2.3 Business Characteristics of each Undertaking

(1) Business Characteristics

The characteristics of each of the Company’s business are classified as
follows:

Securities Broker Business

Market share value of the Company for the past 3 years from 2005 to 2007
are shown in the table below:

Table of Market Share Value

  --------------------------------- ------------ ------------ ------------
  Securities Trading Volume         2005         2006         2007

  SET (Million Baht)                4,067,181    3,983,676    4,271,819

  US (Million Baht)                 100,529      79,273       69,890

  US Market share (%)               1.24%        0.99%        0.82%
  --------------------------------- ------------ ------------ ------------

Source: SET Market Analysis and Reporting Tool (Setsmart)

New Securities Customer Policy

It is the Company’s policy to welcome all types of customer both retail
and institutional which consists of domestics as well as foreigners. At
present, however, most of our customers are retail customers and we have
set up the screening of new customers policy according to the rules and
regulations of the SEC and the SET while focusing on minimizing the
Company‘s risk. In addition, the Company also has the policy not to open
an account or to do any business with the customer or its ultimate
beneficial owner or its ultimate controlling person who violate or
co-operate in the violation of the Anti-Money Laundering Act including
those customers who refuse to supply significant information or
documents so that the Company is not able to identify their true
identity. This is to prevent the Company from being the channel of money
laundering or to unknowingly give the financial support to the terrorist
which is in compliance to the SEC’s notification and to comply to the
Anti-Money Laundering Act.

Loan for Securities Trading Policy

Since 26 June, 2002, the Company has provided loan to customers in form
of Credit Balance under Credit Balance Financing project. The amount of
credit line has been set up in relation to the securities types which
have different degrees of risk in which will be announced occasionally
as appropriate. The Company will set up the list of securities which are
qualified to be put as collaterals. Followings are the policies to be
considered before granting Credit Balance to customers:

1. Marketing staff should know their customers in person so that they
can evaluate the investment objectives, financial position or
limitations as well as the basic investment knowledge of their customers
clearly.

2. Determine appropriate maximum limit of credit line of each customer
under a certain period of time. The Credit Balance Line and the credit
line for stock borrowings for short sale should be approved under one
maximum total credit line for the same customers.

3. Disclose the relationships between marketing staff and the customers
or between the Company and the customers to notify the Company’s
compliance to the Code of Ethics like that of a professional company,
and which is considered to be a provision in the Compliance manual to be
strictly obeyed.

4. Approved authority of the credit line is dependant on the Executive
Board.

5. The marketing staff have to certify that the person who makes the
buying and selling decision is the eligible person and not a nominee and
that the payment should be settled by that particular person. The
Company is therefore, forbidden to approve any credit line to the
nominee of other persons intentionally or unintentionally.

6. In opening a securities trading account, the customers have to make
deposit in cash first before trading can be made at the amount not less
than the initial margin regulated by the Stock Exchange of Thailand (at
present it is 50%).

7. The Company is forbidden to approve for any margin on securities
trading to the customers exceeding their purchasing limit during a
certain period.

8. Purchases exceeding the purchasing limit can be allowed only if the
customers increase their collaterals amount, either by cash or
securities, to the amount not less than the initial margin of the
exceeded volume purchased before purchasing can be done.

9. The Company will set up the marginable list of securities (including
those right offering shares of the listed companies), initial margin
rate, maintenance margin rate and the minimum requirement rate for each
securities in writing at least once a month.

10. In case the customers’ equity falls below that of the Maintenance
Margin, written notice will be sent to inform them to fill in the
collateral on the next working day so that the customers’ equity is not
lower than the Maintenance Margin.

11. In case the equity of any customer has decreased to be equivalent to
or lower than the minimum requirement value, then the Operations
Department will have to force sell on the next working day so that the
equity of the customer rises to the minimum requirement value.

12. Interest on margin loan should be charged to the customers and the
Company will also pay interest to the customers calculated on
collaterals remaining in their margin loan account base on the daily
outstanding amount under the agreed rate. The settlement of interest
will be done by adjusting the margin level of each customer at least
once a month.

13. Report on the outstanding balance and monthly interest settlement on
margin loan account will be sent to inform the customers at least once a
month.

Moreover, the risk control criteria of the loan for securities trading
concentrating on only a particular security was set up by the Risk
Management Committee and which the Risk Control Dept. will be
responsible for the monitoring of such risk.

Securities Trading Credit Line Approval Policy

The Company has set up the securities trading credit line approval
authority for new customers and the review of the credit line (which
already includes all types of accounts for each customer), the net
settlement approval (per client), the changing of order (per
transaction) and the transferring of error into the Company’s portfolio
(per transaction) by appointing the authorized signers as showed in
Table No. 1 which was reviewed and updated effective 9 July, 2007. And
updated the short sell approval line effective 7 August, 2007 as showed
in Table No. 2 below :

Table 1

[]

Table 2 The Approval Line for Short Sell Transactions

Marketing staff should get approval for their customers’ short sell
transactions from the authorized signers showed in the table below :

+-----------------+----------+---------+---------+---------+---------+
| Position        | not      | not     | not     | not     | ex      |
|                 | e        | ex      | ex      | ex      | ceeding |
|                 | xceeding | ceeding | ceeding | ceeding | 20 MN   |
|                 | 5 MN     | 10      | 15 MN   | 20 MN   |         |
|                 |          |         |         |         |         |
|                 |          | MN      |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Manager /       |         | *       | *       | *       | *       |
|                 |          |         |         |         |         |
| Assistant Vice  |          |         |         |         |         |
| President       |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Vice President  |         | *       | *       | *       | *       |
| /               |          |         |         |         |         |
|                 |          |         |         |         |         |
| Senior Vice     |          |         |         |         |         |
| President       |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Executive Vice  |         |        | *       | *       | *       |
| President /     |          |         |         |         |         |
|                 |          |         |         |         |         |
| First Executive |          |         |         |         |         |
| Vice President  |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Senior          |         |        |        | *       | Co-a    |
| Executive Vice  |          |         |         |         | pproval |
| President       |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Executive       |         |        |        |        |         |
| Director -      |          |         |         |         |         |
|                 |          |         |         |         |         |
| Thai Marketing  |          |         |         |         |         |
| / Managing      |          |         |         |         |         |
|                 |          |         |         |         |         |
| Director        |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Remark         |          |         |         |         |         |
| means the trans |          |         |         |         |         |
| action can be a |          |         |         |         |         |
| pproved by the  |          |         |         |         |         |
| Department Head |          |         |         |         |         |
|                 |          |         |         |         |         |
| * means the     |          |         |         |         |         |
| Department Head |          |         |         |         |         |
| can only        |          |         |         |         |         |
| acknowledge but |          |         |         |         |         |
| cannot approve  |          |         |         |         |         |
| the transaction |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+

Settlement Control Policy

The Company has set up a strictly control policy over the customers’
settlement in order to comply with the rules and regulations of SET as
follows:

Payment for securities purchased should be settled on time. Late payment
or cheque default cases will be followed up by the Company’s marketing
officer in order to urge the customers to make payment either by cash or
by depositing into the Company’s account and to warn them to be more
careful in the future. Late payment or late submission of share
certificates will subject to a fine. And if the late payment of any
customer happens 3 times in a year, then the account will be considered
for closing. The Risk Control Dept. will be the one who proposes the
default on settlement cases for prior approval by the Risk Management
Committee.

Securities Dealing

The Company runs Securities Dealing business and the Executive Committee
was assigned to establish a policy and control the Company’s investment.
The Company has invested in securities for both equity and debt
instruments of the securities listed in the Stock Exchange of Thailand,
securities listed in the Market for Alternative Investment (MAI),
securities registered in the Thai Bond Market Association (ThaiBMA) and
non-registered securities. However, due to the fluctuation of the stock
market, economic situation and instability of politics, the Company has
carefully rationalized in its investment. In addition, the Company has
not focused in equity instruments since 2005. For the securities dealing
of debt instruments, the Company has expanded the volume of such
business which has been a type of business that could earn more profits
other than the main income from brokerage fees.

Unit Trust Selling Agent

The Company is a unit trust selling agent for 13 asset management
companies in order to provide services for the investors who would like
to invest in unit trust so that they could have various alternatives of
such investment. Besides, this business could meet the investors’
requirements and be another channel of investment for the customers.

Underwriting Business

In the year 2007, the Company engaged in Underwriting deals either as
lead underwriter or co-underwriter of the IPO Securities of 2 companies
totaling 757.96 million baht, as follows :

  1) Thai Nguan Metal Pcl. 2) Chiang Mai Medical Services, Pcl.

  In addition, there was 1 tender offer deal, namely, Group Lease Pcl.
  totaling 232.91 million baht.

Investment Banking Business

In 2007, the Company provided financial advisory service to
A.P.F.Holdings Co., Ltd. to serve its intention to acquire assets and
increase returns for its investment under the name of “Project
Evergreen” and received a fee of 10.5 million baht and the advisory
services on setting up of Accounting system under the name of “Project
Accent” and received a fee of 3.5 million baht. The Company also
provided source of fund advisory service for Group Lease Pcl. in which
it is still in process until 2008.

(2) Market Outlook and Competition

    Thai Stock Market in 2007

Year 2007 was one of the impressive years of Thai stock market. SET
index rose to retest its record high in the past 11 years at 924.70pt on
Nov 1, 2007 and closed at 858.10pt by the end of the year or increased
by 26%yoy with an average market turnover of Bt 17,436m per day

A positive market sentiment last year was significantly supported by
external factors such as 1) DJIA hit its new high in the past 12 years
at 14,198pt on Sept, 2007. 2) A dramatically increased in energy sector
which supported by skyrocketing in crude oil price from $50 to $99 per
barrel —see chart below for details.

Starting from early of Nov, 2007, SET index was pressured by several
negative factors, namely sub-prime crisis, cost-push inflation and also
the risk of PTT case to be delisted from the SET. However, SET index
could rebound in the last 2 weeks due to the PTT delisting has been
ruled out and impact of returning its pipelines back to MOF is minimal
and a positive outlook of new election in Dec 23, 2007.

[]

Thai Stock Market Outlook in 2008

We expect that Thai stock market is on an up trend in 2008 due to
various positive factors such as 1) A restoration of democratic regime
2) A resumption of investment due to low interest rate and kick-starting
the government’s mega-projects, would help offset waning export growth
due to weak dollar and global demand. We expect real GDP growth of
4.5-5.5% in 2008 which well above last year. 3) Weak dollar trend and
possible cancellation of capital control measures would help attract
foreign capital flow to Thailand. 4) Earning growth is expected to be
impressive and more broad-based due to a turnaround of banking sector’s
earnings after fulfilling IAS 39 reserves and renewed loans growth and
continued strong growth of energy sector.

However, investors still keep an eye on sub-prime crisis which might hit
US economy into recession and put pressure on global stock market in the
first half of 2008. But a significant cut of interest rate and tax
measure will help bolster US economy to recover in the second half of
2008. Moreover, the US’s election in Nov, 2008 would be another positive
catalyst to US stock market as we due to the so-called “Pre-election
rally” phenomenon.

In conclusion, cheap valuation, robust and broad-based earnings growth
and influx of foreign capital flows are three main factors driving SET
index to retest its upside around 1,000pt by the end of 2008.

Competition in Securities Business

In Nov 2006, SEC approved the blueprint for the liberalization of
securities business licensing within five years, giving lead time for
securities firms to prepare themselves for international competition.

Starting from Jan 2012, SEC will accept unlimited applications for new
securities companies, providing that the applicants meet the
requirements for each category of licenses being sought for. License fee
for full services and boutique services are set at Bt20m and Bt5m,
respectively.

Furthermore, SEC will replace current “multiple licenses” with “single
license” that will allow license holders to engage in a full range of
securities business. Applicants who seek to engage in a specific
category of securities businesses, e.g. debt, derivatives, and asset
management, will also be able to apply for “boutique services” license.
However, only full services providers are allowed to do stock broking
business.

To allow lead time for adjustments, SEC Board also approved a temporary
extension of the current minimum brokerage fee for another three years
and set at timeframe for the liberalization of brokerage fees within
five years, as follows:

-   During the first three years, from Jan 2007 to Dec 2009, current
    minimum stock brokerage fee of 25 basis points will apply.

-   During the next two years, from Jan 2010 to Dec 2011, stock
    brokerage fee will be based on a sliding scale where fee will be
    lower as trading volume increases. Once trading volume reaches a
    certain level, the fee will become negotiable.

-   From Jan 2012 onwards, securities brokerage fees will be fully
    negotiable.

-   Notwithstanding the aforesaid brokerage fee liberalization, starting
    Jan 2007, the minimum internet trading fee shall be set at 60% of
    normal stock brokerage fee or a minimum of 15 basis points.

  ------------------------ --------------------------- -------------------
  Average Daily Turnover   Increment value in each     Brokerage fee (%)
  (Bt)                     step (Bt)                   

  X < 1,000,000            1,000,000                   > 0.25

  1,000,000 <X <           9,000,000                   > 0.22
  10,000,000                                           

  10,000,000 <X<           10,000,000                  > 0.18
  20,000,000                                           

  X> 20,000,000            More than 20,000,000        Negotiable
  ------------------------ --------------------------- -------------------

To fulfill Thai capital market with full services and comply with
international standard, SEC has set Thailand Futures Exchange (TFEX) in
2006 to provide measure for investor to well-manage their risks and add
more products into the market such as SET 50 ETF, SET 50 Index Futures
and SET 50 Index Options.

In view of this, we expect that:

-   Price competition among securities firms in the next few years will
    become fiercer again. In response to this, securities firms must
    diversify their revenues sources other than conventional brokerage
    commission.

-   More instruments with increasing varieties and complexity, e.g.
    futures, options, ETF and so forth, will be available in the Thai
    capital market thereby creating new opportunities for traders and
    new risk management tools for investors.

-   Starting from Jan 2012, providers of full services and boutique
    services must have a minimum paid-up capital of Bt500m and Bt100m,
    respectively. However, many stock brokers still have paid-up capital
    less than the aforementioned. Ones with paid-up capital less than
    the threshold must either recapitalize or merge with others to meet
    this new rule.

  ----------- ---------------- ----------- ------- ---------------- ------------
  Brokers                                                           
  Ranking by                                                        
  Market                                                            
  Share in                                                          
  2006-2007                                                         

  No.         Company          Mkt Share   No.     Company          Mkt Share in
                               in 2006 (%)                          2007 (%)

  1           KIMENG           8.57        1       KIMENG           8.10

  2           SCBS             6.38        2       ASP              5.74

  3           ASP              6.19        3       PHATRA           5.63

  4           PHATRA           5.79        4       CS               5.23

  5           CS               5.13        5       SCBS             5.04

  6           UBS              4.63        6       UBS              4.70

  7           KGI              3.94        7       KGI              4.18

  8           ZMICO            3.77        8       BLS              3.68

  9           BFITSEC          3.64        9       BFITSEC          3.51

  10          BLS              3.54        10      AYS              3.50

  11          CLSA             3.32        11      TNS              3.49

  12          TNS              3.31        12      ZMICO            3.05

  13          TSC              3.21        13      CLSA             3.04

  14          AYS              3.00        14      TSC              3.01

  15          DBSV             2.84        15      DBSV             2.84

  16          JPM              2.79        16      JPM              2.79

  17          TMBMACQ          2.72        17      TMBMACQ          2.67

  18          CNS              2.56        18      ASL              2.47

  19          ASL              2.56        19      CNS              2.45

  20          UOBKHST          2.51        20      PST              2.39

  21          ACLS             2.17        21      ACLS             2.34

  22          SICSEC           2.13        22      UOBKHST          2.12

  23          PST              1.74        23      TRINITY          2.11

  24          GLOBLEX          1.64        24      FINANSA          1.71

  25          FES              1.49        25      SICSEC           1.53

  26          KKS              1.48        26      BTSEC            1.50

  27          TRINITY          1.47        27      KKS              1.36

  28          BTSEC            1.12        28      GLOBLEX          1.35

  29          FINANSA          1.11        29      FES              1.30

  30          IVG              1.09        30      KS               1.06

  31          US               0.99*       31      IVG              1.03

  32          SYRUS            0.89        32      AIRA             0.94

  33          KTBS             0.69        33      SYRUS            0.89

  34          SCIBS            0.56        34      SCIBS            0.86

  35          KS               0.51        35      US               0.82*

  36          AIRA             0.29        36      KTBS             0.73

  37          MERCHANT         0.22        37      MERCHANT         0.64

                                           38      CIMB-GK          0.22

  Source:                                                           
  Stock                                                             
  Exchange of                                                       
  Thailand                                                          
  ----------- ---------------- ----------- ------- ---------------- ------------

N.B : * Although the Company’s market share of 2007 decreased from the
year 2006, its total operation result has increased from a net loss of
Bht 18.98 M as of 31 Dec, 06 to a net profit of Bht 15.05 M as of 31 Dec
07.

Competition in Investment Banking Business

Competition in the Investment Banking business and the securities
underwriting business will become fiercer in the future as several
securities companies especially medium to small companies start to focus
more on these businesses. As such the Company will be very selective in
the areas where we offer our services and the clients which we service.

Regarding target customers, the Company focuses both on listed customers
in the stock exchange and companies in general which want to mobilize
funds from both equity and money market. We aim to win new underwriting
deals and at the same time focus on customers who may need financial
advisory services for other non-securities businesses such as financial
restructuring and merges and acquisitions.

(3) Procurement of Products or Services

Sources of Capital

For the past 2 years the Company had engaged mostly in short term loan
from local financial institution as well as the shareholders’ equity as
the source of capital. The capital was utilized on investment in debt
instrument and loan for securities trading and the rest was used as
working capital. The loan from other financial institution, if any,
would be short term . The sources of capital policy is to choose the
source which is more suitable in relation to the business activities and
its objectives and which will not affect the ratio between total
liabilities and shareholders’ equity as well as the NCR ratio.

Securities Trading Loan Policy

In 2007, the Company had allowed securities trading loan under the
Credit Balance system. Towards year end, the total Credit Balance line
was 4,932 million baht with the total outstanding balance of 786 million
baht. The Company exercises the greatest care when extending credit
under the Credit Balance system.

The Maintenance of Net Capital Rule

The Company will maintain its Net Capital Rule (NCR) to be up to the
Securities & Exchange Commission’s standard on a daily basis. The types
of assets and the capital of the Company will be evaluated everyday in
order to control the Company’s NCR to be in line with the standard rate
and in a timely manner.

The NCR as of FY2007 year end was 230.20% of general liabilities. As for
the Company’s NCR management policy, the Company has arranged for
various sources of capital such as to up credit lines with some
financial institutions at the right timing and through the most suitable
financial instruments.