2.1 Risk Factors

From the securities business characteristics of the company there are
probably some risk factors which may have some impact on the company’s
future operations as follows:

1. The risk as a securities broker

The Company bears the risk on the inconsistent of brokerage fee income
caused by uncontrollable factors such as the foreign exchange rate and
interest rates, political stability and unexpected rules and regulations
by the government and other authorities in relation to the Stock
Exchange of Thailand which may affect the investment mood of the stock
market as the brokerage fee income are mainly depended upon the trading
volume of the Company’s customers. The highly competitive market
situation at present together with the snatching away of customers as
well as the marketing staff from other broker companies are the serious
problem that will directly have much impact on the Company’s income.

However, The Company has set up policies to cope with such risk.
Internet Trading system has helped enlarging the Company’s income at
lower cost as well as expanding trading channel for the customers. The
consistent training and developing of Marketing personnel and the open
up of branches to various provinces in order to expand its customers
base are other examples. Additionally, the company has attempted to take
up other possible businesses so that its income will not depend wholly
on brokerage fee income, for example, investment banking business in
which the subsidiary company was set up to undertake up the Financial
Advisory business, Debt Instrument Broker Business and Debt Instrument
Investment. It is certain that all these strategies will help boost up
more income in the long run.

2.  The risk concerning Credit Balance System

At present, the company has provided Credit Balance System service for
securities trading to the customers in addition to the Cash System. The
Credit Balance System was under strict governance of the Risk Control
Management Committee who will be responsible for the determination and
revision of credit line, the collateral evaluation and the setting up of
the restricted securities list, etc. in terms of the risk prevention.

3. The risk on the domination of Management

One of the major shareholders’ groups of the company is “Wongkusolkij”
and its related Companies who holds a total of 38.29% shares of the
Company’s paid up capital as of 31 December 2002. As a result, this
major shareholder may be able to dominate the resolutions from the
shareholders’ meeting to some extent except for those which legally
required 3 quarters votes of the total shareholders and such resolution
may include the appointment of Directors etc. However, the company has
appointed outside Directors who can independently audit the company’s
operations and management.

4. The risk in Securities Trading Business

One of the company’s businesses is Securities Trading Business which
includes the trading of both equity and debt instrument. The revenues
from the trading, however, depend much on the fluctuation of the
securities prices as well as the interest rate all of which were
affected mostly by economic situation and securities market situation.
The Securities Trading Business is, however, taken care of by the
Investment Committee who is responsible in setting up the investment
policy concerning the investment portfolio limit, scope of investment,
types of investment and risk management. The monthly reports summarizing
the investment activities are submitted to the Executive Board to always
assure its efficiency.

5. The risk in Underwriting Business

Most of the company’s underwriting agreements were generally a Firm
Commitment type. Thus, the company may have to risk on price dropping of
the unsold underwriting shares which had to be put into the company’s
portfolio. However, this will rarely happen as we will be very selective
by choosing to underwrite only the good fundamental shares. Moreover,
the company will strictly comply to the rules and regulations governing
the underwriting activities in order to avoid risks.

6. The Impact from the Branches’ Performance

At present, the company has 4 branches undertaking securities brokerage
business which currently contribute considerable income to the company.
Therefore, should any adverse effects happen to the branches’
performance, they may also affect the company’s performance as a whole.

7. The Impact from the Company’s Subsidiary

The Company presently has one fully owned subsidiary handling Financial
Advisory business. Therefore, the fluctuation of the subsidiary ‘s
performance may inevitably affect the performance of the whole company.
Fortunately, the Financial Advisory business still has good potential
growth, thus this is instead considered to bring positive impact to the
company.