Information Memorandum Workpoint Entertainment Public Company Limited (WORK) Head Office: 50/54-56 Moo 8, Phaholyothin Road, Bangkhen, Bangkok Tel. 0-2970-2970 Fax. 0-2970-2681 Website http://www.workpoint.co.th/ Listing Date As at September 29, 2004 ( Trading Commencement on September 29, 2004) Listing Securities 200 million shares of Common Stock at Par value of 1 Baht per share Total Value of 200 million Baht Offering Price Offering to public investor 37,000,000 shares at 15 baht per share Offering to company's directors, management and employees 1,000,000 shares at 15 baht per share Offering to company's directors, management and employees 2,000,000 shares at 5 baht per share Secondary Market Main Market (SET) Type of Business and Nature of Operation The operation can divide into 2 main businesses which are TV Program Production and Publishing which is continuing and supporting business, details as follows; 1. TV Program Production The company has to rent airtime from TV station to produce TV program and sell advertising. Revenues from advertising can divide into two-category sponsorship and in-program advertising. By now, the company has TV programs that can categorize into 5 types for the total amount of 14 programs that broadcast through 3 TV stations which are channel 3, channel 5 and channel 9, details as follows: 1.1 Quiz shows which are "Fan Pan Tae", "Todsagun Game" and "Todsagun Kid Game" 1.2 Game Shows which are "Watee Thong", "Game Kae Jon", "Ching Roi Ching Lan" and "Game Jarachon" 1.3 Sit Coms which are "Raberd Terdterng" and "Raberd Terdterng Holiday" 1.4 Series which are "Kokkoon the Egg Family" and "Tee Lunga Tarfun" 1.5 Varieties which are "Chaibordin show", "Oh! My god" and "The Judgement" 2. Publishing Business Publishing business processing by Workpoint Publishing Company Limited has main objective to present facts and entertainment through any types of publishing such as "Kae Jon" magazine, "Todsagun Game" pocket book and "Aroy Ngen Lan" Environment Impacts -None- Summary of Material Contacts As of April 30, 2004 the Group has 8 contracts regarding land, office buildings, and Studio rental. Those last from 1 to 2 years. And 13 contracts with TV Station regarding airtime rental. Those last approximately 1 year. Feasibility Study -None- Technical and Management Assistance -None- Future Projects New Studio and Office Building The company has a plan to build the new studio and office building for supporting and expanding business on the company own land. Budget for building and interior decorate approximately 300 million Baht and to be completed within 2 years or in 2006. This project will help the company to gather every process in TV program production in one place so this will help the company to have more efficiency with high quality and expand the capacity. Besides, this project will help the company to be fully TV production house and competitiveness. Related Transactions In 2003 and 1H2004, the company has related transactions with related companies and connected person which are normal business operations, details as follow; The related transactions in Year 2003 1. Person/Company : Mr.Panya Nirunkul Relationship : Major Shareholder and Director Shareholding (%) : 46.25% (Before IPO) Transaction - Creditor, loan to the company for expanding business line and investment at interest rate of 12-15 per year. The company has already paid back for the full amount. Transaction Amount : 50.00 million Baht - The company brought the common shares of Workpoint Publishing Co.,Ltd from major shareholder at book value price, with goodwill value of 0.62 million baht. Transaction Amount : 0.50 million Baht - In 2003, the company hired Mr. Panya Nirunkul to be a master of ceremony (M.C.) of 4 TV programs, which are "Ching Roi Ching Lan", "Fan Pan Tae", "Game Kae Jon" and "Todsagun Game" from the total 10 TV programs. Transaction Amount : The master of ceremony fee included in management's compensation. 2. Person/Company : Mr.Prapas Cholsaranon Relationship : Major Shareholder and Director Shareholding (%) : 46.25% (Before IPO) Transaction - Creditor, loan to the company for expanding business line and investment at interest rate of 12-15 per year. The company has already paid back for the full amount. Transaction Amount : 50.00 million Baht - The company brought the common shares of Workpoint Publishing Co.,Ltd from major shareholder at book value price, with goodwill value of 0.62 million baht. Transaction Amount : 0.50 million Baht 3. Person/Company : Barakao Development Co., Ltd. Relationship : The company is held by the cousin of Mr. Propas Cholsaranon(Major shareholder and director) Shareholding (%): -None- Transaction - The company hired Barakao Development to produce the stage background including installment and remove the stage background in production process. The company hired a lot of firms to produce the stage background and Barakao Development also produced the stage background to other companies. Transaction Amount : 21.61 million Baht The related transactions in 6 months of Year 2004 1. Person/Company : Mr.Panya Nirunkul Relationship : Major Shareholder and Director Shareholding (%) : 46.25% (Before IPO) Transaction - For 6 months of 2004, company hired Mr. Panya Nirunkul to be a master of ceremony (M.C.) of 4 TV programs, which are "Ching Roi Ching Lan", "Fan Pan Tae", "Todsagun Game" and "Todsagun Kid Game" from the total 14 TV programs. Transaction Amount : The master of ceremony fee included in management's compensation. 2. Person/Company : Barakao Development Co., Ltd. Relationship : The company is held by the cousin of Mr. Propas Cholsaranon(Major shareholder and director) Shareholding (%) : -None- Transaction - The company hired Barakao Development to produce the stage background including installment and remove the stage background in production process. The company hired a lot of firms to produce the stage background and Barakao Development also produced the stage background to other companies. Transaction Amount : 6.79 million Baht Necessity and Reasonableness of the Related Transactions Board of Directors and Audit Committee provided an opinion on the related transactions as follows : 1. Loan from Directors This transaction was reasonable and to maximize the company benefit because of the limitation to reach the source of fund. The total amount of loan already paid and this type of transaction will not occur in the future. 2. Buy common shares of Workpoint Publishing from major shareholders This transaction was reasonable and to maximize the company benefit. Besides, to construct the group structure to be clear, transparent and protect the conflict of interest that might happen and also expand the related business. The transaction amount was reasonable because Workpoint Publishing just began its operation. 3. The company hired Mr. Panya Nirunkul to be a master of ceremony(M.C.) of 4 TV programs This transaction was reasonable and to maximize the company benefit because Mr. Panya Nirunkul has exceptional professional skill and long experience in this field. Every TV programs that Mr. Panya Nirunkul was appointed to be a master of ceremony had impressive operating performance. The compensation was reasonable and comparable to the market and the process to approve the compensation has to pass by the committee same as other M.C.. 4. The transaction with Barakao Development Co., Ltd. This transaction was reasonable and to maximize the company benefit by fact that the company hires a lot of firms to produce the stage background and also has the process of selection supplier by using quality of work and pricing to acquire the high quality work with reasonable price. Contingencies and Commitments From Footnotes of Financial Statement As of June 30, 2004 1) Liabilities that might occur from bank guarantees for the total amount of 13.25 million Baht collateral by the company' fixed deposit (The obligation of Airtime rent contract) 2) The Company has obligation of land development for the total amount of 4.81 million Baht (The new studio project) Risk Factors 1. Renewal contract with TV Station The company as a TV program producer has to rent airtime from TV station. By doing this,normally, both parties have to sign a six months to one year contract and renew again when its ended. Regarding to this, the company bears the risk of inability to renew or maintain the same condition of the contract which finally adversely effect its airtime and performance. However, The consideration either airtime rental or renewals of the contract with TV stations depend on the concept of TV program, popularity and payment ability. For these conditions, the company always develops TV program to be famous and complies with the term and condition in the contract and maintains kindly relationship with TV station. 2. Declining in TV Program or changing in consumer behavior Nowadays, the popularity of each TV program tends to effect revenue of the TV program producer. Most of agencies and product or service owners also considers the TV program popularity as an important criteria for making decision to invest advertising with such TV program so that the declining in TV program may imply to the decrease of company revenue. However, this risk factor can be dealt because the company has several TV programs and each of them is diversified. Besides, the company usually verifies the quality of all company TV programs before broadcasting and follows up their popularity evaluation versus competitors. 3. Dependable on Master of Ceremony (M.C.) and Production Team Work Production resources and creative team are the key factors of company achievement . Furthermore, most of the company programs are quiz show or game show, therefore, having the professional M.C. is the key function to the program accomplishment and also being the company program strength to compete in the T.V. business. If the company do not have all of this production and master ceremony key person, it may effect to the production quality and operation of the company. Therefore, the company pays more attention to regularly develop the employee's skill and promotes working as a team. All of the shows are presenting their own theme and style which are not attach with each M.C.. Moreover, the company is sharing the M.C. duty to various person including regularly introduce newcomer M.C to join the program. 4. The expansion of others advertising media and new advertising media Expanding of advertising via T.V. media industry directly affect the T.V. program production revenue. Agency and product owner have many options to select the variety of advertising media because of the increasing of advertising media channel including the expansion of non T.V media business which decreasing the advertising via T.V. media market share to the other type of media. However, the growth of the advertising via T.V. media revenue is regularly increasing since between the period of year 2000 to 2004 it still having highest market share (average 60% of total market value) when comparing to the others media type. Moreover, the company plans to expanding to the others business by investing in Workpoint Publishing Company in December 2003 to increasing revenue and lower business risk. Lawsuit -None- No. of Employees 200 persons as of June 30, 2004 Company Background - Mr. Panya Nirunkul and Mr. Prapas Cholsaranon had established Workpoint Entertainment Co., Ltd. In September 11, 1989 with the registered capital of 2 million baht. The purpose was for producing entertainment programs through TV and other media. - The company has produced several high quality entertainment TV programs for over 15 years. "Watee Thong", the first TV program of the company, was very well-known which led to the beginning of company's TV program production business. Other TV programs the company had been produced were "Koo Torahod", "La Korn Hang Cheewit", "Gammathep Pid Kue", "Bann Hang Kwam Ruk", "Shomrom Kon Hua Rook", "7-7-49", "Fantasy Mee Hang", "Krai Pid Yok Mur Kuen", "Suk Gun Ther Rao", and "Tao Kae Yai". By now, there are 14 TV programs broadcast through TV channel 3, channel 5, and channel 9; "Watee Thong", "Ching Roi Ching Lann", "Raberd Terdterng", "Raberd Terdterng Holiday", "Game Kae Jon", "Game Jarachon", "Fan Pan Tae", "Todsagun Game", "Kokkoon the Egg Family", "Chaibordin Show", "Todsagun Kid Game", "Tee Lunga Tarfun", "Oh! My God", and "The Judgement". - Due to the company's policy that main objective to create and produce own TV programs as the company's intelligence property and the several high quality TV programs, the company has been accepted to be the leading TV program producer of Thailand. Also, the company has been designated as "King of Game Show" because of the successful in various outstanding Game Show and Quiz Show TV programs. Consequently, many awards are given to the company which are "Mekalhar Awards", "Golden TV Awards", "National Board of Youth Awards", "Top Awards from TV Pool Magazine", "Vote Award from radio program", "Star Entertainment Awards from entertainment reporter", for instance. Furthermore, "Asian Television Awards" for the year 1999 to 2002 and two awards for the year 2003 (the winner and the runner-up of "Asian Television Awards" from "Fan Pan Tae" and "Todsagun Game" respectively) are also belong to the company. - On December 2003, the company invested 100% to Workpoint Publishing Co., Ltd. and published the first monthly magazine "Kae Jon" in order to expand the business to publishing business and to proceed through more media including to increase the company revenue from its own intelligence property. Investment in Subsidiary/Associated/Related Companies As of June 30, 2004 Unit: Million Baht Name Type of Business Paid-up Capital % of Shareholding Investment Cost 1. WorkPoint Publishing Co., Ltd. Publishing Magazine 4.0 99.99 4.0 and Pocket Book Change in Capital in the last 3 years Unit: Million Baht Date Capital Increase After the Increase Note (Decrease) (Decrease) December 25, 2003 158 160 To support business expansion February 26, 2004 40 200 New studio and office project and support business expansion Accounting Period January 1-December 31 Auditor Mrs. Kesaree Narongdej Registration No. 76 Office of A.M.T. & Associates Auditing Registrar Thailand Securities Depository Co., Ltd. Financial Advisor National Securities Public Company Limited Dividend Policy Approximately not less than 50 % of net profit after taxes if there is no important reinvestment policy and no effect in business operation of the company and the group. B.O.I. Certificates -None- No. of Shareholders As of September 24, 2004 No. of Shareholders No. of Shares % of paid-up capital 1. Strategic shareholders 1.1 Government, state-owned enterprises or public - - - sector agencies 1.2 Directors, managers, and executive 15 150,615,000 75.31 management including related persons and associated persons 1.3 Shareholders who have a holding of above 5% - - - including related persons 1.4 Shareholders who enter into agreement not to - - - sell their stocks within a specific period 2. Non-strategic shareholders hold > 1 trading unit 3,822 49,385,000 24.69 3. Non-strategic shareholders hold < 1 trading unit - - - Total Shareholders 3,837 200,000,000 100.00 Major Shareholders As of September 24, 2004 Name No. of Shares % of Paid-up Capital 1. Cholsaranon's Family 75,050,000 37.53 2. Nirunkul's Family 74,740,000 37.37 Total 149,790,000 74.90 Foreign Shareholders As of September 24, 2004 No. of foreign shareholders 22 Total no. of shares held 73,300 or 0.04% of paid-up capitalNote: The company has a limitation on the percentage of equity shares held by foreign shareholders stated in the article of association number nine that " The share can be freely transferred, except the transfer that brings the total shareholding of foreigners greater than 20% of paid-up capital." Board of Directors Name Position Date in Position 1. Mr. Phanya Nirunkul Chairman of the Board January 27, 2004 2. Mr. Prapas Cholsaranon Deputy Chairman of the Board January 27, 2004 3. Mr. Nuwat Chanbumrung Director January 27, 2004 4. Mr. Phanich Sodsee Director January 27, 2004 5. Ms. Malee Panpochara Director January 27, 2004 6. Ms. Benjamas Chanpum Director January 27, 2004 7. Mr. Kanit Vattanapradit Director January 27, 2004 8. Pol.Col.Pratchai Jaichansukit Director January 27, 2004 9. Mr. Pansingh Khamasundara Director January 27, 2004 Audit Committee The board of directors meeting No. 1/2004 held on March 2, 2004 passed a resolution appointing the audit committee. Members of the audit committee 1. Chairman of the Audit Committee Mr. Kanit Vattanapradit 2. Member Pol.Col.Pratchai Jaichansukit 3. Member Mr. Pansingh Khamasundara Secretary Mr. Pongkarn Juntranggur Scope of duties and responsibilities 1. Review the Company's financial statement to be accurate, reliable and sufficient disclosure. 2. Review the efficiency and effectiveness of the Company's internal control and internal audit. 3. Review the Company's practice to follow up the rules and regulations of the Stock Exchange of Thailand and other related laws. 4. Review and purpose the appointment and remuneration for auditors. 5. Consider the disclosure of the company's information to be reliable and sufficient regarding to the related transaction and conflict of interest. 6. Prepare and sign in the audit committee report and disclose in the Company's annual report. 7. Follow up the duties assigned by the Board of Directors and agreed by the audit committee. Terms for holding office* 1. Chairman 3 years 2. Member 3 years Listing Conditions -None- Silent Period Shareholders, who own common shares before the company's public offering, holding 160,000,000 shares or 100% of paid up capital prior to IPO and directors, management and employees ,who bought the share at 5 baht per share, holding totally 2,000,000 shares certify to the Stock Exchange of Thailand that their shares will not be sold for (more)