RISK FACTORS

Evolution Capital Public Company Limited places importance on the
management of both internal and external risks that may affect its
operations. Therefore, the Company has established the following
effective measures to mitigate such risks:

Property Services

Risk from economic and political factors

Property developments/investments are affected by economic and political
conditions and sentiment. The business plans of both domestic and
foreign developers/investors are driven and shaped by global and
domestic economic and political situations. These risks are outside the
Company’s control. However, most of the time, property
developers/investors will adjust their business strategies according to
changing economic and political conditions. When economic and political
conditions are not favorable, property businesses (both advisory and
proprietary investment) may slow down in line with prevailing
circumstances. However, the Company believes that there are always
unique opportunities in unfavorable conditions which are in line with
the Company’s strategies. The global financial turmoil which accelerated
during the second half of 2008 also created opportunities for the
Company in 2009. However, in the short term, revenue growth may be
slower than foreseen and it is important to manage both costs and risk.

Risk from property market factors

Property market conditions also directly affect property
development/investment activities. However, property market factors are
generally specific to varying types of projects and segments within the
entire market. The Company believes that Thailand’s property market is
diversified in terms of geographical areas and types/classes of
projects. The Company has also not tied its business to one type or
segment of the property market. Within the hospitality and residential
sectors, it can operate under different sub-segments for different types
of clients. In terms of its own development/investment, a careful study
is always performed before entering into specific types of
developments/investments or segments.

Competition and client sources

The services the Company offers to its clients are unique and specific
to their needs. Most real estate consulting firms offer services that
are in the pre-development and/or post-development period, such as
market studies and brokerage. Although the Company can take on such
assignments, it chooses to focus on services required during the
development period. Such services can be as comprehensive as a client
wants, ranging from conducting due diligence to project management. In
terms of client sources, the Company places an emphasis on foreign
investors whom the company believes have unique and specific needs.

Human resources

One of the critical factors in the Company’s operation is human
resources since the services the company provides to its clients require
specialised skills across various disciplines. The Company has
successfully attracted a pool of talented personnel – a mix of Thais and
expatriates who possess extensive experience and have held key positions
in their field. The Company believes that in the near future, after its
new businesses have grown, it will be able to attract more talented
personnel, both Thais and expatriates, to help execute its business
plans. In terms of human resources management, the Company plans to
become one of the preferred employers in Thailand and has been working
to set up a programme for compensation and incentives to create
long-term loyalty between the Company and its employees. The Company is
also designing an internship programme for undergraduate students to
work for the Company during their last semester. This will create
opportunities for students to gain real life experience before
graduation. The main benefit for the Company is the chance to identify
talented personnel to join the Company in the near future.

Media Services

Risk from specific characteristics of the industry

In engaging in the provision of wireless Value Added Services (VAS) to
mobile phone users, the Company faces a highly competitive situation.
New entrants to the industry face relatively low barriers to entry,
resulting in a constant change in the number of competitors. The
industry is also related to the mobile phone industry, which experiences
constant changes in technology. The demand for wireless VAS from mobile
phone users itself also varies with changes in technology and tastes.
Players in the industry must therefore continuously study these changes
in order to respond effectively to the needs of service users. This
means that they must rely heavily upon technology and product
development personnel. However, where such personnel change or leave,
and where the Company is unable to find a replacement in the short term,
the Company’s operations may suffer. Furthermore, this type of business
does not require a very high level of investment in fixed assets,
meaning that the Company has relatively few total assets.

The Company has established effective measures to mitigate risks arising
from the nature of the business. It has tried to enhance its
competitiveness by building its reputation and raising awareness of its
brand name amongst mobile phone users. It has also closely followed
changes in technology and trends in the use of wireless VAS by mobile
phone users, enabling it to design and develop new, modern products and
services, in line with changes in technology. This has allowed it to
respond effectively to the needs of mobile phone users. The result has
been that the customers are impressed with the services, and the trend
is that they will continue to use them on a regular basis.

The Company has also produced work instructions detailing the duties and
responsibilities of personnel holding important positions. The work
instructions contain details concerning work principles and procedures
and allow the Company to pass on knowledge and expertise to all members
of staff. The Company also places importance on remunerating its
personnel fairly, in line with the experience and ability of the
individual, in order to encourage them to continue to work for the
Company. Moreover, the Company stresses the fostering of good relations
between the Company and internal staff at each and every level.

Risk from changes in technology

The Company is engaged in a business that is mainly related to
information technology and communications. It is therefore vulnerable to
risk from rapid and constant changes in technology. These changes in
technology encourage mobile phone manufacturers to continually expand
the capabilities of their mobile phones, to enable them to receive
richer, detailed, and complex information. As such, some of the services
currently provided by the Company may potentially experience a decline
in popularity, or even become obsolete. For example, should it become
easier for mobile phones to receive graphics and music directly from
computers, computer-savvy mobile phone users may begin to create their
own graphics or music, and send these to their mobile phones by
themselves. Thus, there is the possibility that the use of certain
services under wireless VAS may decline in the future. Moreover, rapid
changes in technology will render it necessary for the Company to
continuously invest in new computer software, and arrange training
sessions for relevant personnel, so as to ensure that products and modes
of delivery are developed in line with the latest changes in technology.

Risk from changes in consumer behavior

The Company’s wireless VAS enables users to receive information, news
and entertainment in various forms, directly into their handsets.
However, despite its popularity, wireless VAS is not essential to
communication with others; therefore the demand for it is constantly
open to change, subject to tastes and fashion. Thus, the Company faces
risk from changes in the consumer behaviour of mobile phone users. This
risk includes both that from the decline in the popularity of wireless
VAS in general, as well as from demand for wireless VAS that the Company
does not yet provide. It is therefore crucial that the Company
continuously monitors changes in consumer behaviour, and develops new
content aligned with these changes so as to maintain its customer base
and continues to generate revenue from wireless VAS.

Risk from dependency on mobile operators

The Company faces risk from its dependency on AIS, in that the majority
of the Company’s customers are users of GSM 900 provided by AIS. In
order that the Company’s wireless VAS successfully reaches mobile phone
users, and the Company is able to collect its service fees through AIS,
as specified in agreements between the Company and AIS, the Company must
share its revenue with AIS. Revenue is shared with AIS in return for its
assistance in the collection of service fees from end-users, and to
cover the transport charge for using the AIS network. Thus far, there
have been few problems concerning the collection of service fees from
end-users. This is because the pre-paid system allows AIS to verify the
balances of end-users before providing the wireless VAS. Therefore, AIS
is able to directly debit service fees from mobile phone users at the
point of transaction. In the post-paid system, however, the Company
provides wireless VAS to mobile phone users first, while AIS collects
the service fees later, along with their own monthly service fees. The
Company thus faces risk from AIS being unable able to collect service
fees from end-users using the post-paid system.

As specified in agreements, the contract between the Company and AIS
will be automatically renewed each year, as long as neither party
terminates the contract in writing. The Company thus faces a potential
risk from AIS terminating the contract to provide wireless VAS to mobile
phone users in the AIS network.

The Company has attempted to mitigate its risk from its dependency on
AIS by expanding its customer base to encompass mobile phone users in
other networks, including the GSM 1800 networks of Total Access
Communication Public Company Limited (DTAC) and TrueMove. At the same
time, the Company places importance on the development of modes of
wireless VAS delivery. In particular, it has employed the use of
information from its Internal Information System, which details each
instance of provision of wireless VAS, in its analysis of consumer
behaviour. The Company has used this information to develop wireless VAS
content in line with the needs of mobile phone users. As a result, the
Company’s wireless VAS has experienced a dramatic increase in popularity
amongst mobile phone users. Mobile phone operators have also benefited
from providing wireless VAS together with the Company, through revenue
sharing and transport charges, and being able to provide a diverse range
of services to mobile phone users in their respective systems.

Risk from higher licensing costs

The Company does not possess its own wireless VAS content, and must
therefore pay license fees to licensors. As a result, the Company faces
risk from an increase in content costs, due to licensors charging higher
license fees. This would result in higher service costs which would, in
turn, erode the Company’s competitiveness. The Company must devote a
share of its revenue from its provision of wireless VAS to mobile phone
users to licensors in order to pay for content license fees so that it
may use and develop this content and provide it as wireless VAS to
mobile phone users. As such, the Company’s profits from wireless VAS
provision are lower than those of wireless VAS providers that develop
their own content. The Company shares its revenue from each download
with the licensor of content downloaded only.

Risk from competition

The information technology industry has relatively low barriers to
entry, leading many businesses to enter the industry. Presently, many
businesses, whether those related to IT, mobile phone operators, various
content licensors, including recording and movie production companies,
or others, have begun not only to develop wireless VAS content but also
provide the services themselves. This has led to a considerable increase
in the number of wireless VAS providers. Competition has intensified
accordingly, especially in the development and marketing of new products
and services. Those wireless VAS providers who either possess their own
content, or are mobile phone operators themselves, enjoy a competitive
advantage in that they have lower service costs. Wireless VAS providers
with their own content do not have to pay license fees, whilst those who
are themselves mobile phone operators do not have to use their revenue
from wireless VAS provision to pay for transport costs. Moreover, the
fact that each wireless VAS provider uses a variety of media to market
their products and services makes it difficult for mobile phone users to
distinguish between products and services until they have actually
downloaded them (i.e. there is low product differentiation). This may
affect the Company’s competitiveness.

Moreover, the Company has continuously tried to improve its delivery of
wireless VAS, thereby encouraging customer loyalty, by making it
possible for mobile phone users to subscribe to the Company’s wireless
VAS on a regular basis as specified by the Company. The Company also
commands highly effective distribution channels for its wireless VAS.
This enables it to select advertising media appropriate to its wireless
VAS and target customer groups. In particular, the Company emphasises
using advertising media that is, where employed at suitable intervals,
likely to generate revenues for the Company.

Due to the fact that both content licensors and mobile phone operators
have now begun to develop their own content and provide wireless VAS
services themselves, the wireless VAS industry has seen an increase in
the number of companies implementing pricing policies. In most cases,
wireless VAS fees are around THB 20-40 per download. The service fees
vary according to the popularity of the services and the development of
new wireless VAS that are compatible with the technology of the latest
mobile phone handsets. The providers of these services charge higher
fees than others. However, even though some providers may maintain a
pricing policy, there is no price-cutting among them. This is because
consumer decisions are not based on price alone. Rather, services are
chosen based on whether the provider has the pictures or melodies that
mobile phone users require. Even if a mobile phone user chooses wireless
VAS from a provider that charges a lower service fee, it is not
necessarily the case that he or she will be able to find the picture or
melody they wish to have.