1
Message from the Chairman and Chief Executive Officer
To: All Shareholders
First of all, on behalf of the highest Executives of the Company, we would like to make an apology to all our shareholders that the sales figure in 2013 did not meet the planned target. The main causes were analyzed into three parts as follows:
1. Competitive Situation: The entry of competitors in the “Home Shopping” business. Even though preparations had been made to cope well with the situation but it had to be admitted that the knowhow of both Korean number one and two resulted in direct impact towards the Company’s sales figure. From the whole picture, even though the Company’s existing market had not been penetrated but new market had been created without our participation in this new market at all, and the additional market value created by these two companies was estimated to be about Baht 1,000 million.
2. Economic Situation: Consumers’ spending power and temperament started to decline since the middle of 2013, and importantly, the decline in spending power happened in both Bangkok and the provinces. In the past, Bangkok would be the variable factor while the provinces would be more certain due to their wide area and number of customers. The Company analyzed this as being the rapid expansion of the real estate property, condominium, the 1st car policy, and weather conditions. Hence, overall GDP growth was at 4% level instead of the targeted 5.5%.
3. Human Resource Management System: In 2012, our work processes were adjusted and improved to generate more consistent and coordination but people management had been neglected. With incomplete and non-compact enough human resource development system, the experienced call center team had been recruited by other firm. Even though problem had been solved very quickly by recruiting the replacement but training process for employees to be competent with their works did not result in the satisfactory manner. The Company, then, realized that its human resource development plan was not good enough and decided to hire a consultant firm, “Aon Hewitt” to help build the new human resource development system. The process started from salary structure to the successor process which was completed within 7 months as planned. Thus, in the 4th quarter of 2013, the Company expenses for consultant fee as well as training courses for nearly 1,500 persons was nearly at Baht 21 million. This resulted in less profit in 2013 than in 2012, but the Company believed that this investment would result in operating results of 2014 to be accordance with plan. However, important events in each quarter were listed for acknowledgement to all shareholders as follows:
1st quarter
The Company registered good sales and operating results as a continuation from 2012 in the 1st quarter
Even though total earning of each employee was higher than the minimum wage but interpretation on various other incomes would be counted into the minimum wage or not ? As the Company emphasized on the operating performance, income was paid in the low range while commission would be paid higher than normal in order to generate strong primary efficiency. However, in order to have successful transition, the Company had adjusted the minimum wage to Baht 9,000 to be in line with the law.
2nd quarter
In this 2nd quarter, sales lowered a little but still maintain level of the net profit
The Company issued and offered new ordinary shares for capital increase of registered shares of 94,000,000 shares at par value of 0.50 Baht to original shareholders with right offering at 4 original ordinary shares to 1 new ordinary share at par value of 4.50 Baht
The Company offered total shares of 93,999,992 shares and cash received from share offering was Baht 422,999,964.
During the end of quarter, the call center team had been recruited by other firm resulting in the Company’s sales figure was not as planned.
3rd quarter
From losing the call center team in the 2nd quarter, the Company tried to correct the situation but to no avail. The Company, then, decided to hire a human resource management consultant firm, Aon Hewitt, to help build the new human resource system from salary planning to the successor plan.
2 TV Direct Public Company Limited 3
Hence. From July onwards, over 1,500 personnel of more than 10 groups, had been externally trained in order to build the long term organization commitment.
4th quarter
The Company’s revenue was similar to the 3rd quarter but suffered loss in October from the following causes:
1) The Company decided to use “One Price Policy” in all of the sales channels, thus, creating shock in the first operating period and resulted in the lowest sales during the past 3 years and also resulted in loss in October 2013 at more than Baht 10 million.
2) Investment in human resource management system was approximately at Baht 21 million for hiring consultant and training for employees.
However, later in November and December, the Company was able to generate highest sales during the past 3 years as well. This could be stated that the decision to step backward 2 steps delivered good result later on.
On the corporate social responsibilities the Company still continuously emphasizes in social activities in conjunction with business operations. The Company continuously engages in social and education activities whether in the “A Drop of Blood for Life” project, or “Cooperative Education Project” project, with philosophy and believes that “If we take care of society, society will take care of us”. The Company has inserted this as obligation of the Company in order to build continuously as our planning and guideline with emphasizing on result.
Concerning good corporate governance, even though the Company has been registered in the MAI stock market recently, the Company realizes that the guiding principles on good corporate governance of registered company in the Stock Exchange of Thailand are important and has good standard.
With the commitment and willingness in management with transparency and good corporate governance, the Company has been evaluated on the corporate governance of the registered company in 2013 with “Good” level from the “Thai Institute of Directors” since its first year after registration in the stock market. The Company will be continuously committee in promoting and developing the good corporate governance as always. The Company’s Board of Directors stipulates policy on good corporate governance in writing, and considers to review the good corporate governance and manual on ethics for the Company and its subsidiaries and to follow up on reviewing the policy every year and publishes these in the Company’s website.
The Company realizes the importance of all stakeholders’ rights whether internal stakeholders such as employees, and the Company’s management, or external stakeholders such as customers, trade partners, competitors, creditors, Government agencies, communities, and all related parties. The Company realizes that supports from various stakeholders will create competition, and build profit for the Company which can be considered as long term success for the Company.
From all the above that has been presented, the Company encounters many obstacles but the most important is that we has been through together fairly well at the end. This is from cooperation from employees, management, Directors of all committees, and all shareholders that understand and support us all along. The Directors’ teams and management still have determination and commitment to drive us forward towards the next year.
On behalf of the Company’s Board of Directors, we would like to show our appreciations to all shareholders, investors, customers, business allies, Government agencies, and benefactors who have confident, and support us all along. The most important of all is the employees who dedicate their bodies and minds together in moving our organization forward strongly and consistently even in difficult times. The Company will still emphasize on operating its business under the concept “Entertaining People with Information” with transparency and adhering to good corporate governance together with social responsibility, and hoping that the Company will grow and move forward, and generate good returns to all shareholders similar to trusts given to the Company.
Mr. Phongsuree Bunnag Mr. Songpol Shanmatkit Chairman of the Board Chief Executive Officer
4 TV Direct Public Company Limited 5 6 TV Direct Public Company Limited 7 8 TV Direct Public Company Limited 9
Type of Business Banking business Multichannel Marketing Multichannel Marketing
Company Name TV Direct Public TV Direct Company Limited Public TV Direct Company Limited Bank Thai Public Company Limited
Position Chairman of the Board Chairman of the Nomination and Remuneration Committee Executive Vice – Hu - President man Resources Management
Duration Sept. 1, 2009 - Present Dec. 24, 2012 - Present 2000-2009 Working experiences during last 5 years
- Family with other executives relationship
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0.03% 2013
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Name / Position Mr. Phongsuree Bunnag Phongsuree Mr. Chairman of the Board (Authorized Signatory)
Details of Type of Business Multichannel Marketing Multichannel Marketing Investment Investment in the Satellite television business
Company Name TV Direct Public TV Direct Company Limited Public TV Direct Company Limited TV Direct Indo-China Co., Ltd. Sino-Thai Public Resources Company Limited Development.
Position Director, and Chief Director, Executive Officer Nomination and Remuneration Director Director Independent and Audit Director Committee Director, Executive Director,
Duration May 1, 1999 - Present Dec. 24, 2012 - Present 2011 March - Present 2010 March - Oct. 2012 Working experiences during last 5 years
Family Spouse of Maturanont Ms. La-orsri with other executives relationship
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Name / Position Mr. Songpol Shanmatkit Mr. (Authorized Director Signatory) Executive Committee Chief Executive Officer
10 TV Direct Public Company Limited 11 Type of Business Multichannel Marketing Multichannel Marketing Multichannel Marketing Investment Electricity generating Hotel Consultancy on engineering and alternative energy Multichannel Marketing Multichannel Marketing
Company Name TV Direct Public TV Direct Company Limited Public TV Direct Company Limited Public TV Direct Company Limited Indo-China TV Direct Co., Ltd. Thai Solar Energy Co., Ltd. North Pattaya Plaza Co., Ltd. TBM Solution Co., Ltd. (Original name was “Response TV”) Public TV Direct Company Limited Public TV Direct Company Limited
Position Director Executive Director Head of Home Shopping Chief Direct Marketing Officer Director General Manager Managing Director Director General Manager - Outbound call center General Manager - Finance
Duration Aug. 21, 2009 - Present 1, 2013 March - Present August 21, 2009 - March 1, 2013 - July March 2011 2008 - 2009 2006 - 2008 2000 - Present 2007 - Mar. Dec. 2008 Jan. 2005 - Feb. 2007 Working experiences during last 5 years
Family Brother of Brother Maturanont Ms. La-orsri with other executives relationship
4.96% Company Stake in the and minor (%) including spouse
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43 Age
Name / Position
Mr. Thanabul Maturanont Mr. (Authorized Director Signatory) Executive Committee Head of Home Shopping Type of Business Multichannel Marketing Multichannel Marketing Multichannel Marketing Government agency Government agency Government agency Educational Institution Educational Institution
Company Name TV Direct Public TV Direct Company Limited Public TV Direct Company Limited Public TV Direct Company Limited Ministry of Energy Ministry of Commerce Ministry of Energy State Tarleton University Texas Rattana Bundit University
Position Chairman of the Executive Committee Nomination and Remuneration Committee. Independent Director Audit Committee Advisor to the Ministry of Energy of Public Director Warehouse Organization to the Secretary Ministry of Energy Professor Research At Large Chairman of the Graduate School
Duration Dec. 1,2012 - Present Dec. 24, 2012 - Present 24, 2010 Nov. 30,2012 - Nov. 2008 - 2011 2007 - 2008 2008 2001 – Present 2005 - 2008 Working experiences during last 5 years
- Family with other executives relationship
0.03% Company Stake in the and minor (%) including spouse
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ogram arleton State Education / Directors(IOD) Thai Institute of Ph.D. (Computer and Assumption University MBA – Business Administration(General Business), T University Bachelor of Economics in monetary and fiscal policy University. Certification Pr (DCP) class 61/2005, Audit Committee Pr (ACP) class 11/2006, Monitoring Fraud Risk Management (MFM) class 8/2012, Monitoring the Quality of Financial Reporting (MFR) class 16/2012, Monitoring of Inter (MIA) class 13/2012, and Monitoring the System of Inter Management (MIR) class 13/2012. Engineering Management), T fr
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60 Age
Name / Position Dr. Pisut Chalakornkul Dr. Director Chairman of the Executive Committee
12 TV Direct Public Company Limited 13 Type of Business Public utility Financial Institution Government agency Innovative Office Automation
Company Name Airports of Thailand Plc. Small and Medium Enterprise Development Bank of Thailand Government agency (Thailand) Fuji Xerox Co., Ltd.
Position Advisor and Director Executive Director Advisor to Deputy Prime Minister Suwat (Mr. Liptapanlop) and Chief Director Executive Officer
Duration 2006 2005 - 2006 2004 - 2005 2002 - 2004 Working experiences during last 5 years
Family with other executives relationship
Company Stake in the and minor (%) including spouse
Education / Directors(IOD) Thai Institute of Training course from
Age
Name / Position
Type of Business Multichannel Marketing Multichannel Marketing equipment Electronic distribution Importer and distributer of medicine and medical equipment and equipment Tool retailer Buying and selling used decorative furniture for home and building Security system installation Battery distributer shelves Product distributer
Company Name TV Direct Public TV Direct Company Limited Public TV Direct Company Limited USE Electronics Co., Ltd. Vieda Med Co., ltd. Reyon Asia Co., Ltd. RBS Products Co., Ltd. USE Electronics Co., Ltd. B.B. Battery Asia Co., Ltd. Retail Business Solution Co., Ltd.
Position Director Executive Director General Manager Director Director Director Director Director Director
Duration Aug. 17, 2007 - Present May 25, 2011 - Present 2005 - Present May 12, 2010 - Present 14, 2002 Nov. - Present 25, 2006 Nov. - Present June 14, 2000 - Present Aug. 11, 2008 - Present 28, 1994 Apr. - Present Working experiences during last 5 years
- Family with other executives relationship
0.86% Company Stake in the and minor (%) including spouse
ee from ee from Education / Directors(IOD) Thai Institute of Bachelor degr Engineering Faculty in Electr T T Accr (DAP) class 90/2011
Training course from - Japan okyo University, onics Engineering, - raining in Director editation Program
48 Age
Name / Position Mr.Wirasack Wirojwattanakul Director Executive Committee
14 TV Direct Public Company Limited 15 Type of Business Investment Multichannel Marketing Music and movie distributer and Production distribution of paint and its by products and Production distribution of household paint Hypermarket Advisor and consultant on management Distribution of personal products care
Company Name TV Direct Indo-China TV Direct Co., Ltd. Public TV Direct Company Limited DNA 2002 Public Company Limited Nippon Paint and Decorative Coating (Thailand) Co., Ltd. Nippon Paint (Thailand) Co., Ltd. Ekachai Distribution System Co., Ltd. AMJ Consulting Co., Ltd. Gillette (Thailand) Co., Ltd.
Position Director Director Audit Committee Director Chief Operating Officer Head of Grocery Director Country Director
Duration 2013-Present May 4, 2011 - Present Dec. 2010 - Present 2011 - Present 2008 - 2011 2007 - 2008 Aug. 2006 - Present 1992 - 2006 Working experiences during last 5 years
- Family with other executives relationship
0.21% Company Stake in the and minor (%) including spouse
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Education / Directors(IOD) Thai Institute of MBA fr Administration Faculty in General Management, University of Leicester BBA fr Administration Faculty in General Management, Assumption University T Accr (DAP) class 87/2011, Audit Committee Program class 35/2011, and Role of the Compensation Committee class 14/2012
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42 Age
Name / Position
Mr. Chalermpong Mr. Mahavanidvong Director Type of Business Multichannel Marketing Multichannel Marketing Government agency Multichannel Marketing Multichannel Marketing and credit card Credit service provider bank Commercial
Company Name TV Direct Public TV Direct Company Limited Public TV Direct Company Limited Commission for Science, technology and telecommunica - tions of the Senate. TV Direct Public TV Direct Company Limited Public TV Direct Company Limited Card Krungsri Credit Co., Ltd. CIMB Thai Plc.
Position Independent Director Chairman of the Audit Committee Independent Director Audit Committee President Senior Vice President enterprises. enhance the field of telecommunication Independent Director Audit Committee Independent Director Chairman of the Audit Committee to Sub-committee consider ways to
Duration April 2013 - Present 24, 2010 Nov. - April 2013 Past – Apr. 2011 April 2013 - Present 3, 2010 Nov. - April 2013 2011 Apr. - June 2013 2004 - 2010 Working experiences during last 5 years
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Training course from - - - raining courses in Director - - - raining in Director editation Program ector Class(CDC)
59 70 Age
Name / Position Mr. Tada Tada Mr. Charukitpaisarn Independent Director Chairman of the Audit Committee
Asst. Prof. Anucha Asst. Prof. Chintakanond Independent Director Audit Committee Member
16 TV Direct Public Company Limited 17 Type of Business Securities services, Skin care and and production distribution of skin care products Insurance and claim consultant Medical equipment supplier Government agency Government agency Leasing Business Financial Institution
Company Name Health Benefit Consultants Co., Ltd. Econtech Supply Co., Ltd. National Economic and Social Advisory Council of the National Office Anti-Corruption Krungthai IBJ Leasing Co., Ltd. Krungthai Bank Phillip Securities(Thailand) Public Company Limited Pan Rajdhevee Plc. Group
Position financing committee Audit and Evaluation Committee Chairman of the Audit Committee, management, monitoring and evaluation unit Chairman of the Board - (Repre Director sentative of Minor and Shareholder) Audit Committee Independent Director Audit Committee Advisory to the Chairman and the International and Affairs Business Development Dept. Advisor Advisor Economic advisor on macroeconomic
Duration 2009 - Present 2009 - Present 1993 - Present 2008 - Present 2008 - Present 2006 - 2009 2011– Present 2002-2008 2000-2002 Working experiences during last 5 years
Family with other executives relationship
Company Stake in the and minor (%) including spouse
nal control nal control Education / Directors(IOD) Thai Institute of class 1/2007, Successful Formulation and Execution of Strategy(SFE) class 12/2001, Monitoring the Quality of Financial Reporting (MFR) class16/2012, Role of the Nomination and Gover (RNG) class 3/2012, and Role of the Compensation Committee(RCC) class 15/2012, Monitoring the system of inter & Risk Managements 14/2013, Advanced of Audit committee 11/2013 Training course from nance Committee
Age
Name / Position
Type of Business Multichannel Marketing Sport Club Leasing Financial Institution Multichannel Marketing Multichannel Marketing Multichannel Marketing Sale and service for mobile-phone and products related and Cassette Record tape production Cassette tape production Accounting services and legal advisor
Company Name TV Direct Public TV Direct Company Limited The Royal Bangkok Sports Club Amanah Leasing Public Company Limited Islam Bank Public TV Direct Company Limited Public TV Direct Company Limited Public TV Direct Company Limited NTL Info. Co., Ltd. Co., Ltd. Rota Group Co., Ltd. Asia Tape Saha Buncheekij and Law
Position Independent Audit Director Committee Director Chairman of the Board Director Head of Finance and Accounting Acting Finance Director Accounting Director Finance and Accounting Manager Finance and Accounting Manager Accountant Accounting Chief
Duration Jan. 2013 - Present 2013 - Present 2010 - 2013 2008 – 2009 Sep. 1, 2013 - Present July 1, 2013 - Present Aug. 16 2003 - Present 1996 - 2003 1992 - 1996 1991 - 1992 1990 - 1991 Working experiences during last 5 years
- - Family with other executives relationship
- 0.00% Company Stake in the and minor (%) including spouse
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69 45
Age
Name / Position
Mr. Suthep Mr. Suebsantiwongse Independent Director Audit Committee Member Sakesun Mr. Vipusitwalakul Head of Finance and Accounting
18 TV Direct Public Company Limited 19 Type of Business Multichannel Marketing Multichannel Marketing Multichannel Marketing Multichannel Marketing Multichannel Marketing Multichannel Marketing Multichannel Marketing Investment ,and Warehousing services for ground aircrafts. and distrib - Producing food uting ready-made
Company Name Public TV Direct Company Limited Public TV Direct Company Limited Public TV Direct Company Limited Public TV Direct Company Limited Indo-china TV Direct Co., Ltd. Thai Airport Ground Services Co., Ltd. Sri Thai Food and Beverages Plc. TV Direct Public TV Direct Company Limited Public TV Direct Company Limited Public TV Direct Company Limited
Position Director, & Merchandise Marketing Company Secretary Executive Director Chief Financial Officer Director Finance and Ac - counting Director Vice President of Finance and Accounting Head of DRTV Business DRTV Director, Business Head of Marketing
Duration March 1, March 2013- - resent 1999-March 2013 1, 2013 March - Present 1999 - March 2013 Sep. 1, 2013 - Present 1, 2010 Mar. - Present 1, 2010 Mar. - Present 2011 Mar. - Present 2007 - 2009 1991 - 2006 Working experiences during last 5 years
Family with other executives relationship Brother of Brother Songpol Mr. Shanmatkit Spouse of Songpol Mr. Shanmatkit -
- 8.69% 0.02% Company Stake in the and minor (%) including spouse
ee s Institute of ee, Marketing Education / Directors(IOD) Thai Institute of Bachelor Degr Faculty of Engineering King Mongkut’ T City University USA City University USA Bachelor Degr
Training course from - echnology Thonburi Marketing - Master Degree, - Busi - from -Master Degree ness Administration Faculty in Business Administration, Kasetsart University. Accounting -B.A. from Faculty in accounting Ram - khamhaeng University -Certified Public Account - ant - course in Direc - Training Program tor Accreditation (DAP) class 66/2007.
44 50 40 Age
Name / Position
Mr. Pongchai Shanmatkit Mr. Head of DRTV Business Ms. La-orsri Maturanont Head of Marketing Wichian Manapongpan Mr. Executive Director Company Secretary General Information
Name and address TV Direct Public Company Limited
Registration No. 0107554000101
Type of business The Company conducts its business on distribution of products and services through the Multi Channel Marketing. Business operational structure of the Company can be segmented into 5 main channels as followings :-
1. TV Marketing : The distribution of products and services through normal Free Television, Satellite Television, Cable-TV membership and Digital Television.
2. Direct Marketing : The distribution of products and services through Outbound Call Center, Mail Order, and E-Commerce, including Call Center Services and Customer Services.
3. Conventional Marketing: The retail distribution of products and services through TV Direct Showcase, including wholesaling through domestic and foreign customers.
4. Direct Sale : Single level selling.
5. Services : The Company offers advertising media production services and advertising air-times provider and event organizer services.
20 TV Direct Public Company Limited 21
Registered Capital 246,750,000 Baht Divided into 493,500,000 shares at par value of Baht 0.50 per share
Paid-up Capital 234,999,996 Baht Divided into 469,999,992 shares at par value of Baht 0.50 per share
Address 25, Watcharaphon Road, Tarang, Bangkhen, Bangkok 10230 Home page : www.tvdirect.tv Tel. 02-666-0999 Fax. 02-666-0488
Other reference persons Share registrar : Thailand Securities Depository Co., Ltd. Address 62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110 Tel. 02-229-2888 Fax. 02-654-5427
Auditor : PricewaterhouseCoopers ABAS Ltd. Address 179/74-80 South Sathorn Road Bangkok, 10120 Tel. 02-344-1000 Fax. 02-286-2666 Corporate Social Responsibility
A Drop of Blood for Life January 18, 2013 / April 19, 2013 / July 19, 2013 / October 18, 2013
TV Direct Public Company Limited or TVD recognizes the importance of social participation and has initiated a project called “A Drop of Blood for Life”. This project has been in coordination with the National Blood Center of the Thai Red Cross Society, in receiving donations of blood and stem cells from our employees and people in the vicinity nearby since 2004 till present. The donations have been arranged in every 3 months which up to now total to 8,210 donors, and with the amount of 1,800.00 cc of blood already delivered to the Thai Red Cross Society.
At present, the National Blood Center of the Thai Red Cross Society requires to receive daily blood donation in Bangkok and its vicinity at 1,500 – 1,200 units or 46,000 units per month to be able to have enough blood reserve to help those in need of blood.
22 TV Direct Public Company Limited 23
“TV Direct” Donates “Eagle Eyes” Sun Glasses June 24, 2013
Miss La-orsri Maturanont, Head of Marketing of TV Direct Public Company Limited which is the distributer of “Eagle Eyes” sun glasses from USA, has started the “Clear Sky Thailand” project in order to save and protect the pilots’ eyes in the Royal Thai Air Force. The total of 130 “Eagle Eyes” sun glasses have been donated to Air Vice Marshall Charnlit Paligarnon, Chief of the Flying Training School with his delegates at the headquarter of the Flying Training School in Kratip sub-district, Kamplangsaen district, Nakorn Pathom province in order to use during performance of duties for the Royal Thai Air Force pilots.
Cooperative Education Project
TV Direct Public Company Limited, in association with various leading education institutions, has organized the cooperative education project which is the education system that emphasizes on actual practice in the establishment systematically. The learning process will be done in the school together with real practice at the actual establishment and the students will be able to practice with their own chosen subjects. The emphasize will be based mainly on the real working experience, or the work-based learning, or some special projects that are useful to the establishments such as improvement or increase efficiency, or problem solving in the working process in which students can be accom- plished within 4 months, etc. Students will be able to learn, gain working experiences, and will have the qualifications as required by the establishments. Employment of Disabled Persons
TV Direct Public Company Limited, in association with various leading education institutions, has organized the cooperative education project which is the education system that emphasizes on actual practice in the estab- lishment systematically. The learning process will be done in the school together with real practice at the actual establishment and the students will be able to practice with their own chosen subjects. The emphasize will be based mainly on the real working experience, or the work-based learning, or some special projects that are useful to the establishments such as improvement or increase efficiency, or problem solving in the working process in which stu- dents can be accomplished within 4 months, etc. Students will be able to learn, gain working experiences, and will have the qualifications as required by the establishments.
24 TV Direct Public Company Limited 25 800,000
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Audited Audited Audited Description Consolidated Consolidated Consolidated 2011 2012 2013
Cash and cash equivalents 40.95 47.33 126.45 Accounts receivable- others-net 54.57 139.62 106.46 Inventories - net 333.13 372.65 420.13 Property, plant, and equipment - net 223.07 299.57 353.46 Intangible assets - net 19.62 20.82 34.10 Total Assets 776.43 1,001.70 1,294.95 Bank overdrafts and short term loans 205.29 255.97 127.06 from financial institutions Accounts payable - others 257.43 295.89 274.93 Liabilities under financial lease 2.37 6.40 6.99 Long term loan from financial institutions 40.45 57.77 84.90 Total Liabilities 538.08 663.47 552.88 Registered Capital 188.00 188.00 246.75 Paid up capital 159.04 188.00 235.00 Retained earnings Appropriated – legal reserve 7.37 12.07 16.51 unappropriated 46.35 40.02 6.29 Total Shareholders’ Equity 238.35 338.23 742.07 Total Revenues 1,905.99 2,249.27 2,231.25 Cost of Sales and Services 773.56 980.84 880.86 Selling and Administrative expenses 1,054.47 1,167.73 1,280.35 Interest expenses 11.81 16.94 15.59 Income tax 23.38 27.76 16.20 Net profit 35.67 48.18 36.63 Weighted average number of shares 318,080,000 337,544,918 420,810,955 at par Baht 0.50 Basic earnings per share (Baht) 0.11 0.15 0.0979
26 TV Direct Public Company Limited 27
Business Operation for each Product Group
Nature of Each Business Segment
The Company conducts its business on distribution of products and services through the multichannel marketing. Business operational structure of the Company can be segmented into 5 main channels, such as;
1. TV Marketing: The distribution of products and services through normal free television, satellite television, and television with cable-TV membership.
2. Direct Marketing: The distribution of products and services through outbound call center, direct response printing, and E-Commerce, including the call center.
3. Conventional Marketing: The retail distribution of products and services through TV Direct Showcase, including wholesaling through domestic and foreign customers.
4. Services: This offers contract production services on advertising media and providing advertising times for customers, marketing activity, and organize concert.
5. Direct Sale: Single level selling Revenues Structure
Revenues structure of the Company and subsidiaries companies during 2011 – 2013 is listed below:
Type of Revenue Operated 2011 2012 2013 by Million Baht % Million Baht % Million Baht % 1. Revenue from sales and services 1.1 TV Marketing Company 870.54 45.67 943.30 41.94 874.09 39.17 1.2 Direct Marketing - Outbound Company and 387.38 20.32 487.75 21.68 478.41 21.44 Call Center Subsidiaries - Printed Media Company 127.43 6.69 121.06 5.38 139.61 6.26 - Website – On-line Company 32.92 1.73 46.93 2.09 54.71 2.45 - Call Center Company 24.23 1.27 35.79 1.59 23.92 1.07 - Direct Sale Company 9.03 0.47 8.35 0.37 12.15 0.54 Total Revenue from Company and 580.99 30.48 699.88 31.12 708.80 31.77 Direct Marketing Subsidiaries 1.3 Conventional Marketing - Retailing through Company 273.20 14.33 304.21 13.52 306.20 13.72 Direct2U And TV Direct Showcase - Wholesaling to Company 53.36 2.80 61.38 2.73 69.74 3.13 domestic and foreign customers Total Revenue for Company 326.56 17.13 365.59 16.25 375.94 16.85 Conventional Marketing 1.4 Total Services 1* Company and 97.67 5.13 188.92 8.40 193.12 8.66 Subsidiaries 1.5 Other jobs 2* Company 26.87 1.41 39.39 1.75 51.28 2.30 Total Revenue from 1,902.63 99.82 2,237.08 99.46 2,203.23 98.75 Sales and Services 2. Other Revenue 3* Company and 3.36 0.18 12.24 0.54 28.02 1.26 Subsidiaries Total Revenue 1,905.99 100.00 2,249.32 100.00 2,231.25 100.00
Remark: 1* Services mean offering contract production services on advertising media and providing advertising times for customers, marketing activity, and organize concert. 2* Other jobs mean revenue from products distribution that do not distribute through the main distribution channel. 3* Other Revenue consists of rent, interest received, and currency exchange profit.
28 TV Direct Public Company Limited 29
Revenue from Domestic and Foreign Sales and services during 2011 -2013
Revenue From Operated 2011 2012 2013 Sales and Services by Million Baht % Million Baht % Million Baht %
Domestic Company 1,889.54 99.31 2,222.23 99.34 2,176.04 98.77 Foreign Company and 13.09 0.69 14.85 0.66 27.19 1.23 Subsidiaries Total Revenue from Sales and Services 1,902.63 100.00 2,237.08 100.00 2,203.23 100.00
Details on business operation of each segment are as follows:
1. TV Marketing
(1) Nature of Products and Services
The Company distributes its products and services by using TV marketing in the form of message information offering products and services directly to consumers through various television systems such as normal television, satellite television, and cable television. The Company conducts the sourcing of products and services, producing programs with presentation of products and services by using its own production team to produce the Company’s advertising media with its own studio for broadcasting through television systems.
If customers wish to order products or services, contact can be made through telephone call by ordering products and services at the inbound call center as specified in the Company’s telephone number. The Company has arranged for telephone operators to receive orders of more than 1,000 lines per hour. These operators have been trained to understand all products and services specifications and will be able to give details information and suggestions on products and services to customers. Moreover, the Company has arranged for the Voice Response Unit system so that customers who are waiting for the calls or leave text messages can be responded back by operators, and the Automatic Distribution Calling System, Call Abundance System, and Call Overflow System.
There are many types of products of more than 2,000 items that being distributed by the Company which can be separated into 16 categories as; 1. TV Marketing (Cont’d)
(1) Nature of Products and Services (Cont’d)
Product category Product Item
Health Care Products Ergonomic chair with back support, Seating mat, Back protection pillow, Pillow, Massage chair, Massage vibrator, Foot massage, Spar Machine, Glucose level monitor, Blood pressure Monitor, vitamin and food supplement, food for health, etc.
Beauty Products Skin care products, Wrinkle reducing products, Acne care products, Lotion, Cosmetics, Powder, Lipstick, Eye shadows, Perfume, Body cleaning products, Shampoo, Conditioning cream, Hair colour products, shaver, Vibrator machine for exercise, Fat reducing fitness machine, Slimming machine, Foot massage machine, Muscle tightening equipment for neck, chin, and face, Heel care equipment etc.
Household Products Portable steam cleaner, Mop, Vacuum cleaner, Floor and carpet cleaner, Glass cleaner, Duster, Ionizing machine, Multi-purpose tool, Washing equipment, Washing machine cleaner, Cloth cleaning products, Clothes hanger, Slip protection device, Food drier, Water pipe cleaner, De-humidifier, Air cleaner, Battery charger, sewing machine, shoe box, shoe shelf, shower head, Bathroom accessories, Container bag, Absorbent pad, etc.
Kitchen Products Electric stove, Vacuum food preservation, Food container, Juice extractor, Blender, Food grinder, Food steamer, Toaster, Thermo flask, Kettle, Kitchen knives, pan, Electric plate, Microwave, Food processer, Oven, Vacuum pot, Vegetable and fruit cleaning equipment, Water purifier, Glass.
Fitness Products Variety of exercising machines, Exercise equipment for parts, Back exercise machine, Abdominal exercise machine, Drum bell, Leg exercise machine, Exercise bike, etc.
Family Care Products Health supplements products, Lubricating gel, etc.
Automobile Products Engine performance enhancer, Additive for automatic transmission gear performance, Fuel additive performance, Car cleaning equipment, Paint protection products, Measuring gauge and electric air pump, Battery charger, Air purifier in car, Electric bicycle, Scratch remover pen, Liquid caulk, Spot light, Vacuum cleaner in car, etc.
30 TV Direct Public Company Limited 31
1. TV Marketing (Cont’d)
(1) Nature of Products and Services (Cont’d)
Product category Product Item
Apparel Products Suitcase, handbag, wrist band, scarves, spectacles, etc.
Spare Parts Spare parts for variety of products.
Environmental Friendly Products Pest free, etc.
Collectable Items Sacred objects, 9 dragons sacred objects, Guan Imm Image, Guan Oo image, Chinese fortune sailing ship, Gold plated of 12 zodiac signs, Memory on the gold plate, Animal pictures for good faith, wall clock, etc.
Edutainment Products Books for children, Non-fiction books, Books on various knowledge, Story books, Dictionary, Encyclopedic, Blocks sets, Toys for skill improvement.
Entertainment Products Piano, Music Instruments, VCD players, Game players, etc.
Gadget Products Easy Dictionary, Flash drive, Loud speakers, headphones, GPS, Mouse, Keyboard, Camera, Webcam, MP3, MP4 accessories, Notebook cases, Memory card reader, Mobile phone, Protective equipment for mobile phone, etc.
Do It Yourself Products Plier, screw, and screwdriver set, etc.
Life Innovation Products Table, Swinging chair, Multipurpose folding table, Rocking chairs, Compressed air mattress, etc. (2) Marketing and Competitive Situations
(2.1) Marketing Strategies
The Company operates the following marketing strategies in order to compete with other business operators.
1. Selection of quality products and various types of products: The Company has policy to select quality domestic and foreign products in which customers cannot purchase from normal shops and contain various types of products offering to customers.
2. Products and services presentation: The Company produces its own advertising media for products and services presentation by using its own production studio to produce advertising program. Format of the advertising program will emphasize on the importance of information being clearly presented on products and services. This enables the Company’s products and services to build memorable experience to customers under the concept of “Entertaining People with Information”.
3. Marketing channel through many television systems is being practiced whether in the form of normal television channels, satellite television, and cable television, which results in information on products and services reaching variety of customer groups.
4. Data model has been prepared to study on requirements on various groups of customers so that presentation on products and services is in accordance with the customers’ life style. The Company analyses and collects as per the customer’s data base in order to assist in products and services’ presentation to be suitable and direct to requirement of each customer.
5. Fast delivery service: The Company has the delivery system for direct delivery to customers within 3 – 7 days for customers in Bangkok and its vicinities, and 4 – 14 days for provincial customers. The Company has delivery system from the distribution centers for country wide coverage.
6. Products’ satisfaction guarantee: The Company guarantees on satisfaction of every purchase. Customer has the right to return product within 30 days of purchase as the Company agrees on returning product with refund to customer.
7. Product discount within specific time: During products and services presentation, if customer orders the products and services within the specific time, discount will be given. The Company offers selling strategy with discount from ordinary selling price and/or giving other product as premium to customer to attract and motivate customer into choosing products and services from the Company.
8. Marketing activity (Below-the-Line) on proposing information on products and services to customer: The Company continuously arranges the marketing activities to promote the products, thus resulting in public relation information passing through to customers.
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9. After sales service and good public relation with customer: The Company arranges for its personnel to contact customer for information after delivery of products and services in order to ask for customer satisfaction. This will help in building good relationship with customer and creating impression that leads to repeat sales. Moreover, the Company has service center with personnel who are ready to give information and services for any query or questions on products and services.
(2.2) Target Group
At present the Company has customer base of more than 2.6 million cases, which increases about 100,000 cases in every quarter. The target group will be in accordance with type and category of product for cus- tomer with modern day lifestyle, with purchasing power in every gender and age group.
(2.3) Distribution and Channel of Distribution
The Company uses the distribution channel to offer its products and services through the direct response television which can be separated into categories as follows:
1. Free TV The Company offers the products and services through free TV channel 3, 5, 7, and modern 9 by renting the air time for broadcasting. Hence, the Company will rent the air time from these television channels in the form of products and services presentation, and time renting for advertising products and services.
On distribution of products and services through the free TV, if customer requires to order products or services it can be done by ordering to the inbound call center as in specified telephone number. The Company has operators ready to receive orders of more than 150 lines and these operators are trained to understand products and services and can give details information and suggestions on products and services to customers. Moreover, the Company has the Voice Response Unit so waiting call from customers or messages can be contacted back which will efficiently help in product ordering management.
2. Satellite and Cable Television
Apart from the normal free TV, the Company also presents its products and services through the satellite and cable television with details below:
(a) Products and services through satellite television
The Company offers products and services through the satellite television in the form of cooperation with various programs with more than 50 channels such as Nation, Voice TV, RS, Grammy, Spring News, MV TV, IPM, etc. Moreover, the Company also has its very own television channel to present the ‘Home Shopping” for 24 hours, i.e. No Channel Type of Reception Audience Base Unit: Million Household
1. Shopping Network - True Vision channel 13 2.0 - KU – Band PSI OK channel 12 - Nationwide Cable
2. Shop at home - PSI Disc, C-Band, channel 18 10 - KU Band system channel 18, ThaiCom. - DTV Disc channel 18 - BIG 4 channel 10, ThaiCom. - CTH channel 31 - GMMZ channel 215 - IPM Disc channel 11,NSS6 satellite - Domestic Cable TV Nationwide
3. Shop Thailand - PSI Disc, C-Band, channel 93, ThaiCom. 10 - Big 4 channel 170 - GMMZ channel 270
Variety channel 24 hours
4. Beauty TV - PSI Disc channel 23, C-Band 10
5. Health and Family - PSI Disc channel 33, C-Band 10
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Moreover, the Company encourages Thai people in creating and inventing new product by acting as supporter in producing the program Billionaire Inventor” to be broadcasted through satellite television of the Workpoint TV.
(b) Offering products and services through cable TV
The Company offers products and services through cable TV with True Visions channel 13 on “Shopping Network” for 24 hours daily. The contract has been signed on products and services distribution through this channel with Cineplex Co., Ltd. The Company produces the products and services introduction program on airing with True Visions channel13 in order to offer products to True Visions members.
On products and services offering through the satellite and cable television, interested customers are able to contact the inbound call center as specified by the Company. The Company has ready personnel to accept the purchasing orders of more than 150 lines, and these personnel have been trained to understand products and services, and are able to give details and suggestions concerning products and services to customers. Moreover, the Company has the Voice Response Unit so waiting call from customers or messages can be contacted back.
(2.4) Overall Industry
From Data collection of TV Direct Public Company Limited, total market value of TV marketing business in 2013 was about Baht 5,000 million. Factor that helped in supporting the expansion of TV marketing business was the expansion in television media in presentation of products and services to consumers using satellite and cable television. Presentation of products and services through this media could effectively and efficiently presents information directly to the target group.
At present there are 6 important operators who conduct TV marketing business in Thailand and increasing number of potential operators are joining in the business. Important operators are TV Direct Public Company Limited, Tiger Shopping, Smart Shop, TV Mall, CJO Shopping, and other foreign companies that operate home shopping business that start to operate direct marketing business in Thailand such as TV Mall, CJO Shopping, and True GS Co., Ltd. which results in increasing competitive trend for direct marketing business. (2.5) Competitive Situation
TV marketing business is highly competitive in using channels of various television systems in offering products and services, and sourcing of products and services for distribution. Hence, competitors in the industry can be separated into different groups as follows:
1. Main operators in TV marketing business group in Thailand that distribute products and services through normal free TV, satellite and cable television. Important operators in this group are TV Direct Public Company Limited, and Tiger Shopping.
2. Foreign main operators in TV marketing business group coming to operate TV marketing in Thailand in which important operators are TV Mall, CLO Shopping, True GS Co., Ltd.
3. Operators who own products and services and offering products and services through TV marketing. There are many operators in this category.
Consideration on competitive situations for the above operators indicates their different strong points which points to the different positioning on products and services. However, the Company has policy to sustain the higher competition in TV business by increasing distribution channel for products and services through more television channels, and also increasing investment in supporting technology for business operations of the Company such as telephone, electricity and computer system, etc. The Company has customer base that amounts to more than 1.8 million customers, thus sourcing of computer program for storage and data processing as contact points for customers’ relation and products and services are very essential. The Company also realizes the importance in producing advertising media for products and services introduction by having own studio for producing advertising program. Moreover, the Company realizes the importance of inventory management, has developed fast product delivery to customers, and has confident in its readiness and ability to sustain business competition that has an increasing trend in future.
(3) Product Delivery
The Company has product delivery system for product delivery to customer as follows:
(1) The Company delivers products from warehouse to the main delivery centers or various retail shops by using delivery trucks of more than 24 trucks at present.
(2) The Company hires other delivery companies to deliver products to customers while the Company has the direct product delivery to customers within 3-7 days for customer in Bangkok and its vicinities and within 4-14 days for provincial customers. On small products, the Company may deliver product through the Thai Post Office Co., Ltd., in which the customer has to pay for delivery cost.
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2. Direct Marketing
(1) Products and services
The Company distributes its products and services using direct marketing through the inbound and outbound center, direct printing, and E-Commerce, including the Call Center Service: CCS.
There are more than 2,000 products for distributions with details on type of products are shown in the TV marketing.
(2) Marketing and Competitive Situations
(2.1) Marketing Strategies
In order to be able to compete with other operators, the Company has to conduct the following marketing strategies.
1. Selection of quality products and various types of products: The Company has policy to select quality domestic and foreign products in which customers cannot purchase from normal shops and contain various types of products offering to customers.
2. Products and services presentation: The Company realizes on the importance of information being clearly presented on products and services. This enables the Company’s products and services to build memorable experience to customers under the concept of “Entertaining People with Information”.
3. Data model has been prepared to study on requirements on various groups of customers so that presentation on products and services is in accordance with the customers’ life style. The Company analyses and collects as per the customer’s data base in order to assist in products and services’ presentation to be suitable and direct to requirement of each customer.
4. Fast delivery service: The Company has the delivery system for direct delivery to customers within 3 – 7 days for customers in Bangkok and its vicinities, and 4 – 14 days for provincial customers. The Company has delivery system from the distribution centers for country wide coverage.
5. Products’ satisfaction guarantee: The Company guarantees on satisfaction of every purchase. Customer has the right to return product within 30 days of purchase as the Company agrees on returning product with refund to customer.
6. After sales service and good public relation with customer: The Company arranges for its personnel to contact customer for information after delivery of products and services in order to ask for customer satisfaction. This will help in building good relationship with customer and creating impression that leads to repeat sales. (2.2) Target Group
This contains general type of customers who have trendy life style and purchasing power, all gender, and all age groups.
(2.3) Distribution and Distribution Channels
The Company operates the Multi-Channel Marketing in order to distribute products and services as follows:
1. Outbound Call Center
The Company offers its products and services through the outbound call center using more than 700 personnel to take care and make products introduction through the telephone lines, and operate at the call center every day from 9.00 – 18.00. Customers will be contacted from the data base list prepared by the Company in which personnel will propose products and services at the same time. These personnel have been trained to understand products and services, and are able to give details and suggestions concerning products and services to customers. If customer wishes to purchase products and services, these personnel will be ready to be informed on requirement.
2. Direct Response Printing
The Company offers its products and services through direct response printing as follows:
(a) Catalogue: The Company prints 4 colour catalogues which have been printed every 2 month at about 80,000 – 100,000 catalogues. These catalogues present the Companys products and services in variety of more than 280 items under different brands, and have been delivered to customers as per the selected customers’ base data to inform on products and services.
(b) Leaflet, brochure, and direct mail are used as products and services presentation, and various occasional promotions which are used as tools in sales promotion and public relation with customers.
Customer can order products through these direct response printings by telephone to the inbound call center at specified number by the Company. The Company has ready personnel to accept the purchasing orders of more than 14 lines, and these personnel have been trained to understand products and services, and are able to give details and suggestions concerning products and services to customers. The Company has the Voice Response Unit so waiting call from customers or messages can be contacted back. Moreover, the Company has made arrangement on receiving purchasing order for products and services through the facsimile system in order to serve customers who prefer through the facsimile machine.
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3. E-Commerce
The Company offers products purchasing through on line system through various websites as follows:
The Company website on www.tvdirect.tv has been operated since January 2010 and most customers are from retailing group which is in the general retail customers. Customers can register and order products according to various categories as indicated in the website. Moreover, the Company has information to communicate with customers through the on-line system in order to present information on products and services, and various promotions and also build good relationship with customers. Additionally, the social media is being used to communicate and give useful information to customers.
Moreover, the Company also presents its products and services through other websites such as www.tarad.com, www.ensogo.com, www.lazada.co.th www.xetamall.com www.wowme.com etc.
Product distribution through the E-Commerce system has convenient steps on ordering and payment can be made through credit card or bank transfer.
4. Call Center Service
e Th call center service operates its function to general customers who want to offer products and services. The Company also offers variety of services that cover the supervision of personnel to perform duties as stated with customers, supporting and promoting sales activities that concern the call center such as marketing survey, and data processing, and also finding television advertising period for customers in accordance with customers’ public relation plan on a timely basis.
(2.4) Overall Industry
From data collection by the TV Direct Public Company Limited, total market of direct marketing business in various forms is as below:
. 1 Distribution of products, services, and insurance through the outbound call center in 2013 was approximately at Baht 9,000 million. Factor that assisted in expansion for products and services business through the outbound call center was the expansion in basic telephone and mobile phone system. Hence, presentation on products and services through the outbound call center could directly and efficiently reach the specific target groups. At present, there are about 150 operators who operate domestic outbound call center on distribution of products and services, more potential operators are coming into the business. Important operators are various life insurance and insurance companies, TV Direct Public Company Limited, Property Technology Co., Ltd., which results in increasing competitive trend for outbound call center business.
. 2 Products and services presentation for direct response printing in 2013 amounted approximately to Baht 4,500 million. Factor that supported in the expansion of products and services distribution through the direct response printing represents the changing lifestyle and consumer behavior of consumers who wanted to see and test product before buying decision. This corresponded with convenient product selection and more channel of payment. Presentation on information of the products and services to consumers through direct response printing could directly and efficiently reach the specific target groups.
At present, there are about 30 operators who operate the direct response distribution of products and services business and more potential operators are coming into the business. Important operators are 7 – Catalog, HIS & HER, Trendy Day, TV Direct Public Company Limited, which results in increasing competitive trend for direct response printing business.
. 3 Products and services presentation for E-Commerce in 2013 amounted to approximately Baht 33,750 million. Factor that supported in the expansion of products and services distribution through direct response printing was the expansion of internet and social media by presenting products and services to consumers on-line through websites which can directly and efficiently reach the specific target groups.
At present, there are about 500,000 operators offering products and services through websites in Thailand, and more potential operators are coming into the business. Important operators are; Weloveshopping.com by True Corporation, Tarad.com, shopping.co.th, Pantipmarket.com, Tohome.com, Officemate.co.th, Ensogo.com, Mods.co.th (The Mall Group), and Central.co.th (Central Group), resulting in increasing trend for business.
. 4 Call center service in 2013 amounted to approximately Baht 6,000 million. Factors that supported in the expansion of the call center service was the more efficient in cost management that created hiring of external operators including hiring of other call center service, and network expansion of the basic telephone and mobile phone. The expansion of satellite television by presenting products and services to consumers through the call center was directly and efficiently presenting products and services to reach the specific target groups. t A present, there are about 60 operators who operate the call center service on distributio of products and services business and more potential operators are coming into the business. Important operators are True Touch Co., Ltd., MOCAP Co., Ltd., and “One to One Contacts Co., Ltd.,” which results in increasing competitive trend for the call center service business.
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(2.5) Competitive Situation
Direct marketing is highly competitive on distribution of products and services, and also the sourcing of products and services as well. Competitors in the industry can be separated into groups as follows:
. 1 Main operator group in the direct marketing business that distribute products and services through various channels such as direct mail, mail order, outbound call center, and on-line system through the websites. Important operators in this group are the Property Technology Co., Ltd., and CP All co., Ltd., which operates 7-catalog. . 2 Main operator group in the distribution of products and services through retail shops, or shopping center, or department store, and later on expand business into the direct marketing. Important distribution channels are direct mail, mail order, catalogue, on-line system through the websites with important operators such as Central and The Mall.
. 3 Operators who own the products and services, and in cooperation with credit card operators, present their products and services through direct mail, mail order, catalogue. There are many operators in this group.
Consideration on competitive situations for the above operators indicates their different strong points which point to the different positioning on products and services. However, the Company has policy to sustain the higher competition in direct marketing business by increasing distribution channels for products and services, and also increasing investment in supporting technology for business operations of the Company such as telephone, electricity and computer system, etc. The Company has customer base that amounts to more than 1.8 million customers, thus sourcing of computer program for storage and data processing as contact points for customers’ relation and products and services are very essential. The Company also realizes the importance in producing advertising media for products and services introduction by having own studio for producing advertising program. Moreover, the Company realizes the importance of inventory management, has developed fast product delivery to customers, and has confident in its readiness and ability to sustain business competition that has an increasing trend in future. (3) Product Delivery
The Company has product delivery system for product delivery to customer as follows:
. 1 The Company delivers products from warehouses to the main delivery centers or various retail shops by using delivery trucks of more than 13 trucks at present.
. 2 The Company hires other delivery companies to deliver products to customers while the Company has the direct product delivery to customer within 3-7 days for customer in Bangkok and its vicinities and within 4-14 days for provincial customer. On small products, the Company may use to deliver product through the Thai Post Office Co., Ltd., in which the customer has to pay for delivery cost.
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3. Conventional Marketing
(1) Products and services
The Company distributes products and services through retail shops of “TV Direct Showcase”, including wholesale distribution to domestic and foreign customers.
There are over 1,500 product items for distribution with details as per catalogue shown in the TV marketing section.
(2) Marketing and Competitive situations.
(2.1) Marketing Strategy
In order to compete with other business operators, the Company’s marketing strategies are stated below.
1. Select quality and variety of products. The Company policy is to select quality domestic and foreign products, and products that cannot be purchased from general stores, and including variety of product types on offer to customers.
2. Selection of suitable locations for retail shops, as the Company opens retail shops in communities with purchasing power, and easy access to service.
3. Recruiting and training of salespersons.
4. Arrangement on marketing activities by introducing information on products and services. The Company arranges continuous marketing activities to publicise the products which enable customers to acknowledge the Company products.
(2.2) Customer target groups
Customers’ target group for general marketing business can be separated into 3 groups as follows:
1. Retail customer group that represents general retail customers who purchase products and services from the Company.
2. Corporate customer group.
3. Local wholesale customers which represent customer group that purchases products from the Company for resale purposes such as drug stores, general merchandise shops, operators of shopping malls and department stores, etc.
4. Foreign wholesalers which represent customers who purchase through the Company for resale in other foreign countries such as customers from Indochina region. (2.3) Sales and distribution channels
The Company uses distribution channels for sales of its products and services as follows:
1. Product sales through the Company’s retail shops
The Company offers retail sales through its “TV Direct Showcase” shops which situate in every region of the country. The Company’s retail shops will separate the area layout by itemizing the product segment as per their types with sample of products for tryout such as many types of exercise equipment, etc.
As at December 31, 2013, there are 78 “TV Direct Showcase” retail shops, and 1 “Welness” retail shop that situate in communities, department stores, and modern trades as per list below.
Province Qty. Location
Bangkok 19 (1) Head office (2 Central Plaza -Rama 2 branch (3) Central Plaza -Rama 3 branch (4) 4026,4028,4030 Soi Jakawarn cinema,Asoke-Dindaeng (5) Central Plaza -Pinklao (6) 296, Panitchakarn Thonburi road, Bangkokyai. (7) Central Plaza -Ramindra (8) The Mall -Bangkapi (9) The Mall -Ngam Wong Wan (10) The Mall -Ram Kham Haeng (11) Vongvanij Building -Rama 9 Road (12) Silom Complex Building –Silom Road (13) Future Park - Rangsit (14) Seacon Square (15) Fashion Island (16) Supreme Complex -Samsaen (17) Paradise Park (18) Seacon -BangKae (19) Big C -Wongsawang
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Province Qty. Location
Nonthaburi 4 (1) 26/11 Pracharaj Road, Talard Quan, Muang District, Nonthaburi. (2) Homeworks Shopping Mall, Ratchapruek (3) Central Plaza Ratanatibet (4) Central Plaza Changwattana
Pathumthani 1 323, Prachatiput, Thunyaburi District, Pathumthani
Nakhonpathom 1 88, Rajwithee Rd., Prapathom Jaydee, Muang District, Nakhonpathom
Samutprakan 2 (1) 2014/2 Moo 9, Tayparak Rd., Samrong Nua, Samutprakan (2) Mega Bangna
Samutsakhon 1 1300/93, Ekkachai Rd., Mahachai, Muang District, Samutsakhon
Phetchaburi 1 2/1, Subsin Soi 4, Rajwithee Rd., Klong KraSaeng, Muang District, Phetchaburi.
Ratburi 2 (1) 178/5-6, Phetkasem Rd., Nar Muang, Muang District, Ratburi (2) Robinson Department Store, Ratburi
Ayutthaya 1 161/37 Moo 3, Klong Suanplu, Phanakhon Sri Ayutthay.
Suphanburi 1 249/289 Moo 5, Tar Rahut, Muang District, Suphanburi
Kanchanaburi 1 35/8, Saeng Chootoe, Muang District, Kanchanaburi
Nakhonsawan 1 152/4, Sawam Wethee Rd., Parknampoe, Muang District, Nakhonsawan
Chonburi 5 (1) 64/16, Bang Prasoi, Muang District, Chonburi (2) 212/14-15 Moo 5, Narklue, Bang Lamung District, Chonburi (3) Tesco Lotus Shopping Center, Ohmmata Nakorn branch (4) Pacific Park Shopping Center, Sriraja (5) Welness shop, Pattaya Province Qty. Location
Chanthaburi 1 30/255 Moo 7, Chantra Nimit, Muang District, Chanthaburi
Rayong 1 65/19, Chanta Udom Rd., Ta Prodoo, Muang District, Rayong
Chacengchao 1 205, Sukprayoon Rd., Narmueng, Muang District, Chacengchao
Saraburi 1 184, Phahon Yothin Rd., Park Praew, Muang District, Saraburi
Lopburi 1 136, Narai Maharaj Rd., Talay Chupsorn, Muang District, Lopburi
Kamphaengphet 1 722, 724, Ratchadamnoen 1 Road, Nai Muang, Muang District, Kamphaengphet.
Chiangmai 2 (1) 36/3, Huey Kaew Rd., Muang District, Chiangmai (2) Central Airport Plaza, Chiangmai
Chiangrai 2 (1) 149/4, Tessabarn Bandoo, Phahon Yothin Rd., Muang District. (2) Central Plaza Shopping Center, Chiangrai
Lampang 1 341/7,Chatchai Rd., Suandork, Muang District, Lampang
Phitsanulok 2 (1) 298/14, Barom Trilokkanart 2 Rd., Naimuang, Muang District, Phitsanulok (2) Central Plaza Shopping Center, Phitsanulok
Nakhonratchasima 2 (1) 223,225. Mittrapab Rd., Naimuang, Mang District, Nakhonratchasima (2) The Mall Shopping Center, Korat
Khonkaen 2 (1) 182/133, Srijun Rd., Muang District, Khonkaen (2) Central Plaza Shopping Center, Khonkaen
Udonthani 1 26,room 1-2 Moo 7, Taharn Rd., Mark Kaeng, Muang District, Udonthani
Ubonratchathani 1 190, Upparaj Rd., Naimuang, Muang District, Ubonratchathani
Sakaeo 2 (1) 76/6-7, Suwannasorn Rd., Muang District, Sakaeo (2) 97/238 Suwansorn Rd., Srakaew.
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Province Qty. Location
Roiet 1 41/1, Puttamanon Soi 1 Rd., Naimuang, Muang District,Roiet
Buriram 1 40/7, Thanee Rd., Niamuang, Muang District, Buriram
Prachuapkirikhan 1 Huahin Market Village Shopping Center
Surat Thani 2 (1) 263/4 – 5, Chonkasem Rd., Talad, Muang District, Surat Thani (2) Central Plaza Shopping Center, Surat Thani
Nakhon Sri 1 8/16, Pattana Kukwang Rd., Niamuang, Muang District, Nakhon Sri Thammarat Thammarat
Phuket 2 (1) 110/1, Wichit Songkram Rd., Talard Nua, Muang District, Phuket (2) Central Festival Shopping Center, Phuket
Songkhla 1 488/5, Phetkasem Rd., Haadyai, Songkhla
Pattani 1 12/56, Jaroen Pradit Rd., Sabarung, Muang District, Pattani
Krabi 1 90/43, Maharaj Rd., Paknam, Muang District, Krabi
Trang 1 Robinson Shopping Center, Trang
Chumphon 1 116/7, Kromluang Chumphon Rd., Tar Taprow, Muang Chumphon District, Chumphon
Phetchabun 1 52/45, Taepa Pattana Rd., Niamuang, Muang District, Phetchabun
Nakhon Phanom 1 357/7, Fueng Nokorn Rd., Nongyard, Muang District, Nakhon Phanom
Nongkhai 1 Big Chieng Shopping Center, Nongkhai
Mukdahan 1 Big C Shopping Center, Mukdahan
Total 78 2. Product sales through wholesale channels
2.1 Local wholesaling.
The Company offers sales for local wholesalers to various types of customers as follows:
(a) Department stores and retail modern trade stores such as the Mall Department Store, Big C, Macro, Tesco Lotus, Robinson Department Stores.
(b) “Category Killer” stores type such as HomeWorks, HomePro, Supersport, SportMall.
(c) Operators of the drug stores, and various companies.
Typical product sales through local wholesalers can be categorized into 2 types. (1) The outright sales: Customers will purchase products through the Company, and products will be delivered as stated in the purchasing orders. After delivery, collection will be made from customers with 90 days credit term. (2) Consignment sales: The Company will deliver products and consign them to customers. Payment will be made to the Company after products have been sold. Customers with consignment condition are Robinson Department Store, The Mall Department Store, Supersport, etc.
2.2 Foreign wholesaling.
Foreign wholesaling products are offered to Indo-China’s group of countries i.e. the Lao People’s Democratic Republic, Kingdom of Cambodia, Malaysia, and Socialist Republic of Vietnam. In countries where the affiliated companies have invested in the sales and services business through varieties of channels, the Company will distribute all products to its affiliated companies, which consist of Direct Response Television Co., Ltd., TV Direct Lao Co., Ltd., and TV Direct (Malaysia) Sdn. Bhd.
(2.4) Overall industry
Total market value of the conventional marketing business, from data collected by TV Direct Public Company Limited, in the product innovation category amounted to Baht 3,900 million in 2013. Factors that facilitated the direct sales business expansion were the consumers’ purchasing power, and expansion of shopping malls. At present, there are large numbers of the conventional marketing business operators in Thailand, and increasing numbers of capable direct sales business operators, including some important operators such as Boots, Watson, Loft, etc. Hence, it reflects an increasing competitive trend in the direct sales business.
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(2.5) Competitive situation
The general marketing business is highly competitive whether in the form of distribution channels for products and services, and competition in sourcing of products and services. Competitors can be categorized as per industrial groups below:
1. Fitness equipment products group. 2. Beauty and food supplement group. 3. Kitchen equipment products group. 4. Variety products group.
The Company has considered competitive situations among the above operators as each individual operator has different strong points which indicate different positioning. However, the Company has policy to compete with higher competitive situation in the general marketing business by increasing its number of retail shops for TV Direct Showcase to achieve the economy of scale, and increasing its distribution channels with more retail and wholesale operators. Moreover, policy on inventory management has been given priority and development on product delivery to consumer has been speedup. Hence, the Company is confident with its preparation and ability in dealing with the increasing competitive situation in future.
(3) Product delivery
The Company has the product delivery system as follows:
1. For local transportation to customers, the Company will make direct delivery as:
a. Products will be transported by the Company from its warehouse to the main distribution center or to its various retail shops by using its own 31 trucks at present.
. b For wholesalers in Bangkok and its vicinity, the Company’s trucks will deliver products within 3 – 7 days, and for provincial wholesalers the Company will hire transporters to deliver products to customers within 4 – 14 days.
2. Product delivery to foreign customers can be categorized as:
a. Product delivery to customers in Malaysia and the Socialist Republic of Vietnam will be delivered by ships, and / or trucks. b. Product delivery to the Lao People’s Democratic Republic, Kingdom of Cambodia will be by trucks from transport companies with the ex-works conditions. The ex-works states that seller will end its product delivery commitment as per contract when seller makes its products ready for transportation at the seller’s own place. Seller is not responsible for transferring products on to the trucks, exporting procedures, expenses on transporting products from sellers’ warehouses to destinations, and all risks will be with purchasers. Hence, n i this case, all risks and benefits will be transferred to purchasers when the transportation company receives products from the Company’s warehouse. Then, the shipping processes to these two countries can be summarized as: - Export sales to the Lao People’s Democratic Republic. The transport company receives products and transport to Nongkai, after that officer from the customer’s company will receive products and makes exporting procedures to the Lao People’s Democratic Republic. After receiving products satisfactorily customer will send e-mail confirmation as a proving export document to the Company.
- Export sales to the Kingdom of Cambodia. The transport company receives products at the company’s warehouse, and after receiving products satisfactorily, e-mail will be sent to the Company as exporting document. However, since the end of last year, the bill of lading has been introduced into effect as additional exporting evidence.
4. Service
The Company offers contract production of advertising media, and sourcing on advertising airing time for the Company’s customers. This is additional service given to some of the Company’s customers who are products or services’ owners and have contracts with the Company to sell their products and have assigned the Company to produce and prepare advertising time for their products and services.
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Business description on contract production of advertising media, and sourcing on advertising airing time for the Company’s customers: After the Company has purchased the advertising airing time such as program in television, and satellite and cable television channels, the Company offers to its customers such as the life insurance company, and other operators, to produce the advertising media and finding the advertising airing time as well. This service is to utilize from the Company’s own airing time, and from existing production studio team that is producing the Company’s program already.
Moreover, the Company has service on marketing activity arrangement, and organize concert. As the Company already has marketing activity team for presenting various products on various occasions, marketing activity arrangement service is offered to customers in order to utilize from the existing team. Additionally, the marketing activity team will have more experience from variety of services given to various customers apart from working for the Company. Moreover, the Company had arranged concerts for Thai and foreign artists as follows: In 2006, 2007, and 2009, the Company organized concerts for Toe Saksit Vejsupaporn, concert in 2008 for Michael Learns to Rock, concert in 2010 for Keereeboon Concert, and in April 2012 the Company arranged the “Korean Music Wave in Bangkok, 2012” with collection of about 20 bands of Korean singers. In 2013, the Company arranged the concert “Super Joint Concert in Thailand 2013”.
5. Direct Sale
(1) Products and services
The Company distributes the products as a single level direct sale through its representative under the name “Sarah Lady”, and starting the business in July 2011. Products distribute through direct sale can be separated into categories as follows:
Product category Product Item
Beauty Products Skin care products, Wrinkle reducing products, Acne care products, Lotion, Cosmetics, Powder, Lipstick, Eye shadows, Perfume, Body cleaning products, Shampoo, Conditioning cream, Hair colour products, shaver, Vibrator machine for exercise, Fat reducing fitness machine, Slimming machine, Foot massage machine, Muscle tightening equipment for neck, chin, and face, Heel care equipment.
Health Vitamin, and food supplement, food for health product, etc.
Household Products Portable steam cleaner, Mop, Vacuum cleaner, Floor and carpet cleaner, Glass cleaner, Duster, Ionizing machine, Multi-purpose tool, Washing equipment, Washing machine cleaner, Cloth cleaning products, Clothes hanger, Slip protection device, Food drier, Water pipe cleaner, De-humidifier, Air cleaner, Battery charger, sewing machine, shoe box, shoe shelf, shower head, bathroom accessories, Container bag, absorbent pad, etc.
Kitchen Products Electric stove, Vacuum food preservation, Food container, Juicer extractor, Blender, Food grinder, Food steamer, Toaster, Thermo flask, Kettle, Kitchen knives, pan, Electric plate, Microwave, Food processer, Oven, Vacuum pot, Vegetable and fruit cleaning equipment, Water purifier, Glass. Product category Product Item
Fitness Products Variety of exercising machines, Exercise equipment for parts, Back exercise machine, Abdominal exercise machine, Drum bell, Leg exercise machine, Exercise bike, etc.
Apparel Suitcase, handbag, wrist band, scarves, spectacles, etc.
(2) Market and Competitive Situation
(2.1) Marketing Strategy
1. Selection of quality products and various types of products: The Company has policy to select quality domestic and foreign products in which customers cannot purchase from normal shops and contain various types of products offering to customers.
2. Presentation on information of products through catalog by catalogue suppliers on direct sale business every 30 days to present to consumers.
3. Building sale representative network of “Sarah Lady” to cover all region of the country in order to present products information to variety of customers.
(2.2) Target Group
Target group of direct sale business from present customer base is about 2.6 million persons, and other general customers.
(2.3) Distribution and Distribution Channel
The Company’s direct sale represents the single level marketing through representatives of the Company. The area managers (DSM) who station in each province will recruit independent direct sales called “Sarah Lady” who present products and services directly to consumers or customers. The Company will prepare and print products catalogue for the representatives for presentation to customers. Hence, “Sarah Lady” sales representative’s incomes will be the percentage different between retail sale prices to customers and sale prices specified by the Company.
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Company
DSM DSM DSM DSM
Sarah Lady Sarah Lady Sarah Lady
Customer Customer Customer
AS at December 31, 2013, the Company has “Sarah Lady” sale representatives about 26,273 persons nationwide.
(2.4) Overall Industry
Duration of the direct sale company to last in business is found to be in 2 periods of not more than 5 years, and between 5 – 10 years, or at the rate of 35.4% and 32.3% respectively. The top 3 products are beauty products, health care products, and daily products for body respectively. There are about 15.32 million people who are direct sale operators, or business members, or members who want to purchase.
(2.5) Competitive Situation
Direct sale business is in a highly competitive market in recruitment of sale representatives and train them reach consumers for products and services presentation, competition in sourcing of products and services for sale, and budget for advertising and public relation for products and services. At present, there are many direct sale operators whether from domestic or foreign companies and important operators are: Giffarine Skyline Unity Co., Ltd., Betterway(Thailand) Co., Ltd., Avon Cosmetics ( Thailand ) Limited., Amway Co., Ltd.,Kangzen-Kenko International Co., Ltd., which resulting in higher competitive trend for direct sale business.
Consideration on competitive situation for the above operators indicates their different strong points which points to the different positioning on products and services. However, the Company has policy to sustain the higher competition in direct marketing business by building network of Sarah Lady to cover all provinces, and utilizing the present customer base data of the Company about 2.6 million persons, and also sourcing of products for distribution. The Company is confident to be ready and able to sustain competition which has an increasing trend in future. (3) Product Delivery
The Company uses the Thai mailing service / internal unit of the Company to deliver products to Sarah Lady sale representatives. Sarah Lady sale representative in Bangkok and vicinities will receive products within 3 -5 days, and for Sarah Lady provincial representatives products will be delivered within 4 – 7 days.
3.1 Restrictions on the operations of the Company.
Direct sale business of the Company represents direct sale of products and services to customers and the Company has registered its direct sale business with Office of the Consumer Protection Board which is in accordance with the Direct Sales and Direct Marketing Act B.E. 2545. Moreover, the Company has policy to comply with the Consumer Protection Act B.E.2522, and various rules and regulations of the agencies. Product on the type of food, cosmetics, medical equipment, and dangerous household equipment has to be given permission from Food and Drug Administration, and for document and advertising for product presentation, sample must be sent for approval to the Food and Drug Administration prior to usages.
On product distribution, the Company allows customer the right to return product by guarantee customer’s satisfaction on purchasing within 30 days after receiving product. However, if customer is not satisfied with the product, product return, or new replacement, or other product can be replaced within 15 – 30 days after report of dis-satisfaction such as: (a) In case payment is by cash or money transferred into account, the Company will make cash refund within 15 days after receiving product back in complete and good condition. n (b) I case payment is by credit card, the Company will make payment through the credit card in the form of debit account to customer in the next statement.
Table show amount of products returned in 2011 – 2013
2011 2012 2013
Amount of product returned (Million Baht) 25.05 19.77 16.46
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3.2 Dependence on Customer
In 2013, the Company was not dependent on big or individual customer at proportion of more than 30% of total revenue.
3.3 Product Sourcing
On business operation of the Company, the Company will have to consistently source for new products for presentation to customers by using its product and marketing unit to source and make contact with domestic and foreign distributors. Product samples will be requested for consideration before presentation to customer, or personnel from the product and marketing will travel to source and make selection of product from foreign manufacturer or distributor i.e. from South Korea, Hong Kong, Taiwan, Japan, etc. Apart from contacting to manufacturer or distributor, there are cases where manufacturer or distributor makes contact with the Company to present their products for consideration. Product selection will mainly emphasized on quality more than pricing.
Detail on purchasing of domestic and foreign products during 2011 - 2013
Purchasing Order 2011 2012 2013 Million Baht % Million Baht % Million Baht %
Domestic Products 358.06 47.64 314.06 37.75 311.51 38.68 Foreign Products 393.48 52.36 517.80 62.25 493.83 61.32 Total Purchasing Amount 751.54 100.00 831.85 100.00 805.34 100.00
Characteristics of the products can be separated into major types below:
1. House Brand: Products that the Company has the trademark rights in which at present, the Company owns 3 trademark rights, consisting of;
(a) Fatis – food supplement product
(b) Welness – Fitness equipment product
(c) Nuvite – food supplement product
For this type of product, the Company will contact domestic and foreign manufacturers to produce products for the Company. 2. Products that have been appointed as agent:
The Company has been appointed from manufacturer or distributor as agent in the specified area. At present, main products that the Company has been appointed as agent consist of;
(a) Velform Hair Grow and Velform Hair Grow Plus:
The Company has been appointed from Industex S.L. from Spain as sole agent with exclusive right in Thailand, Laos, and Cambodia through TV marketing channel, home shopping, mail order, and direct response printing,d an E-Commerce. The appointment contract has 12 months duration from contract signing date on December 30, 2010, and this contract can automatically be extended with agreement from both parties.
(b) Bawang Shampoo product:
The Company has been appointed from Hong Kong Bawang International Trading Limited as agent with the exclusive right in Thailand. The Company has agreement with Hong Kong Bawang International Trading Limited that Hong Kong Bawang International Trading Limited will not distribute Bawang shampoo product to customer outside Thailand who has intention to import product into Thailand.
(c) Eagle Eyes:
e Th Company has been appointed from Sun Tiger Inc. Dba Eagle Eyes Optics as agent with exclusive rightn i Thailand, Vietnam, Cambodia, and Laos with duration of 12 months starting from December 2009 to December 2010. The contract can be extended after completion of 12 months under condition on product ordering amount during the period, and at present this is under contract extension process.
(d) Pest Free – product for rat and cockroach expeller
The Company has been appointed from as agent from Pest Free Australia Pty. Limited with exclusive right in Thailand
(e) Misaki: decorative product
The Company has been appointed as agent from Misaki Sam with exclusive right in Thailand with duration of 3 years commencing from November 1, 2010 till October 31, 2013.
3. Product purchases from general manufacturer or distributor
4. Consignment product is the product that the Company receives from owners of various products, and product cost will be paid to owners after products have been sold to customers. These types of products are the beauty products, kitchen products, household products, or technological products. At present, products distribution through direct sale channel by Sarah Direct will be consignment products which will greatly eliminate risk on inventory cost for the Company.
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Proportional ratio on product sourcing as indicated by the Company’s estimation can be summarized below:
House Brand Product with own purchasing 25% 35%
Product as agent 25% Consignment product 15%
Dependence on distributor
In 2013, the Company was not dependent on big or individual distributor at proportion of more than 30% of total revenue.
3.4 Inventory Management
The Company has established the supply chain management department for inventory management in order to monitor movement of products being distributed. The Company has rented a warehouse for storing goods at2o 22 mo 17, Sarmwarr road, Minburi sub-district, Minburi district, Bangkok, which has storing capacity of 4,780 square meters, separating into ordinary storage of 4,450 square meter, and area for air conditioners of 330 square meters. The Company has signed contract with JWD InfoLogistics Co., Ltd., for renting and supervising the warehouse building, and its contents since August 2009, and has extended the contract twice. Present contract has duration of 2 years starting from August 1, 2013 until July 31, 2015. Moreover, JWD InfoLogistics Co., Ltd., has acquired another warehousing area of 1,675 square meters which situates at Latkabang, Bangkok for renting to the Company for 1 year. The JWD InfoLogistics Co., Ltd., will service on inventory count, inventory management, and moving products from the inventory in preparation to load on to the Company’s trucks that arrive at the warehouse. The Company’s delivery trucks will take these goods to distribution centers as per Company’s order. The JWD InfoLogistics Co., Ltd., will operate its duty with personnel from the Company who have been sent to work at the warehouse. Moreover, the Company also has another sub-warehouse at 110/3 moo 6, Tarraeng sub-district, Bangkhen district, Bangkok. The Company’s 2 main distribution centers have their duties to deliver products to various retail shops of the Company and to the Company’s customer i.e. (1) 4026,4028, and 4030, Soi Jakrawarn cinema, Asoke-Dinaeng road, Dindaeng sub district, Dindaeng district, Bangkok, (2) Ta Praa Distribution Center at 296, Panitchakarn Thonburi Road, Wat Taphra sub-district, Bangkok Yai district, Bangkok. Apart from these 2 distribution centers, the 35 retail shops of TV Direct Showcase also operate as additional distribution centers. Risk Factors
Important risk factors for the Company and/or its affiliated companies, including risk management and procedures on risk preventions are as follows:
1. Stability of computer system for business activities
Company’s business activities depend on important data storage, and data processing of computer system such as data on customers’ purchasing orders, products delivery to customers, remaining inventory, about 2.0 million customers’ data information, data connection between head office and warehouse, data linkage between head office with the distribution centers and branches, online products’ sales through website, etc. In case of computer system’s malfunction from various causes, such as computer programs break down, electrical system failure, and if problem cannot be solved on time, some negative repercussion may results to the Company’s business activities.
Risk management of the Company
The Company has introduced measures in dealing with computer system’s malfunction as follows:
(1) Development on efficiency of the computer server, and networking system for data back up and data recovery, including the establishment and management of data center by using DC site, and DR site (in case of emergency) so that the Company has 2 backup computer systems.
(2) Arrangement for the uninterruptible power supply (UPS) in case of electrical system failure, the backup electrical supply will last for about 1 hour.
(3) Arrangement on the maintenance time table schedules for the transformer, and switch board for the main distribution board (MDB), and the load center.
2. Stability of the telephone system for business activities
Company’s business activities depend on the telephone system to communicate with customers using the inbound call center, and outbound call center. Hence, if telephone system failure occurs from various causes such as failure on the telephone control system, and telephone lines cannot cope with the incoming calls volume, this will result in impact against the Company’s business activities.
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Risk management of the Company
The Company realizes the importance of telephone system, and has protection measures for telephone system failure as follows:
(1) Arrangement for sufficient number of telephone lines to serve for maximum inbound calls of 1,500 calls per hour.
(2) Rental arrangement with True Move Co., Ltd., for the “Call Center Solution” for inbound call center. Important services receiving from this solution are; arrangement of incoming customer calls and distribution to operators as the system will select suitable routes for incoming calls, automatic voice mail, showing selected customers’ data on computer screen, maintenance services through the remote maintenance method, suggestion on problem solving solution, etc. Moreover, the Company also utilizes telephone systems from TOT Public Company Limited, and the mobile telephone system, if telephone system of one network fails, the Company will be able to switch to another working network as replacement immediately.
(3) Introduce managing system for telephone system to cope with large number of incoming calls.
(4) Arrangement for the battery backup system to be able to operate for 8 hours in case of electrical outage.
3. Copyright infringement on trademark / service mark
The Company distributes its products under the service mark “TV Direct”, and distributes its products through retail branches under the service mark “TV Direct Showcase”, then; it has the risk on trademark and service mark infringement as follows: (1) The Company has registered its service mark “TV Direct”, for the services on combination of variety of products to facilitate on product selection, with the Department of Intellectual Property. This registration has duration of 10 years commencing from October 28, 2008 to October 27, 2018, and can be extended in every 10 years.
(2) The Company has registered the service mark on its retail business with the Department of Intellectual Property as “TV Direct Showcase” for the combination of variety of products to facilitate on product selection. This registration has duration of 10 years commencing from September 21, 2010 to September 20, 2020, and can be extended in every 10 years.
(3) The Company has registered the trademark “TV Direct” in the Lao People’s Democratic Republic for duration of 10 years commencing from December 1, 2009, and registered the trademark “TV Direct” in the Kingdom of Cambodia for duration of 10 years commencing from May 12, 2010, and also registered the trademark “TV Direct” in the Republic of the Union of Myanmar on February 10, 2011. At present, the Company is registering its trademark “TV Direct” in Malaysia and the Socialist Republic of Vietnam. Moreover, the Company has the policy in closely monitoring on trademark or trade service infringement, and if that occurs, the Company will pursue with legal case.
4. Maintaining the market share
The Company conducts its products distribution and services through the multichannel marketing as revenue from the Company and its affiliated companies at 70% of sales and services coming from sales and services revenue through distribution channels of television and direct marketing. Overall competitive situation in the direct marketing channel shows higher trend from local and foreign competitors, hence, risk from competition with other operators in the same business still exists.
Risk management of the Company
From 14 years’ experience in the direct marketing business, the Company and its executives have overall understanding of the market, and can correctly estimate market demand and service requirement of consumers. Hence, products and services can then be acquired in correspondence with various groups of consumers with variety of requirements. At present, the Company has over 2,000 products for distribution including many distribution channels to present its products and services, whether in the form of; product sales and services through normal television channels, through satellite television channels, cable television, outbound call center, printed media in the form of catalogues, direct mail, leaflets, E-commerce, etc. As the Company operates through retail branches i.e. “TV Direct Showcase”, and also local and foreign wholesale trade, its revenue sources derive from many channels and not depending only from direct sales.
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Moreover, technology for supporting the Company’s business operations has been invested such as telephone, electrical, and computer systems. Computer program for data storage and data processing for customers’ data of about 2.0 million cases has been procured in order to build customers’ relation and suitable products and services presentation to customers with maximum efficiency. The Company also realizes the importance on the advertising media production for products and services introduction by having its own production studio for producing media program. The Company stresses the importance on inventory management, and has developed its product delivery to customers within a short period. Hence, the Company is confident with its readiness, and experiences in business operations, and enough ability to compete which shows an increasing trend in the future.
5. Complying with law and important regulations from the regulatory agencies
Business operations of the Company have to comply with the law and important regulations from the regulatory agencies such as the Direct Sales and Direct Marketing Act, Consumer Protection Act, etc. Important regulatory agencies concerning with the Company are the Ministry of Commerce, Ministry of Public Health, Food and Drug Administration, Office of the Consumer Protection Board, and the National Broadcasting and Telecommunication Commission, etc. The Company has important risks in complying with law and important regulations from the regulatory agencies as follows:
5.1 Products and services’ advertising that do not comply with regulations from the regulatory agencies
The Company that introduces advertising and promotions media for products and services during its business operations encounters prosecution risks from consumers or regulatory agencies if its media’s message on the products and services are not comply with laws on consumer protection in the section concerning consumer advertising. Some of the examples are; products and services with false or exaggerated fact, message that creates misunderstanding on important issue on products and services, using direct or indirect supporting message to break the law or moral, or national culture, etc. If any of the Company’s advertising has broken or not in accordance with regulations of the regulatory agencies, it might have impact towards business operations of the Company, as the Company may be fined, or the Company’s directors may face imprisonment term or fine or both, and this might reflect negative impact towards business operations of the Company. Risk management of the Company
The Company realizes this risk, and has the policy to strictly comply with regulations from regulatory agencies on advertising. Advertising samples will be delivered to the regulatory agencies prior to airing time and the advertising media production unit which is under the product and marketing unit will be assigned to coordinate with concerned agencies.
5.2 Changing of law concerning privacy protection policy
The Company has policy in collecting personal information by gathering customers’ information, and presents its sales of products and services through the Company’s data base. At present, infringement on personal information occursy b using private information without consent from owners for operators’ own benefits, thus, causing annoyances or damages to owners. This causes the Government to consider introducing law on privacy protection. The privacy protection policy act is still under the legislation process as this legislation draft will control the use of personal information on the business and commercial operations, and must be given consent from owners prior to usage. Hence, if this legislation comes into effect, the resulting impact may affect the Company operations.
Risk management of the Company
The Company is continuously monitoring progress of this legislation, and has the policy to comply with laws, requirements, and regulations concerning business operations of the Company. Additionally, the Company’s privacy policy is listed below:
(1) All customers will be informed for permission to use their information for future contacts.
(2) The Company has policy on the number of contacts for each customer per month.
(3) If any customers require no response from the Company, the Company will strictly comply with the customers’ wishes.
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Shareholding Structure and Management
Capital Structure
Company Asset
As at December 31, 2013 the Company had registered capital of Baht 246,750,000 which could be separated as ordinary shares of Baht 493.5 million at par value of 0.50 Baht per share, and the paid up capital of Baht 234,999,996 which consisted of the ordinary share of 469,999,992 shares at par value of 0.50 Baht per share.
Shareholders
List of the first 10 major shareholders as at December 31, 2013 can be summarized as below:
Name No. of Shares %
1. Mr. Lai Chien-Kuo 57,380,074 12.209 2. Ms. Issara Vitayathanakorn 53,750,932 11.436 3. Mr. Phaiboon Maturanont 50,712,867 10.790 4. Mr. Songpol Shanmatkit 40,299,841 8.574 5. USE Electronics Co., Ltd 37,778,113 8.038 6. Mr. Thanabul Maturanont 23,253,027 4.947 7. Mr. Boonchu Wirojwattanakul 11,765,808 2.503 8. Mr. Worapot Tanyasuwankul 10,000,450 2.128 9. Mr. Pathompop Chunpanitkit 7,260,800 1.545 10. Mr.Raywit Tanyasuwankul 7,002,125 1.490
Dividend payment policy
The Company has dividend payment policy of not more than 55% of net profit after tax in the financial statement and after deduction for various reserves. The dividend payment will be considered from various factors concerning business operations of the Company such as financial situation, operating result, cash flow, investment plan, and various necessities in future which has to receive approval from the Company’s Board of Directors and/or shareholders.
The subsidiary companies have dividend payment policy of not more than 55% of net profit after tax in the financial statement and after deduction for various reserves. The dividend payment will be considered from various factors concerning business operations of the Company such as financial situation, operating result, cash flow, investment plan, and various necessities in future which has to receive approval from the Company’s Board of Directors and or shareholders. Finance Accounting Office of Director Office HEAD OF FINANCE AND ACCOUNTING Mr. Sakesun Vipusitwalaku Mr. Marketing Brand Management Product and Marketing Product HEAD OF MARKETING Miss. Laorsri Maturanont Supply Chain Management Internal Auditor Acting HEAD OF Wholesaler Retail Business RETAIL MARKETING RETAIL Mr. Songpol Shanmatkit Mr. Product Delivery & Shop Product Display and Merchandising Mr. Sakesun Vipusitwalakul Mr. Miss Pratoom Chewnongpho Audit Committee C - Office Management
Information System Officer
Shanmatkit Officer
Acting HEAD OF Executive Direct Sales Direct
erating Electronic Sales Electronic Songpol Board of Directors Board
DIRECT MARKETING Executive Committee Chief Sales – printed material Mr. Mr. Songpol Shanmatkit Mr. Management Customer Service Human Resource & Human Resource General Administration General Administration Acting HEAD OF Marketing Marketing Marketing Nomination and Outbound Insurance Organization Structure (as at December 31, 2013) Organization Structure Outbound Special Port Outbound General Port Mr. Songpol Shanmatkit Mr. Remuneration Committee OUTBOUND MARKETING HEAD OF DIGITAL TV DIGITAL INPROGRAM SATELLITE TV SATELLITE CALL CENTER TV MARKETING Mr. Pongchai Shanmatkit Mr. MEDIA HEAD OF Marketing CALL CENTER TV PRODUCTION HOME SHOPPING Mr. Thanabul Maturanont Mr.
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Management Structure
The Company has 4 sets of committees on planning and regulating policies which consist of the Board of Directors, Audit Committee, Executive Committee, and Nomination and Remuneration Committee with the following details:
Board of Directors
As at December 31, 2013, The Board of Directors consists of the following 9 qualified persons:
Name Position
1. Mr. Phongsuree Bunnag Chairman 2. Mr. Songpol Shanmatkit Director 3. Mr. Thanabul Maturanont Director 4. Mr.Wirasack Wirojwattanakul Director 5. Dr. Pisut Chalakornkul Director 6. Mr. Chalermpong Mahavanidvong Director 7. Mr. Tada Charukitpaisarn Independent Director and Chairman of Audit Committee 8. Asst. Prof. Anucha Chintakanond Independent Director and Audit Committee 9. Mr. Suthep Subsantiwong Independent Director and Audit Committee
Mr. Wichien Manapongpun as the Company Secretary
Then, various shareholding groups have sent their representatives as the Company’s Directors as follows:
1) Director who represents shareholders of Shanmatkit group is Mr. Songpol Shanmatkit. 2) Director who represents shareholders of Maturanont group is Mr. Thanabul Maturanont. 3) Director who represents shareholders of USE Electronics is Mr.Wirasack Wirojwattanakul. 4) Director who represents shareholders Mr. Lai Chien-Kuo is Mr. Chalermpong Mahavanidvong. Definition of Independent Directors of the Company
Independent Director means external Director who does not have any executive position or as employee of the Company, does not hold position of Executive Director or Director with binding signature with the Company, and is independent from major shareholders, Executive, and related person. Independent Director has duty to protect enefit of all shareholders equally, and protect any conflict of interest that might occur between the Company and related person by having the following qualifications:
) 1 Holding shares of not over 0.5% of total shares with voting rights of the Company, subsidiaries, joint venture companies, or juristic persons that may have conflict of interest, and including shares holding of related person*
) 2 Not holding position of Director with joint management** / employee / adviser with month- ly payment / person with authorization power in controlling the Company, joint venture companies, subsidiar- iesf o the same category***, or juristic person with may have conflict of interest at present and during 2 years pri- or to appointment.
) 3 Not having blood relationship or by registration in the forms of father, mother, spouse, brother sis- ter and child including relationship by marriage of the offspring with executive, major shareholders, person with con- trolling power, or person who will be nominated as executive or person with authorization power of the Compa- ny or subsidiaries.
4) Business relationship with the Company that can be categorized as follows:
a) Type of relationship • Relationship from professional services - Relationship type: auditor, other professional services such as lawyer, financial adviser, property appraiser, etc. - Important case of non-independent - auditor – forbidden in all cases - other professional service: amount over Baht 2 million per year • Relationship through trade / business (same guideline as per regulation on related transaction of the stock market) - Relationship type: covering all type of business such as item with normal transaction, renting, renter of real estate, item related to asset / service and item in giving or receiving financial assistant. - Important case of non-independent: value at over or equal to Baht 20 million, or over or equal 3% of NTA of the Company depending on which case is lower; consideration on the value includes any item during 6 months prior to recording the item.
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) b In case of relationship in a) with the juristic person: person to be considered as non-independent are such as major shareholder, Director (exclude in the case of Independent / Auditing Committee member), and Executive or partner of that particular juristic person.
c) Period that is forbidden on relationship as in a) and b): present and 2 years before appointment date.
) d Exception: In case of necessary and appropriate that would not happen constantly and continuously: Independent Committee member / Auditing member may have relationship more than specified points during their membership duration but must be given prior approval from the Board of Directors, and resolution must be unanimous. Moreover, the Companys Board of Directors must disclose the relationship of such Director within the offering filling form in the annual 56-1 form, and also in the annual report 56-2 form. Later on if the Company want to propose the Independent / Audit Committee member for another term, the Company’s Board of Directors must disclose the information concerning the relationship in the notice of meeting of shareholders during the election as well.
) 5 The appointed Director must not be the Director appointed as representative of the Company’s Board of Directors, major shareholders, or shareholders with related relationship with major shareholders.
6) Not having any other nature that cannot give independent opinion.
) 7 Independent Director with qualifications in 1) to 6) may be given assignment from the Board of Directors in making decisions for business operations of the Company, subsidiaries,, joint venture companies, subsidiaries of the same level, or juristic persons that may have conflict of interest in the collective decision
In case that the Independent Director hold the position of Independent Director in the Company, subsidiaries, and subsidiaries of the same level, the Board of Directors has to disclose information on this point, including remuneration received by the Independent Director in the filling form 56-1, and 56-2 as well.
* Related person means person as in section 258 of the Securities and Exchange Act * * Director with joint management means Director who holds Executive position, Director who is responsible as an Executive and Director with binding signatory signature except the binding signature is done after authorization from the Board of Directors, and as the counter signing with other Directors. *** Subsidiaries of the same level mean more than 2 subsidiaries that have the same major company.
Hence, definition of the Company’s Independent Director is more strict than the least definition of the Securities and Exchange Commission Office (SEC) as SEC specifies qualification of the Independent Director of not holding shares of not over 1% of all shares with voting rights of the Company, subsidiaries, or related companies, and including shareholding by related person. Authorized signatory directors
Mr. Phongsuree Bunnag, Mr. Songpol Shanmatkit, Mr. Thanabul Maturanont are the authorized signatory Directors that requires 2 of the 3 signatures with the Company’s seal.
Scope of duties and responsibilities of the Company’s Board of Directors
The annual ordinary meeting of shareholders held on April 19, 2011 had the resolution to determine the scope, duties, and responsibilities of the Company’s Board of Directors as follows:
. 1 Consideration on proposal, advice, and short term and long term business operations strategy, and important investment of the Company that the Executive Committee ask for comment and approval.
2. Consideration on proposal of project, and plan on other important matters relating to operations of the Company that the Executive Committee asks for comment and approval.
3. Consideration on operating budget, annual financial budget, and other budgets other than the annual budget that the Executive Committee asks for comment and approval.
4. Consideration on selection and appointment of the Executive Committee, Chairman of the Executive Committee, and the Managing Director / Chief Executive Officer in order to manage and operate business operations of the Company.
5. Follow up and acknowledge on operating results and supervision on business operations of the Company from the Executive Committee consistently.
6. Consideration on minutes of the meeting according to the law, including consideration on proposal from the Executive Committee on the Company’s dividend payment for approval in the shareholders meeting.
7. The Company’s Board of Directors may authorize one or more Director, or other person to act on their behalf. Then, this authorization of power will not include the authorization, or part of authorization that authorizes Director or receiver of authorization to approve item that may have conflict of interest, stakeholder conflict, or may have other types of any beneficial conflict with the Company or its subsidiaries. Exception will be made for normal business transaction and under general trading conditions as specified by the Board of Directors on the authority, and/or financial limit. These will be under the regulations and conditions, and procedures as stipulated in the related transaction and for acquired item by receiving or by distributing of important asset under registered company under regulations of the Stock Exchange of Thailand, announcement from Office of the Securities and Exchange Commission, and announcement of the Capital Market Supervisory Board.
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Hence, scope of duties and responsibilities of the Company’s Board of Directors must be under regulations of laws and regulations of the Company and other related agencies such as the Capital Market Supervisory Board, Office of the Securities and Exchange Commission, and the Stock Exchange of Thailand. Directors or persons that may have conflict of interest, stakeholder conflict, or may have any other types of any beneficial conflict with the Company or its subsidiaries will not have the right to vote on the issue.
Audit Committee
As at December 31, 2013, the Company’s Audit Committee consists of 3 independent members as follows:
Name Position Duration in Position ( Year)
1. Mr. Tada Charukitpaisarn Chairman of Audit Committee 2 2. Asst. Prof. Anucha Chintakanond 1 Audit Committee Director 2 3. Mr. Suthep Subsantiwong Audit Committee Director 2
Remark: 1: Director with knowledge in accounting and finance, with experience in reviewing on reliability of financial statement.
Mr. Wichian Manapongpan is the Secretary of the Audit Committee
Scope of duties and responsibilities of the Audit Committee
The 2011 annual ordinary shareholders meeting on April 19, 2011 had the resolution to approve scope of du- ties and responsibilities of the Audit Committee as follows:
1. Review that the Company’s financial reports are correct and appropriate.
2. Review that the Company internal control and internal audit are suitable, and efficient, and consider on the independence of internal audit unit as well as consideration on the appointment, transfer, dismissal of the in- ternal auditor head, or any other head that is responsible on internal auditing.
3. Review that the Company complies with laws concerning securities and stock market, regulations of the Stock Exchange of Thailand, and laws concerning business operations of the Company.
4. Consider, select, and propose to appoint independent person for the Company’s auditor with remuneration, and include attending meeting with auditor without the present of management at least once a year.
. 5 Consider on related transaction, or item that may have conflict of interest to be in accordance with laws and regulations of the stock market in order to make sure that the transaction is reasonable with maximum benefit to the Company.
6. Prepare the Audit Committee Report for disclosure in the Company’s annual report which has to be signed by Chairman of the Audit Committee, and consisting with at least the following information:
(a) Comment on the correct, complete, and reliable financial statements of the Company.
(b) Comment on the sufficiency of internal control system of the Company.
(c) Comment on complying with laws concerning securities and the stock market, regulations of the stock market, or laws relating to business operations of the Company.
(d) Comment on the suitability of the auditor.
(e) Comment on transaction that may have conflict of interest.
(f) Number of the Audit Committee meeting and including names of each committee members.
(g) Suggestion or remark from the Audit Committee as a whole on performing duties in accordance with the charter.
(h) Other subject that shareholders and other general investors should be informed under the scope of duties and responsibilities as assigned by the Board of Directors
7. Other operations as deemed necessary from the Board of Directors with consent from the Audit Committee.
Executive Committee
As at December 31, 2013, the Company’s Board of Directors consists of 5 knowledgeable persons as follows:
Name Position
1. Dr. Pisut Chalakornkul Chairman of Executive Committee 2. Mr. Songpol Shanmatkit Director 3. Mr. Thanabul Maturanont Director 4. Mr. Wichian Manapongpan Director 5. Mr. Wirasack Wirojwattanakul Director
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Scope of duties and responsibilities of the Executive Committee
In the Board of Directors meeting no. 4/2554 on April 4, 2011, in which there were 3 Independent Director and Audit Committee Directors joining in the meeting, to consider the scope of duties and responsibilities of the Executive Committee as follows:
1. Policy establishment, short and long term business plans, budget, management structure of the Company, and decision making on important investment project of the Company for proposal to the Board of Directors for consideration on the approval or agreement decision.
2. Stipulation on rules, working system, and regulations on business operations of the Company to be in accordance with business strategy, economic situation, and present to the Board of Directors for decision.
3. Responsible on the supervision of normal business operation, and according to business plan that has been approved by the Board of Directors, and including internal management of the Company.
4. Check and follow up on the operating results of the Company with management team in accordance with policy and approved business operating plan that has been approved by the Board of Directors constantly.
5. Monitor, check, and consider on adjustment of various units in important department, and alteration in high level management of the Company.
6. Consider on the stipulation of approval authority only within internal function of important working units of the Company to present for approval from the Board of Directors.
7. Approve on expenses on various business activities within the budget that has been approved by the Board of Directors (details as per authorization on financial limit concerning daily operations).
8. Consider on salary adjustment, and the annual employee’s bonus by the Human Resource Department for consideration and approval to the Board of Directors.
9. Consider proposal from the Human Resource Department on other compensation payment apart from salary, and performance bonus for consideration and approval to the Board of Directors.
10. Consider the guideline approach to correct damage that happened from investment or as per business plan of the Company and make presentation for agreement from the Board of Directors.
11. Consider on dividend payment from profit of the Company and present to the Board of Directors for approval.
12. Any other action as assigned by the Board of Directors. Hence, authorization on the scope of duties and responsibilities of the Executive Committee must come under condition of laws, rules and regulations of the Company. This will not include the authorization, or part of authorization that authorizes the Executive Committee to approve item that may have conflict of interest, stakeholder conflict, or may have other types of any beneficial conflict with the Company or its subsidiaries. Exception will be made for normal business transaction and under general trading conditions as specified by the Board of Directors on the authority, and/or financial limit. These will be under the regulations and conditions, and procedures as stipulated in the related transaction and for acquired item by receiving or by distributing of important asset under registered company of the Company and its subsidiaries under regulations of the Capital Market Supervisory Board, Office of the Securities and Exchange Commission, and the Stock Exchange of Thailand.
Nomination and Remuneration Committee
As at December 31, 2013, the Nomination and Remuneration Committee consists of 3 knowledgeable persons as bellows:
Name Position
1. Mr. Phongsuree Bunnag Chairman 2. Dr. Pisut Chalakornkul Nomination and Remuneration Director 3. Mr. Songpol Shanmatkit Nomination and Remuneration Director
The Human Resource Development Director is the Secretary of the Nomination and Remuneration Director.
Scope of duties and responsibilities of the Nomination and Remuneration Committee
In the Company’s Board of Directors meeting no.8/2011 in August 11, 2011, there were 2 members i.e. the Independent and Audit Committee Director attending the meeting. The meeting had considered the scope of duties and responsibilities of the Nomination and Remuneration as follows:
1. Nomination ) a Stipulation on rules and conditions for nomination of the Company’s Director, and high level Executive of the Company (Deputy / Assistant Chief Operating Officer upward) and proposes to the Board of Directors for approval.
b) Nominate, select, and propose person with suitable qualification for the following positions: - Director of the Company - Director of the Company to be appointed as Director in Committee - Deputy / Assistant Chief Operating Officer upward - Expert for position as advisor of the Board of Directors For approval by the Board of Directors of the Company
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) c Oversee that the Committee has its size and members suitable for the scope of work, including adjustment for suitability with the changing environment. Various Committees have to consist of knowledgeable persons with suitable abilities and experiences.
) d Propose the remuneration of the Company’s Board of Directors and other sub-Committees to the Company’s Board of Directors for approval.
2. Remuneration
a) Stipulation on policy of the remuneration and other benefits including remuneration rate and other benefitso t the Company’s Directors and other high level Executive of the Company (Deputy / Assistant Chief Operating Officer upward). This also includes remuneration for Director, salary, subsidized payment, bonus and other related beneficial alternative, by having the clear and transparent regulations as proposal to the Company’s Board of Directors for approval, and this policy has to be delivered to the Stock Exchange of Thailand if requested.
) b Oversee that the Company’s Board of Directors and other high level Executive of the Compa- ny (Deputy / Assistant Chief Operating Officer upward) receive suitable remuneration rate with their duties and re- sponsibilities comparing to other related business in similar industry.
) c Stipulate guidelines on performance’s evaluation for Director and high level Executive of the Company (Deputy / Assistant Chief Operating Officer upward) for consideration on annual remuneration adjustment by contemplating on their responsibilities, related risks involved, and the importance of the long term value added shareholders’ equity as their performances as well.
) d Stipulate, and review the policy and structure of the remuneration and employee’s benefits of the Company to be in correspondence with the direct marketing business practice in similar labor market.
) e Consider and make proposal on the annual salary adjustment and bonus payment of employees as per performance of the Company to the Company’s Board of Directors for approval.
) f Information disclosure on the policy and various compensations by listing on the stipulation / payment of remuneration with details relating to target and performance as well as suggestion of the Nomination and Remuneration Committee in the Company’s annual report.
g) Any other action as assigned by the Board of Directors. 8.2.5 Executive Committee
As at December 31, 2013, the Company has 5 Executive Committee members as follows:
Name Position
1. Mr. Songpol Shanmatkit Chief Executive Officer 2. Mr. Thanabul Maturanont Head of Home Shopping Business 3. Mr. Pongchai Shanmatkit Head of DRTV Business 4. Miss Laorsri Maturanont Head of Marketing 5. Mr. Sakesun Vipusitwalakul Head of Finance and Accounting
Scope of duties and responsibilities of the Chairman of the Executive Committee
The Company’s Board of Directors meeting no. 4/2011 in April 4, 2011, consists of 3 Independent and Audit Committee Directors and consideration on the scope and responsibilities of the Executive Committee is as follows:
1. Convey the strategic plan, business plan, and capital management plan, investment and budget that have received approval from the Company’s Board of Directors to assign for action in the operational level.
2. Control, monitor, follow up, and evaluate results of the business operations of various units as in the Company’s business plan.
3. Stipulate on regulations on team work among various units of the Company.
4. Regularly prepare the management report of the Committees in order to present to the Executive Directors for consideration.
5. Review the operational budget, the annual financial budget, and other budget apart from the annual financial budget (if any) and present to the Executive Committee for approval.
6. Consider proposal and operating plans from various units concerning the important business operations or on the organization improvement work, approval authority, or various working systems of important units in order to present to the Executive Committee for approval.
7. Any other action as assigned by the Board of Directors.
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Hence, authorization on the scope of duties and responsibilities of the Chairman of the Executive Committee must come under condition of laws, rules and regulations of the Company. This will not include the authorization, or part of authorization that authorizes the Executive Committee to approve item that may have conflict of interest, stakeholder conflict, or may have other types of any beneficial conflict with the Company or its subsidiaries. Exception will be made for normal business transaction and under general trading conditions as specified by the Board of Directors on the authority, and/or financial limit. These will be under the regulations and conditions, and procedures as stipulated in the related transaction and for acquired item by receiving or by distributing of important asset under registered company of the Company and its subsidiaries under regulations of the Capital Market Supervisory Board, Office of the Securities and Exchange Commission, and the Stock Exchange of Thailand.
Authorization of financial limit on daily business operations
In the Company’s Board of Directors meeting no. 4/2011 in April 4. 2011, the Independent Director and Audit Committee Director with total of 3 persons attend the meeting to consider the authorization to the Company’s Executives the authority on daily operations of the Company including authorization of financial limit on daily business operations. Summarization on important items is as follows:
Purchasing of Purchasing of Product Advertising Fixed Asset Inventory Development cost (Baht) (Baht) (Baht) (Baht)
Executive Committee <=10,000,000 > 5,000,000 > 5,000,000 > 5,000,000 Chief Executive <= 200,000 <= 5,000,000 <= 5,000,000 <= 5,000,000 (Chief Officer level) Director <= 50,000 <= 1,000,000 <= 500,000 <= 1,000,000
Hence, authorization on the above persons as in the above table will not include authorization to approve any item for the person or to person that may have conflict, stakeholder conflict, or any other beneficial conflict with the Company or its subsidiaries as stated in regulations of the Stock Exchange of Thailand. This kind of approval will haveoe t b presented to the Board of Directors meeting and/or at the shareholders meeting for consideration and approval as in the Company’s regulations or as specified by related laws.
Nomination of Director and Executive
The Company has started the appointment of Nomination and Remuneration Committee in the Company’s Board of Directors meeting no. 7/2011 in May 20, 2011. However, the present Directors have been appointed by the shareholders’ meeting by considering from their knowledge, capabilities, and experiences relating to the business, and must be the qualified person that have not been forbidden by the Public Company Act B.E. 2535, and announcement from the Securities and Exchange Commission Office, and other related laws. Regulations for the appointment of the Company’s Director in the shareholders’ meeting are as follows: The Company’s Board of Directors consists of at least 5 Directors and with not less than half of Directors must reside in Thailand. The shareholders’ meeting will select the Directors in accordance with regulations and following procedures:
(1) Shareholder has number of vote in correspondence with the number of own share.
(2) Each shareholder shall vote for a single or any number of Directors. In case of election of more than one Director, equal vote must be given to all Directors.
(3) Persons who receive highest votes in sequence shall be elected as Directors equaling to the required Directors. In case that the last two persons have same number of votes which are surplus to requirement for that election, the Chairman shall cast the deciding vote.
In every annual ordinary shareholder’s meeting, 1/3 of Directors has to vacate their positions. If the 1/3 number of Directors are not exactly divided, the nearest number shall be selected.
For Directors who shall vacate their positions in the 1st or 2nd year after the Company’s registration date, drawing of lots shall decide the outcome, while Directors with more years in the positions, the longest serving Directors shall vacate their positions. Directors who vacate their positions shall be eligible for re-election.
Except vacating position of Director at the end of term, Director may vacate the position, in case of;
(1) Death
(2) Resignation
(3) Lack qualification or forbidden by law concerning the Public Limited Companies Act, and/or laws on securities and stock exchange market.
(4) The shareholders’ meeting has resolution for the resignation
(5) Resignation as per court order
Nomination of the Audit Committee
On the nomination of the Audit Committee, the Audit Committee must have Independent Director of at least one third of all members, and not less than 3 persons with at least one Audit Committee member must have accounting and financial knowledge. The Audit Committee will have the following qualifications:
1. Owning shares of not over 1% of total shares with the right to vote of the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company which includes shareholding of person related to that specific Independent Director.
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2. Have never been or have been Director that participates in the management of business, employee, worker, advisor with permanent salary, or person with controlling authority of the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company at the present time or during 2 year before being elected.
3. Must not be person with relationship through blood, or by legal registration in the form of father, mother, spouse, brother and sister, and offspring which includes marriage partner of offspring, Executive, major shareholder, person with authority, or person who has been offered as Executive or controlling authority in the Company or its subsidiaries.
4. Never have or had business relationship with the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company in the characteristic that may interfere with own independent judgment. This also includes person has never been or has been some doubtful shareholder, or person with controlling authority of the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company at the present time or during 2 year before being elected.
5. Never have or had been auditor of the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company and had never been doubtful shareholder, and the controlling authority or partnership of the auditing office that employs the auditor of the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company at the present time or during 2 year before being elected.
6. Never have or had been provider of any professional services including services on legal advice, or financial advisor who receives more than Baht 2 million of services fee from the Company, the main company, subsidiary companies, joint venture company, major shareholder, or person with controlling authority of the Company and has never been doubtful shareholder, or person with controlling authority or partnership in the professional services at present or during 2 years before being elected.
7. Person who has never been Director and has been appointed as representative of the Company’s Director, major shareholder, or shareholder who is related with major shareholder of the Company.
8. Person who does not operates similar business and competes with the Company’s business or its subsidiaries, or has been in doubtful partnership in the partnership company, or Director who participates in business operations, employee, officer, advisor with fixed salary, or holding more than 1% of all shares that have the right to vote in other company that operates similar business and compete with the Company and its subsidiaries.
9. Person with other characteristic behavior who may not be able to give independent suggestion on business operations of the Company. Remuneration for Director and Executive
Financial remuneration
In the annual ordinary shareholders’ meeting of 2013, in March 29, 2013, the meeting resolution had approved remunerations for the Company’s Board of Directors, and other Committee as follows:
(1) Meeting Allowance
BOARD Meeting Allowance (Baht) Chairman Director Independent Director
Board of Directors 20,000 10,000 No payment Audit Committee 20,000 10,000 No payment Executive Committee 20,000 10,000 No payment Nomination and Remuneration 20,000 10,000 No payment Committee
(2) Directors’ Remuneration The Company will pay Directors’ remuneration at the rate of 10% of dividend payment but not over Baht 2.4 million.
Remuneration for the Company’s Board of Directors
In 2013 the Company paid remunerations to the Board of Directors as follows:
Name Number of Meeting / Total Remuneration Total Meeting (Baht) 2013 2013
1. Mr. Phongsuree Bunnag 13/13 683,529 2. Mr. Songpol Shanmatkit 13/13 564,706 3. Mr. Thanabul Maturanont 13/13 282,353 4. Mr. Wirasack Wirojwattanakul 12/13 261,176 5. Dr. Pisut Chalakornkul 13/13 271,176 6. Mr. Chalermpong Mahavanidvong 12/13 261,176 7. Mr. Tada Charukitpaisarn 13/13 271,176 8. Asst. Prof. Anucha Chintakanond 13/13 412,353 9. Mr. Suthep Subsantiwong 9/12 90,000 Total 3,097,647
Remark: Remuneration includes meeting allowance and Director’s remuneration.
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Remuneration for the Audit Committee
In 2013, the Company had paid remunerations to the Audit Committee as follows:
Name Number of Meeting / Total Remuneration Total Meeting (Baht) 2013 2013
1. Mr. Tada Charukitpaisarn 5/5 90,000 2. Asst. Prof. Anucha Chintakanond 5/5 60,000 3. Mr. Suthep Subsantiwong 5/5 50,000 Total 200,000
Remuneration for the Executive Committee
In 2013 the Company had pain remuneration to the Executive Committee as follows:
Name Number of Meeting / Total Remuneration Total Meeting (Baht) 2013 2013
1. Dr. Pisut Chalakornkul 12/12 240,000 2. Mr. Songpol Shanmatkit 12/12 - 3. Mr. Thanabul Maturanont 12/12 - 4. Mr. Wichian Manapongpan 12/12 40,000 5. Mr. Wirasack Wirojwattanakul 11/12 110,111 Total 390,000
Remuneration for the Nomination and Remuneration Committee
In 2013, the Company had paid remunerations to the Nomination and Remuneration Committee as follows:
Name Number of Meeting / Total Remuneration Total Meeting (Baht) 2013 2013
1. Mr. Phongsuree Bunnag 4/4 80,000 2. Dr. Pisut Chalakornkul 4/4 40,000 3. Mr. Songpol Shanmatkit 4/4 - Total 120,000 Remuneration for the Executives
In 2013 the Company had paid remunerations to the Executives as follows:
2013 Remuneration for Executives Number of Million Baht person
Salary and Bonus 5 14,225,224 Other remunerations such as transportation, telephone, 5 2,726,296 contribution fund, Social security Total 5 16,951,540
Remark: Remuneration for Executives in above table consists of 1. Mr. Songpol Shanmatkit 2. Mr. Thanabul Maturanont 3. Miss Laorsri Maturanont 4. Mr. Pongchai Shanmatkit 5. Mr. Sakesun Wipusitworakul
Other Remuneration None
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Employee
Number of employees
As at December 31, 2013 the Company has 1,682 employees by separating into various departments as follows:
Department Number of person
1. Office of Director 18 2. T.V. Marketing 135 3. Outbound 705 4. Digital Marketing 13 5. Direct Response Printing 33 6. Retail Marketing Fulfillment 161 7. Retail Marketing - Retailing 127 8. Re-Seller Marketing 12 9. Marketing 32 10. Supply Chain Management 100 11. Finance 10 12. Accounting 23 13. Information technology 15 14. Human Resource Management 23 15. Event Marketing 89 16. Marketing – Brand Management 21 17. Direct Marketing 27 18. Home Shopping 68 19. General Administration 23 20. Customer Service 47 1,682 Employee’s Remuneration
Financial remuneration
In 2013, the Company had paid employees’ remuneration (not including Executives) at Baht 327,258,609 million in the form of salary, bonus, and other compensations such as commission, overtime, vehicle, telephone payment, etc.
Other remuneration
None
Employee development plan
The important thing in conducting the business of product distribution, with new product innovation all the time, by using multichannel marketing is the impressive creation in product usage experience. Then, training has been arranged for sale representatives in order to present product knowledge and usage of products in each category. owever, in order to develop other employees to develop their abilities to serve the more and increasing sale volume, the Company has the policy on employees’ development as follows:
1. Training by Executive / employee who have experiences with training on the present products and occasionally new products in order to develop understanding in various products completely and will be able to give recommendation correctly to customers with satisfaction.
2. Training course directly by the products’ owner
3. Training by inviting skilled trainer on various topics for employees
4. Arrangement of budget for employee for specialized training.
5. Using the operational system to support on the acquisition management, product management, product delivery, and supply supporting sale information, including training on the real operations in order to establish efficient operations.
Moreover, in 2012, the Company hired external human resources advisor to help in structural development and management of human resources system. These were in the subjects of operation on the structural positioning, characteristic of work position, standard training structure, evaluation system, career path’s growth, including the related software in order to create development and encouragement in all level of employees.
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Labor dispute None
Corporate Governance
The Company realizes that good corporate governance is very important and has supporting role on operations of the Company which enables it to continuous grow and increases confident towards shareholders, investors, and all related parties. The Company will emphasize on operating the business in accordance with the good corporate governance and includes in strictly complying with rules and regulations of the Securities and Exchange Commission Office, and the Stock Exchange of Thailand. Then, the Company also continuously supports Executives and employee to realize the importance of good corporate governance, and supplies knowledge to all employees on the good corporate governance which includes code of ethics of the Company for correct practice.
The Company stipulates on guidelines on good corporate governance to be in accordance with good corporate governance that has been stipulate by the Stock Exchange of Thailand in which 5 important parts are as follows:
1. Shareholders’ Rights
The Company realizes and stresses the importance of equal right to shareholders such as the trading right, profit sharing right from the Company, shareholders’ meeting right, and the right to present their opinions. The right on participation in the important decision making subjects of the Company such as; allocation of dividend payment, appointment or termination of Director, approval on important business transaction that reflects business direction of the Company, and amendment of the Company’s Memorandum of Association and regulations, etc. The Company has the policy to proceed with various operations in order to support and facilitate on shareholders’ rights as follows: (a) The Company will deliver notice of meeting with complimentary information on various agenda, including rightf o shareholders on the meeting, and the right to vote for shareholders so that shareholders will have advanced information in accordance with the related law, or as specified by the Securities and Exchange Commission Office, and the Stock Exchange of Thailand, and the Company also has policy to disclose the information through the Company’s website prior to the meeting.
(b) In case that shareholder cannot attend the meeting, the Company opens opportunity to shareholders to give proxy to Independent Director or any other person as replacement by using one of the proxy forms already delivered with the notice of meeting.
(c) Prior to the shareholders’ meeting, the Company opens opportunity to shareholders to send in their comments, suggestion, and questions before the meeting date. (d) During the meeting, the Company will allocate appropriate time, and opens opportunity to shareholders for comments, suggestion, and questions in various agenda freely before any resolution. Moreover, in the shareholders’ meeting, the Executive Directors and related persons will join the meeting to present information and will answer questions, and all questions and suggestions will be recorded in the minute of the meeting for shareholders to review.
2. Equal right to shareholders
The Company has the policy to treat and protect shareholders’ rights equally especially for minority shareholders such as; open opportunity to minority shareholders to add more agenda before the meeting date, open opportunity to minority shareholders to propose person for appointment as Director, stipulation for Independent Director the duty to take care of the minority shareholders as minority shareholders can give suggestions, and comments to Independent Director who will consider action as appropriated in each case. Additionally, the meeting agenda will not necessarily be added without prior notice especially in some important agenda that requires time on studying information prior to decision making, etc.
On protection of insider information, the Company stipulates protection measures on insider trading of person relatedo t Directors, Executive, employee, and person employed by the Company (including spouse and children who are minors) who are related to the information, are to disclose inside information to outsider or unrelated person. Also, they must not seek for their own benefits and for related person by using position and secret information of the Company such as; Director, Executive, and related person are forbidden to disclose inside information to outsider or unrelated person. Persons who are relating to inside information are not allowed to engage in the Company’s securities trading within 1 month before the quarterly financial statements, and the Company’s annual financial statements are published to the public, and for 24 hours after important information are being disclosed.
The Company stipulates that Director and Executive, including spouse and children who are minors, are to report on their stock holding of the Company to the Securities and Exchange Commission Office in accordance with item 59 in the Securities and Exchange Act BE 2535. Moreover, on the buying, selling or transferring securities of the Company that Director and Executive, including spouse and children who are minors, are to report on their stock holding of the Company to the Securities and Exchange Commission Office and the Stock Exchange of Thailand within 3 days after the buying, selling or transferring, and a copy must be sent to the Company as evidence.
3. Role of the Stakeholders
The Company recognizes the important role of all stakeholders whether from the internal stakeholders such as employees and Executives of the Company, or external stakeholders such as customers, competitors, creditors, Government agencies, communities, and other related organizations. The Company realizes that supports from various stakeholders will generate ability to compete and results in profit to the Company which is considered as long term success for the Company.
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Shareholders : The Company strives to become good representative of shareholders in operating the business in order to build maximum satisfaction for shareholders by considering the long term growth in value with good and continuous returns of the Company.
Customer : The Company strives to build high customers’ satisfaction and promote relationship on the same beneficial basis. This can be preceded by bringing good quality products and services for distribution and ready to quickly execute complaints from customers. Moreover, the Company is responsible toward customers by distributing good quality products and services at reasonable prices with complete presentation on information of products and services with efficient advice on products usages. Researches on products requirements and customers’ satisfaction have been done to bring research information on the development of business in accordance with customers’ requirement.
Trading Partner : The Company contemplates on equal business operations and mutual benefit with the trading partners in accordance with commercial conditions and not contrary to the law. The Company purchase products and services from trading partners in accordance with commercial conditions including the contracts conformation.
Competitor : The Company supports and promotes the policy of free and fair competition within the rules of good competition, ethics, and complying with the law.
Creditor : The Company practices under conditions of the contract and financial obligation towards creditors strictly, correctly and fully.
Employee : The Company promotes and develops employees’ abilities to achieve the most capabilities by arrangement with fair employment, and with good and safe working environment.
Government Agency : The Company realizes the important on strictly complying with the law and regulations of related agencies and has representative as Director in the Thai Direct Marketing Association.
Community : The Company recognizes the important on environment, safety and responsibility toward community by making arrangement to take care of environment and safety with maximum efforts and also campaign on energy saving. Moreover, the Company has arranged activities together with communities in order to compensate and help society such as coordination with the Thai Red Cross Society on blood and stem cells donation under the project “A Drop for Life…..Donation from hundred hearts”.
4. Information disclosure and transparency
The Company’s Board of Directors realizes and stresses that the importance of information disclosure must be correct, complete and transparent on the general reports of financial information and general information under regulations of the Securities and Exchange Commission Office, and the Stock Exchange of Thailand as well as other information that may have impact on the Company’s stock pricing. The Company will publish the information to shareholders, investors, and public through various media such as information broadcasting of the Stock Exchange of Thailand, the Company’s website, newspapers, etc. in order to equally reach the shareholders.
On the investor’s public relation, the Company has assigned the Chief Executive Officer, and the Company’s Secretary, or person assigned by the Chief Executive Officer to communicate with general people such as shareholders, investors, analyzers, and related persons.
The Company’s Board of Directors realizes that the Company’s information concerning financial information and non-financial information have resulted in the decision making of investors and stakeholders of the Company. The Company has stipulated the Audit Committee to review quality of financial statements and internal control system, including sufficient information disclosure of important information in the remark of the financial statements, and report to the Company’s Board of Directors for acknowledgement. Additionally, the Company’s Board of Directors as the policy to disclose information correctly, completely, and truthfully, continuously and on time as per regulations of the Stock Exchange of Thailand.
5. Responsibilities of the Board of Directors
5.1 Board of Directors’ structure
The Company’s Board of Directors consists of knowledgeable members with capabilities and experiences who contribute to the Company. The Board of Directors has important roles in stipulation on the policy, target, business plan, and budget as well as the supervision of Executives to operate efficiently and effectively in accordance with the assigned policy.
At present, the Company’s Board of Directors has 9 members consisting of 2 Executive Directors, and 4 non-Executive Directors, with 3 Independent Directors that are one third of total Directors which will suitably balance on the voting of various topics. Moreover, the Company also appoints 3 additional sub-committees which are the Audit Committee, Executive Committee, and Nomination and Remuneration Committee and has clearly specified their scopes of duties and responsibilities. Additionally, the Chairman of the Company’s Board of Directors is not the same person as the Chief Executive Officer in order to separate their duties on determination on overall policy and supervision of daily operations.
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According to the Company’s regulations, in every annual ordinary shareholder’s meeting, 1/3 of Directors has to vacate their positions. If the 1/3 number of Directors are not exactly divided, the nearest number shall be selected. The Directors who have to vacate their positions in the 1st or 2nd year, after registration of the Company, have to draw lots, and for later year Directors with longest serving years have to vacate the positions but Directors who have to vacate their positions may be re-elected into the new positions.
The Company has Secretary of the Board of Directors who performs duty on the procedures of the Board of Directors’ meeting, and the shareholders’ meeting. The Company’s Secretary has duty on giving suggestions on regulations to the Board of Directors must acknowledge and taking care of the Board of Directors’ activity including coordination on operations as per the Board of Directors’ resolution.
5.2 Scope of duties and responsibilities of the Committees.
Committees are responsible towards shareholders for business operations of the Company by stipulating the policy and business direction of the Company including the monitoring that management is according to target, and guideline for long tern benefit to shareholders under the stipulation of law and business ethics while at the same time the Committees have to consider all stakeholders’ benefits.
Corporate Governance Policy
The Company has its corporate governance policy in written format for presentation to the Company’s Board of Directors meeting for approval. Also, manual on the corporate governance has been published as guidelines to Directors, Executives, and employees for implementation as the Company’s Board of Directors has arranged for its review every year.
Business Ethics
The Company has the policy to operate its business in transparent and ethical manners with responsibility toward stakeholders as well as toward society and environment. The Company has published the code of ethics booklet so that the Company’s Board of Directors, Executives and employees can use as guidelines for their operations, and the Company has made announcement and inform all employees for acknowledgement and strictly conform to the code of ethics.
Conflict of Interest
The Company has policy to carefully consider and terminate conflict of interest with honesty, faithfulness, with reason and freely under the good ethics in order to give benefit to the Company. Related person on subject for consideration must inform his conflict of interest to concerned person and will not be allowed for consideration, including no authority to approve the related subject. The Company has the policy on related party transaction and item that may have conflict of interest to be in accordance with the law, as well as regulations of the Securities and Exchange Commission Office, and the Stock Exchange of Thailand including the disclosure of transaction in the annual report, and in the annual statement (form 56-1).
Internal Control
The Company realizes the important of good internal control system as this has been arranged in manual with procedures in writing. It prescribes segregation on responsibility, operational authorization of employee and Executive on various subjects, asset holding, approving on item, recording of accounting and financial information, separation on duties of operator, monitoring person, and evaluation, from each other in order to set the balance on checking and evaluating.
The Company has appointed RPAM Coaching Co., Ltd., as internal auditor and report the result to the Audit Committee.
5.3 Committee meeting
The Company’s Board of Directors has stipulated that the meeting will normally be on every month and may have extraordinary meeting if necessary. The meeting agenda will be clearly set in advance and information will be given beforehand so that the Committee will have enough time to study the information except in case of emergency. Directors have the duty to attend every meeting except in some necessary event, and the Company will make minute of the meeting and collect documents on minutes of the meeting for reference and review. On consideration of various subjects, the Chairman who acts as Chairman of the meeting will open opportunity to Directors to have free suggestions. In some agenda, there may be high level Executive involving in the meeting to give some additional useful information including the direct acknowledgement on policy for efficient operations.
5.4 Remuneration
The Company has stipulated regulations and remuneration for Directors and Executives according to the knowledge, ability, duty, responsibility, and experience and comparing with the same type of industry. The remuneration rate e must b suitable, to safeguard person with ability to work with the Company for a long term. Moreover, the Company has made proposal on Directors’ remuneration to the shareholders meeting for its approval by receiving agreement from the Nomination and Remuneration Committee beforehand, and these will be disclosed as specified by the Securities and Exchange Commission Office.
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5.5 Directors and Executives’ Development
The Company continuously supports the Board of Directors, and Executives to participate in seminar that is useful to the operations and development. In case of change or resignation in the position of Directors or Executives, the Company will arrange for useful documents and information to be delivered to the new Directors or Executives including arrangement for new Directors or Executives to attend the seminar as well.
Supervision on the use of inside information
In order to create transparency and protection on using inside information that has not been disclosed to the public for self-benefit, including avoiding any scandal on the suitability of inside trading, the Company has the policy and procedures for protection on using internal information for self-benefit as follows:
- Directors, Executives, and employees of the Company must keep secret and / or internal information of the Company by not disclosing or searching for own-benefit, or for benefit of other person either directly or indirectly. This includes buying, selling, transferring, or receiving transfer the Company’s share by using secret and / or internal information of the Company and / or entering into legal document by using secret and / or internal information of the Company that may cause any damage to the Company.
- Communicate with Directors and Executives in various department on the duty to report their own shareholding, spouse, children who are minors to the Securities and Exchange Commission Office, and the Stock Exchange of Thailand as in item 59 and imposed by section 275 of the Securities and Exchange Act BE 2535.
- The Company specifies that Directors and Executives have to report their changes in stockholding to the Securities and Exchange Commission Office as in item 59 of the Securities and Exchange Act BE 2535 and copy of the transaction must be sent to the Company on the same day as report to the Securities and Exchange Commission Office.
- The Company will proceed with circulation letter to Executives that the Executives and related person who receive internal information that have resulting impact on the changing of share prices will have to stop the Company’s share trading within 1 month before the quarterly financial statements, and the Company’s annual financial statements are published to the public, and for 24 hours after important information are being disclosed.
Hence, if there is any violation on the above regulations, the Company will proceed with disciplinary action as appropriated depending on intention and damage caused by that particular action by issuing warning letter, salary cut / temporary suspension and termination from work. Internal Control System
The Board of Directors on the adequacy and appropriateness of the Company’s internal control system.
The Company realizes the importance on strengthening of internal control system to be adequate and appropriate with business operations in order to protect the Company’s property from damage, or for other improper benefit. The Company has appointed the Quantum Point Consulting Co., Ltd. as the auditor of internal control of the Company, and reports the auditing results directly to the Audit Committee for its independence on operations.
In the Board of Directors meeting no. 1/2014, on January 23, 2014, with participation from the Audit Committee, the Board of Directors had evaluated the adequacy of internal control system by questioning information from management, and answering on questionnaires on adequacy of the internal control by themselves. It could be summarized that evaluation on 5 parts of internal control system of the Company which were; the organization and environment, Risk management, the operational control of the management, information systems and data communications, and tracking system, the Board of Directors commented that the internal control system was adequate enough.
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Related Party Transactions
Related party transactions of the TV Direct Public Company Limited or its subsidiaries with other companies or persons who may have conflict of interest
Details and information of related party transactions of the Company, subsidiary companies, and related companies are illustrated in Note 37 of the financial statements as at December 31, 2013. The Company’s Audit Committee had examined the related party transactions and made a remark that those related party transactions are in accordance with general conditions and normal business operations.
Measures and procedures for the approval of related party transactions
Concerning measures and procedures for the approval of related party transactions, the Company specifies that Executive or the stakeholder will not be able to participate in the approval of related item. In case that there is a related party transactions between the Company, or subsidiary companies with person who may have conflict of interest, stakeholder, or may have conflict of interest in future, the Audit Committee will consider necessity on the transaction, sensibility, and suitability on pricing of that item. Various conditions will be considered to be in accordance with normal commercial operationsn i the market, and price will be compared with other external person. In case that the Audit Committee has no prior experience in considering related transactions that may occur, the Company will arrange for person with special skill and experience such as auditor, or independent appraiser, or law firm, etc., that are independent from the Company and person who may have conflict of interest to give suggestion concerning the related transactions. Suggestions or recommendations from these persons with special skills will be used for decision making of the Audit Committee and/or the Company’s Board of Directors and/or shareholders depending on the case. The Company also complies with rules and regulations of the Stock Exchange of Thailand and/or announcement of the Office of the Securities and Exchange Commission and/or accounting standard specified by the Association of Accounting Professions. After that, the Audit Committee will present to the Company’s Board of Directors for consideration and/or shareholders for consideration and approval as appropriate. The Company will disclose items on related party transactions in the remark of the financial statements which have been reviewed by the Company’s auditor.
Policy or Trend on Related Party Transactions in Future
Future related party transactions will have to be reviewed in accordance with measures and procedures for approval as indicated in the Company’s regulations as stated above. The Company’s Board of Directors and Audit Committee are the administrators that the Company will proceed with its operations in accordance with laws on securities and stock market, regulations of the Stock Exchange of Thailand and/or announcement of the Office of the Securities and Exchange Commission and/or accounting standard specified by the Association of Accounting Professions concerning related transactions, including performance as stipulated in regulations on information disclosure on related party transactions, and on acquiring and distributing important assets of the Company or the subsidiary companies. Financial Position and Performance
Financial Statement
Summarization of the Audit Report
The financial statements for the year 2012 and 2013 have been audited by Mr. Sudwin Punyawongkhunti, the registered auditor number 3534 from the Price Waterhouse Cooper ABAS Co., Ltd.
The auditor has reviewed the consolidated financial statements and the Company’s financial statements for the year 2012 and 2013, and has come to the conclusion that the consolidated financial statements and the Company’s financial statements that show the financial position of the consolidated financial statements and the Company’s financial statements as at December 31 2012, and December 31,2013, and the operating results of consolidated financial statements and the Company’s financial statements, and cash flow of the consolidated financial statements and the Company’s financial statements at the end of the same fiscal year of the Company and its subsidiaries, and only of the Company respectively are corrected and appropriated in important information as in generally accepted accounting standard.
Summary of financial position and operating results
TV Direct Public Company Limited and Subsidiaries Consolidated Statement of Financial Position
2012 2013 M. Baht % M. Baht %
Assets Current Assets Cash and cash equivalent 47.33 4.73 126.45 9.77 Account receivable and other - net 139.62 13.94 106.46 8.22 Short term loans to person and other companies - - - - Short term loans to associated company - - - - and related person Inventory - net 372.65 37.20 420.13 32.44 Concert during production - net - - - - Deposit for purchase of products 11.05 1.10 21.42 1.65 Value Added Tax 10.56 1.05 7.91 0.61 Other current assets - net 1.90 0.19 1.25 0.10 Total Current Assets 583.11 58.21 683.62 52.79
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2012 2013 M. Baht % M. Baht %
Non-Current Assets Investments in Subsidiaries and Associates - - - - Investment in securities for sale 27.26 2.72 154.60 11.94 Bank deposits for guarantees 32.26 3.22 29.67 2.29 Property, plant and equipment-net 299.57 29.91 353.46 27.30 Intangible assets - net 20.82 2.08 34.10 2.63 Lease holding rights - net 0.65 0.06 0.13 0.01 Deferred tax assets – net 3.47 0.35 6.40 0.49 Other Non-current Assets 34.56 3.45 32.97 2.55 Total Non-Current Assets 418.59 41.59 611.33 47.21 TOTAL ASSETS 1,001.70 100.00 1,294.95 100.00
Liabilities and Shareholders’ Equity Current Liabilities Short term loan from Financial Institution 255.97 25.55 127.06 9.81 Accounts payable and others 295.89 29.54 274.93 21.23 Payment date within one year of - Long term loan from Financial Institution 14.62 1.46 31.46 2.43 - Current portion of liabilities under financial 6.40 0.64 6.99 0.54 lease - net Short term loan from related person - - - - Accrued expenses - - - - Accrued income tax 7.64 0.76 2.84 0.22 Other current liabilities 5.77 0.58 4.90 0.38 Total current liabilities 586.29 58.53 448.18 34.61 Non-Current Liabilities Long term loan from Financial Institution 57.77 5.77 84.90 6.56 Current portion of liabilities under financial lease 7.80 0.78 2.25 0.17 Obligation for employee benefit 8.91 0.88 14.43 1.11 Other non-current liabilities 2.70 0.27 3.12 0.24 Total Non-current Liabilities 77.18 7.70 104.70 8.08 TOTAL LIABILITIES 663.47 66.23 552.88 42.69 TV Direct Public Company Limited and Subsidiaries Consolidated Statement of Financial Position (cont.):
2012 2013 M. Baht % M. Baht %
Shareholders’ Equity Share Capital Registered Capital 188.00 - 246.75 - Issued and Paid up Share Capital 188.00 18.77 235.00 18.15 Premium on share capital 89.06 8.89 465.06 35.91 Premium on land valuation 25.32 2.53 25.32 1.96 Deficit from Under Common Control (13.69) (1.37) (13.69) (1.06) Earning from investment in securities for sale 0.05 0.01 0.81 0.06 Deferred gain on hedge accounting. - - - - Differences from changing financial statement 1.53 0.15 (0.43) (0.03) Retained earnings: Appropriated – legal reserve 12.06 1.20 16.51 1.27 Inappropriate 40.02 4.00 6.29 0.49 Total shareholders’ equity of parent company 342.35 34.18 734.87 56.75 Uncontrolled equity ( 4.12) (0.41) 7.20 0.56 Total Shareholders’ Equity 338.23 33.77 742.07 57.31 Total Liabilities and Shareholders’ Equity 1,001.70 100.00 1,294.95 100.00
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TV Direct Public Company Limited and Subsidiaries Consolidated Profit and Loss Statement
2012 2013 M. Baht % M. Baht %
Revenue from sales and services 2,237.08 99.46 2,203.23 98.74 Cost of sales and services (980.84) (43.61) (880.86) (39.48) Gross Profit 1,256.24 55.85 1,322.37 59.27 Selling expenses (992.59) (44.13) (1,063.72) (47.67) Administrative expenses (175.14) (7.79) (216.63) (9.71) Earnings from operations 88.51 3.93 42.02 1.88 Net compensation income from warehouse fire 0.04 0.00 8.04 0.36 Other Income 12.19 0.54 19.98 0.90 Other Expenses (8.96) (0.40) (0.33) (0.01) Financing cost – interest paid (16.95) (0.75) (15.59) (0.70) Share of loss from investment - - - - in associated company Profit before tax 74.83 3.33 54.12 2.43 Income Tax (27.76) (1.23) (16.20) (0.73) Profit for the year 47.07 2.09 37.92 1.70 Other comprehensive income Differences from changing financial statement 1.06 0.05 (2.05) (0.09) Profits from investments available for sale 0.06 0.00 0.95 0.04 Changes in deferred tax liabilities Profits from investments available for sale. (0.01) 0.00 (0.19) (0.01) Comprehensive Profit for the Year 48.18 2.14 36.63 1.64
Profit Sharing Majority Interest 48.97 41.21 Minority Interest (1.90) (3.29) 47.07 37.92 Comprehensive Profit Sharing Majority Interest 50.01 40.01 Minority Interest (1.83) (3.38) 48.18 36.63 TV Direct Public Company Limited and Subsidiaries Consolidated Statement of Cash Flow
Unit : Million Baht Description 2012 2013
Cash Flows from Operating Activities Net profit before tax 74.84 54.12 Adjusting Entries: Depreciation and amortization 36.06 50.87 Amortization of leasehold. 0.52 0.52 Allowance for doubtful accounts (reversed) 1.67 10.26 Loss on write-off. 4.71 0.48 Estimated recoverable (reversed) 1.02 (0.16) Allowance for obsolete and slow moving products (reversed) (2.92) (2.78) Allowance for product cost higher than net received value (0.09) (0.53) Loss from products counting (0.81) (0.43) Loss from product demolition 4.48 4.22 Loss from investment in closed subsidiary (reversed) - - Loss from investment in subsidiary 6.26 - Income from compensation on warehouse fire (82.00) - Loss from disposable products sales from fire 81.79 - Loss from disposable equipment sales from fire 0.11 - Loss from disposable sales of consumable materials from fire 0.05 - Loss on disposal of equipment from theft 0.02 - Capital gain - (0.63) Loss from obsolete fixed assets and intangible assets 2.70 0.33 Estimation on provision for unused vacation (reversed) (0.52) - Obligation for employee benefits 5.79 6.43 Expenses resulting from the sale of shares to employees 1.39 - Interest received (1.50) (1.36) Financial costs - interest on loan from financial institution 15.97 14.49 - Interest payable under financial lease 0.94 1.10 - Interest paid on loan from person and related company 0.03 - Profit from operations before changes in operating assets and liabilities 150.52 138.87
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TV Direct Public Company Limited and Subsidiaries Consolidated Statement of Cash Flow (Cont.):
Unit : Million Baht Description 2012 2013
Operating assets decrease (increase) Trade receivables and other receivables (9.13) 23.21 Remain inventory (118.91) (50.57) Deposit for products 7.23 (10.36) Value added tax (2.98) 2.66 Other current assets 0.30 0.65 Other non-current assets (2.66) 1.59 Operating liabilities decrease (increase) Trade payables and other accounts payable 17.55 (18.01) Deposit on received goods - - Accrued expenses - - Other current payables 0.61 0.46 Obligation for employee benefits (1.23) (0.91) Other non-current liabilities 0.31 0.42 Cash received (payable) from operations 40.59 87.98 Interest received 2.20 1.36 Cash paid on financial cost – interest paid (15.32) (16.36) Cash payable for income tax (32.86) (24.12) Net cash received (spent) on operating activities (5.39) 48.86 Cash flows from investing activities Deposits on guarantees at financial institution increased(decreased) (2.53) 2.58 Cash paid for fixed assets (88.16) (100.46) Cash received on selling of fixed assets 0.38 0.46 Cash paid/received for purchasing of intangible assets (9.55) (20.03) Cash received for discount purchase of intangible assets - 0.22 Cash paid for short term loan to person and other company - - Cash received from short term loan to person and other company 7.04 - Cash received for short term loan to associated company and related person (6.93) - Cash from dividend payment - - Non-controlled stakeholder increased (decreased) - 14.70 Cash received(paid) from investment in closed down company - - Consolidated Statement of Cash Flow (cont.):
Description 2012 2013
Net cash received(paid) from investment in subsidiaries 0.96 - Cash paid for investments in securities available for sale (28.20) (197.20) Cash received from sales of securities available for sale 1.00 71.44 Cash paid for investment in associated company - - Net Cash Received (spent) from Investing Activities (125.98) (228.27) Cash flows from financing activities Cash received from short term loan from financial institution 1,338.05 719.50 Cash paid for short term loan from financial institution (1,287.37) (848.41) Short term loan from related business increased (decreased) (11.18) - Short term loan from other person increased (decreased) - - Long term loan from financial institution – cash received 31.93 68.07 Long term loan from financial institution – cash paid (7.47) (24.09) Cash payment for loan under financial lease (3.47) (7.11) Cash received from issued shares from subsidiaries 10.09 - Net cash received from issued shares 120.25 423.00 Cash paid for share offering operation (3.61) - Cash paid on dividend of ordinary shares (50.53) (70.36) Net cash received (paid) in financing activities 136.68 269.59 Differences on adjustment of financial statement 1.06 (2.05) Net Cash and Cash Equivalent Increased (Decreased) 6.38 79.13 Net Cash and Cash Equivalent as at January 1st 40.95 47.33 Net Cash and Cash Equivalent as at December 31st 47.33 126.45
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Summary of Important Financial Ratios
Description 2012 2013
Liquidity Ratio Liquidity Ratio (time) 0.99 1.53 Quick Liquidity Ratio (time) 0.14 0.46 Cash Flow Liquidity Ratio (time) (0.01) 0.09 Account Receivable Turn Over Ratio (time) 39.98 27.58 Average Collection Period (day) 9.00 13.05 Inventory Turnover Ratio (time) 3.05 2.45 Average Product sales Period (day) 118.18 146.79 Payable Turnover Ratio (time) 5.48 4.78 Debt Payment Period (day) 65.66 75.39 Cash Cycle (day) 61.52 84.45
Profitability Ratio Profit Margin Ratio (%) 56.16 60.02 Operating Profit Ratio (%) 3.96 1.91 Profitability Ratio (%) (6.09) 116.26 Net Profit Ratio (%) 2.09 1.70 Return on Equity Ratio (%) 16.21 7.04
Efficiency Ratio Return on Assets (%) 5.29 3.30 Return on Fixed Assets (%) 31.81 27.19 Asset Efficiency Ratio (time) 2.53 1.94
Financial Policy Ratio Debt to Equity Ratio (time) 1.94 0.75 Interest Coverage Ratio (time) 2.79 5.46 Cash Fixed Charge Coverage Ratio (time) (0.03) 0.22 Dividend Payment Ratio (%) 119.81 123.96 Discussion and Analysis on Financial Position and Operating Results
Overall Performance
TV Direct Public Company Limited (or “Company”) had been established in April 21, 1999 and in the beginning the Company operated the direct marketing business using media communication for direct presentation of products and services through the Direct Response Television in the free TV system in which consumers could purchase through the inbound call center. Later on, the Company had expanded the business into the distribution of products and services through the multichannel marketing. Moreover, the Company also distributed its products through the retail channel using the TV Direct Showcase, including the wholesale distribution of products to domestic and foreign customers. This also included contract on producing advertising media and procuring advertising air-time for customers as supplementary service. Hence, from business expansion into the distribution of products and services in various marketing channels, the Company’s sales volume had continuously increased. This had coupled with various marketing strategies that had been in operations in many areas such as; the selection of quality and variety of products by studying the requirement of various customer’s groups, products and services presentation that corresponded with customers’ life style, quick products delivery service, satisfaction guarantee for customers by offering the right to return products within 30 days after receiving, the below-the-line marketing activities to present products and services information to customers, and the importance of after sale service and building good relationship with customers. Hence, from the first year operation in business with sales revenue of only Baht 64 million until 2011, the Company and its subsidiaries had revenue from sales and services at Baht 1,902.63 million, and had increased to Baht 2,237.08 million in 2012, and at Baht 2,203.3 million in 2013 at the growth rates of 17.58% and -1.51% respectively.
In order to be ready for competitions from domestic and foreign competitors in future, the Company had started to expand into the direct marketing business in Indo-china countries in 2011. The Company had invested 99.99% of shares in the TV Direct Indo-China Co., Ltd., which had investments in other companies and, as at present the TV Direct Indo-China has investments in its 4 subsidiaries consisting of;
(1) Direct Response Television Co., Ltd., that situated in Cambodia at 100%.
(2) TV Direct Lao Co., Ltd., in Lao at 95%.
(3) TV Direct (Malaysia) Sdn. Bhd., in Malaysia at 88.25%.
(4) TVDI Vietnam Co., Ltd., in Vietnam at 100%
These 4 subsidiary companies operated the direct marketing business. Moreover, in July 2011, the Company had started the business of one level direct sale which was used to add more marketing channel to other retailing customers.
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In May 12, 2013, the Company expanded its business by joint investing with a British company, John Mills Ltd., which operated the “Screen to Screen” distribution type of business with highly popular operations in Europe and Asian. The J.M.L. Direct (Thailand) Ltd. was setup with the Company holding 51% shares in order to add an additional sales channel to retail customers.
In November 26, 2013, another company called “Shop At Home Co., Ltd.,” was setup for the purpose of product distribution through 24 hours television channel with the Company held 99.99% shares. This was to compete with foreign competitors and the starting of 24 hours television broadcasting technology.
Apart from policy to generate strong revenue growth, the Company also realized the importance of product sourcing, and on controlling product cost to be at the suitable level. The Company had appointed the supply chain management in order to follow up on the product movements. The supply chain management had its duties in the product acquisition plan, management of inventory and cooperated with various units such as sales, marketing, information technology, accounting, and finance departments, etc., in order to follow up on product movements, and data on type of products ordered from customers. This information would be used to evaluate product requirements of customers and on ordering suitable type of products. The Company had planned for the advertising and public relation for product presentation including plan on various selling methods such as, products’ prices adjustment to suit the present situation, etc. Hence, from these operations, the Company was able to generate net profit of Baht 35.34 million, and Baht 47.07 million, and Baht 37.92 million from year 2011 to 2013 respectively. a) Revenue
The Company and its subsidiaries had total revenues of Baht 1,905.99 million in 2011, Baht 2,249.27 million in 2012, and Baht 2,231.25 million in 2013, and details on revenue from sales and services including other revenues could be summarized as follows:
Revenue from Sales and Services
The Company and its subsidiaries’ main revenue came from the distribution of products and services through the multichannel marketing. During 2012 – 2013, revenues from sales and services through the multichannel marketing of the Company and its subsidiaries can be summarized as follows:
2012 2013 Revenues from sales and services M. Baht % Growth M. Baht % Growth as per marketing channel rate (%) rate (%) Television Marketing 943.30 42.17 8.36 874.09 39.67 (7.34) Direct Marketing - Outbound Call Center 487.75 121.06 46.93 35.79 8.35 (1.91) - Direct Response Printing 21.80 5.41 2.10 1.60 0.37 15.32 - Websites 25.91 (5.00) 42.56 47.71 (7.53) 16.58 - Service Call Center 478.41 139.61 54.71 23.92 12.15 (33.17) - Direct Sale 21.71 6.34 2.48 1.09 0.55 45.51 Total Direct Marketing 699.88 31.29 20.46 708.80 32.17 1.27 Conventional Marketing - Retailing 304.21 13.60 11.35 306.20 13.90 0.65 - Wholesaling 61.38 2.74 15.03 69.74 3.17 13.62 Total Conventional Marketing 365.59 16.34 11.95 375.94 17.06 2.83 Services * 188.92 8.44 93.43 193.12 8.77 2.22 Others ** 39.39 1.76 1.76 51.28 2.33 30.19 Total Revenue from sales and services 2,237.08 100.00 17.58 2,203.23 100.00 (1.51)
* Services mean service contract for producing advertising media and advertising air-time for customers, concert organizer, or other marketing activities.
** Others mean revenues from products selling not through the main channel.
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In 2012, the Company and its subsidiaries generated revenues from sales and services at Baht 2,237.08 million, showing an increased amount comparing to Baht 1,902.63 million in 2011 or at growth rate of 17.58%. Revenues from sales and services were from the 3 main distribution channels which consisted of television marketing, direct marketing, and conventional marketing that showed growth from previous years as 8.36%, 20.46% and 11.95% respectively. Additionally, the Company and its subsidiaries had revenue from services at amount of Baht 188.92 million, or growth of 93.43% from previous year from organizing Korean concert in April 2012 that generated revenue of Baht 58 million, and from service contracts to produce advertising media and to find the additional advertising air-time for customers. This resulted in renting more airtime of the Company from other media and the expansion of working studio.
In 2013, the Company and its subsidiaries had revenues from sales and services at Baht 2,203.23 million, a decreased amount comparing to Baht 2,237.08 million in 2012 at a reduced growth rate of 1.51%, as revenue through sales and services of TV marketing showed a decreasing growth rate of 7.34%. The main reason was from business competition from a few large foreign home shopping competitors. The direct marketing and conventional marketing markets still registered growth from previous year at 1.27% and 2.83% respectively even though the domestic retail market showed a slowdown trend. Moreover, the Company and its subsidiaries’ revenue from services amounted to Baht 193.122 Million, showing growth rate of 2.22% even though there was no income from organizing the Korean concert. This was from our stringent measures in collecting revenue for delivery service to customers as well as producing more advertising media and selling more advertising time to customers.
In 2012, the Company and its subsidiaries had other revenues of Baht 12.24 million, which consisted of profit from exchange rate of Baht 3.87 million, revenue from insurance claimed of Baht 3.53 million, interest received of Baht1.50 million and other revenues amounted to Baht 3.29 million such as revenue from insurance claim, rental revenue, service revenue, etc. The main causes that resulted in an increase in other revenue were from receiving insurance claim from flooding in 2011, and profit from the exchange rate due to stronger Baht.
In 2013, the Company and its subsidiaries had other revenues of Baht 28.02 million, which consisted of profit from exchange rate of Baht 3.11 million, revenue from fire insurance compensation in 2012 at net Baht 8.04 million, interest received at Baht 1.36 million, revenue from compensation from delayed office construction at Baht 1.1 million, revenue from data base hiring at Baht 10 million, and other revenues at Baht 4.30 million such as renting, and servicing, etc.
b) Costs and Expenses
The main expenses of the Company and subsidiaries consisted of cost of sales and services, selling expenses, administrative expenses, interest paid, and share of loss from investments in associated companies. From 2012 – 2013, the Company and subsidiaries had total expenses amounted to Baht 2,174.48 million, and Baht 2,177.13 million respectively with the following details: Cost of Sales and Services and Gross Margin
During 2012 – 2013, the Company and subsidiaries had cost of sales and services amounted to Baht 980.84 million, and Baht 880.86 million in which ratio of cost of sales and services against revenue from sales and services was at 43.84 % and 39.98 % respectively, or at the gross profit ratio of 56.16% and 60.02% (for 2012 in case that revenue and cost on concert organizing in April 7, 2012 was not used in the calculation, the cost of sales ratio showed 41.34% and the gross profit ratio showed 58.66%). This indicated that the Company and subsidiaries were able to control the gross profit ratio to be at the continuously high level of 58% - 60%. This was the result of realizing the importance of management control on cost of sales as the Company had proceeded with the following operations below:
(1) The Company had appointed the supply chain management in order to follow up on the product movements. The supply chain management had its duties in the product acquisition plan, management of inventory and cooperated with various units such as sales, marketing, information technology, accounting, and finance departments, etc., in order to follow up on products movement, and data on type of products ordered from customers. This also included on the ordering of large quantity of products in order to receive maximum discount from the distributors.
(2) The Company has policy to purchase products directly from the distributors as much as possible in order to receive pricing advantage on product cost and constantly building good relationship with distributors.
(3) The Company realized the importance of product procurement and finding product sources with production cost that gave advantage over competitors.
(4) The Company realized the importance on efficient inventory management system to control on sufficient inventory by not causing unnecessary management cost, and causing high storage cost. The supply chain management had to monitor product movements, and the Company had signed contract with JWD InfoLogistics Co., Ltd., for renting warehouse and manage the inventory. The JWD InfoLogistics Co., Ltd., would give services on inventory count, inventory management, and moving products from the inventory in preparation to load on to the Company’s trucks that arrive at the warehouse. The Company’s delivery trucks will take these goods to distribution centers as per Company’s order.
(5) The Company had acquired Oracle computer program for storage of accounting information, and this program was able to make data processing on purchasing orders of the Company from suppliers, purchasing orders from customers, inventory, etc. This helped on data collection on product movements in inventory so that the Company would know situation of the remaining inventory in different times and these data would be used on efficient inventory management.
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Selling and Administrative Expenses
The Company and subsidiaries’ selling and administrative expenses amounted to Baht 1,167.73 million in 2012, and amounted to Baht 1,208.35 million in 2013 which was at the ratio of total revenue at 51.91% and 57.38% respectively. The main selling and administrative expenses consisted of renting of advertising air-time and production cost of advertising media which was at the ratio of 30% – 32% of the selling and administrative expenses, and the employees cost was at the proportional ratio of 30% - 31% of selling and administrative cost.
In 2013, the Company and subsidiaries’ selling and administrative expenses ratio increased 5.46%, which was derived from intense competitive situation due to the arrival of foreign companies, and the slowdown of domestic retail market. The Company had to increase many expenses such as renting of more advertising airtime, sales promotion, human resource development, information technology system, and depreciation cost of assets used in the expansion in order to compete in the intense competition.
Other Expenses
The Company and subsidiaries had other expenses amounted to Baht 8.96 million in 2012, and figure in 2013 showed Baht 0.33 million.
In 2012, other expenses was from buying shares for capital increase of the subsidiary company TV Direct(Malaysia) Sdn. Bhd., amounted to Baht 6.26 million by calculating from the differences between purchasing price and accounting price on the purchasing date and loss from disposal of assets at Baht 2.70 million.
For the year 2013, other expenses derived from loss on disposable of assets was at Baht 0.33 million.
Financing Cost
In 2012 - 2013, the Company and subsidiaries had financing cost of Baht 16.95 million and Baht 15.59 million respectively. Most of the interest paid of the Company and subsidiaries were from using the financial limitn o P/N and LC/TR which were the revolving credit facility types for foreign purchasing of finished products. Moreover, interest expenses on loans from commercial banks for investments on the fixed assets of the office, increasing sales representative, and increasing advertising media production had increased also. However, financial cost in 2013 decreased due to registration of the Company in the stock market in July 10, 2013 as some part of the capital increase was used as working capital in order to reduce the financing cost. (c) Net Profit and Net Profit Ratio
From the above operations, in 2012 - 2013 the Company and subsidiaries had net profit amounted to Baht 48.18 million, and 36.63 million respectively which had the net profit ration of 2.14% and 1.64 % respectively.
The Company had the rate on return on equity at 16.72 % in 2012 and at 7.04 % in 2013. Moreover, during 2011 - 2013, the Company had paid continuous dividend payments to shareholders at the dividend payment rates of 73.47 %, 119.81% and 123.96 % respectively.
Financial Position
(a) Assets
At the end of 2012 - 2013, the Company and subsidiaries had total assets of amount Baht 1,001.70 million and Baht 1,294.95 million respectively, and important assets of the Company and subsidiaries were inventory, land, buildings, and equipment, account receivables and other receivables. In 2011, ratio of the important assets and total assets was at 37.20 %, 29.91% and 13.94% respectively, and for 2013 the ratio of the important assets and total assets was at 32.44 %, 27.30 % and 8.22 % respectively. Then, details of important assets of the Company were as follows:
Account Receivables
The Company and subsidiaries had account receivables with allowance for doubtful accounts amounted to Baht 54.80 million at the end of 2012, and amounted to Baht 104.89 million at the end of 2013, and as in general majority of the Company’s customers would pay in cash immediately after products delivery at 85% of revenues from sales and services.
However, the Company had account receivables with a type of customers such as department stores, modern trades, pharmaceutical shops, and foreign companies in which the Company had policy to give credit terms about 30 – 90 days. Nevertheless, collection on account receivables period had been increasing from 9.00 days in 2012 to 13.05 days in 2013, as the Company had adjusted its distribution system to the department stores, modern trades, and pharmaceutical shops from direct sales to appointed distributors who already had business with these customers.
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Overdue Period At Dec. 31,2012 At Dec. 31,2013 M. Baht % M. Baht %
Not Overdue 24.34 44.42 35.83 34.13 Overdue: 1 – 30 days 7.64 13.94 16.61 15.82 31 - 60 days 0.36 0.65 2.24 2.13 61 – 90 days 1.26 2.30 0.59 0.56 91 – 180 days 2.13 3.89 15.89 15.14 181 – 365 days 4.19 7.65 10.14 9.66 More than 365 days 14.88 27.15 23.69 22.56 Account receivables before allowance 54.80 100.00 104.99 100.00 for doubtful accounts Less: Allowance for doubtful accounts (18.40) (26.69) Less: Allowance for revaluation - - Net Account Receivables 36.40 78.30
Account receivables before allowance for doubtful accounts in 2013 increased from figure in 2012, as in 2013 the Company increased the wholesale and services ratio, thus, resulting in the increased account receivables for both. Consideration on account receivables as per the overdue periods in the table above it could be seen that account receivables in the not overdue period of the Company and subsidiaries at the year ending of 2012 and 2013 had the proportional ratio of 44.42 % and 34.13 % against the account receivables before allowance for doubtful accounts respectively. At the same time, the Company’s overdue account receivables had the proportional ratio of 55.58 % and 65.87% against the account receivables before allowance for doubtful accounts respectively. Most overdue account receivables were from accounts with more than 180 days overdue which were at 34.80 % at the end of 2012, and at 32.22 % at the end of 2013 against the account receivables before allowance for doubtful accounts respectively. On consideration of the doubtful accounts, the Company would made consideration into 2 cases
(1) Retail account receivables whether from the distribution through the television marketing, direct marketing through the TV Direct Showcase shops or through various digital media, the Company would make consideration on doubtful accounts as follows:
Aging of Overdue Payment Policy on consideration on doubtful accounts 1 – 30 days - 31 – 60 days - 61 – 90 days - 91 – 180 days 50 % Over 180 days 100 %
(2) In case account receivables from transportation, foreign sale, or from services, if the retail account receivables had the debts of not more than Baht 10,000 per case, the Company would consider setting allowance for doubtful accounts by using the same procedures as retail account receivables as stated before, but if the debt value of account receivables was more than Baht 10,000 the Company would consider on the case by case basis.
At the end of 2012 - 2013, the Company had set the allowance for doubtful accounts at Baht 18.40 million and at Baht 26.69 million respectively. This could be seen that the Company had set the allowance for doubtful accounts at lesser value than the overdue accounts over 180 days because the Company did not set the allowance for doubtful accounts of more than 180 days due to account receivables from wholesale and from some services were estimated as collectable.
Inventory
At the end of 2012 - 2013, the Company and subsidiaries had inventory before allowance for obsolete products and allowance for product value amounted to Baht 383.66 million and Baht 420.13 million respectively as most of the remaining inventory was finished products and product during transportation which had proportional ratio against the total inventory at 99.29 % and 98.94 % respectively with the following details.
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At December 31 2012 At December 2013 M. Baht % M. Baht %
Finished Products 328.64 85.66 389.69 90.86 Products during Transportation 52.28 13.63 34.65 8.08 Consumable materials 2.74 0.71 4.56 1.06 Total 383.66 100.00 428.90 100.00 Less: Allowance for obsolete and slow (10.93) (8.15) moving – finished products Less: Allowance products with cost higher than (0.08) (0.62) net received – finished products Inventory - net 372.65 420.13
From above table, most of the remaining inventories were the finished products ready for distribution and products during transportation as the finished and transporting products increased in volume in accordance with constantly increasing sales. As the Company had increased its marketing distribution channel, hence remaining inventory had to be planned to have enough quantity and covering varieties of products categories in correspondence with customers’ demand. As the product ordering lead time required duration of 3 months, the Company had to keep at least 3 months of inventory, thus resulting in high level of inventory. However, the Company realized the importance of efficient inventory management by appointing the supply chain management to monitor product movements. The supply chain management had its duties in the product acquisition plan, management of inventory and cooperated with various units such as sales, marketing, information technology, accounting, and finance departments, etc., in order to follow up on products’ movements, and data on type of products ordered from customers. The obtained information would be used to evaluate product requirement of customers and for suitable planning of ordering plan on various products.
From 2012 - 2013, the Company had average selling period of 118.18 days and 146.79 days respectively. In 2013, the average selling period increased from number in 2012 because during the end of the year 2013, the Company had made preparation for increased product inventory to participate on increasing sales in the beginning of 2014 as per planned schedule.
At the end of 2012 - 2013, the Company had made allowance for product value amounted to Baht 11.01 million and Baht 8.77 million, while ratio of the product value against total inventory was at 2.86 % and 2.04 % respectively. Other Current Assets
At the end of 2012 - 2013, the Company and subsidiaries had net other current assets amounted to Baht 112.29 million and Baht 33.27 million with the following details:
At December 31, 2012 At December 31, 2013 M. Baht % M. Baht %
Other Receivables 5.17 4.60 5.37 16.14 Receivable assets - - - - Prepaid sales Tax 4.87 4.34 5.14 15.45 Input tax – not due 5.69 5.07 2.77 8.33 Prepaid Expenses 8.74 7.78 7.38 22.18 Advances 0.42 9.37 0.61 1.83 Receivables from exchanged of products 5.40 4.81 5.33 16.02 and services Others 82.00 73.03 6.67 20.05 Total 112.29 100.00 33.27 100.00 Less: Allowance for doubtful debts (8.14) (10.11) Other Current Assets - Net 104.15 23.16
At the end of 2012, other important current assets that were important were the accrued compensation at Baht 82.00 million, the prepaid expenses at Baht 8.74 million such as the advanced rent payment, advanced insurance payment, etc. The account receivables from exchanged of products and services were at Baht 5.40 million and the Company had made allowance for doubtful accounts at 100%, and also other receivables at Baht 5.17 million in which the Company had made allowance for doubtful debt of Baht 2.74 million. At the end of 2013, other important current assets were the accrued compensation of Baht 6.67 million, the prepaid expenses of Baht 7.38 million such as the advanced rent payment, advanced insurance payment, etc., receivables from exchanged of products and services at Baht 5.33 million which the Company had set allowance for doubtful accounts at 100 %, and other receivables at Baht 5.37 million with allowance for doubtful accounts had been set at Baht 4.78 million.
Land, Building and Equipment
The Company and subsidiaries had lands, buildings and equipment at net amount of Baht 299.57 million and Baht 353.46 million at the end of 2012 - 2013 respectively which had ratio against total assets at 29.91 % and 27.30 % respectively.
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At the end of 2012, the Company and subsidiaries had lands, buildings and equipment at net amount of Baht 299.57 million at ratio of 29.91 % of total assets, an increase of Baht 76.50 million comparing to 2011. This was from the construction work of the new office building at approximated amounted of Baht 65.32 million (the total project value was Baht 100 million), investment on setting up of the utility system at the 2nd studio building about Baht 4.43 million, improvement of the basement floor of the main office building at about Baht 1.60 million, and decoration improvement for the TV Direct Showcase at about Baht 1.40 million.
At the end of 2013, the Company and subsidiaries had lands, buildings and equipment at net amount of Baht 353.46 million at ratio of 27.30 % of total assets, an increase of Baht 53.89 million comparing to 2012. This was from the construction work of the new office building at the amount of Baht 100 million which was opened as the building for the call center and products procurement offices.
(b) Liquidity
Cash Flow
In 2012, the Company and subsidiaries had net cash flow from the operating activities of Baht 5.39 million, as the main cause was from increased inventory at Baht 118.91 million. This was due to damage from the office fire in October as more products were ordered as replacement and during the year end when the Company had made preparation on increasing products in order to serve for sufficient sales plan. Account receivables and other receivables increased to Baht 9.13 million. Moreover, the Company and subsidiaries had net cash flow for investment activities at Baht 125.98 million which was mainly from payment of fixed assets amounted to Baht 88.81 million. The main items were from construction of the new office building approximately at Baht 65.32 million (project valued at Baht 100 million), investment for infrastructure plan of the 2nd studio about Baht 4.34 million, improvement for the basement level of the head office about Baht 1.60 million, and the TV Direct Showcase showroom decoration at Baht 1.40 million while the second part was for investment in subsidiaries at Baht 27.20 million. Additionally, the Company and subsidiaries had net cash flows receiving from the financing activities at Baht 136.68 million by consisting of net cash received on short term loan from the financial institution at Baht 39.50 million, net cash received on long term loan from the financial institution at Baht 20.99 million, net cash received from increasing ordinary share capital at Baht 120.246 million, and dividend payment to ordinary shareholders at Baht 50.53 million. Hence, these activities resulted in increased in cash and cash equivalent to the amount of Baht 6.38 million.
In 2013, the Company and subsidiaries had net cash flow for operating activities of Baht 48.86 million which was mainly due to profit from operations before changes in operating assets and liabilities at Baht 138.87 million. Account receivables and other receivables decreased to amount of Baht 23.21 million even though inventory had increased to Baht 50.57 million. This was to make preparation for additional products to be sufficient enough for sales plan in the early 2014. Moreover, the Company and subsidiaries had net cash flow spent in the investing activities at Baht 228.27 million which was mainly from purchasing of fixed assets at Baht 100.46 million. The main items were the construction of the new office about Baht 100 million for the call center and products procurement office. This also included cash received from registration of the ordinary share capital for investing in marketable securities at Baht 197.20 million. Moreover, the Company and subsidiaries had received net cash flow from financing activities at the amount of Baht 269.59 million which consisted of the net cash received on short term loan from financial institution at Baht 128.91 million, net cash received on long term loan at Baht 36.87 million, net cash received from the ordinary shares increased at Baht 423 million, and cash dividend payment for ordinary shares of Baht 70.36 million. Hence, from these causes, the Company and subsidiaries, in 2013, had increas- ing cash and cash equivalent at amount of Baht 79.13 million.
Liquidity Ratio
At the end of 2012 - 2013, the Company and subsidiaries had liquidity ratio of 0.99 times and 1.53 time respectively, and quick liquidity ratio was equal to 0.14 time and 0.46 time respectively. The cause that had made much different between the quick liquidity ratio and the liquidity ratio was because the Company and subsidiaries had high inventory ratio versus current asset ratio at the rate of 63.90 % and 61.46 % respectively. The important reasons that the liquidity ratio and quick liquidity ratio had an increasing trend because part of the cash received from capital increase registration was used for payments of bank overdraft and for short term loan from financial institution in order to reduce the financial cost. However, the Company had never encountered problems on liquidity and payment on current liabilities.
Consideration on the cash cycle showed increasing trend, as the Company and subsidiaries had cash cycle at 61.52 days in 2012, and 84.45 days in 2012. Increasing duration of cash cycle was from the following:
(1) The average debt collection equalled to 9.00 days in 2012 and equalled to 13.05 days in 2013.
(2) The average sale duration of the Company and subsidiaries in 2012 was 118.18 days, and equalled to 146.79 days in 2013.
2012 2013 Liquidity ratio (time) 0.99 1.53 Quick Liquidity Ratio (time) 0.14 0.46 Average Collection Period (day) 9.00 13.05 Product Sale Duration (day) 118.18 146.79 Debt Payment Period (day) 65.66 75.39 Cash Cycle (day) 61.52 84.45
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(c) Sources of Funds
Liabilities
At the end of 2012 - 2013, the Company and subsidiaries total liabilities amounted to Baht 663.475 million and Baht 552.88 million respectively. Consideration on the liabilities structure of the Company and subsidiaries showed that most liabilities were the current liabilities for normal business operations which had proportional ratio against total liabilities at 88.37 % at the end of 2012, and at 81.06 at the end of 2013. Important current liabilities consisted of short term loans from financial institutions at 38.58 % of total liabilities at the end of 2012, and at 22.98 % of total liabilities at the end of 2013 which came mainly from the promissory note and LC/TR for ordering domestic and foreign products. Moreover, current liabilities also included account payables and other liabilities were at 44.60 % of total liabilities at the end of 2012, and at 49.73 % of total liabilities at the end of 2013.
Hence, total liabilities of the Company and subsidiaries decreased as most liabilities of the Company were from trade account payables and other payables, overdraft and short term loan from financial institution as stated above. Important liabilities had the following details:
- At the end of 2012 - 2013, the Company and subsidiaries had account payables amounted to Baht 189.72 million and Baht 179.21 million respectively with average debt payment period at 65.66 days and 75.39 days respectively. The reason that account payables decreased were from the result of decreasing in purchasing finished products comparing to sales volume in 2012 that had to be ordered in anticipation with products loss due to fire in October 2012.
t - A the end of 2012 - 2013, the Company and subsidiaries had bank overdraft and short term loan from financial institutions at the amount of Baht 255.97 million, and Baht 127.06 million respectively, with the following details:
(unit : Million Baht) At Dec. 31, 2012 At Dec. 31, 2013 Bank Overdraft 1.66 - Promissory Note 87.22 3.89 Trust Receipt 167.09 123.17 Total 255.97 127.06 At the end of 2012 - 2013, the Company and subsidiaries had remaining liabilities on the type of long term loan of Baht 72.39 million, and Baht 116.36 million respectively. As at December 31, 2013, the Company had long term loans from 3 financial institutions as follows:
(1) In February 17, 2011, the Company had entered into the long term loan contract with a commercial bank for the amount of Baht 15 million for investment in new studio, and purchasing of machines and equipment for its operations. As at March 31, 2012, the remaining loan contract was at Baht 7.81 million in which the Company had mortgaged its land with constructed building including Directors who had joined in to guarantee debt in full. Moreover, the Company wanted to protect its debt service coverage ratio (DSCR) to be not lower than 2 to 1 time, and debt to equity ratio of not more than 2.5 to 1 time for the financial statement at the end of fiscal year 2011, and not more than 2 to 1 time for the financial statement at the end of fiscal year 2012, and in later years. As at December 31, 2013, the Company had already made full payments as per loan agreements.
(2) In December 8, 2011, the Company had entered into the long term loan contract with a commercial bank for the amount of Baht 40 million for investment in purchasing of land with constructed building for its new head office. As at March 31, 2012, the remaining loan contract was at Baht 39.95 million in which the Company had mortgaged its land. Moreover, the Company wanted to protect its debt service coverage ratio (DSCR) to be not lower than 1.5 to 1 time, and debt to equity ratio of not more than 2.0 to 1 time for the financial statement at the end of fiscal year 2012, and not more than 1.75 to 1 time for the financial statement at the end of fiscal year 2013 until complete debt payment (hence, the ratio of liabilities to capital would not be equal to zero). As at December 31, 2013, the loan commitments as per the loan contracts had outstanding amount of Baht 24.18 million.
(3) In March 1, 2012, the Company had entered into the long term loan contract with a commercial bank for the amount of Baht 100 million for investment in land with building for its new head office building using land and its building structure as collaterals.
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In December 31, 2012 and at December 31, 2013, the Company had DSCR ratio and debt to equity ratio as follows:
DSCR* Debt to Equity Ratio ** Dec. 31, 2012 Dec. 31, 2113 Dec. 31, 2012 Dec. 31, 2113
Financial Statement 6.81 time 6.37 time 1.65 time 0.66 time of the Company Consolidated Financial 5.25 time 4.01 time 1.94 time 0.75 time Statement Term of Loan Not less than Not less than Not over 2 time Not over 2 time 2 time 2 time
Remark:) 1 DSCR was calculated from profit before depreciation, financing cost, and income tax / long term loan with due date of one year from previous year + interest paid.
2) Debt to equity ratio calculated from total liabilities / shareholders’ equity.
This showed that the Company was able to keep the debt service coverage ratio (DSCR) as specified in the loan contracts as in the table above. As at December 31, 2012, the debt to equity ratio calculated from financial statements of the Company and the consolidated financial statements of the Company and subsidiaries were equal to 1.66 times and 1.94 times respectively. Moreover, as at December 31, 2013, the debt to equity ratio calculated from financial statements of the Company and the consolidated financial statements of the Company and subsidiaries were at 0.66 times and 0.75 times respectively which were twice lower than specified in the contract.
Shareholders’ Equity
At the end of 2012, the Company and subsidiaries showed the shareholders’ equity at Baht 338.23 million, an increase amount of Baht 99.88 million from 2011. This was due from the Company’s registration in the Stock Exchange of Thailand by initial public offering (IPO) in August 23, 2012 with additional ordinary shares of amount Baht 28.96 million and received premium on common stocks at amount Baht 89.06 million, and with annual profit of Baht 48.97 million while the dividend payment for ordinary shareholders was at Baht 18.80 million.
At the end of 2013, the Company and subsidiaries showed the shareholders’ equity at Baht 742.07 million, an increase amount of Baht 403.84 million from 2012. As in July 10, 2013, the Company received additional payment on ordinary shares at amount Baht 47.00 million and premium on common stocks at amount Baht 376.00 million while the fiscal year profit was Baht 41.21 million, and dividend payment for ordinary shares was at Baht 70.50 million. Adequacy of the Capital Structure
The Company and subsidiaries had the debt to equity ratio at 1.53 times at the end of 2010, at 2.26 times at the end of 2011. Reason for the constant rising of debt to equity ratio was from the continuous business expansion from sales and services’ revenues. The Company had to purchase additional finished products to serve growth in sales revenue by using short term loan from commercial bank in the forms of promissory note an LC/TR. Moreover, the Company had invested in expansion of office building to serve business expansion in various business functions, thus, generated some additional long term loan.
As at December 31, 2012 and 2013, the Company and subsidiaries had debt to equity ratio at 1.94 times and 0.75 times respectively which was from the decrease in liabilities and increase in the shareholders’ equity as explained in the liabilities and shareholders’ equity topic.
Remuneration for Auditor
Remuneration of the auditor for 2013 was paid to the Company’s auditor, Price Waterhouse Cooper ABAS Co., Ltd: - Audit services : 1,775,000 Baht - Non Audit Services : none
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Board of Directors’ Report
Dear Shareholders, TV Direct Public Company Limited
The Board of Director is responsible for the reporting of the consolidated financial statements on the company and subsidiaries, contents of which have been consistently prepared with respect to the Thai generally accepted accounting standards where prudence are duly exercised and information disclosed in the notes accompanying the statements.
The Annual General Meeting of Shareholders Year 2011 has appointed the Audit Committee comprising independent directors who are not involved in the day-to-day operations to take responsibility over the quality of the financial reports and internal controls, which the Audit Committee’s opinion was described in Audit Committee Report shown in this annual report.
The Board of Director has considered the consolidated financial statements of 2013 on the company and subsidiaries and concurs with the Executives and the authorized auditors that the company’s the financial position and the result of operation presents fairly in conformity with generally accepted accounting principles.
(Mr. Phongsuree Bunnag) (Mr. Songpol Shanmatkit) Chairman of the Board Director / Chief Executive Officer Audit Committee Report
To: All Shareholders TV Direct Public Company Limited
For the fiscal year 2013, the Audit Committee performed its duties in accordance with the Audit Committee Charter which had been approved by the Company’s Board of Directors. Besides placing importance on enhancing and monitoring efficiency aspects of the Company, the Audit Committee also gave importance on enhancing good corporate governance. This is to ensure and provide confidence to shareholders and other stakeholders that the Company conducts business in a transparent and ethical manner, consistent with its code of conduct.
The financial statements of 2013 had been co-reviewed by the Executive Committee and the Auditor, and the Audit Committee. The Audit Committee concurs with the authorized auditor and the Executive Committee that the Company’s financial statements and financial data disclosure are complete, sufficient and appropriate and in accordance with the generally accepted accounting standard. The Company’s internal control systems were appropriate and no substantial defect had been found. Moreover, the Company’s operations were correct and consistent with related laws on matters that might have involved conflict of interest. The Audit Committee is of the opinion that such matters had been conducted with appropriate reasons with the best interest of the Company in mind.
The Audit Committee also approved in setting up the Whistle Blower Policy which was the protection measure for employee who made complaint, or supplying information concerning activity that is not conforming to law, rule, and regulation of the Company, and ethic, or using authority illegally. The Company expected to proceed and completed with the Whistle Blower Policy within the 2nd quarter of 2014.
The Audit Committee has reviewed and concurs with the suitability in terms of qualification, independence, accounting cost, performance, and service readiness of the external auditor. Hence, the Audit Committee has proposed to the Company’s Board of Directors for the appointment of PricewaterhouseCoopers ABAS Ltd. as the Company’s auditor for 2014 which will be submitted for resolution in the next shareholders meeting.
In 2013, the Audit Committee had 5 meetings with details of attendance of members of the Audit Committee as follows:
Name Number of Meeting / Total Meeting 2013 1. Mr. Tada Charukitpaisarn 5/5 2. Asst. Prof. Anucha Chintakanond 5/5 3. Mr. Suthep Suebsantiwongse 5/5
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The Audit Committee performed as per the assigned duties and responsibilities by using knowledge, capability as well as sufficient cautiousness, and freedom without any limitation in receiving information from Executives, employees, and related persons. This included giving various suggestions and recommendation for all stakeholders equally. Thus, performing its duties would be accomplished as per assignment from the Company’s Board of Directors.
On the overall summarization, the Audit Committee concluded that the Company’s Board of Directors as well as Executives, and the Company’s Executive Committee were ethical and committed in performing their duties under the governance policy with efficiency, transparency and reliability. This also included sufficient risk management policy and proper internal system suitable to the operations.
(Mr. Tada Charukitpaisarn) Chairman of the Audit Committee AUDITOR’S REPORT
To the Shareholders of TV Direct Public Company Limited
I have audited the accompanying consolidated and company financial statements of TV Direct Public Company Limited and its subsidiaries and of TV Direct Public Company Limited, which comprise the consolidated and company statements of financial position as at 31 December 2013, and the related consolidated and company statements of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and a summary of significant accounting policies and other notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
120 TV Direct Public Company Limited 121
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position of TV Direct Public Company Limited and its subsidiaries and of TV Direct Public Company Limited as at 31 December 2013, and its consolidated and company results of operations and its cash flows for the year then ended in accordance with Thai Financial Reporting Standards.
Sudwin Panyawongkhanti Certified Public Accountant (Thailand) No. 3534 PricewaterhouseCoopers ABAS Ltd.
Bangkok 24 February 2014 Consolidated and Company Financial Statements
31 December 2013
122 TV Direct Public Company Limited 123 Baht 2012 1 January Restated 19,336,033 1,168,219 4,075,560 26,262,921 28,485,714 341,008,968 55,059,641 779,986,977 - - 329,463,202 18,288,999 7,579,648 100,805 438,978,009 39,100,655 - 29,728,492 221,337,088 Baht 2012 Company Restated 31 December 20,494,499 648,219 3,281,549 30,559,793 43,862,599 474,016,936 150,524,657 1,053,490,634 - - 363,130,490 11,054,298 10,075,083 826,571 579,473,698 89,100,655 1,202,265 32,257,138 296,472,818 Baht 2013 31 December 33,798,275 128,219 6,359,728 32,460,461 89,168,113 714,214,730 122,178,875 1,358,259,075 - - 404,382,369 21,417,895 6,782,824 114,269 644,044,345 116,900,450 149,635,000 29,673,196 345,259,401 Company Baht 2012 1 January Restated 19,621,991 1,168,219 4,331,527 31,585,577 40,949,708 309,509,723 54,569,566 776,430,682 7,043,390 3,915,697 333,130,176 18,288,999 7,589,877 1,433,546 466,920,959 - - 29,728,492 223,073,917 2012 Baht Restated 31 December 20,823,300 648,219 3,469,158 34,561,039 47,326,030 418,587,658 139,623,080 1,001,699,944 - - 372,646,512 11,054,298 10,566,066 1,896,300 583,112,286 - 27,259,178 32,257,138 299,569,626 Consolidated Baht 2013 31 December 34,100,283 128,219 6,401,281 32,973,786 126,454,950 611,332,358 106,456,955 1,294,945,921 - - 420,125,756 21,417,895 7,909,343 1,248,664 683,613,563 - 154,598,313 29,673,196 353,457,280 Notes 16 17 18 19 8 9 10 11 12 13 14 15 As at 31 December 2013 Leasehold right (net) Deferred tax assets (net) Deferred Other non-current assets (net) Other non-current Assets assets Current Cash and cash equivalents Total non-current assets non-current Total Trade and other accounts receivable (net) and other accounts receivable Trade Total assets Total Short-term loans to other company Short-term loans to an associate and other party related Inventories (net) Deposits for goods purchases Value added tax Value Other current assets (net) Other current Total current assets current Total Non-current assets Non-current Investments in subsidiaries, cost method Available-for-sale investments Available-for-sale Restricted deposits at financial institutions Property, plant and equipment (net) Property, Intangible assets (net) Statement of Financial Position an integral part of the financial statements. The accompanying notes on pages 10 to 55 are ------2,393,480 4,346,103 7,368,222 1,301,488 2,917,311 2,365,564 7,480,000 Baht 2012 48,489,081 25,316,392 53,926,133 40,448,010 13,586,008 245,650,747 245,650,747 159,040,000 485,847,149 188,000,000 254,207,102 534,336,230 779,986,977 205,291,164 Restated 1 January 1,812 ------2,699,126 8,907,732 7,804,848 5,309,881 7,512,626 6,400,059 Baht 2012 77,180,283 25,316,392 83,379,038 12,069,134 89,064,620 57,768,577 14,616,433 397,830,996 397,830,996 578,479,355 188,000,000 188,000,000 288,667,677 655,659,638 255,972,679 Restated Company 1,053,490,634 31 December ------703,062 3,115,003 2,248,541 4,197,311 2,842,185 6,988,573 Baht 2013 25,316,392 73,915,310 14,428,964 16,508,719 84,900,974 31,460,151 816,508,067 816,508,067 104,693,482 465,064,588 437,057,526 234,999,996 246,750,000 264,513,339 541,751,008 127,055,967 1,358,259,075 31 December ------523,783 (245,379) 2,393,480 4,346,103 7,368,222 1,301,488 3,434,904 2,365,564 7,480,000 Baht 2012 48,489,081 25,316,392 46,350,848 40,448,010 13,586,008 776,430,682 238,353,866 238,599,245 159,040,000 489,587,735 188,000,000 257,430,095 538,076,816 205,291,164 Restated 1 January 47,342 - - - - 1,526,407 2,699,126 8,907,732 7,804,848 5,770,744 7,636,756 6,400,059 (4,123,044) Baht 77,180,283 25,316,392 40,020,172 12,069,134 89,064,620 57,768,577 14,616,433 2012 (13,687,145) 338,233,878 342,356,922 586,285,783 188,000,000 188,000,000 295,889,112 663,466,066 255,972,679 Restated 1,001,699,944 Consolidated 31 December - - - - 810,940 (430,803) 7,196,583 3,115,003 6,290,362 2,248,541 4,904,267 2,842,185 6,988,573 2013 Baht 25,316,392 14,428,964 16,508,719 84,900,974 31,460,151 (13,687,145) 742,069,632 734,873,049 104,693,482 465,064,588 448,182,807 234,999,996 246,750,000 274,931,664 552,876,289 127,055,967 1,294,945,921 31 December 29 13 12 25 28 23 22 24 23 22 26 20 21 Notes As at 31 December 2013 Total liabilities and shareholders’ equity liabilities and shareholders’ Total Total shareholders’ equity shareholders’ Total Non-controlling interests Non-controlling Total parent’s equity parent’s Total Translation difference Translation Gain on measurement of Gain on measurement investments (net) available-for-sale Total liabilities Total Loss from business combination Loss from under common control Total non-current liabilities non-current Total Surplus from land revaluation (net) land revaluation Surplus from Other non-current liabilities Other non-current Unappropriated Employee benefit obligations Retained earnings - Legal reserve Appropriated Liability under finance lease agreements (net) Liability under finance lease agreements Share premium Share Non-current liabilities Non-current financial institutions from Long-term borrowings 159,040,000 ordinary shares of Baht 1.00 each shares 159,040,000 ordinary Total current liabilities current Total 376,000,000 ordinary shares of Baht 0.50 each shares 376,000,000 ordinary Other current liabilities Other current Issued and paid-up share capital Issued and paid-up share of Baht 0.50 each shares 469,999,992 ordinary Accrued income tax 188,000,000 ordinary shares of Baht 1.00 each shares 188,000,000 ordinary - liability under finance lease agreements (net) - liability under finance lease agreements 376,000,000 ordinary shares of Baht 0.50 each shares 376,000,000 ordinary Current portions of Current financial institutions from - long-term borrowings Shareholders’ Equity Shareholders’ capital Share capital Authorised share of Baht 0.50 each shares 493,500,000 ordinary Trade and other accounts payable Trade Liabilities and Shareholders’ Equity Liabilities and Shareholders’ liabilities Current financial institutions from Short-term borrowings Statement of Financial Position (Cont’d)
124 TV Direct Public Company Limited 125
Statement of Comprehensive Income For the year ended 31 December 2013
Consolidated Company Restated Restated Notes 2013 2012 2013 2012 Baht Baht Baht Baht
Revenues from sales and services 2,203,233,718 2,237,080,041 2,176,044,485 2,222,231,916 Cost of sales and services (880,856,019) (980,841,073) (875,882,482) (981,722,570) Gross profit 1,322,377,699 1,256,238,968 1,300,162,003 1,240,509,346
Net compensation income from fire incident at a warehouse 30 8,037,352 44,518 8,037,352 44,518 Other income 31 19,978,785 12,195,294 18,518,968 11,673,448 Profit before expense 1,350,393,836 1,268,478,780 1,326,718,323 1,252,227,312 Selling expenses (1,063,722,750) (992,588,851) (1,040,414,094) (965,344,171) Administrative expenses (216,631,744) (175,140,995) (189,090,229) (154,973,496) Other expenses 32 (326,678) (8,962,215) (73,410) (2,576,537) Finance costs - interest expense 34 (15,593,911) (16,948,946) (15,593,911) (16,873,995) Profit before income tax 33 54,118,753 74,837,773 81,546,679 112,459,113 Income tax 35 (16,203,152) (27,764,771) (16,072,683) (27,707,796) Profit for the year 37,915,601 47,073,002 65,473,996 84,751,317 Other comprehensive income - translation difference (2,045,475) 1,064,449 - - - gain on measurement of available-for-sale investments 14 954,497 59,178 876,562 2,265 - changes in deferred income tax liabilities • gain on measurement of available-for-sale investments (190,899) (11,836) (175,312) (453) Total comprehensive income for the year 36,633,724 48,184,793 66,175,246 84,753,129 Profit attributable to: Equity holders of the parent 41,207,914 48,967,736 65,473,996 84,751,317 Non-controlling interests (3,292,313) (1,894,734) - - 37,915,601 47,073,002 65,473,996 84,751,317 Comprehensive income attributable to: Equity holders of the parent 40,014,302 50,017,702 66,175,246 84,753,129 Non-controlling interests (3,380,578) (1,832,909) - - 36,633,724 48,184,793 66,175,246 84,753,129 Earnings per share for profit attributable to the equity holders of the parent Basic earnings per share (Baht) 36 0.0979 0.1451 0.1556 0.2511 Diluted earnings per share (Baht) 36 0.0963 0.1530
The accompanying notes on pages 10 to 55 are an integral part of the financial statements.
- - - Total 4,331,527 (2,044,756) 28,960,000 89,064,620 48,184,793 46,999,996 36,633,724 14,700,205 (50,597,500) (13,687,145) (70,498,139) 238,353,866 234,022,339 338,233,878 375,999,968 742,069,632 ------Non- (245,379) (245,379) 7,196,583 interests controlling controlling (1,832,909) (2,044,756) (4,123,044) (3,380,578) 14,700,205 - - - - - Total Total 4,331,527 owners of the parent the parent 28,960,000 89,064,620 50,017,702 46,999,996 40,014,302 (50,597,500) (13,687,145) (70,498,139) 238,599,245 234,267,718 342,356,922 375,999,968 734,873,049 ------control control business Loss from Loss from (13,687,145) (13,687,145) (13,687,145) combination under common ------523,783 523,783 (430,803) 1,002,624 1,526,407 Translation Translation differences (1,957,210) 47,342 47,342 763,598 810,940 ------Gain on Restated investments Consolidated (Baht) measurement of measurement available-for-sale available-for-sale Other comprehensive income Other comprehensive Attributable to owners of the parent Attributable to owners of the parent ------
Surplus Restated from land from revaluation (6,329,098) 25,316,392 31,645,490 25,316,392 25,316,392 ated ------6,290,362 Restated (4,700,912) (4,439,585) 46,350,848 10,660,625 35,690,223 48,967,736 40,020,172 41,207,914 (50,597,500) (70,498,139) - Unappropri ------Retained earnings legal ated - reserve reserve 4,700,912 7,368,222 7,368,222 4,439,585 - Appropri 12,069,134 16,508,719 ------Share Share premium premium 89,064,620 89,064,620 375,999,968 465,064,588 ------28,960,000 46,999,996 159,040,000 159,040,000 188,000,000 issued and Authorised, 234,999,996 fully paid-up share capital share 6 26 26 28 12 29 12 29 26 26 27 28 27 Notes For the year ended 31 December 2013 Changes in shareholder’s equity Changes in shareholder’s for the year 2012 capital in share Increase premium Share Legal reserve Balance after adjustment Dividend paid as previously reported as previously change in adjustment from Retrospective accounting policy Opening balance as at 1 January 2012 Total comprehensive income for the year comprehensive Total Closing balance as at 31 December 2012 Loss from business combination Loss from under common control during the year increase interests Non-controlling Loss from business combination Loss from under common control Non-controlling interests increase during the year increase interests Non-controlling Changes in shareholder’s equity Changes in shareholder’s for the year 2013 capital in share Increase premium Share Legal reserve Dividend paid Closing balance as at 31 December 2013 Total comprehensive income for the year comprehensive Total Statements of Changes in shareholders’ Equity Statements of Changes in shareholders’ The accompanying notes on pages 10 to 55 are an integral part of the financial statements. The accompanying notes on pages 10 to 55 are
126 TV Direct Public Company Limited 127 - - 4,075,560 84,753,129 66,175,246 89,064,620 28,960,000 46,999,996 397,830,996 816,508,067 (50,597,500) (70,498,139) 238,353,866 241,575,187 375,999,968 Total Total 1,812 1,812 703,062 701,250 of ------for-sale for-sale Gain on Restated available- investments measurement measurement income ------Other comprehensive Other comprehensive Surplus Restated from land from revaluation (6,329,098) 25,316,392 25,316,392 25,316,392 31,645,490 - - - - ated 83,379,038 Consolidated (Baht) (4,700,912) (4,439,585) 84,751,317 73,915,310 65,473,996 46,350,848 10,404,658 43,521,475 Restated (50,597,500) (70,498,139) - Unappropri
Attributable to owners of the parent Attributable to owners of the parent ------Retained earnings 4,700,912 7,368,222 4,439,585 7,368,222 Appro- priated - 12,069,134 16,508,719 legal reserve ------Share Share 89,064,620 89,064,620 465,064,588 375,999,968 premium premium ------fully share share capital paid-up 46,999,996 28,960,000 188,000,000 234,999,996 159,040,000 159,040,000 issued and Authorised, 6 26 27 28 26 26 27 28 26
Notes For the year ended 31 December 2013 Changes in shareholder’s equity Changes in shareholder’s for the year 2013 capital in share Increase Closing balance as at 31 December 2012 Total comprehensive income for the year comprehensive Total Dividend payment Legal reserve Share premium Share Closing balance as at 31 December 2013 Changes in shareholder’s equity Changes in shareholder’s for the year 2012 capital in share Increase Total comprehensive income for the year comprehensive Total Balance after adjustment Dividend payment as previously reported as previously change in adjustment from Retrospective accounting policy Legal reserve Opening balance as at 1 January 2012 Share premium Share Statements of Changes in shareholders’ Equity (Cont’d) Statements of Changes in shareholders’ an integral part of the financial statements. The accompanying notes on pages 10 to 55 are Statements of Cash Flows
For the year ended 31 December 2013
Consolidated Company Notes 2013 2012 2013 2012 Baht Baht Baht Baht
Cash flows from operating activities
Profit before income tax 54,118,753 74,837,773 81,546,679 112,459,113 Adjustments:
Depreciation and amortisation charge 15,16 50,870,836 36,062,268 49,337,097 35,186,331
Leasehold right amortisation 17 520,000 520,000 520,000 520,000
Allowance for doubtful accounts (reversal) 9 10,263,434 1,670,179 10,263,434 1,904,833
Allowance for goods returned 24 (156,781) 1,015,694 (156,781) 1,015,694 Loss from bad debt 478,315 4,710,252 478,315 4,710,252 Allowance for obsolete and slow moving inventories (reversal) 10 (2,780,438) (2,924,742) (2,005,919) (3,270,759) Allowance for inventories cost in excess of net realisable value (reversal) 533,306 (89,678) 533,306 (89,678) Net (gain) loss from physical count of inventory 427,072 (809,563) 386,360 (1,086,899) Loss from destruction of inventory 4,223,243 4,480,283 4,211,430 4,253,417 Loss from acquiring investment in subsidiary*, ** 12 - 6,261,688 - - Compensation income from fire incident at a warehouse 30 - (82,000,434) - (82,000,434) Loss from write-off inventory from fire incident 30 - 81,793,263 - 81,793,263 Loss from write-off toolings from fire incident 30 - 109,410 - 109,410 Loss from write-off supplies from fire incident 30 - 53,243 - 53,243 Loss from write-off equipment from theft 31 - 23,904 - 23,904 Gain from disposal of available-for-sale investments 31 (628,223) - (356,173) - Loss from disposals property, plant and equipment and intangible assets 32 326,678 2,700,527 73,410 2,576,537 Provision for unused leave (reversal) - (515,941) - (515,941) Employee benefits obligation 25 6,431,168 5,792,196 6,431,168 5,792,196 Employee expense from selling shares to employees - 1,386,000 - 1,386,000 Interest income 31 (1,355,182) (1,502,467) (1,278,879) (1,065,659) Finance costs - Interest from borrowings from financial institutes 34 14,489,126 15,974,029 14,489,126 15,930,165 Finance costs - Interest from finance lease agreements 34 1,104,785 943,830 1,104,785 943,830 Finance costs - Interest from borrowings from others and related parties 34 - 31,087 - -
138,866,092 150,522,801 165,577,358 180,628,818
The accompanying notes on pages 10 to 55 are an integral part of the financial statements.
128 TV Direct Public Company Limited 129
Statements of Cash Flows (Cont’d)
For the year ended 31 December 2013
Consolidated Company Consolidated Company Notes 2013 2012 2013 2012 Notes 2013 2012 2013 2012 Baht Baht Baht Baht Baht Baht Baht Baht Changes in working capital Cash flows from operating activities - trade and other accounts receivable** 23,206,136 (9,130,333) 17,604,033 (20,079,667) - inventories*, ** Profit before income tax 54,118,753 74,837,773 81,546,679 112,459,113 (50,572,633) (118,907,001) (45,067,262) (115,359,238) - deposits for goods purchases Adjustments: (10,363,597) 7,234,701 (10,363,597) 7,234,701 - value added tax 2,656,723 (2,976,189) 3,292,259 (2,495,435) Depreciation and amortisation charge 15,16 50,870,836 36,062,268 49,337,097 35,186,331 - other current assets*, ** 647,636 296,974 712,302 (725,766) - other non-current assets** 1,587,253 (2,661,292) (1,900,668) (4,296,872) Leasehold right amortisation 17 520,000 520,000 520,000 520,000 - trade and other accounts payable*, ** (18,011,856) 17,745,113 (21,208,746) 30,997,257 - other current liabilities* 460,098 (609,602) 214,005 (24,033) Allowance for doubtful accounts (reversal) 9 10,263,434 1,670,179 10,263,434 1,904,833 - employee benefit obligations paid 25 (909,936) (1,230,567) (909,936) (1,230,567) - other non-current liabilities 415,877 305,646 415,877 305,646 Allowance for goods returned 24 (156,781) 1,015,694 (156,781) 1,015,694 Cash generated from operating activities before Loss from bad debt 478,315 4,710,252 478,315 4,710,252 interest income received, finance costs paid and Allowance for obsolete and slow moving inventories (reversal) 10 (2,780,438) (2,924,742) (2,005,919) (3,270,759) income tax paid 87,981,793 40,590,251 108,365,625 74,954,844 Allowance for inventories cost in excess of net Interest income received 1,355,182 2,204,165 1,278,879 1,065,659 realisable value (reversal) 533,306 (89,678) 533,306 (89,678) Finance costs paid - interest expense (16,358,420) (15,321,932) (16,358,420) (15,209,392) Net (gain) loss from physical count of inventory 427,072 (809,563) 386,360 (1,086,899) Income tax paid (24,120,745) (32,863,490) (23,996,615) (32,987,620) Net cash generated (payments) from operating activi- Loss from destruction of inventory 4,223,243 4,480,283 4,211,430 4,253,417 ties 48,857,810 (5,391,006) 69,289,469 27,823,491 Loss from acquiring investment in subsidiary*, ** 12 - 6,261,688 - - Cash flows from investing activities Compensation income from fire incident at a warehouse 30 - (82,000,434) - (82,000,434) (Increase) decrease in restricted cash deposits at Loss from write-off inventory from fire incident 30 - 81,793,263 - 81,793,263 financial institutions 2,583,942 (2,528,646) 2,583,942 (2,528,646) Cash paid for purchases of property, plant and equip- Loss from write-off toolings from fire incident 30 - 109,410 - 109,410 ment*, ** 15 (100,455,277) (88,157,281) (92,442,318) (87,199,086) Loss from write-off supplies from fire incident 30 - 53,243 - 53,243 Cash received from disposals of property, plant and Loss from write-off equipment from theft 31 - 23,904 - 23,904 equipment 462,858 377,459 14,018 130,794 Gain from disposal of available-for-sale investments 31 (628,223) - (356,173) - Cash paid for purchases of intangible assets 16 (20,025,037) (9,548,251) (19,946,111) (9,423,290) Cash received from discount on intangible asset Loss from disposals property, plant and equipment acquisition 216,000 - 216,000 - and intangible assets 32 326,678 2,700,527 73,410 2,576,537 Cash paid for short-term loans to subsidiary - - - (15,000,000) Provision for unused leave (reversal) - (515,941) - (515,941) Cash received from short-term loans to individual Employee benefits obligation 25 6,431,168 5,792,196 6,431,168 5,792,196 and other company - 7,043,390 - - Employee expense from selling shares to employees - 1,386,000 - 1,386,000 Cash paid for short-term loans to an associate and other related party - (6,925,103) - - Interest income 31 (1,355,182) (1,502,467) (1,278,879) (1,065,659) Increase in non-controlling interest 14,700,205 - - - Finance costs - Interest from borrowings from financial institutes 34 14,489,126 15,974,029 14,489,126 15,930,165 Net cash received (paid) for investment in subsidiary*, Finance costs - Interest from finance lease agreements 34 1,104,785 943,830 1,104,785 943,830 ** 12 - 957,588 (27,799,795) (35,000,000) Finance costs - Interest from borrowings from others Cash paid for available-for-sale investments 13 (197,200,000) (28,200,000) (197,200,000) (1,200,000) and related parties 34 - 31,087 - - Cash received from disposal of available-for-sale investments 13 71,443,585 1,000,000 50,000,000 - 138,866,092 150,522,801 165,577,358 180,628,818 Net cash payments from investing activities (228,273,724) (125,980,844) (284,574,264) (150,220,228)
* These transactions included the changes of TV Direct (Malaysia) Sdn. Bhd., subsidiary of TV Direct Indochina Company Limited, since 30 January 2012, the date when its status becomes a subsidiary. ** These transactions included the changes of TVDI Vietnam Co., Ltd., subsidiary of TV Direct Indochina Company Limited, since 11 October 2012, the date when its status becomes a subsidiary. Statements of Cash Flows For the year ended 31 December 2013 Consolidated Company Notes 2013 2012 2013 2012 Baht Baht Baht Baht
Cash flows from financing activities
Short-term borrowings from financial institution-proceeds 21 719,497,949 1,338,054,307 719,497,949 1,337,844,307 Short-term borrowings from financial institution-repayments 21 (848,414,661) (1,287,372,792) (848,414,661) (1,287,162,792) Repayments for short-term borrowings from related parties* 12 - (11,180,698) - - Long-term borrowings from financial institutions - proceeds 22 68,070,000 31,930,000 68,070,000 31,930,000 Long-term borrowings from financial institutions - repayments 22 (24,093,885) (7,473,000) (24,093,885) (7,473,000) Cash paid for liability under finance lease agreements 23 (7,113,715) (3,469,241) (7,113,715) (3,469,240) Cash received from increase in share capital in subsidiary - 10,090,800 - - Cash received from increase in share capital 26 422,999,964 120,246,000 422,999,964 120,246,000 Cash paid for IPO process 26 - (3,607,380) - (3,607,380) Cash paid for dividend paid 27 (70,355,343) (50,534,273) (70,355,343) (50,534,273) Net cash receipts from financing activities 260,590,309 136,683,723 260,590,309 137,773,622 Translation foreign currency financial statements (2,045,475) 1,064,449 - - Net increase (decrease) in cash and cash equivalents 79,128,920 6,376,322 45,305,514 15,376,885 Cash and cash equivalents - beginning balance 47,326,030 40,949,708 43,862,599 28,485,714 Cash and cash equivalents - ending balance 8 126,454,950 47,326,030 89,168,113 43,862,599 Non-cash transactions: Transfer loan to related persons to investment in subsidiary 12 - 1,350,000 - - Transfer short-term loan to a subsidiary to investment in subsidiary 12 - 8,695,565 - 15,000,000 Transfer of inventory to fixed assets 15 690,206 39,363 690,206 39,363 Additional information Dividend payable 20, 27 206,023 63,227 206,023 63,227 Outstanding receivable arising from disposal of fixed assets as at 31 December 9 781,760 - - - Outstanding payable arising from purchases of fixed assets as at 31 December 1,013,374 3,789,685 1,013,374 3,789,685 Outstanding retention payable as at 31 December 24 231,115 1,400,909 231,115 1,400,909 Interest expense capitalised to fixed assets 15 1,658,344 - 1,658,344 - Outstanding liability under finance lease agreement arising from purchase of fixed assets as of 31 December 940,010 13,220,277 940,010 13,220,277
* These transactions included the changes of TV Direct (Malaysia) Sdn. Bhd., subsidiary of TV Direct Indochina Company Limited, since 30 January 2012, the date when its status becomes a subsidiary. ** These transactions included the changes of TVDI Vietnam Co., Ltd., subsidiary of TV Direct Indochina Company Limited, since 11 October 2012, the date when its status becomes a subsidiary. The accompanying notes on pages 10 to 55 are an integral part of the financial statements.
130 TV Direct Public Company Limited 131
Notes to the Consolidated and Company Financial Statements
For the year ended 31 December 2013
1 General information
TV Direct Public Company Limited (“the Company”) was incorporated as a limited company in Thailand on 21 April 1999 and subsequently registered to convert to a public company limited on 4 May 2011. As a result, the Company registered to change its name from “TV Direct Company Limited” to “TV Direct Public Company Limited” with the Ministry of Commerce. The address of its registered office is at 25 Watcharaphol Road, Tha-Raeng Sub-district, Bang Khen District, Bangkok 10230. As at 31 December 2013, the Company has 96 distribution centers (2012 : 87 distribution centers), which registered to the Ministry of Commerce, in Bangkok and other provinces. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries are referred to as “the Group”. The principal business operations of the Group are sales of goods and services through various marketing channels including providing, producing TV programmes and selling of airtime for advertising. These consolidated and company financial statements have been approved by the Board of Directors on 24 February 2014. 2 Accounting policies
The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below:
2.1 Basis of preparation
The consolidated and company financial statements have been prepared in accordance with Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Financial Reporting Standards issued under the Accounting Profession Act B.E.2547, and the financial reporting requirements of the Securities and Exchange Commission under Securities and Exchange Act. The consolidated and company financial statements have been prepared under the historical cost convention except available-for-sale investments and employee benefit obligations as disclosed in the accounting policies below. The preparation of financial statements in conformity with Thai generally accepted accounting principles requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated and company financial statements are disclosed in Note 4. An English version of the consolidated and company financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.
2.2 New accounting standards, new financial reporting standards and interpretations and amendments to new accounting standards and new financial reporting standards. New accounting standard, new financial reporting standards and amendment to accounting standard which are effective for the period beginning on or after 1 January 2013 and are relevant and have an impact to the Group are as follows:
TAS 12 Income Taxes TAS 21(Revised 2009) The Effects of Changes in Foreign Exchange Rates TFRS 8 Operating Segments
TAS 12 requires tax expenses to be recognised for current and deferred tax. New accounting policy of income taxes is provided in Note 2.14 and the significant impact to the Group is described in Note 6. TAS 21(Revised 2009) requires the Group to determine the functional currency which is the currency of the primary economic environment in which the entity operates. The Group assessed and concluded that Thai Baht is the Group’s functional currency. As a consequence, applying TAS 21 (Revised 2009) has no impact to assets, liabilities and retained earnings. New accounting policy is are described in Note 2.4. TFRS 8 requires the operating segment to be described in the same manner as internal reporting used by the chief operating decision-maker. New accounting policy is are described in Note 2.22. The impact to the Group in applying TFRS 8 is only on a disclosure.
Amendments to accounting standards, and financial reporting standards, interpretations of financial reporting standards and accounting standards, and new accounting standards that are relevant and are not yet effective:
Amendments to accounting standards and financial reporting standards effective for the periods beginning on or after 1 January 2014
TAS 1 (Revised 2012) Presentation of financial statements TAS 7 (Revised 2012) Statement of Cash Flows TAS 12 (Revised 2012) Income taxes TAS 17 (Revised 2012) Leases TAS 21 (Revised 2012) The Effects of Changes in Foreign Exchange Rates TAS 24 (Revised 2012) Related party disclosures TAS 28 (Revised 2012) Investments in Associates TAS 31 (Revised 2012) Interest in Joint Ventures TAS 34 (Revised 2012) Interim financial eportingr TAS 36 (Revised 2012) Impairment of assets TAS 38 (Revised 2012) Intangible Assets TFRS 2 (Revised 2012) Share-based payment TFRS 3 (Revised 2012) Business Combinations TFRS 8 (Revised 2012) Operating Segments
TAS 1 (revised 2012) clarifies that conversion features that are at the holder’s discretion do not impact the classification of the liability component of the convertible instrument. AST 1 also explains that, for each component of equity, an entity may present the breakdown of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. The Group’s management assessed that the revised standard has no impact to the Group’s financial statements.
TAS 7 (revised 2012) clarifies that only expenditures that result in a recognized asset in the statement of financial position are eligible for classification as investing activities. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 12 (revised 2012) amends an exception to the existing principle for the measurement of deferred tax assets or liabilities on investment property measured at fair value. TAS 12 currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. This amendment therefore adds the rebuttable presumption that the carrying amount of an investment property measured at fair value is entirely recovered through sale. As the result of the amendment, TSIC 21 - Income tax - recovery of revalued non-depreciable assets is incorporated in to TAS 12 (revised 2012). The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 17 (revised 2012) deletes the guidance for a lease of land with an indefinite useful life to be classified as an operating lease. The standard has been amended to clarify that when a lease includes both land and buildings, classification as a finance or operating lease is performed separately in accordance with TAS 17’s general principles. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 21 (revised 2012) clarifies the method of recording cumulative amount of the exchange different relating to disposal or partial disposal of a foreign operation. This matter should be adjusted prospectively effective for the period begins on or after 1 January 2011. The Group’s management assessed that the
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revised standard has no impact to the Group’s financial statements.
TAS 24 (revised 2012) removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. It also clarifies and simplifies the definition of elatedr parties. The Group’s management assessed that the revised standard has no impact to the Group’s financial statements.
TAS 28 (revised 2012) clarifies that when an entity moves from an equity accounting to cost accounting in the separate financial statements, the standard requires this to be adjusted retrospectively. An entity losses significant influence, theemaining r interest of investment should be valued at fair value. This matter should be adjusted prospectively effectively for the period begins on or after 1 Jan 2011. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 31 (revised 2012) clarifies that when an entity moves from an equity accounting to cost accounting in the separate financial statements, the standard requires this to be adjusted retrospectively. An entity losses of joint control in its interest in joint control, the remaining interest of investment should be valued at fair value. , This matter should be adjusted prospectively effectively for the period begins on or after 1 Jan 2011. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 34 (revised 2012) emphasises the existing disclosure principles for significant event and transactions. Additional requirements cover disclosure of changes in fair value measurements (if significant), and the need to update relevant information from the most recent annual report. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 36 (revised 2012) clarifies that goodwill being allocated to cash-generating units shall not be larger than an operating segment before aggregation as defined under TFRS 8 - Operating Segments. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TAS 38 (revised 2012) Clarifies that an intangible asset acquired in a business combination might be separable, but only together with a related contract, identifiable asset or liability. In such cases, intangible asset is recognised separately from goodwill, but together with related item. Intangible assets are recognised as a single asset provided the individual assets have similar useful lives. The Group’s management assessed that the revised standard has no impact to the Group’s financial statements.
TFRS 2 (revised 2012) expands the scope to cover classification and accounting of both cash-settled and equity-settled share-based payment transactions in group situation. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TFRS 3 (revised 2012) amends the measurement required for non-controlling interests. The choice of measuring non-controlling interests at fair value or at the proportionate share of the acquiree’s net assets applies only to instruments that represent present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation. All other component of non-controlling interests is measured at fair value unless another measurement basis is required by TFRS. The application guidance in TFRS 3 (revised 2012) also applies to all share-based payment transactions that are part of a business combination, including unreplaced and voluntarily replaced share-based payment awards. The Group’s management assessed that the revised standard has no material impact to the Group’s financial statements.
TFRS 8 (revised 2012) clarifies that an entity is required to disclose a measure of segment assets only if the measure is regularly reported to the chief operating decision-maker. The Group’s management assessed that the revised standard has no impact to the Group’s financial statements.
Interpretations of financial reporting standards and accounting standard effective for the periods beginning on or after 1 January 2014
TFRIC 1 Changes in existing decommissioning, restoration and similar liabilities TFRIC 4 Determining whether an Arrangement contains a Lease TFRIC 13 Customer Loyalty Programmes TFRIC 17 Distributions of non-cash assets to owners TSIC 27 Evaluating the substance of transactions in the legal form of a lease TSIC 32 Intangible assets - Web Site Costs TFRIC 1 provides guidance on accounting for changes in the measurement of an existing decommissioning, restoration and similar liability that results from changes in estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation, or a change in the discount rate. The Group’s management assessed that the interpretation has no material impact to the Group’s financial statements.
TFRIC 4 requires the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfilment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. The Group’s management assessed that the interpretation has no material impact to the Group’s financial statements.
TFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement, and the consideration received or receivable from the customer is allocated between the components of the arrangement using fair values. The Group’s management is currently assessing the impact of applying this interpretation.
TFRIC17 provides guidance on accounting for the distributions of non-cash assets to owners acting in their capacity as owners. The interpretation addresses the issues on the dividend payable recognition and measurement and the accounting for any difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable when an entity settles the dividend payable. The Group’s management assessed that the interpretation has no impact to the Group’s financial statements.
TSIC27 provides guidance on evaluating the substance of transactions in the legal form of a lease between the entity and the investor whether a series of transactions is linked and should be accounted for as one transaction and whether the arrangement meets the definition of a lease under TAS17 “Leases”. The accounting shall reflect the substance of the arrangement. The Group’s management assessed that the interpretation has no impact to the Group’s financial statements.
TSIC 32 provides guidance on the internal expenditure on the development and operation of the entity web site for internal or external access. The entity shall comply with the requirements described in TAS38 “Intangible Assets”. The Group’s management assessed that the interpretation has no material impact to the Group’s financial statements.
2.3 Group Accounting - Investments in subsidiaries
a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity including the potential voting rights from other companies. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of
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investment.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the net value of the Group’s share of the identifiable net assets and liabilities acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.
Intercompany transactions, balances and unrealised gains or loss on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
A list of the Group’s principal subsidiaries is set out in Note 12.
b) Transactions and non-controlling interests
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Thai Baht, which is the Group’s functional and the group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss.
When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss is recognised in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognised in profit and loss, any exchange component of that gain or loss is recognised in profit and loss.
(c) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
• Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; • Income and expenses for each statement of comprehensive income are translated at average exchange rates; and • All resulting exchange differences are recognised as a separate component of equity.
2.5 Cash and cash equivalents
Cash comprises cash on hand, deposit held at call with banks but exclude deposits with banks that are held to maturity, certificates of deposit issued by commercial banks and financial institutions, and restricted deposits. Cash equivalents comprise short-term highly liquid investments with maturities of three months or less from the date of acquisition.
In the consolidated and company statements of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.
2.6 Trade accounts receivable
Trade accounts receivable are recognised initially at original invoice amount and subsequently measured at the remaining amount less any allowance for doubtful receivables based on a review of all outstanding amounts at the year-end. The amount of the allowance is the differences between the carrying amount of receivable and the amount expected to be collected. Bad debts are recognised in the profit or loss within selling & marketing costs.
2.7 Inventories
Inventories are presented in the statement of financial position at the lower of cost or net realisable value. Cost is determined on the first-in, first-out method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventory, such as import duties and transportation charge, less all attributable discounts. Net realisable value is the estimate of the selling price in the ordinary course of business, less the estimated costs necessary to make the sale. Allowance is made, where necessary, for obsolete, slow-moving, defective and excessive inventories.
2.8 Available-for-sale investments
Investments intended to be held for an indefinite period of time, which may be sold in esponser to liquidity needs or changes in interest rates, are classified as available-for-sale; and are included in non-current assets unless management has expressed the intention of holding the investment for less than 12 months from the statement of financial position date or unless they will need to be sold to raise operating capital, in which case they are included in current assets.
Available-for-sale investments are initially recognised at cost, which is equal to the fair value of consideration paid plus transaction cost.
Available-for-sale investments are subsequently measured at fair value. The fair value of investments is based on quoted bid price at the close of business on the statement of financial position date by reference to the Stock Exchange of Thailand. The unrealised gains and losses of available for sale investments are recognised in equity.
A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of comprehensive income.
On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of comprehensive income. When disposing of part of the Company’s holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment.
2.9 Property, plant and equipment
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Land is shown at fair value less allowance for impairment of asset. Fair value is based on valuations from external independent valuers which are conducted every 3 - 5 years. Buildings and equipments are stated at historical cost less accumulated depreciation and allowance for impairment of assets. Initial cost included other direct cost related to assets acquisition. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Increases in the carrying amount arising on revaluation are credited to revaluation surplus of asset under the shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the revaluation surplus; all other decreases are charged to the statement of comprehensive income. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to the statement of comprehensive income) and depreciation based on the asset’s original cost is transferred from revaluation surplus to the retained earnings. Land has not been depreciated. Depreciation of other assets is calculated using the straight-line method to write off the cost of each asset, except land which is considered to have an indefinite useful life, to their residual value over the estimate useful lives as follows:
Land improvements 5 Years Buildings 20 Years Buildings improvements 5 Years Furniture, fixtures and office equipment 5 Years Computer equipment 5 Years Motor vehicles 5 Years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
Gains and losses on disposal of property, plant and equipment are calculated by comparing net proceeds from disposal of assets with assets’ carrying amount and are taken into other income and other expenses, respectively, in the statement of comprehensive income. On disposal of revalued assets, the related revaluation surplus is transferred to retained earnings.
2.10 Intangible assets
Computer software
Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met :
• it is technically feasible to complete the software product so that it will be available for use; • management intends to complete the software product and use or sell it; • there is an ability to use or sell the software product; • it can be demonstrated how the software product will generate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use orsellthe software product are available; and • the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an intangible asset in a subsequent period. Computer software development costs recognised as intangible assets are amortised using the straight-line method over their estimated useful lives, which does not exceed 5 years.
2.11 Impairment of assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
2.12 Accounting for long-term leases - where a Group Company is the leasee
Finance leases
Leases of assets where the lessee has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to principal and to finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance charge is charged to the profit or loss over the lease period. The assets acquired under finance lease is depreciated over the shorter of the useful life of the asset or lease term.
Operating leases
Leases where the lessor has substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.
2.13 Borrowings
Borrowings are recognised initially at the proceeds received (net of transaction costs incurred). In subsequent periods, borrowings are stated at amortised cost using the effective yield method. Any difference between proceeds (net transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of reporting date.
2.14 Current and deferred income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
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in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised, using the liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profitor loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
2.15 Employee benefits
Group companies operate various pension schemes. The schemes are generally funded through payments to trustee-administered funds. The Group has both defined benefit and defined contribution plans.
• For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.
• A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changed in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.
The Group recognises, the obligation determined as at 31 December 2010 on a straight-line basis over a five-year period. The increase of the liability within the current year is fully recognised in the current period financial statements (statements of financial position and statement of comprehensive income). The practice is in compliance with the provision in the Thai Accounting Standard no.19 dealing with accounting for employee benefits.
2.16 Financial assets and financial liabilities
Financial assets carried on the statement of financial position include cash and cash equivalents, trade accounts receivable and other accounts receivable, short-term loans to other company, associate, and related person, certain parts of other current assets and restricted deposits at financial institutions and other non-current assets. Financial liabilities carried on the statement of financial position include short-term loans from financial institutions, trade accounts payable and other accounts payable certain parts of other current liabilities, long-term loans from financial institutions and liability under finance lease agreements. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.
2.17 Provisions - general
Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
2.18 Share-based payment
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of options on the grant date is recognised as expense over the vesting period.
When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
2.19 Revenue recognition
Revenue comprises the fair value for consideration received or receivable for the sale of goods and service net of output tax, rebates and discounts. Revenue from sale of goods is recognised when significant risks and reword of ownership of goods are transferred to the buyer, services income is recognised as revenue in the period in which they are rendered.
Other revenues earned by the Company are recognised on the following basis:
Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Company.
2.20 Finance costs
Finance costs comprise interest expense from bank loans and liabilities under finance lease contracts.
2.21 Dividends
Dividends and interim dividends are recorded in the consolidated and company’s financial statements in the period in which they are approved by the shareholders and board of directors, respectively.
2.22 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions. 3 Financial risk management
3.1 Financial risk factors
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The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
Risk management is carried out by the finance department under policies approved by the Board of Directors. The finance department identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments, and investment excess liquidity.
3.1.1 Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
The Group also hedges the foreign currency exposure of its contract commitments to purchase certain goods from overseas. The forward contracts used in its programme mature in 1 - 4 months or less, consistent with the related purchase commitments.
3.1.2 Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates. All interest rate derivative transactions are subject to approval by the Finance Director before execution. The Group has no significant interest-bearing assets.
3.1.3 Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the amount of credit exposure to one financial institution.
3.1.4 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities, and the ability to close out market positions. Due to the dynamic nature of the underlying business, the Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available.
3.2 Fair value estimation
When a financial instrument is traded in an active market, its quoted market price provides the best evidence of fair value. The quoted market price for an asset held or liability to be issued is usually the current bid price and, for an asset to be acquired or liability held, it is the current offer or asking price. When the current bid and offer prices are unavailable, the price of the most recent transaction may provide evidence of the current fair value provided that there has not been a significant change in economic circumstances between the transaction date and the reporting date. When the Group has matching asset and liability positions, it may appropriately use mid-market prices as a basis for establishing fair values.
When there is infrequent activity in a market, the market is not well established or small volumes are traded relative to the number of trading units of a financial instrument to be valued, quoted market prices may not be indicative of the fair value of the instrument. In these circumstances, as well as when a quoted market price is not available, estimation techniques may be used to determine the fair value with sufficient reliability to satisfy the Group. Techniques that are well established in financial markets include reference to the current market value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. In applying discounted cash flow analysis, an enterprise uses a discount rate equal to the prevailing market rate of interest for financial instruments having substantially the same terms and characteristics, including the creditworthiness of the debtor, the remaining term over which the contractual interest rate is fixed, the remaining term for repayment of the principal and the currency in which payments are to be made. The fair values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group/Company for similar financial instruments.
Information on the fair values of borrowings is included in Note 39. 4 Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
(a) Employee benefit obligations
The present value of the employee benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for employee benefits include the discount rate. Any changes in these assumptions will have an impact on the carrying amount of employee benefit obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the employee benefit obligations. In determining the appropriate discount rate, the Group considers the market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related employee benefit liability.
Other key assumptions for employee benefit obligations are based in part on current market conditions. Additional information is disclosed in Note 25. 5 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to sharehold- ers, return capital to shareholders, and issue new shares of sell assets to reduce debt. 6 Adopt new accounting standard and change in accounting policy
Adopt new accounting standard
During the year ended 31 December 2013, the Company has adopted the TAS 12 that is effective in Thailand since 1 January 2013.
The Group has adopted these standards by applying retrospective adjustments. The effects of the changes to the Company’s statement of financial position as at 31 December 2012 and statement of comprehensive income for year ended 31 December 2012 and unappropriated retained earnings as at 1 January 2012 and 2013 are as follows:
142 TV Direct Public Company Limited 143
Consolidated As previously Increase After reported (decrease) adjustment Baht Baht Baht
Retained earnings - unappropriated as at 1 Jnuary 2012 35,690,223 10,660,625 46,350,848
Statement of financial position as at 31 December 2012 - Deferred income tax assets (net) - 3,469,158 3,469,158 - Surplus from land revelation (net) 31,645,490 (6,329,098) 25,316,392 - Gain on measurement on available-for-sale investments (net) 59,178 (11,836) 47,342
Statement of comprehensive income for the year-ended 31 December 2012 - Income tax 26,914,238 850,533 27,764,771 - Profit for the year 47,923,535 (850,533) 47,073,002 - Total comprehensive income for the year 49,047,162 (862,369) 48,184,793 - Basic earnings per share 0.1476 (0.0025) 0.1451
Retained earnings - unappropriated as at 1 January 2013 30,210,080 9,810,092 40,020,172
Company As previously Increase After reported (decrease) adjustment Baht Baht Baht
Retained earnings - unappropriated as at 1 January 2012 43,521,475 10,404,658 53,926,133
Statement of financial position as at 31 December 2012 - Deferred income tax assets (net) - 3,281,549 3,281,549 - Surplus from land revelation (net) 31,645,490 (6,329,098) 25,316,392 - Gain on measurement on available-for-sale investments (net) 2,265 (453) 1,812
Statement of comprehensive income for the year-ended 31 December 2012 - Income tax 26,914,238 793,558 27,707,796 - Profit for the year 85,544,875 (793,558) 84,751,317 - Total comprehensive income for the year 85,547,140 (794,011) 84,753,129 - Basic earnings per share 0.2534 (0.0023) 0.2511
Retained earnings - unappropriated as at 1 January 2013 73,767,938 9,611,100 83,379,038
Change in accounting policy
During the year ended 31 December 2013, the Group has changed the accounting policy of employee benefits related to the recognition of actuarial gains and losses arising from experience adjustments and changed in actuarial assumptions which previously charged or credited to profit or loss in the period in which they arise to equity in other comprehensive income in the period in which they arise.
The Group’s management assessed that the change in accounting policy has no impact to the Group’s opera- tions as the Group never recognised actuarial gains and losses.
- 44,518 2012 2012 (8,962,215) 47,073,002 12,195,294 25,241,109 80,908,455 (27,764,771) (16,948,946) 663,466,066 663,466,066 224,706,225 920,791,489 (199,465,116) (781,375,957) 1,256,238,968 1,001,699,944 1,230,997,859 2,012,373,816 (1,167,729,846) - Total Total (326,678) 8,037,352 2013 2013 37,915,601 19,978,785 71,671,955 (16,203,152) (15,593,911) 552,876,289 114,806,093 552,876,289 217,044,913 (102,238,820) (778,617,199) 1,322,377,699 1,294,945,921 1,207,571,606 1,223,273,966 1,986,188,805 (1,280,354,494) - - - 2012 2012 2,599,737 17,995,209 17,995,209 39,390,094 (21,394,885) - - Others Others 2013 2013 3,022,423 33,766,041 33,766,041 51,277,217 (17,511,176) - - - 2012 2012 12,425,509 12,425,509 33,646,491 188,750,795 (176,325,286) - - - Services Services 2013 2013 97,757,580 97,757,580 28,186,246 (95,324,278) 193,081,858 - - - 2012 2012 31,890,703 192,957,960 192,957,960 365,585,496 (172,627,536) - - - General marketing General marketing 2013 2013 29,414,293 202,008,971 202,008,971 375,939,718 (173,930,747) Certain part of the consolidated statements of comprehensive income for the years ended 31 December (Baht) Certain part of the consolidated statements comprehensive Certain part of the consolidated statements of comprehensive income for the years ended 31 December (Baht) Certain part of the consolidated statements comprehensive 2012 2012 12,771,524 12,815,600 35,955,430 (23,139,830) (587,353,536) 1,032,860,290 1,020,044,690 1,607,398,226 Direct marketing Direct Direct marketing Direct 2013 2013 (6,914,542) 11,048,992 17,048,513 23,963,055 988,845,107 971,796,594 (587,175,276) 1,558,971,870 Segment information
Net profit for the year Net profit Segment assets Income tax Finance costs Other expenses Selling and administration Other income Net compensation income from fire fire Net compensation income from incident at a werehouse Total gross profit gross Total Consolidated total liabilities Gross profit Gross Unallocated liabilities Cost of service Segment liabilities Service income Consolidated total assets Gross profit Gross Unallocated assets Cost of goods sold Sales of goods 7
144 TV Direct Public Company Limited 145 - 44,518 2012 2012 (8,962,215) 25,241,109 47,073,002 12,195,294 80,908,455 (27,764,771) (16,948,946) 224,706,225 655,659,638 655,659,638 972,582,179 (199,465,116) (782,257,454) 1,256,238,968 1,215,268,237 1,997,525,691 1,053,490,634 (1,167,729,846) - Total Total (326,678) 8,037,352 2013 2013 37,915,601 19,978,785 71,671,955 (16,203,152) (15,593,911) 114,806,093 217,044,913 541,751,008 541,751,008 (102,238,820) (773,643,662) 1,322,377,699 1,185,355,910 1,958,999,572 1,223,273,966 1,294,945,921 (1,280,354,494) - - - 2012 2012 2,599,737 17,995,209 17,995,209 39,390,094 (21,394,885) - - - Others Others 2013 2013 3,022,423 33,766,041 33,766,041 51,277,217 (17,511,176) - - - 2012 2012 12,425,509 12,425,509 33,646,491 188,750,795 (176,325,286) - - - Services Services 2013 2013 97,757,580 97,757,580 28,186,246 (95,324,278) 193,081,858 - - - 2012 2012 31,890,703 192,957,960 192,957,960 365,585,496 (172,627,536) - - - General marketing General marketing 2013 2013 29,414,293 202,008,971 202,008,971 375,939,718 (173,930,747) Certain part of the consolidated statements of comprehensive income for the years ended 31 December (Baht) Certain part of the consolidated statements comprehensive Certain part of the consolidated statements of comprehensive income for the years ended 31 December (Baht) Certain part of the consolidated statements comprehensive 2012 2012 12,771,524 12,815,600 35,955,430 (23,139,830) (588,235,033) 1,032,860,290 1,004,315,068 1,592,550,101 Direct marketing Direct Direct marketing Direct 2013 2013 (6,914,542) 11,048,992 17,048,513 23,963,055 988,845,107 949,580,898 (582,201,739) 1,531,782,637 Segment information (Cont’d)
Segment assets Net compensation income from fire fire Net compensation income from incident at a werehouse Total gross profit gross Total Gross profit Gross Cost of service Service income Cost of goods sold profit Gross Sales of goods Net profit for the year Net profit Income tax Finance costs Selling and administration Other expenses Other income Unallocated liabilities Consolidated total liabilities Unallocated assets Consolidated total assets Segment liabilities 7 8 Cash and cash equivalents
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Cash on hand 1,505,758 1,338,169 1,179,415 862,307 Cash at banks - current accounts 21,004,462 13,453,306 18,700,297 11,487,910 - savings accounts 103,944,730 32,534,555 69,288,401 31,512,382
126,454,950 47,326,030 89,168,113 43,862,599
As at 31 December 2013, cash at banks - savings accounts carry interest at the rates of 0.125% - 0.630% per annum (2012 : 0.125% - 0.75% per annum).
9 Trade and other accounts receivable (net)
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Trade accounts receivable - other 104,987,132 54,801,122 99,475,427 54,470,169 - related parties (Note 37 c)) - - 22,002,492 10,682,985
104,987,132 54,801,122 121,477,919 65,153,154
Accounts receivable from trade barter of goods or service 5,325,778 5,403,497 5,325,778 5,403,497 Posted date cheques - 272,102 - 272,102 Other accounts receivable - other 5,368,965 5,174,901 5,356,478 5,174,901 - related parties (Note 37 c)) 781,760 - 740,965 1,386,136 Advance payment - other 609,620 424,469 565,096 407,399 - related parties (Note 37 c)) - - 277,800 - Prepaid expenses 7,383,728 8,743,737 6,434,867 7,924,216 Accrued income 12,127,682 9,343,340 12,127,682 9,343,340 Compensation income from fire incident at a warehouse (Note 30) 6,676,246 82,000,434 6,676,246 82,000,434
143,260,911 166,163,602 158,982,831 177,065,179
Less Allowance for doubtful accounts - trade accounts receivable (26,693,474) (18,402,207) (26,693,474) (18,402,207) - accounts receivable from trade barter goods or service (5,325,778) (5,403,497) (5,325,778) (5,403,497) - other accounts receivable (4,784,704) (2,734,818) (4,784,704) (2,734,818)
106,456,955 139,623,080 122,178,875 150,524,657
146 TV Direct Public Company Limited 147
9 Trade and other accounts receivable (net) (Cont’d)
Trade accounts receivable classified by aging are as follows:
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Accounts receivable not overdue 35,828,633 24,342,790 37,311,228 28,443,255 Overdue 1 - 30 days 16,608,476 7,642,808 17,132,007 9,723,512 31 - 60 days 2,241,097 358,754 1,521,118 1,275,438 61 - 9 days 589,295 1,258,684 705,494 1,321,744 91 - 180 days 15,893,806 2,127,933 18,027,507 2,265,498 181 - 365 days 10,138,700 4,193,946 17,943,687 4,278,444 Over 365 days 23,687,125 14,876,207 28,836,878 17,845,263
104,987,132 54,801,122 121,477,919 65,153,154
10 Inventories (net)
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Finished goods 389,687,096 328,642,492 376,407,910 318,111,292 Less Allowance for obsolete and slow-moving inventories (8,154,488) (10,934,926) (7,861,575) (9,867,494) Allowance for inventories cost in excess of net realisable value (616,330) (83,024) (616,330) (83,024)
380,916,278 317,624,542 367,930,005 308,160,774
Supplies 4,561,902 2,741,387 4,384,016 2,689,133 Goods in transit 34,647,576 52,280,583 32,068,348 52,280,583
420,125,756 372,646,512 404,382,369 363,130,490
Inventory with a value of Baht 3,265,894 (2012 : Baht 789,796) is carried at net releasable value, this being lower than cost.
During the year 2013, the Group and the Company reversal obsolete and slow-moving inventories Baht 2,780,438 and Baht 2,002,919, respectively. Moreover, during the year 2012, there were inventories and supplies destructed from fire incident at a warehouse value of Baht 81,793,263 and 53,243, respectively (Note 30).
11 Value added tax
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Prepaid output tax 5,139,655 4,870,120 5,129,209 4,870,120 Undue input tax 5,038,185 7,098,610 5,025,536 7,098,610 Value added tax payables (2,268,497) (1,402,664) (3,371,921) (1,893,647)
7,909,343 10,566,066 6,782,824 10,075,083 - - Baht 2012 89,100,655 89,100,655 Company Cost method Baht 2013 12,499,995 89,100,655 15,299,800 116,900,450 - - Baht 2012 90,000,000 Baht 2013 Paid-up share capital Paid-up share 12,500,000 30,000,000 90,000,000 - - % 2012 99.99 % shareholding 2013 99.99 51.00 99.99 Percentage of Percentage Incorporated in Thailand Thailand Thailand Nature of business Nature Sell goods and services through multiple Sell goods and services through marketing channels Sell householdequipment and other Hold investments in subsidiaries and sell household equipment and other Companies name Investments in subsidiaries
Shop at Home Co., Ltd. JML Direct (Thailand) Co., Ltd. JML Direct Subsidiaries (direct) Indochina Company TV Direct Limited 12 the 2012 comprises years ended 31 December 2013 and for the of investments in subsidiaries The net movement following:
148 TV Direct Public Company Limited 149 Baht 2012 9,640,800 7,719,165 17,682,460 11,972,075 Company Cost method Baht 2013 13,277,008 22,682,460 10,686,547 21,456,305 VND KHR MYR 500,000 US Dollar 2,000,000 or equivalent or equivalent or equivalent or equivalent Baht 2012 6,490,536,000 1,000,000,000 9,640,800 Baht 7,719,165 Baht 20,000,000 Baht 14,972,000 Baht VND KHR MYR 800,000 US Dollar Paid-up share capital Paid-up share 2,500,000 or equivalent or equivalent or equivalent or equivalent Baht 2013 8,923,936,000 1,380,000,000 13,277,008 Baht 10,686,547 Baht 24,477,350 Baht 25,000,000 Baht % 88.25 95.00 2012 100.00 100.00 % shareholding 90.60 96.88 Percentage of Percentage 2013 100.00 100.00 in Laos Vietnam Malaysia Cambodia Incorporated
Nature of business Nature Sell household equipment and other Sell household equipment and other Sell household equipment and other Sell household equipment and other Companies name Investments in subsidiaries (Cont’d)
TVDI Vietnam Co., Ltd. TV Direct Lao Co., Ltd. TV Direct (Malaysia) Sdn. Bhd. TV Direct Subsidiaries (indirect) Co., Ltd. Response Television Direct 12 the 2012 comprises years ended 31 December 2013 and for the of investments in subsidiaries The net movement following: (Cont’d) 12 Investments in subsidiaries (Cont’d)
The net movement of investments in subsidiaries for the years ended 31 December 2013 and 2012 comprises the following:
For the years ended 31 December Company 2013 2012 Baht Baht
Opening net book value q 89,100,655 39,100,655 Cash paid for additional investment in TV Direct Indochina Company Limited - 35,000,000 Transferred from short-term loan to a subsidiary to investment in a subsidiary - 15,000,000 Cash paid for investment in JML Direct (Thailand) Co., Ltd. 15,299,800 - Cash paid for investment in Shop at Home Co., Ltd. 12,499,995 -
Ending net book value 116,900,450 89,100,655
Investments in subsidiaries (direct)
• TV Direct Indochina Company Limited
As at 5 August 2012, TV Direct Indochina Company Limited increased its share capital from Baht 40 million to Baht 90 million by issuing 500,000 new ordinary shares of par Baht 100 per share, totalling Baht 50,000,000. TV Direct Public Company Limited purchased all additional ordinary shares totalling Baht 35,000,000 and convert short-term loan to TV Direct Indochina Company Limited to investment in subsidiary totalling Baht 15,000,000, resulting in holding 899,998 shares at par value amounting to Baht 89,999,800 in TV Direct Indochina Company Limited, by paying for the investment total amounting to Baht 89,100,655, which represents 99.99% of total 900,000 outstanding shares.
• JML Direct (Thailand) Co., Ltd.
As at 12 June 2013, TV Direct Public Company Limited joined with John Mills Limited to establish JML Direct (Thailand) Co., Ltd. which its nature of business is sell household equipment and others. The Company invested in JML Direct (Thailand) Co., Ltd. in amount of 152,998 shares from 300,000 shares at par value Baht 100 per share totalling Baht 15,299,800 which represents 51.00% of total shares.
• Shop at Home Co., Ltd.
As at 26 November 2013, TV Direct Public Company Limited established Shop at Home Co., Ltd. which its nature of business is sales of goods and services through multiple marketing channels. The Company invested in Shop at Home Co., Ltd. in amount of 9,999,996 shares from 10,000,000 shares at par value Baht 5 per share totalling Baht 49,999,980 which represents 99.99% of total shares. Shop at Home Co., Ltd. has called for paid- up ordinary share 25% of total shares and the Company has paid totalling Baht 12,499,995 based on percentage of shareholding.
• Direct Response Television Co., Ltd.
As at 30 July 2012, Direct Response Television Co., Ltd. increased its par value of ordinary shares amounting to KHR 480,000,000 equivalent to Baht 3,756,665 from KHR 520,000 per share to KHR 1,000,000 per share for 1,000 outstanding shares totalling KHR 1,000,000,000. TV Direct Indochina Company Limited fully transferred short-term loans to subsidiaries to ordinary shares in subsidiaries resulting in holding 1,000 shares amounting to KHR 1,000 million or equivalent to Baht 7,719,165 in Direct Response Television Co., Ltd. which represents 100.00% of total 1,000 outstanding shares.
As at 16 July 2013, Direct Response Televsion Co.,Ltd increased its share capital from KHR 1,000,000,000 to KHR 1,380,000,000 by increasing par value from KHR 1,000,000 per share to KHR 1,380,000 per share. TV Direct Indochina Company Limited fully transferred short-term loans to subsidiaries to ordinary shares in subsidiaries
150 TV Direct Public Company Limited 151
amounting to Baht 2,967,382, resulting in holding 1,000 shares amounting to KHR 1,380,000 or equivalent to Baht 10,686,547 which represents 100.00% of total 1,000 outstanding shares.
• TV Direct Lao Company Limited
As at 13 September 2013, TV Direct Lao Company Limited increased its share capital amounting to USD 300,000 or equivalent to Baht 9,484,230 by issuing 30,000 new ordinary shares of par USD 10 per share totalling USD 800,000 of registered share capital. TV Direct Indochina Company Limited fully transferred short-term loans to subsidiaries to ordinary shares in subsidiaries resulting in holding 77,500 shares from 80,000 shares amounting to Baht 21,456,305 which represents 96.88% of total 80,000 outstanding shares.
• TV Direct (Malaysia) Sdn. Bhd.
As at 30 January 2012, Ms. Suraiya Binti Mohd Yasin transferred her 135,000 shares of par MYR 1 per share or equivalent to Baht 10 per share totalling Baht 1,350,000 which represents 27.00% of total 500,000 shares outstanding in TV Direct (Malaysia) Sdn. Bhd. to TV Direct Indochina Company Limited so as to settle her outstanding borrowing of Baht 1,350,000 from TV Direct Indochina Company Limited. This results in increasing percentage of shareholding of TV Direct Indochina Company Limited in TV Direct (Malaysia) Sdn. Bhd. from 38.00% to 65.00% of shares outstanding.
The following details are the net carrying value of assets and liabilities of TV Direct (Malaysia) Sdn. Bhd. as at 30 January 2012, when its value closed at the acquisition date.
Baht
Cash and cash equivalents 1,096,672 Inventories 1,949,947 Other current assets 321,711 Equipment (net) 1,480,886 Accounts payable - related parties (7,740,210) Other accounts payable (2,023,411) Short-term borrowings from Director (2,113,201) Other current liabilities (528,839)
Net assets (liabilities) at 30 January 2012 (date of investment) (7,556,445)
Totalling 65.00% of share capital (4,911,688) Less Settlement of Ms. Suraiya Binti Mohd Yasin liabilities (1,350,000) Fair value of equity interest in TV Direct (Malaysia) Sdn. Bhd. Held before 30 January 2012 -
Loss from investment in subsidiary (Note 32) (6,261,688)
Cash receipt from investment in subsidiary - TV Direct Indochina Company Limited 1,096,672 Less Cash paid for investment in subsidiary - TV Direct Indochina Company Limited -
Net cash received from investment in subsidiary (to statement of cash flows) 1,096,672
As at 27 June 2012, TV Direct (Malaysia) Sdn. Bhd. increased its share capital from MYR 500,000 to MYR 2,000,000 by issuing 1,500,000 new ordinary shares of par MYR 1.00 per share or equivalent to Baht 10 per share totalling Baht 15,000,000. TV Direct Indochina Company Limited purchased the additional 1,440,000 ordinary shares resulting in holding 1,765,000 shares amounting to Baht 17,682,460 in TV Direct (Malaysia) Sdn. Bhd. which represents 88.25% of total 2,000,000 outstanding shares. As at 15 November 2013, TV Direct (Malaysia) Sdn. Bhd. increased its shares capital from MYR 2,000,000 to MYR 2,500,000 by issuing 500,000 new ordinary shares of par MYR 1 per share or equivalent to Baht 10 per share totalling Baht 5,000,000. TV Direct Indochina Company Limited fully transferred short-term loans to subsidiaries to ordinary shares in subsidiaries resulting in holding 2,265,000 shares from 2,500,000 shares amounting Baht 22,682,460 which represents 90.60% of total shares.
•TVDI Vietnam Co., Ltd.
As at 11 October 2012, TV Direct Indochina Company Limited invested in TVDI Vietnam Co., Ltd. by acquiring 100 shares of par VND 1,000,000 per share or equivalent to Baht 1,500 per share totalling Baht 150,000 which represents 100.00% of total 100 outstanding shares.
The following details are the net carrying value of assets and liabilities of TVDI Vietnam Co., Ltd. As at 11 October 2012, when its value closed at the acquisition date.
Baht
Cash and cash equivalents 10,916 Trade accounts receivable and other accounts receivable 303,178 Inventories 1,903,255 Other current assets (net) 438,017 Equipments (net) 85,372 Other non-current assets 314,170 Trade accounts payable and other accounts payable (7,524,556) Short-term loan from a related party (9,067,497)
Net assets (liabilities) at 11 October 2012 (date of investment) (13,537,145)
Totalling 100.00% of share capital (13,537,145) Less Investment in subsidiary payable (150,000) Fair value of equity interest in TVDI Vietnam Co., Ltd. held before 11 October 2012 -
Loss from business combination under common control (13,687,145)
On 6 November 2012 TV Direct Indochina Company Limited paid for share capital of Baht 150,000 by pass through to TVDI Vietnam Co., Ltd. to former shareholder.
Cash receipt from investment in subsidiary - TV Direct Indochina Company Limited 10,916 Less Cash paid for investment in subsidiary - TV Direct Indochina Company Limited (150,000)
Net cash received (paid) from investment in subsidiary (to statement of cash flows) (139,084)
As at 11 October 2012, TVDI Vietnam Co., Ltd. increased its share capital from VND 100,000,000 or Baht 150,000 equivalent to VND 6,490,536,000 or Baht 9,640,800 equivalent by increasing par value from VND 1,000,000 per share to VND 64,905,360 per shares. TV Direct Indochina Company Limited made addition payment for all 100 ordinary shares amounting to VND 6,490,536,000 or Baht 9,640,800 equivalent in TVDI Vietnam Co., Ltd which represents 100% of total outstanding shares. TV Direct Indochina Company Limited settled share payables by transferred short-term loans to TVDI Vietnam Co., Ltd. totalling Baht 8,695,565 and paid cash in amount of Baht 795,235 on 6 November 2012.
As at 14 November 2013, TVDI Vietnam Co., Ltd increased its share capital from VND 6,490,536,000 or equivalent to Baht 9,640,800 to VND 8,923,936,000 or equivalent to Baht 13,277,008 by increasing par val- ue from VND 64,905,360 to VND 89,239,360 of total 100 shares. TV Direct Indochina Company Limited trans- ferred short-term loans to subsidiaries to ordinary shares in subsidiaries amounting to Baht 2,845,014 and will pay by cash amounting to Baht 791,194 totalling Baht 3,636,208 resulting in holding 100 shares totalling Baht 13,277,008 which represents 100.00% of total shares.
152 TV Direct Public Company Limited 153 12,405 21,793 - - 24,980 2,265 2012 2012 59,178 2,265 (loss) Baht (loss) Baht Unrealised profit Unrealised profit Unrealised - - 23,454 23,454 990,221 855,373 2013 2013 1,013,675 878,827 6,012,405 10,021,793 - - 11,224,980 1,202,265 2012 2012 27,259,178 1,202,265 Baht Baht Market Value Market Value - - 40,023,454 40,023,454 114,574,859 109,611,546 2013 2013 154,598,313 149,635,000 10.08 10.58 - - 10.33 10.33 2012 2012 Market Price Market Price (Baht) per unit (Baht) per unit - - 19.11 19.11 10.58 10.58 2013 2013 Consolidated (Baht) Consolidated (Baht) 6,000,000 10,000,000 - - 11,200,000 1,200,000 2012 2012 27,200,000 1,200,000 Baht Baht Total cost Total cost Total - - 40,000,000 40,000,000 113,584,638 108,765,173 2013 2013 153,584,638 148,765,173 10.06 10.55 - - 10.31 10.31 2012 2012 Cost Cost (Baht) per unit (Baht) per unit - - 19.10 19.10 10.49 10.50 2013 2013 2,631,094 596,394 974,535 116,442 - - 1,087,165 116,4421 2012 2012 Units held Units held 12,922,964 - - 12,454,254 2,094,065 2,094,065 10,828,899 10,360,189 2013 2013 Securities name Securities name A A
Total SCB Treasury Money Plus SCB Treasury Open End Fund (SCBTMF - PLUS) Finansa Value Plus Fund Finansa Value VF) (FAM Total Krungsri Star Plus Fund (KFS PLUS) Krungsri Star Plus Fund (KFS PLUS) LH Money Market Fund (LHMM) LH Money Market Fund (LHMM) 13 investments vailable-for-sale as follows: investments as at 31 December 2013 and 2012 are vailable-for-sale 13 Available-for-sale investments (Cont’d)
The movement of available-for-sale investments for the years ended 31 December 2013 and 2012 are as follows:
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Opening net book amount 27,259,178 - 1,202,265 - Additions 197,200,000 28,200,000 197,200,000 1,200,000 Disposal (70,815,362) (1,000,000) (49,643,827) - Changes in fair value of available-for-sale investments 954,497 59,178 876,562 2,265
Ending net book amount 154,598,313 27,259,178 149,635,000 1,202,265
14 Restricted deposits at financial institutions
As at 31 December 2013, restricted deposits at financial institutions represent 3-month to 12-month fixed deposits with interest rate of 1.75% - 3.00% per annum (2012 : 1.75% - 3.00% per annum). The fixed deposits are held as collateral against short-term borrowings from financial institutions (Note 21).
154 TV Direct Public Company Limited 155 Total 347,335,967 (3,964,736) 3,409,463 (1,361,085) 1,222,808 (30,255,326) 299,569,626 449,454,731 (149,385,105) (500,000) 299,569,626 (123,762,050) (500,000) 223,073,917 223,073,917 107,405,222 - 39,363 in progress Construction 5,190,535 - - - - - 55,484,519 55,484,519 - - 55,484,519 - - 5,190,535 5,190,535 65,315,445 (15,021,461) - Vehicles 2,491,435 (472,806) 79,901 - - (91,002) 48,476 2,018,629 (1,970,153) - 48,476 (1,959,052) - 532,383 532,383 - - - Computer equipment 36,343,494 (1,215,400) 1,215,323 (368,028) 355,765 (2,670,227) 8,480,434 40,370,388 (31,889,954) - 8,480,434 (30,790,815) - 5,552,679 5,552,679 5,592,584 17,738 - Furniture and office equipment and fixtures 122,029,917 (2,243,820) 2,086,658 (993,057) 867,043 (20,771,581) 82,347,164 168,365,886 (86,018,722) - 82,347,164 (68,200,842) - 53,829,075 53,829,075 34,529,760 15,003,723 39,363 Consolidated (Baht) Building for lease improvements 32,193,555 (32,710) 27,581 - - (3,368,315) 11,982,058 32,818,488 (20,836,430) - 11,982,058 (17,495,696) - 14,697,859 14,697,859 657,643 - - Building 54,724,825 - - - - (2,736,241) 47,089,347 54,724,825 (7,635,478) - 47,089,347 (4,899,237) - 49,825,588 49,825,588 - - - Land for lease improvements 2,161,440 - - - - (617,960) 2,436,862 3,471,230 (1,034,368) - 2,436,862 (416,408) - 1,745,032 1,745,032 1,309,790 - - Land 92,200,766 ------91,700,766 92,200,766 (500,000) 91,700,766 - (500,000) 91,700,766 91,700,766 - - - eciation eciation - cost - cost
- accumulated depr Accumulated depr Pr
As at 1 January 2012 amount Cost or revalued - accumulated depreciation charge (Note 33) Depreciation Closing net book value As at 31 December 2012 amount Cost or revalued Allowance for impairment of assets Net book value Allowance for impairment of assets Net book value For the year ended 31 December 2012 Opening net book value Additions in (out) Transfers inventory from Transfers Less Accumulated depreciation Disposals Write-off Less 15 plant and equipment (net) operty, - 690,206 (821,100) (500,000) Total 1,213,247 1,773,083 1,658,344 (1,492,150) (3,065,476) 97,449,182 (43,517,682) 299,569,626 353,457,280 543,873,737 353,457,280 (189,916,457) ------(821,100) 1,658,344 8,932,189 8,932,189 8,932,189 66,313,692 55,484,519 (113,703,266) in progress Construction ------48,476 36,135 36,135 (12,341) 2,018,629 Vehicles (1,982,494) ------9,782,400 1,854,994 8,480,434 (4,739,989) 15,377,839 15,377,839 52,007,782 Computer equipment (36,629,943) - - - 690,206 1,213,247 1,773,083 (1,492,150) (3,065,476) 14,003,123 29,057,806 82,347,164 96,632,907 96,632,907 Furniture (27,894,096) 207,559,395 and office equipment (110,926,488) and fixtures Consolidated (Baht) ------222,690 ments (5,721,409) Building 31,921,480 11,982,058 38,404,819 38,404,819 64,962,658 for lease - improve (26,557,839) ------Building (4,090,834) 54,936,263 47,089,347 97,934,776 97,934,776 (11,726,312) 109,661,088 ------3,060,000 2,436,862 4,437,849 4,437,849 6,531,230 Land ments (1,059,013) (2,093,381) for lease - improve ------Land (500,000) 91,700,766 91,700,766 91,700,766 92,200,766 Pr
- accumulated depreciation charge (Note 33) Depreciation - accumulated depreciation - cost Write-off Disposal - cost Transfers from inventories from Transfers Reclassification (Note 16) Transfers in (out) Transfers Interest expense capitalised Interest Additions For the year ended 31 December 2013 Opening net book value Net book value Allowance for impairment of assets Less Accumulated depreciation Closing net book value As at 31 December 2012 amount Cost or revalued 15 plant and equipment (net) (Cont’d) operty,
156 TV Direct Public Company Limited 157 39,363 (500,000) (500,000) Total 3,329,562 1,181,815 (3,491,930) (1,320,092) (29,461,507) 345,323,347 296,472,818 221,337,088 221,337,088 104,858,519 445,409,207 296,472,818 (123,486,259) (148,436,389) ------5,190,535 5,190,535 5,190,535 55,484,519 65,315,445 55,484,519 55,484,519 (15,021,461) in progress Construction ------4 4 4 4 1,957,593 1,957,593 Vehicles (1,957,589) (1,957,589) - - 17,738 355,765 (368,028) 5,552,679 5,552,679 8,480,434 5,592,584 8,480,434 1,215,323 (2,670,227) (1,215,400) 36,343,494 40,370,388 Computer equipment (30,790,815) (31,889,954) - - 39,363 826,050 (952,064) 2,086,658 (2,243,820) 52,624,625 52,624,625 79,298,828 31,983,057 15,003,723 79,298,828 Furniture and office (67,926,514) (85,082,570) (20,068,764) 120,551,139 164,381,398 equipment and fixtures Consolidated (Baht) ------27,581 (32,710) 657,643 ments (3,368,315) Building 32,193,555 14,697,859 14,697,859 11,982,058 32,818,488 11,982,058 for lease - improve (17,495,696) (20,836,430) ------Building (4,899,237) (7,635,478) (2,736,241) 54,724,825 49,825,588 49,825,588 47,089,347 54,724,825 47,089,347 ------(416,408) (617,960) Land ments 2,161,440 1,745,032 1,745,032 2,436,862 1,309,790 3,471,230 2,436,862 (1,034,368) for lease - improve ------Land (500,000) (500,000) 92,200,766 91,700,766 91,700,766 91,700,766 91,700,766 92,200,766 Pr
As at 1 January 2012 amount Cost or revalued Allowance for impairment of assets Allowance for impairment of assets Net book value For the year ended 31 December 2012 Opening net book value Additions in (out) Transfers Net book value Less Accumulated depreciation Less Accumulated depreciation Transfers from inventories from Transfers - accumulated depreciation - cost Write-off - accumulated depreciation charge (Note 33) Depreciation Closing net book value As at 31 December 2012 amount Cost or revalued Disposal - cost 15 plant and equipment (net) (Cont’d) operty, 690,206 (821,100) (500,000) Total 1,658,344 1,601,593 1,076,166 (1,605,900) (1,159,287) 89,436,223 (42,089,662) 296,472,818 533,607,693 345,259,401 345,259,401 (187,848,292) (821,100) 1,658,344 8,932,189 8,932,189 8,932,189 66,313,692 55,484,519 in progress (113,703,266) Construction - 4 4 4 1,957,593 Vehicles (1,957,589) 9,782,400 1,854,994 8,480,434 (4,739,989) 52,007,782 15,377,839 15,377,839 Computer equipment (36,629,943) 690,206 1,601,593 1,076,166 (1,605,900) (1,159,287) 14,003,123 21,044,847 79,298,828 88,471,159 88,471,159 (26,478,417) Furniture 197,354,387 and office equipment (108,883,228) and fixtures Consolidated (Baht) - 222,690 ments (5,721,409) Building 31,921,480 11,982,058 64,962,658 38,404,819 38,404,819 for lease - improve (26,557,839) - Building (4,090,834) 54,936,263 47,089,347 97,934,776 97,934,776 (11,726,312) 109,661,088 ------Land ments 3,060,000 2,436,862 6,531,230 4,437,849 4,437,849 for lease - improve (1,059,013) (2,093,381) ------Land (500,000) 91,700,766 92,200,766 91,700,766 91,700,766 eciation - cost - cost
Accumulated depr Pr
Interest expense capitalised Interest in (out) Transfers inventories from Transfers Reclassification (Note 16) Additions For the year ended 31 December 2013 Opening net book value As at 31 December 2013 amount Cost or revalued - accumulated depreciation - accumulated depreciation charge (Note 33) Depreciation Closing net book value Allowance for impairment of assets Disposal Write-off Less of the Company (Note 21 and 22). being used as collaterals of borrowings As at 31 December 2013 and 2012, land building for lease are still in used as included the consolidated and plant and equipment that are carrying amount of fully depreciated As at 31 December 2013, the gross respectively. Baht 97,482,043 and 97,347,876 (2012 : 80,102,319 80,102,319), company financial statements were Net book value 15 plant and equipment (net) (Cont’d) operty,
158 TV Direct Public Company Limited 159
16 Intangible assets (net)
Computer software Consolidated Company Baht Baht
As at 31 December 2011 Cost 29,880,948 29,508,009 Less Accumulated amortisation (10,258,957) (10,171,976)
Net book amount 19,621,991 19,336,033
For the year ended 31 December 2012 Opening net book amount 19,621,991 19,336,033 Additions 9,548,251 9,423,290 Write-offs (2,540,000) (2,540,000) Amortisation charge (Note 33) (5,806,942) (5,724,824)
Closing net book value 20,823,300 20,494,499
As at 31 December 2012 Cost 36,889,199 36,391,299 Less Accumulated amortisation (16,065,899) (15,896,800)
Net book amount 20,823,300 20,494,499
For the year ended 31 December 2013 Opening net book amount 20,823,300 20,494,499
Additions 20,025,037 19,946,111 Reclassification (Note 15) 821,100 821,100 Adjustment (216,000) (216,000) Amortisation charge (Note 33) (7,353,154) (7,247,435)
Closing net book value 34,100,283 33,798,275
As at 31 December 2013 Cost 57,519,336 56,942,510 Less Accumulated amortisation (23,419,053) (23,144,235)
Net book amount 34,100,283 33,798,275
17 Leasehold right (net)
Consolidated/Company 2013 2012 Baht Baht
Leasehold right 2,600,000 2,600,000 Less Accumulated amortisation (2,471,781) (1,951,781)
128,219 648,219
18 Deferred income tax (net)
Deferred income taxes as at 31 December 2013 and 2012 comprise the following:
Consolidated Company Restated Restated 2013 2012 2013 2012 Baht Baht Baht Baht
Deferred income tax assets: Deferred income tax asset to be recovered within 12 months 1,800,234 1,861,891 1,800,234 1,861,891 Deferred income tax asset to be recovered after more than 12 months 14,314,303 11,995,710 14,245,780 11,796,718
16,114,537 13,857,601 16,046,014 13,658,609 Deferred income tax liabilities: Deferred income tax liabilities to be settled within 12 months (960,907) (655,023) (960,907) (655,023) Deferred income tax liabilities to be settled after more than 12 months (8,752,349) (9,733,420) (8,725,379) (9,722,037)
(9,713,256) (10,388,443) (9,686,286) (10,377,060)
Deferred income tax assets (net) 6,401,281 3,469,158 6,359,728 3,281,549
The movement of deferred income taxes for the year ended 31 December 2013 and 2012 comprises the following:
Consolidated Company Restated Restated 2013 2012 2013 2012 Baht Baht Baht Baht
Opening balance 3,469,158 4,331,527 3,281,549 4,075,560 Increase/(decrease) to the statement of comprehensive income 3,123,022 (850,533) 3,253,491 (793,558) Increase/(decrease) to the shareholders’ equity (190,899) (11,836) (175,312) (453)
Closing balance 6,401,281 3,469,158 6,359,728 3,281,549
160 TV Direct Public Company Limited 161
18 Deferred income tax (net) (Cont’d)
The movement of deferred income taxes for the year ended 31 December 2013 and 2012 comprises the following: (Cont’d)
Consolidated (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 31 December 2013 income equity 2012 Baht Baht Baht Baht
Deferred income tax assets: Allowance for doubtful accounts 5,308,104 2,052,687 - 7,360,791 Allowance for obsolete and slow-moving inventories 2,172,491 (531,653) - 1,640,838 Allowance for inventories cost in excess of net realisable value 16,605 106,661 - 123,266 Allowance for impairment of assets 100,000 - - 100,000 Different amortisation charge between tax and accounting for intangible assets amortisation 1,434,735 549,908 - 1,984,643 Liability under finance lease agreements 2,840,981 (993,558) - 1,847,423 Provision for goods returned 203,139 (31,356) - 171,783 Employee benefit obligations 1,781,546 1,104,247 - 2,885,793
13,857,601 2,256,936 - 16,114,537
Deferred income tax liabilities: Surplus from land revaluation (6,329,098) - - (6,329,098)
Gain on measurement available-for-sale investments (11,836) - (190,899) (202,735) Assets under finance lease agreements (4,047,509) 866,086 - (3,181,423)
(10,388,443) 866,086 (190,899) (9,713,256)
3,469,158 3,123,022 (190,899) 6,401,281 18 Deferred income tax (net) (Cont’d)
The movement of deferred income taxes for the year ended 31 December 2013 and 2012 comprises the following: (Cont’d) Consolidated (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 31 December 2013 income equity 2013 Baht Baht Baht Baht
Deferred income tax assets: Allowance for doubtful accounts 5,922,175 (614,071) - 5,308,104 Allowance for obsolete and slow-moving inventories 3,021,798 (849,307) - 2,172,491 Allowance for inventories cost in excess of net realisable value 39,721 (23,116) - 16,605 Allowance for impairment of assets 100,000 - - 100,000 Different amortisation charge between tax and accounting for intangible assets amortisation 1,006,698 428,037 - 1,434,735 Liability under finance lease agreements 804,377 2,036,604 - 2,840,981 Provision for goods returned - 203,139 - 203,139 Employee benefit obligations 906,138 875,408 - 1,781,546
11,800,907 2,056,694 - 13,857,601
Deferred income tax liabilities: Surplus from land revaluation (6,329,098) - - (6,329,098) Gain on measurement available-for-sale investments - - (11,836) (11,836) Assets under finance lease agreements (1,140,282) (2,907,227) - (4,047,509)
(7,469,380) (2,907,227) (11,836) (10,388,443)
4,331,527 (850,533) (11,836) 3,469,158
162 TV Direct Public Company Limited 163
18 Deferred income tax (net) (Cont’d)
The movement of deferred income taxes for the year ended 31 December 2013 and 2012 comprises the following: (Cont’d) Company (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 31 December 2013 income equity 2013 Baht Baht Baht Baht
Deferred income tax assets: Allowance for doubtful accounts 5,308,104 2,052,687 - 7,360,791 Allowance for obsolete and slow-moving inventories 1,973,499 (401,184) - 1,572,315 Allowance for inventories cost in excess of net realisable value 16,605 106,661 - 123,266 Allowance for impairment of assets 100,000 - - 100,000 Different amortisation charge between tax and accounting for intangible assets amortisation 1,434,735 549,908 - 1,984,643 Liability under finance lease agreements 2,840,981 (993,558) - 1,847,423 Provision for goods returned 203,139 (31,356) - 171,783 Employee benefit obligations 1,781,546 1,104,247 - 2,885,793
13,658,609 2,387,405 - 16,046,014
Deferred income tax liabilities: Surplus from land revaluation (6,329,098) - - (6,329,098)
Gain on measurement available-for-sale investments (453) - (175,312) (175,765)
Assets under finance lease agreements (4,047,509) 866,086 - (3,181,423)
(10,377,060) 866,086 (175,312) (9,686,286)
3,281,549 3,253,491 (175,312) 6,359,728
18 Deferred income tax (net) (Cont’d)
The movement of deferred income taxes for the year ended 31 December 2013 and 2012 comprises the following: (Cont’d) Company (Credits) debits to the (Credits) statement of debits to the 1 January comprehensive shareholders’ 31 December 2013 income equity 2013 Baht Baht Baht Baht
Deferred income tax assets: Allowance for doubtful accounts 5,666,208 (358,104) - 5,308,104
Allowance for obsolete and slow-moving inventories 3,021,798 (1,048,299) - 1,973,499
Allowance for inventories cost in excess of net realisable value 39,721 (23,116) - 16,605
Allowance for impairment of assets 100,000 - - 100,000
Different amortisation charge between tax and accounting for intangible assets amortisation 1,006,698 428,037 - 1,434,735
Liability under finance lease agreements 804,377 2,036,604 - 2,840,981
Provision for goods returned - 203,139 - 203,139
Employee benefit obligations 906,138 875,408 - 1,781,546
11,544,940 2,113,669 - 13,658,609
Deferred income tax liabilities: Surplus from land revaluation (6,329,098) - - (6,329,098) Gain on measurement available-for-sale investments - - (453) (453) Assets under finance lease agreements (1,140,282) (2,907,227) - (4,047,509)
(7,469,380) (2,907,227) (453) (10,377,060)
4,075,560 (793,558) (453) 3,281,549
19 Other non-current assets (net)
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Rental guarantees 23,095,193 22,024,443 22,964,693 21,839,369 Other guarantees 7,469,095 7,400,056 7,469,095 7,400,056 Refundable deposit 382,825 573,397 - - Prepaid satellite rental (net) - 3,242,775 - - Others 2,026,673 1,320,368 2,026,673 1,320,368
32,973,786 34,561,039 32,460,461 30,559,793
164 TV Direct Public Company Limited 165
20 Trade and other accounts payable
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht Trade accounts payable - other companies 179,211,706 189,715,211 172,496,247 189,452,691 - related parties (Note 37 c)) - - 2,855,514 - Other accounts payable - other companies 39,978,453 39,891,669 38,755,626 38,874,427 Accrued expenses - Accrued bonus 6,600,000 13,200,000 6,600,000 13,200,000 - Dividend payable (Note 27) 206,023 63,227 206,023 63,227 - Accrued warehouse management & distribution expenses 5,890,384 5,464,344 5,446,303 5,464,344 - Accrued service expenses 3,468,848 2,579,021 1,380,468 625,363 - Accrued commission 5,139,242 3,859,572 5,103,528 3,799,189 - Accrued consulting expenses 4,560,000 - 4,560,000 - - Accrued mail expenses 2,509,302 2,642,434 2,509,302 2,642,434 - Accrued telephone expenses 2,896,402 3,566,271 2,846,163 3,524,209 - Accrued interest expense 581,065 893,142 581,065 893,142 - Other accrued expenses 13,678,958 12,649,665 11,105,799 8,794,783 Advances received from customers 8,955,253 20,355,603 8,930,434 20,348,824 Cash waiting for return to customer 990,156 218,771 987,992 218,771 Revenue received in advance 148,875 766,273 148,879 766,273 Post dated cheque paid 116,997 23,909 - -
274,931,664 295,889,112 264,513,339 288,667,677
21 Short-term borrowings from financial institutions
Consolidated/Company 2013 2012 Type of short-term borrowings Baht Baht
Bank overdrafts - 1,664,361 Promissory notes 3,887,177 87,222,851 Trust receipts 123,168,790 167,085,467
127,055,967 255,972,679
As at 31 December 2013 and 2012, short-term borrowings from financial institutions were as follows:
- As at 31 December 2012, bank overdraft bears interest rates of 7.40% - 7.48% per annum.
- As at 31 December 2013, rollable-over promissory notes denominated in Thai Baht bear interest rates of 5.70% per annum (2012 : 6.00% per annum). The outstanding principal and interest are due for repayments during February to March 2013 (2012 : during January to March 2013).
- As at 31 December 2013, rollable-over trust receipts denominated in Thai Baht bear interest rates of 3.500%- 6.500% per annum (2012 : 5.375% - 6.000%per annum). The outstanding principal and interest rate are due for repayments during February to May 2013 (2012 : during January to May 2013). 21 Short-term borrowings from financial institutions (Cont’d)
- As at 31 December 2013 and 2012, the Company uses its land & building (Note 15) and fixed deposit (Note 14) entitled to TV Direct Public Company Limited as a collateral against these borrowings.
The movement of short-term borrowings from financial institutions for the year ended 31 December 2013 and 2012 is as follows:
Consolidated Bank Promissory overdraf notes Trust receipts Total Baht Baht Baht Baht
Opening net book value as at 1 January 2012 30,615,801 62,841,594 111,833,769 205,291,164 Additions 511,663,552 478,562,936 347,827,819 1,338,054,307 Repayments (540,614,992) (454,181,679) (292,576,121) (1,287,372,792)
Ending net book value as at 31 December 2012 1,664,361 87,222,851 167,085,467 255,972,679 Additions 249,884,488 107,950,082 361,663,379 719,497,949 Repayments (251,548,849) (191,285,756) (405,580,056) (848,414,661)
Ending net book value as at 31 December 2013 - 3,887,177 123,168,790 127,055,967
Company Bank Promissory overdraf notes Trust receipts Total Baht Baht Baht Baht
Opening net book value as at 1 January 2012 30,615,801 62,841,594 111,833,769 205,291,164 Additions 511,663,552 478,562,936 347,827,819 1,338,054,307 Repayments (540,614,992) (454,181,679) (292,576,121) (1,287,372,792)
Ending net book value as at 31 December 2012 1,664,361 87,222,851 167,085,467 255,972,679 Additions 249,884,488 107,950,082 361,663,379 719,497,949 Repayments (251,548,849) (191,285,756) (405,580,056) (848,414,661)
Ending net book value as at 31 December 2013 - 3,887,177 123,168,790 127,055,967
Short-term credit facilities from four financial institutions consists of: Type 2013 2012 2013 2012 2013 2012 Million Million Interest rate Interest rate Collateral Collateral Baht Baht Bank overdrafts 50 50 MOR - 0.375% MOR - 0.375% to MOR to MOR per annum per annum Bank overdrafts by buyer 20 30 MOR - 1.0% MOR - 1.0% per annum per annum Short-term borrowings 110 90 MLR - 1.5% to MLR - 1.0% -Fixed deposits -Fixed deposits - promissory notes MLR - 1.0% per annum (Note 14) (Note 14) per annum -Land including -Land including Letter of credit/trust 370 300 MLR - 2.0% MLR - 2.0% construction construction receipts to MLR - 1.0% to MLR - 1.0% (Note 15) (Note 15) per annum per annum Letter of bank guarantees 60 40 Bank charge Bank charge 1.5% - 2.0% 1.75% per annum per annum Foreign currencies 390 310 - - forward contracts 166 TV Direct Public Company Limited 167
21 Short-term borrowings from financial institutions (Cont’d)
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht Unused credit lines Floating interest rate 344,294,639 260,941,172 344,294,639 260,941,172
22 Long-term borrowing from financial institution
The movement of long-term borrowing from financial institutions for the years ended 31 December 2013 and 2012 comprises:
Consolidated/Company 2013 2012 Baht Baht
Opening net book value 72,385,010 47,928,010 Additions borrowings 68,070,000 31,930,000 Repayment borrowings (24,093,885) (7,473,000)
Ending net book value 116,361,125 72,385,010 Less Current portion (31,460,151) (14,616,433)
84,900,974 57,768,577
The Company has long-term borrowing from 3 financial institutions in Thai Baht as follows:
- The Company entered into long-term loan facilities agreement with a commercial bank denominated in Thai Baht in the amount of Baht 15 million for new studio construction and purchasing equipment. This borrowing bears interest at the rate of MLR - 1.5% and interest is payable on a monthly basis. The principal is repayable in 60 equal - monthly installment of Baht 166,300 each, commencing March 2012. The Company has mortgaged its land including construction (Note15). In addition, the Company must maintain Debt Service Coverage Ratio (DSCR) at least 2.0 :1 and Debt to Equity ratio not over 2.0 :1 for 2012 onwards. As at 31 December 2013, the Company already paid for all of the borrowing (2012 : the total outstanding borrowing amount is Baht 6,315,010).
- The Company entered into long-term loan facilities agreement with a commercial bank denominated in Thai Baht in the amount of Baht 40 million for purchasing land and buildings for new office. This borrowing bears interest at the rate of MLR - 1.25% and interest is payable on a monthly basis. The principal is repayable in 54 equal - monthly installment of Baht 830,000 each, commencing June 2012. The Company has mortgaged its lands (Note 15). The Company must maintain Debt Service Coverage Ratio (DSCR) at least 1.5 : 1 and Debt to Equity ratio not over 2.0 : 1. As at 31 December 2013, the total outstanding borrowing amount is Baht 24,180,000 (2012 : Baht 34,140,000).
- The Company entered into long-term loan facilities agreement with a commercial bank denominated in Thai Baht in the amount of Baht 100 million for purchasing land and buildings for new office. This borrowing bears interest at the rate of MLR - 1.25% and interest is payable on a monthly basis. The principal is repayable in 60 equal - monthly installment of Baht 2,030,000 each, commencing August 2013. The Company has mortgaged its lands (Note 15) as at 31 December 2013, the total outstanding borrowing amount is Baht 92,181,125 (2012 : Baht 31,930,000). 23 Liability under finance lease agreements (net)
Consolidated/Company 2013 2012 Baht Baht Liability under finance lease agreements 9,908,742 15,893,147 Less Future finance charges on finance lease (671,628) (1,688,240)
9,237,114 14,204,907 Less Current portion (6,988,573) (6,400,059)
2,248,541 7,804,848
Payment to be made in subsequent years are as follows:
Within 1 year 7,597,651 7,587,789 More than 1 year but no longer than 3 years 2,311,091 8,305,358
9,908,742 15,893,147
24 Other current liabilities
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Withholding tax payable 3,275,936 2,989,286 2,764,923 2,631,580 Provision for goods returned 858,913 1,015,694 858,913 1,015,694 Retention payable 231,115 1,400,909 231,115 1,400,909 Others 538,303 364,855 342,360 261,698
4,904,267 5,770,744 4,197,311 5,309,881
168 TV Direct Public Company Limited 169
25 Employee benefit obligations
As disclosed in accounting policy in Notes 2.15, the employee benefit obligations of Baht 8,896,666 as at 31 December 2010, is recognised on a straight-line basis over five years at approximately Baht 1,779,333 per year. For employee benefit obligations of subsidiaries, the management assessed that the obligations are not significant.
The movement of employee benefits obligation for the year ended 31 December 2013 and 2012 is set out below:
For the year ended 31 December Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Initial employee benefit obligations which have not been recognised
Opening balance of initial provision for employee benefits which have not been recognised 5,338,000 7,117,333 5,338,000 7,117,333 Recognised as liability during the year (1,779,333) (1,779,333) (1,779,333) (1,779,333)
Closing balance of initial provision for employee benefits which have not been recognised 3,558,667 5,338,000 3,558,667 5,338,000
Employee benefit obligations which are recognised
Opening balance of the recognised provision for employee benefits 8,907,732 4,346,103 8,907,732 4,346,103 Initial provision for employee benefits recognised during the year 1,779,333 1,779,333 1,779,333 1,779,333 Increase during the year 4,651,835 4,012,863 4,651,835 4,012,863 Payment during the year (909,936) (1,230,567) (909,936) (1,230,567)
Closing balance of the recognised provision for employee benefits 14,428,964 8,907,732 14,428,964 8,907,732
Total recognised and non-recognised obligation for employee benefits as at 31 December 2013 17,987,631 14,245,732 17,987,631 14,245,732
The principal actuarial assumptions used were as follows:
For the year ended For the year ended 31 December 31 December Consolidated Company Consolidated Company
Discount rate 4.32% 4.32% 4.32% 4.32% Future salary increases 0.00% - 5.00% 0.00% - 5.00% 0.00% - 5.00% 0.00% - 5.00% Death rate 60% of TMO 2540 60% of TMO 2540 60% of TMO 2540 60% of TMO 2540 Disability rate 5% of death rate 5% of death rate 5% of death rate 5% of death rate Turnover rate 0.00% - 50.00% 0.00% - 50.00% 0.00% - 50.00% 0.00% - 50.00%
26 Share capital
26.1 Change of par value
At the Extraordinary Shareholders’ Meeting No. 1/2012 held on 24 May 2012, the shareholders anonymously approved the change of par value from Baht 1.00 each to Baht 0.50 each by spliting the existing 188,000,000 ordinary shares into 376,000,000 ordinary shares. The Company registered the change of par value with the Ministry of Commerce on 28 May 2012. In addition, the shareholders anonymously approved to offer issued 52,000,000 shares to public and 5,920,000 shares to directors and employees of the Company and its subsidiaries at the same offering period, at the offered price of not less than 0.50 Baht per share. The Board of Directors was authorised to execute the aforementioned execution.
At the Board of Directors’ Meeting 7/2555 held on 23 July 2012, the Board of Directors anonymously approved conditions for new ordinary shares allocation for selling to directors, management and employees of the Company and its subsidiaries. The defined conditions were that the eligible persons had served the Group for at least 2 years, and they can buy the shares at 20% discount to the IPO price. Also, the shares must be in a one-year silent period.
According to letter from the Stock Exchange of Thailand (SET) at Bor.Jor. 469/2555 dated 21 August 2012, the SET’s Board of Governors approved the Company for first trading of 376,000,000 ordinary shares at par value of Baht 0.50 per share in the Market Alternative Investment (MAI) from 23 August 2012 onwards. The 376,000,000 ordinary shares comprises:
- Original 318,080,000 ordinary shares prior to IPO, at par value of Baht 0.50 per share. - Additional 57,920,000 ordinary shares increase for IPO, at par value of Baht 0.50 per share. These shares include: (1) selling to the public for 54,620,000 shares at Baht 2.10 per share. (2) selling to directors and employees of the Company and its subsidiaries for 3,300,000 shares at Baht 1.68 per share with a one-year silent period since first trading.
The variance between selling price to directors and employees of the Company and its subsidiaries and selling price to the public of Baht 1,386,000 is immediately recognised in the statement of comprehensive income (Note 38).
In addition, expenses incurred from IPO of Baht 3,607,380 is recognised and presented net from share premium.
26.2 Increase share capital
At the Extraordinary Shareholders’ Meeting No. 1/2013 held on 25 May 2013 the Board passed a resolution approving the increasing registered share capital and warrants for such new ordinary shares by increasing of the Company’s registered capital from 376,000,000 shares with a par value of Baht 0.50 per share, totalling Baht 188,000,000 to new registered capital of 493,500,000 ordinary shares with a par value of Baht 0.50 per share totalling Baht 246,750,000, by issuing new 117,500,000 ordinary shares at par value of Baht 0.50 per share, totalling Baht 58,750,000. The details of which are as follows:
170 TV Direct Public Company Limited 171
Allotted to Number (shares) Ratio Sale price Subscription (old : new) per share (Baht) and payment period Existing 94,000,000 4 existing shares Baht 4.50 June 28 and Shareholders : 1 new ordinary share July 2-5, 2013 Reserve for exercising 23,500,000 4 new ordinary share Baht 3.50 - the right of the Company’s : 1 unit of warrant (Exercise Price) warrants allotted to the existing (1 unit of warrant shareholders who have represent the right subscribed for the rights to purchase 1 unit of the offering and are allotted the Company right offering shares (TVD-W1) ordinary share)
The Company registered an increasing in registered share capital with Department of Business Development on 11 June 2013.
On 9 July 2013, the Company received such increasing share capital for 93,999,992 shares at Baht 4.50 totalling Baht 422,999,964. The Company registered the increasing of issued and fully paid-up ordinary share capital with Development of Business Development on 10 July 2013.
26.3 Warrants
Warrants to purchase ordinary shares No.1 (TVD-W1)
On 15 July 2013, the Company issued warrants to purchase the Company’s ordinary shares offering to the existing shareholders. The details are as follows:
Type of warrants : Issued in the names of respective holder and negotiable Term of warrants : 3 years from the issuing date Number of warrants offered : 23,500,000 units Number of warrants issued : 23,499,780 units Offering price : Baht 0 per unit Exercise ratio : 1 warrant per 1 ordinary shares (which will be changeable) Exercise price : Baht 3.50 per share (which will be changeable) Exercise date : On the last business day of June and December of each year, throughout the term of the warrants and the first exercise date is the last business day of December 2013. The last exercise date : 14 July 2016
During the year, no holders exercised their rights under the warrants to purchase ordinary shares No. 1 (TVD-W1).
As at 31 December 2013 the outstanding balance of unexercised warrants to purchase ordinary shares No. 1 (TVD-W1) is 23,499,780 units.
27 Dividend payment and legal reserve
At the Board of Directors’ meeting 9/2013 held on 25 September 2013, the shareholders approved the interim dividend for the result of operations from 1 January 2013 to 30 June 2013 at Baht 0.07 per share, totalling Baht 32,899,649 and approved an appropriation for legal reserve amounting to Baht 2,698,501. There was outstanding dividend payable as at 31 December 2013 amounting to Baht 71,163 (Note 20).
At the annual general shareholders’ meeting on 29 March 2013, the shareholders approved the dividend payment for the year 2012 at Baht 0.10 per share, totalling Baht 37,600,000 and approved an appropriation of legal reserve amounting to Baht 1,741,084. The Company already paid dividend amounting to Baht 37,489,423 to shareholders on 11 April 2013 and there was outstanding dividend payable as at 31 December 2013 amounting to Baht 99,150 (Note 20).
At the Board of Directors’ meeting 9/2012 held on 24 September 2012, the shareholders approved the interim dividend for the result of operations from 1 January 2012 to 30 June 2012 at Baht 0.05 per share, totalling Baht 18,800,000 and approved an appropriation for legal reserve amounting to Baht 2,536,160. The Company already paid dividend amounting to Baht 18,726,273 to shareholders on 22 October 2012 and there was outstanding dividend payable as at 31 December 2013 amounting to Baht 35,710 (Note 20).
At the annual general shareholders’ meeting on 5 April 2012, the shareholders approved the dividend payment for the year 2011 at Baht 0.20 per share, totalling Baht 31,808,000 and approved an appropriation for legal reserve amounting to Baht 2,164,752. The Company already paid dividend amounting to Baht 31,808,000 to shareholders during in April and May 2012.
28 Legal reserve
Consolidated/Company 2013 2012 Baht Baht
Opening balance 12,069,134 7,368,222 Appropriation during the year 4,439,585 4,700,912
Ending balance 16,508,719 12,069,134
Under the Public Companies Act, the Company is required to set aside as a statutory reserve at least 5 percent of its net profit after accumulated deficit brought forward (if any) until the reserve is not less than 10 percent of the registered capital. The legal reserve is not distributable as a dividend.
29 Non-controlling interest
Consolidated 2013 2012 Baht Baht
Opening balance (4,123,044) (245,379) Share of net profit (loss) of subsidiary (3,380,578) (1,832,909) (Increase) decrease in non-controlling interest during the year 14,700,205 (2,044,756)
Ending balance 7,196,583 (4,123,044)
172 TV Direct Public Company Limited 173
30 Net compensation income from fire incident at a warehouse
Net compensation income from fire incident at a warehouse for the years ended 31 December 2013 and 2012 are as follows:
Consolidated/Company For the years ended 31 December 2013 2012 Baht Baht
Compensation income from business interruption 6,976,246 - Compensation income from fire incident at a warehouse 1,061,106 82,000,434 Loss from write-off inventory from fire incident (Note 10) - (81,793,263) Loss from write-off tooling from fire incident - (109,410) Loss from write-off supplies from fire incident (Note 10) - (53,243)
Net compensation income from fire incident at a warehouse 8,037,352 44,518
On 17 October 2012, there was a fire in the Company’s rented warehouse, which is operated by JWD InfoLogistics Co., Ltd. located at 222 Moo 17 Samwa Road, Minburi, Bangkok. The fire caused the damage to inventory, tooling and warehouse supplies of Baht 81,793,263, Baht 109,410 and Baht 53,243, respectively.
However, the Company carries insurance policy with Dhipaya Insurance Plc. for all-risk insurance and business interruption insurance. The insurance covers inventory damage of Baht 115 million, assets insurance of Baht 1 million and business interruption of Baht 20 million.
On 28 December 2012, Dhipaya Insurance Plc. has confirmed the amount of compensation for inventory and assets have to pay to the Company totalling Baht 82,000,434 (Note 9). The Company received compensation on 12 April 2013.
During the year 2013, the Company received addition compensation income for inventory damaged from fire incident in late 2012 from Dhipaya Insurance Plc. totalling Baht 1,061,106.
During the year 2013, JWD InfoLogistics Co., Ltd. and Dhipaya Insurance Plc. have confirmed the amount of compensation for business interruption from fire incident in late 2012 totalling Baht 5,300,000 and Baht 1,676,246, respectively. 31 Other income For the year ended 31 December Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht Net gain from exchange rate 3,110,152 3,869,336 2,066,299 4,730,757 Revenue from insurance compensation of flood incident - 3,530,641 - 3,530,641 Interest income 1,355,182 1,502,467 1,278,879 1,065,659 Compensation income from building construction delay 1,103,915 - 1,103,915 - Compensation income from theft of equipment - 23,904 - 23,904 Loss from write-off equipment from theft - (23,904) - (23,904) Income from sale of the Company’s customer database 10,000,000 - 10,000,000 - Gain from disposal of available-for-sale investments 628,223 - 356,173 - Other income 3,781,313 3,292,850 3,713,702 2,346,391
19,978,785 12,195,294 18,518,968 11,673,448
As at 28 December 2012, Insurance company has paid the compensation for the disaster of floods in 2011 to the Company in the amount totalling Baht 3,530,641.
32 Other expenses
For the year ended 31 December Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Loss from investment in the subsidiaries - TV Direct (Malaysia) Sdn. Bhd. (Note 12) - (6,261,688) - - Loss from write-off property, plant and equipment and intangible assets (326,678) (2,700,527) (73,410) (2,576,537)
(326,678) (8,962,215) (73,410) (2,576,537)
174 TV Direct Public Company Limited 175
33 Expenses by nature
The following expenditure items for the years ended 31 December 2013 and 2012, classified by nature, have been charged in profit before finance costs and income tax:
For the year ended 31 December Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht Changes in finished goods and supplies (62,865,119) (13,328,086) (59,991,501) (7,185,276) Purchases of finished goods (837,571,207) (775,541,143) (830,685,143) (775,336,336) Advertising airtime media rental expense (397,665,215) (373,421,355) (390,448,711) (370,064,755) Advertising and printing media production expense (98,604,572) (103,213,228) (98,328,558) (101,593,725) Staff cost expense (383,824,934) (359,308,968) (367,810,874) (347,887,091) Distribution expense (89,298,546) (89,185,186) (87,566,445) (88,376,100) Space and warehouse rental expense (50,462,149) (38,626,240) (44,585,519) (38,451,737) Public utility expense (42,800,691) (38,080,106) (41,188,839) (36,795,721) Depreciation and amortisation (Note 15, 16 and 17) (51,390,836) (36,582,268) (49,857,097) (35,706,331) Organizing fee expense (8,971,549) (86,866,313) (8,258,306) (86,738,489)
34 Finance costs
For the year ended 31 December Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht Interest from borrowings from financial institutions (14,489,126) (15,974,029) (14,489,126) (15,930,165) Interest expense from liability under financial lease agreements (1,104,785) (943,830) (1,104,785) (943,830) Interest expense from borrowings from others and related parties - (31,087) - -
(15,593,911) (16,948,946) (15,593,911) (16,873,995) 35 Income tax
Reconciliation of income tax expenses for the years ended 31 December 2013 and 2012 comprises:
Consolidated Company Restated Restated 2013 2012 2013 2012 Baht Baht Baht Baht
Current income tax on taxable profit for the year 19,326,174 26,914,238 19,326,174 26,914,238 Origination of temporary differences (3,123,022) 850,533 (3,253,491) 793,558
Total income tax 16,203,152 27,764,771 16,072,683 27,707,796
Consolidated Company Restated Restated 2013 2012 2013 2012 Baht Baht Baht Baht
Profit before tax accounting base 54,118,753 74,837,773 81,546,679 112,459,113
Tax calculated at a tax rate of 20%, 24% and 25% (2012 : 23%, 25% and 28%) 16,309,336 25,865,596 16,309,336 25,865,596
Tax effect of: Expenses not deductible for tax purpose (additional tax deductible expenses) (236,653) 1,842,200 (236,653) 1,842,200 Tax losses for which no deferred income tax asset was recognised 130,469 56,975 - -
Income tax 16,203,152 27,764,771 16,072,683 27,707,796
The result of the change in corporation tax rate in Thailand from 30% to 23% for the year beginning on or after 1 January 2012 and 20% for the 2 years beginning on or after 1 January 2013, the relevant deferred tax balances have been re-measured. Deferred tax reverse in the period of 1 January 2013 to 31 December 2013 has been measured using the effective rate that will apply for the period of 20% (1 January 2012 to 31 December 2012 : 23%).
36 Earnings per share
36.1 Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the period.
Consolidated Company Restated Restated 2013 2012 2013 2012
Profit attributable to shareholders of the parent (Baht) 41,207,914 48,967,736 65,473,996 84,751,317 Weighted average number of ordinary shares (Shares) 420,810,955 337,544,918 420,810,955 337,544,918
Basic earnings per share (Baht) 0.0979 0.1451 0.1556 0.2511
176 TV Direct Public Company Limited 177
36 Earnings per share (Cont’d)
36.2 Diluted earnings per share
The diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares that are warrants (Note 26.3). The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the warrant. The difference is added to the denominator as an issue of ordinary shares for no consideration. No adjustment is made to earnings.
Due to diluted earnings per share of the Company is affected by warrants issuance in 2013, as a result, there was no diluted earnings per share in 2012.
Consolidated Company 2013 2012
Profit attributable to shareholders of the parent (Baht) 41,207,914 65,473,996 Weighted average number of ordinary shares outstanding (Shares) 420,810,955 420,810,955 Assumed shares issued from exercising warrants (Shares) 7,030,305 7,030,305
Weighted average number of ordinary shares for diluted earnings per share (Shares) 427,841,260 427,841,260
Diluted earnings per share (Baht) 0.0963 0.1530 37 Related party transactions
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the substance of the relation- ship, and not merely the legal form.
The significant investments in subsidiaries are set out in Note 12.
Relationship between company and related parties:
Related company name Nationality Relationship
TV Direct Indochina Co., Ltd. Thailand Subsidiary company JML Direct (Thailand) Co., Ltd. Thailand Subsidiary company (Since 12 June 2013)
Shop at Home Co., Ltd. Thailand Subsidiary company (Since 26 November 2013) Direct Response Television Co., Ltd. Cambodia Subsidiary company of TV Direct Indochina Co., Ltd. TV Direct Lao Co., Ltd. Laos Subsidiary company of TV Direct Indochina Co., Ltd. TV Direct (Malaysia) Sdn. Bhd. Malaysia Affiliated company of TV Direct Indochina Co., Ltd. since 12 April 2011 until 29 January 2012 and a subsidiary of TV Direct Indochina Co., Ltd. Since 30 January 2012 TVDI Vietnam Co., Ltd. Subsidiary company of TV Direct Indochina Co., Ltd. (Formerly “CONG TY THNN MOT (Since 11 October 2012) THANH VIEN TIVI TRUC TIEP”) Vietnam JML Singapore Pte. Ltd. Singapore Related company of JML Direct (Thailand) Co., Ltd. Related company of subsidiary company of TV Direct Media Sdn. Bhd. Malaysia TV Direct Indochina Co., Ltd. Use Electronics (Taiwan) Co., Ltd. Taiwan Related company North Pattaya Plaza Co., Ltd. Thailand Related company TBM Solution Co., Ltd. Thailand Related company Thaikang Trading Co., Ltd. Thailand Related company
Related person of subsidiary company of Mr. Chieu Arnusorn Cambodia TV Direct Indochina Co., Ltd. (Until 20 July 2012) Related person of subsidiary company of Ms. Suraiya Binti Mohd Yasin Malaysia TV Direct Indochina Co., Ltd. (Until 31 July 2012)
178 TV Direct Public Company Limited 179
37 Related party transactions (Cont’d)
The following significant transactions were carried out with related parties.
a) Sale of goods and services and others for the years ended 31 December 2013 and 2012
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Sales of goods Subsidiaries - - 13,626,532 13,026,707 Related company 1,775,070 - - - 1,775,070 - 13,626,532 13,026,707
Service income Subsidiaries - - 714,453 -
Sales of equipment Related company 781,760 - - -
Interest income Subsidiaries - - - 181,928 Related person - 9,173 - - - 9,173 - 181,928
Sales of goods, service income and sales of equipment transactions with related party are dealt with under the prices and terms as agreed among the parties concerned.
b) Purchases of goods and services and others for the years ended 31 December 2013 and 2012
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Purchase of goods Subsidiaries - - 3,314,113 -
Purchase airtime for television broadcast Related company 4,564,113 - - -
Management benefit expenses Related persons 14,992,618 13,587,373 14,992,618 13,257,373
Directors’ remuneration Related persons 1,952,500 1,352,500 1,780,000 1,210,000
Dividend expenses Related company 5,407,237 4,533,387 5,407,237 4,533,387
Purchase of goods and services transactions with related parties are dealt with under the prices and terms as agreed among the parties concerned. 37 Related party transactions (Cont’d)
c) Outstanding balance arising from sales/purchases of goods/services and others as at 31 December 2013 and 2012
Consolidated Company 2013 2012 2013 2012 Baht Baht Baht Baht
Trade accounts receivable (Note 9) Subsidiary - - 22,002,492 10,682,985 Related company 527,779 - - - 527,779 - 22,002,492 10,682,985
Other accounts receivables (Note 9) Subsidiary - - 740,965 1,386,136 Related party 781,760 - - - 781,760 - 740,965 1,386,136
Advance payment (Note 9) Subsidiary - - 277,800 -
Trade accounts payable (Note 20) Subsidiary - - (2,855,514) -
38 Share-based payment
Share options are granted to directors and employees who meet the criteria. The exercise price of the granted options is equal to the market price of the shares less 20% on the date of the grant. Options are conditional on the employee completing two years’ service (the vesting period). The options are exercisable and expired on 23 August 2012 which is the initial public offering. The shares must be in a one-year silent period. The Group has no legal or constructive obligation to repurchase or settle the options in cash.
As at 31 December 2012, 3,300,000 options are exercised and there is no outstanding options. The exercised options in 2012 are resulted in increase 3,300,000 ordinary shares being issued at a weighted average price of 1.68 Baht per share.
The related transaction costs have been netted off with the proceeds received, and presented netted off share premium.
180 TV Direct Public Company Limited 181
The variance between selling price to directors and employees of the Company and its subsidiaries and selling price to the public of Baht 1,386,000 is immediately recognised in profit & loss (Note 26.1).
39 Financial instrument
a) Forward foreign currency exchange contracts
Consolidated and Company Foreign currency Foreign Contract rate 2013 2012 contract amount currency 2013 2012 2013 2012 Baht Baht USD 1,364,463 194,188 32.92 - 33.03 30.69 - 30.76 43,676,050 6,095,303
At 31 December 2013 and 2012, the settlement dates on open forward contracts ranged between 1 month to 4 months. The local currency amounts to be received and contractual exchange rates of the outstanding contracts were: Net fair values
The net fair values of the derivative financial instruments at the date of statement of financial position were:
Consolidated and Company 2013 2012 Baht Baht
Favourable forward foreign currency exchange contracts 45,030,155 5,961,455
The fair values of the forward foreign exchange contracts have been calculated using rates quoted by the Group’s bankers to terminate the contracts at 31 December 2013 and 2012. ------1.75% - 3.00% 8.91% - 10.81% 0.125% - 0.63% Fixed rate ------Interest rate (%) Interest MLR - 1.25%
Float rate MLR - 2% to 1% est rates as at 31 Total 9,237,114 14,428,964 29,673,196 537,083,329 127,055,967 116,361,125 270,000,159 126,454,950 106,456,955 154,598,313 417,183,414 2013 - - - - Consolidated interest Without 14,428,964 49,633,958 284,429,123 270,000,159 106,456,955 154,598,313 310,689,226 ------1-5 years bath 9,237,114 9,237,114 29,673,196 29,673,196 ------or reprising date or reprising Remaining period Fixed interest rate Fixed interest 76,820,992 76,820,992 1 year before maturity date before Less than ------Rates Interest Floating 243,417,092 127,055,967 116,361,125 Financial instrument and risk management (Cont’d)
39 Outstanding balance of significant financial assets and liabilities their inter Inter
Liability under finance lease (net) agreements Employee benefits obligation financial liabilities Total Trade accounts payable Trade and other accounts payable from Long-term borrowings financial institutions Financial liabilities from Short-term borrowings financial institutions Financial assets Cash and cash equivalents and accounts receivable Trade (net) other accounts receivable investments Available-for-sale Restricted deposits at financial institutions financial assets Total b) est rate risk December 2013 and 2012 are summarised as follows: December 2013 and 2012 are
182 TV Direct Public Company Limited 183 Fixed rate 0.125% - 0.75% - - 1.75% - 3.00% - - - 8.91% - 13.22% - Interest rate (%) Interest Float rate - - - - MLR - 2% to 1% - MLR - 1.5% to 1.25% - - Total 47,326,030 139,623,080 27,259,178 32,257,138 246,465,426 255,972,679 292,969,034 72,385,010 14,204,907 8,907,732 644,439,362 2012 Consolidated interest Without 14,791,475 139,623,080 27,259,178 - 181,673,733 - 292,969,034 - - 8,907,732 301,876,766 1-5 years Baht - - - 32,257,138 32,257,138 - - - 14,204,907 - 14,204,907 or reprising date or reprising Remaining period Fixed interest rate Fixed interest 1 year before maturity date before Less than 32,534,555 - - - 32,534,555 ------Rates Interest Floating - - - - - 255,972,679 - 72,385,010 - - 328,357,689 Financial instrument and risk management (Cont’d)
39 Trade accounts receivable and accounts receivable Trade (net) other accounts receivable investments Available-for-sale Restricted deposits at financial institutions financial assets Total accounts payable Trade and other accounts payable from Long-term borrowings financial institutions Liability under finance lease (net) agreements Employee benefits obligation financial liabilities Total Financial assets Cash and cash equivalents Financial liabilities from Short-term borrowings financial institutions
40 Commitments
40.1 Commitments under letter of guarantee
In the normal course of its business, the Company provides guarantees and letter of credit generally through the banks to its suppliers for the purchases of goods, airtime rental and electricity.
As at 31 December 2013 and 2012, the bank guarantees and letter of credits issued on behalf of the Company were outlined below:
Consolidated and Company 2013 2012 Million Baht Million Baht
Goods (Note 21) 106.40 73.83 Airtime rental (Note 21) 14.14 14.9 Electricity 1.78 0.84
122.32 89.62
40.2 Commitments under agreements
As at 31 December 2013 and 2012, the Company had commitment in respect of rental and services agreements which have obligations to pay as following:
Consolidated
2013 2012 Rental Services Rental Services agreements agreements agreements agreements Due within the years ending Baht Baht Baht Baht
31 December 2013 - - 47,110,748 115,250,565 31 December 2014 64,840,948 116,090,083 36,168,130 50,364,455 31 December 2015 34,759,935 42,960,759 12,403,309 20,525,236 31 December 2016 12,964,960 165,000 11,178,424 - 31 December 2017 - 2021 13,126,444 - - -
125,692,287 159,215,842 106,860,611 186,140,256
Company
2013 2012 Rental Services Rental Services agreements agreements agreements agreements Due within the years ending Baht Baht Baht Baht
31 December 2013 - - 44,594,008 113,875,565 31 December 2014 64,784,014 116,090,083 35,406,130 50,364,455 31 December 2015 34,759,935 42,960,759 11,993,309 20,525,236 31 December 2016 12,964,960 165,000 11,178,424 - 31 December 2017 - 2021 13,126,444 - - -
125,635,353 159,215,842 103,171,871 184,765,256
184 TV Direct Public Company Limited 185
40.3 Capital commitments
As at 31 December 2013, the Company has capital commitments in purchase of computer software amount- ing to Baht 6,815,100 (2012 : capital commitments in respect of building construction and purchase of computer software amounting to Baht 46,330,013 and Baht 5,088,920, respectively). 186 TV Direct Public Company Limited 187 188 TV Direct Public Company Limited