Mar 28, 2016
General Information
Financial Highlights
Report of the Board of Directors
Directors and Management Biography
Organizational Structure
Good Corporate Covernance Report
Related Transactions
Financial Statements
CSR Activities
4 5 6 7 14 19 25 29 74
C o n t e n t s
4 G e n e r a l I n f o r m a t i o n
General Information JAY MART Public Company Limited Stock code : JMART Head office : 9/121-3, 126-7 UM Tower, 12th Floor, Ramkhamheang road, Suanluang, Suanluang, Bangkok Tel : 0-2308-8000 Fax : 0-2308-8117 Registration No. : 0107545000055 (Former Registration Number 40854500678) Website : www.jaymart.co.th Type of business : Distributing Mobile Phone, Accessory, Providing Space Rental and Utilities Service Registered Capital : 300,000,000 Baht Paid-up Capital : 225,000,000 Baht Comprise of 225,000,000 common shares, Par value 1 Baht per share The Subsidiary Company JMT Network Services Company Limited Head Office : 9/143-145 UM Tower, 14th Floor,Ramkhamheang road, Suanluang, Suanluang,Bangkok Tel : 0-2308-9999, 0-2308-9907 Fax : 0-2308-9900, 0-2308-9941 Registration No : 0105537028181 (Former Registration Number (2) 1014/2537) Website : www.jmtnetwork.co.th Type of business : Debt Collection Business and Non Performing Loan Management Registered Capital : 40,000,000 Baht Paid- up Capital : 40,000,000 Baht Comprise of 400,000 common shares, Par value 100 Baht per share Share Holdings Percentage of JMART : 99.99% Auditor Mr. Somckid Tiatragul, Certified Public Accountant Number 2785 or Mrs. Sumalee Chokdeeanan, Certified Public Accountant Number 3322 Grant Thornton Ltd. 87/1 Capital Tower, All Seasons Place, 18th Floor, Wireless Road, Lumpini, Pathumwan Bangkok 10330 Tel: 0-2654-3330 Fax: 0-2654-3339 Legal Consultant Thep Co., Ltd. 1193 EXIM Building, 11th Floor, Room 1107-1108, Phaholyothin Rd., Samsean-nai, Phayathai, Bangkok 10400 Tel : 0-2278-1683-4
5 F i n a n c i a l H i g h l i g h t s
Financial Highlights Sources : The Company Only
Unit : Million Baht
2008 2004 2005 2006 2007
Financial Perfomance Total Revenues Gross Profit Net Profit Total Assets Total Liabilities Shareholdersʼ Equity Key Financial Ratio Gross Profit Margin Return on Equity (ROE) Return on Asstes (ROA) Earning per share (EPS)
5,429.2 672.5 98.6
1,283.7 887.6 396.1
1.82%
24.90% 7.68% 0.44
5,768.4 615.9 79.6
1,550.7 1,185.8 364.9
1.38%
21.82% 5.13% 0.35
5,061.4 487.0 22.7
1,412.9 1,087.1 325.8
0.45% 6.98% 1.61% 0.12
5,543.1 662.2 119.6
1,151.4 793.5 357.8
2.16%
33.42% 10.39%
0.80
5,249.7
717.9 84.7
1,394.5 1,111.2 283.3
1.61%
29.91% 6.08% 0.56
Sources : Consolidated F/S Unit : Million Baht
2008 2004 2005 2006 2007
Financial Perfomance Total Revenues Gross Profit Net Profit Total Assets Total Liabilities Shareholdersʼ Equity Key Financial Ratio Gross Profit Margin Return on Equity (ROE) Return on Asstes (ROA) Earning per share (EPS)
5,534.6 691.2 97.0
1,371.9 941.6 430.3
1.75%
22.55% 7.07% 0.43
5,897.6 639.2 66.5
1,603.8 1,203.1 400.7
1.13%
16.60% 4.15% 0.30
5,192.0 547.6 39.4
1,505.7 1,131.0 374.7
0.76%
10.51% 2.62% 0.21
5,629.3 692.0 119.6
1,160.1 802.3 357.8
2.12%
33.42% 10.31%
0.80
5,426.3 757.1 84.7
1,409.2 1,125.9 283.3
1.56%
29.91% 6.01% 0.56
Note: ROE: Return On Equity ROA: Return On Assets EPS: Earnings Per Share
(Mr. Ptisanu Pongatcha) Chairman
(Mr. Adisak Sukhumvitaya) Executive Chairman
6 R e p o r t o f t h e B o a r d o f D i r e c t o r s
Report of the Board of Directors 2008 was another important year for Jay Mart Public Company Limited. The Company was allowed to offer new shares to the public. It also performed well on the market, yielding net profits of Baht 97 million, up 45.99% from the previous yearfithis, despite the country’ s intensified political uncertainty and the global economic downturn, both of which adversely affected consumer confidence. In order to accomplish this, the Company changed its strategy to suit current economic conditions by selling mobile phone brands that maximized its gross profit margin. Our strong staff and commitment to quality service have been key to our growth during these troubling economic times. Global economic situation in the rest of 2009 may be unpredictable. Somehow crisis provides opportunity for those who differentiate themselves from competitors and continuously strengthen brand, develop organization, employees and management. Mobile phone industry projects to increase market share and have more branches and product lines, especially “house brand” which is the current hit. †“jFone” has appeared in advertising media and increasingly become widely known and accepted. To make jFone be #1 House Brand, the company shall set a decent working system for all departments to have jFone outstand from competitors, reach customer wants in terms of quality, modern design and complete functions. For debt collection and management, the Company plans to buy more non-performing loans to manage. This should create a growth for the future. The Company plans to provide a more efficient debt collection system that maximizes customer satisfaction. It will also develop its IT system to keep the companyʼ s considerable debt collection database up-to-date. The Company would like to use this opportunity to thank all of its shareholders, customers, business partners, managers, and employees for their part in the continued growth of the business. The Company is committed to the principles of good corporate governance, and to continually enhancing the Companyʼ s competitiveness. The Company will also behave in a socially responsible manner, in the hopes of providing a good role model and contributing to a more humane and sustainable society.
9 D i r e c t o r s a n d M a n a g e m e n t B i o g r a p h y
Mr. Pisnu Pong-acha Chairman of the Board
Mr. Adisak Sukumvitaya Director Selection and Remuneration Committee Chief Executive Officer
Miss Yuvadee Pong-acha Director Managing Director JMT Network Services Co., Ltd.
Mrs. Manee Soonthornvatin Director Executive Committee Chief Information Officer
Mr. Pracha Tansaenee Director Executive committee Chief Financial Officer
Mr. Phisit Dachanabhirom Director (Independent Director) Chairman of Auditor Committee Selection and Remuneration Committee
Mr. Dej Bulsuk Director (Independent Director) Audit Committee
Mr. Suwit Kingkaew Director (Independent Director) Audit Committee Chairman of the Selection and Remuneration Committee
Mr. Pichit Nimkul Director (Independent Director) Audit Committee Selection and Remuneration Committee
Mrs. Nonglak Laksanapokin Executive Committee Chief Operating Officer
Mr. Kittipong Kanokvilairat Executive Committee Chief Marketing Officer
10 D i r e c t o r s a n d M a n a g e m e n t B i o g r a p h y
Directors and Management Biography Mr. Pisnu Pong-acha Chairman of the Board Age 54 Education 1994 MBA, Rangsit University Previous Experience 1980-1984 General Manager Chiang Inn Hotel Since 1984 Partner Manager Hahdeng Trading Ltd., Part Mr. Adisak Sukumvitaya Director/Selection and Remuneration Committee/Chief Executive Officer Age 52 Education 1979 B.E. (Economics) Kasetsart University 1981 MBA (Economics) Kasetsart Unitversity Seminar 2008 Director Accreditation Program Thai Institute of Directors Association (69/2008) Previous Experience 1981-1984 Research officer TISCO Securities PCL. 1985-1989 Product Manager Philips Electronics (Thailand) Ltd. Miss Yuvadee Pong-acha Director/Managing Director JMT Network Services Co., Ltd. Age 52 Education 1978 B.E.(Plitical Science) Thammasat University 1980 MBA Bridgeport University, U.S.A. Seminar 2008 Director Accreditation Program Thai Institute of Directors Association (69/2008) Previous Experience 1981-1990 Deputy Vice President TISCO Securities PCL. Money Market 1990-2007 Director, Jaymart PCL. Deputy Chief Executive officer Since 2007 Managing Director JMT Network Services Co., Ltd.
11 D i r e c t o r s a n d M a n a g e m e n t B i o g r a p h y
Mrs. Manee Soonthornvatin Director/Executive Committee/Chief Information Officer Age 53 Education 1997 B.E. (Science) Ramkhamhaeng University Seminar 2008 Director Accreditation Program Thai Institute of Directors Association (69/2008) Previous Experience 1993-1997 Manager Support Services Degital Equipment Corporation (Thailand) Ltd. 1997-2000 Business Operation Manager Compaq (Thailand) Co., Ltd.
Mr. Pracha Tansaenee Director/Executive committee/Chief Financial Officer Age 47 Education 1984 B.E. (Business Administration) Ramkhamhaeng University 2004 MBA Ramkhamhaeng University 2007 Ph.D. (Philosophy) Ramkhamhaeng University Seminar 2008 Director Accreditation Program Thai Institute of Directors Association (69/2008) Previous Experience 2002-2002 Chief Operating Officer Yumark Bangkok Co.,Ltd. 1999-2002 Technical Advisor PT. Mobilkom TelekomindoJakarta Indonesia
Mr. Phisit Dachanabhirom Director (Independent Director)/Chairman of Auditor Committee/Selection and Remuneration Committee Age 68 Education 1964 B.E. (Accounting) Thammasat University Seminar 2004 Director Accreditation Program Thai Institute of Directors Association (13/2004) 2005 Audit Committee Program (6/2005) Thai Institute of Directors Association 2006 Director Certification Program Thai Institute of Directors Association (87/2006) Previous Experience 1960-2000 Chief Financial Officer Berli Jucker PCL. Deputy Managing Director Director, Chairman of Audit Committee
12 D i r e c t o r s a n d M a n a g e m e n t B i o g r a p h y
Mr. Dej Bulsuk Director (Independent Director)/Audit Committee Age 58 Education 1973 B.E. (Business Administration) Thammasat University Seminar 2004 Director Accreditation Program Thai Institute of Directors Association Previous Experience 1984-2004 Chairman of the Board Mcthai Compamy Limited (McDonaldʼ s Thailand) 2004-2006 Honorary Chairman Mcthai Compamy Limited (McDonaldʼ s Thailand) 2001-2006 Chariman McDonald House Charities Foundation Since 2004 Chief Executive Officer CCC Business Development Co., Ltd. Mr. Suwit Kingkaew Director (Independent Director)/Audit Committee/ Chairman of the Selection and Remuneration Committee Age 58 Education 1974 B.E. (Science) Kasetsart University 1995 MBA Kasetsart University Seminar 2005 Director Certification Program Thai Institute of Directors Association Previous Experience 1974-1980 Plan and Policy Analyst Office of the National Economic and Social Development Board 1980-1992 Sale Manager Charoen Pokphand Industry Co., Ltd. 1992-1994 General Manager Charoen Pokphand Engineering Co., Ltd. 1994-1996 Assistant Vice President C.P. Seven Eleven PLC. 1996-2007 Deputy Vice President C.P. Seven Eleven PLC. Since 2007 Senior Vice President CP All PLC. Mr. Pichit Nimkul Director (Independent Director)/Audit Committee/Selection and Remuneration Committee Age 58 Education 1974 B.E. (Economics) Kasetsart University 1978 MBA (Marketing) The National Institute of Development Administration Previous Experience 1982 Product Manager Berli Jucker PCL. 1982-1997 Senior Vice President Ratchaprasong Shopping Mall Co., Ltd. 2002-2006 Executive Vice President The Mall Co.., Ltd.
13 D i r e c t o r s a n d M a n a g e m e n t B i o g r a p h y
Mrs. Nonglak Laksanapokin Executive Committee/Chief Operating Officer Age 48 Education 984 B.E. (Science) Prince of Songkhla University 1987 M.S. (Science) Prince of Songkhla University Semimar 2008 Director Accreditation Program Thai Institute of Directors Association (69/2007) Previous Experience 1994-1997 Operating Manager, Purchase Technic Telecom Co., Ltd. and Humen Resources 1997-1999 Operating Manager, Purchase, M Link Asia Corporation Co., Ltd. Humen Resources and Warehouse
Mr. Kittipong Kanokvilairat Executive Committee/Chief Marketing Officer Age 34 Education 1994 B.E. (Business Administration) Assumption University Seminar 2008 Director Accreditation Program Thai Institute of Directors Association (69/2007) Previous Experience 1995-1996 Marketing Executive NEC Corporation (Thailand) Limited 1996-2002 Account Manager Motorola (Thailand) Co., Ltd. 2002-2006 Chief Marketing Officer Jaymart PLC. 2006-2007 General Manager Thai Samsung Electronics Co., Ltd.
14 O r g a n i z a t i o n a l S t r u c t u r e
Organizational Structure As at 31 December 2008, the Companyʼ s structure comprises of Board of Director and Sub-Committee, the Companyʼ s Committee consists of 4 groups, which are ; 1. Board of Directors 2. Nomination and Remuneration Committee 3. Audit Committee 4. Executive Committee
Board of Directors JAY MART Public Company Limited
Selection and Remuneration Committee
Executive Committee Audit Committee
Chief Executive Officer
Executive Office
Marketing and Sales Information Technology
System Operation Accounting and Finance
Internal Audit
Human Resource Department
15 S h a r e h o l d e r s S t r u c t u r e
JAY MART Public Company Limited List of shareholders as of the book closing date on 31 December 2008
Shareholders Structure
Shareholders No. of shares Percent of total shares
1. Mr. Adisak Sukumvitaya 2. Miss Yuvadee Pong-acha 3. Mrs. Noy Pong-acha 4. Miss Juthamas Sukumvitaya 5. Mr. Ekachai Sukumvitaya 6. Mr. Boonsong Nimsritrakul 7. Mr. songkak Jittrong 8. Mr. Suwit Kingkaew 9. Mrs. Manee Soonthornvatin 10. Mr. Pisnu Pong-acha 11. Mr. Yanyong Akrajindanon 12. Mr. Dej Bulsuk 13. Mr. Phisit Dachanabhirom 14. Mr. Adisak Naknouvatim 15. Mrs. Hattaya Moopradit 16. Miss Wassana Moopradit 17. Miss Somruthai Pong-acha Total
77,667,146 70,552,070 9,750,001
27,313,132 25,400,000 5,000,000 250,000 75,000 75,000 75,000 75,000 75,000 75,000
5,280,000 1,875,151 900,000 562,500
225,000,000
34.52 31.36 4.33
12.14 11.29 2.22 0.11 0.03 0.03 0.03 0.03 0.03 0.03 2.35 0.83 0.40 0.25
100.00
16 B o a r d o f D i r e c t o r s
Board of Directors As of 31 December 2008, the Companyʼ s Board of Directors comprised of 9 members, which are; 1. Mr. Pisnu Pong-acha Chairman of the Board 2. Mr. Adisak Sukumvitaya Director 3. Miss Yuvadee Pong-acha Director 4. Mrs. Manee Soonthornvatin Director 5. Mr. Pracha Tansaenee Director 6. Mr. Phisit Dachanabhirom Chairman of Audit Committee/ Independent Director 7. Mr. Dej Bulsuk Audit committee/Independent Director 8. Mr. Suwit Kingkaew Audit Committee/Independent Director 9. Mr. Pichit Nimkul Audit Committee/Independent Director Mr. Supoj Rojnuntakij is the secretary of the Board of Directors Authorized directors according to the Companyʼ s certificate To bind the Company in any obligation, Mr. Adisak Sukumvitaya or Miss. Yuvadee Pong-acha or Mr. Pisnu†Pong-acha†co-signs with Mrs. Manee Soonthornvatin or Mr. Pracha Tansaenee along with the Companyʼ s seal. Scope of responsibilities of the Board of Director 1. To ensure that the business operation is consistent with the countryʼ s laws, the Companyʼ s objective and regulations, and shareholdersʼ resolution. 2. Authority to appoint the Companyʼ s directors and/or management. The Board may appoint other person to act on behalf of the Board and remain under the Boardʼ s supervision. The Board can cancel, withdraw, change, or amend those authorities as appropriate. 3. Determine goal, guideline, policy, operational plan and the Companyʼ s budget. The Board also supervises the management and other persons who are assigned to ensure that the Boardʼ s policies are carried out. 4. Review, inspect and approve policies, strategies, business plan and major investment projects proposed by the management. 5. Follow up to ensure that operations are inline with business plan and budget. 6. Approve investment in business expansion, merger with other operators or investment in other businesses. 7. Determine policies, business strategies, and supervise the business operations of the Company and/or subsidiaries. 8. Determine companyʼ s regulations. 9. Determine and approve affairs that are crucial to the Company or the activities that may benefit the Company.
17 B o a r d o f D i r e c t o r s
Audit Committee As of 31 December 2008, the Companyʼ s Audit Committee comprised of 4 members, which are; 1. Mr. Phisit Dachanabhirom Chairman of Audit Committee 2. Mr. Dej Bulsuk Audit Committee 3. Mr. Suwit Kingkaew Audit Committee 4. Mr. Pichit Nimkul Audit Committee Miss Samorn Khodkham is the secretary of the Audit Committee Scope of responsibilities of the Audit Committee 1. Review that the Company has complete and adequate financial information disclosure. 2. Ensure that the Company has appropriate and efficient internal control and internal audit systems. 3. Ensure that the Companyʼ s operations are consistent with the laws concerning Securities and Securities Exchange Act, the regulations of the Stock Exchange of Thailand, and laws relevant to the Companyʼ s business. 4. Select and propose accounting auditors and their remuneration. 5. Review and approve connected transaction and/or asset acquisition or disposal of the Company or subsidiary. Ensure complete and accurate information disclosure in an event of connected transaction or the transaction that may cause conflict of interests. 6. Act on other business as assigned by the Board and/or deems appropriate by the Audit Committee. 7. Prepare report of Audit Committee and disclose it in the Companyʼ s annual report. 8. Review performance of the Audit Committee 9. Other activities as assigned by the Companyʼ s Board of Directors.
Selection and remuneration committee
As of 31 December 2008, the Companyʼ s selection and remuneration committee comprised of 4 members, which are; 1. Mr. Suwit Kingkaew Chairman of the Board 2. Mr. Adisak Sukumvitaya Committee 3. Mr. Phisit Dachanabhirom Committee 4. Mr. Pichit Nimkul Committee Mr. Suphot Wanna is the secretary of the selection and remuneration committee Scope of responsibilities of the selection and remuneration committee 1. Recruit, select and propose candidates to take director positions and propose to directors and shareholders in the event of vacancy, retirement by rotation and other incidents. 2. Recruit, select and propose candidates to take chief executive officer positions in the event of vacancy and determine succession plan for top-level management. 3. Propose appropriate remuneration policy and remuneration and benefits guideline for the Board members, sub-committee, chief executive officer and management and consistent with the Companyʼ s performance and market condition.
18 B o a r d o f D i r e c t o r s
4. Evaluate the Companyʼ s success to determine bonus and annual salary raise. 5. Review salary and benefit structure of the Company. 6. Other activities as assigned by the Companyʼ s Board of Directors. Executive Committee As of 31 December 2008, the Companyʼ s executive committee comprised of 5 members, which are; 1. Mr. Adisak Sukumvitaya Chairman of the Executive Committee 2. Mrs. Manee Soonthornvatin Executive Committee 3. Mr. Pracha Tansaenee Executive Committee 4. Mrs. Nonglak Laksanapokin Executive Committee 5. Mr. Kittipong Kanokvilairat Executive Committee Mr. Supoj Rojnuntakij is the secretary of the Executive Committee Scope of responsibilities of the executive committee 1. Consider and determine business policies, directions, strategies, management structure and principle, as well as follow up on the business progress. 2. Determine business plan, budget and management authority and propose the plan for Board approval. 3. Review, follow-up and act to ensure that the Companyʼ s policy and guideline are carried out efficiently. 4. Determine employeeʼ s remuneration and salary structure. 5. Determine the Companyʼ s corporate structure, and consider executive board member and top management appointment. 6. Review and approve budget allocation as approved by the Board. 7. Other activities as assigned by the Companyʼ s Board of Directors.
20 G o o d C o r p o r a t e G o v e r n a n c e R e p o r t
Good Corporate Governance Report To comply with the Code of Best Practices, the Company has determined policies concerning corporate governance to ensure transparency in all level of organization, from operational employees to the Board of Directors. The policies lay a crucial foundation to improve efficiency and effectiveness of business operation that will benefit the Company and shareholders in a long run. Therefore, the Company has completely complied with all 15 Code of Best Practices guideline provided by the Stock Exchange of Thailand. 1. Policies concerning corporate governance The Companyʼ s Board of Directors understands the importance of good corporate governance, internal standard and compliance with the policies of the Stock Exchange of Thailand. The Board appoints Audit Committee to audit and control the Companyʼ s affairs to promote good organization culture and business ethics. The Board is confident that good corporate governance practice will help support the Companyʼ s operation and is one of the key objectives that will maximize shareholdersʼ wealth. The values that the Company expects every directors and employees to keep in mind in every mission are: 1.1 Operate professionally, faithfully and ethically. 1.2 Create harmonious and cooperative workplace. 1.3 Follow good work practices to develop the Company, nations and society. 1.4 Cooperate and be flexible to respond to every situation. 2. Rights and equitable treatments of shareholders From 2002, after the Company has been converted into the public company limited status, the Company has sent meeting invitation along with documents at least 7 days prior to the meeting to comply with the legal requirement. Moreover, the Company has a policy to treat all shareholders on equitable basis. The shareholders can freely select director, vote on agendas and raised any comments and questions in the meeting according to the meeting regulation. Every shareholder will have equal right to receive complete and accurate information on timely basis. Every shareholder will be able to check out the information. Moreover, after the Company is listed in the Stock Exchange of Thailand, the Company plan to increase options for the shareholders by appointing independent directors to receive proxy from the shareholders in case the shareholders cannot attend the meeting. 3. Rights of the stakeholders The Company respects the rights of every stakeholder, whether the internal stakeholders such as employees and management of the Company and subsidiary, or external stakeholders such as customers, trade partners, competitors, creditors, regulators and other related agencies. The Company has complied with relevant laws and regulations to preserve rights of the above stakeholders. The Company has treated employees fairly by offering appropriate compensation; bought products and services from suppliers and acted according to the contract terms; cared and responsible for customers and keep their confidentiality, etc. The Companyʼ s code of ethics also indicates the practices that considered ethical competition that will not seek competitorʼ s confidential information by
21 G o o d C o r p o r a t e G o v e r n a n c e R e p o r t
unethical and inappropriate means. The Company has a policy to operate business and grow with the community. 4. The shareholdersʼ meeting The Company sends meeting invitation and documents concerning relevant agendas to the shareholders at least 7 days prior to the shareholdersʼ meeting. The Company has a policy to give shareholders equal rights to check on business operation, give suggestion or raise questions. The Company records important questions and comments in the shareholdersʼ meeting minutes. Moreover, after the Company is listed in the Stock Exchange of Thailand, the Company has a policy to appoint independent directors to take proxy from the shareholders in case the shareholders cannot participate in the meeting. The Chairman of the Audit Committee and the Chairman of the Board should participate in every Board meeting and Audit Committee meeting according to the good corporate governance practice. 5. Leadership and vision The Board of Directors comprises of knowledgeable, skilled and experienced personnel in the business that determine policy, vision, strategies, objective, mission, business plan and the Companyʼ s budgets. The Board also ensures that the management performs in accordance with the stated policy efficiently and effectively within the scope of laws, the Companyʼ s regulation and the shareholdersʼ resolution. The Board will perform duties responsibly and prudently according to the Code of Best Practices to maximize economic value and shareholdersʼ value. Moreover, the Company gave importance to the internal audit system, internal audit process, appropriate risk management measures and traceable system to make sure the operation is in compliance with the law, and the Company has good audit system to maximize benefit for the Company. Moreover, the Board of Directors clearly determines the roles and responsibilities of the Board of Directors, Audit Committee, Executive Committee and Chief Executive Officers. 6. Conflict of Interest The Board of Directors and management has prudently and ethically eliminate conflict of interest problem under the scope of good ethical guideline for the best interest of the Company. The guidelines are practiced to create transparency and prevent abusing authority for personal gain. The Company has regulations to prevent directors, management and operational employees to use undisclosed insiderʼ s information of the Company and subsidiary for personal benefit. Moreover, if there is related transaction or transaction concerning asset acquisition or disposal of the Company or subsidiary, the Company will carry out the transaction according to the criteria and procedures stated by the Stock Exchange of Thailand. 7. Business ethics The Company is committed to act ethically. Every director, management and employee has obligation to perform duties with accountability within the scope of laws and personal responsibilities. Everyone must prudently act on any transaction and withhold from any action that may damage the Company and society, despite the action may perceived to benefit the Company. The Company provided director and employee code of conduct
22 G o o d C o r p o r a t e G o v e r n a n c e R e p o r t
and code of business ethics for the employee to follow. Both codes were approved by the Board of Directors on 20 November 2007. 8. Balance of power The Board of Directors consists of 9 directors, which are 8.1 4 executive directors 8.2 1 non-executive director 8.3 4 independent directors and audit committees, or 44.44% of the Board of Directors. 9. Position aggregation or segregation The Chairman of the Board is not the same person as the Chief Executive Officer to enable balance of power and management audit process. Moreover, more than half of the Board comprises of non-executive director and independent directors to efficiently determine business policy. Moreover, the Company clearly determines scope of responsibilities, duties and responsibilities of the Chief Executive Officer to prevent complete control over the Company. 10. Director and managementʼ s remuneration The Company set up a committee to consider benefits and remuneration for the management staffs ranked Chief Executive Officer or higher. The remuneration committee will consider fair remuneration to benchmark with the Company in the same industry with similar size. The remuneration will also consider the Companyʼ s performance. The remuneration must be in appropriate level to retain staffs depending on their responsibilities. The Company also discloses remuneration paid to directors and managements as determined by the Office of Securities Exchange Commission and the Stock Exchange of Thailand. 11. Board meeting The Company requires that the meeting invitation, along with enclosed documents, must be distributed to the directors for consideration at least 7 days prior to the meeting according to the legal requirement. During 2006, the Board met 6 times and made board-certified meeting minutes for every meeting and keep them for further reference from directors and related persons. 12. Sub-committee The Company appointed Audit Committee to oversee corporate governance activities. The Audit Committee comprises of 4 independent directors with one of them is knowledgeable in account or finance. The Audit Committee has scope of responsibilities and authorities as specified in the Responsibilities and Authorities of Audit Committee. Moreover, the Company also appoints other sub-committee to oversee various businesses, as follow. 12.1 Management Subcommittee has duties to manage general affair, propose annual budget and employee appointment to the Board of Directors. 12.2 Cost Control Subcommittee has duties to control cost as planned in the budget and propose budget to the Board of Directors.
23 G o o d C o r p o r a t e G o v e r n a n c e R e p o r t
12.3 Disciplinary & Grievance Subcommittee has duties to accept and consider grievance from employee and trade partners and consider any employee fraud or corruption. 12.4 Inventory Subcommittee has duties to control level of inventories to plan and propose the inventories management guideline to the marketing and sales division. 12.5 Information & Networking Security Steering Subcommittee has duties to plan network securities policies and objectives. 13. Internal audit system The Company determined duties, responsibilities and authorities of every operator and management in written. The Company ensures that the resources are used to benefit the Company, there is segregation of authorities of the operator, controller and evaluator to ensure appropriate check and balance. The Company has internal audit department to audit, plan, follow-up and coordinate to ensure that the Companyʼ s core operations are consistent with the determined guideline and are carried out efficiently. The internal audit department is independent and can perform audit responsibilities independently. The internal audit department reports directly to the Audit Committee. In 2008, the Company has hired outsource imternal auditor is Earns & Young office Limited under the supervision of the Audit Committee. In every internal audit activities, the auditor must report findings and suggestions directly to the Audit Committee by having internal audit system plan in the company and also subsidiary company in every quarter. 14. Reports of the Board of Directors The Board of Directors is responsible for the Companyʼ s consolidated financial statements of the Company and subsidiaries and any information appears in the annual report. The Board must provide adequate internal audit measures to ensure accurate, complete and adequate financial information to maintain the Companyʼ s assets, to understand the weakness and to prevent any fraud or any significant abnormal activities. The Board meeting no. 1/2002, dated 29 March 2002, the Board appointed the Audit Committee to responsible for quality of financial reports and internal audit system. 15. Investorsʼ relation After the Company is listed in the Stock Exchange of Thailand, the Company shall establish investorsʼ relation to ensure accurate, complete, transparent and equal information disclosure on the financial information and other information that may affect the Companyʼ s share price. The investorsʼ relation unit will disseminate the Companyʼ s information to investors and public via various channels. However, the Company is preparing corporate governance guideline for the above guideline, which will be reviewed by the Audit Committee before being proposed to the Companyʼ s director for final approval. Then the corporate governance guideline will be applied for every director, management and employee of the Company and subsidiaries.
24 G o o d C o r p o r a t e G o v e r n a n c e R e p o r t
Regulations concerning the usage of insiderʼ s information 1. The Companyʼ s directors, managements, employees and staffs must preserve the Companyʼ s secret and/or insiderʼ s information. 2. The Companyʼ s directors, managements, employees and staffs must not disclose the Companyʼ s secret and/or insiderʼ s information or make personal or other peopleʼ s gain, whether directly or indirectly, and whether being compensated or not. 3. The Companyʼ s directors, managements, employees and staffs must not trade, transfer or transferred the Companyʼ s securities base on the Companyʼ s secret and/or insiderʼ s information, and/or engage with any activities that use the Companyʼ s secret and/or insiderʼ s information that could potentially cause damage to the Company, whether directly or indirectly. The requirement shall cover spouse and immature children of the Companyʼ s directors, managements, employees and staffs. Violation shall be deemed a serious offense to the Company.
25 R e l a t e d T r a n s a c t i o n s
Related person/
Nature of business/
Relationship
Details of transactions Transaction value
(Baht)
Necessity and rationale
of the transactions 2008
Jan-Dec 2007
Jan-Dec
Mr. Pradit Sukhumvitaya
has following relationship
with Jay Mart Pcl.
- Father of Adisak
Sukhumvitaya, who is
major shareholder and
Executive Chairman
Mr. Pitsanu Pongatcha
has following relationship
with Jay Mart Pcl.
- Chaiman of the Board
- Brother of Yuvadee
Pongatcha
- Holds 0.03% of the
Companyʼ s paid-up
capital.
AEON Thana Sinsap
(Thailand) Public
Company Limited
Operates hire purchase,
credit card, personal
Space rental
Muang District, Yala
Province. The contract
is valid for 3 years
starting 1 October 2006
to 30 September 2009 at
the rate of Baht 20,000
per month. (Cancel
rental contract on 1
December 2007 and
reduce rental rate for
Oct-Nov to Baht 10,000/
month).
Rent warehouse
No.35 Soi Lumsali,
Huamark, Bangkapi,
Bangkok. The contract
is valid for 3 years,
starting 1 July 2007 to 30
June 2010 at a rental
rate of Baht 70,000 per
month.
Space rental
ATM machine at 1st
floor, J-Venue, no. 98/
100-98/159 Moo 13,
Klong Nueng, Klong
-
840,000
185,400
200,000
840,000
-
The Company wish to expand
footprint to Yala Province.
The rented area is at the
heart of the province and
next to train station and in
the populated area. The
rental rate is at market price
when compared to nearby
department stores. The Audit
Committee sees that the
transaction is rational and
fairly executed.
The company does not have
enough space to store
equipment and decorative
items. The warehouse is
located near the Companyʼ s
head office, which make it
convenient for relocation.
The rental rate is charged at
market price when compared
to nearby area. The Audit
Committee sees that the
transaction is conducted at
market price.
The Company sub-lease area
to Aeon. The rental and
utility rate is charged at
market price when compared
with nearby rental space and
Related Transactions During 2008 and 2007, the Company has engaged in related transactions, all of which are considered rationally to ensure highest benefit for the Company and shareholders, as if the transactions are done with the third person to prevent any potential conflict of interest and to comply with the regulations stipulated by the Stock Exchange of Thailand. Details of the related transactions are as followed.
26 R e l a t e d T r a n s a c t i o n s
loan business. The
company is located at
no. 159, 1-2 floor,
Sermmit Tower, Asoke
(Sukhumvit 21), Klongton
Nua, Wattana, Bangkok
10110. It has following
relationship with Jay
Mart Pcl.
- It has co-director with
Jay Mart. Mr. Tej Bulsuk
holds independent
director of Jay Mart
and Independent
director audit
committee of AEON
Thana Sinsap (Thailand)
Pcl.
Luang, Patumthani
Province. The contract
is valid for 1 year (1
Nov 2007-30 Dec 2008)
at Baht 10,000 per
month.
No.99, Room no. 25-C9,
2nd floor,
Ratchadapisek Road,
Ratchadapisek,
Bukkalo, Thonburi,
Bangkok. It is 69 sqm
land with 3-year rental
period (1 May 2005-20
April 2008 at Baht
136,894.60 per month).
Referral fees
This is fee income for
the customers who use
hire purchase business
through Aeon. The
referral fee is collected
from Aeon as incurred.
Debt collection
Debt collection and
document delivery
service.
-
9,584,211
19,460,390
1,642,735
9,269,259
47,718,057
other lessees. The Audit
Committee sees that the
transaction is conducted at
market price.
Hire-purchase business
through Aeon is normal
business practice which incur
as actual. The Audit
Committee sees that the
transaction is conducted at
market price.
Debt collection and
document delivery is normal
business of JMT, the
Companyʼ s subsidiary. The
fee is charge at market
price, compared to other
customers.
Related person/
Nature of business/
Relationship
Details of transactions Transaction value
(Baht)
Necessity and rationale
of the transactions 2008
Jan-Dec 2007
Jan-Dec
27 R e l a t e d T r a n s a c t i o n s
JMT Network Services
Company Limited
Operates debt
collection business.
Head office is located
at 9/143,144,145 UM Tower,
14th floor,
Ramkamheang,
Suan Luang, Bangkok.
It has following
relationship with Jay
Mart Pcl.
- Jay Mart Pcl. Hold
99.99% of JMTʼ s paid-
up capital.
Sell mobile phone
products.
Collect management
fee for to manage
budget, finance and
accounting. Give
advice for human
resource, organization
communication and IT
function for 1 year.
(1 Jan 2008-31 Dec 2008
at Baht 348,000 per
month).
Rent 11.5 sqm, No. A08
Central Pattaya,
Pattaya 2 Road,
Banglamung, Cholburi
Province for 1 year
from 1 Apr 2008 ›
31 March 2009 at Baht
5,000 per month.
-
3,132,000
35,040
226,654
4,176,000
-
Mobile phone sales is the
Companyʼ s normal business
operation and is done at
market price, which can be
compared to other
customers.
The Company provides
service for JMT as JMT is the
subsidiary. If JMT would
conduct all those functions
by itself, it will be very costly.
The contract is extendable
every year with written
consent made at least
3 months prior to the
expiration. The audit
committee deems that the
transaction is necessary and
rational and should continue
in the future. The audit
committee will regularly
review to ensure that the
contract is carried out
rationally.
Rental and utility rate is
charge reasonably at market
price when compared to the
nearby area and other
lessees. The Audit
Committee sees that the
transaction is conducted at
similar price with other
customers.
Related person/
Nature of business/
Relationship
Details of transactions Transaction value
(Baht)
Necessity and rationale
of the transactions 2008
Jan-Dec 2007
Jan-Dec
28 R e l a t e d T r a n s a c t i o n s
TAS Asset Company
Limited operates
residential business with
head office at 192 Moo
1, Baanpongyang, Mae
Rim Samung, Pongyang,
Mae Rim District,
Chiang Mai Province.
It has following
relationship with
Jay Mart Pcl.
- It has co-director and
shareholder with Jay Mart.
Khun Yuvadee
Pongatcha is director
and major shareholders
of both Jay Mart Pcl.
and TAS.
Coffee Mill Company
Limited operates food
and beverage business
with head office at 990
Abdulrahim, Rama 4
Road, Silom, Bangrak.
The Company has
co director and
shareholder with Jay
Mart Pcl. Khun
Yuvadee Pongatcha is
director and major
shareholders of both
Jay Mart Pcl. and
Coffee Mill Co., Ltd.
Space rental.
A4 Room, 12th floor,
15.4 sqm of UM Tower
with 1 year duration
from 1 Feb 2006-31 Jan
2009 at Baht 3,850 per
month.
Buy assets
46,200
-
46,200
95,926
The Company sub-leased
the remaining space to TAS
Asset. The rental rate is at
market price when
compared with nearby
space and other lessee. The
Audit Committee deems it is
at the same rate charged
with general customers.
The Company wish to use
office equipment to support
business expansion. Those
assets are relatively cheap as
they are second-hand,
which can be compared
with other customers. The
Audit Committee deems that
the transaction is reasonable.
Related person/
Nature of business/
Relationship
Details of transactions Transaction value
(Baht)
Necessity and rationale
of the transactions 2008
Jan-Dec 2007
Jan-Dec
Financial Statements
Responsibilities of the Board toward financial reports Financial statements and consolidated financial statements of Jay Mart Public Company Limited and subsidiary are prepared according to the Boardʼ s policy to have financial statements prepared according to generally accepted accounting standard. The Company selects appropriate accounting policies and practices them consistently and prudently. The Company provides adequate and transparent information disclosure in the notes attached to the financial statements to the best interest of investors and shareholders. The Board has provided appropriate and efficient risk management and internal audit systems to ensure that the disclosed accounting information is accurate, complete and adequate to maintain assets and prevent any fraud or significant abnormality. Therefore, the Board has formed Audit Committee to review accounting policies, quality of financial statements, quality of internal audit system, internal control, risk management system and information disclosure. The comment of Audit Committee can be found in the Report of the Audit Committee as shown in the Companyʼ s annual report. Financial statements and consolidated financial statements have been audited by the Companyʼ s accounting auditor, Grant Thornton Company Limited. During the review process, the Board has provided any necessary data and documents to enable accounting auditors to be able to audit and express comment according to the accounting standard. The accounting auditorʼ s comments are found in the Report of the Accounting Auditor as shown in the Companyʼ s annual report. The Board believes that the Companyʼ s internal audit system are in the satisfactory level and should ensure that the financial statements of Jay Mart Public Company Limited and consolidated financial statements of Jay Mart Public Company Limited and subsidiary for the accounting year ended 31 December 2008 are reliable and are prepared according to the generally accepted accounting principles and any relevant laws and regulations.
Mr. Pisnu††Pong-acha Chairman of the Board
Mr. Adisak Sukumvitaya Chairman of the Executive Committee
29 F i n a n c i a l S t a t e m e n t s
30 F i n a n c i a l S t a t e m e n t s
Report of the Audit Committee The Audit Committee of Jay Mart Public Company Limited comprised of 4 independent directors. 1. Mr. Phisit Dachanabhirom Chairman of Audit Committee 2. Mr. Dej††† Bulsuk Audit Committee 3. Mr. Suwit†† Kingkaew Audit Committee 4. Mr. Pichit Nimkul†† Audit Committee During 2008, Audit Committee arranged 5 meetings and has carried out duties according to the relevant guideline, regulation, criteria and law. The committee also determines accounting auditor appointment proposal and remuneration. The Audit Committee has hired Ernst and Young Company Limited to the Companyʼ s internal audit. The audit system cover the Companyʼ s main operations such as shop point of sales system, rental fee collection, bad debt auction and debt collection process. The internal audit system could give assurance that the Company and subsidiaryʼ s operations are effectively monitored and controlled. The Company has employed efficient, adequate and appropriate internal audit system that is suitable for highly competitive business. The Audit Committee believes that the Companyʼ s Board of Directors and management are ethical and determined to achieve the Companyʼ s objective. However, the Audit Committee is determined to continuously improve the Companyʼ s internal audit system. Although there are many factors affecting the Companyʼ s operation, the Audit Committee is confident that the Company could manage those factors effectively to result in long-term business growth.
Mr. Phisit Dachanabhirom Chairman of Audit Committee
31 F i n a n c i a l S t a t e m e n t s
Management Discussion and Analysis Overview of the past operation The Company operates IT-related business, both in retail and wholesale, with emphasis on mobile phone and accessories of all major producers, such as Nokia, Motorola, Sony Ericsson and Samsung. The Company is the authorized distributors of Motorola, Sony Ericsson and Samsung. Moreover, the Company is the major retailers of Nokia and major network operators, such as GSM, DTAC, GSM1800, TRUE, etc. The Company distributes products through the Companyʼ s distribution networks. As at 31 December 2008, the Company has 196 distribution points, covering Bangkok, greater Bangkok and major provinces, such as Chiang Mai, Kon Kean, Songkla, Phuket, etc. Moreover, the Company has expand its business to related business, such as managing mobile phone retail space under the name IT Junction, where the Company lease space and sub-lease them to sub-lessees to sell mobile phones. The Company also develops retail space specifically to sell mobile phone and technology products. The Company currently operates retail space near Nava Nakorn Industrial Estates, Patumthani Province, where the Company operates 7,400 square meters of retail space under the department store name J-Venue. Other than the core business, the Company also operate a subsidiary, JMT Network Services Company Limited to collect debt, management non-performing loan, provide legal consultant service and parcel delivery service under brand Mr. Speed. The Company and subsidiary operations can be summarized as follow: Revenue The Companyʼ s total revenue decline from Baht 5,897.58 million in 2007 to Baht 5,534.75 million in 2008, or 6.15% decline. The revenue decline was due to: 1. Sales revenue is the Companyʼ s major revenue contributor, mainly from selling of mobile phone, sim card, prepaid card, or other accessories, which declined from Baht 5,414.79 million in 2007 to Baht 5,054.93 million in 2008, or down Baht 359.86 million or 6.65% as average price of handsets has trended lower. However, the gross margin slightly improve as the Company try to sell mobile phone brands that offers higher gross margin. 2. Total revenue from debt collection and other related business fell from 164.09 million in 2007 to Baht 111.68 million in 2008, or down Baht 52.41 million or 31.94% because debt portfolio has shrunk and commission rate declined. As a result, revenue from debt collection and related business declined. The Company expects the revenue decline could be offset by improved debt collection from debt investment. 3. Rental income is the revenue from retail space management under brand IT Junction and stand-alone retail space under the brand J-Venue. The Company reported rental income of Baht 128.22 million in 2008, which is similar to Baht 128.15 million recorded in 2007.
32 F i n a n c i a l S t a t e m e n t s
4. Sales promotion is the revenue the Company earns from the mobile phone producers, which consists of marketing promotion, activity promotion and sales commission income. Sales promotion revenue is increased from baht 150.28 million in 2007 to Baht 210.91 million in 2008, or rising Baht 60.63 million or 40.34%, as the Company was appointed to be authorized distributor of Sony Ericsson and Samsung. So the Company received more promotion income from those two brands. Other income declined from Baht 40.28 million in 2007 to Baht 29.00 million in 2008 or down Baht 11.28 million or 28.00%. The decline is mostly from falling foreign exchange gains as the Company import less products. Cost of sales During 2008 and 2007, the Company reported cost of sales of Baht 4,843.45 million and Baht 5,258.41 million, respectively. The declining cost of sales is inline with declining sales revenue. The cost of sales as a percentage of sales revenue declined from 93.72% of 2007 sales revenue to 92.28% of 2008 sales revenue. Cost of sales comprises of cost of mobile phone and accessory products that the Company purchase from the mobile phone producers or dealers, both local and overseas. Moreover, there is also cost of sales for retail space management, cost of acquiring non-performing loans and expenses for hiring debt collector in the debt collection and management business. Sales and administration expense During 2008 and 2007, the Company reported selling and administration expense (SG&A) of Baht 509.43 million and Baht 486.20 million, respectively, or up Baht 23.23 million or 4.78% from the previous year. The increase is mainly due to rising management and staff expenses, higher rental and service expense for special activities, and rising sales promotion expense, all of which are resulted from business expansion. Net profits During 2008 and 2007, the Company reported gross profits of Baht 691.31 million and baht 639.17, respectively, up 8.16% over the period. The gross profit margin improved from 10.84% during 2007 to 12.49% during 2008 as the Company is focusing on selling mobile phone that offer high gross margin. The Company reported 2008 and 2007 operating profits of Baht 178.52 million and Baht 149.57 million, respectively, up 19.35% over the period. During 2008 and 2007, the Company reported net profits of Baht 97.11 million and Baht66.51 million, respectively, up 45.99% over the period. These translated into earning per share of Baht 0.43 and Baht 0.30, respectively. Financial Status Assets As of 31 December 2008, the Company has total asset of Baht 1,370 million, comprised of Baht 826.64 million of current assets, or 60.25% of total assets and Baht 545.36 million of non-
33 F i n a n c i a l S t a t e m e n t s
2008 2007 48.05 (1.88)
(77.22) (31.05)
76.46 26.01
(106.51) (4.04)
current assets, or 39.75% of total assets. When compared to 2007, the Company total assets declined by Baht 231.83 million, or 14.45%. Most of the decline was due to Baht 229.02 million and Baht 2.81 million declines in current and non-current assets, respectively. The major changes in 2008 are as followed: 1. Net receivable was at Baht 135.41 million, or 9.87% of total assets, down from Baht 31.83 million during 2007. The decline was inline with declining sales revenue. For the receivable quality, 89.67% of total receivable are not due or remain outstanding less than 30 days. Only 10.33% remain outstanding longer than 30 days. 2. Net inventories are at Baht 478.17 million, or 34.85% of total assets, down Baht 218.85 million due to efficient inventory management as a result of proper IT system utilization and good market strategy. The inventory is maintained at optimal level to reduce risk from product devaluation. As of 2008, the Companyʼ s inventory day was at 46 days. 3. Restricted cash in bank was at Baht 262.25 million, or 19.11% of total assets, down Baht 14.64 million from the previous year, inline with a declining short-term loan from financial institutes because the company has fixed deposit at the bank as a collateral for overdraft credit from financial institutes. Liabilities As of 31 December 2008, the Company has total liabilities of Baht 941.65 million, down Baht 261.44 million from the previous year or 21.73%. Most of the decline was due to Baht 259.01 million and Baht 2.42 million declines in current and non-current liabilities, respectively. The major changes of the liabilities are as follow: 1. The overdraft and short-term loans from financial institutes was at Baht 778.28 million, down Baht 3.71 million as the Company received more trade credit from mobile phone producers and distributors. 2. Trade payable was at Baht 55.79 million, down 253.26 million as the Company mostly pay for goods with cash which enable the Company to earn more trade discount. Moreover, efficient inventory management enabled the Company to have excess cash to pay up liabilities. Liquidity As at the end of 2008, the Company has cash and equivalent decline by Baht 31.05 million, which can be classified as Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Net cash increase (decrease) For the cash flow from operating activities during 2008, the Company reported Baht 48.05 million of net cash inflow from operating activities, which resulted from declining inventories and receivables. 2007 net cash outflow from operating activities was at Baht 76.46 million, mainly due to rising inventories and receivables.
34 F i n a n c i a l S t a t e m e n t s
During 2008, the Companyʼ s net cash outflow from investing activities was at Baht 1.88 million, which resulted from equipment investment for store expansion. While Baht 26.01 million of cash inflow from investing activities during 2007 was due to lower restricted cash as the restriction eased off. For the cash flow from financing activities during 2008, the Company reported Baht 77.22 million of net cash outflow, which resulted from short-term debt repayment and dividend payment. 2007 net cash outflow from financing activities was at Baht 106.51 million, mainly due to short-term debt repayment and dividend payment as well. The current ratio was at 0.92 times during 2008, compared to 0.91 times during 2007. The increase in liquidity ratio was due to lower inventories and receivable, while the trade payable also decline in the greater proportion. Sources of fund The Companyʼ s sources of funds are mainly comprised of shareholdersʼ equity and short-term loans from financial institutes. As of 31 December 2008, the Company has shareholdersʼ equity of Baht 430.35 million, up Baht 29.61 million from 2007 year-end or up 7.39%. The increase was due to Baht 22.11 million increase in un-appropriated retained earnings and Baht 7.5 million increase in legal reserve. During 2008, the Company paid two dividends to shareholders worth a total of Baht 67.50 million, which can be classified into Baht 38.25 million for full year dividend and Baht 29.25 million for interim dividend. The short-term loans from financial institutes as of 31 December 2008 was at Baht 778.28 million down by Baht 3.71 million or 0.47% from the previous year.
35 F i n a n c i a l S t a t e m e n t s
Report of the Independent Auditor To the Shareholders of Jay Mart Public Company Limited I have audited the accompanying consolidated balance sheets of Jay Mart Public Company Limited and subsidiary as at 31 December 2008 and 2007, and the related consolidated statements of income, changes in shareholdersʼ equity and cash flows for the years then ended. I have also audited the separate balance sheets of Jay Mart Public Company Limited as at 31 December 2008 and 2007, and the related statements of income, changes in shareholdersʼ equity and cash flows for the years then ended. These financial statements are the responsibility of the Companyʼ s management as to their correctness and completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all materials respects, the consolidated financial position of Jay Mart Public Company Limited and subsidiary as at 31 December 2008 and 2007 and their consolidated results of operations and cash flows for the years then ended , and the separate financial position of Jay Mart Public Company Limited at 31 December 2008 and 2007 and its results of operations and cash flows for the years then ended in conformity with generally accounting principles.
MR. SOMCKID TIATRAGUL Certified Public Accountant
Registration No. 2785
Bangkok, Thailand 23 February 2009
34 F i n a n c i a l S t a t e m e n t s
Consolidate Financial Statements and Notes to the Financial Statements BALANCE SHEETS JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY AS AT 31 DECEMBER 2008 AND 2007
(Unit : Baht) SEPARATE F/S CONSOLIDATED
Notes 2008 2007 2008 2007 ASSETS
CURRENT ASSETS Cash and cash equivalents Trade accounts receivable-net Trade account receivable-related company Inventories-net Accrued income Refundable value added tax Other current assets Total Current Assets
NON-CURRENT ASSETS Investments in accounts receivable-net Restricted deposits with financial institutions Investment in subsidiary company Building and equipment-net Computer softwares-net Leasehold rights and prepaid rent-net Deposits Total Non-Current Assets TOTAL ASSETS
6 7 28 8 9
10
11
12
13 14 15 16
21,652,828 135,406,011
9,079,667
478,165,755 124,796,090
- 57,535,956
826,636,307
71,300,607
262,245,719
- 72,601,617 8,838,126
53,695,293
76,679,913 545,361,275
1,371,997,582
52,700,473 167,233,160 12,417,635
697,017,407 91,084,359 15,991,765 19,210,581
1,055,655,380
38,031,820
276,885,566
- 91,479,693 11,184,688 60,357,077
70,232,648
548,171,492
1,603,826,872
19,600,698 131,688,157
7,813,019
478,165,755 102,301,899
- 52,770,731
792,340,259
-
253,553,165
39,999,300 67,073,925 1,568,828
53,695,293
75,435,703 491,326,214
1,283,666,473
48,769,595 160,288,118
9,491,789
697,017,407 72,614,693 15,991,765 18,192,716
1,022,366,083
-
275,150,000
39,999,300 80,792,745 3,224,278
60,357,077
68,832,252 528,355,652
1,550,721,735
The accompanying notes form an integral part of these financial statements.
35 F i n a n c i a l S t a t e m e n t s
BALANCE SHEETS
JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY AS AT 31 DECEMBER 2008 AND 2007
(Unit : Baht) SEPARATE F/S CONSOLIDATED
Notes 2008 2007 2008 2007 LIABILITIES AND SHAREHOLDERSʼ EQUITY
CURRENT LIABILITIES Bank overdrafts and short-term loans from financial institutions Trade accounts payable Current portion of - Liabilities under financial leases and hire-purchase agreements - Long-term loans Other payable-subsidiary company Accrued expenses Income tax payable Other current liabilities Total Current Liabilities NON-CURRENT LIABILITIES Liabilities under financial leases and hire-purchase agreements-net Long-term loans-net Rental deposit from related company Other non-current liabilities Total Non-Current Liabilities TOTAL LIABILITIES
17
18
19 28 20 25
18
19 28
21
778,281,887
55,793,879
4,401,836
1,572,000 -
31,140,293 16,978,539 11,403,028
899,571,462
3,463,278
11,378,000 804,528
26,432,506
42,078,312
941,649,774
781,994,888
309,056,787
3,449,770
2,552,000 -
35,267,106 14,590,601 11,672,423
1,158,583,575
1,619,100
12,959,000 804,528
29,119,231
44,501,859
1,203,085,434
750,781,887
36,589,467
4,401,836
1,572,000 11,296
25,018,261 16,978,539 10,171,053
845,524,339
3,463,278
11,378,000 804,528
26,432,506
42,078,312
887,602,651
781,994,888
302,345,467
3,449,770
2,552,000 23,100
29,043,835 11,980,927 9,902,999
1,141,292,986
1,619,100
12,959,000 804,528
29,119,231
44,501,859
1,185,794,845
The accompanying notes form an integral part of these financial statements.
38 F i n a n c i a l S t a t e m e n t s
BALANCE SHEETS JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY AS AT 31 DECEMBER 2008 AND 2007
(Unit : Baht) SEPARATE F/S CONSOLIDATED
Notes 2008 2007 2008 2007 LIABILITIES AND SHAREHOLDERSʼ EQUITY (CONTINUE) SHAREHOLDERSʼ EQUITY Share capital, common share at Baht 1 par value Registered 300,000,000 shares Fully paid-up 225,000,000 shares Retained earnings Appropriated for statutory reserve Unappropriated Total Equity of Companyʼs Shareholders Minority interest in subsidiary company TOTAL SHAREHOLDERSʼ EQUITY TOTAL LIABILITIES AND SHAREHOLDERʼ EQUITY
22
23
300,000,000 225,000,000
30,000,000
175,347,108 430,347,108
700
430,347,808
1,371,997,582
300,000,000 225,000,000
22,500,000
153,240,738 400,740,738
700
400,741,438
1,603,826,872
300,000,000 225,000,000
30,000,000
141,063,822 396,063,822
-
396,063,822
1,283,666,473
300,000,000 225,000,000
22,500,000
117,426,890 364,926,890
- 364,926,890
1,550,721,735
The accompanying notes form an integral part of these financial statements.
39 F i n a n c i a l S t a t e m e n t s
STATEMENTS OF INCOME
JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY FOR THE YEARS ENDED 31 DECEMBER 2008 AND 2007
(Unit : Baht) SEPARATE F/S CONSOLIDATED
Notes 2008 2007 2008 2007 REVENUES Sales Income from debts collection and others Income from collection of investments in accounts receivable Rental income Sales promotion income TOTAL REVENUES COSTS OF SALES AND SERVICES Costs of sales Costs of debts collection and rent TOTAL COSTS OF SALES AND SERVICES Gross profit Selling and administrative expenses Directors remuneration INCOME FROM SALES AND SERVICES Management fee income Dividend income Other income Income Before Interest Expense and Income Tax Interest expense Income tax NET INCOME FOR THE YEAR Net income attributable to: The Companyʼs shareholders Minority interests in subsidiary NET INCOME FOR THE YEAR BASIC EARNINGS PER SHARE Net income of the Company per share (Baht) Weighted average number of common shares (Shares)
28
28, 31
31 26
28 28
25
5,054,933,887
88,324,089
23,360,132
128,224,707 210,906,140
5,505,748,955
4,664,446,954 178,998,746
4,843,445,700 662,303,255
(509,430,025) (3,360,000) 149,513,230
- -
29,004,953 178,518,183
(35,669,435) (45,742,378) 97,106,370
97,106,370 -
97,106,370
0.43
225,000,000
5,414,785,124 150,156,864
13,930,562
128,145,258 150,280,776
5,857,298,584
5,074,625,338 183,783,889
5,258,409,227 598,889,357
(486,196,078) (3,405,000) 109,288,279
- -
40,283,925 149,572,204
(43,357,885) (39,700,004) 66,514,315
66,514,315 -
66,514,315
0.30
225,000,000
5,054,933,887
-
-
128,259,747 210,906,140
5,394,099,774
4,664,446,954 92,192,181
4,756,639,135 637,460,639
(489,934,205) (3,360,000) 144,166,434
3,132,000 3,199,944
28,740,389 179,238,767
(35,072,300) (45,529,535) 98,636,932
98,636,932 -
98,636,932
0.44
225,000,000
5,415,011,779
-
-
128,145,258 150,280,776
5,693,437,813
5,074,625,338 77,901,802
5,152,527,140 540,910,673
(462,630,202) (3,405,000) 74,875,471 4,176,000
30,396,173 40,409,743
149,857,387
(43,356,574) (26,893,568) 79,607,245
79,607,245 -
79,607,245
0.35
225,000,000
The accompanying notes form an integral part of these financial statements.
40 F i n a n c i a l S t a t e m e n t s
STATEMENTS OF CHANGES IN SHAREHOLDERSʼ EQUITY JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY FOR THE YEARS ENDED 31 DECEMBER 2008 AND 2007
(Unit : Baht) Paid-up Share
Capital CONSOLIDATED Balance as at 1 January 2007 Net income for the year Appropriated for statutory reserve Dividend payment Balance as at 31 December 2007 Balance as at 1 January 2008 Net income for the year Appropriated for statutory reserve Dividend payment Balance as at 31 December 2008 SEPARATE F/S Balance as at 1 January 2007 Net income for the year Appropriated for statutory reserve Dividend payment Balance as at 31 December 2007 Balance as at 1 January 2008 Net income for the year Appropriated for statutory reserve Dividend payment Balance as at 31 December 2008
374,727,123
66,514,315 -
(40,500,000) 400,741,438
400,741,438
97,106,370 -
(67,500,000) 430,347,808
325,819,645
79,607,245 -
(40,500,000) 364,926,890
325,819,645
79,607,245 -
(40,500,000) 364,926,890
The accompanying notes form an integral part of these financial statements.
Notes
24
23
24
24
24
Statutory reserve
Unappropriated retained earnings
Minority interest
Total
700
- -
- 700
700
- -
- 700
-
- -
- -
-
- -
- -
129,726,423
66,514,315 (2,500,000)
(40,500,000) 153,240,738
153,240,738
97,106,370 (7,500,000)
(67,500,000) 175,347,108
80,819,645
79,607,245 (2,500,000)
(40,500,000) 117,426,890
80,819,645
79,607,245 (2,500,000)
(40,500,000) 117,426,822
20,000,000
- 2,500,000
- 22,500,000
22,500,000
- 7,500,000
- 30,000,000
20,000,000
- 2,500,000
- 22,500,000
20,000,000
- 2,500,000
- 22,500,000
225,000,000
- -
- 225,000,000
225,000,000
- -
- 225,000,000
225,000,000
- -
- 225,000,000
225,000,000
- -
- 225,000,000
41 F i n a n c i a l S t a t e m e n t s
The accompanying notes form an integral part of these financial statements.
STATEMENTS OF CASH FLOWS JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY FOR THE YEARS ENDED 31 DECEMBER 2008 AND 2007
(Unit : Baht) SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007 Cash flows from operating activities :- Net income before income tax Adjustments to reconcile net income to net cash provided from (used in) operating activities :- Loss (gain) on sales of fixed assets Unrealized loss (gain) on foreign exchange rate Gain from disposal of investment in securities held for trading Dividend received from subsidiary company Depreciation and amortization Allowance for doubtful accounts and bad debts Provision for slow-moving and obsolete inventories Interest income Interest expense Cash provided from operating activities before changes in operating assets and liabilities Decrease (increase) in operating assets:- Trade accounts receivable Trade accounts receivable-related company Investment in accounts receivable Inventories Accrued income Refundable value added tax Other current assets Deposits Increase (decrease) in operating liabilities: Trade accounts payable Trade account payable-subsidiary company Accrued expenses Other current liabilities Other non-current liabilities Cash received from operating activities Cash received from interest Cash paid for interest Income tax paid Net cash provided from operating activities
142,848,748
546,198 881,934
-
- 50,104,263
806,292 5,424,335
(6,670,847) 35,669,435
229,610,358
31,020,858 3,337,968
(14,858,528) 213,427,317 (33,567,058) 15,991,765
(34,761,758) (6,447,265)
(272,555,100)
- (4,126,812)
47,481 (2,686,725) 124,432,501
6,526,172 (35,986,311) (46,918,057) 48,054,305
106,214,319
39,899 (2,699,006)
(90,000)
-
51,214,673 1,313,807 4,866,457
(9,191,073) 43,357,885
195,026,961
(23,884,433)
5,014,487 6,118,893
(129,509,381) (36,347,763) (2,705,589) 1,184,981
(2,078,111)
114,939,280 -
10,349,888 64,911
2,301,699 140,475,823 11,186,137
(43,380,836) (31,816,971) 76,464,153
144,166,467
513,942 881,934
-
(3,199,944) 42,208,735
806,292 5,424,335
(6,606,141) 35,072,300
219,267,920
27,793,669 1,678,770
- 213,427,317 (29,542,531) 15,991,765
(34,578,014) (6,603,451)
(266,637,934)
(11,804) (4,025,574)
584,930 (2,686,725) 134,658,338
6,461,466 (35,389,175) (40,531,923) 65,198,706
106,500,813
(104,676) (2,699,006)
(90,000)
(30,396,173) 43,650,477 1,313,807 4,866,457
(9,079,760) 43,356,574
157,318,513
(22,885,763)
3,699,787 -
(129,509,381) (33,374,476) (2,705,589) 1,260,119
(2,098,247)
147,317,088 22,100
8,174,779 1,254,313 2,301,699
130,774,942 11,074,824
(43,379,524) (18,534,017) 79,936,225
The accompanying notes form an integral part of these financial statements.
STATEMENTS OF CASH FLOWS (CONTINUE) JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY FOR THE YEARS ENDED 31 DECEMBER 2008 AND 2007
(Unit : Baht) SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007 Cash flows from investing activities:-
Decrease in restricted deposits with financial institutions Proceeds from disposal of fixed assets Cash paid for purchases of fixed assets Cash received from dividend of subsidiary company Cash received from disposal of investment in trading securities Cash paid for investment in subsidiary company Net cash provided from (used in) investing activities Cash flows from financing activities:- Decrease in bank overdraft and short-term loans from financial institutions Repayment of liabilities under financial leases and hire-purchase agreements Repayments of long-term loans Dividend paid Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents-beginning of the year Cash and cash equivalents-end of the year Supplemental cash flows information: Non-cash transactions: Purchases of vehicles under financial lease agreements A subsidiary company purchased investment in accounts receivable from financial institution by installments not affecting the cash flows
14,639,847
4,314,858
(20,832,883) -
-
-
(1,878,178)
(3,713,002)
(3,449,770)
(2,561,000) (67,500,000) (77,223,772)
(31,047,645)
52,700,473 21,652,828
6,246,014
18,410,257
58,951,857
1,622,512
(36,758,359) -
2,190,000
-
26,006,010
(59,410,143)
(3,349,439)
(3,252,000) (40,500,000)
(106,511,582)
(4,041,419)
56,741,892 52,700,473
-
5,269,741
21,596,835
4,182,220
(18,622,830) 3,199,944
-
-
10,356,169
(31,213,002)
(3,449,770)
(2,561,000) (67,500,000)
(104,723,772)
(29,168,897)
48,769,595 19,600,698
6,246,014
-
57,757,953
1,107,103
(30,944,259) 30,396,173
2,190,000
(30,000,000)
30,506,970
(59,410,143)
(3,349,438)
(3,252,000) (40,500,000)
(106,511,581)
3,931,614
44,837,981 48,769,595
-
-
The accompanying notes form an integral part of these financial statements. 42
F i n a n c i a l S t a t e m e n t s
43 F i n a n c i a l S t a t e m e n t s
NOTES TO FINANCIAL STATEMENTS JAY MART PUBLIC COMPANY LIMITED AND SUBSIDIARY
31 DECEMBER 2008 AND 2007 1. GENERAL INFORMATION 1.1 The Company registered its incorporation in accordance with the Thai Commerce Code as a limited company in the year 1988. The Company registered the change of its status to a public company and the change of its name to “Jay Mart Public Company Limited” (the Company) on 26 March 2002. The Companyʼ s registered office is located at 9/121-3, 126-7 UM-Tower, 12th Floor Ramkhamhaeng Road, Suanluang Sub-District, Suanluang District, Bangkok. 1.2 The Company is engaged in the trading of mobile phone, computers and related accessories and space rental and public utilities service. The space rental is for periods of 1 to 3 years. In addition, the Company has a subsidiary engaged in the purchase of non-performing accounts receivable for debt collection, and debt collection service. 1.3 As at 31 December 2008 and 2007, the Company has Major shareholders as follows : Name Mr. Adisak Sukumvittaya Miss Yuwadee Pong-acha Miss Jutamas Sukumvittaya Master Aekachai Sukumvittaya 2. FINANCIAL CRISIS The financial crisis experienced by the United States of America over the past year has had far reaching adverse effect on the global economy as evidenced by sharp falls in share prices worldwide, tight squeeze on credit, including interbank lending, failures of foreign large financial institutions and reduced consumer confidence. The crisis has affected substantially business and financial plans of Thailand enterprises and asset values. Despite efforts made by governments of the foreign countries and of Thailand to contain the crisis, and to remedy the financial liquidity of financial institutions and to gain public confidence, it remains uncertain as to when the global economy will return to its normal. These financial statements have been prepared on the bases of facts currently known to the Company, and on estimates and assumptions currently considered appropriate by management. They therefore, could be adversely affected by uncertainties of future events.
Percentage of Shareholding 2008 2007
34.5 31.4 12.1 11.3
34.5 31.4 12.1 11.3
3. BASIS OF FINANCIAL STATEMENTS PREPARATION AND PRINCIPLES OF CONSOLIDATION 3.1 The accompanying financial statements have been prepared in accordance with the generally accepted accounting principles issued under the Accounting Act B.E. 2543, and accounting standards issued under Accounting Profession Act B.E. 2547, and the regulations promulgated by the Securities and Exchange Commission and the Securities Exchange of Thailand concerning the preparation and the disclosure of financial information, under the Securities and Exchange Act B.E. 2535. The financial statements have been prepared on a historical cost basis except as, otherwise, disclosed in the accounting policies. 3.2 The financial statements are officially prepared in Thai language in accordance with statutory requirement with accounting standards enumerated under the Accounting Profession Act B.E. 2547. The translation of these statutory financial statements to other language must be based on the official one. 3.3 During the years 2007 and 2008, the Federation of Accounting Professions has announced the amendments to certain accounting standards, which are effective for the accounting periods beginning on or after 1 January 2008 and 1 January 2009. The Companyʼ s management has reviewed those amended standards and believe that there is no significant impact to the Company. 3.4 The consolidated financial statements include the separate financial statements of Jay Mart Public Company Limited and subsidiary, which are significantly influenced by the Company, as follows : The percentage of subsidiaryʼ s assets and revenues included in the consolidated financial statements of Jay Mart Public Company Limited and subsidiary for the years ended 31 December 2008 and 2007 are as follows : Subsidiary company JMT Network Services Company Limited
44 F i n a n c i a l S t a t e m e n t s
Type of business Paid-up share capital (million Baht)
Percentage of Shareholding
Subsidiary company
2008
40
2007
40
2008
99.99
2007
99.99 JMT Network Services Company Limited
Debt collection
Percentage of subsidiaryʼ s total assets to consolidated
total assets
Percentage of subsidiaryʼ s total revenues to
consolidated total revenues 2008
9
2007 6
2008 2
2007 3
45 F i n a n c i a l S t a t e m e n t s
3.5 Significant intercompany transactions with subsidiary, included in the consolidated financial statements, have been eliminated. 3.6 In the event when subsidiary ceased the operations, the consolidated financial statements included the results of operations of subsidiary up to the date of liquidation. 3.7 The consolidated financial statements have been prepared with the same accounting policies for the same accounting transactions or accounting events used by the Company and subsidiary. 4. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of these consolidated and separate financial statements are set out below : 4.1 Cash and cash equivalents Cash and cash equivalents represent cash on hand, cash card and deposits with financial institutions with maturities of less than three months without restriction of usage or obligation. Restricted deposits with financial institutions are presented under non-current assets in the balance sheet. 4.2 Trade accounts receivable Trade accounts receivable are carried at anticipated realizable value. Allowance for doubtful accounts are based on historical collection experiences and the review of the current status of existing receivables at the year end. Bad debts are written off during the year in which they are identified to be uncollectible. 4.3 Investments in accounts receivable Investments in accounts receivable is carried at purchase cost less allowance for impairment (if any). The Company recognized loss on impairment of investment when the anticipate discounted cash flows to their present value are lower than net book value. 4.4 Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined by 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 charges, less all attribute discounts and allowances. Net realizable value is the estimate of the selling price in the ordinary course of business, less necessary costs to make inventories ready for sales. The Company set up provision
for obsolete, slow-moving and defective inventories, where necessary, from the consideration of market situation and the aged inventories as follows : Inventory aged between 90-180 days Inventory aged between 181-270 days Inventory aged between 271-365 days Inventory aged over 1 year 4.5 Investment in subsidiary company Investment in subsidiary company is accounted for in the Companyʼ s separate financial statements by the cost method. Such investment refers to investment which the Company has over 50% of the voting right, and over which the Company exercises control. 4.6 Buildings and Equipment Buildings and equipment is stated at cost. Cost is measured by the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use. Buildings and equipment are presented in the balance sheet at cost less accumulated depreciation and allowance for loss on impairment of assets (if any). The Company depreciates its buildings and equipment by the straight-line method over their estimated useful lives as follows : Building improvements Office furniture Office equipments Tools and equipments Vehicles The Company and subsidiary, depreciate computer equipment acquired in the year 2006 onward, by the straight-line method over their estimate useful lives of 3 years. Where the carrying amount of an asset is greater than its estimated recoverable amount, the cost is written down immediately to its recoverable amount. Estimated recoverable amount is calculated from the anticipated discounted cash flows to their present value from the continuing use of the assets and the amount obtainable from the sale of the assets less any costs of disposal whichever is higher. 46
F i n a n c i a l S t a t e m e n t s
Allowance for diminution rate 2008
25
25-50 50-75 100
2007
25 25-50 50-75 100
Years
10 5 5
3-5 5
47 F i n a n c i a l S t a t e m e n t s
Gains and losses on disposal of equipment are determined by reference to their carrying amount compared to the selling price and are taken into account in statement of income. Expenditures for expansion, renewal and betterment, which result in a substantial increase in an asset current replacement value, are capitalized. Repair and maintenance costs are recognized as an expense when incurred. 4.7 Computer softwares Computer softwares with specific useful lives are recorded at costs less accumulated amortisation and allowance for impairment (if any). Amortisation is charged to the statement of income on a straight-line basis over the estimated useful lives of the computer softwares for 5 years. 4.8 Leasehold rights cost Cost of obtaining the leasehold rights is presented at cost less accumulated amortization and allowance for impairment (if any). Amortisation is charged to the statement of income on a straight-line basis over the estimated useful lives of the leasehold rights for 6 to 26 years. 4.9 Hire purchases payable Liabilities under hire-purchase contracts are presented with the contracted amounts less deferred interest. The hire purchase contracts are for 36-60 months. The fixed assets acquired under hire purchase agreements are recorded as assets of the Company at their cash price. The Company will register the assets in the name of the Company upon the completion of payments. 4.10 Long-term leases-where Company and subsidiary are the lessee Leases of equipment where the Company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalized at the fair value of leases of assets or estimated present value of the underlying lease payments whichever is lower. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the outstanding finance balance. Future lease payments net of financial charges are recognized as liabilities under financial lease agreements. The interest expense is charged to statement of income over the lease period. Assets acquired under finance lease agreements are depreciated over the useful lives of the assets. Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to statement of income on a straight-line basis over the lease period. When an operating lease is terminated before expiry date of the lease period,
48 F i n a n c i a l S t a t e m e n t s
any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place. 4.11 Long-term leases-where Company and subsidiary are the lessor Assets leased out under operating leases are recorded as assets under building and equipment in the balance sheet. The Company calculates depreciation of these assets over their expected useful lives on a basis consistent with other similar assets. Rental income is recognized on a straight-line basis over the lease period. 4.12 Revenue recognition Sales are recognized upon delivery of merchandises to customers, net of sales taxes and discounts. Interest income and other income are recognized on an accrual basis. Rental income and facilities services income are recognized under the term of the agreements. Sales promotion and incentive income is recognized as income when obtained approval from suppliers. Dividend income is recognized upon the declaration of the right to receive. Revenue from investments in accounts receivable is recognized based on the amortized value of investments in receivable for each period by using effective rate. Estimate recoverable amount of investments in accounts receivable is calculated from the anticipated discounted cash flows to their present value. The subsidiary company regularly re-assesses its cash flows from collection of investments in accounts receivable and recognizes loss on impairment immediately, when there is an indication of significant decrease cash flows. In the event of the increase in estimated cash flows, the subsidiary company will re-calculate the new effective rates in investments in account receivable from the period of changes with the reversal of loss on impairment before using the new effective rates. The subsidiary company recognizes service income from debt collection when service is rendered to the customers based on the agreed rates. 4.13 Employee Benefit Salaries, wages, bonuses contraction to the social security and provident fund are recognised as expenses when incurred. 4.14 Provident fund The Company and subsidiary set up a registered provident fund contributed by employees
49 F i n a n c i a l S t a t e m e n t s
and by the Company for which assets are held in a separate trustee fund and manages by authorized fund manager. The Company contributions are charged to the statement of income in the period in which they relate. 4.15 Income tax The computation of corporate income tax in compliance with the Revenue Code, is based on the taxable profit for the year after adding back expenses that are not deductible in determining taxable profit and the deduction of exempted income, according to the Revenue Code. 4.16 Foreign currency translation The Company and subsidiary translated foreign currency transactions into Thai Baht for bookkeeping purposes at the exchange rates prevailing at the dates of the transactions. Balances of monetary assets and liabilities, denominated in foreign currency, at the balance sheet date are translated into Baht at the exchange rates at that date. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities, denominated in foreign currencies, are recognized as gain or loss in the statement of income. 4.17 Financial instruments Financial assets in the balance sheet include cash and bank balances, investments and trade accounts receivable. Financial liabilities in the balance sheet include trade accounts payable, financial leases and borrowings. The accounting policies for each particular transaction are disclosed under separate sections associated with each item. 4.18 Segment information Segment information is presented in respect of the Company and subsidiary businesses. The primary format of business segments are based on the Company and subsidiary management and internal reporting structure. 4.19 Dividend payment The Company and subsidiary record dividend payment in the financial statements in the fiscal year in which they are approved by the Shareholders or Board of Directors.
50 F i n a n c i a l S t a t e m e n t s
4.20 Basic earnings per share Basic earnings per share is determined by dividing net income for the year by the weighted average number of common shares paid up during the year. 4.21 Provisions for liabilities and expenses, and contingent assets The Company and subsidiary recognize provisions for liabilities and expenses in the financial statements when the Company and subsidiary have present legal or constructive obligations as a result of past events with probable outflow of resources to settle the obligation, and where a reliable estimate of the amount can be made. The contingent asset will be recognized as a separate asset only when the realization is virtually certain. 5. CRITICAL ACCOUNTING ESTIMATES, ASSUMPTION AND JUDGEMENT AND CAPITAL RISK MANAGEMENT 5.1 Critical accounting estimates, assumption and judgments Estimates, assumption and judgments 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 as follows : 5.1.1 Impairment of receivables The Company accounts for allowance for doubtful accounts equal to the estimated collection losses that may be incurred in the collection of receivables. The estimated losses are based on uncertainly in the collection and consider of the management. 5.1.2 Allowance for obsolete, slow-moving and defective inventories The Company estimates an allowance for obsolete, slow-moving and defective inventories to reflect impairment of inventories. The allowance is based on consideration of inventory turnovers and deterioration of each category. 5.1.3 Buildings and equipment and intangible assets Management regularly determines the estimated useful lives and residual values for the Companyʼ s buildings and equipment and intangible assets, and will revise the depreciation amortization charge where useful lives and residual values previously estimated have changed or subject to be written down for impairment or no longer in used. 5.1.4 Leases In determining whether a lease is to be classified as an operating lease or financing lease, management is required to use judgment regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement. 5.1.5 Impairment of assets The Company consider asset as impaired when there has been a significant or
51 F i n a n c i a l S t a t e m e n t s
prolonged decline in the fair value below their cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires management judgment. 5.1.6 Estimated cash flow collection from Investment in account receivable Estimated cash flows from collection in the future of investment is calculated with effective interest rate using historical information of debt collection and payment ability from debtors including consider the collection period from current situation assessed by management. 5.2 Capital risk management The Companyʼ s objectives in the management of capital is to safeguard its 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 Company may issue new shares or issue new shares or sell assets to reduce debts. 6. CASH AND CASH EQUIVALENTS The outstanding balances as at 31 December 2008 and 2007 are as follows :
(Unit : Baht) Cash on hand Undeposited collection from sales Cash cards Bank deposits-current accounts Bank deposits-saving accounts Total Saving deposits with banks bear interest at the floating rate of depository banks.
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
10,000 8,970,608
3,030 12,188,846
480,344
21,652,828
10,000 14,328,814
10,650 37,425,819
925,190
52,700,473
- 8,970,608 3,030
10,577,933 49,127
19,600,698
- 14,328,814
10,650 34,371,440
58,691
48,769,595
52 F i n a n c i a l S t a t e m e n t s
7. TRADE ACCOUNTS RECEIVABLE The aged balances of accounts receivable as at 31 December 2008 and 2007 are as follows :
(Unit : Baht)
Not yet due Past due Less than 3 months 3-6 months 6-12 months Over 12 months Total Less : Allowance for doubtful accounts Trade accounts receivable-net The Company regularly evaluates risk factor from the collection of receivables. The Company believes that the booked balance of allowance for doubtful accounts is appropriate. 8. INVENTORIES
(Unit : Baht) Inventories Goods in transit Less : Allowance for slow-moving and obsolete inventories Inventories-net During the year, the movements in allowance for slow-moving and obsolete inventories are as follows: Balance as at 1 January 2008 Add : Additional allowance during the year Less : Reversal of allowance for obsolete inventories Balance as at 31 December 2008
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
92,983,586
39,127,718 2,784,016 640,407
6,724,223 142,259,950 (6,853,939)
135,406,011
137,115,354
24,695,784 1,946,299 1,602,133 9,728,552
175,088,122 (7,854,962)
167,233,160
90,545,509
37,847,941 2,784,016 640,407
6,724,223 138,542,096 (6,853,939)
131,688,157
135,813,876
22,600,630 1,670,317 314,045
7,744,212 168,143,080
(7,854,962)
160,288,118
Ages of receivable
CONSOLIDATED AND SEPARATE F/S
2008
491,570,947 -
(13,405,192)
478,165,755
2007
611,698,762 93,299,501 (7,980,856)
697,017,407
7,980,856 5,424,336
- 13,405,192
(Unit : Baht)
53 F i n a n c i a l S t a t e m e n t s
9. ACCRUED INCOME
(Unit : Baht) Accrued income from sales and services Accrued subsidy income for goods Accrued promotion income Others Total Accrued subsidy income for goods and accrued promotion income are recognized after approval of suppliers. A portion of accrued income is for services provided to Government enterprise which collection period is longer because payment process takes some time for billing and delivery of documents. During the year 2008, the subsidiary company has joined meeting with the Vice President of the district debts restructuring department and the officers of the district debts management of Government Enterprise, together with other services providers, whereby such Government enterprise has fixed the criteria to settlement debts to service providers soonest. The Companyʼ s management does not expect any problem from such debts collection in the near future. 10. OTHER CURRENT ASSETS
(Unit : Baht) Others receivable Deferred expense Advance for inventory purchasing Other prepaid expenses Prepaid income tax and withholding tax receivable Others Total As at 31 December 2008, the Company has significant advance for inventory purchasing paid to supplier. This represents advance for the contracted manufacturing of goods for the Company.
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
36,656,539
32,841,381
53,539,073 1,759,097
124,796,090
37,649,941
34,818,542
16,384,317 2,231,559
91,084,359
14,162,348
32,841,381
53,539,073 1,759,097
102,301,899
15,680,336
34,818,542
16,384,317 5,731,498
72,614,693
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
7,862,033 3,620,000
28,300,557 7,907,214 3,563,617
6,282,535
57,535,956
4,975,199 3,620,000 2,027,148 1,585,214
-
7,003,020
19,210,581
7,862,033 3,620,000
28,300,557 7,583,940
-
5,404,201
52,770,731
4,975,199 3,620,000 2,027,148 934,408
-
6,635,961
18,192,716
As at 31 December 2008, the subsidiary company has prepaid income tax and withholding tax receivable after tax calculation amounting totalling Baht 1.14 million and Baht 2.42 million, respectively. 11. INVESTMENTS IN ACCOUNTS RECEIVABLE The investments in accounts receivable represent investments which a subsidiary acquired from bidding from credit service companies at discounted values for debt collection. Under the purchase contracts at the discounted values of receivables, the subsidiary company takes all the risks in the collection without recourse. The investments portfolio classified by group of debtors as at 31 December 2008 and 2007 are as follow :
(Unit : Baht) Accounts receivable-Hire purchases Accounts receivable-Personal loans Total During the fourth quarter, the subsidiary company changed estimated cash flows from collection of investments in account receivable from 3 years to 4 years in order to reflect the re-assessed collection period. The subsidiary companyʼ s management has considered the re-assessed period of collection based on the actual collection experience for each quarter comparing with the former estimates and found that the debt collection was more than estimation. The effect from such change in the estimate result of the Company to have more revenue of Baht of 3.65 million in the year 2008. During the year, the Company had movement in investments in accounts receivable as follow :
Balance as at 1 January 2008 Add : Purchase of investment Less : Portion decreased from cash collection, net of income during the year Balance as at 31 December 2008
54 F i n a n c i a l S t a t e m e n t s
CONSOLIDATED 2007 2008
9,169 86,481
95,650
3,161,844 68,138,763
71,300,607
9,507 34,917
44,424
3,739,648 34,292,172
38,031,820
No. of contracts Amount No. of contracts Amount
(Unit : Baht)
38,031,820 48,600,179
(15,331,392)
71,300,607
55 F i n a n c i a l S t a t e m e n t s
12. RESTRICTED DEPOSITS WITH FINANCIAL INSTITUTIONS As at 31 December 2008 and 2007, the Companyʼ s and its subsidiaryʼ s fixed deposits totalling Baht 262.2 million and Baht 276.9 million, respectively, (the Companyʼ s portions are Baht 253.6 million and Baht 275.1 million, respectively), have been placed with banks as collaterals for bank overdraft facilities and bank guarantees issued by banks on behalf of the Company and its subsidiary. These fixed deposits bear interest at rates of 1.75 to 3.75 percent per annum and 2.00 to 3.00 percent per annum, respectively. 13. INVESTMENT IN SUBSIDIARY COMPANY
(Unit : Baht) Subsidiary company JMT Network Services Co., Ltd. Total 14. BUILDING AND EQUIPMENT
(Unit : Baht)
Cost Building improvement Office furniture Office equipment Tools and equipments Vehicles Assets under installation Total Less : accumulated depreciation Building improvement Office furniture Office equipment Tools and equipment Vehicles Total Building and equipment-net
SEPARATE F/S Paid-up capital Cost Percentage of
shareholding Nature of business
2008 2007 2008 2007 2008 2007
Debt collection
40,000,000 40,000,000 99.99 99.99 39,999,300
39,999,300
39,999,300
39,999,300
CONSOLIDATED 2007 Increase Decrease 2008
18,980,000 116,495,294 112,172,892
2,759,259 31,714,389
- 282,121,834
9,021,999 78,440,929 78,592,859 2,722,208
21,864,146 190,642,141
91,479,693
- 6,030,716 7,408,940
- 10,550,000
650,277 24,639,933
1,898,000 12,871,962 16,457,062
19,703 5,461,148
36,707,875
- 8,758,009 5,293,841
3,200 13,017,193
- 27,072,243
- 6,883,276 4,872,396
3,199 8,503,238
20,262,109
18,980,000 113,768,001 114,287,991
2,756,059 29,247,196
650,277 279,689,524
10,919,999 84,429,615 90,177,525 2,738,712
18,822,056 207,087,907
72,601,617
56 F i n a n c i a l S t a t e m e n t s
(Unit : Baht) Cost Building improvement Office furniture Office equipment Tools and equipments Vehicles Assets under installation Total Less : accumulated depreciation Building improvement Office furniture Office equipment Tools and equipment Vehicles Total Building and equipment-net Depreciation for the years ended 31 December 2008 and 2007 of the Company and its subsidiary amounted to Baht 36.7 million and Baht 38.9 million, respectively, (the Companyʼ s portions are Baht 31.5 million and Baht 33.9 million, respectively). As at 31 December 2008 and 2007, a portion of the Companyʼ s and its subsidiaryʼ s equipment had been fully depreciated, but are remained in active use. The gross carrying amounts of such assets before accumulated depreciation are totalling Baht 107.3 million and Baht 96.8 million, respectively, (the Companyʼ s portions are Baht 101.6 million and Baht 92.6 million, respectively). 15. COMPUTER SOFTWARES
(Unit : Baht) Costs Less : Accumulated amortization Computer softwares-net Amortization
SEPARATE F/S 2007 Increase Decrease 2008
18,980,000 115,918,044 89,042,413 2,749,659
29,542,123 -
256,232,239
9,021,999 78,115,381 65,515,815 2,719,373
20,066,926 175,439,494
80,792,745
- 5,964,721 7,285,782
- 10,550,000
650,277 24,450,780
1,898,000 12,744,822 11,496,624
17,783 5,367,130
31,524,359
- 8,758,009 4,608,526
3,200 13,017,193
- 26,386,928
- 6,883,276 4,351,973
3,199 8,503,239
19,741,687
18,980,000 113,124,756 91,719,669 2,746,459
27,074,930 650,277
254,296,091
10,919,999 83,976,927 72,660,466 2,733,957
16,930,817 187,222,166
67,073,925
CONSOLIDATED F/S 2007 Increase Decrease 2008
47,285,027 (36,100,339) 11,184,688
6,311,165
2,438,965 (4,508,139)
2,659,100 2,381,712
47,064,892 (38,226,766)
8,838,126
4,508,139
57 F i n a n c i a l S t a t e m e n t s
(Unit : Baht) Costs Less : Accumulated amortization Computer softwares-net Amortization 16. COSTS OF LEASEHOLD RIGHTS AND PREPAID RENT
(Unit : Baht) Costs of leasehold rights Less : Accumulated amortization Costs of leasehold rights-net As at 31 December 2008 and 2007, the costs of leasehold rights pre-payments and the outstanding leasehold right consisted of :
(Unit : Baht)
SEPARATE F/S 2007 Increase Decrease 2008
34,419,210 (31,194,932)
3,224,278
3,744,720
418,064 (1,796,126)
2,659,100 2,381,712
32,178,174 (30,609,346)
1,568,828
1,796,126
CONSOLIDATED AND SEPARATE F/S 2007 Increase Decrease 2008
76,170,577 (15,813,500) 60,357,077
- (6,661,784) (6,661,784)
- - -
76,170,577 (22,475,284) 53,695,293
Outstanding Costs of leasehold Right Prepayments after amortisation
Costs of leasehold Rights and Prepaid Rent
Leasehold and Rental Amortisation per month
Periods
2007 2008 25 years 23 years 26 years 18 years 21 years 25 years 6 years
12 years 20 years
Total
15,240 17,174 45,641 34,722 17,857 83,500
188,197 12,633 8,125
4,571,843 4,740,000
14,240,000 7,500,000 4,500,000
25,050,000 15,526,174 1,819,125 1,949,900
2,518,647 3,334,092 9,628,012 4,380,421 2,854,860
22,044,000 5,589,239 1,591,112 1,754,910
53,695,293
3,449,650 3,540,179
10,175,704 4,787,661 3,068,299
23,046,000 8,694,474 1,742,705 1,852,405
60,357,077
Leasehold rights of a commercial buildings have been assigned to the bank as collaterals for long › term loans referred to in Note 19 to the financial statements.
58 F i n a n c i a l S t a t e m e n t s
17. BANK OVERDRAFT AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS
(Unit : Baht) Bank overdraft Promissory notes from financial institutions Total As at 31 December 2008 and 2007, promissory notes payable bear interest at the rates of 4.95 to 5.65 percent and 4.50 to 5.20 percent per annum, respectively. As at 31 December 2008 and 2007, the Company has credit facilities covering liabilities under trust receipts, letters of credit, forward exchange contracts and other credits totalling Baht 1,463.7 million and Baht 1,424.9 million, respectively, with interest rates ranging from 4.95 to 5.65 percent and 4.50 to 5.20 percent per annum, respectively. As at 31 December 2008 and 2007, the Company and subsidiary have bank overdraft credit lines totalling Baht 21.0 million (the Company’ s portion are Baht 19.0 million). Short - term loans from financial institutions are collateralized mostly by the pledges of fixed deposits of the Company and a subsidiary, and the personal guarantees of the two directors, with a condition to withdraw the guarantees of the two directors after the listing in the Stock Exchange of Thailand. During the years 2008 and 2007, the interest rates on bank overdraft are 4.75 to 7.0 percent per annum and 4.25 to 7.125 percent per annum, respectively. 18. LIABILITIES UNDER FINANCIAL LEASE AND HIRE-PURCHASE AGREEMENTS
(Unit : Baht) Liabilities under financial lease and hire-Purchase agreements Due within one year Due over 1 year but not later than 5 years Total Less : Deferred interest Less : Current portion Balance due after one year The Company entered into financial lease and hire-purchase agreements for the leases of vehicles for use in its operations, with repayment schedules of 36 to 60 months.
SEPARATE F/S CONSOLIDATED 2008 2007 2008 2007
313,948 777,967,939
778,281,887
- 781,994,888
781,994,888
313,948 750,467,939
750,781,887
- 781,994,888
781,994,888
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
4,710,552 3,594,682
8,305,234 (440,120) 7,865,114
(4,401,836) 3,463,278
3,850,428 1,629,396
5,479,824 (410,954) 5,068,870
(3,449,770) 1,619,100
4,710,552 3,594,682
8,305,234 (440,120) 7,865,114
(4,401,836) 3,463,278
3,850,428 1,629,396
5,479,824 (410,954) 5,068,870
(3,449,770) 1,619,100
59 F i n a n c i a l S t a t e m e n t s
19. LONG-TERM LOANS As at 31 December 2008 and 2007, the Company and subsidiary have long - term loans as follow :
(Unit : Baht) Loans carrying interest at fixed deposit rate + 2.5 per annum, with principal repayment of Baht 131,000 per month (exclusive of interest), from February 2006 to February 2018 Loans carrying interest at fixed deposit rate + 2.5 per annum, with principal repayment of Baht 140,000 per month (exclusive of interest) from February 2006 to February 2009 Total Less : Current portion Long-term loans-net of current portion The long-term loans are collateralized by the mortgages of the leasehold rights on a commercial buildings and the personal guarantees of the Companyʼ s directors. During the year, the Company paid interest on long - term loans at the interest rates of 4.75-5.25 percent per annum. The movements in long-term loans as at 31 December 2008 are as follows :
(Unit : Baht)
Balance as at 1 January 2008 Add : Addition during the year Less : Repayment during the year Balance as at 31 December 2008
CONSOLIDATED AND SEPARATE F/S
2008 2007 12,950,000
-
12,950,000 (1,572,000) 11,378,000
14,522,000
989,000
15,511,000 (2,552,000) 12,959,000
15,511,000 -
(2,561,000) 12,950,000
60 F i n a n c i a l S t a t e m e n t s
20. ACCRUED EXPENSES
(Unit : Baht) Accrued bonuses Accrued other services expenses Accrued rental and utilities expenses Accrued property tax Accrued sale promotion expenses Payables for equipment and supplies Accrued commission Others Total 21. OTHER NON-CURRENT LIABILITIES
(Unit : Baht) Tenant rental deposits Deposits from employees Others Total Tenant deposits are deposits for possible damages. The Company will repay for those deposits upon the termination of the rent. 22. SHARE CAPITAL At the Extraordinary Shareholder Meeting No. 3/2007 held on 27 September 2007, the shareholders of subsidiary passed a resolution to increase its authorized share capital from Baht 20 million (divided into 200,000 common share at Baht 100 par value) to Baht 40 million (divided into 400,000 common share at Baht 100 par value). The subsidiary company received the full amount from its shareholders and registered the increase in share capital with the Department of Business Development on 28 September 2007. At the Extraordinary Shareholder Meeting No. 2/2007 held on 29 November 2007, the shareholders pass a resolution to increase its authorized share capital from Baht 225 million (divided into 225 million common shares at Baht 1 par value) to Baht 300 million (divided into 300 million common shares at Baht 1 par value) and distribute as follows :
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
230,000 4,209,317 7,450,888 3,341,403 1,692,995 3,668,408
4,400,900 6,146,382
31,140,293
7,689,320 4,762,087 5,339,850 2,167,512 2,022,063 1,615,358
3,612,546 8,058,370
35,267,106
230,000 1,719,098 7,450,889 3,341,403 1,692,995 1,696,055
3,000,000 5,887,821
25,018,261
5,905,473 2,176,581 5,339,850 2,167,512 2,022,063 1,375,582
2,288,365 7,768,409
29,043,835
CONSOLIDATED AND SEPARATE F/S
2008 2007 26,236,266
188,240 8,000
26,432,506
28,910,001 202,730
6,500 29,119,231
61 F i n a n c i a l S t a t e m e n t s
1) 60 million common shares are to be offered to the public. 2) 7.5 million common shares are to be offered to directors, management and employees. 3) 7.5 million common shares are to be offered to patronage. As at 31 December 2008, the Company does not offered such shares for distribute to other groups. 23. STATUTORY RESERVE Under the Public Companies Act B.E. 1992, the Company is required to set aside as a statutory reserve at least 5 percent of its net income, after deduction of deficit (if any), until the reserve reaches 10 percent of the registered capital. The reserve is not distributable for dividends. During the year 2008, the Companyʼ s management proposed appropriation for additional statutory reserve of Baht 7,500,000 to bring the reserve to 10 percent of the authorised share capital. The Company, therefore, is not required to make more appropriation of retained earnings to statutory reserve in the future. 24. APPROPRIATION OF NET INCOME The Company At the Meeting of the Company Shareholders No.1/2007 on 26 April 2007, the shareholders passed a resolution to appropriate cash dividend from net income after deduction of tax for the year 2006 at Baht 0.09 per share for 225,000,000 shares for a total amount of Baht 20.25 million At the Meeting of the Companyʼ s Committee No. 4/2007 on 31 August 2007, the shareholders passed a resolution to appropriate cash dividend from the year 2007 net income at Baht 0.09 per share for 225,000,000 shares for a total amount of Baht 20.25 million. At the Meeting of the Company Shareholders No.1/2008 on 17 April 2008, the shareholders passed a resolution to appropriate cash dividend from net income after deduction of tax for the year 2007 at Baht 0.17 per share for 225,000,000 shares for a total amount of Baht 38.25 million At the Meeting of the Companyʼ s Committee No. 4/2008 on 7 August 2008, the shareholders passed a resolution to appropriate cash dividend from the year 2008 net income at Baht 0.13 per share for 225,000,000 shares for a total amount of Baht 29.25 million. Subsidiary Company At the Meeting of the Subsidiary Companyʼ s Shareholders on 26 April 2007, the shareholders passed a resolution to appropriate cash dividend from net income after deduction of tax for the year 2006 in a total amount of Baht 10 million. At the Meeting of the Subsidiary Companyʼ s Committee No. 3/2007 on 31 August 2007, the shareholders passed a resolution to appropriate cash dividend from the first half year 2007
62 F i n a n c i a l S t a t e m e n t s
net income at Baht 169 per share for 100,000 shares for a total amount of Baht 16.9 million and to make additional appropriation as statutory reserve during the period of Baht 2.0 million. At the Meeting of the Subsidiary Companyʼ s Committee No. 4/2007 on 18 December 2007, the shareholders passed a resolution to appropriate cash dividend from the year 2007 net income at Baht 8.75 per share for 400,000 shares for a total amount of Baht 3.5 million. At the Meeting of the Subsidiary Companyʼ s Committee No. 3/2008 on 23 May 2008, the shareholders passed a resolution to appropriate cash dividend from net income after deduction of tax from the first quarter of 2008 at Baht 8 per share for 400,000 shares for a total amount of Baht 3.2 million. 25. INCOME TAX
(Unit : Million Baht) Net income Income tax Net income before income tax Add Items not yet allowable as expenses under Revenue Code Less Dividend income from subsidiary company and tax exempted income Net taxable income Income tax for the year 30 percent Prepaid income tax and withholding tax receivable Accrued income tax As at 31 December 2008, the subsidiary company prepaid income tax and withholding tax receivable was more than income tax of Baht 3.56 million as presented in part of “Other current assets”. 26. DIRECTOR REMUNERATION Director remuneration represents the benefits paid to the Companyʼ s directors in accordance with Section 90 of the Public Companies Act, exclusive of salaries and related benefits payable to executive directors. The director remuneration has been approved at the Company Annual General Meeting.
SEPARATE F/S CONSOLIDATED
2008 2007 2008 2007
97.11 45.74
142.85 11.53
(1.90)
152.48 45.74
(28.76)
16.98
62.36 39.70
102.06 32.88
(2.61)
132.33 39.70
(25.11)
14.59
98.64 45.53
144.17 11.46
(3.87)
151.76 45.53
(28.55)
16.98
79.61 26.89
106.50 16.15
(33.00)
89.65 26.89
(14.91)
11.98
For the years ended 31 December
63 F i n a n c i a l S t a t e m e n t s
27. PROVIDENT FUND On 30 April 2002, the Company and subsidiary and their employees jointly established a provident fund plan as approved by the Ministry of Finance in accordance with the Provident Fund Act B.E. 2530. The fund is contributed to by employees and the Company and its subsidiaries at the rate of 3 percent of salaries. The provident fund will be paid to the employee upon termination of employment in accordance with the rules of the fund. The fund is managed by TISCO Asset Management Company Limited. During the years ended 31 December 2008 and 2007, the Company and subsidiary contributed a total of Baht 1.4 million and Baht 0.9 million (the Companyʼ s portion : Baht 1.3 million and Baht 0.8 million), respectively, to the fund. 28. RELATED PARTY TRANSACTIONS During the year, the Company had significant business transactions with its related persons and parties (related by way of common shareholding and/or management). Such transactions have been concluded on the terms and bases determined by the Company and related parties, the bases of which may be different from the bases used for transactions with unrelated parties. Significant transactions with related parties are summarised below :
(Unit : Million Baht) Sales Rental income Sale promotion income Debt collection income Messenger services income Management fee income Dividend income Office and land rental Directors remuneration During the year 2008, the Company gave the waiver for the collection of management fee for 3 months to the subsidiary company totalling Baht 1.04 million. As at 31 December 2008 and 2007, the outstanding balances of the related party transactions are separately shown in the balance sheet as follows :
Transactions with related parties
Pricing policy CONSOLIDATED SEPARATE F/S
2008 2007 2008 2007
Market price Market price As agreed by suppliers Market price Market price Baht 0.35 million per month Based on net profit Market rate As approved at Shareholder Meeting
- 0.2 9.6
17.6 1.9 -
- 0.8 3.4
- 1.6 9.3
45.1 2.5 -
- 1.0 3.4
- 0.2 9.6 - -
3.1
3.2 0.8 3.4
0.2 1.6 9.3 - -
4.2
30.4 1.0 3.4
64 F i n a n c i a l S t a t e m e n t s
(Unit : Baht) Trade account receivable-related company AEON Thanasin PCL Past due less than 30 days Total Other payable-subsidiary company JMT Network Services Company Limited Total Rental deposit from related company AEON Thanasin PCL Total 29. COMMITMENTS As at 31 December 2008, the Company and its subsidiary had outstanding commitments as follows : Commitments with related parties 29.1 The Company has agreements to provide management, accounting, tax filing and debt collection services for JMT Network Services Company Limited (subsidiary). The subsidiary can renew the agreement on an annual basis, with advance written notice at least 3 months before the expiration of the agreements. The contract period is for 1 year with service charge of Baht 348,000 per month. 29.2 The Company entered into a building space rental contract with a director for a godown rental with a monthly rental of Baht 70,000 for 3 years started 1 July 2007. Commitments with third parties 29.3 The Company has outstanding commitments in respect of the proposed listing of its shares for trading on the Stock Exchange of Thailand (SET) by way of an initial public offering (IPO). Under the terms of the agreement, the Company is committed to pay the following service fees : 29.3.1 An advisory fee of Baht 1 million by installments. This will be initially paid at Baht 0.2 million as first installment upon the signing of the agreement on 25 July 2007 with subsequent 5 monthly installments of Baht 0.13 million. The remaining amount of Baht 0.15 million is payable after obtaining approval for its listing of shares from the Securities and Exchange Commission.
CONSOLIDATED SEPARATE F/S 2008 2007 2008 2007
9,079,667
9,079,667
-
-
804,528 804,528
12,417,635
12,417,635
-
-
804,528 804,528
7,813,019
7,813,019
11,296
11,296
804,528 804,528
9,491,789
9,491,789
23,100
23,100
804,528 804,528
65 F i n a n c i a l S t a t e m e n t s
29.3.2 An underwriting and guarantee fees at 3.0 percent of the funds obtained from the listing, or Baht 3.0 million, whichever is higher. The Company accounted for such fees as deferred expense. This will be deducted from cash proceeds from sales of share capital on the initial public offering after listing in the Stock Exchange of Thailand. 29.3.3 The Company has outstanding commitments of approximately Baht 54.6 million arising from outstanding bank guarantees issued by banks on behalf of the Company in respect of certain performance bonds as required in the ordinary courses of businesses of the Company. 29.3.4 The Company has outstanding commitments in respect of service agreements which are payable in the future totaling approximately Baht 2.5 million. 29.3.5 The Company and its subsidiary have commitments under long-term lease and service agreements, mainly relating to the rental of space for retail shops, office buildings and warehouses, with minimum future rental and service fees payable under the agreements (not include the changes that may incur upon renewal) as follows :
(Unit : Million Baht) Not over 1 year Over 1 year but not over 5 years Over 5 years Total 30. FINANCIAL INSTRUMENTS Credit risk As the Companyʼ s customers are represented by individual persons and retailers from trading business, the Company provides credit terms for certain customers with stable financial status. Whereas most of customers of subsidiary company are represented by financial institutions and companies with stable financial status. The Company and subsidiary company, therefore do not expect the significant loss from collection of credit granting. Interest rate risk The interest rate risk is the risk that future movements in market interest rates will affect the results of the Companyʼ s and its subsidiaryʼ s operations and their cash flows. The Companyʼ s and its subsidiaryʼ s exposure to interest rate risk relates primarily to their deposits with financial institutions, bank overdrafts and loans as follows :
Year CONSOLIDATED SEPARATE F/S 140.7 222.9 216.4 580.0
137.6 221.9 216.4 575.9
66 F i n a n c i a l S t a t e m e n t s
(Unit : Million Baht) Financial assets/ liabilities Cash and cash equivalents Restricted deposits with financial institutions Bank overdrafts and short-term loans from financial institutions
(Unit : Million Baht) Financial assets/ liabilities Cash and cash equivalents Restricted deposits with financial institutions Bank overdrafts and short-term loans from financial institutions
(Unit : Million Baht) Financial assets/ liabilities Cash and cash equivalents Restricted deposits with financial institutions Bank overdraft and short-term loans from financial institutions
CONSOLIDATED As at 31 December 2008
Floating rate Fixed rate Non-interest Total
- -
778
-
262
-
21 -
-
21
262
778
CONSOLIDATED As at 31 December 2007
Floating rate Fixed rate Non-interest Total
1 -
782
-
277
-
52 -
-
53
277
782
SEPARATE F/S As at 31 December 2008
Floating rate Fixed rate Non-interest Total
- -
751
-
254
-
20 -
-
20
254
751
67 F i n a n c i a l S t a t e m e n t s
(Unit : Million Baht) Financial assets/ liabilities Cash and cash equivalents Restricted deposits with financial institutions Bank overdraft and short-term loans from financial institutions Financial instruments as of 31 December 2008 and 2007 with fixed interest rates, and the period of time from the balance sheet date to their maturity dates are as follows :
(Unit : Million Baht)
Financial assets/ liabilities Restricted deposits with financial institutions Bank overdrafts and short-term loans from financial institutions
(Unit : Million Baht) Financial assets/ liabilities Restricted deposits with financial institutions Bank overdrafts and short-term loans from financial institutions
SEPARATE F/S As at 31 December 2007
Floating rate Fixed rate Non-interest Total
- -
782
-
275
-
49 -
-
49
275
782
CONSOLIDATED As at 31 December 2008 Interest Rate
At call 1-6 months
6-12 months
Total
-
-
262
778
-
-
262
778
1.75%-3.75%
4.75%-7.00%
CONSOLIDATED As at 31 December 2007 Interest Rate
At call 1-6 months
6-12 months
Total
-
-
277
782
-
-
277
782
2.00%-3.00%
4.25%-7.125%
68 F i n a n c i a l S t a t e m e n t s
(Unit : Million Baht) Financial assets/ liabilities Restricted deposits with financial institutions Bank overdrafts and short-term loans from financial institutions
(Unit : Million Baht) Financial assets/ liabilities Restricted deposits with financial institutions Bank overdrafts and short-term loans from financial institutions The Company and subsidiary do not use any derivative financial instruments to hedge risks. The details of long-term loans are presented in Note 19 to the financial statements. Since such long-term loans are immaterial, the Company does not use any financial instrument to hedge interest rate risk. Foreign currency risk As at 31 December 2008, the Company has forward exchange contracts to hedge its exchange risk for future payment for the purchase of inventories as follow : Liabilities Liabilities in foreign currency As at 31 December 2008 and 2007, the Company has unhedged assets and liabilities in foreign currency as follows :
SEPARATE F/S As at 31 December 2008 Interest Rate
At call 1-6 months
6-12 months
Total
-
-
254
751
-
-
254
751
1.75%-3.75%
4.75%-7.00%
SEPARATE F/S As at 31 December 2007 Interest Rate
At call 1-6 months
6-12 months
Total
-
-
275
782
-
-
275
782
2.00%-3.00%
4.25%-7.125%
CONSOLIDATED AND SEPARATE F/S Amount
(Thousand USD) Exchange rate
(Baht) Due
131
33.87-35.76
March 2009
69 F i n a n c i a l S t a t e m e n t s
(Unit : Thousand US Dollar) Assets in foreign currency Liabilities in foreign currency Fair values of financial instruments A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an armʼ s length transaction. The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique, depending on the nature of the instrument. The following methods and assumptions are used to estimate the fair value of each class of financial instruments. Cash and cash equivalent-the carrying values approximate their fair values due to the relatively short-term maturity of these financial instruments. Long-term loans-the carrying values are not materially different from the fair value since the loans carry interest at the rates close to market rates.
2008 2007
218 -
615 3,318
70 F i n a n c i a l S t a t e m e n t s
31. EXPENSE BY NATURE
( Unit : Baht ) Salary and other employee compensation expenses Depreciation Amortization Provision for obsolete inventories Promotion expense Rental expenses Changes in finished goods
SEPARATE F/S CONSOLIDATED 2008 2007 2008 2007
193,416,792
36,707,874
8,062,443
5,424,335
44,386,424
192,860,991
(213,427,317)
188,163,439
38,938,185
8,971,262
4,810,936
31,864,823
176,829,257
129,453,859
150,348,399
31,524,359
5,352,676
5,424,335
44,386,424
188,151,027
(213,427,317)
138,863,320
33,940,435
6,404,817
4,810,936
31,864,823
170,403,405
129,453,859
71 F i n a n c i a l S t a t e m e n t s
32. FINANCIAL INFORMATION BY SEGMENT The Companyʼ s segmental financial information, divided into the trading business, debt collection business, office rental business and others as presented in the consolidated financial statements for the years ended 31 December 2008 and 2007, are as follows :
(Unit : Million Baht) Revenues Cost of sales Operating profit Selling and administrative expenses Interest expense Income tax Net income for the year Trade accounts receivable-net Property and equipment-net Computer softwares-net Leasehold rights and prepaid rent-net Other assets Total Assets
CONSOLIDATED 2008
Total Elimination Other Rental business
Debt collection business
Trading business
5,055
(4,664)
391
129
54
2
42
960
1,187
112
(87)
25
4
5
7
-
112
128
128
(92)
36
3
13
-
12
29
57
247
-
247
-
-
-
-
40
40
(7)
-
(7)
-
-
-
-
(40)
(40)
5,535
(4,843)
692
(513)
(36)
(46)
97
136
72
9
54
1,101
1,372
72 F i n a n c i a l S t a t e m e n t s
(Unit : Million Baht) Revenues Cost of sales Operating profit Selling and administrative expenses Interest expense Income tax Net income for the year Trade accounts receivable-net Property and equipment-net Computer softwares-net Leasehold rights and prepaid rent-net Other assets Total Assets
CONSOLIDATED 2007
Total Elimination Other Rental business
Debt collection business
Trading business
5,415
(5,074)
341
157
62
3
43
1,178
1,443
164
(106)
58
7
11
8
-
71
97
128
(78)
50
3
19
-
16
26
64
227
-
227
-
-
-
-
44
44
(36)
-
(36)
-
-
-
-
(44)
(44)
5,898
(5,258)
640
(490)
(43)
(40)
67
167
92
11
59
1,275
1,604
73 F i n a n c i a l S t a t e m e n t s
33. PRESENTATION Certain accounts in the financial statements for the year ended 31 December 2007 have been reclassified to conform with the current year classification, with no effect on previously reported net income or shareholdersʼ equity. 34. SUBSEQUENT EVENT At the meeting of the Companyʼ s board of directors No. 3/2008 on 23 February 2009, the board passed a resolution to appropriate cash dividends from net income after deduction of tax for the year 2008 at Baht 0.17 for 225,000,000 shares for a total amount of Baht 38.25 million. 35. APPROVAL OF FINANCIAL STATEMENTS These financial statements have been approved by the Companyʼ s Board of Directors on 23 February 2009.
C S R A c t i v i t i e s As part of the society, the Company believe that corporate social responsibility (CSR) activities are the crucial part of the business operation. Therefore, the Company has regularly supports and participates in various CSR activities that benefit societies. During 2008, the Company has launched following CSR activities: 1. Promote “Call Donʼ t Drive” campaign with the National Police Department. 2. Donate blankets to hill tribe villagers at Huay Rai Children Development Center at Huay Rai Village, Moo 6, Tambol Mae Rai, Amphur Mae Jan, Chiang Rai. 3. Donate scholarship and necessities to 400 orphans and unfortunate children at Voradith Church, Amphur Pakmok, Angthong Province. 4. Support shirt selling campaign to raise fund to help Blind Foundation, Kon Kaen Province. 5. Support classic CD project to publicize His Majesty the Kingʼ s genius in music talent during His Majestyʼ s birthday in 2008. 6. Support “Time is value for Life” watch campaign in honor of His Majesty the King, and donate profit from watches sold to Red Cross Foundation. The Company believe that the determination to operate business and activities in consistent with CSR policy will help the Company sustainably grow together community and society. This policy will develop youth to grow into future of the country. The Company is determined to develop quality of life for Thai youth and society.
74 C S R A c t i v i t i e s
75 C S R A c t i v i t i e s
Her Royal Highness Princess Sirindhorn graciously received stationary and blackboards from JAY MART to donate to Border Patrol Police Schools nationwide.
76 C S R A c t i v i t i e s
Support “Time is value for Life” watch in honor of His Majesty the King, and donate money received from selling watch to Red Cross Foundation.
Support classic CD to publicize His Majesty the Kingʼ s genius in music talent during His Majestyʼ s birthday in 2008.
Promote “Call Donʼ t Drive” campaign with the Nation Police Department.
77 C S R A c t i v i t i e s
Donate scholarship and necessities to 400 orphans and unfortunate children at Voradith Church, Amphur Pakmok, Angthong Province.
Hold luncheon for 400 orphans and unfortunate children at
Voradith Church, Amphur Pakmok, Angthong Province.
Raise fund for staffs who were affected from a major flood.