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. Risk as a securities broker

The Company bears the risk on the inconsistent of brokerage fee income
caused by uncontrollable factors such as the currency exchange rate and
interest rates, political stability and unexpected rules and regulations
by the government and other related entities in relation to the Stock
Exchange of Thailand which may affect the investment mood of the stock
market as the brokerage fee income dependent 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 broking companies are the serious problems
that will have a direct impact on the Company’s income.

However, the Company has set up policies to cope with such risks. The
Internet Trading system has helped enlarge the Company’s income at lower
cost as well as expand trading channels for the customers. The
consistent training and development 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 or the Financial
Advisory business, Debt Instrument Broker Business and Debt Instrument
Investment. Moreover, the Company has improved the quality of the
analyst’s reports and set up Investment Advisory Division to be able to
serve the various needs of the customers. It is certain that all these
strategies will help boost 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 customers in addition to the Cash System. However,
the Credit Balance System is under strict governance of the Risk Control
Committee who will be responsible for the determination and revision of
credit line, collateral evaluation and the determination of restricted
securities list, etc. for risk prevention.

3. 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 on the fluctuation of the securities
prices as well as the interest rate all of which are affected by the
economy and market situation as a whole. The Securities Trading Business
is 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 control
management. Reports summarizing the investment activities are submitted
monthly to the Executive Board

4. The risk in Underwriting Business

Most of the company’s underwriting agreements were generally of the 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 to
underwrite. Moreover, the Underwriting Risk is taken care of by Risk
Management Committee and the company will strictly comply to the rules
and regulations governing the underwriting activities in order to avoid
risks.

5. The Impact from Branches’ Performance

At present, the Company has 10 branches undertaking securities brokerage
business which currently contribute fairly good 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.

6.  The Impact from other future businesses

According to the year 2006’s plan, the Company is aiming to expand its
business line to offer full-service businesses. The licenses for doing
Derivatives and Securities Borrowing & Lending businesses will be
applied through which higher income will be earned. However, related
risks may also occur in which the company always aware of and is
preparing for risk management in advance to prevent any adverse impact.