INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES

Transcription

1 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 ATTACHMENT: INDEPENDENT ACCOUNTANTS REVIEW REPORT INNOCEAN WORLDWIDE INC.

2 Contents INDEPENDENT ACCOUNTANTS REVIEW REPORT CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES

3 Deloitte Anjin LLC 9F., One IFC, 10, Gukjegeumyung-ro Youngdeungpo-gu, Seoul , Korea Tel: +82 (2) Fax: +82 (2) Independent Accountants Review Report English Translation of a Report Originally Issued in Korean on May 22, 2015 To the Shareholders and the Board of Directors of INNOCEAN WORLDWIDE INC.: We have reviewed the accompanying condensed consolidated financial statements of Innocean Worldwide Inc. (the Company ) and its subsidiaries. The condensed consolidated financial statements consist of the condensed consolidated statements of financial position as of March 31, 2015, the related condensed consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2015 and 2014, respectively, all expressed in Korean Won, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Consolidated Financial Statements The Company s management is responsible for the preparation and fair presentation of the accompanying consolidated financial statements in accordance with Korean International Financial Reporting Standards ( K-IFRS ) and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Independent Accountants Responsibility Our responsibility is to express a conclusion on the accompanying condensed consolidated financial statements based on our review. We conducted our review in accordance with standards for review of interim financial statements in the Republic of Korea. A review is limited primarily to inquiries of the Company personnel and analytical procedures applied to financial data, and this provides less assurance than an audit. We have not performed an audit, and accordingly, we do not express an audit opinion. Review conclusion Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated financial statements of the Company and its subsidiaries are not presented fairly, in all material respects, in accordance with Korean International Financial Reporting Standards 1034, Interim Financial Reporting. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Member of Deloitte Touche Tohmatsu Limited

4 Others We audited the consolidated statement of financial position as of December 31, 2014, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year ended December 31, 2014 (not presented in the accompanying consolidated financial statements), in accordance with auditing standards generally accepted in the Republic of Korea. We expressed an unqualified opinion in our independent auditors report dated on March 22, The consolidated statement of financial position as of December 31, 2014, presented as a comparative purpose in the accompanying financial statements does not differ, in all material respects, from the audited consolidated statement of financial position as of December 31, Accounting principles and review standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations, changes in equity and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to review such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and review standards and their application in practice. May 22, 2015 Notice to Readers This report is effective as of May 22, 2015, the independent accountants review report date. Certain subsequent events or circumstances may have occurred between the independent accountants review report date and the time the independent accountants review report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to the independent accountants review report.

5 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES (the Group ) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 The accompanying condensed consolidated financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the management of the Company. Ahn, Kun Hee Chief Executive Officer INNOCEAN WORLDWIDE INC. Headquarters address : 308, Gangnam-daero, Gangnam-gu, Seoul Headquarters telephone number :

6 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDEDNSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 Current assets: ASSETS Notes March 31, 2015 December 31, 2014 (In Korean won) Cash and cash equivalents ,236,798, ,912,848,618 Short-term financial instruments 3,26 198,019,417, ,181,899,798 Trade and other receivables 4,26,29 600,003,671, ,929,706,505 Other financial assets 5,26 4,550,915,931 3,968,439,606 Current tax assets 2,225,165,919 2,658,916,503 Other current assets 6 37,698,159,083 33,057,804,945 Total current assets 1,021,734,128,525 1,080,709,615,975 Non-current assets: Long-term financial instruments 3,26 334,242, ,006,374 Available-for-sale ( AFS ) financial assets 7,26 2,448,679,828 2,404,703,787 Other financial assets 5,26 4,930,388,886 4,792,854,044 Investments in joint venture and associates 8 15,615,772,879 14,211,520,465 Property, plant and equipment 9,32 9,988,796,555 11,199,776,954 Intangible assets 10,32 57,371,841,322 56,165,565,401 Deferred tax assets 4,496,194,848 4,299,813,938 Other non-current assets 6 59,175,110 60,620,380 Total non-current assets 95,245,092,195 93,489,861,343 (Continued) Total assets 1,116,979,220,720 1,174,199,477,

7 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 (CONTINUED) LIABILITIES AND EQUITY Notes March 31, 2015 December 31, 2014 (In Korean won) Current liabilities: Trade and other payables 11,26,29 625,852,382, ,401,196,484 Other financial liabilities 12,26 12,643,148,681 20,437,847 Current provisions ,552,871 1,041,841,546 Income tax payable 3,302,503,664 10,549,120,189 Other current liabilities 13 23,882,641,241 31,396,539,734 Total current liabilities 666,494,228, ,409,135,800 Non-current liabilities: Other payables 11 40,187,656 48,278,022 Retirement benefit liabilities 14 5,197,035,622 3,158,850,516 Deferred tax liabilities 13,776,197,311 13,085,677,027 Non-current provisions 15 3,847,971,905 4,979,271,689 Other non current liabilities ,640, ,928,743 Total non-current liabilities 23,012,032,973 21,451,005,997 Total liabilities 689,506,261, ,860,141,797 Equity: Capital stock 16 9,000,000,000 9,000,000,000 Other components of equity 17 (12,890,706,215) (9,984,797,193) Retained earnings ,377,077, ,280,069,980 Equity attributable to the owners of the Company 413,486,371, ,295,272,787 Non-controlling interests 13,986,587,300 12,044,062,734 Total equity 427,472,958, ,339,335,521 Total liabilities and equity 1,116,979,220,720 1,174,199,477,318 (Concluded) See accompanying notes

8 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND Notes Three months ended March 31, Three months ended March 31 (In Korean won) Sales 19,29,32 227,079,849, ,808,961,492 Cost of sales 23,29 157,403,425, ,830,789,440 Gross profit 69,676,424,148 49,978,172,052 Selling and administrative expenses 20,23,29 51,743,122,284 36,492,692,768 Operating income 32 17,933,301,864 13,485,479,284 Gain on investments in joint venture and associates, net 8 1,352,488,385 2,916,636,878 Finance income 21,27 5,122,125,070 3,338,852,220 Finance expenses 21,27 4,050,688, ,453,593 Other income 22 1,258,783, ,921,246 Other expenses ,426,038 86,473,688 Income before income tax 21,414,584,414 18,843,962,347 Income tax expense 24 5,878,467,241 5,674,011,710 Profit for the period 15,536,117,173 13,169,950,637 Other comprehensive income (expenses): Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans 18 31,804,012 (18,600,103) 31,804,012 (18,600,103) Items that may be reclassified subsequently to profit or loss: Loss on foreign operations translation, net 17 (2,904,737,079) (792,639,923) Changes in share of earnings of equityaccounted investees, net 8,17 51,764,029 8,676,783 Gain on AFS financial assets, net 17 18,675,335 62,495,259 (2,834,297,715) (721,467,881) Total other comprehensive income (expenses) (2,802,493,703) (740,067,984) Total comprehensive income 12,733,623,470 12,429,882,653 Profit attributable to: Owners of the Company 13,665,203,914 13,169,950,637 Non-controlling interests 1,870,913,259-15,536,117,173 13,169,950,637 Comprehensive income attributable to: Owners of the Company 10,791,098,904 12,429,882,653 Non-controlling interests 1,942,524,566-12,733,623,470 12,429,882,653 Earnings per share attributable to the owners of the Company: Basic and diluted earnings per common share See accompanying notes

9 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 Capital stock Other components of equity Total equity attributable to the Retained owners of the earnings Company (In Korean won) Noncontrolling interests Balance at January 1, ,000,000,000 (3,949,468,201) 342,591,997, ,642,529, ,642,529,342 Payment of cash dividends - - (7,200,000,000) (7,200,000,000) - (7,200,000,000) Profit for the period ,169,950,637 13,169,950,637-13,169,950,637 Gain on AFS financial assets, net - 62,495,259-62,495,259-62,495,259 Remeasurements of defined benefit plans - - (18,600,103) (18,600,103) - (18,600,103) Loss on foreign operations translation, net - (792,639,923) - (792,639,923) - (792,639,923) Changes in valuation of equity-accounted investees, net - 8,676,783-8,676,783-8,676,783 Balance at March 31, ,000,000,000 (4,670,936,082) 348,543,348, ,872,411, ,872,411,995 Balance at January 1, ,000,000,000 (9,984,797,193) 416,280,069, ,295,272,787 12,044,062, ,339,335,521 Payment of cash dividends - - (12,600,000,000) (12,600,000,000) - (12,600,000,000) Profit for the period ,665,203,914 13,665,203,914 1,870,913,259 15,536,117,173 Gain on AFS financial assets, net - 18,675,335-18,675,335-18,675,335 Remeasurements of defined benefit plans ,804,012 31,804,012-31,804,012 Loss on foreign operations translation, net - (2,976,348,386) - (2,976,348,386) 71,611,307 (2,904,737,079) Changes in valuation of equity-accounted investees, net - 51,764,029-51,764,029-51,764,029 Balance at March 31, ,000,000,000 (12,890,706,215) 417,377,077, ,486,371,691 13,986,587, ,472,958,991 Total equity See accompanying notes

10 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND Notes Three months ended March 31, Three months ended March 31 (In Korean Won) Cash flows from operating activities: Cash generated from operations: Profit for the period 30 15,536,117,173 13,169,950,637 Adjustments 4,840,675,779 2,164,408,510 Changes in operating assets and liabilities (42,501,460,525) (11,545,866,695) 22,124,667,573 3,788,492,452 Interest received 1,509,617,557 2,970,694,573 Dividend received 100,000, ,000,000 Income tax paid (12,211,894,413) (8,762,658,313) Net cash used by operating activities (32,726,944,429) (1,903,471,288) Cash flows from investing activities: Proceeds from withdrawal(purchases) of shortterm financial instruments, net 1,264,098,511 (1,774,206,235) Proceeds from disposals of other financial assets 8,100,000 - Proceeds from disposals of property, plant and equipment 1,804, ,131 Acquisitions of other financial assets (1,135,391) (268,648,000) Acquisitions of property, plant and equipment 9 (413,965,366) (633,329,474) Acquisitions of intangible assets 10 (1,395,118,449) (8,576,724) Net cash used by investing activities (536,216,495) (2,684,391,302) Cash flows from financing activities: - - Net decrease in cash and cash equivalents (33,263,160,924) (4,587,862,590) Cash and cash equivalents, beginning of the period 216,912,848,618 91,370,483,561 Effect of exchange rate changes on cash and cash equivalents (4,412,888,800) (84,934,277) Cash and cash equivalents, end of the period 179,236,798,894 86,697,686,694 See accompanying notes

11 INNOCEAN WORLDWIDE INC. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2015 AND DECEMBER 31, 2014 AND FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND GENERAL: (1) Innocean Worldwide Inc. (the Company or Parent Company ) was incorporated on May 17, 2005 under the laws of the Republic of Korea. The Company and its susbsidiaries (the Group ) conduct their business as an advertising agency, and are engaged in the production of commercial advertising and promotional materials, and other related business activities. The Company s head office is located at 308, Gangnamdaero, Gangnam-gu, Seoul, Korea. As of March 31, 2015, the Company s capital stock amounts to 9,000,000 thousand and the stockholders of the Company are as follows: Name Number of shares Equity interest (%) Seong-Yi Chung 7,200, MSPE Highlight Holdings AB 3,600, Ui-Seon Chung 1,800, Hyundai Chung Mong-Koo Foundation 1,800, Others 3,600, Total 18,000, (2) The Company s consolidated subsidiaries as of March 31, 2015 and December 31, 2014 are as follows: Nature of the business Closing Date Ownership percentage March 31, 2015 December 31, 2014 Subsidiaries Location Innocean Worldwide Communication Private Ltd. (IWI) Ad-agency India Innocean Worldwide UK Ltd. (IWUK) Ad-agency UK Innocean Worldwide Europe GmbH (IWE) Ad-agency Germany Innocean Worldwide Italy Srl (IWIt) Ad-agency Italy Innocean Worldwide China Shanghai (IWC Ad-agency China Shanghai) Innocean Worldwide China Beijing (IWC Beijing) Ad-agency China Innocean Worldwide Holdings, Inc.(IWH) Holdings US Innocean Worldwide Americas, LLC (IWA) Ad-agency US Innocean Worldwide Australia Pty Ltd. (IWAu) Ad-agency Australia Innocean Worldwide Rus LLC. (IWR) Ad-agency Russia Innocean Worldwide Canada Inc. (IWC) Ad-agency Canada Innocean Worldwide Spain S.L. (IWS) Ad-agency Spain Innocean Worldwide France (IWF) Ad-agency France Innocean Worldwide Turkey (IWTr) Ad-agency Turkey Innocean Worldwide Brazil (IWB) Ad-agency Brazil Innocean Worldwide Mexico (IWM) Ad-agency Mexico In addition, two Money Market Trusts, over which the Company has the control, are included as consolidated subsidiaries

12 (3) Condensed financial positions and results of operations of the Company s consolidated subsidiaries as of and for the three months ended March 31, 2015, are as follows: Name of subsidiaries Assets Liabilities Sales Profit for the period IWI 15,024,355 5,667,343 7,465, ,586 IWUK 15,754,541 12,636,006 2,906, ,579 IWE 53,232,197 38,416,549 28,058,622 2,382,456 IWIt 11,385,647 8,691,903 2,740, ,428 IWC Shanghai 94,910,931 69,651,579 8,285,010 1,197,478 IWC Beijing 6,957,617 5,085,402 1,740, ,960 IWH(*) 29,270,247 1,461,865 - (1,028) IWA 244,417, ,451,183 70,435,246 4,677,283 IWAu 22,357,387 17,591,878 5,438, ,796 IWR 17,000,823 7,362,687 1,161,684 (53,062) IWC 26,699,572 21,301,501 9,410, ,628 IWS 9,752,905 8,900,515 2,605,963 5,166 IWF 5,268,244 4,033,470 2,958, ,938 IWTr 2,937,837 2,281, ,097 (88,967) IWB 1,829, , , ,631 IWM 1,219,963 1,056, ,217 (40,479) (*) Based on the separate financial statements, where its subsidiary is accounted for as acquisition cost. (**) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial statements, are prepared for the same reporting periods as that of the Company s. (***) Condensed financial position and results of operations of each of the consolidated subsidiaries are presented after adjustments of fair value, the recognition of goodwill and difference of accounting policy between parent company and subsidiaries and before elimination of intercompany transactions and balances

13 Condensed financial positions and results of operations of the Company s consolidated subsidiaries as of and for the three months ended March 31, 2014, are as follows: Name of subsidiaries Assets Liabilities Sales Profit for the period IWI 16,158,221 7,521,077 8,863, ,980 IWUK 9,160,694 7,174,381 3,979, ,442 IWE 62,052,462 46,901,629 32,821,523 2,434,647 IWIt 15,763,947 12,960,669 2,914, ,371 IWC Shanghai 51,927,232 33,793,302 5,139,170 1,006,020 IWC Beijing 5,719,206 3,499,927 1,853, ,901 IWH(*) 20,171, ,843-1,107 IWAu 23,923,344 19,049,883 7,414, ,564 IWR 56,720,191 38,558,017 3,202, ,781 IWC 6,742,058 1,776,029 6,791, ,619 IWS 9,217,686 8,600,824 2,483,106 (281,961) IWF 4,613,442 3,392,912 2,663, ,518 IWTr 3,081,686 2,556,515 1,045,918 (43,878) IWB 2,090, ,545 1,001, ,719 (*) Based on the separate financial statements, where its subsidiary is accounted for as acquisition cost. (**) The financial statements of all subsidiaries, which are used in the preparation of the consolidated financial statements, are prepared for the same reporting periods as the Company s. (***) Condensed financial position and results of operations of each of the consolidated subsidiaries are presented after adjustments of fair value, the recognition of goodwill and difference of accounting policy between parent company and subsidiaries and before elimination of intercompany transactions and balances. (4) Summarized cash flows of non-wholly owned subsidiary that have material non-controlling interests to the Group as of March 31, 2015, are as follows: IWA Cash flows from operating activities (47,895,811) Cash flows from investing activities (22,557) Cash flows from financing activities - Effect of exchange rate changes on cash and cash equivalents 235,281 Net decrease in cash and cash equivalents (47,683,087) (5) Details of non-wholly owned subsidiaries of the Company that have material non-controlling interests as of March 31, 2015, are as follows: IWA Ownership percentage of non-controlling interests 40.00% Non-controlling interests 13,986,587 Profit attributable to non-controlling interests 1,870,913 Comprehensive income attributable to non-controlling interests 1,942,

14 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Company maintains its official accounting records in Korean Won and prepares its consolidated financial statements in conformity with Korean International Financial Reporting Standards ( K-IFRS ), in Korean language (Hangul). Accordingly, these consolidated financial statements are intended for use by those who are informed about K-IFRS and Korean practices. The accompanying consolidated financial statements have been condensed, restructured and translated into English with certain expanded descriptions from Korean language consolidated financial statements. Certain information included in Korean language consolidated financial statements, but not required for a fair presentation of the Group s consolidated statements of financial position, comprehensive income, changes in equity or cash flows, is not presented in the accompanying consolidated financial statements. (1) Basis of consolidated financial statements preparation The Group s condensed consolidated financial statements for the three months ended March 31, 2015 and 2014, respectively, are prepared in accordance with K-IFRS 1034, Interim Financial Reporting. The condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2014, which have been prepared in accordance with K-IFRS. The significant accounting policies used for the preparation of the interim condensed consolidated financial statements are consistent with those applied to the annual consolidated financial statements for the year ended December 31, 2014, except for the adoption effect of the new and revised accounting standards and interpretations described below. 1) New and revised standards that have been applied from the year beginning on January 1, 2015, are as follows: - K-IFRS 1019 (Amendments): Employee Benefits The amendments to K-IFRS 1019 permit to recognize amount of contributions as a reduction in the service cost in which the related service is rendered if the amount of the contributions are independent of the number of years of service. The effect of the above mentioned enactments and amendments are not significant on the Group s interim condensed consolidated financial statements. - Annual Improvements to K-IFRS Cycle The amendments to K-IFRS 1102 (i) change the definitions of vesting condition and market condition ; and (ii) add definition for performance condition and service condition which were previously included within the definition of vesting condition. The amendments to K-IFRS 1103 clarify the classification and measurement of the contingent consideration in business combination. The amendments to K-IFRS 1108 clarify that a reconciliation of the total of the reportable segments assets should only be provided if the segment assets are regularly provided to the chief operating decision maker. The effect of the above mentioned enactments and amendments are not significant on the Group s interim condensed consolidated financial statements. - Annual Improvements to K-IFRS Cycle The amendments to K-IFRS 1103 clarify the scope of the portfolio exception for measuring the fair values of the group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. The amendments to K-IFRS 1113 Fair Value Measurement and K- IFRS 1040 Investment Property exist. The effect of the above mentioned enactments and amendments are not significant on the Group s interim condensed consolidated financial statements

15 2) New and revised standards that have been issued but are not yet effective as of the authorization date for issue of financial statements, and that have not been applied earlier by the Group are as follows: - K-IFRS 1016 (Amendments): Property, Plant and Equipment The amendments to K-IFRS 1016 prohibit from using a revenue-based depreciation method for items of property, plant and equipments. The amendments are effective for the annual periods beginning on or after January 1, K-IFRS 1038 (Amendments): Intangible Assets The amendments to K-IFRS 1038 rebut presumption that revenue is not an appropriate basis for the amortization of intangible assets, which presumption can only be rebutted when the intangible asset is expressed as a measure of revenue or when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The amendments to K-IFRS 1038 are effective for annual periods beginning on or after January 1, K-IFRS 1111(Amendments): Joint Arrangements The amendments to K-IFRS 1111 provide guidance on how to account for the acquisition of a joint operation that constitues a business as defined in K-IFRS 1103 Business Combinations. A joint operator is also required to disclose the relevant information required by K-IFRS 1103 and other standards for business combinations. The amendments to K-IFRS 1111 are effective for the annual periods beginning on or after January 1, The Group does not anticipate that the above mentioned enactments and amendments will have any significant effect on the Group s consolidated financial statements. (2) Significant accounting judgments and key sources of estimation uncertainties In the preparation of the Group s interim consolidated financial statements, management is required to apply accounting policies and make judgments, estimation and assumptions affecting the carrying amounts of assets and liabilities, income and expenses. Actual results may be different from those estimations. The management s significant judgments about the application of the Group s accounting policies and the main resources of the uncertainty are consistent with those of the annual consolidated financial statements for the year ended December 31,

16 3. FINANCIAL INSTRUMENTS: Financial instruments as of March 31, 2015 and December 31, 2014, consist of the following: Accounts March 31, 2015 December 31, 2014 Short-term financial Time deposits 103,862, ,597,960 instruments Financial assets at fair value through profit or loss ( FVTPL )(*) 94,156,910 94,583, ,019, ,181,900 Long-term financial instruments Guarantee deposit for checking accounts 6,000 6,000 Long-term financial institution deposits 328, , , ,006 (*) It consist of MMT(Money Market Trust) designated as FVTPL and the Company has power of control as of March 31, 2015 and December 31, TRADE AND OTHER RECEIVABLES: (1) Trade and other receivables as of March 31, 2015 and December 31, 2014, consist of the following: March 31, 2015 December 31, 2014 Trade receivables 604,505, ,820,267 Less: Allowance for doubtful accounts (7,106,482) (7,181,210) Other receivables 2,608,780 4,313,002 Less: Allowance for doubtful accounts (4,584) (22,353) 600,003, ,929,706 (2) The changes in allowance for doubtful accounts for the three months ended March 31, 2015, are as follows: Trade receivables Other receivables Beginning balance 7,181,210 22,353 Reversal for allowance for doubtful accounts, net (68,789) (17,769) Foreign exchange differences (5,939) - Ending balance 7,106,482 4,584 The changes in allowance for doubtful accounts for the three months ended March 31, 2014, are as follows: Trade receivables Other receivables Beginning balance 2,712,110 37,675 Reversal for allowance for doubtful accounts, net (758,803) (1,876) Foreign exchange differences Ending balance 1,953,813 35,

17 (3) The aging analysis of trade and other receivables that is delinquent but not impaired as of March 31, 2015 a nd December 31, 2014, is as follows: Less than 3 months March 31,2015 Over 3 months, less than 6 months Over 6 months Total Accounts Trade receivables 59,020,155 8,766,764 3,714,710 71,501,629 Other receivables 51,358-31,574 82,932 Less than 3 months December 31, 2014 Over 3 months, less than 6 months Over 6 months Total Accounts Trade receivables 57,167,347 5,868,381 6,915,333 69,951,062 Other receivables 573, , ,407 1,351,752 (4) Aging analysis of impaired trade and other receivables as of March 31, 2015 and December 31, 2014, is as follows: Less than 3 months March 31, 2015 Over 3 months, less than 6 months Over 6 months Total Accounts Trade receivables - 3,021,714 3,985,962 7,007,676 Less: Allowance for doubtful accounts - (2,872,744) (3,789,454) (6,662,198) - 148, , ,478 Less than 3 months December 31, 2014 Over 3 months, less than 6 months Over 6 months Total Accounts Trade receivables 3,021,714 3,985,962-7,007,676 Less: Allowance for doubtful accounts (2,872,744) (3,789,454) - (6,662,198) 148, , ,478 Besides the allowances for doubtful accounts on above impaired trade and other receivables, the Group accounted for allowance for doubtful accounts amounting to 448,868 thousand and 541,365 thousand as of March 31, 2015 and December 31, 2014 respectively, by the collective impairment test

18 5. OTHER FINANCIAL ASSETS: Other financial assets as of March 31, 2015 and December 31, 2014, consist of the following: March 31, 2015 December 31, 2014 Accounts Current Non-current Current Non-current Currency foward 125, Stock warrants 182, ,881 - Accrued income 3,099,379-2,536,664 - Leasehold deposits 18,454 4,930, ,909 4,792,854 Short-term loans 1,125,025-1,117,986-4,550,916 4,930,389 3,968,440 4,792, OTHER ASSETS: Other assets as of March 31, 2015 and December 31, 2014, consist of the following: March 31, 2015 December 31, 2014 Accounts Current Non-current Current Non-current Due from customers for contract work 28,209,727-15,095,843 - Advanced payments 2,841,858-8,027,254 - Prepaid expenses 1,275,438 59,175 1,103,935 60,620 Prepaid value added tax 1,502,560-3,094,879 - Others 3,868,576-5,735,894-37,698,159 59,175 33,057,805 60, AFS FINANCIAL ASSETS: Available-for-sale (AFS) financial assets as of March 31, 2015 and December 31, 2014, consist of the following: Ownership percentage Amortized cost March 31, 2015 December 31, 2014 Valuation difference Book value Book value Non-marketable securities: ISU-S&M Contents Investment Fund 5% 500, , ,000 Debt securities: The Education Co., Ltd. - 1,924,042 24,638 1,948,680 1,904,704 2,424,042 24,638 2,448,680 2,404,

19 8. INVESTMENTS IN JOINT VENTURE AND ASSOCIATES: (1) Investments in joint venture and associates as of March 31, 2015 and December 31, 2014, are as follows: Nature of business Location December 31, 2014 March 31, 2015 Ownership percentage Book value Book value (%) Joint venture: Beijing Innocean-CBAC Advertising Co., Ltd. (ICBAC)(*) Ad-agency China ,260,015 5,945,479 Associates : Mate Communications Co., Ltd. Ad-agency Korea ,107,035 5,048,632 Inspirecorp. Co., Ltd. Education Korea , ,322 UNION Contents Value- Up Investment Fund Investment Korea ,021,832 2,985,087 IWA (**) Ad-agency U.S.A ,615,773 14,211,520 (*) ICBAC is categorized as a joint venture although the Group owns the majority of shares, because the Group have joint control over the entity by virtue of an agreement with the other investors. (**) The subsidiary is newly included in the consolidation scope because the Group obtained additional shares for the year ended December 31, (2) The changes in investments in joint venture and associates for the three months ended March 31, 2015, are as follows: Beginning of the period Share of profits for the period Others End of the period Joint venture: ICBAC 5,945,479 1,262,771 51,765 7,260,015 Associates : Mate Communications Co., Ltd. 5,048,632 58,403-5,107,035 Inspirecorp. Co., Ltd. 232,322 (5,431) - 226,891 UNION Contents Value-Up Investment Fund 2,985,087 36,745-3,021,832 14,211,520 1,352,488 51,765 15,615,

20 The changes in investments in joint venture and associates for the three months ended March 31, 2014, are as follows: Beginning of the period Share of profits for the period Others End of the period Joint venture: ICBAC 5,139,332 1,257,891 (74,652) 6,322,571 Associates : Mate Communications Co., Ltd. 4,772,135 (127,101) - 4,645,034 Inspirecorp. Co., Ltd. 300,120 (17,786) - 282,334 IWA 13,424,412 1,803,633 83,329 15,311,374 23,635,999 2,916,637 8,677 26,561,313 (3) Condensed financial information of the Group s joint venture and associates as of and for the three months ended March 31, 2015, is as follows: Current assets Non-current assets Current liabilities Non-current liabilities Joint venture: ICBAC 54,606,145 67,140 40,437,963 - Associates : Mate Communications Co., Ltd. 15,919,680 2,135,588 4,477,939 87,428 Inspirecorp. Co., Ltd. 26,117 97,210 37,607 - UNION Contents Value-Up Investment Fund 6,645,603 4,436,867 2,420 - Sales Other Profit for the comprehensive period income Total comprehensive income Joint venture: ICBAC 8,054,077 2,476,021-2,476,021 Associates : Mate Communications Co., Ltd. 5,073, , ,290 Inspirecorp. Co., Ltd. 59,495 (18,658) - (18,658) UNION Contents Value-Up Investment Fund 82,722 8,644-8,

21 Condensed financial information of the Group s joint venture and associates as of and for the three months ended March 31, 2014, is as follows: Current assets Non-current assets Current liabilities Non-current liabilities Joint venture: ICBAC 31,034, ,272 18,866,836 - Associates : Mate Communications Co., Ltd. 14,658,974 1,976,081 4,675, ,760 Inspirecorp. Co., Ltd. 194,173 85,210 2,995 - IWA 178,563,045 4,928, ,420,805 - Sales Other Profit for the comprehensive period income Total comprehensive income Joint venture: ICBAC 5,455,022 2,466,453-2,466,453 Associates : Mate Communications Co., Ltd. 2,896,574 (448,941) - (448,941) Inspirecorp. Co., Ltd. 7,236 (61,168) - (61,168) IWA 64,592,468 4,509,083-4,509,083 (4) Condensed additional financial information of the Group s joint venture as of and for the three months ended March 31, 2015, is as follows: Name of the company Current financial liabilities Non-current financial liabilities Depreciation and amortization Cash and cash equivalents Interest income Interest expenses Income tax expense ICBAC 24,921,701 40,437,963-38,158 74, ,340 Condensed additional financial information of the Group s joint venture as of and for the three months ended March 31, 2014, is as follows: Name of the company Current financial liabilities Non-current financial liabilities Depreciation and amortization Cash and cash equivalents Interest Income Interest Expenses Income tax Expense ICBAC 12,227,972 18,866,836-44,336 38, ,

22 (5) Reconciliations of the Group s share of net assets of the Group s joint venture and associates to their carrying amounts as of March 31, 2015, are as follows: Net asset Ownership percentage Group s share of net asset Goodwill Book value Joint venture: ICBAC 14,235, % 7,260,015-7,260,015 Associates : Mate Communications Co., Ltd. 13,489, % 3,818,999 1,288,036 5,107,035 Inspirecorp. Co., Ltd. 85, % 24, , ,891 UNION Contents Value-Up Investment Fund 11,080, % 3,021,832-3,021,832 Reconciliations of the Group s share of net assets of the Group s joint venture and associates to their carrying amounts as of December 31, 2014, are as follows: Net asset Ownership percentage Group s share of net asset Goodwill Book value Joint venture: ICBAC 11,657, % 5,945,479-5,945,479 Associates : Mate Communications Co., Ltd. 13,283, % 3,760,596 1,288,036 5,048,632 Inspirecorp. Co., Ltd. 104, % 30, , ,322 UNION Contents Value-Up Investment Fund 10,945, % 2,985,087-2,985,

23 9. PROPERTY, PLANT AND EQUIPMENT: The changes in property, plant and equipment ( PP&E ) for the three months ended March 31, 2015, are as follows: Beginning of the period Acquisitions Disposals Depreciation Others End of the period Structures 69, (16,044) - 53,466 Equipments 6,010, ,341 (672) (676,633) (159,881) 5,529,932 Leasehold improvements 4,737,250 15,628 - (485,185) (218,571) 4,049,122 Others 382,240 41,996 - (44,699) (23,260) 356,277 11,199, ,965 (672) (1,222,561) (401,712) 9,988,797 The changes in PP&E the three months ended March 31, 2014, are as follows: Beginning of the period Acquisitions Disposals Depreciation Others End of the period Structures 133, (16,040) - 117,640 Equipments 4,479, ,654 - (388,851) (131,491) 4,174,876 Leasehold improvements 3,917, ,132 (1,360) (410,349) 199,611 4,117,225 Others 369,955 5,543 (82) (45,055) 9, ,928 8,900, ,329 (1,442) (860,295) 77,687 8,749,

24 10. INTANGIBLE ASSETS: (1) The changes in intangible assets for the three months ended March 31, 2015, are as follows: Beginning of the period Acquisition Amortization Impairment loss Others End of the period Goodwill 25,358, ,726 25,497,013 Software 657,358 19,618 (56,063) - (59,717) 561,196 Membership 10,013,644 1,375,500 - (120,000) - 11,269,144 Customer Relationships 14,642,752 - (128,364) - 698,700 15,213,088 Others 5,493,524 - (43,400) - (618,724) 4,831,400 56,165,565 1,395,118 (227,827) (120,000) 158,985 57,371,841 The changes in intangible assets for the three months ended March 31, 2014, are as follows: Beginning of the period Acquisition Amortization Others End of the period Goodwill 3,773, (38,800) 3,734,788 Software 822,731 8,577 (51,199) 4, ,631 Membership 10,003, ,003,644 Others 5,048,380 - (43,410) - 5,004,970 19,648,343 8,577 (94,609) (34,278) 19,528,033 (2) Goodwill of the Group as of March 31, 2015 and December 31, 2014, consist of the following : March 31, 2015 December 31, 2014 IWA(*) 21,639,322 21,525,740 IWC Beijing (*) 3,857,691 3,832,547 25,497,013 25,358,287 (*) Changes of book value are due to the effect of foreign currency exchange differences

25 11. TRADE AND OTHER PAYABLES : Trade and other payables as of March 31, 2015 and December 31, 2014, consist of the following: March 31, 2015 December 31, 2014 Accounts Current Non-current Current Non-current Trade payables 603,465, ,290,925 - Other payables 12,366,048-13,448,016 - Accrued expenses 10,021,164 40,188 15,662,255 48, ,852,382 40, ,401,196 48, OTHER FINANCIAL LIABILITIES: Other financial liabilities as of March 31, 2015 and December 31, 2014, consist of the following: Accounts March 31, 2015 December 31, 2014 Currency foward 43,149 20,438 Dividends payable 12,600,000-12,643,149 20, OTHER LIABILITIES: Other liabilities as of March 31, 2015 and December 31, 2014, consist of the following: March 31, 2015 December 31, 2014 Accounts Current Non-current Current Non-current Advance received 17,704,116-21,127,135 - Value-added tax withholding 3,983,432-1,424,343 - Withholdings 1,168,130-2,240,970 - Unearned income 991, ,777 - Others 35, ,640 5,909, ,929 23,882, ,640 31,396, ,

26 14. RETIREMENT BENEFIT PLAN: (1) The main actuarial assumptions used by the Company as of March 31, 2015 and December 31, 2014, are as follows: March 31, 2015 December 31, 2014 Discount rate 2.78% 2.79% Expected rate of salary increase 6.59% 6.61% (2) The amounts recognized in the condensed consolidated statements of financial position related to defined benefit plans as of March 31, 2015 and December 31, 2014, are as follows: March 31, 2015 December 31, 2014 Present value of defined benefit obligations 24,265,577 23,559,645 Fair value of plan assets (19,068,541) (20,400,794) Net defined benefit liabilities 5,197,036 3,158,851 (3) The changes in the net defined benefit liability for the three months ended March 31, 2015, are as follows: Present value of the defined benefit obligations Fair value of the plan assets Net defined benefit liabilities Beginning of the period 23,559,645 (20,400,794) 3,158,851 Current service cost 1,227,171-1,227,171 Interest expenses (income) 159,507 (123,926) 35,581 Subtotal 24,946,323 (20,524,720) 4,421,603 Remeasurements: Actuarial loss arising from changes in financial assumptions (43,595) - (43,595) Subtotal (43,595) - (43,595) Benefits paid (595,067) 1,456, ,112 Effect of exchange rate and others (42,084) - (42,084) End of the period 24,265,577 (19,068,541) 5,197,

27 The changes in the net defined benefit liability for the three months ended March 31, 2014, are as follows: Present value of the defined benefit obligations Fair value of the plan assets Net defined benefit liabilities Beginning of the period 19,391,273 (13,732,654) 5,658,619 Current service cost 1,202,815-1,202,816 Interest expenses (income) 164,221 (111,175) 53,046 Subtotal 20,758,309 (13,843,829) 6,914,481 Remeasurements: Actuarial loss arising from changes in financial assumptions 29,267-29,267 Subtotal 29,267-29,267 Benefits paid (285,766) 642, ,757 Effect of exchange rate and others 9,594-9,593 End of the period 20,511,404 (13,201,306) 7,310,098 (4) The fair value of the plan assets as of March 31, 2015 and December 31, 2014, consists of the following: March 31, 2015 December 31, 2014 Insurance instruments 19,068,541 20,400,

28 15. PROVISIONS: The changes in provisions for the three months ended March 31, 2015, are as follows: Provision for restoration liabilities Other longterm employee benefits Others Total Beginning of the period 646,601 1,632,614 3,741,899 6,021,114 Charged (14,537) 49,261 (1,304,060) (1,269,336) Utilized Amortization of present value discounts and change of discount rate Others (2,343) - (88,105) (90,448) End of the period 629,916 1,681,875 2,349,734 4,661,525 Classification: Current , ,553 Non current 629,916 1,681,875 1,536,181 3,847,972 The changes in provisions for the three months ended March 31, 2014, are as follows: Provision for restoration liabilities Other long-term employee benefits Others Total Beginning of the period 598,732 1,188,384 2,819,228 4,606,344 Charged 21,478 38,351 96, ,273 Utilized - - (480,408) (480,408) Amortization of present value discounts and change of discount rate Others (2,535) (1,806) End of the period 621,109 1,226,735 2,432,729 4,280,573 Classification: Current - - 1,076,362 1,076,362 Non current 621,109 1,226,735 1,356,367 3,204,

29 16. CAPITAL STOCK : Capital stock as of March 31, 2015 and December 31, 2014, consists of the following: Type of share Authorized Issued Par value March 31, 2015 December 31, 2014 Common share 24,000,000 shares 18,000,000 shares 500 9,000,0000 9,000,000 (*) The Group split face value to 500 per share from 5,000 at the General Meeting of Shareholders on March 23rd, OTHER COMPONENTS OF EQUITY: (1) The details of other components of equity as of March 31, 2015 and December 31, 2014, are as follows: March 31, 2015 December 31, 2014 Gain on valuation of AFS financial assets, net 66,214 47,539 Gain on share of the other comprehensive income of equity-accounted investees 416, ,743 Loss on foreign operations translation, net (13,373,427) (10,397,079) (12,890,706) (9,984,797) (2) Changes in gain on valuation of AFS assets for the three months ended March 31, 2015 and 2014, are as follows: March 31, 2015 March 31, 2014 Beginning of the period 47,539 - Gain on changes in fair value of AFS financial assets 24,638 82,448 Tax effect (5,963) (19,953) End of the period 66,214 62, RETAINED EARNINGS: (1) Retained earnings as of March 31, 2015 and December 31, 2014, are as follows: March 31, 2015 December 31, 2014 Legal reserve (*) 4,500,000 4,500,000 Discretionary reserve Reserve for establishment of research center for brand 18,000,000 18,000,000 Reserve for development for overseas markets 21,500,000 21,500,000 Unappropriated 373,377, ,280, ,377, ,280,070 (*) The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve, a minimum of 10% of annual cash dividends declared, until such reserve equals 50% of its capital stock issued. The Company s accumulated legal reserve has already reached 50% of its paid-in capital as of March 31, 2015.The legal reserve may not be utilized for cash dividends, but may only be used to offset a deficit, if any, or be transferred to capital stock

30 (2) Changes in retained earnings for the three months ended March 31, 2015 and 2014, are as follows: March 31, 2015 March 31, 2014 Beginning of the period 416,280, ,591,998 Net income attributable to the owners of the Company 13,665,204 13,886,688 Payment of dividends (12,600,000) (7,200,000) Remeasurements of defined benefit plans 43,595 (29,267) Tax effect (11,791) 10,667 End of the period 417,377, ,260,

31 19. SALES: (1) Sales for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Rendering of services 223,594, ,692,069 Sales of goods 3,485,143 5,116, ,079, ,808,961 (2) The sales revenue from the customer who accounts for more than 10% of the Group s sales revenue are as follows: March 31, 2015 March 31, 2014 Hyundai Motor Company 30,165,036 23,258, SELLING AND ADMINISTRATIVE EXPENSES: Selling and administrative expenses for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Payroll 33,370,700 22,576,908 Post-employment benefits 1,262,752 1,255,862 Welfare expenses 3,597,688 2,338,696 Travel expenses 939, ,119 Entertainment expenses 724, ,503 Communication expenses 421, ,773 Tax and dues 367, ,505 Depreciation 1,194, ,295 Amortization 227,827 94,609 Rent 3,565,995 2,752,920 Repairs 193, ,560 Vehicles maintenance 286, ,128 Employee training cost 131, ,292 Publication expenses 264, ,927 Office supplies expenses 354,959 98,247 Supplies expenses 80, ,771 Service charges 2,808,329 2,329,307 Advertisements 357, ,017 Reversal for allowance for doubtful accounts (86,558) (760,679) Market development expenses 479, ,646 Others 1,199, ,287 51,743,122 36,492,

32 21. FINANCE INCOME AND EXPENSES: (1) Finance income for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Interest income 1,854,184 1,964,007 Dividend income 100, ,000 Gain on foreign exchange transactions 2,883, ,225 Gain on foreign currency translation 153, ,444 Gain on disposals of other financial assets 6,440 - Gain on valuation of derivatives 125,176 40,176 5,122,125 3,338,852 (2) Finance expenses for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Loss on foreign exchange transactions 3,146, ,144 Loss on foreign currency translation 879, ,478 Loss on valuation of derivatives 22,711 59,053 Others 1,870 1,779 4,050, , OTHER INCOME AND EXPENSES: (1) Other income for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Gain on disposals of PP&E 1, Miscellaneous revenues 1,256, ,446 Others 1,120 17,188 1,258, ,921 (2) Other expenses for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Loss on disposals of PP&E - 1,360 Impairment loss on intangible assets 120,000 - Miscellaneous losses 4,996 24,224 Donations 17,898 3,747 Others 58,532 57, ,426 86,

33 23. EXPENSES BY NATURE: Expenses by nature for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Outsourced production expenses 135,769,378 90,803,649 Salaries 38,231,140 26,171,465 Depreciation 1,222, ,295 Amortization 227,827 94,609 Service charges 16,658,606 4,606,663 Others 17,037,036 15,786, ,146, ,323, INCOME TAX EXPENSE: (1) Income tax expenses for the three months ended March 31, 2015 and 2014, consist of the following: March 31, 2015 March 31, 2014 Income tax currently payable 5,450,344 4,670,726 Adjustments recognized in the current period in relation to the prior periods (19,723) 612 Changes in deferred income tax due to: Temporary differences (224,451) 630,778 Items directly charged to equity 5,829 (30,619) Others 666, ,515 Income tax expense 5,878,467 5,674,012 (2) The reconciliations between income before income tax and income tax expense pursuant to Corporate Income Tax Law of Korea for the three months ended March 31, 2015 and 2014, are as follows: March 31, 2015 March 31, 2014 Income before income tax 21,414,584 18,843,962 Income tax expense calculated at current applicable tax rates 5,159,293 4,994,852 Adjustments: Non-taxable income - - Non-deductible expenses 179, ,296 Tax credits - - Others 539, , , ,160 Income tax expense 5,878,467 5,674,012 Effective tax rate 27.45% 30.11%

34 25. EARNINGS PER COMMON SHARE: Basic earnings per common share are computed by dividing profit for the period attributable to owners of the company by the weighted-average number of common shares outstanding during the period. The Group did not compute diluted earnings per common share for the three months ended March 31, 2015 and 2014 since there were no dilutive items during the periods. Basic earnings per common share for the three months ended March 31, 2015 and 2014, are computed as follows: March 31, 2015 March 31, 2014 (In Korean Won) Profit attributable to the owners of the Parent Company 13,665,203,914 13,169,950,637 Weighted-average number of common shares outstanding 18,000,000 shares 18,000,000 shares Basic earnings per common share (*) The Group split face value to 500 per share from 5,000 at the General Meeting of Shareholders on March 23rd, FINANCIAL INSTRUMENTS: (1) Financial assets by categories as of March 31, 2015, are as follows: Financial assets at FVTPL Loans and receivables AFS financial assets Book value Fair value Cash and cash equivalents - 179,236, ,236, ,236,799 Short-term and longterm financial instruments 94,156, ,196, ,353, ,353,660 Trade and other receivables - 600,003, ,003, ,003,671 AFS financial assets - - 2,448,680 2,448,680 2,448,680 Other financial assets 308,057 9,173,248-9,481,305 9,481,305 94,464, ,610,468 2,448, ,524, ,524,115 Financial assets by categories as of March 31, 2014, are as follows: Financial assets at FVTPL Loans and receivables AFS financial assets Book value Fair value Cash and cash equivalents - 216,912, ,912, ,912,849 Short-term and longterm financial instruments 94,583, ,952, ,536, ,536,906 Trade and other receivables - 624,929, ,929, ,929,706 AFS financial Assets - - 2,404,704 2,404,704 2,404,704 Other financial assets 182,881 8,578,413-8,761,294 8,761,294 94,766, ,373,934 2,404,704 1,052,545,459 1,052,545,