MD & A

Operation results of the Company and subsidiaries

The Group generated loss in 2016 and 2015 in amount of THB 85.31 million and THB 103.06 million respectively.

Total revenues were recorded at Baht 491.72 million, main revenue in amount of Baht 353.22 million from film production and film rights distribution, Baht 85.71 million from selling VCDs and DVDs, Baht 4.69 million from selling pocket book, Baht 0.48 million from management fee, and Baht 41.11 million from advertising, representing 71.83%, 17.43%, 0.95%, 0.10% and 8.36% of total revenues respectively. Compared with 2015, the total revenues decreased about 10.95%.

Total expenses became lower about 11.69% from Baht 653.38 million in 2015 to Baht 577.03 million in 2016 because Costs of production and services decreased from Baht 407.83 million to Bath 278.33 million or 31.75% and selling and administrative expenses increased from Baht 234.42 million to Baht 295.20 million or 25.93%.

Revenues

The Group’s total revenues in 2016 decreased about Baht 58.60 million or 10.65% from a year earlier, which could be broken down by line of business in the below table:

(Unit: Million Baht)
Business Line Amount Increase/(Decrease) Ratio : Total Revenue
2016 2015 Amount % 2016 2015
VCD-DVD 85.71 283.88 (198.17) (69.81) 17.43% 51.58%
Film rights 151.66 154.92 (3.26) (2.1) 30.84% 28.15%
Film production 201.56 75.04 126.52 168.6 40.99% 13.64%
Sale pocket book 4.69 8.18 (3.49) (42.67) 0.95% 1.49%
Management fee 0.48 0.2 0.28 140 0.10% 0.04%
Advertising 41.11 19.21 21.9 114 8.36% 3.49%
Other Revenue 6.51 8.89 (2.38) (26.77) 1.32% 1.62%
Total Revenue 491.72 550.32 (58.6) (10.65) 100.00% 100.00%

VCD and DVD distribution business recorded decrease from 2015 of Baht 198.17 million or 69.81% in revenues due to in 2016 the Group has produced and selled VCDs and DVDs less than 2015

Film rights business has decreased in revenues by Baht 3.26 million or 2.10% because the movies released in theaters in 2016 could generate revenue less than in 2015.

Film production business; the revenues increased by Baht 126.52 million or 168.60% because the year 2016, films made high revenue comparing by 2015 especially Thai Movie “Jazz 4G” generated the highest box office at Bath 152.80 million.

Advertising revenues in 2016 recorded increase of Baht 21.90 million or 114.00% because in the year 2016, we had more advertising areas in international and Thai films comparing by 2015.

Costs of Production and Services and Gross Profit Margin

The Group’s costs of production and services decreased from 2015 about Baht 129.50 million or 31.75% because of the decrease of production and distribution in home entertainment sector which connected with lower revenue.

Selling and Administrative Expenses

Selling and administrative expenses became higher by Baht 60.78 million or 25.93% from Baht 234.42 million in 2015 to Baht 295.20 million in 2016 caused by increasing costs of administration of the Group. Mainly due to the reserve for doubtful accounts in Home Entertainment business sector was higher than 2015.

Financial Result of the Company and Group

Asset

As of December 31, 2016, the Group had total assets of Baht 959.34 million, downed from December 31, 2015 of Baht 960.31 million or about 0.97%. The assets were composed of the following items:

(Unit: Million Baht)
Assets As of December 31 Increase (decrease) % of total asset
2016 2015 Amount % 2016 2015
Cash and cash equivalent 133.23 89.72 43.51 48.50 13.89 9.34
Accounts receivable - net 272.03 311.43 (39.40) (12.65) 28.36 32.43
Short term loan to related company 8.00 - 8.00 100.00 0.83 0.00
Inventory-net 4.97 60.42 (55.45) (91.77) 0.52 6.29
Film on Production 221.09 138.43 82.66 59.71 23.05 14.42
Other current assets 51.50 63.48 (11.98) (18.87) 5.37 6.61
Investments in joint venture-net 36.16 49.84 (13.68) (27.45) 3.77 5.19
Building and equipment - net 15.90 18.11 (2.21) (12.20) 1.66 1.89
Goodwill - net 139.14 139.14 - - 14.50 14.49
Computer program-net 0.58 1.71 (1.13) (66.08) 0.06 0.18
Film rights - net 65.62 71.93 (6.31) (8.77) 6.84 7.49
Other non - current assets 11.12 16.10 (4.98) (30.93) 1.16 1.68
 Total Asset 959.34 960.31 (0.97) (0.10) 100.00 100.00

Cash and cash equivalents increased from December 31, 2015 due to efficient management policy. Moreover, in 2016, the Company liquidity’s improved, and partly due to the sale and collection of trade receivables faster which affect the cash and cash equivalents increased

Trade accounts receivable and other receivables – net decreased Baht 39.40 million or 12.65% from 2015 caused by VCD and DVD business.

Inventories which the most from VCD and DVD distribution’s sector, decreased from December 31, 2015 in amount of Baht 55.45 million or 91.77% caused by decreasing manufacturing VCDs DVDs and donation to governmental agencies.

Films on production ncreased in amount of Baht 82.66 million or 59.71% from December 31, 2015 due to the plan of continuous production Thai movies for theatrical release which reflected to higher expense of Film on production.

Investments in joint venture-net decreased from December 31, 2015 by Baht 13.68 million or 27.45% because the Company paid for less of the value of ordinary shares in Transformation Films Co.,Ltd. and Major Kantana Broadcasting Co.,Ltd. paid interim dividend of Baht18.00 million in 2016.

Film rights – net came down from December 31, 2015 by Baht 6.31 million or 8.77%. because the Company has carefully planned and managed film rights which making the value of the film rights decrease by comparing the previous year.

Liabilities and Equity of Shareholders

(Unit : Million Baht)
Liabilities and Equity of Shareholders December 31 Increase (decrease) % of liabilities per Equity of Shareholders
2016 2015 Amount % 2016 2015
Short-Term Loan and OD from Financial Institutes 106.93 9.50 97.43 1025.03 11.15 0.99
Account Payable and other payable 146.16 147.86 (1.70) (1.15) 15.24 15.40
Other Current Liabilities 8.45 22.18 (13.73) (61.90) 0.88 2.31
Other Non-Current Liabilities 5.05 4.14 0.91 21.98 0.53 0.43
Total Liabilities 266.59 183.68 82.91 45.14 27.79 19.13
Equity of Shareholders 692.75 776.63 (83.88) (10.80) 72.21 80.87
Total Liabilities and Equity of Shareholders 959.34 960.31 (0.97) (0.10) 100.00 100.00

Overdrafts and short-term loans from financial institutions are funding sources to meet the Group’s working capital, the outstanding balance as of December 31, 2016 increased from 2015 by Baht 97.43 million or 1,025.03% due in 2016 the Company use more loan from financial bank for producing Thai Films and Series for support Thai and Foreign Films market.

Accounts payable and other payable decreased from December 31, 2015 by Baht 1.70 million or 1.15% for normal transaction of business.

Other Current Liabilities downed from December 31, 2015 by Baht 13.73 million or 61.90%. The decrease mainly due to the estimated returned products of the previous year.

Shareholders' equity as of year-end 2016 was at Baht 692.75 million as presented in the consolidated financial statement, decreased from Baht 776.63 million as of end-2015 resulting from revenues of the company generated loss in 2016.

Analysis of Financial Ratios:

December 31, 2016 December 31, 2015 December 31, 2014
Current Ratio 2.65 3.70 2.52
Receivable Turnover 1.73 1.73 2.07
Average Collection Period 211 211 176
Total Assets Turnover 0.51 0.50 0.69
Debt to Equity Ratio 0.38 0.24 0.38

Efficiency Ratios

Total Assets Turnover; the ratio of assets turnover in 2016 was slightly faster than 2015 because there was more income from the operation result in 2016.

Receivable Turnover and Average Collection Period; The Group typically grants a credit term of around 90-180 days. Its receivable turnover for the current year is the same rate. Nevertheless, the VCD and DVD distribution business grants a collection period to the individual customers in accordance with the usual business norms.