2.12 Financial Status and Performance

(1) Financial Statement: Summary of the Company’s financial status and
    its operations for the past 3 years

  (a) Independent Auditor

In the years 2003, 2004, and 2005, the company has appointed Ernst &
Young Office Limited as an independent auditor. The auditing team
consists of

Miss Rungnapa Lertsuwankul CPA No.3516

Mr. Ruth Chaowangawi CPA No.3247

Mr. Sophon Permsirivallop CPA No.3182

(b) Report of Independent Auditor

  For the past 3 years, the company’s financial statements had been
  given an unqualified opinion from the Independent Auditor every year.

  Table below summarizes the Company and consolidated Financial
  Statement. (Unit : Baht)

+--------------------------------+--------+--------+--------+--------+
| Consolidated                   | 2002   | 2003   | 2004   | 2005   |
+--------------------------------+--------+--------+--------+--------+
| Financial Status               |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Cash and cash equivalents      | 228,1  | 309,0  | 198,8  | 617,7  |
|                                | 02,294 | 65,845 | 62,468 | 73,939 |
+--------------------------------+--------+--------+--------+--------+
| Long-term deposits at          | 24,2   | 39,2   | 64,5   | 53,3   |
| financial institutions         | 64,000 | 64,080 | 46,388 | 97,296 |
+--------------------------------+--------+--------+--------+--------+
| Net investment on securities   | 207,6  | 276,8  | 43,5   | 33,5   |
|                                | 95,233 | 84,137 | 54,908 | 02,910 |
+--------------------------------+--------+--------+--------+--------+
| Trading transact               | 25,1   | 16,5   | 16,6   | 77,0   |
| ions with securities companies | 00,775 | 50,374 | 05,531 | 53,199 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business            | 563,1  | 1      | 680,8  | 429,3  |
| Receivables and Accrued        | 43,106 | ,045,4 | 62,117 | 39,338 |
| Interest Receivables           |        | 71,236 |        |        |
+--------------------------------+--------+--------+--------+--------+
| A                              | (25,87 | (23,20 | (5,22  | (9,73  |
| llowance for Doubtful Accounts | 2,263) | 6,676) | 5,357) | 7,050) |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business        | 537,2  | 1,0    | 675,6  | 419,6  |
| Receivable and Accrued         | 70,843 | 22,560 | 36,760 | 02,288 |
| Interest Receivables           |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Total Assets                   | 1      | 1      | 1      | 1      |
|                                | ,097,9 | ,731,1 | ,075,9 | ,289,1 |
|                                | 16,079 | 83,838 | 69,044 | 51,376 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Payable    | 418,0  | 694,9  | 128,5  | 202,7  |
|                                | 66,862 | 81,465 | 98,657 | 65,003 |
+--------------------------------+--------+--------+--------+--------+
| Total Liabilities              | 479,5  | 853,1  | 188,7  | 242,7  |
|                                | 59,096 | 74,749 | 14,045 | 22,735 |
+--------------------------------+--------+--------+--------+--------+
| Paid-up shares capital         | 537,0  | 580,6  | 618,5  | 844,0  |
|                                | 07,480 | 06,380 | 26,880 | 83,520 |
+--------------------------------+--------+--------+--------+--------+
| Retained earning (loss)        | 30,0   | 234,8  | 200,6  | 136,6  |
|                                | 49,035 | 50,248 | 91,863 | 91,556 |
+--------------------------------+--------+--------+--------+--------+
| Shareholders Equity            | 618,3  | 878,0  | 887,2  | 1      |
|                                | 56,983 | 09,089 | 54,999 | ,046,4 |
|                                |        |        |        | 28,641 |
+--------------------------------+--------+--------+--------+--------+
| Operation Results              |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Income     | 313,7  | 624,9  | 397,2  | 300,5  |
|                                | 10,325 | 99,321 | 60,957 | 41,851 |
+--------------------------------+--------+--------+--------+--------+
| Securities Business Expenses   | 1,9    | 3,8    | 4,2    | 16,9   |
|                                | 84,594 | 59,195 | 41,879 | 62,939 |
+--------------------------------+--------+--------+--------+--------+
| Bad debt and doubtful accounts | (2,54  | 7      | 6,3    | 7,2    |
|                                | 9,540) | 00,000 | 18,350 | 23,392 |
+--------------------------------+--------+--------+--------+--------+
| Net Securities Business Income | 309,1  | 621,8  | 399,3  | 276,3  |
| after bad debts and doubtful   | 76,191 | 40,126 | 36,428 | 55,520 |
| accounts                       |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
| Other Income                   | 1,0    | 8      | 5      | 7      |
|                                | 28,075 | 87,766 | 42,809 | 72,216 |
+--------------------------------+--------+--------+--------+--------+
| Operating Expenses             | 221,4  | 359,7  | 318,1  | 219,2  |
|                                | 70,055 | 98,935 | 74,379 | 38,185 |
+--------------------------------+--------+--------+--------+--------+
| Net Profit (Loss)              | 85,9   | 215,5  | 61,2   | (16,28 |
|                                | 62,087 | 80,224 | 01,945 | 2,490) |
+--------------------------------+--------+--------+--------+--------+
| Basic Earnings (Loss) per      | 0.97   | 1.98   | 0.50   | (0.12) |
| share                          |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+
|                                |        |        |        |        |
+--------------------------------+--------+--------+--------+--------+

Remark : The weighted average number of ordinary shares is 135,862,638
shares.

(c) Significant Financial Ratio which reflects the Company’s financial
Status and Securities Business Operation Results.

 Unit : Percentage

+--------------+----+----+-------+----+----+-------+-------+-------+
|              | F  |    |       | 20 |    | 2003  | 2004  | 2005  |
|              | in |    |       | 02 |    |       |       |       |
|              | an |    |       |    |    |       |       |       |
|              | ci |    |       |    |    |       |       |       |
|              | al |    |       |    |    |       |       |       |
|              | R  |    |       |    |    |       |       |       |
|              | at |    |       |    |    |       |       |       |
|              | io |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Profita      |    |    |       |    |    |       |       |       |
| bility Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Gross Profit |    |    |       | 9  |    | 99.27 | 98.93 | 94.35 |
| Margin       |    |    |       | 9. |    |       |       |       |
|              |    |    |       | 36 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Profit   |    |    |       | 2  |    | 34.49 | 15.41 | (     |
| Margin       |    |    |       | 7. |    |       |       | 5.40) |
|              |    |    |       | 40 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | 2  |    | 28.81 | 6.93  | (     |
| Equity       |    |    |       | 0. |    |       |       | 1.68) |
|              |    |    |       | 23 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    | .  |       | 4. |    | 15.62 | (     | (1    |
| Investment   |    |    |       | 21 |    |       | 4.10) | 5.37) |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Effi         |    |    |       |    |    |       |       |       |
| ciency Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | 1  |    | 15.24 | 4.39  | (     |
| Assets       |    |    |       | 1. |    |       |       | 1.37) |
|              |    |    |       | 37 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Fin          |    |    |       |    |    |       |       |       |
| ancial Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Liquid       |    |    |       |    | 7  | 36.11 | 22.04 | 52.06 |
| Assets to    |    |    |       |    | 1. |       |       |       |
| Total Assets |    |    |       |    | 93 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Performing   |    |    |       |    | 8  | 78.65 | 70.55 | 41.10 |
| Assets to    |    |    |       |    | 2. |       |       |       |
| Total Assets |    |    |       |    | 44 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Debt to      |    |    |       |    | 0. | 0.97  | 0.21  | 0.23  |
| Equity Ratio |    |    |       |    | 77 |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Other Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net          |    |    |       |    | 1  | 15.99 | 4.04  | 2.59  |
| Investment   |    |    |       |    | 8. |       |       |       |
| in           |    |    |       |    | 91 |       |       |       |
| Securities   |    |    |       |    |    |       |       |       |
| to total     |    |    |       |    |    |       |       |       |
| Assets Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Liquid   |    |    |       |    | 13 | 1     | 5     | 4     |
| Capital to   |    |    |       |    | 3. | 45.90 | 10.85 | 91.01 |
| Total        |    |    |       |    | 85 |       |       |       |
| Liabilities  |    |    |       |    |    |       |       |       |
|              |    |    |       |    |    |       |       |       |
| (based on    |    |    |       |    |    |       |       |       |
| SEC’s Net    |    |    |       |    |    |       |       |       |
| Capital      |    |    |       |    |    |       |       |       |
| Rules)       |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+

(2) Management Discussion and Analysis on Consolidated Financial
Statements

1.  Operation Overview During the Past Year

Although securities trading in the stock exchange constantly expanded
throughout the year, together with a fierce competition in the
securities business, the Company’s brokerage incomes subsequently
declined from Baht 334 million in 2004 to Baht 251 million last year.
However, the Company still enjoyed incomes from other fees and services,
interest incomes and dividends despite suffering loss from the
securities trading. This resulted in its net loss of Baht 16.28 million
in 2005 compared to the net profit of Baht 61.2 million in 2004.

2.  Operation Results

Incomes from Securities Business

In 2005, the Company’s brokerage incomes and other service and fee-based
incomes fell from 2004. The firm also suffered loss from its securities
trading portfolio. Yet, its interest incomes rose and it also enjoyed
profits from the sales of its investment in a subsidiary company. The
brokerage income was Baht 251 million while the service income was Baht
21 million. The portfolio loss accounted for Baht 5 million while the
interest income stood at Baht 33 million and a sale of its investment in
the subsidiary company netted the firm Baht 200,000. Its total income
was Baht 301.31 million or a decline by 24.25 per cent from the previous
year.

Expenses in Securities Business

Expenses in the securities business which consist of borrowing expenses
and service fees remained low as usual since the Company had neither
liabilities nor loans. At the same time, service fee expenses were
mainly based on trading volumes in the stock exchange.

Bad Debts and Doubtful Accounts

By way of the Risk Management Control policy, customers are carefully
screened and settlement period is strictly controlled. Therefore, in
2005, the bad debts and doubtful accounts were Baht 7.2 million.

Operating Expenses

In 2005, operating expenses fell as staff expenses, marketing expenses
and director’s remunerations fell while there was an increase in
renovation expense. The total operating expenses were Baht 291 million
or a 4-per cent decline from 2004.

Net Profit(Loss)

As a high proportion of the Company’s incomes was derived from its
securities brokerage business, although it had a policy to expand into
other businesses such as financial advisory, debt instrument trading and
debt instrument investment, this still dragged the Company’s securities
brokerage income down and therefore caused a net loss of Baht 16 million
in 2005 from the net profit of Baht 61 million in 2004.

  3. Financial Status

Total Assets

In 2005, the Company recorded a total asset of Baht 1,289 million, an
increase of 20% from the year 2004, where it was still able to maintain
cash flow and investment fund at an appropriate and controlled level.

Investment in Securities

In 2004, the Company reduced its investment in securities where net
temporary investment was Baht 25.6 million and net long-term investment
was at Baht 7.8 million total of which was Baht 33.5 million or a
decrease of 23% from the year 2004.

Securities Business Receivables and Accrued Interest Receivables

Securities Business Receivables and Accrued Interest Receivables had
dropped from 680 million Baht in the year 2004 to 429 million Baht in
2005. Such receivables were the securities business receivables which
were overdue for payment for over 6 months together with the installment
receivables for the total of 20 million Baht which the Company had
already set a full amount on allowance for doubtful accounts and in
which were under legal proceedings. The rest amount of securities
business receivables accounts would depend on the trading volume of the
Company as they were the overdue cash customers accounts which would be
settled on the third working day after trading date.

The policy on allowance for doubtful debts for the normal securities
business receivables within 3 days settlement was set according to the
amount which were expected to be uncollectable by setting aside the
allowance for doubtful debts every month at 100% of the debts not fully
covered by collaterals otherwise such allowance will not be necessary.

Borrowings

The Company has had no borrowings since the year 2001. The Company’s
capital was increased through the conversion of warrants periodically.

Liquidity

The net cash flow in the year 2005 increased 418 million Baht resulted
from operations for 277 million Baht, cash received from converted
warrants to ordinary shares 255 million Baht and dividend payment of 49
million Baht while cash investment was about 38 million Baht.

Sources of Capital

In 2005. the Company had raised its capital for about 225.5 million Baht
which arisen from the conversion of warrant to ordinary shares and the
amount was spent on the Company’s working capital.

The Net Capital ratio of the Company as at 31 December, 2005 was 491.01%
which was considerably higher than the 7% minimum rate regulated by SEC.

4. Significant Factors that influence the Future Operations and
Financial Status

The significant factors that may have an influence on the company’s
future operation and financial status are the stability of Thai
Economics and the political stability which will not only have much
impact on the investment decision of the investors but also on the
volume of the stock market as a whole. And while the competition in
securities business is still fierce, all factors abovementioned may also
have considerable influence on the profit and financial status of the
company.

The company has realized on such problems and has prepared to expand its
business to Investment Banking Business, investment in financial
instrument especially debts instrument and to the securities
underwriting business in order to earn sufficient income to continue to
grow in this field of business.

(3) Auditor’s Remunerations

  From the past fiscal year, the Company and its subsidiaries had paid
  the following fees:

1.  Audit fee :

  The Company paid Bt 560,000

  United Advisory Services Co., Ltd. paid Bt 100,000

  Siam Chaisri Co., Ltd. paid Bt 60,000

3.2 Non-audit fee : was amounted to Bt 6,632