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san=17.5 mm aize=8.25x11 in A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 1 MUSIC GMM MEDIA GMM ONE MOVIE & OTHERS PAGE 1 2 3 C O N T E N T 14 16 18 34 50 Message from Securities and Management Board of Directors Financial Highlight Chairman and Group Shareholders Information Structure and Excutive Team Chief Executive Officer 53 56 59 74 77 Policy and Business Shareholding Structure Revenue Structure and Risk Factors Presentation and Analysis Overview Business Desciption of Financial Status and Operating Results 84 85 173 175 176 Report on the Board of Independent Audit Committee Risk Management Report of the Nomination Director’s Responsibility Auditor’s Report Report Committee Report and Remuneration towards the Financial and Statements of Committee Statements Financial Position 178 179 212 213 222 Report of the Corporate Corporate Governance Internal Control and Connected Transactions Corporate Social Governance and Risk Management Responsibilities Ethics Committee (CSR) 258 261 262 265 Details of the Head of General and Other Companies in which Other Reference Internal Audit, Company Information GMM Grammy holds Persons Secretary and Head of more than 10% Compliance of their Shares A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 3 TO BE A LEADER IN FULLY INTEGRATED ENTERTAINMENT MEDIA AND PLATFORM BY CREATING THE MOST ENGAGED CONTENTS FOR ALL SCREENS. 4 5 ...THE GROUP HAS ALWAYS HELD TO THE BELIEF THAT BUSINESS OPERATIONS GO HAND-IN-HAND WITH A CREATIVE ROLE IN SOCIAL Music GMM Media GMM ONE Movie & Others DEVELOPMENT, IN ORDER TO CREATE BALANCE • Music & Distribution • GMM 25 Digital TV • ONE 31 Digital TV • GDH 559 • Digital Business (Standard Definition) (High Definition) • Home Shopping BETWEEN ECONOMIC • Concerts & Showbiz • TV Production & Copyrights • TV Production & Copyrights • Satellite Broadcasting DEVELOPMENT SOCIETY • Music Publishing • Radio & Showbiz • Acts Studio AND ENVIRONMENT... • Artist Management A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 5 ...THE GROUP HAS ALWAYS HELD TO THE BELIEF THAT BUSINESS OPERATIONS GO HAND-IN-HAND WITH A CREATIVE ROLE IN SOCIAL Music GMM Media GMM ONE Movie & Others DEVELOPMENT, IN ORDER TO CREATE BALANCE • Music & Distribution • GMM 25 Digital TV • ONE 31 Digital TV • GDH 559 • Digital Business (Standard Definition) (High Definition) • Home Shopping BETWEEN ECONOMIC • Concerts & Showbiz • TV Production & Copyrights • TV Production & Copyrights • Satellite Broadcasting DEVELOPMENT SOCIETY • Music Publishing • Radio & Showbiz • Acts Studio AND ENVIRONMENT... • Artist Management 6 7 MUSIC & DIGITAL STRENGTHENING LEADERSHIP WITH CONTINUOUS GROWTH SONG31,000+ & MASTER RECORDS MVs6,400+ & 17,000+KARAOKE RECORDS CONCERTS600+ CO-OWN OF100% COPYRIGHTS WITH ARTIST EPISODES11,000+ EPISODES54,000+ A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 7 MUSIC & DIGITAL STRENGTHENING LEADERSHIP WITH CONTINUOUS GROWTH SONG31,000+ & MASTER RECORDS MVs6,400+ & 17,000+KARAOKE RECORDS CONCERTS600+ CO-OWN OF100% COPYRIGHTS WITH ARTIST EPISODES11,000+ EPISODES54,000+ 8 9 GMM MEDIA ENGAGED MODERN LIFESTYLES ACROSS A MULTITUDE OF PLATFORM WITH PROFESSIONAL EXPERIENCES Top-Rated Series and Teen’ s Leading Content Production House Integrated Online and On-Air Radio Stations with Highest Listener Engagements A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 9 GMMGMM M MEDIAEDIA ENGAGEDENGAGED MODERN MODERN LIFESTYLES LIFESTYLES ACROSSACROSS A AMULTITUDE MULTITUDE OF OF PLATFORM PLATFORM WITHWITH PROFESSIONAL PROFESSIONAL EXPERIENCES EXPERIENCES Top-RatedTop-Rated Series Series and and Teen’ Teen’ s Leading s Leading Content Content Production Production House House IntegratedIntegrated Online Online and and On-Air On-Air Radio Radio Stations Stations with with Highest Highest Listener Listener Engagements Engagements 10 11 ONE 31 DIGITAL TV FIRMLY RANKED AMONG TOP MOST POPULAR CHANNELS GEARING TOWARDS FREE TV STATION FULL OF HIGH QUALITY CONTENTS A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 11 ONEONE 31 31 DIGITALDIGITAL TV TV FIRMLYFIRMLY RANKED RANKED AMONG AMONG TOP TOP MOSTMOST POPULAR POPULAR CHANNELS CHANNELS GEARINGGEARING TOWARDS TOWARDS FREE FREE TV TV STATION STATION FULLFULL OF OF HIGH HIGH QUALITY QUALITY CONTE CONTENTSNTS 12 13 MOVIE BUSINESS HOME SHOPPING AND OTHERS ATTAINING A FAST GROWTH WITH MUTUAL TRUSTS FROM CUSTOMERS A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 13 MOVIEMOVIE BUSINESS BUSINESS HOMEHOME SHOPPING SHOPPING ANDAND OTHERS OTHERS ATTAININGATTAINING A AFAST FAST GROWTH GROWTH WITH WITH MUTUAL MUTUAL TRUSTSTRUSTS FROM FROM CUSTOMERS CUSTOMERS 14 15 Message from Chairman and Group Chief Executive Officer Dear Shareholders Throughout the year even though the Company encountered many challenges, GMM Grammy has progressively operated its business with stability by strategically planning to deliver outstanding contents for international market along with strengthening music business as the flagship of GMM Grammy Group. The Company remains its leadership position in music business and continues to create a phenomenon to Thai music as always, especially in social media with widespread viewers and comments all over leading to several 100 million view records across music genres, while GMM Grammy Official on YouTube celebrated the success in Diamond Play Button Award with more than 10 million subscribers. In 2017, the company took pride in anchoring investor confidence through strategic investment in Digital TV ONE31 and GMM25, which strengthen the channel potential and competitiveness based on high quality contents to reaching out mass consumer targets on every platforms. As for home shopping business growth remains positive despite overall market downturn, while the films premiered from GDH created the greatest phenomenon for “Bad Genius” won awards in several international film festivals and generated all-time high international box office revenue for Thai film in foreign countries. The operating result of the past year showed significant improvement, following the completion of investment restructuring leading to positive business development, with growing revenue and profitability, while next-year prospects are trending upward from expected rising media advertising spending in line with economic recovery. The Company will step forward on its core strategy execution by effectively managing the assets to create new growth opportunities and reinforcing business strength through fostering human resource competency, as well as committing to good corporate governance and sustainable development. It has been a great pleasure that Thai Institute of Directors (IOD) awarded the company the ‘Five Stars’ rating which represents the ‘highest rank of excellence’ from good governance assessment of the listed company in 2017 which continued for seventh consecutive years so far. GMM Grammy will adhere to its business philosophy to remain the leadership in media and entertainment business with sustainable returns to all shareholders. On behalf of the Board of Directors, we would like to express our gratitude to our stakeholders including shareholders, customers, business partners, financial institutions, government agencies, media agencies, artists, executives and all employees for all support and great contribution to drive for the Company’s excellence in creative produce, service and administration in order to deliver a profitable return to shareholders over the long term, as well as moving forward a healthy development in media and entertainment industry for the nation and society. Mr. Paiboon Damrongchaitham Miss Boosaba Daorueng Chairman Group Chief Executive Officer A N N U A L R E P O R T 2 0 1 7 G M M G R A M M Y P L C. 15 Mr. Paiboon Damrongchaitham Miss Boosaba Daorueng Chairman Group Chief Executive Officer The Company will step forward on its core strategy execution by effectively managing the assets to create new growth opportunities and reinforcing business strength through fostering human resource competency, as well as committing to good corporate governance and sustainable development. 16 17 Securities and Shareholders Information 1. The Company’s Security As of December 31, 2017, the Company has registered capital of 819,949,729 baht, consisting of 819,949,729 common shares with a par value of 1 baht per share. The Company paid-up capital is 819,949,729 baht. 2. Major Shareholders 2.1) Top shareholders according to the share registration book closing on May 3, 2017 are as follows: Rank Shareholders No. of Shares % Holding 1. Mr. Paiboon Damrongchaitham* 392,834,599 47.910 2. Mr. Thaveechat Jurangkool 133,051,623 16.227 3. Mr. Nuttapol Jurangkool 78,205,100 9.538 4. CREDIT SUISSE AG, SINGAPORE BRANCH 26,552,520 3.238 5. Bualuang Long-Term Equity Fund 24,437,800 2.980 6. Mr. Komol Juangroongruangkit 22,720,000 2.771 7. Bangkok Bank Public Co.,Ltd. 12,278,693 1.497 8. Mr. Fahmai Damrongchaitham* 9,000,000 1.098 9. Mr. Rafha Damrongchaitham* 9,000,000 1.098 10. Mr. Takonkiet Viravan 6,930,856 0.845 Total 715,011,191 87.202 * Mr. Paiboon Damrongchaitham Group consists of Mr. Paiboon Damrongchaitham; holding 392,834,599 shares (equivalent to 47.910%), Geurtfah Co., Ltd.; holding 6,139,745 shares (equivalent to 0.749%), Mr. Fahmai Damrongchaitham; holding 9,000,000 shares (equivalent to 1.098%) and Mr. Rafha Damrongchaitham, holding 9,000,000 shares (equivalent to 1.098%). In addition, there are two shareholders who are not in the list of major shareholders, Miss Ingfah Damrongchaitham, holding 4,900,000 shares (equivalent to 0.598%), and Miss Fahchai Damrongchaitham holding 4,900,000 shares (equivalent to 0.598%) The free float of minority shareholders on March 15, 2016 (the day of the registration book closing by the Company for reporting the “Distribution of Ordinary Shares Report Form” to the SET) amounted to 2,391 shareholders, equivalent to 21.26% of the Company's paid-up capital.