Download Notes to Financial Statement

ASIASOFT CORPORATION PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
AS AT DECEMBER 31, 2008 AND 2007
1.
General Information
Asiasoft Corporation Public Co., Ltd was registered under the Civil and Commercial Code on September 20,
2001 and become a public company limited on May 17, 2007 with registration Number 0107550000050. The
Company is located at 9/283-5, 28th floor, UM Tower Building, Ramkhamhaeng Road, Suanluang, Bangkok.
The Company and subsidiaries’ principal business is being the distributor and providing game services both for
online and offline games in Thailand, Singapore, Malaysia and Vietnam.
2.
Basis for Presentation of the Financial Statements and Consolidated Financial Statements
The financial statements are prepared in accordance with Thai Accounting Standards (“TAS”) including related
interpretations and guidelines promulgated by the Federation of Accounting Professions (“FAP”) and with
generally accepted accounting principles in Thailand.
They are prepared on the historical cost basis, except as disclosed in respective accounting policies.
As required by Thai law and regulatory requirements, the Company’s financial statements have been prepared in
the Thai language. They have been translated into English for the convenience of the reader.
The preparation of financial statements in conformity with TAS requires management to make judgments,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances. Therefore, actual result may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the
period of the revision and future periods, if the revision affects both current and future periods.
The consolidated financial statements consist of accounting transactions of the Company and its subsidiaries
after eliminating significant intercompany transactions and balances. The Company's shareholding in
subsidiaries as at December 31, 2008 and 2007, are as follows:
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Business Type
ASIASOFT INTERNATIONAL CO., LTD.
Investment Arm
PLAYPAL CO., LTD.
Computer Software Development
PLAYPARK CO., LTD.
Entertainment Services on Website
A GAME CO., LTD.
Online Game and PC Game Developer
A CAPITAL CO.,LTD
Investment Arm
ASK SOFTWARE PTE. LTD.
Distributor of Online Software
The Subsidary held by A CAPITAL CO., LTD.
FUNDBOX CO.,LTD
Online Game Service
The Subsidaries held by ASIASOFT INTERNATIONAL CO., LTD.
ASIASOFT ONLINE PTE LTD.
Online Game Services in Singapore and Malaysia
ASIASOFT ONLINE SDN BHD.
Distributor in Malaysia
Holdings of interest
2007
2008
99.99
75.50
99.99
99.99
99.99
80.00
99.99
50.99
99.99
-
99.99
-
100
100
100
100
The financial statements of the subsidiary companies incorporated overseas are translated into Thai Baht at the
closing average exchange rate for assets and liabilities and at the monthly average exchange rate applying
during the year for revenues and expenses. The differences have been shown under the caption of “Translation
adjustment” in shareholders’ equity.
Adoption of new or revised Thai Accounting Standards (TAS)
In 2008, the Federation of Accounting Professions has issued Notifications on new or revised Accounting
Standards as follows:A) Thai Accounting Standards which are effective for the current year.
TAS 25 (revised 2007) Cash Flow Statements
TAS 29 (revised 2007) Leases
TAS 31 (revised 2007) Inventories
TAS 33 (revised 2007) Borrowing costs
TAS 35 (revised 2007) Presentation of Financial Statements
TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors
TAS 41 (revised 2007) Interim Financial Reporting
TAS 43 (revised 2007) Business Combinations
TAS 49 (revised 2007) Construction Contracts
TAS 51
Intangible Assets
11
B) Thai Accounting Standards which will be applied to the financial statements for the accounting period
commencing on or after January 1, 2009.
TAS 36 (revised 2007) Impairment of Assets
TAS 54 (revised 2007) Non-Current Asset Held for Sale and Discontinued Operations
The management has assessed that the adoption of these new and revised TAS does not have any material
impact on the consolidated financial statements and separate financial statements.
3.
Significant Accounting Policies
Revenues and Expenses Recognition
Revenues and expenses are recognized on an accrual basis.
Sales are recognized upon the delivery of goods to the customer and after deduction of discounts.
Revenues from airtime cards are recognized when customers utilized the airtime cards.
Revenues from licensing games services to game shops are recognized by the straight-line method over the
license period of 1 year.
Revenues from advertisement on subsidiary’s website are recognized by the period of agreement with the
advertiser.
Cash and Cash Equivalents
Cash and cash equivalents consisted of cash on hand and deposits in financial institutions and highly liquid
short-term investment with an original maturity of three months or less and are not subject to restrictions.
Short-term Investments
Short-term investments consisted of time deposit, treasury bill with a maturity period over 3 months not over
than 12 months, and Open-ended Fund.
Investments are investments in Open-ended Fund, which are classified in the balance sheets as trading securities,
are carried at their fair values. The fair value is calculated by net asset value of the fund as at the balance sheet
date. Gain or loss on valuation is realized in the statement of income.
Trade Receivables
Trade receivables are stated at cost net of allowance for doubtful accounts. Allowance for doubtful accounts is
an estimate of those amounts which may prove to be uncollectible based on a review of the current status of the
existing receivables.
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Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined on the first-in, first-out
(FIFO) method. Net realizable value is the estimate of the selling price in the ordinary course of business, less
the costs of completion and selling expenses. A provision is made, where necessary, for obsolete, slow-moving,
and defective inventories.
Investments in Subsidiaries
The Company recorded the investment in the subsidiary companies in the separate financial statements using the
cost method, and adjusted impairment, if any.
Other Long–term Investments
Other long–term investments are stated at cost net allowance for impairment in value.
Equipment and Depreciations
Equipment is stated at cost less accumulated depreciation. Depreciation is calculated by the straight-line method
over their estimated useful lives of 3 to 5 years.
Depreciations for Computing the Company’s Corporate Income Tax
Computer and office equipment accessories, the Company acquired before year 2005, were depreciated at the
acquisition date of 40% of the cost value and the remaining balance was depreciated by the straight-line method
over the estimated useful life of the assets of 3 years.
Computer and accessories acquired since 2005 are depreciated by the straight-line method over their estimated
useful lives of 3 to 5 years.
Goodwill
Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value of the Group’s
share of the identifiable net assets acquired.
Goodwill was presented at cost and adjusted impairment, if any.
Deferred License Fees
Deferred license fees are stated at cost less accumulated amortization. Amortization is calculated by the
straight-line method over the period expecting benefit from the agreement. The Company will revise the book
value each year and adjusted impairment, if any.
13
Games under Development
Games under development consisted of the salary of technical staff relating to developing games and direct cost
under the developing process. The Company has the policy to amortize by the straight-line method over their
estimated useful period when the developing process was completed. The Company will revise the book value
each year and adjusted impairment, if any.
Deferred Income Tax
The Company adopted the deferred income tax method of accounting under which corporate income tax include
the tax effects of all revenues and expenses into determination of net income for the year, regardless of when
they are recognized for tax purposes. The tax effects of timing differences are reported as deferred income tax
(assets or liabilities) shown in the balance sheet.
Treasury stock
Treasury stock is stated at cost and presented as a reduction from shareholders’ equity. Gains on disposal of
treasury stock are determined by reference to its carrying amount and are taken to premium on treasury stock,
losses on disposal of treasury stock are determined by reference to its carrying amount and are taken to premium
on treasury stock and retained earnings, consecutively.
Transactions in Foreign Currencies
Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates.
Monetary assets and liabilities denominated in foreign currencies outstanding at the balance sheet dates are
translated into Baht at the exchange rates ruling on the balance sheet dates. Gain or losses on exchange rates are
recognized as income or expenses for the year.
Basic Earnings per Share and Diluted Earnings per Share
Basic earnings per share are computed by dividing the net profit for the year by the weighted average number of
issued common shares during the year as if the dilution of par value taking place since January 1, 2007.
Diluted earnings per share are calculated by dividing the net profit for the year by the weighted average number
of common shares during the year as if the dilution of par value taking place since January 1, 2007, assuming all
warrants of 16 million shares were exercised.
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4.
Related Parties Transactions
The Company had significant business transactions with the related parties, which are related through
shareholdings or by certain common shareholders or directors. The financial statements reflect the effect of
these transactions on the basis determined by the Company and the parties concerned.
Significant related parties’ transactions for the years ended December 31, 2008 and 2007 can be summarized as
follows:
Unit: Baht
Consolidated financial statements
Separate financial statements
2008
2007
2008
2007
Transactions with related parties
Subsidiaries
Sales
Revenue on license fees and service
Dividend income
Interest income
Sales of fixed assets
License fees
Related Company
CTY TNHH CHAU A MEM
Revenue on license fees and service
-
20,401,734
-
13,595,683
6,679,800
2,268,425
29,000,000
999,655
10,964,361
1,356,387
204,000,000
2,098,825
6,543
20,401,734
13,595,683
The Company had the above transactions with related parties using cost plus profit as agreed between the
parties concerned.
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Outstanding balance as at December 31, 2008 and 2007 can be summarized as follows:
Unit: Baht
Consolidated financial statements
Separate financial statements
2008
2007
2008
2007
Trade receivables
Subsidiary
Related Company
CTY TNHH CHAU A MEM
Total accounts receivable
Accrued dividend income
Subsidiary
Accounts receivable and loans to related parties
Subsidiary
Related companies
KINGSOFT CORPORATION LIMITED
CTY TNHH CHAU A MEM
Total accounts receivable and loans to related parties
13,413,116
13,413,116
9,075,647
9,075,647
-
-
-
-
4,843
451,989
456,832
604,982
604,982
645,924
1,356,387
13,413,116
14,059,040
9,075,647
10,432,034
-
64,000,000
18,062,666
21,800,000
451,989
18,514,655
604,982
22,404,982
Other Current Asset (Accured Interest)
Subsidiary
-
-
49,549
731,822
Long-term loans to related parties
Subsidiary (Interest rate of 5% p.a.)
Total long-term loans to related parties
-
-
8,000,000
8,000,000
8,000,000
8,000,000
Account payables
Subsidiary
-
-
2,572,773
Other payables
Subsidiary
-
-
325,962
7,085,250
During the year 2008, two subsidiaries have promissory notes for loans amounting to Baht 9.9 million with the
interest rate of 5% per annum which will be due on call.
As at December 31, 2008, a subsidiary had repayment all loan to related parties.
On July 5, 2007, two subsidiaries have promissory notes for loans amounting to Baht 21.8 million with the
interest rate of 5% per annum which will be due on call.
16
During the years, the Company had movements on the accounting balances with related parties as follows:Unit: Baht
Consolidated financial statements
Separate financial statements
2008
2007
2008
2007
Accounts receivable and loans to related parties
Subsidiaries
Balance at beginning of the years
21,800,000
2,986,054
Increase during the years
25,822,402
22,302,694
(29,559,736)
(3,488,748)
Decrease during the years
Balance at end of the years
18,062,666
21,800,000
Related parties
CTY TNHH CHAU A MEM
Balance at beginning of the years
604,982
1,671,689
604,982
1,671,689
Increase during the years
618,082
6,744,059
618,082
6,744,059
(771,075)
(7,810,766)
(771,075)
(7,810,766)
Decrease during the years
Balance at end of the years
451,989
604,982
451,989
604,982
KINGSOFT CORPORATION LIMITED
Balance at beginning of the years
Increase during the years
4,843
Balance at end of the years
4,843
Directors
17,052,000
17,052,000
Balance at beginning of the years
(17,052,000)
(17,052,000)
Decrease during the years
Balance at end of the years
456,832
604,982
18,514,655
22,404,982
Total receivable and loan to related parties
Long-term loans to related parties
Subsidiary
Balance at beginning of the years
Increase during the years
Balance at end of the years
Director
Balance at beginning of the years
Decrease during the years
Balance at end of the years
Total long-term loans to related parties
-
-
8,000,000
8,000,000
4,000,000
4,000,000
8,000,000
-
900,000
(900,000)
-
8,000,000
8,000,000
17
Unit:Thousand Baht
Separate financial statements
2008
2007
Company
Investments in subsidiaries
Asiasoft International Co., Ltd.
Playpal Co., Ltd.
Playpark Co., Ltd.
A GAME CO., LTD.
A CAPITAL CO., LTD.
ASK SOFTWARE PTE. LTD.
Subsidiary held by A CAPITAL Co., Ltd.
FUNDBOX CO.,. LTD.
Relationships
Common management
and shareholdings
Common management
and shareholdings
Common management
and shareholdings
Common management
and shareholdings
Common management
and shareholdings
Common management
and shareholdings
Common management
and shareholdings
Subsidiaries held by Asiasoft International Co., Ltd.
Asiasoft Online Pte Ltd.
Common management
and shareholdings
Asiasoft Online Sbn Bhd.
Common management
and shareholdings
Total investments in the subsidiary companies
Paid-up Owner Cost Paid-up Owner Cost
capital ship % method capital ship % method
100,000
99.99 100,000 50,000 99.99 50,000
10,000
75.50
7,550
5,000 50.99
2,550
5,000
99.99
5,000
5,000 99.99
5,000
5,000
99.99
5,000
-
-
-
500
99.99
500
-
-
-
23
80.00
18
-
-
-
40,000
99.99
-
-
-
-
48,019 100.00
-
48,019 100.00
-
40,239 100.00
-
19,861 100.00
-
118,068
57,550
Less Allowance for impairment of invesments in the subsidiary companies
(7,550)
-
Total investments in the subsidiary companies - net
110,518
57,550
Relationships
Related companies
CTY TNHH CHAU A MEM
N-LOG SOFT, INC.
Games online sublicensee in Vietnam
Company holds 7.5% of its share capital
18
In September 2008, the Company invested in the additional common shares in Asiasoft International Co., Ltd.
in the amount of Baht 20 million (200,000 shares at Baht 100 per share) for the 99.99% interest in the registered
capital. In March 2008, the Company invested in the additional common shares in Asiasoft International Co.,
Ltd. in the amount of Baht 30 million (300,000 shares at Baht 100 per share) for the 99.99% interest in the
registered capited.
In October 2008, the Company invested in the additional common shares in Play Pall Co., Ltd. in the amount of
Baht 5 million (50,000 shares at Baht 100 per share) resulting in the Company holding 75.50% interest.
In February 2008, the Company invested in the ordinary shares of A GAME CO., LTD, which was
incorporated with the Ministry of Commerce on February 8, 2008, totaling 10,000 shares at Baht 100 par value,
resulting in the Company holding 99.99 % interest. In June 2008, the Company invested in the additional
common shares in A GAME CO., LTD, in the amount of Baht 4 million (40,000 shares at Baht 100 per share)
for the 99.99% interest in the registered capital.
In August 2008, the Company invested in the ordinary shares of A CAPITAL CO., LTD, which was
incorporated with the Ministry of Commerce on August 13, 2008, totaling 20,000 shares at Baht 100 par value
(25% paid-up), for a total amount of Baht 0.50 million, resulting in the Company holding 99.99 % interest.
In January 2008, the Company invested in the ordinary shares (80%) of ASK SOFTWARE PTE. LTD.,
incorporated and operated in Singapore, for 800 shares, at a price of SGD 1 per share (equivalent to Baht 0.02
million).
In August 2008, Asiasoft International Co., Ltd., a subsidiary company, invested in the increased shares (100%)
of Asiasoft Online Sdn Bhd, by issuing new common shares of 2,000,000 shares, respectively, at MYR 1 par
value. Total investment is MYR 4 million (equivalent to Baht 40.24 million).
In August 2008, A Capital Co.,Ltd., a subsidiary company, acquired all ordinary shares of Funbox Co.,Ltd., in
the amount of Baht 400,000 equal to 399,998 shares at Baht 1 per share (Par value of Baht 100 per share). This
incurred the excess of cost over the book value as at August 31, 2008 of the subsidiary company according to
the unaudited and unreviewed financial statements of Baht 2.49 million.
19
5.
Cash and Cash Equivalent
Cash and cash deposits at financial institutions as at December 31, consisted of:-
Cash
Cash deposits at banks (Baht)
Cash deposits at banks (Foreign currencies)
Treasury bill with an original maturity of 3 months
Cash and Cash Equivalents
6.
Unit: Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
205,615
105,188
135,685
99,188
104,232,396
51,892,678
76,520,592
48,873,276
51,049,294 128,025,613
50,000,000
50,000,000
205,487,305 180,023,479 126,656,277
48,972,464
Short - term Investments
Short - term investments as at December 31, consisted of:Unit: Baht
Consolidated financial statements Separate financial statements
Term
2008
2007
2008
2007
Time Deposits
4-12 Months 161,228,293
161,228,293
Open mutual fund
293,348,290 118,244,249 278,340,958 118,244,249
Treasury bill and bank
3-5 Months 250,000,000
250,000,000
Total Short - term Investments
704,576,583 118,244,249 689,569,251 118,244,249
The Company has policy to hold these short-term investments for trading and present the investments at fair
value.
20
7.
Trade Receivables - net
Trade receivables as at December 31, consisted of:Unit: Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
Trade receivables – related companies
Not yet due
Past due
Less than 3 months
Over 3 months but not over 6 months
Over 6 Months but not over 12 months
Total
Others trade receivables
Not yet due
Past due
Less than 3 months
Over 3 months but not over 6 months
Over 12 months
Total
Total trade receivables
Less Allowance for doubtful accounts
Total trade receivables - net
8.
1,149,234
3,019,690
1,762,228
4,376,077
7,406,893
3,339,480
1,517,509
13,413,116
6,055,957
9,075,647
7,433,805
3,345,498
1,517,509
14,059,040
6,055,957
10,432,034
193,572,774
221,531,958
130,511,411
133,794,528
28,297,395
6,130
84,774
221,961,073
235,374,189
(84,774)
235,289,415
3,913,830
773
225,446,561
234,522,208
234,522,208
27,965,435
158,476,846
172,535,886
172,535,886
3,913,830
773
137,709,131
148,141,165
148,141,165
Inventories - net
Inventories as at December 31 , consisted of:-
Raw materials
Finished goods
Total
Less Provision for obsolete stock
Inventories - net
Unit: Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
437,524
550,024
437,524
550,024
18,545,614
13,880,528
9,703,242
6,696,803
18,983,138
14,430,552
10,140,766
7,246,827
(3,139,052)
(1,735,353)
(2,874,519)
(1,735,352)
15,844,086
12,695,199
7,266,247
5,511,475
21
9.
Deferred Income Tax Assets - net
Deferred income tax assets as at December 31 , consisted of:Unit: Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
Deferred income tax assets assets
Allowance for doubtful accounts
Provision for obsolete stock
Inter-company profit on inventories
Allowance for impoinment of prepaid license fee
Allowance for impairment of invesments
Allowance for impairment of intangibles assets
Deferred income from airtime cards and license fees
License cost relating to deferred income
Taxable expenses in difference period
Tax loss carried forward
Total deferred income tax assets
25,432
941,716
3,251,872
2,392,920
5,412,000
1,935,356
36,556,088
(9,369,608)
2,392,462
17,175,275
60,713,513
520,606
1,251,586
4,500,000
2,361,908
35,027,390
(11,447,067)
2,537,575
34,751,998
862,356
2,392,920
7,677,000
1,636,716
36,411,932
(9,330,603)
1,260,903
40,911,224
520,606
4,500,000
1,636,716
35,027,391
(11,447,067)
2,127,749
32,365,395
(7,481,874)
2,071,398
(5,410,476)
55,303,037
(40,011)
(9,296,897)
1,813,150
(7,523,758)
27,228,240
(1,254,947)
(1,254,947)
39,656,277
(3,785,962)
(3,785,962)
28,579,433
Deferred income tax liabilities
Taxable expenses in difference period
Difference from accumulated depreciation of equipment
Difference on tax rate
Total deferred income tax liabilities
Deferred income tax assets - net
Corporate income tax
The Company calculated the income tax for the years ended December 31, 2008 and 2007 at the rate of 30%.
The subsidiary in Singapore calculated the income tax for the years ended December 31, 2008 and 2007 at the
rate of 18%.
The subsidiary in Malaysia calculated the income tax for the years ended December 31, 2008 and 2007 at the
rate of 26% and 27%, respectively.
A subsidiary in Thailand calculated the income tax for the years ended December 31, 2008 and 2007 at the
progressive rates of 15% to 25%.
22
10.
Long - term Investment - net
Long-term investments as at December 31, consisted of:Paid-up
Holding
Company
Capital
%
1,638
N-LOG SOFT, INC.
Million Won
7.50%
Less allowance for impairment of investments
Long-term investments - net
Unit: Thousands Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
18,040
(18,040)
-
18,040
(15,000)
3,040
18,040
(18,040)
-
18,040
(15,000)
3,040
In January 2007, the Company acquired ordinary shares of N - LOG SOFT INC CO., LTD. which registered
and operated in Korea for 24,570 shares of USD 5.43 par value per share (calculated by USD 1: Won 920) at
the price of USD 20.35 per share for a total acquisition cost of USD 500,000 (equivalent to Baht 18.04 million),
resulting in the Company holding 7.50 % interest of the registered capital.
11.
Equipment – net
Equipment as at December 31, 2008 consisted of:-
Unit: Baht
Consolidated financial statements
As at
New subsidiary's Movement during the year
January 1, 2008 brought forward Increase
Decrease
Cost
Leasehold improvements
Office equipment
Office furniture
Vehicles
Total
Accumulated Depreciation
Leasehold improvements
Office equipment
Office furniture
Vehicles
Total
Equipment - net
As at
December 31, 2008
18,198,547
194,650,478
13,483,142
23,361,397
249,693,564
225,366
7,494,638
2,173,353
9,893,357
15,452,442
57,630,178
1,570,941
1,730,710
76,384,271
(1,174,275)
(2,690,365)
(166,040)
(4,030,680)
32,702,080
257,084,929
17,061,396
25,092,107
331,940,512
6,136,975
112,828,972
6,026,789
5,688,620
130,681,356
119,012,208
115,413
2,497,844
1,536,574
4,149,831
9,635,095
52,012,093
3,264,036
3,731,311
68,642,535
(444,365)
(2,740,386)
(136,500)
(3,321,251)
15,443,118
164,598,523
10,690,899
9,419,931
200,152,471
131,788,041
23
Depreciation for the years ended December 31, 2008 and 2007, are Baht 68.64 million and Baht 48.75 million,
respectively, and are included in the consolidated statement of income.
As at December 31, 2008 and 2007, the Company and subsidiaries’ equipment amounting to Baht 65.76 million
and Baht 22.29 million, respectively, were fully depreciated but are still in use.
As at
January 1, 2008
Cost
Leasehold improvements
Office equipment
Office furniture
Vehicles
Total
Accumulated Depreciation
Leasehold improvements
Office equipment
Office furniture
Vehicles
Total
Equipment - net
Unit: Baht
Separate financial statements
Movement during the year
Increase
Decrease
As at
December 31, 2008
5,014,274
151,384,827
8,883,760
13,242,391
178,525,252
1,259,174
21,295,437
1,317,604
1,715,658
25,587,873
1,746,315
51,239
1,797,554
6,273,448
170,933,949
10,150,125
14,958,049
202,315,571
2,777,245
93,161,831
4,820,701
5,146,349
105,906,126
72,619,126
1,061,985
28,845,174
1,683,021
2,684,664
34,274,844
1,737,271
41,310.00
1,778,581
3,839,230
120,269,734
6,503,722
7,789,703
138,402,389
63,913,182
Depreciation for the years ended December 2008 and 2007, are Baht 34.27 million and Baht 32.00 million
respectively, and are included in the separate statement of income.
As at December 31, 2008 and 2007, the Company’s equipment amounting to Baht 50.99 million and Baht 21.14
million, respectively, were fully depreciated but are still in use.
24
12.
Intangible Asset - net
Intangible asset as at December 31, 2008 consisted of:Unit: Baht
Consolidated financial statements
New subsidiary's Movement during the year
As at
Decrease
Increase
January 1, 2008 brought forward
Cost
Deferred license fees
Developed games
Games under development
Goodwill
Total
Accumulated amortization
License fees
Developed games
Total
Allowance for impairment
Deferred license fees
Developed games
Total
Intangible assets – net
As at
December 31, 2008
174,399,927
6,226,964
1,516,526
182,143,417
6,855,000
6,855,000
202,474,175
3,835,440
2,318,914
2,487,930
211,116,459
49,768,300
(3,835,440)
45,932,860
333,960,802
10,062,404
2,487,930
346,511,136
(58,906,463)
(489,879)
(59,396,342)
(2,713,829)
(2,713,829)
(83,269,295) (49,768,300)
(2,305,517)
(85,574,812) (49,768,300)
(95,121,287)
(2,795,396)
(97,916,683)
947,862
947,862
(5,455,720)
(995,467)
(6,451,187)
242,143,266
(5,455,720)
(895,000)
(6,350,720)
116,396,355
Deferred license fees
Less Amortization of license fees
Allowance for impairment
Total deferred license fees - net
As at
January 1, 2008
125,943,555
(42,147,895)
(5,455,720)
78,339,940
-
(1,048,329)
(1,048,329)
Unit: Baht
Separate financial statements
Movement during the year
As at
Increase
Decrease
December 31, 2008
171,179,979
49,768,300
247,355,234
(70,348,434)
(49,768,300)
(62,728,029)
(5,455,720)
179,171,485
25
13.
Liabilities under Financial Lease Agreements - net
Liabilities under financial lease agreements as at December 31, consisted of:Unit: Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
Due within 1 year
Minimum payments
Interest charges
Present value of minimum payment
13,092,472
(868,308)
12,224,164
8,123,628
(718,063)
7,405,565
1,804,725
(240,307)
1,564,418
1,603,993
(279,061)
1,324,932
Due over 1 year but not exceed 5 years
Minimum payments
Interest charges
Present value of minimum payment
8,151,055
(2,256,560)
5,894,495
9,480,926
(977,986)
8,502,940
2,968,389
(222,906)
2,745,483
3,640,194
(350,590)
3,289,604
Net book value of equipments
under finance leases agreements
29,416,489
25,630,863
6,634,825
6,880,843
As at December 31, 2008 and 2007, the Company and subsidiaries have financial lease agreements for the
terms of 18 months to 60 months at the effective interest rate of 3.5% to 7.75% per annum and their payments
are monthly due.
14.
Share Capital
On May 20, 2008, the Company initially offered to the public of 75 million shares of Baht 12 per shares and
recorded expenses related to this offering totaling of Baht 28.17 million by deduction to premium on share
capital. The Company registered the above changes with the Ministry of Commerce on May 26, 2008.
At the Extraordinary Meeting of Shareholders No.1/2007 held on May 3, 2007, and the 2007 Annual General
Meeting of Shareholders held on April 18, 2007, the shareholders approved the Company to convert to be a
Public Company Limited and change its par value from Baht 100 per share to Baht 1 per share. Additionally,
the meeting also approved the Company to increase the Company’s registered share capital from Baht 225
million to Baht 316 million by issuing new shares totaling 91 million shares to offer to its directors and
employees of 16 million shares and to the public of 75 million shares. The Company registered the above
changes with the Ministry of Commerce on May 17, 2007.
26
15.
Warrants Issued and Offered to Directors and Employees (ESOP)
The resolutions of the Extraordinary Meeting of Shareholders No.1/2007 held on May 3, 2007, approved to
offer warrant to its directors and employees of the Company and subsidiary companies as remuneration of 16
million units at Baht 0 per unit. A warrant is eligible to exercise for buying one common share at par value of
Baht 1 per share. The term for warrant exercise will not exceed 3 years from the issued and offered date.
Proportion to exercise warrant
30%
30%
40%
Exercise period from the offered date
12 months
18 months
24 months
The exercise date is the last working day of May and November through the age of warrant, except the latest
exercise date on May 15, 2011.
16.
Legal Reserve
Starting from May 17, 2007, the Company is required to set aside a legal reserve of at least 5% of its net profit
until the reserve reaches 10 percent of the registered share capital in accordance with the Public Limited
Companies Act B.E. 2535. The reserve can not be used for dividend payment.
17.
Treasury Shares and Reserve for Treasury Shares
At the resolutions of the Board of Director’s meeting No. 6/2008 held on November 13, 2008, the Company’s
directors resolved to approve the share repurchase program for financial management purpose in accordance
with the Section 66/1(2) of the Limited Public Company Act (No. 2) B.E. 2544 in the amount not exceeding
Baht 85 million. The number of ordinary shares to be repurchased is 8.5 million shares (par value of Baht 1 per
share); equal to 2.83% of the total number of paid-up share capital of the Company. The Company shall
repurchase its ordinary shares through the main board of the Stock Exchange of Thailand during the period
from December 1, 2008 to May 31, 2009. The boards of directors have considerations the share resale
procedures by resale its ordinary shares through the main board of the Stock Exchange of Thailand or by public
offering depending on the prevailing situation at that time of shares sold. Period for the resale of share is from
December 1, 2009 to May 31, 2012 (after 6 months from the completion date of share repurchase and not latter
than 3 years from the completion date of share repurchase).
As at December 31, 2008, the Company repurchased a total of 1.692 million of its shares (equal to 0.564% of
the total number of paid-up share capital of the Company) for a total consideration of Baht 12.48 million.
As at December 31, 2008, the Company appropriated Baht 12.48 million from its retained earnings as a reserve
for treasury shares.
27
18.
Dividend Payments
The resolutions of the Board of Director’s meeting No. 5/2008, held on August 13, 2008, approved to pay an
interim dividend from its operations for the year 2008 for the 300 million shares at the rate of Baht 0.31 per
share, totaling Baht 93 million. The dividend was paid on September 5, 2008.
The resolutions of the Board of Director’s meeting No. 1/2008, held on February 20, 2008, approved to pay an
interim dividend from its operations for the year 2007 for the 225 million shares at the rate of Baht 0.3972 per
share, totaling Baht 89.37 million. The dividend was paid on March 10, 2008.
The resolutions of the Board of Director’s meeting No. 1/2007 held on June 20, 2007, approved to pay an
interim dividend from its operation in the first 6 months of 2007 and its beginning retained earning for the 225
million shares at the rate of Baht 0.7816 per share, totaling Baht 175.86 million. The Company approved an
additional legal reserve of Baht 8.793 million.
19.
Basic and Diluted Earnings per Share
Basic and diluted earnings per share are calculated as follows:
Consolidated financial statements
2008
2007
Net income attributable to
shareholders of the parent
Number of ordinary share outstanding
at beginning of years
Increase in common share capital
Effect of own ordinary shares held
Weighted average number of ordinary
shares outstanding during the years
Basic earning per shares
Number of ordinary share outstanding
at beginning of years
Increase in common share capital
Effect of own ordinary shares held
Effect of warrants were exercised
Weighted average number of ordinary
shares outstanding during the years
Dilute earning per shares
Separate financial statements
2008
2007
185,132,345
252,145,020
183,073,259
336,476,368
225,000,000
44,383,562
(85,413)
225,000,000
-
225,000,000
44,383,562
(85,413)
225,000,000
-
269,298,149
225,000,000
269,298,149
225,000,000
0.69
1.13
0.68
1.50
225,000,000
44,383,562
(85,413)
8,414,095
225,000,000
-
225,000,000
44,383,562
(85,413)
8,414,095
225,000,000
-
277,712,244
225,000,000
277,712,244
225,000,000
0.67
1.13
0.66
1.50
28
20.
Disclosure of Financial Instruments
Financial risk management and policies
The Company and subsidiaries are exposed to risks from changes in market interest rates and in currency
exchange rates, and from nonperformance of contractual obligations by counterparties. The Company manages
the risks as follows:
Interest rate risk
The groups of Company have no significant interest bearing assets and liabilities except the interest income from
cash and cash equivalents and short-term investments. The Company manages the interest rate risk by depositing
and investing with reliable financial institutions having a different maturity dates and interest rates pursuant to the
Company’s financial plan.
Foreign currency risk
Foreign currency risk occurs from license fee payment to foreign companies by mainly using US dollar currency.
However, the licensor takes the risk and the Company believed that there will not be any significant effect to the
financial statements.
As at December 31, 2008 and 2007, the Company has prepaid license fees in a foreign currency of USD 915,784
and USD 115,315, respectively, and license fees payable of USD 698,983 and USD 301,464, respectively.
Credit risk relating to trade accounts receivable
The Company has a policy to manage the credit risk from trade accounts receivable by having prudent credit
policies and debt collection procedures. The company expects that its will have no damages as a result of debt
collection.
Fair Value
Most of the financial assets are cash deposits at financial institutions, short-term investment and trade accounts
receivable which are short-term assets. Most financial liabilities are trade accounts payable, other payables and
accrued expense. The carrying amount of the financial assets and financial liabilities are, therefore, not
significantly different from their fair value.
21.
Financial Information by Segment
The Company and its subsidiaries' operations are involved in two business segments in online games and offline
games and have geographic segments in Thailand and oversea geographic areas. The segment information of the
Company and subsidiaries for the years ended December 31, 2008 and 2007, were as follows:
29
Consolidated financial statements (Unit: Thousands Baht)
Online games
2008
Foreign Domestic
531,799 935,761
Sales and service income - net
Cost of sales and services
Gross profit
Selling and administrative expenses
Profit from operating
Other income
Net income before interest expense and income tax
Interest income
Interest expenses
Net profit before income tax
Income tax expense
Net profit before minority interest
Minority interest
Net profit
As at December 31,
Equipment - net
Other assets
Total assets
2007
Foreign Domestic
615,449 862,522
Offline games
2008
Foreign Domestic
52,647
67,158
2007
Foreign Domestic
8,953
60,145
Total foreign
Total domestic
2008
2007
2008
2007
584,446
624,402
1,002,919
922,667
34,576
123,357
150,556
61,892
44,916
183,379 260,957
245,271 305,873
Grand total
2008
2007
130,278
1,587,365
(925,001)
662,364
(422,527)
239,837
12,278
252,115
12,216
(1,670)
262,661
(77,529)
185,132
185,132
1,547,069
(896,335)
650,734
(323,718)
327,016
10,514
337,530
966
(645)
337,851
(85,706)
252,145
1,490
253,635
69,896
74,096
1,398,095 483,482
1,467,991 557,578
131,788
1,581,474
1,713,262
119,012
744,439
863,451
30
22.
Significant expenses
Significant expenses for the years ended December 31, are as follows:
Unit: Million Baht
Consolidated financial statements Separate financial statements
2008
2007
2008
2007
259
119
177
107
127
75
95
68
Management and employees expenses
Advertising and Sales promotions
23.
Commitment and Contingent Liabilities
Distribution agreements with foreign companies
The Company entered into distribution agreements to provide online games services and to distribute
offline games with foreign companies. The Company has commitments to pay license fees and royalty fees
as stated in the agreements.
Lease agreements
The Company entered into operating lease agreements for its office space, warehouse, facilities and services
for a period of 1-3 years which are renewable upon mutual agreement. As at December 31, 2008 and 2007,
the Company is committed to pay monthly operating lease of Baht 2.9 million and Baht 0.64 million,
respectively.
Server service agreement
The Company entered into server service agreements for a period of 1 year and the agreement is renewable
upon mutual agreement. As at December 31, 2008 and 2007, the Company is committed to pay monthly
operating lease and services of Baht 973,000.
Letter of guarantee
As at December 31, 2008 and 2007, the Company and subsidiaries had a commitment with local bank for
the letters of guarantee issued by banks totaling Baht 30,000.
Commitments
As at December 31, 2008, a subsidiary has a short-term loan with the financial institution by issuing the
promissory note for Baht 40 million bearing interest rate of 4.75% per annum. This is secured by the
Company’s fixed deposits of Baht 40 million and guaranteed by the Company.
31
24.
Litigation
The Company has a litigation case regarding the copyright with total claims of Baht 7.98 million. The
Company’s lawyer believes that the Company will have no damage from the ultimate outcome of the
litigation. Presently the court of the first instance dismissed all the Company’s cases. Therefore, the
Company did not provide for any possible loss in the financial statements.
An oversea subsidiary received notice from a previous distributor for breach of contract totaling amount
SGD 1.78 million (Baht 41.43 million). The management, on the advice of legal counselor, has the view
that the claim is made without merit. Therefore, no provision has been made in the financial statements.
25.
Reclassification
The financial statements for the year ended December 31, 2007 have been reclassified to conform to the
presentation in the financial statements for the year ended December 31, 2008.
26.
Subsequent events
The Board of Director’s meeting held on February 27, 2009 had approved the addition payment of the
interim dividends on the consolidated results of operation for the year 2008 for the shareholders at the rate
of Baht 0.32 per share. The dividends will be declared for the shareholders whose name appeared as being
eligible for the receipt of dividend on April 28, 2009 (record date). This has to be approved from the annual
shareholders’ meeting for the year 2009. The Company plans to pay this dividend to the shareholders on
May 12, 2009.
27.
Approval of Financial Statements
These financial statements have been authorized and approved by the Company’s director on February 27,
2009.
32