REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION BY THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS INTOUCH HOLDINGS PUBLIC COMPANY LIMITED We have reviewed the consolidated statement of financial position of Intouch Holdings Public Company Limited and its subsidiaries and the separate statement of financial position of Intouch Holdings Public Company Limited as at March, 2016, and the related consolidated and separate statements of profit or loss and profit or loss and other comprehensive income, changes in shareholders equity and cash flows for the three-month period then ended, and the condensed notes to the. The Company s management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard No. 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with Thai Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the aforementioned interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard No. 34 Interim Financial Reporting. Emphasis of Matter Without modifying our conclusion, we draw attention to condensed Note 2.2. and 18.2 to the interim, on February 1, 2016, ITV Public Company Limited ( ITV ) (Subsidiary) received a copy of the Arbitration s award, the Case Number Red 1/2559, which was ruled on January 14, 2016 regarding the Case Number Black 46/ 2550 between ITV and the Office of the Permanent Secretary of the Office of the Prime Minister ( PMO ) with the claim for whether a termination of the Operating Agreement was legal or not and for damages arising from the illegitimate termination of the Operating Agreement. The Arbitration s award had the ruling that both parties have duty to pay to each other at the same amount. Although the ruling is final and binding both ITV and the PMO, if either party wants to have the Arbitration s award withdrawn, that party may submit a petition to revoke at the Court having jurisdiction over the case, within the timeframe as stipulated by law. At present, ITV has not been informed and/or received any document regarding the PMO s petition. Accordingly, ITV was unable to evaluate the circumstance due to such uncertainty. However, ITV has ceased recording additional provision for interest of unpaid operating fee and will consider any adjustments when ITV receives a copy of the PMO s petition.
Deloitte Touche Tohmatsu Jaiyos Audit ด ลอยท ท ช โธม ทส ไชยยศ สอบบ ญช The events indicate a material uncertainty which may cast significant doubt on ITV s ability to continue as a going concern. Consequently, we are unable to express a conclusion on the ITV interim financial information as at March, 2016 due to the significance of the matters mentioned above. Assets and liabilities of ITV included in the consolidated as at March, 2016, represent 2.0% and 22.5% of consolidated total assets and liabilities, respectively and the investment in ITV included in the Company s separate as at March, 2016 is nil because the Company has fully recognized provision for impairment of investment. Other Matter The consolidated statement of financial position of Intouch Holdings Public Company Limited and its subsidiaries and the separate statement of financial position of Intouch Holdings Public Company Limited as at December, 2015, presented herein as comparative information, were audited by other auditors, whose audit report thereon dated February 17, 2015 expressed an unmodified opinion on those statements with emphasis of matter paragraph regarding the material uncertainty of the liabilities arising from the litigation cases of ITV Public Company Limited and the adoption of the new and revised Thai Financial Reporting Standards. The consolidated and separate statements of profit or loss and profit or loss and other comprehensive income, changes in shareholders equity and cash flows for the three-month period ended March, 2015, presented herein as comparative information, were reviewed by other auditors, whose review report thereon dated May 11, 2015, concluded that nothing had come to their attention that caused them to believe that such interim financial information was not prepared, in all material respects, in accordance with Thai Accounting Standard No. 34 Interim Financial Reporting with an emphasis of matter paragraph regarding the material uncertainty of the dispute and the ability to continue as a going concern of ITV Public Company Limited. Dr. Suphamit Techamontrikul Certified Public Accountant (Thailand) BANGKOK Registration No. 3356 May 13, 2016 DELOITTE TOUCHE TOHMATSU JAIYOS AUDIT CO., LTD. - 2 -
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF FINANCIAL POSITION AS AT MARCH 2016 Consolidated Separate Notes March December March December 2016 2015 2016 2015 (Unaudited) (Unaudited) Assets Current assets Cash and cash equivalents 4,135,259 3,620,623 162,023 175,110 Current investments 5 4,743,665 4,403,960 1,520,444 1,624,487 Dividend receivable from related companies 3 7,805,601-8,098,667 - Trade and other receivables 6 2,597,427 2,6,894 9,605 11,477 Amounts due from, advances and loans to related parties 3 207,116 209,147 583 275 Inventories 226,274 229,799 - - Non-current assets held for discontinued operations 7 54,128 54,145 - - Total current assets 19,769,470 11,149,568 9,791,322 1,811,349 Non-current assets Investments in subsidiaries 8 - - 3,951,954 3,951,954 Investments in joint ventures 8 1,462,072 1,440,394 - - Investments in associates 8 16,021,886 20,589,752 8,538,289 8,567,295 Long-term investments 5 22,665 22,665 22,665 22,665 Long-term loans to related parties 3 2,110,567 2,161,864 - - Property, plant and equipment 9 9,220,811 9,145,629 60,577 63,149 Intangible assets under operating agreements 9 10,724,285 11,227,187 - - Other intangible assets 9 944,033 974,724 4,721 5,251 Deferred tax assets 241,363 243,005 - - Other non-current assets 758,027 871,974 4,036 4,036 Total non-current assets 41,505,709 46,677,194 12,582,242 12,614,350 Total assets 61,275,179 57,826,762 22,373,564 14,425,699 See condensed notes to the 3
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF FINANCIAL POSITION (CONTINUED) AS AT MARCH 2016 Consolidated Separate Notes March December March December 2016 2015 2016 2015 (Unaudited) (Unaudited) Liabilities and shareholders' equity Current liabilities Short-term loans from financial institutions 11 1,616,423 1,650,520 - - Trade and other payables 10 1,643,562 2,251,523 37,709 114,296 Accounts payable - equipment 75,9 92,473 - - Dividend payable 8,408,142-7,919,858 - Amounts due to related parties 3 332 272 952 201 Current portion of long-term loans 11 393,958 69,063 - - Accrued operating agreement fees 579,056 333,402 - - Provision for unpaid operating agreement fee and interest 18.2 6,772,226 6,756,832 - - Income tax payable 301,888 166,481 - - Liabilities of non-current assets held for discontinued operations 7 175 191 - - Total current liabilities 19,791,081 11,320,757 7,958,519 114,497 Non-current liabilities Long-term accounts payable - equipment 244,1 250,151 - - Long-term loans 11 9,550,575 10,004,092 - - Employee benefit obligations 477,358 484,088 45,564 65,519 Other non-current liabilities 404,086 427,290 - - Total non-current liabilities 10,676,330 11,165,621 45,564 65,519 Total liabilities 30,467,411 22,486,378 8,004,083 180,016 See condensed notes to the 4
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF FINANCIAL POSITION (CONTINUED) AS AT MARCH 2016 Consolidated Separate Notes March December March December 2016 2015 2016 2015 (Unaudited) (Unaudited) Shareholders' equity Share capital 12 Authorised share capital - ordinary shares 5,000,000 5,000,000 5,000,000 5,000,000 Issued and paid-up share capital - ordinary shares 3,206,420 3,206,420 3,206,420 3,206,420 Additional paid in capital 12 Premium on ordinary shares 10,341,569 10,341,569 10,341,569 10,341,569 Retained earnings Appropriated Legal reserve 500,000 500,000 500,000 500,000 Unappropriated 2,594,745 7,056,985 281,093 164,404 Other components of shareholders' equity 4,370,335 4,378,745 40,399 33,290 Equity attributable to owners of the Company 21,013,069 25,483,719 14,369,481 14,245,683 Non-controlling interests 9,794,699 9,856,665 - - Total shareholders' equity 30,807,768 35,340,384 14,369,481 14,245,683 Total liabilities and shareholders' equity 61,275,179 57,826,762 22,373,564 14,425,699 See condensed notes to the 5
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF PROFIT OR LOSS FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Separate Notes 2016 2015 2016 2015 Income 14 Revenue from sales and rendering of services 3,240,961 3,117,834 - - Dividend income 3, 8 - - 8,098,667 7,461,230 Share of profits of investments in joint ventures 8 13,933 46,370 - - Share of profits of investments in associates 8 3,258,183 4,004,336 - - Net foreign exchange gain 114,122 74,353 - - Other income 97,272 74,683 37,132 18,671 Total income 6,724,471 7,7,576 8,135,799 7,479,901 Expenses 14 Cost of sales and rendering of services 1,550,665 1,641,490 - - Operating agreement fee 273,336 251,535 - - Loss on provision for interest of unpaid operating agreement fee 18.2 15,395 106,870 - - Selling expenses 72,238 87,973 - - Administrative expenses 583,347 526,934 76,601 77,933 Management benefit expenses 3 42,140 49,206 22,260 22,605 Total expenses 2,537,121 2,664,008 98,861 100,538 Profit before finance costs and income tax expense 4,187,350 4,653,568 8,036,938 7,379,363 Finance costs (69,961) (82,723) (391) (507) Profit before income tax expense 4,117,389 4,570,845 8,036,547 7,378,856 Income tax expense (204,095) (151,059) - - Profit for the periods - continuing operations 3,913,294 4,419,786 8,036,547 7,378,856 Profit for the periods from discontinued operations - net of income tax 7-344 - - Profit for the periods 3,913,294 4,420,130 8,036,547 7,378,856 See condensed notes to the 6
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF PROFIT OR LOSS (CONTINUED) FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Separate Notes 2016 2015 2016 2015 Profit Attributable to: Owners of the Company Profit for the periods - continuing operations 3,457,618 4,100,613 8,036,547 7,378,856 Profit for the periods - discontinued operations - 344 - - Profit for the periods - Owners of the Company 3,457,618 4,100,957 8,036,547 7,378,856 Non-controlling interests Profit for the periods - continuing operations 455,676 9,173 - - Loss for the periods - discontinued operations - - - - Profit for the periods - Non-controlling interests 455,676 9,173 - - 3,913,294 4,420,130 8,036,547 7,378,856 Basic earnings per share (Baht per share) From continuing operations 1.08 1.28 2.51 2.30 From discontinued operations - - - - Owners of the Company 15 1.08 1.28 2.51 2.30 Diluted earnings per share (Baht per share) From continuing operations 1.08 1.28 2.51 2.30 From discontinued operations - - - - Owners of the Company 15 1.08 1.28 2.51 2.30 See condensed notes to the 7
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Separate 2016 2015 2016 2015 Profit for the periods 3,913,294 4,420,130 8,036,547 7,378,856 Other comprehensive income, net of income tax Items that are or maybe reclassified to profit or loss Foreign currency translation differences for foreign operations (49,652) (105,490) - - Net change in fair value of available-for-sale investments 2,464 (196,812) 4,201 1,611 Share of other comprehensive income of associates - 1,082 - - (47,188) (301,220) 4,201 1,611 Items that will never be reclassified to profit or loss Share of other comprehensive income of associates 27,066 - - - 27,066 - - - Other comprehensive income for the periods, net of income tax (20,122) (301,220) 4,201 1,611 Total comprehensive income for the periods 3,893,172 4,118,910 8,040,748 7,380,467 Total comprehensive income attributable to: Owners of the Company 3,468,628 3,978,765 8,040,748 7,380,467 Non-controlling interests 424,544 140,145 - - 3,893,172 4,118,910 8,040,748 7,380,467 See condensed notes to the 8
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Shareholders' equity attributable to owners of the Company Other components of shareholders' equity Unrealised Fair value Share of other Total Equity Issued and Retained earnings Other reserves gain on Currency changes in comprehensive other components attributable to Nonpaid-up Premium on Legal share-based dilution from translation available-for-sale income of of shareholders' owners of controlling Total share capital share capital reserve Unappropriated payment investments differences investments associates equity the Company interests shareholders' equity Opening balance at 1 January 2015 3,206,420 10,341,569 500,000 6,086,696 13,840 4,216,974 (32,886) 343,191 2,482 4,543,601 24,678,286 9,552,582 34,230,868 Changes in shareholders' equity for the period Dividends - - - (7,141,652) - - - - - - (7,141,652) (474,400) (7,616,052) Share-based payment transactions - - - - 3,242 - - - - 3,242 3,242 1,380 4,622 Unrealised gain on dilution of investments in subsidiaries and associates - - - - - 3,254 - - - 3,254 3,254-3,254 Comprehensive income for the period Profit for the period - - - 4,100,957 - - - - - - 4,100,957 9,173 4,420,130 Other comprehensive income for the period Items that are or may be reclassified to profit or loss - - - - - - (43,203) (80,071) 1,082 (122,192) (122,192) (179,028) (301,220) Total comprehensive income for the period - - - 4,100,957 - - (43,203) (80,071) 1,082 (122,192) 3,978,765 140,145 4,118,910 Balance at March 2015 3,206,420 10,341,569 500,000 3,046,001 17,082 4,220,228 (76,089) 263,120 3,564 4,427,905 21,521,895 9,219,707 30,741,602 See condensed notes to the 9
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUED) FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Shareholders' equity attributable to owners of the Company Other components of shareholders' equity Unrealised Fair value Share of other Total Equity Issued and Retained earnings Other reserves gain on Currency changes in comprehensive other components attributable to Nonpaid-up Premium on Legal share-based dilution from translation available-for-sale income of of shareholders' owners of controlling Total Notes share capital share capital reserve Unappropriated payment investments differences investments associates equity the Company interests shareholders' equity Opening balance at 1 January 2016 3,206,420 10,341,569 500,000 7,056,985 28,400 4,229,016 103,398 18,539 (608) 4,378,745 25,483,719 9,856,665 35,340,384 Changes in shareholders' equity for the period Dividends 16 - - - (7,919,858) - - - - - - (7,919,858) (488,176) (8,408,034) Share-based payment transactions 13 - - - - 4,072 - - - - 4,072 4,072 1,666 5,738 Unrealised gain on dilution of investments in subsidiaries and associates - - - - - (23,492) - - - (23,492) (23,492) - (23,492) Comprehensive income for the period Profit for the period - - - 3,457,618 - - - - - - 3,457,618 455,676 3,913,294 Other comprehensive income for the period Items that are or may be reclassified to profit or loss - - - - - - (20,018) 3,962 - (16,056) (16,056) (,132) (47,188) Items that will never be reclassified to profit or loss - - - - - - - - 27,066 27,066 27,066-27,066 Total comprehensive income for the period - - - 3,457,618 - - (20,018) 3,962 27,066 11,010 3,468,628 424,544 3,893,172 Balance at March 2016 3,206,420 10,341,569 500,000 2,594,745 32,472 4,205,524 83,380 22,501 26,458 4,370,335 21,013,069 9,794,699 30,807,768 See condensed notes to the 10
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Separate Other components of shareholders' equity Fair value Total Issued and Retained earnings Other reserves changes in other components paid-up Share Legal share-based available-for-sale of shareholders' Total share capital premium reserve Unappropriated payment investments equity shareholders' equity Opening balance at 1 January 2015 3,206,420 10,341,569 500,000 84,465 10,015 8,940 18,955 14,151,409 Changes in shareholders' equity for the period Dividends - - - (7,141,652) - - - (7,141,652) Share-based payment transactions - - - - 2,277-2,277 2,277 Comprehensive income for the period Profit for the period - - - 7,378,856 - - - 7,378,856 Other comprehensive income for the period Items that are or may be reclassified to profit or loss - - - - - 1,611 1,611 1,611 Total comprehensive income for the period - - - 7,378,856-1,611 1,611 7,380,467 Balance at March 2015 3,206,420 10,341,569 500,000 321,669 12,292 10,551 22,843 14,392,501 See condensed notes to the 11
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUED) FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Separate Other components of shareholders' equity Fair value Total Issued and Retained earnings Other reserves changes in other components paid-up Share Legal share-based available-for-sale of shareholders' Total Notes share capital premium reserve Unappropriated payment investments equity shareholders' equity Opening balance at 1 January 2016 3,206,420 10,341,569 500,000 164,404 21,308 11,982 33,290 14,245,683 Changes in shareholders' equity for the period Dividends 16 - - - (7,919,858) - - - (7,919,858) Share-based payment transactions 13 - - - - 2,908-2,908 2,908 Comprehensive income for the period Profit for the period - - - 8,036,547 - - - 8,036,547 Other comprehensive income for the period Items that are or may be reclassified to profit or loss - - - - - 4,201 4,201 4,201 Total comprehensive income for the period - - - 8,036,547-4,201 4,201 8,040,748 Balance at March 2016 3,206,420 10,341,569 500,000 281,093 24,216 16,183 40,399 14,369,481 See condensed notes to the 12
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Separate Notes 2016 2015 2016 2015 Cash flows from operating activities Profit for the periods - continuing operations 3,913,294 4,419,786 8,036,547 7,378,856 Adjustments for Depreciation and amortisation 9 691,330 707,721 5,910 4,822 Past and current service costs of employee and share based payment expense 15,477 13,134 4,199 3,163 Gain from sale of investment in associate (30,257) - (25,274) - Interest income (53,354) (41,429) (11,741) (16,767) Interest expense 65,412 69,263 384 494 Income tax expense 204,095 151,059 - - Share of profit of investments in joint ventures 8 (13,933) (46,370) - - Share of profit of investments in associates 8 (3,258,183) (4,004,336) - - Dividend income 3, 8 - - (8,098,667) (7,461,230) Loss on provision for interest of unpaid operating agreement fee 18.2 15,395 106,870 - - Unrealised gain on foreign exchange (118,354) (135,060) - - Allowance for doubtful accounts 126,757 26,458 - - Impairment loss of assets - 26,774 - - (Reversal of) allowance for obsolete inventory (1,626) (1,402) - - Amortisation cost of loans 11 265 263 - - Others (7,246) 3,966 2,121 6,254 1,549,072 1,296,697 (86,521) (84,408) Changes in operating assets and liabilities Trade and other receivables (110,700) (242,056) (1,835) 10,491 Inventories 5,153 9,253 - - Other non-current assets 105,657 (36,699) - - Trade and other payables (595,144) (552,923) (75,919) (50,921) Accrued operating agreement fees 245,654 233,817 - - Other non-current liabilities (103,533) (1,511) (21,630) - Interest received 56,144 65,261 2,566 5,458 Income tax paid (66,675) (48,619) - - Net cash (used in) provided by operating activities 1,085,628 723,220 (183,339) (119,380) See condensed notes to the 13
INTOUCH HOLDINGS PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE THREE-MONTH PERIOD ENDED MARCH 2016 (UNAUDITED) Consolidated Separate Notes 2016 2015 2016 2015 Cash flows from investing activities Cash paid for additional investment in a subsidiary 8 - - - (49,980) Cash paid for acquisition of associate 8 - (22,500) - (22,500) Cash paid for purchase of property, plant and equipment (229,657) (81,629) (2,691) (6,224) Cash paid for purchase of other intangible assets (2,7) (1,182) (35) (22) (Increase) decrease in current investments (337,719) (69,2) 118,691 287,348 Cash paid for loans and advances to related parties (1,532) 39,280-2,036 Proceeds from sale of investment in associate 8 54,279-54,279 - Cash received from disposal of equipment 13,005 458 8 284 Net cash (used in) provided by investing activities (503,941) (134,804) 170,252 210,942 Cash flows from financing activities Proceeds from short-term borrowings 1,636,134 150,000 - - Repayments of short-term borrowings (1,650,521) (407,306) - - Repayments of long-term borrowings (4,154) (270,661) - (97) Interest paid (49,728) (53,020) - (7) Net cash used in financing activities (68,269) (580,987) - (104) Net increase (decrease) in cash and cash equivalents 513,418 7,429 (13,087) 91,458 Opening cash and cash equivalents at 1 January 3,620,623 3,453,549 175,110 305,179 Reclassification of cash and cash equivalents - discontinued operations 7 - (49,980) - - Effects of exchange rate changes on balances held in foreign currencies 1,218 774 - - Cash and cash equivalents at March 4 4,135,259 3,411,772 162,023 396,637 See condensed notes to the 14
Condensed notes to the Note Contents 1 General information 2 Basis of preparation and presentation of the interim consolidated and separate 3 Related parties transaction 4 Additional cash flow information 5 Other investments 6 Trade and other receivables 7 Non-current assets held for abandonment and discontinued operations 8 Investments in subsidiaries, joint ventures and associates 9 Capital expenditure 10 Trade and other payables 11 Interest bearing liabilities 12 Share capital and premium 13 Share-based payment 14 Segment information 15 Earnings per share 16 Dividends 17 Commitments 18 Significant events, disputes and litigation of INTOUCH Group 19 Bank guarantees 20 Events after the reporting period 21 Approval of the interim consolidated and separate 15
Condensed notes to the 1 GENERAL INFORMATION Intouch Holdings Public Company Limited ( the Company ) is incorporated in Thailand and has its registered office at 29 th 30 th floors, SJ Infinite One Business Complex, 349 Vibhavadi-Rangsit Road, Chompol, Chatuchak, Bangkok, 10900. The Company was listed on the Stock Exchange of Thailand ( SET ) in August 1990. As at March 2016 and December 2015, the principle shareholder of the Company is Aspen Holdings Limited ( Aspen ), holding 40.5% and 40.5%, respectively, which is incorporated in Thailand. The Company, subsidiaries, joint ventures and associates, collectively called INTOUCH Group, is principally engaged in the satellite, internet, telecommunications, media and advertising businesses. Detail of the Company s subsidiaries and associates as at March 2016 and December 2015 were as follows: Country of Ownership Name of the entity Type of business incorporation interest Subsidiaries Thaicom Public Company Limited and its Group ( THAICOM ) Operating transponder services for domestic & international communications, sale of satellite equipment, provides consulting and installation of integrated broadband network, telephone network services & value added services on mobile and engineering & development services on communication technology & electronics in addition with internet data center services, internet, the printing and publishing of telephone directories, the conducting of classified and printing directories businesses and mobile contents. March December 2016 2015 (%) Thailand 41.14 41.14 I.T. Applications and Service Company Limited ( ITAS ) Providing computer program and related services. Thailand 99.99 99.99 Intouch Media Company Limited and its Group ( Intouch Media ) ITV Public Company Limited and its Group ( ITV ) Matchbox Company Limited ( MB ) To do business in relation to broadcasting and television, including other related businesses. At present, ITV has ceased its operation (note 17.1 and 18.2) having previously operated a television broadcasting station under a UHF radiotelevision broadcasting agreement, provided by the Office of the Permanent Secretary of the Office of the Prime Minister. At present, MB has ceased its operation (note 7) having previously provided advertising services and production of advertisements for radio and television broadcast. Thailand 99.99 99.99 Thailand 52.92 52.92 Thailand 99.99 99.99 16
Condensed notes to the Country of Name of the entity Type of business incorporation Associates Advanced Info Service Public Company Limited and its Group ( AIS ) Operating a 2.1-GHz and 1.8-GHz cellular telephone system, service provider of online data communications via telephone land line & optical fiber, telecom & network operator, broadcasting network services or television, importer & distribution of handset & accessories, and other related services. Ownership interest March December 2016 2015 (%) Thailand 40.45 40.45 Ookbee Company Limited ( OOKBEE ) Meditech Solution Company Limited ( Meditech ) Computerlogy Company Limited ( Computerlogy ) Sinoze Company Limited ( Sinoze ) Playbasis Pte Limited ( Playbasis ) Golfdigg Company Limited ( Golfdigg ) Service provider for digital publication platform and e-booking. A manufacturer and vendor of eye blink communication aids for paralytics and disabled people. A software or computer system and web site development, including social media management tool. In January 2016, the Company disposed all of its investment (note 8). Create and develop games on smart phone and tablet. Service provider and develop the digital gamification platform. Service provider and develop the golf course booking platform and other golf-related services. Thailand 22.26 22.26 Thailand 24.00 24.00 Thailand - 25.01 Thailand 16.67 16.67 Singapore 15.36 15.36 Thailand 25.00 25.00 2 BASIS OF PREPARATION AND PRESENTATION OF THE INTERIM CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2.1 Basis of preparation of (1) The interim issued for Thai regulatory reporting purposes are prepared in the Thai language. These English language interim have been prepared for the convenience of readers not conversant with the Thai language. (2) The interim are prepared on a condensed basis in accordance with Thai Accounting Standard (TAS) 34 (revised 2015) Interim Financial Reporting; guidelines promulgated by the Federation of Accounting Professions (FAP); and applicable rules and regulations of the Thai Securities and Exchange Commission and the SET and generally accepted accounting principles in Thailand. The interim are prepared according to the notification of the Department of Business Development regarding The Brief Particulars in the Financial Statements B.E. 2554. 17
Condensed notes to the (3) The interim are prepared to provide an update on the for the year ended December 2015. They do not include all of the financial information required for full annual but focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim should be read in conjunction with the of the Company and its subsidiaries for the year ended December 2015. (4) The interim are presented in Thai Baht, which is the Company s functional currency. All financial information presented in Thai Baht has been rounded to the nearest thousand unless otherwise stated. (5) The accounting policies and methods of computation applied in these interim are consistent with those applied in the for the year ended December 2015. (6) The preparation of interim in conformity with Thai Financial Reporting Standards (TFRS) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. (7) In preparing these interim, the significant judgments made by management in applying the INTOUCH Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the for the year ended December 2015. (8) INTOUCH Group has adopted the new and revised TFRSs that are announced by the FAP and become effective for the for the period beginning on or after 1 January 2016 onwards. These TFRSs have no material impact on the presentation and/or disclosure in the current year financial statements. 2.2 Financial status of ITV Public Company Limited and its Group ( ITV ) As at March 2016, ITV s current liabilities exceed its current assets by an amount of Baht 5,575 million and deficit in excess of its share capital by an amount of Baht 5,578 million ( December 2015: Baht 5,569 million and Baht 5,571 million, respectively). In addition, as discussed in note 17.1 and 18.2 to the financial statements, in consequence of the ruling of the Supreme Administrative Court on 13 December 2006, ITV is liable for unpaid operating agreement fee totalling Baht 2,210 million and the interest on the total unpaid operating agreement fee at 15% per annum including the penalty arising from the alteration of television programming of Baht 97,760 million to the Office of the Permanent Secretary of the Office of the Prime Minister ( PMO ). ITV has not yet paid these unpaid operating agreement fees including interest and penalty which are still under dispute. ITV s operating agreement was revoked on 7 March 2007 by the PMO therefore; ITV ceased its operation at that date. In addition, on 30 March 2007, the PMO claimed the undelivered value of assets under operating agreement amounting to Baht 656 million plus interest. ITV has been in the arbitration proceeding regarding the unpaid operating agreement fee including interest, penalty arising from the alteration of television programming of Baht 97,760 million and value of undelivered assets including its interest. However, on 1 February 2016, ITV received a copy of the Arbitration award, ruling of 14 January 2016. The Arbitration s award and the petition from the PMO have been summarised and disclosed in note 18.2 to the. The of ITV have ceased recording additional provision for interest of unpaid operating fee but do not include any adjustments that may be necessary as a result of these uncertainties. The consolidated of the Company and its subsidiaries for the three-month period ended March 2016 have consolidated the of ITV. Accordingly, the recorded assets amounting to Baht 1,205 million represent 2.0% of consolidated total assets ( December 2015: Baht 1,200 million, represented 2.1%) and liabilities amounting to Baht 6,783 million represent 22.3% of consolidated total liabilities ( December 2015: Baht 6,771 million, represented 30.0%), and therefore, the recorded deficit in excess of ITV s issued share capital amounting to Baht 5,578 million ( December 2015: Baht 5,571 million) has been taken up in full in the consolidated. 18
Condensed notes to the However, the Company s legal liability for any losses incurred by ITV is limited to the Company s share paid to ITV s capital. In the event that ITV is unable to continue its operations, the Company s consolidated net liabilities as at March 2016 and December 2015 would be reduced by Baht 5,578 million and Baht 5,571 million, respectively. The retained earnings and shareholders equity as at March 2016 and December 2015 would be increased by Baht 5,578 million and Baht 5,571 million, respectively. 3 Related parties transaction Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, INTOUCH Group, including holding companies, subsidiaries and fellow subsidiaries are related parties of INTOUCH Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of INTOUCH Group that gives them significant influence over the enterprise, key management personnel of INTOUCH Group and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. Transactions among INTOUCH Group are transactions among the Company, its subsidiaries, joint ventures and associates, also the transactions with management and other related companies of the Company, including with major shareholder s group are recognised as related party transactions of the Company. INTOUCH Group entered into a number of transactions with related parties, the terms of which were negotiated on an arm s length basis in the ordinary course of business and according to normal trade conditions. Related parties which have transactions with INTOUCH Group increased/decreased during the three-month period ended March 2016. Country of Name of entity Type of business incorporation Relationship Related parties increased during the period IPSTAR (India) Private Limited Sale of satellite equipment and ( IPI ) provides technical consulting in relation to satellite India Subsidiary of THAICOM Related parties decreased during the period Computerlogy Co., Ltd. ( Computerlogy ) A software or computer system and web site development, including social media management tool. Thailand Associate Significant transactions for the three-month period ended March 2016 and 2015 with related parties were as follows: Consolidated Separate For the three-month 2016 2015 2016 2015 period ended March Sales of goods and rendering services, including dividend received Subsidiaries Dividend received and others - - 293,292 293,363 Joint ventures Interest income 21,584 2,083 - - Rental income and others 12,980 2,004 - - 34,564 4,087 - - 19
Condensed notes to the Consolidated Separate For the three-month 2016 2015 2016 2015 period ended March Associates Mobile content services 61,919 57,265 - - Computer services 28,902 43,107 - - Transponder lease 16,543 12,393 - - Call center and voice services 16,020 11,769 - - Rental income and others 2,017 4,551 321 239 Dividend received 7,805,601 7,168,164 7,805,601 7,168,164 7,9,002 7,297,249 7,805,922 7,168,403 Related parties Rental income 615 615 - - Subsidiaries Computer and other expenses - - 935 2,254 Joint ventures Rental and other expenses 1,692 1,428 - - Associates Rental and other expenses 6,290 12,921 259 1,186 Related parties Rental and other expenses 1,930 2,541 - - Directors Dividend paid 568 1,7 568 1,7 Major shareholders Dividend paid 3,207,543 2,975,611 3,207,543 2,975,611 20
Condensed notes to the Balances as at March 2016 and December 2015 with related parties were as follows: Consolidated March December 2016 2015 Separate March December 2016 2015 Trade accounts and notes receivable Notes Joint Ventures - 500 - - Associates 65,651 130,161 - - Related parties 59,698 61,109 - - Total 6 125,349 191,770 - - Less allowance for doubtful accounts (58,544) (59,955) - - Net 66,805 1,815 - - Accrued income Joint ventures 6 159 - - Associates 42,804 64,713 - - 6 42,810 64,872 - - Amounts due from, advances and loans to related parties Subsidiaries - - - 84 Joint ventures 206,533 208,633-10 Associates 583 514 583 181 207,116 209,147 583 275 Other receivables Subsidiaries - - 543 272 Joint ventures - 77 - - Associates 129 301 126 336 Related parties 45 17 - - 174 395 669 608 Current investment in debenture through private funds, managed by independent fund manager Subsidiaries - - 26,744 26,266 Associates 39,760 39,081 39,760 39,081 39,760 39,081 66,504 65,347 Long-term loans to related parties Joint ventures 2,110,567 2,161,864 - - Dividend receivable Subsidiaries - - 293,066 - Associates 7,805,601-7,805,601-7,805,601-8,098,667-21
Condensed notes to the Movements of loan to a related party (included in amounts due from, advances and loans to related parties) during the three-month periods ended March 2016 and 2015 were as follows: For the three-month period ended March Consolidated 2016 2015 Opening balance at 1 January 168,521 291,144 Repayment (18,321) (41,837) Unrealised loss on currency translation (3,564) (3,080) Balance at March 146,636 246,227 Loan in consolidated is a short-term loan to a joint venture, which is a call loan bearing interest rate at London Inter-Bank Offered Rate (LIBOR) plus margin. Movements of long-term loan to a related party during the three-month period ended March 2016 and 2015 were as follows: For the three-month period ended March Consolidated 2016 2015 Opening balance at 1 January 2,161,864 - Unrealised loss on currency translation (51,297) - Balance at March 2,110,567 - Loan is a long-term to a joint venture which is ten years loan with interest rates at LIBOR rate plus margin. Consolidated March December 2016 2015 Separate March December 2016 2015 Trade accounts and notes payable Note Joint ventures 930 832 - - Associates 4,082 5,753 - - Related parties 2,521 2,023 - - 10 7,533 8,608 - - Amounts due to related parties Subsidiaries - - 826 116 Associates 332 272 126 85 332 272 952 201 Other payables Joint ventures 9,977 - - - Associates 7,986 9,206 13 - Related parties - 519 - - 17,963 9,725 13 - Other non-current liabilities Associates 4,054 4,460 - - 22
Condensed notes to the Management compensation Directors remuneration and key management personnel compensation for the three-month period ended March 2016 and 2015 comprised of: Consolidated Separate For the three-month 2016 2015 2016 2015 period ended March Short-term benefit Directors remuneration 13,969 14,454 8,050 6,905 Key managements compensation 28,171 34,752 14,210 15,700 Total management benefit expenses 42,140 49,206 22,260 22,605 Long-term benefit Included in administrative expenses - Current service costs 803 1,034 386 386 - Share-based payment 2,751 3,226 2,499 1,856 Included in finance costs Interest on obligation 326 497 98 249 Total long-term management benefit expenses 3,880 4,757 2,983 2,491 Total 46,020 53,963 25,243 25,096 Directors remuneration Directors remuneration represents monthly allowance, meeting allowance, daily expense allowance (per diem) and bonus which are paid to chairman of the board, independent directors, and non-executive directors as approved by the Annual General Meeting of shareholders of the Company and INTOUCH Group. Commitments and significant agreements with related parties As at March 2016, the significant commitments with related parties were as follows: (1) The Company and certain associates entered into agreements with a subsidiary, under which the subsidiary committed to maintain accounting programme service for one year with an option to renew one year each. The parties have the right to terminate the agreement by giving at least three-month advance written notice. As at March 2016, the Company and associates committed to pay the subsidiary for services in respect of the agreements at approximately Baht 45 million on the consolidated and approximately Baht 1 million on the separate financial statements ( December 2015: nil, as the agreement had matured). (2) A subsidiary entered into agreements with associates, under which the subsidiary committed to provide transponder service, advisory service and Thaicom 4 (IPSTAR) bandwidth service. As at March 2016, associates committed to pay the subsidiary for the service of the agreements at approximately Baht 24 million and approximately USD 3 million ( December 2015: approximately Baht 25 million and USD 3 million). 23
Condensed notes to the 4 Additional cash flow information Significant non-cash items for the periods ended March 2016 and 2015 were as follows: For the three-month Consolidated Separate period ended March 2016 2015 2016 2015 Purchase of property, plant and equipment and other intangible assets - by liabilities 3,353 21,482 82 5,445 5 Other investments Other investments as at March 2016 and December 2015 were as follows: Consolidated March December 2016 2015 Separate March December 2016 2015 Current investments Short-term deposits 2,307,843 1,950,666 221,644 340,334 Debt securities available for sale 2,435,822 2,417,362 1,298,800 1,284,153 Equity securities available for sale - 35,932 - - 4,743,665 4,403,960 1,520,444 1,624,487 Long-term investments Investment in other companies 47,665 47,665 47,665 47,665 Less Impairment loss on investment (25,000) (25,000) (25,000) (25,000) 22,665 22,665 22,665 22,665 Total 4,766,330 4,426,625 1,543,109 1,647,152 6 Trade and other receivables Trade receivables as at March 2016 and December 2015 were as follows: Consolidated March December 2016 2015 Separate March December 2016 2015 Trade receivables Trade accounts and notes receivable 1,693,641 1,779,2 - - Accrued income 805,596 613,905 - - Less allowance for doubtful accounts (349,392) (232,892) - - 2,149,845 2,160,244 - - Other receivables 447,582 471,650 9,605 11,477 Total 2,597,427 2,6,894 9,605 11,477 24
Condensed notes to the Notes Consolidated March 2016 December 2015 Trade accounts and notes receivable Related parties 3 125,349 191,770 Other parties 1,568,292 1,587,461 Total 1,693,641 1,779,2 Accrued income Related parties 3 42,810 64,872 Other parties 762,786 549,033 Total 805,596 613,905 Total trade accounts, notes receivable and accrued income 2,499,237 2,393,136 Less allowance for doubtful accounts (349,392) (232,892) Net 2,149,845 2,160,244 Aging analyses for trade accounts receivable and notes receivable were as follows: Consolidated March 2016 December 2015 Within credit terms 603,053 514,932 Overdue: Less than 3 months 500,059 642,858 3-6 months 291,085 350,114 6-12 months 78,554 77,203 Over 12 months 220,890 194,124 Total 1,693,641 1,779,2 Less allowance for doubtful accounts (349,392) (232,892) Net 1,344,249 1,546,339 7 Non-current assets held for abandonment and discontinued operations The Company reclassified assets, liabilities and the operating result of MB to assets held for discontinued operations in the consolidated. MB has ceased its operation since 2014. 25
Condensed notes to the 8 Investments in subsidiaries, joint ventures and associates The movement of investments in subsidiaries, joint ventures and associates as at March 2016 was as follows: Consolidated Financial statements Separate Financial statements Investments in subsidiaries Opening balance at 1 January 2016-3,951,954 Balance at March 2016-3,951,954 Investments in joint ventures Opening balance at 1 January 2016 1,440,394 - Share of profits of investments in joint ventures 13,933 - Foreign currencies translation adjustment 7,745 - Balance at March 2016 1,462,072 - Investments in associates Opening balance at 1 January 2016 20,589,752 8,567,295 Disposal of investment (24,022) (29,006) Share of profits of investments in associates 3,258,183 - Dividend income (7,805,601) - Share of other comprehensive income 3,574 - Balance at March 2016 16,021,886 8,538,289 26
Condensed notes to the Investments in subsidiaries, joint ventures and associates as at March 2016 and December 2015 and dividend income for the three-month period ended March were as follows: Consolidated Ownership interest Paid-up capital Cost method Equity method Dividend income March December March December March December March December for the three-month period ended March 2016 2015 Currency 2016 2015 2016 2015 2016 2015 2016 2015 (%) (in Thousand) (in Thousand Baht) Joint ventures SHEN 51.00 51.00 SGD 14,658 14,658 137,639 137,639 1,259,198 1,210,351 - - High Shopping 51.00 51.00 Baht 500,000 500,000 255,000 255,000 202,874 230,043 - - 392,639 392,639 1,462,072 1,440,394 - - Associates AIS 40.45 40.45 Baht 2,973,095 2,973,095 8,382,6 8,382,6 15,869,507 20,405,883 7,805,601 7,168,164 OOKBEE 22.26 22.26 Baht 1,501 1,501 57,481 57,481 57,692 63,697 - - Meditech 24.00 24.00 Baht 1,786 1,786 4,999 4,999 - - - - Computerlogy - 25.01 Baht - 1,333-29,006-24,022 - - Sinoze 16.67 16.67 Baht 3,600 3,600 22,500 22,500 21,830 21,947 - - Playbasis 15.36 15.36 SGD 3,443 3,443 52,159 52,159 48,812 50,927 - - Golfdigg 25.00 25.00 Baht 1,333 1,333 23,833 23,833 24,045 23,276 - - Total 8,543,288 8,572,294 16,021,886 20,589,752 7,805,601 7,168,164 27
Condensed notes to the Separate Ownership Dividend income interest Paid-up capital Cost method Impairment At cost - net for the three-month period ended March December March December March December March December March December March 2016 2015 Currency 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 (%) (in Thousand) (in Thousand Baht) Subsidiaries THAICOM 41.14 41.14 Baht 5,479,688 5,479,688 3,612,974 3,612,974 - - 3,612,974 3,612,974 293,066 293,066 ITV 52.92 52.92 Baht 6,033,487 6,033,487 3,297,255 3,297,255 (3,297,255) (3,297,255) - - - - ITAS 99.99 99.99 Baht 10,000 10,000 10,000 10,000 - - 10,000 10,000 - - MB 99.99 99.99 Baht 58,980 58,980 121,946 121,946 (71,966) (71,966) 49,980 49,980 - - Intouch Media 99.99 99.99 Baht 279,000 279,000 279,000 279,000 - - 279,000 279,000 - - 7,321,175 7,321,175 (3,369,221) (3,369,221) 3,951,954 3,951,954 293,066 293,066 Associates AIS 40.45 40.45 Baht 2,973,095 2,973,095 8,382,6 8,382,6 - - 8,382,6 8,382,6 7,805,601 7,168,164 OOKBEE 22.26 22.26 Baht 1,501 1,501 57,481 57,481 - - 57,481 57,481 - - Meditech 24.00 24.00 Baht 1,786 1,786 4,999 4,999 (4,999) (4,999) - - - - Computerlogy - 25.01 Baht - 1,333-29,006 - - - 29,006 - - Sinoze 16.67 16.67 Baht 3,600 3,600 22,500 22,500 - - 22,500 22,500 - - Playbasis 15.36 15.36 SGD 3,443 3,443 52,159 52,159 - - 52,159 52,159 - - Golfdigg 25.00 25.00 Baht 1,333 1,333 23,833 23,833 - - 23,833 23,833 - - 8,543,288 8,572,294 (4,999) (4,999) 8,538,289 8,567,295 7,805,601 7,168,164 28
Condensed notes to the Significant transactions during the three-month period ended March 2016 of INTOUCH Group was as follows: (1) The disposal of investment in Computerlogy On 8 January 2016, the Company sold 3,335 ordinary shares in Computerlogy, equivalent to 25.01% of the paid-up capital, to Yello Digital Marketing Global Pte Ltd. amounting to Baht 54.3 million. (2) Establishment of a subsidiary of THAICOM On 19 January 2016, THAICOM has established a new subsidiary namely IPSTAR (India) Private Limited ( IPI ). The registered share capital is Rs. 30 million, divided into 30 million ordinary shares at the par value of Rs. 1 per share. THAICOM has 100% shareholding. 9 Capital expenditure Capital expenditure as at March 2016 was as follows: Consolidated Intangible assets Property, under Other plant and operating intangible equipment agreements assets Cost Opening balance at 1 January 2016 13,774,175 26,423,384 4,552,697 Acquisitions 233,010-2,7 Transfers and adjustments 1,704 - - Disposals (28,877) - - Write-off (146) - (641,016) Foreign currencies translation adjustment 12,359-247 Balance at March 2016 13,992,225 26,423,384 3,914,245 Accumulated depreciation and amortisation Opening balance at 1 January 2016 (4,628,388) (15,196,197) (2,095,169) Depreciation and amortisation (153,437) (502,902) (34,991) Transfers and adjustments (1,704) - - Disposals 23,160-641,016 Write-off 77 - - Foreign currencies translation adjustment (10,964) - 1,736 Balance at March 2016 (4,771,256) (15,699,099) (1,487,408) Allowance for impairment Opening balance at 1 January 2016 (158) - (1,482,804) Balance at March 2016 (158) - (1,482,804) Net book value Opening balance at 1 January 2016 9,145,629 11,227,187 974,724 Balance at March 2016 9,220,811 10,724,285 944,033 Borrowing costs to finance the construction of projects in process for the three-month period ended March 2016 amounting to Baht 35 million (for the year 2015: Baht 134 million) are capitalised as part of assets acquisition during the period. 29
Condensed notes to the As at March 2016, property, plant and equipment included a project in progress of Baht 5,094 million ( December 2015: Baht 4,926 million) relating to the Thaicom 8 project. THAICOM provides telecommunication services under licenses granted by the National Broadcasting and Telecommunications Commission ( NBTC ). The Thaicom 8 project is expected to be completed within 2016. The other intangible assets in the consolidated mainly were goodwill from business combination and the development of Thaicom 4 (IPSTAR) technology. Separate Building Other and equipment intangible assets Cost Opening balance at 1 January 2016 139,640 67,178 Acquisitions 2,773 35 Disposals (120) - Balance at March 2016 142,293 67,213 Accumulated depreciation and amortisation Opening balance at 1 January 2016 (76,491) (61,927) Depreciation and amortisation (5,345) (565) Disposals 120 - Balance at March 2016 (81,716) (62,492) Net book value Opening balance at 1 January 2016 63,149 5,251 Balance at March 2016 60,577 4,721 10 Trade and other payables Trade and other payables as at March 2016 and December 2015 were as follows: Consolidated Separate March December March December Note 2016 2015 2016 2015 Trade payables Related parties 3 7,533 8,608 - - Other parties 494,692 510,035 - - 502,225 518,643 - - Other payables 1,141,337 1,732,880 37,709 114,296 Total 1,643,562 2,251,523 37,709 114,296 30