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 foreign 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 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 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 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 customers in addition to the Cash System. However,
the Credit Balance System was 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 much on the fluctuation of the
securities prices as well as the interest rate all of which were
affected mostly by economic and securities market situation as a whole.
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 control management. Reports summarizing the
investment activities are submitted monthly to the Executive Board to
always assure of its efficiency.

4. 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 to
underwrite. Moreover, the Underwriting Risk is taken care of by ECM
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 5 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 the Company’s Subsidiaries

The Company presently has two fully owned subsidiaries 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
sound potential growth, thus this is instead considered to bring
positive impact to the company.