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 2000, 2001, and 2002, the company has appointed Ernst &
Young Office Limited as an independent auditor. The auditing team
consisted of

Miss Rungnapa Lertsuwankul CPA No.3516

Mr. Ruth Chaowangawi CPA No.3247

Mr. Sophon Permsiriwallop 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        |           | 1999   | 2000   | 2001  | 2002  |
+---------------------+-----------+--------+--------+-------+-------+
| Financial Status    |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Cash and deposits   |           | 179,7  | 49,9   | 59,22 | 92,36 |
| in financial        |           | 51,555 | 95,157 | 6,798 | 6,294 |
| institutions        |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Loans to financial  |           | 40,0   | -      | 30,00 | 1     |
| institutions        |           | 31,507 |        | 7,534 | 60,16 |
|                     |           |        |        |       | 4,384 |
+---------------------+-----------+--------+--------+-------+-------+
| Net investment on   |           | 46,5   | 106,3  | 1     | 2     |
| securities          |           | 55,404 | 76,375 | 06,51 | 07,69 |
|                     |           |        |        | 5,086 | 5,233 |
+---------------------+-----------+--------+--------+-------+-------+
| Trading             |           | 46,8   | 42,5   | 79,33 | 25,10 |
| transactions with s |           | 62,280 | 53,860 | 3,002 | 0,775 |
| ecurities companies |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Securities Business |           | 340,1  | 288,3  | 1     | 5     |
| Receivables and     |           | 55,386 | 87,158 | 87,65 | 63,14 |
| Accrued Interest    |           |        |        | 4,620 | 3,106 |
| Receivables         |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Allowance fo        |           | (      | (      | (9    | (2    |
| r Doubtful Accounts |           | 240,01 | 213,29 | 3,558 | 5,872 |
|                     |           | 8,267) | 4,205) | ,083) | ,263) |
+---------------------+-----------+--------+--------+-------+-------+
| Net Securities      |           | 100,1  | 75,0   | 94,09 | 5     |
| Business Receivable |           | 37,119 | 92,953 | 6,537 | 37,27 |
| and Accrued         |           |        |        |       | 0,843 |
| Interest            |           |        |        |       |       |
| Receivables         |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Total Assets        |           | 440,8  | 348,8  | 4     | 1,0   |
|                     |           | 45,466 | 84,738 | 14,83 | 97,91 |
|                     |           |        |        | 3,533 | 6,079 |
+---------------------+-----------+--------+--------+-------+-------+
| Borrowings          |           | -      | 3,6    | -     | -     |
|                     |           |        | 44,126 |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Securities Business |           | 157,2  | 105,3  | 1     | 4     |
| Payable             |           | 62,979 | 19,130 | 74,56 | 18,06 |
|                     |           |        |        | 4,858 | 6,862 |
+---------------------+-----------+--------+--------+-------+-------+
| Total Liabilities   |           | 190,1  | 135,3  | 1     | 4     |
|                     |           | 58,500 | 95,629 | 84,47 | 79,55 |
|                     |           |        |        | 4,532 | 9,096 |
+---------------------+-----------+--------+--------+-------+-------+
| Paid-up shares      |           | 258,3  | 258,3  | 3     | 5     |
| capital             |           | 73,570 | 74,000 | 04,37 | 37,00 |
|                     |           |        |        | 3,570 | 7,480 |
+---------------------+-----------+--------+--------+-------+-------+
| Retained earning    |           | (8,12  | (45,19 | (5    | 30,04 |
| (loss)              |           | 7,452) | 6,259) | 4,331 | 9,035 |
|                     |           |        |        | ,524) |       |
+---------------------+-----------+--------+--------+-------+-------+
| Shareholders Equity |           | 250,6  | 213,4  | 2     | 6     |
|                     |           | 86,966 | 89,109 | 30,35 | 18,35 |
|                     |           |        |        | 9,001 | 6,983 |
+---------------------+-----------+--------+--------+-------+-------+
| Operations Results  |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Securities Business |           | 388,8  | 173,6  | 1     | 3     |
| Income              |           | 29,727 | 48,302 | 04,53 | 13,71 |
|                     |           |        |        | 2,246 | 0,325 |
+---------------------+-----------+--------+--------+-------+-------+
| Securities Business |           | 4      | 1,8    | 59    | 1,98  |
| Expenses            |           | 24,548 | 55,791 | 1,522 | 4,594 |
+---------------------+-----------+--------+--------+-------+-------+
| Bad debt and        |           | (3,39  | 2,9    | (500  | (     |
| doubtful accounts   |           | 9,222) | 72,211 | ,505) | 2,549 |
|                     |           |        |        |       | ,540) |
+---------------------+-----------+--------+--------+-------+-------+
| Net Securities      |           | 385,0  | 174,7  | 1     | 3     |
| Business Income     |           | 05,957 | 64,722 | 03,44 | 09,17 |
| after bad debts and |           |        |        | 0,219 | 6,191 |
| doubtful accounts   |           |        |        |       |       |
+---------------------+-----------+--------+--------+-------+-------+
| Other Income        |           | 5,8    | 3      | 6,81  | 1,02  |
|                     |           | 72,376 | 97,046 | 5,806 | 8,095 |
+---------------------+-----------+--------+--------+-------+-------+
| Operating Expenses  |           | 211,3  | 211,7  | 1     | 2     |
|                     |           | 59,650 | 06,336 | 17,69 | 21,47 |
|                     |           |        |        | 3,118 | 0,055 |
+---------------------+-----------+--------+--------+-------+-------+
| Net Profit (Loss)   |           | 179,5  | (37,06 | (     | 85,96 |
|                     |           | 18,683 | 8,807) | 9,135 | 2,087 |
|                     |           |        |        | ,265) |       |
+---------------------+-----------+--------+--------+-------+-------+
| Basic Earnings      |           | 5.30   | (0.72) | (     | 0.97  |
| (Loss) per share    |           |        |        | 0.16) |       |
+---------------------+-----------+--------+--------+-------+-------+

Remarks : year 2000-2003 are consolidated data

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

 Unit : Percentage

+--------------+----+----+-------+----+----+-------+-------+-------+
|              | F  |    |       | 19 |    | 2000  | 2001  | 2002  |
|              | in |    |       | 99 |    |       |       |       |
|              | an |    |       |    |    |       |       |       |
|              | ci |    |       |    |    |       |       |       |
|              | al |    |       |    |    |       |       |       |
|              | R  |    |       |    |    |       |       |       |
|              | at |    |       |    |    |       |       |       |
|              | io |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Profita      |    |    |       |    |    |       |       |       |
| bility Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Gross Profit |    |    |       | 9  |    | 98.93 | 99.43 | 99.36 |
| Margin       |    |    |       | 9. |    |       |       |       |
|              |    |    |       | 89 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Profit   |    |    |       | 4  |    | (2    | (     | 27.40 |
| Margin       |    |    |       | 5. |    | 1.30) | 8.20) |       |
|              |    |    |       | 48 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | 12 |    | (1    | (     | 20.23 |
| Equity       |    |    |       | 5. |    | 5.97) | 4.12) |       |
|              |    |    |       | 08 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    | .  |       | 3. |    | 10.90 | 4.97  | 4.21  |
| Investment   |    |    |       | 71 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Effic        |    |    |       |    |    |       |       |       |
| iency Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Return on    |    |    |       | 5  |    | (     | (     | 11.37 |
| Assets       |    |    |       | 7. |    | 9.39) | 2.39) |       |
|              |    |    |       | 73 |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Assets       |    |    |       | 1. |    | 0.44  | 0.29  | 0.42  |
| turnover     |    |    |       | 27 |    |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Fina         |    |    |       |    |    |       |       |       |
| ncial Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Liquid       |    |    |       |    | -  | 42.91 | -     | -     |
| Assets to    |    |    |       |    |    |       |       |       |
| total        |    |    |       |    |    |       |       |       |
| Borrowing    |    |    |       |    |    |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Performing   |    |    |       |    | -  | 49.80 | -     | -     |
| Assets to    |    |    |       |    |    |       |       |       |
| total        |    |    |       |    |    |       |       |       |
| Borrowings   |    |    |       |    |    |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Liquid       |    |    |       |    | 6  | 44.82 | 47.19 | 71.93 |
| Assets to    |    |    |       |    | 0. |       |       |       |
| Total Assets |    |    |       |    | 41 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Performing   |    |    |       |    | 4  | 52.01 | 55.59 | 82.44 |
| Assets to    |    |    |       |    | 2. |       |       |       |
| Total Assets |    |    |       |    | 35 |       |       |       |
| Ratio        |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Debt to      |    |    |       |    | 0. | 0.63  | 0.80  | 0.77  |
| Equity Ratio |    |    |       |    | 76 |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Other Ratios |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net          |    |    |       |    | 1  | 30.49 | 25.68 | 18.91 |
| Investment   |    |    |       |    | 0. |       |       |       |
| in           |    |    |       |    | 56 |       |       |       |
| Securities   |    |    |       |    |    |       |       |       |
| to total     |    |    |       |    |    |       |       |       |
| Assets Ratio |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+
| Net Liquid   |    |    |       |    | 11 | 1     | 1     | 1     |
| Capital to   |    |    |       |    | 6. | 87.56 | 12.27 | 33.85 |
| Total        |    |    |       |    | 18 |       |       |       |
| Liabilities  |    |    |       |    |    |       |       |       |
|              |    |    |       |    |    |       |       |       |
| (Calculated  |    |    |       |    |    |       |       |       |
| according to |    |    |       |    |    |       |       |       |
| the SEC’s    |    |    |       |    |    |       |       |       |
| Net Capital  |    |    |       |    |    |       |       |       |
| Rules)       |    |    |       |    |    |       |       |       |
+--------------+----+----+-------+----+----+-------+-------+-------+

(2) Explanations and Analysis on Company’s Financial Status and
Operations Results

1. Overall View of the past year’s operations

Because of high competitiveness in securities brokerage business
together with the low brokerage fee income rate arisen from the
liberalization of commission rate, the Compay brokerage fee income had
decreased from 131.5million Baht in the year 2000 to 49.8million Baht
which the operations cost had decreased tremendously from 211.7million
Baht to 117.6million Baht. Thus, the Company’s net loss had been reduced
from 37million Baht to 9million Baht in the year 2001. In 2002, after
the brokerage fee rate had been fixed, the Company’s overall performance
has picked up from a net loss to a net profit.

2. Operations Results

Income from Securities Business

In the year 2001, the competition situation was still high resulted from
the liberalization of commission fee policy. Consequently, the Company’s
income from securities brokerage had reduced from 173.6million Baht in
the year 2000 to 104million Baht. However, in 2001, the brokerage fee
income had been substituted by the income from Investment Banking
business. In 2002, the overall income from the securities business were
totaled to 313.7million Baht which came from the brokerage fee income of
247.8million Baht, fees and services 57.4million Baht and the rest were
income from the profit from securities trading, interest and dividend
received.

Expenses from Securities Business

The Securities Business Expenses consisting of Borrowing Cost and the
fees and services expenses were still low because the company had
reorganized its financial structure by increasing its capital to redeem
the bond before its maturity date which could release the obligations on
borrowing fund and interest expenses considerably.

Bad Debts and Doubtful Accounts

By way of the Right Management Control policy, customers are carefully
screened and settlement period is strictly controlled and especially in
the year 2001, there was no policy for margin loan trading; therefore,
the bad debts and doubtful accounts amount were only 0.5million Baht.
However, in 2002, the Company had provided margin loan in term of Credit
Balance service to the customers and thus resulted in a high amount of
debts and doubtful accounts which was 2.54million Baht.

Operating Expenses

In 2001, the Company’s operation expenses had reduced to 117.69million
Baht from 211.70million Baht in the previous year which resulted from
the decreasing of personnel expenses mainly on incentive payment to the
marketing staff, the premises equipment and the directors’ remunerations
expenses. In 2002, the total operating expenses were 221.47million Baht
which mainly came from the personnel expenses of 131.37million Baht and
the premises and equipment expenses of 49.52million Baht.

Net Profit(Loss)

In 1999, the company had operated a net profit of 179.52 million Baht.
However, in the following 2 years, i.e. the years 2000 and 2001, the
company had a net loss of 37.06 million baht and 9.13 million baht,
respectively. The losses were resulted largely from the considerable
decrease in brokerage income from the slow down of the stock market and
from the aggressive competition of the securities business. However, the
company had solved the problem by getting into other field of securities
business such as Financial Advisory, trading of Debenture instrument or
investment in debentures so that the company’s income will not rely
singly on securities brokerage income. And thus in 2002, the Company was
able to manage a net profit of 85.96million Baht.

  3. Financial Status

Total Assets

The Company’s total assets had a tendency to grow. Since the year 2001,
the total assets was 348.88million Baht and in the year 2001, it came up
to 414.83million Baht and in 2002, the total assets had become
1,097.91million Baht. This resulted from the Company’s stability of the
assets by maintaining an appropriate proportion of the Company’s Working
Capital.

Investment on Securities

Investment on Securities in the years 2000, and 2001 were 106.37 and
106.51 million Baht, respectively. And in 2002, the Company had an
investment on securities of 207.69million Baht. Most of the investment
on securities was short-term investment of approximately 194.57million
Baht and approximately 13.12million Baht was a long-term investment. The
yields from such investments were in appropriate with the investment
cost and considered to be at the satisfactory level. Nevertheless, the
company had set an allowance of 8.83million Baht for loss on impairment
of the invested securities which were listed in the Exchange and about
8.5 million Baht for unlisted securities total of which were considered
to be sufficient.

Securities Business Receivables and Accrued Interest Receivables

Securities Business Receivables and Accrued Interest Receivables dropped
from 288.38million Baht in year 2000 to 187.65million Baht in year 2001
and increased to 563.14million Baht in the year 2002. The receivables
accounts consisted of the accounts overdue over 6 months and the
pay-by-installment accounts totaling of 25.87million Baht which amount
had been set as allowance for doubtful accounts and these debtors had
already been put under legal action. The rest amount from the
Receivables accounts would vary in relation to the amount of trading
volume of the Company as those were the amount due for settlement for 3
days after trading date under normal cash basis trading. As for the
methods of setting the allowance for doubtful accounts for the cash
basis trading which had 3 days period to settle, the company will
consider on a case –by-case basis according to the forecasted late
payment amount. And the allowance will be set on a 100% basis of the
total debts. If the debtors have sufficient collateral then the
allowance will not be necessary.

Borrowings

The Company had not had any borrowings since the year 2001 as the
financial structure had been adjusted by the increasing of Company’s
capital

Liquidity

The net cash flow in the year 2000 was minus 129.76million Baht because
securities trading income decreased and the operating costs were high.
In the year 2001, however, the Company was able to improve its liquidity
by improving the efficiency in making profit which reducing its costs so
that the net cash flow was increased for 9.23million Baht and in 2002 it
was increased for another 33.14million Baht.

Sources of Capital

In the year 2002, the company had increased its capital by issuing
rights offerings to its existing shareholders and by means of private
placement for the total sum of 301.95million Baht. The amount was
invested in securities trading for 7.85million Baht, in expanding
offices and branches for 18.66million Baht and in utilizing for working
capital and for set up the Credit Balance system of 275.44million Baht.

As for the Company’s Net Capital Ratio, as at 31 December, 2002 the
Company had an NCR ratio of 133.85% which was far more than the 5%
minimum rate regulated by the 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 operations 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
survive in this field of business.