opinions of the independent financial advisor regarding...

(Translation)

This English translation has been prepared solely for the convenience of foreign shareholders of VGI Global Media Public Company Limited. The Thai language version is the definitive and official document to this report and shall prevail in all respects in the event of any inconsistency with this English translation.

Opinions of the Independent Financial Advisor regarding the acquisition of assets

To be supporting document for Extraordinary General Meeting of Shareholders

VGI Global Media Public Company Limited September 19, 2014

Prepared by Finnex Advisory Company Limited

Opinion of Independent Financial Advisor on Asset Acquisition of VGI Global Media Public Company Limited

Finnex Advisory Company Limited -i -

Table of Contents

Page

Executive Summary 4 Part 1 : Characteristics and Details of Transaction 6

1.1 Date of Transaction 6 1.2 Related Parties and Relationship with the Company 6 1.3 General Characteristics and Size of Transaction 6 1.4 Details of Assets Acquired 8 1.5 Shareholding Structure after Transaction 8 1.6 Total Value of Consideration and Basis to Determine Value of Consideration 10 1.7 Terms and Conditions of Payment 10 1.8 Sources of Funds 10 1.9 Transaction Conditions 10 1.10 Main Points of Draft Preliminary Memorandum of Understanding 11 1.11 Main Points of Management Contract 13 1.12 Obligations and Legal Disputes of Tong Hua 13 1.13 Related Transactions between the Company and Tong Hua 14

Part 2 : Reasonableness of Transaction 15 2.1 Objectives and Necessity of Transaction 15 2.2 Comparison of Advantages and Impacts of Entering into Transactions 16 2.3 Comparison of Advantages and Impact of Not Entering into Transactions 18 2.4 Risks of Entering into Transactions 18

Part 3 : Fairness of Price and Transaction Conditions 21 3.1 Appropriateness of Price on Asset Acquisition 22

1) Book Value Approach 23 2) Adjusted Book Value Approach 23 3) Market Value Approach 42 4) Market Comparable Approach 43 5) Discounted Cash Flow Approach 44

3.2 Appropriateness of Transaction Conditions 49 Part 4 : Opinion of Independent Financial Advisor on Assets Acquisition 51 Part 5 : Attachment of General Information 53

5.1 VGI Global Media Public Co., Ltd. 53 5.2 Tong Hua Communications Public Co., Ltd. and Tong Hua Daily Newspaper Co., Ltd. 65 5.3 Aqua Ad Public Co., Ltd. 84


Finnex Advisory Company Limited -ii -

Acronym and Definition

Office of SEC, SEC : Office of Securities and Exchange Commission Stock Exchange, SET : The Stock Exchange of Thailand The Company, VGI : VGI Global Media Public Co., Ltd. Tong Hua, TH : Tong Hua Communications Public Co., Ltd. Tong Hua Daily News, THD : Tong Hua Daily Newspaper Co., Ltd. AQUA : Aqua Corporation Public Co., Ltd. Aqua Ad, AA : Aqua Ad Public Co., Ltd. Independent Financial Advisor, FINNEX

: Finnex Advisory Co., Ltd.

MM : Million Miles Co., Ltd. RSP : R.S.P. Steel Co., Ltd. Spring News TV : Spring News Television Co., Ltd. Transaction : Purchasing newly-issued ordinary shares of Tong Hua Communications Public Co.,

Ltd. by VGI Global Media Public Co., Ltd. Private Placement, PP : Sale of new shares to a relatively small number of select investors Right Offering, RO : Sales of new shares to existing shareholders


Finnex Advisory Company Limited Page 1 / 97

September 19, 2014 Re: Opinion of Independent Financial Advisor on Asset Acquisition of VGI Global Media Public Company Limited To: Shareholders of VGI Global Media Public Company Limited Ref. : 1) Resolution of the Board of Directors’ Meeting of VGI Global Media Public Co., Ltd. No. 6/2014 on August

8, 2014 2) Information Memorandum on Asset Acquisition of VGI Global Media Public Co., Ltd. on August 8, 2014 3) Annual Information Disclosure Form (56-1 Form) of VGI Global Media Public Co., Ltd., ended March 31,

2014 4) Draft Preliminary Memorandum of Understanding between VGI Global Media Public Company Limited

and Tong Hua Communications Public Company Limited 5) Notice Confirming Shareholding in Tong Hua Communications Public Company Limited of VGI Global

Media Public Company Limited and the related parties, pursuant to Section 258 as of August 20, 2014 6) Information Memorandum on “Connected Transaction – Sales of Common Shares of Tong Hua Daily News

Company Limited” 7) Information Memorandum of “Asset Acquisition – Purchase of Common Shares of Aqua Ad Public Co.,

Ltd.” 8) Information Memorandum on “Connected Transaction – Execution of Service Agreement on Sales and

Marketing Management with VGI Global Media Public Company Limited” 9) Information Memorandum on “Offering of Newly Issued Shares on Private Placement Basis at Low Prices

of Tong Hua Communications Public Company Limited” Disclaimers: 1) Study results of Finnex Advisory Company Limited (“Independent Financial Advisor” or “FINNEX”)

in this report are based on information and assumptions obtained from management of Tong Hua Communications Public Company Limited, Tong Hua Daily News Company Limited, Aqua Corporation Public Company Limited and Aqua Ad Public Company Limited including information available to the public and in website of the Office of Securities and Exchange Commission (www.sec.or.th) website of the Stock Exchange of Thailand (www.set.or.th) and website of Bank of Thailand (www.bot.or.th)

http://www.sec.or.th/

http://www.set.or.th/

http://www.bot.or.th/



2) Independent Financial Advisor shall not be liable for any profit or loss including any impacts incurred from entering into this transaction.

3) Independent Financial Advisor conducted this study thoroughly and prudently under code of professional practices.

4) Independent Financial Advisor rendered opinion based on circumstances and information prevailing at the time of this study. Therefore, if there is material change in the said circumstance and information, it may affect opinion provided herein.

The Board of Directors’ Meeting of VGI Global Media Public Company Limited (“the Company”) No. 6/2014 held on August 8, 2014 approved the Company to purchase 640,000,000 newly-issued ordinary shares of Tong Hua Communications Public Company Limited (“TH”) issued and offered on private placement basis at offering price of 1.431 Baht per share. Therefore total amount that the Company must pay to TH shall be 915,840,000 Baht. TH shall issue and offer 1,565,000,000 new ordinary shares on private placement basis and shall issue and allot 100,000,000 shares to the existing shareholders pursuant to their shareholding proportion (right offering) at the same price offered as per private placement basis. If issued and offered shares both on private placement and right offering basis have been fully subscribed, the Company shall hold 27.06% of paid-up capital of TH after completion of capital increase of TH. In addition, the Company shall enter into share subscription agreement with TH pursuant to format, terms and conditions mutually agreed by both parties. Source of fund shall be acquired from cash flow from operating activities and/or loan from financial institution.

This purchase of common shares of TH shall make shareholding proportion of the Company in TH in excess of 25% of paid-up capital after capital increase, which shall be categorized under criteria on acquisition of common shares of business which is required to prepare tender offer for purchase of all securities of the business as per Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover dated May 13, 2011 and the related amendments. However, the Company does not wish to purchase all securities of TH, therefore, the Company and TH shall apply for waiver of tender offer through resolution of shareholders (whitewash) pursuant to criteria specified in the related notification of the Office of Securities and Exchange Commission No. Sor Jor. 36/2546 as it is specified that it is a condition precedent before execution of share subscription agreement.

Moreover, entry into the said transaction is categorized as transaction of asset acquisition in accordance with the Notification of the Capital Market Supervisory Board No. Thor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets and the Notification of the Board of Directors of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 (collectively referred to as “Notifications on Asset Acquisition”). When calculation based on criteria stipulated in those notifications by applying the highest value, size of transaction is equaled to 28.88% (calculation is based on the consolidated financial statement of the Company for the three month ended on June 30, 2014 which has already been reviewed by the auditor). Additionally when combining transactions occurred during 6 month period before entering into this transaction, total size of transaction is 53.73% of total assets, which is higher than 50%



but lower than 100%, so it was regarded as Category 1 pursuant to the Notification of the Stock Exchange of Thailand Re: Acquisition or Disposal of Assets and the Company is required to prepare information memorandum to submit to the Stock Exchange of Thailand as well as convene the shareholders’ meeting to consider and approve the entry into such transaction. The Company’s Board of Directors’ Meeting No. 6/2014 on August 8, 2014 resolved to approve on such transaction and to propose to the Extraordinary General Meeting of Shareholders No. 1/2014 to be held on September 19, 2014 to consider and approve the acquisition of 640,000,000 ordinary shares of Tong Hua Communications Public Company Limited. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders. The Company has appointed Finnex Advisory Company Limited as the Independent Financial Advisor to provide opinions to the shareholders in relation to reasonableness and fairness of price and conditions on transaction of this assets acquisition.

Opinion of the Independent Financial Advisor on this asset acquisition can be summarized as follows:



Executive Summary

The Company’s Board of Directors’ Meeting of VGI Global Media Public Co., Ltd. (the “Company”) No.

6/2014 held on August 8, 2014 approved the Company to purchase 640,000,000 newly-issued ordinary shares of Tong Hua Communications Public Company Limited (“TH”) to be issued and offered on private placement basis at offering price 1.431 Baht per share. Therefore total amount that the Company must pay to TH shall be 915,840,000 Baht. TH shall issue and offer 1,565,000,000 newly-issued ordinary shares on private placement basis and shall issue and allot 100,000,000 new ordinary shares to the existing shareholders pursuant to their shareholding proportion (right offering) at the same price offered as per private placement basis. If the issued and offered shares both on private placement and right offering basis have been fully subscribed, the Company shall hold 27.06% of paid-up capital of TH after completion of capital increase of TH. In addition, the Company shall enter into share subscription agreement with TH pursuant to format, terms and conditions mutually agreed by both parties. Source of fund shall be acquired from cash flow from operating activities and/or loan from financial institution.

When combining such transaction with asset acquisition transactions incurred during the 6 month period before entering into this transaction, total size of transaction shall be equaled to 53.73% which is regarded as Category 1 Transaction as it is equal to or higher than 50% but lower than 100% pursuant to Notification of the Capital Market Supervisory Board No. Thor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets and Notification of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 (collectively referred to as “Notifications on Asset Acquisition”). The Company therefore is obligated to disclose information relevant to Category 1 Transaction to the Stock Exchange of Thailand (“SET”) and to convene a shareholders’ meeting to request for approval on entry of such transaction. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders.

Finnex Advisory Company Limited as the Independent Financial Advisor of the Company’s shareholders has considered relevant information and document of the Company, TH, THD and AA, conditions on purchasing of newly-issued ordinary shares between the Company and TH, nature and details of transaction, reasonableness on entering into transaction, appropriateness on transaction conditions as well as appropriateness of price of TH’s newly-issued ordinary share which is at 1.431 Baht per share.

The Independent Financial Advisor is of opinion that the Company’s purchasing of 640,000,000 new ordinary shares of TH at offered price of 1.431 Baht per share or total amount to be paid by the Company is Bht. 915,840,000.00 is appropriated, both on reasonableness and benefits to be gained by the Company. The reasons are that the Company’s strategy is to expand its investment to new business, both domestically and abroad, by taking into consideration potential investment project as well as selection of strong strategic partners including focusing on diversified investments fields that the Company excelled. Those factors shall contribute to sustainable growth in long-term of the Company by mainly taking into account the best interest of the Company and the shareholders as a whole. The Company sees opportunity and growth in Out of Home Media and Billboard business expansion to respond to the



marketing’s and customers groups requirements in larger extent. Investments in TH shall lead to coverage of various types of advertisement media networks and an increased number of billboard’s structure, thus it can lead to higher market share. It shall be beneficial from synergy on sales that the Company has experienced and skills, so the Company’s shareholders can enjoy increased rate of return in the long run.

Purchase price of newly-issued ordinary shares of TH at 1.431 Bht. per share is reasonable as it is between appropriated ranges assessed by the Independent Financial Advisor which is between 1.40-1.47 Baht/share. Terms of payment and transaction conditions are also appropriated.

Finnex Advisory Company Limited as the Independent Financial Advisor recommended that the Company’s shareholders should approve this acquisition transaction of newly-issued ordinary shares of TH. However, the final decision rests with the shareholders’ own discretion and they are advised to study information contained and attached to an invitation to Extraordinary General Meeting of Shareholders No. 1/2014 so that they shall be well informed before deciding to casting vote.



Part 1: Characteristics and Details of Transaction

1.1 Date of Transaction

After the Company has been approved to enter into this transaction from the Extraordinary General Meeting of Shareholders No. 1/2014 which shall be held on September 19, 2014, transaction date to be specified by the Company and TH shall be on September 30, 2014 or other date mutually agreed by both parties including after fulfillment of all conditions precedent.

1.2 Related Parties and Relationship of the Company

Buyer : VGI Global Media Public Company Limited (“the Company”)

Seller : Tong Hua Communications Public Company Limited (“TH”)

Relationship : The buyer and the seller are not the connected parties.

1.3 General Characteristics and Size of Transaction

The Company wishes to expand its business into billboard business in order to better respond to requirements of the markets and customer groups. The Company is now preparing draft preliminary memorandum of understanding pursuant to format, terms and conditions and responsibilities mutually agreed with TH on purchasing of 640,000,000 newly-issued ordinary shares of TH at offered price of 1.431 Baht per share, so total amount to be paid to TH is 915,840,000 Baht. TH shall issue and offer 1,565,000,000 newly-issued ordinary shares on private placement basis, and offer and allot 100,000,000 newly-issued shares to the shareholders according to their shareholding proportion at the same price offered on private placement basis. If the issued and offered shares both on private placement and right offering basis have been fully subscribed, the Company shall hold 27.06% of paid-up capital of TH after completion of capital increase of TH.

Moreover, the entry into of the said transaction is categorized as transaction of asset acquisition in accordance with the Notification of the Capital Market Supervisory Board No. Thor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets and the Notification of the Board of Directors of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 of which transaction size is higher than 50% but lower than 100%, so it was regarded as Category 1 pursuant to the Notification of the Stock Exchange of Thailand Re: Acquisition or Disposal of Assets and the Company is required to prepare information memorandum to disclose to the Stock Exchange of Thailand as well as convene the shareholders’ meeting to consider and approve the entry into such transaction. The Company’s Board of Directors’ Meeting No. 6/2014 on August 8, 2014 resolved to approve on such transaction and to propose to the Extraordinary General Meeting of Shareholders No. 1/2014 to be held on September 19, 2014 to consider and approve acquisition of 640,000,000 ordinary shares of Tong Hua



Communications Public Company Limited. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders.

When calculation value of transaction size pursuant to various criteria by using information from the consolidated financial statement of the Company for 3 month period ended on June 30, 2014 already reviewed by the Certified Public Accountant and the consolidated financial statement of TH for 6 month period ended on June 30, 2014 already reviewed by the Certified Public Account, transaction size appeared to be 28.88%. When combining transactions incurred during 6 months period before entry into this transaction, for instance, acquisition of 74,900,000 shares of Master Ad Public Company Limited (“MACO”) during May to June 2014 with total value of 681,150,000 Baht of which transaction size under total value of consideration criteria equaled to 24.85%, total transaction size now equal to 53.73% of total assets. Therefore, it is higher than 50% but lower than 100%, so it is regarded as Category 1 Transaction pursuant to Notification of the Stock Exchange of Thailand, consequently the Company is obligated to disclose information to the Stock Exchange of Thailand (“SET”) and to convene a shareholders’ meeting to request for approval on entry of such transaction. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders.

When calculation of transaction size pursuant to Notifications on Asset Acquisition by referring to the consolidated financial statement of the Company for three month period ended on June 30, 2014 and the consolidated financial statement for six month period ended on June 30, 2014 pursuant to 4 calculation criteria, details obtained are as follows:

Financial Data

The Company TH

Consolidated financial statement for 3 month period ended on June 30, 2014

(MBaht)

Consolidated financial statement for 6 month period ended on June 30, 2014

(MBaht)

Total Assets 3,170.85 1,010.13 Intangible Assets 122.22 84.54 Total Liabilities 960.16 206.15 Total Shareholders’ Equity 2,210.69 803.98 Net Profit (Loss)* 1,095.19 (11.62) Minority Interest - 61.25 NTA** 2,088.46 658.19

Note : * Net profit (loss) for trailing 12 months. **NTA is calculated by deducting total assets with intangible asset, total liabilities and minority interest.



Calculation Basis Calculation Method Transaction Size (%)

1 Net Total Asset (NTA) (NTA of TH pursuant to ratio of shares

acquired / NTA of the Company 8.53

2 Net Profit Net profit of TH pursuant to ratio of shares

acquired / Net profit of the Company (0.29)

3 Total Value of Consideration Value of consideration paid/ total assets of the

Company 28.88

4 Value of Securities No. of shares to be issued for acquisition of

assets / no. of issued and paid-up shares of the Company

N.A.

Note: * Referred to the consolidated financial statement of the Company as of June 30, 2014 and financial statement of TH as of June 30, 2014.

1.4 Details of the Acquired Assets Assets to be acquired : Newly-issued ordinary shares of TH allotted to investors on private

placement basis and the existing shareholders on right offering basis

No. of assets to be acquired and proportion of shares after transaction

: 640,000,000 newly-issued ordinary shares of TH at par value of 1.00 Baht per share, or equal to 27.06% of paid-up capital after capital increase of TH

1.5 Shareholding Structure after Transaction

The Board of Directors’ meeting of TH held on August 8, 2014 passed a resolution on increase of registered capital TH from 759,998,983.00 Baht to 2,464,998,983.00 Baht by issuing 1,705,000,000 ordinary shares at par value of 1.00 Baht per share with specific purpose on capital increase, totally 1,705,000,000 Baht. Newly-issued ordinary shares will be offered as private placement as follows:

(1) 640,000,000 of allotted shares will be offered at 1.431 Baht per share to VGI Global Media Public Co., Ltd. (Private Placement),

(2) 100,000,000 of allotted shares will be offered at 1.431 Baht per share to Aqua Corporation Public Co., Ltd. (Private Placement),

(3) 825,000,000 of allotted shares will be offered at 1.431 Baht per share to the following private investors (Private Placement):

1. Mr. Nares Ngamapichon 100,000,000 shares 2. Mr. Wanchai Panvichien 100,000,000 shares 3. Mr. Pracha Damrongsuttipong 80,000,000 shares 4. Mr. Nuttapon Poolpoka 145,000,000 shares 5. Mr. Supalerk Vayakornvichitr 160,000,000 shares 6. Miss Nitnara Mintarkhin 40,000,000 shares



7. Mr. Chong Rangsibrahmanakul 80,000,000 shares 8. Miss Pawasut Jotikasthira 50,000,000 shares 9. Mr. Raweerot Khiannilsiri 70,000,000 shares

(4) 100,000,000 of allotted shares will be offered at 1.431 Baht per share to the existing shareholders on a right offering basis pursuant to their shareholding proportion,

(5) Consider to increase additional registered capital of 40,000,000.00 Baht by issuing 40,000,000 new ordinary shares at par value of 1.00 Baht to allot for right adjustment of TH-W1.

If the issued and offered shares under private placement and right offering basis have been fully subscripted

including full TH-W1 warrants, shareholders’ proportion of TH shall be as follows:

Existing Shareholders No. of Shares % 1 Mrs. Kanlayanee Kyavatanakij 90,426,000.00 3.67 2 Mr. Somnuk Kyavatanakij 90,156,000.00 3.66 3 Mr. Wichai Tongtang 60,000,000.00 2.43 4 Mrs. Sumjalee Ongjarit 60,000,000.00 2.43 5 Mr. Akekavit Kamontepa 50,000,000.00 2.03 6 Mr. Tanomsak Sammawuttichai 20,686,200.00 0.84 7 Mr. Panurak Saengaram 20,000,000.00 0.81 8 Mr. Sukit Traiwavapong 10,000,000.00 0.41 9 Mr. Pongsak Suttisripok 10,000,000.00 0.41

10 Mrs. Duangnapa Tongsri 7,005,605.00 0.28 11 Mr. Akekavit Kamontepa 6,700,000.00 0.27 12 Miss Suntaree Piti 4,299,907.00 0.17 13 Thai NVDR Co., Ltd. 4,208,800.00 0.17 14 Mr. Kumpon Tatiyakawee 3,150,000.00 0.13 15 Mr. Charoon Leelakulvech 3,113,800.00 0.13 16 Others 260,253,688.00 10.56

Total Existing Shareholders 700,000,000.00 28.40

List of persons allocated for purchasing of ordinary shares of TH No. of Shares %

1 VGI Global Media Public Co., Ltd. (PP) 640,000,000.00 25.96 2 Aqua Corporation Public Co., Ltd. (PP) 100,000,000.00 4.06 3 Private investors 825,000,000.00 33.47 4 Existing shareholders (Right Offering) pursuant to shareholding proportion 100,000,000.00 4.06

Total allotted shares 1,665,000,000.00 67.55

Warrant No. of Shares %

1 Warrant (existing) 59,998,983.00 2.43 2 Allotment for right adjustment of TH-W1 (additionally allotted) 40,000,000.00 1.62

Total warrants 99,998,983.00 4.06

Total shares of TH in case all shares are fully subscribed 2,464,998,983.00 100.00



If the warrant rights have been fully exercised, the Company shall hold shares at approximately 25.96%, so the Company is obligated to prepare tender offer for purchase of all securities of TH, pursuant to the Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover. However, the Company does not wish to prepare tender offer to purchase all securities of TH, therefore, the Company shall proceed for waiver of tender offer of TH shares through resolution of the shareholder’s meeting (Whitewash).

1.6 Total Value of Consideration and Basis to Determine Value of Consideration

The Company shall enter the acquisition of 640,000,000 ordinary shares of TH at offered price of 1.431 Baht per share, totaled value of 915,840,000.00 Baht. Payment shall be made upon all conditions precedent have been fulfilled.

Basis to determine value of consideration of newly-issued ordinary shares of TH are purchase and sales price mutually agreed by the buyer and the seller based on investment worthiness including the support for advertisement network expansion of the Company.

1.7 Terms of Payment The payment for consideration shall be made to TH by cash upon all condition precedent have been

fulfilled. The Company’s sources of fund for payment of such consideration shall be cash flow from operating activities and/or loan from financial institution.

1.8 Source of Fund

Source of fund for purchase newly-issued shares of TH shall be from cash flow from operating activities and/or borrowings from financial institutions.

According to information stated in the Company’s financial statement as of June 30, 2014 (as per details in Section 5: Attachments on General Information), the Company has cash and cash equivalent amounting to 151.25 million Baht, temporary investments amounting to 507.10 million Baht and revolving credit obtained from many financial institutions totaled 1,100.00 million Baht.

1.9 Transaction Conditions

This transaction is the acquisition of newly issued securities of the listed company and it is issued and offered on private placement basis including offering of newly issued shares with prices offered lower than 90% of the market price, therefore, TH as the securities issuer is required to have approval from the shareholders’ meeting as per criteria specified in the relevant notifications by the Capital Market Supervisory Board. Moreover, such transaction is regarded as asset acquisition as per notification regarding assets acquisition, so when combining with assets transaction during the past 6 months before this transaction, size of total transactions as per total value of consideration criteria is more than 50%. Consequently, the Company must obtain approval from the Company’s



shareholders’ meeting not less than three-fourths of shareholders attending and eligible to vote, excluding the stakeholders’ vote. Additionally, such acquisition might be categorized as acquisition of shares of the business that is required to prepare tender offer of all securities of the business pursuant to Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover dated May 13, 2011 and the related amendments.

Furthermore, the Company shall execute Share Subscription Agreement with TH and such agreement specified that share purchase transaction shall be subject to fulfillment of all conditions precedent, which shall include the followings:

(1) The Company shall be granted approval from the Company’s shareholders’ meeting on assets acquisition pursuant to Notifications of Assets Acquisition.

(2) TH shall be granted approval from TH’s shareholders’ meeting on capital increase and offering of 1,565,000,000 newly-issued ordinary shares as private placement basis including offering of new ordinary shares at price lower than 90% of market price, pursuant to Notification of the Capital Market Supervisory Board No. Thor Jor 28/2551.

(3) The Company obtains tender offer waiver of all securities of TH through resolution of the shareholders (Whitewash), pursuant to rules of the Office of the Securities Exchange Commission.

(4) TH completes the execution of agreement on purchasing of AA’s shares from AQUA at ratio of approximately 74.00%.

(5) TH disposes investments in THD at ratio of 81.00% and in Million Miles at ratio of 60.63% as well as cancels joint venture agreement in Spring News TV with the return of deposit amounting to 250,000,000.00 Baht together with opportunity cost of 12% per year.

(6) The Company executes the Management Contract to manage business of AA concerning general management and administration.

1.10 Main Points of Draft Preliminary Memorandum of Understanding*

Between : The Company and TH

The Company : Wish to expand advertising media business

TH : Wish to seek for joint investors to undertake advertisement media business

Obligations of TH : 1. In order to comply with business expansion plan, TH shall decrease its registered capital by cancellation 400,000,000 unsold ordinary shares and increase registered capital by issuing 1,655,000,000 newly-issued ordinary shares with offered price of 1.431 Baht per share. This offered price is allotted as private placement pursuant to resolution of the 2014 Annual General Meeting of Shareholders. It shall be allotted as private placement and right offering to the existing shareholders, by allotting to VGI amounting to 640,000,000 shares (approximately 27.06% of paid-up capital after capital



increase of TH). 2. As VGI wishes to hold shares more than 25%, therefore, TH must convene the

shareholders’ meeting to request for approval on waiver of tender offer pursuant to the Notification of the Office of Securities and Exchange Commission Ref. No. Sor Jor. 36/2546.

3. Prior to purchasing of capital increase pursuant to Item 1, TH agrees to dispose other businesses, so that outdoor advertisement media business shall be its sole core business, except publishing business which shall be kept at ratio not exceeding 19%. TH shall use money obtained from issuance and offering of newly-issued ordinary shares, amounting to 829.95 million Baht to purchase shares of Aqua Ad Public Co., Ltd. at ratio of approximately 74% of total issued and paid-up capital of Aqua Ad at offered price of 2.773 Baht per share.

Obligations of the Company

: 1. To be responsible for management on sales & marketing, cost & expense management, organizational management & administration and financial management to add value to the joint venture. TH shall appoint VGI to manage sales and marketing of TH and business solely invested by TH to add value to the joint venture.

2. VGI shall receive remuneration for management work according to details specified in Management Contract of each business to be mutually agreed, so that it shall be corresponding to each business to be invested. For business management of Aqua Ad Public Co., Ltd., remuneration obtained by VGI shall be sum of (i) 5% of total income per year and (ii) 50% of net income increased from net income of previous year. * Net income means total income after deduction of relevant expenses, which

shall include cost of sales and services, selling and administrative expense

and financial costs.

3. Since VGI is also the shareholder of MACO who operates outdoor advertisement media business, so VGI shall try to create synergy for the best interest of all party. In addition, both parties acknowledge that the above conditions are related transaction and it is required to have approval from the shareholders’ meeting of TH. Moreover, remuneration to be incurred under Item 2 shall become effective in 2015.



1.11 Main Points of Management Contract

Execution Date : After the date TH has been granted approval from the Extraordinary General Meeting of Shareholders No. 1/2514 to be held on September 22, 2014 with vote of not less than three-fourths of total votes of shareholders presented at the meeting and eligible to vote, excluding shareholders who are stakeholders and after the Company purchases shares of AA.

Service Provider : The Company, “VGI” Customer : Aqua Ad Public Co., Ltd., “AA” Main points of contract

: 1. To be responsible for management on sales & marketing, cost & expense management, organizational management & administration and financial management to add value to the joint venture. TH shall appoint VGI to manage sales and marketing of TH and business solely invested by TH to add value to the joint venture.

2. VGI shall receive remuneration for management work according to details specified in Management Contract for each business to be mutually agreed, so that it shall be corresponding to each business to be invested. For business management of Aqua Ad Public Co., Ltd., remuneration to be obtained by VGI shall not be higher than the sum of:

(i) 5% of total income per year, and (ii) 50% of net income* increased from net income of previous

year * Net income means total income after deduction of relevant

expenses, which shall include cost of sales and services, selling and administrative expense and financial costs.

3. In addition, the term of Management Contract to be executed by both parties shall be 5 year each and VGI shall have rights of first refusal.

1.12 Obligations and Legal Disputes of Tong Hua

According to financial statement of TH for the 6 month period as of June 30, 2014 which has been reviewed by the Certified Public Accountant, it stated that during 2013, its subsidiary (MM) has been accused as co-defendant in civil case about where the subsidiary’s truck collided with passenger van in Rayong Province and there were many injured persons caused by this accident. Total claim requested for this case was approximately 37.8 million Baht. Presently, it is under process for evidence examination and it has not yet been finalized. Therefore, the Company has not yet recorded damages which might be incurred in the financial statement.



However, the Board of Directors’ meeting No. 3/2014 held on July 27, 2014 has unanimously resolved to dispose ordinary shares of such subsidiary within 15 days after the Board of Directors approval for such shares disposal.

1.13 Related Transactions between the Company and Tong Hua

According to the financial statement of VGI Global Media Public Co., Ltd for the period ended June 30, 2014, the Company and TH did not have undertake any related transaction.

However, after acquisition of newly-issued ordinary share of TH pursuant to details in the abovementioned Management Contract, it shall be regarded as connected transaction which shall become effective in 2015 and such transaction is required to have an approval from the shareholders’ meeting of TH.



Part 2: Reasonableness of Transactions

2.1 Objectives and Necessity of Transactions

As one of strategic plans of the Company is to expand to new business both within the country and abroad by taking into consideration the potential investment projects as well as selection strong strategic partner including emphasis on investment in business it has specialized knowledge. These factors shall contribute to sustainable growth of the Company in the long run and any consideration shall be mainly based on the best interests of the Company and its shareholders. As such, the Company sees prospective opportunity and potential growth on expansion of business into Out of Home media and Billboard businesses. Therefore, on May 12, 2014, the Company decided to invest in Master Ad Public Co., Ltd. (“MACO”), a leading Out of Home Media business operator and a listed company, by purchasing 73,500,000 shares from MACO’s existing shareholders at par value of 1.00 Baht per share, accounting for 24.43% of paid-up capital of MACO because the Company deemed that MACO has experienced and capable management team in Out of Home Media business (currently, the Company holds 74,900,000 shares in MACO or 24.89% of paid-up capital of MACO).

This transaction shall increase business expansion potential of Out of Home Media as well because TH has a policy to keep its newspaper business at ratio of 19% and to dispose its other businesses. Part of money obtained from disposition of TH’s other business and from offering of newly-issued ordinary shares allocated as private placement to private investors and right offering to existing shareholders shall be used to purchase shares of Aqua Ad Public Co., Ltd. (“AA”) at ratio of approximately 74% of issued and paid-up capital. AA engages in media advertisement business, particularly billboard business, with a fast growing. It has been trusted from customers from its work and after sales services, including quality of team work, so AA becomes one of the leading companies in the billboard market within a short time. Vision of AA is “Becoming one of the top advertising media company in Thailand and Asian Pacific Region and determining to become fully integrated and well-known advertising media company by applying outstanding, extinguishing innovation and design and render satisfaction results to the customers in parallel with environment preservation”.



When comparing with directly investment in AA, purchasing new ordinary shares of TH shall be more beneficial to the Company because investment in AA shall make the Company have more billboard media only, while total money gained from capital increase of TH shall be approximately 2,382.62 million Baht (consisting of 915.84 Baht from the Company, 143.10 million Baht from AQUA, 1,180.57 million Baht from 9 individual investors and 143.10 million Baht from the existing shareholders). Consequently, TH shall have adequate cash flow to change its existing business structure from publication business into advertising media service rendering and production business. Preliminary, TH shall use approximately 829.95 million Baht from such capital increase to purchase shares of AA and the remaining cash flow shall be used to invest in potential and relevant projects with prospective growth. This strategy is corresponding to the Company’s policy which is to expand investments in Out of Home Media and other relevant media. As a result, investment in TH shall allow the Company to have various types of advertising media service networks, increased number of billboards or additional investment projects in the future which can lead to higher market shares arising from synergy on sales which the Company has keen experiences and expertise in this field. All of these factors shall contribute to increased rate of returns to the Company’s shareholders in the long term.

2.2 Advantages and Impact from Entering into Transactions This newly-issued share purchasing transaction of TH is in line with the strategic policy of the Company on

expansion of Out of Home Media networks because it can increase diversity of advertising media of the Company. Out of Home Media managed by Aqua Ad is located in good locations which covering areas both in Bangkok and provinces, with continued business expansion. Aqua Ad also has experienced team work in this field with excellent business performance for a long time. Benefits expected to be gained from this transactions are as follows: Advantages from Entering into Transaction

(1) To expand network and increase advertising areas of the Company to Out of Home Media. The Company has 170 billboard structures from previous investment in MACO and if it invests in TH, it will have 145 additional billboard structures, or accounting for 315 billboard structures in total. These billboards are installed in Bangkok and provinces throughout the country. The increase number of billboard shall increase target customer base which can better respond to the markets’ need and it can make the service users have more options for purchasing media.

(2) TH shall have more than 2,000 million Baht from this registered capital increase, so it shall make TH have adequate working capital to invest in potential projects with good prospect and to grow business in the future, apart from investment in purchasing ordinary shares of AA pursuant to its business restructuring policy which shall focus on manufacturing, service rendering and rental of advertising media areas.

(3) After TH purchases AA’s shares, the Company shall manage AA’s business pursuant to Management Contract by responsible for management, sales & marketing, cost and expense management, organizational management and administration, financial management to add value to AA. As a result, it shall generate more income to AA with continued profit growth, which can lead to higher profit sharing or dividend and



even overall performance growth for the Company on continued basis, besides from receiving income from Management Contract during 5 year period (2015-2019), so total remuneration gained shall be at approximately 138.00 million Baht.

(4) To build business relationship between the Company and AA to increase additional accessible means to the market and target group customers of AA. It can provide opportunity to have the increased market shares on Out of Home Media for the Company and AA. Total value of Out of Home Media (consisting of billboard, mobile media and in-store media) in 2012 was 10,167.00 million Baht (dividing into share of the Company for approximately 30.97%, of MACO for approximately 7.13% and for AA for approximately 3.90%). Thus, AA shall have constant growing income and profit and TH shall have profit sharing and dividend (according to previous record in the annual report, AA always paid dividend at the rate of 0.087 Baht per share, 0.062 Baht per share and 0.097 Baht per share during 2011-2013 respectively), so it can lead to the continued growth of overall performance of TH and favorable results to the Company as the shareholder.

(5) Offering price for newly-issued ordinary share of TH at 1.431 Baht per share is lower than market price (lower than 90% of weight average prices of TH shares in the Stock Exchange of Thailand backdated for 7 consecutive business days or during July 30, 2014-August 7, 2014 before the Board of Directors of TH passed a resolution for such transaction which equaled to 3.05 Baht per share. However, since there are 1,665,000,000 new ordinary shares issued and offered this time, so it might have impact to the shareholders with regards to price dilution under assumption that TH can sell all of newly-issued ordinary shares as private placement and as right offering to existing shareholders. As such, price dilution shall be equaled to 37.37%, which shall make market price after this offering equals to 1.91 Baht per share. Nonetheless, the Company still can enjoy benefits from difference of such prices later after consideration on results of price dilution.

(6) The Company’s performance has more tendency to grow from synergy on sales and management between the Company and AA because AA’s teamwork has experiences and expertise in Out of Home Media as can be witnessed from its constant profitability. Therefore, when combining management skills of the Company’s management team with AA’s team, advertising media business run effectively and it can make AA have constant revenue and profit, and it can yield profit sharing or dividend and better overall performance for the Company.

Impacts from Transaction

(1) The Company shall be burdened with interest paid for loan repayment to the financial institute, in case such loan is used as source of fund for transaction of TH’s newly-issued ordinary shares.

(2) The Company may lack liquidity or has inadequate cash flow for undertaking current business operations or for investment in the future projects pursuant to its business operation plan of the Company. Nonetheless, the Company has adequate credit loan amount from the financial institute as well as has capability to create positive cash flow which can reduce this impact.



2.3 Comparison of Advantages and Impacts of Not Entering into Transaction

Advantages from not entering into transaction (1) The Company shall not have any burden from loan repayment and interests expenses incurred from such

loan because source of fund for purchasing of newly-issued ordinary shares come from working capital and/or loan from financial institution that the Company has credit amount.

(2) The Company shall still have financial liquidity and cash flow to be used as working capital for undertaking main business at present as well used as capital for other investment projects in the future because the Company does not have to pay a large sum of money for such capital increase ordinary share in one stance.

(3) The Company shall not have any risks performance of TH does not achieve as per estimated which might be impacted to the Company’s performance in the future.

Impact from not entering into transaction (1) The Company may lose opportunity on network expansion and increase of its advertising areas to Out of

Home Media located in Bangkok and provincial areas throughout the country. (2) The Company may lose opportunity to receive remuneration from management in AA pursuant to

Management Contract and it shall make to Company unable to receive profit sharing from AA’s operations which might impact to overall performance of the Company.

(3) The Company may lose opportunity to expand or increase market shares in Out of Home Media business. (4) The Company may lose opportunity to build relationship with business partner which shall make it unable

to enter into the targeted market and customer groups or business plan projected. (5) The Company may lose opportunity to receive remuneration from investment in business with potential on

competitive potential and growth in the future. (6) The Company may lose opportunity to diversify source of income to Out of Home Media business, which is

one of methods that can help reducing its business operation risks.

2.4 Risks of Entering into Transaction Permit for billboard construction

Core business of AA is to provide services on billboard rental area, acquiring area, hired for construction and installation of various type of advertisement, by emphasizing on outdoor advertising and billboard which are installed in Bangkok and in provinces. These billboard structures consist of those constructed by the Company and those are bought by the Company. About 40% of such billboard structures have construction permits pursuant to Building Control Act B.E. 2522 and 60% of such billboards have insufficient document because they were purchased from existing owners which have incomplete document storage system and some of them have not been applied for construction permit at all. Therefore, they are regarded as the Company’s risk in case such ill-equipped billboard have been inspected or forced to dismantle, which can lead to significant reduction of operating performance of AA.



However, during the past period, AA did not encounter any problem on being forced by the government authorities to dismantle billboards. In addition, AA has regulated the practical guidelines regarding billboards, for instance, pay tax for billboard that can generate income every year, execute insurance for all billboards continually, inspect stability pursuant to the related Acts then requested the Billboard Association to certify stability of its billboards every year as well as plan and conduct maintenance of billboards to expand their usage life. Moreover, the management also closely follows up news and information on the relevant laws so that they can proceed for permit request correctly as well as consider to invest in the billboard which have permits to avoid risk specified in this case.

Ability to renew leased areas contract for billboard installation

Most billboards of AA installed on land or buildings whose ownership rights do not belong to AA and most of them have lease contract or sub-lease contract with term not exceeding 3 years. Therefore, the Company may have risks if the owners of such areas or buildings revoke lease contract or sub-lease contract as it shall impact income of AA and the Company.

However, the management of AA prevented this risk by entering into lease contracts with conditions that either party can request for contract renewal or in case of termination, advance notice must be sent in advance. Additionally, most of leased areas for billboard installation cannot be used for other appropriated benefits. Therefore, it is quite unlikely that such lease contracts shall be revoked. Transaction Conditions

Before the Company enters into transaction for purchasing of newly-issued ordinary shares of TH, the Company is required to enter into share subscription contract with TH and in order to achieve requirements under such share subscription contract, 6 main conditions precedent specified in Transaction Conditions topic must be fulfilled. Those conditions are that all relevant companies must convene shareholders’ meeting and must obtain approval not less than three-fourths of votes from the shareholders presented and eligible to vote, excluding votes of the stakeholders. In case the shareholders of any relevant company do not approve for any transaction specified in such condition precedent, this transaction shall not be achieved as planned, so all relevant expenses incurred from this transaction shall be wasted.

Nevertheless, the management of each relevant company jointly attended meetings and planned for this transaction to reduce risks which might be incurred and it is expected all conditions precedent shall be fulfilled and obtained approval from shareholders of each relevant company.

Change of Advertisement Trend in Digital and Online Era

According to overall picture of advertisement industry, television advertisement media still possesses main proportion of 60% of total advertisement budget and it is expected that growth of advertisement trend in this year shall not be more than 3-5% under peaceful political conditions. Companies that shall spend the highest budget in advertisement are consumer product companies, i.e. beverage,



vehicles and communication technology. At present, it is regarded as digital and online era and these media play significant role on communication of advertisement message to the consumers because the consumers need fast response and they can reach wide target groups. However, if the advertised products need to be regularly recognized by the target groups, billboard must be jointly used with digital and online media. The Company studied about digital advertisement so that it can catch up with the trend and can respond to the consumer’s needs.



Part 3: Fairness of Price and Transaction Conditions

The Company’s Board of Directors’ Meeting No. 6/2014 held on August 8, 2014 passed the resolution on

approval of transaction undertaking and requested to propose to the shareholders’ meeting for consideration and approval of subscription of 640,000,000 newly-issued shares of TH at par value of 1.00 Baht and at offered price of 1.431 Baht per share, or equaled to 915,840,000 Baht. For this transaction, TH shall issue and allot 1,565,000,000 newly issued shares as private placement and shall issue and allot 100,000,000 shares as right offering to the existing shareholders, so total amount of newly ordinary shares issued and allotted are 1,665,000,000 shares. After the Company purchases newly-issued ordinary shares of TH, shareholding proportion of the Company in TH shall be 27.06% of issued and paid-up capital of TH. In addition, TH still has 59,998,983 ordinary shares to support right exercise of TH-W1 to be allotted to the existing shareholders and if all warrants have been exercised, so it shall make the Company hold 25.96% of all issued and paid-up shares of TH.

Furthermore, it is specified in share subscription contract that the Company’s transaction on purchasing of TH’s newly issued ordinary shares are subject to fulfillment the following conditions:

(1) The Company must be granted approval from the Company’s shareholders’ meeting for this

transaction. (2) TH must be granted approval from TH’s shareholders’ meeting on capital increase and offering of

1,565,000,000 newly-issued ordinary shares as private placement including offering of new ordinary shares at price lower than 90% of market price.

(3) The Company obtains tender offer waiver for purchasing all of TH’s securities through resolution of the shareholders (Whitewash), pursuant to rules of the Office of the Securities Exchange Commission.

(4) TH completes the execution of Aqua Ad’s shares purchase agreement from AQUA at ratio of approximately 74.00%.

(5) TH disposes investment in THD at ratio of 81.00%, disposes investment in Million Miles Co., Ltd. at ratio of 60.63% and cancels joint venture agreement in Spring News TV including obtains return of deposit amounting to 250,000,000.00 Baht together with opportunity cost at the rate of 12% per year.

(6) The Company executes the Management Contract to manage business concerning general management and administration of Aqua Ad.

The Independent Financial Advisor considered about appropriateness and fairness of price and conditions on

transaction of newly-issued ordinary shares of TH as follows:



3.1 Appropriateness of Price on Assets Acquisition The Company requested the shareholders’ meeting to consider and approve the subscription of

640,000,000 newly-issued ordinary shares of TH at par value of 1.00 Baht per share and at offered price of 1.431 Baht per share. Such price has been agreed by the purchaser and the buyer based on worthiness on investment return that the Company shall receive including business strategic benefits that can support for expansion of advertisement media of the Company to Out of Home Media business.

The Independent Financial Advisor has considered appropriateness of price of newly-issued ordinary

shares of TH after TH changed its business structure by disposition all investments in Million Miles Co., Ltd., which engages in transportation business, reduction of shareholding proportion in Tong Hua Daily News Company Limited, which engages in printing media business from 100% to 19% and while it is under process for purchasing newly-issued ordinary shares of Aqua Ad Public Company Limited (“AA”), which engages in business of billboard. Therefore, after business restructuring, main business of TH shall be changed from publication media to billboard business as follows:

The Independent Financial Advisor assessed appropriateness share value of TH by employing 5 assessment approaches as follows:

1.) Book Value Approach 2.) Adjusted Book Value Approach 3.) Market Value Approach 4.) Market Comparable Approach

4.1 Price to Book Value Approach (P/BV Ratio) 4.2 Price to Earnings Approach (P/E Ratio)

5.) Discounted Cash Flow Approach

Tong Hua Communications Public Co., Ltd.

Tong Hua Daily News Co., Ltd. Aqua Ad Public Co., Ltd.

19.00% 74.00%



1.) Book Value Approach

By this approach, book value of shares is valuated based on book value of shareholders’ equity of TH shown in the consolidated financial statement of TH as of June 30, 2014 which has been audited by the Certified Public Accountant approved by the Office of SEC, divided by number of issued and paid-up ordinary shares with details as follows:

(Unit : Thousand Baht)

As of June 30, 2014

Issued and paid-up capital 700,000.00

Plus Premium on ordinary shares 43,833.00

Retained earning (loss) (1,704.00)

Other components of shareholders’ equity 600.00

Total Shareholders’ Equity 742,729.00

No. of issued and paid-up ordinary shares (million shares) 700,000.00

Book Value (Baht/Share) 1.06

Value of share of TH as valuated by this approach is 1.06 Baht per share.

2.) Adjusted Book Value Approach

By this method, book value of TH as stated in financial statement as of June 30, 2014 is adjusted by commitments and contingent liabilities incurred after closing date of financial statement as of June 30, 2014 so as to make it reflect actual and most up-to-date value. Such adjustments include increase or decrease of value of assets and investments not yet recorded in financial statement, decrease or increase value of trade account receivable from a change of bad debt or doubtful account following consideration on classification of borrowers, assessment of intangible assets, i.e. goodwill, patent, concession and etc., adjustment of commitment and contingent liabilities including adjustment of material transaction after closing date of financial statement which can impact to a change of book value of business. Divide results of adjusted book value with total issued and paid-up shares of TH. This approach can better reflect present value of net assets of business than book value approach.

The Independent Financial Advisor considered assets of TH pursuant to financial statement as of June 30, 2014 and it was found that most of assets are temporary investments, deposit for investments and fixed assets, i.e. vehicles, buildings and equipment with totaled value of 826.17 million Baht or accounting for 81.79% of total assets. In addition, depreciation has been correctly applied with fix assets. Temporary investment has been recorded as per market prices and differences between market price and cost prices have been recorded as profit and loss from a change of value of temporary investment. Deposit for investment shown in financial statement amounting to 250 million Baht is deposit pursuant to joint venture agreement with Spring News Television Company Limited (“Spring News TV”) on February 7,



2014 which has been recorded pursuant to amount actually paid by TH. As book value of such material assets are values pursuant to financial statement which has been audited by the Certified Public Accountant approved by the Office of S.E.C., hence book value of such fixed assets can reflect actual value in some certain extent.

Adjusted book value of TH for transactions incurred after June 30, 2014 until the date the Board of

Directors passed resolution for transaction which was on August 8, 2014 and transactions expected to be incurred after the Extraordinary General Meeting of Shareholders of TH No. 1/2014 which shall be held on September 22, 2014 shall be as follows:

- Disposition of investments in Million Miles Company Limited (“MM”)

During the past period, MM encountered problems on shortage of vehicles, drivers’ strikes, reduction volume of transportation work from major customers, so its past performance was far below from the estimated amount that impairment of investment in the subsidiaries has been set aside for 16.47 million Baht. Later on July 10, 2014, TH has received a notice from R.S.P. Steel Company Limited (“RSP”) notifying its intention to purchase all of MM’s ordinary shares at 178.00 million Baht.

After TH’s management considered circumstances of MM, they deemed that even though conditions are getting better, however when considering about previous performance, risks still can be foreseen and it might take a lot of time to boost performance to make it close to value of shares assessed by the Independent Financial Advisor. Therefore, it deemed suitable to dispose MM’s shares, however, it must be disposed at 194.00 million Baht which is equal to the amount purchased by TH. After negotiation with RSP, confirmed purchase and sales prices of MM is 194.00 million Baht and payment is scheduled to be made within August 9, 2014 (within 30 days from the date specified in purchase offering notice). Ordinary shares of MM amounting to 194.00 million Baht had been paid by RSP to TH already on August 7, 2014.

The Board of Directors’ Meeting of TH No. 3/2514 on July 25, 2014 passed a resolution to dispose all of investments in MM amounting to 9,095,000 shares at par value of 10 Baht per share, or equaled to 60.63% of paid-up shares at offered price of 21.33 Baht per share, totaled 194.00 million Baht which equal to amount purchased by TH. This amount was recorded as investment costs but since TH has set aside impairment of investment amounting to 16.47 million Baht, so there must be reversal of impairment of investment in subsidiary for the whole amount. Consequently, the Independent Financial Advisor has adjusted reversal of impairment of investment in subsidiary pursuant to book value of TH amounting to 16.47 million Baht.

- Cancellation of Investment in Spring News Television Company Limited

TH has entered into joint venture agreement with Spring News Television Company Limited (“Spring News TV”) on February 7, 2014 with investment proportion between 25-60% of paid-up capital of Spring News TV. Spring News TV must complete capital increase within September 30, 2014 and TH has placed deposit for joint investment of 250 million Baht.



However, since TH has investment plan in other businesses which are expected to yield favorable returns and to be recognized faster than digital TV business which might take quite a long time before profit can be recognized because it just has been launched in Thailand. Therefore, during the Board of Directors’ meeting of TH No. 3/2514 on July 25, 2014, it has resolution to cancel investment in Spring News TV. Such contract cancellation entitled the Company to receive opportunity cost at the rate of 12% per year of such total investment from the date TH transferred money for joint venture agreement until the date Spring News TV returns full amount. On August 5, 2014, Spring News TV repaid deposit for investment amounting to 250.00 million Baht including opportunity cost amounting to 14.27 million Baht, so total amount received by TH was 264.27 million Baht. However, TH received opportunity cost after closing date of financial statement which was on June 30, 2014, so it was not recorded as income of the Company, so the Independent Financial Advisor has adjusted book value of TH for income from opportunity cost from cancellation of joint venture agreement amounting to 14.27 million Baht.

- Capital Increase amounting to 1,665 million shares

The Board of Directors’ Meeting of TH No. 4/2014 held on August 8, 2014 resolved to issue and allot 1,565,000,000 newly-issued ordinary shares as private placement and 100,000,000 shares as right offering, so total newly issued and allotted shares was amounting to 1,665,000,000 shares at par value of 1.00 Baht and at offered price of 1.431 Baht. The meeting also proposed to request for approval from the Extraordinary General Shareholders’ Meeting No. 1/2514 on September 22, 2014. If all shares offered as per RO and PP have been fully purchased, TH shall have more cash amounting to 2,382.62 million Baht, with registered capital of 2,424,998,983 shares and 2,365,000,000 issued and paid-up shares. The Independent Financial Advisor has adjusted book value for cash received from capital increase of TH amounting to 2,382.62 million Baht.

- Disposition of ordinary shares of Tong Hua Daily News Company Limited (“Tong Hua Newspaper”)

The Board of Directors’ Meeting of TH No. 4/2014 held on August 8, 2014 resolved to dispose investment in Tong Hua Newspaper for 8.10 million shares at price equaled to par value of 10.00 Baht per share, totaled 81.00 million Baht. If this transaction has been granted approval from the Extraordinary General Meeting of Shareholders No. 1/2014 to be held on September 22, 2014, remained investments of TH in Tong Hua Newspaper shall be at 1.90 million shares, or 19.00% of paid-up capital. TH recorded investments in Tong Hua Newspaper as cost price and it did not set aside allowance for a change of such investments, so this disposition of Tong Hua Newspaper shall not result in any profit or loss as per book value of TH at all.

The Independent Financial Advisor has assessed remaining investments in Tong Hua Newspaper of 19.00% of paid-up capital by using Discounted Cash Flow Approach based on financial projection of Tong Hua Newspaper for the next 9 years 6 months (July 2014 - December 2023) where Free Cash Flow to Firm is discounted into to net present value with Weighted Average Cost of Capital (WACC) in order to assess fair value of investments in ordinary shares of Tong Hua Newspaper, then compare fair value with investments recorded as cost price pursuant to financial statement ended on June 30, 2014 of TH which has been reviewed by the Certified Public Accountants



approved by the Office of SEC. The Independent Financial Adviser adjusted book value of such investment of TH by using difference between assessed fair price and cost price recorded in financial statement. The Independent Financial Advisor appraised financial project during the last 6 months of 2014 by subtracting performance actually incurred during the first 6 months from estimation of performance of the whole year of 2014 . Assumption used for financial estimation is referred from financial statement of Tong Hua Newspaper of 2013 which has been audited by the Certified Public Accountant, financial statement for the 1st quarter and the 2nd quarter of 2014 and trial balance of the first 6 months of 2014, assumption received from Tong Hua Newspaper and from interview of the management and the relevant officers. Material assumption used for preparation of financial projection throughout the forecasted period of 9 years and 6 months can be summarized as follows:

1. Income

1.1 Income from selling newspaper It is income from publishing and selling of “Tong Hua” newspaper, classified by distribution channels, i.e.

distribution to agent and to airlines. Assumption of income from selling newspaper is as follows: - Sales amount. Amount sold to agents both in Bangkok and provincial areas was assumed to be reduced by

5.0% per year beginning from 2014, by referring to backdated information during 2010-2013 and from interview with the management of Tong Hua Daily Newspaper who informed that demand of newspaper in the market, particularly Chinese newspaper was in a decline. Reasons are that the number of target group customers who read Chinese newspaper was reduced and accessing to news and information via electronic media become more popular and such media is used to access news instead of reading from newspaper. With regard to selling to airlines, the management of Tong Hua newspaper said that sale amount has tendency to grow in relation to expansion of airline routes because Chinese newspaper must be provided to the customers in every flight. However, when considering about sales amount backdated during 2010-2013, average rate in each year was not increased, hence, it is assumed that sales to airlines was constantly from 2013 throughout the estimated period.

- Selling price of newspaper The management clarified that since Chinese newspaper marketing condition was no longer popular among the customers, so they did not have a policy to increase selling price because it can directly impact to the reduced sales volume. In addition, selling price during the past period of 2010-2013 was always constantly, so it was assumed that selling price of newspaper was constantly from 2013 throughout the estimated period with selling price to agent in Bangkok is at 6.50 Baht each, selling price to provincial agents is at 7.25 Baht each and selling price to the airlines is 5.00 Baht each.

- Discount rate which is used in estimation in assumption by referring to average information in the past from 2010-2013 is 3% for distribution to agent in provincial areas and 20% for distribution to airlines.

- Returned rate Only newspaper distributed to provincial agent can be returned. Return rate used for this estimation was referred to average information for the past during 2010-2013 which was at 20%.



First 6 months of 2014 A

Last 6 months of 2014F

2015 F 2016 F 2017 F 2018 F

Sales Amount (Volume): - Bangkok n.a. n.a. 395,540 375,763 356,974 339,126 - Provinces n.a. n.a. 376,549 357,722 339,836 322,844 - Airlines n.a. n.a. 119,551 119,551 119,551 119,551 Total Sales Amount n.a. n.a. 891,640 853,035 816,361 781,521 Selling Price– before Discount (Baht/Volume)

Bangkok = 6.50 Baht / Provinces = 7.25 Baht / Airlines = 5.00 Baht

Selling Price – after Discount (Baht/Volume)


Returned – Provinces only (Thousand Baht)

(324.62) (250.12) (546.00) (518.70) (492.76) (468.12)

Net Sales Amount (Thousand Baht)

2,514.10 2,883.15 5,151.30 4,917.64 4,695.67 4,484.80

2019 F 2020 F 2021 F 2022 F 2023 F

Sales Amount (Volume): - Bangkok 322,169 306,061 290,758 276,220 262,409 - Provinces 306,702 291,367 276,798 262,958 249,810 - Airlines 119,551 119,551 119,551 119,551 119,551

Total Sales Amount 748,422 716,979 687,108 658,729 631,770 Selling Price– before Discount (Baht/Volume)


Selling Price – after Discount (Baht/Volume)


Returned – Provinces only (Thousand Baht)

(444.72) (422.48) (401.36) (381.29) (362.23)

Net Sales Amount (Thousand Baht)

4,284.47 4,094.15 3,913.36 3,741.60 3,578.43

1.2 Income from advertisement in newspaper Income from advertisement is classified by type of advertisement placed in newspaper, i.e. selling products or

services, publishing of announcement and printing special publication. Assumption used for forecast of income from advertisement in newspaper was determined by referring to average information backdated during 2010-2013 and it is assumed that income from advertisement from selling products and services has increased 5% per year, income from publishing announcement and special publication has decreased 5% per year throughout the forecast period. Discount is granted to publishing of announcement only by referring to backdated information during 2010-2013 which was at the rate of 9% per year throughout the forecast period.



1.3 Income from advertisement in website There is only one customer who places advertisement in website with contract renewal every 2 years. Income

from this means is 1.20 million Baht per year. The increased income rate was determined by referring to estimation of the management who said that it will be 5% each every renewal period which is every 2 year throughout the forecast period.

1.4 Income from rental and service fees It is income from rental fee of building and service fees that TH has transferred its right for rental fee to THD

during July 2014. Such income from rental and service fee shall commence to be forecasted after the date being transferred of rental right fee from TH. Assumption for increased rate of rental fee was 2.50% per year, which was determined by referring to inflation rate as specified in financial policy report of June 2014 by the Bank of Thailand.

1.5 Other incomes Other incomes included income from selling of scrap paper, old newspaper and old printing plate which shall be

varied pursuant to income from selling newspaper, so it is determined that discount rate is 5% per year throughout the forecast period which is in line with the decrease sales volume of newspaper.

Unit: Thousand Baht First 6 months

of 2014 A Last 6 months

of 2014 F 2015 F 2016 F 2017 F 2018 F

Income from selling newspaper 2,514.10 2,883.15 5,151.30 4,917.64 4,695.67 4,484.80 Income from ad. in newspaper 9,007.98 16,253.61 25,432.97 25,667.50 25,965.62 26,327.90 Income from ad. in website 618.69 581.31 1,200.00 1,260.00 1,260.00 1,323.00 Income from rent and services - 1,047.50 2,576.85 2,641.27 2,707.30 2,774.99 Other incomes 903.72 11.06 280.92 267.01 253.79 241.23

Total Income 13,044.49 20,776.62 34,642.03 34,753.42 34,882.38 35,151.91

Unit: Thousand Baht 2019 F 2202 F 2021 F 2022 F 2023 F

Income from selling newspaper 4,284.47 4,094.15 3,913.36 3,741.60 3,578.43 Income from ad. in newspaper 26,755.10 27,248.12 27,808.03 28,436.06 29,133.60 Income from ad. in website 1,323.00 1,389.15 1,389.15 1,458.61 1,458.61 Income from rental and service fees 2,844.36 2,915.47 2,988.36 3,063.06 3,139.64 Other incomes 229.30 217.96 207.20 196.97 187.25

Total Income 35,436.23 35,864.86 36,306.09 36,896.29 37,497.53

2. Cost of Goods Sold and Service Rendering

2.1 Cost of raw materials Cost of raw materials comprises cost of paper, printing ink, plate, chemicals and etc. According to information

in 2013, cost of raw materials per each newspaper sold is 5.90 Baht. It is assumed that increased rate of this cost is 2.50% per year from 2013 throughout the forecast period according to inflation rate by referring to financial policy report of June 2014 by the Bank of Thailand.



2.2 Manufacturing expenses Manufacturing expenses comprise salary of employees of manufacturing department, typesetting cost,

publishing expenses of special printed matter, depreciation of machineries, electricity charge, water supply cost and etc. It is assumed that the increased rate of manufacturing expenses is 2.50% per year from 2013 throughout the forecast period according to inflation rate by referring to financial policy report of June 2014 by the Bank of Thailand , except depreciation of machineries, which is determined pursuant to actual rate in 2013 until the accumulated depreciation equal to cost.

3. Selling Expense

Selling expenses comprise commission for selling of advertisement placement, newspaper transportation cost, transportation vehicle expenses, sales commission and etc. It is assumed that commission for selling of advertisement placement shall be in proportion of income from advertisement in newspaper, by referring to backdated information during 2010-2013 which is at 12% of income of advertisement from newspaper. Increased rate of selling expenses of other types is determined at 2.50% per year from 2013 throughout the forecast period according to inflation rate by referring to financial policy report of June 2014 by the Bank of Thailand.

4. Administrative Expenses

Administrative expenses comprise salary of administration department, building rental fee, land lease fee, maintenance expenses of office equipment, deferred lease right of the building, depreciation of office equipment and doubtful account. It is assumed that increased rate of administrative expenses which are fixed expenses is 2.50% per year from 2013 throughout the forecast period according to inflation rate by referring to financial policy report of June 2014 by the Bank of Thailand. Allowance for doubtful account is determined at 0.5% of income from sells and services, which referred to actual rate incurred in 2013.

Depreciation of office equipment in each year throughout the forecast period is forecasted at actual rate incurred in 2013 until depreciation equal to cost.

5. Corporate Income Tax

Corporate income tax is determined by using current rate at 20% of profit before tax throughout forecast period whereas THD does not have accumulated loss to be used for tax reduction.

6. Account Receivable Turnover and Payable Turnover

It is referred to turnover actually incurred in the past with rate at follows: - Account receivable approximately 90 days - Account Payable approximately 100 days

Forecast of profit and loss statement shall be prepared based in the above assumptions as follows:



Unit: Thousand Baht First 6 months of 2014 A

Last 6 months of 2014 F

2015 F 2016 F 2017 F 2018 F

Income Income from sales and services 12,140.77 20,765.57* 34,361.11 34,486.41 34,628.59 34,910.69 Other incomes 903.72 11.06 280.92 267.01 253.79 241.23 Total Income 13,044.49 20,776.62 34,642.04 34,753.42 34,882.38 35,151.91

Costs and Expenses Cost of goods sold and service rendering 9,655.11 7,409.07 17,189.49 17,346.73 17,514.33 17,692.39 Selling expenses 1,704.10 2,645.52 4,403.15 4,465.07 4,535.47 4,614.44 Administrative expenses 4,371.80 5,963.61 10,326.42 10,494.37 10,632.36 10,794.44 Total Costs and Expenses 15,731.01 16,018.21 31,919.05 32,306.17 32,682.16 33,101.26

Profit before income tax (2,686.53) 4,758.42 2,722.98 2,447.25 2,200.22 2,050.65 Income tax - 414.38 544.60 489.45 440.04 410.13

Net Income (Loss) (2,686.53) 4,344.04 2,178.39 1,957.80 1,760.17 1,640.52

Note: *THD started to have income from building lease and service fees from July 2014.

Unit : Thousand Baht 2019 F 2020 F 2021 F 2022 F 2023 F

Income Income from sales and services 35,206.93 35,646.89 36,098.89 36,699.33 37,310,281 Other income 229.30 217.96 207.20 196.97 187,248 Total Income 35,436.23 35,864.86 36,306.09 36,896.29 37,497,529

Costs and Expenses Cost of goods sold and service rendering 17,881.01 18,080.28 17,986.71 17,416.86 17,648.79 Selling expenses 4,702.08 4,798.53 4,903.93 5,018.47 5,142.33 Administrative expenses 10,919.12 11,109.41 9,629.90 8,539.12 8,645.96 Total costs and expenses 33,502.20 33,988.21 32,520.54 30,974.45 31,437.08

Profit before income tax 1,934.03 1,876.65 3,785.54 5,921.85 6,060.45 Income tax 386.81 375.33 757.11 1,184.37 1,212.09

Net Profit (Loss) 1,547.22 1,501.32 3,028.43 4,737.48 4,848.36

7. Terminal Value Growth Rate

Terminal value of growth is determined at 0% per year pursuant to conservative basis under assumption that THD does not have any significant business expansion plan.

8. Discount Rate

Discount rate used for calculating net present value of the project is based on Weighted Average Cost of Capital (WACC), but since capital structure of THD is from shareholders’ equity and it does not have loan burden and finance cost, so discount rate of WACC equals to shareholders’ required rate of return (Ke) with formula as follows:



Ke = Rf + β ( Rm – Rf )

Whereas Ke = Shareholders’ required rate of return

Risk Free Rate (Rf) = Risk free investment rate of return by referring to interest rate of 20-year government bond which equals to 3.97% (referred from www.thaibma.or.th as of August 4, 2014)

Beta (β ) = Average variation of weekly return of Tong Hua Communications Public Co., Ltd. (TH) compared with return of the Stock Exchange of Thailand backdated for 3 years, beginning from August 5, 2011 to August 4, 2014 which averagely equaled to 0.969 (Referred from Bloomberg)

(Note: Average backdated Beta value of TH was referred for comparison. Even though business and management structure of TH is similar to THD, but their financial structure are differently and they are important factors which can significantly impact to performance and financial position in the future).

Rm = Average return on investment in the Stock Exchange of Thailand backdated for 15 years from August 1999 – July 2014, which equaled to 13.70%. These periods occurred after index fluctuation of the Stock Exchange of Thailand, so applying such abovementioned period for consideration is quite appropriated. (Referred from www.set.or.th)

Shareholders’ required rate of return (Ke) calculated by using the above formula and variation is equaled to

13.40% per year. Replace variation in equation to calculate for shareholders’ required rate of return

Ke = Rf + β ( Rm – Rf )

= 3.97% + 0.969 (13.70% - 3.97%) = 13.40%

http://www.thaibma.or.th/




9. Terminal Value This value is forecasted by dividing cash flow from operating activities for the last forecasted year (2023) with

discount rate after that deduction with terminal value growth rate as per the following formula:

Terminal Value = Cash flow from operating activity in 2023 / (Discount Rate – G)

Whereas Discount Rate = Shareholders’ required rate of return (Ke) equaled to 13.40% G = Terminal Value Growth Rate equaled to 0%

10. Sensitivity Analysis

In order to make forecast of investment value yield correct value or value closed to actual value, it depends on accuracy and appropriateness of assumption used in financial forecast as well as business operation plan and management policy in the future under present economic situation and circumstances. Therefore, if there is any circumstances which can result to any change in business plans and policies of the Company or changing of economic conditions which can cause significantly impact the present business operation of the Company or different from forecast and defined variation, the above forecast which is determined under the abovementioned assumptions may be significant changed and it can impact the forecast investment value of the Company as well.

As there are causes and factors which might change and impact share value forecast of TH, therefore, the Independent Financial Advisor has conducted Sensitivity Analysis of investment value forecast in order to study about impacts of factors which might be changed, for instance, a change in shareholders’ required rate of return (Ke) which is used as discount rate of cash flow from operating activities by determining that a change will be in the range of - 1.00% to + 1.00% from Base Case. Result of value of share forecasted by using Discounted Cash Flow Approach as per the following cases is as follows:

(Unit : Thousand Baht) Change in Shareholders’ Required Rate of Return (Ke)

12.40% 13.40% (Base Case)

14.40%

Present value of cash flow of Tong Hua Daily Newspaper 35,585.03 34,374.25 33,233.16 Present value of terminal value of Tong Hua Daily Newspaper 12,785.54 11,753.71 10,813.14

Total Present Value of Cash Flow 48,370.57 46,127.96 44,046.30

From the above information and assumption, present value of cash flow and investment value of ordinary shares

of THD can be calculated by using Discounted Cash Flow Approach as follows:




Minimum - Maximum Present value of cash flow 33,233.16 - 35,585.03 Present value of terminal value 10,813.14 - 12,785.54 Plus cash and cash equivalent as stated in financial statement as of June 30, 2014 73,520.44 Net Present Value of Cash Flow 117,566.74 - 121,891.01 Investment value in ordinary shares of THD for proportion that TH holds 19.00% of issued and paid-up capital 22,337.68 - 23,159.29 Investment value recorded as cost price as per financial statement of TH as of June 30, 2014 19,000.00 Different value is used to adjust book value of investment of TH 3,337.68 - 4,159.29

The Independent Financial Advisor compared fair value from the forecasted investment value of ordinary share

of TH which remained at ratio of 19% by using Discounted Cash Flow approach amounting 22.34 – 23.16 million Baht with investment value recorded as cost price pursuant to financial statement ended June 30, 2014 amounting to 19.00 million Baht. After that using different value between the forecasted fair value and cost price recorded in financial statement to adjust book value of such investments of TH, which is increased by 3.34-4.16 million Baht.

- Purchase of ordinary shares in Aqua Ad Public Co., Ltd. (“AA”)

The Board of Directors’ Meeting of TH No. 4/2517 on August 8, 2014 passed a resolution to approve TH to purchase 299,278,748 newly-issued ordinary shares of Aqua Ad Public Co., Ltd. (“AA”) at par value of 1.00 Baht per share, or accounting for 74.00% of registered capital of AA at offered price of 2.773 Baht per share, so total amount purchased of 829,951,645 Baht from the existing shareholders of AA, which is Aqua Corporation Public Co., Ltd. (“AQUA”). This transaction required an approval from the Extraordinary General Meeting of Shareholders No. 1/2014 to be held on September 22, 2014. After purchasing ordinary shares of AA and after disposition of investment in ordinary shares of THD, core business of TH shall be changed from publishing business to billboard business.

The Independent Financial Advisor adjusted investment value of AA’s ordinary shares purchased by TH in order to compare with value of AA’s shares purchased amounting to 829.95 million Baht that TH paid to AQUA. After that adjust different value of the forecasted fair price and value of share purchased price shall be used to adjust as per book value of investments of TH.

The Independent Financial Advisor shall assess fair value of investment in ordinary shares of AA by using discounted cash flow approach from financial forecast of AA during the next 9 years and 6 months (July 2014 – December 2023) by discounting Free Cash Flow to Firm to net present value with Weighted Average Cost of Capital (WACC). The Independent Financial Advisor appraised financial project during the last 6 months of 2014 by subtracting performance actually incurred during the first 6 months from performance estimated for the whole year of 2014. Assumption used for financial forecast is referred from financial statement of AA in 2013 which has been audited by the Certified Public Accountant, financial statement for 6 month period ended June 30, 2014, trial balance of the Company during the first 6 months of 2014, assumption obtained from AA and from interview with the management and the



relevant officers. Material assumption used for financial projection throughout the forecasted period of 9 years and 6 months can be summarized as follows:

1. Income

1.1 Income from service rendering Income from rendering advertisement services consists of billboard, digital media around Government Center

Chaengwattana and advertisement placed in trolley in Suvarnabhumi Airport. Income from billboard service rendering consists of 3 parts, advertisement fee, lighting rental fee and billboard manufacturing charge. According to information as of June 30, 2014, billboards of AA which are used to forecast income are as follows:

Billboard Area Company’s Structure Sub-contractors’

structure Total

Central, Eastern Region and Vicinity 10 - 10 North Eastern Region 11 - 11 Southern Region 6 - 6 Northern Region 6 3 9 Bangkok + Nonthaburi 112 6 118 Phuket - 2 2

Total Billboard 145 11 156

Amount

Digital Media - LED Screen 1 - LCD Screen 128

Total 129

Advertisement placed in Trolley 140

- Amount of Billboard Amount of billboard is assumed to be correspondent with business expansion plans of AA in the future and according to information interviewed with the management, AA plans to construct approximately 5-12 new billboards each year. The Independent Financial Advisor uses conservative basis for forecast, so it is determined that the increased rate of billboard for the first 6 months of 2014 was 5 items per year. The political unrest conditions resulted in slowdown of the country’s economic conditions, so the Company has increased only 1 new billboard, so during the last 6 months of 2014, it is determined to increase 3 billboards and all increased billboards belong to AA throughout the forecast period. Billboard structure that AA leased from the sub-contractor (Sub-contractors’ structure) is determined to be unchanged throughout the forecast period. Digital media advertisement billboard around Government Center Chaengwattana and advertisement on trolley are also specified to be unchanged throughout the forecast period.



Unit: Billboard June 30, 2014 2014 F 2015 F 2016 F 2017 F 2018 F

AA’s structure 145 148 153 158 163 168 Sub-contractor’s structure 11 11 11 11 11 11

Total 156 159 164 169 174 179

Unit : Billboard 2019 F 2020 F 2021 F 2022 F 2023 F

AA’s structure 173 178 183 188 193 Sub-contractor’s structure 11 11 11 11 11

Total 184 189 194 199 204

- Income from billboard advertisement It is specified that average income from billboards which are AA’s

structure equaled to 1.8 million Baht each by referring to backdated information during 2012-the first 6 months of 2014. Income from billboards which are sub-contractors’ structure equaled to 2.0 million Baht by referring to actual information during the first 6 months of 2014 because during the period of 2012-2013, vacant rate of billboards belong to sub-contractor’s structure was rather high, so AA has cancelled rental of billboards which did not generate income. Therefore, average income of billboards which have sub-contractors’ structure during the first 6 months was likely to better reflect income forecast than using average values since 2012. Average increased rate of income per billboard is at approximately 10% per year which is the rate referred to the average increased rate per billboard during 2012-the first 6 months of 2014, however, since conservation basis is applied, so increased rate was forecasted at 5% per year throughout the forecasted period.

Vacant rate of sub-contractors’ billboard structure during 2012 and 2013 is as follows: of all 33 billboards in 2012, 26 were rented and of all 18 billboards in 2013, 6 of them were rented for placing advertisement, while for the first 6 months of 2014, all 11 billboards or 100% have been rented.

Income from digital media advertisement is assumed at 3.02 million Baht per year and income from

advertisement in trolley is assumed at 0.33 million Baht per year, by referring to average income per advertisement during 2012-the first 6 months of 2014 and it is assumed that the increased rate is approximately 5% per year throughout the forecasted period.

1.2 Other Incomes

Other incomes comprise of interest received, income from rental, services and management fees and most of them are income from related businesses. During 2014, AQUA has repaid loan payment for AA which made income from interest received in 2014 reduced. Therefore, other incomes are determined as ratio of income from services rendering by referring to average value during the first 6 months of 2014, which equaled to 2.0% of income from service rendering.



Unit : Thousand Baht First 6 months of 2014 A

Last 6 months of 2014 F

2015 F 2016 F 2017 F 2018 F

Income from Billboard - AA’s Structure 134,796.43 144,923.57 303,628.50 329,228.55 356,629.53 385,947.54 - Sub-contractors’ Structure 11,191.51 11,908.50 24,255.00 25,467.75 26,741.14 28,078.19 Total Income from Billboard 145,987.93 156,832.07 327,883.50 354,696.30 383,370.67 414,025.74 Income from Digital Media 899.67 2,274.99 3,333.39 3,500.06 3,675.06 3,858.82 Income from Trolley 291.85 56.78 366.06 384.36 403.58 423.76 Total Income from Service 147,179.45 159,163.84 331,582.95 358,580.72 387,449.31 418,308.31 Other Incomes 2,555.02 5,821.85 6,631.66 7,171.61 7,748.99 8,366.17

Total Income 149,734.47 164,985.68 338,214.61 365,752.34 395,198.30 426,674.48


Income from Billboard - AA’s Structure 417,305.78 450,834.98 486,673.82 524,969.47 565,877.99 - Sub-contractor’s Structure 29,482.10 30,956.21 32,504.02 34,129.22 35,835.68 Total Income from Billboard 446,787.89 481,791.18 519,177.84 559,098.69 601,713.68 Income from Digital Media 4,051.76 4,254.34 4,467.06 4,690.42 4,924.94 Income from Trolley 444.95 467.19 490.55 515.08 540.84 Total Income from Services 451,284.59 486,512.72 524,135.46 564,304.19 607,179.45 Other Incomes 9,025.69 9,730.25 10,482.71 11,286.08 12,143.59

Total Income 460,310.28 496,242.98 534,618.17 575,590.27 619,323.04

2. Cost for services rendering Cost for service rendering comprises of area/billboard structure’s rental fees, hire of work, depreciation of

billboard’s structure, billboard tax and etc. Forecasted costs for service rendering for each type is assumed to be equaled to average rate of cost for rendering service per average income from service rendering, backdated from 2012-the first 6 months of 2014, with ratio between 0.12 – 20.00% in each type, for instance ratio of area/billboard’s structure’s rental fee is 20.0%, hire of work is 4.0%, billboard tax is 2.5% and electricity charge for billboard is 2.5% of income from service rendering. Depreciation of billboard structure is forecasted by deducting depreciation in each year throughout the forecasted period equal to depreciation actually incurred in 2013 until depreciation equal to cost price.

3. Selling Expenses

Selling expenses of AA consists of sales commission only. It is forecasted that selling expenses equaled to average commission per income from service rendering, backdated since 2012 – the first 6 months of 2014, with ratio of 7.5% of income from services rendering throughout the forecasted period.



4. Administrative Expenses Administrative expenses consist of salary of employees of Administration Department and related expenses,

office expenses, depreciation of office equipment. It is assumed that increased rate of salary of employees of Administration Department and related expenses are 5% per year throughout the forecasted period. While increased rate of administrative expenses in other type is assumed at 2.5% per year, by referring to inflation rate pursuant to financial report of June 2014 of the Bank of Thailand.

Depreciation of office equipment in each year throughout the forecasted period is forecasted to be equaled to depreciation actually incurred in 2013 until depreciation equal to cost price.

5. Corporate Income Tax

Corporate income tax is determined by using current rate at 20% of profit before tax throughout forecast period whereas AA does not have accumulated loss to be used for tax reduction.

6. Capital Expenditure

Capital expenditure consists of investments to increase billboard which assumed that capital expenditure for each increased billboard is approximately 2.10 million Baht. Increased rate of capital expenditure per each billboard is assumed to be 2.50% per year in order to be corresponding to the increased income from service rendering and inflation rate in the future. Capital expenditure for office equipment is determined to be at 1.70 million Baht per year throughout the forecasted period. The above assumptions are specified by referring from information obtained from AA.

7. Loan from Financial Institution

Details of long term loan from financial institution of AA as of June 30, 2014 are as follows: - 1st Refinance Loan: Remaining debt equaled to 0.83 million Baht with repayment of approximately

0.12 million Baht per month, interest rate = MLR, - 2nd Refinance Loan: Remaining debt equaled to 16.86 million Baht, with repayment of approximately

0.25 million Baht per month, interest rate = MLR -1.0%, - 96 million Baht Loan: Remaining debt equaled to 51.53 million Baht, with repayment of

approximately 1.98 million Baht per month, interest rate = MLR – 0.25% - 69.60 million Baht Loan: Remaining debt equaled to 49.15 million Baht, with repayment of

approximately 1.42 million Baht per month, interest rate = MLR – 0.25% Interest rate is referred to interest rate of Thai Military Bank Public Co., Ltd, as of August 1, 2014 of which MLR interest rate = 7.25%.



8. Account Receivable Turnover and Payable Turnover Referred from turnover rate actually incurred in the past with the rate as follows:

- Account receivable approximately 130 days - Account Payable approximately 60 days

Forecast of profit and loss statement has been prepared based on the said assumptions as follows:

Unit : Thousand Baht First 6 months of

2014 A

Last 6 months of

2014 F

2015 F 2016 F 2017 F 2018 F

Income Income from services 147,179.45 159,163.84 331,582.95 358,580.72 387,449.31 418,308.31 Other incomes 2,555.02 5,821.85 6,631.66 7,171.61 7,748.99 8,366.17 Total Income 149,734.47 164,985.68 338,214.61 365,752.34 395,198.30 426,674.48

Costs and Expenses Cost of services 87,412.20 67,861.77 162,982.62 172,890.39 183,435.86 194,658.72 Selling expenses 9,112.56 13,863.19 24,868.72 26,893.55 29,058.70 31,373.12 Administrative expenses 27,113.38 45,414.83 75,774.18 78,574.92 79,995.02 84,650.32 Total Costs and Expenses 123,638.13 127,139.79 263,625.53 278,358.87 292,489.58 310,682.17 Profit before tax and finance cost 26,096.33 37,845.90 74,589.08 87,393.47 102,708.72 115,992.31 Finance cost (5,401.91) (3,611.11) (4,395.50) (1,255.50) - - Profit before income tax 20,694.42 34,234.78 70,193.59 86,137.96 102,708.72 115,992.31 Income tax (4,140.69) (6,017.03) (10,985.84) (14,038.72) (17,227.59) (20,541.74)

Net Profit (Loss) 16,553.73 28,217.75 59,207.74 72,099.25 85,481.13 95,450.57


Income Income from services 451,284.59 486,512.72 524,135.46 564,304.19 607,179.45 Other incomes 9,025.69 9,730.25 10,482.71 11,286.08 12,143.59 Total Income 460,310.28 496,242.98 534,618.17 575,590.27 619,323.04

Costs and Expenses Cost of services 206,601.05 219,307.46 232,825.25 217,160.08 209,359.22 Selling expenses 33,846.34 36,488.45 39,310.16 42,322.81 45,538.46 Administrative expenses 87,560.19 90,445.16 91,914.00 96,701.44 99,714.25 Total Costs and Expenses 328,007.59 346,241.07 364,049.41 356,184.34 354,611.93

Profit before tax and finance costs 132,302.70 150,001.91 170,568.76 219,405.93 264,711.10 Finance costs - - - - - Profit before tax 132,302.70 150,001.91 170,568.76 219,405.93 264,711.10 Income tax (23,198.46) (26,460.54) (30,000.38) (34,113.75) (43,881.19)

Net Profit (Loss) 109,104.23 123,541.37 140,568.38 185,292.18 220,829.92



9. Terminal Value Growth Rate Terminal Value Growth Rate is assumed to be 0% per year according to conservative basis.

10. Discount Rate Discount rate used for calculating Net Present Value of the project is based on Weighted Average Cost of

Capital (WACC) as per following formula:

WACC = (D/(D+E))* Kd* (1-T) + (E/(D+E)) *Ke

Whereas WACC = Weighted Average Cost of Capital D = Financial liabilities with interest E = Total shareholders’ equity

Financial Statement as of June 30, 2014 (Bht.) Ratio (%)

Liabilities (D) 118.37 21.12% Shareholders’ equity (E) 442.02 78.88%

Total (D+E) 560.38 100.00%

Kd = Finance cost from loan, equaled to 6.90%

T = Corporate income tax rate, equaled to 20.00% Ke = Shareholders’ required rate of return calculated from CAPM

formula, which equal to 12.30%. Details on calculation of Ke are as follows:

Ke = Rf + β ( Rm – Rf )

Whereas Risk Free Rate (Rf) = Risk free investment rate of return by referring to interest

rate of 20 year government bond which equals to 3.97% (referred from www.thaibma.or.th as of August 4, 2014)

Beta (β ) = Average variation of weekly return of Aqua Corporation

Public Co., Ltd. (AQUA) compared with return of the Stock Exchange of Thailand backdated for 3 years, beginning from August 5, 2011 to August 4, 2014 which equaled to 0.856 (Referred from Bloomberg)

http://www.thaibma.or.th/



(Note: Average backdated Beta value of AQUA was referred for comparison. Even though business and management structure of AQUA is similar to AA, but it has different financial structure and they are important factors which have significant factor which can impact performance and financial position in the future).

Rm = Average rate of return for investment in the Stock Exchange

of Thailand backdated for 15 years from August 1999 – July 2014, which equaled to 13.70%. This period occurred after index fluctuation of the Stock Exchange of Thailand which was during 1997-1998, so period used for consideration should be appropriated. (Referred from www.set.or.th)

Shareholders’ required rate of return (Ke) calculated by using the above formula and variation is equaled to

12.30% per year. Replace variation in equation to calculate for shareholders’ required rate of return

Ke = Rf + β ( Rm – Rf ) = 3.97% + 0.856 (13.70% - 3.97%)

= 12.30% Replace variation in equation to calculate for Weighted Average Cost of Capital

WACC = (D/(D+E))* Kd* (1-T) + (E/(D+E)) *Ke = ( 21.12% x 6.90% x ( 1 – 20% ) ) + ( 78.88% x 12.30% )

= 10.87%

11. Terminal Value This value is forecasted by dividing cash flow from operating activities of the last year of forecast period (2023) by Discount Rate after deduction with Terminal Value Growth Rate as per the following formula:

Terminal Value = Cash flow from operating activities in 2023 / (Discount Rate – G)

Whereas Discount Rate = Shareholders’ required rate of return (Ke) equaled to 10.87% G = Terminal Value Growth Rate equaled to 0%




12. Sensitivity Analysis As there might be a change in cause and factor which can impact the Company’s share value forecasted,

therefore, the Independent Financial Advisor has conducted Sensitivity Analysis for investment value estimation in order to study about impacts of factors which might be changed, for instance, a change in Weighted Average Cost of Capital (WACC) which is used as discount rate of cash flow from operating activities by determining that a change will be in the range of - 1.00% to + 1.00% from Base Case. Result of value of share forecasted by using Discounted Cash Flow Approach, based on various cases can be summarized as follows:

(Unit : Thousand Baht) Change in Weighted Average Cost of Capital (WACC)

9.87% 10.87% (Base Case)

11.87%

Present value of cash flow of AA 833,940.22 795,736.33 760,068.46 Present value of terminal value of AA 779,929.01 715,603.73 657,091.40

Total Present Value of Cash Flow 1,613,869.24 1,511,340.06 1,417,159.87

From the above information and assumption, present value of cash flow and investment value of ordinary shares

of AA can be calculated by using Discounted Cash Flow Approach as follows:


Minimum - Maximum Present value of cash flow 760,068.46 - 833,940.22 Present value of terminal value 657,091.40 - 779,929.01 Less Financial liability pursuant to financial statement as of June 30, 2014 (118,366.44) Plus Cash and cash equivalent pursuant to financial statement as of June 30, 2014 44,190.37 Net Present Value of Cash Flow 1,342,983.80 - 1,539,693.17

Investment value in ordinary shares of AA for proportion that TH holds 74.00% of issued and paid-up capital 993,807.96 - 1,139,372.89

Investment value of AA 829,951.65 Different value is used to adjust book value of investment of TH 163,856.32 - 309,421.25

The Independent Financial Advisor compared fair value based on appraisal of investment value in ordinary

share of AA at ratio of 74% by using Discounted Cash Flow Approach amounting 993.81 – 1,139.37 million Baht with investment value of 829.95 million Baht for this transaction entered by TH, then adjusting different value between the appraised fair value and investments for purchased price with book value of such investments of TH, which is increased 163.86 – 309.42 million Baht.



Appraisal of value of share by using Adjusted Book Value Approach of TH for transactions occurred after June 30, 2014 until the date the Board of Directors passed a resolution to approve for transaction, which is August 8, 2014 and transactions expected to be occurred after the Extraordinary General Meeting of Shareholders of TH No. 1/2514 to be held on September 22, 2014 as per shown in details above can be summarized as follows:


Financial Statement as of June 30, 2014

Book Value of TH 742,729.00

Adjusted Transaction: Plus Accounting earnings from reversing entries of allowance for impairment of

investments in Million Miles Company Limited 16,470.00

Plus Opportunity cost from cancellation of joint venture agreement with Spring News Television Co., Ltd.

14,271.06

Plus Capital increase on RO and PP basis amounting to 1,665 million shares @ 1.431 Baht per share

2,382,615.00

Adjust increase (decrease) from appraisal of investments in Tong Hua Daily Newspaper Co., Ltd. at remaining ratio of 19.00 %**

3,337.68 - 4,159.29

Adjust increase (decrease) from appraisal of investments in AA, at ratio of 74.00% purchased by TH

163,856.32 - 309,421.25

Value of share of TH by using Adjusted Book Value Approach 3,323,279.06 - 3,469,665.60

No. of ordinary shares issued and paid-up after capital increase (Thousand Shares) 2,365,000.00 Value of share as per Adjusted Book Value Approach after adjustment (Baht/ Share)

1.41 - 1.47

Value of share of TH appraised by using Adjusted Book Value Approach is in a range of 1.41 – 1.47

Baht/share.

3.) Market Value Approach

Value of share appraised by using average weighted market value approach from trading securities of TH in the Stock Exchange of Thailand, by considering weighted average market price with number of share traded each day backdated for 7 working days and 15 working days by referring to definition of “Market Price” of the Office of SEC. Weighted average market price considered is backdated from August 7, 2014 onwards (1 working day before the date the Board of Directors approved for transaction on purchasing of newly-issued ordinary shares of TH). Details on appraisal of value of share by using Market Value Approach can be calculated as follows:



Backdated working days

Period Average trading volume per day

(Shares)

Weighted average of closing price per share

(Baht)

% of average trading volume each date per total

shares sold

7 Working days July 30 – August 7, 2014 18,369,443 3.05 2.62% 15 Working days July 17 – August 7. 2014 26,702,393 3.00 3.81%

Source: www.setsmart.com

Value of share of TH appraised by using Market Value Approach is in a range of 3.00 – 3.05 Baht/share. As backdated period for consideration of market price is the period before the Board of Directors of TH

approved for issuance of 1,655 million newly-issued ordinary shares, therefore, market value of share of TH after realization of price dilution can be calculated as follows:

Market price after offering = (Market Price * No. of Paid-up Shares) + (This offered price * No. of new ordinary share)

(No. of Paid-up shares + No. of new ordinary share)

Market price after offering = ((3.00 to 3.05) * 700 million shares) + (1.431 * 1,665 million share) (700 million shares + 1,665 million shares)

= 1.90 – 1.91Baht/Share By using Market Value Approach, value of share of TH after price dilution from issuance of new ordinary

shares is valuated between 1.90 -1.91 Baht/Share.

4.) Market Comparable Approach

4.1 Price to Book Value Approach (P/BV Ratio) Under this approach, shares are valuated by multiplying book value as specified in Financial

Statement as of June 30, 2014 which have been reviewed by the Certified Public Account approved by the Office of SEC (as per suggested by the Independent Financial Advisor), by average P/BV Ratio backdated for 7 days, 15 days, 1 month, 3 months, 6 months, 9 months and 12 months of companies listed in the SEC engaging in similar business to TH. The Independent Financial Advisor appraised share of TH after restructuring of core business to billboard business. Presently, P/BV of the listed companies engaging in billboard business is as follows:

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P/BV of TH Average Backdated P/BV (Time)

7 Days 15 Days 1 Month 3 Months 6 Months 9 Months 12 Months

1.06 Baht/Share

AQUA ; Aqua Corporation Public Co., Ltd. 2.61 2.76 2.58 2.31 2.17 2.00 1.87 MACO ; Master Ad Public Co., Ltd. 7.11 6.64 6.24 5.36 4.60 4.25 4.14 VGI ; VGI Global Media Public Co., Ltd. 22.74 22.67 22.46 21.97 21.75 20.39 19.99 Average P/BV 10.82 10.69 10.43 9.88 9.51 8.88 8.67

Share value as per P/BV Ratio Method 11.48 11.34 11.06 10.49 10.09 9.42 9.20

Source: www.setsmart.com

Based on Price to Book Value Approach (P/BV Ratio), share of TH is valuated in a range of 9.20 – 11.48 Baht per share.

4.2 Price to Earnings Approach (P/E Ratio) By this method, share price is appraised by multiplying net earning per share of TH as per specified in

the Financial Statement during the 4 latest quarters, i.e. sum of earning per share in the 3rd quarter – the 4th quarter of 2013 and the 1st quarter – the 2nd quarter of 2014 which have been reviewed by the Certified Public Account approved by the Office of SEC (as per suggested by the Independent Financial Advisor) by the average P/E ratios over the past period of 7 days, 15 days, 1 month, 3 months, 6 months, 9 months and 12 months of the listed companies engaging in business similar to TH after TH restructured its core business to billboard business.

However TH incurred net loss during the 4 latest quarters of (0.05) Baht/share, so P/E Ratio approach is not applicable to appraise for share value of TH.

5.) Discounted Cash Flow Approach

Discounted Cash Flow Approach principally focuses on future profitability expected to be obtained from financial projection by discounting Cash Flow to Firm as net present value by using Weighted Average Cost of Capital (WACC), then subtract out with liabilities burden with finance cost, add with cash and cash equivalents as per specified in the latest financial statement of TH, then divide such sum with number of all issued and paid-up shares after capital increase ordinary shares of TH.

However, since TH currently engages in business similar to a holding company, that is it does not have main business of its own, but instead it invests in businesses expected to yield favorable profits and returns. On August 8, 2014, the Board of Directors’ meeting of TH passed resolutions to dispose investment in Tong Hua Newspaper and remain shareholding proportion to 19.00% of paid-up capital and to purchase ordinary shares of AA at ratio of 74.00% of the registered capital. As a result, if the operations pursuant to the Board’s resolutions can be fulfilled, TH shall have

http://www.setsmart.com/



investment in 1 associate company, Tong Hua Daily Newspaper, with shareholding proportion of 19.00% and 1 subsidiary, AA, with shareholding proportion of 74.00%.

Therefore, the Independent Financial Advisor appraised value of share by using Discounted Cash Flow Approach as Sum of the Parts, that is to include appraised discounted cash flow of the associate company and the subsidiary invested of TH, then combining sum of discounted cash flow of each company with cash and cash equivalent of TH pursuant to financial statement as of June 30, 2014, after cash-related adjustment incurred after June 30, 2014, the closing date of financial statement, until August 8, 2014, the date the Board of Directors of TH has resolution to approve transaction and items affecting cash expected to be incurred after the Extraordinary General Meeting of Shareholders of TH No. 1/2014 to be held on September 22, 2014. Details of cash item adjustment of TH after June 30, 2014 are as follows:

- Cash received amounting to 13.67 million Baht from transfer of lease right of Building No. 959 to

Tong Hua Daily Newspaper on July 31, 2014 at book value as of July 31, 2014, as per resolution of the Board of Directors’ meeting of TH No. 3/2014 dated July 25, 2014,

- Cash received amounting to 194.00 million Baht from disposition of investment in MM for 9,095,000 shares, or accounting for 60.63% of paid-up share capital at par value of 10 Baht per share, at offered price of 21.33 Baht per share, as per resolution of the Board of Directors’ meeting of TH No. 3/2014 dated July 25, 2014. Such total amount is scheduled to be received within August 9, 2014.

- Cash received amounting to 264.27 million Baht, comprising of deposit of 250.00 million Baht and opportunity costs of 14.27 million Baht from cancellation of joint venture agreement in Spring News TV, as per resolution of the Board of Directors’ meeting of TH No. 3/2014 dated July 25, 2014 . TH shall receive full amount on August 5, 2014.

- Cash to be received amounting to 2,382.62 million Baht from issuance and allotment of 1,665,000 newly-issued ordinary shares at par value of 1.00 Baht per share, at offered price of 1.431 per share as per resolution of the Board of Directors’ meeting of TH No. 4/2014 dated August 8 , 2014, if such shares which are offered under RO and PP basis have been wholly purchased.

- Cash to be received amounting to 81.00 million Baht from disposition of investments in Tong Hua Daily Newspaper of 8.10 million shares at par value of 10.00 Baht per share, as per resolution of the Board of Directors’ meeting of TH No. 4/2014 dated August 8, 2014.

- Cash to be paid amounting to 829,951,645 Baht for purchasing 299,278,748 ordinary shares of Aqua Ad Public Co., Ltd. (AA), or accounting for 74.00% of paid-up share capital of AA, at par value of 1.00 Baht, at offered price of 2.773 Baht, as per resolution of the Board of Directors’ meeting of TH No. 4/2014 dated August 8, 2014.

Details on appraisement of discounted cash flow of the associate company and the subsidiary of TH after business restructure, i.e. investments in Tong Hua Daily Newspaper and AA are as per specified in item 2) Adjusted Book Value Approach



Summary of share value appraisement of TH by using Discounted Cash Flow Approach in Sum of the

Parts basis is summarized as follows: (Unit : Thousand Baht)

Financial Statement as of June 30, 2014

Cash and cash equivalents 863.00 Temporary investment 192,733.00 Cash Item Adjustment: Plus Cash received from lease right transfer to Tong Hua Daily Newspaper 13,673.36 Plus Cash received from disposition of investment in Million Miles Co., Ltd. 193,996.35 Plus Deposit and opportunity cost received from cancellation of joint venture agreement

with Spring News Television Co., Ltd. 264,271.06 Plus Cash to be received from capital increase of 1,665 million newly-issued shares @

1.431 Baht per share on RO and PP basis 2,382,615.00 Plus Cash received from disposition of investments at ratio of 81% of registered capital of

Tong Hua Daily Newspaper 81,000.00 Less Cash paid for investments in AA at ratio of 74% of registered capital (829,951.65)

Total cash and cash equivalents and temporary investments of TH 2,299,200.13 Value of investments in Tong Hua Daily Newspaper at ratio of 19% based on Discounted Cash Flow Approach 22,337.68 - 23,159.29 Value of investments in AA at ratio of 74% based on Discounted Cash Flow Approach 993,807.96 - 1,139,372.89 Total value of shares of TH based on Discounted Cash Flow Approach 3,315,345.77 - 3,461,732.31 No. of issued and paid-up ordinary shares after capital increase (Thousand Shares) 2,365,000.00 Value of share based on Discounted Cash Flow Approach (Baht/Share) 1.40 - 1.46

Based on Discounted Cash Flow Approach, share of TH is valuated in a range of 1.40 – 1.46 Baht per

share. Summary on comparison of TH’s ordinary share appraisal based on various approaches to order determine

the appropriated price for purchasing newly-issued ordinary share of TH:

(Unit : Baht/Share)

As of June 30, 2014 1.) Book Value Approach 1.06 2.) Adjusted Book Value Approach 1.41 – 1.47 3.) Market Value Approach 1.90 - 1.91 4.) Market Comparable Approach

4.1 Price to Book Value Approach ; P/BV Ratio 9.20 – 11.48 4.2 Price to Earnings Approach ; P/E Ratio N/A

5.) Discounted Cash Flow Approach 1.40 – 1.46



Based on the above 5 approaches, each approach can reflect appropriated price of share differently as per the following details:

Book Value Approach: This approach can reflect value of share of TH as of the date of financial statement used for this consideration, which is June 30, 2014 only, but it does may reflect actual value of asset because some assets have been recorded as per investment values in the past, so their prices may be increased or decreased at present time. In addition, Book Value Approach does not focus on business performance and profitability in the future and most of assets of TH are investments in the subsidiary and the associate company which recorded as cost prices, so it may not reflect actual value from future performance of the subsidiary and the associate company.

Adjusted Book Value Approach: This approach represents value of business as per specified in the financial statement as of June 30, 20214 and adjustments of material items, so it can best reflect the present value, for instance, adjustment of increase or decrease of some value of assets, liabilities and shareholders’ equity, contingent commitment and items which may impact book value after the date of the Financial Statement. Apart from adjustment of the impacted items, the Independent Financial Advisor also adjusted value of investments in the subsidiary and the associate company which are majority assets and main source of income of TH as TH engages business as a holding company, by considering about adjustment and appraisal of investment values of the subsidiary and the associate company to be procured from future business operations by using Discounted Cash Flow Approach. Hence, this Adjusted Book Value approach is one of the suitable approaches used for appraisal of value of share of TH because it can reflect business performance and profitability in the future.

Market Value Approach: This approach can reflect demand and supply of TH’s shares by the investors

during various periods quite well with regards to fundamental factor, business capability and growth of TH at market prices. When considering amount of shares traded during consideration period, it can be seen that average trading volume of value of TH’s share backdated for 7 to 15 working days was between 18.37-28.97 million shares per day or approximately 2.62-3.81% of total sold shares, which is regarded as high turnover ratio, when compared with turnover ratio of those of other listed companies engaging in publication business, i.e. AQUA, MACO and VGI during the same period, which was at 3.16-3.88%, 1.62-1.74% and 0.16-0.23% respectively. However, when considering that market prices of such shares were backdated prices during 7-15 working days before the Board of Directors of TH resolved and approved to purchase of AA’s shares and before the date TH informed resolution of the Board and disclosed such information memorandum to the SET, as a result, value of share of TH appraised by using Market Value Approach cannot reflect news and information acknowledged by the investors on purchasing AA’s shares by TH and business restructuring from publication business to billboard business, which is important information and might impact market price of TH’s shares. Consequently, Market Value Approach might not be appropriated because it cannot reflect actual value of TH on engaging in billboard business in the future.

Price to Book Value Approach (P/BV): This approach is an appraisal of average backdated share value

by referring to P/BV Ratio of the companies listed in the SET engaging in business similar to TH after TH restructured its



business from publication to billboard. These peer companies include AQUA, MACO and VGI. Calculation of value of share by referring to P/BV ratio of these peer companies may be able to reflect share value of the Company because share prices of the listed companies in the SET mostly influenced by acknowledgement of the relevant information, i.e. industrial conditions, competitive conditions in industry including overall economic conditions of the country and the world. However, appraisal of the Company’s share value by using P/BV approach might not be adequately appropriated because such companies may have different management, business structure and financial structure from those of TH. Moreover, book value of TH used for this share value appraise is book value from operations in publication media as main business, without taking into account main business restructure of TH, as well as its business competency, performance, organizational management, investment and business plan as well as trend on economic and industrial conditions in the future of billboard business of TH. Hence, share prices appraised by such method cannot reflect appropriated price of TH.

Price to Earnings Approach (P/E Ratio): This approach used average and backdated P/E ratio of the

peer companies for appraisal of share value of TH like the P/BV Ratio Approach. However, TH incurred net loss during the lasted 4 quarters (the 3rd – the 4th quarter of 2013 and the 1st -2nd quarter of 2014), so this approach cannot be used for appraisal of share value of TH.

Discounted Cash Flow Approach: This is a method used for analysis past performance and focuses on

TH’s business operations and economic trends relating to its future operation, with regards to profitability, expenditure estimation based on estimation of the net present value of free cash flow expected from the company’s future operation . As current business operation of TH is like a holding company, so value of share of TH is appraised by including appraisal of share value of the subsidiary and the associate company of TH by using Discounted Cash Flow Approach based on assumption of Going Concern Basis of these 2 companies. In addition, items which may impact cash flow of TH are also taking into account. Therefore, this approach might be able to reflect actual value of share of TH and it is one of the methods used for appraisal of share price of TH.

According to opinion of the Independent Financial Advisor, the Adjusted Book Value Approach and

the Discounted Cash Flow Approach can best reflect share value of TH as nature of business of TH is to invest in the subsidiary and the associate company as a holding company. Fair value of TH appraised by using Adjusted Book Value Approach and Discounted Cash Flow Approach is in a range of 1.40-1.47 Baht per share, consequently, the Independent Financial Advisor deemed that purchasing newly-issued ordinary share of TH at 1.437 Baht per share is fair and appropriated without curtailing any advantages of the Company’s shareholder, because it is in a range of fair price appraised by the Independent Financial Advisor.



3.2 Appropriateness of Transaction Conditions This transaction is the purchase of newly-issued ordinary shares of TH by issuing and offering on private

placement basis and right offering basis with offered price is lower than 90% of market prices and it might be classified under criteria that is required to prepare tender offer for purchase of all securities of the business as per Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover dated May 13, 2011 and the related Amendments. As such, TH as the securities issuer, is obligated to convene a shareholders’ meeting. Moreover, such transaction is deemed as Category 1 assets acquisition under the Acquisition or Disposal Notification and when combining acquisition transactions during past 6 months before this transaction, total size of transaction pursuant to total value of consideration criteria is greater than 50% but lower than 100%.

Conditions precedent required are that the Company must seek approval from the shareholders’ meeting

for the entering into transaction for purchasing of TH’s newly-issued ordinary shares, which must be given by a vote of at least three-fourths of the total votes of shareholders present at the meeting and having the right to vote including seek for waiver of tender offer for all securities of TH through resolution of the shareholders’ meeting (Whitewash). Condition precedent required for TH is that TH must obtain approval from its shareholders’ meeting on capital increase and offering of newly-issued ordinary shares. The above conditions precedents are appropriated and are normal conditions that the relevant parties, i.e. the Company and TH, must be complied so as to conform to regulations of the Office of Securities and Exchange Commission because they can ensure possibility of transactions and that each party obtain approval from its shareholders’ meeting, which can help reducing risk and uncertainties of all relevant parties.

With regards to condition precedents which specified that TH must complete execution of AA’s shares

purchase agreement from AQUA at ratio of approximately 74.00% and TH must dispose investments in THD at ratio of 81.00%, dispose all remaining investments in Million Miles at ratio of 60.63% and cancel joint venture agreement in Spring News TV, they are appropriated because they can confirm the change of business of TH into billboard business, so TH has to dispose investments in businesses which are not related to billboard before the Company purchases shares in TH. It can ensure that purchasing newly-issued ordinary shares of TH can strengthen business strategy and expand customer base from indoor advertisement business to outdoor advertisement, so it should be beneficial to the Company in the future.

Condition precedent on execution of Management Contract to manage business and general administration task for AA can ensure that the Company can manage business of the Company and AA, so that business strategy can go in the same direction and it can increase advertisement channels both indoor and outdoor to better respond to the requirements of the Company’s and AA’ customers. Additionally, the Company shall have remuneration from entering into Management Contract for 5 years as per projected by the Independent Financial Advisor at approximately 138.00 million Baht, so it is regarded as suitable condition.



Transactions of the Company under such conditions can reduce operating risks and can be assured that purchasing TH’s share can help the Company to fully expand to billboard business and can generate income to the Company, so the Independent Financial Advisor has opinions that this transaction is appropriated.



Part 4: Opinion of the Independent Financial Advisor on Asset Acquisition

Summary of Opinions of the Independent Financial Advisor

The Independent Financial Advisor is of opinion that the Company’s transaction on purchasing of 640,000,000 newly-issued ordinary shares of TH of which 1,565,000,000 shares are issued and offered as private placement and 100,000,000 shares as right offering pursuant to shareholding proportion at the same price offered as private placement basis which is at 1.431 Baht per share at total amount of 915,840,000 Baht with source of fund shall be from cash flow from operating activities and/or loan from financial institution are appropriated, both on reasonableness and benefits the Company shall gain. The reasons are that the Company has plans to expand to new business, both domestically and abroad, by considering potential investment projects as well as selection strong strategic partners and such investments must be diversified and within skilled and expertise field of the Company. These factors which are considered by mainly taking into consideration the best interest of the Company and overall shareholders can lead to sustainable growth in the long run. The Company sees potential and growth in Out of Home Media and Billboard business to respond to additional number of markets and target group of customers and by investment in TH, the Company shall have diversified advertisement networks and increasing billboard’s structures, consequently they shall lead to higher market share and the increased return to the Company’s shareholders in the long run as they shall be beneficial from synergy on sales which the Company has keen experiences and expertise.

Purchase price of newly-issued ordinary share of TH at 1.431 Baht per share is appropriated because it is in a range between 1.40-1.47 Baht/share appraised by the Independent Financial Advisor. Terms and conditions of payment and transactions are also appropriated.

Based on the above rationale, Finnex Advisory Company Limited, as the Independent Financial Advisor, opinioned that acquisition of 640,000,000 newly-issued ordinary shares of TH is reasonable and has suitable and fair price, so we recommended that the Company’s shareholders should approve this transaction. However, final decision rests with the shareholders’ own discretion and we would like to suggest that they should thoroughly study information contained in document attached to invitation to 2014 Annual General Meeting of Shareholders before making any decision.

Finnex Advisory Company Limited, as the Independent Advisor, certified that we have studied and analyzed such information thoroughly and reasonably according to the professional standards and all opinions provided are based on fundamental of information and fairness by primarily adhering to the best interest of the minority shareholders. Additionally, our opinion provided based on information available to the public, industrial information obtained from the third party as well as information, document and financial estimation obtained from the management of the Company and from the relevant companies, including interview with the Company’s management. Our opinion is based on assumption that the abovementioned information is true and correct. In addition, we do not examine correctness and completeness of all information, so if there is any material change in such information, it will likely affect the opinion provided herein.



The Independent Financial Advisor hereby certified that we have rendered the above opinion prudently

under code of professional practices and in the interest of the shareholders.

Sincerely Yours, Finnex Advisory Company Limited - signed - - signed - .................................................................. ........................................................................... (Mr. Vorachat Tuaycharoen) (Mr. Vorachat Tuaycharoen) Supervisor Managing Director



ส่วนที ่5 : Attachment of General Information

5.1 VGI Global Media Plc. (“VGI”)

5.1.1 Corporate information

Symbol : VGI Status : Listed on the Stock Exchange of Thailand (“SET”) since 11 October 2012 Nature of business : Provider of advertising media network with focus on lifestyle media Address : No. 21 TST Tower, 9th Floor, Chomphon Subdistrict, Chatuchak District,

Bangkok 10900 Incorporation number : 0107555000066 Homepage : www.vgi.co.th Telephone : 0-2273-8884 Facsimile : 0-2273-8883 Registered capital : THB 343,198,879.90, divided into 3,431,988,799 ordinary shares with a par

value of THB 0.10 per share (as per certificate of corporation dated 12 June 2014)

Paid-up capital : THB 343,197,362.50, divided into 3,431,973,625 ordinary shares with a par value of THB 0.10 per share (as per certificate of corporation dated 12 June 2014)

5.1.2 Background

VGI Global Media Plc. (“VGI”), formerly named Global Technologies and Telecom Co., Ltd., was established on 5 April 1995 with a start-up registered capital of THB 1 million to engage in providing marketing and advertising services. In November 1998, the Company changed its name to Global Media Co., Ltd. and increased its registered capital to THB 10 million. It was renamed as VGI Global Media Co., Ltd. in December 1998.

Based on the Company’s potential having personnel with diverse experience in advertising media business, its expertise in advertising media services, determination to develop lifestyle media network, and offering of quality services to customers, VGI has grown its business firmly and consistently. Having envisaged value added creation prospects of the business, in September 2009, Bangkok Mass Transit System Plc. (“BTSC”) signed an agreement to take up all the shares of the Company from the existing shareholders. On 2 April 2012, VGI was converted from a limited company into a public limited company and raised its registered capital to THB 400 million. Its paid-up capital was raised to THB 300 million during September-October 2012, with offering of 26 million new ordinary shares each of THB 1 par value at the offer price of THB 35 per share to the shareholders of BTS Group Holdings Plc. and those of BTSC. In this regard, BTSC made initial public offering of 62 million VGI existing ordinary



shares each of THB 1 par value at the offer price of THB 35 per share, and had all VGI existing ordinary shares listed on the SET with first trade on 11 October 2012.

5.1.3 Business overview

VGI’s core business is providing advertising media services with focus on lifestyle media. At present, the Company’s advertising media networks have a broad and strong reach to its target groups’ daily activities everywhere from BTS sky train commuting to working in office buildings and modern trade shopping. Such media networks are where product owners and consumers meet, serving as intermediary for product owners to present or publicize their products to a broad spectrum of consumers in different forms and diverse dimensions, and in prime locations across the country.

Besides advertising media networks, VGI also engages in other businesses that generate additional income, such as being contracted to produce static image advertising and modern trade point-of-purchase radio spots, and being sales agent of mega LED and outdoor LED media located in major communication routes, as well as providing advertising media services on the bus rapid transit (BRT) and in the Chulalongkorn University shuttle bus system thereby the Company has obtained the right thereof from JV Sikor Co., Ltd. and Energy for Environment Co., Ltd.

Advertising media networks under VGI’s management comprise three main networks below: (1) Advertising media in BTS sky train system (2) Modern trade advertising media, and (3) Advertising media in office buildings and others, with details as follows:

Advertising media in BTS sky train system

- Advertising media in BTS sky train system covers an advertising space of 27,000 sq.m. in 23 stations, and in 47 trains, divided into two main types, i.e. multimedia and static image. Multimedia is the integration of multiple forms of media including static images, audio, video, etc., presented on digital screens in the platform areas of stations and in trains. Advertising media in static images are scattered all through each station in such areas as entrance escalators/stairs, ticket booths and platforms, as well as on train bodies inside and outside.

- Besides providing advertising media services, VGI has obtained the right to manage merchandising space in BTS sky train stations pursuant to the marketing management agreement awarded by BTSC thereby the Company has the exclusive right to manage rental space of shops within the stations. The merchandising space managed by the Company at present covers around 6,000 sq.m., housing almost 1,000 shops and kiosks in 23 stations.

Modern trade advertising media

- VGI provides advertising media services to outlets of three modern trade operators, i.e. Tesco Lotus, Big C and Watsons, which have branches scattered



across the country. The Company has obtained the exclusive right over the spaces designated in the agreements which mostly cover 3-5 contractual terms. Its modern trade advertising media are classified into three main types, i.e. multimedia, point-of-purchase (POP) radio spots and static image media.

Advertising media in office buildings and others

- VGI provides advertising media services in office buildings through its subsidiary. As of 31 March 2013, the subsidiary has obtained the right to manage advertising media in 51 office buildings Bangkok-wide, involving altogether 451 digital screens installed in such buildings. Other businesses include being contracted to produce static image advertising media and radio spots, and being sales agent of mega LED media in major routes and advertising media in airport rail link system, as well as being agent in managing advertising space in BRT and Chulalongkorn University shuttle bus system.

5.1.4 Shareholding and management structures

Name-list of VGI’s shareholders according to its share register as of 15 July 2014 Names of shareholders Number of shares held %

1 Bangkok Mass Transit System Plc. 1,750,320,000.00 51.00 2 BTS Group Holdings Plc. 384,377,496.00 11.20 3 Thai NVDR Co., Ltd. 103,440,418.00 3.01 4 Mr. Nares Ngamapichon 84,000,000.00 2.45 5 State Street Bank Europe Limited 77,116,591.00 2.25 6 HSBC (Singapore) Nominees Pte. Ltd. 69,565,058.00 2.03 7 Mr. Pracha Dumrongsuthipong 62,712,000.00 1.83 8 Krungsri Long-term Dividend Fund 56,695,891.00 1.65 9 Nortrust Nominees Limited-NT0 SEC Lending Thailand 44,191,752.00 1.29 10 Krungsri Dividend Fund 31,243,721.00 0.91 11 Miss Pimpatra Supatcharawong 28,301,560.00 0.82 12 Citibank Nominees Singapore Pte. Ltd. 26,408,288.00 0.77 13 AIA Company Limited-TIGER 25,500,004.00 0.74 14 K 20 Select Long-term Dividend Fund 21,210,100.00 0.62 15 Mr. Jaresak Songwutwichai 19,748,012.00 0.58 16 K Growth Long-term Dividend Fund 18,978,900.00 0.55 17 Mr. Keeree Kanjanapas 18,594,229.00 0.54 18 Krungsri Equity Dividend Fund 17,841,194.00 0.52 19 Others 591,728,411.00 17.24

Total 3,431,973,625.00 100.00



Name-list of VGI’s Board of Directors according to its certificate of corporation as of 12 June 2014 Names of directors Position

1 Mr. Keeree Kanjanapas Chairman 2 Mr. Kavin Kanjanapas Director 3 Mr. Kong Chi Keung Director 4 Mr. Surapong Laoha-Unya Director 5 Mr. Marut Arthakaivalvatee Director 6 Mr. Chan Kin Tak Director 7 Mrs. Jaruporn Viyanant Independent Director 8 Mrs. Maneeporn Siriwatanawong Independent Director 9 Mr. Mana Jantanayingyong Independent Director

Two of the following six directors: Mr. Keeree Kanjanapas, Mr. Kavin Kanjanapas, Mr. Kong Chi Keung, Mr.

Surapong Laoha-Unya, Mr. Marut Arthakaivalvatee and Mr. Chan Kin Tak, are authorized to jointly sign to bind the Company with the Company seal affixed.

Name-list of VGI’s management team according to its management structure as of 1 April 2014 Names of management team Position

1 Mr. Kavin Kanjanapas Chairman of the Executive Committee 2 Mr. Marut Arthakaivalvatee Chief Executive Officer 3 Mr. Chan Kin Tak Chief Operating Officer 4 Mrs. Oranuch Rujirawona Chief Marketing Officer 5 Mr. Chavin Kalayanamitr Chief Technology Officer 6 Mrs. Suparanan Tanviruch Chief Financial Officer 7 Miss Catharin Jirarudee Chief Legal and Compliance Officer 8 Mrs. Pitchapaksorn Jit-Opas Billing and Accounting Director 9 Mrs. Daranee Phanklin Financial Controller

5.1.5 Operating results and financial status of VGI

VGI’s financial statements for the years ended 31 March 2012 and 31 March 2013 were audited by Miss Siraporn Ouaanunkun, CPA No. 3844 of Ernst & Young Office Limited, and those for the year ended 31 March 2014 were audited by Mr. Supachai Phanyawattano, CPA No. 3930 of Ernst & Young Office Limited.

The Company’s financial statements for the quarter ended 30 June 2014 have been reviewed by Mr. Supachai Phanyawattano, CPA No. 3930 of Ernst & Young Office Limited.



VGI’s operating results for the years ended 31 March 2012, 31 March 2013 and 31 March 2014, and as of 30 June 2014

Statement of Comprehensive Income

Actual (THB million)

Year 11/12 Year 12/13 Year 13/14 Year 14/15

31 Mar

2012 %

31 Mar

2013 %

31 Mar

2014 %

30 Jun

2014 %

Revenues

Revenue from services 1,977.34 100.00 2,837.81 100.00 3,149.04 100.00 762.19 100.00

Total revenues 1,977.34 100.00 2,837.81 100.00 3,149.04 100.00 762.19 100.00

Costs of services 1,295.50 65.52 1,289.35 45.43 1,341.93 42.61 341.45 44.80

Gross profit 681.84 34.48 1,548.46 54.57 1,807.10 57.39 420.74 55.20

Operating expenses

Selling expense 43.91 2.22 74.73 2.63 69.12 2.20 17.56 2.30

Administrative expense 226.38 11.45 315.57 11.12 356.74 11.33 87.66 11.50

Business survey and development expense - - - - - - 10.25 1.34

Total expenses 270.28 13.67 390.30 13.75 425.86 13.52 115.47 15.15

Operating profit 411.56 20.81 1,158.15 40.81 1,381.24 43.86 305.27 40.05

Other revenues 27.48 1.39 34.03 1.20 46.60 1.48 17.62 2.31

Gains on investments in JV and associated

company - - - - - - 1.46 0.19

Other income 27.48 1.39 34.03 1.20 46.60 1.48 16.16 2.12

Other expenses 11.92 0.60 3.20 0.11 8.55 0.27 0.97 0.13

Loss on investments in JV and associated

company - - - - 0.81 0.03 - -

Other expenses 11.92 0.60 3.20 0.11 7.73 0.25 0.97 0.13

Earnings before interest and tax (EBIT) 427.12 21.60 1,188.98 41.90 1,419.30 45.07 321.92 42.24

Financial cost 0.51 0.03 2.16 0.08 0.68 0.02 1.04 0.14

Earnings before tax (EBT) 426.61 21.57 1,186.83 41.82 1,418.62 45.05 320.88 42.10

Corporate income tax 148.15 7.49 285.23 10.05 272.90 8.67 63.60 8.34

Net profit (loss) 278.45 14.08 901.60 31.77 1,145.73 36.38 257.28 33.76

Analysis of VGI’s operating results Revenues VGI’s operating revenues come from rental and service revenue in relation to advertising boards and media.

For the past three years during 2011/12-2013/14, the Company has recorded consistent income growth prospects. Its net revenues from services in 2013/14 amounted to THB 3,149.04 million, a yoy growth of THB 311.23 million



or 10.97%, attributable mainly to increase in BTS-related advertising media. Although its 2013/14 service revenue growth missed the 30% growth target set forth as impacted by certain external factors, the Company developed sales strategies and launched sales promotion campaigns to attract advertising purchases in order to maintain its revenue growth in this year and the years thereafter, such as 1) offering special discounts for clients whose media bookings are campaign-based, 2) minimizing package value by reducing the bundled media types to be affordable for limited-budget clients, 3) launching more customized modern trade media packages, not single-type packages across the country, and 4) developing new types of advertising media and spaces. For the first three months of 2014/15 ended 30 June 2014, the Company posted revenues from services of THB 762.19 million.

Costs In 2013/14, VGI recorded costs of services of THB 1,341.93 million, a yoy increase of THB 52.58 million

or 4.08%. Costs of services went up in line with the increase in revenue from services while the Company fully recognized consideration for right to use of advertising spaces in BTS trains in the year. The Company’s costs of services to revenue from services proportion in 2013/14 was 42.61%, which declined from 45.43% a year earlier. As of 30 June 2014, its costs of services amounted to THB 341.45 million, representing 44.80% of total revenues.

Selling and administrative expenses In 2013/14, VGI’s selling and administrative expenses amounted to THB 425.86 million, a yoy increase of

THB 35.56 million or 9.11%. Selling expense dropped in contrast to increase in administrative expense. Administrative expense went up in line with the increase in revenues. The Company’s selling and administrative expenses to total revenues proportion in 2013/14 was 13.52%, a decrease from 13.75% in the foregoing year, thanks to the Company’s ability to control its expenses to match its revenue from services and suit the economic conditions. As of 30 June 2014, its selling and administrative expenses amounted to THB 115.47 million, representing 15.15% of total revenues, which included THB 10.25 million in business survey and development expense.

Net profit (loss) In 2013/14, VGI brought in a net profit of THB 1,145.73 million, a yoy growth of THB 244.13 million or

27.08% as the Company grew its revenue from services at a higher rate than the increase in costs of services and selling and administrative expenses. As of 30 June 2014, its net profit amounted to THB 257.28 million, representing 33.76% of total revenues.



VGI’s financial status as of 31 March 2012, 31 March 2013 and 31 March 2014, and as of 30 June 2014

Statement of financial position



31 Mar

2012 %

31 Mar

2013 %

31 Mar

2014 %

30 Jun

2014 %

Current assets

Cash and cash equivalents 381.25 29.02 1,253.82 48.61 503.46 18.37 151.25 4.77

Current investments - - - - 505.81 18.45 507.10 15.99

Trade and other receivables 484.26 36.86 673.42 26.11 606.99 22.15 718.62 22.66

Prepaid expenses 63.22 4.81 53.93 2.09 4.03 0.15 12.20 0.38

Other current assets 31.64 2.41 13.89 0.54 9.87 0.36 7.39 0.23

Total current assets 960.38 73.09 1,995.06 77.35 1,630.16 59.48 1,396.55 44.04

Non-current assets

Investment in a joint venture - - - - 44.52 1.62 41.18 1.30

Investments in subsidiaries - - - - - - 685.95 21.63

Equipment 227.86 17.34 473.44 18.36 922.69 33.66 887.26 27.98

Goodwill 78.66 5.99 78.66 3.05 78.66 2.87 78.66 2.48

Intangible assets – computer software 8.81 0.67 13.13 0.51 23.90 0.87 25.59 0.81

Deferred tax assets - - 6.29 0.24 16.73 0.61 17.98 0.57

Other non-current assets 38.19 2.91 12.71 0.49 24.20 0.88 37.68 1.19

Total non-current assets 353.52 26.91 584.23 22.65 1,110.69 40.52 1,774.29 55.96

Total assets 1,313.89 100.00 2,579.29 100.00 2,740.85 100.00 3,170.85 100.00

Current liabilities

Short-term borrowing from financial

institution - - - - - - 200.00 6.31

Trade and other payables 468.52 35.66 177.88 6.90 150.76 5.50 110.77 3.49

Accrued expenses 340.18 25.89 296.04 11.48 363.42 13.26 311.86 9.84

Income tax payable 55.63 4.23 108.33 4.20 89.62 3.27 137.27 4.33

Unearned revenues 64.73 4.93 47.43 1.84 50.87 1.86 55.25 1.74

Deposits received from renting

spaces 34.87 2.65 47.10 1.83 54.72 2.00 54.20 1.71

Other current liabilities 40.99 3.12 60.08 2.33 52.33 1.91 61.77 1.95

Total current liabilities 1,004.91 76.48 736.85 28.57 761.72 27.79 931.11 29.36

Non-current liabilities

Unearned revenues - - - - - - 7.29 0.23

Provision for long-term employee

benefits 15.84 1.21 21.55 0.84 25.87 0.94 21.76 0.69

Total non-current liabilities 15.84 1.21 21.55 0.84 25.87 0.94 29.05 0.92



Statement of financial position



31 Mar

2012 %

31 Mar

2013 %

31 Mar

2014 %

30 Jun

2014 %

Total liabilities 1,020.75 77.69 758.40 29.40 787.58 28.73 960.16 30.28

Shareholders’ equity

Share capital

Registered 100.00 7.61 400.00 15.51 343.20 12.52 343.20 10.82

Paid-up 100.00 7.61 300.00 11.63 343.20 12.52 343.20 10.82

Share premium - - 862.54 33.44 862.54 31.47 862.54 27.20

Retained earnings (losses)

Appropriated – statutory reserve 10.00 0.76 40.00 1.55 40.00 1.46 40.00 1.26

Unappropriated 147.44 11.22 583.13 22.61 708.86 25.86 966.14 30.47

Surplus (Deficit) on business

consolidation under common control 35.51 2.70 35.51 1.38 (1.63) (0.06) (1.63) (0.05)

Other component of shareholders’

equity 0.20 0.01 (0.28) (0.01) 0.31 0.01 0.44 0.01

Total shareholders’ equity 293.14 22.31 1,820.89 70.60 1,953.27 71.27 2,210.69 69.72

Total liabilities and shareholders’

equity 1,313.89 100.00 2,579.29 100.00 2,740.85 100.00 3,170.85 100.00

Analysis of VGI’s financial status Assets In 2013/14, VGI had total assets of THB 2,740.85 million, a yoy growth of THB 161.56 million or 6.26%.

Most assets included cash and current investments in a total amount of THB 1,009.27 million. Cash and cash equivalents dropped THB 750.40 million. Equipment-net amounted to THB 922.69 million, a surge of THB 449.24 million, due mainly to increases in investments in digital advertising media, i.e. BTS platform truss LED and BTS platform screen doors. As of 30 June 2014, the Company’s total assets accounted for THB 3,170.85 million, most of which have still been equipment-net representing 27.98% of total assets, followed by account and other receivables 22.66%, and investment in Master Ad Plc. 21.63%.

Liabilities In 2013/14, VGI’s total liabilities amounted to THB 787.58 million, a yoy increase of THB 29.18 million or

3.85%, coming primarily from increases in accrued expenses on sales promotion chargeable by agencies, advertising media production expense, and building tax payable-net. Decreases were recorded in trade and other payables, and income tax payable. As of 30 June 2014, the Company’s total liabilities accounted for THB 960.16 million, still mainly comprising accrued expenses, and including short-term borrowing from financial institution of THB 200.00 million.



Shareholders’ equity In 2013/14, VGI had shareholders’ equity of THB 1,953.27 million, a yoy growth of THB 132.38 million or

7.27%. As of 30 June 2014, the Company’s shareholders’ equity amounted to THB 2,210.69 million, going up THB 257.42 million or 13.17% yoy, driven by a net profit growth.

VGI’s financial ratios

Financial ratios Units

Actual


31 Mar

2012

31 Mar

2013

31 Mar

2014

30 Jun

2014

Liquidity ratios

1. Current ratio times 0.96 2.71 2.14 1.50

2. Quick current ratio times 0.96 2.71 2.14 1.50

Efficiency ratios

1. Total assets turnover times 1.50 1.10 1.15 0.24

2. Fixed assets turnover times 8.68 5.99 3.41 0.86

3. Account receivables turnover times 4.08 4.21 5.19 1.06

4. Average collection period days 89.39 86.62 70.36 170.65

5. Account payables turnover times 2.77 7.25 8.90 3.08

6. Payable days days 132.00 50.35 41.01 58.72

7. Inventories turnover times - - - -

8. Sales period days - - - -

Profitability ratios

1. Gross profit margin % 34.48 54.57 57.39 55.20

2. Operating profit margin % 20.81 40.81 43.86 40.05

3. Net profit margin % 14.08 31.77 36.38 33.76

4. Return on assets (ROA) % 21.19 34.96 41.80 8.11

5. Return on fixed assets % 122.20 190.43 124.17 29.00

6. Return on equity (ROE) % 94.99 49.51 58.66 11.64

Leverage ratios

1. Total liabilities to total assets ratio times 0.78 0.29 0.29 0.30

2. Total liabilities to equity ratio times 3.48 0.42 0.40 0.43

3. Registered capital to total assets ratio % 7.61 15.51 12.52 10.82

4. Paid-up capital to total assets ratio % 7.61 11.63 12.52 10.82

5. Shareholders’ equity to total assets ratio % 22.31 70.60 71.27 69.72

6. Interest debt service coverage ratio times 839.29 551.15 2,099.35 309.54

7. Long-term liabilities to total assets ratio % - - - -



Financial ratios Units

Actual


31 Mar

2012

31 Mar

2013

31 Mar

2014

30 Jun

2014

Other ratios

1. Total revenue growth % - 43.52 10.97 -

2. Net profit growth % - 223.79 27.08 -

3. Total asset growth % - 96.31 6.26 -

Liquidity analysis Liquidity analysis aims to figure out the Company’s ability to settle short-term liabilities. In 2013/14, its

current ratio was 2.14 times, which was 0.57 times down from 2.71 times a year earlier. However, with such current ratio, the Company is considered having sufficient current assets to cover its short-term liabilities settlement. Most of the Company’s assets in 2013/14 included cash and cash equivalents of THB 503.46 million and current investments of THB 505.81 million.

Efficiency analysis Efficiency analysis aims to measure the Company’s capability in managing its assets to generate income. In

2013/14, the Company’s total assets turnover was 1.15 times, an increase from 1.10 times in the foregoing year, and is considered efficient utilization of total assets. Its fixed assets turnover in 2013/14 was 3.41 times, a drop from 5.99 times a year earlier, as a result of additional investments in fixed assets. The Company’s account receivables turnover went up from 4.21 times in 2012/13 to 5.19 times in 2013/14, reflecting its better management of debt collection with debt collection period reduced to 71 days from 87 days a year earlier.

Profitability analysis In 2013/14, the Company had operating profit margin of 43.86%, rising from 40.81% in the previous year,

driven by increase in revenue from services. This resulted in its net profit margin of 36.38% in 2013/14, up from 31.77% a year earlier. In 2013/14, the Company used assets and shareholders’ equity to generate net profit resulting in an ROA of 41.80% and an ROE of 58.66%, up from 2012/13 which saw an ROA of 34.96% and an ROE of 49.51%, in line with the increase in net profit.

Leverage analysis Leverage analysis aims to figure out the Company’s financial leverage as regards its methods and

proportions of fund raising and its ability to meet financial obligations. In 2012/13 and 2013/14, the Company had equal total liabilities to total assets ratio of 0.29 time, and similar shareholders’ equity to total assets ratios of 70.60 times and 71.27 times respectively. Its total liabilities to equity ratios in 2012/13 and 2013/14 were 0.42 time and 0.40 time respectively. This has reflected the Company’s capital structure being composed of equity more than liabilities. Most of the Company’s liabilities were trade payables and accrued expenses. Meanwhile, the Company’s interest debt service coverage ratios were very impressive, i.e. 551.15 times in 2012/13 and 2,099.35



times in 2013/14, well ensuring that its operating profit was adequate to support debt servicing without having to borrow loans from any financial institution for use as working capital.

As of 30 June 2014, the Company recorded a short-term loan of THB 200 million from a financial institution, resulting in a decline in its debt service coverage ratio to 309.54 times, due to higher financial cost.

Growth analysis The Company’s total revenue growth and net profit growth in 2013/14 were in the same direction, being at

decelerating rates of 10.97% and 27.08% respectively. Its total asset growth was also at a declining rate of 6.26%.

5.1.6 Overview of Thailand’s out-of-home advertising media In 2013/14, out-of-home advertising media including advertising media in mass transit systems, modern

trade outlets, and outdoor places, had total market value of THB 10,167 million which represented 9.0% of total market value of advertising media industry of THB 113,408 million. The growth of this type of advertising media has for the past years been on the rise at a significantly higher rate than that of traditional media outlets, i.e. television, radio, newspaper and magazine, although those traditional media outlets have constituted the largest market share of 83.2%. It is expected that out-of-home advertising media will continue to grow for the years to come.

Value of advertising media spending in Thailand during 2008/09–2013/14 (Unit: THB million) 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

Television 51,581 54,535 62,537 62,528 68,755 68,106 Newspaper 14,821 14,513 15,038 14,650 14,993 14,729 Motion picture 4,155 5,037 6,382 7,231 7,566 8,049 Radio 6,739 6,208 6,057 6,027 6,335 6,136 Magazine 5,872 5,490 5,764 5,715 5,653 5,361 Outdoor place 4,158 3,883 3,962 4,319 4,472 4,159 Mass transit system 1,498 1,828 2,262 2,650 3,189 3,522 Modern trade 847 846 1,198 1,760 2,813 2,486 Internet 170 287 328 500 645 860

Total 89,841 92,627 103,527 105,382 114,421 113,408

Source: The Nielsen Company (Thailand) Limited, excluding classified and house ads.

Advertising media market conditions Thailand’s top 5 providers of out-of-home advertising media services ranked by level of revenues are as below:

Company name Revenues (THB million)

VGI Global Media Plc.* 3,149.0 Master Ad Plc. 724.6 Plan B Media Plc.** 644.6 ThreeSixtyFive Plc. 412.2 Aqua Corporation Plc. 397.1

Notes: *Fiscal year ended 31 March 2014 **Operating result for 6-month period ended 30 June 2013



For the past few years, advertisement budget spending has tended to be allocated to diversified media types on account of the different features, strengths and effectiveness of each type of media in accessing customers, and also to ensure maximum advertising efficiency. Agencies and product/service owners have used blended media to best suit the target groups and the budgets, and with consistent frequency, so that there is continuity in building product and brand awareness, expand viewership or customer base to a greater extent, and retain brand loyalty among viewers or customers. In this respect, the competition in the advertising media market today aims vying for market shares not within any particular type of media but across all types of media. Advertising media companies with diverse media network and broad coverage of target groups will thus have high competitive advantage as they can better respond to the demand of buyers, hence larger market share. Moreover, as consumers today tend to be fond of doing multiple activities at the same time, the conventional approach using stand-alone media would fail to fit with such changing behavior of the consumers. Thus, advertising media have increasingly been in integrated forms between traditional and digital outlets, and presented in diverse styles, to bring interesting and enjoyable experience to the consumers. This blended media strategy has currently become widely accepted with consistent growth among players in the advertising media market. Particularly, with the hike in ads rates for TV and newspapers, product/service owners have shifted more to other media outlets that are cheaper and more effective.

The diversity of advertising media in accessing consumers has offered more choices within the same budget for agencies and buyers in picking media types that best suit their target customers. This has necessitated traditional media outlets to adjust and develop their services to maintain their competitive edge in meeting agencies and buyers’ demand. Since the end of 2013, the Thai broadcasting industry has turned a new page with the introduction of digital TV. The digital system has allowed for wider allocation of broadcasting frequencies to new players than in the decades-long used analog system where frequency channels have been limited to only a few players. In view of this, in the next 3-5 years, fierce competition would be seen among TV ads media providers on account of broader choices for buyers. The success of TV ads media sales hinges mainly on the quality of the contents in attracting viewership. However, in overall, the market share of TV advertising media should remain unchanged, and there should be only an increase in the number of players.

Amid the changing consumer behavior environment as mentioned above, VGI is confident of the advantages of its advertising media networks covering BTS mass transit system, modern trade outlets, office buildings and outdoor areas, which fit with the modern lifestyles of consumers today who spend most of the time out of home. Target groups can be figured out in both geographical and demographic terms. According to its survey, product/service owners and agencies have found the Company’s advertising media help modernize and promote their corporate image, brand identity and product uniqueness, with adequate broadcasting frequency to convince the viewers and build brand loyalty, and good potential in reaching out to the target groups, being located or installed in prime areas/selling points that can effectively induce consumer demand. At present, the Company has consistently developed and expanded its media modes to fulfill greater digital media demand in a bid to expand its media networks in line with its vision to become a leading provider of lifestyle media solutions.



5.2 Tong Hus Communications Plc. (“TH”) and Tong Hua Daily News Co., Ltd. (“THD”) 5.2.1 Corporate information

Symbol : TH Status : Listed on the Stock Exchange of Thailand (“SET”) since 29 May 1991 Nature of business : Mainly engaging in production and distribution of Chinese daily newspaper

“Tong Hua” featuring full-fledged content coverage, i.e. local and international news, economic news, political news, and variety content articles, including provision of advertising service in newspaper, and printing and publishing services

Address : No. 877–881 Charoenkrung Road, Talatnoi Subdistrict, Samphanthawong District, Bangkok 10100

Incorporation number : 0107537000122 Homepage : www.thaizhonghua.com Telephone : 0-2236-9171-6 Facsimile : 0-2238-5286 Registered capital : THB 1,159,998,983, divided into 1,159,998,983 ordinary shares with a par value

of THB 1.00 per share (as per certificate of corporation dated 30 June 2014) Paid-up capital : THB 700,000,000, divided into 700,000,000 ordinary shares with a par value of

THB 1.00 per share (as per certificate of corporation dated 30 June 2014) 5.2.2 Business overview

TH has currently changed its business structure with the core business shifted from production and distribution of Chinese daily newspaper to operate business as a holding company. It set up Tong Hua Daily News on 7 January 2013 to produce and distribute newspaper on its behalf. This move has responded to TH’s policy to develop a strong business model, focusing more on providing outdoor advertising media production and space renting services, which is a sector witnessing prospective growth.

TH has made investments in a number of businesses. It holds 99.99% in Tong Hua Daily News Co., Ltd. (“THD”), its subsidiary company which engages in production and distribution of newspaper, provision of newspaper advertising service, and provision of printing and publishing services. It also has a 60.63% stake in Million Miles Co., Ltd., which engages in road transportation and machinery and vehicle lease services, and has invested in Spring News Television Co., Ltd. with an investment deposit placed at THB 250.00 million.



TH’s current shareholding structure is as below:

On 25 July 2014, TH Board of Directors’ meeting resolved for the Company to dispose of its share equity of

60.63% of the total paid-up shares of Million Miles Co., Ltd. (“Million Miles”), amounting to THB 193,996,350, with payment to be received by 9 August 2014, and to terminate the joint venture agreement with Spring News Television Co., Ltd. (“Spring News TV”), with deposit of THB 250,000,000 to be returned together with an opportunity cost of 12% per year to be paid by 8 August 2014.

In addition, to accommodate the change in nature of business operation, TH Board of Directors’ meeting on 8 August 2014 resolved for its business restructure by divesting its share equity of 81.00% in THD, and to acquire shares of Aqua Ad Plc. (“Aqua Ad”) from Aqua Corporation Plc. (“AQUA”) in a proportion of 74.00% of the total issued and paid-up shares of Aqua Ad at the purchase price of THB 2.773 per share, hence total investment value of THB 829,951,645, which would be funded by the proceeds from TH’s issuance and offering of new ordinary shares on a private placement. However, equity investment in Aqua Ad would be subject to the approval of AQUA shareholders’ meeting, and the approval of TH’s new share issuance and offering, as well as fulfillment of transaction conditions.

Aqua Ad engages in providing outdoor advertising media service in the type of billboard which involves a large variety of design, size, location and presentation style.

The above business restructure would result in the shareholding restructure of TH as shown below:

19.00% 74.00%

Tong Hua Communications Plc.

Tong Hua Daily News Co., Ltd.

Aqua Ad Plc.

99.99% 60.63%

Tong Hua Daily News Co., Ltd. Million Miles Co., Ltd. Spring News Television Co., Ltd.

Tong Hua Communications Plc.

Deposit of THB 250 million



5.2.3 Shareholding and management structures

Name-list of TH’s shareholders according to its share register as of 3 April 2014 Names of shareholders Number of shares held %

1 Mrs. Kalayanee Kyavatanakij 90,426,000.00 14.82 2 Mr. Somnuk Kyavatanakij 90,156,000.00 14.78 3 Mr. Wichai Thongtang 60,000,000.00 9.84 4 Mrs. Sumalee Ongcharit 60,000,000.00 9.84 5 Mr. Thanomsak Sammawuthichai 20,686,200.00 3.39 6 Mrs. Duangnapa Tongsee 7,005,605.00 1.15 7 Mr. Ekawit Kamolthepa 6,700,000.00 1.10 8 Miss Sunthree Piti 4,299,907.00 0.70 9 Thai NVDR Co., Ltd. 4,208,800.00 0.69 10 Mr. Kampol Tatiyakawi 3,150,000.00 0.52 11 Mr. Jaroon Leelakulavej 3,113,800.00 0.51 12 Others 260,253,688.00 42.66

Total 610,000,000.00 100.00

Name-list of TH’s shareholders from allocation of new ordinary shares as of 26 June 2014

Names of shareholders Number of shares held % 1 Mr. Ekawit Kamolthepa 50,000,000.00 55.56 2 Mr. Panurak Saengararm 20,000,000.00 22.22 3 Mr. Sukij Triwanapong 10,000,000.00 11.11 4 Mr. Pongsak Suthisripok 10,000,000.00 11.11

Total 90,000,000.00 100.00

Name-list of TH’s shareholders after capital increase as of 26 June 2014

Names of shareholders Number of shares held % 1 Mrs. Kalayanee Kyavatanakij 90,426,000.00 12.92 2 Mr. Somnuk Kyavatanakij 90,156,000.00 12.88 3 Mr. Wichai Thongtang 60,000,000.00 8.57 4 Mrs. Sumalee Ongcharit 60,000,000.00 8.57 5 Mr. Ekawit Kamolthepa 50,000,000.00 7.14 6 Mr. Thanomsak Sammawuthichai 20,686,200.00 2.96 7 Mr. Panurak Saengararm 20,000,000.00 2.86 8 Mr. Sukij Triwanapong 10,000,000.00 1.43 9 Mr. Pongsak Suthisripok 10,000,000.00 1.43 10 Mrs. Duangnapa Tongsee 7,005,605.00 1.00 11 Mr. Ekawit Kamolthepa 6,700,000.00 0.96 12 Miss Sunthree Piti 4,299,907.00 0.61 13 Thai NVDR Co., Ltd. 4,208,800.00 0.60



Names of shareholders Number of shares held %

14 Mr. Kampol Tatiyakawi 3,150,000.00 0.45 15 Mr. Jaroon Leelakulavej 3,113,800.00 0.44 16 Others 260,253,688.00 37.18

Total 700,000,000.00 100.00

As of 26 June 2014, TH had increase in paid-up registered capital by THB 90,000,000 from

allocation of 90,000,000 new ordinary shares each of THB 1.00 par value on a private placement to the following persons:

(1) Mr. Ekawit Kamolthepa: 50,000,000 shares (2) Mr. Panurak Saengararm: 20,000,000 shares (3) Mr. Sukij Triwanapong: 10,000,000 shares, and (4) Mr. Pongsak Suthisripok: 10,000,000 shares Therefore, TH’s current paid-up registered capital is THB 700,000,000. TH also has unexercised warrants (TH-W1) of 59,998,983 units at the exercise right of 1 warrant for

1 ordinary share and the last exercise of warrant scheduled for 9 September 2017. As of 31 March 2013, the number of remaining ordinary shares to accommodate exercise of warrant was 59,998,983 shares.

Name-list of TH’s Board of Directors according to its certificate of corporation as of 30 June 2014

Names of directors Position

1 Mr. Somnuk Kyavatanakij Chairman 2 Mr. Prichar Phornprapha Director 3 Mr. Chai Nawaphan Independent Director 4 Mr. Kamol Nakornchai Independent Director 5 Mrs. Preeyaporn Kyavatanakij Director 6 Mr. Suphot Jirakraisri Independent Director 7 Mr. Prajerd Sukkaew Director 8 Mr. Thitisak Sakunkhru Director 9 Mr. Siroj Ongjit Director 10 Mr. Nithi Jaruworn Director

Two of the above 10 directors are authorized to jointly sign to bind TH with the company seal affixed.

Name-list of TH’s management according to Form 56-1 of 2013 Name Position

1 Mr. Pawit Tokakuna Executive Editor 2 Miss Ratana Amornsaensuk Manager, Office of Management 3 Mr. Saenee Chortnuchittrakul Manager, Advertisement



5.2.4 Operating results and financial status of TH TH’s financial statements for the years ended 31 December 2011 and 31 December 2012 were audited by

Mr. Sathien Vongsnan, CPA No. 3495 of ANS Audit Co., Ltd., and those for the year ended 31 December 2013 were audited by Mr. Boonlert Kaewphanpurk, CPA No. 4165 of BPR Audit and Advisory Co., Ltd.

The Company’s financial statements for the six months ended 30 June 2014 have been reviewed by Ms. Wimonsri Jongudomsombut, CPA No. 3899 of Karin Audit Co., Ltd.

TH’s operating results for the years ended 31 December 2011, 31 December 2012, 31 December 2013, and as of 30 June 2014

Statement of Comprehensive Income Actual (THB million)

2011* % 2012* % 2013 % 30 Jun 14 %

Revenues

Revenue from sales and services 30.92 100.00 36.11 100.00 115.00 100.00 39.84 100.00

Total revenues 30.92 100.00 36.11 100.00 115.00 100.00 39.84 100.00

Cost of sales and services 20.17 65.23 19.54 54.12 96.28 83.72 31.86 79.97

Gross profit 10.75 34.77 16.56 45.88 18.72 16.28 7.98 20.03

Operating expenses

Selling expense 5.38 17.40 5.33 14.76 4.05 3.52 0.65 1.63

Administrative expense 11.83 38.25 11.52 31.91 28.06 24.40 11.22 28.15

Executive remuneration - - 1.08 2.98 3.62 3.15 - -

Total expenses 17.21 55.66 17.93 49.66 35.74 31.07 11.87 29.78

Operating profit (6.46) (20.89) (1.37) (3.78) (17.02) (14.80) (3.88) (9.75)

Other revenues 8.51 27.52 15.82 43.82 18.41 16.01 5.53 13.88

Interest income 4.05 13.10 4.03 11.16 2.90 2.52 0.29 0.72

Gains on change in value of current

investment 0.22 0.72 0.32 0.89 7.43 6.46 0.27 0.69

Gains on sales of fixed assets

- 6.50 18.00 - - - -

Gains on sales of investment in

associated company - - - - - - 0.11 0.28

Reversal of allowance for devaluation of

investment - - - - - - 3.00 7.53

Dividend income 0.59 1.91 - - - - 0.18 0.45

Other income 3.65 11.79 4.97 13.76 8.08 7.02 1.68 4.22

Other expenses 0.68 2.19 - - 17.48 15.20 0.43 1.08

Loss on devaluation of goodwill

- - - 16.47 14.32 - -

Loss on investment in associated

company

- - - 1.01 0.88 0.43 1.08

Loss on sales of fixed assets 0.68 2.19 - -

- - -



Statement of Comprehensive Income Actual (THB million)

2011* % 2012* % 2013 % 30 Jun 14 %

Earnings before interest and tax (EBIT) 1.37 4.44 14.46 40.03 (16.09) (13.99) 1.22 3.06

Financial cost - - - - 6.61 5.74 2.36 5.93

Earnings before tax (EBT) 1.37 4.44 14.46 40.03 (22.69) (19.73) (1.14) (2.87)

Corporate income tax 0.45 1.47 3.21 8.89 0.18 0.16 2.36 5.93

Net profit (loss) 0.92 2.97 11.24 31.14 (22.87) (19.89) (3.50) (8.79) Note: *Financial statements of 2011 and 2012 were standalone financial institutions as TH had no associated and subsidiary companies by then.

Analysis of TH’s operating results Revenues TH’s operating revenues are derived from newspaper production and distribution and from advertising fee.

In 2013, TH recorded revenue from sales and services of THB 115.00 million, a yoy growth of THB 78.89 million or 218.50% attributable mainly to investment in subsidiary company. Printing and publishing business was on a decline as resulted from decreases in readership and advertisement, together with political unrest. For the 6-month period as of 30 June 2014, revenues from services amounted to THB 39.84 million.

Costs In 2013, TH had cost of services of THB 96.28 million, a yoy increase of THB 76.74 million or 392.67% in

line with the increase in revenue from services. Cost of services to revenue from services was 83.72%, up from 54.12% a year earlier, due to cost of investment in subsidiary company. As of 30 June 2014, its cost of services amounted to THB 31.86 million, representing 79.97% of total revenues.

Operating expenses In 2013, TH incurred operating expenses of THB 35.74 million, surging THB 17.81 million or 99.30% from

2012 caused by a hike in administrative expense in line with the revenue increase, being composed of increases in subsidiary company, securities-related fee and financial advisory fee. Operating expenses to total revenues in 2013 was 31.07%, going down from 49.66% in the previous year. For the 6-month period as of 30 June 2014, TH’s operating expenses amounted to THB 11.87 million, which was 29.78% of total revenues.

Net profit (loss) In 2013, TH posted a net loss of THB 22.87 million, a yoy increase of THB 34.12 million or 303.43% on

account of recognition of loss on devaluation of goodwill in subsidiary company. As of 30 June 2014, its net loss was THB 3.50 million, representing 8.79% of total revenues.



TH’s financial status for the years ended 31 December 2011, 31 December 2012, 31 December 2013, and as of 30 June 2014

Statement of financial position Actual (THB million)

2011* % 2012* % 2013 % 30 Jun 14 %

Current assets

Cash and cash equivalents 1.94 1.32 1.99 0.48 5.87 0.63 2.90 0.29

Current investments 46.21 31.36 322.32 78.22 391.68 41.92 264.67 26.20

Trade and other receivables 11.70 7.94 11.11 2.70 40.24 4.31 39.09 3.87

Current portion of receivables under

financial lease - - - - 3.82 0.41 2.57 0.25

Short-term loans to other business 3.25 2.21 3.25 0.79 - - - -

Inventories - net 1.06 0.72 1.77 0.43 5.19 0.56 5.23 0.52

Deposit for investment - - - - - - 250.00 24.75

Other current assets - - - - 2.55 0.27 2.74 0.27

Total current assets 64.16 43.54 340.44 82.62 449.35 48.09 567.20 56.15

Non-current assets

Saleable investment 9.30 6.31 9.90 2.40 9.80 1.05 10.00 0.99

Investment in associated company - - - - 0.82 0.09 - -

Other long-term investment 41.37 28.07 24.00 5.82 4.00 0.43 4.00 0.40

Receivables under financial lease - - - - 20.05 2.15 15.54 1.54

Land, building and equipment 29.33 19.91 33.00 8.01 351.41 37.61 311.49 30.84

Advance land rental 2.84 1.93 2.65 0.64 13.99 1.50 12.94 1.28

Intangible assets - - 0.19 0.04 0.12 0.01 0.10 0.01

Deferred tax assets - - 1.52 0.37 4.49 0.48 4.90 0.48

Goodwill - - - - 79.54 8.51 79.54 7.87

Other non-current assets 0.36 0.25 0.36 0.09 0.80 0.09 4.42 0.44

Total non-current assets 83.20 56.46 71.62 17.38 485.02 51.91 442.93 43.85

Total assets 147.36 100.00 412.07 100.00 934.37 100.00 1,010.13 100.00

Current liabilities

Overdraft and short-term borrowing

from financial institution - - - - - - 4.63 0.46

Trade and other payables 5.34 3.62 6.84 1.66 30.71 3.29 19.77 1.96

Current portion of payables under

financial lease - - - - 52.14 5.58 44.21 4.38

Current portion of long-term

borrowing from financial institution - - - - 10.01 1.07 10.01 0.99

Income tax payable 0.02 0.02 0.26 0.06 0.18 0.02 0.00 0.00

Total current liabilities 5.36 3.64 7.11 1.73 93.04 9.96 78.62 7.78



Statement of financial position Actual (THB million)

2011* % 2012* % 2013 % 30 Jun 14 %


Other payables-related business - - - - 1.75 0.19 1.75 0.17

Payables under financial lease - - - - 124.80 13.36 96.71 9.57

Long-term borrowing from financial

institution - - - - 24.96 2.67 19.95 1.98

Contingent employee benefits 3.07 2.09 3.29 0.80 3.47 0.37 3.65 0.36

Deferred income tax - - 0.15 0.04 3.36 0.36 4.73 0.47

Other non-current liabilities - - - - 0.79 0.08 0.74 0.07

Total non-current liabilities 3.07 2.09 3.44 0.83 159.12 17.03 127.53 12.63

Total liabilities 8.44 5.73 10.55 2.56 252.16 26.99 206.15 20.41


Share capital

Registered 120.00 81.43 920.00 223.26 1,170.00 125.22 1,160.00 114.84

Paid-up 120.00 81.43 370.00 89.79 610.00 65.28 700.00 69.30

Share premium 5.04 3.42 5.04 1.22 5.04 0.54 43.83 4.34

Retained earnings (losses)

Appropriated – statutory reserve 12.00 8.14 12.00 2.91 12.56 1.34 12.56 1.24

Unappropriated 1.83 1.24 13.98 3.39 (7.44) (0.80) (14.26) (1.41)

Other component of shareholders’

equity 0.05 0.03 0.50 0.12 0.44 0.05 0.60 0.06

Minority interest in earnings - - - - 61.61 6.59 61.25 6.06

Total shareholders’ equity 138.92 94.27 401.52 97.44 682.21 73.01 803.98 79.59

Total liabilities and shareholders’

equity 147.36 100.00 412.07 100.00 934.37 100.00 1,010.13 100.00 Note: *Financial statements of 2011 and 2012 were standalone financial institutions as TH had no associated and subsidiary companies by then.

Analysis of TH’s financial status Assets In 2013, TH had total assets of THB 934.37 million, a yoy growth of THB 522.30 million or 126.75%, due

to investment in Million Miles Co., Ltd. during the year, resulting in an increase in land, building and equipment, as well as an increase in goodwill on account of business merger with Million Miles. As of 30 June 2014, total assets accounted for THB 1,010.13 million, of which 30.84% was equipment-net, followed by current 26.20% and deposit on investment in Spring News Television Co., Ltd. 4.75%.



Liabilities In 2013, TH recorded total liabilities of THB 252.16 million, a THB 241.61 million or 2,290.92% surge

from 2012, mainly comprising payables under financial lease in relation to investment in Million Miles which were 13.36% of total assets. As of 30 June 2014, TH had total liabilities of THB 206.15 million, most of which or 96.71% remained to be payables under financial lease in relation to investment in Million Miles equaling 9.57% of total assets.

Shareholders’ equity In 2013, TH recorded shareholders’ equity of THB 682.21 million, a yoy growth of THB 280.69 million or

69.91%, mainly coming from the increase in paid-up registered capital to THB 610 million from THB 370 million a year earlier. As of 30 June 2014, TH had shareholders’ equity of THB 803.98 million and paid-up registered capital of THB 700 million.

TH’s financial ratios

Financial ratios Units Actual

2011* 2012* 2013 30 June 14

Liquidity ratios


2. Quick current ratio times 11.76 47.64 4.77 7.15

Efficiency ratios

1. Total assets turnover times 0.21 0.09 0.12 0.04

2. Fixed assets turnover times 1.05 1.09 0.33 0.13

3. Account receivables turnover times 2.64 3.25 2.86 1.02

4. Average collection period days 138.10 112.30 127.71 177.58

5. Account payables turnover times 3.78 2.86 3.14 6.89

6. Payable days days 96.65 127.84 116.41 26.28

7. Inventories turnover times 19.03 11.04 18.54 6.09

8. Sales period days 19.18 33.07 19.69 29.70



2. Operating profit margin % (20.89) (3.78) (14.80) (9.75)

3. Net profit margin % 2.97 31.14 (19.89) (8.79)

4. Return on assets (ROA) % 0.62 2.73 (2.45) (0.35)

5. Return on fixed assets % 3.13 34.07 (6.51) (1.12)

6. Return on equity (ROE) % 0.66 2.80 (3.35) (0.44)

Leverage ratios

1. Total liabilities to total assets ratio times 0.06 0.03 0.27 0.20

2. Total liabilities to equity ratio times 0.06 0.03 0.37 0.26



Financial ratios Units Actual

2011* 2012* 2013 30 June 14

3. Registered capital to total assets ratio % 81.43 223.26 125.22 114.84

4. Paid-up capital to total assets ratio % 81.43 89.79 65.28 69.30

5. Shareholders’ equity to total assets ratio % 94.27 97.44 73.01 79.59

6. Interest debt service coverage ratio times

(2.44) 0.52

7. Long-term liabilities to total assets ratio % - - 3.74 2.97

Other ratios

1. Total revenue growth % - 16.79 218.50 -

2. Net profit growth % - 1,123.89 (303.43) -

3. Total asset growth % - 179.63 126.75 - Note: *Financial statements of 2011 and 2012 were standalone financial institutions as TH had no associated and subsidiary companies by then.

Liquidity analysis Liquidity analysis aims to figure out the Company’s ability to settle short-term liabilities. In 2013, TH’s

current ratio was 4.83 times, which was a 43.05 times drop from 47.88 times a year earlier. However, its quick current ratio, regardless of inventories, was close to normal current ratio. The sharp drop in its current ratio was due to the fact that in 2013 TH had current portion of payables under financial lease in an amount of THB 52.14 million, and current portion of long-term loan from financial institution in an amount of THB 10.01 million. In view of this, TH is considered having sufficient current assets to cover its short-term liabilities settlement. Most of its assets were current investments which can be converted into cash for settlement of short-term liabilities without any problem.

Efficiency analysis Efficiency analysis aims to measure the Company’s capability in managing its assets to generate income. In

2013, TH’s total assets turnover was 0.12 time, picking up from 0.09 time in the foregoing year, and is considered a slight improvement in utilization of total assets, but still at low level of efficiency. Its fixed assets turnover in 2013 was 0.33 time, a drop from 1.09 times a year earlier, as a result of additional investments in fixed assets. TH’s account receivables turnover declined from 3.25 times in 2012 to 2.86 times in 2013, reflecting its lower efficiency in management of debt collection with longer debt collection period from 113 days in 2012 to 128 days in 2013. It recorded 117 payable days in 2013, decreasing from 128 days a year earlier, reflecting its lower efficiency in managing trade payables.

Profitability analysis In 2013, TH posted a net loss of THB 22.87 million, constituting a net loss margin of 19.89%, falling from a

net profit margin of 31.14% in the previous year. As a result of such loss, TH’s ROA and ROE in 2013 were in red at 2.45% and 3.35% respectively.



Leverage analysis Leverage analysis aims to figure out TH’s financial leverage as regards its methods and proportions of fund

raising and its ability to meet financial obligations. In 2012 and 2013, TH had total liabilities to total assets ratios of 0.03 time and 0.27 time respectively, and shareholders’ equity to total assets ratios of 97.44 times and 73.01 times respectively. Its total liabilities to equity ratios were 0.03 time in 2012 and 0.37 time in 2013. This has reflected TH’s capital structure being composed of equity rather than liabilities. Most of its liabilities in 2013 were payables under financial lease and trade payables. Meanwhile, considering its interest debt service coverage ratio, as TH recorded loss before financial cost, is would be unable to service its existing interest debts.

Growth analysis In 2013, TH had total revenue growth at an increasing rate of 218.50%, while being faced with a net loss of

THB 22.87 million compared with a net profit of THB 11.24 million a year earlier, hence a net profit slump of THB 34.11 million or 303.50%. Its total asset growth was on a decelerating rate from 179.63% in 2012 to 126.75% in 2013.

5.2.5 Information of Tong Hua Daily Co., Ltd., a subsidiary of TH

Symbol : TH Daily or THD Nature of business : Producer and distributor of Chinese daily newspaper “Tong Hua,”

featuring full-fledged content coverage, i.e. local and international news, economic news, political news, and variety content articles, including provision of advertising service in newspaper, and printing and publishing services, as well as space rent service on newspaper and website.

Address : No. 877–881 Charoenkrung Road, Talatnoi Subdistrict, Samphanthawong District, Bangkok 10100

Incorporation number : 0105556002699 Homepage : www.thaizhonghua.com Telephone : 0-2236-9172-6 Facsimile : 0-2238-5286 Registered capital : THB 100,000,000, divided into 10,000,000 ordinary shares with a

par value of THB 10 per share (as per certificate of corporation dated 2 April 2014)

Paid-up capital : THB 100,000,000, divided into 10,000,000 ordinary shares with a par value of THB 10 per share



Name-list of THD’s shareholders according to its share register as of 28 March 2014 Names of shareholders Number of shares held %

1 Tong Hua Communications Plc. 9,999,997.00 100.00 2 Others 3.00 0.00

Total 10,000,000.00 100.00

Name-list of THD’s Board of Directors according to its certificate of corporation as of 2 April 2014

Names of directors Position

1 Mrs. Kalayanee Kyavatanakij Chairperson 2 Mr. Somnuk Kyavatanakij Director 3 Mrs. Preeyaporn Kyavatanakij Director

Two of the above three directors are authorized to jointly sign to bind THD with the company seal affixed. Name-list of THD’s management

Name Position

1 Mrs. Kalayanee Kyavatanakij Chairperson 2 Mr. Somnuk Kyavatanakij President 3 Mrs. Preeyaporn Kyavatanakij Director

Operating results and financial status of THD THD’s financial statements for the year ended 31 December 2013 were audited by Mr. Boonlert

Kaewphanpurk, CPA No. 4165 of BPR Audit and Advisory Co., Ltd.

Operating results of THD as of 31 December 2013

Statement of Comprehensive Income Actual (2013)

THB million %

Revenues

Revenue from sales and services 27.60 100.00

Total revenues 27.60 100.00

Cost of sales 17.82 64.55

Gross profit 9.79 35.45

Operating expenses

Selling expense 3.78 13.69

Administrative expense 5.53 20.04

Executive remuneration 0.80 2.91

Total expenses 10.11 36.64



Statement of Comprehensive Income Actual (2013)

THB million %

Operating profit (0.33) (1.19)

Other revenues 1.37 4.95

Interest income 0.01 0.03

Other income 1.36 4.91

Earnings before interest and tax (EBIT) 1.04 3.76

Financial cost - -

Earnings before tax (EBT) 1.04 3.76

Corporate income tax 0.24 0.86

Net profit (loss) 0.80 2.90

Financial status of THD as of 31 December 2013

Statement of Financial Position Actual (2013)

THB million %

Current assets

Cash and cash equivalents 1.47 2.41

Current investments 30.63 50.31

Trade and other receivables 10.74 17.64

Inventories - net 5.19 8.53

Total current assets 48.03 78.90

Non-current assets

Equipment 12.73 20.91

Intangible assets 0.11 0.19

Total non-current assets 12.84 21.10

Total assets 60.87 100.00

Current liabilities

Trade and other payables 6.88 11.30

Total current liabilities 6.88 11.30


Contingent employee benefits 3.19 5.25

Total non-current liabilities 3.19 5.25

Total liabilities 10.07 16.55


Share capital

Registered capital, 5 million shares @ THB 10 50.00 82.14

Paid-up capital, 5 million shares @ THB 10 50.00 82.14



Statement of Financial Position Actual (2013)

THB million %

Retained earnings (loss) 0.80 1.31

Total shareholders’ equity 50.80 83.45

Total liabilities and shareholders’ equity 60.87 100.00

Financial ratios of THD

Financial Ratios Units Actual

2013

Liquidity ratios

1. Current ratio times 6.98

2. Quick current ratio times 6.23

Efficiency ratios

1. Total assets turnover times 0.45

2. Fixed assets turnover times 2.17

3. Account receivables turnover times 2.57

4. Average collection period days 139.67

5. Account payables turnover times 2.59

6. Payable days days 138.61

7. Inventories turnover times 3.43

8. Sales period days 104.66


1. Gross profit margin % 35.45

2. Operating profit margin % (1.19)

3. Net profit margin % 2.90

4. Return on assets (ROA) % 1.31

5. Return on fixed assets % 6.28

6. Return on equity (ROE) % 1.57

Leverage ratios

1. Total liabilities to total assets ratio times 0.17

2. Total liabilities to equity ratio times 0.20

3. Registered capital to total assets ratio % 82.14

4. Paid-up capital to total assets ratio % 82.14

5. Shareholders’ equity to total assets ratio % 83.45

6. Interest debt service coverage ratio times

7. Long-term liabilities to total assets ratio %



Financial projection of THD

Projected statement of income

(THB) Jul–Dec 2014 E 2015 F 2016 F 2017 F 2018 F 2019 F 2020 F 2021 F 2022 F 2023 F

Revenues Revenue from sales and services 20,765,566 34,361,113 34,486,414 34,628,590 34,910,685 35,206,929 35,646,894 36,098,891 36,699,327 37,310,281 Interest income 1,305 2,611 2,611 2,611 2,611 2,611 2,611 2,611 2,611 2,611 Other income 9,751 278,311 264,395 251,176 238,617 226,686 215,352 204,584 194,355 184,637 Total revenues 20,776,622 34,642,035 34,753,420 34,882,377 35,151,913 35,436,226 35,864,857 36,306,086 36,896,293 37,497,529

Expenses Cost of sales and services 7,409,069 17,189,485 17,346,725 17,514,331 17,692,393 17,881,007 18,080,279 17,986,707 17,416,856 17,648,788 Selling expense 2,645,523 4,403,149 4,465,073 4,535,471 4,614,435 4,702,076 4,798,525 4,903,933 5,018,470 5,142,329 Administrative expense 5,963,613 10,326,417 10,494,369 10,632,358 10,794,436 10,919,115 11,109,408 9,629,904 8,539,119 8,645,960 Total expenses 16,018,205 31,919,051 32,306,167 32,682,159 33,101,263 33,502,199 33,988,211 32,520,544 30,974,445 31,437,077

Earnings before tax 4,758,418 2,722,983 2,447,253 2,200,218 2,050,649 1,934,028 1,876,646 3,785,542 5,921,847 6,060,452 Corporate income tax 414,378 544,597 489,451 440,044 410,130 386,806 375,329 757,108 1,184,369 1,212,090 Net profit (loss) 4,344,040 2,178,387 1,957,802 1,760,174 1,640,519 1,547,222 1,501,316 3,028,434 4,737,478 4,848,362



Projected statement of financial position

(THB) 2014 E 2015 F 2016 F 2017 F 2018 F 2019 F 2020 F 2021 F 2022 F 2023 F

Assets Current assets Cash and cash equivalents 7,483,442 13,666,387 20,280,491 26,671,074 32,900,869 38,988,639 45,005,868 50,583,594 55,761,456 60,962,828 Current investments 59,937,503 59,937,503 59,937,503 59,937,503 59,937,503 59,937,503 59,937,503 59,937,503 59,937,503 59,937,503 Trade and other receivables - Related business 3,201,324 3,201,324 3,201,324 3,201,324 3,201,324 3,201,324 3,201,324 3,201,324 3,201,324 3,201,324 - Other business 8,113,891 8,472,603 8,503,499 8,538,557 8,608,114 8,681,161 8,789,645 8,901,096 9,049,149 9,199,795 Inventories 5,228,253 5,228,253 5,228,253 5,228,253 5,228,253 5,228,253 5,228,253 5,228,253 5,228,253 5,228,253 Total current assets 83,964,413 90,506,070 97,151,071 103,576,710 109,876,063 116,036,880 122,162,593 127,851,771 133,177,686 138,529,703

Non-current assets Equipment 27,603,200 23,351,861 19,100,522 14,849,183 10,620,989 6,450,172 2,285,852 97,691 - - Intangible assets 73,282 33,535 - - - - - - - - Total non-current assets 27,676,482 23,385,396 19,100,522 14,849,183 10,620,989 6,450,172 2,285,852 97,691 - -

Total assets 111,640,895 113,891,466 116,251,593 118,425,893 120,497,052 122,487,052 124,448,445 127,949,462 133,177,686 138,529,703



Projected statement of financial position (cont.)

(THB) 2557 E 2558 F 2559 F 2560 F 2561 F 2562 F 2563 F 2564 F 2565 F 2566 F

Liabilities and shareholders’ equity Current liabilities Trade and other payables - Related business 111,203 111,203 111,203 111,203 111,203 111,203 111,203 111,203 111,203 111,203 - Other business 5,529,983 5,258,426 5,308,415 5,361,397 5,421,865 5,485,216 5,556,380 5,630,330 5,712,474 5,797,315 Total current liabilities 5,641,186 5,369,629 5,419,618 5,472,601 5,533,068 5,596,419 5,667,584 5,741,533 5,823,678 5,908,518

Non-current liabilities Contingent employee benefits 3,542,320 3,886,062 4,238,397 4,599,540 4,969,712 5,349,138 5,738,050 6,136,685 6,545,286 6,964,102 Total non-current liabilities 3,542,320 3,886,062 4,238,397 4,599,540 4,969,712 5,349,138 5,738,050 6,136,685 6,545,286 6,964,102

Total liabilities 9,183,506 9,255,690 9,658,014 10,072,141 10,502,780 10,945,557 11,405,634 11,878,218 12,368,963 12,872,619

Shareholders’ equity Registered - ordinary shares 5,000,000 shares @ THB 10 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 Issued and paid-up – 5,000,000 shares @ THB 10 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 Retained earnings 2,457,390 4,635,776 6,593,579 8,353,753 9,994,272 11,541,495 13,042,811 16,071,245 20,808,723 25,657,084 Total shareholders’ equity 102,457,390 104,635,776 106,593,579 108,353,753 109,994,272 111,541,495 113,042,811 116,071,245 120,808,723 125,657,084

Total liabilities and shareholders’ equity

111,640,896 113,891,467 116,251,593 118,425,894 120,497,052 122,487,052 124,448,445 127,949,463 133,177,686 138,529,704



Projected statement of cash flows

(THB) Jul–Dec 2014 E 2015 F 2016 F 2017 F 2018 F 2019 F 2020 F 2021 F 2022 F 2023 F

EBT 4,758,418 2,722,983 2,447,253 2,200,218 2,050,649 1,934,028 1,876,646 3,785,542 5,921,847 6,060,452 Plus Depreciation and amortization 2,145,543 4,291,086 4,284,874 4,251,339 4,228,194 4,170,817 4,164,320 2,188,160 97,691 - Less Corporate income tax (414,378) (544,597) (489,451) (440,044) (410,130) (386,806) (375,329) (757,108) (1,184,369) (1,212,090) Cash flows before change in working capital 6,489,583 6,469,473 6,242,676 6,011,513 5,868,714 5,718,039 5,665,637 5,216,594 4,835,169 4,848,362

Change in working capital Decrease (Increase) in trade receivables of related business

- - - - - - - - - -

Decrease (Increase) in trade receivables of other business

(2,247,332) (358,712) (30,896) (35,057) (69,558) (73,047) (108,485) (111,451) (148,053) (150,646)

Decrease (Increase) in inventories - - - - - - - - - - Increase (Decrease) in trade payables of related business

- - - - - - - - - -

Increase (Decrease) in trade payables of other business

3,157,436 (271,557) 49,989 52,983 60,467 63,351 71,165 73,949 82,145 84,840

Increase (Decrease) in contingent employee benefits 174,186 343,742 352,335 361,143 370,172 379,426 388,912 398,635 408,601 418,816 Cash flows from operating activity 7,573,873 6,182,945 6,614,104 6,390,582 6,229,796 6,087,770 6,017,229 5,577,727 5,177,862 5,201,372

Cash flows from investing activity Decrease (Increase) in current investments 12,000,000 - - - - - - - - - Decrease (Increase) in equipment (13,673,364) - - - - - - - - - Decrease (Increase) in intangible assets - - - - - - - - - - Cash flows from investing activity (1,673,364) - - - - - - - - -

Cash flows increase (decrease) 5,900,509 6,182,945 6,614,104 6,390,582 6,229,796 6,087,770 6,017,229 5,577,727 5,177,862 5,201,372



Ke = 13.40% Jul–Dec 2014 E 2015 F 2016 F 2017 F 2018 F 2019 F 2020 F 2021 F 2022 F 2023 F

Business cash flows 5,900,509 6,182,945 6,614,104 6,390,582 6,229,796 6,087,770 6,017,229 5,577,727 5,177,862 5,201,372

Terminal value - - - - - - - - 38,815,612

Total business cash flows - net 5,900,509 6,182,945 6,614,104 6,390,582 6,229,796 6,087,770 6,017,229 5,577,727 5,177,862 44,016,984



5.3 Aqua Ad Public Company Limited 5.3.1 Corporate information

Abbreviate name : AA Status : Non Listed Company Business Type : Provide rental space for advertisement board including Indoor and Outdoor

building as well as Digital advertisement board and other advertisement medias

Address : 121/69, 21st Floor RS Tower, Ratchadapisek Road Din-Daeng Bangkok 10400 Thailand

Registration number : 0107552000138 Homepage : www.aquacorp.co.th Telephone : 0-2694-8888 Fax : 0-2694-8880 Registered Capital : Baht 404,430,759 , Comprise of ordinary shares of 404,430,759 shares at

par value of Baht 1 each ( According to company’s article of association dated April 10, 2014)

Paid up Capital : Baht 404,430,759 , Comprise of ordinary shares of 404,430,759 shares at par value of Baht 1 each ( According to company’s article of association dated April 10, 2014)

5.3.2 AA’s Business overview

AA was officially established on December 6, 2000 under the name J. R. Deal Company Limited to provide rental space for advertising board, produce and install advertising medias by focusing on Out of Home Media especially Billboard. AA’s Billboard are a variety of pattern, size, installed location, technique, innovation and presentation methodology in order to serve a variety of market demand and target customers. The installed locations cover both business and community areas in both Bangkok Metropolitan and upcountry with the outstanding in every direction which enable to reach the target group. With the location and Billboard structure that safety certified by the Advertising Sign and Producing Association (ASPA), together with the type and variety of Billboard size including the quality of production and after sales service make the AA’ Billboards are well acceptable and trusted from the customers leading the company to be the leader in Billboard business. In the year 2007, one of the listed company in the Stock Exchange of Thailand was interested in acquiring AA and AA then changed its business strategy to be the one stop service medias by expanding to other types of media in order to be a leader of media provider of the country. And for the early of year 2012, Group of the company had restructured its group to support the aggressively growth of media business under the name Aqua Ad Public Company Limited and the brand “AQUA”



Currently AA has 2 main businesses which are advertising media renting service and preparing and manufacturing various types of advertisement. Usually, Aqua Ad requires its customers to use Aqua Ad’s production in producing advertising media in order to maintain its warranty.

Total amount of Billboard as of ending period.

Location 2011 2012 2013

Bangkok and Nontaburi 70 106 113 Upcountry Province 25 26 31

Total 95 132 144

Source: Aqua Ad PCL.

5.3.3 Shareholding and management structures AA

Shareholders of the Company as at (December 25, 2013)

Shareholders’ names No. of shares %

1 Aqua Corporation Public Company Limited. 299,278,748.00 74.00 2 Wattana Capital Public Company Limited. 105,151,997.00 26.00 3 Others 14.00 0.00

Total 404,430,759.00 100.00

Shareholders of the AA after AQUA sold AA’s stocks to TH

Shareholders’ names No. of shares %

1 Aqua Corporation Public Company Limited. 299,278,748.00 74.00 2 Wattana Capital Public Company Limited. 105,151,997.00 26.00 3 Others 14.00 0.00

Total 404,430,759.00 100.00

The Board of Directors as at April 10, 2014

Board of Directors’ names Positions

1 Mr. Pakorn Mongkolthada Chairman of the Board 2 Ms. Rewadee Whanchid Director

3 Ms. Orawan Lekrungruangkit Director

4 Mr. Siriwat Towachirakul Director 5 Mr. Rapeepath Saunsilphong Director

The authorized directors of the Company who can sign to bind the Company are any two of these five directors are authorized to jointly sign with the Company’s seal affixed.



The executives of the Company following Company Profile

Executives’ names Positions

1 Mr. Pakorn Mongkolthada Managing Director 2 Mr. Maitree Techaseeudom Marketing Director 3 Ms. Suwanna Sermrut Accounting and Finance Director 4 Ms. Wanee Yotpunya Operation Director

5.3.4 Operating performance and Financial status of AA

According to the Financial statement of AA ended December 31, 2011 audited by Mr. Boonlert Kaewphanpurk, Certified Public Accountant No. 4165 from BPR Audit and Advisory Co., Ltd and the Financial statement end December 31, 2012 audited by Chaovana Viwatpanachai, Certified Public Accountant No. 4712 from Office of Pitisevi Co., Ltd

For the Financial Statement of AA for the period of 6 months ended June 30, 2014 had not been audited by the certified auditor

Income Statement as at Dec. 31, 2011 / Dec. 31, 2012 / Dec. 31, 2013 and Jun. 30, 2014

Income Statement Actual

2011 % 2012 % 2013 % Jun. 30,

2014

%

REVENUES

Sales income 16.97 5.06 36.87 11.45 27.50 8.39 - -

Proceeds from services 318.54 94.94 285.16 88.55 300.34 91.61 147.18 100.00

TOTAL REVENUES 335.51 100.00 322.02 100.00 327.84 100.00 147.18 100.00

COST OF SALES AND SERVICES

Cost of sales 7.16 2.14 31.75 9.86 18.65 5.69 - -

Cost of services 179.74 53.57 143.98 44.71 145.48 44.38 87.41 59.39

TOTAL COSTS 186.90 55.71 175.73 54.57 164.13 50.07 87.41 59.39

GROSS PROFIT 148.61 44.29 146.30 45.43 163.71 49.93 59.77 40.61

EXPENSES

Selling expenses 32.31 9.63 30.69 9.53 24.62 7.51 9.11 6.19

Administrative expenses 95.68 28.52 80.95 25.14 79.36 24.21 34.13 23.19

TOTAL EXPENSES 127.99 38.15 111.64 34.67 103.99 31.72 43.24 29.38

OPERATIONS PROFIT 20.62 6.15 34.65 10.76 59.72 18.22 16.52 11.23

OTHER REVENUES 19.02 5.67 14.75 4.58 16.92 5.16 3.05 2.08

Gain on disposal of investment in

associated company 3.26 0.97 - - - - - -

Share of profit on investment in associated

company 5.14 1.53 - - - - - -



Income Statement Actual

2011 % 2012 % 2013 % Jun. 30,

2014

%

Other comprehensive income - - - - - - 0.16 0.11

Other Revenues 10.62 3.16 14.75 4.58 16.92 5.16 2.89 1.96

OTHER EXPENSES

- - - - - - -

PROFIT BEFORE FINANCE COST AND

INCOME TAX (EBIT) 39.64 11.81 49.40 15.34 76.64 23.38 19.58 13.30

Finance Cost 2.65 0.79 6.67 2.07 11.42 3.48 5.40 3.67

PROFIT BEFORE INCOME TAX (EBT) 36.99 11.02 42.73 13.27 65.22 19.89 14.18 9.63

Income tax 12.70 3.79 8.52 2.65 13.37 4.08 4.20 2.85

NET PROFIT FOR THE YEAR 24.28 7.24 34.21 10.62 51.85 15.82 9.98 6.78

Analysis of Operating performance of AA Revenue Revenue of the company comprise of renting and service revenue related to outdoor Billboard and

advertising media. In the year 2013, AA recorded net income of Baht 327.84 million, increased Baht 5.82 million or 1.81 %. Most of the incremental income came from the increasing of service revenue of Baht 15.18 million while the selling revenue decreased Baht 9.37 million and during the period of June 30, 2014 , AA recorded revenue of Baht 147.18 million

Cost of Goods Sold In the year 2013, AA recorded Cost of goods sold of Baht 164.13 million, decrease from 2012 with the

amount of Baht 11.59 million or 6.60 %. The reduction of Cost of goods sold was on the opposite way of the increasing revenue. The reduction of Cost of goods sold mostly came from the reduction of selling revenue. When comparing the Cost of goods sold per revenue, it found that year 2013 ratio was 50.07%, decreased from the year 2012 which was 54.57% and for the period of June 30, 2014, Cost of goods sold was Baht 87.41 million or 59.39% of total revenue which all of the cost was service cost

Selling and administrative expenses For the year 2013, AA recorded the selling expense of Baht 24.62 million, decreased Baht 6.07 million or

19.77 % from the year 2012. While the administrative expense recorded Baht 79.39 million, decreased Baht 1.59 million or 1.96% from previous year. The reduction of total S&A expensed Baht 7.66 million or 6.86 % came from the more efficience in controlling expense. When comparing the operating expense to total revenue, the ratio of operating expenses to total revenue for the year 2013 was 31.72%, decreased from the previous year which was 34.67 %. For the period of June 30, 2014, the total operating expense recorded Baht 43.42 million or 29.38% of total revenue.



Net Profit For the year 2013, AA showed a net profit of Baht 51.85 million, increased Baht 17.64 million or 51.55%

from previous year. The increasing of net profit came from the more increasing in revenue than the increasing in Cost of goods sold and SG&A expenses. For the period of June 30, 2014, AA recorded net profit Baht 9.98 million or 6.785 % of total revenue.

Statement of Financial Position as at Dec. 31, 2011 / Dec. 31, 2012 / Dec. 31, 2013 and Jun. 30, 2014

Statement of Financial Position

Actual

2011 % 2012 % 2013 % Jun. 30,

2014

%

CURRENT ASSETS

Cash and cash equivalents 10.64 2.04 55.79 9.01 123.77 19.00 44.19 7.20

Trade accounts and other receivable - net 123.77 23.77 113.85 18.40 91.81 14.09 104.68 17.05

Inventories - net 17.05 3.27 10.70 1.73 0.41 0.06 0.90 0.15

Short-term loan to related person 160.83 30.89 152.56 24.65 47.23 7.25 - -

Other current assets 3.33 0.64 2.21 0.36 0.14 0.02 0.18 0.03

Total current assets 315.61 60.62 335.10 54.14 263.36 40.43 149.94 24.43

NON-CURRENT ASSETS

Deposits at financial institutions pledged as collaterals 9.60 1.84 13.75 2.22 18.43 2.83 18.06 2.94

Long-term investments - - 1.00 0.16 1.00 0.15 1.00 0.16

Property, plant and equipment - net 181.83 34.92 253.61 40.98 358.29 55.00 434.14 70.73

Defered tax assets - - 10.45 1.69 5.79 0.89 5.67 0.92

Other non - current assets 13.61 2.61 4.99 0.81 4.55 0.70 4.97 0.81

Total non-current assets 205.05 39.38 283.81 45.86 388.07 59.57 463.84 75.57

TOTAL ASSETS 520.66 100.00 618.91 100.00 651.43 100.00 613.79 100.00 CURRENT LIABILITIES

Bank overdrafts - - 10.98 1.77 5.46 0.84 - - Trade accounts and other payable 44.73 8.59 37.03 5.98 34.67 5.32 30.57 4.98 Current portion of long-term loans from

financial institution 2.89 0.55 26.33 4.25 45.46 6.98 46.50 7.58 Accrued corporate income tax 1.42 0.27 0.52 0.08 1.14 0.18 0.73 0.12 Other current liabilities 1.05 0.20 0.71 0.11 0.44 0.07 0.55 0.09

Total current liabilities 50.09 9.62 75.58 12.21 87.17 13.38 78.35 12.77 NON – CURRENT LIABILITIES

Long-term loans from financial institution - net 23.60 4.53 83.21 13.45 95.23 14.62 71.87 11.71

Employee benefit obligations 3.87 0.74 4.61 0.74 1.18 0.18 2.20 0.36



Statement of Financial Position

Actual

2011 % 2012 % 2013 % Jun. 30,

2014

%

Provision debt for demolition billboard 13.35 2.56 14.87 2.40 17.61 2.70 19.35 3.15 Total non-current liabilities 40.82 7.84 102.69 16.59 114.02 17.50 93.42 15.22

TOTAL LIABILITIES 90.91 17.46 178.27 28.80 201.19 30.88 171.77 27.99 SHAREHOLDERS' EQUITY

Share capital

Registered Capital 404.43 77.68 404.43 65.35 404.43 62.08 404.43 65.89

Paid up Capital 404.43 77.68 404.43 65.35 404.43 62.08 404.43 65.89 Retained earnings (Deficit)

Appropriated 7.60 1.46 9.45 1.53 11.84 1.82 12.80 2.09

Non-appropriated 13.20 2.53 22.06 3.56 29.47 4.52 24.78 4.04 Non-controlling interests 4.52 0.87 4.70 0.76 4.51 0.69 - -

Total shareholders' equity 429.75 82.54 440.64 71.20 450.24 69.12 442.02 72.01 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 520.66 100.00 618.91 100.00 651.43 100.00 613.79 100.00

Analysis of Financial status of AA Assets As at the end 2013, AA had total assets of Baht 651.43 million, increased Baht 32.52 million or 5.25% from

previous year. The increasing of assets mainly came from the increase in cash and cash equivalent. As at the end 2013, AA had cash and cash equivalent of Baht 123.77 million, increased Baht 67.93 million or 121.86 % from previous year. The next increasing of assets was the increase of Land, Building and equipment. As at the end 2013, AA had Land, Building and Equipment of Baht 253.67 million, increased Baht 104.68 million or 41.28%. As at June 30, 2014, AA had total assets of Baht 613.79 million which 70.73% of total assets was Land, Building and Equipment while the 17.05% of total assets was net -trade receivable and other receivables

Liabilities As at the end 2013, AA had total liabilities Baht 201.19 million, increased Baht 22.92 million or 12.86%

from previous year. Most of the liabilities were long term loan from financial institution which accounted for 21.60% of total assets, increased 17.70% from previous year. At June 30.2014, AA had total liabilities Baht 171.77 million which most of those liabilities were long term loan form financial institution with the amount of Baht 118.37 million or 19.29% of total assets.

Shareholders’ equity As at the end 2013, AA had shareholders’ equity of Baht 450.24 million , increased Baht 9.60 million or

2.18% from previous year due to the retained earning for the year 2013 of Baht 41.30 million , increased Baht 9.79



million or 31.08% from previous year. For the end of June 30, 2014, AA had shareholders’ equity of Baht 442.02 million or 72.01 % of total assets.

Financial Ratio of AA

Financial Ratio Unit

Actual

2011 2012 2013 Jun. 30,

2014

Liquidity ratios


2. Acid-test ratio (Quick ratio) times 5.96 4.29 3.02 1.90

Activity ratios (Efficiency Ratios)

1. Asset turnover ratio times 0.64 0.52 0.50 0.24

2. Fixed-Asset turnover ratio times 1.85 1.27 0.92 0.34

3. Receivables turnover ratio times 2.71 2.83 3.57 1.41

4. Receivables conversion period days 134.65 129.04 102.22 128.74

5. Payables turnover ratio times 4.18 4.75 4.73 2.86

6. Payables conversion period days 87.36 76.91 77.11 63.31

7. Inventory turnover ratio times 10.96 16.43 404.59 97.63

8. Inventory conversion period days 33.29 22.22 0.90 1.85



2. Operating profit margin % 6.15 10.76 18.22 11.23

3. Net profit margin % 7.24 10.62 15.82 6.78

4. Return on assets % 4.66 5.53 7.96 1.63

5. Return on fixed-assets % 13.35 13.49 14.47 2.30

6. Return on equity % 5.65 7.76 11.52 2.26

Capital Structure Analysis Ratios

1. Debt ratio times 0.17 0.29 0.31 0.28

2. Debt to equity ratio times 0.21 0.40 0.45 0.39

3. Registered capital to total asset ratio % 77.68 65.35 62.08 65.89

4. Paid up capital to total asset ratio % 77.68 65.35 62.08 65.89

5. Equity to total asset ratio % 82.54 71.20 69.12 72.01

6. Interest coverage ratio times 14.94 7.41 6.71 3.62

7. Long term debt to total asset ratio % 5.09 17.70 21.60 19.28

Others Ratio

1. Total revenue escalation % - (4.02) 1.81 -

2. Net profit escalation % - 40.91 51.55 -

3. Total assets escalation % - 18.87 5.25 -



Liquidity analysis The purpose of liquidity analysis is to analyze the capability to repay short term debt, for the year 2013, AA

had the current ratio at 3.02 decreased from the previous year which was 4.43 or decreased by 1.41. According the current ratio, AA was considered as a high capability to repay short term debt which most of the assets are cash and cash equivalent totaling Baht 123.77 million. When considering the quick ratio (not include inventory), the quick ratio was closed to current ratio.

Operating performance analysis The purpose of operating performance analysis is to analyze how efficiency in using the asset to generate

income. In the year 2013, AA recorded the asset turnover ratio at 0.50, decreased from previous year which was 0.52. This is considered a low utilization of assets. For the account receivable turnover, AA had an improvement of collecting management which the ratio had increased from 2.83 in the year 2012 to 3.57 in the year 2013 or equivalent to 130 days and 103 days respectively. However the efficiency in collecting debt was not in line with the payment period as it showed in the year 2013, AA had a payment period of 78 days which were shorter than the collecting period.

Profit analysis For the year 2013, AA had operating margin of 18.22%, increased from previous year which was 10.76%

due to the increasing of service revenue. As a result of that the net profit of the year 2013 was 15.82%, increased from previous year which was only 10.62%. Considering of the return on asset and return on equity, year 2013, AA had utilize its assets and equity to generate net profit of 5.53% and 7.76% respectively in line with the increasing of net profit.

Financing policy analysis The purpose of financing policy analysis is to analyze the proportion of financing in order to know the

company‘s direction for fund raising and capability to repay interest. In the year 2102 and 2103, AA’s debt to assets ratio was 0.29 and 0.31 respectively. While the Equity to Total assets ratio was 71.20 and 69.12 respectively. When considering the debt to equity ratio, it was 0.40 and 0.45 respectively. This means that company’s capital structure was mainly came from the equity. Most of the debt of AA belonged to Account payable and long term loan from financial institution. When considering the debt service capability, AA had a high capability to repay debt as it showed the ratio of debt service at 7.41 and 6.71 for the year 2102 and 2013 respectively.

Growth analysis For the year 2013, AA’s revenue growth and net profit growth were in the same direction with the growth

rate at 1.81% and 51.55% respectively. While the total assets growth was decreased from 18.87% for the year 2102 to 5.25% for the year 2013.



5.3.5 FINANCIAL PROJECTIONS OF AA Projected statement of income

Jul. – Dec. 2014

2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

REVENUES Sales income - - - - - - - - - - Proceeds from services 159,163,836 331,582,950 358,580,722 387,449,315 418,308,314 451,284,591 486,512,724 524,135,459 564,304,186 607,179,447 Other revenues 5,821,848 6,631,659 7,171,614 7,748,986 8,366,166 9,025,692 9,730,254 10,482,709 11,286,084 12,143,589 TOTAL REVENUES 164,985,685 338,214,609 365,752,337 395,198,301 426,674,481 460,310,283 496,242,979 534,618,169 575,590,270 619,323,036

EXPENSES Cost of sales - - - - - - - - - - Cost of services 67,861,766 162,982,622 172,890,394 183,435,864 194,658,722 206,601,050 219,307,461 232,825,250 217,160,084 209,359,222 Selling expenses 13,863,188 24,868,721 26,893,554 29,058,699 31,373,124 33,846,344 36,488,454 39,310,159 42,322,814 45,538,459 Administrative expenses 45,414,832 75,774,183 78,574,920 79,995,019 84,650,322 87,560,192 90,445,159 91,913,996 96,701,442 99,714,253 TOTAL EXPENSES 127,139,786 263,625,526 278,358,868 292,489,582 310,682,168 328,007,586 346,241,074 364,049,406 356,184,340 354,611,933

PROFIT BEFORE FINANCE COST AND INCOME TAX (EBIT) 37,845,899 74,589,083 87,393,469 102,708,719 115,992,312 132,302,697 150,001,905 170,568,763 219,405,930 264,711,103 Finance Cost (3,611,115) (4,395,497) (1,255,505) - - - - - - - PROFIT BEFORE INCOME TAX (EBT) 34,234,784 70,193,585 86,137,964 102,708,719 115,992,312 132,302,697 150,001,905 170,568,763 219,405,930 264,711,103 Income tax (6,017,033) (10,985,841) (14,038,717) (17,227,593) (20,541,744) (23,198,462) (26,460,539) (30,000,381) (34,113,753) (43,881,186) NET PROFIT FOR THE YEAR 28,217,751 59,207,744 72,099,247 85,481,126 95,450,569 109,104,234 123,541,366 140,568,382 185,292,177 220,829,917



Projected statement of financial position

2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

ASSETS CURRENT ASSETS Cash and cash equivalents 62,940,637 113,801,123 178,155,257 298,828,779 432,523,156 580,198,436 742,619,588 922,072,853 1,116,967,827 1,324,207,725 Trade accounts and other receivable - net 109,108,567 118,098,037 127,713,682 137,995,646 148,986,523 160,731,498 173,278,505 186,678,383 200,985,053 216,255,694 Inventories - net 1,377,066 1,491,041 1,612,972 1,743,368 1,882,771 2,031,756 2,190,933 2,360,947 2,542,486 2,736,277 Short-term loan to related person - - - - - - - - - - Other current assets 177,327 177,327 177,327 177,327 177,327 177,327 177,327 177,327 177,327 177,327 Total current assets 173,603,598 233,567,529 307,659,238 438,745,120 583,569,778 743,139,018 918,266,352 1,111,289,511 1,320,672,694 1,543,377,023

NON-CURRENT ASSETS Deposits at financial institutions pledged as

collaterals 18,063,713 18,063,713 18,063,713 18,063,713 18,063,713 18,063,713 18,063,713 18,063,713 18,063,713 18,063,713 Investment in associated company - - - - - - - - - - Long-term investments 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 Advance payment for share subscription -

net - - - - - - - - - - Property, plant and equipment - net 412,619,501 369,557,937 325,339,265 279,925,646 233,295,708 185,427,541 136,638,692 86,906,142 66,250,766 67,698,726 Derfered tax assets 5,673,740 5,673,740 5,673,740 5,673,740 5,673,740 5,673,740 5,673,740 5,673,740 5,673,740 5,673,740 Other non - current assets 4,956,935 4,933,435 4,920,662 4,920,662 4,920,662 4,920,662 4,920,662 4,920,662 4,920,662 4,920,662 Total non-current assets 442,313,889 399,228,825 354,997,379 309,583,760 262,953,822 215,085,656 166,296,806 116,564,256 95,908,880 97,356,840

TOTAL ASSETS 615,917,486 632,796,353 662,656,617 748,328,880 846,523,600 958,224,673 1,084,563,158 1,227,853,767 1,416,581,574 1,640,733,863



Projected statement of financial position (Continue)

2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES Bank overdrafts - - - - - - - - - - Trade accounts and other payable 31,808,137 34,204,597 36,393,840 38,477,032 41,221,183 43,818,022 46,615,141 49,337,368 52,772,997 56,095,370 Current portion of long-term loans from

financial institution 54,641,650 36,403,968 - - - - - - - - Short-term loan to related person - - - - - - - - - - Accrued corporate income tax 732,071 732,071 732,071 732,071 732,071 732,071 732,071 732,071 732,071 732,071 Other current liabilities 545,760 545,760 545,760 545,760 545,760 545,760 545,760 545,760 545,760 545,760 Total current liabilities 87,727,618 71,886,396 37,671,671 39,754,863 42,499,014 45,095,853 47,892,973 50,615,199 54,050,829 57,373,201 NON – CURRENT LIABILITIES Long-term loans from financial institution - net 36,403,968 9,916,314 1,892,055 - - - - - - - Employee benefit obligations 2,203,001 2,203,001 2,203,001 2,203,001 2,203,001 2,203,001 2,203,001 2,203,001 2,203,001 2,203,001 Provision debt for demolition billboard 19,347,039 19,347,039 19,347,039 19,347,039 19,347,039 19,347,039 19,347,039 19,347,039 19,347,039 19,347,039 Total non-current liabilities 57,954,008 31,466,354 23,442,095 21,550,040 21,550,040 21,550,040 21,550,040 21,550,040 21,550,040 21,550,040

TOTAL LIABILITIES 145,681,626 103,352,749 61,113,766 61,304,903 64,049,054 66,645,893 69,443,013 72,165,239 75,600,869 78,923,241

SHAREHOLDERS' EQUITY Registered capital Ordinary shares of 404,430,759 shares at

par value of Baht 1.00 per share 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 Paid up capital Ordinary shares of 404,430,759 shares at

par value of Baht 1.00 per share 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 404,430,759 Retained earnings (Deficit)



2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Legal reserves 14,074,493 17,034,881 20,639,843 24,913,899 29,686,428 35,141,639 40,443,076 40,443,076 40,443,076 40,443,076 Non-appropriated 51,730,608 107,977,964 176,472,249 257,679,319 348,357,359 452,006,382 570,246,311 710,814,693 896,106,870 1,116,936,787

Total equity of the parent company 470,235,860 529,443,604 601,542,851 687,023,977 782,474,546 891,578,780 1,015,120,146 1,155,688,528 1,340,980,705 1,561,810,622 Non-controlling interests - - - - - - - - - - Total shareholders' equity 470,235,860 529,443,604 601,542,851 687,023,977 782,474,546 891,578,780 1,015,120,146 1,155,688,528 1,340,980,705 1,561,810,622

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 615,917,486 632,796,353 662,656,617 748,328,880 846,523,600 958,224,673 1,084,563,158 1,227,853,767 1,416,581,574 1,640,733,863



Projected statement of cash flows

Jul. – Dec. 2014

2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

CASH FLOWS FROM OPERATING ACTIVITIES Profit before finance cost and income tax (EBIT) 37,845,899 74,589,083 87,393,469 102,708,719 115,992,312 132,302,697 150,001,905 170,568,763 219,405,930 264,711,103 Depreciation and amortization expense 27,829,213 55,547,564 56,963,008 58,420,970 59,919,974 61,447,952 62,665,630 63,913,751 35,148,606 13,365,101 Income tax (6,017,033) (10,985,841) (14,038,717) (17,227,593) (20,541,744) (23,198,462) (26,460,539) (30,000,381) (34,113,753) (43,881,186) Profit (loss) from operating activities before change in operating assets and liabilities 59,658,079 119,150,805 130,317,760 143,902,096 155,370,542 170,552,187 186,206,996 204,482,132 220,440,784 234,195,018

Change in operating assets and liabilities Decrease (Increase) Trade accounts and other receivable (4,427,684) (8,989,469) (9,615,645) (10,281,964) (10,990,877) (11,744,975) (12,547,006) (13,399,878) (14,306,670) (15,270,641) Decrease (Increase) Inventories - net (481,724) (113,976) (121,930) (130,396) (139,403) (148,985) (159,177) (170,015) (181,539) (193,791) Decrease (Increase) Other current assets - - - - - - - - - - Decrease (Increase) Defered tax assets - - - - - - - - - - Decrease (Increase) Other non - current assets - - - - - - - - - - Increase (Decrease) Trade accounts and other payable 1,233,532 2,396,459 2,189,243 2,083,192 2,744,151 2,596,839 2,797,119 2,722,227 3,435,629 3,322,372 Increase (Decrease) Accrued corporate income tax - - - - - - - - - - Increase (Decrease) Other current liabilities - - - - - - - - - - Increase (Decrease) Employee benefit obligations - - - - - - - - - - Increase (Decrease) Provision debt for demolition billboard - - - - - - - - - - Cash provided (used in) by operating activities 55,982,202 112,443,819 122,769,428 135,572,928 146,984,413 161,255,066 176,297,933 193,634,466 209,388,204 222,052,959

CASH FLOWS FROM INVESTING ACTIVITIES Cash receive (paid) from change in Short-term loan to related person - - - - - - - - - -



Jul. – Dec. 2014

2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Decrease (Increase) Deposits at financial institutions pledged as collaterals - - - - - - - - - - Cash received for disposal of investment in associated company - - - - - - - - - - Cash received for disposal of long-term investment - - - - - - - - - - Cash received (paid) for disposal of fixed assets (6,300,000) (12,462,500) (12,731,563) (13,007,352) (13,290,035) (13,579,786) (13,876,781) (14,181,200) (14,493,230) (14,813,061) Net cash provided (used in) by investing activities (6,300,000) (12,462,500) (12,731,563) (13,007,352) (13,290,035) (13,579,786) (13,876,781) (14,181,200) (14,493,230) (14,813,061)

CASH FLOWS FROM FINANCING ACTIVITIES Interest expense (3,611,115) (4,395,497) (1,255,505) - - - - - - - Bank overdrafts increase (decrease) - - - - - - - - - - Short-term loans from Subsidiary - - - - - - - - - - Long-term loan from financial institution increase (decrease) (27,320,825) (44,725,336) (44,428,227) (1,892,055) - - - - - - Net cash provided (used in) by financing activities (30,931,940) (49,120,833) (45,683,731) (1,892,055) - - - - - -

Net cash and cash equivalent increase (decrease) 18,750,263 50,860,486 64,354,134 120,673,522 133,694,378 147,675,280 162,421,152 179,453,265 194,894,974 207,239,898

WACC = 11.82% Jan. – Jun.

2014 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F

Free cash flow to firm 49,682,202 99,981,319 110,037,865 122,565,576 133,694,378 147,675,280 162,421,152 179,453,265 194,894,974 207,239,898 Terminal Value

- - - - - - - - 1,906,899,566

Net free cash flow to firm 49,682,202 99,981,319 110,037,865 122,565,576 133,694,378 147,675,280 162,421,152 179,453,265 194,894,974 2,114,139,464

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