Coastal Greenland Limited - Proxy Solicitation & Information Statement 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in SiS International Holdings Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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SiS INTERNATIONAL HOLDINGS LIMITED 新龍國際集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00529)

POSSIBLE VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE PRE-CONDITIONAL VOLUNTARY GENERAL OFFER TO ACQUIRE THE OFFER SHARES OF THE TARGET COMPANY BY THE OFFEROR

A notice convening the SGM of SiS International Holdings Limited to be held at Kellett Room IV, 3/F The Excelsior, 281 Gloucester Road, Causeway Bay, Hong Kong on 31 October 2017 (Tuesday) at 3:00 p.m. is set out on pages 287 and 288 of this circular. Whether or not you intend to attend the SGM, you are requested to complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM or any adjournment. Completion and return of the proxy form will not preclude you from attending and voting in person at the SGM or any adjournment thereof should you so wish.

For identification purposes only

16 October 2017

CONTENTS

			Pages
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . .	1
LETTER	FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	6
APPENDIX I — FINANCIAL INFORMATION OF THE TARGET		GROUP . . .	23
.	HISTORICAL TRACK RECORD PERIOD ACCOUNTS . .	. . . . . . . . . . . . .	23
.	MANAGEMENT DISCUSSION AND ANALYSIS OF
	THE TARGET GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	211
.	DIFFERENCES BETWEEN THE ACCOUNTING POLICIES
	ADOPTED BY THE COMPANY AND SIS THAI . . . . . . . .	. . . . . . . . . . . . .	233
.	SUPPLEMENTAL FINANCIAL INFORMATION OF
	THE TARGET GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	259
APPENDIX II — FINANCIAL INFORMATION OF THE GROUP		. . . . . . . . . . . . .	260
APPENDIX III— UNAUDITED PRO FORMA FINANCIAL
	INFORMATION OF THE ENLARGED GROUP	. . . . . . . . . . .	265
APPENDIX IV — GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . .		. . . . . . . . . . . . .	277
NOTICE	OF THE SPECIAL GENERAL MEETING . . . . . . . . . . . . . . . .	. . . . . . . . . . . . .	287

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following terms shall have the following meanings:

‘‘Acquisition’’
the acquisition of the Offer Share(s) by the Offeror from certain Target Company Shareholder(s) under the Offer
‘‘acting in concert’’ has the meaning ascribed to it in the Thailand’s Rules on Business Takeovers
‘‘Announcement’’ the announcement of the Company dated 13 September 2017 in relation to the Acquisition
‘‘associate(s)’’ has the meaning ascribed to it in the Hong Kong Listing Rules
‘‘Baht’’ Thai Baht, the lawful currency of Thailand
‘‘Board’’ the board of Directors
‘‘business day(s)’’ any day other than Saturday, Sunday, SET holidays, Thailand SEC holidays, or public holidays of Thailand
‘‘Closing Date’’ the closing date of the Offer
‘‘CMSB Notification’’
the Notification of the Capital Market Supervisory Board No. ThorJor. 12/2554 Re: Rules, Conditions and Procedures for the Acquisition of Securities for Business Takeovers
‘‘Company’’
SiS International Holdings Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Hong Kong Stock Exchange (Stock Code: 00529)
‘‘connected person’’ has the meaning ascribed to it in the Hong Kong Listing Rules
‘‘Director(s)’’ the director(s) of the Company
‘‘Dissenting Target Company Shareholder(s)’’
the Target Company Shareholders who do not accept the Offer
‘‘Enlarged Group’’
the Group as enlarged by Target Group upon completion of the Acquisition
‘‘FBA’’

The Foreign Business Act B.E. 2542 (A.D. 1999), as amended from time to time

– 1 –

DEFINITIONS

‘‘Formal Offer Announcement’’ an announcement on the Offeror’s firm intention to make the Offer
‘‘Group’’ the Company and its subsidiaries
‘‘HK$’’

Hong Kong dollars, the lawful currency of Hong Kong

‘‘Hong Kong’’

the Hong Kong Special Administrative Region of the PRC

‘‘Hong Kong Listing Rules’’
the Rules governing the Listing of Securities on the Hong Kong Stock Exchange
‘‘Hong Kong Stock Exchange’’

The Stock Exchange of Hong Kong Limited

‘‘Independent Third Party’’
a person independent of the Company and its connected persons (as defined in the Hong Kong Listing Rules)
‘‘Intention Letter’’
the intention letter sent by the Offeror to the Target Company on 13 September 2017 (after the trading hours of the Hong Kong Stock Exchange) in relation to the Offer
‘‘IT’’
Information Technology
‘‘Last Trading Date’’
means 13 September 2017, being the last trading day prior to the publication of the Pre-Conditional Offer Announcement
‘‘Latest Practicable Date’’
11 October 2017, being the latest date prior to the printing of this circular for ascertaining certain information contained herein
‘‘Long-Stop Date’’
the date falling approximately 7 weeks after the date of the Pre-Conditional Offer Announcement, being 1 November 2017, or such other date as the Offeror and the Target Company may determine in consultation with the Thailand SEC
‘‘Material Adverse Effect’’ in relation to the Target Company, (a) any event, occurrence, fact, condition or change that is, or would reasonably be expected to become, individually or in the aggregate, materially adverse to the business, results of operations, financial condition or assets of the Target Company provided that such event or act is not caused by the Group, or (b) any event or occurrence, including, among others, any act performed by the Target Company, that results or is likely to result in a substantial reduction in the market price of the Target Shares as quoted on the SET

– 2 –

DEFINITIONS

‘‘Minority Ordinary Shareholders’’

meaning ordinary shareholders who are not Persons Taking Part in the Management. Under Thailand law, ‘‘Persons Taking Part in the Management’’ means person who has controlling power, and shall mean to include shareholders who are:

(1) directors, managers or the first four persons in the management level next below the manager, all persons who hold positions equivalent to the fourth person in the management level of the company, including related persons and persons related by blood, marriage or registration under laws of the said persons, which are father, mother, spouse and children; or
(2) shareholders holding shares in excess of 5% of the paid-up capital, which shall be inclusive of the shares held by related persons, unless such shareholders are securities companies, life-insurance companies, insurance companies, mutual funds, provident funds, social security funds, pension funds, or investment projects approved under Thailand law
‘‘Offer’’
‘‘Offer Document’’
‘‘Offer Period’’
‘‘Offer Price’’
‘‘Offer Share(s)’’
‘‘Offeror’’
a pre-conditional voluntary general offer to be made, subject to the fulfilment or waiver by the Offeror (as applicable) of the Pre-Conditions, by the Offeror to acquire all of the Offer Shares
the formal offer document setting out the definitive terms and conditions of the Offer
the period during which the Offer will remain open
the final offer price per Offer Share
184,095,498 shares, being all the issued and fully paid-up Target Shares other than those already owned and controlled by the Group, Mr. Lim Kia Hong and Mr. Lim Hwee Hai, together representing approximately 52.57% of the Target Shares as at Latest Practicable Date

Thai Alliance Co Ltd., a company incorporated in Thailand with limited liability which was incorporated on 10 August 2017 and is directly held as to approximately 48.996% by Thai Investment, 0.004% by the Registered Shareholders, and 51% by Thai Hero Co., Ltd.

– 3 –

DEFINITIONS

‘‘PRC’’ or ‘‘China’’
the People’s Republic of China excluding, for the purpose of this circular, Hong Kong, the Macau Special Administrative Region and Taiwan
‘‘Pre-Conditional Offer the pre-conditional offer announcement made by the Target Announcement’’ Company in relation to the Offer on 13 September 2017, subject to the fulfilment (or waiver, if applicable) of the Pre-Conditions (a copy of which is available on the website of the SET (https://www.set.or.th)
‘‘Pre-Condition(s)’’
the pre-conditions to the making of the Offer, as set out under the section headed ‘‘Pre-Conditions to the Offer’’ of this circular
‘‘Registered Shareholders’’
Mr. Lim Kia Hong and Mr. Lim Hwee Hai who each holds 0.017%, 0.011%, 0.007%, 0.004% and 0.002% interests for and on behalf of Thai Investment in Thai Success Co., Ltd., Thai Prosperity Co., Ltd., Thai Joyful Co., Ltd., Thai Hero Co., Ltd. and the Offeror, respectively
‘‘Requirement of Minority Ordinary Shareholders’’
has the meaning ascribed to it in the section headed ‘‘Listing Status of the Target Company’’ of this circular
‘‘Restricted Jurisdiction’’
has the meaning ascribed to it in the section headed ‘‘General’’ of this circular
‘‘SEA’’
the Securities and Exchange Act B.E. 2535 (A.D. 1998), as amended from time to time
‘‘SET’’
The Stock Exchange of Thailand
‘‘SET Regulation on Listing Status’’
Regulation of the SET Re: Listing of Ordinary Shares or Preferred Shares as Listed Securities B.E. 2558 (2015), Chapter 6 — Maintaining the Status of Listed Companies on the Exchange
‘‘SFO’’ the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
‘‘SGM’’
the special general meeting of the Company (or any adjournment thereof) to be convened for the purpose of considering, and if thought fit, approving the Acquisition and the transactions contemplated thereunder
‘‘Share(s)’’ ordinary share(s) of the Company ‘‘Shareholder(s)’’ holder(s) of issued Share(s)

– 4 –

DEFINITIONS

‘‘Target Company’’

SiS Distribution (Thailand) Public Company Limited, a company incorporated in Thailand, the shares of which are listed on the SET

‘‘Target Company holder(s) of issued Target Share(s) Shareholder(s)’’
‘‘Target Group’’

the Target Company and its subsidiaries

‘‘Target Share(s)’’
ordinary share(s) in the capital of the Target Company. As at the Latest Practicable Date, the Target Company has 350,198,655 issued and paid-up shares
‘‘Thai Holding Companies’’
being Thai Success Co., Ltd., Thai Prosperity Co., Ltd., Thai Joyful Co., Ltd. and Thai Hero Co., Ltd.. which were incorporated in Thailand on 10 August 2017 as limited liability companies whose principal businesses are investment holding
‘‘Thai Investment’’ Thai Investment Holdings Pte. Ltd., a company incorporated in Singapore with limited liability and is an indirectly wholly owned subsidiary of the Company, with the principal activity of investment holding
‘‘Thailand’s Rules on Business the SEA and the CMSB Notification Takeovers’’
‘‘Thailand SEC’’ the Securities and Exchange Commission of Thailand
‘‘%’’ per cent.

Unless otherwise stated, the exchange rates adopted in this circular for illustration purposes only is HK$1 to Baht4.35.

– 5 –

LETTER FROM THE BOARD

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SiS INTERNATIONAL HOLDINGS LIMITED 新龍國際集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00529)

Executive Directors: Mr. Lim Kia Hong Mr. Lim Kiah Meng Mr. Lim Hwee Hai Madam Lim Hwee Noi

Registered office: Canon’s Court 22 Victoria Street Hamilton HM 12 Bermuda

Independent Non-executive Directors: Mr. Lee Hiok Chuan Ms. Ong Wui Leng Mr. Ma Shiu Sun, Michael

Principal place of business in Hong Kong: 803 Nine Queen’s Road Central Hong Kong

16 October 2017

To the Shareholders

Dear Sir or Madam,

POSSIBLE VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE PRE-CONDITIONAL VOLUNTARY GENERAL OFFER TO ACQUIRE THE OFFER SHARES OF THE TARGET COMPANY BY THE OFFEROR

INTRODUCTION

Reference is made to the Announcement.

The purposes of this circular are to provide you with: (i) further information regarding the Acquisition; (ii) the financial information of the Target Group; (iii) the financial information of the Group; (iv) the unaudited pro forma financial information of the Enlarged Group; and (v) the management discussion and analysis of the Group and the Target Group, respectively.

For identification purposes only

– 6 –

LETTER FROM THE BOARD

THE POSSIBLE OFFER

The Offeror, on 13 September 2017, sent the Intention Letter to the board of directors of the Target Company, pursuant to which the Offeror will make a pre-conditional voluntary general offer for all the Offer Shares from the Target Company Shareholders in accordance with the Thailand’s Rules on Business Takeovers, subject to the fulfilment (or waiver, as applicable) of the Pre-Conditions. The Offer is on the following basis:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Baht7.00 in cash

As at the Latest Practicable Date, the Offeror does not own or control, directly or indirectly, any Target Shares.

The Pre-Conditional Offer Announcement setting out the terms and conditions of the Offer (the key terms and conditions of which have been described in this circular) and such other information as required under applicable Thailand laws and Thailand’s Rules on Business Takeovers, is available on the website of the SET (https://www.set.or.th).

A. Pre-Conditions to the Offer

The making of the Offer and the posting of the Offer Document are subject to the fulfillment (or waiver, as applicable) of the following Pre-Conditions on or before the LongStop Date:

(a) the Shareholders having approved the Acquisition at a general meeting of the Company pursuant to the requirements of the Hong Kong Listing Rules; and
(b) there being no Material Adverse Effect on the Target Company from the date of the Pre-Conditional Offer Announcement up to the Long-Stop Date.

The Pre-Condition (a) above cannot be waived by the Offeror whereas the Pre-Condition (b) above can be waived by the Offeror. If and when all the Pre-Conditions have been fulfilled or waived by the Offeror (as applicable), the Offeror will make the Formal Offer Announcement within one business day after such Pre-Conditions are fulfilled or waived (as applicable). The Offer Document and the appropriate form(s) of acceptance for the Offer will be despatched to the Target Company Shareholders not later than seven business days from the date of the Formal Offer Announcement, or such other date permitted under the Thailand’s Rules on Business Takeovers. The Offer will be made for all the Offer Shares subject to the terms and conditions to be set out in the Offer Document to be issued by the Offeror to the Target Company Shareholders in connection with the Offer. In the case of non-satisfaction of the Pre-Conditions or upon the expiration of one year from the date of the Announcement, the Offeror shall submit a statement declining to make the Offer to the Thailand SEC within three business days from the date of non-satisfaction of such Pre-Conditions or the last day of such one year period, whichever comes earlier.

If any of the Pre-Conditions are not fulfilled or waived by the Offeror (as applicable) on or before the Long-Stop Date, the Offer will not be made and the Company will issue an announcement confirming that fact as soon as reasonably practicable.

– 7 –

LETTER FROM THE BOARD

B. Offer Price

The Offer Price shall be Baht7.00 (subject to up to 10% adjustments based on the market conditions in Thailand) and will be satisfied in cash. Such 10% adjustments (if applicable) will be made prior to the making of the Offer and the posting of the Offer Document. If any adjustment is made to the Offer Price, the Company will issue an announcement confirming the final Offer Price as soon as reasonably practicable.

The Offer, based on the Offer Price of Baht7.00 (which is subject to adjustments) and the 184,095,498 Offer Shares, is valued at Baht1,288,668,486 (equivalent to approximately HK$296,245,629). The total value of the Offer will be up to Baht1,417,535,335 (equivalent to approximately HK$325,870,192), assuming an upward adjustment of 10% of the Offer Price is made.

Settlement of the Offer will be made in cash by way of either cheque or money transfer to the tender offeree on the third business day following the last day of the Offer Period upon valid acceptance of the Offer.

In determining the Offer Price, the Board has made reference to several valuation methodologies that are customary to a transaction of this nature, including the use of dividend discount model, market multiples analysis, and volume weighted average price and considered (i) the stable financial and business performance of the Target Company over the past three years, which is expected to continue to grow steadily in the foreseeable future, (ii) the wellestablished corporate governance of the Target Company, (iii) the historical share prices of the Target Company with the price range of Baht6.96 to Baht8.12 over the past year before the Last Trading Date, with references to the valuation methodology of volume weighted average price model provided by the Company’s financial adviser in Thailand, and (iv) the closing price of Baht7.85 as quoted on the SET on the Last Trading Date.

The Offer Price of Baht7.00 represents:

(a) a discount of approximately 10.83% over the closing price of Baht7.85 per Target Share as quoted on the SET on the Last Trading Date;
(b) a discount of approximately 11.95% over the average closing price of Baht7.95 per Target Share, being the average closing price of Target Shares as quoted on the SET for the 5 trading days immediately prior to the Last Trading Date;
(c) a discount of approximately 7.89% over the average closing price of Baht7.60 per Target Share, being the average closing price of Target Shares as quoted on SET for the 30 trading days immediately prior to the Last Trading Date; and
(d) a discount of approximately 5.66% over the average closing price of Baht7.42 per Target Share, being the average closing price of Target Shares as quoted on SET for the 60 trading days immediately prior to the Last Trading Date.

If any dividend, right or other distribution or return of capital is announced, declared, paid or made by the Target Company on or after the date of the Pre-Conditional Offer Announcement, the Offeror reserves the right to reduce the Offer Price payable to the accepting Target Company Shareholder(s) by an amount equivalent to such dividend, right, other distribution or return of capital.

– 8 –

LETTER FROM THE BOARD

C. Minimum Acceptance Condition

The Offer (if and when made) will be conditional upon the Offeror receiving valid acceptances in respect of such number of Offer Shares which, when taken together with the shares already owned and controlled by the Group, will result in the Offeror and the Group carrying more than 51% of the voting rights attributable to the Target Shares, by the Closing Date. In the case that this minimum acceptance condition is not met, the Offeror is entitled to withdraw the Offer. However, since each of Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont, who are directors of the Target Company, has given written irrevocable and unconditional undertakings to the Offeror that each of them will accept the Offer in respect of approximately 2.70% and 3.02% respectively of the Target Shares as at the Latest Practicable Date, the Offeror and the Group are expected to be able to acquire more than 51% of the voting rights attributable to the Target Shares by the Closing Date. Upon the completion of the Offer, the Target Company will become an indirectly non-wholly owned subsidiary of the Company.

D. Undertakings

As at the Latest Practicable Date, the Company, through its indirect wholly owned subsidiary, SiS Technologies (Thailand) Pte. Ltd., holds approximately 47.29% of the Target Shares. In addition, each of Mr. Lim Kia Hong and Mr. Lim Hwee Hai holds approximately 0.07% and 0.07% of the Target Shares, respectively. Each of SiS Technologies (Thailand) Pte. Ltd., Mr. Lim Kia Hong and Mr. Lim Hwee Hai have given written irrevocable and unconditional undertakings pursuant to the letters of undertakings dated 10 October 2017, respectively, to the Offeror that, among other things, they:

(a) shall not accept the Offer in respect of their respective Target Shares; and
(b) shall not sell, transfer, assign or dispose of their respective Target Shares to any third party or purchase or trade any Target Shares or related derivative securities or agree to do any of the foregoing, provided that nothing herein shall prohibit or preclude each of them from granting a security interest over all or any part of their respective Target Shares or the enforcement of any such security interest by the relevant beneficiary thereof in accordance with its terms.

In addition, Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont, who are directors of the Target Company, hold approximately 2.70% and 3.02% respectively of the Target Shares as at the Latest Practicable Date. Each of Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont has given written irrevocable and unconditional undertakings pursuant to the letters of undertakings dated 10 October 2017, respectively, to the Offeror that, among other things, they:

(a) shall accept the Offer in respect of 2.70% and 3.02% respectively of the Target Shares in accordance with the terms of the Offer and not withdraw such acceptance of the Offer tendered in respect of any of their undertaken Target Shares; and

– 9 –

LETTER FROM THE BOARD

(b) shall not directly or indirectly (i) sell, transfer, assign, charge, pledge, grant any option or otherwise dispose of their Target Shares or any beneficial interest therein to any third party, (ii) purchase or trade any Target Shares or related derivative securities or agree to do any of the foregoing, except as contemplated under their undertakings or as otherwise agreed in writing by the Offeror.

LISTING STATUS OF THE TARGET COMPANY

Pursuant to the SET Regulation on Listing Status, upon an announcement by the Offeror that acceptances have been received pursuant to the Offer, in order to maintain the qualification of being a listed company on the SET, the number of Minority Ordinary Shareholders of the Target Company shall be not less than 150 and such shareholders shall hold shares in aggregate of not less than 15% of the paid-up capital of the Target Company (the ‘‘Requirement of Minority Ordinary Shareholders’’). In the case that the Requirement of Minority Ordinary Shareholders is not met, the SET shall be notified of such event in writing and the Target Company shall proceed with the distribution of shareholdings to meet the Requirement of Minority Ordinary Shareholders within one year from the end of the period for submitting the share distribution report specified by the SET. In the case that the Target Company is unable to distribute its shareholdings to meet the Requirement of Minority Ordinary Shareholders within that one year period, the SET shall generally announce that the Target Company is unable to distribute shareholdings to meet the Requirement of Minority Ordinary Shareholders. The Target Company shall pay additional annual fee apart from the annual fee to be normally paid by the Target Company and report the progress of the distribution of shareholders in accordance with the guideline stipulated by the SET.

THE OFFEROR’S INTENTIONS

Upon the completion of the Offer, the Company has no plan to liquidate the Target Company’s core assets, or change the nature of the Target Company’s business, or capital structure. In addition, the Company intends to maintain the listing status of the Target Company on the SET and fulfill the Requirement of Minority Ordinary Shareholders upon the completion of the Offer.

INFORMATION ON THE COMPANY

INFORMATION ON THE OFFEROR

The principal activity of the Offeror is investment holding. The Offeror is a company incorporated in Thailand and is directly held as to approximately 48.996% by Thai Investment (a wholly-owned subsidiary of the Company), 0.004% by the Registered Shareholders, and 51% by Thai Hero Co., Ltd.. Both the Company and Mr. Somchai Sittichaisrichart are the ultimate beneficial owners of the Offeror.

– 10 –

LETTER FROM THE BOARD

Set out below is the current shareholding structure of the Offeror as at the Latest Practicable Date:

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----- Start of picture text -----

The Company
100%
SiS Distribution Limited
(incorporated in the British Virgin
Islands with limited liability)
100%
MaximaTechnology Ltd
(incorporated in the British Virgin Mr. Somchai
Islands with limited liability) Sittichaisrichart [(2)]
100%
51.0%
The Registered 49.0% Thai Success Co., Ltd. [(3)]
Thai Investment [(1)] [(1)]
Shareholders
51.0%
49.0%
Thai Prosperity Co.,
Ltd. [(3)]
51.0%
49.0%
Thai Joyful Co., Ltd. [(3)]
51.0%
49.0%
Thai Hero Co., Ltd. [(3)]
51.0%
49.0%
The Offeror [(3)(4)]
----- End of picture text -----

– 11 –

LETTER FROM THE BOARD

Notes:

(1) Thai Investment holds 48.966%, 48.978%, 48.986%, 48.992% and 48.996% interests in Thai Success Co., Ltd., Thai Prosperity Co., Ltd., Thai Joyful Co., Ltd., Thai Hero Co., Ltd. and the Offeror. Each of the Registered Shareholders holds 0.017%, 0.011%, 0.007%, 0.004% and 0.002% interests for and on behalf of Thai Investment in Thai Success Co., Ltd., Thai Prosperity Co., Ltd., Thai Joyful Co., Ltd., Thai Hero Co., Ltd. and the Offeror, pursuant to the declarations of trust dated 19 July, 20 July, 21 July, 24 July and 25 July 2017, respectively. Also, Thai Investment obtained an undertaking from each of the Registered Shareholders under these declarations of trust that they would vote in the same way as Thai Investment on all the resolutions to be proposed at the shareholders’ meeting of each of the Thai Holding Companies and the Offeror. Thai Investment together with the Registered Shareholders hold 49% interests in each of the Thai Holding Companies and the Offeror.
(2) None of Mr. Somchai Sittichaisrichart or any of his associates is a connected person by virtue of Rule 14A.09 of the Hong Kong Listing Rules.
(3) For each of the Thai Holding Companies and the Offeror, the board of directors are the two Registered Shareholders and Madam Lim Hwee Noi, who together represent the Company, and Mr. Somchai Sittichaisrichart.
(4) Under this shareholding structure, the Company (through Thai Investment), together with the Registered Shareholders, will obtain an effective equity interest of 96.55% in the Offeror, which is calculated as 49% +(49%51%)+(49%51%51%)+(49%51%51%51%)+(49%51%51%51%51%). Mr. Somchai Sittichaisrichart will obtain an effective equity interest of 3.45% in the Offeror, which is calculated as 51% 51%51%51%51%.

As advised by the Company’s legal counsel in Thailand, (a) the Offer and the shareholding structure of the Offeror complies with the Thailand’s Rules on Business Takeovers and the relevant laws and regulations in Thailand, and (b) the Target Company will comply with the relevant listing rules in Thailand upon completion of the Acquisition.

The FBA imposes limitations on the types of business enterprises a foreign person can operate in Thailand. A ‘‘foreign corporation’’ is an incorporated limited company, where at least 50% of its capital is owned by non-Thai nationals or non-Thai corporations. If a foreigner owns a 50% stake or more in the entity in Thailand, such entity will be restricted under the FBA from engaging in certain business activities, such as wholesale/retail, broker/agent, and any type of service activities, including giving advice, training, installation, repair, and maintenance. As advised by the Company’s legal counsel in Thailand, since each of the Thai Holding Companies and the Offeror is held as to 49% by Thai Investment together with the Registered Shareholders and is regarded as a Thai company under the FBA, and Mr. Somchai Sittichaisrichart is Thai national, each of the Thai Holding Companies and the Offeror shall not be restricted from engaging in businesses in Thailand under the FBA.

Under Thailand law, a simple majority number of shareholders of a limited company can control the company by exercising their voting rights at shareholders’ meeting by a show of hands and can appoint or remove a director at such shareholders’ meeting. There is no requirement for shareholders to vote by poll at shareholders’ meeting of a limited company under the relevant laws and regulations (including listing rules) in Thailand. However, a company can opt for voting by poll in its articles under Thailand law.

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LETTER FROM THE BOARD

According to the articles of each of the Thai Holding Companies and the Offeror, every shareholder shall vote by a show of hands at the respective shareholders’ meeting. As illustrated in the shareholding structure above, the Company, through Thai Investment, together with the two Registered Shareholders already represent the majority number of the shareholders of each of the Thai Holding Companies and the Offeror. Given that (a) Thai Investment obtained an undertaking from each of the Registered Shareholders that they would vote in the same way as Thai Investment on all the resolutions to be proposed at the shareholders’ meeting of each of the Thai Holding Companies and the Offeror, and (b) a transfer, sale, pledge, or disposal of the shares or placement of the shares as a guarantee, or creating any encumbrance over the shares by other means shall be made only with prior approval from the board of directors according to these respective articles, the Company (as an ultimate shareholder of Thai Investment) has control over each of the Thai Holding Companies and the Offeror.

According to the articles of the Target Company, every Target Company Shareholder shall have one vote for each share of the Target Company at the shareholders’ meeting. Since the Company, together with the Offeror, will obtain more than 51% of the voting rights attributable to the Target Shares upon completion of the Acquisition, the Company will have control over the Target Company after the Acquisition.

Under Thailand law, additions to or alterations of the articles of a limited company can only be adopted by passing a special resolution with votes of not less than 75% of total number of votes of shareholders who attend the shareholders’ meeting and have the right to vote, either by a show of hands or by poll in accordance with the articles of the limited company. Since (a) the Company, through Thai Investment, together with the two Registered Shareholders already represent the majority number of the shareholders of each of the Thai Holding Companies and the Offeror, and (b) the Company, together with the Offeror, will obtain more than 51% of the voting rights attributable to the Target Shares upon completion of the Acquisition, it is not expected that the articles of each of the Thai Holding Companies, the Offeror and the Target Company will be amended or altered upon completion of the Acquisition without the approval of the Company or the Offeror.

RISKS RELATING TO DOING BUSINESS IN THAILAND

As advised by the Company’s legal counsel in Thailand, foreign investors are subject to restrictions on foreign ownership in Thailand. The regulatory authorities in Thailand may reevaluate or amend the relevant laws and regulations or policies, and any adverse changes in the laws and regulations or policies, including their application or interpretation, could require the Company to remove or amend its shareholding structure of the Target Group or reduce the Company’s voting or economic interests in any existing or future subsidiaries and associates in Thailand. Any such removal, amendment or reduction could affect the Company’s ability to successfully implement its business strategies and operation in Thailand. If foreign ownership restrictions are determined to have been violated, monetary and criminal penalties could be imposed and relevant licences or agreements could be cancelled or voided. Any of these events could materially and adversely affect the Company’s business, financial condition and results

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LETTER FROM THE BOARD

of operations. The Board has taken into account of the above risks in respect of the Acquisition and worked with the Company’s legal counsel in Thailand in formulating the shareholding structure of the Offeror in order to minimize such risks.

INFORMATION ON THE TARGET COMPANY

The Target Company is a company incorporated in Thailand whose shares have been quoted and traded on the SET since 21 June 2004. The principal business of the Target Company is the distribution of IT products (such as computer, software, computer components, peripheral, office automation equipment and smartphone) in Thailand.

The Target Company operates in IT distribution which purchases products and services from approximately 70 suppliers and distributes to various channel. In 2016, the Target Company distributed products and services to approximately 4,600 dealers and retailers which re-sell to end users, corporate as well as government sector. Majority of products is the IT products which cover all product categories, ranging from products that are used in households such as computers, printers, smartphones and tablets to the products that are used in corporations such as server computers, network, data storage, software and other peripheral equipment.

According to the annual report of the Target Company for the year ended 31 December 2016, the Target Group has four reportable segments:

(1) Commercial products. These are IT products which are used in business. The distribution channel are corporate reseller and system integrators. Major product categories include personal computer/server, storage, network and printer.
(2) Consumer products. These are IT products which are used in small enterprises and households. The main distribution channel is retail dealer. Major product categories include printer, personal computer/notebook, network, monitor, mouse/keyboard, storage and tablet.
(3) Value-added products. These are the IT products which require pre-sales and aftersales services. The type of these products are new innovative, high technology for data center and mostly demanded by large organizations including both private and government sectors. Major product categories include enterprise storage, enterprise server, backup, network, security, virtualization and surveillance.
(4) Phones. These are phone products including smartphone and phone accessories such as memory cards. The distribution channel is phone retailers.

As at the Latest Practicable Date, to the best knowledge, information and belief of the Directors having made reasonable enquiries:

(a) each of the shareholders of the Offer Shares (including Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont) and its ultimate beneficial owner(s) (if applicable) is an Independent Third Party;

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LETTER FROM THE BOARD

(b) the Target Company does not have any outstanding options, warrants, derivatives or convertibles which may confer any rights to the holders to subscribe for, convert or exchange into shares of the Target Company besides the Target Shares; and
(c) no Director has a material interest in the Acquisition, therefore no Director is required to abstain from voting on the proposed resolution to approve the Acquisition at the meeting of the Board.

FINANCIAL INFORMATION OF THE TARGET GROUP

Set out below is a summary of certain consolidated audited financial information of the Target Group for the two years ended 31 December 2015 and 31 December 2016, respectively, and the unaudited interim financial information of the Target Group for the six months ended 30 June 2017, which has been prepared in accordance with the Thai Financial Reporting Standards as extracted from the published financial results of the Target Group.

	For the six months	For the year ended	For the year ended
	ended 30 June	31 December 2016	31 December 2015
	2017 (unaudited)	(audited)	(audited)
Net profit before	Baht180,299,000	Baht307,130,000	Baht232,498,000
taxation and	(equivalent to	(equivalent to	(equivalent to
extraordinary items (if	approximately	approximately	approximately
any)	HK$41,448,000)	HK$70,605,000)	HK$53,448,000)
Net profit after taxation	Baht142,057,000	Baht227,445,000	Baht166,338,000
and extraordinary	(equivalent to	(equivalent to	(equivalent to
items (if any)	approximately	approximately	approximately
	HK$32,657,000)	HK$52,286,000)	HK$38,239,000)

The audited and unaudited consolidated net asset value of the Target Group as at 31 December 2016 and 30 June 2017 was Baht1,709,123,000 (equivalent to approximately HK$392,902,000) and Baht1,711,101,000 (equivalent to approximately HK$393,357,000), respectively.

WAIVER IN RELATION TO THE ACCOUNTANTS’ REPORT ON THE TARGET GROUP

Pursuant to Rule 14.69(4)(a)(i) of the Hong Kong Listing Rules, the Company is required to include in this circular an accountants’ report on the Target Group prepared in accordance with Chapter 4 of the Hong Kong Listing Rules. The accounts on which the report is based must relate to a financial period ended six months or less before a circular is issued and the financial information on a company being acquired as contained in the accountants’ report must be prepared using accounting policies which should be materially consistent with those of the listed issuer. In addition, the relevant accountants’ reports must normally be prepared by certified public accountants who are qualified under the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong) for appointment as auditors of a company and who are independent both the issuer and of any other company concerned to the same extent as that required of an auditor under the Hong Kong Companies Ordinance (Chapter 622 of the Laws

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LETTER FROM THE BOARD

of Hong Kong) and in accordance with the requirements on independence issued by the Hong Kong Institute of Certified Public Accountants, provided that, in the case of a circular issued by a listed issuer in connection with the acquisition of an overseas company, the Hong Kong Stock Exchange may be prepared to permit the accountants’ report to be prepared by a firm of practicing accountants which is not qualified under the Professional Accountants Ordinance (Chapter 50 of the Laws of Hong Kong) but which is acceptable to the Hong Kong Stock Exchange. Such a firm must normally have an international name and reputation and be a member of a recognized body of accountants.

This circular has included the Target Group’s published audited financial information for the three years ended 31 December 2016 and the unaudited financial information for the six months ended 30 June 2017, which have been audited or reviewed in accordance with the Thai Financial Reporting Standards and audited or reviewed by the Target Company’s auditors, KPMG Phoomchai Audit Ltd. (‘‘KPMG Thailand’’), in accordance with the Thai Standards on Auditing.

The Company has applied for a waiver from strict compliance with Rule 14.69(4)(a)(i) of the Hong Kong Listing Rules in relation to the requirement for an accountants’ report to be prepared on the Target Group based on the following grounds:

(a) The financial information of the Target Group is already publicly available and is audited or reviewed by KPMG Thailand. which is a firm with international name and reputation and is registered with the Federation of Accounting Professions and is subject to the independent oversight by the Thailand SEC;
(b) Based on the initial assessment by the Company, there will not be material differences between Thai Financial Reporting Standards and International Financial Reporting Standards (which has no principal difference from the Hong Kong Financial Reporting Standards) if the accountants report were prepared under the Hong Kong Financial Reporting Standards;
(c) Based on discussion with KPMG Thailand and KPMG Hong Kong, there is no material difference between Thai Standards on Auditing and International Standards on Auditing (which has no principal difference from the Hong Kong Standards on Auditing); and
(d) The considerable time, resources and costs that are expected to be incurred to prepare the accountants’ report on the Target Group which is likely to cause undue delay to the Acquisition.

The Hong Kong Stock Exchange has granted the above waiver to the Company on the condition that the Company will include in this circular the following additional information:

(a) a line-by-line reconciliation by comparing the differences among the accounting policies adopted by the Target Company, International Financial Reporting Standards and the accounting policies adopted by the Company which are in compliance with Hong Kong Financial Reporting Standards, and quantifying the relevant material financial effects of such differences (if any); and

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LETTER FROM THE BOARD

(b) supplemental financial information of the Target Group for the three years ended 31 December 2016 and six months ending 30 June 2017, which is required for an accountants’ report under the Hong Kong Listing Rules but not disclosed in the published financial statements of the Target Group, excluding the information required under Rule 4.08(3) of the Hong Kong Listing Rules (which requires the accountants’ report to state that it has been prepared in accordance with the Auditing Guideline — Prospectuses and the reporting accountant (Statement 3.340) issued by the Hong Kong Institute Certified Public Accountants).

For details, please refer to the Appendix I of this circular.

SHAREHOLDING STRUCTURE OF THE TARGET COMPANY

Set out below is the current shareholding structure of the Target Company as at the Latest Practicable Date:

==> picture [427 x 310] intentionally omitted <==

----- Start of picture text -----

The Company
100%
SiS Distribution Limited
(incorporated in the British Virgin
Islands with limited liability)
100%
MaximaTechnology Ltd
(incorporated in the British Virgin Mr. Lim Kia Hong Mr. Somchai Mr. Sombuti Other Target
Islands with limited liability) and Sittichaisrichart and Pungsrinont and Company
Mr. Lim Hwee Hai [(1)] his associates his associates Shareholders
100%
SiS Technologies (Thailand)
Pte. Ltd
(incorporated in Singapore
with limited liability)
0.14% 11.94% [(2)] 9.81% [(2)] 30.82% [(2)]
47.29%
The Target Company
----- End of picture text -----

Notes

(1) Each holds approximately 0.07% of the Target Shares.
(2) The Offer Shares of 184,095,498 shares, being all the issued and fully paid-up Target Shares other than those already owned and controlled by the Group, Mr. Lim Kia Hong and Mr. Lim Hwee Hai, together representing approximately 52.57% of the Target Shares as at the Latest Practicable Date.

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LETTER FROM THE BOARD

Set out below is the proposed shareholding structure of the Target Company immediately upon completion of the Acquisition:

==> picture [440 x 310] intentionally omitted <==

----- Start of picture text -----

The Company
100%
SiS Distribution Limited
(incorporated in the British Virgin
Islands withlimited liability)
100%
MaximaTechnology Ltd
(incorporated in the British Virgin Mr. Lim Kia Hong Mr. Somchai Mr. Sombuti Other Target
Islands with limited liability) and Sittichaisrichart’s Pungsrinont’s The Offeror Company
Mr. Lim Hwee Hai [(1)] associates [(2)] associates [(3)] Shareholders
100%
SiS Technologies (Thailand)
Pte. Ltd
(incorporated in Singapore
with limited liability)
0.14% 9.24% 6.79% >5.72% [(5)] 30.82% [(6)]
47.29% The Target
Company [(4)]
----- End of picture text -----

Notes

(1) Each holds approximately 0.07% of the Target Shares.
(2) Mr. Somchai Sittichaisrichart’s associates continue to hold approximately 9.24% of the Target Shares, as a result of Mr. Somchai Sittichaisrichart’s undertakings to accept the Offer. Mr. Somchai Sittichaisrichart’s associates did not enter into any agreement or arrangement with the Company, the Company’s connected persons and the Other Target Company Shareholders in relation to the Acquisition, which confers upon Mr. Somchai Sittichaisrichart and his associates any benefits (whether economic or otherwise) not available to the Shareholders.
(3) Mr. Sombuti Pungsrinont’s associates continue to hold approximately 6.79% of the Target Shares, as a result of Mr. Sombuti Pungsrinont’s undertakings to accept the Offer. Mr. Sombuti Pungsrinont’s associates did not enter into any agreement or arrangement with the Company, the Company’s connected persons and the Other Target Company Shareholders in relation to the Acquisition, which confers upon Mr. Sombuti Pungsrinont and his associates any benefits (whether economic or otherwise) not available to the Shareholders.
(4) The Company (through Thai Investment) and the Registered Shareholders will obtain an effective equity interest of 52.81% in the Target Company, which is calculated as 47.29%+5.72%(96.55%). Mr. Somchai Sittichaisrichart and his associates will obtain an effective equity interest of 9.44% in the Target Company, which is calculated as 9.24%+5.72%(3.45%).
(5) Pursuant to the undertakings given by Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont, each of them will accept the Offer in respect of approximately 2.70% and 3.02% respectively of the Target Shares as at the Latest Practicable Date, the Offeror and the Group are expected to be able to acquire more than 51% of the voting rights attributable to the Target Shares by the Closing Date.
(6) Subject to the Requirement of Minority Ordinary Shareholders.

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LETTER FROM THE BOARD

Under the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, since the Company owns more than half of the voting power of each of the Thai Holding Companies and the Offeror under the proposed shareholding structure and will have control over the shareholders’ meeting of the Target Company upon completion of the Acquisition, the financial results of the Target Group, the Offeror and the Thai Holding Companies will be consolidated into the accounts of the Group, and each of the Target Group, the Offeror and the Thai Holding Companies will be recognized as subsidiaries of the Company upon completion of the Acquisition by the Offeror. The Company’s reporting accountant, Deloitte Touche Tohmatsu, has provided unmodified opinion on the unaudited pro forma financial information of the Enlarged group, which is set out in the Appendix III of this circular, that (a) the unaudited pro forma financial information has been properly compiled on the basis stated; (b) such basis is consistent with the accounting policies of the Group; and (c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to Rules 4.29(1) of the Hong Kong Listing Rules.

FUNDING FOR THE ACQUISITION

Given the effective equity interests held in the Offeror, the Group and Mr. Somchai Sittichaisrichart will contribute up to Baht1,368,630,366 (equivalent to approximately HK$314,627,670) and Baht48,904,969 (equivalent to approximately to HK$11,242,522) assuming an upward adjustment of 10% of the Offer Price is made, representing approximately 96.55% and 3.45%, respectively, of the Offer Price.

The funds to be contributed by Group will be financed by a combination of bank loans and internal resources of the Company, for the Offeror to settle the Offer Price.

The funds to be contributed by Mr. Somchai Sittichaisrichart will be financed by his personal funds, for the Offeror to settle the Offer Price.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group has been actively assessing the global market for attractive investment opportunities to complement its existing businesses and to further develop itself into a leading company in the IT industry.

The Board believes that the Acquisition is beneficial to the Group for the following reasons:

(a) The Acquisition will bring financial benefits to the Group

According to the annual report of the Company for the year ended 31 December 2016, the Target Company continued to perform well during 2016 and contributed profit of HK$23 million to the Group. The Board considers that the business prospects of the Target Company is promising. The Acquisition would help enhance the profitability of the Group and it is in the interests of the Group and the Shareholders as a whole.

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LETTER FROM THE BOARD

(b) The Acquisition is strategically beneficial to the Group

The principal activity of the Company is investment holding. The Group is principally engaged in real estate investments business, distribution of mobile and IT products and investments in IT, securities and other businesses. As part of its investment strategy, the Group will look for acquisition opportunities in the international markets to strengthen its existing business. The Board believes that the Acquisition is strategically beneficial to the Group as it will allow the Group to:

(i) establish market presence in Thailand and other Southeast Asian regions

The Group currently only has a moderate market presence of IT business in Hong Kong and Macau. The Target Company operates in IT distribution which purchases products and services from approximately 70 suppliers and distributes to various channel in Thailand. In 2016, the Target Company has distributed products and services to approximately 4,600 dealers and retailers which re-sell to end users, corporate as well as government sector. The Acquisition can help the Group establish market presence in Thailand, which can be a gateway for the Group to expand into other Southeast Asian regions. Also, the establishment of the Group’s market presence in Thailand can enhance the Target Group’s business and create business synergies and economies of scales as a result of geographical diversification.

(ii) enhance the Group’s IT product distribution business

Apart from real estate investments business, investment in IT, securities and other businesses, the Group is also engaged in IT products distribution business in Hong Kong and Macau. Since the business scale of the IT products distribution business of the Target Company is significantly larger than that of the Group, the Acquisition will enhance the Group’s IT product distribution business by (i) bringing in new business opportunities for the Group, (ii) broadening the IT products portfolio of the Group and (iii) expanding the sellers’ network of the Group.

In light of the above, the Company started to explore the possibility to increase its shareholding in the Target Company in the first quarter of 2017. The Board has known Mr. Somchai Sittichaisrichart, who was appointed as a director of the Target Company since June 1998, for over 18 years. Since Mr. Somchai Sittichaisrichart has extensive management experience in the Target Group, cooperation with Mr. Somchai Sittichaisrichart to establish the Offeror will enable the Company to better manage the Target Group after the Acquisition. Based on the above, the Board considers that the Acquisition (including the terms and conditions of the Offer) are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

HONG KONG LISTING RULES IMPLICATIONS

As the applicable percentage ratios as defined in Rule 14.07 of the Hong Kong Listing Rules for the Acquisition exceed 100%, the Acquisition constitutes a very substantial acquisition of the Company under Chapter 14 of the Hong Kong Listing Rules. Accordingly, the Acquisition is subject to the reporting, announcement and Shareholders’ approval requirements under the Hong Kong Listing Rules.

SGM

The SGM will be convened for the purpose of considering and, if thought fit, approving the Acquisition and the transactions contemplated thereunder. To the best knowledge of the Board, as at the Latest Practicable Date, except for Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont who hold approximately 0.072% and 0.072% of the Shares, respectively, no Shareholder has a material interest in the Acquisition, therefore no Shareholder (other than Mr. Somchai Sittichaisrichart, Mr. Sombuti Pungsrinont and their associates) is required to abstain from voting on the proposed resolution to approve the Acquisition at the SGM.

Pursuant to Rules 13.39(4) and 13.39(5) of the Hong Kong Listing Rules, the resolutions proposed to be approved at the SGM will be taken by poll and an announcement will be made by the Company on the results of the SGM.

RECOMMENDATION

The Directors consider that the Acquisition and the transactions contemplated thereunder are fair and reasonable, and in the interests of the Group and the Shareholders as a whole. Accordingly, the Directors recommend all Shareholders to vote in favour of the resolution to be proposed at the SGM to approve the Acquisition and the transactions contemplated thereunder.

GENERAL

This circular is being distributed to the Shareholders and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor is it a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this circular in any jurisdiction in contravention of applicable law. Neither this circular nor anything contained therein shall form the basis of any contract or commitment whatsoever.

The Offer (if and when made), will be made solely by the Offer Document and the relevant form(s) of acceptance accompanying the same, which will contain the full terms and conditions of the Offer, including details of how it may be accepted. For the avoidance of doubt, the Offer (if and when made) will be open to all Target Company Shareholders holding Target Shares, including those to whom the Offer Document and relevant form(s) of acceptance may not be sent.

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LETTER FROM THE BOARD

The release, publication or distribution of this circular and the Offer Document in certain jurisdictions may be restricted by law and therefore persons in any such jurisdictions into which this circular and the Offer Document are released, published or distributed should inform themselves about and observe such restrictions.

Copies of this circular and any formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any jurisdiction where the making of or the acceptance of the Offer would violate the law of that jurisdiction (a ‘‘Restricted Jurisdiction’’) and will not be capable of acceptance by any such use, instrumentality or facility within any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction.

The Offer (unless otherwise determined by the Offeror and permitted by applicable law and regulation) will not be made, directly or indirectly, in or into, or by the use of mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities.

The ability of Target Company Shareholders who are not resident in Thailand to accept the Offer may be affected by the laws of the relevant jurisdictions in which they are located. Persons who are not resident in Thailand should inform themselves of, and observe, any applicable requirements.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

WARNING

THE OFFER WILL NOT BE MADE UNLESS AND UNTIL THE PRECONDITIONS ARE FULFILLED OR WAIVED BY THE OFFEROR (AS APPLICABLE) ON OR BEFORE THE LONG-STOP DATE. ACCORDINGLY, ALL REFERENCES TO THE OFFER IN THIS CIRCULAR REFER TO A POSSIBLE VOLUNTARY GENERAL OFFER WHICH WILL ONLY BE MADE IF AND WHEN SUCH PRE-CONDITIONS ARE FULFILLED OR WAIVED BY THE OFFEROR (AS APPLICABLE).

SHAREHOLDERS AND PROSPECTIVE INVESTORS OF THE COMPANY ARE ADVISED TO EXERCISE CAUTION WHEN DEALING IN THE SECURITIES OF THE COMPANY. PERSONS WHO ARE IN DOUBT AS TO THE ACTION SHOULD CONSULT THEIR PROFESSIONAL ADVISERS.

Yours faithfully, For and on behalf of the Board of

SiS International Holdings Limited Lim Kia Hong Chairman

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

HISTORICAL TRACK RECORD PERIOD ACCOUNTS

INTERIM FINANCIAL STATEMENTS ENDED 30 JUNE 2017

Independent Auditor’s Report on Review of Interim Financial Information

To the Board of Directors of SiS Distribution (Thailand) Public Company Limited

I have reviewed the accompanying consolidated and separate statements of financial position of SiS Distribution (Thailand) Public Company Limited and its subsidiaries, and of SiS Distribution (Thailand) Public Company Limited, respectively, as at 30 June 2017; the consolidated and separate statements of income and comprehensive income for the three-month and six-month periods ended 30 June 2017, the consolidated and separate statements of changes in equity and cash flows for the six-month period ended 30 June 2017; and condensed notes (‘‘interim financial information’’). Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34, ‘‘Interim Financial Reporting’’. My responsibility is to express a conclusion on this interim financial information based on my review.

Scope of Review

I conducted my review in accordance with the 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 me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion.

Conclusion

Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34, ‘‘Interim Financial Reporting’’.

(Porntip Rimdusit)

Certified Public Accountant Registration No. 5565

KPMG Phoomchai Audit Ltd.

Bangkok 11 August 2017

– 23 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF FINANCIAL POSITION

Assets Note Current assets Cash and cash equivalents Trade accounts receivable 3, 4 Other current receivables 3 Short-term loans to related parties 3 Current portion of long-term loans to related party 3 Inventories 5 Other current assets Total current assets Non-current assets Investments in subsidiaries 6 Investments in associates 7 Equipment Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets	Consolidated financial statements Separate financial statements 30 June 2017 31 December 2016 30 June 2017 31 December 2016 (Unaudited) (Unaudited) (in thousand Baht) 148,524 147,870 106,984 106,493 2,583,177 2,361,380 2,404,419 2,218,802 294,451 272,811 107,635 88,765 — — 20,500 20,000 53,853 49,782 64,000 64,000 1,817,943 1,718,131 1,687,702 1,620,801 — 5,443 — 5,348 4,897,948 4,555,417 4,391,240 4,124,209 — — 171,958 171,958 — — — — 98,675 107,156 98,075 106,863 24,853 29,592 24,853 29,592 231,961 254,450 208,618 222,622 11,664 11,725 11,664 11,725 367,153 402,923 515,168 542,760 5,265,101 4,958,340 4,906,408 4,666,969	Consolidated financial statements Separate financial statements 30 June 2017 31 December 2016 30 June 2017 31 December 2016 (Unaudited) (Unaudited) (in thousand Baht) 148,524 147,870 106,984 106,493 2,583,177 2,361,380 2,404,419 2,218,802 294,451 272,811 107,635 88,765 — — 20,500 20,000 53,853 49,782 64,000 64,000 1,817,943 1,718,131 1,687,702 1,620,801 — 5,443 — 5,348 4,897,948 4,555,417 4,391,240 4,124,209 — — 171,958 171,958 — — — — 98,675 107,156 98,075 106,863 24,853 29,592 24,853 29,592 231,961 254,450 208,618 222,622 11,664 11,725 11,664 11,725 367,153 402,923 515,168 542,760 5,265,101 4,958,340 4,906,408 4,666,969
		4,124,209
		171,958 — 106,863 29,592 222,622 11,725
		542,760
		4,666,969

The accompanying notes are an integral part of these financial statements.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Liabilities and shareholders’ equity Note Current liabilities Bank overdrafts and short-term borrowings from financial institutions Trade accounts payable 3, 8 Other current payables 3 Income tax payable Other current liabilities Total current liabilities Non-current liabilities Provision for cost of assets dismantlement Provisions for employee benefit Total non-current liabilities Total liabilities Shareholders’ equity Share capital: Authorized share capital Issued and paid share capital Share premium: Share premium on ordinary shares Retained earnings Appropriated Legal reserve Unappropriated Total shareholders’ equity Total liabilities and shareholders’ equity	Consolidated financial statements Separate financial statements 30 June 2017 31 December 2016 30 June 2017 31 December 2016 (Unaudited) (Unaudited) (in thousand Baht) 1,491,060 1,219,222 1,372,212 1,017,705 1,620,859 1,683,714 1,425,776 1,586,602 368,704 277,139 326,030 267,871 50 37 — — 21,377 21,175 20,798 20,703 3,502,050 3,201,287 3,144,816 2,892,881 3,960 3,960 3,960 3,960 47,990 43,970 47,990 43,970 51,950 47,930 51,950 47,930 3,554,000 3,249,217 3,196,766 2,940,811 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 890,467 888,489 889,008 905,524 1,711,101 1,709,123 1,709,642 1,726,158 5,265,101 4,958,340 4,906,408 4,666,969	Consolidated financial statements Separate financial statements 30 June 2017 31 December 2016 30 June 2017 31 December 2016 (Unaudited) (Unaudited) (in thousand Baht) 1,491,060 1,219,222 1,372,212 1,017,705 1,620,859 1,683,714 1,425,776 1,586,602 368,704 277,139 326,030 267,871 50 37 — — 21,377 21,175 20,798 20,703 3,502,050 3,201,287 3,144,816 2,892,881 3,960 3,960 3,960 3,960 47,990 43,970 47,990 43,970 51,950 47,930 51,950 47,930 3,554,000 3,249,217 3,196,766 2,940,811 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 890,467 888,489 889,008 905,524 1,711,101 1,709,123 1,709,642 1,726,158 5,265,101 4,958,340 4,906,408 4,666,969
		2,892,881
		3,960 43,970
		47,930
		2,940,811
		350,199
		350,199 435,415 35,020 905,524
		1,726,158
		4,666,969

The accompanying notes are an integral part of these financial statements.

– 25 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF INCOME (UNAUDITED)

Note
Revenues
Revenues from sales
3
Revenues from services
Other income
Net foreign exchange gain
Total revenues
Expenses
Cost of sale of goods
3
Cost of rendering of services
Selling expenses
Administrative expenses
3
Net foreign exchange loss
Finance costs
3
Total expenses
Share of profit of investments in
associates
Profit before tax expense
Tax expense
Profit for the period
Profit attributable to:
Owners of the Company
Non-controlling interests
Profit for the period
Basic earnings per share
(in Baht)
10

Consolidated
financial statements
Separate
financial statements
Three-month period ended
30 June
Three-month period ended
30 June
2017
2016
2017
2016
(in thousand Baht)
4,935,050
4,510,274
4,182,403
3,768,215
12,434
12,223
3,582
6,936
22,958
20,304
31,494
28,046
—
389
—
439
4,970,442
4,543,190
4,217,479
3,803,636
4,668,707
4,293,562
3,936,439
3,591,928
6,061
3,200
5,683
3,454
51,678
55,303
47,968
52,455
132,753
100,690
131,501
100,564
4,644
—
4,700
—
11,219
13,255
10,550
10,554
4,875,062
4,466,010
4,136,841
3,758,955
1,428
1,030
—
—
96,808
78,210
80,638
44,681
(23,021)
(15,419)
(16,139)
(8,944)
73,787
62,791
64,499
35,737
73,787
62,791
64,499
35,737
—
—
—
—
73,787
62,791
64,499
35,737
0.21
0.18
0.18
0.10

The accompanying notes are an integral part of these financial statements.

– 26 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

Profit for the period Other comprehensive income Total comprehensive income for the period Total comprehensive income attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the period	Consolidated financial statements Separate financial statements Three-month period ended 30 June Three-month period ended 30 June 2017 2016 2017 2016 (in thousand Baht) 73,787 62,791 64,499 35,737 — — — — 73,787 62,791 64,499 35,737 73,787 62,791 64,499 35,737 — — — — 73,787 62,791 64,499 35,737	Consolidated financial statements Separate financial statements Three-month period ended 30 June Three-month period ended 30 June 2017 2016 2017 2016 (in thousand Baht) 73,787 62,791 64,499 35,737 — — — — 73,787 62,791 64,499 35,737 73,787 62,791 64,499 35,737 — — — — 73,787 62,791 64,499 35,737
		35,737
		35,737 —
		35,737

The accompanying notes are an integral part of these financial statements.

– 27 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF INCOME (UNAUDITED)

Note
Revenues
Revenue from sale of goods
3
Revenue from rendering of services
Other income
Total revenues
Expenses
Cost of sale of goods
3
Cost of rendering of services
Selling expenses
Administrative expenses
3
Net foreign exchange loss
Finance costs
Total expenses
Share of profit (loss) of investments
in associates
3, 7
Profit before tax expense
Tax expense
Profit for the period
Profit attributable to:
Owners of the Company
Non-controlling interests
Profit for the period
Basic earnings per share
(in Baht)
10

Consolidated
financial statements
Separate
financial statements
Six-month period ended
30 June
Six-month period ended
30 June
2017
2016
2017
2016
(in thousand Baht)
9,610,453
8,923,126
8,181,761
7,480,314
29,265
23,605
6,540
16,901
33,537
34,933
49,432
49,191
9,673,255
8,981,664
8,237,733
7,546,406
9,095,669
8,486,134
7,692,805
7,105,453
10,760
9,483
10,713
10,236
91,478
97,865
86,079
92,905
259,717
212,117
257,591
210,914
17,647
8,241
17,467
7,874
21,756
25,757
19,808
21,597
9,497,027
8,839,597
8,084,463
7,448,979
4,071
(1,799)
—
—
180,299
140,268
153,270
97,427
(38,242)
(28,393)
(29,707)
(19,505)
142,057
111,875
123,563
77,922
142,057
111,875
123,563
77,922
—
—
—
—
142,057
111,875
123,563
77,922
0.41
0.32
0.35
0.22

The accompanying notes are an integral part of these financial statements.

– 28 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

Profit for the period Other comprehensive income Total comprehensive income for the period Total comprehensive income attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the period	Consolidated financial statements Separate financial statements Six-month period ended 30 June Six-month period ended 30 June 2017 2016 2017 2016 (in thousand Baht) 142,057 111,875 123,563 77,922 — — — — 142,057 111,875 123,563 77,922 142,057 111,875 123,563 77,922 — — — — 142,057 111,875 123,563 77,922	Consolidated financial statements Separate financial statements Six-month period ended 30 June Six-month period ended 30 June 2017 2016 2017 2016 (in thousand Baht) 142,057 111,875 123,563 77,922 — — — — 142,057 111,875 123,563 77,922 142,057 111,875 123,563 77,922 — — — — 142,057 111,875 123,563 77,922
		77,922
		77,922 —
		77,922

The accompanying notes are an integral part of these financial statements.

– 29 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

		Consolidated financial statements
Issued and paid share capital 350,199 — — — — 350,199	Share premium 435,415 — — — — 435,415	Retained earnings Legal reserve Unappropriated Equity attributable to owners of the Company (in thousand Baht) 35,020 766,104 1,586,738 — (105,060) (105,060) — (105,060) (105,060) — 111,875 111,875 — 111,875 111,875 35,020 772,919 1,593,553	Non- controlling interests — — — — — —	Total shareholders’ equity 1,586,738 (105,060
		Legal reserve 35,020 — — — — 35,020
				(105,060
				111,875
				111,875
				1,593,553

The accompanying notes are an integral part of these financial statements.

– 30 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

		Consolidated financial statements
Issued and paid share capital 350,199 — — — — 350,199	Share premium 435,415 — — — — 435,415	Retained earnings Legal reserve Unappropriated Equity attributable to owners of the Company (in thousand Baht) 35,020 888,489 1,709,123 — (140,079) (140,079) — (140,079) (140,079) — 142,057 142,057 — 142,057 142,057 35,020 890,467 1,711,101	Non- controlling interests — — — — — —	Total shareholders’ equity 1,709,123 (140,079
		Legal reserve 35,020 — — — — 35,020
				(140,079
				142,057
				142,057
				1,711,101

The accompanying notes are an integral part of these financial statements.

– 31 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

Separate financial statements

Note Six month period ended 30 June 2016 Balance at 1 January 2016 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Dividend to owners of the Company 11 Total contributions by and distributions to owners of the Company Comprehensive income for the period Profit and other comprehensive income Total comprehensive income for the period Balance at 30 June 2016	Issued and paid share capital 350,199 — — — — 350,199	Retained Share premium Legal reserve (in thousand Baht) 435,415 35,020 — — — — — — — — 435,415 35,020	Retained	earnings Unappropriated 862,849 (105,060) (105,060) 77,922 77,922 835,711	Total shareholders’ equity 1,683,483 (105,060
					(105,060
					77,922
					77,922
					1,656,345

The accompanying notes are an integral part of these financial statements.

– 32 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

Separate financial statements

Note Six month period ended 30 June 2017 Balance at 1 January 2017 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Dividend to owners of the Company 11 Total contributions by and distributions to owners of the Company Comprehensive income for the period Profit and other comprehensive income Total comprehensive income for the period Balance at 30 June 2017	Issued and paid share capital 350,199 — — — — 350,199	Retained Share premium Legal reserve (in thousand Baht) 435,415 35,020 — — — — — — — — 435,415 35,020	Retained	earnings Unappropriated 905,524 (140,079) (140,079) 123,563 123,563 889,008	Total shareholders’ equity 1,726,158 (140,079
					(140,079
					123,563
					123,563
					1,709,642

The accompanying notes are an integral part of these financial statements.

– 33 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CASH FLOWS (UNAUDITED)

Cash flows from operating activities
Profit for the period
Adjustments to reconcile profit to cash
receipts (payments)
Tax expense
Finance costs
Depreciation and amortization
Unrealised gain on exchange
Loss (gain) on disposal of equipment
Loss on disposal of intangible assets
Share of (profit) loss of investments in
associates
(Reversal of) bad debts and doubtful debts
expense
(Reversal of) provision for obsolete and
defective stocks
Employee benefit expenses
Interest income
Change in operating assets and liabilities
Trade accounts receivable
Other receivables
Inventories
Other current assets
Other non-current assets
Trade accounts payable
Other current payables
Other current liabilities
Net cash used in operating
Employee benefit obligation paid
Taxes paid
Net cash used in operating activities

Consolidated
financial statements
Separate
financial statements
Six-month period ended
30 June
Six-month period ended
30 June
2017
2016
2017
2016
(in thousand Baht)
142,057
111,875
123,563
77,922
38,242
28,393
29,707
19,505
21,756
25,757
19,808
21,597
18,085
18,988
18,010
18,927
(31)
(1,171)
(31)
(1,191)
22
(268)
22
(268)
1,755
—
1,755
—
(4,071)
1,799
—
—
12,927
(1,014)
12,710
226
(44,807)
48,308
(42,275)
49,137
4,020
3,493
4,020
3,493
(4,318)
(3,750)
(3,832)
(4,173)
185,637
232,410
163,457
185,175
(234,724)
(247,350)
(198,327)
(203,194)
(18,412)
(9,778)
(16,280)
(12,281)
(55,006)
(607,081)
(24,627)
(418,133)
5,443
3,425
5,348
3,033
29
1,046
29
1,028
(62,779)
438,395
(160,751)
397,729
91,519
61,622
58,116
44,143
202
2,484
95
2,265
(88,091)
(124,827)
(172,940)
(235)
—
(1,550)
—
(1,550)
(18,342)
(37,528)
(18,305)
(37,528)
(106,433)
(163,905)
(191,245)
(39,313)

The accompanying notes are an integral part of these financial statements.

– 34 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Cash flows from investing activities
Acquisition of equipment
Proceeds from sales of equipment
Acquisition of intangible assets
Interest received
Repayment of (proceeds from) loans to
related parties
Net cash from (used in) investing
activities
Cash flows from financing activities
Interest paid
Net proceeds of bank overdrafts and short-
term borrowings from financial
institutions
Dividends paid to owners of the Company
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of
period
Cash and cash equivalents at ending of
period

Consolidated
financial statements
Separate
financial statements
Six-month period ended
30 June
Six-month period ended
30 June
2017
2016
2017
2016
(in thousand Baht)
(6,802)
(6,316)
(6,420)
(6,115)
160
912
160
912
—
(460)
—
(460)
3,680
3,750
3,832
4,925
—
(9,800)
(500)
117,000
(2,962)
(11,914)
(2,928)
116,262
(21,710)
(25,800)
(19,764)
(21,207)
271,838
469,423
354,507
203,142
(140,079)
(105,060)
(140,079)
(105,060)
110,049
338,563
194,664
76,875
654
162,744
491
153,824
147,870
49,490
106,493
31,699
148,524
212,234
106,984
185,523

The accompanying notes are an integral part of these financial statements.

– 35 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Note Contents

1 General information 2 Basis of preparation of the interim financial statements 3 Related parties 4 Trade accounts receivable 5 Inventories 6 Investment in subsidiaries 7 Investment in associates 8 Trade accounts payable 9 Segment information 10 Earnings per share 11 Dividends 12 Financial instruments 13 Commitments with non-related parties 14 Reclassification of accounts

– 36 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

These notes form an integral part of the interim financial statements.

The interim financial statements issued for Thai regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language statutory financial statements, and were approved and authorized for issue by the Board of Directors on 11 August 2017.

1 GENERAL INFORMATION

SiS Distribution (Thailand) Public Company Limited, ‘‘the Company’’, is incorporated in Thailand and has its registered office at 9 Pakin Building, 9th Floor, Room No. 901, Ratchadaphisek Road, Din Daeng, Bangkok, Thailand.

The Company was listed on the Stock Exchange of Thailand on 21 June 2004.

The Company’s major shareholders during the financial period were SiS Technologies (Thailand) Pte. Ltd. which was incorporated in Singapore (47.29% shareholding), Sittichaisrichart Family (12.78% shareholding) and Pungsrinont Family (9.83% shareholding).

The principal activities of the Company are trading in computer components, smartphone, office automation equipment and service and rental of computers and other peripheral. Details of the Company’s subsidiaries as at 30 June 2017 and 31 December 2016 are given in notes 3 and 6.

2 BASIS OF PREPARATION OF THE INTERIM FINANCIAL STATEMENTS

(a) Statement of compliance

The interim financial statements are prepared on a condensed basis in accordance with Thai Accounting Standard (TAS) No. 34 (revised 2016) Interim Financial Reporting; guidelines promulgated by the Federation of Accounting Professions (FAP); and applicable rules and regulations of the Thai Securities and Exchange Commission.

The interim financial statements are prepared to provide an update on the financial statements for the year ended 31 December 2016. They do not include all of the financial information required for full annual financial statements but focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim financial statements should be read in conjunction with the financial statements of the Company and its subsidiaries for the year ended 31 December 2016.

The accounting policies and methods of computation applied in these interim financial statements are consistent with those applied in the financial statements for the year ended 31 December 2016 except that the Group has adopted all the new and revised TFRS that are effective for annual periods beginning on or after 1 January 2017. The adoption of these new and revised TFRS did not have any material effect on the accounting policies, methods of computation, financial performance or position of the Group.

(b) Functional and presentation currency

The interim financial statements 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.

– 37 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

(c) Use of judgements and estimates

The preparation of interim financial statements in conformity with TFRS requires management to make judgements, 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.

In preparing these interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2016.

Measurement of fair values

The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the chief financial officer.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which the valuations should be classified.

Significant valuation issues are reported to the Group Audit Committee.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

– 38 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

3 RELATED PARTIES

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Relationships with subsidiaries and associates are described in notes 6 and 7. Relationship with key management and other related parties were as follows:

	Country of
	incorporation/
Name of the parties	nationality	Nature of relationships
Key management personnel	Thailand	Persons having authority and responsibility for
	Singapore	planning, directing and controlling the
		activities of the entity, directly or indirectly,
		including any director (whether executive or
		otherwise) of the Group
SiS International Holdings Ltd.	Bermuda	Ultimate parent of the Group and some common
		directors
SiS Technologies (Thailand) Pte. Ltd.	Singapore	Under the same control of the ultimate parent
		company
Nippon Pack Trading Co., Ltd.	Thailand	Associate, 49% shareholding by the subsidiary
		company
Wiko Mobile (Thailand) Co., Ltd.	Thailand	Associate, 45% shareholding by the subsidiary
		company
Alliance & Link Corporation Co., Ltd	Thailand	15% shareholding by the subsidiary company
Click Connect Co., Ltd.	Thailand	15% shareholding by the subsidiary company
Hardware House International Co., Ltd.	Thailand	Indirect shareholding by the subsidiary
Direct subsidiaries
SiS Venture Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding
Qool Distribution (Thailand) Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding

The pricing policies for transactions with related parties are explained further below:

Transactions	Pricing policies
Sale of goods	Market price plus actual related expenses
Rendering of services	Contractually agreed price
Management income/fee	Contractually agreed price
Purchase of goods	Actual cost plus actual related expenses
Interest income	Reference from interest rate of financial institution
Other income	Actual cost plus margin

– 39 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Significant transactions for the three-month and six-month periods ended 30 June 2017 and 2016 with related parties were as follows:

Three-month period ended 30 June Ultimate parent company Management fee Subsidiaries Sale of goods Purchase of goods Management income Interest income Associates Sale of goods Purchase of goods Rendering of service Other income Interest income Key management personnel Key management personnel compensation Short-term benefits Other long-term benefits Total key management personnel compensation Six-month period ended 30 June Ultimate parent company Management fee Subsidiaries Sale of goods Purchase of goods Management income Interest income Associates Sale of goods Purchase of goods Rendering of service Other income Interest income Key management personnel Key management personnel compensation Short-term benefit Other long-term benefits Total key management personnel compensation	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) 3,092 2,837 2,614 2,370 — — 1,771 4,365 — — 10,620 732 — — 9,206 12,107 — — 157 305 130 120 130 65 451,138 344,946 — — 4,676 470 — — 1,692 5,230 1,227 1,526 836 880 488 560 16,637 9,962 15,059 8,798 557 440 499 382 17,194 10,402 15,558 9,180 Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) 6,015 5,605 5,114 4,699 — — 3,556 6,023 — — 10,621 911 — — 17,548 23,659 — — 311 1,112 279 157 279 102 853,126 642,071 — — 5,705 920 — — 3,508 5,783 2,659 2,069 1,636 1,751 971 1,120 34,374 22,885 31,256 20,717 1,046 743 939 653 35,420 23,628 32,195 21,370	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) 3,092 2,837 2,614 2,370 — — 1,771 4,365 — — 10,620 732 — — 9,206 12,107 — — 157 305 130 120 130 65 451,138 344,946 — — 4,676 470 — — 1,692 5,230 1,227 1,526 836 880 488 560 16,637 9,962 15,059 8,798 557 440 499 382 17,194 10,402 15,558 9,180 Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) 6,015 5,605 5,114 4,699 — — 3,556 6,023 — — 10,621 911 — — 17,548 23,659 — — 311 1,112 279 157 279 102 853,126 642,071 — — 5,705 920 — — 3,508 5,783 2,659 2,069 1,636 1,751 971 1,120 34,374 22,885 31,256 20,717 1,046 743 939 653 35,420 23,628 32,195 21,370
		21,370

– 40 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Balances as at 30 June 2017 and 31 December 2016 with related parties were as follows:

Trade accounts receivable from associates
Nippon Pack Trading Co., Ltd.
Trade accounts receivable from other related
party
Hardware House International Co., Ltd.
Less allowance for doubtful accounts
Net
Other current receivables from associates
Nippon Pack Trading Co., Ltd.
Wiko Mobile (Thailand) Co., Ltd.
Other current receivable from other related
party
Hardware House International Co., Ltd.
Less allowance for doubtful accounts
Net
Accrued income from subsidiary
Qool Distribution (Thailand) Co., Ltd.

Consolidated
financial statements
Separate
financial statements
30 June
31 December
30 June
31 December
2017
2016
2017
2016
(in thousand Baht)
117
556
—
—
46,223
46,223
46,223
46,223
46,340
46,779
46,223
46,223
(46,223)
(46,223)
(46,223)
(46,223)
117
556
—
—
1,498
860
—
—
3,110
20
451
20
557,087
557,087
541,542
541,542
561,695
557,967
541,993
541,562
(557,087)
(557,087)
(541,542)
(541,542)
4,608
880
451
20
—
—
3,631
3,660

The Company and its subsidiary (Qool Distribution (Thailand) Co., Ltd.) have agreement on consignment with a related party (Hardware House International Co., Ltd.) which has notified the call for return all consignment from the related party in November 2012 because of the default of the terms of agreement for consignment. The Company and its subsidiary are in the process to reclaim those losses from the related party. As at 30 June 2017 the receivable from the loss of consignment amounted to approximately Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in the separate financial statements, respectively (31 December 2016: Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in the separate financial statements, respectively). The Company is undertaking litigation proceedings, therefore, pending the outcome of these proceedings, the Company and its subsidiary estimated the allowance for doubtful account, amounted to Baht 557.09 million and Baht 541.54 million, respectively.

– 41 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Loans to related party Interest rate 30 June 31 December 2017 2016 (% per annum) Short-term loans to Subsidiaries SiS Venture Co., Ltd. 2.80–3.25 2.80–3.25 Total Associate Nippon Pack Trading Co., Ltd. 5.25 5.25 Less allowance for doubtful account Less share of loss exceeds its interest in associate Total Grand total Current portion of long-term loans to Associate Wiko Mobile (Thailand) Co., Ltd. 3.03–3.15 3.03–3.15 Less share of loss exceeds its interest in associate Grand total	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) — — 20,500 20,000 — — 20,500 20,000 24,500 24,500 — — (10,163) (10,163) — — (14,337) (14,337) — — — — — — — — 20,500 20,000 64,000 64,000 64,000 64,000 (10,147) (14,218) — — 53,853 49,782 64,000 64,000	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) — — 20,500 20,000 — — 20,500 20,000 24,500 24,500 — — (10,163) (10,163) — — (14,337) (14,337) — — — — — — — — 20,500 20,000 64,000 64,000 64,000 64,000 (10,147) (14,218) — — 53,853 49,782 64,000 64,000
		20,000
		— — —
		—
		20,000
		64,000 —
		64,000

– 42 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Movements during the six-month periods ended 30 June 2017 and 2016 of loans to subsidiaries were as follows:

Short-term loans to Subsidiaries At 1 January Increase Decrease At 30 June Associates At 1 January Increase Share of loss exceeds its interest in associates At 30 June	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) — — 20,000 137,000 — — 500 — — — — (117,000 — — 20,500 20,000 — 11,523 — — — 9,800 — — — (5,434) — — — 15,889 — —	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) — — 20,000 137,000 — — 500 — — — — (117,000 — — 20,500 20,000 — 11,523 — — — 9,800 — — — (5,434) — — — 15,889 — —
		20,000
		— — —
		—

Short-term loans to related parties were due on demand.

Long-term loans to Associate At 1 January Reversal of share of loss exceeds its interest in associates At 30 June	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) 49,782 44,973 64,000 73,259 4,071 3,634 — — 53,853 48,607 64,000 73,259	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht) 49,782 44,973 64,000 73,259 4,071 3,634 — — 53,853 48,607 64,000 73,259
		73,259

– 43 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

During 2015 the Company entered into an unsecured long-term loan agreement with an associate company, Wiko Mobile (Thailand) Co., Ltd., for the loan principal of Baht 73 million. The loan principal is receivable in the various amounts as stipulated in the agreement, commencing in August 2017 and maturity in December 2017.

Trade payable to associate Wiko Mobile (Thailand) Co., Ltd. Trade payable to other related party Alliance & Link Corporation Co., Ltd. Total Other current payable to ultimate parent company SiS International Holdings Ltd. Significant agreements with related parties	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 115,335 57,104 — — 86 86 86 86 115,421 57,190 86 86 2,172 2,053 1,835 1,789	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 115,335 57,104 — — 86 86 86 86 115,421 57,190 86 86 2,172 2,053 1,835 1,789
		86
		1,789

Management income

The Company has an agreement with a subsidiary (Qool Distribution (Thailand) Co., Ltd.) for sharing the combined staff and assets cost. The parties agreed to enter into new agreement effective from 1 January 2017 to charge the monthly rate of management fee to Baht 0.50 million per month plus 1% of the net sales of the subsidiary for each month. The agreement is in force for an indefinite period of time and may be terminated by either party giving to the other notice in writing.

Administrative support agreement

On 30 December 2015, the Company entered into an administrative service agreement with Wiko Mobile (Thailand) Co., Ltd. to provide certain administrative supports. Under the terms of the agreement, the Company is committed to pay monthly administrative service fee at the rate as specified in the agreement. The agreement is in force for an indefinite period of time and may be terminated by either party giving to the other notice in writing not less than 30 days.

Management fee

In 2004, the Company entered into an agreement with SiS International Holdings Ltd. for sharing the combined the management cost. The term of the agreement is from 1 January 2004 onward, and the monthly rate of management fee is 0.0625% of the sale of each month. The agreement is in force for an indefinite period of time and may be terminated by either party giving to the other notice in writing.

– 44 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

4 TRADE ACCOUNTS RECEIVABLE

Note
Related parties
3
Other parties
Total
Less allowance for doubtful accounts
Net
Bad debts and doubtful debts expenses
(reversal) for the:
— Three-month period ended 30 June
— Six month period ended 30 June
Aging analysis for trade accounts receivable wer
Related parties
Within credit terms
Overdue:
Less than 3 months
Over 12 months
Less allowance for doubtful accounts
Other parties
Within credit terms
Overdue:
Less than 3 months
3–6 months
6–12 months
Over 12 months
Less allowance for doubtful accounts
Net

Consolidated
financial statements
Separate
financial statements
30 June
31 December
30 June
31 December
2017
2016
2017
2016
(in thousand Baht)
46,340
46,779
46,223
46,223
2,693,170
2,587,359
2,511,358
2,442,462
2,739,510
2,634,138
2,557,581
2,488,685
(156,333)
(272,758)
(153,162)
(269,883)
2,583,177
2,361,380
2,404,419
2,218,802
2017
2016
2017
2016
(in thousand Baht)
5,095
(5,884)
4,573
(4,807)
12,927
(1,014)
12,710
226
e as follows:
Consolidated
financial statements
Separate
financial statements
30 June
31 December
30 June
31 December
2017
2016
2017
2016
(in thousand Baht)
117
128
—
—
—
428
—
—
46,223
46,223
46,223
46,223
46,340
46,779
46,223
46,223
(46,223)
(46,223)
(46,223)
(46,223)
117
556
—
—
2,233,014
1,957,914
2,067,570
1,849,228
348,619
402,087
335,187
368,695
9,609
5,019
9,091
4,844
5,581
8,042
5,382
8,042
96,347
214,297
94,128
211,653
2,693,170
2,587,359
2,511,358
2,442,462
(110,110)
(226,535)
(106,939)
(223,660)
2,583,060
2,360,824
2,404,419
2,218,802
2,583,177
2,361,380
2,404,419
2,218,802

The normal credit term granted by the Group is ranging from 30 days to 90 days.

– 45 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

5 INVENTORIES

Finished goods Work in progress Goods in transit Total Less allowance for decline in value of inventories Net	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 1,830,159 1,568,999 1,691,504 1,459,539 1,884 712 655 645 158,277 365,604 158,255 365,604 1,990,320 1,935,315 1,850,414 1,825,788 (172,377) (217,184) (162,712) (204,987 1,817,943 1,718,131 1,687,702 1,620,801	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 1,830,159 1,568,999 1,691,504 1,459,539 1,884 712 655 645 158,277 365,604 158,255 365,604 1,990,320 1,935,315 1,850,414 1,825,788 (172,377) (217,184) (162,712) (204,987 1,817,943 1,718,131 1,687,702 1,620,801
		1,825,788 (204,987
		1,620,801

6 INVESTMENT IN SUBSIDIARIES

Investments in subsidiaries as at 30 June 2017 and 31 December 2016, and dividend income from those investments for the six-month period ended 30 June 2017 and 2016, were as follows:

Type of business Ownership interest 30 June 31 December 2017 2016 (%) Subsidiaries SiS Venture Co., Ltd. Holding Investment 99.99 99.99 Qool Distribution (Thailand) Co., Ltd Trading 99.99 99.99 Total	Paid-up capital 30 June 31 December 2017 2016 120,000 120,000 200,000 200,000 320,000 320,000	Paid-up capital 30 June 31 December 2017 2016 120,000 120,000 200,000 200,000 320,000 320,000	Separated financial statements Cost Impairment At cost-net 30 June 31 December 30 June 31 December 30 June 31 December 2017 2016 2017 2016 2017 2016 (in thousand Baht) 120,000 120,000 69,401 69,401 50,599 50,599 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 148,036 171,958 171,958	Separated financial statements Cost Impairment At cost-net 30 June 31 December 30 June 31 December 30 June 31 December 2017 2016 2017 2016 2017 2016 (in thousand Baht) 120,000 120,000 69,401 69,401 50,599 50,599 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 148,036 171,958 171,958	Separated financial statements Cost Impairment At cost-net 30 June 31 December 30 June 31 December 30 June 31 December 2017 2016 2017 2016 2017 2016 (in thousand Baht) 120,000 120,000 69,401 69,401 50,599 50,599 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 148,036 171,958 171,958	Separated financial statements Cost Impairment At cost-net 30 June 31 December 30 June 31 December 30 June 31 December 2017 2016 2017 2016 2017 2016 (in thousand Baht) 120,000 120,000 69,401 69,401 50,599 50,599 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 148,036 171,958 171,958	Separated financial statements Cost Impairment At cost-net 30 June 31 December 30 June 31 December 30 June 31 December 2017 2016 2017 2016 2017 2016 (in thousand Baht) 120,000 120,000 69,401 69,401 50,599 50,599 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 148,036 171,958 171,958	Separated financial statements Cost Impairment At cost-net 30 June 31 December 30 June 31 December 30 June 31 December 2017 2016 2017 2016 2017 2016 (in thousand Baht) 120,000 120,000 69,401 69,401 50,599 50,599 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 148,036 171,958 171,958	Dividend income 30 June 30 June 2017 2016 — — — — — —	Dividend income 30 June 30 June 2017 2016 — — — — — —
	320,000	320,000	319,994	319,994	148,036	148,036	171,958	171,958	—	—

All subsidiaries were incorporated in Thailand.

– 46 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

7 INVESTMENT IN ASSOCIATES

Investments in associates as at 30 June 2017 and 31 December 2016, and dividend income from those investments for the six-month periods ended 30 June 2017 and 2016 were as follows:

Type of business Ownership interest 30 June 31 December 2017 2016 (%) Associates Nippon Pack Trading Co., Ltd. Trading and rendering service 49.00 49.00 Wiko Mobile (Thailand) Co., Ltd. Trading 45.00 45.00 Total	Paid-up capital 30 June 31 December 2017 2016 20,000 20,000 100,000 100,000 120,000 120,000	Paid-up capital 30 June 31 December 2017 2016 20,000 20,000 100,000 100,000 120,000 120,000	Consolidated financial statements Cost method Equity method 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Consolidated financial statements Cost method Equity method 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Consolidated financial statements Cost method Equity method 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Consolidated financial statements Cost method Equity method 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Dividend income 30 June 30 June 2017 2016 — — — — — —	Dividend income 30 June 30 June 2017 2016 — — — — — —
	120,000	120,000	54,800	54,800	—	—	—	—

None of the Group’s associates are publicly listed and consequently do not have published price quotations.

As at 30 June 2017, the Group’s accumulated share of loss of investment in Wiko Mobile (Thailand) Co., Ltd. and Nippon Pack Trading Co., Ltd. exceeded the carrying amount of the investment in shares. The excess loss is adjusted to loan to the associates. Future reversals of losses are first be applied to the loan to the extent that such loss is previously applied against this loan and subsequently recognised in the investment in shares.

8 TRADE ACCOUNTS PAYABLE

Note Related parties 3 Other parties Total	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 115,421 57,190 86 86 1,505,438 1,626,524 1,425,690 1,586,516 1,620,859 1,683,714 1,425,776 1,586,602	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in thousand Baht) 115,421 57,190 86 86 1,505,438 1,626,524 1,425,690 1,586,516 1,620,859 1,683,714 1,425,776 1,586,602
		1,586,602

– 47 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

9 SEGMENT INFORMATION

The Group has four reportable segments, as described below, which are the Group’s strategic divisions. The strategic divisions offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic divisions, the chief operating decision maker (CODM) reviews internal management reports on at least a quarterly basis. The following summary describes the operations in each of the Group’s reportable segments.

. Segment 1 Commercial products . Segment 2 Consumer products . Segment 3 Value added products . Segment 4 Phones

None of other operations meets the quantitative thresholds for determining reportable segments.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Group’s CODM. Segment profit before tax is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.

Information about reportable segments:

Three-month period ended 30 June External revenues Total segment revenues Segment gross profit Six-month period ended 30 June External revenues Total segment revenues Segment gross profit Reportable segment assets as at 30 June/31 December	Segment 1 2017 2016 1,500 1,242 1,500 1,242 50 45 Segment 1 2017 2016 2,803 2,386 2,803 2,386 117 89 488 426	Segment 2 2017 2016 1,950 1,578 1,950 1,578 100 51 Segment 2 2017 2016 3,700 3,188 3,700 3,188 190 130 968 916	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2017 2016 2017 2016 2017 2016 (in million Baht) 621 525 674 756 4,745 4,101 621 525 674 756 4,745 4,101 65 64 13 18 228 178 Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2017 2016 2017 2016 2017 2016 (in million Baht) 1,358 1,125 1,330 1,491 9,191 8,190 1,358 1,125 1,330 1,491 9,191 8,190 122 122 27 41 456 382 214 149 65 104 1,735 1,595	Others 2017 2016 190 409 190 409 38 38 Others 2017 2016 419 733 419 733 59 55 83 123	Total 2017 2016 4,935 4,510 4,935 4,510 266 216 Total 2017 2016 9,610 8,923 9,610 8,923 515 437 1,818 1,718	Total 2017 2016 4,935 4,510 4,935 4,510 266 216 Total 2017 2016 9,610 8,923 9,610 8,923 515 437 1,818 1,718
						8,923
						437
						1,718

– 48 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Reconciliation of reportable segment profit or loss and assets

Three-month period ended 30 June
Gross profit or loss
Total profit for reportable segments
Other segment’s profit
Unallocated amounts:
— Other income
— Other corporate expenses
— Finance costs
— Share of profit of investments in associates
Consolidated profit before income tax
Six-month period ended 30 June
Gross profit or loss
Total profit for reportable segments
Other segment’s profit
Unallocated amounts:
— Other income
— Other corporate expenses
— Finance costs
— Share of profit (loss) of investments in associates
Consolidated profit before income tax
Assets
Total assets for reportable segments
Other segment’s assets
Unallocated amounts:
Consolidated assets

Consolidated
financial statements
2017
2016
(in million Baht)
228
178
38
38
266
216
35
33
(194)
(159)
(11)
(13)
1
1
97
78
Consolidated
financial statements
2017
2016
(in million Baht)
456
382
59
55
515
437
62
58
(379)
(327)
(22)
(26)
4
(2)
180
140
Consolidated
financial statements
30 June
31 December
2017
2016
(in million Baht)
1,735
1,595
83
123
3,447
3,240
5,265
4,958

– 49 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

10 EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share for the three-month and six-month periods ended 30 June 2017 and 2016 were based on the profit for the period attributable to ordinary shareholders of the Company and the number of ordinary shares outstanding during the periods as follows:

Three-month period ended 30 June Profit attributable to equity holders of the Company (basic) Number of ordinary shares outstanding Basic earnings per share (in Baht) Six-month period ended 30 June Profit attributable to equity holders of the Company (basic) Number of ordinary shares outstanding Basic earnings per share (in Baht)	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht/thousand shares) 73,787 62,791 64,499 35,737 350,199 350,199 350,199 350,199 0.21 0.18 0.18 0.10 Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht/thousand shares) 142,057 111,875 123,563 77,922 350,199 350,199 350,199 350,199 0.41 0.32 0.35 0.22	Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht/thousand shares) 73,787 62,791 64,499 35,737 350,199 350,199 350,199 350,199 0.21 0.18 0.18 0.10 Consolidated financial statements Separate financial statements 2017 2016 2017 2016 (in thousand Baht/thousand shares) 142,057 111,875 123,563 77,922 350,199 350,199 350,199 350,199 0.41 0.32 0.35 0.22
		350,199
		0.22

11 DIVIDENDS

At the annual general meeting of the shareholders of the Company held on 21 April 2017, the shareholders passed the resolution to approved the appropriation of dividend from the profit for the year ended 31 December 2016 for 350.20 million ordinary shares at the rate of Baht 0.25 per share and the special rate of Baht 0.15 per share in totalling rate of Baht 0.40 per share, totalling Baht 140.08 million. The dividend was paid on 19 May 2017.

At the annual general meeting of the shareholders of the Company held on 22 April 2016, the shareholders passed the resolution to approved the appropriation of dividend from the profit for the year ended 31 December 2015 for 350.20 million ordinary shares at the rate of Baht 0.30 per share, totalling Baht 105.06 million. The dividend was paid on 19 May 2016.

– 50 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

12 FINANCIAL INSTRUMENTS

Carrying amounts and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Carrying
amount
30 June 2017
Financial assets/Financial liabilities
measured at fair value
Forward contracts
(10,226)
31 December 2016
Financial assets/Financial liabilities
measured at fair value
Forward contracts
5,444
Swap contracts
(1)
Carrying
amount
30 June 2017
Financial assets/Financial liabilities
measured at fair value
Forward contracts
(10,226)
31 December 2016
Financial assets/Financial liabilities
measured at fair value
Forward contracts
5,350
Swap contracts
(1)

Consolidated financial statements
Fair value
Level 1
Level 2
Level 3
Total
(in thousand Baht)
—
(10,226)
—
(10,226)
—
5,444
—
5,444
—
(1)
—
(1)
Separate financial statements
Fair value
Level 1
Level 2
Level 3
Total
(in thousand Baht)
—
(10,226)
—
(10,226)
—
5,350
—
5,350
—
(1)
—
(1)

– 51 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

Financial asset not measured at fair value 30 June 2017 Long-term loans to related party Total 31 December 2016 Long-term loans to related party Total	Consolidated financial statements Separate financial statements Fair value Carrying amount Fair value Carrying amount (in thousand Baht) 53,815 53,853 63,962 64,000 53,815 53,853 63,962 64,000 49,686 49,782 63,904 64,000 49,686 49,782 63,904 64,000	Consolidated financial statements Separate financial statements Fair value Carrying amount Fair value Carrying amount (in thousand Baht) 53,815 53,853 63,962 64,000 53,815 53,853 63,962 64,000 49,686 49,782 63,904 64,000 49,686 49,782 63,904 64,000
		64,000
		64,000
		64,000

The Group determines Level 2 fair values for forward contracts rate and swap contracts rate are based on counterparties’ quotes. Fair value of the instrument reflect the credit risk and include adjustment to take account of the credit risk.

13 COMMITMENTS WITH NON-RELATED PARTIES

Future minimum lease payments under non- cancellable operating leases Within one year After one year but within five years Total Other commitments Unutilised credits facilities Forward contracts Swap contracts Bank guarantee Total Lease and service agreements	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in million Baht) 20 13 20 13 28 2 28 2 48 15 48 15 4,517 4,773 4,316 4,572 673 451 673 445 — 21 — 21 167 183 167 165 5,357 5,428 5,156 5,203	Consolidated financial statements Separate financial statements 30 June 31 December 30 June 31 December 2017 2016 2017 2016 (in million Baht) 20 13 20 13 28 2 28 2 48 15 48 15 4,517 4,773 4,316 4,572 673 451 673 445 — 21 — 21 167 183 167 165 5,357 5,428 5,156 5,203
		15
		4,572 445 21 165
		5,203

The Group had commitments for building, warehouse and equipment lease contracts with terms of 1–3 years.

Forward contracts

As at 30 June 2017, the Company had forward contract facilities with banks in the amount of USD 129.8 million equivalent to Baht 4,431.1 million (31 December 2016: USD 126.1 million equivalent to Baht 4,540.6 million).

– 52 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

As at 30 June 2017, the Group had forward contract facilities with banks in the amount of USD 137.1 million equivalent to Baht 4,681.1.million (31 December 2016: USD 133.1 million equivalent to Baht 4,790.6 million).

As at 30 June 2017, the Company had purchased forward contracts in the amount of USD 19.5 million equivalent to Baht 673.5 million. The contracts are due in December 2017 (31 December 2016: USD 12.6 million, equivalent to Baht 445.5 million, the contracts were due in July 2017).

As at 30 June 2017, the Group had purchased forward contracts in the amount of USD 19.5 million equivalent to Baht 673.5 million. The contracts are due in December 2017 (31 December 2016: USD 12.7 million, equivalent to Baht 450.8 million, the contracts were due in July 2017).

Swap contracts

As at 30 June 2017, the Group and the Company had no currency swap contract (31 December 2016: USD 0.6 million, equivalent to Baht 21 million which the contracts were due in March 2017).

14 RECLASSIFICATION OF ACCOUNTS

Certain accounts in the statement of financial position as at 31 December 2016 which are included in the 2017 interim financial statements for comparative purposes, have been reclassified to conform to the presentation in the 2017 interim financial statements as follows:

Statement of financial position as at 31 December 2016 Trade accounts receivable Other current receivables	2016 Consolidated financial statements Separate Before reclass. Reclass. After reclass. Before reclass. (in thousand Baht) 2,412,339 (50,959) 2,361,380 2,269,761 221,852 50,959 272,811 37,806 —	financial statements
	Before reclass. 2,412,339 221,852	Reclass. After reclass. (50,959) 2,218,802 50,959 88,765 —

The reclassifications have been made because, in the opinion of management, the new classification is more appropriate to the Group’s business.

– 53 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

Independent Auditor’s Report

To the shareholders of SiS Distribution (Thailand) Public Company Limited

Opinion

I have audited the consolidated and separate financial statements of SiS Distribution (Thailand) Public Company Limited and its subsidiaries (the ‘‘Group’’) and of SiS Distribution (Thailand) Public Company Limited (the ‘‘Company’’), respectively, which comprise the consolidated and separate statements of financial position as at 31 December 2016, the consolidated and separate statements of income and comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

In my opinion, the accompanying consolidated and separate financial statements present fairly, in all material respects, the financial position of the Group and the Company, respectively, as at 31 December 2016 and their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards (TFRSs).

Basis for Opinion

I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of my report. I am independent of the Group and the Company in accordance with the Code of Ethics for Professional Accountants issued by the Federation of Accounting Professions under the Royal Patronage of His Majesty the King that is relevant to my audit of the consolidated and separate financial statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

– 54 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Key Audit Matters

Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of my audit of the consolidated and separate financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

Recognition of deferred tax assets

Refer to Note 3(r) and note 14

The key audit matter

How the matter was addressed in the audit

The Group has recognised deferred tax assets in the consolidated

statements of financial position as at 31 December 2016 of Baht 254.5 million which was deferred tax assets from loss carry forward of Baht 24.8 million.

Significant management judgment is required over the recoverability of deferred tax assets because realisation of tax benefits from these deferred tax assets is dependent on future taxable profit projections and there are uncertainties about business actual performance may different from future profit projections. This is a focus area in my audit.

My audit procedures included:

Inquiring of the management who is responsible for preparation of the Group’s future taxable profit projection.
Reconciliation of taxable loss carry forward and expiration year with tax report.
Consideration of the key assumption underlying the future taxable profit projections prepared by the Group’s management to support the Group’s assessment of its ability to recover deferred tax assets. The key assumptions are the revenue growth rates and profit margins which drive the future profit projections.
Comparison of actual revenue growth rates with the Company business plan to business forecasts and assessing the reasonableness of that forecasting process in the past and consider whether profit margins in the projections are achievable which reference to the recent business performance, business plans and management expectation.
Recalculation test of future taxable profit projection; and
Consideration of the adequacy of the Group’s disclosures in respect of income tax in accordance with Thai Financial Reporting Standards.

– 55 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Valuation of inventory

Refer to Note 3(g) and note 8

The key audit matter

The Group and the Company has a significant level of inventory. Management judgment is required in assessing the appropriateness of the allowance for decline in value of inventory in respect of obsolete and slow moving inventories. Therefore, there is a risk that the allowance for decline in value of inventory may not adequately provided for due to the products based on technology. This is a focus area in my audit.

How the matter was addressed in the audit

My audit procedures included:

Inquiring the management who is responsible in this area to obtain an understanding of the Group’s and the Company’s policy and procedure in estimating the allowance for decline in value of inventory.
Assessment of the Group’s and the Company’s compliance with their accounting policy.
Assessment of the reasonableness of the inventory aging report by using KPMG’s information technology specialist to test, on a sample test basis, whether the inventory items in the report were categorised in appropriate aging bracket and I test aging of inventory with relating supporting document on a sample basis.
Reasonableness testing on methodology used for calculating the allowance for obsolescence by challenging the assumptions used and comparing with historical experience, sale plan as well as recalculating of the inventory report and also performing test on a sample basis of net realisable value of inventories by investigating the latest sales documents and comparing the cost of inventories against expected net realisable value; and
Consideration of the adequacy of disclosures in relation to inventory in accordance with Thai Financial Reporting Standards.

– 56 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated and separate financial statements and my auditor’s report thereon. The annual report is expected to be made available to me after the date of this auditor’s report.

My opinion on the consolidated and separate financial statements does not cover the other information and I will not express any form of assurance conclusion thereon.

In connection with my audit of the consolidated and separate financial statements, my responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with TFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, management is responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

My objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

– 57 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

. Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.
. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern.
. Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

– 58 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

(Ekkasit Chuthamsatid) Certified Public Accountant Registration No. 4195

KPMG Phoomchai Audit Ltd.

Bangkok 23 February 2017

– 59 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF FINANCIAL POSITION

Assets Note Current assets Cash and cash equivalents 5 Trade accounts receivable 4, 6 Other receivables 4, 7 Short-term loans to related parties 4 Current portion of long-term loans to related party 4 Inventories 8 Other current assets Total current assets Non-current assets Investments in subsidiaries 9 Long-term loans to related party 4 Equipment 12 Intangible assets 13 Deferred tax assets 14 Other non-current assets Total non-current assets Total assets	Consolidated financial statements Separate financial statements 31 December 31 December 2016 2015 2016 2015 (in thousand Baht) 147,870 49,490 106,493 31,699 2,412,339 2,045,107 2,269,761 1,907,230 221,852 520,292 37,806 316,452 — 11,523 20,000 137,000 49,782 — 64,000 — 1,718,131 1,323,205 1,620,801 1,281,617 5,443 3,425 5,348 3,033 4,555,417 3,953,042 4,124,209 3,677,031 — — 171,958 181,758 — 44,973 — 73,259 107,156 112,275 106,863 112,096 29,592 34,522 29,592 34,522 254,450 271,172 222,622 216,781 11,725 11,707 11,725 11,689 402,923 474,649 542,760 630,105 4,958,340 4,427,691 4,666,969 4,307,136	Consolidated financial statements Separate financial statements 31 December 31 December 2016 2015 2016 2015 (in thousand Baht) 147,870 49,490 106,493 31,699 2,412,339 2,045,107 2,269,761 1,907,230 221,852 520,292 37,806 316,452 — 11,523 20,000 137,000 49,782 — 64,000 — 1,718,131 1,323,205 1,620,801 1,281,617 5,443 3,425 5,348 3,033 4,555,417 3,953,042 4,124,209 3,677,031 — — 171,958 181,758 — 44,973 — 73,259 107,156 112,275 106,863 112,096 29,592 34,522 29,592 34,522 254,450 271,172 222,622 216,781 11,725 11,707 11,725 11,689 402,923 474,649 542,760 630,105 4,958,340 4,427,691 4,666,969 4,307,136
		3,677,031
		181,758 73,259 112,096 34,522 216,781 11,689
		630,105
		4,307,136

The accompanying notes are an integral part of these financial statements.

– 60 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Liabilities and equity Note Current liabilities Bank overdrafts and short-term loans from financial institutions 15 Trade accounts payable 4, 16 Other payables 4, 17 Income tax payable Other current liabilities Total current liabilities Non-current liabilities Provision for cost of assets dismantlement Employee benefit obligations 18 Total non-current liabilities Total liabilities Equity Share capital: 19 Authorised share capital Issued and paid-up share capital Premium on ordinary shares 19 Retained earnings Appropriated Legal reserve 20 Unappropriated Total equity Total liabilities and equity	Consolidated financial statements Separate financial statements 31 December 31 December 2016 2015 2016 2015 (in thousand Baht) 1,219,222 1,258,005 1,017,705 1,093,005 1,683,714 1,245,065 1,586,602 1,207,273 277,139 260,842 267,871 246,948 37 16,571 — 16,571 21,175 17,975 20,703 17,361 3,201,287 2,798,458 2,892,881 2,581,158 3,960 3,960 3,960 3,960 43,970 38,535 43,970 38,535 47,930 42,495 47,930 42,495 3,249,217 2,840,953 2,940,811 2,623,653 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 888,489 766,104 905,524 862,849 1,709,123 1,586,738 1,726,158 1,683,483 4,958,340 4,427,691 4,666,969 4,307,136	Consolidated financial statements Separate financial statements 31 December 31 December 2016 2015 2016 2015 (in thousand Baht) 1,219,222 1,258,005 1,017,705 1,093,005 1,683,714 1,245,065 1,586,602 1,207,273 277,139 260,842 267,871 246,948 37 16,571 — 16,571 21,175 17,975 20,703 17,361 3,201,287 2,798,458 2,892,881 2,581,158 3,960 3,960 3,960 3,960 43,970 38,535 43,970 38,535 47,930 42,495 47,930 42,495 3,249,217 2,840,953 2,940,811 2,623,653 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 888,489 766,104 905,524 862,849 1,709,123 1,586,738 1,726,158 1,683,483 4,958,340 4,427,691 4,666,969 4,307,136
		2,581,158
		3,960 38,535
		42,495
		2,623,653
		350,199
		350,199 435,415 35,020 862,849
		1,683,483
		4,307,136

The accompanying notes are an integral part of these financial statements.

– 61 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF INCOME

Note
Income
Revenue from sale of goods
4
Revenue from rendering of services
Other income
4, 22
Gain on exchange rate
Gain from loss of controlling
interests in subsidiary
Total income
Expenses
Cost of sale of goods
4, 24
Cost of rendering of services
Selling expenses
24
Administrative expenses
4, 24
Finance costs
Total expenses
Share of profit (loss) of investments
in associates
Profit before income tax expense
Income tax expense
25
Profit for the year
Profit (loss) attributable to:
Owners of the Company
Non-controlling interests
Profit for the year
Basic earnings per share (Baht)
26

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2016
2015
2016
2015
(in thousand Baht)
18,374,515 17,969,111
15,599,991 15,631,725
60,344
54,201
34,185
28,947
59,610
73,159
94,033
89,652
232
23,522
596
19,723
—
895
—
—
18,494,701 18,120,888
15,728,805 15,770,047
17,437,296 17,028,185
14,794,494 14,828,435
29,822
29,577
27,157
29,573
193,441
227,060
185,108
204,126
479,702
455,747
475,652
447,564
50,218
64,346
41,592
59,113
18,190,479 17,804,915
15,524,003 15,568,811
2,908
(83,475)
—
—
307,130
232,498
204,802
201,236
(79,685)
(66,160)
(57,067)
(42,446)
227,445
166,338
147,735
158,790
227,445
168,851
147,735
158,790
—
(2,513)
—
—
227,445
166,338
147,735
158,790
0.65
0.48
0.42
0.45

The accompanying notes are an integral part of these financial statements.

– 62 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF COMPREHENSIVE INCOME

Profit for the year Other comprehensive income Total comprehensive income for the year Total comprehensive income attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year	Consolidated financial statements Separate financial statements For the year ended 31 December For the year ended 31 December 2016 2015 2016 2015 (in thousand Baht) 227,445 166,338 147,735 158,790 — — — — 227,445 166,338 147,735 158,790 227,445 168,851 147,735 158,790 — (2,513) — — 227,445 166,338 147,735 158,790	Consolidated financial statements Separate financial statements For the year ended 31 December For the year ended 31 December 2016 2015 2016 2015 (in thousand Baht) 227,445 166,338 147,735 158,790 — — — — 227,445 166,338 147,735 158,790 227,445 168,851 147,735 158,790 — (2,513) — — 227,445 166,338 147,735 158,790
		158,790
		158,790 —
		158,790

The accompanying notes are an integral part of these financial statements.

– 63 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

		Consolidated financial statements	Consolidated financial statements
Issued and paid-up share capital 350,199 — — — — — 350,199 350,199 — — — — 350,199	Share premium 435,415 — — — — — 435,415 435,415 — — — — 435,415	Retained earnings Legal reserve Unappropriated (in thousand Baht) 35,020 667,293 — — — (70,040) — (70,040) — 168,851 — 168,851 35,020 766,104 35,020 766,104 — (105,060) — (105,060) — 227,445 — 227,445 35,020 888,489	Equity attributable to owners of the Company 1,487,927 — (70,040) (70,040) 168,851 168,851 1,586,738 1,586,738 (105,060) (105,060) 227,445 227,445 1,709,123	Non- controlling interests — 2,513 — 2,513 (2,513) (2,513) — — — — — — —	Total equity 1,487,927 2,513 (70,040
					(67,527
					166,338
					166,338
					1,586,738
					1,586,738 (105,060
					(105,060
					227,445
					227,445
					1,709,123

The accompanying notes are an integral part of these financial statements.

– 64 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

	Separate financial statements
Issued and paid-up share capital 350,199 — — — — 350,199 350,199 — — — — 350,199	Retained earnings Share premium Legal reserve Unappropriated (in thousand Baht) 435,415 35,020 774,099 — — (70,040) — — (70,040) — — 158,790 — — 158,790 435,415 35,020 862,849 435,415 35,020 862,849 — — (105,060) — — (105,060) — — 147,735 — — 147,735 435,415 35,020 905,524	Total equity 1,594,733 (70,040
		(70,040
		158,790
		158,790
		1,683,483
		1,683,483 (105,060
		(105,060
		147,735
		147,735
		1,726,158

The accompanying notes are an integral part of these financial statements.

– 65 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CASH FLOWS

Note
Cash flows from operating activities
Profit for the year
Adjustments for
Depreciation
12
Amortisation of intangible assets
13
Interest income
Finance costs
Unrealised loss on exchange
Gain on disposal of equipment
Bad debts and doubtful debts expense (reversal)
6
Doubtful debts expense for short-term loans to
related party
4
Provision of allowance for obsolete and defective
stocks (reversal)
8
Provision for employee benefit obligation
Impairment losses on investment in subsidiary
Impairment losses on other long-term investments
Share of (profit) loss of investments in associates
Gain from loss of controlling interests in subsidiary
Income tax expense
25
Changes in operating assets and liabilities
Trade accounts receivable
Other receivables
Inventories
Other current assets
Other non-current assets
Trade accounts payable
Other payables
Other current liabilities
Cash generate from operating activities
Employee benefit obligations paid
Income tax paid
Net cash provided by operating activities

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2016
2015
2016
2015
(in thousand Baht)
227,445
166,338
147,735
158,790
31,248
33,229
31,126
32,327
5,804
5,883
5,804
5,883
(8,808)
(6,927)
(8,887)
(19,815)
50,218
64,346
41,592
59,113
813
761
812
786
(354)
(1,309)
(354)
(179)
(14,406)
13,979
(12,813)
12,517
10,163
—
—
—
68,020
(40,003)
61,251
(2,238)
6,985
6,059
6,985
6,059
—
—
9,800
8,571
—
8,571
—
—
(2,908)
83,475
—
—
—
(895)
—
—
79,685
66,160
57,067
42,446
453,905
399,667
340,118
304,260
(352,826)
(108,978)
(349,718)
(190,054)
298,419
(9,794)
277,894
113,525
(462,946)
607,371
(400,435)
300,105
(2,018)
(643)
(2,315)
(841)
(18)
412
(36)
134
437,836
444,649
378,517
442,895
15,981
114,717
20,565
11,057
3,200
2,208
3,342
2,028
391,533
1,449,609
267,932
983,109
(1,550)
(600)
(1,550)
(600)
(79,497)
(42,222)
(79,479)
(42,222)
310,486
1,406,787
186,903
940,287

The accompanying notes are an integral part of these financial statements.

– 66 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Note
Cash flows from investing activities
Interest received
Purchase of equipment
Sale of equipment
Cash inflow (outflow) on loans to related parties
Purchase of intangible assets
Net payment from investment in associate
Net cash from (used in) investing activities
Cash flows from financing activities
Interest paid
Payment of dividend
27
Net payments of loan from financial institutions
Repayment of short-term loan from subsidiary
Net cash used in financing activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents from loss control’s
subsidiary
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
5

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2016
2015
2016
2015
(in thousand Baht)
8,829
6,927
9,639
21,278
(26,789)
(29,976)
(26,553)
(29,400)
1,014
6,255
1,014
1,081
(541)
(87,959)
126,259
267,878
(874)
(1,259)
(874)
(1,259)
—
(44,985)
—
—
(18,361)
(150,997)
109,485
259,578
(49,902)
(65,007)
(41,234)
(59,812)
(105,060)
(70,040)
(105,060)
(70,040)
(38,783) (1,169,589)
(75,300) (1,078,589)
—
—
—
(49,000)
(193,745) (1,304,636)
(221,594) (1,257,441)
98,380
(48,846)
74,794
(57,576)
—
(10,835)
—
—
49,490
109,171
31,699
89,275
147,870
49,490
106,493
31,699

The accompanying notes are an integral part of these financial statements.

– 67 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Note	Contents
1	General information
2	Basis of preparation of the financial statements
3	Significant accounting policies
4	Related parties
5	Cash and cash equivalents
6	Trade accounts receivable
7	Other receivables
8	Inventories
9	Investments in subsidiaries
10	Investment in associates
11	Other long-term investments
12	Equipment
13	Intangible assets
14	Deferred tax
15	Interest-bearing liabilities
16	Trade accounts payable
17	Other payables
18	Employee benefit obligations
19	Share capital
20	Reserves
21	Operating Segment
22	Other income
23	Employee benefit expenses
24	Expenses by nature
25	Income tax expense
26	Earnings per share
27	Dividends
28	Financial instruments
29	Commitments with non-related parties
30	Events after the reporting period
31	Thai Financial Reporting Standards (TFRS) not yet adopted

– 68 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of the financial statements.

The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language statutory financial statements, and were approved and authorised for issue by the Board of Directors on 23 February 2017.

1 GENERAL INFORMATION

The Company was listed on the Stock Exchange of Thailand on 21 June 2004.

The Company’s major shareholders during the financial year were SiS Technologies (Thailand) Pte. Ltd. which was incorporated in Singapore (47.29% shareholding), Sittichaisrichart Family (14.66% shareholding) and Pungsrinont Family (9.83% shareholding).

The principal activities of the Company are trading in computer component, smartphone, office automation equipment, service and rental of computers and accessories and trading in Digital Disc — Movie and Music. Details of the Company’s subsidiaries as at 31 December 2016 and 2015 are given in notes 4 and 9.

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(a) Statement of compliance

The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS); guidelines promulgated by the Federation of Accounting Professions (‘‘FAP’’); and applicable rules and regulations of the Thai Securities and Exchange Commission.

The FAP has issued new and revised TFRS effective for annual accounting periods beginning on or after 1 January 2016. The initial application of these new and revised TFRS has resulted in changes in certain of the Group’s accounting policies. These changes have no material effect on the financial statements.

In addition to the above new and revised TFRS, the FAP has issued a number of other new and revised TFRS which are effective for annual financial periods beginning on or after 1 January 2017 and have not been adopted in the preparation of these financial statements. Those new and revised TFRS that are relevant to the Group’s operations are disclosed in note 31.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items.

Items	Measurement bases
Derivative financial instruments	Fair value
Defined benefit liability	Present value of the defined benefit obligation as explained in Note
	3 (n)

The financial statements 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.

– 69 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(d) Use of estimates and judgements

The preparation of financial statements in conformity with TFRS requires management to make judgements, 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 estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties

Information about assumption and estimation uncertainties that have a significant risk of resulting in a material adjustments to the amounts recognised in the financial statements is included in the following notes:

Note 3(r) Current and deferred taxation; Note 14 Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used; Note 18 Measurement of defined benefit obligations: key actuarial assumptions; and Note 28 Valuation of financial instruments

Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Group Audit Committee.

. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

– 70 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in notes 28 financial instruments.

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Basis of consolidation

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the ‘‘Group’’) and the group’s interests in associate.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

Non-controlling interests

At the acquisition date, the Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions

Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

Interests in equity — accounted investees

The Group’s interests in equity-accounted investees was interests in associates.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.

Interests in associates and joint ventures are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity — accounted investees, until the date on which significant influence or joint control ceases.

– 71 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date.

Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency at the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in profit or loss.

(c) Derivative financial instruments

Derivative financial instruments are used to manage exposure to foreign exchange risks arising from operational activities. Derivative financial instruments are not used for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, they are remeasured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.

The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price at the reporting date for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

(d) Hedging

Fair value hedges

Where a derivative financial instrument hedges the changes in fair value of a recognised asset, liability or unrecognised firm commitment (or an identified portion of such asset, liability or firm commitment), any gain or loss on remeasuring the fair value or foreign currency component of the hedging instrument is recognised in the profit or loss. The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognised in profit or loss.

(e) Cash and cash equivalents

Cash and cash equivalents in the statements of cash flows comprise cash balances, call deposits and highly liquid short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.

– 72 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(f) Trade and other accounts receivable

Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

The allowance for doubtful accounts is based on management’s assessment of loss which may arise from the outstanding accounts receivable. Such assessment is provided by considering the accounts receivable outstanding over 3 months, for which allowance for doubtful accounts is set at the rate of 100%, together with the analysis of payment histories, future expectations of customer payment and the local economic conditions. Bad debts are written off when incurred.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost principle, and comprises all costs of purchase or other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

The Group sets an allowance for the decline in value of obsolete and defective stock by management reviewing.

(h) Investment

Investment in subsidiaries and associates

Investment in subsidiaries and associates in the separate financial statements of the Company are accounted for using the cost method. Investments in associates in the consolidated financial statements are accounted for using the equity method.

Equity securities

Equity securities which are not marketable are stated at cost less any impairment losses.

Disposal of investments

On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in profit or loss.

If the Group disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average applied to the carrying value of the total holding of the investment.

(i) Equipment

Recognition and measurement

Owned assets

Equipment is stated at cost less accumulated depreciation and impairment losses.

– 73 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

Gains and losses on disposal of an item of equipment are determined by comparing the proceeds from disposal with the carrying amount of equipment, and are recognised net within other income in profit or loss.

Subsequent costs

The cost of replacing a part of an item of equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of equipment are recognised in profit or loss as incurred.

Depreciation

Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is charged to profit and loss on a straight-line basis over the estimated useful lives of each component of an item of equipment. The estimated useful lives are as follows:

Vehicles	5 years
Furniture & fixtures	5 years
Computer & office equipment	3 and 5 years
Leasehold improvements	3, 5, 10 and 12 years

No depreciation is provided on asset under construction.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(j) Intangible assets

Software licences

Software licences that are acquired by the Group, which have finite useful lives, are stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of software licences from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods are 5 and 10 years.

– 74 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(k) Impairment

The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.

Calculation of recoverable amount

The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment

An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised in profit or loss. For financial assets carried at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised in other comprehensive income.

(l) Interest-bearing liabilities

Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

(m) Trade and other accounts payable

Trade and other accounts payable are stated at cost.

(n) Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount.

– 75 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any application minimum funding requirements.

Remeasurements of the net defined benefit liability, actuarial gain or loss are recognised immediately in OCI. The Group determines the interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(o) Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts.

Sale of goods and services rendered

Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs, the probable return of goods or the continuing management involvement with the goods.

Revenue from the sale of goods for Digital Disc — Movie and Music products after provision for sales return is recognised when have been sold to the customer.

Revenue from services is recognised when services are rendered.

Interest income

Interest income is recognised in profit or loss as it accrues.

(p) Finance costs

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration.

Interest expenses and similar costs are charged to profit or loss for the period in which they are incurred.

– 76 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(q) Operating leases

Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made.

Contingent rentals are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the use of the underlying asset.

(r) Income tax

Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries and jointly-controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

– 77 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(s) Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for share options granted to employees.

(t) Segment reporting

Segment results that are reported to the Group’s CEO (the chief operating decision maker) include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and tax assets and liabilities.

4 RELATED PARTIES

Relationships with subsidiaries and associate are described in notes 9 and 10. Relationship with other related parties were as follows:

	Country of
	incorporation/
Name of the entities	nationality	Nature of relationships
Key management personnel	Thailand	Persons having authority and responsibility for
	Singapore	planning, directing and controlling the
		activities of the entity, directly or indirectly,
		including any director (whether executive or
		otherwise) of the Group.
SiS International Holdings Ltd.	Bermuda	Ultimate parent of the Group and some common
		directors
SiS Technologies (Thailand) Pte. Ltd.	Singapore	Under the same control of the ultimate parent
		company
Nippon Pack Trading Co.,Ltd.	Thailand	Associate, 49% shareholding by the subsidiary
		company
Wiko Mobile (Thailand) Co., Ltd.	Thailand	Associate, 45% shareholding by the subsidiary
		company
Alliance & Link Corporation Co., Ltd	Thailand	15% shareholding by the subsidiary company
Click Connect Co., Ltd.	Thailand	15% shareholding by the subsidiary company
Hardware House International Co., Ltd.	Thailand	Indirect shareholding by the subsidiary company
Direct subsidiaries
SiS Venture Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding
Qool Distribution (Thailand) Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding

– 78 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

On 15 February 2015, a subsidiary was diluted in its ownership interest of Wiko Mobile (Thailand) Co., Ltd. from 60% to 45%. As a result, Wiko Mobile (Thailand) Co., Ltd. was ceased to be a subsidiary to become an associated company.

The pricing policies for particular types of transactions are explained further below:

Transactions	Pricing policies
Sale of goods	Market price plus actual related expenses
Rendering of services	Contractually agreed price
Management income/expense	Contractually agreed price
Purchase of goods	Actual cost plus actual related expenses
Interest income/expense of loan to/from	Reference from interest rate of financial institution

Significant transactions for the years ended 31 December with related parties are summarised as follows:

Year ended 31 December Ultimate parent company Management fee Subsidiary Sale of goods Purchase of goods Management income Interest income Interest expense Associates Sale of goods Purchase of goods Service income Other income Interest income Related party Sale of goods Key management Key management personnel Compensation Short-term employee benefit Other long-term benefits Total key management personnel compensation	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 11,492 11,252 9,750 9,789 — — 9,218 582 — — 2,810 2,439 — — 46,253 33,871 — — 1,561 13,747 — — — 265 2,314 16,595 1,270 5,563 1,261,460 498,646 — — 9,992 — — — 17,745 34,135 11,432 5,265 3,453 2,613 2,175 2,198 — 45 — 45 51,081 55,231 46,584 50,588 1,646 1,997 1,440 1,789 52,727 57,228 48,024 52,377	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 11,492 11,252 9,750 9,789 — — 9,218 582 — — 2,810 2,439 — — 46,253 33,871 — — 1,561 13,747 — — — 265 2,314 16,595 1,270 5,563 1,261,460 498,646 — — 9,992 — — — 17,745 34,135 11,432 5,265 3,453 2,613 2,175 2,198 — 45 — 45 51,081 55,231 46,584 50,588 1,646 1,997 1,440 1,789 52,727 57,228 48,024 52,377
		52,377

– 79 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Balances as at 31 December with related parties are as follows:

Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
556
316
—
316
—
920
—
920
46,223
46,223
46,223
46,223
46,779
47,459
46,223
47,459
(46,223)
(46,223)
(46,223)
(46,223)
556
1,236
—
1,236
—
—
—
54
860
414
—
—
20
29,036
20
752
557,087
557,087
541,542
541,542
(557,087)
(557,087)
(541,542)
(541,542)
880
29,450
20
806
—
—
3,660
3,698

– 80 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The Company and its subsidiary (Qool Distribution (Thailand) Co., Ltd.) have an agreement on consignment with a related company (Hardware House International Co., Ltd.) which has notified the call for return all consignment from the related company in November 2012 because of the default of the terms of the agreement for consignment. The Company and its subsidiary are in the process to reclaim those losses from the related company. As at 31 December 2016 the receivable from the loss of consignment amounted to approximately Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in separate financial statements, respectively (31 December 2015: Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in the separate financial statements, respectively). The Company is undertaking litigation proceedings, therefore, pending the outcome of these proceedings, the Company and its subsidiary has estimated the allowance for doubtful account, amounted to Baht 557.09 million and 541.54 million, respectively.

Loans to related party Interest rate 2016 2015 (% per annum) Short-term loans to Subsidiaries Qool Distribution (Thailand) Co., Ltd. — 3.00 SiS Venture Co., Ltd. 2.80–3.25 3.25 Total Associate Nippon Pack Trading Co., Ltd. 5.25 5.25 Less allowance for doubtful debt Less share of loss exceeds its interest in associates Total Grand Total Current portion of long-term loans to Associate Wiko Mobile (Thailand) Co., Ltd. 3.03–3.15 — Less share of loss exceeds its interest in associates Total Long-term loans to Associate Wiko Mobile (Thailand) Co., Ltd. — 3.03–3.15 Less share of loss exceeds its interest in associates Grand Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — — — 127,000 — — 20,000 10,000 — — 20,000 137,000 24,500 14,700 — — (10,163) — — — (14,337) (3,177) — — — 11,523 — — — 11,523 20,000 137,000 64,000 — 64,000 — (14,218) — — — 49,782 — 64,000 — — 73,259 — 73,259 — (28,286) — — — 44,973 — 73,259	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — — — 127,000 — — 20,000 10,000 — — 20,000 137,000 24,500 14,700 — — (10,163) — — — (14,337) (3,177) — — — 11,523 — — — 11,523 20,000 137,000 64,000 — 64,000 — (14,218) — — — 49,782 — 64,000 — — 73,259 — 73,259 — (28,286) — — — 44,973 — 73,259
		137,000
		— — —
		—
		137,000
		— —
		—
		73,259 —
		73,259

– 81 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Movements during the years ended 31 December of loans to related parties were as follows:

Short-term loans to Subsidiaries At 1 January Increased Decreased At 31 December Associate At 1 January Increase Allowance for doubtful debt Share of loss exceeds its interest in associates At 31 December	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — — 137,000 478,137 — — 10,000 — — — (127,000) (341,137 — — 20,000 137,000 11,523 — — — 9,800 14,700 — — (10,163) — — — (11,160) (3,177) — — — 11,523 — —	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — — 137,000 478,137 — — 10,000 — — — (127,000) (341,137 — — 20,000 137,000 11,523 — — — 9,800 14,700 — — (10,163) — — — (11,160) (3,177) — — — 11,523 — —
		137,000
		— — — —
		—

Short-term loans to related parties were due on demand.

Long-term loans Associate At 1 January Increase (decrease) (Reversal of) share of loss exceeds its interest in associates Reclassify to current portion of long-term loans At 31 December	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 44,973 — 73,259 — (9,259) 73,259 (9,259) 73,259 14,068 (28,286) — — (49,782) — (64,000) — — 44,973 — 73,259	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 44,973 — 73,259 — (9,259) 73,259 (9,259) 73,259 14,068 (28,286) — — (49,782) — (64,000) — — 44,973 — 73,259
		73,259

– 82 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

During January 2015 the Company entered into an unsecured long-term loan agreement with an associate company, Wiko Mobile (Thailand) Co., Ltd., for the loan principal of Baht 73 million. The loan principal is receivable in the various amounts as stipulated in the agreement, commencing in April 2017.

Trade payable to associate Wiko Mobile (Thailand) Co., Ltd. Trade payable to other related parties Alliance & Link Corporation Co., Ltd. Total Other payable to ultimate parent company SiS International Holdings Ltd. Accrued expense to ultimate parent company SiS International Holdings Ltd.	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 57,104 11,072 — — 86 86 86 86 57,190 11,158 86 86 909 841 778 744 1,144 870 1,011 733	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 57,104 11,072 — — 86 86 86 86 57,190 11,158 86 86 909 841 778 744 1,144 870 1,011 733
		86
		744
		733

Significant agreements with related parties

Management income

The Company has an agreement with a subsidiary (Qool Distribution (Thailand) Co., Ltd.) for sharing the combined staff and assets cost. The parties agreed to enter into new agreement effective from 1 January 2013 to change the monthly rate of management fee to Baht 1.50 million per month plus 1% of the net sales of the subsidiary for each month. The agreement is in force for an indefinite period of time and may be terminated by either party giving to the other notice in writing.

Administrative support agreement

On 31 December 2015, the Company entered into an administrative service agreement with Wiko Mobile (Thailand) Co., Ltd to provide certain administrative supports. Under the terms of the agreement, the Company is committed to pay monthly administrative service fee at the rate as specified in the agreement. The agreement is in force for an indefinite period of time and may be terminated by either party giving to the other notice in writing not less than 30 days.

Management fee

In 2004, the Company entered into an agreement with SiS International Holdings Ltd. for sharing the combined staff and assets cost. The term of the agreement is from 1 January 2004 onward, and the monthly rate of management fee is 0.0625% of each month’s sales. The agreement is in force for an indefinite period of time and may be terminated by either party giving to the other notice in writing.

– 83 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

5 CASH AND CASH EQUIVALENTS

Cash on hand Cash at banks — current accounts Cash at banks — savings accounts Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 165 164 165 164 (7,919) (58,903) (8,060) (60,870) 155,624 108,229 114,388 92,405 147,870 49,490 106,493 31,699

Cash and cash equivalents of the Group and the Company as at 31 December 2016 and 2015 were denominated entirely in Thai Baht.

6 TRADE ACCOUNTS RECEIVABLE

Note Related parties 4 Other parties Total Less allowance for doubtful accounts Net Bad debts and doubtful debts expenses for the year (reversal)	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 46,779 47,459 46,223 47,459 2,638,318 2,280,022 2,493,421 2,138,506 2,685,097 2,327,481 2,539,644 2,185,965 (272,758) (282,374) (269,883) (278,735) 2,412,339 2,045,107 2,269,761 1,907,230 (14,406) 13,979 (12,813) 12,517

– 84 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Aging analysis for trade accounts receivable were as follows:

Related parties Within credit terms Overdue: Less than 3 months Over 12 months Less allowance for doubtful accounts Other parties Within credit terms Overdue: Less than 3 months 3–6 months 6–12 months Over 12 months Less allowance for doubtful accounts Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 128 1,236 — 1,236 428 — — — 46,223 46,223 46,223 46,223 46,779 47,459 46,223 47,459 (46,223) (46,223) (46,223) (46,223 556 1,236 — 1,236 2,008,864 1,589,499 1,900,179 1,471,341 402,096 433,805 368,703 415,635 5,019 31,820 4,844 30,966 8,042 14,314 8,042 13,103 214,297 210,584 211,653 207,461 2,638,318 2,280,022 2,493,421 2,138,506 (226,535) (236,151) (223,660) (232,512 2,411,783 2,043,871 2,269,761 1,905,994 2,412,339 2,045,107 2,269,761 1,907,230	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 128 1,236 — 1,236 428 — — — 46,223 46,223 46,223 46,223 46,779 47,459 46,223 47,459 (46,223) (46,223) (46,223) (46,223 556 1,236 — 1,236 2,008,864 1,589,499 1,900,179 1,471,341 402,096 433,805 368,703 415,635 5,019 31,820 4,844 30,966 8,042 14,314 8,042 13,103 214,297 210,584 211,653 207,461 2,638,318 2,280,022 2,493,421 2,138,506 (226,535) (236,151) (223,660) (232,512 2,411,783 2,043,871 2,269,761 1,905,994 2,412,339 2,045,107 2,269,761 1,907,230
		47,459 (46,223
		1,236
		1,471,341 415,635 30,966 13,103 207,461
		2,138,506 (232,512
		1,905,994
		1,907,230

The normal credit term granted by the Group is ranging from 30 days to 90 days.

The currency denomination of trade accounts receivable as at 31 December 2016 and 2015 were as follows:

Thai Baht (Baht) United States Dollars (USD) Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 2,412,339 2,044,397 2,269,761 1,906,520 — 710 — 710 2,412,339 2,045,107 2,269,761 1,907,230	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 2,412,339 2,044,397 2,269,761 1,906,520 — 710 — 710 2,412,339 2,045,107 2,269,761 1,907,230
		1,907,230

– 85 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

7 OTHER RECEIVABLES

Note
Related parties
Other receivables
4
Receivable from losses of consignment
4
Accrued income
4
Less allowance for doubtful accounts
Net
Other parties
Account receivable from Revenue
Department
Accrued income
Prepaid expenses
Others
Total
Total
8
INVENTORIES

Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
880
29,450
20
806
557,087
557,087
541,542
541,542
—
—
3,660
3,698
557,967
586,537
545,222
546,046
(557,087)
(557,087)
(541,542)
(541,542)
880
29,450
3,680
4,504
144,002
397,165
—
256,118
22,881
49,314
7,383
34,967
9,723
10,729
7,366
7,005
44,366
33,634
19,377
13,858
220,972
490,842
34,126
311,948
221,852
520,292
37,806
316,452

Finished goods — computer components, and
telecommunication components
Finished goods Digital Disc — Movie and Music
Work in progress
Goods in transit
Less allowance for decline in value of inventories
Net
Inventories recognised as an expense in ‘‘cost of
sales of goods’’:
— Cost
— Write-down to net realisable value (reversal)
Net

Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
1,568,999
1,369,197
1,459,539
1,322,747
—
21,880
—
21,880
712
13,169
645
13,146
365,604
68,123
365,604
67,580
1,935,315
1,472,369
1,825,788
1,425,353
(217,184)
(149,164)
(204,987)
(143,736)
1,718,131
1,323,205
1,620,801
1,281,617
17,369,276
17,068,188
14,733,243
14,830,673
68,020
(40,003)
61,251
(2,238)
17,437,296
17,028,185
14,794,494
14,828,435

– 86 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

9 INVESTMENTS IN SUBSIDIARIES

At 1 January Allowance for impairment At 31 December	Separate financial statements 2016 2015 (in thousand Baht) 181,758 190,329 (9,800) (8,571 171,958 181,758	Separate financial statements 2016 2015 (in thousand Baht) 181,758 190,329 (9,800) (8,571 171,958 181,758
		181,758

Investments in subsidiaries as at 31 December 2016 and 2015, and dividend income from those investments for the years then ended, were as follows:

Type of business Ownership interest 2016 2015 (%) Subsidiaries SiS Venture Co., Ltd. Holding Investment 99.99 99.99 Qool Distribution (Thailand) Co., Ltd Trading 99.99 99.99 Total	Paid-up 2016 120,000 200,000	capital 2015 120,000 200,000	Separated financial statements Cost Impairment At cost-net 2016 2015 2016 2015 2016 2015 (in thousand Baht) 120,000 120,000 69,401 59,601 50,599 60,399 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 138,236 171,958 181,758	Separated financial statements Cost Impairment At cost-net 2016 2015 2016 2015 2016 2015 (in thousand Baht) 120,000 120,000 69,401 59,601 50,599 60,399 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 138,236 171,958 181,758	Separated financial statements Cost Impairment At cost-net 2016 2015 2016 2015 2016 2015 (in thousand Baht) 120,000 120,000 69,401 59,601 50,599 60,399 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 138,236 171,958 181,758	Separated financial statements Cost Impairment At cost-net 2016 2015 2016 2015 2016 2015 (in thousand Baht) 120,000 120,000 69,401 59,601 50,599 60,399 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 138,236 171,958 181,758	Separated financial statements Cost Impairment At cost-net 2016 2015 2016 2015 2016 2015 (in thousand Baht) 120,000 120,000 69,401 59,601 50,599 60,399 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 138,236 171,958 181,758	Separated financial statements Cost Impairment At cost-net 2016 2015 2016 2015 2016 2015 (in thousand Baht) 120,000 120,000 69,401 59,601 50,599 60,399 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 148,036 138,236 171,958 181,758	Dividend income 2016 2015 — — — — — —	Dividend income 2016 2015 — — — — — —
	320,000	320,000	319,994	319,994	148,036	138,236	171,958	181,758	—	—

All subsidiaries were incorporated in Thailand.

In 2016, the Company set up allowance for impairment in the value of SiS Venture Co., Ltd. amounting to Baht 9.8 million (2015: 8.6 million).

10 INVESTMENT IN ASSOCIATES

For the period ended 31 December At 1 January Share of loss of associates Reclassification from indirect subsidiary Acquisitions At 31 December	Consolidated financial statements 2016 2015 (in thousand Baht) — 9,800 — (52,013 — (2,772 — 44,985 — —	Consolidated financial statements 2016 2015 (in thousand Baht) — 9,800 — (52,013 — (2,772 — 44,985 — —
		—

– 87 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

At the extra ordinary shareholders’ meeting of a subsidiary (Wiko Mobile (Thailand) Co., Ltd.) held on 9 February 2015, the shareholders of the subsidiary passed resolution to approve the increase of authorised share capital from Baht 0.1 million to Baht 100 million to current shareholders. SiS Venture Co., Ltd. has invested in 449,400 new ordinary shares on 15 February 2015, at par value of Baht 100 per share, totaling of Baht 44.9 million and consequently its decrease of ownership interest from 60% to 45%. Wiko Mobile (Thailand) Co., Ltd. thereby ceased to be a subsidiary and become an associate. The carrying amount of Wiko Mobile (Thailand) Co., Ltd.’s net assets in the Group’s financial statements on the date of invested was Baht 6.2 million. The fair value of the Group’s retained interest in the associate at the date when control was lost was Baht 2.8 million, which became the carrying value of the Group’s interest in associate at that date. The Group recognised an increase in retained earnings of Baht 5.3 million; loss of non-controlling interests from dilution of interests in subsidiary of Baht 2.5 million; and gain from loss of controlling interests in subsidiary of Baht 0.9 million, which is included in the consolidate statement of income.

For the year ended 31 December 2016, the Group’s share of profit of investment in Wiko Mobile (Thailand) Co., Ltd. amounted to Baht 14.1 million (2015: share of loss of investment amounted to Baht 70.5 million). As at 31 December 2016, the Group’s accumulated share of loss of investment in Wiko Mobile (Thailand) Co., Ltd. exceeded the carrying amount of the investment in shares. The excess loss is adjusted to loan to Wiko Mobile (Thailand) Co., Ltd. Future reversals of losses are first be applied to the loan investment to the extent that such loss is previously applied against this loan investment and subsequently recognised in the investment in shares.

Moreover, for the year ended 31 December 2016, the Group’s share of loss of investment in Nippon Pack Trading Co., Ltd. amounted to Baht 11.2 million (2015: Baht 13.0 million). As at 31 December 2016, the Group’s accumulated share of loss of investment in Nippon Pack Trading Co., Ltd. exceeded the carrying amount of the investment in shares. The excess loss is adjusted to loan to Nippon Pack Trading Co., Ltd. Future reversals of losses are first be applied to the loan investment to the extent that such loss is previously applied against this loan investment and subsequently recognised in the investment in shares.

Investments in associate as at 31 December 2016 and 2015, and dividend income for the years then ended, were as follows:

Type of business Ownership interest 2016 2015 (%) Associate Nippon Pack Trading Co., Ltd. Trading and service 49.00 49.00 Wiko Mobile (Thailand) Co., Ltd. Trading 45.00 45.00 Total	Paid-up capital 2016 2015 20,000 20,000 100,000 100,000 120,000 120,000	Paid-up capital 2016 2015 20,000 20,000 100,000 100,000 120,000 120,000	Consolidated financial statements Cost method Equity method 2016 2015 2016 2015 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Consolidated financial statements Cost method Equity method 2016 2015 2016 2015 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Consolidated financial statements Cost method Equity method 2016 2015 2016 2015 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Consolidated financial statements Cost method Equity method 2016 2015 2016 2015 (in thousand Baht) 9,800 9,800 — — 45,000 45,000 — — 54,800 54,800 — —	Dividend income 2016 2015 — — — — — —	Dividend income 2016 2015 — — — — — —
	120,000	120,000	54,800	54,800	—	—	—	—

None of the Group’s associates are publicly listed and consequently do not have published price quotations.

– 88 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The following table summarises the financial information of the associates as included in their own financial statements, adjusted for fair value adjustments at acquisition and differences in accounting policies. The table also reconciles the summarised financial information to the carrying amount of the Group’s interest in these companies.

Revenue
Total income (100%)
Total income (45% hold)
Total income (49% hold)
Elimination of unrealised profit on downstream sales
Group’s share of total income
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets (100%)
Group’s share of net assets (45% hold)
Group’s share of net assets (49% hold)
Reclassification from indirect subsidiary
Elimination of unrealised profit on downstream sales
Differences between amount paid and carrying
amount of interest in associate
Share of loss exceeded the carrying amount of
investment adjusted to loan to associates
Carrying amount of investment in associates
OTHER LONG-TERM INVESTMENTS
Other long-term investment
Other non-marketable equity security
Less Allowance for impairment
Net

Nippon Pack Trading
Co., Ltd.
Wiko Mobile (Thailand)
Co., Ltd
2016
2015
2016
2015
(in thousand Baht)
11,719
13,105
1,269,013
519,665
(22,808)
(26,306)
24,209
(154,754)
—
—
13,963
(70,013)
(11,176)
(12,890)
—
—
16
(87)
105
(501)
(11,160)
(12,977)
14,068
(70,514)
11,026
16,748
227,852
186,448
13,909
18,169
16,006
11,920
(68,577)
(55,142)
(128,546)
(86,376)
(659)
(547)
(146,086)
(166,975)
(44,301)
(20,772)
(30,774)
(54,983)
—
—
(13,848)
(25,013)
(21,707)
(10,179)
—
—
—
—
—
(2,772)
281
(87)
(370)
(501)
7,089
7,089
—
—
14,337
3,177
14,218
28,286
—
—
—
—
Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
59,601
59,601
—
—
59,601
59,601
—
—
(59,601)
(59,601)
—
—
—
—
—
—

11 OTHER LONG-TERM INVESTMENTS

Other long-term investments were investments in ordinary shares of Alliance & Link Corporation Co., Ltd. at 15% and Click Connect Co., Ltd. at 15% of authorised share capital, by the Company’s subsidiary (SiS Venture Co., Ltd.).

– 89 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

In 2011, SiS Venture Co., Ltd. set up allowance for impairment in the value of long-term investment in Alliance & Link Corporation Co., Ltd. Baht 51.0 million.

In 2015, SiS Venture Co., Ltd. set up allowance for impairment in the value of long-term investment in Click Connect Co., Ltd. Baht 8.6 million.

12 EQUIPMENT

Cost At 1 January 2015 Additions Disposals At 31 December 2015 and 1 January 2016 Additions Disposals Transfers At 31 December 2016 Depreciation At 1 January 2015 Depreciation charge for the year Disposals At 31 December 2015 and 1 January 2016 Depreciation charge for the year Disposals At 31 December 2016 Net book value At 1 January 2015 Owned assets At 31 December 2015 and 1 January 2016 Owned assets At 31 December 2016 Owned assets	Vehicles 7,473 — — 7,473 — (1,012) — 6,461 6,284 602 — 6,886 70 (495) 6,461 1,189 1,189 587 587 — —	Furniture & fixtures 16,807 413 (2,785) 14,435 706 — — 15,141 9,439 1,525 (2,784) 8,180 1,307 — 9,487 7,368 7,368 6,255 6,255 5,654 5,654	Consolidated financial statements Computer & office equipment Leasehold improvements (in thousand Baht) 196,240 69,979 29,189 374 (38,178) (3,948) 187,251 66,405 25,468 115 (574) — — 500 212,145 67,020 129,561 24,741 24,603 6,499 (33,233) (3,948) 120,931 27,292 23,604 6,267 (431) — 144,104 33,559 66,679 45,238 66,679 45,238 66,320 39,113 66,320 39,113 68,041 33,461 68,041 33,461	Assets under installation — — — — 500 — (500) — — — — — — — — — — — — — —	Total 290,499 29,976 (44,911
					275,564 26,789 (1,586 —
					300,767
					170,025 33,229 (39,965
					163,289 31,248 (926
					193,611
					120,474
					120,474
					112,275
					112,275
					107,156
					107,156

The gross amount of the Group’s fully depreciated equipment that was still in use as at 31 December 2016 amounted to Baht 100.8 million (2015: Baht 97.6 million).

– 90 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Cost At 1 January 2015 Additions Disposals At 31 December 2015 and 1 January 2016 Additions Disposals Transfers At 31 December 2016 Depreciation At 1 January 2015 Depreciation charge for the year Disposals At 31 December 2015 and 1 January 2016 Depreciation charge for the year Disposals At 31 December 2016 Net book value At 1 January 2015 Owned assets At 31 December 2015 and 1 January 2016 Owned assets At 31 December 2016 Owned assets	Vehicles 7,473 — — 7,473 — (1,012) — 6,461 6,284 602 — 6,886 70 (495) 6,461 1,189 1,189 587 587 — —	Furniture & fixtures 16,807 413 (2,785) 14,435 706 — — 15,141 9,439 1,525 (2,784) 8,180 1,307 — 9,487 7,368 7,368 6,255 6,255 5,654 5,654	Separate financial statements Computer & office equipment Leasehold improvements Assets under installation (in thousand Baht) 191,267 69,979 — 28,613 374 — (33,055) (3,948) — 186,825 66,405 — 25,232 115 500 (574) — — — 500 (500) 211,483 67,020 — 129,138 24,740 — 23,701 6,499 — (32,154) (3,948) — 120,685 27,291 — 23,482 6,267 — (431) — — 143,736 33,558 — 62,129 45,239 — 62,129 45,239 — 66,140 39,114 — 66,140 39,114 — 67,747 33,462 — 67,747 33,462 —	Total 285,526 29,400 (39,788
				275,138 26,553 (1,586 —
				300,105
				169,601 32,327 (38,886
				163,042 31,126 (926
				193,242
				115,925
				115,925
				112,096
				112,096
				106,863
				106,863

The gross amount of the Company’s fully depreciated equipment that was still in use as at 31 December 2016 amounted to Baht 100.6 million (2015: Baht 97.6 million).

– 91 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

13 INTANGIBLE ASSETS

Cost
At 1 January 2015
Additions
Transfers
At 31 December 2015 and 1 January 2016
Additions
Disposal
At 31 December 2016
Amortisation
At 1 January 2015
Amortisation charge for the year
Disposal
At 31 December 2015 and 1 January 2016
Amortisation charge for the year
At 31 December 2016
Net book value
At 1 January 2015
At 31 December 2015 and 1 January 2016
At 31 December 2016

Consolidated financial statements/
Separate financial statements
Software
licences
Software
licences in
progress
Total
(in thousand Baht)
81,361
3,585
84,946
939
320
1,259
(25,459)
—
(25,459)
56,841
3,905
60,746
874
—
874
250
(250)
—
57,965
3,655
61,620
45,800
—
45,800
5,883
—
5,883
(25,459)
—
(25,459)
26,224
—
26,224
5,804
—
5,804
32,028
—
32,028
35,561
3,585
39,146
30,617
3,905
34,522
25,937
3,655
29,592

The gross amount of the Group’s fully amortised intangible assets that was still in use as at 31 December 2016 amounted to Baht 1.7 million (2015: Baht 1.3 million).

14 DEFERRED TAX

Deferred tax assets and liabilities as at 31 December were as follows:

Deferred tax assets Deferred tax liabilities Net deferred tax assets	Consolidate financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 255,538 279,742 223,692 225,272 (1,088) (8,570) (1,070) (8,491) 254,450 271,172 222,622 216,781

– 92 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Movements in total deferred tax assets and liabilities during the year were as follows:

Deferred tax assets
Trade and other accounts receivable
Inventories
Provisions
Loss carry forward
Others
Total
Deferred tax liabilities
Fair value change of forward exchange contracts in assets
Allowance for purchased return
Total
Net
Deferred tax assets
Trade and other accounts receivable
Inventories
Provisions
Loss carry forward
Others
Total
Deferred tax liabilities
Fair value change of forward exchange contracts in assets
Allowance for purchased return
Total
Net

Consolidated
financial statements
At
1 January
2016
(Charged)/
Credited to:
At
31 December
2016
Profit or loss
(Note 25)
(in thousand Baht)
158,132
(8,930)
149,202
29,833
13,604
43,437
26,768
1,377
28,145
47,367
(22,567)
24,800
17,642
(7,688)
9,954
279,742
(24,204)
255,538
(685)
(403)
(1,088)
(7,885)
7,885
—
(8,570)
7,482
(1,088)
271,172
(16,722)
254,450
Consolidated
financial statements
At
1 January
2015
(Charged)/
Credited to:
At
31 December
2015
Profit or loss
(Note 25)
(in thousand Baht)
156,730
1,402
158,132
37,833
(8,000)
29,833
21,420
5,348
26,768
60,610
(13,243)
47,367
13,605
4,037
17,642
290,198
(10,456)
279,742
(556)
(129)
(685)
(5,460)
(2,425)
(7,885)
(6,016)
(2,554)
(8,570)
284,182
(13,010)
271,172

– 93 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Deferred tax assets
Trade and other accounts receivable
Inventories
Provisions
Others
Total
Deferred tax liabilities
Fair value change of forward exchange contracts in assets
Allowance for purchased return
Total
Net
Deferred tax assets
Trade and other accounts receivable
Inventories
Provisions
Others
Total
Deferred tax liabilities
Fair value change of forward exchange contracts in assets
Allowance for purchased return
Total
Net

Separate financial statements
At
1 January
2016
(Charged)/
Credited to:
At
31 December
2016
Profit or loss
(Note 25)
(in thousand Baht)
154,642
(8,610)
146,032
28,747
12,250
40,997
24,320
2,408
26,728
17,563
(7,628)
9,935
225,272
(1,580)
223,692
(606)
(464)
(1,070)
(7,885)
7,885
—
(8,491)
7,421
(1,070)
216,781
5,841
222,622
Separate financial statements
At
1 January
2015
(Charged)/
Credited to:
At
31 December
2015
Profit or loss
(Note 25)
(in thousand Baht)
153,530
1,112
154,642
29,195
(448)
28,747
15,654
8,666
24,320
13,596
3,967
17,563
211,975
13,297
225,272
(438)
(168)
(606)
(5,460)
(2,425)
(7,885)
(5,898)
(2,593)
(8,491)
206,077
10,704
216,781

The loss carry forward will be expired in fiscal year 2017. The deductible temporary differences do not expire under current tax legislation.

One of the Group’s subsidiaries, Qool Distribution (Thailand) Company Ltd. expands its market and business for trading in communication and electronic equipment. As a result, management prepared its estimates of future taxable profits. The Group recognized the tax effect of Baht 24.8 million of cumulative tax losses in the amount of Baht 124 million because management considered it probable that future taxable profits would be available against which such losses can be used. The remaining loss carry forward in the amount of Baht 13 million has not been recognised as deferred tax assets.

– 94 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

15 INTEREST-BEARING LIABILITIES

Current — unsecured Bank overdrafts Trust receipts Loans from financial institutions Bank overdrafts and loans from financial institutions Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — 3 — 3 1,019,222 658,002 917,705 643,002 200,000 600,000 100,000 450,000 1,219,222 1,258,005 1,017,705 1,093,005 1,219,222 1,258,005 1,017,705 1,093,005	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — 3 — 3 1,019,222 658,002 917,705 643,002 200,000 600,000 100,000 450,000 1,219,222 1,258,005 1,017,705 1,093,005 1,219,222 1,258,005 1,017,705 1,093,005
		1,093,005
		1,093,005

The periods to maturity of interest-bearing liabilities, excluding finance lease liabilities, as at 31 December was as follows:

Within one year Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 1,219,222 1,258,005 1,017,705 1,093,005 1,219,222 1,258,005 1,017,705 1,093,005	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 1,219,222 1,258,005 1,017,705 1,093,005 1,219,222 1,258,005 1,017,705 1,093,005
		1,093,005

Under the term of the loan agreements, the Company has to comply with all terms and conditions which were specified in the agreements such as maintaining the debt to equity ratio, etc.

Interest-bearing liabilities of the Group and the Company as at 31 December 2016 and 2015 were denominated entirely in Thai Baht.

16 TRADE ACCOUNTS PAYABLE

Note Related parties 4 Other parties Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 57,190 11,158 86 86 1,626,524 1,233,907 1,586,516 1,207,187 1,683,714 1,245,065 1,586,602 1,207,273	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 57,190 11,158 86 86 1,626,524 1,233,907 1,586,516 1,207,187 1,683,714 1,245,065 1,586,602 1,207,273
		1,207,273

– 95 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The currency denomination of trade accounts payable as at 31 December 2016 and 2015 were as follows:

Thai Baht (Baht) United States Dollars (USD) Total 17 OTHER PAYABLES	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 1,256,491 1,036,229 1,159,380 999,077 427,223 208,836 427,222 208,196 1,683,714 1,245,065 1,586,602 1,207,273	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 1,256,491 1,036,229 1,159,380 999,077 427,223 208,836 427,222 208,196 1,683,714 1,245,065 1,586,602 1,207,273
		1,207,273

Note Related parties Other payables 4 Accrued expenses 4 Total Other parties Accrued marketing expenses Accrued employee benefit expenses Other payables Advance received Payable for intangible assets Account payable to Revenue department Others Total Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 909 841 778 744 1,144 870 1,011 733 2,053 1,711 1,789 1,477 140,727 133,840 133,638 121,600 73,867 62,772 73,867 62,772 25,379 26,404 23,991 25,312 12,000 9,976 11,836 9,976 11,575 11,575 11,575 11,575 8,859 — 8,859 — 2,679 14,564 2,316 14,236 275,086 259,131 266,082 245,471 277,139 260,842 267,871 246,948	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 909 841 778 744 1,144 870 1,011 733 2,053 1,711 1,789 1,477 140,727 133,840 133,638 121,600 73,867 62,772 73,867 62,772 25,379 26,404 23,991 25,312 12,000 9,976 11,836 9,976 11,575 11,575 11,575 11,575 8,859 — 8,859 — 2,679 14,564 2,316 14,236 275,086 259,131 266,082 245,471 277,139 260,842 267,871 246,948
		1,477
		121,600 62,772 25,312 9,976 11,575 — 14,236
		245,471
		246,948

– 96 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

18 EMPLOYEE BENEFIT OBLIGATIONS

As at 31 December Statement of financial position Obligations for: Define benefit plans Total Year ended 31 December Statement of income Recognised in profit or loss: Define benefit plans Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 43,970 38,535 43,970 38,535 43,970 38,535 43,970 38,535 6,985 6,059 6,985 6,059 6,985 6,059 6,985 6,059	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 43,970 38,535 43,970 38,535 43,970 38,535 43,970 38,535 6,985 6,059 6,985 6,059 6,985 6,059 6,985 6,059
		38,535
		6,059
		6,059

The Group operates defined benefit plans based on the requirement of Thai Labour Protection Act B.E. 2541 (1998) to provide retirement benefits to employees based on pensionable remuneration and length of service.

The defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk.

Movements in the present value of the defined benefit obligations are detailed as follows:

Defined benefit obligations at 1 January Included in profit or loss: Current service costs Interest on obligation Other Benefits paid by the plan Defined benefit obligations at 31 December	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 38,535 33,076 38,535 33,076 5,690 4,948 5,690 4,948 1,295 1,111 1,295 1,111 (1,550) (600) (1,550) (600 43,970 38,535 43,970 38,535	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 38,535 33,076 38,535 33,076 5,690 4,948 5,690 4,948 1,295 1,111 1,295 1,111 (1,550) (600) (1,550) (600 43,970 38,535 43,970 38,535
		38,535

– 97 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Actuarial assumptions

The following were the principal actuarial assumptions at the reporting date (expressed as weighted averages).

	Consolidated	Consolidated	Separate
	financial	statements	financial statements
	2016	2015	2016	2015
		(%)
Discount rate	3.36	3.36	3.36	3.36
Future salary growth	5.23	5.23	5.23	5.23
Employee turnover rate	0–33	0–33	0–33	0–33

Assumptions regarding future mortality have been based on published statistics and mortality tables.

At 31 December 2016, the weighted-average duration of the defined benefit obligations were 9.42 years (2015: 9.42 years).

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

	Consolidated	Consolidated	Separate	Separate
	financial statements		financial statements
	Increase	Decrease	Increase	Decrease
		(in thousand Baht)
Defined benefit obligation 31 December 2016
Discount rate (0.5% movement)	(1,837)	1,977	(1,837)	1,977
Future salary growth (0.5% movement)	1,931	(1,814)	1,931	(1,814)
Life expectancy (1 year movement)	324	(322)	324	(322)
Defined benefit obligation 31 December 2015
Discount rate (0.5% movement)	(1,636)	1,759	(1,636)	1,759
Future salary growth (0.5% movement)	1,718	(1,616)	1,718	(1,616)
Life expectancy (1 year movement)	296	(293)	296	(293)

– 98 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

19 SHARE CAPITAL

Par value per share (in Baht) Authorised At 1 January — ordinary shares 1 At 31 December — ordinary shares 1 Issued and fully paid-up At 1 January — ordinary shares 1 At 31 December — ordinary shares 1	2016 2015 Number Baht Number Baht (thousand shares/thousand Baht) 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199	2016 2015 Number Baht Number Baht (thousand shares/thousand Baht) 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199
		350,199
		350,199
		350,199

Share premium

Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (‘‘share premium’’). Share premium is not available for dividend distribution.

20 RESERVES

Legal reserve

Section 116 of the Public Companies Act B.E. 2535 Section 116 requires that a public company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account (‘‘legal reserve’’), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

Movements in reserves

Movements in reserves are shown in the statements of changes in equity.

21 OPERATING SEGMENTS

. Segment 1 Commercial products . Segment 2 Consumer products . Segment 3 Value added products . Segment 4 Phones

None of other operations meets the quantitative thresholds for determining reportable segments in 2016 or 2015.

– 99 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Information about reportable segments:

Segment 1 2016 2015 5,145 5,186 5,145 5,186 221 216 426 229	Segment 1 2016 2015 5,145 5,186 5,145 5,186 221 216 426 229	Segment 2 2016 2015 6,523 6,507 6,523 6,507 322 309 916 643	Segment 2 2016 2015 6,523 6,507 6,523 6,507 322 309 916 643	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2016 2015 2016 2015 2016 2015 (in million Baht) 2,511 1,578 2,818 3,239 16,997 16,510 2,511 1,578 2,818 3,239 16,997 16,510 247 200 92 112 882 837 149 99 104 211 1,595 1,182	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2016 2015 2016 2015 2016 2015 (in million Baht) 2,511 1,578 2,818 3,239 16,997 16,510 2,511 1,578 2,818 3,239 16,997 16,510 247 200 92 112 882 837 149 99 104 211 1,595 1,182	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2016 2015 2016 2015 2016 2015 (in million Baht) 2,511 1,578 2,818 3,239 16,997 16,510 2,511 1,578 2,818 3,239 16,997 16,510 247 200 92 112 882 837 149 99 104 211 1,595 1,182	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2016 2015 2016 2015 2016 2015 (in million Baht) 2,511 1,578 2,818 3,239 16,997 16,510 2,511 1,578 2,818 3,239 16,997 16,510 247 200 92 112 882 837 149 99 104 211 1,595 1,182	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2016 2015 2016 2015 2016 2015 (in million Baht) 2,511 1,578 2,818 3,239 16,997 16,510 2,511 1,578 2,818 3,239 16,997 16,510 247 200 92 112 882 837 149 99 104 211 1,595 1,182	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2016 2015 2016 2015 2016 2015 (in million Baht) 2,511 1,578 2,818 3,239 16,997 16,510 2,511 1,578 2,818 3,239 16,997 16,510 247 200 92 112 882 837 149 99 104 211 1,595 1,182	Others 2016 2015 1,378 1,459 1,378 1,459 55 104 123 141	Others 2016 2015 1,378 1,459 1,378 1,459 55 104 123 141	Total 2016 2015 18,375 17,969 18,375 17,969 937 941 1,718 1,323	Total 2016 2015 18,375 17,969 18,375 17,969 937 941 1,718 1,323
5,145	5,186	6,523	6,507	2,511	1,578	2,818	3,239	16,997	16,510	1,378	1,459	18,375	17,969
221	216	322	309	247	200	92	112	882	837	55	104	937	941
426	229	916	643	149	99	104	211	1,595	1,182	123	141	1,718	1,323

Reconciliation of reportable segment profit or loss and assets

Gross profit or loss Total profit for reportable segments Other segment’s profit Unallocated amounts: — Other income — Other corporate expenses — Finance cost — Share of loss of investments in associates Consolidated profit before income tax Assets Total assets for reportable segments Other segment’s assets Other unallocated amounts Consolidated total assets	Consolidated financial statements 2016 2015 (in million Baht) 882 837 55 104 937 941 120 151 (703) (713 (50) (64 3 (83 307 232 1,595 1,182 123 141 3,240 3,105 4,958 4,428	Consolidated financial statements 2016 2015 (in million Baht) 882 837 55 104 937 941 120 151 (703) (713 (50) (64 3 (83 307 232 1,595 1,182 123 141 3,240 3,105 4,958 4,428
		941 151 (713 (64 (83
		232
		1,182 141 3,105
		4,428

– 100 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Geographical segments

The Group is managed and operates principally in Thailand. There are no material revenues derived from, or assets located in, foreign countries.

Major customer

The Group has no major customer.

22 OTHER INCOME

Note Management income 4 Income from marketing refund 4 Income from administrative service Interest income 4 Others Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — — 46,253 33,871 30,891 52,298 22,291 24,517 11,432 — 11,432 — 8,808 6,927 8,887 19,815 8,479 13,934 5,170 11,449 59,610 73,159 94,033 89,652	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) — — 46,253 33,871 30,891 52,298 22,291 24,517 11,432 — 11,432 — 8,808 6,927 8,887 19,815 8,479 13,934 5,170 11,449 59,610 73,159 94,033 89,652
		89,652

23 EMPLOYEE BENEFIT EXPENSES

Wages and salaries Pension costs — defined contribution plans Pension costs — defined benefit plans Others Total	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 304,836 283,570 300,133 282,350 8,105 8,480 8,105 8,480 6,985 6,059 6,985 6,059 15,367 17,443 15,367 17,317 335,293 315,552 330,590 314,206	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in thousand Baht) 304,836 283,570 300,133 282,350 8,105 8,480 8,105 8,480 6,985 6,059 6,985 6,059 15,367 17,443 15,367 17,317 335,293 315,552 330,590 314,206
		314,206

The Company has established a contributory provident fund for its employees. Membership of the fund is on a voluntary basis. Contributions are made monthly by the employees at the rate of 3% and 5% of their basic salaries and by the Company at the rate of 3% and 5% of the employees’ basic salaries. The provident fund is registered with the Ministry of Finance as juristic entity and is managed by a licensed Fund Manager.

– 101 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

24 EXPENSES BY NATURE

The statements of comprehensive income include an analysis of expenses by function. Expenses by nature disclosed in accordance with the requirements of various TFRS were as follows:

Included in cost of sales of goods:
Changes in inventories
Purchase
Allowance for obsolete and defective stocks
(reversal)
Total
Included in selling expenses:
Advertising and marketing expenses
Transportation expenses
Employee benefit expenses
Others
Total
Included in administrative expenses:
Employee benefit expenses
Tax penalties
Depreciation and amortisation
Rental expense
Bad debts and doubtful accounts (reversal)
Doubtful debts expense for short-term loans to
related party
Management fee
Impairment losses on investment
Service charge
Others
Total

Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
(462,946)
691,986
(400,435)
300,105
17,832,222
16,376,202
15,133,678
14,530,568
68,020
(40,003)
61,251
(2,238)
17,437,296
17,028,185
14,794,494
14,828,435
133,786
170,354
128,891
149,432
34,593
32,845
31,155
30,928
20,790
20,678
20,790
20,583
4,272
3,183
4,272
3,183
193,441
227,060
185,108
204,126
Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
301,489
284,054
301,489
282,804
41,777
—
41,777
—
37,052
39,112
36,930
38,210
36,769
36,861
36,769
36,858
(14,406)
13,979
(12,813)
12,517
10,163
—
—
—
11,491
11,253
9,750
9,789
—
8,571
9,800
8,571
4,480
4,171
4,480
4,112
50,887
57,746
47,470
54,703
479,702
455,747
475,652
447,564

– 102 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

25 INCOME TAX EXPENSE

Income tax recognised in profit or loss

Note
Current tax expense
Current year
Under provided in prior year
Deferred tax expense
Movements in temporary differences
14
Total
Reconciliation of effective tax rate
Accounting profit before income tax
Tax at the applicable tax rates
Tax effect of income and expenses that are not
taxable income or not deductible in determining
taxable profit, net
Derecognition of previously recognised deductible
temporary differences
Under provided in prior year
Total

Consolidated
financial statements
Separate
financial statements
2016
2015
2016
2015
(in thousand Baht)
61,303
52,662
61,248
52,662
1,660
488
1,660
488
62,963
53,150
62,908
53,150
16,722
13,010
(5,841)
(10,704)
16,722
13,010
(5,841)
(10,704)
79,685
66,160
57,067
42,446
Consolidated
financial statements
2016
2015
Rate (%)
(in
thousand
Baht)
Rate (%)
(in
thousand
Baht)
307,130
232,498
20.0
61,426
20.0
46,500
2.8
8,692
8.2
19,172
2.6
7,907
—
—
0.5
1,660
0.2
488
25.9
79,685
28.4
66,160

– 103 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Accounting profit before income tax Tax at the applicable tax rates Tax effect of income and expenses that are not taxable income or not deductible in determining taxable profit, net Derecognition of previously recognised deductible temporary differences Under provided in prior year Total Income tax reduction	Separate financial statements 2016 2015 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 204,802 201,236 20.0 40,960 20.0 40,247 4.5 9,227 0.9 1,711 2.6 5,220 — — 0.8 1,660 0.2 488 27.9 57,067 21.1 42,446	Separate financial statements 2016 2015 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 204,802 201,236 20.0 40,960 20.0 40,247 4.5 9,227 0.9 1,711 2.6 5,220 — — 0.8 1,660 0.2 488 27.9 57,067 21.1 42,446
		40,247 1,711 — 488
		42,446

Revenue Code Amendment Act No. 42 B.E. 2559 dated 3 March 2016 grants a reduction of the corporate income tax rate to 20% of net taxable profit for accounting periods which begin on or after 1 January 2016.

26 EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share for year ended 31 December 2016 and 2015 were based on the profit for the period attributable to ordinary shareholders of the Company and the number of ordinary shares outstanding during the year as follows:

Profit attributable to equity holders of the Company (Basic) Number of ordinary shares outstanding Basic earnings per share (in Baht)	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (thousand Baht/thousand shares) 227,445 168,851 147,735 158,790 350,199 350,199 350,199 350,199 0.65 0.48 0.42 0.45	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (thousand Baht/thousand shares) 227,445 168,851 147,735 158,790 350,199 350,199 350,199 350,199 0.65 0.48 0.42 0.45
		350,199
		0.45

27 DIVIDENDS

At the annual general meeting of the shareholders of the Company held on 22 April 2016, the shareholders passed the resolution to approved the appropriation of dividend as at 31 December 2015 for 350.20 million ordinary shares, Baht 0.30 per share, totalling Baht 105.06 million. The dividend was paid in May 2016.

At the annual general meeting of the shareholders of the Company held on 24 April 2015, the shareholders passed the resolution to approved the appropriation of dividend as at 31 December 2014, for 350.20 million ordinary shares, Baht 0.20 per share, totalling Baht 70.04 million. The dividend was paid in May 2015.

– 104 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

28 FINANCIAL INSTRUMENTS

Financial risk management policies

The Group is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Group does not hold or issue derivative financial instruments for speculative or trading purposes.

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding noncontrolling interests and also monitors the level of dividends to ordinary shareholders.

Interest rate risk

Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows. The Company is primarily exposed to interest rate risk from its borrowings (Note 15). Most of the interest rates of financial assets and liabilities of the Group are floating rates, which are based on market rates such as the interest prime rate of commercial banks, saving interest rate or other benchmark floating rates.

The effective interest rates of interest-bearing financial liabilities as at 31 December 2016 and 2015 and the periods in which those liabilities mature or re-price were as follows:

Effective interest rates (% per annum) 2016 Current Trust receipts 2.20–2.49 Loan from financial institutions 2.40–2.80 Total 2015 Current Trust receipts 2.38–2.69 Loan from financial institutions 2.70–3.00 Total	Within 1 year 1,019 200 1,219 658 600 1,258	Consolidated financial statements After 1 year but within 5 years After 5 years (in million Baht) — — — — — — — — — — — —	Total 1,019 200
			1,219
			658 600
			1,258

– 105 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Effective interest rates (% per annum) 2016 Current Trust receipts 2.20–2.49 Loan from financial institutions 2.40 Total 2015 Current Trust receipts 2.38–2.69 Loan from financial institutions 2.70–2.74 Total Foreign currency risk	Separate financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 918 — — 918 100 — — 100 1,018 — — 1,018 643 — — 643 450 — — 450 1,093 — — 1,093	Separate financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 918 — — 918 100 — — 100 1,018 — — 1,018 643 — — 643 450 — — 450 1,093 — — 1,093
		1,018
		643 450
		1,093

The Group is exposed to foreign currency risk relating to purchases and sales which are denominated in foreign currencies. The Group primarily utilises forward exchange contracts with maturities of less than one year to hedge financial liabilities denominated in foreign currencies. The forward exchange contracts entered into at the reporting date also relate to anticipated purchases and sales in foreign currencies, for the subsequent period.

At 31 December, the Group and the Company were exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies:

Note United States Dollars Trade accounts receivable 6 Trade accounts payable 16 Gross balance sheet exposure Forward contracts Swap contracts Net exposure Credit risk	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in million Baht) — 1 — 1 (427) (209) (427) (208 (427) (208) (427) (207 451 474 445 439 21 93 21 93 45 359 39 325	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in million Baht) — 1 — 1 (427) (209) (427) (208 (427) (208) (427) (207 451 474 445 439 21 93 21 93 45 359 39 325
		(207 439 93
		325

Credit risk is the risk arising from failure of customers or counterparties to meet their contractual obligations, which may eventually cause financial losses. The Group has determined a risk management policy through analysis of the customer and counterparties’ financial status, and also by defining the rules for credit approval and debt collection period. In addition, the Group has policy to take out risk insurance for uncollectability of accounts receivable.

– 106 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.

Carrying amount and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

31 December 2016 Financial assets/Financial liabilities measured at fair value Forward contracts Swap contracts 31 December 2015 Financial assets/Financial liabilities measured at fair value Forward contracts Swap contracts 31 December 2016 Financial assets/Financial liabilities measured at fair value Forward contracts Swap contracts 31 December 2015 Financial assets/Financial liabilities measured at fair value Forward contracts Swap contracts	Carrying amount 5,444 (1) 3,568 (144) Carrying amount 5,350 (1) 3,177 (144)	Consolidated financial statements Fair value Level 1 Level 2 Level 3 Total (in thousand Baht) — 5,444 — 5,444 — (1) — (1) — 3,568 — 3,568 — (144) — (144) Separate financial statements Fair value Level 1 Level 2 Level 3 Total (in thousand Baht) — 5,350 — 5,350 — (1) — (1) — 3,177 — 3,177 — (144) — (144)

– 107 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Financial asset not measured at fair value 31 December 2016 Long-term loans to related party Total Financial asset not measured at fair value 31 December 2015 Long-term loans to related party Total	Consolidated financial statements Separate financial statements Fair value Carrying amount Fair value Carrying amount (in thousand Baht) 49,686 49,782 63,904 64,000 49,686 49,782 63,904 64,000 44,936 44,973 73,222 73,259 44,936 44,973 73,222 73,259	Consolidated financial statements Separate financial statements Fair value Carrying amount Fair value Carrying amount (in thousand Baht) 49,686 49,782 63,904 64,000 49,686 49,782 63,904 64,000 44,936 44,973 73,222 73,259 44,936 44,973 73,222 73,259
		64,000
		73,259
		73,259

29 COMMITMENTS WITH NON-RELATED PARTIES

Future minimum lease payments under non-cancellable operating leases Within one year After one year but within five years Total Other commitments Unutilised credits facilities Forward contracts Swap contracts Bank guarantee Total Lease and service agreements	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in million Baht) 13 34 13 34 2 12 2 12 15 46 15 46 4,773 4,097 4,572 4,061 451 474 445 439 21 93 21 93 183 165 165 165 5,428 4,829 5,203 4,758	Consolidated financial statements Separate financial statements 2016 2015 2016 2015 (in million Baht) 13 34 13 34 2 12 2 12 15 46 15 46 4,773 4,097 4,572 4,061 451 474 445 439 21 93 21 93 183 165 165 165 5,428 4,829 5,203 4,758
		46
		4,061 439 93 165
		4,758

The Group had commitments for building and warehouse lease contracts with terms of 1–3 years.

Forward contracts

In 2016, the Group has forward contract facilities with banks in the amount of Baht 4,791 million equivalent to USD 133 million (2015: Baht 4,324 million equivalent to USD 119 million).

As at 31 December 2016, the Group had purchased forward contracts in the amount of USD 12.7 million, equivalent to Baht 450.76 million. The contracts are due in July 2017 (2015: USD 13 million, equivalent to Baht 473.71 million which the contracts were due in June 2016).

– 108 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Swap contracts

As at 31 December 2016 the Group had purchased a currency swap contract in the amount of USD 0.6 million equivalent to Baht 21 million. The contracts are due in March 2017. (2015: USD 3 million, equivalent to Baht 93 million which the contracts were due in March 2016).

Others

In 2006, the Company entered into two Digital Disc — Movie and Music distributor agreements. The Company has to pay a portion of related income to the vendor from the sale of Digital Disc — Movie and Music, after deduction of discount as stated in the distribution agreements. The agreements were effective from 1 July 2006 and 1 October 2006 onward and terminated on 1 July 2017.

30 EVENTS AFTER THE REPORTING PERIOD

At the Board of Directors’ meeting held on 23 February 2017, the Board approved to propose for approval of cash dividend at the rate of Baht 0.25 per share and the special rate of Baht 0.15 per share, in the totally rate of Baht 0.40 per share, approximately amount to Baht 140.08 million, to the annual general meeting of the shareholders of the Company. The dividends will be paid subject to general shareholders’ meeting approval.

31 THAI FINANCIAL REPORTING STANDARDS (TFRS) NOT YET ADOPTED

A number of new and revised TFRS have been issued but are not yet effective and have not been applied in preparing these financial statements. Those new and revised TFRS that may be relevant to the Group’s operations, which become effective for annual financial periods beginning on or after 1 January 2017, are set out below. The Group does not plan to adopt these TFRS early.

TFRS Topic

TAS 1 (revised 2016) Presentation of Financial Statements TAS 2 (revised 2016) Inventories TAS 7 (revised 2016) Statement of Cash Flows TAS 8 (revised 2016) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (revised 2016) Events after the Reporting Period TAS 12 (revised 2016) Income Taxes TAS 16 (revised 2016) Property, Plant and Equipment TAS 17 (revised 2016) Leases TAS 18 (revised 2016) Revenue TAS 19 (revised 2016) Employee Benefits TAS 21 (revised 2016) The Effects of Changes in Foreign Exchange Rates TAS 23 (revised 2016) Borrowing Costs TAS 24 (revised 2016) Related Party Disclosures TAS 26 (revised 2016) Accounting and Reporting by Retirement Benefit Plans TAS 27 (revised 2016) Separate Financial Statements TAS 28 (revised 2016) Investments in Associates and Joint Ventures TAS 33 (revised 2016) Earnings per Share TAS 34 (revised 2016) Interim Financial Reporting TAS 36 (revised 2016) Impairment of Assets TAS 37 (revised 2016) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2016) Intangible Assets TAS 40 (revised 2016) Investment Property TAS 105 (revised 2016) Accounting for Investments in Debt and Equity Securities TAS 107 (revised 2016) Financial Instruments: Disclosure and Presentation TFRS 8 (revised 2016) Operating Segments TFRS 10 (revised 2016) Consolidated Financial Statements TFRS 12 (revised 2016) Disclosure of Interests in Other Entities TFRS 13 (revised 2016) Fair Value Measurement

– 109 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

TFRS Topic TSIC 25 (revised 2016) Income Taxes — Changes in the Tax Status of an Entity or its Shareholders TFRIC 1 (revised 2016) Changes in Existing Decommissioning, Restoration and Similar Liabilities TFRIC 4 (revised 2016) Determining whether an Arrangement contains a Lease TFRIC 10 (revised 2016) Interim Financial Reporting and Impairment TFRIC 13 (revised 2016) Customer Loyalty Programmes TFRIC 14 (revised 2016) TAS 19 (revised 2016) Employee Benefits — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction FAP Announcement no. 5/2559 Accounting guidance for derecognition of financial assets and financial liabilities

The Group has made a preliminary assessment of the potential initial impact on the consolidated and separate financial statements of these new and revised TFRS and expects that there will be no material impact on the financial statements in the period of initial application.

– 110 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015

Independent Auditor’s Report

To the shareholders of SiS Distribution (Thailand) Public Company Limited

I have audited the accompanying consolidated and separate financial statements of SiS Distribution (Thailand) Public Company Limited and its subsidiaries (the ‘‘Group’’), and of SiS Distribution (Thailand) Public Company Limited (the ‘‘Company’’), respectively, which comprise the consolidated and separate statements of financial position as at 31 December 2015, the consolidated and separate statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated and Separate Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these consolidated and separate financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

– 111 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Opinion

In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position of the Group and the Company, respectively, as at 31 December 2015 and their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.

(Ekkasit Chuthamsatid)

Certified Public Accountant Registration No. 4195

KPMG Phoomchai Audit Ltd.

Bangkok 18 February 2016

– 112 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF FINANCIAL POSITION

Assets Note Current assets Cash and cash equivalents 5 Trade accounts receivable 4, 6 Other receivables 4, 7 Short-term loans to related parties 4 Inventories 8 Other current assets Total current assets Non-current assets Investments in subsidiaries 9 Investments in associates 10 Other long-term investments 11 Long-term loans to related party 4 Equipment 12 Intangible assets 13 Deferred tax assets 14 Other non-current assets Total non-current assets Total assets	Consolidated financial statements Separate financial statements 31 December 31 December 2015 2014 2015 2014 (in thousand Baht) 49,490 109,171 31,699 89,275 2,045,107 1,951,441 1,907,230 1,729,693 520,292 532,575 316,452 431,440 11,523 — 137,000 478,137 1,323,205 1,975,188 1,281,617 1,579,484 3,425 2,782 3,033 2,192 3,953,042 4,571,157 3,677,031 4,310,221 — — 181,758 190,329 — 9,800 — — — 8,571 — — 44,973 — 73,259 — 112,275 120,474 112,096 115,925 34,522 39,146 34,522 39,146 271,172 284,182 216,781 206,077 11,707 12,118 11,689 11,823 474,649 474,291 630,105 563,300 4,427,691 5,045,448 4,307,136 4,873,521	Consolidated financial statements Separate financial statements 31 December 31 December 2015 2014 2015 2014 (in thousand Baht) 49,490 109,171 31,699 89,275 2,045,107 1,951,441 1,907,230 1,729,693 520,292 532,575 316,452 431,440 11,523 — 137,000 478,137 1,323,205 1,975,188 1,281,617 1,579,484 3,425 2,782 3,033 2,192 3,953,042 4,571,157 3,677,031 4,310,221 — — 181,758 190,329 — 9,800 — — — 8,571 — — 44,973 — 73,259 — 112,275 120,474 112,096 115,925 34,522 39,146 34,522 39,146 271,172 284,182 216,781 206,077 11,707 12,118 11,689 11,823 474,649 474,291 630,105 563,300 4,427,691 5,045,448 4,307,136 4,873,521
		4,310,221
		190,329 — — — 115,925 39,146 206,077 11,823
		563,300
		4,873,521

The accompanying notes are an integral part of these financial statements.

– 113 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Liabilities and equity Note Current liabilities Bank overdrafts and short-term loans from financial institutions 15 Trade accounts payable 4, 16 Other payables 4, 17 Short-term loans from subsidiary 4 Income tax payable Other current liabilities Total current liabilities Non-current liabilities Provision for cost of assets dismantlement Employee benefit obligations 18 Total non-current liabilities Total liabilities Equity Share capital: 19 Authorised share capital Issued and paid-up share capital Premium on ordinary shares 19 Retained earnings Appropriated Legal reserve 20 Unappropriated Total equity Total liabilities and equity	Consolidated financial statements Separate financial statements 31 December 31 December 2015 2014 2015 2014 (in thousand Baht) 1,258,005 2,427,594 1,093,005 2,171,594 1,245,065 804,384 1,207,273 763,592 260,842 267,055 246,948 236,590 — — — 49,000 16,571 5,643 16,571 5,643 17,975 15,809 17,361 15,333 2,798,458 3,520,485 2,581,158 3,241,752 3,960 3,960 3,960 3,960 38,535 33,076 38,535 33,076 42,495 37,036 42,495 37,036 2,840,953 3,557,521 2,623,653 3,278,788 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 766,104 667,293 862,849 774,099 1,586,738 1,487,927 1,683,483 1,594,733 4,427,691 5,045,448 4,307,136 4,873,521	Consolidated financial statements Separate financial statements 31 December 31 December 2015 2014 2015 2014 (in thousand Baht) 1,258,005 2,427,594 1,093,005 2,171,594 1,245,065 804,384 1,207,273 763,592 260,842 267,055 246,948 236,590 — — — 49,000 16,571 5,643 16,571 5,643 17,975 15,809 17,361 15,333 2,798,458 3,520,485 2,581,158 3,241,752 3,960 3,960 3,960 3,960 38,535 33,076 38,535 33,076 42,495 37,036 42,495 37,036 2,840,953 3,557,521 2,623,653 3,278,788 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 766,104 667,293 862,849 774,099 1,586,738 1,487,927 1,683,483 1,594,733 4,427,691 5,045,448 4,307,136 4,873,521
		3,241,752
		3,960 33,076
		37,036
		3,278,788
		350,199
		350,199 435,415 35,020 774,099
		1,594,733
		4,873,521

The accompanying notes are an integral part of these financial statements.

– 114 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF INCOME

Note
Income
Revenue from sale of goods
4
Revenue from rendering of services
Other income
4, 22
Gain on exchange rate
Gain from loss of controlling
interests in subsidiary
Total income
Expenses
Cost of sale of goods
4, 24
Cost of rendering of services
Selling expenses
24
Administrative expenses
4, 24
Loss on exchange rate
Finance costs
Total expenses
Share of loss of investments in
associates
Profit before income tax expense
Income tax expense
25
Profit for the year
Profit (loss) attributable to:
Owners of the Company
Non-controlling interests
Profit for the year
Basic earnings per share (Baht)
26

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2015
2014
2015
2014
(in thousand Baht)
17,969,111 18,518,529
15,631,725 15,043,033
54,201
35,822
28,947
34,339
73,159
38,289
89,652
97,287
23,522
—
19,723
—
895
—
—
—
18,120,888 18,592,640
15,770,047 15,174,659
17,028,185 17,564,472
14,828,435 14,235,142
29,577
26,819
29,573
25,605
227,060
264,514
204,126
254,309
455,747
415,270
447,564
405,783
—
2,694
—
4,202
64,346
87,533
59,113
80,682
17,804,915 18,361,302
15,568,811 15,005,723
(83,475)
—
—
—
232,498
231,338
201,236
168,936
(66,160)
(47,244)
(42,446)
(34,435)
166,338
184,094
158,790
134,501
168,851
184,094
158,790
134,501
(2,513)
—
—
—
166,338
184,094
158,790
134,501
0.48
0.53
0.45
0.38

The accompanying notes are an integral part of these financial statements.

– 115 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF COMPREHENSIVE INCOME

Note Profit for the year Other comprehensive income Items that will never be reclassified to profit or loss Actuarial gains from defined benefit plan 18 Income tax on other comprehensive income 25 Other comprehensive income for the year — net of income tax Total comprehensive income for the year Profit (loss) attributable to: Owners of the Company Non-controlling interests Profit for the year	Consolidated financial statements Separate financial statements For the year ended 31 December For the year ended 31 December 2015 2014 2015 2014 (in thousand Baht) 166,338 184,094 158,790 134,501 — 5,583 — 5,583 — (1,117) — (1,117) — 4,466 — 4,466 166,338 188,560 158,790 138,967 168,851 188,560 158,790 138,967 (2,513) — — — 166,338 188,560 158,790 138,967

The accompanying notes are an integral part of these financial statements.

– 116 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

		Consolidated financial statements	Consolidated financial statements
Issued and paid-up share capital 350,199 — — — — — 350,199 350,199 — — — — — 350,199	Share premium 435,415 — — — — — 435,415 435,415 — — — — — 435,415	Retained earnings Legal reserve Unappropriated (in thousand Baht) 35,020 548,773 — (70,040) — (70,040) — 184,094 — 4,466 — 188,560 35,020 667,293 35,020 667,293 — — — (70,040) — (70,040) — 168,851 — 168,851 35,020 766,104	Equity attributable to owners of the Company 1,369,407 (70,040) (70,040) 184,094 4,466 188,560 1,487,927 1,487,927 — (70,040) (70,040) 168,851 168,851 1,586,738	Non- controlling interests — — — — — — — — 2,513 — 2,513 (2,513) (2,513) —	Total equity 1,369,407 (70,040
					(70,040
					184,094 4,466
					188,560
					1,487,927
					1,487,927 2,513 (70,040
					(67,527
					166,338
					166,338
					1,586,738

The accompanying notes are an integral part of these financial statements.

– 117 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

Separate financial statements

		Separate financial statements
Note Year ended 31 December 2014 Balance at 1 January 2014 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Dividend to owners of the Company 27 Total contributions by and distributions to owners of the Company Comprehensive income for the year Profit Other comprehensive income Actuarial gains from defined benefit plan — net of tax Total comprehensive income for the year Balance at 31 December 2014 Year ended 31 December 2015 Balance at 1 January 2015 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Dividend to owners of the Company 27 Total contributions by and distributions to owners of the Company Comprehensive income for the year Profit and other comprehensive income Total comprehensive income for the year Balance at 31 December 2015	Issued and paid-up share capital 350,199 — — — — — 350,199 350,199 — — — — 350,199	Retained earnings Share premium Legal reserve Unappropriated (in thousand Baht) 435,415 35,020 705,172 — — (70,040) — — (70,040) — — 134,501 — — 4,466 — — 138,967 435,415 35,020 774,099 435,415 35,020 774,099 — — (70,040) — — (70,040) — — 158,790 — — 158,790 435,415 35,020 862,849	Total equity 1,525,806 (70,040
			(70,040
			134,501 4,466
			138,967
			1,594,733
			1,594,733 (70,040
			(70,040
			158,790
			158,790
			1,683,483

The accompanying notes are an integral part of these financial statements.

– 118 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CASH FLOWS

Note
Cash flows from operating activities
Profit for the year
Adjustments for
Depreciation
12
Amortisation of intangible assets
13
Interest income
22
Finance costs
Unrealised loss on exchange
(Gain) loss on disposal of equipment
Bad debts and doubtful debts expense
6
Provision of allowance for obsolete and
defective stocks (reversal)
8
Employee benefit obligations
18
Impairment losses on investment in subsidiary
Impairment losses on other long-term investments
9, 11
Share of loss of investments in associates
Gain from loss of controlling interests in subsidiary
Income tax expense
25
Changes in operating assets and liabilities
Trade accounts receivable
Other receivables
Inventories
Other current assets
Other non-current assets
Trade accounts payable
Other payables
Other current liabilities
Employee benefit obligations paid
Cash generate from operating activities
Income tax paid
Net cash provided by operating activities

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2015
2014
2015
2014
(in thousand Baht)
166,338
184,094
158,790
134,501
33,229
28,765
32,327
28,292
5,883
5,725
5,883
5,725
(6,927)
(6,180)
(19,815)
(28,205)
64,346
87,533
59,113
80,682
761
3,262
786
2,948
(1,309)
384
(179)
(171)
13,979
2,445
12,517
2,502
(40,003)
74,659
(2,238)
36,729
6,059
6,022
6,059
6,022
—
—
8,571
—
8,571
—
—
—
83,475
—
—
—
(895)
—
—
—
66,160
47,244
42,446
34,435
399,667
433,953
304,260
303,460
(108,978)
344,144
(190,054)
458,622
(9,794)
(49,269)
113,525
(109,169)
607,371
(357,799)
300,105
(34,356)
(643)
17,638
(841)
15,644
412
(303)
134
(8)
444,649
1,306
442,895
(18,571)
114,717
26,602
11,057
3,298
2,208
(2,634)
2,028
(2,952)
(600)
—
(600)
—
1,449,009
413,638
982,509
615,968
(42,222)
(48,291)
(42,222)
(48,291)
1,406,787
365,347
940,287
567,677

The accompanying notes are an integral part of these financial statements.

– 119 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CASH FLOWS

Note
Cash flows from investing activities
Interest received
Purchase of equipment
12
Sale of equipment
Proceeds (payments) on loans to related parties
Purchase of intangible assets
13
Net cash outflow on investment in associates
7
Net cash outflow on investment in subsidiary
Net cash provided by (used in) investing activities
Cash flows from financing activities
Interest paid
Dividends paid to owners of the Company
27
Net repayment for loan from financial institutions
Net proceeds from loan from subsidiary
Repayment of short-term loan from subsidiary
4
Net cash used in financing activities
Net increase (decrease) in cash and
cash equivalents
Cash and cash equivalents from loss control’s
subsidiary
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
5

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2015
2014
2015
2014
(in thousand Baht)
6,927
6,180
21,278
27,664
(29,976)
(20,297)
(29,400)
(15,599)
6,255
1,500
1,081
1,348
(87,959)
—
267,878
(41,087)
(1,259)
(6,285)
(1,259)
(6,285)
(44,985)
(9,800)
—
—
—
—
—
(60,000)
(150,997)
(28,702)
259,578
(93,959)
(65,007)
(83,224)
(59,812)
(81,228)
(70,040)
(70,040)
(70,040)
(70,040)
(1,169,589)
(148,143) (1,078,589)
(343,922)
—
—
—
49,000
—
—
(49,000)
—
(1,304,636)
(301,407) (1,257,441)
(446,190)
(48,846)
35,238
(57,576)
27,528
(10,835)
—
—
—
109,171
73,933
89,275
61,747
49,490
109,171
31,699
89,275

The accompanying notes are an integral part of these financial statements.

– 120 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Note	Contents
1	General information
2	Basis of preparation of the financial statements
3	Significant accounting policies
4	Related parties
5	Cash and cash equivalents
6	Trade accounts receivable
7	Other receivables
8	Inventories
9	Investments in subsidiaries
10	Investment in associates
11	Other long-term investments
12	Equipment
13	Intangible assets
14	Deferred tax
15	Interest-bearing liabilities
16	Trade accounts payable
17	Other payables
18	Employee benefit obligations
19	Share capital
20	Reserves
21	Operating Segment
22	Other income
23	Employee benefit expenses
24	Expenses by nature
25	Income tax expense
26	Earnings per share
27	Dividends
28	Financial instruments
29	Commitments with non-related parties
30	Events after the reporting period
31	Thai Financial Reporting Standards (TFRS) not yet adopted

– 121 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of the financial statements.

1 GENERAL INFORMATION

The Company was listed on the Stock Exchange of Thailand on 21 June 2004.

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(a) Statement of compliance

The FAP has issued new and revised TFRS effective for annual accounting periods beginning on or after 1 January 2015. The initial application of these new and revised TFRS has resulted in changes in certain of the Group’s accounting policies. These changes have no material effect on the financial statements.

In addition to the above new and revised TFRS, the FAP has issued a number of other new and revised TFRS which are effective for annual financial periods beginning on or after 1 January 2016 and have not been adopted in the preparation of these financial statements. Those new and revised TFRS that are relevant to the Group’s operations are disclosed in note 31.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items, which are measured on an alternative basis on each reporting date.

Items Measurement bases Derivative financial instruments Fair value Net defined benefit liability Present value of the defined benefit obligation, limited as explained in Note 3(n)

– 122 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(c) Functional and presentation currency

The financial statements are presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated.

(d) Use of estimates and judgements

The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties

Information about significant areas of estimation uncertainties that have a significant risk of resulting in a material adjustments to the amounts recognised in the financial statements is included in the following notes:

Note 3(r) Current and deferred taxation Note 14 Utilisation of tax losses Note 18 Measurement of defined benefit obligations Note 28 Valuation of financial instruments

Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Group Audit Committee.

. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

– 123 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in notes 28 financial instruments.

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Basis of consolidation

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the ‘‘Group’’) and the group’s interests in associate.

Subsidiaries

Loss of control

Interests in equity — accounted investees

The Group’s interests in equity-accounted investees was interests in associates.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

– 124 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(b) Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date.

Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency at the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in profit or loss.

(c) Derivative financial instruments

(d) Hedging

Fair value hedges

(e) Cash and cash equivalents

(f) Trade and other accounts receivable

Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

– 125 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(g) Inventories

Inventories are measured at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost principle, and comprises all costs of purchase or other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

The Group sets an allowance for the decline in value of obsolete and defective stock by management reviewing.

(h) Investment

Investment in subsidiaries and associates

Equity securities

Equity securities which are not marketable are stated at cost less any impairment losses.

Disposal of investments

(i) Equipment

Recognition and measurement

Owned assets

Equipment is stated at cost less accumulated depreciation and impairment losses.

When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

– 126 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Subsequent costs

Depreciation

Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is charged to profit and loss on a straight-line basis over the estimated useful lives of each component of an item of equipment. The estimated useful lives are as follows:

Vehicles 5 years Furniture & fixtures 5 years Computer & office equipment 3 and 5 years Leasehold improvements 3, 5, 10 and 12 years

No depreciation is provided on asset under construction.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(j) Intangible assets

Software licences

Software licences that are acquired by the Group, which have finite useful lives, are stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(k) Impairment

– 127 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Calculation of recoverable amount

Reversals of impairment

(l) Interest-bearing liabilities

(m) Trade and other accounts payable

Trade and other accounts payable are stated at cost.

(n) Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

Defined benefit plans

– 128 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Short-term employee benefits

(o) Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts.

Sale of goods and services rendered

Revenue from the sale of goods for Digital Disc — Movie and Music products after provision for sales return is recognised when have been sold to the customer.

Revenue from services is recognised when services are rendered.

Interest income

Interest income is recognised in profit or loss as it accrues.

(p) Finance costs

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration.

(q) Operating leases

Contingent rentals are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

– 129 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Determining whether an arrangement contains a lease

(r) Income tax

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

– 130 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(s) Earnings per share

(t) Segment reporting

4 RELATED PARTIES

Relationships with subsidiaries and associate are described in notes 9 and 10. Relationship with other related parties were as follows:

	Country of
	incorporation/
Name of the entities	nationality	Nature of relationships
Key management personnel	Thailand	Persons having authority and responsibility for
	Singapore	planning, directing and controlling the
		activities of the entity, directly or indirectly,
		including any director (whether executive or
		otherwise) of the Group.
SiS International Holdings Ltd.	Bermuda	Ultimate parent of the Group and some common
		directors
SiS Technologies (Thailand) Pte. Ltd.	Singapore	Under the same control of the ultimate parent
		company
Nippon Pack Trading Co., Ltd.	Thailand	Associate, 49% shareholding by the subsidiary
		company
Wiko Mobile (Thailand) Co., Ltd.	Thailand	Associate, 45% shareholding by the subsidiary
		company
Alliance & Link Corporation Co., Ltd	Thailand	15% shareholding by the subsidiary company
Click Connect Co., Ltd.	Thailand	15% shareholding by the subsidiary company
Hardware House International Co., Ltd.	Thailand	Indirect shareholding by the subsidiary company
Direct subsidiaries
SiS Venture Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding
Qool Distribution (Thailand) Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding

– 131 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The pricing policies for particular types of transactions are explained further below:

Transactions	Pricing policies
Sale of goods	Market price plus actual related expenses
Management income/expense	Contractually agreed price
Purchase of good	Actual cost plus actual related expenses
Interest income/expense of loan to/from	Reference from interest rate of financial institution

Significant transactions for the years ended 31 December with related parties are summarised as follows:

Year ended 31 December Ultimate parent company Management fee Subsidiary Sale of goods Management income Interest income Purchase of goods Interest expense Associates Sale of goods Other income Interest income Purchase of goods Related party Sale of goods Key management Key management personnel Compensation Short-term employee benefit Other long-term benefits Total key management personnel compensation	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 11,252 11,574 9,789 9,402 — — 582 — — — 33,871 37,148 — — 13,747 22,420 — — 2,439 — — — 265 167 16,595 — 5,563 — 34,135 — 5,265 — 2,613 — 2,198 — 498,646 — — — 45 277 45 899 55,231 48,182 50,588 43,172 1,997 1,933 1,789 1,703 57,228 50,115 52,377 44,875	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 11,252 11,574 9,789 9,402 — — 582 — — — 33,871 37,148 — — 13,747 22,420 — — 2,439 — — — 265 167 16,595 — 5,563 — 34,135 — 5,265 — 2,613 — 2,198 — 498,646 — — — 45 277 45 899 55,231 48,182 50,588 43,172 1,997 1,933 1,789 1,703 57,228 50,115 52,377 44,875
		44,875

– 132 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Balances as at 31 December with related parties are as follows:

Trade accounts receivable from associates
Nippon Pack Trading Co., Ltd.
Wiko Mobile (Thailand) Co., Ltd.
Trade accounts receivable from other related
parties
Hardware House International Co., Ltd.
Click Connect Co., Ltd.
Less allowance for doubtful accounts
Net
Other receivables from subsidiary
SiS Venture Co., Ltd.
Other receivables from associates
Nippon Pack Trading Co., Ltd.
Wiko Mobile (Thailand) Co., Ltd.
Other receivable from other related parties
Hardware House International Co., Ltd.
Less allowance for doubtful accounts
Advance payment to subsidiary
Wiko Mobile (Thailand) Co., Ltd.
Accrued income from subsidiary
Qool Distribution (Thailand) Co., Ltd.
Interest receivable from subsidiary
Qool Distribution (Thailand) Co., Ltd.
Interest receivable from associates
Nippon Pack Trading Co., Ltd.
Wiko Mobile (Thailand) Co., Ltd.
Total

Consolidated
financial statements
Separate
financial statements
2015
2014
2015
2014
(in thousand Baht)
316
—
316
—
920
—
920
—
46,223
46,223
46,223
46,223
—
32
—
17
47,459
46,255
47,459
46,240
(46,223)
(46,223)
(46,223)
(46,223)
1,236
32
1,236
17
—
—
54
—
285
—
—
—
28,284
—
—
—
557,087
557,087
541,542
541,542
(557,087)
(557,087)
(541,542)
(541,542)
28,569
—
54
—
—
—
—
116,973
—
—
3,698
2,754
—
—
—
2,215
129
—
—
—
752
—
752
—
881
—
752
—

– 133 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The Company and its subsidiary (Qool Distribution (Thailand) Co., Ltd.) have an agreement on consignment with a related company (Hardware House International Co., Ltd.) which has notified the call for return all consignment from the related company in November 2012 because of the default of the terms of the agreement for consignment. The Company and its subsidiary are in the process to reclaim those losses from the related company. As at 31 December 2015 the receivable from the loss of consignment amounted to approximately Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in separate financial statements, respectively (31 December 2014: Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in the separate financial statements, respectively). The Company is undertaking litigation proceedings, therefore, pending the outcome of these proceedings, the Company and its subsidiary has estimated the allowance for doubtful account, amounted to Baht 557.09 million and 541.54 million, respectively.

Loans to related party Interest rate 2015 2014 (% per annum) Short-term loans to Subsidiaries Qool Distribution (Thailand) Co., Ltd. 3.00 4.00–4.50 SiS Venture Co., Ltd. 3.25 — Total Associate Nippon Pack Trading Co., Ltd. 5.25 — Less share of loss exceeds its interest in associates Total Grand Total Long-term loans to Associate Wiko Mobile (Thailand) Co., Ltd. 3.03–3.15 — Less share of loss exceeds its interest in associates Grand Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) — — 127,000 478,137 — — 10,000 — — — 137,000 478,137 14,700 — — — (3,177) — — — 11,523 — — — 11,523 — 137,000 478,137 73,259 — 73,259 — (28,286) — — — 44,973 — 73,259 —	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) — — 127,000 478,137 — — 10,000 — — — 137,000 478,137 14,700 — — — (3,177) — — — 11,523 — — — 11,523 — 137,000 478,137 73,259 — 73,259 — (28,286) — — — 44,973 — 73,259 —
		478,137
		— —
		—
		478,137
		— —
		—

– 134 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Movements during the years ended 31 December of loans to related parties were as follows:

	Consolidated	Consolidated		Separate
	financial statements		financial statements
	2015	2014	2015		2014
		(in thousand	Baht)
Short-term loans to
Subsidiaries
At 1 January	—	—	478,137		437,050
Increase (decreased)	—	—	(341,137)		41,087
At 31 December	—	—	137,000		478,137
Associate
At 1 January	—	—		—	—
Increase	14,700	—		—	—
Share of loss exceeds its interest in associates	(3,177)	—		—	—
At 31 December	11,523	—		—	—
Short-term loans to related parties were due on demand.
	Consolidated			Separate
	financial statements		financial statements
	2015	2014	2015		2014
		(in thousand	Baht)
Long-term loans
Associate
At 1 January	—	—		—	—
Increase	73,259	—	73,259		—
Share of loss exceeds its interest in associates	(28,286)	—		—	—
At 31 December	44,973	—	73,259		—

– 135 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

			Consolidated	Consolidated	Consolidated		Separate	Separate
		financial		statements			financial	statements
			2015		2014		2015		2014
					(in thousand		Baht)
Trade payable to associate
Wiko Mobile (Thailand) Co., Ltd.			11,072			—	—			—
Trade payable to other related parties
Alliance & Link Corporation Co., Ltd.			86			86	86			86
			11,158			86	86			86
Other payable to ultimate parent company
SiS International Holdings Ltd.			841		1,847		744			1,544
Accrued expense ultimate parent company
SiS International Holdings Ltd.			870		806		733			728
Accrued interest expense to subsidiary
SiS Venture Co., Ltd.			—			—	—			167
				Consolidated			Separate
Short-term loans from subsidiary	Interest rate		financial statements				financial statements
	2015	2014		2015		2014	2015		2014
	(% per annum)				(in thousand Baht)
SiS Venture Co., Ltd.	—	4.40			—	—		—	49,000

Movements during the years ended 31 December of short-term loans from related party were as follows:

Subsidiary At 1 January Increase (decrease) At 31 December	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) — — 49,000 — — — (49,000) 49,000 — — — 49,000	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) — — 49,000 — — — (49,000) 49,000 — — — 49,000
		49,000

– 136 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Significant agreements with related parties

Management income

The Company has an agreement with a subsidiary (Qool Distribution (Thailand) Co., Ltd.) for sharing the combined staff and assets cost. The parties agreed to enter into new agreement effective from 1 January 2013 to change the monthly rate of management fee to Baht 1.50 million per month plus 1% of the net sales of the subsidiary for each month.

Management fee

5 CASH AND CASH EQUIVALENTS

Cash on hand Cash at banks – current accounts Cash at banks – savings accounts Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 164 204 164 204 (58,903) (43,067) (60,870) (46,210) 108,229 152,034 92,405 135,281 49,490 109,171 31,699 89,275

Cash and cash equivalents of the Group and the Company as at 31 December 2015 and 2014 were denominated entirely in Thai Baht.

6 TRADE ACCOUNTS RECEIVABLE

Note Related parties 4 Other parties Total Less allowance for doubtful accounts Net Bad debts and doubtful debts expenses for the year	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 47,459 46,255 47,459 46,240 2,280,022 2,186,542 2,138,506 1,964,359 2,327,481 2,232,797 2,185,965 2,010,599 (282,374) (281,356) (278,735) (280,906) 2,045,107 1,951,441 1,907,230 1,729,693 13,979 2,445 12,517 2,502

– 137 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Aging analysis for trade accounts receivable were as follows:

Related parties Within credit terms Overdue: Less than 3 months Over 12 months Less allowance for doubtful accounts Other parties Within credit terms Overdue: Less than 3 months 3–6 months 6–12 months Over 12 months Less allowance for doubtful accounts Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 1,236 23 1,236 8 — 9 — 9 46,223 46,223 46,223 46,223 47,459 46,255 47,459 46,240 (46,223) (46,223) (46,223) (46,223 1,236 32 1,236 17 1,589,499 1,451,587 1,471,341 1,354,211 433,805 436,701 415,635 383,856 31,820 74,817 30,966 3,110 14,314 20,980 13,103 20,725 210,584 202,457 207,461 202,457 2,280,022 2,186,542 2,138,506 1,964,359 (236,151) (235,133) (232,512) (234,683 2,043,871 1,951,409 1,905,994 1,729,676 2,045,107 1,951,441 1,907,230 1,729,693	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 1,236 23 1,236 8 — 9 — 9 46,223 46,223 46,223 46,223 47,459 46,255 47,459 46,240 (46,223) (46,223) (46,223) (46,223 1,236 32 1,236 17 1,589,499 1,451,587 1,471,341 1,354,211 433,805 436,701 415,635 383,856 31,820 74,817 30,966 3,110 14,314 20,980 13,103 20,725 210,584 202,457 207,461 202,457 2,280,022 2,186,542 2,138,506 1,964,359 (236,151) (235,133) (232,512) (234,683 2,043,871 1,951,409 1,905,994 1,729,676 2,045,107 1,951,441 1,907,230 1,729,693
		46,240 (46,223
		17
		1,354,211 383,856 3,110 20,725 202,457
		1,964,359 (234,683
		1,729,676
		1,729,693

The normal credit term granted by the Group is ranging from 30 days to 90 days.

The currency denomination of trade accounts receivable as at 31 December 2015 and 2014 were as follows:

Thai Baht (Baht) United States Dollars (USD) Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 2,044,397 1,951,441 1,906,520 1,729,693 710 — 710 — 2,045,107 1,951,441 1,907,230 1,729,693	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 2,044,397 1,951,441 1,906,520 1,729,693 710 — 710 — 2,045,107 1,951,441 1,907,230 1,729,693
		1,729,693

– 138 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

7 OTHER RECEIVABLES

Note
Related parties
Other receivables
4
Receivable from losses of consignment
4
Advance payment
4
Accrued income
4
Interest receivable
4
Less allowance for doubtful accounts
Net
Other parties
Account receivable from Revenue Department
Accrued income
Prepaid expenses
Others
Total
Total
8
INVENTORIES

Consolidated
financial statements
Separate
financial statements
2015
2014
2015
2014
(in thousand Baht)
28,569
—
54
—
557,087
557,087
541,542
541,542
—
—
—
116,973
—
—
3,698
2,754
881
—
752
2,215
586,537
557,087
546,046
663,484
(557,087)
(557,087)
(541,542)
(541,542)
29,450
—
4,504
121,942
397,165
440,960
256,118
269,996
49,314
50,215
34,967
29,175
10,729
27,568
7,005
7,325
33,634
13,832
13,858
3,002
490,842
532,575
311,948
309,498
520,292
532,575
316,452
431,440

Consolidated
financial statements
Separate
financial statements
2015
2014
2015
2014
(in thousand Baht)
1,369,197
2,055,219
1,322,747
1,616,363
21,880
10,240
21,880
10,240
13,169
27,967
13,146
27,926
68,123
70,929
67,580
70,929
1,472,369
2,164,355
1,425,353
1,725,458
(149,164)
(189,167)
(143,736)
(145,974)
1,323,205
1,975,188
1,281,617
1,579,484
17,068,188
17,489,813
14,830,673
14,198,413
—
74,659
—
36,729
(40,003)
—
(2,238)
—
17,028,185
17,564,472
14,828,435
14,235,142

– 139 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

9 INVESTMENTS IN SUBSIDIARIES

At 1 January Acquisitions Allowance for impairment At 31 December	Separate financial statements 2015 2014 (in thousand Baht) 190,329 130,329 — 60,000 (8,571) — 181,758 190,329	Separate financial statements 2015 2014 (in thousand Baht) 190,329 130,329 — 60,000 (8,571) — 181,758 190,329
		190,329

Investments in subsidiaries as at 31 December 2015 and 2014, and dividend income from those investments for the years then ended, were as follows:

Type of business Ownership interest 2015 2014 (%) Subsidiaries SiS Venture Co., Ltd. Holding Investment 99.99 99.99 Qool Distribution (Thailand) Co., Ltd Trading 99.99 99.99 Total	Paid-up 2015 120,000 200,000	capital 2014 120,000 200,000	Separated financial statements Cost Impairment At cost-net 2015 2014 2015 2014 2015 2014 (in thousand Baht) 120,000 120,000 59,601 51,030 60,399 68,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 138,236 129,665 181,758 190,329	Separated financial statements Cost Impairment At cost-net 2015 2014 2015 2014 2015 2014 (in thousand Baht) 120,000 120,000 59,601 51,030 60,399 68,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 138,236 129,665 181,758 190,329	Separated financial statements Cost Impairment At cost-net 2015 2014 2015 2014 2015 2014 (in thousand Baht) 120,000 120,000 59,601 51,030 60,399 68,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 138,236 129,665 181,758 190,329	Separated financial statements Cost Impairment At cost-net 2015 2014 2015 2014 2015 2014 (in thousand Baht) 120,000 120,000 59,601 51,030 60,399 68,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 138,236 129,665 181,758 190,329	Separated financial statements Cost Impairment At cost-net 2015 2014 2015 2014 2015 2014 (in thousand Baht) 120,000 120,000 59,601 51,030 60,399 68,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 138,236 129,665 181,758 190,329	Separated financial statements Cost Impairment At cost-net 2015 2014 2015 2014 2015 2014 (in thousand Baht) 120,000 120,000 59,601 51,030 60,399 68,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 319,994 138,236 129,665 181,758 190,329	Dividend income 2015 2014 — — — — — —	Dividend income 2015 2014 — — — — — —
	320,000	320,000	319,994	319,994	138,236	129,665	181,758	190,329	—	—

All subsidiaries were incorporated in Thailand.

In 2015, the Company set up allowance for impairment in the value of SiS Venture Co., Ltd. amounting to Baht 8.6 million.

10 INVESTMENT IN ASSOCIATES

For the period ended 31 December At 1 January Share of loss of associates Reclassification from indirect subsidiary Acquisitions At 31 December	Consolidated financial statements 2015 2014 (in thousand Baht) 9,800 — (52,013) — (2,772) — 44,985 9,800 — 9,800	Consolidated financial statements 2015 2014 (in thousand Baht) 9,800 — (52,013) — (2,772) — 44,985 9,800 — 9,800
		9,800

– 140 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2015, the Group’s share of loss of investment in Wiko Mobile (Thailand) Co., Ltd. amounted to Baht 70.5 million. As at 31 December 2015, the Group’s accumulated share of loss of investment in Wiko Mobile (Thailand) Co., Ltd. exceeded the carrying amount of the investment in shares. The excess loss is adjusted to loan to Wiko Mobile (Thailand) Co., Ltd. Future reversals of losses are first be applied to the loan investment to the extent that such loss is previously applied against this loan investment and subsequently recognised in the investment in shares.

Moreover, for the year ended 31 December 2015, the Group’s share of loss of investment in Nippon Pack Trading Co., Ltd. amounted to Baht 13.0 million. As at 31 December 2015, the Group’s accumulated share of loss of investment in Nippon Pack Trading Co., Ltd. exceeded the carrying amount of the investment in shares. The excess loss is adjusted to loan to Nippon Pack Trading Co., Ltd. Future reversals of losses are first be applied to the loan investment to the extent that such loss is previously applied against this loan investment and subsequently recognised in the investment in shares.

Investments in associate as at 31 December 2015 and 2014, and dividend income for the years then ended, were as follows:

Type of business Ownership interest 2015 2014 (%) Associate Nippon Pack Trading Co., Ltd. Trading and service 49.00 49.00 Wiko Mobile (Thailand) Co., Ltd. Trading 45.00 — Total	Paid-up 2015 20,000 100,000	capital 2014 9,800 —	Consolidated financial statements Cost method Equity method 2015 2014 2015 2014 (in thousand Baht) 9,800 9,800 — 9,800 45,000 — — — 54,800 9,800 — 9,800	Consolidated financial statements Cost method Equity method 2015 2014 2015 2014 (in thousand Baht) 9,800 9,800 — 9,800 45,000 — — — 54,800 9,800 — 9,800	Consolidated financial statements Cost method Equity method 2015 2014 2015 2014 (in thousand Baht) 9,800 9,800 — 9,800 45,000 — — — 54,800 9,800 — 9,800	Consolidated financial statements Cost method Equity method 2015 2014 2015 2014 (in thousand Baht) 9,800 9,800 — 9,800 45,000 — — — 54,800 9,800 — 9,800	Dividend income 2015 2014 — — — — — —	Dividend income 2015 2014 — — — — — —
	120,000	9,800	54,800	9,800	—	9,800	—	—

None of the Group’s associates are publicly listed and consequently do not have published price quotations.

– 141 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Revenue Net loss Current assets Non-current assets Current liabilities Non-current liabilities Net assets Group’s interest in net assets of investee at 1 January Acquisitions Total comprehensive income attributable to the Group Group’s interest in net assets of investee at end of year Elimination of unrealised profit on downstream sales Reclassification from indirect subsidiary Share of loss exceeded the carrying amount of investment adjusted to loan to associates Carrying amount of interest in investee at 31 December	Nippon Pack Trading Co., Ltd. Wiko Mobile (Thailand) Co., Ltd 2015 2014 2015 2014 (in thousand Baht) 13,105 5,181 519,665 — (26,306) (12,917) (154,754) — 16,748 19,331 186,448 — 18,169 3,138 11,920 — (55,142) (16,917) (86,376) — (547) (18) (166,975) — (20,772) 5,534 (54,983) — 9,800 — — — — 9,800 45,000 — (12,890) — (70,013) — (3,090) 9,800 (25,013) — (87) — (501) — — — (2,772) — 3,177 — 28,286 — — 9,800 — —	Nippon Pack Trading Co., Ltd. Wiko Mobile (Thailand) Co., Ltd 2015 2014 2015 2014 (in thousand Baht) 13,105 5,181 519,665 — (26,306) (12,917) (154,754) — 16,748 19,331 186,448 — 18,169 3,138 11,920 — (55,142) (16,917) (86,376) — (547) (18) (166,975) — (20,772) 5,534 (54,983) — 9,800 — — — — 9,800 45,000 — (12,890) — (70,013) — (3,090) 9,800 (25,013) — (87) — (501) — — — (2,772) — 3,177 — 28,286 — — 9,800 — —
		—
		— — —
		— — — —
		—

11 OTHER LONG-TERM INVESTMENTS

Other long-term investment Other non-marketable equity security Less Allowance for impairment Net	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 59,601 59,601 — — 59,601 59,601 — — (59,601) (51,030) — — — 8,571 — —	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 59,601 59,601 — — 59,601 59,601 — — (59,601) (51,030) — — — 8,571 — —
		— —
		—

– 142 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

In 2011, SiS Venture Co., Ltd. set up allowance for impairment in the value of long-term investment in Alliance & Link Corporation Co., Ltd. Baht 51.0 million.

In 2015, SiS Venture Co., Ltd. set up allowance for impairment in the value of long-term investment in Click Connect Co., Ltd. Baht 8.6 million.

12 EQUIPMENT

Cost At 1 January 2014 Additions Disposals At 31 December 2014 and 1 January 2015 Additions Disposals At 31 December 2015 Depreciation At 1 January 2014 Depreciation charge for the year Disposals At 31 December 2014 and 1 January 2015 Depreciation charge for the year Disposals At 31 December 2015 Net book value At 1 January 2014 Owned assets At 31 December 2014 and 1 January 2015 Owned assets At 31 December 2015 Owned assets	Vehicles 7,473 — — 7,473 — — 7,473 5,488 796 — 6,284 602 — 6,886 1,985 1,985 1,189 1,189 587 587	Consolidated financial statements Furniture & fixtures Computer & office equipment Leasehold improvements Construction in progress (in thousand Baht) 16,807 187,438 69,266 10 — 19,584 713 — — (10,782) — (10) 16,807 196,240 69,979 — 413 29,189 374 — (2,785) (38,178) (3,948) — 14,435 187,251 66,405 — 7,816 118,841 18,023 — 1,623 19,628 6,718 — — (8,908) — — 9,439 129,561 24,741 — 1,525 24,603 6,499 — (2,784) (33,233) (3,948) — 8,180 120,931 27,292 — 8,991 68,597 51,243 10 8,991 68,597 51,243 10 7,368 66,679 45,238 — 7,368 66,679 45,238 — 6,255 66,320 39,113 — 6,255 66,320 39,113 —	Total 280,994 20,297 (10,792
			290,499 29,976 (44,911
			275,564
			150,168 28,765 (8,908
			170,025 33,229 (39,965
			163,289
			130,826
			130,826
			120,474
			120,474
			112,275
			112,275

– 143 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Cost At 1 January 2014 Additions Disposals At 31 December 2014 and 1 January 2015 Additions Disposals At 31 December 2015 Depreciation At 1 January 2014 Depreciation charge for the year Disposals At 31 December 2014 and 1 January 2015 Depreciation charge for the year Disposals At 31 December 2015 Net book value At 1 January 2014 Owned assets At 31 December 2014 and 1 January 2015 Owned assets At 31 December 2015 Owned assets	Vehicles 7,473 — — 7,473 — — 7,473 5,488 796 — 6,284 602 — 6,886 1,985 1,985 1,189 1,189 587 587	Furniture & fixtures 16,807 — — 16,807 413 (2,785) 14,435 7,816 1,623 — 9,439 1,525 (2,784) 8,180 8,991 8,991 7,368 7,368 6,255 6,255	Separate financial statements Computer & office equipment Leasehold improvements Construction in progress (in thousand Baht) 185,931 69,266 10 14,886 713 — (9,550) — (10) 191,267 69,979 — 28,613 374 — (33,055) (3,948) — 186,825 66,405 — 118,365 18,023 — 19,156 6,717 — (8,383) — — 129,138 24,740 — 23,701 6,499 — (32,154) (3,948) — 120,685 27,291 — 67,566 51,243 10 67,566 51,243 10 62,129 45,239 — 62,129 45,239 — 66,140 39,114 — 66,140 39,114 —	Total 279,487 15,599 (9,560
				285,526 29,400 (39,788
				275,138
				149,692 28,292 (8,383
				169,601 32,327 (38,886
				163,042
				129,795
				129,795
				115,925
				115,925
				112,096
				112,096

The gross amount of the Group and Company’s fully depreciated equipment that was still in use as at 31 December 2015 amounted to Baht 97.6 million (2014: Baht 90.1 million).

– 144 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

13 INTANGIBLE ASSETS

Cost
At 1 January 2014
Additions
Transfers
At 31 December 2014 and 1 January 2015
Additions
Disposal
At 31 December 2015
Amortisation
At 1 January 2014
Amortisation charge for the year
At 31 December 2014 and 1 January 2015
Amortisation charge for the year
Disposal
At 31 December 2015
Net book value
At 1 January 2014
At 31 December 2014 and 1 January 2015
At 31 December 2015
14
DEFERRED TAX

Consolidated financial statements/
Separate financial statements
Software
licences
Software
licences in
progress
Total
(in thousand Baht)
75,441
3,220
78,661
3,540
2,745
6,285
2,380
(2,380)
—
81,361
3,585
84,946
939
320
1,259
(25,459)
—
(25,459)
56,841
3,905
60,746
40,075
—
40,075
5,725
—
5,725
45,800
—
45,800
5,883
—
5,883
(25,459)
—
(25,459)
26,224
—
26,224
35,366
3,220
38,586
35,561
3,585
39,146
30,617
3,905
34,522

Deferred tax assets and liabilities as at 31 December were as follows:

Deferred tax assets Deferred tax liabilities Net deferred tax assets	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 279,742 290,198 225,272 211,975 (8,570) (6,016) (8,491) (5,898) 271,172 284,182 216,781 206,077

– 145 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Movements in total deferred tax assets and liabilities during the year were as follows:

Deferred tax assets Trade and other accounts receivable Inventories Provisions Loss carry forward Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net Deferred tax assets Trade and other accounts receivable Inventories Provisions Loss carry forward Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net	Consolidated financial statements (Charged)/Credited to: At 1 January 2015 Profit or loss Other comprehensive income (Note 25) (in thousand Baht) 156,730 1,402 — 37,833 (8,000) — 21,420 5,348 — 60,610 (13,243) — 13,605 4,037 — 290,198 (10,456) — (556) (129) — (5,460) (2,425) — (6,016) (2,554) — 284,182 (13,010) — Consolidated financial statements (Charged)/Credited to: At 1 January 2014 Profit or loss Other comprehensive income (Note 25) (in thousand Baht) 156,672 58 — 22,901 14,932 — 15,231 6,189 — 86,890 (26,280) — 13,079 1,643 (1,117) 294,773 (3,458) (1,117) (4,084) 3,528 — (5,528) 68 — (9,612) 3,596 — 285,161 138 (1,117)	At 31 December 2015 158,132 29,833 26,768 47,367 17,642 279,742 (685) (7,885) (8,570) 271,172 At 31 December 2014 156,730 37,833 21,420 60,610 13,605 290,198 (556) (5,460) (6,016) 284,182

– 146 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Deferred tax assets Trade and other accounts receivable Inventories Provisions Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net Deferred tax assets Trade and other accounts receivable Inventories Provisions Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net	At 1 January 2015 153,530 29,195 15,654 13,596 211,975 (438) (5,460) (5,898) 206,077 At 1 January 2014 153,461 21,849 14,960 13,072 203,342 (3,567) (5,528) (9,095) 194,247	Separate financial statements (Charged)/Credited to: Profit or loss Other comprehensive income (Note 25) (in thousand Baht) 1,112 — (448) — 8,666 — 3,967 — 13,297 — (168) — (2,425) — (2,593) — 10,704 — Separate financial statements (Charged)/Credited to: Profit or loss Other comprehensive income (Note 25) (in thousand Baht) 69 — 7,346 — 694 — 1,641 (1,117) 9,750 (1,117) 3,129 — 68 — 3,197 — 12,947 (1,117)	At 31 December 2015 154,642 28,747 24,320 17,563 225,272 (606) (7,885) (8,491) 216,781 At 31 December 2014 153,530 29,195 15,654 13,596 211,975 (438) (5,460) (5,898) 206,077

The loss carry forward will be expired in fiscal year 2017. The deductible temporary differences do not expire under current tax legislation.

– 147 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

15 INTEREST-BEARING LIABILITIES

Current — unsecured Bank overdrafts Trust receipts Loans from financial institutions Loans from financial institutions Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 3 — 3 — 658,002 1,147,594 643,002 1,121,594 600,000 1,280,000 450,000 1,050,000 1,258,005 2,427,594 1,093,005 2,171,594 1,258,005 2,427,594 1,093,005 2,171,594	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 3 — 3 — 658,002 1,147,594 643,002 1,121,594 600,000 1,280,000 450,000 1,050,000 1,258,005 2,427,594 1,093,005 2,171,594 1,258,005 2,427,594 1,093,005 2,171,594
		2,171,594
		2,171,594

The periods to maturity of interest-bearing liabilities, excluding finance lease liabilities, as at 31 December was as follows:

Within one year Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 1,258,005 2,427,594 1,093,005 2,171,594 1,258,005 2,427,594 1,093,005 2,171,594	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 1,258,005 2,427,594 1,093,005 2,171,594 1,258,005 2,427,594 1,093,005 2,171,594
		2,171,594

Under the term of the loan agreements, the Company has to comply with all terms and conditions which were specified in the agreements such as maintaining the debt to equity ratio, etc.

Interest-bearing liabilities of the Group and the Company as at 31 December 2015 and 2014 were denominated entirely in Thai Baht.

16 TRADE ACCOUNTS PAYABLE

Note Related parties 4 Other parties Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 11,158 86 86 86 1,233,907 804,298 1,207,187 763,506 1,245,065 804,384 1,207,273 763,592	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 11,158 86 86 86 1,233,907 804,298 1,207,187 763,506 1,245,065 804,384 1,207,273 763,592
		763,592

– 148 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The currency denomination of trade accounts payable as at 31 December 2015 and 2014 were as follows:

Thai Baht (Baht) United States Dollars (USD) Total 17 OTHER PAYABLES	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 1,036,229 581,045 999,077 541,107 208,836 223,339 208,196 222,485 1,245,065 804,384 1,207,273 763,592	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 1,036,229 581,045 999,077 541,107 208,836 223,339 208,196 222,485 1,245,065 804,384 1,207,273 763,592
		763,592

Note Related parties Other payables 4 Accrued expenses 4 Accrued interest expenses 4 Total Other parties Accrued marketing expenses Accrued employee benefit expenses Other payables Advance received Accrued intangible assets Others Total Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 841 1,847 744 1,544 870 806 733 728 — — — 167 1,711 2,653 1,477 2,439 133,840 107,099 121,600 78,269 62,772 73,248 62,772 73,248 26,404 39,784 25,312 38,887 9,976 10,550 9,976 10,550 11,575 11,575 11,575 11,575 14,564 22,146 14,236 21,622 259,131 264,402 245,471 234,151 260,842 267,055 246,948 236,590	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 841 1,847 744 1,544 870 806 733 728 — — — 167 1,711 2,653 1,477 2,439 133,840 107,099 121,600 78,269 62,772 73,248 62,772 73,248 26,404 39,784 25,312 38,887 9,976 10,550 9,976 10,550 11,575 11,575 11,575 11,575 14,564 22,146 14,236 21,622 259,131 264,402 245,471 234,151 260,842 267,055 246,948 236,590
		2,439
		78,269 73,248 38,887 10,550 11,575 21,622
		234,151
		236,590

– 149 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

18 EMPLOYEE BENEFIT OBLIGATIONS

As at 31 December Statement of financial position Obligations for: Define benefit plans Total Year ended 31 December Statement of income Recognised in profit or loss: Define benefit plans Total Statement of comprehensive income Recognised in other comprehensive income: Actuarial gains from defined benefit plan recognised in the year Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 38,535 33,076 38,535 33,076 38,535 33,076 38,535 33,076 6,059 6,022 6,059 6,022 6,059 6,022 6,059 6,022 — 5,583 — 5,583 — 5,583 — 5,583	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 38,535 33,076 38,535 33,076 38,535 33,076 38,535 33,076 6,059 6,022 6,059 6,022 6,059 6,022 6,059 6,022 — 5,583 — 5,583 — 5,583 — 5,583
		33,076
		6,022
		6,022
		5,583
		5,583

The defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

Movements in the present value of the defined benefit obligations are detailed as follows:

Defined benefit obligations at 1 January Included in profit or loss: Current service costs Interest on obligation Included in other comprehensive income income: Actuarial gains from defined benefit plan Other Benefits paid by the plan Defined benefit obligations at 31 December	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (Restated) (Restated) (in thousand Baht) 33,076 32,637 33,076 32,637 4,948 4,880 4,948 4,880 1,111 1,142 1,111 1,142 — (5,583) — (5,583 (600) — (600) — 38,535 33,076 38,535 33,076	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (Restated) (Restated) (in thousand Baht) 33,076 32,637 33,076 32,637 4,948 4,880 4,948 4,880 1,111 1,142 1,111 1,142 — (5,583) — (5,583 (600) — (600) — 38,535 33,076 38,535 33,076
		33,076

– 150 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Actuarial gains and losses recognised in other comprehensive income arising from:

Demographic assumptions Financial assumptions Experience adjustment Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) — 1,897 — 1,897 — (1,839) — (1,839 — (5,641) — (5,641 — (5,583) — (5,583	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) — 1,897 — 1,897 — (1,839) — (1,839 — (5,641) — (5,641 — (5,583) — (5,583
		(5,583

Actuarial assumptions

The following were the principal actuarial assumptions at the reporting date (expressed as weighted averages).

	Consolidated	Consolidated	Separate
	financial	statements	financial statements
	2015	2014	2015	2014
		(%)
Discount rate	3.36	3.36	3.36	3.36
Future salary growth	5.23	5.23	5.23	5.23
Employee turnover rate	0–33	0–33	0–33	0–33

Assumptions regarding future mortality are based on published statistics and mortality tables.

At 31 December 2015, the weighted-average duration of the defined benefit obligations were 9.42 years (2014: 9.42 years).

Sensitivity analysis

	Consolidated	Consolidated	Separate	Separate
	financial statements		financial statements
	Increase	Decrease	Increase	Decrease
		(in thousand Baht)
Defined benefit obligation 31 December 2015
Discount rate (0.5% movement)	(1,636)	1,759	(1,636)	1,759
Future salary growth (0.5% movement)	1,718	(1,616)	1,718	(1,616)
Life expectancy (1 year movement)	296	(293)	296	(293)

– 151 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

19 SHARE CAPITAL

Par value per share (in Baht) Authorised At 1 January — ordinary shares 1 At 31 December — ordinary shares 1 Issued and fully paid-up At 1 January — ordinary shares 1 At 31 December — ordinary shares 1	2015 2014 Number Baht Number Baht (thousand shares/thousand Baht) 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199	2014	2014
			350,199
			350,199
			350,199

Share premium

20 RESERVES

Legal reserve

Movements in reserves

Movements in reserves are shown in the statements of changes in equity.

21 OPERATING SEGMENTS

. Segment 1 Commercial products . Segment 2 Consumer products . Segment 3 Value added products . Segment 4 Phones

None of other operations meets the quantitative thresholds for determining reportable segments in 2015 or 2014.

– 152 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Information about reportable segments:

Segment 1 2015 2014 5,186 4,478 5,186 4,478 216 239 229 291	Segment 1 2015 2014 5,186 4,478 5,186 4,478 216 239 229 291	Segment 2 2015 2014 6,507 7,965 6,507 7,965 309 357 643 861	Segment 2 2015 2014 6,507 7,965 6,507 7,965 309 357 643 861	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2015 2014 2015 2014 2015 2014 (in million Baht) 1,578 1,424 3,239 3,544 16,510 17,411 1,578 1,424 3,239 3,544 16,510 17,411 200 172 112 128 837 896 99 140 211 457 1,182 1,749	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2015 2014 2015 2014 2015 2014 (in million Baht) 1,578 1,424 3,239 3,544 16,510 17,411 1,578 1,424 3,239 3,544 16,510 17,411 200 172 112 128 837 896 99 140 211 457 1,182 1,749	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2015 2014 2015 2014 2015 2014 (in million Baht) 1,578 1,424 3,239 3,544 16,510 17,411 1,578 1,424 3,239 3,544 16,510 17,411 200 172 112 128 837 896 99 140 211 457 1,182 1,749	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2015 2014 2015 2014 2015 2014 (in million Baht) 1,578 1,424 3,239 3,544 16,510 17,411 1,578 1,424 3,239 3,544 16,510 17,411 200 172 112 128 837 896 99 140 211 457 1,182 1,749	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2015 2014 2015 2014 2015 2014 (in million Baht) 1,578 1,424 3,239 3,544 16,510 17,411 1,578 1,424 3,239 3,544 16,510 17,411 200 172 112 128 837 896 99 140 211 457 1,182 1,749	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2015 2014 2015 2014 2015 2014 (in million Baht) 1,578 1,424 3,239 3,544 16,510 17,411 1,578 1,424 3,239 3,544 16,510 17,411 200 172 112 128 837 896 99 140 211 457 1,182 1,749	Others 2015 2014 1,459 1,108 1,459 1,108 104 58 141 226	Others 2015 2014 1,459 1,108 1,459 1,108 104 58 141 226	Total 2015 2014 17,969 18,519 17,969 18,519 941 954 1,323 1,975	Total 2015 2014 17,969 18,519 17,969 18,519 941 954 1,323 1,975
5,186	4,478	6,507	7,965	1,578	1,424	3,239	3,544	16,510	17,411	1,459	1,108	17,969	18,519
216	239	309	357	200	172	112	128	837	896	104	58	941	954
229	291	643	861	99	140	211	457	1,182	1,749	141	226	1,323	1,975

Reconciliation of reportable segment profit or loss and assets

Gross profit or loss Total profit for reportable segments Other segment’s profit Unallocated amounts: — Other income — Other corporate expenses — Finance cost — Share of loss of investments in associates Consolidated profit before income tax Assets Total assets for reportable segments Other segment’s assets Other unallocated amounts Consolidated total assets	Consolidated financial statements 2015 2014 (in thousand Baht) 837 896 104 58 941 954 151 74 (713) (709 (64) (88 (83) — 232 231 1,182 1,749 141 226 3,105 3,070 4,428 5,045	Consolidated financial statements 2015 2014 (in thousand Baht) 837 896 104 58 941 954 151 74 (713) (709 (64) (88 (83) — 232 231 1,182 1,749 141 226 3,105 3,070 4,428 5,045
		954 74 (709 (88 —
		231
		1,749 226 3,070
		5,045

Geographical segments

The Group is managed and operates principally in Thailand. There are no material revenues derived from, or assets located in, foreign countries.

– 153 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Major customer

The Group has no major customer.

22 OTHER INCOME

Note Income from marketing refund Interest income 4 Management income 4 Others Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 52,298 27,510 24,517 27,510 6,927 6,180 19,815 28,205 – – 33,871 37,148 13,934 4,599 11,449 4,424 73,159 38,289 89,652 97,287	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 52,298 27,510 24,517 27,510 6,927 6,180 19,815 28,205 – – 33,871 37,148 13,934 4,599 11,449 4,424 73,159 38,289 89,652 97,287
		97,287

23 EMPLOYEE BENEFIT EXPENSES

Management Wages and salaries Others Other employees Wages and salaries Others Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 55,231 48,182 50,588 43,172 1,997 1,933 1,789 1,703 57,228 50,115 52,377 44,875 228,339 217,486 231,762 213,771 29,985 24,805 30,067 24,698 258,324 242,291 261,829 238,469 315,552 292,406 314,206 283,344	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 55,231 48,182 50,588 43,172 1,997 1,933 1,789 1,703 57,228 50,115 52,377 44,875 228,339 217,486 231,762 213,771 29,985 24,805 30,067 24,698 258,324 242,291 261,829 238,469 315,552 292,406 314,206 283,344
		44,875
		213,771 24,698
		238,469
		283,344

The Company has established a contributory provident fund for its employees. Membership of the fund is on a voluntary basis. Contributions are made monthly by the employees at the rate of 5% of their basic salaries and by the Company at the rate of 5% of the employees’ basic salaries. The provident fund is registered with the Ministry of Finance as juristic entity and is managed by a licensed Fund Manager.

– 154 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

24 EXPENSES BY NATURE

The statements of comprehensive income include an analysis of expenses by function. Expenses by nature disclosed in accordance with the requirements of various TFRS were as follows:

Included in cost of sales of goods:
Changes in inventories
Purchase
Provision (reversal) of allowance for obsolete and
defective stocks
Total
Included in selling expenses:
Advertising and marketing expenses
Transportation expenses
Employee benefit expenses
Others
Total
Included in administrative expenses:
Employee benefit expenses
Depreciation and amortisation
Rental expense
Bad debts and doubtful accounts
Management fee
Impairment losses on investment
Service charge
Others
Total

Consolidated
financial statements
Separate
financial statements
2015
2014
2015
2014
(in thousand Baht)
691,986
(357,800)
300,105
(34,356)
16,376,202
17,847,613
14,530,568
14,232,769
(40,003)
74,659
(2,238)
36,729
17,028,185
17,564,472
14,828,435
14,235,142
170,354
206,135
149,432
197,640
32,845
32,466
30,928
30,835
20,678
22,322
20,583
22,243
3,183
3,591
3,183
3,591
227,060
264,514
204,126
254,309
Consolidated
financial statements
Separate
financial statements
2015
2014
2015
2014
(in thousand Baht)
284,054
260,060
282,804
256,316
39,112
34,489
38,210
34,018
36,861
37,113
36,858
37,113
13,979
2,445
12,517
2,502
11,253
11,574
9,789
9,402
8,571
—
8,571
—
4,171
15,300
4,112
15,300
57,746
54,289
54,703
51,132
455,747
415,270
447,564
405,783

– 155 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

25 INCOME TAX EXPENSE

Income tax recognised in profit or loss

Note Current tax expense Current year Under provided in prior year Deferred tax expense Movements in temporary differences 14 Total	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 52,662 47,382 52,662 47,382 488 — 488 — 53,150 47,382 53,150 47,382 13,010 (138) (10,704) (12,947 13,010 (138) (10,704) (12,947 66,160 47,244 42,446 34,435	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht) 52,662 47,382 52,662 47,382 488 — 488 — 53,150 47,382 53,150 47,382 13,010 (138) (10,704) (12,947 13,010 (138) (10,704) (12,947 66,160 47,244 42,446 34,435
		47,382
		(12,947
		(12,947
		34,435

Income tax recognised in other comprehensive income

Before tax Actuarial gains from defined benefit plan — Total — Reconciliation of effective tax rate Accounting profit before income tax, net Tax at the applicable tax rates Tax effect of income and expenses that are not taxable income or not deductible in determining taxable profit, net Under provided in prior year Total	Consolidated financial statements/ Separate financial statements 2015 2014 Tax (expense) benefit Net of tax Before tax Tax (expense) benefit Net of tax (in thousand Baht) — — 5,583 (1,117) 4,466 — — 5,583 (1,117) 4,466 Consolidated financial statements 2015 2014 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 232,498 231,338 20.0 46,500 20.0 46,268 8.2 19,172 0.4 976 0.2 488 — — 28.4 66,160 20.4 47,244	Consolidated financial statements/ Separate financial statements 2015 2014 Tax (expense) benefit Net of tax Before tax Tax (expense) benefit Net of tax (in thousand Baht) — — 5,583 (1,117) 4,466 — — 5,583 (1,117) 4,466 Consolidated financial statements 2015 2014 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 232,498 231,338 20.0 46,500 20.0 46,268 8.2 19,172 0.4 976 0.2 488 — — 28.4 66,160 20.4 47,244	Net of tax 4,466
			4,466

		46,268 976 —
		47,244

– 156 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Accounting profit before income tax, net Tax at the applicable tax rates Tax effect of income and expenses that are not taxable income or not deductible in determining taxable profit, net Under provided in prior year Total Income tax reduction	Separate financial statements 2015 2014 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 201,236 168,936 20.0 40,247 20.0 33,787 0.9 1,711 0.4 648 0.2 488 — — 21.1 42,446 20.4 34,435	Separate financial statements 2015 2014 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 201,236 168,936 20.0 40,247 20.0 33,787 0.9 1,711 0.4 648 0.2 488 — — 21.1 42,446 20.4 34,435
		33,787 648 —
		34,435

Royal Decree No. 577 B.E. 2557 dated 10 November 2014 grants the reduction to 20% of net taxable profit for the accounting period 2015 which begins on or after 1 January 2015.

On 22 January 2016, The National Legislative Assembly has approved a reduction of the corporate income tax rate from 30% to 20% of net taxable profit for the accounting period which begins on or after 1 January 2016.

The Group has applied the tax rate of 20% in measuring deferred tax assets and liabilities as at 31 December 2015 and 2014 in accordance with the clarification issued by the FAP in 2012.

26 EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share for year ended 31 December 2015 and 2014 were based on the profit for the period attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the year.

Profit attributable to equity holders of the Company (Basic) Weighted average number of ordinary shares outstanding Basic earnings per share (in Baht)	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht/thousand share) 168,851 184,094 158,790 134,501 350,199 350,199 350,199 350,199 0.48 0.53 0.45 0.38	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in thousand Baht/thousand share) 168,851 184,094 158,790 134,501 350,199 350,199 350,199 350,199 0.48 0.53 0.45 0.38
		350,199
		0.38

– 157 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

27 DIVIDENDS

At the annual general meeting of the shareholders of the Company held on 24 April 2015, the shareholders passed the resolution to approved the appropriation of dividend of Baht 0.20 per share, for 350.20 million ordinary shares, totalling Baht 70.04 million, from the profit for the year ended 31 December 2014. The dividend was paid in May 2015.

At the annual general meeting of the shareholders of the Company held on 18 April 2014, the shareholders passed the resolution to approved the appropriation of dividend of Baht 0.20 per share, for 350.20 million ordinary shares, totalling Baht 70.04 million, from the profit for the year ended 31 December 2013. The dividend was paid in May 2014.

28 FINANCIAL INSTRUMENTS

Financial risk management policies

Capital management

Interest rate risk

– 158 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The effective interest rates of interest-bearing financial liabilities as at 31 December 2015 and 2014 and the periods in which those liabilities mature or re-price were as follows:

Effective interest rates (% per annum) 2015 Current Trust receipts 2.38–2.69 Loan from financial institutions 2.70–3.00 Total 2014 Current Trust receipts 1.05–4.40 Loan from financial institutions 2.90–4.15 Total Effective interest rates (% per annum) 2015 Current Trust receipts 2.38–2.69 Loan from financial institutions 2.70–2.74 Total 2014 Current Trust receipts 1.05–4.35 Loan from financial institutions 3.75–4.15 Total	Consolidated financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 658 — — 658 600 — — 600 1,258 — — 1,258 1,148 — — 1,148 1,280 — — 1,280 2,428 — — 2,428 Separate financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 643 — — 643 450 — — 450 1,093 — — 1,093 1,122 — — 1,122 1,050 — — 1,050 2,172 — — 2,172	Consolidated financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 658 — — 658 600 — — 600 1,258 — — 1,258 1,148 — — 1,148 1,280 — — 1,280 2,428 — — 2,428 Separate financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 643 — — 643 450 — — 450 1,093 — — 1,093 1,122 — — 1,122 1,050 — — 1,050 2,172 — — 2,172
		1,093
		1,122 1,050
		2,172

– 159 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Foreign currency risk

At 31 December, the Group and the Company were exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies:

Note United States Dollars Trade accounts receivable 6 Trade accounts payable 16 Trust receipts Gross balance sheet exposure Forward contracts Swap contracts Net exposure	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in million Baht) 1 — 1 — (209) (223) (208) (222) — (196) — (196) (208) (419) (207) (418) 474 250 439 201 93 456 93 456 359 287 325 239

Credit risk

Liquidity risk

– 160 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Fair values of financial assets and liabilities

Fair values of financial assets and liabilities, together with the carrying value shown in the consolidated and separate statement of financial position at 31 December 2016 are as follows.

		Consolidated financial statements	Consolidated financial statements	Consolidated financial statements	Consolidated financial statements
	Carrying
	amount		Fair value
		Level 1	Level 2	Level	3	Total
		(in thousand Baht)
Current
Forward contracts	3,568	—	3,568		—	3,568
Swap contracts	(144)	—	(144)		—	(144)
Non-current
Long-term loan to related parties	44,973	—	—	73,222		73,222
		Separate financial statements
	Carrying
	amount		Fair value
		Level 1	Level 2	Level	3	Total
		(in thousand Baht)
Current
Forward contracts	3,177	—	3,177		—	3,177
Swap contracts	(144)	—	(144)		—	(144)
Non-current
Long-term loan to related parties	73,259	—	—	73,222		73,222

The fair values of other financial assets and liabilities are taken to approximate their carrying values.

Financial instruments carried at fair value

Fair value hierarchy

The table above analyses recurring fair value measurements for financial assets. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows.

. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.
. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
. Level 3: unobservable inputs for the asset of liability.

– 161 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

29 COMMITMENTS WITH NON-RELATED PARTIES

Non-cancellable operating lease commitments Within one year After one year but within five years Total Other commitments Unutilised credits facilities Forward contracts Swap contracts Bank guarantee Total Lease and service agreements	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in million Baht) 34 34 34 34 12 46 12 46 46 80 46 80 4,097 2,425 4,061 2,510 474 250 439 201 93 456 93 456 165 165 165 165 4,829 3,296 4,758 3,332	Consolidated financial statements Separate financial statements 2015 2014 2015 2014 (in million Baht) 34 34 34 34 12 46 12 46 46 80 46 80 4,097 2,425 4,061 2,510 474 250 439 201 93 456 93 456 165 165 165 165 4,829 3,296 4,758 3,332
		80
		2,510 201 456 165
		3,332

The Group had commitments for building and warehouse lease contracts with terms of 1–3 years.

Forward contracts

In 2015, the Group has forward contract facilities with banks in the amount of Baht 4,324 million equivalent to USD 119 million (2014: Baht 4,180 million equivalent to USD 126 million).

As at 31 December 2015, the Group had purchased forward contracts in the amount of USD 13 million, equivalent to Baht 473.71 million. The contracts are due in June 2016 (2014: USD 8 million, equivalent to Baht 250.29 million which the contracts were due in June 2015).

Swap contracts

As at 31 December 2015 the Group had purchased a currency swap contract in the amount of USD 3 million equivalent to Baht 93 million. The contracts are due in June 2016. (31 December 2014: USD 14 million, equivalent to Baht 456 million which the contracts were due in March 2015).

Others

30 EVENTS AFTER THE REPORTING PERIOD

At the Board of Directors’ meeting held on 18 February 2016, the Board approved to propose for approval of cash dividend at the rate of Baht 0.30 per share, in the totally amount of Baht 105.06 million, approximately, to the annual general meeting of the shareholders of the Company.

– 162 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

31 THAI FINANCIAL REPORTING STANDARDS (TFRS) NOT YET ADOPTED

A number of new and revised TFRS have been issued but are not yet effective and have not been applied in preparing these financial statements. Those new and revised TFRS that may be relevant to the Group’s operations, which become effective for annual financial periods beginning on or after 1 January 2016, are set out below. The Group does not plan to adopt these TFRS early.

TFRS Topic TAS 1 (revised 2015) Presentation of Financial Statements TAS 2 (revised 2015) Inventories TAS 7 (revised 2015) Statement of Cash Flows TAS 8 (revised 2015) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (revised 2015) Events After the Reporting Period TAS 12 (revised 2015) Income Taxes TAS 16 (revised 2015) Property, Plant and Equipment TAS 17 (revised 2015) Leases TAS 18 (revised 2015) Revenue TAS 19 (revised 2015) Employee Benefits TAS 21 (revised 2015) The Effects of Changes in Foreign Exchange Rates TAS 23 (revised 2015) Borrowing Costs TAS 24 (revised 2015) Related Party Disclosures TAS 26 (revised 2015) Accounting and Reporting by Retirement Benefit Plans TAS 27 (revised 2015) Separate Financial Statements TAS 28 (revised 2015) Investments in Associates and Joint Ventures TAS 33 (revised 2015) Earnings Per Share TAS 34 (revised 2015) Interim Financial Reporting TAS 36 (revised 2015) Impairment of Assets TAS 37 (revised 2015) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2015) Intangible Assets TFRS 3 (revised 2015) Business Combinations TFRS 8 (revised 2015) Operating Segments TFRS 10 (revised 2015) Consolidated Financial Statements TFRS 11 (revised 2015) Joint Arrangements TFRS 12 (revised 2015) Disclosure of Interests in Other Entities TFRS 13 (revised 2015) Fair Value Measurement TSIC 25 (revised 2015) Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders TFRIC 1 (revised 2015) Changes in Existing Decommissioning, Restoration and Similar Liabilities TFRIC 4 (revised 2015) Determining Whether an Arrangement Contains a Lease TFRIC 10 (revised 2015) Interim Financial Reporting and Impairment TFRIC 13 (revised 2015) Customer Loyalty Programmes TFRIC 14 (revised 2015) TAS 19 (revised 2015) Employee Benefits — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

– 163 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014

Independent Auditor’s Report

To the shareholders of SiS Distribution (Thailand) Public Company Limited

I have audited the accompanying consolidated and separate financial statements of SiS Distribution (Thailand) Public Company Limited and its subsidiaries (the ‘‘Group’’), and of SiS Distribution (Thailand) Public Company Limited (the ‘‘Company’’), respectively, which comprise the consolidated and separate statements of financial position as at 31 December 2014, the consolidated and separate statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated and Separate Financial Statements

Auditor’s Responsibility

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

– 164 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Opinion

In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the financial position of the Group and the Company, respectively, as at 31 December 2014 and their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards.

(Ekkasit Chuthamsatid)

Certified Public Accountant Registration No. 4195

KPMG Phoomchai Audit Ltd.

Bangkok 24 February 2015

– 165 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF FINANCIAL POSITION

Assets Note Current assets Cash and cash equivalents 5 Trade accounts receivable 4, 6 Other receivables 4, 7 Short-term loans to subsidiary 4 Inventories 8 Other current assets Total current assets Non-current assets Investments in subsidiaries 9 Investments in associate 10 Other long-term investments 11 Equipment 13 Intangible assets 14 Deferred tax assets 15 Other non-current assets Total non-current assets Total assets	Consolidated financial statements Separate financial statements 31 December 31 December 2014 2013 2014 2013 (in thousand Baht) 109,171 73,933 89,275 61,747 1,951,441 2,298,030 1,729,693 2,190,817 532,575 483,306 431,440 321,730 — — 478,137 437,050 1,975,188 1,692,048 1,579,484 1,581,857 2,782 20,420 2,192 17,836 4,571,157 4,567,737 4,310,221 4,611,037 — — 190,329 130,329 9,800 — — — 8,571 8,571 — — 120,474 130,826 115,925 129,795 39,146 38,586 39,146 38,586 284,182 285,161 206,077 194,247 12,118 11,815 11,823 11,815 474,291 474,959 563,300 504,772 5,045,448 5,042,696 4,873,521 5,115,809	Consolidated financial statements Separate financial statements 31 December 31 December 2014 2013 2014 2013 (in thousand Baht) 109,171 73,933 89,275 61,747 1,951,441 2,298,030 1,729,693 2,190,817 532,575 483,306 431,440 321,730 — — 478,137 437,050 1,975,188 1,692,048 1,579,484 1,581,857 2,782 20,420 2,192 17,836 4,571,157 4,567,737 4,310,221 4,611,037 — — 190,329 130,329 9,800 — — — 8,571 8,571 — — 120,474 130,826 115,925 129,795 39,146 38,586 39,146 38,586 284,182 285,161 206,077 194,247 12,118 11,815 11,823 11,815 474,291 474,959 563,300 504,772 5,045,448 5,042,696 4,873,521 5,115,809
		4,611,037
		130,329 — — 129,795 38,586 194,247 11,815
		504,772
		5,115,809

The accompanying notes are an integral part of these financial statements.

– 166 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF FINANCIAL POSITION

Liabilities and equity Note Current liabilities Short-term loans from financial institutions 16 Trade accounts payable 4, 17 Other payables 4, 18 Short-term loans from subsidiary 4 Income tax payable Other current liabilities Total current liabilities Non-current liabilities Provision for cost of assets dismantlement Employee benefit obligations 19 Total non-current liabilities Total liabilities Equity Share capital 20 Authorised share capital Issued and paid-up share capital Share premium 20 Retained earnings Appropriated Legal reserve 21 Unappropriated Total equity Total liabilities and equity	Consolidated financial statements Separate financial statements 31 December 31 December 2014 2013 2014 2013 (in thousand Baht) 2,427,594 2,573,577 2,171,594 2,513,356 804,384 801,976 763,592 781,375 267,055 236,144 236,590 233,838 — — 49,000 — 5,643 6,552 5,643 6,552 15,809 18,443 15,333 18,285 3,520,485 3,636,692 3,241,752 3,553,406 3,960 3,960 3,960 3,960 33,076 32,637 33,076 32,637 37,036 36,597 37,036 36,597 3,557,521 3,673,289 3,278,788 3,590,003 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 667,293 548,773 774,099 705,172 1,487,927 1,369,407 1,594,733 1,525,806 5,045,448 5,042,696 4,873,521 5,115,809	Consolidated financial statements Separate financial statements 31 December 31 December 2014 2013 2014 2013 (in thousand Baht) 2,427,594 2,573,577 2,171,594 2,513,356 804,384 801,976 763,592 781,375 267,055 236,144 236,590 233,838 — — 49,000 — 5,643 6,552 5,643 6,552 15,809 18,443 15,333 18,285 3,520,485 3,636,692 3,241,752 3,553,406 3,960 3,960 3,960 3,960 33,076 32,637 33,076 32,637 37,036 36,597 37,036 36,597 3,557,521 3,673,289 3,278,788 3,590,003 350,199 350,199 350,199 350,199 350,199 350,199 350,199 350,199 435,415 435,415 435,415 435,415 35,020 35,020 35,020 35,020 667,293 548,773 774,099 705,172 1,487,927 1,369,407 1,594,733 1,525,806 5,045,448 5,042,696 4,873,521 5,115,809
		3,553,406
		3,960 32,637
		36,597
		3,590,003
		350,199
		350,199 435,415 35,020 705,172
		1,525,806
		5,115,809

The accompanying notes are an integral part of these financial statements.

– 167 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF INCOME

Note
Income
Revenue from sale of goods
4
Revenue from rendering of services
Other income
4, 23
Total income
Expenses
Cost of sale of goods
4, 25
Cost of rendering of services
Selling expenses
25
Administrative expenses
4, 25
Loss on exchange rate
Finance costs
Total expenses
Profit before income tax expense
Income tax expense
26
Profit for the year
Basic earnings per share (Baht)
27

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2014
2013
2014
2013
(in thousand Baht)
18,518,529 18,198,371
15,043,033 17,241,291
35,822
26,878
34,339
19,006
38,289
119,833
97,287
121,137
18,592,640 18,345,082
15,174,659 17,381,434
17,564,472 17,163,432
14,235,142 16,255,594
26,819
19,322
25,605
16,287
264,514
338,949
254,309
320,582
415,270
466,178
405,783
462,582
2,694
27,764
4,202
28,049
87,533
84,611
80,682
83,641
18,361,302 18,100,256
15,005,723 17,166,735
231,338
244,826
168,936
214,699
(47,244)
(54,652)
(34,435)
(48,598)
184,094
190,174
134,501
166,101
0.53
0.64
0.38
0.56

The accompanying notes are an integral part of these financial statements.

– 168 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF COMPREHENSIVE INCOME

Note Profit for the year Other comprehensive income Actuarial gains from defined benefit plan 19 Income tax on other comprehensive income 15 Other comprehensive income for the year — net of tax Total comprehensive income for the year	Consolidated financial statements Separate financial statements For the year ended 31 December For the year ended 31 December 2014 2013 2014 2013 (in thousand Baht) 184,094 190,174 134,501 166,101 5,583 — 5,583 — (1,117) — (1,117) — 4,466 — 4,466 — 188,560 190,174 138,967 166,101	Consolidated financial statements Separate financial statements For the year ended 31 December For the year ended 31 December 2014 2013 2014 2013 (in thousand Baht) 184,094 190,174 134,501 166,101 5,583 — 5,583 — (1,117) — (1,117) — 4,466 — 4,466 — 188,560 190,174 138,967 166,101
		166,101

The accompanying notes are an integral part of these financial statements.

– 169 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

Consolidated financial statements

		Consolidated financial statements
Note Year ended 31 December 2013 Balance at 1 January 2013 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Issue of ordinary shares 20 Total contributions by and distributions to owners of the Company Comprehensive income for the year Profit and other comprehensive income Total comprehensive income for the year Transfer to legal reserve 21 Balance at 31 December 2013 Year ended 31 December 2014 Balance at 1 January 2014 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Dividend to owners of the Company 28 Total contributions by and distributions to owners of the Company Comprehensive income for the year Profit Other comprehensive income Actuarial gains from defined benefit plan — net of tax Total comprehensive income for the year Balance at 31 December 2014	Issued and paid-up share capital 233,466 116,733 116,733 — — — 350,199 350,199 — — — — — 350,199	Retained earnings Share premium Legal reserve Unappropriated (in thousand Baht) 176,694 21,317 372,302 258,721 — — 258,721 — — — — 190,174 — — 190,174 — 13,703 (13,703) 435,415 35,020 548,773 435,415 35,020 548,773 — — (70,040) — — (70,040) — — 184,094 — — 4,466 — — 188,560 435,415 35,020 667,293	Total equity 803,779 375,454
			375,454
			190,174
			190,174
			—
			1,369,407
			1,369,407 (70,040
			(70,040
			184,094 4,466
			188,560
			1,487,927

The accompanying notes are an integral part of these financial statements.

– 170 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CHANGES IN EQUITY

Separate financial statements

		Separate financial statements
Note Year ended 31 December 2013 Balance at 1 January 2013 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Issue of ordinary shares 20 Total contributions by and distributions to owners of the Company Comprehensive income for the year Profit and other comprehensive income Total comprehensive income for the year Transfer to legal reserve 21 Balance at 31 December 2013 Year ended 31 December 2014 Balance at 1 January 2014 Transactions with owners, recorded directly in equity Contributions by and distributions to owners of the Company Dividend to owners of the Company 28 Total contributions by and distributions to owners of the Company Comprehensive income for the year Profit Other comprehensive income Actuarial gains from defined benefit plan — net of tax Total comprehensive income for the year Balance at 31 December 2014	Issued and paid-up share capital 233,466 116,733 116,733 — — — 350,199 350,199 — — — — — 350,199	Retained earnings Share premium Legal reserve Unappropriated (in thousand Baht) 176,694 21,317 552,774 258,721 — — 258,721 — — — — 166,101 — — 166,101 — 13,703 (13,703) 435,415 35,020 705,172 435,415 35,020 705,172 — — (70,040) — — (70,040) — — 134,501 — — 4,466 — — 138,967 435,415 35,020 774,099	Total equity 984,251 375,454
			375,454
			166,101
			166,101
			—
			1,525,806
			1,525,806 (70,040
			(70,040
			134,501 4,466
			138,967
			1,594,733

The accompanying notes are an integral part of these financial statements.

– 171 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CASH FLOWS

Cash flows from operating activities
Profit for the year
Adjustments for
Depreciation and amortisation
Interest income
Finance costs
Unrealised loss on exchange
Loss (gain) on disposal of equipment
Bad debts and doubtful debts expense
Allowance for obsolete and defective stocks
(reversal)
Provision for defined benefit obligation
Income tax expense
Changes in operating assets and liabilities
Trade accounts receivable
Inventories
Other receivables
Other current assets
Long-term trade accounts receivable
Other non-current assets
Trade accounts payable
Other payables
Other current liabilities
Income tax paid
Net cash provided by (used in) operating activities

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2014
2013
2014
2013
(in thousand Baht)
184,094
190,174
134,501
166,101
34,489
35,596
34,018
35,227
(6,180)
(23,200)
(28,205)
(35,777)
87,533
84,611
80,682
83,641
3,262
19,555
2,948
17,819
384
236
(172)
177
403
1,184
347
1,056
74,659
(4,887)
36,729
18,314
6,022
5,300
6,022
5,300
47,244
54,652
34,435
48,598
431,910
363,221
301,305
340,456
346,186
253,110
460,777
338,028
(357,799)
(495,813)
(34,356)
(460,396)
(49,269)
35,881
(109,169)
44,941
17,638
(20,420)
15,644
(17,836)
—
29,219
—
29,219
(302)
(505)
(8)
(505)
1,306
(392,939)
(18,571)
(330,825)
26,602
46,975
3,298
64,401
(2,634)
5,244
(2,952)
6,692
(48,291)
(67,496)
(48,291)
(67,495)
365,347
(243,523)
567,677
(53,320)

The accompanying notes are an integral part of these financial statements.

– 172 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

STATEMENT OF CASH FLOWS

Note
Cash flows from investing activities
Interest received
Purchase of equipment
Sale of equipment
Loan to subsidiary
Purchase of intangible assets
Net cash outflow on acquisition of associate
Net cash outflow on acquisition of subsidiary
Net cash provided by (used in) investing activities
Cash flows from financing activities
Interest paid
Dividends paid to owners of the Company
Finance lease payments
Net repayment for loan from financial institutions
Net proceeds from loan from subsidiary
Proceeds from issue of ordinary shares
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
5

Consolidated
financial statements
Separate
financial statements
For the year ended
31 December
For the year ended
31 December
2014
2013
2014
2013
(in thousand Baht)
6,180
23,200
27,664
35,462
(20,297)
(20,466)
(15,599)
(19,745)
1,500
537
1,348
485
—
—
(41,087)
(226,000)
(6,285)
(1,785)
(6,285)
(1,785)
(9,800)
—
—
—
—
—
(60,000)
—
(28,702)
1,486
(93,959)
(211,583)
(83,224)
(83,962)
(81,228)
(84,853)
(70,040)
—
(70,040)
—
—
(1,201)
—
(1,201)
(148,143)
(52,222)
(343,922)
(29,840)
—
—
49,000
—
—
375,454
—
375,454
(301,407)
238,069
(446,190)
259,560
35,238
(3,968)
27,528
(5,343)
73,933
77,901
61,747
67,090
109,171
73,933
89,275
61,747

The accompanying notes are an integral part of these financial statements.

– 173 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Note	Contents
1	General information
2	Basis of preparation of the financial statements
3	Significant accounting policies
4	Related parties
5	Cash and cash equivalents
6	Trade accounts receivable
7	Other receivables
8	Inventories
9	Investments in subsidiaries
10	Investment in associate
11	Other long-term investments
12	Long-term trade accounts receivable
13	Equipment
14	Intangible assets
15	Deferred tax
16	Interest-bearing liabilities
17	Trade accounts payable
18	Other payables
19	Employee benefit obligations
20	Share capital
21	Reserves
22	Operating Segment
23	Other income
24	Employee benefit expenses
25	Expenses by nature
26	Income tax expense
27	Earnings per share
28	Dividends
29	Financial instruments
30	Commitments with non-related parties
31	Events after the reporting period
32	Thai Financial Reporting Standards (TFRS) not yet adopted

– 174 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

These notes form an integral part of the financial statements.

1 GENERAL INFORMATION

The Company was listed on the Stock Exchange of Thailand on 21 June 2004.

2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

(a) Statement of compliance

The FAP has issued the following new and revised TFRS relevant to the Group’s operations and effective for annual accounting periods beginning on or after 1 January 2014:

TFRS Topic

TAS 1 (revised 2012)	Presentation of financial statements
TAS 7 (revised 2012)	Statement of Cash Flows
TAS 12 (revised 2012)	Income Taxes
TAS 17 (revised 2012)	Leases
TAS 18 (revised 2012)	Revenue
TAS 19 (revised 2012)	Employee Benefits
TAS 21 (revised 2012)	The Effects of Changes in Foreign Exchange Rates
TAS 24 (revised 2012)	Related Party Disclosures
TAS 28 (revised 2012)	Investments in Associates
TAS 31 (revised 2012)	Interests in Joint Ventures
TAS 34 (revised 2012)	Interim Financial Reporting
TAS 36 (revised 2012)	Impairment of Assets
TAS 38 (revised 2012)	Intangible Assets
TFRS 8 (revised 2012)	Operating Segments
TFRIC 10	Interim Financial Reporting and Impairment
TFRIC 13	Customer Loyalty Programmes
TIC 27	Evaluating the Substance of Transactions Involving the Legal Form
	of a Lease

The initial application of these new and revised TFRS has resulted in changes in certain of the Group’s accounting policies. These changes have no material effect on the financial statements.

– 175 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

In addition to the above new and revised TFRS, the FAP has issued a number of other new and revised TFRS which are effective for annual financial periods beginning on or after 1 January 2015 and have not been adopted in the preparation of these financial statements. Those new and revised TFRS that are relevant to the Group’s operations are disclosed in note 32.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material items in the statements of financial position:

financial instruments at fair value through profit or loss are measured at fair value;
the present value of the defined benefit obligation.
(c) Functional and presentation currency

(d) Use of estimates and judgements

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes:

Note 3 (r) Current and deferred taxation Note 15 Utilisation of tax losses Note 19 Measurement of defined benefit obligations Note 29 Valuation of financial instruments

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Basis of consolidation

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the ‘‘Group’’) and the group’s interests in associate.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

– 176 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Losses applicable to non-controlling interests in a subsidiary are allocated to non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Associates

Associate is that entity in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

Investments in associates are accounted for in the consolidated financial statements using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investment includes transaction costs.

The consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of equity accounted investees from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount of that interest is reduced to zero and recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Transactions eliminated on consolidation

(b) Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency at exchange rates at the dates of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date.

Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency at the exchange rates at the dates of the transactions.

Foreign currency differences are recognised in profit or loss.

(c) Derivative financial instruments

– 177 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

(d) Hedging

Fair value hedges

(e) Cash and cash equivalents

(f) Trade and other accounts receivable

Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

(g) Inventories

Inventories are measured at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost principle, and comprises all costs of purchase or other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

The Group sets an allowance for the decline in value of obsolete and defective stock by management reviewing.

(h) Investment

Investment in subsidiaries and associate

Equity securities

Equity securities which are not marketable are stated at cost less any impairment losses.

– 178 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Disposal of investments

(i) Equipment

Recognition and measurement

Owned assets

Equipment is stated at cost less accumulated depreciation and impairment losses.

When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

Leased assets

Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are classified as finance leases. Equipment acquired by way of finance leases is capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss.

Subsequent costs

Depreciation

Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

– 179 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Depreciation is charged to profit and loss on a straight-line basis over the estimated useful lives of each component of an item of equipment. The estimated useful lives are as follows:

Vehicles 5 years Furniture & fixtures 5 years Computer & office equipment 3 and 5 years Leasehold improvements 3, 5, 10 and 12 years

No depreciation is provided on asset under construction.

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(j) Intangible assets

Software licences

Software licences that are acquired by the Group, which have finite useful lives, are stated at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(k) Impairment

Calculation of recoverable amount

– 180 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Reversals of impairment

(l) Interest-bearing liabilities

(m) Trade and other accounts payable

Trade and other accounts payable are stated at cost.

(n) Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on long term government bond in Thailand that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed by a qualified actuary using the projected unit credit method.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.

The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all expenses related to defined benefit plans in profit or loss.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

– 181 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

A liability is recognised for the amount expected to be paid under short-term cash bonus or profitsharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(o) Revenue

Revenue excludes value added taxes and is arrived at after deduction of trade discounts.

Sale of goods and services rendered

Revenue from the sale of goods for Digital Disc — Movie and Music products after provision for sales return is recognised when have been sold to the customer.

Revenue from services is recognised when services are rendered.

Interest income

Interest income is recognised in profit or loss as it accrues.

(p) Finance costs

Interest expenses and similar costs are charged to profit or loss for the period in which they are incurred. The interest component of finance lease payments is recognised in the statement of income using the effective interest rate method.

(q) Operating leases

Contingent rentals are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Determining whether an arrangement contains a lease

(r) Income tax

– 182 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

(s) Earnings per share

(t) Segment reporting

– 183 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

4 RELATED PARTIES

Relationships with subsidiaries and associate are described in notes 9 and 10. Relationship with other related parties were as follows:

	Country of
	incorporation/
Name of the entities	nationality	Nature of relationships
Key management personnel	Thailand	Persons having authority and responsibility for
	Singapore	planning, directing and controlling the
		activities of the entity, directly or indirectly,
		including any director (whether executive or
		otherwise) of the Group/Company.
SiS International Holdings Ltd.	Bermuda	Ultimate parent of the Group and some Common
		directors
SiS Technologies (Thailand) Pte. Ltd.	Singapore	Under the same control of the ultimate parent
		company
Nippon Pack Trading Co.,Ltd.	Thailand	49% shareholding by the subsidiary company
Alliance & Link Corporation Co., Ltd	Thailand	15% shareholding by the subsidiary company
Click Connect Co., Ltd.	Thailand	15% shareholding by the subsidiary company
Hardware House International Co., Ltd.	Thailand	Indirect shareholding by the Company
Direct subsidiaries
SiS Venture Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding
Qool Distribution (Thailand) Co., Ltd.	Thailand	Subsidiary, 99.99% shareholding
Indirect subsidiary
Wiko Mobile (Thailand) Co., Ltd.	Thailand	60% shareholding by the subsidiary company

The pricing policies for particular types of transactions are explained further below:

Transactions	Pricing policies
Sale of goods	Market price plus actual related expenses
Management income/expense	Contractually agreed price
Purchase of good	Actual cost plus actual related expenses
Interest of loan from/to	Reference from interest rate of financial institution

– 184 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Significant transactions for the years ended 31 December with related parties are summarised as follows:

Year ended 31 December
Ultimate parent company
Management fee
Subsidiary
Management income
Interest income
Interest expense
Related party
Revenue from sale of goods
Key management personnel
Key management personnel
Compensation
Short-term employee benefit
Other long-term benefits
Total key management personnel compensation
Balances as at 31 December with related parties are as
Trade accounts receivable
from related parties
Hardware House International Co., Ltd.
Click Connect Co., Ltd.
Less allowance for doubtful accounts
Net
Reversal of bad debts and doubtful
debts expense for the year
Other receivable
Hardware House International Co., Ltd.
Less allowance for doubtful accounts
Reversal of bad debts and doubtful debts expense for
the year
Advance payment
Wiko Mobile (Thailand) Co., Ltd.
Accrued income
Qool Distribution (Thailand) Co., Ltd.
Interest receivable
Qool Distribution (Thailand) Co., Ltd.

Consolidated
financial statements
Separate
financial statements
2014
2013
2014
2013
(in thousand Baht)
11,574
11,374
9,402
10,776
—
—
37,148
27,963
—
—
22,420
13,067
—
—
167
—
277
120
899
318
48,182
42,621
43,172
38,087
1,933
1,772
1,703
1,554
50,115
44,393
44,875
39,641
follows:
Consolidated
financial statements
Separate
financial statements
2014
2013
2014
2013
(in thousand Baht)
46,223
46,223
46,223
46,223
32
1
17
1
46,255
46,224
46,240
46,224
(46,223)
(46,223)
(46,223)
(46,223)
32
1
17
1
—
(349)
—
(349)
557,087
557,087
541,542
541,542
(557,087)
(557,087)
(541,542)
(541,542)
—
—
—
—
—
(42,742)
—
(42,742)
—
—
116,973
—
—
—
2,754
2,654
—
—
2,215
1,674

– 185 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The Company and its subsidiary (Qool Distribution (Thailand) Co., Ltd.) have agreement on consignment with a related company (Hardware House International Co., Ltd.) which has notified the call for return all consignment from those related company in November 2012 because the default agreement for consignment. The Company and its subsidiary are in the process to reclaim those losses from the related company. As at 31 December 2014 the receivable from the loss of consignment amounted to approximately Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in separate financial statements, respectively (31 December 2013: Baht 557.09 million in the consolidated financial statements and Baht 541.54 million in the separate financial statements, respectively). The Company is undertaking on litigation proceedings, therefore, the Company and its subsidiary estimated the allowance for doubtful account, amounted to Baht 557.09 million and 541.54 million, respectively.

Short-term loans to related party Interest rate 2014 2013 (% per annum) Subsidiary Qool Distribution (Thailand) Co., Ltd. 4.40–4.50 4.00–4.50	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — 478,137 437,050

Movements during the years ended 31 December of loans to related party were as follows:

Subsidiary At 1 January Increase Decrease At 31 December	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — 437,050 211,050 — — 711,588 328,700 — — (670,501) (102,700 — — 478,137 437,050	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — 437,050 211,050 — — 711,588 328,700 — — (670,501) (102,700 — — 478,137 437,050
		437,050

Short-term loans to related parties were due on demand.

Trade payable to related parties Alliance & Link Corporation Co., Ltd. Other payable to related parties SiS International Holdings Ltd. Accrued expense SiS International Holdings Ltd. Accrued interest expense SiS Venture Co., Ltd.	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 86 86 86 86 86 86 86 86 1,847 823 1,544 767 806 758 728 686 — — 167 —	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 86 86 86 86 86 86 86 86 1,847 823 1,544 767 806 758 728 686 — — 167 —
		86
		767
		686
		—

– 186 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Short-term loans from related party Interest rate 2014 2013 (% per annum) Subsidiary SiS Venture Co., Ltd. 4.40 —	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — 49,000 —

Movements during the years ended 31 December of loans from related party were as follows:

Subsidiary At 1 January Increase At 31 December	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — — — — — 49,000 — — — 49,000 —	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — — — — — 49,000 — — — 49,000 —
		—

Significant agreements with related parties

Management income

The Company has an agreement with a subsidiary (Qool Distribution (Thailand) Co., Ltd.) for sharing the combined staff and assets cost. The parties agreed to enter into new agreement effective from 1 January 2013 to change the monthly rate of management fee to Baht 1.50 million per month plus 1% of the net sales of the subsidiary for each month.

Management fee

5 CASH AND CASH EQUIVALENTS

Cash on hand Cash at banks — current accounts Cash at banks — savings accounts Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 204 174 204 174 (43,067) 2,104 (46,210) 937 152,034 71,655 135,281 60,636 109,171 73,933 89,275 61,747	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 204 174 204 174 (43,067) 2,104 (46,210) 937 152,034 71,655 135,281 60,636 109,171 73,933 89,275 61,747
		61,747

Cash and cash equivalents of the Group and the Company as at 31 December 2014 and 2013 were denominated entirely in Thai Baht.

– 187 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

6 TRADE ACCOUNTS RECEIVABLE

Note Related parties 4 Other parties Total Less allowance for doubtful accounts Net Bad debts and doubtful debts expenses for the year	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 46,255 46,224 46,240 46,224 2,186,542 2,522,711 1,964,359 2,414,992 2,232,797 2,568,935 2,010,599 2,461,216 (281,356) (270,905) (280,906) (270,399) 1,951,441 2,298,030 1,729,693 2,190,817 2,445 61,762 2,502 61,635

Aging analysis for trade accounts receivable were as follows:

Related parties
Within credit terms
Overdue:
Less than 3 months
Over 12 months
Less allowance for doubtful accounts
Other parties
Within credit terms
Overdue:
Less than 3 months
3–6 months
6–12 months
Over 12 months
Less allowance for doubtful accounts
Total

Consolidated
financial statements
Separate
financial statements
2014
2013
2014
2013
(in thousand Baht)
23
1
8
1
9
—
9
—
46,223
46,223
46,223
46,223
46,255
46,224
46,240
46,224
(46,223)
(46,223)
(46,223)
(46,223)
32
1
17
1
1,451,587
1,623,170
1,354,211
1,549,885
436,701
688,479
383,856
654,097
74,817
20,453
3,110
20,401
20,980
8,932
20,725
8,932
202,457
181,677
202,457
181,677
2,186,542
2,522,711
1,964,359
2,414,992
(235,133)
(224,682)
(234,683)
(224,176)
1,951,409
2,298,029
1,729,676
2,190,816
1,951,441
2,298,030
1,729,693
2,190,817

The normal credit term granted by the Group is ranging from 30 days to 90 days.

– 188 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The currency denomination of trade accounts receivable as at 31 December 2014 and 2013 were as follows:

Thai Baht (Baht)
United States Dollars (USD)
Total
7
OTHER RECEIVABLES
Note
Related parties
Receivable from losses of consignment
4
Advance payment
4
Accrued income
4
Interest receivable
4
Less allowance for doubtful accounts
Net
Other parties
Account receivable from Revenue
Department
Accrued income
Prepaid expenses
Others
Total
Total

Consolidated
financial statements
Separate
financial statements
2014
2013
2014
2013
(in thousand Baht)
1,951,441
2,280,714
1,729,693
2,188,953
—
17,316
—
1,864
1,951,441
2,298,030
1,729,693
2,190,817
Consolidated
financial statements
Separate
financial statements
2014
2013
2014
2013
(in thousand Baht)
557,087
557,087
541,542
541,542
—
—
116,973
—
—
—
2,754
2,654
—
—
2,215
1,674
557,087
557,087
663,484
545,870
(557,087)
(557,087)
(541,542)
(541,542)
—
—
121,942
4,328
440,960
419,254
269,996
272,787
50,215
54,008
29,175
40,911
27,568
2,369
7,325
2,369
13,832
7,675
3,002
1,335
532,575
483,306
309,498
317,402
532,575
483,306
431,440
321,730

– 189 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

8 INVENTORIES

Finished goods — computer components, and telecommunication components Finished goods Digital Disc — Movie and Music Work in progress Goods in transit Less allowance for decline in value of inventories Net Inventories recognised as an expense in ‘cost of sales of goods’: — Cost — Write-down to net realisable value — Reversal of write-down Net	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 2,055,219 1,733,453 1,616,363 1,618,080 10,240 13,842 10,240 13,842 27,967 767 27,926 686 70,929 58,494 70,929 58,494 2,164,355 1,806,556 1,725,458 1,691,102 (189,167) (114,508) (145,974) (109,245 1,975,188 1,692,048 1,579,484 1,581,857 17,489,813 17,168,319 14,198,413 16,237,280 74,659 18,314 36,729 18,314 — (23,201) — — 17,564,472 17,163,432 14,235,142 16,255,594	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 2,055,219 1,733,453 1,616,363 1,618,080 10,240 13,842 10,240 13,842 27,967 767 27,926 686 70,929 58,494 70,929 58,494 2,164,355 1,806,556 1,725,458 1,691,102 (189,167) (114,508) (145,974) (109,245 1,975,188 1,692,048 1,579,484 1,581,857 17,489,813 17,168,319 14,198,413 16,237,280 74,659 18,314 36,729 18,314 — (23,201) — — 17,564,472 17,163,432 14,235,142 16,255,594
		1,691,102 (109,245
		1,581,857
		16,237,280 18,314 —
		16,255,594

9 INVESTMENTS IN SUBSIDIARIES

At 1 January Acquisitions Allowance for impairment At 31 December	Separate financial statements 2014 2013 (in thousand Baht) 259,994 259,994 60,000 — (129,665) (129,665 190,329 130,329	Separate financial statements 2014 2013 (in thousand Baht) 259,994 259,994 60,000 — (129,665) (129,665 190,329 130,329
		130,329

Investments in subsidiaries as at 31 December 2014 and 2013, and dividend income from those investments for the years then ended, were as follows:

Type of business Ownership interest 2014 2013 (%) Subsidiaries SiS Venture Co., Ltd. Holding investment 99.99 99.99 Qool Distribution (Thailand) Co., Ltd. Trading 99.99 99.99 Total	Paid-up 2014 120,000 200,000	capital 2013 60,000 200,000	Separated financial statements Cost Impairment At cost-net 2014 2013 2014 2013 2014 2013 (in thousand Baht) 120,000 60,000 51,030 51,030 68,970 8,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 259,994 129,665 129,665 190,329 130,329	Separated financial statements Cost Impairment At cost-net 2014 2013 2014 2013 2014 2013 (in thousand Baht) 120,000 60,000 51,030 51,030 68,970 8,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 259,994 129,665 129,665 190,329 130,329	Separated financial statements Cost Impairment At cost-net 2014 2013 2014 2013 2014 2013 (in thousand Baht) 120,000 60,000 51,030 51,030 68,970 8,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 259,994 129,665 129,665 190,329 130,329	Separated financial statements Cost Impairment At cost-net 2014 2013 2014 2013 2014 2013 (in thousand Baht) 120,000 60,000 51,030 51,030 68,970 8,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 259,994 129,665 129,665 190,329 130,329	Separated financial statements Cost Impairment At cost-net 2014 2013 2014 2013 2014 2013 (in thousand Baht) 120,000 60,000 51,030 51,030 68,970 8,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 259,994 129,665 129,665 190,329 130,329	Separated financial statements Cost Impairment At cost-net 2014 2013 2014 2013 2014 2013 (in thousand Baht) 120,000 60,000 51,030 51,030 68,970 8,970 199,994 199,994 78,635 78,635 121,359 121,359 319,994 259,994 129,665 129,665 190,329 130,329	Dividend income 2014 2013 — — — — — —	Dividend income 2014 2013 — — — — — —
	320,000	260,000	319,994	259,994	129,665	129,665	190,329	130,329	—	—

– 190 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

At the Board of Directors’ meeting of the Company held on 7 November 2014, the Board of Directors approve to increase the authorised share capital of SiS Venture Co., Ltd. from Baht 60 million to Baht 120 million by issuing 6 million new ordinary shares at Baht 10 per value. The subsidiary had registered the increase share capital with the Ministry of Commerce on 8 December 2014.

All subsidiaries were incorporated in Thailand.

10 INVESTMENT IN ASSOCIATE

Investments in associate as at 31 December 2014 and 2013, and dividend income for the years then ended, were as follows:

Type of business Ownership interest 2014 2013 (%) Associate Nippon Pack Trading Co., Ltd. Trading and service 49.00 — Total	Paid-up capital 2014 2013 9,800 — 9,800 —	Paid-up capital 2014 2013 9,800 — 9,800 —	Consolidated financial statements Cost method Equity method 2014 2013 2014 2013 (in thousand Baht) 9,800 — 9,800 — 9,800 — 9,800 —	Consolidated financial statements Cost method Equity method 2014 2013 2014 2013 (in thousand Baht) 9,800 — 9,800 — 9,800 — 9,800 —	Consolidated financial statements Cost method Equity method 2014 2013 2014 2013 (in thousand Baht) 9,800 — 9,800 — 9,800 — 9,800 —	Consolidated financial statements Cost method Equity method 2014 2013 2014 2013 (in thousand Baht) 9,800 — 9,800 — 9,800 — 9,800 —	Dividend income 2014 2013 — — — —	Dividend income 2014 2013 — — — —
	9,800	—	9,800	—	9,800	—	—	—

At the Board of Directors’ meeting of the Company held on 7 November 2014, the Board of Directors of the Company passed a resolution to approve SiS Venture Co., Ltd, a wholly owned subsidiary, to invested in 980,000 ordinary shares of Nippon Pack Trading Co., Ltd., a directly owned subsidiary of Nippon Pack (Thailand) Public Company Limited as a listed company on the Stock Exchange of Thailand (equal to 49% of Nippon Pack Trading Co., Ltd.’s authorised share capital after issue of new shares) at par value of Baht10 per share, totalling of Baht9.8 million.

11 OTHER LONG-TERM INVESTMENTS

Other long-term investment Other non marketable equity security Less Allowance for impairment Net	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 59,601 59,601 — — 59,601 59,601 — — (51,030) (51,030) — — 8,571 8,571 — —	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 59,601 59,601 — — 59,601 59,601 — — (51,030) (51,030) — — 8,571 8,571 — —
		— —
		—

In 2011, SiS Venture Co., Ltd. set up allowance for impairment in the value of long-term investment in Alliance & Link Corporation Co., Ltd. Baht 51 million.

– 191 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

12 LONG TERM TRADE ACCOUNT RECEIVABLE

Within one year Total	Consolidated financial statements/Separate financial statements 2014 2013 Principal Interest Collections Principal Interest Collections (in thousand Baht) — — — 29,219 781 30,000 — — — 29,219 781 30,000	Consolidated financial statements/Separate financial statements 2014 2013 Principal Interest Collections Principal Interest Collections (in thousand Baht) — — — 29,219 781 30,000 — — — 29,219 781 30,000
		30,000

In 2011, the Group entered into a sales agreement with a university, the payment term on sales agreement is Baht 15 million every 6 months for 3 years ending in April 2014. The Group calculates interest rate based on the average rates of interest on short-term loans from a financial institution.

13 EQUIPMENT

Cost At 1 January 2013 Additions Disposals At 31 December 2013 and 1 January 2014 Additions Disposals At 31 December 2014 Depreciation At 1 January 2013 Depreciation charge for the year Disposals At 31 December 2013 and 1 January 2014 Depreciation charge for the year Disposals At 31 December 2014 Net book value At 1 January 2013 Owned assets Assets under finance leases At 31 December 2013 and 1 January 2014 Owned assets At 31 December 2014 Owned assets	Vehicles 10,563 1,012 (4,102) 7,473 — — 7,473 8,239 1,351 (4,102) 5,488 796 — 6,284 — 2,324 2,324 1,985 1,985 1,189 1,189	Consolidated financial statements Furniture & fixtures Computer & office equipment Leasehold improvements Construction in progress (in thousand Baht) 17,137 169,958 68,826 — 323 18,681 440 10 (653) (1,201) — — 16,807 187,438 69,266 10 — 19,584 713 — — (10,782) — (10) 16,807 196,240 69,979 — 6,693 99,152 11,113 — 1,776 20,119 6,910 — (653) (430) — — 7,816 118,841 18,023 — 1,623 19,628 6,718 — — (8,908) — — 9,439 129,561 24,741 — 10,444 70,806 57,713 — — — — — 10,444 70,806 57,713 — 8,991 68,597 51,243 10 8,991 68,597 51,243 10 7,368 66,679 45,238 — 7,368 66,679 45,238 —	Total 266,484 20,466 (5,956
			280,994 20,297 (10,792
			290,499
			125,197 30,156 (5,185
			150,168 28,765 (8,908
			170,025
			138,963 2,324
			141,287
			130,826
			130,826
			120,474
			120,474

– 192 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Cost At 1 January 2013 Additions Disposals At 31 December 2013 and 1 January 2014 Additions Disposals At 31 December 2014 Depreciation At 1 January 2013 Depreciation charge for the year Disposals At 31 December 2013 and 1 January 2014 Depreciation charge for the year Disposals At 31 December 2014 Net book value At 1 January 2013 Owned assets Assets under finance leases At 31 December 2013 and 1 January 2014 Owned assets At 31 December 2014 Owned assets	Vehicles 10,563 1,012 (4,102) 7,473 — — 7,473 8,239 1,351 (4,102) 5,488 796 — 6,284 — 2,324 2,324 1,985 1,985 1,189 1,189	Furniture & fixtures 17,137 323 (653) 16,807 — — 16,807 6,693 1,776 (653) 7,816 1,623 — 9,439 10,444 — 10,444 8,991 8,991 7,368 7,368	Separate financial statements Computer & office equipment Leasehold improvements Construction in progress (in thousand Baht) 169,045 68,826 — 17,960 440 10 (1,074) — — 185,931 69,266 10 14,886 713 — (9,550) — (10) 191,267 69,979 — 99,029 11,113 — 19,748 6,910 — (412) — — 118,365 18,023 — 19,156 6,717 — (8,383) — — 129,138 24,740 — 70,016 57,713 — — — — 70,016 57,713 — 67,566 51,243 10 67,566 51,243 10 62,129 45,239 — 62,129 45,239 —	Total 265,571 19,745 (5,829
				279,487 15,599 (9,560
				285,526
				125,074 29,785 (5,167
				149,692 28,292 (8,383
				169,601
				138,173 2,324
				140,497
				129,795
				129,795
				115,925
				115,925

The gross amount of the Group and Company’s fully depreciated equipment that was still in use as at 31 December 2014 amounted to Baht 90.1 million (2013: Baht 91.0 million).

– 193 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

14 INTANGIBLE ASSETS

Cost At 1 January 2013 Additions At 31 December 2013 and 1 January 2014 Additions Transfers At 31 December 2014 Amortisation At 1 January 2013 Amortisation charge for the year At 31 December 2013 and 1 January 2014 Amortisation charge for the year At 31 December 2014 Net book value At 1 January 2013 At 31 December 2013 and 1 January 2014 At 31 December 2014 15 DEFERRED TAX	Consolidated financial statements/ Separate financial statements Software licences Software licences in progress Total (in thousand Baht) 75,441 1,435 76,876 — 1,785 1,785 75,441 3,220 78,661 3,540 2,745 6,285 2,380 (2,380) — 81,361 3,585 84,946 34,633 — 34,633 5,442 — 5,442 40,075 — 40,075 5,725 — 5,725 45,800 — 45,800 40,808 1,435 42,243 35,366 3,220 38,586 35,561 3,585 39,146	Consolidated financial statements/ Separate financial statements Software licences Software licences in progress Total (in thousand Baht) 75,441 1,435 76,876 — 1,785 1,785 75,441 3,220 78,661 3,540 2,745 6,285 2,380 (2,380) — 81,361 3,585 84,946 34,633 — 34,633 5,442 — 5,442 40,075 — 40,075 5,725 — 5,725 45,800 — 45,800 40,808 1,435 42,243 35,366 3,220 38,586 35,561 3,585 39,146
		78,661 6,285 —
		84,946
		34,633 5,442
		40,075 5,725
		45,800
		42,243
		38,586
		39,146

Deferred tax assets and liabilities as at 31 December were as follows:

Deferred tax assets Deferred tax liabilities Net deferred tax assets	Consolidate financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 290,198 294,773 211,975 203,342 (6,016) (9,612) (5,898) (9,095 284,182 285,161 206,077 194,247	Consolidate financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 290,198 294,773 211,975 203,342 (6,016) (9,612) (5,898) (9,095 284,182 285,161 206,077 194,247
		194,247

– 194 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Movements in total deferred tax assets and liabilities during the year were as follows:

Deferred tax assets Trade and other accounts receivable Inventories Provisions Loss carry forward Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net Deferred tax assets Trade and other accounts receivable Inventories Provisions Fair value change of forward exchange contracts in liabilities Loss carry forward Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net	At 1 January 2014 156,672 22,901 15,231 86,890 13,079 294,773 (4,084) (5,528) (9,612) 285,161 At 1 January 2013 156,435 23,879 12,127 512 87,858 13,890 294,701 — (7,087) (7,087) 287,614	Consolidated financial statements (Charged)/ Credited to: Profit or loss (Note 26) (Charged)/ Credited to: Other Comprehensive income (in thousand Baht) 58 — 14,932 — 6,189 — (26,280) — 1,643 (1,117) (3,458) (1,117) 3,528 — 68 — 3,596 — 138 (1,117) Consolidated financial statements (Charged)/ Credited to: Profit or loss (Note 26) (Charged)/ Credited to: Other Comprehensive income (in thousand Baht) 237 — (978) — 3,104 — (512) — (968) — (811) — 72 — (4,084) — 1,559 — (2,525) — (2,453) —	At 31 December 2014 156,730 37,833 21,420 60,610 13,605 290,198 (556) (5,460) (6,016) 284,182 At 31 December 2013 156,672 22,901 15,231 — 86,890 13,079 294,773 (4,084) (5,528) (9,612) 285,161

– 195 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Deferred tax assets Trade and other accounts receivable Inventories Provisions Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net Deferred tax assets Trade and other accounts receivable Inventories Provisions Fair value change of forward exchange contracts in liabilities Others Total Deferred tax liabilities Fair value change of forward exchange contracts in assets Allowance for purchased return Total Net	At 1 January 2014 153,461 21,849 14,960 13,072 203,342 (3,567) (5,528) (9,095) 194,247 At 1 January 2013 153,251 18,186 12,127 279 13,890 197,733 — (7,087) (7,087) 190,646	Separate financial statements (Charged)/ Credited to: Profit or loss (Note 26) (Charged)/ Credited to: Other Comprehensive income (in thousand Baht) 69 — 7,346 — 694 — 1,641 (1,117) 9,750 (1,117) 3,129 — 68 — 3,197 — 12,947 (1,117) Separate financial statements (Charged)/ Credited to: Profit or loss (Note 26) (Charged)/ Credited to: Other Comprehensive income (in thousand Baht) 210 — 3,663 — 2,833 — (279) — (818) — 5,609 — (3,567) — 1,559 — (2,008) — 3,601 —	At 31 December 2014 153,530 29,195 15,654 13,596 211,975 (438) (5,460) (5,898) 206,077 At 31 December 2013 153,461 21,849 14,960 — 13,072 203,342 (3,567) (5,528) (9,095) 194,247

The loss carry forward will be expired in fiscal year 2017. The deductible temporary differences do not expire under current tax legislation.

– 196 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

16 INTEREST-BEARING LIABILITIES

Current — unsecured Trust receipts Loans from financial institutions Loans from financial institutions Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 1,147,594 1,215,280 1,121,594 1,205,059 1,280,000 1,358,297 1,050,000 1,308,297 2,427,594 2,573,577 2,171,594 2,513,356 2,427,594 2,573,577 2,171,594 2,513,356	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 1,147,594 1,215,280 1,121,594 1,205,059 1,280,000 1,358,297 1,050,000 1,308,297 2,427,594 2,573,577 2,171,594 2,513,356 2,427,594 2,573,577 2,171,594 2,513,356
		2,513,356
		2,513,356

The periods to maturity of interest-bearing liabilities, excluding finance lease liabilities, as at 31 December was as follows:

Within one year Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 2,427,594 2,573,577 2,171,594 2,513,356 2,427,594 2,573,577 2,171,594 2,513,356	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 2,427,594 2,573,577 2,171,594 2,513,356 2,427,594 2,573,577 2,171,594 2,513,356
		2,513,356

Under the term of the loan agreements, the Company has to comply with all terms and conditions which were specified in the agreements such as maintaining the debt to equity ratio, etc.

17 TRADE ACCOUNTS PAYABLE

Note Related parties 4 Other parties Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 86 86 86 86 804,298 801,890 763,506 781,289 804,384 801,976 763,592 781,375	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 86 86 86 86 804,298 801,890 763,506 781,289 804,384 801,976 763,592 781,375
		781,375

The currency denomination of trade accounts payable as at 31 December 2014 and 2013 were as follows:

Thai Baht (Baht) United States Dollars (USD) Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 581,045 591,013 541,107 582,473 223,339 210,963 222,485 198,902 804,384 801,976 763,592 781,375	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 581,045 591,013 541,107 582,473 223,339 210,963 222,485 198,902 804,384 801,976 763,592 781,375
		781,375

– 197 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

18 OTHER PAYABLES

Note Related parties Other payables 4 Accrued expenses 4 Accrued interest expenses 4 Total Other parties Accrued marketing expenses Accrued employee benefit expenses Other payables Advance received Accrued intangible assets Others Total Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 1,847 832 1,544 767 806 758 728 686 — — 167 — 2,653 1,590 2,439 1,453 107,099 68,685 78,269 67,329 73,248 65,789 73,248 65,789 39,784 36,611 38,887 36,300 10,550 24,562 10,550 24,562 11,575 11,575 11,575 11,575 22,146 27,332 21,622 26,830 264,402 234,554 234,151 232,385 267,055 236,144 236,590 233,838	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 1,847 832 1,544 767 806 758 728 686 — — 167 — 2,653 1,590 2,439 1,453 107,099 68,685 78,269 67,329 73,248 65,789 73,248 65,789 39,784 36,611 38,887 36,300 10,550 24,562 10,550 24,562 11,575 11,575 11,575 11,575 22,146 27,332 21,622 26,830 264,402 234,554 234,151 232,385 267,055 236,144 236,590 233,838
		1,453
		67,329 65,789 36,300 24,562 11,575 26,830
		232,385
		233,838

19 EMPLOYEE BENEFIT OBLIGATIONS

Movement in the present value of the defined benefit obligations:

Defined benefit obligations at 1 January Current service costs and interest Actuarial gains in other comprehensive income Defined benefit obligations at 31 December	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 32,637 27,337 32,637 27,337 6,022 5,300 6,022 5,300 (5,583) — (5,583) — 33,076 32,637 33,076 32,637	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 32,637 27,337 32,637 27,337 6,022 5,300 6,022 5,300 (5,583) — (5,583) — 33,076 32,637 33,076 32,637
		32,637

Expense recognised in profit or loss

Current service costs Interest on obligation Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 4,880 4,343 4,880 4,343 1,142 957 1,142 957 6,022 5,300 6,022 5,300	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 4,880 4,343 4,880 4,343 1,142 957 1,142 957 6,022 5,300 6,022 5,300
		5,300

– 198 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The expense is recognised in the following line item in the statement of income:

Administrative expenses Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 6,022 5,300 6,022 5,300 6,022 5,300 6,022 5,300	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 6,022 5,300 6,022 5,300 6,022 5,300 6,022 5,300
		5,300

Actuarial gain recognised in other comprehensive income:

Included in retained earnings: At 1 January Recognised during the year At 31 December	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — — — (5,583) — (5,583) — (5,583) — (5,583) —	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) — — — — (5,583) — (5,583) — (5,583) — (5,583) —
		—

Principal actuarial assumptions at the reporting date (expressed as weighted averages):

	Consolidated	Consolidated	Separate
	financial	statements	financial statements
	2014	2013	2014	2013
		(%)
Discount rate	3.5	3.5	3.5	3.5
Future salary increases	6	6	6	6
Employee turnover rate	0–22	0–22	0–22	0–22

Assumptions regarding future mortality are based on published statistics and mortality tables.

20 SHARE CAPITAL

Par value per share (in Baht) Authorised At 1 January — ordinary shares 1 Reduction of shares Issuance of new shares 1 At 31 December — ordinary shares 1 Issued and fully paid-up At 1 January — ordinary shares 1 Issuance of new shares 1 At 31 December — ordinary shares 1	2014 2013 Number Baht Number Baht (thousand shares/thousand Baht) 350,199 350,199 250,000 250,000 — — (16,534) (16,534 — — 116,733 116,733 350,199 350,199 350,199 350,199 350,199 350,199 233,466 233,466 — — 116,733 116,733 350,199 350,199 350,199 350,199	2014 2013 Number Baht Number Baht (thousand shares/thousand Baht) 350,199 350,199 250,000 250,000 — — (16,534) (16,534 — — 116,733 116,733 350,199 350,199 350,199 350,199 350,199 350,199 233,466 233,466 — — 116,733 116,733 350,199 350,199 350,199 350,199
		350,199
		233,466 116,733
		350,199

– 199 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Issue of ordinary shares

At the annual general meeting of the shareholders of the Company held on 26 April 2013, the shareholders passed the resolution to approve the Company to decrease the authorised share capital from Baht 250 million to Baht 233 million in order to reduce the authorised share capital that the Company’s employees have not exercised warrant, the remaining share of stock dividend and the remaining share capital that was not on General Mandate and approved the Company to increase the authorised share capital from Baht 233 million to Baht 350 million, with the par value of Baht 1 each, by means of the issuance of 117 million ordinary shares, with the par value of Baht 1 each. The offering price was Baht 3.25 per share. The increase of share capital was registered with Ministry of Commerce on 19 June 2013.

Share premium

21 RESERVES

Legal reserve

Movements in reserves

Movements in reserves are shown in the statements of changes in equity.

22 OPERATING SEGMENT

.	Segment	1	Commercial products
.	Segment	2	Consumer products
.	Segment	3	Value added products
.	Segment	4	Phones

None of other operations meets the quantitative thresholds for determining reportable segments in 2014 or 2013.

– 200 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Information about reportable segments:

Segment 1 2014 2013 4,478 4,739 4,478 4,739 239 261 291 309	Segment 1 2014 2013 4,478 4,739 4,478 4,739 239 261 291 309	Segment 2 2014 2013 7,965 8,478 7,965 8,478 357 407 861 971	Segment 2 2014 2013 7,965 8,478 7,965 8,478 357 407 861 971	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2014 2013 2014 2013 2014 2013 (in million Baht) 1,424 1,475 3,544 2,069 17,411 16,761 1,424 1,475 3,544 2,069 17,411 16,761 172 193 128 107 896 968 140 159 457 116 1,749 1,555	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2014 2013 2014 2013 2014 2013 (in million Baht) 1,424 1,475 3,544 2,069 17,411 16,761 1,424 1,475 3,544 2,069 17,411 16,761 172 193 128 107 896 968 140 159 457 116 1,749 1,555	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2014 2013 2014 2013 2014 2013 (in million Baht) 1,424 1,475 3,544 2,069 17,411 16,761 1,424 1,475 3,544 2,069 17,411 16,761 172 193 128 107 896 968 140 159 457 116 1,749 1,555	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2014 2013 2014 2013 2014 2013 (in million Baht) 1,424 1,475 3,544 2,069 17,411 16,761 1,424 1,475 3,544 2,069 17,411 16,761 172 193 128 107 896 968 140 159 457 116 1,749 1,555	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2014 2013 2014 2013 2014 2013 (in million Baht) 1,424 1,475 3,544 2,069 17,411 16,761 1,424 1,475 3,544 2,069 17,411 16,761 172 193 128 107 896 968 140 159 457 116 1,749 1,555	Consolidated financial statements Segment 3 Segment 4 Total reportable segments 2014 2013 2014 2013 2014 2013 (in million Baht) 1,424 1,475 3,544 2,069 17,411 16,761 1,424 1,475 3,544 2,069 17,411 16,761 172 193 128 107 896 968 140 159 457 116 1,749 1,555	Others 2014 2013 1,108 1,437 1,108 1,437 58 67 226 137	Others 2014 2013 1,108 1,437 1,108 1,437 58 67 226 137	Total 2014 2013 18,519 18,198 18,519 18,198 954 1,035 1,975 1,692	Total 2014 2013 18,519 18,198 18,519 18,198 954 1,035 1,975 1,692
4,478	4,739	7,965	8,478	1,424	1,475	3,544	2,069	17,411	16,761	1,108	1,437	18,519	18,198
239	261	357	407	172	193	128	107	896	968	58	67	954	1,035
291	309	861	971	140	159	457	116	1,749	1,555	226	137	1,975	1,692

Reconciliation of reportable segment profit or loss and assets

Gross profit or loss Total profit for reportable segments Other segment’s profit Unallocated amounts: — Other income — Other corporate expenses — Finance cost Consolidated profit before income tax Assets Total assets for reportable segments Other segment’s assets Other unallocated amounts Consolidated total assets	Consolidated financial statements 2014 2013 (in million Baht) 896 968 58 67 954 1,035 74 147 (709) (852 (88) (85 231 245 1,749 1,555 226 137 3,070 3,351 5,045 5,043	Consolidated financial statements 2014 2013 (in million Baht) 896 968 58 67 954 1,035 74 147 (709) (852 (88) (85 231 245 1,749 1,555 226 137 3,070 3,351 5,045 5,043
		1,035 147 (852 (85
		245
		1,555 137 3,351
		5,043

Geographic segments

The Group is managed and operates principally in Thailand. There are no material revenues derived from, or assets located in, foreign countries.

Major customer

The Group has no major customer.

– 201 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

23 OTHER INCOME

Note Income from marketing refund Interest income 4 Management income 4 Others Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 27,510 80,954 27,510 42,852 6,180 23,200 28,205 35,777 — — 37,148 27,963 4,599 15,679 4,424 14,545 38,289 119,833 97,287 121,137	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 27,510 80,954 27,510 42,852 6,180 23,200 28,205 35,777 — — 37,148 27,963 4,599 15,679 4,424 14,545 38,289 119,833 97,287 121,137
		121,137

24 EMPLOYEE BENEFIT EXPENSES

Management Wages and salaries Others Other employees Wages and salaries Others Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 48,182 42,621 43,172 38,087 1,933 1,772 1,703 1,554 50,115 44,393 44,875 39,641 217,486 223,288 213,771 223,288 24,805 23,412 24,698 23,412 242,291 246,700 238,469 246,700 292,406 291,093 283,344 286,341	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 48,182 42,621 43,172 38,087 1,933 1,772 1,703 1,554 50,115 44,393 44,875 39,641 217,486 223,288 213,771 223,288 24,805 23,412 24,698 23,412 242,291 246,700 238,469 246,700 292,406 291,093 283,344 286,341
		39,641
		223,288 23,412
		246,700
		286,341

The Company has established a contributory provident fund for its employees. Membership of the fund is on a voluntary basis. Contributions are made monthly by the employees at the rate of 5% of their basic salaries and by the Company at the rate of 5% of the employees’ basic salaries. The provident fund is registered with the Ministry of Finance as juristic entity and is managed by a licensed Fund Manager.

– 202 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

25 EXPENSES BY NATURE

The statements of comprehensive income include an analysis of expenses by function. Expenses by nature disclosed in accordance with the requirements of various TFRS were as follows:

Included in cost of sales of goods:
Changes in inventories
Purchase
Provision (reversal) of allowance for obsolete and
defective stocks
Total
Included in selling expenses:
Advertising and marketing expenses
Transportation expenses
Employee benefit expenses
Others
Total
Included in administrative expenses:
Employee benefit expenses
Rental expense
Depreciation and amortisation
Service charge
Management fee
Bad debts and doubtful accounts
Provision expenses
Others
Total

Consolidated
financial statements
Separate
financial statements
2014
2013
2014
2013
(in thousand Baht)
(357,800)
(495,813)
(34,356)
(460,396)
17,847,613
17,664,132
14,232,769
16,697,676
74,659
(4,887)
36,729
18,314
17,564,472
17,163,432
14,235,142
16,255,594
206,135
281,470
197,640
265,591
32,466
32,892
30,835
30,404
22,322
21,649
22,243
21,649
3,591
2,938
3,591
2,938
264,514
338,949
254,309
320,582
260,060
258,696
256,316
258,696
37,113
37,935
37,113
37,935
34,489
35,596
34,018
35,227
15,300
15,661
15,300
15,661
11,574
11,329
9,402
10,776
2,445
41,238
2,502
41,111
—
13,349
—
13,349
54,289
52,374
51,132
49,827
415,270
466,178
405,783
462,582

– 203 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

26 INCOME TAX EXPENSE

Income tax recognised in profit or loss

Note Current tax expense Current year Over provided in prior year Deferred tax expense Movements in temporary differences 15 Total	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 47,382 53,690 47,382 53,690 — (1,491) — (1,491 47,382 52,199 47,382 52,199 (138) 2,453 (12,947) (3,601 (138) 2,453 (12,947) (3,601 47,244 54,652 34,435 48,598	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in thousand Baht) 47,382 53,690 47,382 53,690 — (1,491) — (1,491 47,382 52,199 47,382 52,199 (138) 2,453 (12,947) (3,601 (138) 2,453 (12,947) (3,601 47,244 54,652 34,435 48,598
		52,199
		(3,601
		(3,601
		48,598

Income tax recognised in other comprehensive income

Defined benefit plan actuarial gains Total	Consolidated financial statements/Separate financial statements 2014 2013 Before tax Tax (expense) benefit Net of tax Before tax Tax (expense) benefit Net of tax (in thousand Baht) 5,583 (1,117) 4,466 — — — 5,583 (1,117) 4,466 — — —	Consolidated financial statements/Separate financial statements 2014 2013 Before tax Tax (expense) benefit Net of tax Before tax Tax (expense) benefit Net of tax (in thousand Baht) 5,583 (1,117) 4,466 — — — 5,583 (1,117) 4,466 — — —
		—

Reconciliation of effective tax rate

Accounting profit before income tax, net Tax at the applicable tax rates Tax effect of income and expenses that are not taxable income or not deductible in determining taxable profit, net Total	Consolidated financial statements 2014 2013 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 231,338 244,826 20.0 46,268 20.0 48,965 0.4 976 2.0 5,687 20.4 47,244 22.0 54,652	Consolidated financial statements 2014 2013 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 231,338 244,826 20.0 46,268 20.0 48,965 0.4 976 2.0 5,687 20.4 47,244 22.0 54,652
		48,965 5,687
		54,652

– 204 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Accounting profit before income tax, net Tax at the applicable tax rates Tax effect of income and expenses that are not taxable income or not deductible in determining taxable profit, net Total Income tax reduction	Separate financial statements 2014 2013 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 168,936 214,699 20.0 33,787 20.0 42,940 0.4 648 3.0 5,658 20.4 34,435 23.0 48,598	Separate financial statements 2014 2013 Rate (%) (in thousand Baht) Rate (%) (in thousand Baht) 168,936 214,699 20.0 33,787 20.0 42,940 0.4 648 3.0 5,658 20.4 34,435 23.0 48,598
		42,940 5,658
		48,598

Royal Decree No. 530 B.E. 2554 dated 21 December 2011 grants a reduction in the corporate income tax rate for the three accounting periods 2012, 2013 and 2014; from 30% to 23% for the accounting period 2012 which begins on or after 1 January 2012 and to 20% for the following two accounting periods 2013 and 2014 which begin on or after 1 January 2013 and 2014, respectively. Royal Decree No. 577 B.E. 2557 dated 10 November 2014 extends the reduction to 20% for the accounting period 2015 which begins on or after 1 January 2015.

The Group has applied the reduced tax rate of 20% in measuring deferred tax assets and liabilities as at 31 December 2014 and 2013 in accordance with the clarification issued by the FAP in 2012.

27 EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share for year ended 31 December 2014 and 2013 were based on the profit for the period attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the year.

Profit attributable to equity holders of the Company (Basic) Number of ordinary shares outstanding at 1 January Effect of shares issued on 19 June 2013 Weighted average number of ordinary shares outstanding Basic earnings per share (in Baht)	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (thousand Baht/thousand shares) 184,094 190,174 134,501 166,101 350,199 233,466 350,199 233,466 — 62,684 — 62,684 350,199 296,150 350,199 296,150 0.53 0.64 0.38 0.56	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (thousand Baht/thousand shares) 184,094 190,174 134,501 166,101 350,199 233,466 350,199 233,466 — 62,684 — 62,684 350,199 296,150 350,199 296,150 0.53 0.64 0.38 0.56
		233,466 62,684
		296,150
		0.56

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

28 DIVIDENDS

29 FINANCIAL INSTRUMENTS

Financial risk management policies

Capital management

Interest rate risk

Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s operations and its cash flows. The Company is primarily exposed to interest rate risk from its borrowings (Note 16). Most of the interest rates of financial assets and liabilities of the Group are floating rates, which are based on market rates such as the interest prime rate of commercial banks, saving interest rate or other benchmark floating rates.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

The effective interest rates of interest-bearing financial liabilities as at 31 December 2014 and 2013 and the periods in which those liabilities mature or re-price were as follows:

Effective interest rates (% per annum) 2014 Current Trust receipts 1.05–4.40 Loan from financial institutions 2.90–4.15 Total 2013 Current Trust receipts 1.05–4.60 Loan from financial institutions 3.20–4.40 Total Effective interest rates (% per annum) 2014 Current Trust receipts 1.05–4.35 Loan from financial institutions 3.75–4.15 Total 2013 Current Trust receipts 1.05–4.60 Loan from financial institutions 3.20–4.40 Total	Consolidated financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 1,148 — — 1,148 1,280 — — 1,280 2,428 — — 2,428 1,216 — — 1,216 1,358 — — 1,358 2,574 — — 2,574 Separate financial statements Within 1 year After 1 year but within 5 years After 5 years Total (in million Baht) 1,122 — — 1,122 1,050 — — 1,050 2,172 — — 2,172 1,205 — — 1,205 1,308 — — 1,308 2,513 — — 2,513	Total 1,148 1,280
		2,428
		1,216 1,358
		2,574
		2,172
		1,205 1,308
		2,513

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

Foreign currency risk

At 31 December, the Group and the Company were exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies:

Note United States Dollars Trade accounts receivable 6 Trade accounts payable 17 Trust receipts Gross balance sheet exposure Forward contracts 29 Swap contracts 29 Net exposure Credit risk	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in million Baht) — 17 — 2 (223) (211) (222) (199) (196) (465) (196) (454) (419) (659) (418) (651) 250 693 201 616 456 — 456 — 287 34 239 35

Liquidity risk

Fair value

A number of Group’s accounting policies and disclosures require the determination of fair value, for both financial and non financial assets and liabilities. The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Fair values have been determined for the measurement and/or disclosure purpose based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

The fair value of trade receivables, trade payables and bank overdrafts and loans from financial institutions is taken to approximate the carrying value.

The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price at the balance sheet date for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

– 208 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

30 COMMITMENTS WITH NON-RELATED PARTIES

Non-cancellable operating lease commitments Within one year After one year but within five years Total Other commitments Unutilised credits facilities Forward contracts Swap contracts Bank guarantee Total Lease and service agreements	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in million Baht) 34 17 34 17 46 2 46 2 80 19 80 19 2,425 2,162 2,510 2,002 250 693 201 616 456 — 456 — 165 165 165 165 3,296 3,020 3,332 2,783	Consolidated financial statements Separate financial statements 2014 2013 2014 2013 (in million Baht) 34 17 34 17 46 2 46 2 80 19 80 19 2,425 2,162 2,510 2,002 250 693 201 616 456 — 456 — 165 165 165 165 3,296 3,020 3,332 2,783
		19
		2,002 616 — 165
		2,783

The Group had commitments for building and warehouse lease contracts with terms of 1–3 years.

Forward contracts

In 2014, the Group has forward contract facilities with banks in the amount of Baht 4,180 million equivalent to USD126 million (2013: Baht 3,843 million equivalent to USD117 million).

As at 31 December 2014, the Group had purchased forward contracts in the amount of USD8 million, equivalent to Baht 250.29 million. The contracts are due in June 2015 (2013: USD22 million, equivalent to Baht 693.26 million which the contracts were due in June 2014).

Swap contracts

As at 31 December 2014, the Group had purchased a currency swap contract in the amount of USD14 million equivalent to Baht 456 million. The contracts are due in March 2015. (31 December 2013: the Group has no currency swap contract).

Others

31 EVENTS AFTER THE REPORTING PERIOD

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

NOTES TO THE FINANCIAL STATEMENTS

At the Board of Directors’ meeting held on 24 February 2015, the Board approved to propose for approval of cash dividend at the rate of Baht 0.20 per share, in the totally amount of Baht 70.04 million, approximately, to the annual general meeting of the shareholders of the Company.

32 THAI FINANCIAL REPORTING STANDARDS (TFRS) NOT YET ADOPTED

A number of new and revised TFRS have been issued but are not yet effective and have not been applied in preparing these financial statements. Those new and revised TFRS that may be relevant to the Group’s operations, which become effective for annual financial periods beginning on or after 1 January in the year indicated, are set out below. The Group does not plan to adopt these TFRS early.

		Year
TFRS	Topic	effective
TAS 1 (revised 2014)	Presentation of Financial Statements	2015
TAS 2 (revised 2014)	Inventories	2015
TAS 7 (revised 2014)	Statement of Cash Flows	2015
TAS 8 (revised 2014)	Accounting Policies, Changes in Accounting Estimates and Errors	2015
TAS 10 (revised 2014)	Events after the Reporting Period	2015
TAS 12 (revised 2014)	Income Taxes	2015
TAS 16 (revised 2014)	Property, Plant and Equipment	2015
TAS 17 (revised 2014)	Leases	2015
TAS 18 (revised 2014)	Revenue	2015
TAS 19 (revised 2014)	Employee Benefits	2015
TAS 21 (revised 2014)	The Effects of Changes in Foreign Exchange Rates	2015
TAS 23 (revised 2014)	Borrowing Costs	2015
TAS 24 (revised 2014)	Related Party Disclosures	2015
TAS 26 (revised 2014)	Accounting and Reporting by Retirement Benefit Plans	2015
TAS 27 (revised 2014)	Separate Financial Statements	2015
TAS 28 (revised 2014)	Investments in Associates and Joint Ventures	2015
TAS 33 (revised 2014)	Earnings per Share	2015
TAS 34 (revised 2014)	Interim Financial Reporting	2015
TAS 36 (revised 2014)	Impairment of Assets	2015
TAS 37 (revised 2014)	Provisions, Contingent Liabilities and Contingent Assets	2015
TAS 38 (revised 2014)	Intangible Assets	2015
TFRS 8(revised 2014)	Operating Segments	2015
TFRS 10	Consolidated Financial Statements	2015
TFRS 12	Disclosure of Interests in Other Entities	2015
TFRS 13	Fair Value Measurement	2015
TSIC 25 (revised 2014)	Income Taxes — Changes in the Tax Status of an Entity or its	2015
	Shareholders
TSIC 27 (revised 2014)	Evaluating the Substance of Transactions Involving the Legal Form	2015
	of a Lease
TFRIC 1(revised 2014)	Changes in Existing Decommissioning, Restoration and Similar	2015
	Liabilities
TFRIC 10 (revised 2014)	Interim Financial Reporting and Impairment	2015
TFRIC 13 (revised 2014)	Customer Loyalty Programmes	2015
TFRIC 14	TAS 19 (revised 2014) — The Limit on a Defined Benefit Asset,	2015
	Minimum Funding Requirements and their Interaction

– 210 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

MANAGEMENT DISCUSSION AND ANALYSIS OF THE TARGET GROUP

Set out below is the management discussion and analysis of the business and performance of SiS Distribution (Thailand) Public Company Limited and its subsidiaries for the three years ended 31 December 2014, 2015 and 2016 and the six months ended 30 June 2017.

1. Business and financial review

For the six months ended 30 June 2017

Working Capital and Financial Position at the beginning of the period

The Company started to operate its business from the beginning of 2017 with three main capital structures as follows: (1) Shareholder’s equity of 1,709 Million Baht (2) Loans from financial institutions of 1,219 Million Baht and (3) Credit given by Trade Accounts Payable of 1,684 Million Baht. Most of them were mainly invested in inventories and credit granted to customer (Trade Accounts Receivable). In the beginning of the period, there were inventories of 1,718 Million Baht and Trade Accounts Receivable of 2,361 Million Baht. These two current assets was totally 4,079 Million Baht.

Operating Performance

Total revenue of the Company and its subsidiaries for the first half of the year of 2017 was 9,673 Million Baht, an increase of 692 Million Baht or 7.7% from the same period of last year. This increase were mainly due to both the selling of commercial and consumer products. In particular, the corporate IT market has continued to have a high potential for growth. While the smartphone market was highly competitive in both mid-range and premium segments. As a result, sales in this group decreased. However, entry level smartphones that the company distributed continues to grow. For details of the reportable segments, please refer to note 9 to the financial statements for the six months ended 30 June 2017.

Operating Profit

The Company’s gross profit from sales of goods and services for the six months period ended 30 June 2017 was 533 Million Baht, 18% better than the interim period 2016, and equivalent to 5.5% of sales. Net Profit was 142 Million Baht or increased 27% from the last interim period.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Financial Position at the end of the period

Assets

The main assets of the Company are Trade Accounts Receivable and Inventories. Both items are 84% of the total assets. The details are as follows:

Trade Accounts Receivable

As at 30 June 2017, Trade Accounts Receivable was 2,583 Million Baht or increased 9% from the previous year and no change in normal credit term granted to customers.

Inventories

As at 30 June 2017, Inventories was 1,818 Million Baht, or increased 100 Million Baht.

Liabilities and Equities

The main liabilities of the Company are Trade Accounts Payable and Loans from Financial Institutions. Both items are 88% of the total liabilities. The details are as follows:

Trade Accounts Payable

As at 30 June 2017, Trade Accounts Payable was 1,621 Million Baht or decreased 63 Million Baht from last year end.

Loans from Financial Institutions

As at 30 June 2017, net Loan from Financial Institutions increased by 272 Million Baht to 1,491 Million Baht when compared with 31 December 2016. Interest bearing Debt to Equity was increased from 0.71 times to 0.87 times when compared with the level at 31 December 2016.

Cash Flows

Cash Flows from Operating Activities

During the six months period ended 30 June 2017, net cash used in Operating Activities of 106.4 Million Baht. The main items that decreased cashflow from Operating Activities of the period was mainly caused by increase in Trade Accounts Receivable.

Shareholder’s Equity

Shareholder’s Equity at 30 June 2017 was 1,711 Million Baht or net increased 2 Million Baht after payment of 140.08 Million Baht dividend during the period.

– 212 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Dividend Payment

140.08 Million Baht dividend was paid during the period, representing total dividend of 0.40 Baht per share from the profit for the year ended 31 December 2016.

No interim dividend was declared for the six months period ended 30 June 2017.

For the year ended 31 December 2016

Working Capital and Financial Position at the beginning of the year

The Company started to operate its business from the beginning of 2016 with three main capital structures as follows: 1) Shareholder’s equity of 1,587 Million Baht 2) Loans from financial institutions of 1,258 Million Baht and 3) Credit given by Trade Accounts Payable of 1,245 Million Baht. Most of them were mainly invested in inventories and credit granted to customer (Trade Accounts Receivable). In the beginning of the year, there were inventories of 1,323 Million Baht and Trade Accounts Receivable of 2,045 Million Baht. These two current assets was totally 3,368 Million Baht.

Operating Performance

The total revenue of the Company in 2016 was 18,495 Million Baht or increased 2.1% compared to the previous year. The Company has divided into business units by breaking down revenue and gross profit margin of each business unit as following:

Business Unit Commercial Consumer Value Added Phone Others Total	Revenues 4,739 8,479 1,474 2,069 1,437	2013 Gross Profit 261 407 193 107 67	Gross Profit (%) 5.5% 4.8% 13.1% 5.2% 4.7%	Revenues 4,478 7,965 1,424 3,544 1,108	2014 Gross Profit 239 357 172 128 58	Gross Profit (%) 5.3% 4.5% 12.1% 3.6% 5.2%	Revenues 5,186 6,507 1,578 3,239 1,459	2015 Gross Profit 216 309 200 112 104	Gross Profit (%) 4.2% 4.7% 12.7% 3.5% 7.1%	Revenues 5,145 6,523 2,511 2,818 1,378	2016 Gross Profit 221 322 247 92 55	Gross Profit (%) 4.3% 4.9% 9.8% 3.3% 4.0%	Change Revenues Gross Profit (%) -0.8% 2.3% 0.2% 4.2% 59.1% 23.5% -13.0% -17.9% -5.6% -47.1%	Change Revenues Gross Profit (%) -0.8% 2.3% 0.2% 4.2% 59.1% 23.5% -13.0% -17.9% -5.6% -47.1%
	18,198	1,035	5.7%	18,519	954	5.2%	17,969	941	5.2%	18,375	937	5.1%	2.3%	-0.4%

Table shown Revenues and Gross Profit Margin of each Business Unit

In 2016, the total revenues of Value Added Business Unit increased from 1,578 Million Baht to 2,511 Million Baht. Because the government has issued a policy to promote the investment in capital expenditure in 2016 which allowed corporate entities to deduct 200% of computer spendings for corporate income tax purposes, so each of the companies increased in their spendings, especially in Quarter 4. It was a result of a 59% increase in total revenues and 23.5% increase in gross profit margin respectively. For Phone Business Unit, the total revenues decreased 13% because there was one off big project worth 764 Million Baht last year. Apart from the said project, the revenues of Phone also increased 343 Million Baht or 14% from last year.

– 213 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Operating Profit

The Company’s gross profit from sales of goods and services for the year 2016 was 968 Million Baht, slightly better than last year, and equivalent to 5.25% of sales. Net Profit was 227 Million Baht or increased 36.7% from the previous year.

Financial Position at the end of the year

Assets

The main assets of the Company are Trade Accounts Receivable and Inventories. Both items are 83% of the total assets. The details are as follows:

Trade Accounts Receivable

As at 31 December 2016, Trade Accounts Receivable was 2,412 Million Baht or increased 18% from the previous year and equivalent to an average collection period of 48.9 days which was in line with the normal industry standard period. The reason why Trade Accounts Receivable (net) increased significantly in 2016 because sales in December 2016 reached as high as 1,936 Million Baht while sales in December 2015 was only 1,456 Million Baht or increased by 480 Million Baht due to the government’s tax incentive policy on capital expenditure spending in 2016.

Over the past years, Trade Accounts Receivable and Average Collection Period are illustrated as the diagram below:

==> picture [439 x 155] intentionally omitted <==

----- Start of picture text -----

3,000 54.0
2,500 52.0
50.0
2,000
48.0
1,500
46.0
1,000
44.0
500 42.0
0 40.0
2013 2014 2015 2016
Accounts Receivable (M.Baht) 2,298 1,951 2,045 2,412
Average Collection Period (Days) 53.4 46.6 45.5 48.9
----- End of picture text -----

Inventories

As at 31 December 2016, Inventories was 1,718 Million Baht, or increased 395 Million Baht and equivalent to Average Day Sale Period of 30.6 days. The higher inventory level was goods in transit that ready for sale in January 2017 of 366 Million Baht which included in inventories.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Over the past years, Inventories and Average Day Sale Period are illustrated as the diagram below.

==> picture [435 x 155] intentionally omitted <==

----- Start of picture text -----

2,500 45.0
40.0
2,000 35.0
30.0
1,500
25.0
20.0
1,000
15.0
500 10.0
5.0
0 0.0
2013 2014 2015 2016
Inventory (M.Baht) 1,692 1,975 1,323 1,718
Average Day Sale Period (Days) 31.6 39.0 36.9 30.6
----- End of picture text -----

Liabilities and Equities

The main liabilities of the Company are Trade Accounts Payable and Loans from Financial Institutions. Both items are 89% of the total liabilities. The details are as follows:

Trade Accounts Payable

As at 31 December 2016, Trade Accounts Payable was 1,684 Million Baht or increased 439 Million Baht from the previous year and equivalent to an average payment period of 30.2 days which was standard payment period given by accounts payable.

Over the past years, Trade Accounts Payables and Average Payment Period are illustrated as the diagram below.

	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 2013 2014 2015 2016 802 804 1,245 1,684 20.9 16.4 21.6 30.2	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 2013 2014 2015 2016 802 804 1,245 1,684 20.9 16.4 21.6 30.2	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 2013 2014 2015 2016 802 804 1,245 1,684 20.9 16.4 21.6 30.2	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 2013 2014 2015 2016 802 804 1,245 1,684 20.9 16.4 21.6 30.2
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800
	2013	2014	2015	2016
Account Payable (M.Baht)	802	804	1,245	1,684
Average Payment Period (Days)	20.9	16.4	21.6	30.2

– 215 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Loans from Financial Institutions

At the end of 2016, as a result of profitability from operation and improvement of assets management, Loan from Financial Institutions decreased by 38.8 Million Baht from the previous year to 1,219.2 Million Baht and Interest bearing Debt to Equity was 0.71 time which was the lowest level of the Company.

==> picture [433 x 155] intentionally omitted <==

----- Start of picture text -----

3,000 2.0
1.8
2,500 1.6
1.4
2,000
1.2
1,500 1.0
0.8
1,000 0.6
0.4
500
0.2
0 0.0
2013 2014 2015 2016
Loan from Financial Institution (M.Baht) 2,574 2,428 1,258 1,219
Interest Bearing Debt to Equity (Time) 1.9 1.6 0.79 0.71
----- End of picture text -----

Cash Flows

Cash Flows from Operating Activities

In 2016, the Company had a cash cycle of 49.4 days and increased cash flow from Operating Activities of 310.5 Million Baht.

The main items that increased cashflow from Operating Activities of the year 2016 were

Profit for the year after non-cash adjustments 454 Million Baht
— Increase in Trade Accounts Payable 438 Million Baht — Decrease in Other Receivables 298 Million Baht

The main items that decreased cashflow from Operating Activities of the year 2016 were

Increase in Trade Accounts Receivable 353 Million Baht
— Increase in Inventories 463 Million Baht


-400 -200 0 200 400 600 800 1,000 1,200 1,400 1,600

	2013	2014	2015	2016
Cashfow from operation (M.Baht)	-243.5	365.5	1,406.8	310.5

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Shareholder’s Equity

Shareholder’s Equity in 2016 was 1,709 Million Baht or increased 122.4 Million Baht from the previous year.

==> picture [407 x 155] intentionally omitted <==

----- Start of picture text -----

2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2013 2014 2015 2016
Dividend (M.Baht) 70 70 105 140
Shareholder's Equity (M.Baht) 1,369 1,488 1,587 1,709
----- End of picture text -----

Dividend Payment

In 2016, the Company had a basic earnings per share was 0.65 Baht. The Board of Directors’ meeting approved to propose a dividend payment for the year 2016 from the total operating results at the rate of 0.40 Baht per share, which represented a 33% increase from the previous year because the Company had a better cashflow and a lower Debt to Equity. And then it will be proposed for approval from the Annual General Meeting of Shareholders for the year 2017.

If the dividend payment is approved by this Annual General Meeting of Shareholders, then the total dividend payment will be 140 Million Baht, equivalent to dividend payout of 61.6% and dividend yield of 6.02% when compared to the closing price of February 23, 2017 (Baht 6.65) which was the day before notification the dividend payment resolution to the Stock Exchange of Thailand or equivalent to 6.2% when compared with the closing price of December 30, 2016 (Baht 6.50).

At the Annual General Meeting of the Shareholders held on 21 April 2017, the Shareholders approved the total dividend of 0.40 Baht per share.

For the year ended 31 December 2015

Working Capital and Financial Position at the beginning of the year

In the year 2015, the Company begins the operation from the equity at the amount of 1,488 Million Baht together with loan from financial institutions at the amount of 2,428 Million Baht, totally 3,916 Million Baht to mainly invest in inventories, the inventories was 1,975 Million Baht at the beginning of the year. Also, the Company invested in grating credit for customers (account receivables), the account receivables was 1,951 Million Baht. These two current assets was totally 3,927 Million Baht which was nearly the equity and the loans from financial institutions.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Operation Performance

In the year 2015, the total revenue of the Company was 18,121 Million Baht, decreased 2.5% from the previous year. This is able to illustrate by breaking down through the business units as following:

The sale by Business Unit (Million Baht)

Business Unit Commercial Consumer Value Added Phone Others Total	2013 4,739 8,479 1,474 2,069 1,437 18,198	2014 4,478 7,965 1,424 3,544 1,108 18,519	2015 5,186 6,507 1,578 3,239 1,459 17,969	15/14 15.8% -18.3% 10.8% -8.6% 31.7% -2.97%	14/13 -5.5% -6.1% -3.4% 71.3% -22.9%
					1.76%

Commercial

This business unit provides the IT products for using in corporation. There was the growth of sale at 15.8%, comparing to the year 2014. This is because the political crisis was improved under the new government which influenced the investment among business sector.

Consumer

This business unit provides the IT products for using in households. The main products of this sector are PC which decreased noticeably at 18.3%. This caused from 3 main reasons: 1) The replacement of PC by smartphone/tablet which some of their features could use as the PC. 2) Lacking of the new innovation of PC which can lead the consumers buy the new one to replace their existing PC. 3) There was the decreasing in purchasing power of households which is in accordance with the information from the Bank of Thailand which disclosed that the household debt was dramatically increased.

Value Added

This business unit provides the sales of IT products together with the new technology. There are many ranges of services that are necessary to provides to customers in order to support those sales both pre-sales which is the test of using before sales and after sales which is the assistance in order to maximize the use of those products for customers.

The majority of the products is the products for data center such as virtualization which enhance the Hyper Converge, including server, storage, network and software to be the system which is able to support many ranges of work. This kind of product is demanding among the market and there is the new technology continuously entry to the market. In the year 2015, this business grew 10.8%.

– 218 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Phone

This business unit provides smartphones. However, the smartphone market is large and the Company gains not much market share because the Company still could not expand the channel of sales and most manufacturers provides the sales by themselves.

In the year 2015, the total sales of smartphone was 3,239 Million Baht, which decreased 8.6% when compared to the previous year. This was because there was sales of smartphone to the large project work which continued from the year 2014 slightly decreased in the year 2015.

In summary, the increasing in sales of Commercial business unit and Value Added business unit was not coverage the decreasing in sales of Consumer business unit which affected the decreasing in total sales at 2.97% in the year 2015.

Operating Profit

In the year 2015, the gross profit was 966 Million Baht or 5.36% of sales which slightly improved from the previous year. While, the net profit before share loss of investment in associates was 250 Million Baht which also improved from the previous year 35.7%.

Nevertheless, the Company has invested in two associates namely, Wiko Mobile (Thailand) Company Limited which operates in manufacturing and selling smartphone and Nippon Pack Trading Company Limited which operates in electronic advertising media. These two associates have been in initial investment period then they still got loss and the Company has to share loss from the investment in this year as 83 Million Baht. This affected the decreasing in the net profit of the Company to 166 Million Baht or decreased 9.6%, comparing to the previous year.

Total Revenues Gross Profit % gross profit Selling and Administrative expenses Profit before tax and interest Finance Cost Profit before tax Corporate Tax Profit before share loss from associates Loss from associates Net Profit	2015 18,121 966 5.36% 683 380 64 316 -66 250 -83 166	2014 18,593 963 5.19% 680 319 88 231 -47 184 — 184	15/14 -2.5% 0.3% 3.2% 0.4% 19.3% -26.5% 36.6% 40.0% 35.7% —
			-9.6%

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Financial Position at the end of the year

Assets

The main assets of the Company are comprised of Account Receivables and Inventories. These 2 items was 76% of the total assets. The details are followings:

Account Receivables

As at 31 December 2015, the account receivables was 2,045 Million Baht which increased 4.8% from the previous year and the average collection period was 45.5 days which was the normal period when compare to the industry.

Over the past years, the account receivables and the average collection period are illustrated as the diagram below:

	0 10 20 30 40 50 60 2012 2013 2014 2015 2,595 2,298 1,951 2,045 40.8 53.4 46.6 45.5	0 10 20 30 40 50 60 2012 2013 2014 2015 2,595 2,298 1,951 2,045 40.8 53.4 46.6 45.5	0 10 20 30 40 50 60 2012 2013 2014 2015 2,595 2,298 1,951 2,045 40.8 53.4 46.6 45.5	0 10 20 30 40 50 60 2012 2013 2014 2015 2,595 2,298 1,951 2,045 40.8 53.4 46.6 45.5
0 500 1,000 1,500 2,000 2,500 3,000
	2012	2013	2014	2015
Accounts Receivable (M.Baht)	2,595	2,298	1,951	2,045
Average Collction Period (Days)	40.8	53.4	46.6	45.5

Inventories

As at 31 December 2015, the inventories of the Company was 1,323 Million Baht which decreased 652 Million Baht due to the cancellation of the project at the beginning of the year. After this problem was solved, the inventories were reduced until the average sale period was 36.9 days. However, the average sale periods would be 26.9 days when use the balances of inventories as at the end of the year as calculation and it was the appropriate situation.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Over the past years, the volume of inventories is illustrated as the diagram below.

==> picture [427 x 155] intentionally omitted <==

----- Start of picture text -----

2,000 45
40
1,500 35
30
25
1,000
20
15
500 10
5
0 0
2012 2013 2014 2015
Inventory (M.Baht) 1,191 1,692 1,975 1,323
Average Day Sale Period (Days) 38.9 31.6 39.0 36.9
----- End of picture text -----

Liabilities and Equities

The main liabilities of the Company are comprised of Account Payables and Loan from Financial Institutions. These 2 items was 88% of the total liabilities. The details are followings:

Account Payable

The balance of the account payables as at 31 December 2015 was 1,245 Million Baht, increased 441 Million Baht from the previous year and the average payment period was 21.6 days.

The normal term of payment was between 30–45 days. Many payables offered the trade discounts in case of early payment, if the Company considered that it was worth and there was the remaining unutilized bank facilities then the Company would make payments earlier than the term of payment. This made the Average Payment Period lower than 30 days. Also, the Company set the policy to pay within the term that agreed with the payables and this is one of the good corporate governance policy in category of role of stakeholders.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Over the past years, the balance of Account payables is illustrated as the diagram below.

0 200 400 600 800 1,000 1,200 1,400	0 5 10 15 20 25 30 35 2012 2013 2014 2015 1,191 802 804 1,245 29.4 20.9 16.4 21.6	0 5 10 15 20 25 30 35 2012 2013 2014 2015 1,191 802 804 1,245 29.4 20.9 16.4 21.6	0 5 10 15 20 25 30 35 2012 2013 2014 2015 1,191 802 804 1,245 29.4 20.9 16.4 21.6	0 5 10 15 20 25 30 35 2012 2013 2014 2015 1,191 802 804 1,245 29.4 20.9 16.4 21.6
	2012	2013	2014	2015
Account Payable (M.Baht)	1,191	802	804	1,245
Average Payment Period (Days)	29.4	20.9	16.4	21.6

Equity And Loan From Financial Institutions at the end of the year

During the year 2015, the Company paid the dividend to the shareholders, totally 70 Million Baht. When combined with the operating profit, the equity as at 31 December 2015 was 1,587 Million Baht which increased 98.8 Million Baht from the previous year.

As at 31 December 2015, there was the profit from the operation as well as the effectiveness of asset management which affected the decreasing in loan from financial institution. It was 1,258 Million Baht which decreased significantly 1,170 Million Baht and the debt to equity was 0.79 which was the lowest level.

	0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2012 2013 2014 2015 2,610 2,574 2,428 1,258 3.2 1.9 1.6 0.79	0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2012 2013 2014 2015 2,610 2,574 2,428 1,258 3.2 1.9 1.6 0.79	0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2012 2013 2014 2015 2,610 2,574 2,428 1,258 3.2 1.9 1.6 0.79	0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2012 2013 2014 2015 2,610 2,574 2,428 1,258 3.2 1.9 1.6 0.79
0 500 1,000 1,500 2,000 2,500 3,000
	2012	2013	2014	2015
Loan from Financial Institution (M.Baht)	2,610	2,574	2,428	1,258
Interest Bearing Debt to Equity	3.2	1.9	1.6	0.79

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Cash Flows

Operating Cash Flow

The cash cycle of the Company in the year 2015 was 60.8 days and there was an increasing in operating cash flow 1,407 Million Baht. The main items that affected the increasing in operating cash flow in the year 2015 was

The profit after non-cash adjusted transactions 400 Million Baht
— The increasing in account payables 445 Million Baht — The decreasing in inventories 607 Million Baht

The main items that affected the decreasing in cash flow in the year 2015 was

The increasing in account receivables 109 Million Baht

Shareholder’s Equity

In the year 2015, the equity was 1,587 Million Baht which increased 98.8 Million Baht from the previous year due to the operating profit from management.

Shareholders’ Equity/Dividend (M. Baht)

==> picture [279 x 117] intentionally omitted <==

----- Start of picture text -----

1,800
1,600 105.06
70.0
1,400 70.0
1,200
1,000 1,587
800 1,488
1,369
600
400 804
200
0
2012 2013 2014 2015
----- End of picture text -----

Dividend Payment

The basic earnings per share of the Company was 0.48 Baht and the Board of Directors had the resolution to propose to the Annual General Meeting of Shareholders in 2016 to approve the dividend payment of the year 2015 at 0.30 Baht per share which increased 50% of the rate of the previous year due to the significance of cash flow and the lowest of debt to equity.

In case of this dividend payment rate is approved by this Annual General Meeting of Shareholders, then the total dividend payment will be 105 Million Baht, equal to the dividend payout at 63.2% and equal to the dividend yield at 7.2% when compared with the closed price at 4.18 Baht on 18 February 2016 which was the day before notification the dividend payment resolution to the Stock Exchange of Thailand or equal to 7.0% when compared with the closed price at 4.28 Baht on 30 December 2015.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

At the Annual General Meeting of the Shareholders held on 22 April 2016, the Shareholders approved the total dividend of 0.30 Baht per share.

For year ended 31 December 2014

Performance

The total revenue of the Company in 2014 was 18,593 Million Baht which was nearly to the previous year (increased 1.3%). The sales of 3 main IT business units were decreased; especially the Consumer business unit which was the sale in IT products for households mostly decreased 513 Million Baht (6.1%). This was because there was an increasing in household debt that affects the declining in purchasing power, also the turning of consumers’ attention to Smartphone.

The sale of Commercial business unit which was the IT products used in organizations also decreased because of the political crisis as well as the Coup d’état in 2014. This affected the shrink of the investment of its business sector. Also, the change in government impacted the stuck of purchasing in IT of the government.

The Sale of Value Added business unit which mostly was enterprise products, sold to Data Center of the large organizations slightly declined (3.4%). Although, the demand in this kind of product was high due to the new innovation but many projects were postponed because of this political crisis.

The sale of Phone business unit which distributing in Smartphone was only one that increased. It increased sharply 1,475 Million Baht (increased 71.3%) because there was the growth in Smartphone and the Company provided various popular products to sell such as Samsung Galaxy and Asus ZenFone. However, the increasing in the sale of Smartphone was able to recover the decreasing in other IT products then the total revenue of this year was nearly to the previous year.

The sale by Business Unit (Million Baht)

Business Unit Commercial Consumer Value Added Phone Others Total	2013 4,739 8,479 1,474 2,069 1,437 18,198	2014 4,478 7,965 1,424 3,544 1,108 18,519	Change -5.5% -6.1% -3.4% 71.3% -22.9%
			1.8%

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Operating Profit

The gross profit of the Company of the year 2014 was 963 Million Baht or 5.2% of sales which was the normal gross profit rate of this industry. The comprehensive profit was 189 Million Baht which slightly decreased from the previous year or 1.01% of the total revenue and the Return on Equity (ROE) was 12.9%

Dividend Payment

The basic earnings per share of the Company was 0.53 Baht and the Board of Directors had the resolution to propose the dividend payment of the year 2014 at 0.20 Baht per share to the Annual General Meeting of Shareholders in 2015.

In case of this dividend payment rate is approved by this Annual General Meeting of Shareholders, then the total dividend payment will be 70 Million Baht, equal to the dividend payout at 37.1% and equal to the dividend yield at 3.67% when compared with the closed price at 5.45 Baht on 24 February 2015 which was the day before notification the dividend payment resolution to the Stock Exchange of Thailand or equal to 4.02% when compared with the closed price at 4.98 Baht on 30 December 2014.

At the Annual General Meeting of the Shareholders held on 24 April 2015, the Shareholders approved the total dividend of 0.20 Baht per share.

Financial Position

Assets

The significant assets of the Company was 2 items, they were account receivables and inventories. These 2 items was precisely 78% of the total assets. The details are as followings:

Account Receivables

As at 31 December 2014, the net account receivables of the Company was 1,951 Million Baht which was decreased 15% from the previous year. The average collection period was 46.6 days. This was decreasing both in the balance of account receivables and the average collection period. The average collection period and it was considered as the normal circumstance of this industry.

Generally, the Company defined the term of collection as 30 days, however, practically, most of customers would pay weekly or twice a months. This affected the extension of the term of collection that would be over 30 days. Furthermore, the projects that were clearly defined the term of collection, the Customers often request to pay upon the period of those contracts.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Over the past years, the account receivables and the average collection period are illustrated as the diagram below.

	0.0 10.0 20.0 30.0 40.0 50.0 60.0 2010 2011 2012 2013 2014 2,018 1,837 2,595 2,298 1,951 46.2 34.9 40.8 53.4 46.6	0.0 10.0 20.0 30.0 40.0 50.0 60.0 2010 2011 2012 2013 2014 2,018 1,837 2,595 2,298 1,951 46.2 34.9 40.8 53.4 46.6	0.0 10.0 20.0 30.0 40.0 50.0 60.0 2010 2011 2012 2013 2014 2,018 1,837 2,595 2,298 1,951 46.2 34.9 40.8 53.4 46.6	0.0 10.0 20.0 30.0 40.0 50.0 60.0 2010 2011 2012 2013 2014 2,018 1,837 2,595 2,298 1,951 46.2 34.9 40.8 53.4 46.6	0.0 10.0 20.0 30.0 40.0 50.0 60.0 2010 2011 2012 2013 2014 2,018 1,837 2,595 2,298 1,951 46.2 34.9 40.8 53.4 46.6
0 500 1,000 1,500 2,000 2,500 3,000
	2010	2011	2012	2013	2014
Accounts Receivable (M.Baht)	2,018	1,837	2,595	2,298	1,951
Average Collction Period (Days)	46.2	34.9	40.8	53.4	46.6

Inventories

As at 31 December 2014, the inventories of the Company was 1,975 Million Baht which increased 283 Million Baht or 17%, compared with the previous year and the Average Sale Period was 39 days. This volume of inventories was higher than normality because it included the products of some projects that still remained in the stock. Nevertheless, it is expected to solve this circumstance and the volume of inventories will be able to reduce to the normal level which is not over 30 days within the middle of the year 2015.

Over the past years, the volume of inventories is illustrated as the diagram below.

	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2009 2011 2012 2013 2014 919 3,171 1,191 1,692 1,975 23.9 2010 1,152 24.7 37.9 38.9 31.6 39.0	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2009 2011 2012 2013 2014 919 3,171 1,191 1,692 1,975 23.9 2010 1,152 24.7 37.9 38.9 31.6 39.0	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2009 2011 2012 2013 2014 919 3,171 1,191 1,692 1,975 23.9 2010 1,152 24.7 37.9 38.9 31.6 39.0	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2009 2011 2012 2013 2014 919 3,171 1,191 1,692 1,975 23.9 2010 1,152 24.7 37.9 38.9 31.6 39.0	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2009 2011 2012 2013 2014 919 3,171 1,191 1,692 1,975 23.9 2010 1,152 24.7 37.9 38.9 31.6 39.0	0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2009 2011 2012 2013 2014 919 3,171 1,191 1,692 1,975 23.9 2010 1,152 24.7 37.9 38.9 31.6 39.0
0 500 1,000 1,500 2,000 2,500 3,000 3,500
	2009	2010	2011	2012	2013	2014
Inventory (M.Baht)	919	1,152	3,171	1,191	1,692	1,975
Average Days Sale Period (Days)	23.9	24.7	37.9	38.9	31.6	39.0

Liabilities

The main liabilities of the Company are comprised of Account Payables and Loan from Financial Institutions. These 2 items was 91% of the total liabilities. The details are followings.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Account Payable

The balance of the account payables as at 31 December 2014 was 804 Million Baht and the Average payment period was 16.4 days. The normal term of payment was between 30 — 45 days. Many payables offered the trade discounts in case of early payment, however if the Company considered that it was worth and there was the remaining unutilized bank facilities then the Company would make payments earlier than the term of payment. This made the Average Payment Period lower than 30 days. Also, the Company set the policy to pay within the term that agreed with the payables and this is one of the good corporate governance policy in category of role of stakeholders.

Over the past years, the balance of Account payables is illustrated as the diagram below.

==> picture [427 x 155] intentionally omitted <==

----- Start of picture text -----

2,500 35
30
2,000
25
1,500 20
1,000 15
10
500
5
0 0
2010 2011 2012 2013 2014
Account Payable (M. Baht) 991 2,274 1,191 802 804
Average Payment Period (Days) 22.1 27.5 29.4 20.9 16.4
----- End of picture text -----

Loan from financial Institution

The Loan from Financial Institution of the Company as at 31 December 2014 was 2,428 Million Baht and the Interest Bearing Debt to Equity was 1.6 which decreased from the previous year.

==> picture [427 x 167] intentionally omitted <==

----- Start of picture text -----

3,000 3.5
2,500 3.0
2,000 2.5
1,500 2.0
1,000 1.5
500 1.0
0 0.5
2010 2011 2012 2013 2014
Loan from Financial Institution
976 2,243 2,610 2,574 2,428
(M. Baht)
Interest Bearing Debt to Equity 0.8 1.0 3.2 1.9 1.6
----- End of picture text -----

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Shareholders’ Equity

Shareholders’ Equity of the year 2014 was 1,488 Million Baht which increased 119 Million Baht from the previous year, gaining from the profit of operational performance.

Shareholders’ Equity (M. Baht)

==> picture [279 x 118] intentionally omitted <==

----- Start of picture text -----

1,600 1,488
1,369
1,400 1,242 1,280
1,200
1,000
804
800
600
400
200
0
2010 2011 2012 2013 2014
----- End of picture text -----

Cash Flows

Operating Cash Flow

The cash cycle of the Company in the year 2014 was 69.2 days and there was an increasing in operating cash flow 366 Million Baht. The main items that affected the increasing in operating cash flow in the year 2014 was

The profit after non-cash adjusted transactions 432 Million Baht
— The decreasing in account receivables 346 Million Baht

The main items that affected the decreasing in cash flow in the year 2014 was

The increasing in inventories

358 Million Baht

2. Number and Remuneration of Employees, Remuneration Policies and Bonus

The Company has the policy to set short term and long term compensation schemes for employees with benefits, including provident fund, performance based compensation, quarterly and yearly bonus, yearly heath checkup program, personal accident insurance, employee training and development programs. There had been no material changes in the policy for the six months ended 30 June 2017 and the three years ended 31 December 2016.

For the six months period ended 30 June 2017:

The number of staff of the Group as at 30 June 2017 was 460 (30 June 2016: 436) and the salaries and other benefits paid and payable to employees, excluding directors’ emoluments, amounted to Baht191,459,000 (30 June 2016: Baht161,339,000) for the six months period ended 30 June 2017.

– 228 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

For financial year ended 31 December 2016:

The number of staff of the Group as at 31 December 2016 was 438 (31 December 2015: 440) and the salaries and other benefits paid and payable to employees, excluding directors’ emoluments, amounted to Baht335,293,000 (31 December 2015: Baht315,552,000) for the year ended 31 December 2016.

For financial year ended 31 December 2015:

The number of staff of the Group as at 31 December 2015 was 440 (31 December 2014: 403) and the salaries and other benefits paid and payable to employees, excluding directors’ emoluments, amounted to Baht315,552,000 (31 December 2014: Baht292,406,000) for the year ended 31 December 2015.

For financial year ended 31 December 2014:

The number of staff of the Group as at 31 December 2014 was 403 (31 December 2013: 388) and the salaries and other benefits paid and payable to employees, excluding directors’ emoluments, amounted to Baht292,406,000 (31 December 2013: Baht291,093,000) for the year ended 31 December 2014.

3. Liquidity, Financial Resources and Capital Structure

The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Company monitors the return on capital, which the Group defines as result from operating activities divided by total shareholders’ equity, excluding non-controlling interests and also monitors the level of dividends to ordinary shareholders of the Group. For the three years ended 31 December 2016 and the six months ended 30 June 2017, there was no significant change to the capital structure of the Group.

For six months period ended 30 June 2017

As at 30 June 2017, the Group had total assets of Baht5,265 million which were financed by total equity of Baht1,711 million and total liability of Baht3,554 million. The Group had current ratio of approximately 1.4 (31 December 2016: 1.4).

As at 30 June 2017, the Group had Baht148,524,000 (31 December 2016: Baht147,870,000) cash and cash equivalents, which were denominated in Thai Baht. The working capital requirements were mainly financed by internal resources and unsecured short term loans from financial institutions. All the borrowing were denominated in Thai Baht and was primarily charged by financial institutions at floating interest rate, which is based on market rates such as the interest prime rate of commercial banks, saving interest rate or other benchmark floating rates in Thailand.

The Group’s gearing ratio (total borrowings over total equity) was 87% as at 30 June 2017 (31 December 2016: 71%).

– 229 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

For borrowings, please refer to p.212 ‘‘Loans from Financial Institutions’’ for details.

For financial year ended 31 December 2016

As at 31 December 2016, the Group had total assets of Baht4,958 million which were financed by total equity of Baht1,709 million and total liability of Baht3,249 million. The Group had current ratio of approximately 1.4 (2015: 1.4).

As at 31 December 2016, the Group had Baht147,870,000 (31 December 2015: Baht49,490,000) cash and cash equivalents, which were denominated in Thai Baht. The working capital requirements were mainly financed by internal resources and unsecured short term loans from financial institutions. All the borrowing were denominated in Thai Baht and was primarily charged by financial institutions at floating interest rate, which is based on market rates such as the interest prime rate of commercial banks, saving interest rate or other benchmark floating rates in Thailand.

The Group’s gearing ratio (total borrowings over total equity) was 71% as at 31 December 2016 (2015: 79%).

For borrowings, please refer to p.216 ‘‘Loans from Financial Institutions’’ for details.

For financial year ended 31 December 2015

As at 31 December 2015, the Group had total assets of Baht4,428 million which were financed by total equity of Baht1,587 million and total liability of Baht2,841 million. The Group had current ratio of approximately 1.4 (2014: 1.3).

As at 31 December 2015, the Group had Baht49,490,000 (31 December 2014: Baht109,171,000) cash and cash equivalents, which were denominated in Thai Baht. The working capital requirements were mainly financed by internal resources and unsecured short term loans from financial institutions. All the borrowing were denominated in Thai Baht and was primarily charged by financial institutions at floating interest rate, which is based on market rates such as the interest prime rate of commercial banks, saving interest rate or other benchmark floating rates in Thailand.

The Group’s gearing ratio (total borrowings over total equity) was 79% as at 31 December 2015 (2014: 163%).

For borrowings, please refer to p.222 ‘‘Equity and Loans from Financial Institutions at the end of the year’’ for details.

For financial year ended 31 December 2014

As at 31 December 2014, the Group had total assets of Baht5,045 million which were financed by total equity of Baht1,488 million and total liability of Baht3,557 million. The Group had current ratio of approximately 1.3 (2013: 1.3).

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

As at 31 December 2014, the Group had Baht109,171,000 (31 December 2013: Baht73,933,000) cash and cash equivalents, which were denominated in Thai Baht. The working capital requirements were mainly financed by internal resources and unsecured short term loans from financial institutions. All the borrowing were denominated in Thai Baht and was primarily charged by financial institutions at floating interest rate, which is based on market rates such as the interest prime rate of commercial banks, saving interest rate or other benchmark floating rates in Thailand.

The Group’s gearing ratio (total borrowings over total equity) was 163% as at 31 December 2014 (2013: 188%).

For borrowings, please refer to p.227 ‘‘Loan from Financial Institution’’ for details.

4. Currency Risk Management and Exchange Rate Exposure

The Group is exposed to foreign currency risk relating to purchases and sales which are denominated in foreign currencies, especially the USD. The Group primarily utilizes forward exchange contracts with maturities of less than one year to hedge financial liabilities denominated in foreign currencies. The forward exchange contracts entered into at the reporting date also relate to anticipated purchases and sales in foreign currencies, for the subsequent period. The Company mitigates the risk by buying forward contract at least 50% of purchase orders and has been regularly advised by the relevant financial institutions on how much forward contract should be taken. There was no significant change in the currency risk management for the six months period ended 30 June 2017, year ended 31 December 2016, 2015 and 2014.

5. Charges on Assets

There was no charge on the Group’s assets as at 30 June 2017, 31 December 2016, 31 December 2015 and 31 December 2014.

6. Capital Expenditure

The Company spent Baht6,802,000, Baht27,663,000, Baht31,235,000 and Baht26,582,000 on equipment and intangible assets for the six months period ended 30 June 2017, year ended 31 December 2016, 2015 and 2014 respectively.

7. Material Investments, Acquisitions and Disposals

On 15 February 2015, SiS Venture Co., Ltd, a subsidiary of the Company, invested in 449,400 new ordinary shares of Wiko Mobile (Thailand) Co., Ltd at par value of Baht 100 per share, with a total consideration of Baht44.9 million, after the shareholders of Wiko Mobile (Thailand) Co., Ltd approved the increase of its authorized share capital from Baht0.1 million to Baht100 million on 9 February 2015. Prior to the above transactions, Wiko Mobile (Thailand) Co., Ltd was a subsidiary of and held as to 60% by SiS Venture Co., Ltd. As a result of the above transactions, SiS Venture Co., Ltd’s interests in Wiko Mobile (Thailand) Co., Ltd decreased from 60% to 45% in 2015, and Wiko Mobile (Thailand) Co., Ltd. thereby ceased to be a subsidiary and become an associate of the

– 231 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Group. For details, please refer to note 10 to the financial statements for the year ended 31 December 2015. Save as disclosed above, the Group did not carry out any material investments, acquisitions or disposals for the three years ended 31 December 2016 and the six months ended 30 June 2017. There are no specific plan for material investments, acquisitions or disposals of material capital assets by the Group as at the Latest Practicable Date.

8. Contingent Liabilities

The Company had no contingent liabilities as at 30 June 2017, 31 December 2016, 31 December 2015 and 31 December 2014.

– 232 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

DIFFERENCES BETWEEN THE ACCOUNTING POLICIES ADOPTED BY THE COMPANY AND SIS THAI

As described in the section entitled ‘‘Letter from the Board — Waiver in Relation to the Accountants’ Report on the Target Group’’, the Company has applied to the Hong Kong Stock Exchange for, and been granted, a waiver from the requirement to produce an accountants’ report on SiS THAI in accordance with Rule 14.69(4)(a)(i) of the Listing Rules.

Instead, this circular contains a copy of:

(a) the audited consolidated financial statements of SiS THAI for the financial years ended December 31, 2014, 2015 and 2016 prepared in accordance with Thailand Financial Reporting Standards (‘‘TFRS’’); and
(b) the unaudited condensed consolidated financial statements of SiS THAI for the six months ended June 30, 2017 prepared in accordance with TFRS.

(together the ‘‘SiS THAI Historical Track Record Accounts’’ as set out in the section entitled ‘‘Historical Track Record Period Accounts’’).

The SiS THAI Historical Track Record Accounts cover the consolidated financial position of SiS THAI as at December 31, 2014, 2015 and 2016 and June 30, 2017 and the consolidated results of SiS THAI for each of the three years ended December 31, 2014, 2015 and 2016 and the six months ended June 30, 2016 and 2017 (the ‘‘Relevant Periods’’).

Apart from certain differences in presentation, the accounting policies adopted in the preparation of the SiS THAI Historical Track Record Accounts do not differ in any material respect from International Financial Reporting Standards (‘‘IFRS’’) and the accounting policies adopted by the Company, which comply with Hong Kong Financial Reporting Standards (‘‘HKFRS’’).

Basis of Preparation

Disclosure is set out by providing a comparison (the ‘‘Reconciliation’’) between SiS THAI’s financial information for the Relevant Periods as extracted from the SiS THAI Historical Track Record Accounts on the one hand, and an adjustment of such financial information had they instead been prepared in accordance with IFRS and the accounting policies adopted by the Company, where appropriate. The process applied in the preparation of such Reconciliation is set out below.

Reconciliation Process

The Reconciliation has been prepared by the directors of the Company by comparing the differences among the accounting policies adopted by SiS THAI for the preparation of the SiS THAI Historical Track Record Accounts, IFRS and the accounting policies adopted by the Company which are in compliance with HKFRS, and quantifying the relevant material financial effects of such differences, where appropriate.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

KPMG Phoomchai Audit Ltd. (‘‘KPMG Thailand’’) and KPMG (‘‘KPMG Hong Kong’’) were separately engaged by the Company to conduct work in accordance with the International Standard on Assurance Engagement 3000 ‘‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’’ (‘‘ISAE 3000’’) issued by The International Auditing and Assurance Standards Board (‘‘IAASB’’) and Hong Kong Standard on Assurance Engagement 3000 ‘‘Assurance Engagements Other Than Audits or Reviews of Historical Financial Information’’ (‘‘HKSAE 3000’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’) respectively.

The work conducted by KPMG Thailand consisted primarily of:

(i) comparing the ‘‘Unadjusted Financial Information under TFRS’’ as set out below in the section entitled ‘‘SiS THAI’s Unaudited Adjusted Financial Information under the Company’s Policies’’ with the SiS THAI Historical Track Record Accounts prepared under TFRS;
(ii) considering the adjustments made and evidence supporting the adjustments made in arriving at the ‘‘Adjusted Financial Information under IFRS’’ as set out below in the section entitled ‘‘SiS THAI’s Unaudited Adjusted Financial Information under the Company’s Policies’’, which included examining the differences between SiS THAI’s accounting policies under TFRS and IFRS; and
(iii) checking the arithmetic accuracy of the computation of the ‘‘Adjusted Financial Information under the Company’s Policies’’.

The work conducted by KPMG Hong Kong consisted primarily of:

(i) considering the adjustments made and evidence supporting the adjustments made in arriving at the ‘‘Adjusted Financial Information under the Company’s Policies’’ as set out below in the section entitled ‘‘SiS THAI’s Unaudited Adjusted Financial Information under the Company’s Policies’’, which included examining the differences between IFRS and the Company’s accounting policies under HKFRS.

KPMG Thailand’s and KPMG Hong Kong’s engagement did not involve independent examination of any of the underlying financial information. The work carried out in accordance with ISAE 3000 and HKSAE 3000 is different in scope from an audit or a review conducted in accordance with International Standards on Auditing or International Standards on Review Engagements issued by the IAASB and Hong Kong Standards on Auditing or Hong Kong Standards on Review Engagements issued by the HKICPA respectively and consequently, KPMG Thailand and KPMG Hong Kong did not express an audit opinion nor a review conclusion on the Reconciliation. KPMG Thailand’s and KPMG Hong Kong’s engagements were intended solely for the use of the Directors in connection with this circular and may not be suitable for another purpose. KPMG Thailand has not audited SiS THAI’s financial information for any period subsequent to December 31, 2016. KPMG Hong Kong has not audited or reviewed SiS THAI’s financial information for any period.

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APPENDIX I

Based on the work performed, KPMG Thailand has concluded that:

(i) the ‘‘Unadjusted Financial Information under TFRS’’ as set out in the section entitled ‘‘SiS THAI’s Unaudited Adjusted Financial Information under the Company’s Policies’’ is in agreement with the SiS THAI Historical Track Record Accounts;
(ii) the adjustments reflect, in all material respects, the differences between SiS THAI’s accounting policies and IFRS; and
(iii) the computation of the ‘‘Adjusted Financial Information under the Company’s Policies’’ is arithmetically accurate.

Based on the work performed, KPMG Hong Kong has concluded that:

(i) the adjustments reflect, in all material respects, the differences between IFRS and the Company’s accounting policies under HKFRS.

SiS THAI’s Unaudited Adjusted Financial Information under the Company’s Policies

The SiS THAI Historical Track Record Accounts have been prepared and presented in accordance with TFRS. There are no material differences between the SiS THAI Historical Track Record Accounts compared to that applying IFRS and the Company’s accounting policies under HKFRS.

The Reconciliation includes reclassification adjustments to align the presentation of SiS THAI’s financial information with the requirement under IFRS and the Company’s presentation.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Profit or Loss and Consolidated Statement of Profit or Loss and Other Comprehensive Income under the Company’s Policies for the period ended June 30, 2017

Notes Revenue Revenue 2 Revenue from sale of goods 2 Revenue from rendering of services 2 Cost of sales Cost of sales 3 Cost of sale of goods 3 Cost of rendering of services 3 Gross profit Other income Other gains and losses 4, 5 Net foreign exchange loss 4 Selling expenses (‘‘Distribution costs’’ under the Company’s policies) 1 Administrative expenses 1, 5, 6 Share of profit of investments in associates (‘‘Share of results of associates’’ under the Company’s policies) Finance costs 6 Profit before tax expense (‘‘Profit before taxation’’ under the Company’s policies) Tax expense (‘‘Income tax expense’’ under the Company’s policies) Profit for the period	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 9,639,718 9,610,453 — 9,610,453 (9,610,453) 29,265 — 29,265 (29,265) 9,639,718 9,639,718 — — — (9,106,429) (9,095,669) — (9,095,669) 9,095,669 (10,760) — (10,760) 10,760 (9,106,429) (9,106,429) 533,289 533,289 33,537 — 33,537 — — — — (17,670) (17,647) — (17,647) 17,647 (91,478) (160,355) (251,833) — (259,717) 160,355 (99,362) (3,747) 4,071 — 4,071 — (21,756) — (21,756) 3,770 180,299 180,299 (38,242) — (38,242) — 142,057 142,057	Adjusted Financial Information under the Company’s Policies 9,639,718 — —
		9,639,718
		(9,106,429 — —
		(9,106,429
		533,289 33,537 (17,670 — (251,833 (103,109 4,071 (17,986
		180,299 (38,242
		142,057

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Profit for the period attributable to: Owners of the Company Non-controlling interests Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit for the period Other comprehensive income Total comprehensive income for the period Total comprehensive income for the period attributable to: Owners of the Company Non-controlling interests	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 142,057 — 142,057 — — — — — 142,057 142,057 142,057 — 142,057 — — — — — 142,057 — 142,057 — 142,057 — 142,057 — — — — — 142,057 142,057	Adjusted Financial Information under the Company’s Policies 142,057 —
		142,057
		142,057
		—
		142,057
		142,057 —
		142,057

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Profit or Loss and Consolidated Statement of Profit or Loss and Other Comprehensive Income under the Company’s Policies for the year ended December 31, 2016

Notes Revenue Revenue 2 Revenue from sale of goods 2 Revenue from rendering of services 2 Cost of sales Cost of sales 3 Cost of sale of goods 3 Cost of rendering of services 3 Gross profit Other income 5 Other gains and losses 4, 5 Gain on exchange rate 4 Selling expenses (‘‘Distribution costs’’ under the Company’s policies) 1 Administrative expenses 1, 6 Share of profit of investments in associates (‘‘Share of results of associates’’ under the Company’s policies) Finance costs 6 Profit before income tax expense (‘‘Profit before taxation’’ under the Company’s policies) Income tax expense Profit for the year	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 18,434,859 18,374,515 — 18,374,515 (18,374,515) 60,344 — 60,344 (60,344) 18,434,859 18,434,859 — — — (17,467,118) (17,437,296) — (17,437,296) 17,437,296 (29,822) — (29,822) 29,822 (17,467,118) (17,467,118) 967,741 967,741 59,610 — 59,610 (354) — — — 586 232 — 232 (232) (193,441) (235,754) (429,195) — (479,702) 235,754 (243,948) (8,920) 2,908 — 2,908 — (50,218) — (50,218) 8,920 307,130 — 307,130 — (79,685) — (79,685) — 227,445 227,445	Adjusted Financial Information under the Company’s Policies 18,434,859 — —
		18,434,859
		(17,467,118 — —
		(17,467,118
		967,741 59,256 586 — (429,195 (252,868 2,908 (41,298
		307,130 (79,685
		227,445

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Profit for the year attributable to: Owners of the Company Non-controlling interests Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit for the year Other comprehensive income Total comprehensive income for the year Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 227,445 — 227,445 — — — — — 227,445 227,445 227,445 — 227,445 — — — — — 227,445 227,445 227,445 — 227,445 — — — — — 227,445 227,445	Adjusted Financial Information under the Company’s Policies 227,445 —
		227,445
		227,445
		—
		227,445
		227,445 —
		227,445

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Notes Revenue Revenue 2 Revenue from sale of goods 2 Revenue from rendering of services 2 Cost of sales Cost of sales 3 Cost of sale of goods 3 Cost of rendering of services 3 Gross profit Other income 5 Other gains and losses 4, 5 Net foreign exchange loss 4 Selling expenses (‘‘Distribution costs’’ under the Company’s policies) 1 Administrative expenses 1, 6 Share of loss of investments in associates (‘‘Share of results of associates’’ under the Company’s policies) Finance costs 6 Profit before tax expense (‘‘Profit before taxation’’ under the Company’s policies) Tax expense (‘‘Income tax expense’’ under the Company’s policies) Profit for the period	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 8,946,731 8,923,126 — 8,923,126 (8,923,126) 23,605 — 23,605 (23,605) 8,946,731 8,946,731 — — — (8,495,617) (8,486,134) — (8,486,134) 8,486,134 (9,483) — (9,483) 9,483 (8,495,617) (8,495,617) 451,114 451,114 34,933 — 34,933 (268) — — — (7,973) (8,241) — (8,241) 8,241 (97,865) (116,232) (214,097) — (212,117) 116,232 (95,885) (4,577) (1,799) — (1,799) — (25,757) — (25,757) 4,577 140,268 140,268 (28,393) — (28,393) — 111,875 111,875	Adjusted Financial Information under the Company’s Policies 8,946,731 — —
		8,946,731
		(8,495,617 — —
		(8,495,617
		451,114 34,665 (7,973 — (214,097 (100,462 (1,799 (21,180
		140,268 (28,393)
		111,875

– 240 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Profit for the period attributable to: Owners of the Company Non-controlling interests Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit for the period Other comprehensive income Total comprehensive income for the period Total comprehensive income for the period attributable to: Owners of the Company Non-controlling interests	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 111,875 — 111,875 — — — — — 111,875 111,875 111,875 — 111,875 — — — — — 111,875 111,875 111,875 — 111,875 — — — — — 111,875 111,875	Adjusted Financial Information under the Company’s Policies 111,875 —
		111,875
		111,875
		—
		111,875
		111,875 —
		111,875

– 241 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Notes Revenue Revenue 2 Revenue from sale of goods 2 Revenue from rendering of services 2 Cost of sales Cost of sales 3 Cost of sale of goods 3 Cost of rendering of services 3 Gross profit Other income 5 Other gains and losses 4, 5, 7 Gain on exchange rate 4 Gain from loss of controlling interests in subsidiary 7 Selling expenses (‘‘Distribution costs’’ under the Company’s policies) 1 Administrative expenses 1, 6 Share of loss of investments in associates (‘‘Share of results of associates’’ under the Company’s policies) Finance costs 6 Profit before income tax expense (‘‘Profit before taxation’’ under the Company’s policies) Income tax expense Profit for the year	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 18,023,312 17,969,111 — 17,969,111 (17,969,111) 54,201 — 54,201 (54,201) 18,023,312 18,023,312 — — — (17,057,762) (17,028,185) — (17,028,185) 17,028,185 (29,577) — (29,577) 29,577 (17,057,762) (17,057,762) 965,550 965,550 73,159 — 73,159 (1,308) — — — 25,725 23,522 — 23,522 (23,522) 895 — 895 (895) (227,060) (252,431) (479,491) — (455,747) 252,431 (203,316) (7,833) (83,475) — (83,475) — (64,346) — (64,346) 7,833 232,498 232,498 (66,160) — (66,160) — 166,338 166,338	Adjusted Financial Information under the Company’s Policies 18,023,312 — —
		18,023,312
		(17,057,762 — —
		(17,057,762
		965,550 71,851 25,725 — — (479,491 (211,149 (83,475 (56,513
		232,498 (66,160
		166,338

– 242 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Profit for the year attributable to: Owners of the Company Non-controlling interests Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit for the year Other comprehensive income Total comprehensive income for the year Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 168,851 — 168,851 — (2,513) — (2,513) — 166,338 166,338 166,338 — 166,338 — — — — — 166,338 166,338 168,851 — 168,851 — (2,513) — (2,513) — 166,338 166,338	Adjusted Financial Information under the Company’s Policies 168,851 (2,513
		166,338
		166,338
		—
		166,338
		168,851 (2,513
		166,338

– 243 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Notes Revenue Revenue 2 Revenue from sale of goods 2 Revenue from rendering of services 2 Cost of sales Cost of sales 3 Cost of sale of goods 3 Cost of rendering of services 3 Gross profit Other income Other gains and losses 4, 5 Loss on exchange rate 4 Selling expenses (‘‘Distribution costs’’ under the Company’s policies) 1 Administrative expenses 1, 5, 6 Finance costs 6 Profit before income tax expense (‘‘Profit before taxation’’ under the Company’s policies) Income tax expense Profit for the year	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 18,554,351 18,518,529 — 18,518,529 (18,518,529) 35,822 — 35,822 (35,822) 18,554,351 18,554,351 — — — (17,591,291) (17,564,472) — (17,564,472) 17,564,472 (26,819) — (26,819) 26,819 (17,591,291) (17,591,291) 963,060 963,060 38,289 — 38,289 — — — — (3,069) (2,694) — (2,694) 2,694 (264,514) (236,950) (501,464) — (415,270) 236,950 (178,320) (6,118) (87,533) — (87,533) 6,493 231,338 231,338 (47,244) — (47,244) — 184,094 184,094	Adjusted Financial Information under the Company’s Policies 18,554,351 — —
		18,554,351
		(17,591,291 — —
		(17,591,291
		963,060 38,289 (3,069 — (501,464 (184,438 (81,040
		231,338 (47,244
		184,094

– 244 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Profit for the year attributable to: Owners of the Company Non-controlling interests Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit for the year Other comprehensive income: Items that will never be reclassified to profit or loss: Actuarial gains from defined benefit plan Income tax on other comprehensive income Other comprehensive income for the year — net of tax Total comprehensive income for the year Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 184,094 — 184,094 — — — — — 184,094 184,094 184,094 — 184,094 — 5,583 — 5,583 — (1,117) — (1,117) — 4,466 4,466 188,560 188,560 188,560 — 188,560 — — — — — 188,560 188,560	Adjusted Financial Information under the Company’s Policies 184,094 —
		184,094
		184,094
		5,583 (1,117
		4,466
		188,560
		188,560 —
		188,560

– 245 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of June 30, 2017

Notes Non-current assets Equipment (‘‘Property, plant and equipment’’ under the Company’s policies) Intangible assets Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables, deposits and prepayments 8 Trade accounts receivable 8, 9 Other current receivables 8, 9 Amounts due from associates 9, 10 Current portion of long-term loans to related party 10 Cash and cash equivalents (‘‘Bank balances and cash’’ under the Company’s policies)	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 98,675 — 98,675 — 24,853 — 24,853 — 231,961 — 231,961 — 11,664 — 11,664 — 367,153 367,153 1,817,943 — 1,817,943 — — — — 2,872,903 2,583,177 — 2,583,177 (2,583,177) 294,451 — 294,451 (294,451) — — — 58,578 53,853 53,853 (53,853) 148,524 — 148,524 — 4,897,948 4,897,948	Adjusted Financial Information under the Company’s Policies 98,675 24,853 231,961 11,664
		367,153
		1,817,943 2,872,903 — — 58,578 — 148,524
		4,897,948

– 246 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of June 30, 2017 (Continued)

Notes Current liabilities Trade payables, other payables and accruals 11, 12 Trade accounts payable 9, 11 Other current payables 9, 11 Amount due to ultimate parent company 9 Amount due to an associate 9 Amount due to a related company 9 Income tax payable (‘‘Tax payable’’ under the Company’s policies) Derivative financial instruments 13 Bank overdrafts and short-term borrowings from financial institutions (‘‘Bank loans’’ under the Company’s policies) Other current liabilities 12, 13 Net current assets Total assets less current liabilities Non-current liabilities Provision for cost of assets dismantlement Provisions for employee benefit NET ASSETS	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 1,883,121 1,620,859 — 1,620,859 (1,620,859) 368,704 — 368,704 (368,704) — — — 2,172 — — — 115,335 — — — 86 50 — 50 — — — — 10,226 1,491,060 — 1,491,060 — 21,377 — 21,377 (21,377) 3,502,050 3,502,050 1,395,898 1,395,898 1,763,051 1,763,051 3,960 — 3,960 — 47,990 — 47,990 — 51,950 51,950 1,711,101 1,711,101	Adjusted Financial Information under the Company’s Policies 1,883,121 — — 2,172 115,335 86 50 10,226 1,491,060 —
		3,502,050
		1,395,898
		1,763,051
		3,960 47,990
		51,950
		1,711,101

– 247 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of June 30, 2017 (Continued)

Capital and reserves Authorised share capital (‘‘Share capital’’ under the Company’s policies) Share premium on ordinary shares (‘‘Share premium’’ under the Company’s policies) Retained earnings Appropriated Legal reserve (‘‘Reserves’’ under the Company’s policies) Unappropriated (‘‘Retained profits’’ under the Company’s policies) TOTAL EQUITY	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 350,199 — 350,199 — 435,415 — 435,415 — 35,020 — 35,020 — 890,467 — 890,467 — 1,711,101 1,711,101	Adjusted Financial Information under the Company’s Policies 350,199 435,415 35,020 890,467
		1,711,101

– 248 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2016

Notes Non-current assets Equipment (‘‘Property, plant and equipment’’ under the Company’s policies) Intangible assets Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables, deposits and prepayments 8 Trade accounts receivable 8, 9 Other receivables 8, 9 Amounts due from associates 9, 10 Current portion of long-term loans to related party 10 Cash and cash equivalents (‘‘Bank balances and cash’’ under the Company’s policies) Other current assets (‘‘Derivative financial instruments’’ under the Company’s policies)	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 107,156 — 107,156 — 29,592 — 29,592 — 254,450 — 254,450 — 11,725 — 11,725 — 402,923 402,923 1,718,131 — 1,718,131 — — — — 2,632,755 2,412,339 — 2,412,339 (2,412,339) 221,852 — 221,852 (221,852) — — — 51,218 49,782 — 49,782 (49,782) 147,870 — 147,870 — 5,443 — 5,443 — 4,555,417 4,555,417	Adjusted Financial Information under the Company’s Policies 107,156 29,592 254,450 11,725
		402,923
		1,718,131 2,632,755 — — 51,218 — 147,870 5,443
		4,555,417

– 249 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2016 (Continued)

Notes Current liabilities Trade payables, other payables and accruals 11, 12 Trade accounts payable 9, 11 Other payables 9, 11 Amount due to ultimate parent company 9 Amount due to an associate 9 Amount due to a related company 9 Income tax payable (‘‘Tax payable’’ under the Company’s policies) Bank overdrafts and short-term loans from financial institutions (‘‘Bank loans’’ under the Company’s policies) Other current liabilities 12 Net current assets Total assets less current liabilities Non-current liabilities Provision for cost of assets dismantlement Employee benefit obligations NET ASSETS	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 1,922,785 1,683,714 — 1,683,714 (1,683,714) 277,139 — 277,139 (277,139) — — — 2,053 — — — 57,104 — — — 86 37 — 37 — 1,219,222 — 1,219,222 — 21,175 — 21,175 (21,175) 3,201,287 3,201,287 1,354,130 1,354,130 1,757,053 1,757,053 3,960 — 3,960 — 43,970 — 43,970 — 47,930 47,930 1,709,123 1,709,123	Adjusted Financial Information under the Company’s Policies 1,922,785 — — 2,053 57,104 86 37 1,219,222 —
		3,201,287
		1,354,130
		1,757,053
		3,960 43,970
		47,930
		1,709,123

– 250 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2016 (Continued)

Capital and reserves Authorised share capital (‘‘Share capital’’ under the Company’s policies) Premium on ordinary shares (‘‘Share premium’’ under the Company’s policies) Retained earnings Appropriated Legal reserve (‘‘Reserves’’ under the Company’s policies) Unappropriated (‘‘Retained profits’’ under the Company’s policies) TOTAL EQUITY	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 350,199 — 350,199 — 435,415 — 435,415 — 35,020 — 35,020 — 888,489 — 888,489 — 1,709,123 1,709,123	Adjusted Financial Information under the Company’s Policies 350,199 435,415 35,020 888,489
		1,709,123

– 251 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2015

Notes Non-current assets Equipment (‘‘Property, plant and equipment’’ under the Company’s policies) Intangible assets Long-term loans to related party 10 Amount due from an associate 10 Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables, deposits and prepayments 8 Trade accounts receivable 8, 9 Other receivables 8, 9 Amounts due from associates 9, 10 Short-term loans to related parties 10 Cash and cash equivalents (‘‘Bank balances and cash’’ under the Company’s policies) Other current assets (‘‘Derivative financial instruments’’ under the Company’s policies)	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 112,275 — 112,275 — 34,522 — 34,522 — 44,973 — 44,973 (44,973) — — — 44,973 271,172 — 271,172 — 11,707 — 11,707 — 474,649 474,649 1,323,205 — 1,323,205 — — — — 2,534,713 2,045,107 — 2,045,107 (2,045,107) 520,292 — 520,292 (520,292) — — — 42,209 11,523 — 11,523 (11,523) 49,490 — 49,490 — 3,425 — 3,425 — 3,953,042 3,953,042	Adjusted Financial Information under the Company’s Policies 112,275 34,522 — 44,973 271,172 11,707
		474,649
		1,323,205 2,534,713 — — 42,209 — 49,490 3,425
		3,953,042

– 252 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2015 (Continued)

Notes Current liabilities Trade payables, other payables and accruals 11, 12 Trade accounts payable 9, 11 Other payables 9, 11 Amount due to ultimate parent company 9 Amount due to a related company 9 Income tax payable (‘‘Tax payable’’ under the Company’s policies) Bank overdrafts and short-term loans from financial institutions 14 Bank loans 14 Bank overdrafts 14 Other current liabilities 12 Net current assets Total assets less current liabilities Non-current liabilities Provision for cost of assets dismantlement Employee benefit obligations NET ASSETS	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 1,522,085 1,245,065 — 1,245,065 (1,245,065) 260,842 — 260,842 (260,842) — — — 1,711 — — — 86 16,571 — 16,571 — 1,258,005 — 1,258,005 (1,258,005) — — — 1,258,002 — — — 3 17,975 — 17,975 (17,975) 2,798,458 2,798,458 1,154,584 1,154,584 1,629,233 1,629,233 3,960 — 3,960 — 38,535 — 38,535 — 42,495 42,495 1,586,738 1,586,738	Adjusted Financial Information under the Company’s Policies 1,522,085 — — 1,711 86 16,571 — 1,258,002 3 —
		2,798,458
		1,154,584
		1,629,233
		3,960 38,535
		42,495
		1,586,738

– 253 –

FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2015 (Continued)

Capital and reserves Authorised share capital (‘‘Share capital’’ under the Company’s policies) Premium on ordinary shares (‘‘Share premium’’ in the Company’s policies) Retained earnings Appropriated Legal reserve (‘‘Reserves’’ under the Company’s policies) Inappropriate (‘‘Retained profits’’ under the Company’s policies) TOTAL EQUITY	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 350,199 — 350,199 — 435,415 — 435,415 — 35,020 — 35,020 — 766,104 — 766,104 — 1,586,738 1,586,738	Adjusted Financial Information under the Company’s Policies 350,199 435,415 35,020 766,104
		1,586,738

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2014

Notes Non-current assets Equipment (‘‘Property, plant and equipment’’ under the Company’s policies) Intangible assets Investments in associate (‘‘Interests in associates’’ under the Company’s policies) Other long-term investments (‘‘Available-for-sale investments’’ under the Company’s policies) Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables, deposits and prepayments 8 Trade accounts receivable 8, 9 Other receivables 8 Amount due from a related company 9 Cash and cash equivalents (‘‘Bank balances and cash’’ under the Company’s policies) Other current assets (‘‘Derivative financial instruments’’ under the Company’s policies)	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 120,474 — 120,474 — 39,146 — 39,146 — 9,800 — 9,800 — 8,571 — 8,571 — 284,182 — 284,182 — 12,118 — 12,118 — 474,291 474,291 1,975,188 — 1,975,188 — — — — 2,483,984 1,951,441 — 1,951,441 (1,951,441) 532,575 — 532,575 (532,575) — — — 32 109,171 — 109,171 — 2,782 — 2,782 — 4,571,157 4,571,157	Adjusted Financial Information under the Company’s Policies 120,474 39,146 9,800 8,571 284,182 12,118
		474,291
		1,975,188 2,483,984 — — 32 109,171 2,782
		4,571,157

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2014 (Continued)

Notes Current liabilities Trade payables, other payables and accruals 11, 12 Trade accounts payable 9, 11 Other payables 9, 11 Amount due to ultimate parent company 9 Amount due to a related company 9 Income tax payable (‘‘Tax payable’’ under the Company’s policies) Short-term loans from financial institutions (‘‘Bank loans’’ under the Company’s policies) Other current liabilities 12 Net current assets Total assets less current liabilities Non-current liabilities Provision for cost of assets dismantlement Employee benefit obligations NET ASSETS	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) — — — 1,084,509 804,384 — 804,384 (804,384) 267,055 — 267,055 (267,055) — — — 2,653 — — — 86 5,643 — 5,643 — 2,427,594 — 2,427,594 — 15,809 — 15,809 (15,809) 3,520,485 3,520,485 1,050,672 1,050,672 1,524,963 1,524,963 3,960 — 3,960 — 33,076 — 33,076 — 37,036 37,036 1,487,927 1,487,927	Adjusted Financial Information under the Company’s Policies 1,084,509 — — 2,653 86 5,643 2,427,594 —
		3,520,485
		1,050,672
		1,524,963
		3,960 33,076
		37,036
		1,487,927

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

Unaudited Adjusted Consolidated Statement of Financial Position under the Company’s Policies as of December 31, 2014 (Continued)

Notes Capital and reserves Authorised share capital (‘‘Share capital’’ under the Company’s policies) Share premium Retained earnings Appropriated Legal reserve (‘‘Reserves’’ under the Company’s policies) Unappropriated (‘‘Retained profits’’ under the Company’s policies) TOTAL EQUITY	Unadjusted Financial Information under TFRS Adjustments Adjusted Financial Information under IFRS Adjustments (in thousand Baht) 350,199 — 350,199 — 435,415 — 435,415 — 35,020 — 35,020 — 667,293 — 667,293 — 1,487,927 1,487,927	Adjusted Financial Information under the Company’s Policies 350,199 435,415 35,020 667,293
		1,487,927

Notes:

(1) SiS THAI presents certain expenses primarily related to staff cost and transportation cost for distributing activities within ‘‘Administrative expenses’’ in compliance with local guidelines, which deviates from the relevant principles under IFRS. The Company presents all such expenses based on their function as ‘‘Distribution costs’’ and accordingly, these items have been reclassified.
(2) SiS THAI presents ‘‘Revenue from sale of goods’’ and ‘‘Revenue from rendering of services’’ as two separate line items on its consolidated statement of income. The Company presents them as components of ‘‘Revenue’’ and accordingly, ‘‘Revenue from sale of goods’’ and ‘‘Revenue from rendering of services’’ are grouped together and presented as ‘‘Revenue’’.
(3) SiS THAI presents ‘‘Cost of sale of goods’’ and ‘‘Cost of rendering of services’’ as two separate line items on its consolidated statement of income. The Company presents them as components of ‘‘Cost of sales’’ and accordingly, ‘‘Cost of sale of goods’’ and ‘‘Cost of rendering of services’’ are grouped together and presented as ‘‘Cost of sales’’.
(4) SiS THAI presents exchange gain or loss as separate line items as ‘‘Net foreign exchange loss’’, ‘‘Loss on exchange rate‘‘; or ‘‘Gain on exchange rate’’ on its consolidated statement of income. The Company presents exchange gain or loss as a component of ‘‘Other gains and losses’’ and accordingly, such item has been reclassified.
(5) SiS THAI presents gain or loss on disposal of properties, plant and equipment as a component of ‘‘Administrative expenses’’ or ‘‘Other income’’. The Company presents it as a component of ‘‘Other gains and losses’’ and accordingly, such item has been reclassified.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

(6) SiS THAI presents bank charges as a component of ‘‘Finance costs’’. The Company presents it as a component of ‘‘Administrative expenses’’ and accordingly, such item has been reclassified.
(7) SiS THAI presents gain from loss of controlling interest in a subsidiary as a separate line item as ‘‘Gain from loss of controlling interest in a subsidiary’’ on its consolidated statement of income. The Company presents it as a component of ‘‘Other gains or losses’’ and accordingly, such item has been reclassified.
(8) SiS THAI presents ‘‘Trade accounts receivable’’ and ‘‘Other receivables’’ or ‘‘Other current receivables’’ as two separate line items on its consolidated statement of financial position. The Company presents them as a component of ‘‘Trade and other receivables, deposits and prepayments’’. Accordingly, ‘‘Trade accounts receivables’’ and ‘‘Other receivables’’ or ‘‘Other current receivables’’ are grouped together and presented as ‘‘Trade and other receivables, deposits and prepayments’’.
(9) SiS THAI presents amounts due from/to ultimate parent company, associates or related companies as components of ‘‘Trade accounts receivable’’, ‘‘Other receivables’’, ‘‘Other current receivables’’, ‘‘Trade accounts payable’’, ‘‘Other payables’’ or ‘‘Other current payables. The Company presents its amounts due from/to ultimate parent company, associates or related companies as separate line items as ‘‘Amount due from/to ultimate parent company’’, ‘‘Amounts due from/to associates’’ or ‘‘Amounts due from/to related companies’’ on the consolidated statement of financial position. Accordingly, such items have been separately presented and classified.
(10) SiS THAI presents loans to an associate as a component of ‘‘Current portion of long-term loans to related party’’, ‘‘Short-term loans to related parties’’ or ‘‘Long-term loans to related party’’. The Company presents loans to an associate as a component of ‘‘Amounts due from associates’’ and accordingly, such item has been reclassified.
(11) SiS THAI presents ‘‘Trade accounts payable’’ and ‘‘Other payables’’ or ‘‘Other current payables’’ as two separate line items on its consolidated statement of financial position. The Company presents them as a component of ‘‘Trade payables, other payables and accruals’’. Accordingly, ‘‘Trade accounts payable’’ and ‘‘Other payables’’ or ‘‘Other current payables’’ are grouped together and presented as ‘‘Trade payables, other payables and accruals’’.
(12) SiS THAI presents withholding tax payable, staff guarantee and warranty provision as ‘‘Other current liabilities’’. The Company presents all such items as components of ‘‘Trade payables, other payables and accruals’’ and accordingly, these items have been reclassified.
(13) SiS THAI presents derivative financial instruments as a component of ‘‘Other current liabilities’’. The Company presents derivative financial instruments as a separate line item as ‘‘Derivative financial instruments’’ on its consolidated statement of financial position and accordingly, such item has been separately presented and classified.
(14) SiS THAI presents bank overdrafts and short-term bank loans as components of ‘‘Bank overdrafts and shortterm loans from financial institutions’’. The Company presents bank overdrafts and short-term bank loans as two separate line items as ‘‘Bank loans’’ and ‘‘Bank overdrafts’’ respectively on its consolidated statement of financial position. Accordingly, such items have been separately presented and classified.

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FINANCIAL INFORMATION OF THE TARGET GROUP

APPENDIX I

SUPPLEMENTAL FINANCIAL INFORMATION OF THE TARGET GROUP

The Company sets out the following supplemental financial information of the Target Group, which was not included in Target Company’s audited consolidated financial statements showing the financial information for the financial years ended 31 December 2014, 2015 and 2016 and the six month period ended 30 June 2017.

1. Aging analysis of Accounts Payables

Aged analysis of the trade payables, based on the invoice date, at the end of the reporting period.

Within 30 days 31 to 90 days 91 to 120 days Over 120 days	30.6.2017 Baht’000 142,310 20,421 3,010 1,339,696 1,505,437	31.12.2016 Baht’000 1,120,786 484,268 9,762 11,708 1,626,524	31.12.2015 Baht’000 712,512 503,414 8,898 9,083 1,233,907	31.12.2014 Baht’000 527,219 257,636 — 19,443
				804,298

2. Five Highest Paid Individuals Emoluments

Of the five individuals with the highest emoluments in the Target Company, two were directors emoluments in each of the financial years ended 31 December 2014, 2015 and 2016 and the six months period ended 30 June 2017.

Salaries and other benefits Contribution to pension	30.6.2017 Baht’000 9,865 324 10,189	31.12.2016 Baht’000 19,922 574 20,496	31.12.2015 Baht’000 17,515 538 18,053	31.12.2014 Baht’000 16,476 492
				16,968

3. Gearing Ratio

Gearing ratio, as defined by total bank borrowings to total equity were as follows:

As	at	30.6.2017	87%
As	at	31.12.2016	71%
As	at	31.12.2015	79%
As	at	31.12.2014	163%

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

FINANCIAL SUMMARY

The published audited consolidated financial statements of the Group (i) for the year ended 31 December 2014 are disclosed on pages 28 to 101 of the 2014 annual report of the Company released on 27 April 2015; (ii) for the year ended 31 December 2015 are disclosed on pages 33 to 112 of the 2015 annual report of the Company released on 21 April 2016; and (iii) for the year ended 31 December 2016 are disclosed on pages 42 to 119 of the 2016 annual report of the Company released on 19 April 2017.

The published unaudited condensed consolidated financial statements of the Group for the six months ended 30 June 2017 is disclosed on pages 5 to 24 of the 2017 interim report of the Company released on 19 September 2017.

All these financial statements have been published on the website of the Hong Kong Stock Exchange at www.hkexnews.hk and the Company’s website at www.sisinternational.com.hk.

1. WORKING CAPITAL

After taking into account the expected completion of the Acquisition and the Group’s presently internal financial resources and the available banking facilities, and in the absence of unforeseen circumstances, the Directors, after due and careful enquiry, are of the opinion that the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of publication of this circular.

2. INDEBTEDNESS STATEMENT OF THE ENLARGED GROUP

At the close of business on 31 August 2017, being the latest practicable date prior to the printing of this circular and for the purpose of this indebtedness statement, the Enlarged Group had total borrowings amounting to approximately HK$2,685,088,000 and obligation under finance lease amounting to approximately HK$34,818,000, details of which are as follows:

The Group had outstanding unsecured bank borrowings of approximately HK$34,300,000, secured bank borrowings of approximately HK$2,016,279,000 which were secured by properties, bank deposits, rental proceeds, trust beneficiary interests, preferred shares and specified shares of subsidiaries, secured bonds of approximately HK$271,657,000 which were secured by trust beneficiary interests, preferred shares and specified shares of subsidiaries and secured obligation under finance lease of approximately HK$34,818,000. Except for secured bank borrowings of approximately HK$114,233,000 and obligations under finance leases of approximately HK$34,818,000 which are guaranteed by the Company, all other balances were not covered by any guarantees as at 31 August 2017.

The Target Group had outstanding unsecured bank borrowings of approximately HK$362,852,000. All balances were not covered by any guarantees as at 31 August 2017.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, the Enlarged Group did not, as at the Latest Practicable Date, have any outstanding loan capital issued, outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, finance lease, hire purchase commitments, guarantees or other material contingent liabilities.

3. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Group is principally engaged in (i) real estate investments business, (ii) distribution of mobile and IT products and (iii) investments in IT, securities and other businesses.

(i) Real Estate Investments Business

The momentum for the Group’s real estate investments continued. Total revenue from the Group’s real estate investment portfolio for the year ended 31 December 2016 increased by 36% to HK$217 million and generated a segment profit excluding gains from change in fair value of HK$121 million as compared to the same period last year of HK$100 million.

During the year ended 31 December 2016, the Group acquired a total of seven properties in Japan and two of which included the hotel operations. Total consideration for these acquisitions during the year amounted to JPY12,488,948,000 (equivalent to HK$875,264,000). The total number of properties invested in Japan stood at 17 at end of 2016.

The sizeable portfolio of income generating properties with long-term potential for the capital appreciation has contributed positively to the net results of the Group. Coupled with the assets appreciation in Japan and Hong Kong, the carrying value of the Group’s real estate investment portfolio increased from HK$2,795 million to HK$3,724 million for the year ended 31 December 2016.

(ii) Distribution Business

Sales revenue from distribution of storage, networking and infrastructure products continued on an upward trend. The higher contributions derived from sale of IT products offset the lower sales revenue from mobility products. The total distribution sales revenue decreased slightly from HK$986 million to HK$911 million for the year ended 31 December 2016.

The challenging and difficult economic environment, the intensive competition in mobility products, falling demand from tourists coupled with weak demand in retail market in Hong Kong resulted in decrease of revenue. The revenue shortfall was further exacerbated by a recall of the Group’s major vendor’s flagship mobile phone product during the last quarter 2016. The Group will continue to identify and seek new growth products to add to our stability of products we are currently distributing.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The Directors believes that the Acquisition will be beneficial to the Group as detailed in the section headed ‘‘Reasons for and Benefits of the Acquisition’’ in this circular.

(iii) Investment in IT, Securities and Other Businesses

In Bangladesh, the Group’s associated company Information Technology Consultants Limited (‘‘ITCL’’) was successfully listed on 10 January 2016, on both Chittagong Stock Exchange and Dhaka Stock Exchange. The dual-listed ITCL is a leading consultant and provider of financial services, payment gateway, ATM, mobile payments & banking solutions in the rapidly evolving area of electronic payments, mobile payment, e-commerce, m-commerce and internet banking. ITCL continues to gain growth and contributed HK$4.8 million to the Group’s earnings during the year ended 31 December 2016.

The Group’s investment businesses also include investment in securities of listed corporations, as well as securities in unlisted companies for mid to long-term period. During the year ended 31 December 2016, the Group disposed of two investments engaged in distribution and medical; the proceeds of which contributed a total profit of HK$2.6 million. In addition, one of the Group’s investment portfolios in IT business listed successfully in the US in September 2016. The Group will continue to explore and seek for investment opportunities to further strengthen its investment portfolio.

The Directors expect to face a softer and more difficult economic environment in the near terms. Demand for IT and mobility products continue to soften. The Directors anticipate that year 2017 will be beset with much challenges and headwinds due to the uncertain global economy. However, the Directors are confident that fundamentals of the Group are strong. With a strong balance sheet, an experienced management team, the Group is well positioned to explore business opportunities, strengthen the Group’s position and pursue opportunities for profitable grown during this time. As part of its investment strategy, the Group will continue to look for acquisition opportunities in the international markets to strengthen its existing business and enhance the growth prospects of the Group and create value for the Shareholders.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

4. FINANCIAL REVIEW OF THE GROUP

Revenue of the Group was HK$1,128.4 million for the year ended 31 December 2016, representing a decrease of approximately 1.5% from HK$1,145.8 million for the year ended 31 December 2015. Such decrease was mainly due to the higher revenue from real estate investments business offset the lower sales revenue from distribution business.

Profit of the Group was HK$252.7 million for the year ended 31 December 2016, representing an increase of approximately 5.6% from HK$239.3 million for the year ended 31 December 2015. Such increase was mainly due to (i) increase in gain from changes in fair value of investment properties from HK$182.3 million for financial year 2015 to HK$232.1 million for financial year 2016; and (ii) increase in loss from changes in fair value of derivative financial instruments from HK$2.9 million for the financial year 2015 to HK$40.1 million for the financial year 2016.

The Group maintains a conservative approach on foreign exchange exposure management by entering into foreign currency forward contracts. There are no significant changes in strategies to hedge against exposure to fluctuations in exchange rates from last year end date. As at 31 December 2016 the Group had no outstanding forward contracts (2015: notional amount HK$327,600,000 which were measured at fair value at the reporting date).

5. LIQUIDITY AND FINANCIAL RESOURCES

As at 31 December 2016, the Group had total assets of HK$5,665,306,000 which were financed by total equity of HK$2,950,786,000 and total liabilities of HK$2,714,520,000. The Group had a current ratio of approximately 0.93 compared to that of approximately 0.97 at 31 December 2015. As at year end 2016 the Group had HK$976,839,000 (2015: HK$844,945,000) bank deposits balances and cash of which HK$331,948,000 (2015: HK$455,029,000) was pledged to banks to secure bank borrowings. The Group’s working capital requirements were mainly financed by internal resources, bank loans and bonds. As at 31 December 2016, the Group had short term loans and bonds of total HK$1,101,758,000 (2015: HK$945,272,000) and long term loans and bonds of HK$1,213,463,000 (2015: HK$474,560,000). The borrowings were mainly denominated in Japanese Yen and Hong Kong Dollar, and were charged by banks at floating interest rates. At the end of December 2016, the Group had a net cash deficit (total bank loans and bonds, less bank balances and cash and pledged deposits) of HK$1,338,382,000 (2015: HK$574,887,000). Gearing ratio, as defined by total bank borrowings and bonds to total equity as at 31 December 2016 was 78% (2015: 55%).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

6. CAPITAL STRUCTURE

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged. The capital structure of the Group consists of bank borrowings and bonds, net of cash and cash equivalents and equity, comprising issued share capital, reserves and retained profits. The management of the Group reviews the capital structure on an annual basis. As part of this review, the management of the Group considers the cost of capital and the risks associated with the capital, and takes appropriate actions to adjust the Group’s capital structure. The Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as raising new debt or repayment of existing debt.

7. NUMBER AND REMUNERATION OF EMPLOYEES, REMUNERATION POLICIES, BONUS AND SHARE OPTION SCHEMES

The number of staff of the Group as at 31 December 2016 was 103 (2015: 94) and the salaries and other benefits paid and payable to employees, excluding Directors’ emoluments and share option expenses, amounted to HK$43,787,000 (2015: HK$41,138,000) for the year ended 31 December 2016. In addition to the contributory provident fund and medical insurance, the Company adopts share option scheme and may grant shares to eligible employees of the Group. The Directors believe that the Company’s share option schemes could create more incentives and benefits for the employees and therefore increase employees’ productivity and contribution to the Group. During the year ended 31 December 2016, share options of 100,000 have been exercised and the weighted average closing share price immediately before dates of exercise of the share options were HK$3.91. The Group’s remuneration policy is to relate performance with compensation. The Group’s salary and discretionary bonus system is reviewed annually. There are no significant changes in staff remuneration policies from last year.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(A) BASIS OF PREPARATION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

In connection with the proposed very substantial acquisition in relation to the preconditional voluntary general offer to acquire the offer shares of SiS Distribution (Thailand) Public Company Limited (the ‘‘Target Company’’) (the ‘‘Acquisition’’), the unaudited pro forma consolidated statement of profit or loss, unaudited pro forma consolidated statement of cash flows and the unaudited pro forma consolidated statement of financial position of the Company and its subsidiaries (hereinafter referred to as the ‘‘Group’’, together with the Target Company and its subsidiaries (the ‘‘Target Group’’) hereinafter referred to as the ‘‘Enlarged Group’’) have been prepared to illustrate the effect of the proposed Acquisition on the Group’s financial position as at 30 June 2017, and the Group’s financial performance and cash flows for the year ended 31 December 2016, as if the Acquisition had taken place at 30 June 2017 and 1 January 2016, respectively. Although the result of this general offer may result in incountable scenario, for illustration and for simplicity for the purpose of this unaudited pro forma financial information, it is assumed that an additional 5.72% of total issued shares of the Target Company would be acquired by Thai Alliance Co., Ltd. (the ‘‘Offeror’’) from Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont, who are directors of the Target Company, as they have given written irrevocable and unconditional undertaking to the Offeror that each of them will accept the offer in respect of approximately 2.70% and 3.02%, respectively, of the shares of the Target Company held by them, which will result in the Group obtaining 53.01% of the voting rights of the Target Company.

The unaudited pro forma financial information of the Enlarged Group is prepared based on the audited consolidated statement of profit or loss and the audited consolidated statement of cash flows of the Group for the year ended 31 December 2016, which have been extracted from the published annual report of the Company for the year ended 31 December 2016, the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2017 which has been extracted from the published interim report of the Company for the six months ended 30 June 2017, and the consolidated statement of profit or loss and the consolidated statement of cash flows of the Target Group for the year ended 31 December 2016 and the consolidated statement of financial position of the Target Group as at 30 June 2017 which have been extracted from the accountants’ report of the Target Group as set out in Appendix I to this Circular.

The unaudited pro forma financial information of the Enlarged Group has been prepared by the Directors of the Company in accordance with paragraph 29 of Chapter 4 of the Hong Kong Listing Rules and is solely for the purpose to illustrate (a) the financial performance and cash flows of the Group as if the Acquisition had taken place on 1 January 2016; and (b) the financial position of the Group as if the Acquisition had taken place on 30 June 2017.

The unaudited pro forma financial information of the Enlarged Group is prepared based on the aforesaid historical data after giving effect to the pro forma adjustments described in the accompanying notes, with narrative description of the pro forma adjustments of the proposed Acquisition that are (i) directly attributable to the Acquisition; and (ii) factually supportable.

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The unaudited pro forma financial information of the Enlarged Group has been prepared by the Directors of the Company based on certain assumptions, estimates and uncertainties for illustrative purposes only and because of its hypothetical nature, the unaudited pro forma financial information of the Enlarged Group may not give a true picture of the results, cash flows or assets and liabilities of the Group would have been upon completion of the Acquisition for the year ended 31 December 2016 or as at 30 June 2017 and in any future periods or on any future dates, as appropriate.

(B) The unaudited pro forma financial information of the Enlarged Group should be read in conjunction with the letter from the board set out in this circular, the financial information of the Target Group as set out in Appendix I to this circular and other financial information included elsewhere in this circular.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF PROFIT OR LOSS

The Group for the year ended 31 December 2016 HK$’000 (Note 1) 1,128,417 (950,589)	Unaudited pro forma adjustments	Unaudited pro forma of the Enlarged Group for the year ended 31 December 2016 HK$’000 5,363,782 (4,966,018
	The Target Group for the year ended 31 December 2016 Baht’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note 2) (Note 3) (Note 5) (Note 6) 18,434,859 4,237,899 (2,534) (17,467,118) (4,015,429) 967,741 222,470 59,256 13,622 586 135 (429,195) (98,666) (252,868) (58,131) 2,534 (6,000) — — — — 3,116 2,908 669 (23,399) (41,298) (9,494) 307,130 70,605 (79,685) (18,318) 227,445 52,287 227,445 52,287 — — 24,674 227,445 52,287
177,828 12,224 (28,066) (29,114) (86,846) 232,057 — 28,214 (28,645)	967,741 59,256 586 (429,195) (252,868) — — 2,908 (41,298)	397,764 25,846 (27,931 (127,780 (148,443 232,057 3,116 5,484 (38,139
277,652 (24,919)	307,130 (79,685)	321,974 (43,237
252,733	227,445	278,737
236,209 16,524	227,445 —	237,539 41,198
252,733	227,445	278,737

– 266 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

2. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Non-current assets Investment properties Property, plant and equipment Interests in associates Goodwill Intangible assets Available-for-sale investments Deferred tax assets Other non-current assets Current assets Inventories Trade and other receivables, deposits and prepayments Amounts due from associates Investment held-for-trading Tax recoverable Pledged bank deposit Bank balances and cash Current liabilities Trade payables, other payables and accruals Amount due to an associate Amount due to a related company Derivative financial instruments Obligations under finance leases Tax payable Dividend payable Rental deposits received Bank loans Net current (liabilities) assets	The Group as at 30 June 2017 HK$’000 (Note 1) 3,859,235 328,018 278,246 — — 148,287 — — 4,613,786 55,596 156,774 2,667 15,766 2,146 333,198 587,737 1,153,884 148,910 — — — 4,135 16,143 8,339 7,815 1,053,117 1,238,459 (84,575)	Unaudited pro forma adjustments The Target Group as at 30 June 2017 Baht’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note 2) (Note 3) (Notes 4 and 5) (Note 6) — — 98,675 22,684 — — (186,120) — — 92,926 24,853 5,713 — — 231,961 53,324 11,664 2,681 367,153 84,402 1,817,943 417,918 2,872,903 660,439 58,578 13,466 (499) — — — — — — 148,524 34,143 (32,245) (6,000) 4,897,948 1,125,966 1,883,121 432,901 115,335 26,514 2,258 519 (499) 10,226 2,351 — — 50 11 — — — — 1,491,060 342,772 3,502,050 805,068 1,395,898 320,898	Unaudited pro forma of the Enlarged Group as at 30 June 2017 HK$’000 3,859,235 350,702 92,126 92,926 5,713 148,287 53,324 2,681
			4,604,994
			473,514 817,213 15,634 15,766 2,146 333,198 583,635
			2,241,106
			581,811 26,514 20 2,351 4,135 16,154 8,339 7,815 1,395,889
			2,043,028
			198,078

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APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma adjustments

		Unaudited pro forma adjustments
Non-current Liabilities Bank loans Bonds Obligations under finance leases Rental deposits received — non-current Deferred taxation liabilities Provision for cost of assets dismantlement Provision for employee benefit Net assets Capital and reserves Financed by: Share capital Share premium Reserves Retained earnings Equity attributable to owners of the Company Non-controlling interests Total equity	The Group as at 30 June 2017 HK$’000 (Note 1) 981,779 269,373 31,360 123,408 85,802 — — 1,491,722 3,037,489 27,797 73,400 32,265 2,773,620 2,907,082 130,407 3,037,489	The Target Group as at 30 June 2017 Baht’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 2) (Note 2) (Note 3) (Notes 4 and 5) (Note 6) — — — — — — — — — — 3,960 911 47,990 11,032 51,950 11,943 1,711,101 393,357 350,199 80,506 (80,506) 435,415 100,095 (100,095) 35,020 8,051 (8,051) 890,467 204,705 (122,412) (6,000) 1,711,101 393,357 — — 185,625 1,711,101 393,357	Unaudited pro forma of the Enlarged Group as at 30 June 2017 HK$’000 981,779 269,373 31,360 123,408 85,802 911 11,032
			1,503,665
			3,299,407
			27,797 73,400 32,265 2,849,913
			2,983,375 316,032
			3,299,407

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

3. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW

Unaudited pro forma adjustments

	Unaudited pro forma adjustments	Unaudited pro forma adjustments	Unaudited pro forma adjustments
Cash flows from operating activities Profit before taxation Adjustments for: Allowance (reversal) for doubtful debts Allowance for obsolete and slow moving inventories Amortization of intangible assets Dividend income from available-for-sale investments Dividend income from investments held-for- trading Depreciation of property, plant and equipment Doubtful debts expense for short-term loans to related parties Finance costs Loss from changes in fair value of derivative financial instruments Gain on disposal of available-for-sale investments Gain from change in fair value of investments held-for-trading Gain from changes in fair value of investment properties Gain on re-measurement of previously held interest in an associate Interest income Loss(gain) on disposal of property, plant and equipment Loss on disposal of subsidiaries Share of results of associates Equity-settled share option expense Gain on liquidation of a joint venture Provision for employee benefit obligation Unrealised loss on exchange Operating cash flows before movements in working capital Decrease (increase) in inventories Increase in trade and other receivables, deposits and prepayments Decrease in amount due from a joint venture Increase in amount due from an associate Increase in rental deposit Increase in trade payables, other payables and accruals Employee benefit obligations paid Change in other non-current assets Cash from operations Hong Kong Profit tax paid Overseas tax paid Interest paid Net cash from operating activities	The Group for the year ended 31 December 2016 The Target Group for the year ended 31 December 2016 Unaudited pro forma of the Enlarged Group for the year ended 31 December 2016 HK$’000 Baht’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 2) (Note 3) (Notes 4 and 5) (Note 6) 277,652 307,130 70,605 (23,399) 3,116 (6,000) 321,974 1,360 (14,406) (3,312) (1,952 3,008 68,020 15,637 18,645 — 5,804 1,334 1,334 (112) — — (112 (645) — — (645 5,093 31,248 7,183 12,276 — 10,163 2,336 2,336 28,645 50,218 11,544 40,189 40,116 — — 40,116 (2,618) — — (2,618 (560) — — (560 (232,057) — — (232,057 — — — (3,116) (3,116 (1,920) (8,808) (2,025) (3,945 8 (354) (81) (73 24 — 24 (28,214) (2,908) (669) 23,399 (5,484 4,005 — 4,005 (10,987) — (10,987 — 6,985 1,606 1,606 — 813 187 187 82,798 453,905 104,345 181,143 31,603 (462,946) (106,424) (74,821 (42,422) (56,425) (12,971) (55,393 2,065 — — 2,065 (127) — — (127 44,207 — — 44,207 27,773 457,017 105,061 132,834 — (1,550) (356) (356 — (18) (4) (4 145,897 389,983 89,651 229,548 (1,705) — — (1,705 (4,997) (79,497) (18,275) (23,272 (28,645) — — (28,645 110,550 310,486 71,376 175,926
			181,143 (74,821 (55,393 2,065 (127 44,207 132,834 (356 (4
			229,548 (1,705 (23,272 (28,645
	110,550	310,486	175,926

– 269 –

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

Unaudited pro forma adjustments

	Unaudited pro forma adjustments	Unaudited pro forma adjustments
Investing activities Acquisition of investment properties Acquisition of subsidiaries Dividend received from associates Dividend received from available-for-sale investments Dividend received from investments held-for- trading Interest received Withdrawal of pledged deposits Proceeds from disposal of investments held- for-trading Proceeds from disposal of available-for-sale investments Purchase of available-for-sale investments Purchase of investment held-for-trading Purchase of intangible assets Purchase of property, plant and equipment Cash received from the liquidation of a joint venture Cash outflow on loans to related parties Proceeds from disposal of property, plant and equipment Net settlement on maturity of derivative financial instruments Net cash used in investing activities Financing activities Dividends paid Interest paid Proceeds from issue of new shares Proceeds from issue of bonds Net payments of loan from financial institutions New bank loans raised Repayment of bank loans Repayment of finance lease obligations Contribution from non-controlling interests Net cash from (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of foreign exchange rate changes Cash and cash equivalents at 31 December, represented by bank balances and cash	The Group for the year ended 31 December 2016 The Target Group for the year ended 31 December 2016 HK$’000 Baht’000 HK$’000 HK$’000 HK$’000 HK$’000 (Note 1) (Note 2) (Note 2) (Note 3) (Notes 4 and 5) (Note 6) (681,883) — — — — — (32,245) 10,980 — — (10,980) 112 — — 645 — — 1,920 8,829 2,030 123,081 — — 149 — — 9,520 — — (27,797) — — (760) — — — (874) (201) (198,539) (26,789) (6,158) 10,987 — — — (541) (124) 606 1,014 233 (45,644) — — (796,623) (18,361) (4,220) (8,327) (105,060) (24,152) — (49,902) (11,472) 172 — — 149,643 — — — (38,783) (8,916) 1,385,178 — — (627,950) — — (3,763) — — 55,059 — — 950,012 (193,745) (44,540) 263,939 98,380 22,616 389,916 49,490 11,377 (8,964) — — 644,891 147,870 33,993		Unaudited pro forma of the Enlarged Group for the year ended 31 December 2016 HK$’000 (681,883 (32,245 — 112 645 3,950 123,081 149 9,520 (27,797 (760 (201 (204,697 10,987 (124 839 (45,644
			(844,068
			(32,479 (11,472 172 149,643 (8,916 1,385,178 (627,950 (3,763 55,059
	950,012	(193,745)	905,472
	263,939 389,916 (8,964)	98,380 49,490 —	237,330 401,293 (8,964
	644,891	147,870	629,659

– 270 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Notes:

(1) The unaudited condensed consolidated statement of financial position as at 30 June 2017 and the consolidated statement of profit or loss and consolidated statement of cash flows of the Group for the year ended 31 December 2016 were extracted from the published interim report of the Company for the six months 30 June 2017 and published annual report of the Company for the year ended 31 December 2016.
(2) The unaudited consolidated statement of financial position as at 30 June 2017 and the consolidated statement of profit or loss of the Target Group for the year ended 31 December 2016 were extracted from the Adjusted Financial Information under the Company’s Policies in the ‘‘Unaudited Adjusted Consolidated Statement’’ of the Target Group as set out in Appendix I to the Circular, with certain reclassification being made to bring them in line with presentation of the consolidated financial statements of the Group, where appropriate. The consolidated statement of cash flows for the year ended 31 December 2016 of the Target Group was extracted from the ‘‘Statement of cash flow’’ of the Target Group as set out in Appendix I to the Circular.

For the purpose of preparation of the unaudited pro forma financial information, the exchange rates adopted are as follows:

As at 30 December 2015	HK$1=Baht4.35
As at 1 January 2016	HK$1=Baht4.35
As at 30 June 2017	HK$1=Baht4.35
Average rate in the year ended 31 December 2016	HK$1=Baht4.35

No representation is made that the Baht amounts have been, could have been or could be converted to Hong Kong Dollar, or vice versa, at those rates or at any other rates or at all.

(3) The adjustment represents elimination of intercompany balances as at 30 June 2017, elimination of intercompany transactions within the Enlarged Group, and reversal of the share of result of, and dividend received from, the Target Group as an associate for the year ended 31 December 2016 as if the Acquisition was completed at 1 January 2016.
(4) The adjustment represents the consideration of the Group for the acquisition of additional 9,457,961 and 10,580,010 shares, which represented 2.70% and 3.02% of the shares of the Target Company, respectively, from Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont, who are directors of the Target Company and have given written irrevocable and unconditional undertakings to Thai Alliance Co Ltd. (the ‘‘Offeror’’) that each of them will accept the offer and sell their shares to the Offeror. The total consideration, based on the offer price of Baht7.00 per share, to be paid by the Group for the acquisition of additional 5.72% issued shares of the Target Company, is approximately Baht140,266,000 (equivalent to approximately HK$32,245,000).

As set out in this Circular, the funding of the Acquisition will be satisfied by cash. It is the intention of the Directors that the acquisition is to be financed by a combination of bank loans and the Group’s internal resources. As at the date of this Circular, the Company has been in negotiations with various financial institutions, and no definitive agreements for such external financing from financial institutions have been entered into. Therefore it is assumed that the funding of the Acquisition will be satisfied by cash for the purpose of preparation the unaudited pro forma consolidated statement of financial position.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(5) The adjustment represents consolidation entry for the elimination of the investment cost of the Target Group, and allocation of the cost of the Acquisition to the identifiable assets acquired and liabilities assumed by the Company and recognition of the goodwill on consolidation. Upon completion of the Acquisition, the Group will apply the acquisition method of accounting in accordance with Hong Kong Financial Reporting Standard 3 (Revised) ‘‘Business Combinations’’, the identifiable assets and liabilities of the Target Group will be accounted for in the consolidated financial statements of the Enlarged Group at fair value.

For the purpose of the preparation of the unaudited pro forma financial information of the Enlarged Group and for illustrative purpose, the Directors of the Company had assumed that the carrying values of the identifiable assets and liabilities of the Target Group as at 30 June 2017 of HK$393,357,000 (details are set out in the unaudited pro forma consolidated statement of financial position) approximates to their fair values and the recognition of goodwill arising from the Acquisition is analysed as follows:

Consideration for the Acquisition (note 4 above) Add: Fair value of previously held interest (see below) Non-controlling interest Less: Assumed fair value of the net identifiable asset of the Target Group Goodwill arising from the Acquisition	HK$’000 32,245 268,413 185,625 (393,357) 92,926

As a consequence of the Acquisition, SiS Distribution (Thailand) Public Company Limited will become a non-wholly owned subsidiary of the Group by way of step acquisition, as previously the Group accounted for its 47.29% share interest in SiS Distribution (Thailand) Public Company Limited as interests in an associate. Under HKFRS 3, the Group is required to recognise a gain or loss between the carrying value of its interest in SiS Distribution (Thailand) Public Company Limited (while it is classified as interests in an associate) and the fair value of this interest at the date of the Group obtaining control over such investee. The Directors determined the fair value of the Group’s existing interest in SiS Distribution (Thailand) Public Company Limited at the date of the Acquisition when control is obtained to be approximately HK$268,413,000 which represents the 165,616,595 shares of SiS Distribution (Thailand) Public Company Limited held by the Group stated at the quoted market price per share of Baht7.05 as at 30 June 2017. The carrying amount of interest in SiS Distribution (Thailand) Public Company Limited included in the condensed consolidated financial statements of the Group for the six months ended 30 June 2017 was HK$186,120,000. As a result, the gain on remeasurement of previously held interest in an associate was HK$82,293,000.

If the Acquisition was completed at 1 January 2016, the Directors determined the fair value of the Group ‘s existing interest in SiS Distribution (Thailand) Public Company Limited as the date of Acquisition to be approximately HK$162,952,000 which represents the number of 165,616,595 shares of SiS Distribution (Thailand) Public Company Limited held by the Group stated at the quoted market price per share of Baht4.28 as at 30 December 2015. The carrying amount of interest in SiS Distribution (Thailand) Public Company Limited included in the consolidated financial statements of the Group at 31 December 2015 was HK$159,836,000. As a result, the gain on re-measurement of previously held interest in an associate was HK$3,116,000.

Non-controlling interest is measured at the present ownership interests’ proportionate share in the carrying amounts of the net identifiable asset of the Target Group. The Group currently owned 47.29% equity interests in the Target Company and according to the current group structure set out in the letter from the board, the Group (through Thai Investment Holdings Pte. Ltd.) and Mr. Lim Kia Hong and Mr. Lim Hwee Hai, the Directors of the Company, held 96.55% effective interests in the Offeror. After completion of the Acquisition, the Group would hold 52.81% interests in the Target Company and 47.19% will be held by non-controlling interest. The non-controlling interest recognised, at the date of Acquisition, to be HK$185,625,000. If the Acquisition was completed at 1 January 2016, the share of result of the non-controlling interest for the year ended 31 December 2016 to be approximately HK$24,674,000.

– 272 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Since the carrying amounts and fair values of the identifiable assets acquired and liabilities assumed of the Target Group at the actual date of completion of the Acquisition may be substantially different from the values used in preparing this unaudited pro forma financial information of the Enlarged Group, eventual goodwill at the date of actual completion will be different from the amounts presented above.

For the purpose of the unaudited pro forma financial information of the Enlarged Group, the Group’s management has performed an impairment assessment on the provisional goodwill arising from the Acquisition in accordance with Hong Kong Accounting Standard 36 ‘‘Impairment of Assets’’ (‘‘HKAS 36’’) and concluded that there would have been no impairment of the goodwill if the Acquisition had been completed on 30 June 2017 for the purpose of unaudited pro forma consolidated statement of financial position and 1 January 2016 for the purpose of unaudited pro forma consolidated statement of profit or loss and unaudited pro forma consolidated statement of cash flows. The recoverable amount under impairment assessment was derived based on the value-in-use calculations. That calculations used cash flows projections based on financial budgets as approved by management of the Target Group covering five years period, assuming that (i) there are no material adverse changes in the fair values of the assets and liabilities of the Target Group; and (ii) the identifiable assets and liabilities can be realised at their carrying amounts. However, should there be any adverse changes to the business of the Target Group, including but not limited to, any subsequent adverse changes in the operation, impairment may be required to be recognised against provisional goodwill in accordance with HKAS 36 and the Group’s accounting policies.

The Directors confirmed that they will adopt consistent approach to assess impairment of goodwill in subsequent reporting periods in accordance with the requirements of HKAS 36 and will disclose in the Group’s annual report the basis and assumptions adopted by the Directors in the impairment assessment in accordance with the disclosure requirements in HKAS 36.

(6) The adjustment represents the estimated transaction costs of approximately HK$6,000,000, including the accountancy, legal, valuation and other professional services related to the Acquisition. The expenses are charged to profit or loss directly.
(7) The adjustments in respect of the unaudited pro forma consolidated statement of profit or loss and the unaudited pro forma consolidated statement of cash flows are not expected to have a continuing effect on the Enlarged Group.

– 273 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

(C) INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION

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To the Directors of SiS International Holdings Limited

We have completed our assurance engagement to report on the compilation of unaudited pro forma financial information of SiS International Holdings Limited (the ‘‘Company’’) and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’) by the directors of the Company (the ‘‘Directors’’) for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited pro forma statement of financial position as at 30 June 2017, the unaudited pro forma statement of profit or loss for the year ended 31 December 2016, the unaudited pro forma statement of cash flows for the year ended 31 December 2016 and related notes as set out on pages 266 to 273 of the circular issued by the Company 16 October 2017 (the ‘‘Circular’’). The applicable criteria on the basis of which the Directors have compiled the unaudited pro forma financial information are described on page 265 of the Circular.

The unaudited pro forma financial information has been compiled by the Directors to illustrate the impact of the Group’s acquisition of additional 5.72% issued shares in SiS Distribution (Thailand) Public Company Limited (the ‘‘Target Company’’) from Mr. Somchai Sittichaisrichart and Mr. Sombuti Pungsrinont, who are directors of the Target Company and have given written irrevocable and unconditional undertaking to Thai Alliance Co., Ltd. (the ‘‘Offeror’’) on the Group’s financial position as at 30 June 2017 and the Group’s financial performance and cash flows for the year ended 31 December 2016 as if the event or transaction had taken place at 30 June 2017 and 1 January 2016 respectively. As part of this process, information about the Group’s financial position has been extracted by the Directors from the Group’s financial statements for the six months ended 30 June 2017, on which a review report has been published, the Group’s financial performance and cash flows has been extracted by the Directors from the Group’s financial statements for the year ended 31 December 2016, on which an annual report has been published.

Directors’ Responsibilities for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the unaudited pro forma financial information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ (‘‘AG 7’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).

– 274 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the ‘‘Code of Ethics for Professional Accountants’’ issued by the HKICPA, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

Our firm applies Hong Kong Standard on Quality Control 1 ‘‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements’’ issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules, on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus’’ issued by the HKICPA. This standard requires that the reporting accountants plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled the unaudited pro forma financial information in accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the unaudited pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the unaudited pro forma financial information.

The purpose of unaudited pro forma financial information included in an investment circular is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at 30 June 2017 or 1 January 2016 would have been as presented.

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UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

A reasonable assurance engagement to report on whether the unaudited pro forma financial information has been properly compiled on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by the Directors in the compilation of the unaudited pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether:

. the related unaudited pro forma adjustments give appropriate effect to those criteria; and
. the unaudited pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgment, having regard to the reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of which the unaudited pro forma financial information has been compiled, and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the unaudited pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion:

(a) the unaudited pro forma financial information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong, 16 October 2017

– 276 –

GENERAL INFORMATION

APPENDIX IV

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors of the Company collectively and individually accept full responsibility, includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors or chief executive of the Company in the Shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (i) to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO); or (ii) pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (iii) pursuant to the Model Code for Securities Transactions by Directors of Listed Companies set out in Appendix 10 to the Hong Kong Listing Rules adopted by the Company to be notified to the Company and the Hong Kong Stock Exchange, were as follows:

(i) Long positions in ordinary shares of HK$0.10 each of the Company

							Percentage
							of the
						Total	issued
						number of	share
						issued	capital of
	Personal	Family	Joint		Corporate	ordinary	the
Name of Director	interests	interests	interests		interests	shares held	Company
			(Note 1)		(Note 2)
Lim Kia Hong (Note 4)	6,933,108	504,000		—	178,640,000	186,077,108	66.94%
Lim Kiah Meng (Note 4)	5,403,200	450,000	534,000		178,640,000	185,027,200	66.56%
Lim Hwee Hai (Note 3)	4,493,200	4,751,158		—	—	9,244,358	3.33%
Lim Hwee Noi
(Note 3, 4)	4,751,158	4,493,200		—	—	9,244,358	3.33%
Lee Hiok Chuan	250,000	—		—	—	250,000	0.09%
Ong Wui Leng	250,000	—		—	—	250,000	0.09%

Notes:

(1) 534,000 shares are jointly held by Mr. Lim Kiah Meng and his spouse.
(2) Gold Sceptre Limited holds 140,360,000 shares and Kelderman Limited, Valley Tiger Limited and Swan River Limited each holds 12,760,000 shares in the issued share capital of the Company. Mr. Lim Kiah Meng and his spouse and Mr. Lim Kia Hong and his spouse together own 40.50% and 39.50%, respectively of the issued share capital of Summertown Limited which owns the entire issued share capital of each of the above-mentioned companies.

– 277 –

GENERAL INFORMATION

APPENDIX IV

(3) 4,493,200 shares and 4,751,158 shares are beneficially owned by Mr. Lim Hwee Hai and Madam Lim Hwee Noi respectively. Mr. Lim and Madam Lim are spouse, so they have deemed interest in their spouse’s shares under the SFO.
(4) In addition to the interests disclosed above, Mr. Lim Kiah Meng and Madam Lim Hwee Noi are trustees of an estate and are holding 304,000 shares on behalf of three beneficiaries aged below 18. Out of these 304,000 shares, 200,000 shares and 104,000 shares are beneficially owned by the children of Mr. Lim Kiah Meng and Mr. Lim Kia Hong respectively, and are included in the family interests of Mr. Lim Kiah Meng and Mr. Lim Kia Hong as disclosed above.

(ii) Share Options

Directors of the Company and their associates had interest in share options under the Company’s share option scheme, detail of which are set out as follows.

				Number of	Number of
				share options
				outstanding
			Exercise	at the Latest
			price	Practicable
Date of grant	Vesting period	Exercise period	HK$	Date
Lim Kia Hong
26.06.2015	27.06.2015–31.12.2015	01.01.2016–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2016	01.01.2017–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2017	01.01.2018–26.06.2025	4.47		50,000
Lim Kiah Meng
26.06.2015	27.06.2015–31.12.2015	01.01.2016–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2016	01.01.2017–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2017	01.01.2018–26.06.2025	4.47		50,000
Lim Hwee Hai
26.06.2015	27.06.2015–31.12.2015	01.01.2016–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2016	01.01.2017–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2017	01.01.2018–26.06.2025	4.47		50,000
Lim Hwee Noi
26.06.2015	27.06.2015–31.12.2015	01.01.2016–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2016	01.01.2017–26.06.2025	4.47		50,000
26.06.2015	27.06.2015–31.12.2017	01.01.2018–26.06.2025	4.47		50,000

– 278 –

GENERAL INFORMATION

APPENDIX IV

Date of grant
Vesting period
Exercise period
Exercise
price
HK$ Lee Hiok Chuan
26.06.2015
27.06.2015–31.12.2015
01.01.2016–26.06.2025
4.47
26.06.2015
27.06.2015–31.12.2016
01.01.2017–26.06.2025
4.47
26.06.2015
27.06.2015–31.12.2017
01.01.2018–26.06.2025
4.47
Ong Wui Leng
26.06.2015
27.06.2015–31.12.2015
01.01.2016–26.06.2025
4.47
26.06.2015
27.06.2015–31.12.2016
01.01.2017–26.06.2025
4.47
26.06.2015
27.06.2015–31.12.2017
01.01.2018–26.06.2025
4.47
Ma Shiu Sun, Michael
26.06.2015
27.06.2015–31.12.2015
01.01.2016–26.06.2025
4.47
26.06.2015
27.06.2015–31.12.2016
01.01.2017–26.06.2025
4.47
26.06.2015
27.06.2015–31.12.2017
01.01.2018–26.06.2025
4.47

Number of
share options
outstanding
at the Latest
Practicable
Date
40,000
40,000
40,000
40,000
40,000
40,000
50,000
50,000
50,000

990,000

(iii) Long positions in the shares and underlying shares of a subsidiary of the Company

Ordinary share of HK$0.10 each of SiS Mobile Holdings Limited (‘‘SiS Mobile’’), which is listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 1362).

						Percentage
						of the
					Total	issued
					number of	share
					issued	capital of
	Personal	Family	Joint	Corporate	ordinary	the SiS
Name of Director	interests	interests	interests	interests	shares held	Mobile
				(Notes 2
			(Note 1)	and 3)
Lim Kia Hong (Note 5)	1,846,754	161,280	—	203,607,467	205,615,501	73.43%
Lim Kiah Meng (Note 5)	1,729,024	144,000	170,880	203,607,467	205,651,371	73.45%
Lim Hwee Hai (Note 4)	1,065,984	1,145,330	—	—	2,211,314	0.79%
Lim Hwee Noi (Note 4, 5)	1,145,330	1,065,984	—	—	2,211,314	0.79%
Lee Hiok Chuan	64,000	—	—	—	64,000	0.02%
Ong Wui Leng	64,000	—	—	—	64,000	0.02%

– 279 –

GENERAL INFORMATION

APPENDIX IV

Notes:

(1) Shares are jointly held by Mr. Lim Kiah Meng and his spouse.
(2) 146,442,667 shares are registered in the name of SiS International Holdings Ltd. It is owned as to approximately 50.50% by Gold Sceptre Limited.
(3) Gold Sceptre Limited holds 44,915,200 shares and Kelderman Limited, Valley Tiger Limited and Swan River Limited each holds 4,083,200 shares in the issued share capital of SiS Mobile. Mr. Lim Kiah Meng and his spouse and Mr. Lim Kia Hong and his spouse together own 40.50% and 39.50%, respectively of the issued share capital of Summertown Limited which owns the entire issued share capital of each of the above-mentioned companies.
(4) 1,065,984 shares and 1,145,330 shares are beneficially owned by Mr. Lim Hwee Hai and Madam Lim Hwee Noi respectively. Mr. Lim and Madam Lim are spouse, so they have deemed interest in their spouse’s shares under the SFO.
(5) In additional to the interests disclosed above, Mr. Lim Kiah Meng and Madam Lim Hwee Noi are trustees of an estate and are holding 97,280 shares. 64,000 shares and 33,280 shares are beneficially owned by the children of Mr. Lim Kiah Meng and Mr. Lim Kia Hong respectively, and are included in the family interests of Mr. Lim Kiah Meng and Mr. Lim Kia Hong as disclosed above.

(iv) Share options of SiS Mobile, a subsidiary of the Company

Date of grant
Vesting period
Exercise period
Exercise
price
HK$ Directors and their associates:
Lim Kia Hong
25.06.2015
26.06.2015–31.12.2015
01.01.2016–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2016
01.01.2017–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2017
01.01.2018–30.06.2023
2.36
Lim Kiah Meng
25.06.2015
26.06.2015–31.12.2015
01.01.2016–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2016
01.01.2017–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2017
01.01.2018–30.06.2023
2.36
Lim Hwee Hai
25.06.2015
26.06.2015–31.12.2015
01.01.2016–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2016
01.01.2017–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2017
01.01.2018–30.06.2023
2.36
Lim Hwee Noi
25.06.2015
26.06.2015–31.12.2015
01.01.2016–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2016
01.01.2017–30.06.2023
2.36
25.06.2015
26.06.2015–31.12.2017
01.01.2018–30.06.2023
2.36

Number of
share options
outstanding at
the Latest
Practicable
Date
400,000
400,000
400,000
400,000
400,000
400,000
400,000
400,000
400,000
200,000
200,000
200,000

4,200,000

– 280 –

GENERAL INFORMATION

APPENDIX IV

(v) Long positions in the shares and underlying shares of associated corporations of the Company
(a) Ordinary share of Baht 1 each of SiS Distribution (Thailand) Public Company Limited (‘‘Target Company’’), which is listed in the Stock Exchange of Thailand.

				Total number of	Approximate %
				issued ordinary	of issued share
	Personal	Corporate		shares held in	capital of
Name of Director	interests	interests		Target Company	Target Company
		(Note)
Lim Kia Hong	241,875	165,616,595		165,858,470	47.36%
Lim Hwee Hai	244,687		—	244,687	0.07%

Note: The Company indirectly holds 165,616,595 ordinary shares of the issued capital of Target Company. As disclosed in (i) above, Mr. Lim Kia Hong and his family has total interest of 66.94% in the Company, therefore Mr. Lim has deemed corporate interest in Target Company under the SFO.

(b) Ordinary share of Taka 10 each of Information Technology Consultants Limited (‘‘ITCL’’) which is incorporated in Bangladesh, and is listed in The Dhaka Stock Exchange and The Chittagong Stock Exchange on 10 January 2016 (DSE Stock Code: ITC, CSE Stock Code: ITC).

		Approximate
		% of issued
	Corporate	share capital
Name of Director	Interests	of ITCL
	(Note)
Lim Kiah Meng	46,068,298	46.05%

Note: A related corporation which is jointly owned by Mr. Lim Kiah Meng and his spouse holds 8,452,500 ordinary shares in ITCL, while the Company indirectly holds 37,615,798 ordinary shares. As disclosed in (i) above, Mr. Lim Kiah Meng and his family has total interest of 66.56% in the Company, therefore Mr. Lim has deemed corporate interest of 37,615,798 shares in ITCL under the SFO.

Save as disclosed above, none of the Directors nor their associates, as at the Latest Practicable Date, had any interests or short positions in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company under Section 352 of the SFO, or which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.

– 281 –

GENERAL INFORMATION

APPENDIX IV

3. SUBSTANTIAL SHAREHOLDERS’ INTERESTS

Long positions in ordinary shares of HK$0.10 each of the Company

					Percentage
					of the
				Total	issued
				number of	share
				issued	capital of
	Personal	Family	Corporate	ordinary	the
Name of Shareholder	interests	interests	interests	shares held	Company
		(Note 1)	(Note 2)
Yeo Seng Chong	700,000	1,220,000	12,900,000	14,820,000	5.33%
Lim Mee Hwa	1,220,000	700,000	12,900,000	14,820,000	5.33%

Notes:

(1) Mr. Yeo Seng Chong and Madam Lim Mee Hwa are spouse so they have deemed interest in their spouse’s shares under the SFO.
(2) Mr. Yeo Seng Chong and Madam Lim Mee Hwa each have 50% direct interest in a corporation which holds the shares of the Company as an investment manager.

As at the Latest Practicable Date, so far as was known to the Directors or chief executive of the Company based on the register maintained by the Company pursuant to Part XV of the SFO, there were no persons (other than a Director or chief executive of the Company as disclosed above) had interests or short positions in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under Divisions 2 and 3 of Part XV of the SFO, or who, as at the Latest Practicable Date, was directly and indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, no Directors had any existing or proposed service contracts with the Company or any of its subsidiaries which is not determinable within one year without payment of compensation other than statutory compensation.

– 282 –

GENERAL INFORMATION

APPENDIX IV

5. DIRECTORS’ INTEREST IN COMPETING BUSINESS

As at the Latest Practicable Date, none of the Directors and their respective associates was interested in any business which competes or was likely to compete, whether directly or indirectly, with the business of the Group.

6. DIRECTORS’ INTEREST IN ASSETS AND/OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors had any interest, direct or indirect, in any assets which had been acquired or disposed of by or leased to any members of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2016, being the date to which the latest published audited consolidated financial statements of the Company were made up.

As at the Latest Practicable Date, there is no contract or arrangement subsisting in which a Director was materially interested and which was significant in relation to the business of the Group as a whole.

7. MATERIAL CONTRACTS

The following contracts, not being contracts in the ordinary course of business, were entered into by the members of the Group within two years preceding the Latest Practicable Date and are or may be material:

(i) the Sale & Purchase Agreement dated 25 February 2016 entered into between TMK SSG23, an indirect wholly-owned subsidiary of the Company and Kenedix Development Kabushiki Kaisha for the Acquisition of the Trust Beneficial Interest of a property (including land and building) in Japan at a consideration of approximately JPY5,963,000,000 (equivalent to approximately HK$411,447,000);
(ii) the Sale & Purchase Agreement dated 16 June 2016 entered into between SiSJP10 TMK, an indirect wholly-owned subsidiary of the Company, and Kabushiki Kaisha Miya Estate for the Acquisition of the Trust Beneficial Interest of a property named Hotel Sun Plaza Sakai Annex in Osaka, Japan at a consideration of JPY1,670,000,000 (equivalent to approximately HK$116,900,000);
(iii) the Sale & Purchase Agreement dated 8 December 2016 entered into between TMK SSG28, an indirect wholly-owned subsidiary of the Company, and B-Lot Company Limited for the Acquisition of the Trust Beneficial Interest of a property named Imano Tokyo Hostel located in Tokyo, Japan together with furniture, fixtures and equipment at a total consideration of JPY946,596,000 (equivalent to approximately HK$66,262,000); and
(iv) the Sale & Purchase Agreement dated 12 December 2016 entered between SiSJP10 TMK, an indirect wholly-owned subsidiary of the Company, and the seller for the Acquisition of two hospitality properties in Kyoto city, Japan at a total consideration of JPY3,000,000,000 (equivalent to approximately HK$210,000,000).

– 283 –

GENERAL INFORMATION

APPENDIX IV

8. EXPERT AND CONSENT

The following is the qualification of the experts who have been named in this circular or have given opinions or advice which are contained in this circular:

Name Qualification Deloitte Touche Tohmatsu Certified Public Accountants KPMG Phoomchai Audit Ltd Certified Public Accountants KPMG Certified Public Accountants

Each of the above named experts has confirmed that as at the Latest Practicable Date, it did not have any beneficial shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor did it have any direct or indirect interests in any assets which have since 31 December 2016 (being the date to which the latest published audited consolidated financial statements of the Company were made up) been acquired or disposed of by or leased to any member of the Group, or were proposed to be acquired or disposed of by or leased to any member of the Group.

Each of the above named experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its opinion prepared for the purpose of incorporation in this circular, and the references to its name and opinion in the form and context in which they respectively appear.

9. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse changes in the financial or trading position of the Group since 31 December 2016, being the date to which the latest published audited consolidated accounts of the Group have been made up.

10. MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES AND AFFILIATED COMPANIES

Save as disclosed in this circular, the Directors confirm that there has been on any material acquisitions and disposals of subsidiaries and affiliated companies since 31 December 2016.

– 284 –

GENERAL INFORMATION

APPENDIX IV

11. LITIGATION

Reference is made to the announcement of the Company dated 29 March 2017. During the six months ended 30 June 2017, an originating notice of application (the ‘‘Originating Notice’’) filed with the Competition Tribunal of the Hong Kong Special Administrative Region (the ‘‘Competition Tribunal’’) was served on SiS International Limited, a wholly-owned subsidiary of the Group (‘‘SiS International’’), by the legal adviser of the applicant, the Competition Commission (the ‘‘Applicant’’). According to the Originating Notice, the Applicant alleged that, among other things, SiS International, along with other respondents under the Originating Notice (the ‘‘Respondents’’), has contravened section 6(1) of the Competition Ordinance (Cap. 619, the laws of Hong Kong) (the ‘‘First Conduct Rule’’) and the Applicant seeks orders from the Competition Tribunal, amongst other reliefs, for pecuniary penalty to be imposed on the Respondents and declaration that each Respondent has contravened the First Conduct Rule. The Group is seeking legal advice on the Originating Notice and the appropriate course of action in respect of the abovementioned application. It is currently at fact finding and information gathering stage, the outcome of the application cannot be readily ascertained. The Directors are of the opinion that the financial effects, if any, would not likely to be significant to the Group.

Save as disclosed above, as of the Latest Practicable Date, no litigation or claims of material importance was known to the Directors to be pending or threatened against any member of the Group.

12. GENERAL

(i) The Company Secretary of the Company is Ms. Chiu Lai Chun, Rhoda, associated member of Hong Kong Institute of Certified Public Accountants;
(ii) The registered office of the Company is Canon’s Court, 22 Victoria Street, Hamilton HM 12, Bermuda;
(iii) The Company’s Branch Share Registrar in Hong Kong is Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong; and
(iv) In the event of inconsistency, the English text shall prevail over the Chinese text.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at 803 Nine Queen’s Road Central, Hong Kong up to and including the date of SGM:

(i) this circular;
(ii) the memorandum of association and Bye-Laws of the Company;
(iii) the annual reports of the Company and the Target Company for the three years ended 31 December 2014, 31 December 2015 and 31 December 2016;

– 285 –

GENERAL INFORMATION

APPENDIX IV

(iv) the interim report of the Company and the interim financial statements of the Target Company for the six months period ended 30 June 2017;
(v) the Assurance Report on the pro forma financial information of the Enlarged Group issued by Deloitte Touche Tohmatsu, the text of which is set out in Appendix III to this circular;
(vi) the letters of consents referred to under the section headed ‘‘Experts and Consents’’ in this appendix; and
(vii) the material contracts referred to under the section headed ‘‘Material Contracts’’ in this appendix.

– 286 –

NOTICE OF THE SPECIAL GENERAL MEETING

==> picture [60 x 43] intentionally omitted <==

SiS INTERNATIONAL HOLDINGS LIMITED 新龍國際集團有限公司[*]

(Incorporated in Bermuda with limited liability)

(Stock Code: 00529)

NOTICE OF SPECIAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the special general meeting of SiS International Holdings Limited (the ‘‘Company’’) will be held at Kellett Room IV, 3/F The Excelsior, 281 Gloucester Road, Causeway Bay, Hong Kong on 31 October 2017 (Tuesday) at 3:00 p.m., for the purpose of considering and, if thought fit, passing with or without modifications, the following resolution which will be proposed as ordinary resolution of the Company:

ORDINARY RESOLUTION

‘‘1. THAT:

(a) the acquisition of all the issued and fully paid-up shares in the capital of SiS Distribution (Thailand) Public Company Limited, other than those already owned and controlled by the Company and its subsidiaries, Mr. Lim Kia Hong and Mr. Lim Hwee Hai (collectively the ‘‘Offer Shares’’ and each an ‘‘Offer Share’’), by way of a voluntary general offer in Thailand by Thai Alliance Co Ltd. (the ‘‘Offeror’’), a company incorporated in Thailand with limited liability and is directly held as to approximately 48.996% by Thai Investment Holdings Pte. Ltd., a company incorporated in Singapore with limited liability and is an indirectly wholly owned subsidiary of the Company, in respect of the Offer Shares at an offer price of Baht7.00 per Offer Share (subject to 10% adjustments based on the market conditions in Thailand) in cash in the manner described in the Company’s circular dated 16 October 2017 (the ‘‘Acquisition’’) and all the transactions contemplated thereunder, be and are hereby ratified, confirmed, authorised and approved; and
For identification purposes only

– 287 –

NOTICE OF THE SPECIAL GENERAL MEETING

(b) any one or more directors of the Company be and are hereby authorised to do all such further acts and things and to sign, seal, execute and deliver all such documents, instruments, agreements and deeds, including under seal where applicable (in which case by any two directors of the Company) and to take all such steps as he may in his absolute discretion considers necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions set out in the above resolution and to agree to any variation, amendments, supplement or waiver of matters relating thereto.’’

Yours faithfully, For and on behalf of the Board of SiS International Holdings Limited Lim Kia Hong Chairman

Hong Kong, 16 October 2017

Notes:

The resolution set out in this notice will be voted by poll.
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and, in the event of poll, vote in his stead. A proxy needs not be a member of the Company.
In order to be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority must be deposited, at the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than 48 hours before the time for holding the meeting or adjourned meeting.
If more than one of joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the register in respect of the relevant shares shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member in whose name any share stands shall be deemed joint holders.
Completion and deposit of a proxy will not preclude a member from attending and voting in person at the meeting if he or she so wishes. If a member attends and votes at the meeting, the authority of the proxy will be revoked.
The Register of Members will be closed on 31 October 2017, no share transfer will be effected on that date. In order to qualify for attending and voting at the meeting or any adjournment thereof, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Branch Share Registrar in Hong Kong, Tricor Secretaries Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:00 p.m. on 30 October 2017.

As at the date of this notice, the executive directors are Mr. Lim Kia Hong, Mr. Lim Kiah Meng, Mr. Lim Hwee Hai and Madam Lim Hwee Noi. The independent non-executive directors are Mr. Lee Hiok Chuan, Ms. Ong Wui Leng and Mr. Ma Shiu Sun, Michael.

– 288 –

AI assistant

Coastal Greenland Limited — Proxy Solicitation & Information Statement 2017

49707_rns_2017-10-16_a3c7dabd-b20f-4ed3-a0dd-300160c1a391.pdf

SiS INTERNATIONAL HOLDINGS LIMITED 新 龍 國 際集 團 有 限 公 司[*]

POSSIBLE VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE PRE-CONDITIONAL VOLUNTARY GENERAL OFFER TO ACQUIRE THE OFFER SHARES OF THE TARGET COMPANY BY THE OFFEROR

DEFINITIONS

DEFINITIONS

SiS INTERNATIONAL HOLDINGS LIMITED 新 龍 國 際集 團 有 限 公 司[*]

(Stock Code: 00529)

POSSIBLE VERY SUBSTANTIAL ACQUISITION IN RELATION TO THE PRE-CONDITIONAL VOLUNTARY GENERAL OFFER TO ACQUIRE THE OFFER SHARES OF THE TARGET COMPANY BY THE OFFEROR

INTRODUCTION

THE POSSIBLE OFFER

A. Pre-Conditions to the Offer

B. Offer Price

C. Minimum Acceptance Condition

D. Undertakings

LISTING STATUS OF THE TARGET COMPANY

THE OFFEROR’S INTENTIONS

INFORMATION ON THE COMPANY

INFORMATION ON THE OFFEROR

Notes:

LETTER FROM THE BOARD

RISKS RELATING TO DOING BUSINESS IN THAILAND

INFORMATION ON THE TARGET COMPANY

FINANCIAL INFORMATION OF THE TARGET GROUP

WAIVER IN RELATION TO THE ACCOUNTANTS’ REPORT ON THE TARGET GROUP

SHAREHOLDING STRUCTURE OF THE TARGET COMPANY

LETTER FROM THE BOARD

FUNDING FOR THE ACQUISITION

REASONS FOR AND BENEFITS OF THE ACQUISITION

(a) The Acquisition will bring financial benefits to the Group

(b) The Acquisition is strategically beneficial to the Group

(i) establish market presence in Thailand and other Southeast Asian regions

(ii) enhance the Group’s IT product distribution business

HONG KONG LISTING RULES IMPLICATIONS

SGM

RECOMMENDATION

GENERAL

ADDITIONAL INFORMATION

WARNING

HISTORICAL TRACK RECORD PERIOD ACCOUNTS

INTERIM FINANCIAL STATEMENTS ENDED 30 JUNE 2017

Independent Auditor’s Report on Review of Interim Financial Information

To the Board of Directors of SiS Distribution (Thailand) Public Company Limited

Scope of Review

Conclusion

(Porntip Rimdusit)

KPMG Phoomchai Audit Ltd.

STATEMENT OF FINANCIAL POSITION

STATEMENT OF INCOME (UNAUDITED)

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

STATEMENT OF INCOME (UNAUDITED)

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

STATEMENT OF CASH FLOWS (UNAUDITED)

NOTES TO THE INTERIM FINANCIAL STATEMENTS

Note Contents

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1 GENERAL INFORMATION

2 BASIS OF PREPARATION OF THE INTERIM FINANCIAL STATEMENTS

(b) Functional and presentation currency

NOTES TO THE INTERIM FINANCIAL STATEMENTS

(c) Use of judgements and estimates

Measurement of fair values

NOTES TO THE INTERIM FINANCIAL STATEMENTS

3 RELATED PARTIES

NOTES TO THE INTERIM FINANCIAL STATEMENTS

For the three-month and six-month periods ended 30 June 2017 (Unaudited)

NOTES TO THE INTERIM FINANCIAL STATEMENTS

NOTES TO THE INTERIM FINANCIAL STATEMENTS

NOTES TO THE INTERIM FINANCIAL STATEMENTS

NOTES TO THE INTERIM FINANCIAL STATEMENTS

Management income

Administrative support agreement

Management fee

NOTES TO THE INTERIM FINANCIAL STATEMENTS

4 TRADE ACCOUNTS RECEIVABLE

Coastal Greenland Limited Proxy Solicitation & Information Statement 2017

SiS INTERNATIONAL HOLDINGS LIMITED 新龍國際集團有限公司[*]

SiS INTERNATIONAL HOLDINGS LIMITED 新龍國際集團有限公司[*]