2003 2002 - rs public company limited

Transcription

..........................................................................
Name and address
R.S. Promotion Public Company Limited
Registration No. : 40854600001
Address
Tel.
E-mail
Website
: 419/1 Chetchotisak Building Ladphrao 15, Ladyao,
Jatujark, Bangkok 10900
: 0-2511-0555 Fax. : 0-2511-2324
: ir@rs-promotion.com
: www.rs-promotion.com
Type of business
Fully integrated entertainment business
Registered capital
Authorized share capital 140,000,000 and 5,600,000 ordinary shares in 2003 and 2002 respectively,
Baht 5 and 100 par value respectively Total Baht 700,000,000
Issued and paid-up capital
140,000,000 and 5,600,000 ordinary shares in 2003 and 2002 respectively Total Baht 700,000,000
Other reference persons
Share registrar : Thailand Securities Depository Co.,Ltd.
Address
: 62 The Stock Exchange of Thailand Building, 4, 6-7th Floor,
Rachadapisek Road, Klongtoey, Bangkok 10110
Tel.
: 0-2359-1200-1 Fax. : 0-2359-1259
Auditor
KPMG Phoomchai Audit Limited
By 1. Mr. Supot Singhasaneh Auditor License No. 2826 or
2. Ms. Somboon Supasiripinyo Auditor License No. 3731
Address
: 21st & 22nd Fl., Empire Tower 195 South Sathorn Rd, Yannawa, Sathorn, Bangkok 10120
Tel.
: 0-2677-2000 Fax. : 0-2677-2222
Special legal counselor
MINTER ELLISON (THAILAND) LTD
Address
: No.900 Tonson Tower Building, 17th Floor, Zone A, Ploenchit Road, Lumpini, Pathumwan, Bangkok
Tel.
: 0-2689-3333 Fax. : 0-2689-3300
.....................................................
.................................................
Rose Sound, R.S.Group's first music business, was established by Khun
Kriangkrai Chotchetsak in 1976. A new company was registered in 1992 as R.S.
Promotion (1992) Co., which was later to become R.S.Promotion (Public
Company) Limited. Since May 2003, the company has been listed on the Stock
Exchange of Thailand.
From the outset, Kriangkrai Chotchetsak instituted a method of working
based on integrity. In its early years, R.S. Group was simply a music company
with a production team and a tape cassette factory that also acted as producer
for other music companies. In marketing, though, R.S. had few rivals thanks to
its long experience in the music business and its good relationship with
distributors. This helped the Group to distribute its music products to consumers
throughout Thailand.
Originally, only Thai traditional and country songs were the main stock
of Thailand's music business. RS was the first company to introduce modern
pop music to the industry, and its bands at the time included Kereeboon,
Rainbow, Ruam Dao Artists and Noppakao. They boosted not only the revenue
but also the reputation of RS. Pop fans knew them well; they helped to build the
market for pop music and led the way for new artists to follow them.
With the vision and leadership of the brothers
Kriengkrai and Surachai Chetchotisak, RS saw new
opportunities for expansion. The company extended its
interests into the entertainment industry with TV
programmes and drama series, radio advertising and
management, and film productions that returned a
notable increase in its revenue.
004 R.S. Promotion Public Company Limited
...................................................
1976
Mr Kriangkrai Chetchotisak entered the music business by forming Rose Sound Company.
1992
Chetchotisak Family registered a new company, R.S.Promotion 1992 Co., Ltd and announced the company's new
positioning as an integrated entertainment company rather than a music company. It entered other branches of the
entertainment industry, namely radio and television, and established the R.S. Star Club, the first music business fan
club in Thailand.
1995
The company moved decisively into the movie business with "Lok Tang Bai Hai Nai Kon Diew" (Romantic Blue), a great
success in terms of the profits it attracted and the critical awards it received.
1997
"Shock Game", the talk-of-the-town game show, was the company's initial entry in the television business.
1999
The company formed Sky-High Network as its offical entry into the radio business. At that time, it had two radio
stations, 88.5 Z POP We Like, targeted on the Z generation; and 98 Cool FM, an easy listening station.
2002
Significant business re-structuring and re-organizing culminated in RS being elevated to a Public Limited Company.
2003
The company was listed on the Stock Exchange of Thailand in the Entertainment and Recreation category.
2003
Listed on
the Stock Exchange
of Thailand
1999
Establishes "Sky High Network"
to enter radio business
1997
Enters television business with
"Shock Game"
1995
Enters movie business with
" Lok Tang Bai Hai Nai Kon Diew" (Romantic Blue)
1992
R.S. Promotion 1992 Co.,Ltd
forms R.S Star Club
1976
Rose Sound established
..................
"Quality enterprise creates quality entertainment for quality society" is the business philosophy of RS
. It reflects the company resolve to combine art with entertainment and bring happiness to everyone; and its determination to make the
organization an expert in the integrated entertainment industry, with emphasis on supporting activities that will benefit society.
Since it was first formed, the company has always adhered to this philosophy, and it has led to continuous and stable business
expansion. When it switched its policy to the international system with the decision to be listed its on the Stock Exchange, RS continued
to formulate plans focussing on producing quality entertainment creating the highest income and profit, and adding value to the
business.
..................
Today, RS business consist of three main segments:
1. Music;
2. Media, incorporating television, radio and publishing; and
3. Motion Pictures and production house
Other continuing business activites support RS Group's business, such as
studio and film-making equipment hire, concert and marketing organizing services, and
design and commercial production for the media.
* Temporarily suspended.
Thai Copyright
Collection Co., Ltd.
[10 Million Bath]
R Siam Co., Ltd.
[1 Million Bath]
Rock Skin Co., Ltd.
[1 Million Bath]
Red Sailor Co., Ltd.
[1 Million Bath]
Ruk Saing Co., Ltd.
[1 Million Bath]
K. Master Co., Ltd.
[82 Million Bath]
Music
Sky-High Network
Co., Ltd.
[100 Million Bath]
Magic Advertainment
Co., Ltd.
[47 Million Bath]
Shadow Entertainment
Co., Ltd.
[37 Million Bath]
Radio
Television
Media
Poema Co., Ltd.
[10 Million Bath]
Publishling
R.S. PROMOTION PUBLIC COMPANY LIMITED
Tai-Saduak Co., Ltd
[5 Million Bath]
Nagasia Co., Ltd.
[10 Million Bath]
Aladdin House Co., Ltd.
[5 Million Bath]
P.O.V.
[point of view] Co., Ltd
[3 Million Bath]
Red Drama Co., Ltd.
[10 Million Bath]
R.S. Television Co., Ltd.
[3 Million Bath]
Filmsurf Co., Ltd.
[10 Million Bath]
Avant Co., Ltd.
[10 Million Bath]
RS Film & Distribution
Co., Ltd
[5 Million Bath]
Motion Picture
& Production
Screen Head Co., Ltd.
[2.80 Million Bath]
Bangkok Organizer
Co., Ltd
[3 Million Bath]
R.S. Studio Co., Ltd
[10 Million Bath]
Support
.........................................................................................
Dear Shareholders,
In 2003, RS Promotion Public Limited Company passed an important milestone in its progress by improving the work process
in every one of its business segments. In the past, we had sometimes encountered difficulties in the way we worked and in decision
making. Now, through its efficient preparation and teamwork, RS can rightly claim to be an integrated entertainment provider dedicated to
consumers’ satisfaction.
RS performance for the fiscal year 2003 earned a total revenue of 1,961.27 million baht, an increase of 61% over the previous
year. Net profits reached 107.81 million baht, representing a year-on-year increase of 81%.
This increase in net profit -- almost double that of the last year -- derived from the growth in all major businesses. The music
segment released 78 new albums and 181 compilation albums, demonstrating how effectively the Music Library, the company’s major
asset, is being used.
The television segment created programmes which all did well. Notable among them were the 15 drama series, a main source
of revenue, which were aired in 2003.
In radio, we received the concession to present new programmes on FM 93 MHz in mid-2003. After evaluation, we decided
against renewing the FM 98 MHz contract when it expired at the end of 2003, as it did not yield an acceptable level of profit.
Our latest business venture is in the print medium, and in February we launched a new women’s magazine, FRONT. We are
pleased to say that it has received a good response from both readers and advertising buyers.
In 2003, RS launched seven movies, one of which,Pan-Rock-Nah-Yon proved a hit at the box office and brought in 50 million
baht.
The copyright collection business managed by TCC has been acknowledged by the industry as the most efficient in its field. This
company manages the copyright of 30,000 songs for RS, as well as for a number of songwriters.
In the Mobile Entertainment segment, the MobiClub brand was launched and successfully built customer recognition, especially
in the first six months after its launch in June 2003.
RS aims to be an integrated entertainment provider serving the needs of consumers, and at the same time adding value to its
business. To achieve its goals the company must give special consideration to all those parties with whom it is concerned: shareholders,
employees, clients and business partners.
RS has identified effective actions to improve the efficiency of its marketing and public relations, such as forming the music
production team into an independent music company, combining media segments, and restructuring its movie business operations.
At RS, we firmly believe that our sustainable profit derives from the quality of our products and from our competitive advantages.
Our commitment is to build on the skills that are the foundation of our business so that we shall continue to see our strength, success
and reputation grow.
Thus we are committed to operating the businesses that we have skilled for which help boost our capability. We will also return
benefit to the society as well as focus on the Good Corporate Governance in order to create long-term benefits for our shareholders.
Mr Kriengkrai Chetchotisak
Chairman
Mr Surachai Chetchotisak
Chief Executive Officer
........
Mr. Surachai Chetchotisak
Mr. Kriengkai Chetchotisak
Chairman
4
2
5
1
6
3
1. Mr. Kriengkai Chetchotisak
Chairman
2. Miss Malee Chetchotisak
Deputy Managing Director
3. Miss Pornpan Rungruengbangchan Assistant Managing Director
4. Mr. Vorapoj Nimvijit
5. Ms. Pattama Kositangkul
6. Miss Sutthinun Srichaisak
Operation Director
Business development Director
Public Relations Director
1. Mr. Surachai
2. Mr. Suwat
3. Mr. Sataporn
4. Mrs. Napaporn
Chetchotisak
Chetchotisak
Panichraksapong
Treepayak
Music Business Director
Central Administration Director
5. Miss Buntanik Boonsin
Advertising Business Director
6. Miss Assanee Sritrakoon
Finance & Accounting Director
7. Mr. Chairat
Lkitcharoenpong Home Entertainment Business Director
6
5
4
2
1
7
3
Detail
Product Sales
Copyright
Production House
Motion Pictures
Concert And Event
Advertising
Others
2003
2002
Amount share in revenue
(Million Baht)
(%)
Amount share in revenue
(Million Baht)
(%)
838.75
166.29
214.56
134.03
129.10
399.20
79.34
Tatal
43%
8%
11%
7%
7%
20%
4%
1,961.27
Product Sales
Copyright
Production House
Motion Pictures
Concert And Event
Advertising
Others
232.02
455.93
143.92
20.85
114.89
169.14
80.97
1,217.72
19%
37%
12%
2%
9%
14%
7%
Detail
Cash and cash equivalent
Accounts and notes receivable-net
Inventories
Property, plant and equipment-net
Total assets
Short-term loans from financial institutions
Accounts payable
Long-term loan
Total Liabilities
Registered capital
Paid-up capital
Retained earnings
Total shareholders' Equity
Total Revenue
Cost of sales and productions
Selling and administrative expense
Interest Expense
Tax Expense
Net profit
Weigted average number of shares at par 5 Bt
Earnings per share
Book value per share
Auditors report
Consolidated
Auditors report
Consolidated
2002
2003
320,939,618
282,228,850
326,427,110
228,511,078
1,353,780,283
230,000,000
192,571,993
55,000,000
689,944,457
560,000,000
560,000,000
103,835,826
663,835,826
1,217,729,748
867,694,460
190,360,882
4,371,972
95,829,982
59,472,453
48,230,140
1.23
13.76
206,032,962
471,113,774
739,204,629
437,850,188
2,226,383,941
78,500,000
287,770,936
707,217,540
700,000,000
700,000,000
211,650,162
1,519,166,401
1,961,266,375
1,329,183,417
458,297,863
7,402,835
58,207,924
107,814,336
129,896,790
0.83
11.70
.............................
In 2003, the company seized the opportunity to restructure its music business by dividing the production team into
independent music companies. They would be responsible for producing as well as for public relations and marketing, as they saw
fit. This led to a greater variety of music and increased flexibility in the distribution planning, with more specifically identified target
groups. The changes were not complete until the end of the year, so more time will be needed before the results fully materialize;
as there will be more kinds of music and more albums.
In 2003, RS sold some eight million units including top ten favourite albums from I-Nam, D2B, Hyper, Parn Tanaporn
Wagprayoon, B-Mix, Baby Bull, Bovi, Pink, Nai Kunchid and Tid Laem and Neo X.
.......................
It was a competitive year for the media business, whether TV, radio or publishing, as there was more spending on
commercials because of the improved economy. Always assertive, RS became the leading entrepreneur in all media, and we
expanded by increasing the broadcasting time on Channel 9 and iTV, adopting another radio station, which is the 93MHz of the
Navy radio station and launching the women's magazine, FRONT.
Our TV output in 2003 consisted of music video programmes, drama series, variety shows and children's programmes.
On the radio, our three stations targetted all age groups from pre-teens to teenagers and working people.
In the publishing business, as well as introducing FRONT, the company launched nine pocket books, which were popular
with readers.
.....................
In 2003, RS produced seven movies. After they were screened in and around Bangkok, the company sold the copyright
to provincial distributors, and the movies also went to VCD and DVD for sale. Selling copyright to foreign customers is another
distribution channel that the company believes has the potential to create a handsome income in 2004.
This year, RS looks forward to producing more good movies that are oriented to the demand of the market, and expects
to put another seven movies on the screen.
Other RS productions were TV commercials and drama series. These included the Buddhanubhap and Ka-Wao Ti Bang
Pleng drama series for Channel 3, and Jone Plon Jai for Channel 7.
.....................................................................................
Recognized by the local and foreign entertainment industries
for its leadership, R.S. Promotion (Public) Co., Ltd is an integrated
entertainment company whose policy is to develop society as well as
maintaining the highest standards in the way it runs its business. The
company puts its responsibility to society at the forefront of its
activities, and many awards it has received attest to its vision and
philosophy in the business world
In order to carry on this socially-oriented policy, RS
Promotion has joined with the Department of Provincial
Administration, Ministry of Interior, to form the Ruam Pa-lang
Chao Thai Ruam Jai Jud Rabiab Sangkom (Thais join forces
to organize society) Project. This campaign is aimed at
creating harmony among the Thais, showing the power of the
nation, and responding to Government initiatives to strengthen
economic growth. Its success has been demonstrated by the
recognition it has received from public opinion and
government agencies alike.
There are many other activities that RS views as
benefitting society and to which it contributes. It supports its
artists as good role models for young people, encouraging
them to spend their leisure time in useful, creative activities
like sport and music to ensure good health and avoid the
scourge of drug abuse. Many of the company's artists have
received honours for this, and been selected as presenters for
social campaigns.
Each year's successes increase RS Promotion's determination to maintain its leadership in Thailand's
integrated entertainment industry. RS is firm in its commitment to step onto the international stage in the near
future, and thus to further contribute to the development of Thai society.
Presenters against Osteoporosis
The Osteoporosis Foundation
Presenters of Tri-Rally on the Occasion
of King Rama V's150th Anniversary
Representatives on the Occasion of
Supreme Patriarch's 90th Birthday
Presenters Promoting National Flag Sticker
Posting to Welcome APEC Summit
Presenters of HRH Princess Maha
Chakri Sirindhorn's Paintings
Presenters Promoting Thai Costume
on Lay Kratong Day
2nd World Anti Drug Artist
Office of Transport and Traffic Policy
and Planning
Laymen's Working Team on the Occasion of
90th Birthday the Supreme Patriarch's
Thai Is Free Club
Presenters Promoting Garbage Sorting,
Clean Alert Project
Presenters Promoting Thai Products
as New Year's Gifts
Presenters Promoting Tree Planting
Commemorative Medals for Supporting
Supporter of "Ruam Pa-lang Chao Thai
Ruam Jai Jud Rabiab Sangkom"
Supporter of "Royal Thai Army's Sports
and Music Camp""
Nab Kun Cheep" Award, Merit Contributor to
Royal Thai Army
The Gold Medal (Sixth Class) of
the Direkgunakorn as Merit Contributor
Best Drama Series in Supporting Buddhism
and Moral, Buddhanubhap
Best Grateful Children
Best Drama Series and Best Movie,
Buddhanubhap and Sex Phone
Trader of the Year for Large Enterprise
Chitralada Shop
Bangkok Metropolitan Administration
Ning Kulsatri Siripongpreeda, Donut Manusnant
Panlertwongskul, Cha-cha Arita Ramnarong
Dance Army
Num Sornram Theppitak,
Tik Kanyarat Chirarachakij
Tao Somchai Kemklad, Kade Tiyada Pannabua
Ning Kulsatri Siripongpreeda, Orn Luckana
Huangmaneerungroj, Nathan Oman, Louis Scott
Ning Kulsatri Siripongpreeda, Touch Na Takuatung
The Foundation for Crime and Drug
Prevention of Thailand
Ministry of Natural Resources and
the Environment
Chitralada Shop
Num Sornram Theppitak
Ministry of Natural Resources and
on Thai Environment Day
Chulalongkorn University
Rama V Honour Celebration
Ministry of the Interior
James Ruangsak Loychoosak, Aeh Sasikarn
the Environment Apichartvorasilp
Foen Nantaka Worawanichanant, Touch Na King
Takuatung, Arm Siriroj Siricharoen
Surachai Chettachotisak
Royal Thai Army
RS Promotion (Public) Co., Ltd.
Foundation of the King's Royal Attendant
Bodyguard, 1st Infantry Division,
Royal Thai Army
Directorate of Civil Affairs, Royal Thai Army
to the Nation
Office of National Buddhism
Surachai Chettachotisak,
Komwit Chettachotisak, Chairat Likitcharoenpong
Mo Mae Napassorn Buranasiri,
Donut Manusnant Panlertwongskul, Anan Anwa
Nat Avitra Sirasart, Sandra Mavrow
RS Promotion (Public) Co., Ltd
National Council for Social Welfare of Thailand
Catholic Social Communications of Thailand
Khun Kriangkrai Chettachotisak
Commercial World Magazine
Kriangkrai Chettachotisak
Presenters of Teachers' Day
Commemorative Pins, "Nam Phra Tai Chuay
Duay JaiKhon Thai MaiTing Kan"
20th Best Mass Communications for Youth
Anti Sexual Diseases and Aids Presenters
Organ Donation Presenters
Special Surasawadi Award,
Best Anti Drug Artist
5th Golden Phra Pikanase
Khurusapha, Ministry of Education
Dunk Pankorn Boonyachinda,
Mo Mae Napassorn Buranasiri,
Donut Manusnant Panlertwongskul
Friends in Need (of "Pa") Volunteers Foundation, Ning Kulsatri Siripongpreeda,
The Thai Red Cross Society
Tukta Ubonwan Boonraud, Bazoo
Office of the National Youth Promotion and
D2B
Co-ordination Commission,Ministry of Social
Development and Human Security
Ministry of Public Health
Lift Supoj Chancharoen, Oil Tana Suttikomol
Organ Donation Center,
Tao Somchai Kemklad, Kade Tiyada Pannabua
Khurusapha
Ning Kulsatri Siripongpreeda
Music Association of Thailand
Ford Sobchai Kraiyoorasane, Parn Tanaporn
Wagprayoon, D2B, Bazoo
Num Sornram Theppitak, D2B
"Nab Kun Cheep" Award, Merit Contributor
to Royal Thai Army
Golden Pin, Best Anti Drug Artist
Presenters of Jasmine Distribution
on Mother's Day
Foundation of King's Royal Attendant
Bodyguard,1st Infantry Division,Royal Thai Army
Ning Kulsatri Siripongpreeda
Office of the Narcotics Control Board
Tik Kanyarat Chirarachakij,
National Social Welfare Council of Thailand
Lift Supoj Chancharoen, Oil Tana Suttikomol
Presenters of Five Dharma Practices against
Social Perils on the Occasion of
Asalha Bucha Day
Commemorative Medals for Supporting
Asalha Bucha Day
Presenters against Alcohol during Buddhist
Ning Kulsatri Siripongpreeda,
James Ruangsak Loychoosak, Louis Scott
Presenters of Traffic Discipline
Promoting Songs
Presenters Promoting Global Warming
Office of Transport and Traffic Policy
and Planning
WWF Thailand Programme Office
Star with Dharma, Buddhanubhap
Presenters of Loving Mum Project
Loving Mum Association and
National Social Welfare Council of Thailand
Ning Kulsatri Siripongpreeda,
James RuangsakLoychoosak, Louis Scott
Tik Kanyarat Chirarachakij,
Donut ManusnantPanlertwongskul
Vitamin A, Lift Supoj Chancharoen,
Oil Tana Suttikomol
Nancy Nantaporn Sawangchaeng,
Orn Luckana Huangmaneerungroj, Jiwa, Strikerz
Num Sornram Theppitak
Ning Kulsatri Siripongpreeda, Aeh Sasikarn
Apichartvorasilp, Lift Supoj Chancharoen
Tukta Ubonwan Boonraud, Dan Woradech
Taniwong
D2B
Best National Grateful Children
Best National Youth
Best Youth, "Siam Diamonds" in
Gratitude Category
Lent Ministry of Public Health
Office of Welfare Promotion, Protection
and Empowerment of Vulnerable Groups
Culture Center, Rajabhat Institute Chandrakasem Tukta Ubonwan Boonraud
1.
Capital structure
1.1
Company's Assets
The company has the paid-up registered capital of 700 million baht including 140,000,000 ordinary shares at five baht par value.
The company has adjusted the par value from 100 baht each to five baht each, according to the resolution of the
extraordinary meeting 1/2003 on 13 January 2003
1.2
Shareholders
The 10 major shareholders as at 31 December 2003 are as follows
Shareholder
1. Thailand Securities Depository Company Limited for depositors
2. Mr Kriangkrai Chetchotisak
3. Mr Surachai Chetchotisak
4. Mr Suwat
Chetchotisak
5. Miss Malee Chetchotisak
6. ING Securities (Singapore) Pte Ltd.
7. Mr Annop Limprasert
8. Mr Chalaew Chimma
9. Mrs Chantaporn Angkasurak
10. Mr Anun
Limprasert
No. of Shares
%
35,746,797
23,184,000
21,638,400
21,638,400
7,728,000
6,048,000
5,628,000
4,536,000
4,452,000
3,360,000
25.53
16.56
15.46
15.46
5.52
4.32
4.02
3.24
3.18
2.40
R.S. Promotion Public Company Limited has not closed the registered book of shareholders as it was listed on the Stock
Exchange of Thailand on 22 May 2003. Latest information is according to the report of Thailand Securities Depository Company Limited
as at 31 December 2003. The shareholders without share warrants are listed under the name of Thailand Securities Depository
Company Limited for depositors if they are Thai shareholders. Foreign shareholders will be listed under the name of Thailand Securities
Depository Company Limited.
1.3
Dividend payment policy
The company and its subsidiaries will pay a dividend not less than 50 per cent of net profit after tax and legal reserve.
The company committee may consider and decide not to follow this policy, or adjust it in order to maximize the benefit to the shareholders.
2.
Management
2.1
Management structure (Corporate Structure chart updated 31 December 2003)
See details on page 7
Remark: The management structure noted above came into effect on 1 March 2003.
019 R.S. Promtion Public Company Limited
Management structure of the company consists of 3 set of committees including: Board of Directors, Audit Committee and
Executive Board. Details are as follows:
2.1.1
As at 31 December 2003, the Board of Directors consists of 11 qualified persons:
1. Mr Kriangkrai
2. Mr Surachai
3. Miss Malee
4. Mr Suwat
5. Mrs Nareerat
6. Miss Marisa
7. Mrs Naphaporn
8. Miss Assanee
9. Gen.Thani
10. Pol.Gen Somchai
11. Mr Kriangkrai
Chetchotisak
Chetchotisak
Chetchotisak
Chetchotisak
Limprasert
Chetchotisak
Treepayauk
Sritrakoon
Saeneewong Na Ayudhya
Wanichsaeree
Sretkraikul
Chairman
Vice Chairman
Director
Director
Director
Director
Director and Secretary
Director
Independent Director and Audit Committee Chairman
Independent Director and Audit Committee
Authorized signatory directors
Directors authorized to sign for the company are Mr Kriangkrai Chetchotisak, Mr Surachai Chetchotisak, Miss Malee
Chetchotisak, Mr Suwat Chetchotisak, Mrs Nareerat Limprasert, Miss Marisa Chetchotsak, Mrs Naphaporn Treepayak, and Miss Assanee Sritrakul.
Two of above directors can jointly sign and affix the company seal.
Roles of Board of Directors
The Board of Directors is in charged with overseeing the company's operations to be in compliance with the country's laws and
regulations as well as the policies and resolutions of shareholders' meetings. The Board of Directors can appoint the committee or assign
any other persons to take any or several actions under the control of the Board of Directors except for the actions stated below. Those
actions can be performed after receiving the approval from the shareholders' meeting. In cases where the committeeor any person has a
conflict of interest with the company or its subsidiaries, the committee involved in that conflict may not vote on that case.
(A) Any case that the laws mention must be in compliance with the resolution of the shareholders' meeting.
(B) Performing cases where the committee gains the interest or where the laws and regulations the Stock Exchange of Thailand
are mentioned must be approved by the shareholders' meeting. The following cases must be approved by the Board of
Directors' meeting and the shareholders' meeting with a voting score of three-fourths of the number of shareholders
attending the meeting and voting:
(A) Trading or transferring the company's businesses or an important part of the business.
(B) Acquiring or receiving transferred business from other companies or private entities.
(C) Making, rectifying or terminating the renting contracts for the entire business of the company or an important section of it.
Appointing any person to run the company's business or form a merger with any person for the purpose of profit and loss sharing.
(D) Amending the Articles of Association or Memorandum of Association.
(E) Increasing or reducing capital, issuing debentures, forming mergers or closing the company.
(F) Any actions mentioned in the Securities Act or announcements by the Stock Exchange of Thailand requiring the approval of
the shareholders' meeting, such as the acquisition or disposal of assets of the listed company or any related items.
2.1.2
Audit Committee
As at 31 December 2003, the three members of the Audit Committee are:
1. Gen.Thani Saeneewong Na Ayudhya Audit Committee Chairman
2. Pol.Gen Somchai Wanichsaenee
Audit Committee
3. Mr Kriangkrai Sretkraikul
Audit Committee
Responsibilities of Audit Committee
Audit Committee's responsibilities are as follows:
(A) To attend the Board of Directors' meeting in order to formulate policy, to make decisions on business operations and
control those operations.
(B) To consider, select and propose the appointment of the auditors and propose the annual audit.
(C) To consider the policy and operation guidelines of the Central Audit Department to ensure that they are effective and proper.
(D) To consider and review plans for the annual audit of the Central Audit Department.
(E) To work with external and internal auditors to ensure that the company has an effective internal control and internal audit systems.
(F) To consider quarterly audit reports and comments of the internal and external auditors. To follow up the results based on
those comments.
(G) To review the quarterly financial statement of the company and its subsidiaries, to ensure its correctness and reliability,
and to disclose appropriate information in line with good corporate governance.
(H) To oversee and ensure that the company's operation complies with the regulations and conditions of the Stock Exchange
of Thailand, and other related laws.
(I) To review the dealings of the company and its subsidiaries with any person who may have a conflict of interest and ensure
that all dealings are proper and without interest transfer. The long-term benefits of the shareholders will be borne in mind.
(G) To join the auditors in considering any problems or restrictions caused by the financial budget audit.
(K) To report on the activities of the Audit Committee and disclose their findings in the company's annual report. The report
will be signed by the Audit Committee Chairman.
(L) The Audit Committee can invite the executive directors, executives and other related persons to share the information or
attend the meeting.
(M) To be responsible for other duties assigned by the Board of Directors.
2.1.3
Executive Committee
As at 31 December 2003, the seven members of Executive Committee are:
1. Mr Kriangkrai Chetchotisak Advisor to the Executive Committee
2. Mr Surachai Chetchotisak Chief Executive Officer
3. Miss Malee
Chetchotisak Executive Director
4. Mr Suwat
Chetchotisak Executive Director
5. Mrs Nareerat Limprasert
Executive Director
6. Mrs Naphaporn Treepayak
Executive Director
7. Miss Assanee Sritrakoon
Executive Director
Responsibilities of the Executive Committee
The Executive Committee's responsibilities are as follows:
(A) To approve loans or apply for credit from financial institutions as well as acting as surety or making payments for general
activities of the company. The credit limit of each item must be less than 100 million baht or equivalent.
(B) To appoint and remove the company employees who are ranked below Managing Director.
(C) To initiate, suggest and formulate policy for the business direction and business strategy of the company and present it
to the Board of Directors.
(D) To form corporate and management structures and Executive Committee. To oversee all aspects of the recruiting, training,
employment and removal of company employees.
(E) To formulate business plans and management powers. To approve the annual budget for business operations and expenses.
To run the company following the business plan and strategy as well as the policy and business direction presented to the
Board of Directors.
(F) To be responsible for other duties assigned by the Board of Directors in each period.
Approval for carrying out the activities mentioned above would not be granted in cases where the Administrative Committee,
or parties authorized by the Administrative Committee, are authorized to approve activities that may conflict with the company's interests
under the regulations and announcements of the Stock Exchange of Thailand. Exceptions would be made for those activities carried out
under policies and regulations approved by the Company's Committee, whereby the Committee has the authority to amend or change
the responsibilities of the Administrative Committee whenever necessary.
2.1.4
Management Team
As at 31 December 2003, the 12 members of Management Board:
1. Mr Surachai
Chetchotisak
Managing Director
2. Miss Malee
Chetchotisak
3. Mr Suwat
Chetchotisak
4. Miss Pornpan Rungruengbangchan Assistant Managing Director
5. Mrs Naphaporn Treepayak
6. Miss Assanee
Sritrakoon
Accounting and Finance Director
7. Mr Chairat
Likitcharoenpong
Home Entertainment Business Director
8. Mr Sathaporn
Phanitraksapong
9. Mr Vorapoj
Nimwijit
Operation Director
10. Miss Pattama
Kositangkul
Business Development Director
11. Miss Buntanik Bunsin
Advertising Business Director
12. Miss Sutthinun Srichaisak
Public Relations Director
(Details of all directors and executives are shown in Appendix 1 in page 25-26)
Remark 1. "Executive" in this section refers to directors, the managing director and the top four executives ranked below the president
or any persons of an equivalent position to the top four executives.
Roles and Responsibilities of the Managing Director
The Managing Director is concerned with the company in general and has the authority to carry out any activity that is necessary.
However, the Managing Director has no authority to deal with important assets received or sold out of the company; or matters
concerning persons who may be in conflict with, or have conflict of interest with the activities of the company or affiliated companies.
In such instances, the Internal Audit Committee and/or the Administrative Committee, depending on the case, will consider the matter.
2.2
Nomination of Directors and Executives
Nomination of the company's directors is not conducted by the Nomination Committee. The committee nomination will be
conducted by the Board of Directors which selects the members based on section 68 of the Public Company Limited Act 1992 and the
related announcements of the Securities and Exchange Commission. In addition, the Board will consider the experience, knowledge and
ability of any nominee before making proposals to the shareholders' meeting for appointments.
To elect the Board of Directors, the shareholders' meeting appoints the director based on majority scores with the following
regulations and guidelines:
(A) The voting score of each shareholder is equal: one share equals one score
(B) Shareholders can vote for each directorial appointment.
(C) Persons who receive the highest scores will be appointed to the committee. In the case of any persons receiving equal scores,
the nomination president will make the final decision.
2.3
Executive Remuneration
2.3.1
Cash Remuneration
(A) Directors
No.
Year 2003
Amount of money (baht)
Detail of Remuneration
Directors
11
290,000
Meeting allowance
Audit Committees
3
90,000
Meeting allowance
No.
Year 2003
Amount of money (baht)
Detail of Remuneration
Executive Directors
7
-
-
Management team
14
31.89
Salary/bonus/ other allowance
List
(B) Executive Directors and Company Management Team
List
2.3.2
Other remunerations
-None-
2.4
Administration of the Business
The committee clearly understands its roles and responsibilities towards the company and its shareholders, and has performed
to the best of its ability in accordance with the registration of the company with the Stock Exchange of Thailand, as indicated in document #3.
2.5
Monitoring Internal Use of Information
The company has explained to the administrators their their responsibilities in reporting the number of shares in the company
owned by them, their spouses and their children who are considered as minors, and any changes made to the holdings, to the Stock
Exchange of Thailand, in accordance with Article 59, where the penalty is indicated in Article 275 of the Securities and Exchange Act
B.E. 2535 (1992)
In addition, the company has laid out rules and regulations on the use of the company's internal information as follows:
(1) The administrative committee, staff members and the employees of the company are obliged to treat the internal information
of the company with confidentiality.
(2) The administrative committee, staff members and the employees of the company should not directly or indirectly disclose
confidential or internal information of the company for the personal benefit of any individual.
(3) The administrative committee, the staff members and the employees of the company should not buy, sell, transfer or receive
the company's assets by using the confidential or internal information that may cause direct or indirect damage to the company.
The above mentioned regulations include the spouses and children who are considered minors of the administrative committee,
the staff members and employees of the company. Any violation of the company's regulations would be considered as a serious
breach of those regulations which could lead to a penalty ranging from a verbal warning to being asked to leave the company.
2.6
Personnel
The number of staff in the company and its affiliated companies as of December 2003 is 1,578 persons.
The total rewards of company staff as of the year 2003 amounted to 352.20 million baht, paid in the form of salaries, overtime
and welfare payments, bonus and provident fund. Since its establishment,
the company has had no labour disputes that adversely affected its image.
Staff Development Policy
The company has a clear policy on developing the staff by promoting their knowledge and working skills. It provides on-the-job
training through practical work and advice from experienced persons. In addition, the company encourages the staff to participate in
training and seminars in accordance with their field of work.
3.
Internal Audit
The first meeting of the committee was held on 28th January 2003 with three members of the audit committee taking part.
The committee evaluated the requirements of the internal control system by requesting information from the administrators. They filled in
evaluation forms on the internal control system of the company themselves.The company's internal control system is evaluated in five
sectors: the organization and surrounding environment; risk management; the administrators' work control; public relations and
information systems; and the follow-up system. According to the committee, the company has a satisfactory system of administering the
work of the major shareholders, the administrative committee, and the persons concerned (see point 3 from 3.3 to 3.7 of the evaluation
form). With regard to the other sectors of the company, the committee found that the internal control system was sufficient.
In 2003, the company emphasised the importance of building and developing an internal control system, with the internal
audit unit responsible for examining important financial transactions and reporting on their auditing. This was carried out independently and
directly by the internal audit committee.
Miss Marisa Chetchotisak
Mrs Nareerat Limprasert
Mrs Naphaporn Treepayauk
Miss Assanee Sritrakoon
6
7
8
Mr Suwat Chetchotisak
3
5
Mr Surachai Chetchotisak
2
Miss Malee Chetchotisak
Mr Kriangkrai Chetchotisak
1
4
Name
No
34
37
37
33
43
38
41
49
(Yrs)
Age
in Political Science
Ramkhamhaeng University
Rajaphat Institute
Suansunandha
Mini MBA
Thammasat University
Rajaphat Institute
Suansunandha
Assumption University
in Business Administration
Studies, California, USA
Bachelor's degree in Arts
Assumption University
Barry University, Florida, USA
Master's degree in International Management Business Administration
Other
Bachelor's degree in Political Sciences
Monterey Institute of International
Master's degree in International Management International Management
Bachelor's degree in Political Sciences
Bachelor's degree in Political Sciences in Political Science
Bachelor's degree in Political Sciences in Mass Communications
Bangkok University
Master's degree in Business Administration (Honorary)
Education
0.03
0.08
6.46
(Include share
owned by spouse)
4.30
(Include share
owned by spouse)
5.52
15.46
15.60
16.56
-
-
Kinship with
Executives ranked 1-5
1997-2002
1992-1997
2003-present
1997-present
1993-1997
2003-present
2001-present
1997-2001
2002-November 2003
2003-present
2003-present
1992-present
2003-present
1992-present
2003-present
Period
Job Title
Director and Executive Director
Managing Director
Music Sales Management Director
Accountant
Assistant to Managing Director
Accouting and Finance Director
Manager
KPMG Audit (Thailand) Co.Ltd.
Thai Copyright Collection Co., Ltd
K. Master Co., Ltd.
Star Merchandise Co., Ltd.
R.S Retail And Restaurant Co., Ltd.
Magic Advertianment Co., Ltd
Employment Records
Experience in past five years
Advisory to the Executive Committee
Chairman
Vice Chairman
CEO and Managing Director
October 2003-present Deputy Managing Director
1997-October 2003 Sales Management Director
1997-present Managing Director
1992-1997
Marketing Manager
Sibling of Executives 2003-present Director and Executive Director
No.1-4 and 6
July 2003-present Deputy Managing Director
2001-July 2003 Central Audit Director
1997-2001
Accounting and Finance Director
1992-1997
Accounting and Finance Manager
Sibling of Executives 2003-present Director
No.1-5
2002-present Managing Director
1998-2002
Managing Director
1997-1998
Sibling of 2003
Executives No. 2-6
Sibling of Executives
No. 1-2 and No. 4-6
Sibling of Executives
No. 1-3 and No. 5-6
% of share owned Family relationship between
executives
Description of management team and other persons overeeing the company As at 31 December 2003
Name
Gen. Thani Saeneewong Na Ayudhya
Pol.Gen Somchai Wanichsaenee
Mr Kriangkrai Sretkraikul
Miss Pornpan Rungruengbangchan
Mr Chairat Likitcharoenpong
Mr Sathaporn Panichraksapong
Mr Vorapoj Nimwijit
Miss Pattama Kositangkul
Miss Buntanik Boonsin
Miss Sutthinun Srichaisak
No
9
10
11
12
13
14
15
16
17
18
39
36
35
39
36
39
34
63
61
66
(Yrs)
Age
The National Defence College of Thailand (34)
Chulachomklao Royal Military Academy (5)
Ramkamhaeng University
Management Skill Certificate
in Mass Communications
Bangkok Univeristy
Electrics Bangkok Techical Campus
in Journalism and Mass Communications
in Industrial Education
Rajabhat Institute Pranakorn
of Business Administration of Chulalongkorn University
in Business Administration Sasin Graduate Institute
(Second honour)
Master's degree
Kasetsart University
in Journalism and Mass Communications
Bachelor's degree in Economics and Business Administrationin Economics and Business Administration
Master's degree
Other
High Vocational Education
Bachelor's degree in Statistics
Other
Master's degree
Bachelor's degree
Bachelor's degree
in Political Science
Police Cadet Academy (16)
in Economics
Senior Executive Certificate
Master's degreein Political Sciences Political Science
Master's degree
Bachelor's degree
Education
0.01
0.03
0.02
0.11
0.04
0.002
0.01
-
0.03
% of share owned Family relationship between
executives
Marketing and Promotion Director
Home Entertainment Business Director
Operation Director
TV Programme Production Manager
October 2003-present Public Relations Director
2002-September 2003 Public Relations Manager
Public Relations and Advertising Manager
Operation Director
Business Development Manager
Country Manager of Thailand
General Manager
March 2003-present Business Development Director
2002-2003
Business Development Manager
2000-2002
Marketing Manager
1996-2000
Assistant to Marketing Director
October 2003-present Advertising Business Director
1999-2003
Managing Director
June 2003-present
2003-June 2003
2002-2003
2001-2002
1997-2001
June 2003-present
1997-June 2003
1992-1997
2003-present
2001-2003
1997-2001
1996-1997
2003-present Assistant Managing Director
2001-March 2003 Assistant Managing Director
1999-July 2001 Assistant Director
Deputy Director General (Suppression Bureau)
Special Staff Officer
Senator
Member of the National Legislature
Deputy Commissioner-General
Assistant Commissioner
1991-1997
1979-1985
1977-1979
2003-present
1997-2000
1996-1997
2003-present
1971-2000
Extra Royal-de-Camp
Special Staff Officer
Job Title
Warner Chaple Music (Thailand) Co., Ltd
Bakery Music Co., Ltd
Promotional Partners Woldwide [Thailand] Co.,Ltd.
California Fitness Centers Co.,Ltd.
Kantana Co., Ltd.
Shadow Entertainment Co., Ltd.
SG Asia Asset Securities Co., Ltd.
Golden Land Property Development Public Company Limited
Customs Department, Finance Ministry
Royal-de-Camp Division,
Chulachomklao Toyal Military Academy
First Airforce Artillery Battellion Royal King's Guard
The Senate
National Legislature
Royal Thai Police
Royal Thai Police
Employment Records
Experience in past five years
2003-present
1997
1997
Period
Description of management team and other persons overeeing the company As at 31 December 2003
4.
Business descriptions
RS Group's major entertainment business incorporates music, media including television, radio, magazine publishing, films, TV
drama series and programme production.
4.1
Music
There are five factors driving the success to RS Group's businesses:
1) RS Group employs a fully integrated business model managing all types of related business. As a company associated with
a number of artists, RS Group has produced a variety of music with continuous releases onto the market. The company's
music products are screened by its Music Committee to ensure the quality and market's popularity.
2) The Committee is composed of four separate units: pre-production, music production, music promotion, and distribution. It
is RS Group's policy to generate products in an appropriate quantity and of good quality. It places its priority on released
products driving investment.
3) RS Group utilises its television, radio and Internet media to facilitate public relations programmes.
4) Efficient distribution transfers products to end customers speedily; effective inventory control management can adjust appropriate
levels of stock.
5) Efficient music copyright management creates added revenue for the business.
Music business acquires most of its revenue from the following five sources:
1) Sale of products, new or compilation albums in the form of cassettes, CDs, VCDs and DVDs;
2) Advertising and promotion campaigns invested with products' owners;
3) Tickets and sponsors from concert events;
4) Commission from its artists as presenters;
5) Copyright collection from ringtone downloading and karaoke copyright collection.
4.1.1
Products and Services Descriptions
RS Music Company produces Thai modern and country songs as well as international songs for foreign companies.
4.1.1.1 Music Production Factors
Pre-Production Unit
The Pre-Production Unit under the management of RS Group is an experienced team whose responsibility covers recruitment,
selection and development focussing on potential artists. By introducing new artists, the company has extended opportunities to produce
more outcomes in music, drama series, advertising and films.
Music Production Unit
RS Music Production Unit has 12 teams, each with a producer, creative, song writer, tune writer and composer skilled and
experienced in their field. They combine to produce quality music in a variety of styles. The Music Production Unit is responsible for
making complete master tapes in the studio and sending them to the RS subsidiary K. Master Factory. Then they are transformed into
cassette tapes, CDs, VCDs and DVDs and passed on to end customers through wholesale and retail outlets.
Music Promotion
Music Promotion is responsible for marketing campaigns, distribution systems, sales and feedback follow-up, and marketing
plan adjustment. Its marketing strategies influence sales volumes, product life cycle and artists' popularity. The Music Promotion team
works closely with Music Production unit to ensure that the music is produced as planned.
Artists/Singers
RS Group currently has 200 artists and singers under its management including solo singers and groups who all have different
styles. RS artists and singers include:
Solo
Group
Male
Dunk-Pankorn, James-Ruengsak, Joni Anwar,
Polsant, Ford-Sopchai, Anan Anwar, Tannatorn,
Joe-Thanarat, Keng-Jakapong, Nutt, Nathan,
Mathew Dean, Bovy, Touch Na Takuatung
D2B, I-nam, Hyper, Pluem, Sandstone, B-Mix,
3Plus1, Strikerz, Mono, Motif, A Cappela 7,
Out, Pa-tong-ko, Baby Bull, Dance Army,
Neo-X, Bogie-Dodge, Kanchit-Tidleam
Female
Parn-Thanaporn, Fourth-Naruemol, MamPatcharida, Sandra, Momae, Nancy, Ae-Sasikarn
Pink, The Sis, Girly Berry, 001, Zigzag
Top Thai country singers associated with R.S. include Santi Duangsawang, Ekachai Sriwichai, Paijit Aksornnarong, Dan Sriwichai,
Jeab Benjaporn, Sonthi Sommart, Namoil Thamlanka and Man Motorcycle
The Top five selling albums for 2003 were
Album
1
2
3
4
5
I-Nam
D2B
Hyper
Parn-Thanaporn
B-Mix
Sales as % of total sales
8.02
5.09
4.63
3.64
1.41
4.1.1.2 Compilation Albums
This is another income-generating channel with copyright collection. Most customers buy newly released albums and have
favorite songs; others prefer to collect compilation albums. Compilation albums therefore have their own market, and are poised for growth.
4.1.1.3 Concerts and Events
Concerts free or paid for will be organised after the release of an album to stimulate sales and create a close relationship
between artists and audience. Artists and singers presented in special events form another revenue-producing channel.
The company cooperates with sponsors in music marketing campaigns to promote its products among target groups using the
company's artists as presenters. These events may be concerts, game shows or tours.
4.1.1.4 Copyright Collection Business
Thai Copyright Collection Co., Ltd. (TCC) manages copyright for owners. In 2003, TCC was dedicated to developing license and
copyright collection systems. It is acknowledged as the prototype of efficient copyright collection and manages the copyright of more than
30,000 songs for R.S. Promotion Plc., as well as music companies and songwriters. From 1 January 2004, TCC extended its copyright
collection network to companies by distributing the copyright to modifier mini-disk (MD) karaoke VCDs of almost 30,000 songs.
TCC earns revenue from copyright collection, and means to extend collection to companies that distribute copyright works to
radio stations and paid TV channels.
4.1.1.5 Other Copyright Revenue
The company can earn other copyright revenue from ringtone and downloading artists' photos in forms such as Picture
Messages and Wallpaper through the company's website www.mobiclub.net and its partners. The company plans to develop and extended
technology-based service channels such as MobiOke (karaoke on mobile phone), MobiPixer (wallpaper decoration) and other services. This
will utilise intellectual property and add value to it for the company's benefit.
4.1.1.6 International Songs
The company is also a music distributor and organiser for international music companies including Unlimited Group Co., Ltd., a
large Japanese-based music company promoting artists like Glay, Lucifer and famous Japanese singers. RS Group earns only a small
portion of the revenue but it offers a good opportunity to enter the international market.
4.1.2
Marketing and Competitive Environment
4.1.2.1 Marketing
Strategy
1) Quality Production Strategy
RS Group's priority is quality, in both artists and music. The company's pre-production unit selects and develops artists with
the right quality and plans ongoing improvement in its 12 sub-units. Each team gathers personnel with expertise who have worked in the
music industry for between 10 and 20 years. This skilled workforce has an in-depth knowledge of the flow of the Thai music market and
can produce different types of music based on their expertise, attracting audiences from all age groups and backgrounds.
2) Thorough Distribution
RS distributes its products effectively and thoroughly through wholesalers and retailers. The company uses an effective production
policy to provide products in accordance with estimated sales figures. This improves the company's inventory control management and keeps
a low level of outdated products in stock.
B) Client Description and Distribution Channel
1) Music Products as cassette tapes, CDs, VCDs and DVDs
The company's music clients can be categorised in three major groups: listeners, wholesalers and retailers, and sponsors
1. Listeners can also be divided into three groups :
..
.
Pre-teen students under 15;
Teens and students from 16-22;
Adult working people over 22 .
2. Wholesalers and Retailers
K. Master, an RS subsidiary, currently applies sales and distribution systems as follows:
Factory
Dealer
Modern Trade
GMC / LION / Cherry
D-Network / CD Warehouse
Retailers in
Bangkok
(Modern Shop)
Retailers in
provincial area
Super Store
LOTUS / CARREFOUR / BIG C
(G&C Store)
7-11 / JIFFY / SELECT
STAR MART
..
3. Sponsors
Agencies
Direct Customers
Some 70 per cent of advertising sales are generated through advertising agencies, with the remaining 30 percent coming
from promotional campaigns in cooperation with product/brand owners. Most sponsors are well known such as Pepsi, Orange,
Sony, Panasonic, Hanami, GSM, GSM 1800, DTAC, 12 Plus and Lip Ice Color.
2) Music and Artists' Picture Copyright
Music and Artists' Picture Copyrights clients are in two groups: the first group is consisted of 20 duplicate licensees including
website operators and ringtone operators; and the second group is distribution members such as karaoke booth and jukebox
operators with approximately 90,068 machines.
4.1.2.2 Competitive Environment
1. Thai Music Market Value and Growth Trends
In 2003, the company forecast that the domestic music market would grow to 3,400 million baht, an eight per cent decrease
from the 3,700 million baht of the previous year. However, the company believes that in 2004 the music market will grow by at least
10 per cent as each music company increases the number of its music products launched onto the market. The outcome of the antipiracy campaign in which all parties cooperated has motivated consumers to buy more copyright products as well as pirated products,
though it encounters distribution channel problems whenever the authorities show reluctance to arrest illegal traders. These factors
encourage growth for the domestic music industry and impact positively on the music business generally.
2. Music Business Operators
The Thai music market has two major operators including RS, a large music company and other independent music companies
3. Competitive Trends
The domestic music industry remains more competitive in products and marketing promotional campaigns than in price. Each
company tends to differentiate its music.
4.1.3
Product or Service Placement
4.1.3.1 Production
The company continually employs pre-production methods through its experienced team to improve its quality.
Raw material for CDs, VCDs, and DVDs production such as reels and cassettes can be obtained from domestic suppliers. This
has never been a problem.
The RS subsidiary, K. Master Co., Ltd. is a factory that manages distribution systems (see 3.1.2.1) and plans to service other
music companies. The new factory is at 9/9 Moo 1, Ban Chang Subdistrict, Muang District, Patumthani on 5.4 rai of land. The facility
usage area is 5,012 square metres. State-of-the-art production machinery is shown in the Production Capacity for 2002 and 2003 table.
In November 2003, the company imported a new machine at a cost of 55 million baht for CD and DVD production with a production
capacity of 1.8 million DVDs per year.
Production capacity (Unit)
Full Capacity
Tape
Increase (%)
CD / VCD
Increase (%)
Actual Production
Tape
Utilization Rate (%)
CD / VCD1)
Utilization Rate (%)
Production Hour / Day
2002
24 hours
22,500,000
5,000,000
7,500,000
8 hours
20 hours
5,000,000
33.33
3,500,000
46.67
2003
31,860,000
15,000,000
0.00
16,860,0002)
124.80
5,239,762
34.93
13,617,462
80.76
In 2003, the company disbursed 2.8 million to outsource CD and VCD production while terminated production for a month to
move its factory from Ladprao to Patunthani, and another two weeks to install new machinery in November 2003.
Inventory Control Management
The company applies a strict production order system to ensure effective inventory management,. Production order volume is
allowed for fixed period to meet market demand. Effective production and marketing policies have improved the inventory system.
4.1.3.2
Environmental Effects
-None-
5.1
Media
RS Group believes that its ownership of media companies boosts its music business, improves its flexibility and provides public
relations and advertising channels for the benefit of its organisation. This accords with its business objectives as a fully integrated
entertainment provider. Utilising its resources including artists, production unit and capital, R.S. Group penetrated the media market,
beginning with television, radio and publishing respectively.
Media Business of R.S. Promotion (Public) Co., Ltd. can be categorised as follows:
1. Television
2. Radio
3. Publishing
Media business also covers selling advertising media such as album covers, films, concerts, contests and sport events.
Television
5.1.1
Product or Service Descriptions
The company operates advertising airtime sales in RS television programmes broadcast on Channels 3, 5, 7, 9 and ITV.
The company's programmes consist of:
NON MV which includes four drama series, variety shows and children's programmes
Twenty-one music programmes
5.1.1.1 Drama series, Variety Shows and Children's Programmes
All programmes are produced by RS subsidiaries. The company is involved in Time-Sharing with Channel 3 and 9 as follows:
Program type
Channel
Airing Day
Airing Time
Drama
Drama
Variety
Kids
3
3
9
3
Sat-Sun
Sat
Wed
Sun
10:45-11:30
14:00-15:00
21:00-22:00
07:00-07:40
Program Name
Na-kak-khon-nok
Ran-Maha-Sanook
T-Zaa
Zoo
Weekend morning drama series are focussed on teenagers and students. For example, the Ran-Ma-Ha-Sa-Nook (Amusing
Shop) sitcom serves audiences of all genders and ages. It has received a good response from advertising agencies.
T-ZAA, a live variety programme is presented on prime time and is directed to the teenage group. The company has also
produced a children's programme, Zoo Puen-Rak-Sad-Lok-Maha-Sanook (Zoo--Amusing Good Friends) for two years.
5.1.1.2 Music Programmes
The company produces music programmes to promote its artists' and singers' albums. Music videos and concert events are
also presented. These 21 programmes are broadcast every day on different channels.
Airing
day
Airing-time
Monday
11.50 - 12.50
12.35 - 13.30
13.00 - 13.30
00.15 - 01.15
00.30 - 01.30
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
Holiday
12.30 - 13.00
13.00 - 13.30
15.00 - 16.00
23.10 - 00.04
13.00 - 13.30
16.30 - 17.00
00.15 - 01.15
01.10 - 01.35
Channel 5
11.30 - 12.30
15.00 - 16.00
11.00 - 12.00
12.00 - 13.00
13.00 - 14.00
Channel 9
ITV
Pleng Talu Jaw
Ban Terng Mue Tieng
DAY LIVE
Yoohoo Night
HOT HEAD
MUSIC IN TREND
DAY LIVE
Puen Dern Tang
Music Mart
DAY LIVE
Pooyai ban Dumde
POP ON THE ROAD
Looktung sananmuang
12.50 - 13.20
13.00 - 13.30
23.45 - 00.45
12.30 - 13.30
13.00 - 13.30
23.20 - 00.00
00.30 - 01.30
Channel 7
Kluen Look Mai
DAY LIVE
MIX CLUB
TV Relax
DAY LIVE
Na na na show
Wai Man Pan Karaoke
SEE SAW SCENE
MUSICA
Menu Wan yud
R.S. Television
R Saim
R.S. Television
Nagasia
Filmsurf
Aladdin House
R.S. Television
R.S. Television
P.O.V.
R.S. Television
R Siam
P.O.V.
R Siam
Nagasia
R.S. Television
Filmsurf
Aladdin House
R.S. Television
R.S. Television
Filmsurf
Filmsurf
Aladdin House
Saturday Show
T-UNITED
Produced by
R.S. Television
P.O.V.
R.S. Television
5.1.2
Marketing and Competitive Environment
5.1.2.1 Marketing
Marketing Strategy
1) Positioning Strategy
The TV business team is responsible for research and determining target groups before designing programmes or selecting
plays. This method facilitates production, improves viewing ratings, gains higher advertising income and makes good sales.
2) Quality-oriented Strategy
The team takes account of trends and audience behaviour as well as programmes produced by the competition before
designing and producing its own quality-based programmes. The company has produced a variety of programmes created by its seven
companies. Each team has extensive experience and is skilled in making all types of programmes and series. They receive a good
response and are high in the charts.
3) Advertising Airtime Sales Strategy
Advertising airtime sales for series and game shows are managed by Shadow Entertainment Co., Ltd. and Magic Advertisement
Co., Ltd. through Loose Spot and Tie-in advertising. The package pricing is utilised for music programmes.
4) Good Relationship Strategy
The company's major partners for television business are the TV stations and advertising agencies. RS Group gives priority to
both groups because the stations rent airtime and are also clients for its productions. Maintaining good relationships and providing
quality-based production ensures better business opportunities for the company. Advertising clients are also one of the company's main
sponsors and play an important role in the company's growth.
Client Description and Distribution Channels
1) Advertising Clients
Agencies
Direct Customers
RS Group makes advertising airtime sales through agencies and direct customers in the proportion of 90% and 10% of total
television media sales.
2) Target Audiences
Target audiences can be categorised according to the kind of programmes they watch and the airtimes. For example:
Drama series
Teenagers, students, families, all genders and all ages
Variety shows
Teenagers
Children's programmes
Primary school students
Television media's advertising market value and growth
According to research by AC Neilsen (Thailand) Co., Ltd., advertising market value through television media in 2003 increased
by 11.70% from 37, 339 million baht in 2002 to 42,288 million baht. Its popularity has never declined and it has the highest rate of
advertising investment compared to other media: 59.17% of the 71,465 million baht total advertising market value.
Advertising Market Value
Advertising Market Value Comparison
January - December 2003 = 71,456 Million Baht
Octher 36%
TV 51%
80,000
71,456
70,000
61,211
60,000
53,053
50,000
42,288
37,339
32,879
40,000
30,000
20,000
TV
Octher
Publishing
Publishing 5%
10,000
Radio 8%
Total Advertising
Radio
Television Media
2001
2002
2003
Television Companies
TV companies are highly competitive and have their own artists. The only differences between them are audience numbers
and popularity. Well known production companies include RS Group, GMM, PolyPlus, BEC Tero, Kantana, JSL, Work Point, and Born.
Each is dedicated to its own quality-based productions.
Competition in television business is based on the quality of the programmes. Programmes that are aired at the same time or
share the same target audience require clients to consider carefully which one they should allocate their advertising budget to.
Competitive Trends
Clients give priority to programmes with high viewing figures and an audience in the target group for their products. These
two factors are the forces that drive producers to focus on the quality of their programmes and their ability to satisfy the target
audience's taste, and thus improve their programme's viewing ratings.
5.1.3
Production or Service Placement
5.1.3.1 Production
To produce television programmes and drama series, RS Group utilises its existing resources including actors/actresses and
programme presenters as well as production teams from its seven subsidiaries. The company also rents tools and equipment including
studios, sound studios, cameras and production equipment from its affiliate, R.S. Studio Co., Ltd.
5.1.3.2 Environmental Effects
-None-
Radio Media
5.2.1
Product or Service Description
In 2003, Sky High Network Co., Ltd., produced radio programmes for three stations: FM 88.5 MHz, FM 93.0 MHz and FM
98.0 MHz. The concession to produce programmes for FM 93.0 MHz started on 1 July, 2003. All three stations generated revenue from
advertising airtime sales. They are directed to different target audience as shown in the table below:
F.M. 88.5 MHz. / 88.5 Z Pop
F.M. 93.0 MHz. / 93 DNA F.M.
F.M. 98.0 MHz. / 98 Cool F.M.
Radio Station
Concessioners
Navy Radio Station
Navy Radio Station
First Battalion Royal King's Guard
Radio Station
On Air Date and Time
Signal Coverage
Programme Concept
Target Audience
24 hours
24 hours
Bangkok and vicinity
Za Puan (Naughty)
Excited Station
Students aged 10-18 years old Students aged 18- 25 years old
24 hours
Music Lovers' Station
Students and Employed
people aged 18-35 years old
The policy of all the three frequencies is to let their radio stations pursue a fully commercial operation. The stations are free to
play any song from any music company in the market, thus improving the stations' popularity with business management. Today, the
stations have clearly-defined audience bases and are gradually gaining higher ratings. This has prompted the clients of advertising
companies and product owners to put their trust in the programmes and popularity of the stations, thus raising the stations' income
from their advertising budgets.
The Radio Station Styles
Radio Station: F.M. 88.5 MHz (Z Pop, Zaa Puan) Navy Radio Station
Z Pop is a friendly, cheerful station favoured by the audience group of secondary-school teenagers for its "zaa" (naughty),
unique, continuously streamlined presentation. With a "zaa puan" (daring and mischievous) concept it is hosted by new-generation guys
and girls with a high sense of individualism, taste and modernity, the organizers are well able to reach the teenage students.
Mon-Fri
08:00-11:00
F.M. 88.5 MHz. "Z Pop, We Like"
DJ
Sat-Sun
Totsaporn Taengluang
08:00-11:00
11:00-14:00
14:00-16:00
16:00-19:00
Porawan Wanitcha
Veeravon Pikilpol
Kanda Srithamupatam
11:00-14:00
14:00-16:00
16:00-19:00
DJ
Papasawan Yotnane
Nakorn Kaewkanipakorn
Didi Anwar
Napasorn Buranasiri
Varote Sahatsanan
Anuwat Amnatruangkrai
Tanate Luangorachartkul
Pajaree Na Nakorn
F.M. 88.5 MHz. "Z Pop, We Like"
Mon-Fri
20:30-24:00
24:00-03:00
03:00-05:30
DJ
Anuwat Amnatruangkrai
Tanate Luangorachartkul
Piyakiat Boonruang
Totsavut Ratanakunchorn
Sat-Sun
20:30-24:00
DJ
Natavut Kanjanapairin
24:00-03:00
03:00-05:30
Veeravon Pikilpol
Totsavut Ratanakunchorn
The activities presented focus on uniqueness and are oriented towards teenagers who are at a fun and adventurous age. The
show emphasises friendliness, allowing the teenagers to express themselves, give opinions and join in special activities. The leading
activities in 2003 were 'Z on the Beach # Aqua Mission' (an Eco-tourism activity at the Surin Isles, Trang), 'Z teen Idol Carnival' (where
young stars were transformed into teen idols at Siam Square), 'School Greet Weed Boom' (cheerleading competition for the trophy of
HRH Princess Maha Chakri Sirindhorn) and 'Z Pop Culture in Japan' (out-of-classroom experience in Japan). All the activities were
extremely well received by the target audience.
Z Pop clearly lays out the structure of the programme, targetted to secondary-school listeners most of whom are fans of RS
shows and artists. This is the strong point of the programme: the audience can listen to the latest songs in original versions and this
expands the audience base. The station has become a hub where Thai and international songs from all music companies are played,
focussing on new and favourite songs. It has become 'the' pop music station, chosen from 35 stations in the Greater Bangkok, in the
poll by Tapscan (December 2003). The station also won second place in the pre-teen (10 to 18 years old) category.
Radio Station: F.M. 93.0 MHz (93 DNA) Navy Radio Station
This new-species radio station began operations on July 1, 2003 to appeal to new generation listeners, college and university
students aged from 18-25, with 24-hour exciting, modern programmes
Mon-Fri
04:00-07:00
08:00-11:00
11:00-14:00
14:00-17:00
17:00-19:00
20:30-23:00
F.M. 93.0 MHz.
DJ
Atiruj Porakitsuwan
Chatchai Charoenchutsana
Katreeya Nipamanee
Renar Chotikajinda
Pipat Vitayapanyanon
Sai Charoenpura
23:00-02:00
02:00-04:00
Chavalit Srimankongtham
Sweep
93 DNA
Sat-Sun
04:00-07:00
08:00-11:00
11:00-14:00
14:00-17:00
17:00-19:00
20:30-23:00
23:00-02:00
02:00-04:00
DJ
Atiruj Porakitsuwan
Tommy and Club
Duanpen Sriharat
Chatchai Charoenchutsana
Sopat Nasawat
Sat- Wongthanong and team
Sun-Manote Puttan
Patric Chainam
Sweep
93 DNA is another new-species radio station offering modern, exciting programmes of all kinds to satisfy the taste and lifestyle
of new generation people, with songs and special activities. With its unique "Exotic Species F.M." concept, the station has been
welcomed by audiences at a rapid rate and at a satisfying level. The leading activity was its 'X'cite Broadcast in New Zealand', a
programme for young people promoting Thai culture in New Zealand.
Radio Station: F.M. 98.0 MHz (Cool F.M.) First Battalion Royal King's Guard Radio Station
Cool F.M. is for an audience that enjoys easy-listening Thai songs from past and present and from every music company.
The programme's concept is 'a music frequency for music listeners', and it lets the audience listen to song after song as much as they
can from a commercial radio station. Cool F.M. has won its spurs among teenagers and working listeners. Hosted by light-hearted
professionals who themselves prefer easy-listening music, the clean programme structure reflects the audience's fashionable lifestyle.
F.M. 98.0 MHz. Cool F.M.
DJ
Sat-Sun
Mon-Fri
DJ
08:00-11:00
Thanate Saengchotikul
08:00-11:00
Prasert Tantigakaveera
11:00-15:00
Rangrong Wannarot
13:00-15:00
Sukteeporn Roma
15:00-18:00
Warongporn Vichaidit
15:00-18:00
Kanokporn Wongwisetpaiboon
20:00-22:00
Burin Hematat
20:00-23:00
Pornchai Chanwisetlak
22:00-24:00
Boonyita Ngamtapasil
20:30-02:00
Urairat Wittanond
24:00-02:00
Sribang-orn Teenamkam
02:00-05:00
Nonthanee Kongniyom
02:00-05:00
Kriengkrai Tiyanan
Besides the accepted programme structure, the 'Cool Experience' is a forum where listeners can exchange ideas with other
working people. There are several kinds of activity for this thought-trading forum, such as concerts, local and overseas trips, seminars
and creative activities to improve the living conditions of working people. Examples are 'X'coolsive Moment' (exclusive concerts by hot
artists for Cool F.M.'s fans), 'Wonder Cool Rally # Music Racing' (the first music rally from Bangkok to Cha-am), 'Cool Journey #1
Smart Life Club' (high-class visit to Club Med, Phuket), 'Cool Journey #2 Simply Your Life' (simple living at Muang Pai, Chiang Rai) and
'Cool 3rd Anniversary in Kenya' (third anniversary celebration in Kenya). These were marketing-promotion activities that won the
audience's attention and keen support from sponsors.
For these reasons, Cool F.M. has proved to be a popular radio station according to the December 2003 Tapscan popularity poll
for 34 radio frequencies. It won third place in the Cool Easy Listening category for working people aged 25-45.
5.2.2 Marketing and Competitiveness
5.2.2.1 Marketing
A. Marketing and Competition Strategies
1) Pricing strategies
The company has used pricing strategies to create an advertising customer base by selling packages, expanding the loosespot time and organizing "activities in programmes" and event marketing. These have added to the value of sales promotions and
investment, especially with 93 DNA 93 F.M., where the company offered a 'buy one, get one free' package to allow clients to test the
station's advertising strength. The package was enthusiastically welcomed by the sponsors, and the income from it was well up to
expectations.
Examples were the 'Red Bull Extra Ordinary DJ Talent', 'Travogen Cool on Trip at Kaeng Hin Plern, Nakorn Nayok', and the
'Man from Mars, Women from Venus' concert at Science Center for Education held by Heineken.
The pricing strategies together with sales promotion activities brought in advertising budgets from advertising agencies and
product owners for packages throughout the year. There were more advertising budgets while new advertising agencies had more trust
in the company's ability and investment value. As a result, the company was gradually able expand its customer base and earn more
income.
2) Sales Promotion Strategies
In the tough competitiveness of the radio business in 2003, the sale of advertising airtime was not enough for customers'
needs. Thus, the company added value to the products by organizing sales promotion activities between the programme and the
audience, such as games during the programme. There were special activities between the product owners and Government offices, such
as the visits to tourist attractions in Bangkok held with the Tourism Authority of Thailand, youth cultural exchange programmes, concerts
and contests.
The company focussed on the quality of the activities, combining academic interest with entertainment for those taking part.
The company also responded effectively to the marketing policies of the clients. It formed a special project team to create and run the
special sales promotion activities exclusively for the customers thus December 2003 creating further income.
In addition, the company used the potential of its Advertising and PR Departments to publicize the activities of its radio stations. The
clients' activities were widely accepted in the form of PR news and advertisements on TV programmes, in magazines, and on outdoor
and mobile media.
3) Advertising Planning Service
With its long experience in the radio business, the company has a thorough understanding of all aspects of the business. Its
staff can advise clients how to plan the best quality media management. They can also help them choose the most appropriate airtime
or advertising package to suit their purpose and reach the audience.
Since the Government announcement that advertisements for alcoholic beverages may not be broadcast before 10 pm, the
company has adjusted the style of its public relations and advertising. It has turned to promoting the product image through scoops in
several programmes, and now conducts special activities to meet the needs of the customers and the limitations on each product type.
Based on the policies of its business partners, the company and the programme sponsors have planned advertising strategies that will
keep sponsors' interest and return the greatest benefit to them as they use the company's media service.
B. Customer description and target group
1) Target group
Advertising agencies
Direct customers
2) Target audience
88.5 MHz. Z pop
93.0 MHz.DNA F.M.
98.0 MHz. Cool F.M.
:
:
:
Students, male and female teenagers aged between 10 and 18.
Student and male and female working adults aged between 18 and 25 years.
Students male and female working adults aged 25-45 years.
C. Distribution Channels
Some 70% of radio airtime will be distributed to the advertising agency while 30% of total airtime will go directly to the
product owner.
5.2.2.2
Competitive Environment
A. Value of Radio Advertising Market and Growth Potential
According to the data from AC Neilsen (Thailand) Ltd., total radio advertising expenditure in 2003 was 6,662 millionbaht , a
rise of 7.97 per cent over the 6,170 million baht in the previous year. Radio advertising costs accounted for nine per cent of total
advertising expenditures, which amounted to 71,456 million bath.
TV 51%
Octher 36%
80,000
71,456
70,000
61,211
60,000
53,053
50,000
42,288
37,339
32,879
40,000
30,000
20,000
TV
Octher
Publishing 5%
Publishing
10,000
Radio 8%
Total Advertising
Radio
Television Media
2001
2002
2003
B. Radio Station Operators
Twelve radio stations broadcasting mainly Thai songs with similar target listeners are presented on the table below. Currently,
the company is the third largest radio station operator with a market share of 2.2 per cent and a growth of 69 per cent over 2003. The
company is satisfied with this growth rate as it has been running three radio stations for four years.
Radio Station
Teenage
10-18 years
F.M. 88.0 Radio Noproblem
F.M. 88.5 Z Pop
Sky-High Network
F.M. 89.0 Vergin Soft
F.M. 91.5 Hot Wave
Competitor
F.M. 93.0 03 DNA
F.M. 93.5 Radio Vote Sattlelite
F.M. 94.0 Bangkok Radio
F.M. 95.5 Vergin Hitz
F.M. 98.0 Cool F.M.
F.M. 103.5 Modern Love
F.M. 104.5 Fat Radio
F.M. 106.5 Green Wave
College Student
15-25 years
Working Group
18-35 years
Adult 25-45 years
Competitor
Competitor
Sky-High Network
Competitor
Competitor
Competitor
Competitor
Competitor
Sky-High Network
Competitor
Sky-High Network
Competitor
Competitor
Competitor
C. Competition Trends
There is strong competition in the radio business because of limits on advertising expenditure. Clients prefer to buy advertising
airtime on radio stations with good ratings. Consideration is given to pricing strategies that will allow the client to buy more airtime or
choose a variety of advertising styles. This will depend on the sales strategy of each company; those who can show that they are
providing the best value-added service will stay ahead of the competition.
5.2.3
Product and service placement
A. DJs and production staff
The company employs 21 DJs and a production staff of 22. DJs are the key factor contributing to the reputation of the radio
station as they are responsible people who have a good understanding of the music, and the ability to communicate with the listeners.
With training, they can improve their knowledge of technology in order to be able to handle state-of-the-art equipment and software. They
host their programmes in a style that meets the taste of the target listener, and may also work externally as programme hosts for sales
promotion activities.
B. Studios
In the past, the company rented studio space for its programmes from the radio station operator. In 2003, the company built
its own broadcast studios, the first totally digital studios in Thailand, at R.S. Group's head office at Chetchotsak 2 Building. Opened in
July 2003, the studios are equipped with Radioman software from Finland, which is also used for the universal standard radio
programmes of the BBC in the UK and NHK in Japan. The company believes that this will increase the quality of its broadcasting and its
productions, and will significantly increase the number of listeners.
The digital studios include:
Four broadcast studios: Programme hosts use the state-of-the-art software and hardware to select the songs and tailor the
broadcast to their specific programme style. This equipment helps the host make the programme and its content more interesting. It is
of the same standard as global radio stations such the BBC and NHK.
Two digital production studios: These help the company to produce standard quality programmes with catchy effects and
gimmicks that add to their interest.
The library: Music is collected and classified here according to the requirements of each programme.
The transfer room: This is where song data, jingles and spots are loaded to the main server. DJs can use these data for
each programme.
Traffic control room: Broadcasting system and sound quality with digital system are transferred here to each radio station.
Master control room: The DJs' work, advertising spots and the billing system are controlled from here. The control room
also checks and reports feedback from the advertising spots in clients' programmes in real time. This ensures the clients' confident in
the advertising.
5.2.3.2
Environment Effects
-None-
Publishing
Having established its new publishing business in 2003, R.S. Group launched Front Magazine in February. It also launched
Poema Books, its pocket book publishing company, and introduced eight pocket books in the same year.
The company, previously published RS Star Club Magazine to promote its artists' performance, and made it a communication
channel for staging activities for the customers. This magazine received an overwhelming response from customers as it communicates
news and information of the company to them directly. By doing so it helped the company to gain specific target groups.
The production team of Front Magazine consists of professional in the Thai publishing business with experience in leading
magazines and an understanding of how to produce quality magazines. Also, celebrities are invited to design the content and columns of
the magazine.
5.3.1
Product and Service Description
Front is a leading monthly women's magazine featuring the lifestyle of trendy women in a variety of sections including fashion,
beauty care, society and personal relationships.
Poema Books mainly publishes translated pocket books from best-selling contemporary books in the Europe and the U.S. Last
year, it focussed on books for female readers, which was the popular trend at the time.
5.3.2
Marketing and competitive Environment
5.3.2.1 Marketing
Marketing Strategy and Competitive Environment
1) Specific Selling Points for Magazines
The core strategy is to advance the concept of Front Magazine as the leading women's magazine with outstanding layout and
content. This is done by integrating the style and presentation of foreign magazines with issues of concern to women in Thailand. The
content is delivered in informal language, making the reader feel that she is communicating with friends.
2) Public Relations and Sales Promotion
In order to sell advertising space in the magazine, the company has focussed on public relations material on radio and
television. This enables Front Magazine to receive positive reactions from readers within a short time as it has total sales of 80,000
copies per issue.
Target Groups and Distribution
1) Buyers and Consumers
The target group is ladies aged between 20 and 45 in the high-end class who read a lot of women's magazines and has high
purchasing power.
There are two ways to purchase the magazine:
- Apply for membership: the expected membership number is 5,000 in the first year of the launch.
- Buy from bookstalls: the company distributes the magazine through the distributor.
2) Distributors
Front magazine is distributed nationwide through the leading distribution agencies, allowing the customers to easily buy the
magazine at bookstalls. The distribution ratio between Bangkok and Greater Bangkok and the Provinces is 70:30.
3) Advertising customers
Agencies
Direct customers
The advertising distribution ratio between agencies and direct customers is 60:40.
Thai Advertising Market Value and Growth Trends
The total print advertising expenditure in 2003 amounted to 4,550 million baht or 6% of total advertising expenditure.
Advertising expenditure growth was around 25 per cent, compared with total magazine advertising expenditures of 3,640 million baht in
2002. Popular products advertised in the magazine are cosmetics, clothing, mobile phones, cars and restaurants -- products for trendy
people.
The publishing business trends to grow continually and the number of new magazine increase every year. Each magazine has
its own selling point and target readership. Existing publishers have to increase their magazines' quality and maintain the customer base
by presenting content and adjusting the style according to market trends. This will include activities for the readers such as a lucky draw
or special premiums or offers. Front magazine has conducted activities such as workshops and roadshows at office building to promote
itself and attract readers. These activities receive a positive response from readers.
TV 51%
Octher 36%
80,000
71,456
70,000
61,211
60,000
53,053
50,000
42,288
37,339
32,879
40,000
30,000
20,000
TV
Octher
Publishing
Radio
Publishing 5%
10,000
Radio 8%
Total Advertising
Television Media
2001
2002
2003
Operators and Market Share
Many existing magazine operators include large companies that publish several books at their own printing house or with
independent printers.
Competitive Environment
Each magazine has its specific target group, whether it be women's fashions magazine or men's magazines. Magazines are
also categorized by their target market, such as high-end, middle-end and low-end market. Front Magazine of R.S. Group is high-end
women's fashion magazine. There are 12 magazines in this category and have similar readers. Competition is considered moderate to
high, as many publishers want to invest in this business in the future. However, with the capabilities of R.S. Group, strong television
media backing and continuing additional activities, the company expects to broaden the customer base of Front Magazine rapidly.
5.3.3
Product and service placement
5.3.3.1 Product placement for distribution
To publish a monthly fashion magazine, teams are appointed to take responsibility for two main processes: content selection
and printing. For the content selection, Poema Ltd assigns competent staff members with experience in leading magazines to select the
content and create issues, as well as choosing well-known writers and experts from many fields to be the columnists. Every issue is
printed by a contract printing house, and the contract price includes paper cost and printing fee.
5.3.3.2 Environment Effects
-None-
6.1
Films, Drama Series and TV Programmes
The keys to the success of R.S. Group's film and TV business are these:
1) The number of its production staff producing good quality work that responds to the needs of the market; and its
experienced sales team.
2) A strong capital base that supports smooth and continuous production.
3) The integrated nature of the group's media business, with television and radio helping the company to effectively market
films and television drama.
4) Good relation with other branches of the industry, such as television companies, cinema owners and film distributors.
The film business derives its main income from five sources:
1) Provincial movie distributors.
2) Copyright fees for cable TV and free TV.
3) Profit sharing, with some 50 per cent of the income from feature films in Bangkok and greater Bangkok.
4) Distribution in the form of VDOs, VCDs and DVDs.
5) Copyright fee in the overseas market.
6.1.1
Products and Services
6.1.1.1 Production
R.S. Group's film business is evaluated as another perfect business model. It includes eight production teams from eight
companies that can produce many films with different themes each year. Experienced sales teams who distribute films both
domestically and in the overseas market help the film segment to make a significant contribution to the Group's income.
There are five outstanding characteristics of the film business:
1. The cost of production and promotion of each film differs according to the size and type of production. On average, the
expenditure on each film ranges from 20 to 30 million baht.
2. Production costs account for 60-70% of total cost. Production will be completed within three or four months.
3. Pre-sales -- selling the rights to provincial distributors and cable or free TV. Any feature film, which is pre-sold at a good
price, has a chance recovering the cost before being released in the cinema. Profit evaluation will be conducted after selling films
through regular cinema channels.
4. The proportion of profit sharing from ticket prices in Bangkok and Greater Bangkok, which stands at 50 per cent.
5. Popular feature films producing high income when released in VCD and DVD form.
With the goal of being market leader, R.S. Group plans to produce films continuously. Ability in all aspects of the business
from budget to actors and capable production staff who know the market are the key factors that have made the Group's films popular
from the beginning.
A. Film Production
The average production period of each film is eight to 10 months. The first three or four months are for preparation: selecting,
writing and developing the screenplay. When the screenplay is agreed, casting begins, together with equipment planning and shooting
preparation. Filming should be completed in three or four months. After filming, the editing and post-production processes will take
around two months. Later, the company will launch public relations activities and advertising to promote the film two months before it
opens.
B. Previous Film Experience
The company has released a total of 21films to date:
No.
Story
21
The park
20
Zaa Club
19
Talking Dick
18
Sex Phone a.k.a. The Girl Next Door
17
Omen
16
Old Mad Rock
15
Taloompuk
14
Bangkok Haunted
13
Where is Tong?
12
Killer Tattoo
11
Cloning
10
Friendship Breakdown
9
A Miracle of Oam + Somwang
8
Dreamer
7
Buddy
6
Long June
5
Jenny
4
Extreme Game
3
Darkside Romance
2
Romantic Blue
1
Long Ta Lab Prab
6.1.1.2 Sales and Distribution
R.S. Film and Distribution Ltd.*, a subsidiary of R.S. Group mainly distributes R.S. Group films but is also the distributor for
other film companies including large production houses and independent companies.
Currently, there are four distribution channels: cinemas, provincial film distributors, home entertainment (VDO, VCD, DVD, cable
TV, free TV) and the overseas market. The last is a new channel which has grown significantly through the international film festivals
held three times a year. These include AFM in the US in February, Cannes in May and MIFED in Italy in November. With experience in
distributing films in a global market, the company is confident that Thai films will receive a positive response from this market,
depending on the type and quality of the films and the perception of the purchasers.
*R.S. Film and Distribution Ltd., is temporarily closed and responsibility for distribution has been transferred to the Film Business
and Home Entertainment Department of R.S. Promotion (Public) Co., Ltd.
6.1.1.3 Production House
R.S. Group has been assigned by three television channels, Channel 3, Channel 7 and ITV, to produce drama series broadcast
on prime time including pre-news and post-news drama series. The company's income is based on the production contract for each
drama series. In 2003, the company produced and broadcast the following 15 drama series:
Channel Name
Airing Time
Produced By
3
18-80 Puan-si-mai-me-sua
Sainam lookpuchai
Nueng Ruethai
Buddhanuparp
Nee-Kan-saen-rak
Hak-leam pra-karn
Olwon-kon-rai-som
Na-kak-khon-nok
Wai-rai-Freshy
Ia-ya-a-teu
Botan
Ka-waw-tee-bang-pleng
May-Aug
Aug-Nov
Jan-May
July-Aug
Dec02-Mar03
Jun-Aug
Mar-Jun
Nov03-Feb04
Jul02-Jan03
Sep
Nov-Dec
Nov03-Jan04
Magic Advertainment
Magic Advertainment
Magic Advertainment
Red Drama
RS Promotion
Magic Advertainment
Red Drama
Red Drama
Filmsurf
7
Jone-pluon-jai
Jul
Red Drama
ITV
Daw-mang-korn
Rak-fan-wan-rue-do-naw
Oct-Dec
Dec
Nagasia
Filmsurf
In addition to drama series, R.S. Group has been producing commercial films since late 2002. Clients for commercials
broadcast in 2003 include Coke, Mistine, Kito, Tanachart and Kom Chad Luek newspaper.
6.1.1.4 New Products
In June 2003, the company introduced Tele Movie or VCD movie, new product line in the home entertainment category.
Tele Movie films are produced for home entertainment only; they will not be released in the cinema. Their production costs are
significantly lower than those of feature films. The average cost of a Tele Movie is two to three million baht, while that of a feature film
would be between 20 and 50 million baht. This cost factor has attracted many companies to enter the business.
In 2003, R.S. Group released the following 21 Tele Movies:
Month
Story
Produced by
June 2003
MISS QUEEN THAILAND
REST ROOM
SNEAK
MY WONDERFUL LIFE
X Generation Cop
Kill Me Why
Dead Line
Scenery of Love
PIZZA
Haunted Night
Soul Under Bed
Body - Snatcher
Sexy Number
LAST REMEMBER
Haunted House
The Band 's Battle
The Vanished
Crimson Blood
What's Upon A Time
Indiana Joai : Elephant Cemetery
China Girl
RS TELE
P.O.V.
AVANT
NAGASIA
NAGASIA
FILMSURE
RS TELE
FILMSURF
P.O.V.
Aladdin House
Aladdin House
Aladdin House
NAGASIA
NAGASIA
FILMSURF
FILMSURF
Aladdin House
SHADOW
Filmsurf
P.O.V.
Aladdin House
July 2003
Aug 2003
September 2003
October 2003
November 2003
December 2003
Although the Tele Movie market experienced strong competition in 2003, with the advantages of its production team, its
experienced sales team and wide-ranging distribution network, the company can deliver a high quality product that will be welcomed by
consumers. At present, R.S. Group is the market leader of Tele Movies in term of both quantity and quality.
6.1.2 Marketing and Competitive Environment
6.1.2.1 Marketing
A. Marketing Strategy
1) Quality Work in Response to Market Needs
R.S. Group takes pride in its productions, whether of films, Tele Movies, drama series or TV programmes, and it pays careful
attention to every aspect of the process. First, the production team will study and evaluate the market condition and the taste of the
audience. After choosing suitable themes, they painstakingly begin the screenwriting, casting, shooting, editing and sound mixing to
produce work of the highest quality work that will live up to the expectations of the audience.
2) Continuity
With more than 25 years' business experience, R.S. Group understands that continuity is the best means of gaining trust and
confidence from its business partners, the TV channels cinema owners, film distributors, home entertainment companies and, of course,
the audience. In addition to the continuity of its business, R.S. Group is continuously expanding its investment in related areas such as
increasing its production staff, investing in modern filmmaking equipment and continuous marketing.
3) Development with State-of-Art-Technology
The company is the first movie producer to use the latest digital system for filmmaking in Thailand. This helps the company
not only to improve the quality of its work, but also to save on production and film costs as compared with more conservative
production methods.
B. Customers and Target Groups
1) Film Customers
Core customers are cinemas, provincial film distributors, free TV and cable TV.
2) Production Customers
TV Channels 3, 5, 7, 9 and ITV
3) Tele Movie Customers
The company's subsidiary, K Master Ltd. is in charge of distribution, so most Tele Movie customers are wholesale
distributors and retailers.
C. Distribution Channels
1) Film Distribution
See detail referred to in 3.3.1.2
2) Drama Series
The company works continually for the television channels as it can produce quality work within the deadlines set by the
operators.
3) Tele Movies
These are distributed through the company's subsidiary K Master Ltd., to wholesale distributors and retailers.
A. Thai Movie Market Value and Growth Trends
In 2003, the market value of the film industry was 3,600 million baht, an increase of 22% over the 2,950 million baht shown
in 2002. In 2003, Thai films were valued at 1,000 million baht, or one third of the total market value of 53 released movies.
R.S. released seven movies in 2003 and plans to release seven movies in 2004.
Film Market Value Table
(Million Baht)
Thai Movies
Hollywood Movies
Other Foreign movies
2002
2003
Growth
650
2,100
200
1,000
2,400
200
54%
14%
2,950
3,600
22%
-
Source: R.S. Group and Film Distribution Companies
Unit : Million Baht
Graph Movie Maket Value
4,000
3,000
3,500
2,950
3,400
20%
29%
34%
2,000
1,000
Thai Movies
Foreign movies
80%
71%
60%
2001
2002
2003
1,000
1,950
650
2,580
1,000
2,500
B. Film Companies
There are six large film companies who release movies continuously: R.S. Group, Mongkol Film, Five Stars, Film Bangkok,
Thai-Entertainment and GMM Picture.
C. Competitive Environment
The company estimates that all film companies will be creating new work in 2004 focussing on quality as well as expanding
distribution channels to the overseas market.
6.1.3
Product and Service Placement
6.3.3.1 Product Placement
R.S. Group is able to runs its business effectively with its film business model. Films made by the teams of R.S. Group's
subsidiaries use equipment supported by R.S. Studio Ltd., which ensure the smooth running of the Group's production process.
The company has an independent policy for casting. The subsidiaries may select non-R.S. Group actors based on the suitability
of the actor's character and the script of each film.
In addition to working with well-known film directors, R.S. Group introduces new directors selected from staff members who
are creative and can present alternative films. This makes R.S. Group films more interesting and capable of attracting audiences.
Continuity of film production attracts new personnel including screenwriters, directors, actors and production staff to join the company.
6.3.3.2 Environmental Effects
-None7.
Research and Development
The company truly understands the importance of the marketing research and has worked closely with the marketing and sales
promotion department to conduct regular surveys. Marketing and consumer behaviour surveys help the company to perceive the
movement of the target consumers' tastes and requirements. This information is essential for planning and deciding the marketing
strategy for all products including music, drama series, films and publications; they all need preparation to respond to changes in the
social climate.
The company uses marketing surveys to estimate the consumer acceptance of each product. This is not just in order to follow
the existing market requirements, but also to introduce new products to meet new market trends.
In addition to regular internal assessments, specific studies such as ratings surveys of drama series and programmes, and
surveys of advertising expenditures in all media are conducted by professionals such as AC Nielsen (Thailand), the leading research and
marketing survey firm.
By giving attention to the surveys' results, the company can improve the quality of its work and plan effective strategies to
make it more competitive.
8.
Risk Factors
R.S. Group has evaluated the risks that might affect its companies and subsidiaries.
8.1
Economic and Regulatory Risks
The Economic Environment
With its 25 years experience, the company believes that there is a low level of risk from economic changes to its music
business, as entertainment goods remain continuously popular with consumers. Music brings pleasure and relaxation at a low cost to
the consumer, and the same may be said of the film business.
Amendments to Radio Broadcasting and Television Regulations
Radio, the company's second priority business, may feel the effects of the free media business policy as laid down by the
Constitution of the Thai Kingdom 1997 section 40. The Constitution has approved the National Radio and Television Broadcasting
Committee (NRTC) as the government-based independent agency responsible for allocating broadcasting frequencies and overseeing the
fairness of policies related to radio and television broadcasting.
Changes in the management agency may lead to risks for existing media operators in the areas of increasing rigidity of
regulations, and in the revision of radio concessions. It is true that there will be opportunities for new media companies to enter the
industry after the free media business policy becomes effective; however, the potential for growth in business will be a competitive
advantage for all media operators.
The company has evaluated the risks and is confident that it has the potential, preparedness, experience and financial support
to enhance its capability and competitive advantages. In addition, it has the full complement of requirements to enter the bidding for
radio broadcasting concessions and continue its radio business.
8.2
Industrial Risks
Piracy
The increased production of pirated cassettes and CDs is a serious obstacle to the growth of the music industry, as music
providers cannot collect their full entitlement to the legal revenues for copyright and sale. All concerned parties, music companies,
entertainment providers, artists and Government, will be well advised to devote more attention to this problem, and cooperate to motivate
consumers to buy copyright products rather than pirated goods.
Manufacturers have reduced the cost of their entertainment products to narrow the price gap between copyright and pirated
goods. At the same time, Government has adopted stronger measures against infringement of the law, resulting in a decrease in the
numbers of pirated products. The Government also allows karaoke copyright collection, a move which supports business expansion and
companies' health.
Changes in Consumer Behaviour
With its interests in television, films, radio and publishing, the company accepts that it will encounter changes in the habits and
behaviour of consumers. These changes might include the influence of Western music styles, and the popularity of entertainers, singers,
actors/actresses, programme presenters and DJs as well as in drama styles.
Trends in films and film-going habits may cause instability that is hard to control. However, with its executives' skills in
market evaluation and forecasting and its research into target group behaviour, the company has confidence in its readiness to adapt to
innovations and new developments in music, drama series, television programmes and films, and its ability to meet the target groups'
expectations.
8.3
Business Risks
Expiry of Radio Concession Contracts
The company has one-year lease contracts with two radio stations: 88.5 MHz and 93.0 MHz. It decided against renewing the
FM 98.0 MHz contract when it expired on 31 December 2003, as the running costs were too high to guarantee a profit.
The company believes that the risk posed by renewing contracts with the two existing stations is low. The audience base is of
a suitable size, the company's output is popular, and it enjoys a good relationships with the stations' owners.
Dependence on Company Executives
The success of RS Group is due to the visionary leadership of the Chetchotisak Family led by Mr Kriangkrai and Mr Surachai,
but in recent years the Group has adopted a policy of greater decentralisation. It has divided its core business into segments each
managed by its own Managing Director and executive teams. This allows for independent decision making and makes for flexibility. Thus,
the level of dependence on the Chetchotisak Family has been reduced.
As the major shareholders and founders of RS Business, the Chetchotisak Family is committed to extending the company's
activities into other sectors of the entertainment industry in order to continue its growth and add values to its business. The family will
continue to maintain its position as the major shareholders.
Movement of Human Resources
Throughout its 25 years of operation, the company and its management have given a high priority to human resources, and
the risk from this direction is low. The company and senior executives realise that the workforce in the entertainment business is an
essential component in its sustainable growth and progress.
The management reviews its artists' yields and growth regularly to satisfy all parties. This has helped to improve relationships
and create the supportive and easy-going culture which people in entertainment desire. The positive relationship between artists and
production teams in each segment of the company means that they are happy to work together, dedicated to their responsibility and
committed to giving best performance for the company.
The company believes that its ability to handle risk management efficiently has been demonstrated by the absence of significant risks in
all segments of its business.
8.4
Management Risk from as major shareholder hold more than 50%
As of 31 December 2003, Chetchotisak Group held 53% of the company's shares. The Chetchotisak Group is eligible to take
control of resolutions by Shareholders' Meetings concerned with committee appointments. If shareholders' majority is needed to exempt
any case from the company's regulations, three out of four votes will be required. Other shareholders may not consolidate votes to examine
or delay matters proposed by the major shareholder.
The company's management structure consists of the Board of Directors, the Executive Committee and the Audit Committee. It
can be seen that the company has appointed highly skilled persons to suitable positions and settled questions of the authority of each
committee with transparency.
In matters related to the Committee, major shareholder and business controllers, or such issues as conflicts of interest, those
involved will be ineligible to vote. This is to assure shareholders that the company's management is transparent in its dealings.
10.
Management's Discussion and Analysis
With its restructuring on 11 September 2003, the RS Group acquired 99.99 percent of the shares of its 22 subsidiaries. Thus,
the company's consolidated financial statement for 2002 cannot be compared to that of 2003.The consolidated financial statement for 2002
shows RS Group's performance only after restructuring in September, and so does not reflect performance for the entire year. To simplify
comparative analysis, the company prepared management account assuming the completed restructuring from 1 January 2002 in order
to compare its financial statement with the 2003 financial statement.
Management's explanation and analysis in this section was based on RS Group's performance in the management account
financial statement for 2002, and the audited statement for 2003. For a clear understanding of the Group's overall performance from the
chart, RS Group's business is divided into three segments: Music, Media and Motion Picture and production house in conformity with the
type of its core business. (See the chart of RS Group's Shareholding Structure, page 7)
10.1
2002 and 2003 performance
Revenue
In 2002 and 2003, the company earned revenue from each business segment as follows:
Type of Revenue
Music
Media
Film Production and
Production Services
Others
Overall operating income
Other income
Overall income
2003 Revenue
(Million baht)
2002 Revenue
(Million baht)
1,061.74
319.38
1,035.64
273.06
26.10
46.32
446.74
63.41
1,891.27
70.00
1,961.27
169.73
11.63
1,490.06
42.35
1,532.41
277.01
51.78
401.21
27.65
428.86
Increase
(Million baht)
Type of Revenue
Music
Media
Film Production and Production Services
Others
Overall operating income
Other income
Overall income
2003 Proportion
(percentage)
54
16
23
3
96
4
100
2002 Proportion
(percentage)
67
18
11
1
97
3
100
Music
The company's revenue derives from products sold after deducting costs of returned goods and discounts during the year.
The company has prepared reserves for year-end in case of returned goods.
In 2003, the company earned 1,061.74 million baht from its music business, an increase of 26.10 million baht year-on-year.
Its major revenue came from sales of cassettes, CDs and CVDs, which accounted for 65 percent of overall music business revenue. The
company sold 2.68 million cassettes, 1.58 million CDs and 3.31 million CVDs. The proportion of sales revenue was 23 percent for cassettes,
24 percent for CDs and 53 percent for VCDs.
In 2003, the company released 259 albums of which 78 were new albums and 181 compilations.
Revenue from music also came from concert and marketing activities, advertising airtime, production services and copyright.
Respectively, these accounted for 12 per cent, 9 per cent, 1 per cent and 13 per cent of overall revenue from music business.
Media
In 2003, the company earned 319.38 million baht from its activities in the media, with the focus on income from advertising
airtime sales. Its income from television was 211.36million baht; from radio, 98.20million baht; and from publishing 9.82 million baht.
In 2003, the company earned 302.33 million baht from advertising airtime sales, while 6.08 million baht came from
production services, 10.50 million baht from publishing and drama series CDs sales and 0.47 million baht from other sources. The
advertising income was generated from its seven drama series and three television programmes. The average income of its advertising
airtime sales per series was 21.75 million baht, and from television programmes 16.21 million baht.
Motion Picture and Production Services
In 2003, the company generated an income of 446.74 million baht from film production and production services, an increase
of 277.01 million baht on the previous year. Its main sources of income were drama series and advertising production services, films
and film CD sales and copyright collection.
In 2003, the company generated 85.65 million baht from drama series and production services, 61.32 million baht from
advertising production services, 188.55 million baht from film copyright collection and product sales, and 111.22 million baht from drama
series, talk shows, film CDs and others. The company also earned revenue from six films released this year and one film continuing
from the previous year.
Expenses
Sales and management expenses in 2003 can be categorised as follows: employee expenses and commission 52%; rent and
public utilities, 12%; advertising and public relations, 10%; depreciation, 4%; others, 22%. However, these percentages exclude 46.81
million baht loss of reserves for product devaluation, and 13.02 million baht reserves for returned goods. These figures represent 1.23
million baht, a 6.15 million baht increase on the previous year.
In 2003, the company showed primary profits before depreciation, interest and tax, shareholders' returns and permanent assets'
returns of 30%, 12%, 10% and 50% respectively. Costs and expenses of each business units can be described as follows:
Music
Major costs of music business were production expenses, rent for radio and television airtime, programme production expenses,
concert and event expenses, advertising and public relations expenses and employee expenses.
Other expenses included promotion and artist management, commissions for artists and music owners, production and distribution
costs, television airtime, artists and songs development, and the cost of music programmes for public relations purposes.
Media
Major costs of television media business were series and programme production, television airtime, commissions, and public relations.
Major costs of radio media business were radio airtime, production costs and public relations.
Motion Picture and Production Services
Major costs of movie production business and production services were series and programme production, field production, film
support and employees' expenses.
Net Profit
In 2003, the company generated a net profit of 108 million baht, a decrease of 86 million baht on the previous year. The lower
profits were due to the loss from motion picture, the loss from provision on obsolete inventories and sales return, copyright devaluations
for comedy programmes and the increase in amortization of intangible assets.
The year before the company recognised other income from the record of negative goodwill of its subsidiaries at 23 million baht.
This resulted from a negative goodwill evaluation that was higher than two of its subsidiaries' non-current assets.
10.2
Financial Status
Assets
In 2003, the company held 2,226 million baht in assets. These consisted of 1,625 million baht in current assets accounting
for 73% of total assets and 601 million baht in non-current assets. The company's major assets consisted of 739 million baht of inventories,
206 million baht in cash and bank savings as working capital, and 471 million baht in net account receivable. Of these, 98% are current
and less than 6 months overdue receivable. There is 438 million baht in net property plant and equipment, and 168 million baht in net
intangible assets such as master music copyright, drama series and films.
Liabilities
As of 31 December 2003, the company owed 78.50 million baht in short-term loans. The number of overall loans was reduced
from the previous year by 206.50 million baht as the company paid back its short-term and long-term creditors by fund raised from the
initial public offering in 2003.
Liquidity
The company had 2.30 times liquidity ratio and approximately 103 days of cash cycle.
Sources of capital
In 2003, the company gained 748 million baht in cash by raising fund(net of all expenses for registering with the Stock Exchange)
through the initial public offering. The company used the proceed to pay back short-term and long-term loans while retaining some for
working capital and for investment in film production and building broadcast studios.
Audit Committee Report
To Shareholders,
The Audit Committee was appointed by a resolution of the Shareholders' Meeting of R.S. Promotion (Public) Limited on 13
January 2003. In 2003, the Audit Committee performed its duties in accordance with the Audit Committee Charter approved by the
Board of Directors, including reviewing quarterly financial statements and the Financial Statement for 2003 to ensure their accuracy and
adequate disclosure.
The Audit Committee held meetings with internal and external auditors in order to discuss and exchange views on risk
assessment, audit results and the adequacy of the internal control system. The Audit Committee was also responsible for recommending
the decrement and prevention of risk, considering and approving charters and internal audit plans, overseeing the company's operations
to ensure transparency and compliance with the related laws and regulations.
The Audit Committee has proposed to the Board of Directors that it should seek approval from the Shareholders' Meeting to
appoint KPMG Phoomchai Business Advisory Limited as the company's auditor for 2004.
(
Chairman of the Audit Committee
AUDITOR'S REPORT OF CERTIFIED PUBLIC ACCOUNTANT
To The Shareholders of R.S. Promotion Public Company Limited
(Formerly: R.S. Promotion 1992 Company Limited)
I have audited the consolidated balance sheets of R.S. Promotion Public Company Limited and subsidiaries as at December 31,
2003 and 2002, and the related consolidated statements of income, changes in shareholders equity and cash flows for the years then
ended and the separate financial statements of R.S. Promotion Public Company Limited for the same period. The Company's
managements are responsible for the correctness and completeness of information presented in these financial statements. My
responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform
the 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 audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of R.S. Promotion Public Company Limited and subsidiaries as at December 31, 2003 and 2002, and the consolidated results of their
operations, and cash flows for the years then ended and the separate financial positions as at December 31, 2003 and 2002, and results
of the operations and cash flows of R.S. Promotion Public Company Limited, for the years then ended, in conformity with generally
accepted accounting principles.
Somboon Supasiripinyo
Certified Public Accountant
Registration Number 3731
KPMG Phoomchai Audit Ltd.
Bangkok
February 3, 2004
R.S. PROMOTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES
(FORMERLY : R.S. PROMOTION 1992 COMPANY LIMITED)
BALANCE SHEETS
AS AT 31 DECEMBER 2003 AND 2002
ASSETS
Baht
The Company Only
2003
2002
Consolidated
Notes
2003
2002
206,032,962
320,939,618
46,862,518
13,174,868
-
-
700,674,515
232,952,695
471,113,774
282,181,128
78,751,613
52,782,896
-
-
66,750,000
177,340,139
739,204,629
326,427,110
284,694,105
124,155,142
67,227,721
30,342,253
12,095,744
6,814,613
26,005,222
12,264,870
24,907,911
6,165,250
Prepaid expenses
29,759,603
16,795,714
22,033,829
9,689,283
Advance payments
13,749,075
16,511,342
516,226
2,407,384
Other current assets
72,378,885
26,227,108
58,549,696
8,484,985
1,625,471,871
1,031,689,143
1,295,836,157
633,967,255
454,317,403
322,275,836
CURRENT ASSETS
Cash on hand and at banks
Accounts and notes receivable - related parties 3, 5
Accounts and notes receivable - others - net
Loans to related parties
Inventories
4, 5
3
3, 4, 6
Undue input vat
Accrued income
3
Total Current Assets
NON CURRENT ASSETS
Investments in subsidiaries - net
4, 7
-
Property plant and equipment - net
4, 8
437,850,188
228,511,078
55,553,118
39,146,826
Intangible assets - net
4, 9
168,420,792
88,718,822
104,100,150
25,979,392
4
(32,435,084)
(34,169,962)
-
-
20,934,939
23,861,100
4,192,851
5,492,272
6,141,235
15,170,102
105,239
165,476
600,912,070
322,091,140
618,268,761
393,059,802
2,226,383,941
1,353,780,283
1,914,104,918
1,027,027,057
Goodwill
Withholding tax
Other non current assets
Total Non Current Assets
TOTAL ASSETS
-
BALANCE SHEETS
AS AT 31 DECEMBER 2003 AND 2002
LIABILITIES AND SHAREHOLDERS' EQUITY
Baht
Consolidated
Notes
2003
The Company Only
2002
2003
2002
CURRENT LIABILITIES
Short-term loans from financial institutions
10
78,500,000
230,000,000
30,000,000
150,000,000
Accounts and notes payable - related parties
3
-
-
146,254,527
75,522,438
287,770,936
192,571,993
110,596,050
58,228,725
69,356,336
26,556,933
11,449,118
10,839,498
Accounts and notes payable - others
Other payable
Current portion of long-term loan from
financial institution
11
-
11,538,926
-
-
Unearned revenues
3
92,038,625
22,420,645
17,431,808
9,601,208
Undue output vat
68,250,423
32,569,159
51,098,055
18,732,204
Accrued corporate income tax
14,149,863
64,317,143
-
24,425,006
Accrued expenses
58,781,481
34,710,515
23,016,160
15,267,356
Other current liabilities
37,548,990
31,502,752
4,598,425
340,439
706,396,654
646,188,066
394,444,143
362,956,874
-
43,461,074
-
-
Other non current liabilities
820,886
295,317
494,374
234,357
Total Non Current Liabilities
820,886
43,756,391
494,374
234,357
707,217,540
689,944,457
394,938,517
363,191,231
700,000,000
560,000,000
700,000,000
560,000,000
ordinary shares in 2003 and 2002 respectively, fully paid
700,000,000
560,000,000
700,000,000
560,000,000
Premium on share capital
607,516,239
-
607,516,239
-
5,400,000
-
5,400,000
-
206,250,162
103,835,826
206,250,162
103,835,826
Total Shareholders' Equity of parent company
1,519,166,401
663,835,826
1,519,166,401
663,835,826
Total Shareholders' Equity
1,519,166,401
663,835,826
1,519,166,401
663,835,826
Total Current Liabilities
NON CURRENT LIABILITIES
Long-term loan from financial institution - net
from current portion
11
Total Liabilities
SHAREHOLDERS' EQUITY
Share capital
14
Authorized share capital 140,000,000 and 5,600,000 ordinary shares in 2003
and 2002 respectively, Baht 5 and Baht 100 par value, respectively
Issued share capital 140,000,000 and 5,600,000
Retained earnings
Appropriated - legal reserve
Unappropriated
STATEMENTS OF INCOME
FOR THE YEARS ENDED 31 DECEMBER 2003 AND 2002
Baht
Consolidated
Notes
The Company Only
2003
2002
Revenues from sales - net
838,746,463
232,015,121
6,819,754
2,113,341
Revenue from copyrights
166,290,512
455,932,932
775,791,176
710,682,570
Revenue from production
214,556,912
143,921,335
29,505,326
60,227,723
Revenue from films production
134,031,094
20,852,207
124,925,620
-
and marketing activities
129,102,734
114,891,623
132,327,734
114,891,623
Advertising income
399,197,621
169,137,797
107,659,436
91,298,036
9,344,566
38,049,056
14,382,532
51,800,000
Revenue from copyrights violation
52,915,051
7,454,559
51,072,060
2,757,559
Other income
15,346,544
12,370,692
8,240,239
14,072,203
1,734,878
23,104,426
-
-
-
-
66,137,688
-
1,961,266,375
1,217,729,748
1,316,861,565
1,047,843,055
1,329,183,417
867,694,460
1,067,196,474
812,915,004
458,297,863
190,360,881
133,489,679
111,259,839
-
-
-
12,826,937
360,000
-
360,000
-
1,787,841,280
1,058,055,341
1,201,046,153
937,001,780
173,425,095
159,674,407
115,815,412
110,841,275
7,402,835
4,371,972
3,438,398
2,997,220
58,207,924
95,829,982
4,562,678
48,371,602
107,814,336
59,472,453
107,814,336
59,472,453
0.83
25.00
0.83
25.00
REVENUES
2003
2002
3,4
Revenue from production concerts
Service income
Goodwill from subsidiaries
Share of profit from subsidiary companies - net
Total Revenues
COST AND EXPENSES
3,4
Cost of sales and production
Selling and administrative expenses
Share of loss from subsidiary companies - net
Directors remuneration
Total Cost and Expenses
PROFIT BEFORE INTEREST EXPENSES
AND INCOME TAX
Interest expenses
3
Income tax
Net profit for the year
Basic earnings per share
4
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Baht
Consolidated
Retained Earnings
Beginning balance of the year 2002
Increase share capital
Ending balance of the year 2002
Legal reserve
Issued and
Paid-up
Share Capital
Premium on
Share Capital
Appropriated Legal Reserve
Unappropriated
100,000,000
460,000,000
560,000,000
140,000,000
700,000,000
607,516,239
607,516,239
5,400,000
5,400,000
44,363,373
59,472,453
103,835,826
107,814,336
(5,400,000)
206,250,162
Total
144,363,373
460,000,000
59,472,453
663,835,826
747,516,239
107,814,336
1,519,166,401
Baht
The Company
Retained Earnings
Beginning balance of the year 2002
Legal reserve
Issued and
Paid-up
Share Capital
Premium on
Share Capital
Appropriated Legal Reserve
Unappropriated
100,000,000
460,000,000
560,000,000
140,000,000
700,000,000
607,516,239
607,516,239
5,400,000
5,400,000
44,363,373
59,472,453
103,835,826
107,814,336
(5,400,000)
206,250,162
Total
144,363,373
460,000,000
59,472,453
663,835,826
747,516,239
107,814,336
1,519,166,401
R.S. PROMTION PUBLIC COMPANY LIMITED AND SUBSIDIARIES
Notes to Financial Statements
December 31, 2003 and 2002
2. Copyright of drama
Copyright of drama is recognized at cost, comprising various related direct expenses of production less accumulated amortization.
Amortization is charged to the Statement of Income as follows:
80% of the copyright value when the drama is on air until the end of the first time show ; the remaining 20% over a period
of 5 years from the end of first time show.
3. Copyright of films
Copyright of films is recognized at cost, comprising various related direct expenses of production and filming, less accumulated
amortization. Amortization is charged to the Statement of Income as follows:
Year 1: 60% of the copyright value based on the estimated income ratio;
Year 2 to Year 10: the remaining 40% of the copyright value using the straight-line method.
4. Other copyrights
Other copyrights are recognized at cost, comprising various related direct expenses of acquisition, less accumulated amortization.
Amortization is charged to the Statement of Income using the straight-line method over the whole period of the contract.
Investments
The Company records cost of investment securities in the subsidiaries by the equity method.
The Company records cost of investment in subsidiaries by the equity method in order to recognize the status and return from
investment in the said companies. The Company does not consider net profit (loss) from investment in subsidiaries for the year ended
December 31, 2003 and 2002 in calculating the income tax for each year.
Amortized positive goodwill and negative goodwill
The above stated goodwill is the result of the fair value of assets and liabilities of the subsidiary companies, which are lower
or higher than cost - respectively. The positive goodwill and negative goodwill are amortized by the straight-line method for a period of
20 years.The negative goodwill being part of profit of monetary assets is immediately recognized as revenue.
Positive goodwill
Beginning balance
Occurred during the year
Amortized during the year
Ending balance
2003
32.36
(1.64)
30.72
2002
32.86
(0.50)
32.36
In Million Baht
Consolidated
Negative goodwill
2003
(66.53)
3.37
(63.16)
2002
(90.14)
23.61
(66.53)
Total
2003
(34.17)
1.73
(32.44)
2002
(57.28)
23.11
(34.17)
STATEMENTS OF CASH FLOWS
Baht
Consolidated
Notes
The Company Only
2003
2002
2003
2002
107,814,336
59,472,453
107,814,336
59,472,453
86,048,855
21,672,653
14,631,628
7,353,220
Allowance for devaluation intangible assets
4,800,000
-
-
-
Allowance for doubtful debts and written off withholding tax
2,871,186
27,331,330
1,308,845
24,734,451
-
-
(66,137,688)
12,826,937
Goodwill from subsidiaries
(1,734,878)
(23,104,426)
-
-
Loss from provision for obsolete inventories
46,810,803
45,579,959
-
637,365
Allowance for sales return
13,017,048
6,868,754
-
-
Loss (Gain) on sale of equipment
154,165
(143,229)
(113,651)
(140,117)
Loss on write off equipment
688,907
65,921
121,428
40,337
260,470,422
137,743,415
57,624,898
104,924,646
Accounts and notes receivable
(188,868,246)
(59,928,472)
(493,690,538)
(135,971,289)
Inventories
(459,588,322)
(185,247,689)
(160,538,963)
(92,748,165)
Other current assets
(106,979,219)
39,707,441
(84,541,890)
(15,230,829)
Intantigible assets
(111,175,127)
(64,650,710)
(82,392,351)
(26,348,053)
9,019,442
(34,272,076)
(9,425)
33,811
133,575,996
60,615,827
161,476,468
38,789,137
36,810,775
31,310,027
(9,989,199)
77,653,034
525,569
128,733
260,017
234,357
(426,208,710)
(74,593,504)
(611,800,983)
(48,663,351)
CASH FLOWS FROM OPERATING ACTIVITIES :
Net profit
Adjustments to reconcile net profit to net cash provided
by (used in) operating activities:
Depreciation and amortization
Share of loss (profit) from subsidiaries
Profit from operating activities before changes in
operating assets and liabilities
DECREASE (INCREASE) IN OPERATING ASSETS:
Other non - current assets
INCREASE (DECREASE) IN OPERATING LIABILITIES :
Accounts payable and notes payable
Other current liabilities
Other non - current liabilities
Net Cash used in Operating Activities
STATEMENTS OF CASH FLOWS
Baht
Consolidated
Notes
2003
The Company Only
2002
2003
2002
CASH FLOWS FROM INVESTING ACTIVITIES :
Decrease (Increase) in loans to related parties
-
(196,046,664)
110,650,376
(177,340,139)
Increase investments in subsidiaries
-
(335,102,772)
(118,000,000)
(335,102,773)
(231,381,638)
(81,360,419)
(27,262,151)
(43,694,717)
1,667,453
1,956,601
488,049
399,595
-
-
52,096,120
-
(229,714,185)
(610,553,254)
17,972,394
(555,738,034)
(206,500,000)
230,000,000
(120,000,000)
150,000,000
-
55,000,000
-
-
Proceeds from issue of share capital
747,516,239
559,000,000
747,516,239
460,000,000
Net Cash Provided by Financing Activities
541,016,239
844,000,000
627,516,239
610,000,000
(114,906,656)
158,853,242
33,687,650
5,598,615
4
320,939,618
162,086,376
13,174,868
7,576,253
4
206,032,962
320,939,618
46,862,518
13,174,868
12,166,192
8,354,881
3,438,398
2,997,220
145,939,403
46,169,357
51,374,364
23,946,597
Purchase of equipment
Cash received from sales of equipment
Dividend from subsidiaries
Net Cash Provided by (Used in) Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES :
Loan from financial institutions
Cash received from other long-term loan
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT
THE ENDING OF THE YEAR
SUPPLEMENTARY CASH FLOWS INFORMATION :
Cash paid during the year
Interest expenses
Income taxes
1. GENERAL INFORMATION, ECONOMIC ENVIRONMENT AND BASIS OF FINANCIAL STATEMENTS PRESENTATION
General Information
R.S. Promotion Public Company Limited, formerly - R.S. Promotion 1992 Company Limited, was registered as a Limited
Company in Thailand on 17 April 1992 and was registered as a public company on 15 January 2003. The operations of R.S.
Promotion Public Company Limited and its subsidiaries (Group of companies) are integrated entertainment businesses including
music, television, radio and publishing media and production houses.
The numbers of the parent company employees as at December 31, 2003 and 2002 were 487 and 331, respectively.
The total expenditure for employees for the years ended December 31, 2003 and 2002 amounted to Baht 132.40 million and Baht
90.37 million, respectively.
The Company is located at 419/1 Soi Ladphrao 15, Ladphrao Road, Lad Yao, Jatujak, Bangkok.
Economic Environments and Basis of Financial Statements Presentation
The financial statements of R.S. Promotion Public Company Limited and its subsidiaries have been prepared in accordance
with the Department of Commercial Registration's announcement dated 14 September 2001, under the Accounting Act B.E. 2543
and the generally accepted accounting principles practiced in Thailand.
As required by Thai law and regulatory requirements, the Company's financial statements have been prepared in the Thai
language. They have been translated into English for the convenience of the reader.
2. CONSOLIDATED FINANCIAL STATEMENTS PRESENTATION
The Company has invested in subsidiary companies since September 12, 2002 through the increases in the share capital
and the changes in the shareholders structure, amounting to Baht 335.10 million. As a result, the prepared consolidated income
statement for the year ended 31 December 2002 presents the subsidiaries' operating result from the period between 12 September
to 31 December 2002.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Subsidiaries
Nature of Business
K. Master Co., Ltd.
Ruk Seing Co., Ltd.
Rock Skin Co., Ltd.
R Siam Co., Ltd.
RS Film and Distribution Co., Ltd.
Avant Co., Ltd.
Filmsurf Co., Ltd.
Sky - High Network Co., Ltd.
Distributor of Tapes, CD, VCD and DVD
Music promotion house
Master tape production and music promotion house
Films distributor
Production house - films and drama series
Production house - films, drama series and TV programs
Radio production
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
Subsidiaries
Nature of Business
Magic Advertainment Co., Ltd.
Red Drama Co., Ltd.
P.O.V. (Point of View) Co., Ltd.
R.S. Studio Co., Ltd.
Bangkok Organizer Co., Ltd.
Screen Head Co., Ltd
Nagasia Co., Ltd.
Thai Copyright Collection Co., Ltd.
Poema Co., Ltd.
Tai-Saduak Co., Ltd.
TV broadcast and production house
TV broadcast
Production house - drama series
Production house - films and TV programs
Production house - films and TV programs
Post production service studio
Concerts and events organizer
Printing designer
Music copyright collection
Publishing business
Production house - commercial films
The significant accounting transactions between the Company and the subsidiary companies were eliminated from the
consolidated financial statements.
3. RELATED PARTY TRANSACTIONS
The Company has significant transactions with its related parties through the common shareholding and/or some of
the directors. The financial statements reflect the effects of these transactions on the basis determined between the parent company and
the related parties, with concern over normal business terms.
3.1 The Company's financial statement only has significant balances between the Company and its related parties for the year ended
December 31, 2003 and 2002 as follows:
In Million Baht
2003
2002
Accounts Receivable
0.02
Shadow Entertainment Co., Ltd
0.51
0.01
0.08
8.93
0.01
0.03
0.38
0.09
0.01
0.07
0.27
2.08
In Million Baht
2003
2002
Accounts Receivable
K. Master Co., Ltd.
Rock Skin Co., Ltd.
R Siam Co., Ltd.
Ruk Seing Co., Ltd.
Thai Copyright Collection Co., Ltd
Chetchoatisak Co., Ltd.
Avant Co., Ltd.
Poema Co., Ltd.
Red Drama Co., Ltd.
Total
680.35
2.98
10.49
4.47
0.95
0.02
0.02
0.04
0.09
700.67
219.94
0.30
0.03
0.05
0.02
1.10
0.16
0.09
0.02
0.01
232.95
Accrued Interest Income
Red Drama Co., Ltd.
Avant Co., Ltd.
Filmsurf Co., Ltd.
K. Master Co., Ltd.
Rock Skin Co., Ltd.
R Siam Co., Ltd.
Ruk Seing Co., Ltd.
Total
0.04
0.03
0.03
0.04
0.02
0.16
0.12
0.01
0.09
0.13
0.36
0.06
0.01
0.02
0.04
0.04
0.02
0.90
13.00
11.00
20.00
12.55
-
23.00
1.50
17.10
26.65
71.00
12.55
2.25
3.20
Loans to
Red Drama Co., Ltd.
Avant Co., Ltd
Filmsurf Co., Ltd
K. Master Co., Ltd.
Rock Skin Co., Ltd.
R Siam Co., Ltd.
In Million Baht
2003
2002
Accrued Interest Income
Ruk Seing Co., Ltd.
R.S. Studio Co., Ltd
Tai - Saduak Co., Ltd.
Poema Co., Ltd.
Total
5.70
1.50
3.00
66.75
7.65
8.68
3.50
0.26
177.34
Beginning of the year 2002 - Loans
Increase during the year
Paid during the year
Ending Balance
177.34
29.50
140.09
66.75
Cost of work in process
0.12
-
25.06
8.54
R.S. Television co., Ltd.
12.99
16.82
26.02
19.32
Avant Co., Ltd.
50.90
46.03
30.66
25.64
Filmsurf Co., Ltd.
10.88
-
0.93
-
Rock Skin Co., Ltd.
0.54
-
Ruk Seing Co., Ltd.
3.83
-
0.27
-
0.90
-
33.20
2.29
1.32
-
Red Drama Co., Ltd.
0.40
-
Tai-Saduak Co., Ltd.
2.02
-
200.04
118.64
Nagasia Co., Ltd.
Total
Accounts payable
Avant Co., Ltd.
Filmsurf Co., Ltd.
K. Master Co., Ltd.
Rock Skin Co., Ltd.
R Siam Co., Ltd.
Ruk Seing Co., Ltd.
Nagasia Co., Ltd
Shadow Entertainment Co., Ltd
Red Drama Co., Ltd.
Poema Co., Ltd.
Total
Unearned revenues
In Million Baht
2003
2002
0.95
3.36
23.23
20.39
17.53
15.89
2.88
12.41
2.93
3.05
1.16
7.12
0.01
4.85
11.57
12.32
4.60
1.63
0.21
0.16
146.25
0.75
0.83
6.22
12.84
11.03
12.89
0.07
4.71
6.06
3.34
0.41
1.00
2.68
0.05
2.46
5.63
1.46
3.09
75.52
1.19
-
3.2 The Company's financial statements only has significant transactions between the Company and subsidiaries for the year ended December
31, 2003 and 2002 as follows:
In Million Baht
2003
2002
Revenue from sales - net
0.20
0.27
Revenue from copyrights
703.86
267.80
Revenue from production
8.78
Revenue from concert and marketing activities
3.23
Advertising income
4.35
3.27
Service income
14.13
14.53
Interest income
3.17
4.44
Other income
1.75
0.99
Cost of sales
421.69
82.21
13.13
2.25
The parent company has a plan for business restructuring, under which the personnel and business of seven subsidiary
companies will be transferred into the parent company's working lines or business units. This will be effected as follows:
Company
Magic Advertainment Co., Ltd
Rock Skin Co., Ltd.
Ruk Seing Co., Ltd
Name Effective Date
October 1, 2003
October 1, 2003
December 1, 2003
December 1, 2003
December 1, 2003
January 1, 2004
January 1, 2004
The Transfer of the Remaining Items in the Books between those of the Subsidiaries & Companies
Besides transferring their personnel and business, the above-stated 7 companies will sell their fixed assets of Baht 0.04 million
according to their book values and work in process of Baht 6.06 million to the Company at book value. Thus, the income of Promoter groups,
receive from the Company which, according to the original conditions, is calculated from the total sales volume of musical
products, will be terminated on December 31, 2003.
Basis of measurements on intercompany revenues and expenses
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.2.6
3.2.7
3.2.8
Sales are determined per unit on cost basis.
Revenue from copyrights is determined either by per unit historical cost or by a proportion of copyrights usage to revenue collection
During the year 2003, there has been a change in basis of billing the cost of copyright of musical work with K. Master Co., Ltd,
from using the number of covers delivered to total net sales.
Revenue from production is determined from original cost plus operating margin based on normal business operation. Revenue
sharing from production of promotional work is based on the sales volume.
Revenue from concert and marketing activities is calculated from cost plus operating margin based on normal business operation.
Revenue from advertising is determined per unit by referring to the market price.
Services income is determined by referring to the market price.
Radio stations lease income is determined on cost basis.
Interest income derived from subsidiaries is based on the cost of fund or at market rate of approximately 2 - 8 % per annum.
3.3
In the consolidated financial statements, the transactions between the Company and its subsidiaries and its related parties and
persons for the year ended December 31, 2003 and 2002 are summarized as follows:
3.3.1
3.3.2
Purchase of goods
In Million Baht
2003 2002
37.72 29.44
-
3.49
Basis of Pricing
Unit price comparable to the market price
survey of rental and service fees in the neighborhood area.
Acquisition cost
In Million Baht
2003 2002
3.3.3
3.3.4
Payment on purchase of assets
Interest expenses
0.74
-
Basis of Pricing
21.94 As per lower of book value or market rate
1.95
Interest rate referable to market rate
3.4
In July, 2002, K. Master Co., Ltd entered into an agreement for the purchase of machinery, amounting to Baht 24 million from
a related party, by installments for which full payment was made.
3.5
In December 2002, the Company entered into an agreement permitting the uses of copyright to a subsidiary for a period of 3
years as from August 2002, the remuneration of which is based on costs amounting to Baht 12 million.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF MEASUREMENT
The Measurement Basis Used in Preparing the Financial Statements
Other than those disclosed in other outlines in the summary of significant accounting policies and other notes to the financial statements,
the financial statements have been prepared using the historical cost basis.
Revenue and Expenses Recognition
Revenues and expenses are recognized on an accrual basis.
a. Revenue from sales
Revenue from sales is recognized at invoice value after deduction of goods returned and discounts.
Revenue from sales of printed matter is recognized according to billing issued showing goods delivered and after deduction of goods
returned and discounts.
b. Revenue from Copyright
Revenue from copyright is recognized at invoice value upon issue of the invoice.
Revenue from sale of film copyrights is recognized based on the agreement date and / or the rights attaching to the said film.
c. Revenue from production
Revenue from production of a drama, a TV programme, an advertising film and various other productions is recognized upon delivery of
completed work or recognized based on the proportion of completed service, whichever is the case.
d. Revenue from films production
Income from box - office sharing is recognised when the motion pictures have been exhibited.
Revenue from motion picture films is recognized upon delivery of the films.
e. Revenue from organizing concerts and marketing activities
Revenue from organizing concerts and marketing activities is recognized based on the proportion of work completed.
f. Revenue from sales of advertising
Revenue from sales of advertising being the revenue from the sale of advertising media, i.e. the media of TV, radio, printed matter, and
others, is recognized at invoice value less discounts when service has been provided.
g. Revenue from services
Revenue from services is recognized when the service has been provided.
Director's Remuneration
Director's remuneration represents the benefit paid to the Company's directors according to section 90 of the Public Company Limited
Act. B.E. 2535, which excludes the salaries and other related benefits payable to executive directors.
Inventories
Inventories are stated at cost or at net realizable value, whichever is lower.
Property, Plant and Equipment
Land is stated at cost.
Buildings and equipment are stated at cost less accumulated depreciation.
Depreciation is computed by the straight-line method over the estimated useful lives of assets of 5-20 years
Income tax
Income tax for each year is recognized on an accrual basis, which is based on the taxable net profit for the year, in accordance with the
Revenue Code.
Accounting Estimation
Preparation of financial statements in conformity with generally accepted accounting principles in Thailand requires management to make
estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent
assets and liabilities - actual results may differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents are cash in hand, cash at banks and cash in transit, which are not pledged.
Allowance for Doubtful Accounts
Allowance for doubtful accounts is an estimate of those amounts which are expected to be uncollectable.
Intangible Assets
Intangible assets are recognized at cost amortized based on the nature of each category of copyright acquired and net of allowance for
intangible assets as follows:
1. Copyright of musical master tapes
Cost of copyright of musical master tapes is recognized at cost comprising various related direct expenses of production less
accumulated amortization.
Amortization is charged to the Statement of Income and calculated using the straight-line method over a period of ten years
from the date of completion of work.
2. Copyright of drama
Copyright of drama is recognized at cost, comprising various related direct expenses of production less accumulated amortization.
Amortization is charged to the Statement of Income as follows:
80% of the copyright value when the drama is on air until the end of the first time show ; the remaining 20% over a period
of 5 years from the end of first time show.
3. Copyright of films
Copyright of films is recognized at cost, comprising various related direct expenses of production and filming, less accumulated
amortization. Amortization is charged to the Statement of Income as follows:
Year 1: 60% of the copyright value based on the estimated income ratio;
Year 2 to Year 10: the remaining 40% of the copyright value using the straight-line method.
4. Other copyrights
Other copyrights are recognized at cost, comprising various related direct expenses of acquisition, less accumulated amortization.
Amortization is charged to the Statement of Income using the straight-line method over the whole period of the contract.
Investments
The Company records cost of investment securities in the subsidiaries by the equity method.
The Company records cost of investment in subsidiaries by the equity method in order to recognize the status and return from
investment in the said companies. The Company does not consider net profit (loss) from investment in subsidiaries for the year ended
December 31, 2003 and 2002 in calculating the income tax for each year.
Amortized positive goodwill and negative goodwill
The above stated goodwill is the result of the fair value of assets and liabilities of the subsidiary companies, which are lower
or higher than cost - respectively. The positive goodwill and negative goodwill are amortized by the straight-line method for a period of
20 years.The negative goodwill being part of profit of monetary assets is immediately recognized as revenue.
Positive goodwill
Beginning balance
Occurred during the year
Amortized during the year
Ending balance
2003
32.36
(1.64)
30.72
2002
32.86
(0.50)
32.36
In Million Baht
Consolidated
Negative goodwill
2003
(66.53)
3.37
(63.16)
2002
(90.14)
23.61
(66.53)
Total
2003
(34.17)
1.73
(32.44)
2002
(57.28)
23.11
(34.17)
Basic Earnings per Share
Basic earnings per share are computed by dividing the net profit by the number of shares using the weighted average number
129,413,699 shares and 2,411,507 shares for years 2003 and 2002, respectively.
5. ACCOUNTS AND NOTES RECEIVABLE - NET
As at December 31, 2003 and 2002 accounts and notes receivable are classified by aging as follows:
In Thousand Baht
Consolidated
- related parties
Current
Overdue :
Less than 3 months
3-6 months
6-12 months
Over 12 months
related parties
The Company Only
2003
2002
2003
2002
-
-
190,410
134,672
-
-
262,408
182,812
65,042
2
97,856
425
-
-
-
700,674
232,953
In Thousand Baht
Consolidated
Accounts and notes receivable others
Current
Overdue :
Less than 3 months
3-6 months
6-12 months
Over 12 months
Total
Less Allowance for doubtful accounts
others - Net
The Company Only
2003
2002
2003
2002
314,194
228,337
67,843
32,805
106,793
43,223
4,385
4,846
473,441
(2,327)
31,072
21,564
2,855
808
284,636
(2,455)
10,353
128
428
78,752
-
17,548
2,429
52,782
-
471,114
282,181
78,752
52,782
6. INVENTORIES
In Thousand Baht
Consolidated
Finished goods
(Tape , CD , VCD , DVD)
Work in process
Raw materials
Others
Total
Less Allowance for obsolete inventories
Inventories - Net
2003
2002
492,634
333,932
2,668
2,361
831,595
(92,390)
739,205
214,008
152,079
2,915
3,005
372,007
(45,580)
326,427
The Company Only
2003
2002
1,754
283,577
285,331
(637)
284,694
1,065
120,723
3,005
124,793
(637)
124,156
7. INVESTMENTS / RESERVE FOR LOSS FROM INVESTMENT BY EQUITY METHOD
As at December 31, 2003 and 2002 investments under equity method in the Company's financial statements consisted of
investment in ordinary shares as follows:
In Thousand Baht
Equity Method
Cost Method
(Reserve for loss)
Paid up capital
Subsidiaries
K. Master Co., Ltd.
Ruk Seing Co., Ltd.
Rock Skin Co., Ltd.
R Siam Co., Ltd.
Avant Co., Ltd.
Filmsurf Co., Ltd.
Sky-High Network Co., Ltd.
Red Drama Co., Ltd.
P.O.V. (Point of view) Co., Ltd.
2003
2002
2003
2002
2003
2002
200,000
1,000
1,000
1,000
1,000
5,000
10,000
10,000
100,000
37,000
47,000
10,000
3,000
3,000
5,000
10,000
3,000
82,000
1,000
1,000
1,000
1,000
5,000
10,000
10,000
100,000
37,000
47,000
10,000
3,000
3,000
5,000
10,000
3,000
199,999
10
10
999
999
4,999
9,999
9,999
80,200
36,996
46,999
100
3,000
3,000
4,999
9,999
3,000
81,999
10
10
999
999
4,999
9,999
9,999
80,200
36,996
46,999
100
3,000
3,000
4,999
9,999
3,000
143,865
(123)
(21,342)
7,534
8,710
3,064
11,111
14,714
72,528
36,153
40,869
13,015
32,579
9,990
10,190
21,025
19,027
45,729
(2,327)
(6,122)
(2,164)
(983)
6,261
9,178
13,193
71,450
43,293
46,517
6,994
21,643
4,676
8,907
12,716
10,257
In Thousand Baht
Cost Method
Paid up capital
Equity Method
(Reserve for loss)
2003
2002
2003
2002
2003
2002
2,800
2,800
2,798
2,798
4,765
3,887
Nagasia Co., Ltd.
10,000 10,000
9,999
9,999
10,485
8,936
10,000 10,000
9,999
9,999
18,856
8,058
Poema Co., Ltd.
10,000 10,000
10,000 10,000
(10,049)
8,492
7,351
3,685
5,000
Tai - Saduak Co., Ltd.
5,000
484,800 366,800
5,000
5,000
453,103 335,103
454,317 322,276
8. PROPERTY, PLANT AND EQUIPMENT - NET
In Thousand Baht
Consolidated
Furniture
Buildings Machines
Fixture
and
Land and
and
and
operation
land
building
office
improvement improvement equipment equipment Vehicles
Cost :
At the beginning of the year
Purchase / transfer in
Disposal / transfer out
At the end of the year
32,705
32,705
Accumulated depreciation :
Depreciation
Net book value :
-
32,705
32,705
Construction
in progress
and
equipment
under
installation
Total
9,518
80,661
(523)
89,656
124,070
173,189
(497)
296,762
50,881
46,889
(1,995)
95,775
10,056
2,105
(1,550)
10,611
32,219
45,707
(76,561)
1,365
259,449
348,551
(81,126)
526,874
711
(80)
4,933
5,564
19,680
(216)
38,597
58,061
8,822
(524)
13,724
22,022
1,725
(470)
2,122
3,377
-
30,938
(1,290)
59,376
89,024
8,807
84,092
104,390
238,701
42,059
73,753
8,331
7,234
32,219
1,365
228,511
437,850
In Thousand Baht
The Company Only
Furniture
Buildings Machines
Fixture
Land and
and
and
and
land
building
operation
office
improvement improvement equipment equipment Vehicles
Construction
in progress
and
equipment
under
installation
Total
Cost :
Purchase / transfer in
-
-
13,924
24,834
3,401
2,599
44,758
-
-
2,600
25,588
1,672
-
29,860
-
-
(6)
(342)
(360)
(2,598)
(3,306)
-
-
16,518
50,080
4,713
1
71,312
-
-
2,520
2,548
543
-
5,611
-
-
(2)
(103)
(107)
-
(212)
Depreciation
-
-
3,172
6,391
797
-
10,360
-
-
5,690
8,836
1,233
-
15,759
Accumulated depreciation :
Net book value :
-
-
11,404
22,286
2,858
2,599
39,147
-
-
10,828
41,244
3,480
1
55,553
Office building rental from related business.
9. INTANGIBLE ASSETS - NETÔ
In Million Baht
Consolidated
Beginning Balance: Intangible assets - net
Add Increased during the year
Total
Less Amortized during the year
Less Allowance for intangible assets
Ending Balance: Intangible assets - net
2003
88.72
111.17
199.89
26.67
4.80
168.42
2002
32.36
64.65
97.01
8.29
88.72
The Company Only
2003
2002
25.98
1.46
82.39
26.35
108.37
27.81
4.27
1.83
104.10
25.98
10. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS
As at December 31, 2003 and 2002 the Company and a subsidiary obtained loans from a financial institution with commitments as follows.
In Million Baht
Consolidated
2003
2002
30.00
150.00
48.50
80.00
78.50
230.00
Parent Company
Subsidiary
Guarantee/Commitments
- 2 directors signed as guarantors
- 2 directors signed as guarantors
The Company
As at December 31, 2003, the Company had short-term loan from a local bank, to the amount of Baht 30,000,000, according
to the agreement dated December 19, 2003. The loan bears interest at 2.75% per annum. The said loan is due for repayment at the
maturity date and repayment of interest per month/per due.
Subsidiary
As at December 31, 2003, the subsidiary had a short-term loan from a local bank, to the amount of Baht 48,500,000,
according to the agreement dated December 1, 2003. The loan bears interest at 2.75% per annum. The said loan is due for repayment
at the maturity date and repayment of interest per month/per due.
11. LONG-TERM LOAN
Long-term loan as at December 31, 2003 and 2002 consisted of :
Long-term loan
Less Long-term loan due for repayment in 1 year
Long-term loan - net
In Million Baht
Consolidated
2003
2002
55.00
(11.54)
43.46
Subsidiary
As at December 31, 2002, the subsidiary had a loan from a local bank, to the amount of Baht 55,000,000, according to the
agreement dated 24 December 2002. The loan bears interest at the minimum lending rate (MLR) less one percent per annum. The
said loan is due for repayment of principal and interest at Baht 1,200,000 per month and due for repayment by 60 months with the
first repayment in January 2003. In 2003 the subsidiary changed to promissory notes.
The said loan plus interest has been collateralized by R.S. Promotion Co., Ltd and the Company's directors
12. DIVIDEND
K. Master Co., Ltd.
According to the Board of Director's Meeting held on August 19, 2002, a resolution was passed to pay the interim dividend
to the shareholders at the rate of Baht 400 per share, totaling Baht 40,000,000.
According to the Board of Director's Meeting held on 14 November 2003, a resolution was passed to pay dividend to all
shareholders whose names were listed in the shareholder book as at November 14, 2003 at the rate of Baht 90 per share, totaling
Baht 33,300,000.
According to the Board of Directors' Meeting held on 19 August 2002, a resolution was passed to pay the interim dividend to
all shareholders whose names were listed in the shareholders book as at 19 August 2002 at the rate of Baht 1,500 per share, totalling
Baht 30,000,000.
According to the Board of Directors' Meeting held on 14 November 2003, a resolution was passed to pay dividend to all
shareholder whose names were list in the shareholder book as at November 14, 2003 at the rate of Baht 40 per share, totaling Baht 18,800,000.
According to the Board of Directors' Meeting held on August 19, 2002, a resolution was passed to pay the interim dividend
to all shareholders whose names were listed in the shareholders book as at 19 August 2002 at the rate of Baht 150 per share, totalling
Baht 30,000,000.
13. LEGAL RESERVE
Under the provisions of the Limited Public Company Act. B.E. 2535, the Company is required to appropriate at least 5% of its
annual net income as reserve fund until the reserve reaches 10% of the authorized capital. This reserve is not available for dividend
distribution.
14. SHARE CAPITAL
The Company
In 2003
At the Extraordinary Shareholders' Meeting held on 13 January 2003, it was resolved to increase the authorized share capital
to Baht 560 Million and split all authorized share capital to 112 million shares at Baht 100 to Baht 5 per share.
On 15 January 2003 the Company registered with the Commercial Department and became a public company limited and
increased its share capital by Baht 140 Million resulting in the increase of registered capital and number of registered shares to Baht
700 million and 140 million shares at 5 Baht par value accordingly.
On 19 May 2003 the Company registered the increased paid up share capital from Baht 560 million to Baht 700 million at
the Ministry of Commerce.
In 2002
At the Extraordinary Shareholders' Meetings held on 22 July 2002 and 28 August 2002, it was resolved to increase the
authorized share capital from Baht 100,000,000 to Baht 560,000,000 by issuing 4,600,000 new ordinary shares at Baht 100 par value.
The Company registered the increased paid up share capital at the Ministry of Commerce on 11 September 2002.
Subsidiaries
In 2003
At the Extraordinary Shareholders' Meeting of K. Master Co., Ltd. held on 14 May 2003, it was resolved to increase the share
capital from Baht 82,000,000 to Baht 200,000,000 by issuing 1.18 million ordinary shares at Baht 100 par value. The subsidiary
registered the increased paid up share capital on 30 May 2003.
In 2002
At the Extraordinary Shareholders' Meetings of Shadow Entertainment Co., Ltd. held on 22 July 2002 and 19 August 2002,
was resolved to increase the authorized share capital from Baht 10,000,000 to Baht 37,000,000 by issuing 54,000 ordinary shares at
Baht 500 par value. The subsidiary registered the increased paid up share capital on 6 September 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of Shadow Entertainment Co., Ltd. held on 19 September 2002 and 4 October
2002, it was resolved to decrease the value of the share capital from Baht 500 par value to Baht 100 par value. The subsidiary
registered the said reduction of share capital on 4 October 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of Magic Advertainment Co., Ltd. held on 22 July 2002 and 19 August 2002, it
was resolved to increase the share capital from Baht 20,000,000 to Baht 47,000,000 by issuing 270,000 ordinary shares at Baht 100
par value. The subsidiary registered the increased paid up share capital on 6 September 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of Aladdin House Co., Ltd. held on 29 November 2002 and 18 December 2002, it
was resolved to increase the share capital from Baht 1,000,000 to Baht 5,000,000 by issuing 40,000 ordinary shares at Baht 100 par
value. The subsidiary registered the increased paid up share capital on 25 December 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of K. Master Co., Ltd held on 22 March 2002 and 8April 2002, it was resolved to
increase the share capital from Baht 2,000,000 to Baht 10,000,000 by issuing 80,000 ordinary shares at Baht 100 par value. The
subsidiary registered the increased paid up share capital on 11April 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of K. Master Co., Ltd. held on 22 July 2002 and 19 August 2002, it was resolved to
increase the share capital from Baht 10,000,000 to Baht 82,000,000 by issuing 720,000 ordinary shares at Baht 100 par value The
subsidiary registered the increased paid up share capital on 6 September 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of Sky - High Network Co., Ltd held on 29 November 2002 and 18 December
2002, it was resolved to increase the share capital from Baht 20,000,000 to Baht 100,000,000 by issuing 800,000 ordinary shares at
Baht 100 par value. The subsidiary registered the increased paid up share capital on 25 December 2002, at the Ministry of Commerce.
At the Extraordinary Shareholders' Meetings of Tai - Saduak Co., Ltd held on 10 October 2002 and 25 October 2002, it was
resolved to increase the share capital from Baht 1,000,000 to Baht 5,000,000 by issuing 40,000 ordinary shares at Baht 100 par value.
The subsidiary registered the increased paid up share capital on 31 October 2002, at the Ministry of Commerce.
.
At the Extraordinary Shareholders' Meetings of Screen Head Co., Ltd. held on 19 September 2002 and 4 October 2002, it was
resolved to decrease the value of share capital from Baht 500 par value to Baht 100 par value. The subsidiary registered the decreased
share capital on 4 October 2002, at the Ministry of Commerce
At the Extraordinary Shareholders' Meetings of Screen Head Co., Ltd. held on 6 November 2001 and 22 November 2001, it was
resolved to decrease the share capital from Baht 5,000,000 to Baht 2,800,000 by reducing from 10,000 to 5,600 ordinary shares at Baht
500 value. The subsidiary registered the decreased share capital on 19 March 2002, at the Ministry of Commerce.
15. SEGMENTATION
The Company is a fully integrated entertainment business whose operations are interdependent. Therefore the management
considers that the Company operates with only one segment. Considering the Company's service location and market, the Company and
subsidiaries are operating in a sole domestic geographical area.
16. DISCLOSURE OF FINANCIAL INSTRUMENT INFORMATION
The Company and its subsidiaries do not have the policy of buying and selling derivative financial instruments or for trading or
speculative purposes.
16.1 Credit risk
The Company and subsidiaries have credit risk on trade accounts receivable. However, the Company and subsidiaries have the
policy of doing business with traders who are reliable and with good financial status to reduce the risk of financial loss. The Company and
subsidiary make allowance for doubtful accounts - to cover the residual risk of financial loss.
16.2 Risk from exchange rate
The Company hedges against exchange rate risk in order to mitigate the said risk which may arise from foreign accounts payable,
with contract value of about EURO 246,000 as at December 31, 2002 and value of about EURO 875,083 and USD 169,166 as at
December 31, 2003.
16.3 Risk from interest rate
The Company and subsidiary borrow at floating interest rates which approximate financial market rates.
16.4 Fair value of financial instruments
The Company uses the following measures and assumptions in estimating fair value of financial instrument.
Cash and cash at bank, short- term investment - the book value is close to fair value due to those financial instruments being
due in short periods of time.
Trade accounts receivable, other accounts receivable and other assets - the book value is close to fair value due to those
financial instruments being due in short periods of time.
Investment in subsidiaries - the fair value of investments in subsidiaries is not readily determinable as these investments do
not have a quoted market price. Accordingly, these investment are held at their net asset value.
Trade accounts payable, other accounts payable and accrued liabilities - the book value is close to fair value due to those financial
instruments being due in short periods of time.
Long -term loans - the book value is close to fair value because these financial instruments have floating interest rates
which approximate financial market rates.
17. COMMITMENT AND CONTINGENT LIABILITIES
The Company
1. As at December 31, 2003, the Company had commitments for 12 letters of guarantee issued by the bank which have been
used as collateral for airtime rental and government agency in the amount of Baht 2.85 million, and 2.27 million, respectively.
2. As at December 31, 2003, the Company had commitments for 11 letters of service & advertising broad rental period 1 - 2
years in the amount of Baht 16.64 million.
3. As at December 31, 2003, the Company had commitments for a service & rental agreement with a related company in the
amount of Baht 53.81 million.
4. As at December 31, 2002, the Company had commitments for 3 letters of guarantee issued by the bank which have been
used as collateral for airtime rental in the amount of Baht 1.84 million for the total amount of Baht 13.73 million.
Subsidiaries
1. Commitment for a bank guarantee As at December 31, 2003, a subsidiary had a commitment for a bank guarantee which
relates to normal business of EURO 875,083 and USD 169,166.66
As at December 31, 2002 a subsidiary had a commitment for a bank guarantee which relates to normal business of EURO 246,000.
2. As at December 31, 2003, subsidiaries had commitments for 5 letters of guarantee issued by the bank which have been
used as collateral for electricity in the amount of Baht 0.80 million.
3. As at December 31, 2003, a subsidiary had a commitment for a letter of guarantee issued by the bank which has been
used as collateral for telecommunication of Thailand in the amount of Baht 0.01 million.
4. As at December 31, 2003, subsidiaries had a commitment for a service & office rental agreement with a related company
in the amount of Baht 27.01 million.
5. In August 2002, a subsidiary had a commitment to sell discounted bills to the bank to the line of Baht 100 million.
18. RECLASSIFICATION OF ACCOUNTS
The Company has reclassified certain accounts of the 2002 financial statements to conform with the 2003 financial statement
presentation.
19. SUBSEQUENT EVENTS
The Company
On 1 January 2004, two subsidiaries transferred their business to the Company (See note 3).

2003 2002 - rs public company limited

Transcription

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