’s asset, he will notify an executive of high level only and such information will be revealed to the employees only as necessary for their work performance. • Executives including their spouses, children under legal age are to report any change of security holding to the Securities Exchange Commission and the Stock Exchange of Thailand within 3 working days, from the occurrence date of purchase and sale, under Section 59 of Securities and Stock Exchange Act, B.E. 2535 (A.D. 1992)
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. 4. As of 3 December 2008, there were 67 personnel in the Company and its subsidiaries as follows : Number 1. Executives and personnel of the company 28 2. Executives and employees of M. Pictures Co., Ltd. 39 3. Executives and employees of TV Form Co., Ltd. 4. Executives and employees of Dream Media Co., Ltd. 5. Executives and employees of Incense Plus Co., Ltd. 6. Executives and employees of Graphic Corner Radio Co., Ltd. 7. Executives and employees of Ruam Otop Co., Ltd. Total 67 As of the end of 2008, total remuneration for personnel of the company and its subsidiaries was 44 million Baht, consisting of their salaries, provident fund, and other welfares Employees development Policy The policy is for development of personnel of every level, such as sending personnel to participate in the trainings for promoting their knowledge, understanding, technology and skill in conducting works, and bring about new knowledge for self development and development collectively.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
37
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M PICTURES
Annual Report 2008
The Company has set an appropriate level of remuneration for its directors and executive officers relative to other companies in the same business sector. The Director remuneration payable each year is proposed to the Company’s Board of Directors, as well as to the shareholders for approval. As for the remuneration of executive officers, this is linked to the Company’s performance, as well as to the performance of the relevant executive officer. In 2008, the following remuneration was paid : Monetary Compensation • The remuneration of 10 Board of Directors totaled THB 955,000 , in the form of meeting allowances :
Mr. Tirachai Vutitum Mr. Vicha Poolvaraluck Mr. Suraphong* Triamchanchai Mr. Padet Hongfa Mr. Chattaphum Khantiviriya Mr. Virat Udomsinwatana Mr. Anont** Asvanund Mr. Wirapol Duangsungnoen Mr. Suthep Dansiriviroj Mr. Arun Eamsureya * Resignation tendered in March 2009
amount amount amount amount amount amount amount amount amount amount
THB THB THB THB THB THB THB THB THB THB
150,000 115,000 100,000 25,000 90,000 80,000 85,000 130,000 90,000 90,000
** Resignation tendered during 2008 The total remuneration of the Directors who were executive officers, Executive Directors, and Executive officers was THB 10,470,000 consisting of salary and other welfare benefits. Such remuneration also included the director remuneration/executive remuneration of those who resigned during the year. •
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. The Board of Directors recognizes the importance of good corporate governance as an important and essential element in the sustainable growth and prosperity of its business operation, to improve transparency, and to increase shareholders and other related parties’ confidence. The Board has, therefore, devised a policy for the Company which incorporates the principles of corporate governance under the operational regulations of the Stock Exchange of Thailand as follows : 1. Setting the Corporate Governance Policy
1. The Company will treat every shareholder and stakeholder on equal and fair basis. 2. The Company will conduct its business activity with transparency, accountability, and disclose sufficient and comprehensive information to all parties concerned. 3. The Company will conduct its business activity with constant consideration of risks through appropriate control and management of risk procedures. 4. The Company’s Board of Directors comprises at least 3 independent directors. 5. The Company’s Board of Directors will hold a regular meeting every 45 days, and may hold other additional meetings if required. The date of the meeting will scheduled in advance, together with the clear outline of the meeting agendas. This will be submitted prior to the meeting, together with supporting documents in line with the Company’s articles of association so that the Company’s Board of Directors has sufficient time to study the information prior to attending the meeting. 6. The Company’s Board of Directors values the establishment of an internal control system, both financial and performance control, as well as the supervision of its operation. In this regard, the Board has set up an independent internal audit work unit as part of the Company’s business operation. 7. The Board of the Company will ensure the application of ethical guidelines to the Company’s business performance, the desired good work ethics of directors and staff, and will communicate these ethics to all related departments for information. 2. Rights and Equality of Shareholders The Company recognizes the significance of shareholder’s rights in accessing information on the Company, through its policy of providing clear information that is transparent, accurate, and fair. In this connection, the Company submits news and information on its performance results, investments in various projects, as well as inter company transactions on a regular and timely basis. Shareholders are entitled to receive such Company information on fair and equal basis, and are entitled to attend the meetings, vote, and express their opinions during the shareholders’ meeting (as per details in clause number 4). Each and every shareholder has equal rights as follows: 1. The right to receive information on the Company’s operation on a regular and timely basis M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
39
40
M PICTURES
Annual Report 2008
2. The right to participate in the shareholders’ meetings, express opinions and propose recommendations, as well as make inquiries on various issues 3. The right to be informed of inter related transactions 4. Other legal rights 3. Stakeholders’ Rights
The Company values the rights of every group of stakeholders including staff, executives, trade partners, executives, clients, shareholders, and related parties, in accordance with their roles, functions, and responsibilities to comply with the relevant rules and regulations for the purpose of the Company’s healthy performance and stable growth. • Shareholders the Company discloses information with transparency and reliability in order to create understanding and highest satisfaction amongst its shareholders • Staff the Company has consistently treated its staff with fairness, and has assumed responsibility for the maintenance of work environment that is considered safe for the lives and assets of staff, and in strict compliance with the labor law, providing welfare, and paying proper compensation • Clients the Company treats all of its clients on fair and equal basis, and does not sign direct contracts with any exclusive advertising agency/ product owner client. Neither does it disclose client information to outside parties without receiving prior permission from the client or from authorized personnel within the Group; with the exception of information that must be disclosed by law to relevant outside parties. The Company focuses on enhancing customer satisfaction and confidence by primarily emphasizing on proposing programs which help differentiate Company from its competitors, and are popular amongst viewers. • Trade Partners the business activities of trade partners must not in any way damage the Company’s business reputation, or contradict with the regulations. Consideration is given to fairness in terms of business operation and mutual interests with clients. • Society the Company undertakes various forms of charity projects and activities which benefit society as a whole. 4. The Shareholders’ Meeting
The Company schedules a General Shareholders’ Meeting once a year, not longer than 4 months after the Company’s fiscal year end date. In 2008, the Company held the Annual General Shareholders’ meeting on 29 April 2008, and held one extraordinary shareholders’ meeting in order to consider various important agendas. It had dispatched the appointment/invitation letters together with supporting documents providing sufficient and comprehensive information to the Company’s share registrar for onward delivery to the shareholders prior to the meeting as required by the law, in order to provide opportunity for shareholders to study the afore-mentioned information in detail. Furthermore, the Company facilitated the shareholders’ participation in the shareholders’ meeting by having the meeting room easily accessible, and in the event the shareholder cannot attend the meeting in person, he may authorize other individuals to attend in his place or authorize one of the independent directors to vote on his behalf. The shareholders’ meeting is set M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. usually held in the afternoons, with registration starting from 13.00 hrs. The meeting will commence from 14.00 hrs. onwards. The Company’s Board of Directors gives importance to meeting attendance, and at least half of the total number of directors must attend the meeting, including the Audit Committee which also comprises the independent directors. At every meeting, the Chairman of the meeting will explain to the shareholders the meeting procedures, the exercise of voting rights, and the right to express opinions. Opportunity will be given for shareholders to make queries and recommendations on various issues, and the Company’s management team, including the financial auditor attending the meeting will answer any questions raised on the various agendas. 5. Role, Leadership Position, and Vision
The Company’s Board of Directors is responsible to its shareholders for the Company’s business performance, and for overseeing that management of the business is in line with the objectives and guidelines set, and in the shareholders’ best interests; while at the same time taking into consideration the interests of all stakeholders. In its operation, the Board has appointed the Group’s Chairman of the Executive Committee who is responsible for the management of the Company’s regular business affairs, and has clearly defined the roles and functions of the Board of Directors and the senior management so that the operation proceeds most effectively, in accordance with the policy set. The Company’s directors are individuals with knowledge and capability who have undergone various training programs from the Thai Institute of Directors Association - IOD) as follows : Director Certification Program Khun Vicha Poolvaraluck Khun Chattaphum Khantiviriya Khun Wirapol Duangsungnoen Khun Suthep Dansiriviroj
2003 2008 2005 2006
Director Accreditation Program Khun Tirachai Vutithum Khun Wirapol Duangsungnoen Khun Suthep Dansiriviroj
2004 2005 2005
Finance for Non-Finance Director Program Khun Wirapol Duangsungnoen
2005
Audit Committee Program Khun Chattaphum Khantiviriya Khun Wirapol Duangsungnoen
2005 2006
Company Secretary Program Khun Chattaphum Khantiviriya
2005
Role of Compensation Committee Khun Chattaphum Khantiviriya
2008
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
41
42
Annual Report 2008
M PICTURES 6. Conflict of Interest The Board of Directors recognizes the significance of carefully considering transactions which may create conflict of interest, inter related or inter company transactions, and will treat them the same way it treats transactions with outside parties, upholding and abiding by the Stock Exchange of Thailand regulations as well as other rules which may be applicable to the transactions. 7. Business Ethics The Board of Directors, the Committees, the management, and staff have a joint role in performing their duties in line with the Company’s mission, guidelines and desired code of conduct, with honesty, integrity, and fairness which includes performance towards the Company, clients, and every group of stakeholders. 8. Balance Amongst Non Executive Directors As of 31 December 2008, there were 9 directors in the Company as follows : • Executive Directors 3 persons • Non Executive Directors (Independent Directors) 3 persons • Independent Audit Directors 3 persons In this connection, the Company has 6 Independent Directors or equivalent to 75% of the total number of directors. The Company’s Board of Directors is responsible for performing its duties in accordance with the law, its objectives, and the articles of association of the Company, as well as shareholders’ resolution, with honesty, integrity, and caution in preserving the Company and its shareholders’ interests. Each director’s position has a definite term which is in accordance with the Company’s articles of association which stipulate that at each Annual General Shareholders’ meeting 1 out of 3 directors must leave his position, by having the director who has assumed the position longest resign. 9. Combining/Separating of Positions The Company separates the position of Chairman of Board of Directors from that of Chairman of Executive Committee, and such positions can not be assumed by one individual. This serves to balance the power amongst the management for the purpose of appropriateness and transparency. The Company has defined functions by setting clear polices with regard to supervision and management. • Mr. Teerachai Wutitam, Chairman of the Board of Directors, is responsible as the Head of the Company’s Board of Directors, and acts as the Chairman of the Company’s Board of Directors’ meetings. Whenever, the Company holds a shareholders’ meeting, the Chairman of the Board of Directors will assign the Deputy Chairman of Board of Directors, or Chairman of the Management Committee, or Chairman of the Executive Committee to serve as the Chairman of the meeting on his behalf if he is required to perform his duties overseas during that time. • Mr. Padet Hongfa is Chief of Executive Board/Chief of Executive Offer, and is responsible as the Head of the Company’s management team, responsible for the Company’s performance in accordance with the policy M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. by the Company’s Board of Directors, and reports directly to the Company’s Board of Directors. 10. Director and Executive Remuneration The total remuneration of the 10 members of the Company’s Board of Directors totaled THB 955,000 in the form of meeting allowance : Khun Tirachai Vutithum amount THB 150,000 Khun Vicha Poolvaraluck amount THB 115,000 Khun Suraphong* Triamchanchai amount THB 100,000 Khun Padet Hongfa amount THB 25,000 Khun Chattaphum Khantiviriya amount THB 90,000 Khun Virat Udomsinwatana amount THB 80,000 Khun Anon* Asvanund amount THB 85,000 Khun Wirapol Duangsungnoen amount THB 130,000 Khun Suthep Dansiriviroj amount THB 90,000 Khun Arun Eamsureya amount THB 90,000 *Resigned during 2008 Total remuneration of the Company’s directors who are also executives, executive directors, and executives, in total 8 persons, is Baht 10,470,000, comprising of salary and other welfare. This remuneration sum includes those of the directors / executives who resigned during the year. 11. Board of Directors’ Meeting In 2008, the Company held 11 Board of Directors’ meetings. The Company prepares the meeting invitation, the meeting agenda, together with supporting documents at least 7 days prior to each meeting. The proper timing allocated for the various meeting agendas will be set by the Board of Directors, and an officer will be responsible for recording of the minutes of the meeting, and seriously implementing the meeting resolution, as well as following up, and filing of the previous minutes which have been endorsed by the Board of Directors, ready for review to be undertaken by the Board of Directors and related parties. (Details of director and executive attendance is explained on page 34) 12. The Committees The company sets up the Sub-Committee, namely Audit Committee and Procurement Committee (under detailed structure and management of the organization P.29) 13. Internal Control and Audit Policy The Company has established an internal control system by setting up the Internal Audit Department which reports directly to the Audit Committee, in order to undertake audit of the internal operational system, and to make recommendations regarding the adequacy and appropriateness of the Company and its subsidiaries’ internal control systems. The Company’s internal control system will also be applicable to executives in order to prevent damages which may arise from the misuse of assets or from lack of proper authority, by clearly setting executives’ scope of authority and responsibility. The Company’s Audit Committee through the Internal Audit Department has supervised and reviewed the efficiency, adequacy, and appropriateness of the Company’s internal control system in various aspects, and if any serious M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
43
44
Annual Report 2008
M PICTURES
defect or abnormality is discovered, then this must be reported to the Company’s Board of Directors for swift improvement and rectification. At the Company’s Board of Directors meeting, during which the Independent Audit Directors are also present, the Board considered the adequacy of the Company’s internal control system, and concluded based on the appraisal of the Company and its subsidiaries’ internal control systems in the following 5 aspects : 1. Organization and environmental conditions 2. Risk management 3. Supervision of executive performance 4. Information system and communication of information 5. Follow up process The Company’s Board of Directors and the Audit Commitment are in agreement with the Company’s financial auditor who has reviewed the efficiency of the Group, that the Company and its subsidiaries have adequate and appropriate internal control systems suited to their business activities, which are capable of protecting the Company’s assets from executives’ misuse of the assets or from having insufficient authority. No significant defect was found in the accounting internal control system which would require the financial auditor’s comments to be included in the 2008 financial statements. In addition, the Company’s Board of Directors also stressed the development of corporate governance system in order that the internal control system may be continuously and further improved. 14. Board of Directors’ Report The Company’s Board of Directors is responsible for the Company and its subsidiaries’ consolidated financial statements, and financial information which appear in the annual report. The afore-mentioned financial statements have been prepared in accordance with internationally accepted standards, in Thailand, using careful judgment, and the best possible estimates/ projections, as well as disclosing sufficient information in the notes to financial statements. This will create stakeholders’ confidence in the Company’s financial statements. In the past, the Company’s Board of Directors had appointed an Executive Committee which comprised highly qualified independent directors with qualification which comply with the Stock Exchange of Thailand’s regulations, to conduct a review, and ensure that the Company’s financial reports are correct and adequate, with an appropriate and efficient internal control system, and to review that the operations comply with the Stock Exchange regulations, obligations to outside parties, and other relevant rules and regulations, including the selection and proposal to appoint and offer compensation to the financial auditor. 15. Investor Relations The Company’s Board of Directors recognizes the importance of disclosing correct, complete, transparent, and comprehensive information which include the financial report, general information, as well as other pertinent information which could affect its share price. The distribution of the aforementioned news and information is for investors and related parties’ information through the various information distribution media channels of the Stock Exchange of Thailand and the Company’s website. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
45
In 2008, most of the inter relate transactions shown on the Profit and Profit and Loss Statement were transactions in which the Company and its subsidiaries sold products and services to related companies totaling THB 170.26 millions. (Unit : Mill Baht)
Inter ralated transactions between the Company and other reiated companies and Individuals during 2008 Revenue generated from sales and services of sports business acitvity Revenue generated from sales and services of entertainment business acitvity Interest income Other revenue Cost of sales and services Advertising expenses Rental and office services Other Expenses
7.50 162.58 0.06 0.12 6.22 0.79 3.19 0.78 (Unit : Mill Baht)
Related party transaction of the Company and related persons in the consolidated balance sheet of the year 2008
Inside Info Co., Ltd. EGV Entertainment Plc. Pacific Marketing and Entertainment Co., Ltd. Major Cineplex Group Plc. Incenplus Marketing Solutions SDN.BHD Total
Account receivable
Other Debtors
Short Term Inter Company Loans
39,263 1,668 86,880 9,817 387 138,015
2,126 259 2,385
-
Total
41,389 1,668 86,880 9,817 646 140,400
The company had outstanding inter-related balance between the company and subsidiaries, consisting of trade debtors in the amount of 138.02 millions and other debtors in the amount of 2.38 millions Bath detailed debts are as follows : • Insight Info Co., Ltd., having the outstanding debt of 41.39 millions Baht, as of 31 December 2008. The payment had been made partially by cheques, each was worth 10 millions Baht, to be due in 2009. As for trade debtors in 2008, they were normal debtors with trade condition in general just like those given to the other people. • Major Cineplex Group (Public) Co., Ltd., having the unpaid debt amount of 9.82 millions Baht, EGV Entertainment (Public) Co., Ltd. 1.67 millions Baht, and Pacific Marketing and Entertainment Co., Ltd., 86.88 millions Baht. They all are normal trade debtors under general condition of the company. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
46
M PICTURES
Annual Report 2008
AUDIT FEE •
In the past fiscal year, the Company and its subsidiaries paid an audit fee to the financial auditor’s audit firm, to individuals or businesses related to the financial auditor, and the financial auditor’s audit firm, totaling THB 2,270,000.
NON AUDIT FEE •
The Company and its subsidiaries did not make use of any additional services from the financial auditor, the financial audit or’s audit firm, individuals, or businesses related to the financial auditor, or the financial auditor’s audit firm.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
47
Group of Companies had Loss in 2008 in the amount of 224.41 million Baht, 182.51 million Baht or 435.58% increased from that of 2007, due to unsuccessful businesses in sports and news, coupled with expenses incurred in adjustment of new business structure. Income of Group of Companies was in the total of 288.80 million Baht, having main revenue from movie copyright business 222.80 million Baht, from sports business 46.10 million Baht, from database management 7.50 million Baht , and from news business 1.90 million Baht or equivalent to 77%, 16%, 2% and 1% of total income respectively. In comparison with those in 2007, the income increased approximately 142% Total expense as a whole of Group of Companies increased from that of 2007 from 171.91 million Baht to 227.86 million Baht, or approximately 32.54%, while production cost and service decreased 33.77 million Baht, or approximately 28.07%. Expenses in sale and administration increase 89.72 million Baht or 173.82%”
Total revenues of the company for 2008 increased from last year by 169.50 millions baht or 142%, which can be separated by business as follows : Business Line
Increase / (Decrease)
Amount 2008
(Unit : Million Baht)
2007
Amount
Sale Portion by
%
2008
2007
Sport Business
46.1
85.1
(39.0)
-46%
16%
71%
News Business
1.9
17.1
(15.2)
-89%
1%
14%
222.8
6.0
216.8
3,613%
77%
5%
7.5
2.3
5.2
226%
2%
2%
Other Revenue
10.5
8.8
1.7
15%
4%
7%
Total Revenues
288.8
119.3
169.5
142%
100%
100%
Movie Copyright Business Database Management
Sport Business : The revenue decreased from last year by 39.0 millions baht or 46%, mainly due to expiry of license in live broadcasting of English Premier League in May 2007. License of live broadcasting of FA Cup still remains. However, license of live broadcasting of Calcio Series A (Italy) and Bundesliga (Germany) are bought and commenced to live broadcast in May 2008. However, popularity in both new football leagues still lower than English Premier League. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
48
M PICTURES
Annual Report 2008
News Business : The revenue decreased from last year by 15.2 millions baht or 89% because the company eliminated publishing business and operation of FM.105 of Public Relation Department ceased in 2008, it causes no revenue from publishing and radio operation in this year. Movie copyright business : There was an increase income of 216.8 millions Baht or about 3,613% from that in 2008 of Movie copyright business group, which is joint-venture in M. Pictures Co., Ltd., the company has conducted the business of entertainment of overseas movies since February 2008. Income from database management : Increase 5.2 million Baht from 2007, or about 226%. It was an income from business operation of subsidiaries in giving service of market information, with increase of the capital conducted during 2008 in the amount of 1.0 millions Baht, presently has ceased operation since November 2008 (Million Baht) Increase / (Decrease)
Amount
Group of business
2007
Sports business
46.1
85.1
(39.0)
-46%
16%
71%
News business
1.9
17.1
(15.2)
-89%
1%
14%
222.8
6.0
216.8
3,613%
77%
5%
7.5
2.3
5.2
226%
2%
2%
278.3
110.5
167.8
152%
100%
100%
86.5
120.3
(33.8)
-28%
31%
109%
Movie copyright sale cost
251.4
-
251.4
Total Sale and Service Costs
337.9
120.3
217.6
181%
121%
109%
Preliminary loss
(59.6)
(9.8)
49.8
508%
-21%
-9%
(1) Preliminary loss from businessof sports news, database service
(31.0)
(9.8)
21.2
216%
-56%*
-9%
(2) Preliminary loss form movies
(28.6)
-
28.6
Database management Total income (Only main income)
%
2008
2007
2008
Movie copyright business
Amount
Ratio/total income
Sale cost and service givingService cost, advertising cost and other service cost
90%
-13%**
* (1) Preliminary loss from sports, news, database service in 2008 : income of these 3 business groups in total was 55.5 millions Baht with the cost of 86.5 millions Baht. Preliminary loss was 31.0 millions Baht or 56% of income. ** (2) Preliminary loss from movie copyright business in 2008 : income of movie copyright business was 222.8 millions Baht with the cost of 251.4 millions Baht, Preliminary loss was 28.6 millions Baht or 13% of income. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
49
Production and service cost of the Group of Companies in 2008 decreased from that of 2007 about 33.77 million Baht, or 28.07% due to decrease of income from sports business and news business. However, upon consideration of gross profit rate, profit rate in 2008 was -21%, while that of 2007 was at the level of -9% as cost of copyright of televising live on competition of FA Cup Football vs Gulsosery of Italy, as well as Bundelika Football of Germany ended in May 2008, as well as foreign movie copyright business in 2008 during the unrest problem within the country, causing the income as a whole to be still in negative amount after comparing with production and service costs.. Sale and administration expense Sale and administration expense of the Group of companies in 2008, after comparing with that in 2007 increased from 51.61 million Baht to 141.33 million Baht or increase of 89.72 million Baht, equivalent to 173.82%, as some portion of expense was the expense incurred in movie media entertainment which was 48.66 million Baht, or 34% causing the increase of sale and administration expenses
Assets As at 31 December 2008, the group of the company had total assets 604.15 millions baht increased from 31 December 2007 by 465.86 millions baht or 336.87%
(Million Baht)
31 December 2008
31 December 2007
Amount
%
Amount
2.5
0%
0.8
1%
177.2
29%
49.2
35%
Other current assets
29.6
5%
34.8
25%
Building and equipment - net
17.0
3%
20.8
15%
Other non - current assets
377.9
63%
32.7
24%
Total Assets
604.2
100%
138.3
100%
Cash and cash equivalent Trade accounts receivable - net
Cash and cash equivalent :Cash and cash equivalent slightly decreased from 31 December 2007. Trade accounts receivable - net : Trade accounts receivable were mainly debtors from entertainment business and advertising sales. The company tried to collect from debtors and the allowance for doubtful account is adequate. The amount of deposit was seized from video rights - Customer
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
%
M PICTURES
Annual Report 2008
50
(Million Baht) 31 December 2008
31 December 2007
Amount
%
Amount
%
Less than 3 months
94.01
32%
23.59
23%
3-6 months
31.85
11%
20.75
20%
6-12 months
49.96
17%
10.05
10%
117.84
40%
45.19
45%
0.15
0%
1.80
2%
Total
293.81
100%
101.38
100%
Less : Allowance for soubtful accounts
(78.35)
-27%
(52.22)
-52%
215.46
73%
49.16
48%
Less : Deposit amount received from the customer
(38.30)
13%
0
0%
Net
177.16
60%
49.16
48%
The aging of the outstanding trade accounts receivable
more than 12 months Receivable income
Other current asset, reduced from 31 December 2007 in the amount of 5.20 million Baht Building and equipment – net decreased from 31 December 2007 in the amount of 3.8 million Baht as the depreciation in 2008 was 13.1 million Baht, The company also set up allowance for depletion of 6.01 million Baht for depletion value of the building and equipment of the subsidiaries. Other current asset increases from 31 December 2007 in the amount of 345.2 million Baht as it is the asset in the part of movie copyright for 201.6 million Baht, and the goodwill cost in the amount of 139.1 million Baht due to the company having made investment in its subsidiaries in 2008
(Million Baht)
31 December 2008
31 December 2007
Amount
%
Amount
281.1 281.1 46%46%
53.553.5
39%39%
เจ้าหนี ก้ ารค้accounts า Trade payable
60.760.7 10%10%
57.457.4
42%42%
หนีส้ Other นิ หมุนcurrent เวียนอืน่ liabilities
46.346.3
8% 8%
25.525.5
18%18%
หนีส้ Non นิ ไม่ห- มุcurrent นเวียน liabilities
7.0 7.0
1% 1%
0 0
0% 0%
รวมหนี ส้ นิ liabilites Total
395.1 395.1 65%65%
136.4 136.4
99%99%
ส่วนของผู ถ้ อื หุน้ equity Shareholders’
209.1 209.1 35%35%
1.9 1.9
1% 1%
รวมหนี ส้ นิ liabilities และส่วนของผู อื หุน้ Total and ถ้ Shareholder’s equity
604.2 604.2 100% 100%
เงินกูShort ย้ มื ระยะสั - termน้ จากสถาบั loans นการเงิน
%
138.3 138.3 100% 100%
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC. Short term loan from financial institution : the source of company’s capital for use in carrying on the operation. The total as of 31 December 2008 increased from the balance as of 31 December 2007 in the amount of 227.6 million Baht, or 425.4% being loan taken in the category of promissory note, and overdraft from bank. Trade Creditor : Increased from 31 December 2007 for 3.3 million Baht or 6% as the company was allowed to increase repayment term to the Trade Creditors. Other Liabilities : Increased from 31 December 2007 in the amount of 20.8 million Baht as it was the debt in sales tax not yet due for payment in the amount of 13.8 million Baht Shareholders’ Equity : As of the end of 2008, Shareholders’ Equity according to Financial Statements was 209.1 million Baht, while that as of the end of 2007 displayed the amount of 1.9 million Baht. Increase was due to the Company holding share of M. Pictures Co., Ltd. FINANCIAL RATIO ANALYSIS 31 DEC 2008
Annual Report 2008
51
(Million Baht) 31 DEC 2007 31 DEC 2006
Current Ratio
0.54
0.62
0.47
Receivable Turnover
2.46
2.31
6.19
148.37
158.05
58.98
Total Assets Turnover
0.75
0.80
2.21
Total Debt to Equity Ratio
1.88
72.55
-5.24
Average Collection Period
Current Ratio, financial liquidity of the company, in comparison with that of the preceding year, the rate is not better. Capability in settlement of short term debt with short term asset was not good enough. Short term debt was greater than short term asset available. The problem of lack of liquidity was going on although early 2008 the company made investment jointly with group of companies on movie entertainment media and the company had liquidity in better direction, but facing loss affected the company’s liquidity again.
Total Assets Turnover : The Company did not require the fixed assets in running a business, because the main business was advertising sale. The company needed to maintain the enough level of current assets to support the operating expenses. As customary business practice of the company on sale of copyright giving credit term about 90-120 days. Receivable turnover this year is rather high due to payment in arrear beyond the term stipulated. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
52
Annual Report 2008
M PICTURES
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
To the Shareholders and the Board of Directors of M Pictures Entertainment Public Company Limited (Formerly “Traffic Corner Holdings Public Company Limited”) I have examined the consolidated Balance Sheet, Balance Sheet of the company as of 31 December 2008, consolidated Profit and Loss Statements, Profit and Loss Statements of the company, statement showing consolidated change of Shareholders’ equity, statement showing change of Shareholders’ equity of the company, consolidated Cash Flow Statement, and Cash Flow Statement of the company for the same year ended on the same date of every year of M. Pictures Entertainment (Public) Co., Ltd. and its subsidiaries, and only of M Pictures Entertainment (Public) Co., Ltd. respectively, with the Company’s executives assuming responsibility for accuracy and completeness of data in those Financial Statements, while I am responsible for my opinion expressed about the Financial Statements from my auditing. The aforementioned consolidated financial statements and financial statements of the company for the year ended as of 31 December 2007, brought for comparison with the audit by another auditor, who expressed opinion unconditionally as per report dated 29 February 2008, with a paragraph placed the emphasis on the capability of the company in carrying on the business continuously, and the change in accounting policy re recording investment in subsidiaries in the financial statements for certain transaction from loss and gain method to costing method.” I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial positions as at 31 December 2008, and the consolidated and company results of operations, and cash flows for the year then ended of M Pictures Entertainment Public Company Limited and its subsidiaries and of M Pictures Entertainment Public Company Limited, respectively, in accordance with generally accepted accounting principles. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Kajornkiet Aroonpirodkul Certified Public Accountant (Thailand) No. 3445 PricewaterhouseCoopers ABAS Limited. Bangkok 23 February 2009
53
M PICTURE
Annual Report 2008
54
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Unit : Baht CONSORIDATED NOTE Assets Current assets Cash on hand and cash equivalents Trade accounts receivable and accrued income, net Amount due from related parties, net Loans to related parties, net Loan to third party, net Prepayments Other current assets, net
2008
COMPANY
2007
2008
2007
2,511,928
784,788
1,908,513
114,050
177,164,828 1,750,122 9,412,567 18,405,014
49,165,809 3,092,760 17,340,399 14,388,653
31,788,536 3,893,737 1,278,002 14,361,321
33,953,619 12,339,034 17,310,880 5,884,367
209,244,459
84,772,409
53,230,109
69,601,950
2,300,256 17,007,342 2,046,325 201,641,864 139,142,506 32,768,284
6,275,500 20,815,227 2,080,657 24,351,175
328,564,919 12,551,664 1,294,992 1,350,000 11,126,190
1,200,000 20,444,489 10,862,537 866,988 16,716,611
Total non-current assets
394,906,577
53,522,559
354,887,765
50,090,625
Total assets
604,151,036
138,294,968
408,117,874
119,692,575
7 21 21 8 9
Total current assets Non-current assets Restricted cash Investments in subsidiaries, net General investment, net Plant and equipment, net Computer program, net Film rights, net Goodwill, net Other non-current assets, net
10 11 12 13 13 13 14
The notes are an integral part of these interim financial statements.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
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Unit : Baht CONSORIDATED NOTE Liabilities and shareholders equity Current liabilities Bank overdrafts and borrowings from financial institutions Trade accounts payable Amount due to related parties Current portion of liability under finance lease Accounts payable - other Short-term loans from subsidiaries Liabilities arisen from guarantee Undue output VAT Accrued expenses Other current liabilities
2008
COMPANY
2007
2008
2007
15 21 21
281,066,349 60,650,591 6,393,280
53,519,367 57,394,299 727,624
15,527,071 14,659,636
53,519,367 30,677,012 5,592,501
15
978,123 7,184,118 770,000 13,822,215 15,983,760 1,192,715
271,669 2,570,000 7,705,376 7,866,166 6,359,476
978,123 5,646,031 89,934,000 770,000 3,486,968 7,897,135 467,800
227,721 75,800,000 2,570,000 4,526,425 5,057,525 6,354,711
388,041,151
136,413,977
139,366,764
184,325,262
Other liabilities
7,014,584
-
-
-
Total non-current liabilities
7,014,584
-
-
-
395,055,735
136,413,977
139,366,764
184,325,262
21
Total current liabilities Non-current liabilities
Total liabilities
The note are an integral part of these interim financial statements.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
M PICTURE
Annual Report 2008
56
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Unit : Baht CONSORIDATED NOTE
COMPANY
2008
2007
2008
2007
360,000,000
158,250,000
360,000,000
158,250,000
360,000,000 191,610,374 (348,565,269)
120,000,000 (124,340,747)
360,000,000 191,610,374 (282,859,264)
120,000,000 (184,632,687)
203,045,105 6,050,196
(4,340,747) 6,221,738
268,751,110 -
(64,632,687) -
Total shareholders’ equity
209,095,301
1,880,991
268,751,110
(64,632,687)
Total liabilities and shareholders’ equity
604,151,036
138,294,968
408,117,874
119,692,575
Liabilities and shareholder’s equit (Cont’d) Shareholders’ equity 16
Share capital Registered Issued and fully paid-up Share premium Deficits
16
Total parent’s shareholders’ equity Minority interests
17
The notes are an integral part of these interim financial statements.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
57
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Unit : Baht CONSORIDATED พ.ศ. 2008 2551
NOTE
COMPANY
2007
พ.ศ. 2008 2551
2007
Revenues Advertising income Sales of film rights Services income
48,021,782 222,826,126 7,473,703
102,235,925 8,239,147
50,401,795 15,299,895 -
85,608,485 -
Total revenues
278,321,611
110,475,072
65,701,690
85,608,485
Cost of sales and services Cost of advertising and other services Cost of film rights
86,527,813 251,363,317
120,298,350 -
81,839,149 10,803,911
101,981,571 -
Total cost of sales and services
337,891,130
120,298,350
92,643,060
101,981,571
Gross loss
(59,569,519)
(9,823,278)
(26,941,370)
(16,373,086)
Other income Selling and administrative expenses
18
10,450,292 141,329,509
23,322,191 51,613,460
10,078,534 76,946,638
9,430,508 99,591,798
Loss before financial costs and income tax Finance costs
19
(190,448,736) (17,705,646)
(38,114,547) (3,786,582)
(93,809,474) (4,417,103)
(106,534,376) (7,541,515)
Loss before income tax Income tax
(208,154,382) (16,250,827)
(41,901,129) -
(98,226,577) -
(114,075,891) -
Net loss for the year
(224,405,209)
(41,901,129)
(98,226,577)
(114,075,891)
Shareholders of the parent Minority interests
(224,224,522) (180,687)
(41,755,176) (145,953)
(98,226,577) -
(114,075,891) -
Loss for the year
(224,405,209)
(41,901,129)
(98,226,577)
(114,075,891)
(0.66)
(0.27)
(0.29)
(0.74)
Attributable to:
Loss per share of the parent Basic loss per share
20
The notes are an integral part of these interim financial statements.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
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3,500,000 (3,500,000) -
191,610,374 182,300,000 (182,300,000) -
360,000,000 342,774,695 90,000,000 (312,774,695) 120,000,000
Closing balance 31 December 2008
Opening balance as at 1 January 2007 Increase of share capital Decrease of share capital Net loss for the year Decreade of minority interests in subsidiaries Increase of minority interests in subsidiaries
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
16 16 17 17 17
16 17 17
(124,340,747)
(581,160,266) 498,574,695 (41,755,176) -
(348,565,269)
(124,340,747) (224,224,522) -
Deficits
Total
6,221,738
1,880,991
13,743,772 (38,841,799) - 90,000,000 (145,953) (41,901,129) (9,000,000) (9,000,000) 1,623,919 1,623,919
6,050,196 209,095,301
6,221,738 1,880,991 - 431,610,374 (180,687) (224,405,209) 9,145 9,145
Minority interests
(Unit : Baht)
Annual Report 2008
Closing balance 31 December 2007
Opening balance as at 1 January 2008 Increase of share capital Net loss for the year Minority’s interests in subsidaries
Note 191,610,374 -
Consolidated
120,000,000 240,000,000 -
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58
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M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED (581,160,266)
12,028,775 12,028,775 (569,131,491) (40,556,796) 90,000,000 498,574,695 (114,075,891) (114,075,891)
3,500,000 3,500,000 (3,500,000) -
182,300,000 182,300,000 (182,300,000) -
342,774,695 342,774,695 90,000,000 (312,774,695) 120,000,000
Opening balance as at 1 January 2007-as previously reported Cumulative effect of the change in accounting policy-investment in subsidiaries 10 Opening balance as restated 16 Increase of share capital 16 Decrease of share capital Net loss for the year
Closing balance 31 December 2007
(184,632,687)
(282,859,264)
-
191,610,374
360,000,000
Closing balance 31 December 2008
(64,632,687)
(52,585,571)
268,751,110
(64,632,687) 431,610,374 (98,226,577)
(184,632,687) (98,226,577)
Total
-
Deficits
191,610,374 -
Opening balance as at 1 January 2008 Increase of share capital Net loss for the year
Note
Legal reserves
Company
(Unit : Baht)
120,000,000 240,000,000 -
16
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ENTERTAINMENT PLC. Annual Report 2008 59
M PICTURE
Annual Report 2008
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Unit : Baht CONSORIDATED NOTE Net loss before income tax Adjustments for: 12, 13 Depreciation and amortisation charge (Reversal) bad debt and doubtful accounts Reversal of account payable to income Net gain on disposal and write-off of equipment and intangible assets Impairment of film rights and broadcasting football matches license 10 Impairment of investments in subsidiaries Impairment of property, plant and 12 equipment and intangible assets Reversal of liabilities arisen from guarantee Interest income 19 Finance costs 17 Increase in minority interests Changes in operating assets and liabilities: (excluding the effects of acquisition of a subsidiary) - trade accounts receivable and accrued income - amounts due from related parties - prepayments - other current assets - other non-current assets - trade accounts payable - amount due to related parties - accounts payable - other - undue output VAT - accrued expense - other current liabilities Cash flows from operating activities Add Interest received Less Interest paid Withholding tax Net cash flows from (used in) operating activities
COMPANY
2008
2007
2008
(208,154,382)
(41,901,129)
(98,226,577)
(114,075,891)
163,796,521 29,021,719 -
13,280,181 (14,472,656) (3,870,860)
11,073,769 (2,642,066) -
4,042,113 (1,448,067) (1,556,035)
(184,567)
(218,713)
-
(417,011)
16,706,399 -
-
14,552,286 12,877,330
66,019,674
6,143,042 (1,800,000) (251,529) 17,705,646 -
1,568,068 (4,000,000) (313,307) 3,786,582 1,623,919
2,542,771 (1,800,000) (1,526,982) 4,417,103 -
(4,000,000) (1,456,853) 7,541,515 -
68,936,347 1,447,389 3,926,017 6,977,079 10,238,765 (18,802,074) 5,665,656 6,912,449 (10,406,335) 8,117,594 (35,831,914)
13,929,058 15,299,683 839,291 (11,950,942) 5,337,711 (38,004,708) (247,986) (2,046,363) (1,801,840) (482,846) 2,601,574
2,502,333 14,235,690 1,480,592 (12,528,904) 7,595,501 (15,149,941) 5,956,991 5,418,310 (1,039,457) 2,839,610 (5,868,919)
1,089,841 6,373,901 (5,526,510) (8,474,891) (150,569) (25,718,555) 1,664,126 (1,496,952) (94,953) 299,122 474,265
70,163,822 187,496 (17,656,891) (9,560,126)
(61,045,283) 343,495 (5,116,155) (3,613,632)
(53,290,560) 80,465 (1,306,960) (1,972,189)
(76,911,730) 246,119 (6,252,331) (2,511,381)
43,134,301
(69,431,575)
(56,489,244)
(85,429,323)
The note are an integral part of these interim financial statements.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
2007
Annual Report 2008
ENTERTAINMENT PLC.
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Unit : Baht CONSORIDATED NOTE Cash flows from operating activities Cash flows from investing activities Movements in deposits with financial institution used as collateral Loan repayments received from subsidiaries and related parties 21 Purchase of investment in subsidiary 10 Proceeds from decrease in investment in subsidiary 10 Purchases of property and equipment Purchases of intangible assets 13 Purchases of film rights 13 Purchase of goodwill 13 Loans made to subsidiary 21 Proceeds from disposal of equipment Net cash and cash equivalent received from investments in a subsidiary 10 Net cash receipts from (used in) investing activities Cash flows from financing activities Repayments to bank overdrafts and short-term loans from financial institutions Repayments to short-term loans from subsidiaries Proceeds from short-term loans from subsidiaries Repayment to liabilities under financial lease Proceeds from issuance of ordinary shares Payment to minority for decrease in share capital Net cash receipts from financing activities
21 21 16 17
Net increase in cash and cash equivalents Opening balance of cash and cash equivalents Closing balance of cash and cash equivalents
2008
COMPANY
2007
2008
2007
43,134,301
(69,431,575)
(56,489,244)
(85,429,323)
3,975,244
6,523,745
1,200,000
(1,200,000)
(5,828,946) (51,391) (118,213,913) 1,887,372
1,145,875 (3,741,564) (231,142) (1,504,322) 1,475,781
2,680,000 (1,000,000) (6,357,913) (570,000) (9,000,000) (700,000) -
(4,000,000) 31,000,000 (2,333,022) (63,000) (4,190,733) 936,029
975,312 (117,256,322)
3,668,373
(13,747,913)
20,149,274
(34,330,096) (1,433,357) 111,612,614 75,849,161
(16,937,227) (170,225) 90,000,000 (9,000,000) 63,892,548
(53,519,367) (13,120,000) 27,254,000 (195,627) 111,612,614 72,031,620
(6,818,837) (18,117,940) 90,000,000 65,063,223
1,727,140 784,788 2,511,928
(1,870,654) 2,655,442 784,788
1,794,463 114,050 1,908,513
(216,826) 330,876 114,050
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319,997,760 151,743
-
Non-cash transactions Significant non-cash transactions for the years ended 31 December 2008 and 2007: Shares issued for exchange with investment in a subsidiary 10 Outstanding payable arising from purchases of equipment
319,997,760 1,805,430
The notes are an integral part of these interim financial statements.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
M PICTURES
Annual Report 2008
62
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1
2
General information M Pictures Entertainment Public Company Limited (“the Company”) is a public limited company incorporated and resident in Thailand. The address of the Company’s registered office is as follows: 97/11, 5th EGV Metropois Building, Ratdamri Rd., Lumpini, Phatumwan, Bangkok 10330. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries are referred to as “the Group”. The Company becomes an associate of Major Cineplex Group Public Company Limited after the exchange of newly issued shares as detailed in Note 10. On 14 May 2008, the Company registered with the Ministry of Commerce to change its name from “Traffic Corner Holdings Public Company Limited” to “M Pictures Entertainment Public Company Limited”. The Company and its subsidiaries (“the Group”) are principally engaged in the business of providing medias, marketing services and distribution of film rights. These group consolidated and company financial statements were authorised for issue by the Board of Directors on 23 February 2009. Accounting policies The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below: 2.1 Basis for preparation The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported periods. Although these estimates are based on management’s best knowledge of current events and actions, actual results may differ from those estimates. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. An English version of the consolidated and company financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail. 2.2 New accounting standard and amendments to accounting standards During 2007 and 2008, the Federation of Accounting Profession (“FAP”) has announced new standard and amendments to Thai Accounting Standards (“TAS”) as follows: Revised standards TAS 25 “Cash Flow Statements” TAS 29 “Leases” TAS 31 “Inventories” M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
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TAS 33 “Borrowing Costs” TAS 35 “Presentation of Financial Statements” TAS 39 “Accounting Policies, Changes in Accounting Estimates and Errors” TAS 41 “Interim Financial Reporting” TAS 43 “Business Combinations” TAS 49 “Construction Contracts” New standard TAS 51 “Intangible Assets” The amendments to accounting standards and the new accounting standard are effective for the period beginning on or after 1 January 2008 except TAS 29 which is effective for the lease contract started on or after 1 January 2008. There are Thai accounting standards that will be effetive for the period beginning on or after 1 January 2009 and have not early been adopted by the group as follows TAS 36 “Impairment of Assets” TAS 54 “Non-current Assets Held for Sale and Discontinued Operations” Those two standards are not expected to have a material impact on the financial statements being presented. 2.3 Investments in subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, inrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of income. Intercompany transactions, balances and unrealised gains or losses on transactions between group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. In the Company’s separate financial statements investments in subsidiaries are reported by using the cost method of accounting. Under the cost method income from investments in subsidiaries will be recorded when dividends are declared. A list of the Group’s principal subsidiaries and the financial effects of the acquisitions and disposals of are shown in Note 10. 2.4 Investments General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of income. 2.5 Foreign currency translation Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated financial statements are presented in Thai Baht. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
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M PICTURES
Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the statement of income. 2.6 Financial instruments Financial assets carried on the balance sheet include cash and cash equivalents, trade accounts receivables and related party receivables. Financial liabilities carried on the balance sheet include trade accounts payable, related party payables, finance leases and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. 2.7 Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less from the date of acquisition and bank overdrafts. 2.8 Trade accounts receivable Trade accounts receivable are carried at original invoice amount and subsequently measured at the remaining amount less allowance for doubtful receivables based on a review of all outstanding amounts at the year end. The amount of the allowance is the difference between the carrying amount of the receivable and the amount expected to be collectible. Bad debts are written off during the year in which they are identified and recognised in the statement of income within selling and administrative expenses. 2.9 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis to write off the cost of each asset to its residual value over the estimated useful life or, if it is shorter, the lease term, as follows: Condominium 20 years Leasehold improvements 5 years Tools and equipment 5 years Furniture, fixtures and office equipment 3, 5 years Motor vehicles (including vehicles under finance leases) 5 years Residual value and the estimated useful life of the assets are revised at every reporting balance sheet date Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Repairs and maintenance are charged to the statement of income during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the related asset. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. 2.10 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary undertaking at the date of acquisition. Goodwill on acquisitions of subsidiaries is reported in the consolidated balance sheet as an intangible asset. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash generating units or group of cash generating units that are expected to benefit from the business combination in which the goodwill arose. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
2.11 Other intangible assets Film rights Film rights are capitalised at the purchase price including costs directly attributable to the acquisition of rights. Film rights are amortised and charged to direct costs of exhibition, VCD and DVD and TV broadcasting at the ratio relating to the expected revenue earned from each of the revenue-generated channels over the lifetime of rights. In the event that an ultimate loss is projected for each right, an amount equivalent to this loss will be written-off in the statement of income immediately. Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of 10 years. Cost associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Expenditure which enhances or extends the performance computer software programmes beyond their original specifications is recognised as a capital improvement and added to the original cost of the software. Computer software development costs are recognised as assets are amortised using the straight - line method over their useful lives, not exceeding a period of 10 years. Other intangible assets Expenditure on acquired patents, or licences is capitalised and amortised using the straight-line method over their useful lives, generally over 10 years. Intangible assets are not revalued. 2.12 Impairment of assets Property, plant and equipment and other non-current assets, including goodwill and intangible assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. Assets other than goodwill that suffered an impairment are reversed for possible impairment loss of the estimation of the recoverable amount were changed in subsequent period after the Group’s recognition of impairment. 2.13 Leases - where a group company is the lessee Leases of property, plant and equipment, which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payable. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant period rate of interest on the remaining balance of the liability for each period. The property and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term. Leases not transferring a significant portion of the risks and rewards of ownership to the leasee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 2.14 Borrowings Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the statement of income over the period of the borrowings. M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
65
Annual Report 2008
66
M PICTURES
2.15 Employee benefits The Group operates a provident fund, that is a defined contribution plan. The assets of which are held in a separate fund. The provident fund is funded by payments from employees and by the relevant Group companies. The Group’s contributions to the provident fund are charged to the statement of income in the period to which the contributions relate.
3
The Group does not recognise a provision for post employee benefits, payable to employees under the Thai Labour Law. 2.16 Provisions Provisions, are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate assets but only when the reimbursement is virtually certain. 2.17 Revenue recognition Revenue of the Group consist revenues from advertising media of television and radio, advertising services in publishing media, production and sales of publishing media, revenue from barter transaction involving advertising, revenue from database management business and film rights distribution income. Revenue comprises the invoiced value for the sale of goods and services net of output tax, rebates and discounts, and after eliminating sales within the Group for the consolidated financial statements. Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer. Revenue from providing services is recognised when the services are rendered. Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group. 2.18 Income tax The Group calculates income tax in accordance with the Revenue Code and records income tax on an accrual basis. 2.19 Segment reporting Segment information has been prepared based on the internal report of the Group, which disaggregates its business by services or products. Financial risk management 3.1 Financial risk factors The Group’s activities expose it to a variety of financial risks, including the effects from change of foreign currency exchange rates, interest rates and non-performance of contractual obligations by counterparties. Risk management is carried out by Group Management. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. 3.1.1 Interest rate risk Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows. The loan interest rates of the Group are mainly floated. However, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group does not use the interest rate derivative to manage exposure from fluctuation in interest rate on specific borrowing. 3.1.2 Foreign exchange risk The Group has significant exposure to foreign currency risk because its accounts payable are mainly dominated in various currencies. The Group does not use any derivative financial instruments to hedge foreign currency exposure.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
4
5
3.1.3 Credit risk The Group has no significant concentrations of credit risks. The Group has policies in place to ensure that sales of products and services are made to customers with appropriate credit history. The management of the Group believes that the maximum exposure to credit risk is the carrying amount of the accounts receivable less allowance for doubtful accounts, as stated in the consolidated balance sheet. 3.1.4 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying business, Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available. 3.2 Fair value The fair values of financial assets and liabilities with a maturity of less than one year are approximate their book values. Long-term borrowings and loans made with related parties carried an interest approximately at the market interest rate. Management believed that their net book values are assumed to approximate their fair value. Critical accounting estimates, assumption and judgements Estimates and judgements are continually evaluated by the management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4.1 Impairment of receivable The Group maintains an allowance for doubtful accounts to reflect impairment of trade receivables relating to estimated losses resulting from the inability of customers to make required payments. The allowance for doubtful accounts is significantly impacted by the Group’s assessment of future cash flows, such assessment being based on consideration of historical collection experience, known and identified instances of default and consideration of market trends. 4.2 Impairment of goodwill The Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. 4.3 Property, plant and equipment and intangible assets Management determines the estimated useful lives and residual values for the Group’s property, plant and equipment and intangible assets. Management will revise the depreciation charge where useful lives and residual values are different to previously estimation, or will write off or write down technically obsolete or assets that have been abandoned or sold. Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
67
M PICTURES
Annual Report 2008
68
6
Segment information Financial information by business segment is as follows:For the year ended 31 December 2008
Revenues Segment result Other income Net loss before interest expense Interest expense Net loss before income tax Income tax Net loss for the year Trade accounts receivable and accrued income, net Film rights, net Unallocated assets Consolidated total assets
Sports News Film rights Programmes Programmes Distribution 50,401,795 1,888,987 (99,671,323) (6,343,138)
31,788,536 -
814,380 -
Unit : Baht
Consilidated Other
222,826,126 (83,536,095)
8,239,703 (11,167,785)
142,291,949 201,641,864
3,241,387 -
Eliminated
(5,035,000) 278,321,611 - (200,718,341) 10,450,292 (190,268,049) (17,705,646) (207,973,695) (16,250,827) (224,224,522) (971,424) -
Revenues Segment result Other income Net loss before interest expense Interest expense Net loss before income tax Income tax Net loss for the year Trade accounts receivable and accrued income, net Unallocated assets Consolidated total assets
Sports News Programmes Programmes
Film rights Distribution
177,164,828 201,641,864 225,344,344 642,451,036 Unit : Baht
Consilidated For the year ended 31 December 2007
Consilidated
Other
Eliminated
Consilidated
85,563,685 (59,710,470)
17,183,240 (16,329,723)
-
9,082,797 14,749,408
(1,354,650) -
110,475,072 (61,290,785) 23,322,191 (37,968,594) (3,786,582) (41,755,176) (41,755,176)
33,953,619
4,936,230
-
11,471,920
(1,195,960)
49,165,809 89,129,159 138,294,968
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
Unallocated costs represent corporate expenses. Segment assets consist primarily property and equipment, intangible assets, and operating cash. Liabilities are mainly borrowings purposed to be used for all segments and for the Group’s liquidity. Accordingly, the Group does not present the liabilities segment information 7
Trade accounts receivable and accrued income, net
Unit : Baht Consolidated
Trade accounts receivable - Third parties - Related parties (Note 21) Accrued income - Trird parties - Related parties (Note 21) Total trade accounts recivable and accrued income Less Allowance for doubtful accounts Less Deposit received from customers Trade accounts receivable and accrued income, net
Company
2008
2007
2008
2007
153,954,959 139,701,306 293,656,265
46,341,410 53,242,465 99,583,875
26,202,556 37,322,696 63,525,252
18,658,008 45,727,705 64,385,713
105,628 50,000 155,628 293,811,893 (78,347,065) 215,464,828 (38,300,000) 177,164,828
1,797,500 1,797,500 101,381,375 (52,215,566) 49,165,809 49,165,809
105,628 50,000 155,628 63,680,880 (31,892,344) 31,788,536 31,788,536
1,797,500 1,797,500 66,183,213 (32,229,594) 33,953,619 33,953,619
Outstanding trade accounts receivable and accrued income as at 31 December can be analysed as follows: Consolidated 2008 Trade accounts receibable Current Over-due less than 3 months Over-due 3-6 months Over-due 6-12 months Over-due over 12 months Accrued income Total trade accounts receivable and accrued income Less Allowance for doubtful accounts 215,464,828 Less Deposit received from customers Trade accounts receivable and accrued income, net
94,010,956 15,257,544 16,588,402 49,961,565 117,837,798 293,656,265 155,628 293,811,893 (78,347,065) 49,165,809 (38,300,000) 177,164,828
Unit : Baht Company
2007 23,587,424 10,602,393 10,154,642 10,045,970 45,193,446 99,583,875 1,797,500 101,381,375 (52,215,566) 31,788,536 49,165,809
2008 6,331,270 864,559 5,671,182 9,748,299 40,909,942 63,525,252 155,628 63,680,880 (31,892,344) 33,953,619 31,788,536
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
2007 19,371,164 5,237,449 8,309,620 9,416,669 22,050,811 64,385,713 1,797,500 66,183,213 (32,229,594) 33,953,619
69
M PICTURES
Annual Report 2008
70
8
Loan to third party, net Loan to third party recorded in the consolidated financial statement as at 31 December 2008 and 2007 represented short-term loan of Baht 14.20 million to Lukthung F.M. Co., Ltd., a former related company. The loan represented promissory notes due at call and bearing interest at the rate of 4.00% per annum. The Company has provided allowance for doubtful account in full.
9
Other current assets, net
Unit : Baht Consolidated
Company
2008
2007
2008
2007
Undue input VAT Value added tax receivable Other receivables Interest receivable Others Other current assets
5,136,045 9,186,467 3,481,565 931,375 4,075,487 22,810,939
3,024,176 5,038,422 7,164,633 943,136 2,270,366 18,440,733
1,606,957 8,737,472 4,016,892 14,361,321
1,051,884 4,385,946 446,537 5,884,367
Less Allowance for doubtful debt Other current assets, net
(4,405,925) 18,405,014
(4,052,080) 14,388,653
14,361,321
5,884,367
10 Investments in subsidiaries, net Accounting change - investments in subsidiaries During 2007, the Company has changed the accounting policy regarding investments in subsidiaries carrying in the Company financial statements in order to comply with the notification of Federation of Accounting Professions dated on 2 May 2007.The notification requires that the cost method should be applied to the investments. Under the cost method, income from investment will be recorded when dividends are declared. The Company had adopted the cost method commencing 1 January 2007 by applying retrospective adjustment to the Company financial statements and has restated the retained earnings as at 1 January 2007 accordingly. As of 31 December, investment in subsidiaries are as follows:
Unit : Baht Consolidated 2007
2008 Investment in subsidiaries Less Allowance for doubtful debt Investment in subsidiaries, net
Company
-
2008 -
563,994,960 (235,430,041) 328,564,919
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
2007 242,997,200 (222,552,711) 20,444,489
ENTERTAINMENT PLC.
Annual Report 2008
a) Movements of investments in subsidiaries
Unit : Baht Company
Investment in subsidiaries Opening net book amount Acquisition Less Impairment Closing net book amount
20,444,489 320,997,760 (12,877,330) 328,564,919
Incenplus (Thailand) Company Limited On 1 February 2008, the Company has paid for the additional investment in 80,000 ordinary shares of Incenplus (Thailand) Company Limited at Baht 12.50 per share, totaling Baht 1 million. M Pictures Company Limited On 4 February 2008, the Company acquired 999,993 ordinary shares in M Pictures Company Limited (“MP”) from Major Cineplex Group Public Company Limited (“Major”) and other existing shareholders of MP at Baht 320 per share, representing 99.99 % of the paid-up share capital, at a total price of Baht 320 million by exchange of its newly issued ordinary shares with MP’s ordinary shares at the rate of 173.91 ordinary shares against 1 ordinary share of MP. The total exchanged ordinary shares represented 173,911,826 shares at Baht 1.84 per share totaling Baht 320 million. The net fair values of the identifiable assets and liabilities transferred from MP on the acquisition date are as follows: Unit : Baht Cash on hand and at banks Trade accounts receibable Other current assets Equipment, net (Note 12) Film rights, net (Note 13) Computer software, net (Note 13) Other non-current assets Bank overdrafts and borrowings from financial institutions Trade accounts payable Advance received from customer Other current liabilities Net fair values of net addets transferred Net fair values of net assets transferred (proportion approximately at 99.9949%) Purchase considerations by issuance of shares Goodwill from investment (Note 13)
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
975,312 260,366,865 25,387,391 5,728,299 238,546,175 775,602 17,419,447 (261,877,077) (22,058,366) (37,300,000) (47,099,250) 180,864,398 180,855,254 (319,997,760) 139,142,506
71
72
M PICTURES
Annual Report 2008
b) The details of investments in subsidiaries are as follows : Subsidiaries
Nature of business
TV Forum Company Limited Traffic Corner Radio Company Limited Dream Media Company Limited Otopplus Company Limited Incenplus (Thailand) Company Limited M Pictures Company Limited
Television media business Radio media business Publishing business and radio and television media Television media business concert and event marketing Database management Distribution of film rights for cinema, VCD / DCD production and TV broadcast
% Ownership interst
Nature of relationship
2008
2007
Shareholder Shareholder Shareholder
99.99 70.00 99.99
99.99 70.00 99.99
Shareholder
99.99
99.99
Shareholder Shareholder
80.00 99.99
80.00 -
All subsidiaries are incorporated in Thailand. All holdings are investments in ordinary shares.
11 General investment, net
Unit : Baht Consolidated
General investment - Future Biz Co., Ltd. Less Allowance for impairment General investment, net
Company
2008
2007
2008
2007
8,500,000 (8,500,000) -
8,500,000 (8,500,000) -
8,500,000 (8,500,000) -
8,500,000 (8,500,000) -
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
12 Plant and equipment, net
At 31 December 2007 Cost Less Accumulated depreciation Allowance for impairment Net book value For the year ended 31 December 2008 Opening net book value Additions Transfer Addition from investment in subsidiary (Note10) Disposals and write off, net Depreciation charge Impairment charge Closing net book value At 31 December 2008 Cost Less Accumulated depreciation Allowance for impairment Net book value
Unit : Baht
Consolidated Building and building improvements
Office equipment
Motor vehicles
Construction in progress
Total
24,671,101 (15,632,172) 9,038,929
51,241,480 (39,649,753) (108,654) 11,483,073
852,808 (684,583) 168,225
125,000 125,000
76,890,389 (55,966,508) (108,654) 20,815,227
9,038,929 3,784,920 125,000
11,483,073 2,740,066 -
168,225 3,072,000 -
125,000 (125,000)
20,815,227 9,596,986 -
(2,038,702) (1,599,743) 9,310,404
3,350,470 (857,334) (7,034,441) (4,382,132) 5,299,702
2,377,829 (1,964,046) (1,233,619) (23,153) 2,397,236
-
5,728,299 (2,821,380) (10,306,762) (6,005,028) 17,007,342
28,581,022 (17,670,874) (1,599,744) 9,310,404
40,681,644 (31,343,635) (4,038,307) 5,299,702
4,275,877 (1,878,641) 2,397,236
-
73,538,543 (50,893,150) (5,638,051) 17,007,342
As at 31 December 2008, the costs of fully depreciated property and equipment that are still in use are amounting to Baht 30.74 million (2007: Baht 19.26 million). As at 31 December 2008, the Company has pledged the condominium with the net book value of Baht 5.92 million (2007: Bath 6.37 million) as collateral against credit facility obtained from the commercial bank
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
73
74
M PICTURES
Annual Report 2008
Plant and equipment, net (Cont’d)
Unit : Baht
Consolidated Building and building improvements
Office equipment
Motor vehicles
Construction in progress
Total
At 31 December 2007 Cost Less Accumulated depreciation Net book value
11,695,000 (4,865,352) 6,829,648
16,963,651 (13,055,762) 3,907,889
-
125,000 125,000
28,783,651 (17,921,114) 10,862,537
For the year ended 31 December 2008 Opening net book value Additions Transfer Disposals, net Depreciation charge Impairment charge Closing net book value
6,829,648 3,784,921 125,000 (1,071,079) (358,085) 9,310,405
3,907,889 2,186,686 (22,936) (1,958,579) (2,184,686) 1,928,374
1,565,000 (252,115) 1,312,885
125,000 (125,000) -
10,862,537 7,536,607 (22,936 ) (3,281,773) (2,542,771) 12,551,664
At 31 December 2008 Cost
15,604,920
19,010,138
1,565,000
-
36,180,058
Less Accumulated depreciation Allowance for impairment Net book value
(5,936,430) (358,085) 9,310,405
(14,897,078) (2,184,686) 1,928,374
(252,115) 1,312,885
-
(21,085,623) (2,542,771) 12,551,664
As at 31 December 2008, the costs of fully depreciated property and equipment that are still in use are amounting to Baht 11.55 million (2007: Baht 10.45 million). Leased motor vehicle included above, where the Group and the Company is a lessee under finance lease contract, is as follow: Unit : Baht Consolidated 2008 Cost - capitalished finance leases Less Accumulated depreciation Net book amount
1,565,000 (252,115) 1,312,885
Company 2007
2008 -
1,565,000 (252,115) 1,312,885
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
2007 -
Annual Report 2008
ENTERTAINMENT PLC.
13 Intangible assets, net Unit : Baht Consolidated Computer programme At 31 December 2007 Cost Less Accumulated amortisation Allowance for impairment Net book value For the year ended 31 December 2008 Opening net book value Additions Addition from investment in subsidiary (Note 10) Disposals Amortisation Impairment charge Closing net book value At 31 December 2008 Cost Less Accumulated amortisation Allowance for impairment Net book value
Company
Film rights
Computer programme and film rights
Goodwill
11,938,050 (3,609,936) (6,247,457) 2,080,657
-
-
1,165,340 (298,352) 866,988
2,080,657 650,000
118,213,914
-
866,988 9,570,000
775,602 (796,273) (525,647) (138,014) 2,046,325
238,546,175 (152,964,112) (2,154,113) 201,641,864
139,142,506 139,142,506
(7,791,996) 2,644,992
3,402,191 (1,287,875) (67,991) 2,046,325
356,760,088 (152,964,111) (2,154,113) 201,641,864
139,142,506 139,142,506
10,735,340 (8,090,348) 2,644,992
14 Other assets, net
Unit : Baht Consolidated
Withholding tax deducted at sources Guarantee Others
Company
2008
2007
2008
2007
29,503,837 3,183,700 80,747 32,768,284
17,238,141 3,109,494 4,003,540 24,351,175
7,943,390 3,182,800 11,126,190
9,774,431 3,073,738 3,868,442 16,716,611
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
75
76
M PICTURES
Annual Report 2008
15 Borrowings
Unit : Baht Consolidated
Current Bank overdrafts Short-term loans from financial institutions Total bank overdrafts and short-term loans from financial institutions Current portion of borrowings: - Finance lease liabilities Non-current portion of borrowings Total borrowings
Company 2007
2008
2007
22,941,349 258,125,000
13,519,367 40,000,000
-
13,519,367 40,000,000
281,066,349
53,519,367
-
53,519,367
978,123
-
978,123
-
282,044,472
53,519,367
978,123
53,519,367
2008
The interest rate exposure on the borrowing of the Group and the Company is as follows:
Unit : Baht
Consolidated
Borrowings: - at fixed rates - at floating rates Total borrowings
Company
2008
2007
978,123 281,066,349 282,044,472
53,519,367 53,519,367
2007
2008 978,123 978,123
53,519,367 53,519,367
The movements in financial institutions borrowings (exclude finance lease liabilities) can be analysed as follows:
Unit : Baht
Consolidated
Opening balance Additional from investment in a subsidiary (Note 10) Additions Repayments Closing balance
Company
2008
2007
2008
2007
40,000,000
40,000,000
40,000,000
40,000,000
253,125,000 5,000,000 (40,000,000) 258,125,000
40,000,000
(40,000,000) -
40,000,000
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
Short-term loans from financial institutions represent promissory notes denominated in Thai Baht bearing interest rate at Minimum Lending Rate (“MLR”) minus 0.50%. During the year the interest rate ranged from 6.50 to 7.00% per annum (2007: 7.10% per annum). The promissory notes are due at call. 16 Share capital and premium on share capital Authorised number of shares At 1 January 2007 Decrease of authorised shares Increase of authorised shares At 31 December 2007 Decrease of authorised shares Increase of authorised shares At 31 December 2008
432,774,695 (364,524,695) 90,000,000 158,250,000 (38,250,000) 240,000,000 360,000,000
Issued and fully paid-up Number Ordinary of shares shares Baht 342,774,695 (312,774,695) 90,000,000 120,000,000 240,000,000 360,000,000
342,774,695 (312,774,695) 90,000,000 120,000,000 240,000,000 360,000,000
Share premium Baht 182,300,000 (182,300,000) 191,610,374 191,610,374
The total authorised number of ordinary shares are 360 million shares (2007: 158.25 million shares) with a par value of Baht 1 per share (2007: Baht 1 per share). At the Annual Extraordinary Meeting of the shareholders No. 1/2008 held on 7 January 2008, the shareholders passed a resolution to approve the decrease of authorised share capital from 158.25 million shares to 120 million shares with a par value of Baht 1 per share. The Company registered the reduction of the registered share capital with the Ministry of Commerce on 16 January 2008. In addition, the shareholders passed a resolution to approve the increase of authorised share capital from 120 million shares to 360 million shares with a par value of Baht 1 per share to be used for working capital and for investment in M Pictures Company Limited (“MP”) by exchange of 173.91 million newly issued ordinary shares with MP’s ordinary shares as explained in Note 10. The remaining 66 million newly issued shares are issued to the existing shareholders and the Company has received Baht 111.6 million from this share issuance. The issuance of new shares results in Baht 191.6 million of share premium. The Company registered the increase in share capital with the Ministry of Commerce on 7 February 2008. 17 Minority interests
Unit : Baht Consolidated
Opening balance at 1 January Share of net profit of subsidiaries Share of net loss of subsidiaries Decrease of share capital Colsing balance at 31 December
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
2008
2007
6,221,738 (180,687) 9,145 6,050,196
13,743,772 (145,953) 1,623,919 (9,000,000) 6,221,738
77
78
M PICTURES
Annual Report 2008
18 Expense by nature
Unit : Baht Company
Consolidated
Staff costs Depreciation on property and equipment (Note 12) Amortisation of intangible assets - Film rights (Note 13 ) - Computer software (Note 13 ) Impairment of assets - building and equipment (Note 12) - intangibl assets - goodwill (Note13) - film rights (Note 13) - football license - computer software (Note 13) Doubtful debts (reversed doubtful debts)
2008
2007
2008
2007
43,533,177
16,233,730
19,064,835
9,819,109
10,306,762
12,956,619
3,281,773
3,928,155
152,964,112 525,647
323,562
7,650,000 141,996
113,958
6,005,028
-
2,542,771
-
2,154,113 14,552,286 138,014 29,021,719
1,504,322 63,746 (14,472,656)
14,552,286 (2,642,066)
(1,448,067)
19 Finance costs
Unit : Baht Company
Consolidated
Finance cost: Bank borrowings Short-term loan from related parties Finance lease Total
2008
2007
2008
2007
17,656,891 48,755 17,705,646
3,779,295 4,000 3,287 3,786,582
970,899 3,423,903 22,301 4,417,103
3,736,408 3,805,107 7,541,515
20 Loss per share Basic loss per share are calculated by dividing the net loss attributable to shareholders by the weighted average number of paidup ordinary shares in issue during the year. There are no potential dilute ordinary shares in issue during the year. The basic loss per share are calculated as follows:
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
79
Consolidated Weighted average number of shares shares
Net loss Baht For the years ended 31 December
Basic loss per share
2008
(224,224,522)
2007
2008
(41,755,176)
2007
337,704,918
Loss per share Baht 2008
154,777,279
2007
(0.66)
(0.27)
Company Weighted average number of shares shares
Net loss Baht For the years ended 31 December
Basic loss per share
i)
2008
(98,226,577)
2007
2008
(114,075,891)
337,704,918
2007
Loss per share Baht 2007
2008
154,777,279
(0.29)
(0.74)
21 Related party transactions Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Group, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Group that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Group and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. The following material transactions were carried out with related parties: Sales of goods and services and others Unit : Baht’ 000 Company
Consolidated
Sale of goods and services to: Subsidiaries Related parties Rental income Subsidiaries Interest income Subsidiariy Related parties Other income Subsidiaries Related parties
2008
2007
2008
2007
170,203 170,203
4,269 52,183 52,183
15,510 19,779
42,076 42,076
-
-
1,560
400
64 64
233 233
1,344 64 1,408
1,330 213 1,543
-
1,768 1,768
2,243 2,243
29 29
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M PICTURES
Annual Report 2008
ii) Perchase of goods and services and others
Unit : Baht’ 000 Consolidated
Purchases of services and other from: Subsidiaries Related parties
2008
2007
2008
2007
6,319 6,319
9,276 9,276
1,453 4,012 5,465
955 4,135 5,090
-
-
-
3,549
787 787
1,036 1,036
211 677 888
316 1,036 1,352
3,188
-
2,948
-
-
4 4
3,424 3,424
3,805 3,805
780 780
662 662
5 283 288
139 139
Commission Subsidiaries Advertising expense Subsidiaries Related parties Rental expense Related party
Company
Interest expenses Subsidiaries Related party Other expenses Subsidiaries Related parties
Pricing policies for related party transactions are as follows: Pricing policies Advertising fee Film rights Rental and services Equipment rental Interest charge Commission fee Management fee
Agreed price as stipulated in the agreements Agreed prices as stipulated in the agreements Agreed prices which approximate to market price Agreed prices which approximate to market price Rate ranging from 4.00 % to 7.37 % per annum 10% of advertising fee Ageed prices as stipulated in the agreements
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
Annual Report 2008
ENTERTAINMENT PLC.
81
iii) Outstanding balances arising from sales / purchases of goods / services and others
Unit : Baht’ 000 Company
Consolidated
Trade accounts receivable (included in “Trade accounts receivable and accrued income”) Subsidiaries Related parties Trade accounts receivable (Note 7) Less Allowance for doubtful debt Trade accounts receivable, net Amount due from related parties Subsidiaries Related parties Less Allowance for doubtful debt Amount due from related parties, net
2008
2007
2008
2007
139,751 139,751 (20,928) 118,823
53,242 53,242 (33,766) 19,476
4,280 33,093 37,373 (14,873) 22,500
4,280 41,448 45,728 (31,762) 13,966
4,023 4,023 (2,273) 1,750
7,468 7,468 (4,375) 3,093
5,764 1,549 7,313 (3,419) 3,894
10,000 6,428 16,428 (4,089) 12,339
-
-
1,420
738
3,060
1,858
1,628
-
3,060
1,858
3,048
738
-
-
9,517
5,571
6,393
728
5,142
22
6,393
728
14,659
5,593
-
-
360
80
Trade accounts payable (included in “Trade accojunts payable”) Subsidiaries Related parties Amount due to related parties (included in “Amount due to related parties”) Subsidiaries Related parties Guarantee deposits (included in ”Other non-current assets”)
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iv) Loans to related parties, net
Unit : Baht’000 Consolidated
Company
For the year ended 31 December 2008 Subsidiaries Beginning balance Loans made during the year Loans repayments during the year Reclassified to short-term loan to third party Less Allowance for doubtful accounts Ending balance
37,126
71,616
-
700
(170)
(2,680)
(35,236)
(35,236)
1,720
34,400
(1,720)
(34,400)
-
-
Loans to related parties are due for repayment within 3 months. The loans amounting to Baht 1.70 million and Baht 0.02 million are carrying interest at the rate of 4.00% and 7.00% per annum, respectively (2007: 4.00% per annum). Another loan amounting to Baht 34.40 million is carrying interest at the rate of 4.00% per annum (2007: 4.00% per annum). v) Loans from subsidiaries
Unit : Baht’000 Company
For the year ended 31 December 2008 Beginning balance Loans received during the year Loans repaid during the year Ending balance
75,800 25,734 (11,600) 89,934
Loans from subsidiaries are carrying interest at the rate ranging from 4.00% to 7.37% per annum (2007: 4.00% per annum). The loan amounting to Baht 69.24 million is due for repayment within 3 months. Another loan amounting to Baht 20.69 million has no specific repayment date. vi) Directors’ remuneration In 2008, the total remunerations of the directors are amounting to Baht 10.47 million (2007 : Baht 6.64 million) 22 Commitments and contingencies i) Bank guarantees There are bank guarantees given on behalf of the Group to third parties amounting to Baht 4.13 million outstanding as at 31 December 2008 (2007 : Baht 6.25 million).
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED
ENTERTAINMENT PLC.
Annual Report 2008
83
ii)
Guarantee The Company and a related company have jointly guaranteed to the bank and the financial institution for liabilities of a company amounting Baht 0.77 million as at 31 December 2008 (2007: Baht 2.57 million). The Company has provided full provision for this guarantee.
iii) Litigation As at 31 December 2008, the Company and its subsidiaries were sued for breach of a joint venture agreement with the claim amount of Baht 16,129,432. At present, the ultimate outcome of these cases cannot be determined reasonable. Accordingly, no provision for any liability that may result has been made in the financial statements. iv) Operating lease commitments - where a group company is the lessee As of 31 December, the Company and its subsidiaries have commitment obligations in terms of long-term lease of land, buildings and service contracts. The future aggregate non-cancellable minimum lease and service payments under the contracts are as follows: Unit : MillionBaht Consolidated
Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years
Company
2008
2007
2008
2007
5.94 23.75 54.93 84.62
10.22 2.00 12.22
5.94 23.75 54.93 84.62
6.91 0.86 7.77
v) Commitment for acquisitions of film rights As of 31 December 2008, the Group has commitments in respect of purchases of film rights amounting to Baht 175.28 million (2007: Baht 226.04 million) payable over the next two years. 23 Post balance sheet events At the Board of directors’ meeting No. 1/2009 held on 23 February 2009, the directors passed a resolution to approve the dissolution of five subsidiaries, which are Dream Media Company Limited, Traffic Corner Radio Company Limited, OTOP Plus Company Limited, Incenplus (Thailand) Company Limited and TV Forum Company Limited.
M PICTURES ENTERTAINMENT PUBLIC COMPANY LIMITED