INFORMATION MEMORANDUM MASTER AD PUBLIC COMPANY LIMITED Head Office 24/10, Landy-Master Floor 3-6, Soi Lardplao 19, Lardplao Road, Lard Yao, Chatuchak, Bangkok 10900 Telephone:0 2938 3388 Facsimile:0 2938 3488 Website:http://www.masterad.co.th Listing Date As at September 29, 2003 (Trading commencement on September 29, 2003) Listing Securities Number of Common Shares 125,000,000 at Par Value 1.00 Baht Total value 125,000,000 Baht Secondary Market Market for Alternative Investment ("MAI") Offering Price 8.00 Baht Type of Business and Nature of Operation The major business of Master Ad and its subsidiary, Master&More, is providing and servicing the Out of Home Media and Entertainment Master Ad is responsible for the medias which are larger than 60 square meters, while its subsidiary is responsible for smaller size. The revenue of Master Ad is deriving from 2 categories; advertising and production. The products of Master Ad and Master & More are as below: Managed by Master Ad Billboard Media with one display picture along major road and expressway Trivision Media with 3 rotating display pictures Dyna Vision Media at Don Muang International Airport located near entrance and exit Focus Display Media with product decoration Rota graphic Media at selling area Airship Movable media Balloon Movable media Managed by Master&More City Vision Trivision Media along sidewalk and street isle BTS City Vision Trivision Media located at BTS station pillar Grip Light Media at pay point - 1st Stage Express Way and Don-Muang Toll-Way Pillar Media with 3 sided display around Victory Monument Adshel Media with 2 sided display around Victory Monument Siam Square Media Variety Media around Siam Square area Environmental Impacts None Summary of Material Long Term Contracts The success of doing Out of Home Media business is mainly depended on location. The details of long term contracts are as below; Lessor Tenor of Contract Term of Payment Private Individual - Land 3-5 years Monthly and Yearly Government / State Enterprise - Land 3-9 years Monthly Private Individual - Structure 10 years Monthly *In year 2002, the company sold 35 structures at THB 17,000,000 to Master Construction Co.,Ltd and rent the structures back with long term contract. Feasibility Study None Technical and Management Assistance None Future Projects 1. Enhance Media in prospect location of private individual and/or government and/or state enterprise. Currently, the company is in the process of preparing contract with Railway Station of Thailand for leasing premise, a road along northern railroad line next to Vibhavadirangsit Road. Master Ad will install 117 Medias and expects to complete and to realize revenue in year 2004. 2. Innovate and research new potential Media. 3. Peruse to invest in other company within the Out of Home Media business in order to increase media and market share. 4. Construct a plant to produce rotation part of Trivision in Thailand by join venture with a Trivision Company in Sweden, which will reduce the cost and enhance the competitive advantage. 5. Manage and market the benefit for sportsman. In year 2002, the company has signed the contract with SFX Sports Group, a world leader agency in sport business who providing Sport Event for sportsman. In Thailand, the company is assigned to responsible for Paradon Srichaphan - Thailand tennis superstar. In future, the company will expand to cover more sportsmen. 6. Conduct business with Total Sport Asia, one of the leading providers in Sport Entertainment, to arrange a first world wresting match in Thailand "Smacksdown Tour" in July 2003. In future, the company will cooperate to arrange more events. 7. Expand the business to entertainment sector which is related to the current business of the company. This will help in increasing income and profit in the future. Related Transactions Person/Company Relationship Transaction Detail and Pricing Amount (Million Baht) Necessity and Reasonable Policy 2002 2003 Jan-Jun Core Management Directors and major Lending money to In year 2002, no 30.41 20.23 Using for working capital Mr.Noppadon, shareholders total of the Company interest charged. In of the company. The Mr.Piched, and 63.70% of paid up year 2003, interest transaction was reasonable Mr.Tawat capital rate charged at in area of flexibility 3.00% p.a. to borrow and also lower interest rate charged. Other Shareholders 4.95 3.29 Clear Channel A shareholder of 49% Lending money to In year 2002, interest 33.32 27.93 Using for construction International in Master & More, a Master & More charged at 10% p.a. media structure of Ltd. subsidiary of Master Ad In year 2003, interest Master&More. The charged at MLR+2% p.a. transaction was reasonable in area of flexibility to borrow. Inkjet Images Mr.Noppadon, a director Renting 2,000 At the price of 100 0.39 0.24 Master Ad rent an (Thailand) of Master Ad, as a square meter Baht / square meter / unused office space Co., Ltd. director office space month, which is higher to Inkjet, a subsidiary, from Master Ad than rental, rate that which resulted in on Vibhavadirangsit Master Ad renting decreasing rental Road for tenor of from the lessor at cost of Master Ad. 325 square meter 40 Baht / square years, due at meter / month. Due Dec 31st, 2005 to the cost of refurnished building- ready to use. Printed Picture At the same price 14.45 7.17 As usual operation, for Master Ad to as the other Master Ad has to install on Out of producers hire others for Home Media printed picture. For subsidiary, Master Ad was able to control and manage the quality and time. Landy Mr.Noppadon, Mr.Piched, Rent 988.76 square At rental rate 2.52 1.31 The rental price Development and Mr.Tawat, directors meter office space of 164 Baht per is as same as Co., Ltd. of Master Ad and from Landy-Master square meter per the other lessees. shareholders of 20.55%, Building for tenor month and electrical 34.87%, 34.67% in Landy of 3 years, due at utility of 45,000 Development respectively Dec 31st, 2004 Baht per month Dai-I-chi House Mr.Noppadon, Mr.Piched, A client of Master Based on location, 0.29 1.53 The transaction is Co., Ltd. and Mr.Tawat, directors Ad in Out of Home which the same normal and charged of Master Ad and Media price as the other price is reasonable. shareholders of 9.30%, clients 38.70%, 36.70% in Dai-I-chi respectively The procedure for granted the related transaction. Each related transaction might have a necessity and reasonable basis in order to maximize profit of the company. At present, all existing related transactions are reviewed by the Audit Committee. In future, any related transaction will need the approval from the Audit Committee. The policy of the company for this existing related transaction: Borrowing money from shareholders The company will decrease the amount of borrowing money from shareholders. At the end of year 2003, the amount will be zero. Rend an office space to The company will continue renting an subsidiary company. office space to the subsidiary. Printed picture The company will continue using Inkjet service for printed picture, if Inkjet is available. This is because of its flexible control and manageable. Contingencies and Commitments As at June 30th, 2003, the company and its subsidiary had the following outstanding contingent liabilities as follows: 1. Letter of guarantees issued to local banks in total of approximately 15.87 Million Baht. 2. Commitments under long term lease and service agreement, mainly related to the rental of space for operation 2003 30.31 Million Baht 2004 25.91 Million Baht 2005 onward 65.01 Million Baht 121.23 Million Baht Risk Factors 1. Economic Recession Risk Growth of Out of Home Media business directly related to the expansion of advertising industry and economy. During recession period, advertising spending will decrease. However, cost of using Out of Home Media is relatively lower than other medias; therefore, most of customers are able to publish their products through Out of Home Media. In addition, fixed operation cost of Out of Home Media is only rental expense, which is considered low. Mostly, the lower fixed cost, the less affect from revenue fluctuation. This can be concluded that company's risk from economy's recession is quite low. 2. Renewal Contract Risk : Land The company does not have a policy to invest in land in order to establish the media. All of the company's locations rent from private company and government. The tenors of Rental Contract are different for each contract. The contract which has the tenor less than 3 years is accounted for 12% of total revenue. Therefore, the company might encounter the renewal risk. However, the company believes that this risk is relatively low due to the possibility and ability in installation technology, working capital, staffs, and also quality of work which satisfy the customer and the lesser. This can be confirmed as the company has never encountered any renewal problem in the past. 3. Renewal Contract Risk : Structure The company also rent structure of Billboards and Trivisions from other companies, mostly from Master Construction Co., Ltd. Therefore, the company might face problem if Master Construction denies renewing the contract. In order to reduce the risk, the company has entered a 10-year rental agreement with Master Construction Co., Ltd. The revenue from rental structure is accounted for 10% of total revenue. 4. Rely on Trivision System Risk All existing trivisions media of the company using system from Prisma Sign Technology Ltd., a company from Sweden. The company might have risk of Prisma Sign denying renewing the right to use trivision system for new media. The company has been using trivision system of Prisma Sign Technology Ltd. from year 1994 and recognized as one of the largest clients of Prisma Sign Technology in Asia Region. The chance that the company will be denied to use a system of Prisma Sign is considerably low. In addition, there are a number of companies in Sweden that provide the trivision system and are interested in having business in Asia Region. 5. Rely on personnel risk The key success to operate business of Out of Home media is location, technology, and presentation scheme. However, the company realizes that personnel and team work are important factors. The company is concentrating on working as a team work rather than a standalone person. The company might face risk of losing personnel and team work. In order to reduce the risk, the company has pay attention on training course and supporting their personnel to grow up as same as company grows. Moreover, the key persons to the company are also the core management and major shareholders. 6. Major Shareholders Risk At present the core management team; Mr. Noppadon Tansalarak, Mr.Piched Maneerattanaporn and Mr. Tawat Meeprasertskul, hold the stake of totally 63.70% of registered and paid up capital of the company. This stake would decrease to 50.96% after the initial public offering. Therefore, the management team can conduct the position of the company and control a shareholders' resolution. However, the company has appointed other four members as its independent directors and established an audit committee team in order to verify, review, and monitor the operation of the company. Lawsuit None No. of Employees As at March 31st, 2003, the company has 86 employees. Company Background The company was found in year 1988 by Mr. Noppadon Tansalarak with a paid up capital of THB 600,000 and started operating in year 1989 after inviting another two members: Mr. Piched Maneerattanaporn and Mr. Tawat Meeprasertskul to join. The first product of the company was Billboards. In year 1996, the company had joined with Inkjet Images (M) SDN BHD Co., Ltd. from Malaysia to establish Inkjet Images (Thailand) Co., Ltd. The company holds 27.78% or investment amount of 1.67 Million Baht. The objective is to create advertising images by using Inkjet Technology in order to create various in home and Out of Home Media. Also the company has joined with Clear Channel International Company, one of the leaders in Out of Home Media from United Kingdom, to establish Master&More Co, Ltd. The company holds 51.00% or investment amount of 10.20 Million Baht. The objective is to provide service and to produce Out of Home media, which size lesser than 60 square meter. The company had brought the system of ISO 9001:2000, an international organization for standardization, to monitor quality management. And has been certified for ISO 9001:2000 from United Registrar of Systems Limited (URS), United Kingdom. Master Ad is one and only Out of Home media company in Thailand which receive an ISO 9001:2000 under a slogan of "Creative media with quality". Currently, the company registered capital is 125,000,000 Baht and converted into the public company. In addition, the company is in process of Initial Public Offering and prepares to be listed on Market for Alternative Investment (MAI). Investment in Subsidiary/Associated/ Related Companies) As of June 30th, 2003 (unit : million baht) Name Type of business Paid-up capital %of Shareholding Investment cost Master & More Service and produce 20.00 51.00 10.20 Co., Ltd. Out of Home media Inkjet Images Printing by Inkjet 6.00 27.78 1.67 (Thailand) Co., Technology Ltd. Changed in Capital in the last 3 years (unit : million baht) Date Before After Capital Note / Objective Capital increase increase (decrease) (decrease) 9/6/2003 25 125 Enhanced media in prospect location of private individual,invested in construction structures for a project of Railway Station of Thailand "Railway Billboard", maintained & renovated the existing structure 8/3/2002 94 100 Repaid the long term loan Accounting Period Ending 31 December of each year Auditor Mrs. Sumalee Chokdeeanant Grant Thornton Limited Registrar Thailand Securities Depository Co., Ltd. Financial Advisor IB Securities Co., Ltd. Dividend Policy Not less than 40% of net income after tax and statutory reserve however it depends on economic situation and future operation cost B.O.I. Certificates None No. of Shareholders As of September 23, 2003 No. of No. of % of paid-up shareholders shares capital 1. Strategic shareholders 1.1 Government, state-owned enterprises - - - or public sector agencies 1.2 Directors, manager, and executive 7 77,366,666 61.89 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 5 16,783,333 13.43 not to sell their stocks within a specified period 2. Non-Strategic shareholders hold > 1 1,966 30,850,001 24.68 trading unit 3. Non-Strategic shareholders hold < 1 - - - trading unit unit Total Shareholders 1,978 125,000,000 100.00 Major Shareholders As of September 23, 2003 Name No.of share % of paid-up 1. Mr. Noppadon Tansalarak 22,050,000 17.64 2. Mr. Phiched Maneerattanaporn 20,825,000 16.66 3. Mr. Tawat Meeprasertskul 20,825,000 16.66 4. Mr. Vichit Dilokvilas 7,350,000 5.88 5. Mrs. Choltada Fuvattanasilp 6,000,000 4.80 6. Miss Vanida Patharamanop 5,666,666 4.53 7. Miss Porntip Maneerattanaporn 5,666,666 4.53 8. Miss Nuchvaree Autchanapornkul 2,450,000 1.96 9. Miss Kanokphon Akanit 2,000,000 0.53 Total 93,499,999 74.79 Foreign Shareholders (as of September 23, 2003) No. of foreign shareholders 26 Total no. of share held 404,000 or 0.32% of paid-up capital Note: The Company has a limitation on the percentage of equity shares held by foreign shareholders as stated in the Article of Association of the Company item No. 10, "There are no transfer restrictions unless the transfers caused the foreign shareholder to own shares more than 49% of paid-up capital". Board of Directors Name Position 1. Pol.Sub.Lt Kriengsak Lohachala Chairman of the Board & Audit Committee 2. Mr. Noppadon Tansalarak Director and CEO 3. Mr. Piched Maneerattanaporn Director 4. Mr. Tawat Meeprasertskul Director 5. Mr. Vichit Dilokvilas Director 6. Mr. Parames Rachjaibun Director 7. Mr. Prasert Virasathienpornkul Audit Committee 8. Mrs. Napaporn Kraipanon Audit Committee Audit Committee Subject to the shareholders meeting No. 2/2003 held on April 23rd, 2003 Name Position 1. Pol.Sub.Lt Kriengsak Lohachala Chairman of the Audit Committee 2. Mr. Prasert Virasathienpornkul Audit Committee 3. Mrs. Napaporn Kraipanon Audit Committee and Secretary Scope of duties and responsibilities 1. Review the company's financial statement for 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 procedure to comply with the rules and regulations of the Stock Exchange of Thailand and other related regulatory. 4. Peruse the disclosure of related transaction 5. Follow the duties assigned by the Board of Directors and agreed by the Audit Committee. 6. Review and propose the appointment and remuneration for auditors 7. Prepare and sign in the audit committee report and disclose in the company's annual report with the following details: 7.1 Provide opinion for process and disclosure of information in financial statement to be accurate, reliable, and sufficient 7.2 Provide opinion for sufficient internal control system 7.3 Provide opinion for appropriation of the appointed auditor 7.4 Provide opinion to comply with the rules and regulations of Security Exchange Committee, Stock Exchange of Thailand, and other related regulatory 7.5 Other opinions which shareholders and investors should know under duties and responsibilities Terms for holding office 1. Chairman as same as director of the company 2. Director as same as director of the company Listing Conditions None Silent Period Shareholders, who own common shares before the company's public offering, holding 93,499,999 shares or 93.49% of paid up capital or 74.79% of paid up capital after the initial public offering certify to the Stock Exchange of Thailand that their shares will not be sold for the period of one and a half years from the trading date. Upon the expiry date of each 6 months period of the prescribed time, those shareholders will be allowed to sell of 25% of the total amount of shares prohibited for sale and the rest after one and a half years. Relaxation None Others STATISTICAL SUMMARY Master Ad Public Company Limited |--- Thousands ----|------- Baht/share*------| YEAR TOTAL NET PROFIT EARNINGS DIVIDEND BOOK PAYOUT SALES (LOSS) (LOSS) VALUE RATIO (%) 2001* 155,051 7,157 11.93 -0- 58.61 -0- 2002* 198,817 16,623 2.14 3.50*** 11.08 210 Period of 3 months 103,505 31,138 0.31 -0- 1.42 -0- Ended 30 June 03** (Reviewed) Remark : * par value at 10 Baht, number of common share 600,000 shares ** par value at 1 Baht, number of common share 10,000,000 shares *** Previously, the company had never paid any dividend; this was a first dividend payment Master Ad Public Company Limited and its Subsidiaries |--- Thousands ----|------- Baht/share*------| YEAR TOTAL NET PROFIT EARNINGS DIVIDEND BOOK PAYOUT SALES (LOSS) (LOSS) VALUE RATIO (%) 2001* 210,907 7,157 11.93 -0- 76.46 -0- 2002* 288,938 16,623 2.14 3.50*** 12.22 210 Period of 3 months 165,961 31,138 0.31 -0- 1.62 -0- Ended 30 June 032 (Reviewed) Remark : * par value at 10 Baht, number of common share 600,000 shares ** par value at 1 Baht, number of common share 10,000,000 shares *** Previously, the company had never paid any dividend; this was a first dividend payment Master Ad Public Company Limited Balance Sheets Year 2000-2003 Company Consolidated 2000 2001 2002* Jan - June 2003 Current Assets Cash and cash at bank 8,382 6.97% 30,665 11.47% 24,886 9.90% 34,064 12.29% Trade accounts receivable (Net) - 0.00% 40,196 15.03% 72,000 28.66% 80,180 28.93% Other receivable - 0.00% 384 0.14% 47 0.02% 63 0.02% Work in process 42,718 35.55% - 0.00% - 0.00% 754 0.27% Prepaid rent - 0.00% 14,232 5.32% 14,436 5.75% 10,374 3.74% Prepaid rent - 0.00% - 0.00% 2,371 0.94% 8,156 2.94% Accrued income 7,377 6.14% 130 0.05% 3,116 1.24% 3,949 1.43% Other current assets 7,525 6.26% 9,158 3.43% 4,921 1.96% 7,852 2.83% Total Current Assets 66,002 54.92% 94,764 35.44% 121,776 48.47% 145,392 52.47% Loan to subsidiary 8,160 6.79% - 0.00% - 0.00% - 0.00% Investments in subsidiary and 13,300 11.07% 3,317 1.24% 4,134 1.65% 5,135 1.57% associated Companies (more)