2. Description of business

1.  Background and major developments

+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | D |          | The Company began its securities business     |   |
| 9 |        | e |          | operations after Kasikorn Bank Public Company |   |
| 8 |        | c |          | Limited, Finance One Public Company Limited   |   |
| 6 |        | e |          | and a group of major shareholders of Finance  |   |
|   |        | m |          | One Public Company Limited acquired Goldhill  |   |
|   |        | b |          | Securities Company Limited from its existing  |   |
|   |        | e |          | shareholders. In the beginning, the Company   |   |
|   |        | r |          | had three licenses; securities broker,        |   |
|   |        |   |          | securities dealer, and investment advisory.   |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | M |          | The Company became a member of the Stock      |   |
| 9 |        | a |          | Exchange of Thailand.                         |   |
| 8 |        | y |          |                                               |   |
| 7 |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | F |          | The Company changed its name to “Securities   |   |
| 9 |        | e |          | One Company Limited”                          |   |
| 8 |        | b |          |                                               |   |
| 8 |        | r |          |                                               |   |
|   |        | u |          |                                               |   |
|   |        | a |          |                                               |   |
|   |        | r |          |                                               |   |
|   |        | y |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | D |          | The Company became a listed company in the    |   |
| 9 |        | e |          | Stock Exchange of Thailand, known as “S-ONE”. |   |
| 8 |        | c |          |                                               |   |
| 9 |        | e |          |                                               |   |
|   |        | m |          |                                               |   |
|   |        | b |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | r |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | M |          | The Company registered as a public company.   |   |
| 9 |        | a |          |                                               |   |
| 9 |        | y |          |                                               |   |
| 3 |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | J |          | The Company obtained Securities Registrar     |   |
| 9 |        | u |          | license.                                      |   |
| 9 |        | n |          |                                               |   |
| 4 |        | e |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | O |          | The company became a member of the Bangkok    |   |
| 9 |        | c |          | Stock Dealing Center (BSDC)                   |   |
| 9 |        | t |          |                                               |   |
| 5 |        | o |          |                                               |   |
|   |        | b |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | r |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | J |          | The Company obtained an Underwriting license. |   |
| 9 |        | u |          |                                               |   |
| 9 |        | l |          |                                               |   |
| 6 |        | y |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | M |          | The Company obtained a Private Portfolio      |   |
| 9 |        | a |          | Management license.                           |   |
| 9 |        | r |          |                                               |   |
| 7 |        | c |          |                                               |   |
|   |        | h |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | S |          | The Company made a tender offer to acquire    |   |
|   |        | e |          | 100% of First Asia Securities Public Company  |   |
|   |        | p |          | Limited.                                      |   |
|   |        | t |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | m |          |                                               |   |
|   |        | b |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | r |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | A |          | KGI Group became the major shareholder of the |   |
| 9 |        | p |          | Company.                                      |   |
| 9 |        | r |          |                                               |   |
| 8 |        | i |          |                                               |   |
|   |        | l |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 1 |        | F |          | The Company obtained a Securities Borrowing   |   |
| 9 |        | e |          | and Lending license.                          |   |
| 9 |        | b |          |                                               |   |
| 9 |        | r |          |                                               |   |
|   |        | u |          |                                               |   |
|   |        | a |          |                                               |   |
|   |        | r |          |                                               |   |
|   |        | y |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | J |          | The Company changed its name to KGI           |   |
|   |        | u |          | Securities One Public Company Limited.        |   |
|   |        | l |          |                                               |   |
|   |        | y |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          | As part of its plan to expand its securities  |   |
|   |        |   |          | and investment banking business to other      |   |
|   |        |   |          | countries in the region, the Company adopted  |   |
|   |        |   |          | the following measures:                       |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   In 1999, shareholders’ meeting approved   |   |
|   |        |   |          |     the Company’s proposed acquisition of a   |   |
|   |        |   |          |     securities and investment banking company |   |
|   |        |   |          |     in Hong Kong. In addition, the Company    |   |
|   |        |   |          |     increased its paid-up capital from Baht   |   |
|   |        |   |          |     9,880 million to Baht 14,880 million by   |   |
|   |        |   |          |     allocating new shares to existing         |   |
|   |        |   |          |     shareholders at the ratio of 2 existing   |   |
|   |        |   |          |     share to 1 new share at a price of Baht   |   |
|   |        |   |          |     5.00 per share to be used as a source of  |   |
|   |        |   |          |     funds in expanding its business overseas. |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   In December 1999, shareholders’ meeting   |   |
|   |        |   |          |     approved the Company’s plan to acquire a  |   |
|   |        |   |          |     company which operated securities         |   |
|   |        |   |          |     business in Korea.                        |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   Due to restrictions on the transfer of    |   |
|   |        |   |          |     money overseas, the Company invested in   |   |
|   |        |   |          |     the Korea securities business through KGI |   |
|   |        |   |          |     International Holdings Limited (KGII), a  |   |
|   |        |   |          |     company registered in Cayman Island and   |   |
|   |        |   |          |     46.6% owned by the Company.               |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   In August 2000, Board of Directors’       |   |
|   |        |   |          |     Meeting resolved not to ratify the        |   |
|   |        |   |          |     signing of contract to acquire the        |   |
|   |        |   |          |     securities business of Sassoon Group in   |   |
|   |        |   |          |     Singapore between KGII and existing       |   |
|   |        |   |          |     shareholders of Sassoon Group. In         |   |
|   |        |   |          |     September 2000, KGII returned its assets  |   |
|   |        |   |          |     to its shareholders proportionately to    |   |
|   |        |   |          |     their holdings.                           |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   Between October and December 2000, KGII   |   |
|   |        |   |          |     changed its capital structure and issued  |   |
|   |        |   |          |     shares to other investors. Therefore, as  |   |
|   |        |   |          |     of end of December 2000, the Company’s    |   |
|   |        |   |          |     holding in KGII via KGI Securities        |   |
|   |        |   |          |     (Thailand) International Holdings Limited |   |
|   |        |   |          |     (HOLDCO) was reduced to 0.45%.            |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   In March 2001, shareholders’ meeting      |   |
|   |        |   |          |     approved the Company’s plan to sell its   |   |
|   |        |   |          |     overseas investments to KGII in exchange  |   |
|   |        |   |          |     for convertible bonds and bonds issued by |   |
|   |        |   |          |     KGII.                                     |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 2 |        | M |          | The Company changed its name to KGI           |   |
| 0 |        | a |          | Securities (Thailand) Public Company Limited  |   |
| 0 |        | y |          | and changed securities code to “KGI”.         |   |
| 1 |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | S |          | SEC granted an approval to the Company to act |   |
|   |        | e |          | as a Financial Advisor.                       |   |
|   |        | p |          |                                               |   |
|   |        | t |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | m |          |                                               |   |
|   |        | b |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | r |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 2 |        | J |          | SEC authorized the Company to act as selling  |   |
| 0 |        | a |          | agent for mutual funds.                       |   |
| 0 |        | n |          |                                               |   |
| 2 |        | u |          |                                               |   |
|   |        | a |          |                                               |   |
|   |        | r |          |                                               |   |
|   |        | y |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | M |          | Private fund management division was          |   |
|   |        | a |          | transferred to One Asset Management Limited,  |   |
|   |        | r |          | a 96% owned subsidiary.                       |   |
|   |        | c |          |                                               |   |
|   |        | h |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | M |          | Board of Directors’ Meeting approved the      |   |
|   |        | a |          | Company to set up KGI                         |   |
|   |        | y |          |                                               |   |
|   |        |   |          | (Thailand) Holdings Limited (KTHL), a new     |   |
|   |        |   |          | company with registration in British Virgin   |   |
|   |        |   |          | Island, to create a more efficient structure  |   |
|   |        |   |          | to hold the Company’s overseas assets.        |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | N |          | The Company cancelled its private portfolio   |   |
|   |        | o |          | management license.                           |   |
|   |        | v |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | m |          |                                               |   |
|   |        | b |          |                                               |   |
|   |        | e |          |                                               |   |
|   |        | r |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
| 2 |        | J |          | The extraordinary general meeting of          |   |
| 0 |        | a |          | shareholders no. 1/2003                       |   |
| 0 |        | n |          |                                               |   |
| 3 |        | u |          | approved:                                     |   |
|   |        | a |          |                                               |   |
|   |        | r |          |  the Company to reduce its registered        |   |
|   |        | y |          | capital from Baht 37,069 million to Baht      |   |
|   |        |   |          | 30,732 million by cancellation of unissued    |   |
|   |        |   |          | shares previously reserved to accommodate the |   |
|   |        |   |          | exercise by the holders of Warrant #1,        |   |
|   |        |   |          | Warrant #2 and Warrant #3 (which had already  |   |
|   |        |   |          | expired).                                     |   |
|   |        |   |          |                                               |   |
|   |        |   |          |  the Company to transfer its general, legal, |   |
|   |        |   |          | and share premium reserves to compensate for  |   |
|   |        |   |          | part of its accumulated losses.               |   |
|   |        |   |          |                                               |   |
|   |        |   |          |  the Company’s capital restructuring plan    |   |
|   |        |   |          | by:                                           |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   - Approving the sale of the convertible     |   |
|   |        |   |          |   bonds and straight bonds                    |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   issued by KGI International Holdings        |   |
|   |        |   |          |   Limited (KGII).                             |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   - Approving the reduction of the Company’s  |   |
|   |        |   |          |   (i) registered capital from Baht 30,732     |   |
|   |        |   |          |   million to Baht 23,049 million and (ii)     |   |
|   |        |   |          |   paid-up capital from Baht 17,333 million to |   |
|   |        |   |          |   Baht 12,999 million by way of a reduction   |   |
|   |        |   |          |   of par value from Baht 10 to Baht 7.50 per  |   |
|   |        |   |          |   share and a subsequent return of Baht 2.50  |   |
|   |        |   |          |   per share to all the shareholders           |   |
|   |        |   |          |   proportionately to their respective         |   |
|   |        |   |          |   shareholding be approved.                   |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   The capital reduction was approved by the   |   |
|   |        |   |          |   Office of the Securities and Exchange       |   |
|   |        |   |          |   Commission and there was no objections from |   |
|   |        |   |          |   the creditors. The Company therefore        |   |
|   |        |   |          |   registered the change of its capital with   |   |
|   |        |   |          |   the Ministry of Commerce on 21 March 2003.  |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | F |          | SEC granted an approval to the Company to     |   |
|   |        | e |          | operate an OTC derivatives business.          |   |
|   |        | b |          |                                               |   |
|   |        | r |          |                                               |   |
|   |        | u |          |                                               |   |
|   |        | a |          |                                               |   |
|   |        | r |          |                                               |   |
|   |        | y |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        | A |          | The annual general meeting of shareholders    |   |
|   |        | p |          | resolved an elimination of all of the         |   |
|   |        | r |          | Company’s accumulated losses (retained        |   |
|   |        | i |          | deficit). During the year, the Company        |   |
|   |        | l |          | transferred premium on share capital amounted |   |
|   |        |   |          | Baht 653 million to offset against the rest   |   |
|   |        |   |          | of the accumulated losses as of 31 December   |   |
|   |        |   |          | 2002.                                         |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   | 2004   |   | S        | SEC granted an approval for the Company to    |   |
|   |        |   | eptember | act as a registered derivatives agent and     |   |
|   |        |   |          | derivatives dealer.                           |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   | 2005   |   | February | TRIS Rating Co., Ltd. announced the company   |   |
|   |        |   |          | rating of KGI Securities (Thailand) Public    |   |
|   |        |   |          | Company Limited at “BBB”.                     |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   | March    | The Company sold its investment in Ace        |   |
|   |        |   |          | Capital Company Limited (a subsidiary company |   |
|   |        |   |          | excluded from consolidated financial          |   |
|   |        |   |          | statement) since the Company has introduced a |   |
|   |        |   |          | policy to cease management control of this    |   |
|   |        |   |          | subsidiary. Investment in that subsidiary was |   |
|   |        |   |          | recorded at zero and the Company has ceased   |   |
|   |        |   |          | taking equity. The Company has recorded a     |   |
|   |        |   |          | gain of Baht 90 million on the sale of the    |   |
|   |        |   |          | investment in the income statements.          |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   | April    | The Annual General Meeting of the             |   |
|   |        |   |          | shareholders of the Company approved a share  |   |
|   |        |   |          | capital reduction and the transfer share      |   |
|   |        |   |          | premium, generated from the reduction of      |   |
|   |        |   |          | share capital to offset the discount on       |   |
|   |        |   |          | common stock, as follows :-                   |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   The Company’s registered capital is to be |   |
|   |        |   |          |     reduced from Baht 23,049 million to Baht  |   |
|   |        |   |          |     14,938 million through the cancellation   |   |
|   |        |   |          |     of 1,081 million unissued ordinary        |   |
|   |        |   |          |     shares, each with par value of Baht 7.50, |   |
|   |        |   |          |     previously reserved to accommodate the    |   |
|   |        |   |          |     exercise of Warrant #4, which expired on  |   |
|   |        |   |          |     30 April 2004.                            |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   The Company’s registered and paid-up      |   |
|   |        |   |          |     capital is to be reduced from Baht 14,938 |   |
|   |        |   |          |     million to Baht 3,984 million by way of a |   |
|   |        |   |          |     reduction of par value from Baht 7.50 to  |   |
|   |        |   |          |     Baht 2.00 per share.                      |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   The share premium of Baht 10,955 million  |   |
|   |        |   |          |     generated by reducing the par value of    |   |
|   |        |   |          |     the shares from Bath 7.50 to Baht 2.00 is |   |
|   |        |   |          |     to be offset against the discount on      |   |
|   |        |   |          |     common stock of Baht 11,964 million.      |   |
|   |        |   |          |     After the capital reduction and offset,   |   |
|   |        |   |          |     the balance sheet will present discount   |   |
|   |        |   |          |     on common stock of Baht 1,010 million.    |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   The capital reduction was approved by The   |   |
|   |        |   |          |   Office of the Securities and Exchange       |   |
|   |        |   |          |   Commission and there was no objections from |   |
|   |        |   |          |   the creditors. The Company therefore        |   |
|   |        |   |          |   registered the change of its capital with   |   |
|   |        |   |          |   the Ministry of Commerce on 30 June 2005.   |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   The above transaction affected only the     |   |
|   |        |   |          |   presentation on the Balance Sheet and did   |   |
|   |        |   |          |   not result in any change to total           |   |
|   |        |   |          |   shareholders’ equity.                       |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   | S        | The Company received approval to be a member  |   |
|   |        |   | eptember | of the Thailand Futures Exchange Plc (TFEX)   |   |
|   |        |   |          | and the Thailand Clearing House Company       |   |
|   |        |   |          | Limited (TCH).                                |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          | The Company obtained a license to conduct     |   |
|   |        |   |  October | Futures Brokerage Business                    |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   | 2006   |   |   April  | The Shareholders’ Meeting No. 1/2006,         |   |
|   |        |   |          | approved the following:                       |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   1) The reduction of the Company’s           |   |
|   |        |   |          |   registered and paid-up capital from Baht    |   |
|   |        |   |          |   3,984 million to Baht 1,992 million by way  |   |
|   |        |   |          |   of a reduction of par value from Baht 2.00  |   |
|   |        |   |          |   to Baht 1.00 per share.                     |   |
|   |        |   |          |                                               |   |
|   |        |   |          | 2)  The Company’s share premium of Baht 1,992 |   |
|   |        |   |          |     million generated by reducing the par     |   |
|   |        |   |          |     value from Baht 2.00 to Baht 1.00 per     |   |
|   |        |   |          |     share, to be off-set against the share    |   |
|   |        |   |          |     discount of Baht (1,010) million. After   |   |
|   |        |   |          |     the capital reduction and offset, the     |   |
|   |        |   |          |     balance sheet will have no share discount |   |
|   |        |   |          |     left.                                     |   |
|   |        |   |          |                                               |   |
|   |        |   |          |   The capital reduction was approved by the   |   |
|   |        |   |          |   Office of the Securities and Exchange       |   |
|   |        |   |          |   Commission on 17 July 2006 and there was no |   |
|   |        |   |          |   objection from the company’s creditors. The |   |
|   |        |   |          |   Company therefore registered the change in  |   |
|   |        |   |          |   its capital with the Ministry of Commerce   |   |
|   |        |   |          |   on 7 August 2006.                           |   |
|   |        |   |          |                                               |   |
|   |        |   |          | The above transaction affects only the        |   |
|   |        |   |          | presentation on the Balance Sheet and does    |   |
|   |        |   |          | not result in any change to total             |   |
|   |        |   |          | shareholders’ equity.                         |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |   April  | The Company started to provide a Futures      |   |
|   |        |   |          | Brokerage Service                             |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |   July   | TRIS Rating Co., Ltd. announced the company   |   |
|   |        |   |          | rating of KGI Securities (Thailand) Public    |   |
|   |        |   |          | Company Limited at “BBB”                      |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |   August | The Company launched an online Internet       |   |
|   |        |   |          | service for futures trading                   |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |   S      | The Company was one of the first three        |   |
|   |        |   | eptember | brokers to be appointed as a market maker of  |   |
|   |        |   |          | the Thailand Futures Exchange Public Company  |   |
|   |        |   |          | Limited (TFEX).                               |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          | The Company won the “Top Star Most Active”,   |   |
|   |        |   | November | broker for being the most active broker in    |   |
|   |        |   |          | 3-month period from the Thailand Futures      |   |
|   |        |   |          | Exchange Public Company Limited (TFEX).       |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   | 2007   |   |          | -   The Company joined a group led by One     |   |
|   |        |   | February |     Asset Management Limited which won the    |   |
|   |        |   |          |     right to launch Thailand’s first equity   |   |
|   |        |   |          |     exchange traded fund (ETF). The wining    |   |
|   |        |   |          |     bid was submitted by One Asset Management |   |
|   |        |   |          |     Limited, KGI Securities (Thailand) Plc.,  |   |
|   |        |   |          |     Bualuang Securities Plc., Kim Eng         |   |
|   |        |   |          |     Securities (Thailand) Plc., Thanachart    |   |
|   |        |   |          |     Securities Plc., and Citicorp Securities  |   |
|   |        |   |          |     (Thailand) Ltd.                           |   |
|   |        |   |          |                                               |   |
|   |        |   |          | -   The Company won the “Best House of the    |   |
|   |        |   |          |     Year 2006”, which was given to the        |   |
|   |        |   |          |     futures brokerage firm with the           |   |
|   |        |   |          |     outstanding performance and best service  |   |
|   |        |   |          |     quality, and won the “Most Active House   |   |
|   |        |   |          |     2006”, which was given to the futures     |   |
|   |        |   |          |     brokerage firm with the most active       |   |
|   |        |   |          |     futures derivatives business, at the TFEX |   |
|   |        |   |          |     Best Awards 2006.                         |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |   S      | -   The Company started to provide services   |   |
|   |        |   | eptember |     of Market Maker(MM) and Participating     |   |
|   |        |   |          |     Dealer(PD) for ThaiDEX SET50 ETF (TDEX),  |   |
|   |        |   |          |     Thailand’s first equity exchange traded   |   |
|   |        |   |          |     fund.                                     |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          | -   The Company started to provide Options    |   |
|   |        |   |  October |     Trading to clients which adding a further |   |
|   |        |   |          |     alternative tools for financial market    |   |
|   |        |   |          |     participants.                             |   |
+---+--------+---+----------+-----------------------------------------------+---+
|   |        |   |          |                                               |   |
+---+--------+---+----------+-----------------------------------------------+---+

2.2 Overview of the Company’s business

KGI Securities (Thailand) Public Company Limited has licenses and
approval to operate businesses as follows:

1)  Securities broker

2)  Securities dealer

3)  Investment advisory

4)  Financial advisory

5)  Securities underwriting

6)  Securities borrowing and lending

7)  Securities registrar

8)  Selling agent of unit trusts

9)  Futures Business

10) OTC derivative business

KGI Securities (Thailand)’s shareholding in subsidiaries

(Subsidiary companies included in consolidated financial statements) 

As of 31 December 2007

+----------------------------+-------------------+-------------+------+
| Company                    | Country           | Bu          | %    |
|                            |  of Incorporation | siness Type | hol  |
|                            |                   |             | ding |
+----------------------------+-------------------+-------------+------+
| One Asset Management       | Thailand          | Fund        | 96   |
| Limited                    |                   | Management  |      |
+----------------------------+-------------------+-------------+------+
| KGI Securities (Thailand)  | Hong Kong         | Investment  | 100  |
| International              |                   |             |      |
|                            |                   |             |      |
| Holdings Limited           |                   |             |      |
+----------------------------+-------------------+-------------+------+
| KGI (Thailand) Holdings    | British Virgin    | Investment  | 100  |
| Limited                    | Islands           |             |      |
+----------------------------+-------------------+-------------+------+

(See details of investments in subsidiary companies in section 9 of the notes to financial statement)

Subsidiary companies included in consolidated financial statements

One Asset Management Limited (1AM)

One Asset Management Limited is a fund management company incorporated
in Thailand, which is 96% owned by the Company. The funds it manages
include mutual funds, provident funds, and private funds.

KGI Securities (Thailand) International Holdings Limited (HOLDCO)

Formerly known as “KGI Securities One International Holdings Limited”, a
wholly owned offshore subsidiary established in Hong Kong. Its name was
changed to “KGI Securities (Thailand) International Holdings Limited” on
December 7, 2001.

KGI (Thailand) Holdings Limited (KTHL)

KGI (Thailand) Holdings Limited (KTHL), a wholly owned offshore
subsidiary established in British Virgin Islands.

Policy for group operations

KGI Securities (Thailand) Plc. and its subsidiaries have hired
professional managers and appointed directors to be responsible for
setting policies for the Company and its subsidiaries.

2.3 Revenue Structure

During year 2007, the majority of the operations of the Company and its
subsidiary companies involved the single business segment of securities
related business, including securities broker, derivatives broker,
mutual fund management, securities dealer, financial advisory business,
securities underwriting, securities borrowing and lending, and selling
agent of unit trusts.

(See details in Section 32 “Financial Information by Segment” of Notes
to Financial Statements)

As of 31 December 2007, the Company has total income of Baht 1,523
million. The income is derived mainly from Baht 634 million of brokerage
fee from securities business and from derivatives business (42%) and
Baht 448 million of gain on trading in securities and trading
derivatives (29%) and Baht 217 million of fee and service income (14%),
the income structure for the year 2007 is as follows:

Income Structure of the year 2007

+------------------------+-------+-----+------+-----+------+------+
|                        | Op    | %   | In   | Con | T    | % of |
|                        | erate | Sh  | come | tra | otal | t    |
|                        | By    | are | of   |     | In   | otal |
|                        |       | H   | 2007 |     | come | in   |
|                        |       | old |      |     | of   | come |
|                        |       | ing | (be  |     | 2007 |      |
|                        |       |     | fore |     |      |      |
|                        |       | By  | con  |     | (a   |      |
|                        |       | C   | tra) |     | fter |      |
|                        |       | omp |      |     | con  |      |
|                        |       | any |      |     | tra) |      |
+------------------------+-------+-----+------+-----+------+------+
| 1. Brokerage fee from  | Co    | -   | 57   | -   | 57   | 37   |
| securities business    | mpany |     | 7.53 |     | 7.53 | .93% |
+------------------------+-------+-----+------+-----+------+------+
| 2. Brokerage fee from  | Co    | -   | 5    | -   | 5    | 3    |
| derivatives business   | mpany |     | 6.28 |     | 6.28 | .70% |
+------------------------+-------+-----+------+-----+------+------+
| 3. Fees and services   | Co    | -   | 2    | -   | 2    | 1    |
| income^(/1)            | mpany |     | 3.47 |     | 3.47 | .54% |
+------------------------+-------+-----+------+-----+------+------+
| Fees and services      | ONEAM | 96% | 19   | (0. | 19   | 12   |
| income^(/1)            | ^(/2) |     | 3.62 | 51) | 3.11 | .68% |
+------------------------+-------+-----+------+-----+------+------+
| 4. Gain (loss) on      | Co    | -   | 52   | -   | 52   | 34   |
| trading in securities  | mpany |     | 8.31 |     | 8.31 | .70% |
+------------------------+-------+-----+------+-----+------+------+
| 5. Gain (loss) on      | Co    | -   | (80  | -   | (80  | (5.  |
| trading derivatives    | mpany |     | .50) |     | .50) | 29)% |
+------------------------+-------+-----+------+-----+------+------+
| 6. Interest and        | Co    | -   | 19   | (   | 14   | 9    |
| dividends              | mpany |     | 0.29 | 42. | 7.70 | .70% |
|                        |       |     |      | 59) |      |      |
+------------------------+-------+-----+------+-----+------+------+
| Interest and dividends | ONEAM | 96% | 7.72 | -   | 7.72 | 0    |
|                        |       |     |      |     |      | .51% |
+------------------------+-------+-----+------+-----+------+------+
| Interest and dividends | H     | 1   | 0.20 | -   | 0.20 | 0    |
|                        | OLDCO | 00% |      |     |      | .01% |
|                        | ^(/3) |     |      |     |      |      |
+------------------------+-------+-----+------+-----+------+------+
| 7. Interest on margin  | Co    | -   | 6    | -   | 6    | 4    |
| loans                  | mpany |     | 2.02 |     | 2.02 | .07% |
+------------------------+-------+-----+------+-----+------+------+
| 8 . Share of profit    | Co    | -   | 3    | (   | -    | 0    |
| from subsidiary        | mpany |     | 1.77 | 31. |      | .00% |
|                        |       |     |      | 77) |      |      |
| Companies accounted    |       |     |      |     |      |      |
| for                    |       |     |      |     |      |      |
|                        |       |     |      |     |      |      |
| Under equity method    |       |     |      |     |      |      |
+------------------------+-------+-----+------+-----+------+------+
| 9. Other income        | Co    | -   | 6.30 | -   | 6.30 | 0    |
|                        | mpany |     |      |     |      | .41% |
+------------------------+-------+-----+------+-----+------+------+
| Other income           | ONEAM | 96% | 0.47 | -   | 0.47 | 0    |
|                        | ^(/2) |     |      |     |      | .03% |
+------------------------+-------+-----+------+-----+------+------+
| Other income           | H     | 1   | -    | -   | -    | 0    |
|                        | OLDCO | 00% |      |     |      | .00% |
|                        | ^(/3) |     |      |     |      |      |
+------------------------+-------+-----+------+-----+------+------+
| TOTAL INCOME           |       |     | 1,59 | (   | 1,52 | 100  |
|                        |       |     | 7.48 | 74. | 2.61 | .00% |
|                        |       |     |      | 87) |      |      |
+------------------------+-------+-----+------+-----+------+------+

Note /1 See note of financial statements No. 23: Fees and Services
Income.

/2 ONEAM: One Asset Management Limited, 96% owned by the Company.

/3 HOLDCO: KGI Securities (Thailand) International Holdings Limited,
100% owned by

the Company.

2.4 Business goal for the next 3 to 5 years

The Company’s goal is to provide a full range of services for its
clients. The Company aims to develop its investment banking business,
stock borrowing and lending business, derivatives business, futures
business, and other new business.