Annual Report 2014
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ANNUAL REPORT 2014 Vision: To be recognized as one of the leading providers of quality content and fun Mission: Nation International Edutainment To provide content and fun from Public Company around the world Limited 1858/123-124 Bangna-Trad Road, Bangna, Bangkok 10260 Thailand Tel. (662) 338 3694 Fax. (662) 338 3986 PASSION Put the whole hearted effort and dedication in the work to get the best. SYNERGY INTEGRITY CARE Be consistent in To act with honesty, Take a great care of all our team working for transparency, and trust- stakeholders, customers, mutual success. worthiness. employees, and community. INNOVATION To always make improvement, keep on developing and come out with new creative ideas 02 Nation International Edutainment Public Company Limited Content General Information 04 Summary of Financial Data and Investments 05 Message from Chairman 07 Board of Directors and Management Team 08 Business Group Structure 21 Characteristics of the Business 22 Products and Services 23 Overview and Competition 32 Risk Factor 38 List of Major Shareholders 49 Corporate Governance Report 50 Internal Control and Risk Management 84 Social Contribution Activities 2013 86 Milestone Award 88 Audit Committee’s Report for The Year 2013 90 Report of Responsibilities of The Board 92 The Results of the Consolidated Financial Statements 93 Financial Statement 94 Other Reference Persons 154 03 ANNUAL REPORT 2014 General Information Name Nation International Edutainment Public Company Limited Symbol NINE Core Businesses • Publishing Business: Publishes and distributes wide range of books and magazines for children and grown-ups. • TV Business for Youth for Digital TV station • Service Business for Oversea Publications: Provides oversea periodical publishers many services including printing, advertising sales, subscription sales, distribution and delivery. • Digital Businesses: Provides digital content through various devices and operating systems, eg., online, mobiles, tablets and etc. • Character Management Businesses • Tutorial and Education Service Head Office 1858/123-124, 29thFl, Bangna-Trad Road, Bangna, Bangkok 10260 Registration PLC no. 0107551000312 Telephone (66) 2338-3333 Fax (66) 2338-3904 Registered Capital Baht 259,250,000 Paid-up Capital Baht 170,048,386 The Company’s shareholding exceeded 10% of Paid Capital (December 31, 2014). % Registered Paid-up Company Name / Address Business of Holding Capital Capital Direct Subsidiaries Nation Edutainment Co., Ltd. Publishing 99.99 41,250,000 41,250,000 1858/123-124 29th Floor Bangna-Trad Road, Bangna, Bangkok 10260 Nation Kids Co., Ltd. Produce and conduct 99.99 1,000,000 1,000,000 1858/123-124 29th Floor business as a content Bangna-Trad Road, Bangna, provider with multimedia Bangkok 10260 channels including TV Nation Global Edutainment Publishing 98.99 50,000,000 50,000,000 Co., Ltd. 1858/123-124 29th Floor Bangna-Trad Road, Bangna, Bangkok 10260 Nine Be Bright Co., Ltd. Education Service 59.99 1,000,000 1,000,000 1858/123-124 29th Floor Bangna-Trad Road, Bangna, Bangkok 10260 Note : on December 29, 2014, The Group obtained control of Nation Egmont Edutainment Co., Ltd. a publisher by acquiring 49% of the ordinary shares capital from an existing shareholder and has changed company name to Nation Global Edutainment Co., Ltd. 04 Nation International Edutainment Public Company Limited Summary of Financial Data and Investments (Unit: in Million Baht) 1. Data from Consolidated Financial Statements 2014 2013 2012 • Sales and Service Income 241.45 347.85 339.55 • Total Revenues 268.47 359.45 354.85 • Gross Profit Margin 64.14 105.79 104.06 • Profit Before Interest, Taxes, Depreciation and Amortization 31.01 64.52 64.16 • Net Profit 1.71 20.44 24.95 • Total Assets 711.43 761.31 368.86 • Shareholders’ Equity 516.27 529.64 183.06 2. Financial Ratios 2014 2013 2012 • Total Debts to Equity Times 0.38 0.44 1.01 • Gross Profit Margin % 26.56 30.41 30.65 • Net Profit on Total Revenues % 0.64 5.69 7.03 • Return on Equity % 0.33 5.74 14.10 • Return on Total Assets % 0.23 3.62 7.16 • Earnings per Share (Basic) Baht 0.01 0.16 0.29 • Earnings per Share (Diluted) Baht 0.01 0.16 0.29 • Dividend per Share Baht 0.10 0.15 0.15 • Book Value per Share (Basic) Baht 3.04 4.22 2.15 • Book Value per Share (Diluted) Baht 3.04 4.11 2.15 05 ANNUAL REPORT 2014 Summary of Financial Data and Investments Investments in Subsidiaries of Nation International Edutainment Public Company Limited Registered Capital Percentage Million Baht of Investment Publishing Business Nation Edutainment Co., Ltd. 41.25 99.99 Nation Global Edutainment Co., Ltd. (Formerly: Nation Egmont Edutainment Co., Ltd.) 50.00 98.99 TV Program Nation Kids Co., Ltd. 1.00 99.99 Sale of goods and Service on internet N Coupon Co., Ltd. (Liquidated and dissolution on 14 December 2012) 1.00 99.98 Education Service Nine Be Bright Co., Ltd 1.00 59.99 Dividend Policy In normal situation where the group has no capital requirement for investment or business expansion and has secured adequate cash flow, the group has a policy to pay dividend of the company and subsidiaries of no less than 30 percent of each company’s net profit (individual company’s financial statements) after corporate income tax, legal reserve requirement and other necessary and appropriate reserves. However, the dividend payment percentage may be changed depending on necessity and suitability of circumstantial conditions that are considered to be of the best interest of shareholders. The Board of Director’s resolution to pay dividend must be approved at the shareholder’s meeting, except for payment of interim dividend at which the Board of Directors have authority to approve and must report such payment at the next shareholder’s meeting. The company paid dividend from its operating results in 2013 and retained earnings at Bt 0.10 per share, totaling Bt17 million. Payment was made on April 30, 2014. 06 Nation International Edutainment Public Company Limited Message from the Chairman Nation International Edutainment Public Co., Ltd. (NINE) took a number of strategic directions in 2014 despite a challenging economy following the political crisis and change in government, which undermined consumers’ confidence. The parent company Nation Multimedia Group Pcl (NMG) successfully bid for two digital adult TV channels last year while NINE itself did not participate in the auction of the children digital channel. Nevertheless, NINE ended its satellite TV transmission and started to supply to NMG’s two TV channels (Nation TV22 and Now22) – both with bigger audiences and have needs to allocate times to children programmers (regulatory requirements). NINE TV was also entrusted to produce TV programmers for MCOT Family Channel. The successful foray into children television production in 2014 set the stage for NINE to grow its TV business in years to come and helps to anchor volatility in the book and cartoon publishing businesses which saw the market shrank last year due to negative consumers’ sentiment and challenge from digital technology. In response, NINE reduced the numbers of titles published to control cost. These carefully selected titles did well in the second half year when the book market recovered somewhat following the appointment of the interim government. Our tutorial business through the joint venture Nine Be Bright Co., Ltd. expanded the teaching and teachers’ facility in Phaya Thai in the second half of last year. We were commissioned by the Bangkok Metropolitan Administration to provide English language teaching to more than 300 front end staff so that they can serve visiting foreigners to the city better. This collaboration which was participated by Nation University and Nation Junior is expected to expand in 2015. NINE has a number of important initiatives in 2015 as we are well positioned to grow leap and bound with sustained and quality content for children and the families. Apart from television some of our digital products have also began to take off in a meaningful way. We are grateful for support from shareholders, Board members, customers and staff of Nine snd Nation Group – all of whom made significant contributions in a trying year, especially the publishing industry. Suthichai Yoon Chair, Board of Directors 07 ANNUAL REPORT 2014 Board of Directors & Management Team Mr. Suthichai Sae-Yoon Chairman Mr. Somsak Cheer Chiranakhon Independent Director and Chairman of The Audit Committee Mr. Thepchai Sae-Yong Dr. Santhaya Kittikowit Director Independent Director and Mr. Sermsin Samalapa Member of The Audit Director Mr. Sutee Jintananarumit Independent Director and Committee Member of The Audit Committee 4 2 7 6 5 1 08 Nation International Edutainment Public Company Limited Mr. Pana Janviroj Director and President Mr. Sangchai Leelanawalikhit Dr. Wongsiri Sankhavasi Miyaji Vice President - Sales Editor-in-Chief Ms. Thitagan Thana-Olarn Ms. Boonpa Saebay Vice President - Business Assistant Vice President - Development Accounting & Financing 8 3 10 11 9 09 ANNUAL REPORT 2014 Board of Directors Mr. Suthichai Sae-Yoon Position Chairman Age 69 years Education Background - Assumption Commercial College Bangkok (ACC) - Saengthong School, Had Yai, Songkhla Training Course(s) Thai Institute of Directors Association - Director Accreditation Program (DAP # 54) Training Course(s) 2014 - Thailand is back - Japan’s New Wave of Overseas Investment: Thailand and Asean-Plus-One No. of Shares Held as at December 30, 2014 Mr. Suthichai Sae-Yoon 1,536,848 shares (0.90%) Mrs. Nantawan Sae-Yoon 29,788 shares (0.02%) Minor child - shares Relationship with NINE’s Executive - Younger brother (Mr. Thepchai Sae-Yong) Experience 1971 - 2012 Editor-in-Chief Nation Multimedia Group Plc. 2011 - Present Chairman Nation Broadcasting Corporation Plc. March 6, 2012 - Present Chairman Nation Multimedia Group Plc. April 17, 2012 - Present Chairman Nation International Edutainment Plc. Director of Other Listed Company 2012 - Present Chairman Nation Multimedia Group Plc.