4. Nature of Business by Business Group

The Company engages in 4 main businesses namely (1) Mass transit (2)
Property (3) Media and (4) Services.

1.  Mass Transit Business

    1.  SkyTrain Business

Highlights of BTS SkyTrain System are:

-   Speed and punctuality

-   Cleanliness

-   High safety when compared to other means of mass transportation

-   Affordable fares

-   Routes located in the central business district which is the
    destination for many people.

    1.  Existing Routes

The Company operates the mass transit business through its subsidiary,
BTSC, in which it holds a 94.6% shareholding. BTSC invested in and
operates the BTS SkyTrain System under the Concession Agreement between
BTSC and BMA. BTSC owns the right to use, and to provide service for,
the BTS SkyTrain System which covers a total distance of 23.5 km,
consisting of the 17 km on Sukhumvit Line and the 6.5 km on Silom Line.
Both lines service a total of 23 stations, one of which is a single
shared interchange station between the two lines:

-   The Sukhumvit Line starts from Sukhumvit Soi 77 and runs along main
    roads such as Sukhumvit, Pleonchit, Rama I, Phayathai and
    Phahonyothin before ending at Mo Chit, totaling 17 stations.

-   The Silom Line starts at the Taksin Bridge on Chareon Krung side and
    runs along main roads such as Sathorn, Silom, Ratchadamri and Rama I
    before ending at the National Stadium near Ban That Thong Road,
    totaling 7 stations.

The Sukhumvit and Silom Lines run parallel for about 800 meters along
Rama I Road, where the interchange station, Siam, is situated. The map
below shows the routes of the BTS SkyTrain System and the connections
with other selected public transportation systems.

[]

BMA’s Silom Line Extension of 2.2 km, starts from Sapan Taksin station,
running through 2 new stations, Krungthonburi station and Wongwienyai
station. While BMA invested in the Civil Works and Electrical &
Mechanical Works (E&M) of the new extension (Details are in Section
4.1.1.2 Present Route Extensions), BMA opted to outsource the operation
of the extension to BTSC. The extension began providing services to the
public on 15 May 2009.

For Fiscal Year 2010, the BTS SkyTrain System served 144.5 million
passengers or an average of 451,300 passengers per weekday, the highest
since BTS SkyTrain System has been operating. Since the commencement of
operations of BTS SkyTrain System, the number of passengers using the
BTS SkyTrain System and the farebox revenue continue to increase (refer
to the table below). Fiscal Year 2008 is the first fiscal year in which
the number of passengers decreased since the start of the operation in
1999. This was partly due to political uncertainty, including the coup
in September 2006 and bombs in Bangkok at the end of 2006. Therefore,
the number of passengers in calendar year 2007 (Jan 2007 – Dec 2007)
declined from the same period a year earlier, causing the number of
passengers in Fiscal Year 2008 to decrease by 3.9%.

However, the number of passengers increased by 2.1% in Fiscal Year 2009
compared to the same period in 2008. This was due to the improvement of
the political situation. Furthermore, real estate development projects
continue to increase along the BTS route. As for Fiscal Year 2010, the
number of passengers increased by 6.3%, due to the opening of the Silom
Line extension.

Number of Passengers and Average Fare

  --------------------------------------------------------------------------------------------------------------------------
               Fiscal                                                                                              
               Year                                                                                                
               Ended                                                                                               
               March 31                                                                                            
  ------------ --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
               2000      2001      2002      2003      2004      2005      2006      2007      2008      2009      2010

  No. of       17,540    58,818    79,253    96,491    105,093   118,465   131,887   138,558   133,128   135,939   144,474
  Passengers                                                                                                       
  (‘000)                                                                                                           

  Growth                 235.3     34.7      21.8      8.9       12.7      11.3      5.1       (3.9)     2.1       6.3
  Rate(%)                                                                                                          

  No. of days  118       365       365       365       366       365       365       365       366       365       365

  Average      148,641   161,146   217,133   264,360   287,140   324,561   361,335   379,610   363,737   372,438   395,820
  passengers                                                                                                       
  per day                                                                                                          
  (pax/day)                                                                                                        

  Growth Rate            8.4       34.7      21.8      8.6       13.0      11.3      5.1       (4.2)     2.4       6.3
  (%)                                                                                                              

  No. of       11,778    43,004    59,172    73,367    81,226    91,155    101,214   104,790   101,990   104,143   110,117
  Passengers                                                                                                       
  –Weekday                                                                                                         
  (‘000)                                                                                                           

  Growth Rate            265.1     37.6      24.0      10.7      12.2      11.0      3.5       (2.7)     2.1       5.7
  (%)                                                                                                              

  No. of       80        244       243       244       247       246       246       241       246       245       244
  weekdays                                                                                                         

  Average      147,227   176,246   243,507   300,683   328,852   370,547   411,437   434,812   414,595   425,076   451,300
  passengers                                                                                                       
  per weekday                                                                                                      
  (pax/day)                                                                                                        

  Growth Rate            19.7      38.2      23.5      9.4       12.7      11.0      5.7       (4.6)     2.5       6.2
  (%)                                                                                                              

  Farebox      477.4     1,419.0   1,779.9   2,122.2   2,293.5   2,573.4   2,817.4   3,065.8   3,224.2   3,292.3   3,488.5
  revenue –                                                                                                        
  before                                                                                                           
  discount                                                                                                         
  (Baht                                                                                                            
  million)                                                                                                         

  Growth Rate            197.3     25.4      19.2      8.1       12.2      9.5       8.8       5.2       2.1       6.0
  (%)                                                                                                              

  Average fare 27.22     24.13     22.46     21.99     21.82     21.72     21.36     22.13     24.22     24.22     24.15
  per                                                                                                              
  passenger                                                                                                        
  (Baht/pax)                                                                                                       

  Growth Rate            -11.4     -6.9      -2.1      -0.8      -0.5      -1.7      3.6       9.5       0.0       -0.3
  (%)                                                                                                              
  --------------------------------------------------------------------------------------------------------------------------

Source: BTSC’s financial statements

Farebox

BTSC collects fares based on distance traveled (Distance Related Fare).
At present, the fare rate collectible by BTSC (Effective Fare) is fixed
at a progressive rate based on the number of stations traveled by a
passenger, ranging from Baht 15 to Baht 40 as shown in the table below.
BTSC may, from time to time, provide fare discount under sales promotion
activities.

  ------------------- ---------- --- ---- --- ---- --- ---- --- ---- --- ---- ---- --------
                      Stations                                                     

                      0          1   2    3   4    5   6    7   8    9   10   11   12 and
                                                                                   beyond

  Farebox (Baht)      15             20       25       30       35       40        
  ------------------- ---------- --- ---- --- ---- --- ---- --- ---- --- ---- ---- --------

The Effective Fare is determined by the Concession Agreement, which
allows BTSC to collect fares according to distance traveled and
determines the fare ceiling (Authorized Fare). The Authorized Fare is
currently at Baht 15 to Baht 45. However, BTSC may set the Effective
Fare at a rate lower than the Authorized Fare as BTSC’s management deems
appropriate.

Under the Concession Agreement, the Effective Fare may be raised at any
time after a 18 month period from the pervious increase of the Effective
Fare lapses, but the increase shall not exceed the Authorized Fare.
However, if BTSC wishes to increase the Effective Fare more frequently
than the said 18 month period, such increase must be approved by the
BMA. If approved, BTSC must notify the BMA and the public in writing of
the increased fare rate at least 30 days in advance of the effective
date of such increase.

According to the Concession Agreement, the Authorized Fare can be
adjusted in two ways as follows:

-   Normal Adjustment: BTSC may request an increase in the Authorized
    Fare by an amount not exceeding 7% of the previous rate if the
    monthly Customer Price Index for Bangkok (“Index”), as determined by
    the Ministry of Commerce of Thailand, is equal to or exceeds 5% of
    the Reference Index of any month over 12 months. (Reference Index
    refers to the latest index used in adjusting the Authorized Fare).

-   Special Adjustment upon the occurrence of any of the following
    events:

-   The monthly Index increases or decreases by more than 9% compared to
    the monthly Index which is at least 12 months ago;

-   The foreign exchange rate between Baht and U.S. Dollars is 10%
    higher or lower than the reference rate (the reference rate means
    the currency exchange rate as announced by the Bank of Thailand and
    used in the latest adjustment of the Authorized Fare, which is
    equivalent to Baht 39.884 per U.S. Dollar);

-   The interest rates of BTSC’s domestic and foreign currency loans are
    10% higher or lower than the “reference rate.” (The domestic
    reference interest rate refers to the average rate of the domestic
    minimum lending rates of Bangkok Bank Public Company Limited, Krung
    Thai Bank Public Company Limited, Kasikornbank Public Company
    Limited and Siam Commercial Bank Public Company Limited used in the
    latest adjustment of the Authorized Fare while the foreign reference
    interest rate refers to the London Interbank Offering Rate (“LIBOR”)
    that was used in the latest adjustment of the Authorized Fare;

-   BTSC bears much higher or lower electricity costs;

-   BTSC invests significantly beyond the scope of work under the
    Concession Agreement; or

-   BTSC incurs “Exceptional Risk,” as defined in the Concession
    Agreement.

The Special Adjustment of Authorized Fare must be mutually agreed upon
by both parties to the Concession Agreement. If no agreement can be
reached within 30 days, such matter will be referred to and determined
by the Advisory Committee. The Advisory Committee consists of two BTSC
directors, two BMA directors and three independent directors appointed
by the four foregoing directors. If the Advisory Committee agrees to
adjust the Authorized Fare, but the Government has a policy to fix the
fare rate to suit the situation, BTSC cannot adjust the Authorized Fare.
However, the Government will take appropriate measures to compensate for
the loss incurred by BTSC due to the restriction on fare adjustment.

1.  Present Route Extensions

Following the success of the BTS SkyTrain System, both the government
and BMA have a policy to invest in the mass transit systems projects to
service the population of Bangkok and its vicinity. These projects
include the Green Line Extension with the first extension line completed
being the 2.2 km Silom Line extension.

BMA financed and constructed the Civil Works and E&M Works of the 2
stations, Krung Thonburi and Wongwienyai stations, in the 2.2 km Silom
Line extension from Taksin Bridge crossing over the Chaopraya River to
Wongwienyai. BTSC benefits from this extension as it feeds more
passengers into the BTS SkyTrain System.

In addition, BTSC is engaged by Krungthep Thanakom to assist in the
preparation of the Silom Line extension service including the
preparation of equipment, trains, recruiting and training staff. On 12
May 2009, BTSC was engaged by BMA to provide operation and maintenance
services for the Silom Line extension in accordance with the Operational
and Maintenance Service Agreement.

According to the agreement with BMA, BTSC is required to acquire trains
to service such extension and to repair and maintain such trains. In
return, BTSC will receive a fee of approximately Baht 184.2 million per
year, which shall be adjusted in accordance to the conditions set forth
in the agreement. The agreement covers a period of 28 months commencing
from the date the service is first provided and BTSC has the option to
extend the agreement to 21 years to be equal to the Concession
Agreement.

As for the passengers traveling on both the BTS SkyTrain System and on
BMA’s Silom Line extension, BMA and BTSC will allocate the farebox fares
between the parties in accordance with the calculation method as
specified in the Memorandum of Agreement, executed on 31 August 2009.
The farebox revenue is split according to the actual distance passengers
travel under each system, with variation based on ticket types.

2.  Planned Route Extension from the Existing BTS SkyTrain Route by BMA
    and the Government (Green Line Extension)

-   With respect to the 5.2 km extension of the Sukhumvit Line from On
    Nut to Baring, BMA has the policy to follow a similar approach and
    structure to the Silom Line Extension, from Sapan Taksin to
    Wongwienyai, that is, BMA will fund the construction and own all
    Civil Works and Engineering & Mechanical Works. It will then engage
    the private sector for the procurement of trains, operational and
    maintenance works. BTSC believes that it is the most ready and
    suitable company to be the operator of this extension. At present,
    Civil Works and track works has been completed and BMA is in the
    process of searching for the operator of the Electrical & Mechanical
    system. This extension is expected to be completed and to open for
    service by mid 2011.

-   With respect to the 5.3 km extension of the Silom Line from
    Wongwienyai to Phetkasem Road, Bangwa, BMA is following a similar
    approach and structure to the Silom Line Extension. At present, BMA
    has completed the construction of trackwork while construction of
    the stations, rail works, and the Engineering & Mechanical Works is
    under way. This extension is expected to open for service by the end
    of 2011.

-   The 12 km extension of the Sukhumvit Line from Mo Chit station to
    Saphanmai and a 13 km extension from Baring station to Samut Prakan
    have been approved by the government, who has assigned the Mass
    Rapid Transit Authority of Thailand (“MRTA”) to invest in the Civil
    Works. With respect to investments in Engineering & Mechanical
    Works, train operations, fare box collection and maintenance, it is
    anticipated that a private sector entity will be chosen to be an
    investor in the same manner as previous investments in the Blue Line
    of the MRT subway system. BMA has a concept to co-manage the train
    operation and arrange for connections with other mass transit
    transportation for greater convenience to the passengers. BTSC
    believes that it is well-positioned to operate both extension lines
    as BTSC can provide greater convenience to the passengers through a
    single train, without having to transfer trains. Furthermore, BTSC
    believes that BTSC or the Company will incur lower investment and
    operational cost compared to other operators as BTSC can leverage on
    the existing system. On the other hand, other operators will be
    required to invest in a new control centre and other systems.

[][]

1.  Operations and Services

Trackwork

The trains operate on a dual-rail track elevated approximately 12 meters
above the street. The tracks are supported by a pre-cast, segmented
viaduct structure which is supported by reinforced concrete columns.
Each column is supported by piles which extend approximately 55 meters
underground and are 30-35 meters apart or more for columns located
around junctions. The dual-rail track is made of steel and the
electricity is provided by means of a third rail which runs parallel to
the trackwork. The third rail is made of steel and aluminum covered with
another layer of metal for neatness and safety reasons.

Rolling Stock

At present, BTSC has a total of 35 units of rolling stock manufactured
and specifically designed by Siemens to suit Bangkok’s conditions. Each
rolling stock unit consists of 3 cars with the total capacity for 1,106
passengers each, divided into 126 seated passengers and 980 standing
passengers. Each rolling stock can accommodate up to 6 cars. Each car
has forty-two seats, is air-conditioned and is connected by a walk way
to allow passengers to walk between the cars.

The rolling stock is powered by an AC electric motor at 750 volts
generated from the third rail system. The average speed at which the BTS
SkyTrain System runs is approximately 35 kilometers per hour (including
time for passengers boarding the trains), with a maximum speed of 80
kilometers per hour. The wheels are installed with noise reduction
equipment.

To support the increased number of passengers and the 2.2 kilometer
Silom Line Extension from Taksin Bridge to Wongwienyai which commenced
operation in 2009, BTSC has purchased an additional 12 four-car trains,
totaling 48 cars, from CRC, the leading manufacturer of trains and
electric trains in the People’s Republic of China. The trains that BTSC
previously purchased mainly used equipment from Europe. CRC will
gradually import all trains into Thailand by June 2010 and they are
expected to be ready for service by December 2010. BTSC chose to
purchase the additional 12 trains from CRC instead of Siemens because it
viewed that the CRC proposal would benefit BTSC more, both in terms of
price and technique, as well as conditions of the maintenance service.

  4.1.1.4.3 SkyTrain Stations

The BTS SkyTrain System comprises 23 elevated stations, including one
interchange or central station at Siam. BTS SkyTrain stations have been
designed to avoid both ground and underground infrastructure, as well as
to take up as little street surface as possible. Furthermore, each
station has a single column support structure and is approximately 150
meters long. Each station consists of 3 levels:

-   The street level, the lowest level of the station, is the entry
    point to passenger areas. Stairways, escalators, and elevators (in
    some stations) lead the passengers to the station concourse. The
    street level is also used to store various equipment, such as
    electric generators, fuel tanks, water pumps and water tanks;

-   The concourse level is located above the street level and leads the
    passengers to the train platform. The concourse level is divided
    into a public area for those who have not paid the fare, and
    internal station area after passengers have paid the fares. The
    public area contains an information counter, the ticket sales booth,
    the automatic ticket machine, shops, ATM machines, small food kiosks
    and other amenities. For the internal station area, apart from the
    stairways and escalator to the platform floor, there are additional
    amenities such as newsstands and restricted areas accessible only by
    the Company’s staff, such as the control room; and

-   The platform level is the highest level of each station. Normal
    platform level will have the train rail in the middle and the
    platform on both side of the rails, except for the Siam interchange
    station which has 2 platform levels to facilitate passenger transfer
    between the Silom Line and the Sukhumvit Line and the platform on
    each level is located at the middle thereof.

To accommodate handicapped passengers, BMA constructed elevators in 5
stations, i.e. Mo Chit, Siam, Asok, On Nut and Chong Nonsi stations.
BTSC is responsible for maintaining these elevators and BMA is in the
process of installing elevators at all stations.

All BTS stations are equipped with a warning system, a protection
system, and an extinguishing system. Vulnerable areas, such as machine
rooms, are installed with sprinkler systems or Carbon Dioxide gas
extinguishing systems. (Please see Section 4.1.1.4.10 “Security
System”). All stations have a backup power supply system. In addition,
approximately half of BTS stations have an electricity sub-stations to
provide electricity to BTS’s third rail to power the trains. Each
station has a station manager who is responsible for ensuring safe and
efficient operation. Station managers will monitor the system through
CCTV and communicate with passengers and train controllers.

In addition, recognizing the importance of attracting tourists to use
the BTS SkyTrain System as their means of transportation in Bangkok,
BTSC has set up tourist information centers in Siam, Nana and Taksin
Bridge stations. At the tourist information centers, visitors can get
information on Bangkok’s tourist attractions and assistance with
traveling around Bangkok. Services include offering boat tickets for
Chao Praya River Tours, long distance calling, internet services and
sales of souvenirs. The tourist information centers are open daily from
8:00 am to 8:00 pm.

Several stations have sky-bridges and walkways that connect the
stations’ concourses directly to neighboring hotels, shopping malls and
business centers. BTSC receives payment from the owners of relevant
buildings for the permission to construct sky-bridges and walkway
connections with the BTS SkyTrain System. The owners of such relevant
buildings remain responsible for the construction and maintenance costs
of their respective sky bridge and walkway connections. According to
BMA’s policy, seeking commercial benefits from such sky-bridges and
walkway connections is not allowed.

Some examples of significant connections are as follows:

+------------+------------------+------------------+------------------+
| Stations   | Shopping Malls   | Hotels           | Buildings and    |
|            |                  |                  | others           |
+============+==================+==================+==================+
| Mo Chit    |                  |                  | MRT station      |
+------------+------------------+------------------+------------------+
| Victory    | Fashion Mall and |                  | Uthomporn        |
| Monument   | Century Movie    |                  | Building         |
|            | Plaza            |                  |                  |
+------------+------------------+------------------+------------------+
| Ra         |                  | The Asia Hotel   |                  |
| tchathewee |                  | Bangkok          |                  |
+------------+------------------+------------------+------------------+
| Siam       | Siam Center      |                  |                  |
|            | Central World    |                  |                  |
|            | Siam Paragon     |                  |                  |
|            | Digital Gateway  |                  |                  |
+------------+------------------+------------------+------------------+
| Chid Lom   | Central Chidlom  | Grand Hyatt      | Maneeya Center   |
|            |                  | Erawan Bangkok   |                  |
|            | Gaysorn Plaza    | Hotel            |                  |
|            |                  |                  |                  |
|            | Amarin Plaza     |                  |                  |
+------------+------------------+------------------+------------------+
| Phloen     |                  |                  | Wave Place       |
| Chit       |                  |                  | Building         |
+------------+------------------+------------------+------------------+
| Asok       | Robinson         | Sheraton Grande  | MRT station      |
|            | Department Store | Sukhumvit Hotel  |                  |
|            |                  |                  | Times Square     |
|            |                  |                  | Building         |
|            |                  |                  |                  |
|            |                  |                  | Exchange Tower   |
+------------+------------------+------------------+------------------+
| Phrom      | Emporium         |                  |                  |
| Phong      |                  |                  |                  |
+------------+------------------+------------------+------------------+
| On Nut     | Tesco Lotus      |                  |                  |
+------------+------------------+------------------+------------------+
| Sala Daeng | Silom Complex    |                  | Thaniya Plaza    |
|            |                  |                  | Building MRT     |
|            |                  |                  | station          |
+------------+------------------+------------------+------------------+
| National   | Mah Boon Krong   |                  | Bangkok Art and  |
| Stadium    | (MBK)            |                  | Culture Centre   |
+------------+------------------+------------------+------------------+
| Ekamai     | Major Cineplex   |                  | Nusasiri         |
|            |                  |                  | Building         |
+------------+------------------+------------------+------------------+

Furthermore, the BTS SkyTrain System links to the MRT subway system at
three stations, namely Mo Chit, Asok and Sala Daeng stations.

  4.1.1.4.4 Power Supply

The Bangkok Metropolitan Electricity Authority (“BMEA”) supplies power
to the BTS SkyTrain System via 2 power distribution stations, one at Mo
Chit Station and another at Paisingto. The BTS SkyTrain System has been
designed to operate from power supplied by either or both stations in
order to avoid any disruption to the SkyTrain service in case any one
power distribution station fails to supply power. Since BTSC officially
commenced the operation of the BTS SkyTrain System in December 1999, it
has never had to halt operation due to power disruption and there have
never been incidents whereby both power distribution stations failed to
supply power at the same time. Furthermore, during service braking, the
traction motor will apply electrical regenerative brake at the high
speed which helps which helps the train to stop faster. At the same
time, electrical power will be generated and fed back to the system for
use in other trains. This technology reduces the power usage and wear
and tear of the brake system.

In case of power failure or if BMEA is unable to supply power, the
emergency power supply will operate automatically. The emergency power
supply has been installed to protect the loss of critical electronic
data, reduce the time for returning to normal operation and ensure the
safety of passengers by moving trains to park at the nearest station.
However, no situation has ever arisen that required the emergency power
supplies.

  4.1.1.4.5 Control Center

The BTS SkyTrain System is controlled from BTSC’s headquarters at Mo
Chit, where control officers are stationed 24 hours a day. Each control
officer uses computer control panels and monitors as tools to control
the system’s operation. This control center is responsible for
monitoring the BTS SkyTrain System to ensure operation in accordance
with daily time schedules and designated routes.

The control center will determine the minimum safety distances between
trains. Because the control center can locate all trains in the BTS
SkyTrain System on closed circuit television monitors, BTSC is able to
maintain effective control over the BTS SkyTrain System. In addition,
there are radio communication equipment for control centre to
communicate with the drivers of each train and with the stationmaster at
each station, acting as the central coordinator should any problems
arise.

  4.1.1.4.6 Signaling System

The signaling system has been designed to provide safe and efficient
operation of the BTS SkyTrain System. It transmits control data to the
trains through the rails and exchanges information through
bi-directional data links at stations. In addition, it also uses a fiber
optic network for transmitting non-safety related information to the
control center. In the event of any disruption, trains will be able to
operate in either direction or either line in the safest manner and at
normal speeds.

BTSC is currently upgrading its signaling system by signing an agreement
with Bombardier Group to replace the existing Signaling System with a
more modern system which requires less maintenance. (More details in
Section 4.5: Future Projects)

  4.1.1.4.7 Communications System

Communications are made through telephone, radio, intercom, CCTV system
and public radio broadcasting. The main communication is done through
the fiber glass system. Telephones are installed at every key area. In
case of emergency, passengers can communicate with drivers through an
intercom installed in the train. Public radio broadcasting can be done
in many forms such as from the control center to the platform and from
the train driver to passengers.

  4.1.1.4.8 Tickets System and Ticket Types

The automatic fare collection system is controlled by the central
computer system. The automatic fare collection system comprises
automatic ticket gates which can support both magnetically encoded
tickets and contactless smartcards. Passengers enter the system by
inserting the encoded ticket or tapping the contactless smartcard at the
ticket readers, which will record the station and time that passengers
enter the system in the accounting and operation data system. Usage
history of all stored-value tickets is kept by the central computer
system so that unusual circumstance, such as misuse or forgery, can be
detected quickly and appropriate action can be taken.

Presently, BTSC issues the following types of tickets:

+--------------------------------------------------+-------------------+
| Ticket Type                                      | Fiscal Year 2010  |
|                                                  |                   |
|                                                  | Revenue Breakdown |
|                                                  | (%)               |
+--------------------------------------------------+-------------------+
| Single Journey Ticket (Fare varies with the      | 49.7              |
| number of stations traveled; Fare ranges from    |                   |
| Baht 15-40)                                      |                   |
+--------------------------------------------------+-------------------+
| Stored Value Ticket                              | 16.3              |
+--------------------------------------------------+-------------------+
| 30-Day Smart Pass for general person; Specified  | 26.3              |
| number of trips but no distance limit; 30 days   |                   |
| life                                             |                   |
+--------------------------------------------------+-------------------+
| 30-Day Smart Pass for students; Specified number | 6.1               |
| of trips but no distance limit; 30 days life     |                   |
+--------------------------------------------------+-------------------+
| One-Day Pass; One-day unlimited travel           | 1.6               |
+--------------------------------------------------+-------------------+

  4.1.1.4.9 Insurance

BTSC maintains non-life insurance policies for the BTS SkyTrain System
covering Third Party Insurance, General Third Party Liability and
Product Liability Insurance, and Property “All Risks”, Machinery
Breakdown and Business Interruption Insurance as per conditions
specified in the Concession Agreement, and Property Terrorism Insurance.
BTSC’s policy is to continuously maintain the insurance policies, except
for terrorism insurance, which is subject to evaluation on an annual
basis. The primary beneficiaries of these insurance policies are BMA and
BTSC.

  Details of Insured Amount:

+---+-------------------------------+-----------------------------------+
|   | Type of Insurance             | Insured Amount                    |
+===+===============================+===================================+
| 1 | 1.1 General Third Party       | US Dollars 25,000,000 (For each   |
|   | Liability                     | and every event)                  |
+---+-------------------------------+-----------------------------------+
|   | 1.2 Product Liability         | 25,000,000 US Dollars (for each   |
|   |                               | and every event and all events    |
|   |                               | collectively)                     |
+---+-------------------------------+-----------------------------------+
| 2 | 2.1 Property “All Risks”      | US Dollars 250,000,000 (For each  |
|   |                               | and every event)                  |
+---+-------------------------------+-----------------------------------+
|   | 2.2 Machinery Breakdown       | US Dollars 25,000,000 (For each   |
|   |                               | and every event)                  |
+---+-------------------------------+-----------------------------------+
|   | 2.3 Business Interruption     |                                   |
+---+-------------------------------+-----------------------------------+
|   |   (1) Arising from 2.1 -      | (1) US Dollars 93,500,000 (For    |
|   |   Property “All Risks”        | each and every event)             |
+---+-------------------------------+-----------------------------------+
|   |   (2) Arising from 2.2 -      | (2) US Dollars 25,000,000 (For    |
|   |   Machinery Breakdown         | each and every event)             |
+---+-------------------------------+-----------------------------------+
| 3 | Property Terrorism            | US Dollars 10,000,000 (for each   |
|   |                               | and every event and all events    |
|   |                               | collectively)                     |
+---+-------------------------------+-----------------------------------+

  4.1.1.4.10 Security System

Since commencement of official operations in December 1999, BTSC has
serviced more than 1,160 million trips with no loss of life and no
significant injury. BTSC is dedicated to implementing strict safety
codes; all BTS SkyTrains and stations are equipped with emergency
equipment, and BTSC has a handbook on rules, regulations and emergency
procedures available to all passengers. BTSC tested its system for over
6 months prior to starting official operations in order to identify and
correct any flaws in the safety system. Since the start of operations,
BTSC constantly trains and drills staff on safety and emergency
procedures.

All trains are controlled by one driver who may choose to operate the
train through an Automatic Train Operation System (“ATO”) or a system
controlled by the driver (“Supervised Manual”). Electric trains are
normally operated under the ATO system, which controls train operations
at all times. Under the ATO system, the driver is only responsible for
closing doors and ordering the train to move so as to ensure that all
passengers board the train before the doors are closed. The ATO system
will adjust the operation schedule in order to support the maximum
number of passengers during peak hours and will adjust the operation
schedule for energy saving during off-peak hours.

Every train is equipped with an Automatic Train Protection System
(“ATP”) that ensures safety at all times. The ATP system controls
operations under both the ATO system or under the Supervised Manual
system. In any event which may cause danger, the ATP system overrides
the train and automatically shuts down operations. In case of an
emergency, the train will be operated by the Restricted Manual (“RM”)
system by which the train’s speed is limited to 25 kilometers per hour.
Passengers can communicate with the driver through intercom or radio
communications. Furthermore, the train radio system enables the driver
to contact the control center at all times. In addition, major materials
used in all trains are non-flammable materials and all trains are
equipped with fire extinguishers, so as to prevent fires from spreading
if fire breaks out. Emergency evacuation is conducted through the exits
located at the front and back of each train.

Each station was designed with strict safety codes for passengers’
benefit and features emergency exits, a Public Announcement (“PA”)
system to convey emergency warnings, a fire protection system in
accordance with the standards of the National Fire Protection
Association (“NFPA”) and lightning rods. In addition, all stations are
equipped with CCTV and a central control system to regulate station
escalators and elevators. The control panel can be used to stop trains
and control its doors in case of an emergency.

Each train’s motors have enough power so that a train full with
passengers could drag or push another train full of passengers to the
nearest station for transferring passengers if the system fails. When a
blackout occurs, the train has an electricity reserve system so that
relevant safety systems continue to work.

  4.1.1.4.11 Fire Protection System

As the BTS SkyTrain System is an elevated rail system, passengers are
exposed to a significantly lower risk of injury due to fire or smoke
inhalation than underground systems. BTSC has designed advanced fire
protection systems in accordance with NFPA practice. Administration
buildings and depot have sprinkler systems installed. These systems are
supported by booster pumps and water storage facilities. Fire hose
cabinet, hose reels and portable extinguishers are also placed in the
stations. In areas where the equipment could be damaged by water, BTSC
has installed a gas drenching system instead. Manual and automatic fire
alarms are located all over the depot and stations.

  4.1.1.4.12 Maintenance Agreement

Currently, Siemens is the provider of maintenance services for the BTS
SkyTrain System and Siemens uses its own personnel pursuant to the
Maintenance Agreement made between BTSC and Siemens dated 30 December
2004 (the “Maintenance Agreement”). However, BTSC has assigned its own
personnel to work jointly with Siemens so that BTSC can manage and
perform maintenance by itself the in case that BTSC chooses not to
extend the Maintenance Agreement.

The scope of Siemens’ services under the Maintenance Agreement includes:

-   Maintenance of electrical and mechanical system

-   Planned overhauls and asset replacements

-   Unplanned asset replacements.

For Fiscal Year 2010, fees paid to Siemens for maintenance of the
electrical and mechanical system and planned overhauls and asset
replacements were Baht 345.6 million and Baht 59.3 million respectively.
These charges, payable in monthly installments, are based on mileage at
the rate pre-specified and shall be adjustable upwards in the case that
the actual mileage is more than the specified mileage. The charges
payable by BTSC to Siemens for unplanned asset replacements are based
upon price quote by Siemens.

Under the conditions in the agreement, Siemens is required to reimburse
BTSC for up to 5% of the annual maintenance fee for any contract year if
the electrical and mechanical system fails to meet specified performance
criteria.

The term of the Maintenance Agreement has been effective from 1 January
2005 and will expire on 30 December 2014. BTSC can request for contract
extension for another 10 years under the same terms and conditions
(except for the scope of services and maintenance fee to be renegotiated
by the parties) by notifying Siemens at least 12 months prior to the
expiration of the agreement, provided that the parties must enter into a
new agreement at least 6 months prior to the expiry of the existing
agreement.

Maintenance in each year will be prescribed in advance according to the
Maintenance Agreement and there shall be a plan to provide enough trains
for a normal service. Moreover, BTSC schedules overhauls every 7-8 years
by gradually repairing each train in order not to affect the normal
service, which will take approximately 2 years to complete. In this
regard, BTSC began the first overhaul at the beginning of 2006 and it
was completed at the end of 2008. The overhaul did not affect the
service.

The scope of the Maintenance Agreement does not cover the additional 12
trains purchased from CRC. BTSC staff will provide maintenance services
to the 12 additional trains purchased. According to the terms of the
purchase agreement for the additional 12 trains, CRC shall provide
training for the operation and maintenance of such trains for BTSC staff
within 1 month before the delivery of the first train and for overhaul
maintenance within 18 months after the delivery of the first train.

1.  Bus Rapid Transit

Bus Rapid Transit (BRT) is a project pioneered by BMA when Mr. Apirak
Kosayothin was the governor of Bangkok. The purpose of this project is
to provide a bus service which is faster than the general bus service by
having a special lane for BRT.

BRT has 12 stations, covering 15 km., from Chong Nonsi, Narathiwat
Ratchanakarin road, crossing Krungthep Bridge to Ratchapruek road as
shown in the map below. The first BRT station is connected to the BTS
Chong Nonsi station. BMA invested in the construction of the bus lane
and bus stations while their concept is to hire a private entity to
procure and operate the buses as well as manage the stations. The
construction of the bus lane and stations is almost completed and test
runs began on 29 May 2010.

[]

BTSC has been chosen by BMA to operate the buses and bus stations. On 10
February 2010, Krungthep Thanakom entered into the contract to hire BTSC
to operate and procure the buses for the Chong Nonsi – Ratchapruek line.

BMA earns all revenues from BRT fares while BTSC will earn fees for the
bus operation and procurement service from BMA, through Krungthep
Thanakom, in the total amount of Baht 535 million throughout the
contract life, regardless of the number of passengers. In the first few
years, BTSC will earn a fee of approximately Baht 55 million per annum.
The fees may be adjusted under the conditions specified in the contract.
The contract life is 7 years, starting from the first day of service.
Under the contract, BTSC will bear the operating expenses, maintenance
expenses and investment in the buses. BTSC has ordered 25 buses from a
leading bus manufacturer in China, which is expected to cost Baht 187
million in total. The buses are air-conditioned, NGV-fueled and have
better features than the general buses used in Thailand.

Besides the bus operation and procurement contract, on 11 May 2010, BTSC
has also entered into the bus station operation contract with Krungthep
Thanakom worth Baht 737 million. The contract life is 7 years, starting
from the first day of service. Under this contract, BTSC will earn fees
for performing obligations hereunder and may have the opportunity to
manage the advertising space at the stations.

In addition to the revenue from bus and station operations, BTS SkyTrain
System is expected to benefit from increased passengers as BRT will make
it more convenient for passengers to use the BTS SkyTrain System as the
BRT route passes through residential areas and business districts, with
high population density and traffic jams, and connects to BTS Chong
Nonsi station. Furthermore, BTSC also has identified the opportunity to
manage the advertising space in the buses and at the stations.

BMA also plans to launch 2 other BRT routes, which are 1) Mochit –
Government Center on Chaeng Wattana road, with 7 stations and covering a
total distance of 13.5 km. and 2) Chong Nonsi – Pracha Uthit, with 7
stations and covering a total distance of 19.5 km. As these two routes
would be connected to the BTS SkyTrain System, BTSC is therefore
interested in these projects and will closely monitor the development of
these projects in order to evaluate the opportunity to participate in
them. In evaluating these projects, BTS will consider factors including
the project details and appropriate investment cost, as well as the
project return.

2.  Bangkok Transportation Industry Overview

Bangkok is the capital of Thailand with a total area of 1,562.2 square
kilometers and very high population density. At present the
transportation becomes the principal problem in Bangkok due to high
population density and limited and inadequate mass transit networks. At
the end of year 2008, the population of Bangkok metropolis according to
census figures was approximately 5.7 million and the number could be as
high as 7 million if the hidden population is accounted for (citizens
living in Bangkok without having their names in the House Registration
System).

The continuous population growth in Bangkok has increased demand for
public transportation systems in Bangkok and driven the development of
mass transit systems.

  ---------------------- ----------- ----------- ----------- ----------- -----------
  Number and Growth of                                                   
  Population in Bangkok                                                  
  as of 31 December                                                      

  Unit : persons         2004        2005        2006        2007        2008

  Bangkok Population     5,634,132   5,658,953   5,695,956   5,716,248   5,710,883

  Growth (%)                         0.4         0.7         0.4         0.0
  ---------------------- ----------- ----------- ----------- ----------- -----------

Source: Ministry of Interior

The areas along the route of BTS SkyTrain System, which is largely
located in the central business district (CBD areas including Silom,
Sathorn, Surawong, Rama IV, Ploenchit, Wireless, early part of Sukhumvit
and Asoke areas) has continuously grown as evidenced by a continuous
growth in supply of condominiums in the centre of Bangkok (centre of
Bangkok includes CBD areas, end of Sukhumvit road and Rama III road).
The growth rates still remain high in 2009, and this should benefit the
BTS SkyTrain System which services the CBD areas.

  ------------------ ----------- ----------- ----------- ----------- ----------- -----------
  Number and Growth                                                              
  of Condominiums in                                                             
  the Centre of                                                                  
  Bangkok as of 31                                                               
  December                                                                       

  Unit : Unit        2004        2005        2006        2007        2008        2009

  Condominium        38,148      42,878      46,548      51,270      56,269      65,067
  (units)                                                                        

  Growth (%)                     12.4        8.6         10.1        9.8         15.6

  CBD (sqm.)         3,505,647   3,530,147   3,655,933   3,721,960   3,858,715   3,906,015

  Growth (%)                     0.7         3.6         1.8         3.7         1.2

  Outside CBD (sqm.) 3,679,529   3,679,529   3,806,509   3,828,809   3,938,420   4,077,420

  Growth (%)                     0.0         3.5         0.6         2.9         3.5

  Total Area (sqm.)  7,185,176   7,209,676   7,462,502   7,550,769   7,797,135   7,983,435
  ------------------ ----------- ----------- ----------- ----------- ----------- -----------

Source: CBRE Richard Ellis as of December 2009

1.  Electric Railway System

Even though there has been development of the electric railway system,
both underground and above ground, for more than 10 years, the ratio
between distance covered by the electric railway system in Bangkok and
population is 8.0 km per 1 million people, which is very low compared to
that of Singapore and Hong Kong. As such, accessibility to the electric
railway systems in Bangkok remains quite low, hence the opportunity to
expand the electric railway systems in Bangkok to be of the same
standard with such countries remains high.

  ---------------- ------------ -------------- --------------- -------------- ---------------
  Details of                                                                  
  Electric Railway                                                            
  System of                                                                   
  Important                                                                   
  Countries                                                                   

                   Population   System Length  City Size       Electric       City Size per
                   (million)    (Kilometers)   (Kilometers²)   Railway System Electric
                                                               Length per 1   Railway System
                                                               million people Length
                                                               (Kilometers)   (Kilometers²/
                                                                              Kilometer)

  Hong Kong (MRT)  7.0          209.9          1,104.4         30.0           5.3

  Singapore (SMRT) 5.0          118.9          710.3           23.8           6.0

  Bangkok (BTS &   5.7          45.7           1,568.7         8.0            34.3
  MRT)                                                                        
  ---------------- ------------ -------------- --------------- -------------- ---------------

Source: MTR Corporation Limited, SMRT Corporation Limited, Bangkok Metro
Public Company Limited, Bangkok Mass Transit System Public Company
Limited, and the Census and Statistics Department of Hong Kong and
Singapore as of December 2009.

Electric railway service per capita of population of Bangkok is still
low compared to Hong Kong and Singapore as the electric railway system
in Bangkok still has an inadequate area coverage, causing commuting by
electric railway to be inconvenient when compared to Hong Kong and
Singapore. The inadequate area coverage of the electric railway is one
of the reasons why the number of passengers using the system is still
low.

In 2009, the government, through the Office of Transport and Traffic
Policy and Planning (“OTP”), prepared the Urban Rail Transportation
Master Plan for Bangkok or “URMAP2” which has a duration of 20 years
(2010-2029). It will consist of 2 overlapping phases; the first phase
will last 10 years (2010-2019) and the second phase will last 20 years
(2010-2029), both of which, when completed, will expand rail line
coverage to 362.5 km and 487 km respectively presently the construction
of the rail of 43.5 km has been completed).

Currently, the government has adopted policies to stimulate the local
economy and resolve traffic problems in Bangkok by having a clearer
investment plan for the electric railway system. This investment plan is
part of the government Mega Project plan.

2.  Other Transportation Systems in Bangkok

  --------------------------- ----------- ----------- ----------- ----------- -----------
  Number and Growth of                                                        
  Registered Cars in Bangkok                                                  
  for the year                                                                

  Unit: Car                   2004        2005        2006        2007        2008

  Registered Cars             4,288,468   4,899,969   5,557,111   5,715,078   5,911,696

  Growth (%)                              14.3        13.4        2.8         3.4
  --------------------------- ----------- ----------- ----------- ----------- -----------

Source: Statistics Sub-Division, Technical and Planning Group, Land
Transport Management of the Department of Land Transport

The transportation of population in Bangkok maybe categorized into 2
major types: personal vehicle transportation and public transportation.
Currently, the principal public transportation to serve the traveling
population in Bangkok is the bus system.

From the past until present, the BMTA bus transportation in Bangkok and
the vicinity is quite limited as it needs to share road routes with
personal vehicles. As such, it inevitably encounters bad traffic
conditions particularly during rush hour.

It has been found that since 2005 there has not been significant
increase in the road space in Bangkok. In contrast, the number of
registered cars in Bangkok has continued to increase since 2004. Due to
the difference between the supply of road space in Bangkok and the
demand for space, traffic problems are dramatically increasing in
Bangkok. This is a key factor which should increase the number of
passengers of BTS SkyTrain in the future as more people turn to a faster
and more convenient way of transportation.

  ----------------------------------------------------------------------------------
  Number and Growth of                                                   
  Passengers per day in                                                  
  Bangkok for the year                                                   
  ---------------------- ----------- ----------- ----------- ----------- -----------
  Unit: Passengers per   2004        2005        2006        2007        2008
  day                                                                    

  Regular BMTA buses     1,168,055   830,792     766,545     932,947     894,937

  Air-conditioned BMTA   902,926     1,124,345   999,846     747,805     708,241
  buses                                                                  

  Total BMTA buses       2,070,981   1,955,137   1,766,391   1,680,752   1,603,178

  Growth rate (%)                    (6.0)       (10.0)      (5.0)       (4.6)

  Trains                 137,611     134,457     121,144     123,656     131,055

  Growth rate (%)                    (2.0)       (10.0)      2.0         6.0

  Subway                 73,263      156,720     158,428     163,523     162,099

  Growth rate (%)⁽¹⁾                 n.m.        1.1         3.2         (0.9)

  Electric Railway⁽²⁾    316,070     348,904     383,695     361,837     373,562

  Growth rate (%)                    10.4        10.0        (5.7)       3.2
  ----------------------------------------------------------------------------------

Source: Ministry of Transport, average assuming 365 days per year

(1) Commenced operation on 3 July 2004

(2) For the period from January - December

As traffic congestion increases, especially during rush hours, it causes
the average speed of the BMTA bus transportation system in Bangkok to be
low. The number of passengers of public buses decreased from two million
passengers per day in 2004 to 1.6 million per day in 2008, a decrease of
more than 22.6%.

The number of passengers of other alternatives, such as trains, is on a
decreasing trend as well. In the years 2004, 2005, 2006, 2007 and 2008,
the State Railway of Thailand estimated the number of train passengers
per day at approximately 137,611 persons, 134,457 persons, 121,144
persons, 123,656 and 131,055 passengers per day respectively, or a
decrease of 4.8% from 2004 to 2008.

While the number of passengers of buses and trains decreases, the
average number of passengers per day of the newer and more convenient
means of transportation such as subway and BTS SkyTrain System continues
to increase.

During the past five years, from 2004 to 2008, the fares for public
transportation, especially regular buses or air-conditioned buses, have
not changed significantly. Even though oil prices increased, the
government has conducted measures to maintain fares through subsidy.
Thus, most other transportation systems have not adjusted to increased
costs. The current transportation fares are summarized in the table
below. However, even with stable fares, demand for electric railway
remains unaffected (except for 2007, which was adversely affected by the
military coup and bombings which occurred at the end of 2006).

  ----------------------- ---------------- -------------------------------
  Fare Rates of Mass                       
  Transit System in                        
  Bangkok as of December                   
  2009                                     

  Types                   Fare (Baht)      Remarks

  Minibuses               6.50             Flat rate

  Utility trucks          5.50             Flat rate

  Cream-red buses         7.00             Flat rate

  White-blue buses        8.00             Flat rate

  Expressway buses        9.00             Flat rate

  Air-conditioned buses   11.00 – 19.00    Varies with distance traveled

  Air-conditioned buses   12.00 – 24.00    Varies with distance traveled
  (Euro II)                                

  Taxi                    ≥35              Starts at Baht 35 (for the
                                           first km.) and varies with
                                           distance traveled

  BTS SkyTrain            15 – 40          Starts at Baht 15 and varies
                                           with the number of stations
                                           traveled

  BMCL subway             16 – 41          Starts at Baht 16 and varies
                                           with the number of stations
                                           traveled
  ----------------------- ---------------- -------------------------------

Source: Bangkok Mass Transit Authority and information of BMCL Public
Company Limited

  4.1.3.3 Relevant Laws and Government Agencies

BTSC has been granted an exclusive concession from BMA to operate the
BTS SkyTrain System. TBTSC earns income from the BTS SkyTrain System and
associated business activities, including advertisements, licensing and
fare collection under the Concession Agreement for a period of 30 years
from the first date of commercial operations
5 December 1999.

As is normal with a project of this size and magnitude, certain
approvals, permits and authorizations by governmental agencies are
required prior to the commencement of operations. BTSC has obtained the
approvals and permits with respect to the relevant operation, including
permits covering the environment, operation and maintenance.

BTSC is subject to a number of laws and regulations, including laws of
general application and regulations specifically applicable to the
transportation business, the National Executive Commission’s
Announcement No. 58 and the Investment Promotion Act, including factory
business operation related laws. As a public limited company, the
Company is also subject to the provisions of the Public Limited Company
Act B.E. 2535 (1992) (as amended) and the SEC Act.

In addition, since BTSC’s operations fall within the meaning of “service
provider” under the Consumer Protection Act B.E. 2522 (1979), BTSC is
subject to consumer protection mechanisms for safety of use of goods and
services under the Consumer Protection Act B.E. 2522 (1979) and the
Consumer Case Procedure Act B.E. 2551 (2008), as well as regulations,
rules, orders and announcements issued therefrom.

1.  The Bangkok Metropolitan Administration (“BMA”)

BMA is the body that governs the Bangkok metropolitan area. BMA’s
functions include maintaining law and order, city planning, construction
and maintenance of roads, waterways and drainage systems, provision of
transportation services, traffic management, social welfare services,
and other services in Bangkok. BMA is headed by the Governor of Bangkok
who is elected and serves a four-year term. The Governor is assisted by
deputy Governors, who are each appointed by the Governor and serve a
four-year term. In addition, members of the Bangkok Metropolitan
Assembly are elected to represent the interest of the citizens under the
Bangkok Metropolitan Administration Act B.E. 2528 (1985). BMA is
organized into nineteen offices and fifty district offices.

BMA’s revenue comes from two sources: regular income and extra income.
The regular income is derived from local taxes, fees, fines, license
fees, service fees and rental fees for BMA’s assets. The extra income is
derived from government subsidies relating to projects specified by the
government.

Under the Concession Agreement, BMA is responsible for supervising
BTSC’s operations to be in accordance with the Concession Agreement. In
addition, BMA is responsible for approving construction designs relating
to the BTS SkyTrain System, including bridges between BTS stations and
nearby buildings.

2.  Office of National Environment Board (“ONEB”)

According to the Enhancement and Conservation of the National
Environmental Quality Act B.E. 2535 (1992) (the “Environmental
Enhancement Act”), major infrastructure projects with potential
environmental impacts must receive National Environvent Board (“NEB”)
approval prior to construction. Since the Environmental Enhancement Act
came into force on 9 April 1992, the same day the Concession Agreement
was signed and came after the Cabinet approved the concession, BTSC was
not required to obtain ONEB’s approval for the project. However, the
Environmental Enhancement Act will apply to any expansion of the BTS
SkyTrain System, including those initiated under the two supplements to
the Concession Agreement.

3.  Office of the National Economic and Social Development Board
    (“NESDB”)

The Act Governing the Consent for the Private Sector to Participate in
or Operate State Business B.E. 2535 (1992) (the “Joint Venture Act”)
empowers the NESDB to approve or disapprove certain economically or
socially significant projects. Since the concession was approved before
the Joint Venture Act came into force, BTSC is not obligated to seek
NESDB’s approval for its currently operating BTS SkyTrain System.
However, BMA may need to obtain the approval from NESDB for according to
such Act future expansion of the BTS SkyTrain System, depending on the
scale of the expansion.

1.  Property Business

Property business has been the Company’s business since the beginning of
operations in 1968. The Company has developed several types of projects,
ranging from condominiums to hotels and offices. The decision on which
types of projects to develop is largely determined by the location of
the land plot, including the connection to the mass transit system.
Given the broad range of projects that may be developed, the Company is
open to opportunities to bring in or join with other third parties if
they can contribute to the potential projects to enhance the Company’s
capacity.

After the acquisition of BTSC, the Company is planning to leverage the
expertise and knowledge accumulated to develop the properties that BTSC
currently owns with the purpose of generating a recurring source of
income in case that the SkyTrain concession is not renewed or extended
after its expiration in December 2029. The consolidation of BTSC’s land
bank adds land plots along the mass transit routes to the Company’s
existing portfolio which consists of land mostly located upcountry. As
such, the Company’s property projects are divided into properties along
mass transit routes and properties in other locations.

Investment in property projects, by its nature, has a higher risk than
operating the SkyTrain service; therefore, the Company has a policy to
develop projects in entities separated from BTSC.

1.  Properties along Mass Transit Routes

The properties along mass transit routes, particularly those on the
route of the BTS SkyTrain System, are of the highest priority to the
Company, given the advantages that the Company has in building a skywalk
connection from the BTS SkyTrain to the buildings. Moreover, the
development of residential buildings, office buildings or hotels will
enhance SkyTrain ridership.

The Company has 6 projects along a mass transit route, all of which are
located at or near existing or future SkyTrain stations. These projects
are currently in their early stage and more details are discussed in
section 4.5 Future Projects. The six projects are as follows:

+---------------------+------------------------------------------------+
| Projects            | Description                                    |
+=====================+================================================+
| Projects under      |                                                |
| development:        |                                                |
+---------------------+------------------------------------------------+
| Four Points by      | -   4 star hotel                               |
| Sheraton            |                                                |
|                     | -   Located next to BTS Surasak station        |
+---------------------+------------------------------------------------+
| Abstracts           | -   Condominiums under the Abstracts brand     |
| Phahonyothin Park   |                                                |
|                     | -   Close to Central Ladprao, along the green  |
|                     |     line extension route to Saphanmai          |
+---------------------+------------------------------------------------+
| Abstracts Sukhumvit | -   2-building low-rise condominium project    |
| 66/1                |     under the Abstracts brand                  |
|                     |                                                |
|                     | -   Located near Udomsuk station on SkyTrain   |
|                     |     Sukhumvit extension                        |
+---------------------+------------------------------------------------+
| Projects under      |                                                |
| study:              |                                                |
+---------------------+------------------------------------------------+
| The Langham         | -   Hotel and serviced apartment project       |
| Sukhumvit           |                                                |
|                     | -   Next to BTS Nana station                   |
+---------------------+------------------------------------------------+
| Langham Place       | -   Hotel project                              |
| Phayathai           |                                                |
|                     | -   Next to BTS Phayathai station and Airport  |
|                     |     Link station                               |
+---------------------+------------------------------------------------+
| JJ Park             | -   Studying and developing plan to develop    |
|                     |     the land into residential and office       |
|                     |     buildings                                  |
|                     |                                                |
|                     | -   Next to BTSC head office and close to BTS  |
|                     |     Mo Chit station                            |
+---------------------+------------------------------------------------+

1.  Properties in Other Locations

Properties that are not located along an existing mass transit route are
mostly the Company’s existing portfolio before the acquisition of BTSC,
both in Bangkok and upcountry. The properties include:

-   Property Development Projects

The Thana City project is located on Bangna-Trad Road Km. 14. The
project location offers convenient access to Bangna-Trad road, the
expressway, On-Nuch road, and Bangkok-Chonburi Motorway. The project
also offers easy access to many facilities such as shopping complexes,
universities, hospitals, Suvarnabhumi Airport and the Airport Link,
which will facilitate access to the city in the future.

The total project area of more than 1,600 rai has been developed with
comprehensive utilities and infrastructure in the midst of green space.
Residents can become members of the sports club, which consists of
outdoor sport area, being tennis courts, swimming pool, and indoor sport
area, being badminton courts, basketball courts, sauna, playground,
fitness and aerobic rooms. Furthermore, residents can become members of
the golf club, which has an 18-hole golf course, par 72 as well as a
golf driving range located within the project area. Thana City is a
large project that can serve the needs of all types of clients. The
Company has developed various types of property to fulfill various
clients’ demand, including Single Detached Houses with land, Townhouses,
Condominiums and Land for Sale. Parts of the project such as Prestige
House 1, which is a Single Detached House project with land of 400
square wah and above, are already completed and sold out.

In the Fiscal Year 2010, the Company began the renovation of units in
Thana City projects that are available for sale. As a result, in the
same period, the Company generated Baht 100.9 million from two Thana
City projects, namely Nouvelle and King Kaew condominiums, a 106.8%
increase over Baht 48.8 million generated in the Fiscal Year 2009. As of
31 March 2010, property development projects within Thana City are as
follows:

  ------------------------------------------------------------------------------
  Project Name   Thana City                                     
  -------------- --------------- -------------- --------------- ----------------
  Product Type   Single Houses   Townhouses     Condominiums    Land Plots

  Project Area   304-2-80 rai    14-3-20 rai    55-2-10 rai     120-3-7.5 rai

  Investment     Baht 618.3      Baht 133.9     Baht 2,579.9    Baht 214.4
  Capital        million         million        million         million

  Project Value  Baht 1,946.1    Baht 212.8     Baht 2,680.6    Baht 1,384.9
                 million         million        million         million

  Unit Type      100 – 250 sq.   3-4 storey,    Low / mid rise  Land for sale
                 wah             40-60 sq. wah  buildings       and
                                                                build-to-order

  Number of      680 units       92 units       1,701 units     186 units
  Units                                                         

  Price per Unit Baht            Baht 3.0 - 5.1 Baht 0.8 – 15.0 Baht 1.2 – 23.2
                 29,000-42,000   million        million         million
                 per sq. wah                                    

  Price per Sq.m N/A             N/A            Baht            Baht
                                                12,833-27,805   10,000-40,000

  Sold Value     Baht 1,159.6    Baht 139.9     Baht 2,089.2    Baht 1,045.7
                 million         million        million         million

  Units Sold and 461 units       58 units       1,432 units     123 units
  Transferred                                                   

  Available for  219 units       34 units       269 units       63 units
  Sale                                                          
  ------------------------------------------------------------------------------

-   Hotel and Residential Apartments

The Company has a background in the hotel business as in the past it was
a shareholder of the Regent Hotel on Rajadamri Road in Bangkok and the
Empress Hotel in Chiang Mai. From 1991 to 2009, the Company also
operated the Eastin Lakeside, Chaeng Wattana.

Today, the Company operates 4-star hotels under the brand “U Hotel &
Resorts”, and managed by Absolute, a joint venture company between the
Company and partners with experience in the hotel business. Currently, a
hotel under “U Hotel & Resorts” has been operated in Chiang Mai and
another hotel under the brand “U Hotel & Resorts” is in the process of
preparing to open by the River Khwae, Kanchanaburi province, at the end
of 2010.

-   U Chiang Mai Hotel

U Chiang Mai Hotel is the first hotel under the hotel chain “U Hotels &
Resorts”, and opened on 1 June 2008. It is a 4-star boutique hotel with
Lanna architecture on the famous walking street “Rachadamnern Road”, in
the city center of Chiang Mai. The hotel offers 41 rooms of luxurious
accommodation, targeted at Thai and international tourists and business
travelers.

U Chiang Mai Hotel will also serve as the flagship for the “U” brand in
the future as it helped Absolute to effectively establish and market the
“U” brand, which is one of the factors that helped “U” to grow and
achieve success in a short time. At present, 43 hotels, with 4,108 rooms
in total, have signed agreement to hire Absolute to manage their hotels,
both under “U” brand and their own brand.

In the Fiscal Year 2010, U Chiang Mai Hotel had an average occupancy
rate of 45.3% and generated revenue of Baht 16.9 million, compared to
Baht 14.0 million in the Fiscal Year 2009.

-   The Royal Place 2 and the The Grand Residential Apartments

The Royal Place 2 and The Grand are residential apartments located
nearby Rajadamri BTS station and the largest shopping district in
Bangkok. The projects are located in Soi Mahadlekluang 2, Rajadamri Road
on land leased from the Office of the Privy Purse. Initially, the
project consisted of 3 buildings, Royal Place I, Royal Place 2 and The
Grand, for long-term lease of 30 years and first opened in 1993.

Presently, Royal Place I is fully rent out. The remaining units in Royal
Place 2 and The Grand are fully furnished units for short-term lease.
There are also some commercial spaces available for rent on the ground
floor for short-term lease. In the Fiscal Year 2010, Royal Place 2
generated revenue of Baht 23.1 million while The Grand generated Baht
16.5 million.

-   Office Building

TST Tower is located on Viphavadi-Rangsit Road opposite the head office
of Thai Airways International Public Company Limited. It is a 24-Storey
office building with a total rental area of 15,875.5 square meters,
comprising a 16-storey office and a 8-storey car park. Present occupancy
rate is 91%. Some of the key tenants include the Office of Small and
Medium Enterprises Promotion (OSMETP), and Rangsit University.

TST Tower is part of the security assets under the business
rehabilitation plan. The Central Bankruptcy Court ordered the auction
sale of the asset and the proceeds will be shared among creditors, pro
rata to their debt. The Company held an auction and the winning bidder
was awarded on 14 May 2009. Furthermore, the Company has entered into a
contract with the winning bidder to purchase TST Tower back. However,
the Company has not transferred the ownership of this asset as two
creditors of the Company have submitted a petition to the Central
Bankruptcy Court for cancellation of the auction. Nevertheless, the
Central Bankruptcy Court dismissed this petition on 9 June 2010. At
present, it is still the period in which the creditors can appeal the
court order.

-   Others

Other than the property development, hotels and office building
projects, the Company has provided project management services to the
National Housing Authority (NHA) for the low cost housing development
projects, Baan Aur-Arthorn. Initially, Company was contracted to build
20,000 units in Chonburi (Na Jomtien), Prajuabkirikhan (Hua Hin) and
Saraburi (Kok Yae) in 2006. However, the number of units that the
Company has been approved to construct was 8,048 units. The Company has
already subcontracted to third party contractors, completed the
construction and hand-over of 4,216 units to the NHA. Presently, 2,108
units are under construction for a target hand-over in December 2011.
1,724 units are scheduled for construction at a later date. The Company,
however, does not plan to pursue further low cost housing opportunities
unless proven to be value-added to the Company.

1.  Property Industry

-   Property Development

In 2009, the property development industry gradually recovered from the
global economic crisis, supported by some positive factors including
lower price of construction materials, lower interest rates and the
improvement of the Thai economy in the second half of the year. Despite
a positive trend in 2009, which resulted in a recovery in homebuyers’
confidence, access to funds for both property developers and end users
was still limited. The governmental tax incentives were extended from
March 2009 until June 2010 to boost the property market. The recovery of
the Thai property business in the second half of 2009 was confirmed in
the first quarter 2010 with the announcement of impressive gains in
presales by major Thai listed developers. However, the political
instability and surge of violence in the capital in the second quarter
of 2010 may have a direct impact on the confidence of investors and
consumers and will likely delay their purchase decisions.

Newly Registered Residential Units in Bangkok and its Vicinity

[]

  -------------------------- -------- -------- -------- -------- ---------
  Residential units by       2005     2006     2007     2008     2009
  Developers:                                                    

  Number                     45,164   49,167   49,769   59,048   69,938

  Increase/decrease (%)      -6.8%    8.9%     1.2%     18.6%    18.4%

  Residential units by                                            
  Owners:                                                        

  Number                     25,244   28,949   25,341   24,017   21,033

  Increase/decrease (%)      27.1%    14.7%    -12.5%   -5.2%    -12.4%

  Total units built          70,408   78,116   75,110   83,065   90,971
  -------------------------- -------- -------- -------- -------- ---------

Source: Real Estate Information Center

Note: Bangkok and Vicinity includes Samutprakarn, Nonthaburi,
Pathumthani, Nakorn Pathom and Samutsakorn

The number of the new registered single-detached houses has gradually
decreased from 2005 to 2009; however, listed developers have been able
to gain market share as buyers seek well-established names from larger
companies, as they feel more confident that the developments will be
completed. In 2009, the total number of newly registered single-detached
houses continued to decline by 14.2%. The new supply of townhouse and
commercial buildings declined by 6.5%, while the semi-detached house
supply declined by 50.9%. Condominiums, on the other hand, have
registered the largest number of units in a decade and became the
fastest growing sector in the Bangkok and vicinity housing industry.

46,452 condominium units were registered in 2009, accounting for 51.1%
of the total number of registrations. Currently, there are 82,421 units
marketed in the Bangkok city center and peripheral areas which are
expected to be completed within the next two to three years. Take up
rate in the city center as of the fourth quarter of 2009 is 79.6%
meaning only 3,769 units out of the 18,478 units marketed there remain
unsold. Take-up rate in the vicinity was 68.5%. The increasing interest
in condominiums is the result of a changing lifestyle among Thai buyers.
Easier access to working places and shopping centers, more facilities
and security, smaller unit sizes to serve singles and young families, as
well as off-plan opportunities with low down-payments, have pushed Thais
and foreigners alike to purchase condominiums to live in and for
investment purposes. Increasing land prices have de facto forced
developers to offer condominiums rather than landed houses in the city
center and along the new mass transit lines as condominiums offer
greater revenue opportunities.

In 2008 and 2009, the market also saw a growing trend for condominiums
located in peripheral areas along the existing and new extension of
BTS/MRT lines. The most popular areas of development are located along
the BTS extensions, both the Light Green (On Nut-Udomsuk-Bearing) and
the Dark Green (Saphan Taksin – Wongwienyai and beyond) and the future
routes of MRT lines including the Purple line (Bangsue-Bangyai) and Blue
line (Bangsue-Taling Chan). As of the fourth quarter of 2009, there were
63,943 units being marketed in the peripheral areas, with 21.5% in the
Ratchadapisek/Rama IX/Ladprao areas, 14.7% in the upper Sukhumvit area,
13.3% in the Phahonyothin areas, and 8.8% in Thonburi area.

In addition, the market also saw a move toward smaller units. Studios
and one-bedroom units now represent the majority of new launches, with
room sizes reduced as the price per square meters increased. The
property development sector should remain a very competitive market with
a decreased emphasis on luxury properties.

-   Hotel

Thailand’s tourism industry has been impacted by several negative
factors in the past several years, starting from the SARS outbreak in
2003, the bird flu outbreak in 2004, the Asian Tsunami in 2005, the
political uncertainty starting with the 2006 coup d’etat, leading to
airport closures in 2008 and the recent riots in 2010. Despite these
events, the number of international tourists coming to Thailand in 2009
increased by almost 30% over 2002.

In 2009, the number of international tourists decreased by 3.5% as a
result of the global economic turmoil, escalating fears over H1N1 virus
and the political situation in Thailand that led to the closure of the
Suvarnabhumbi International airport in December 2008 and the
demonstrations at the ASEAN summit in April 2009. The fourth quarter of
2009 and first quarter of 2010 were remarkably strong with arrivals up
40% and 20% respectively compared to the year before, but political
tension in the streets of the Thai capital at the end of the first
quarter of 2010 and continuing into the second quarter of 2010 has made
the recovery of tourism in 2010 more difficult. As of the first quarter
of 2010, forecasts from the Tourism Authority of Thailand put
international arrivals at 14.5 million, down from an original target of
15.0-15.5 million.

Number of International Tourists

[]

  E = Estimate; F= Forecast

  Source: Tourism Authority of Thailand and Office of Tourism
  Development

Chiang Mai Tourism

The hotel industry in Chiang Mai suffered from the closure of the
Suvarnabhumbi International Airport at the end of 2008, which led to a
relatively quiet ‘high-season’ in the first quarter of 2009. A reduction
in visitors resulted in a decrease in occupancy rate from 41.5% in 2008
to 31.3% in 2009. Selected upscale hotels in Bangkok were operating at
55% and 44% occupancy over the first and second quarter of 2009
respectively. Improvements in the second half with the recovery of
international tourist arrivals and a dynamic domestic market helped
operators improve their occupancy levels to 45% and 57% in the third and
fourth quarter respectively. However, most hotels had to reduce their
rates, add new campaigns and give discounts to pull in tourists. Revenue
Per Available Room (RevPar) in the fourth quarter of 2009 was Baht 2,677
per night, about 30% less than a year before.

Number of Rooms by Nationality and Average Occupancy Rate

[]

  Source: Office of Tourism Development

Number of Visitors and Average Length of Stay

[]

  Source: Office of Tourism Development

Bangkok Tourism

Unrest in late 2008 and continuing into 2009 and again in the first
quarter of 2010 had a severe impact on the tourism industry, with the
occupancy rate reaching its lows in the first quarter of 2010 as the
unrest turned violent in Bangkok.

Number of Rooms and Average Occupancy Rate in Bangkok

[]

  Source: Office of Tourism Development

Number of Visitors by Nationality and Average length of Stay in Bangkok

[]

  Source: Office of Tourism Development

Many hotels offer more discount to attract tourists, leading to a 22.8%
decrease in average daily rate and 31.9% decrease in the revenue per
room on average. The price pressure is expected to continue as there are
9,452 new rooms to be completed within the next four years.

Revenue Per Available Room (RevPar) and Average Daily Room Rate (ADR) of
Selected Upscale Hotels in Bangkok

  --------------------- --------- --------- --------- --------- ---------
                        2005      2006      2007      2008      2009

  ADR (Baht)            5,349     5,607     5,669     6,030     4,658

  RevPar (Baht)         4,102     4,167     4,012     3,929     2,677

  Occupancy (%)         75%       75%       71%       63%       57%
  --------------------- --------- --------- --------- --------- ---------

Source: CB Richard Ellis (Thailand)

Future Hotel Openings in Downtown Bangkok (number of rooms)

  -------------- ------------------- --------- --------- --------- ---------
  Type           Price Range         2010F     2011F     2012F     2013F

  Luxury         over Baht           736       730       245       150
  (5-star)       5,500/night                                       

  First Class    Baht                1,486     1,438     780       700
  (4-star)       4,500-5,500/night                                 

  Mid-range      Baht                866       899       N/A       N/A
  (3-star)       2,500-4,500/night                                 

  Economy        Baht                562       860       N/A       N/A
  (2-star)       1,000-2,500/night                                 

  Total                              3,650     3,927     1,025     850
  -------------- ------------------- --------- --------- --------- ---------

Source: CB Richard Ellis (Thailand)

The market expects an additional 9,452 rooms to be added to the hotel
supply within the next four years, or about a 35% increase on current
capacity. This will put additional pressure on hotels, particularly at
the top-end of the market. A better outlook is to be expected in the
‘economy’ segment with recent openings in the two to three star segment
showing better returns. Tourism characteristics in Thailand are
changing, with more Asian tourists, particularly Indians and Chinese,
who have different needs in terms of accommodation and destinations –
that brings new opportunities to the hotel industry.

Thailand remains an attractive tourist destination, receiving awards
from various countries such as “The Best Tourist Destination 2010” by
the Swedish Grand Travel Award for the 8th consecutive year, “Most
Popular Destination” by the Hotel Club Award 2009, “Best Value Hotels
2010” by the Sunday Times Travel magazine. Tourism is also one of the
most important segments of the Thai economy. As such, the Thai
Government has given a priority to support the recovery of the industry
and has recently announced the consideration of several initiatives to
help revive the segment including ideas to allow hotel expense to be tax
deductible expenses for individuals for up to Baht 15,000.

1.  Media Business

    1.  Nature of Business

Under the Concession Agreement, BTSC has been granted the rights to
carry out commercial activities in or related to the BTS SkyTrain
System, which includes the advertising spaces on the trains and train
stations as well as merchandising spaces on train stations. BTSC has
awarded a concession to manage such advertising spaces to VGI, whereby
under the License Agreement, VGI is required to share its revenue with
BTSC.

Nowadays, advertising on the BTS SkyTrain System reaches a target
audience of approximately 450,000 people per weekday, representing one
of the highest viewer exposures. The total advertising area is
approximately 17,000 square meters with permanent media of 6,000 panels,
56 plasma screens, 630 in-train LCD screens and 35 train wraps. In
addition, there is retail space of approximately 6,000 square meters for
475 shops and 262 kiosks.

BTSC believes that the advertising media business is a complementary
business that could create additional value for BTSC. Furthermore, VGI’s
revenue and profit has continuously grown over the past 10 years.
Therefore, BTSC acquired all shares of VGI on 30 September 2009, with
Baht 500 million remaining to be paid, according to the original
agreement. BTSC shall offer newly issued shares to seller of VGI shares
at BTSC’s IPO price or an agreed price. However, since BTSC became a
subsidiary of the Company, BTSC has agreed with the seller of VGI shares
to use the share price at which the Company purchased BTSC shares of
Baht 2.665 per share as the reference price instead of the IPO price. On
27 May 2010, the Board of Directors’ meeting of BTSC approved the
allocation of the remaining shares set aside for the conversion of
convertible bonds of 187,617,260 shares at Baht 2.665 per share to repay
the remaining amount payable for VGI shares. However, the seller of VGI
shares, according to the share purchase agreement with BTSC, has
transferred the right to receive BTSC shares to Nice Traders Company
Limited, who is the previous shareholder of VGI as appears in the record
of the Ministry of Commerce on 19 March 2009. BTSC will therefore issue
new ordinary shares to Nice Traders Company Limited. However, such share
allocation is subject to approval from BTSC shareholders.

VGI continues to operate the advertising and commercial space on the BTS
SkyTrain System under the License Agreement, which will expire in 2014.
Throughout the life of the License Agreement, BTSC granted an exclusive
license to VGI to manage the advertising and merchandising space on the
BTS SkyTrain System, which includes merchandising areas in the
concourse, advertising spaces on SkyTrain stations and the exterior and
interior train area. However, on 11 February 2010, the Board of
Directors’ meeting of BTSC approved the extension of the License
Agreement to the end of BTSC’s Concession Agreement in December 2029.
Presently, BTSC is in the process of amending the License Agreement.

  VGI’s scope of service includes:

-   Management of the overall marketing and sales promotion;

-   Design of overall layout of spaces;

-   Production and installation of advertising equipment;

-   Marketing and sales planning for advertising and merchandising
    spaces;

-   Execution of sales.

VGI is responsible for all investment and operating expenses, including
the provision of equipment and materials (such as LCD screens on trains)
and any other expenses in connection with the construction of retail
stores, installation of utilities system and advertising panels. In
addition, VGI is also responsible for the maintenance and repair of such
equipment during the entire term of the License Agreement.

Fees payable by VGI to BTSC are based on the proportion of revenues as
follows:

-   50% of gross revenue generated from the management of advertising
    space and merchandising areas;

-   60% of gross revenue generated from the management of the exterior
    train areas; and

-   50% of gross revenues generated from the management of other areas
    beyond the areas specified in the License Agreement.

If, in any year, the total area of advertising space and merchandising
areas allocated to VGI is less than the total area specified in the
License Agreement, both parties shall agree to reduce the minimum
guaranteed fee in that year proportionate to the decrease in area
allocated in that year. Moreover, the minimum guaranteed fee in each
year shall be adjusted upwards with the increase in the number of
passengers of BTS SkyTrain System, but such minimum fee shall not exceed
Baht 200 million throughout the life of the License Agreement. If, in
any year, the fees payable to BTSC according to the proportion of gross
revenue as specified in the License Agreement are higher than the
minimum guaranteed fee, VGI must pay the fee in the amount based on such
proportion of gross revenues. In the Fiscal Years 2008, 2009 and 2010,
BTSC received revenue under the License Agreement of Baht 277.3 million,
Baht 344.8 million and Baht 416.6 million respectively.

In the past 5 years, VGI Group has expanded its scope of business to
focus on management of advertising spaces, both static panels and LCD
screens, in leading superstores such as Tesco Lotus and Tesco Express,
Big C Supercenter, Carrefour and Watsons. VGI has exclusive right
(mostly 4-5 year contracts) to manage advertising space in areas as
specified in the contract with these leading superstores.

Presently, VGI Group manages advertising spaces in 188 Tesco Lotus
branches, 528 Lotus Express branches, 67 Big C branches, 36 Carrefour
branches and 150 Watsons branches nationwide. In 2009, it introduced
1,321 LCD screens to grocery areas in 31 Tesco branches across Bangkok
and vicinity. With regard to the network of point-of-sale digital
advertising service, VGI Group has modern technology and one of the
widest service networks which covers areas nationwide.

In addition, on 31 October 2009, VGI also expanded to the management of
advertising space in office buildings and entertainment venues through
the Baht 90 million acquisition of all ordinary shares in POV. The
objective of the acquisition is to capture mid to high-income profile
viewer base to tap into a larger base of advertising spend budget and to
be the price setter in LCD digital signage network in Thailand. POV
manages 362 LCD screens in elevators or lobbies of 41 prime buildings in
Bangkok, capturing approximately 200,000 viewers per day. In addition,
it has over 800 mini billboards located in hundreds of retail and
entertainment locations i.e. restaurants, pubs, movie theatres,
providing coverage of over 2 million viewers per month.

With the exclusive coverage on BTS SkyTrain System and presence in 4
nationwide prominent retailing stores whose market share represent 75%
of total sales of modern trade outlets and over 41 prime office
buildings in Bangkok, VGI has become one of the largest players in the
“Out-of-Home” media, where media of VGI Group has the capability to
reach out to the audience throughout the day on the main mass transit
routes along the BTS SkyTrain System and places where consumers spend
their time out of home.

After the acquisition of all shares in VGI on 30 September 2009, BTSC
has begun to recognize all revenues and expenses of VGI Group instead of
recognizing revenue sharing as specified in the License Agreement. For
Fiscal Year 2009, revenue from managing the advertising space on the BTS
SkyTrain System accounts for approximately 80% of VGI Group total
revenue while revenue from managing the advertising space in modern
trade and other revenue accounts for the remaining 20%.

1.  Industry Overview

The advertising industry is one of the largest industries in Thailand.
In 2009, total advertising expenditure amounted to Baht 90,217 million
and yielded growth both in traditional channels and new channels,
including advertising in the mass transit system, advertising in retail
and department stores, and internet advertising. These modern
advertising channels have shown a considerable growth in the last 3
years.

Advertising Expenditure in Thailand’s Advertising Media Industry

  ----------------------------------------------------------------------------
               January –                                 January -   
               December                                  April       
  ------------ ---------- --------- --------- ---------- ----------- ---------
               2006       2007      2008      2009       2009        2010

  TV           53,473     53,491    51,137    52,935     16,441      18,892

  Growth                  0.03%     (4.40%)   3.52%                  14.91%

  Radio        6,596      6,318     6,933     6,165      1,813       1,818

  Growth                  (4.21%)   9.73%     (11.08%)               0.28%

  Newspapers   15,425     15,809    15,282    14,149     4,184       4,611

  Growth                  2.49%     (3.33%)   (7.41%)                10.21%

  Magazines    6,179      6,067     5,998     5,227      1,627       1,595

  Growth                  (1.81%)   (1.14%)   (12.85%)               (1.97%)

  Cinema       2,086      4,341     4,173     4,947      1,274       1,619

  Growth                  108.10%   (3.87%)   18.55%                 27.08%

  Outdoor      4,667      4,481     4,229     3,960      1,355       1,245

  Growth                  (3.99%)   (5.62%)   (6.36%)                (8.12%)

  Transit      994        956       1,372     1,755      606         683

  Growth                  (3.82%)   43.51%    27.92%                 12.71%

  In store     314        570       826       820        277         346

  Growth                  81.53%    44.91%    (0.73%)                24.91%

  Internet                          172       259        60          88

  Growth                                      50.58%                 46.67%

  Total        89,735     92,035    90,120    90,217     27,636      30,898

  Growth                  2.56%     (2.08%)   0.11%                  11.80%
  ----------------------------------------------------------------------------

Source: The Nielsen Company (Thailand)

From Nielsen’s survey, there has been a shift of advertising budget from
traditional channels to new channels that can reach the target markets
more efficiently, both selected profile and mass. From the above survey,
transit and in-store channels have continued to grow despite the slump
in the economy in the last 2 years. In 2009, the top 5 spenders in
advertising were international consumer product companies, such as
Unilever (Thai) Holdings, Procter & Gamble (Thailand), L'Oreal,
Beiersdorf (Thailand) and Coca-Cola (Thailand) Limited. Their combined
advertising expenditure was Baht 11,751 million or 13% of total
advertising expenditure in 2009.

The advertising industry in Thailand in the first 4 months of 2010 has
grown from the same period last year despite the negative global
economic and internal political factors. The transit channel has grown
12.71% and department store/modern trade channel has grown 24.91%.
However, the riots in Bangkok in May 2010 as well as the financial
crisis in the Eurozone may have impact on a number of business operators
and the macroeconomic impact may result in businesses tightening their
advertising expenditure. This may affect the advertising on other media
in the second half-year of 2010.

-   Mass Transit Media

The BTS SkyTrain System has become a transportation alternative that has
widely gained popularity in the last 5 years as the BTS SkyTrain System
and subway system are mass transit systems that are located in the
central business district of Bangkok, making them high impact media with
high frequency and exposure to the focused target groups of consumers.
Moreover, the number of passengers continues to grow since BTS SkyTrain
offers a quick and convenient means to commute, particularly with its
connections with the MRT subway, airport link, BRT and a recent BTS
SkyTrain extension to Thonburi district. This growth in audience base
will increase the popularity, and thus the value of the mass transit
media.

-   Retail and Department Store/Modern Trade Media

The shift of consumer’s preferences havs reshaped the competitive
landscape of Retail and Department Store/Modern Trade Advertising. Media
placements in department stores/modern trade channels have become an
effective tool in reaching the target audience group. Moreover,
innovative advertisements and locations have attracted marketers and
advertisers to this valued channel of advertising.

Presently, the leading modern trade/department stores include Tesco,
BigC, Carrefour and Tops Supermarket. VGI’s main competitor is RS
In-store whose focus is on radio and in-store LCD monitors.

Advertising Media in Retail and Department Store/Modern Trade (In-store)

  -------------------- ------------ ------------ ------------ ------------
  TYPE                 TESCO        BIG C        CARREFOUR    TOPS

  Radio                VGI          RS In-Store  RS In-Store  RS In-Store

  In-Store LCD         VGI          Absolute     RS In-Store  RS In-Store
                                    Impact                    

  Visual Signboard /   VGI          VGI          VGI          -
  Lightbox                                                    

  On-Shelf             -            ACT Media    IMS          ACT Media

  Demo Tasting         Demo Power   Demo Power   Demo Power   Demo Power
  -------------------- ------------ ------------ ------------ ------------

Source: VGI, Information as of 15 May 2010

1.  Services Business

    1.  Smartcard Business

BTSC established Bangkok Smartcard System Co., Ltd., to operate the
e-Money business. BTSC entered into a ticket system development
agreement with Bangkok Metro Public Company Limited (“BMCL”), the subway
operator, to jointly develop a common ticketing system for the
convenience of passengers. In the future, BTSC may provide opportunities
for financial institutions, retail shops and other service providers to
join the smartcard system to expand the card and system network to, be
more widely used and be more convenient to passengers.

Presently, Bangkok Smartcard System Co., Ltd. is in the process of
applying for an e-Money license from the Bank of Thailand.

BTSC agrees to grant BMCL the right to invest and hold shares in Bangkok
Smartcard System Co., Ltd. proportionate to the average daily passengers
of BTSC and BMCL at the latest 6 months before the day that BMCL
acquires shares in Bangkok Smartcard System Co., Ltd.

Furthermore, within 3 months from the day that BMCL becomes the
shareholder of Bangkok Smartcard System Co., Ltd. or any period mutually
agreed by the parties, the parties agree to grant the right to each of
the Thai commercial banks, one of which is nominated by BTSC and the
other nominated by BMCL, to co-invest and hold shares in Bangkok
Smartcard System Co., Ltd. such that the combined shareholding of the
two banks does not exceed 10% of total issued shares at a price mutually
agreed by the parties.

On 26 April 2010, BTSC sold a 10% stake in Bangkok Smartcard System Co.,
Ltd. to Bangkok Bank Plc. for Baht 20 million, resulting in the
reduction of BTSC’s shareholding in Bangkok Smartcard System Co., Ltd.
to 90%.

2.  Hotel Management Business

The Company has set up Absolute, a joint venture with a partner that has
extensive experience in hotel management. Absolute provides consultancy
and hotel management services under “U” and “Eastin” brands, which are
owned by Absolute. In addition to U Chiang Mai, Absolute has agreed to
manage 2 of the Company’s hotels under “U” brand, one at Kanchanaburi
which is under renovation while the other at Khao Yai is at the design
stage.

In February 2010, the Company set up a joint venture with the same
partner in Hong Kong under the name “Absolute Hotel Services Hong Kong
Limited”, to engage in consultancy services and the hotel management
business in the Asia Pacific region as well as investing in companies in
Asia Pacific region which engage in consultancy services and the hotel
management business.

3.  Construction Management Business

Hip Hing is a joint venture between the Company and Hip Hing Overseas
Limited, which is a leading constructor in Hong Kong and has experience
in constructing various large projects overseas and has know-how and
technology in construction. Hip Hing is engaged in construction business
and its first project is the Four Points by Sheraton Hotel, which is
owned by BTS Assets.

4.  Golf Course Business

The Company operates a golf club in the Thana City project on Bangna
Trad road through its subsidiary, Thana City Golf and Sports Club
Company Limited, which operates a golf club and a 18-hole golf course.

2.  Future Projects

    1.  Mass Transit Business

        1.  Signaling System Upgrade

BTSC planned to increase the efficiency of the existing signaling system
and signed an agreement with Bombardier Group in February 2007 to
replace the existing signaling system. The new signaling system will
enable BTSC to better serve the SkyTrain extension lines and has a lower
maintenance cost as it is a more modern system. Furthermore, the new
signaling system will allow BTSC to be less dependent on third party
service providers as Bombardier Group is required to provide more
technical information and training to BTSC under the agreement.

For installation of the new signaling system, BTSC is required to invest
approximately Euro 16.86 million and Baht 583.67 million in total. As of
31 March 2010, BTSC has a remaining commitment of Baht 243.2 million,
Euro 1.9 million and USD 0.9 million which is due by December 2010 for
the change and upgrade of the signaling system. The new signaling system
will be used in the Silom line initially and will be ready for both
lines by December 2010.

2.  Purchase of Additional New Trains

To support the increasing demand on the existing lines and potential
demand from future skytrain extensions, BTSC has ordered 12 additional
trains from CRC, the leading manufacturer of train cars and electric
train cars in China. Each of the new trains will have 4 cars, amounting
to 48 cars in total, and will be used to service the Silom Line. The
current trains running on the Silom Line will be transferred to the
Sukhumvit Line. CRC has gradually imported all the trains into Thailand
by June 2010 and all new trains are expected to be ready for commercial
use by December 2010. As of 31 March 2010, BTSC has the remaining
commitment for these new trains of USD 42.5 million and Baht 26 million
out of the total cost of USD 65.42 million. As for the expansion of the
depot and maintenance to support the increased number of trains, BTSC
has already invested the full cost.

3.  Other Mass Transit Systems

In addition to the operating and maintenance agreement for the 2.2 km
Silom line extension, BTSC is also interested in becoming the operator
of future mass transit projects, both skytrain extensions and other mass
transit projects, whether as an operator under an operation contract or
as a partial or full investor. Nonetheless, the Company and BTSC will
have to evaluate the details, risks, and return to ensure creation of
value to BTSC and its shareholders.

BTSC is significantly interested in operating Wongwienyai - Bangwa and
On Nut – Baring extensions, which are connected to the existing BTS
SkyTrain System. Although, the BMA has not yet selected or appointed the
operator for these two extension lines, BTSC believes that BTSC has an
advantage to be appointed as operator due to the nature of the track,
which is a single and continuous railway, making operation by a single
operator more efficient.

The other extension projects, especially the Green Line extensions from
Mo Chit to Saphanmai and from Baring to Samut Prakarn, are still in
their preparatory stages and the role of the private sector in such
projects is not yet finalized. BTSC will continue to closely monitor and
assess any opportunities to participate in possible bids, either as an
operator under an operation contract or as a direct investor in the
projects. BTSC will ensure that any investment or opportunities pursued
will be value accretive to BTSC.

Furthermore, BTSC is also interested in leveraging on its experience to
participate in other mass transit systems such as Light Rail and mass
transit system overseas. BTSC’s participation may be in the role of an
operator, investor or advisor.

2.  Property Business

  4.5.2.1 Property Along Mass Transit Route

(1) Four Points by Sheraton

A 4-star, 29-floor, 430-room hotel project is located on South Sathorn
road with the land area of 2 rai 1 ngan 57 square wah. The hotel will be
connected to the Surasak BTS station, and is one of the few hotels in
Bangkok that will be connected directly to a BTS station. A management
agreement has been signed with Starwood under the “Four Points by
Sheraton” brand. A construction agreement has been signed with Hip Hing
on a turn-key basis. As of June 2010 the construction is over 20%
completed and the hotel is expected to be ready for service by the end
of 2011. The total project cost is approximately Baht 3 billion, out of
which approximately Baht 1.2 billion has been invested in the form of
equity. The remaining investment will be financed by Baht 1.8 billion
credit line secured from a bank.

As of 27 November 2008, the land appraisal value was Baht 574 million.

(2) The Langham Sukhumvit, Bangkok

The 5-star, 210-room hotel project and 128-unit serviced apartments are
located on Sukhumvit road with the land area of 3 rai 1 ngan 69 square
wah and can be connected to the Nana BTS station. A management agreement
has been signed with the Langham Group under “The Langham” brand for the
hotel and under “The Langham Residence” brand for the serviced
apartments. Established in 1865, The Langham name benefits from
international recognition among sophisticated travelers and The Langham
Sukhumvit, Bangkok, will be the first property in Bangkok to enjoy this
prestigious name. The Langham Sukhumvit will offer guests and residents
the ultimate classical luxury. At present, the architect has already
been appointed.

As of 26 December 2007, the land appraisal value was Baht 822 million.

(3) The Langham Place, Phayathai, Bangkok

The 4-star, 400-room hotel project is located on Phayathai road with the
land area of 2 rai 2 ngan 67 square wah and can be linked to the
Phayathai BTS station and Airport Link station. It is close to shopping
and entertainment centers in the heart of Bangkok. A management
agreement has been signed with The Langham Group under the “Langham
Place” brand. The Langham Place brand offers a more contemporary,
casual-chic take on luxury than its elder sister brand The Langham.
Presently, the architect has already been appointed.

As of 15 December 2008, the land appraisal value was Baht 384 million.

(4) Abstracts Phahonyothin Park

The condominium project on a piece of land of approximately 22 rai 2
ngan 18 square wah is the only asset of Nuvo Line (80% held by BTSC).
The land, with buildings, is situated on Phahonyothin Road, close to
Central Ladprao and along the dark green line extension. At present,
Nuvo Line has signed an agreement to engage the Company as the project
management advisor in the development of 3 condominiums. The project
will become a flagship of the “Abstracts” brand, the Group’s own brand.
The sales office was built in April 2010 and the first building is
expected to be sold in July 2010 with CB Richard Ellis (CBRE) as the
sales agent for the first building which has approximately 1,000 rooms.
The total project cost is approximately Baht 8.7 billion, out of which
approximately Baht 2 billion has been invested in the form of equity as
land cost. The rest will be financed by a project finance loan and
proceeds from sales to customers as the towers are finished.

As of November 2008, the land appraisal value was Baht 2,023 million.

(5) Abstracts Sukhumvit 66/1

The new Abstracts Sukhumvit 66/1 is one of two projects under the
Group’s new ‘Abstracts’ brand. It is a low-rise boutique condominium
project on approximately 2 rai of land strategically located just 250
meters from the future BTS station at Udomsuk, the Green line extension.
The project will be developed in two phases with 55 rooms in each phase
and comes in the form of one- and two- bedroom units. Preselling is
expected to be launched in mid 2010.

As of 29 March 2010, the land appraisal value was Baht 51 million.

(6) JJ Park Phahonyothin

A piece of land with an area of 15 rai 2 ngan 63.3 square wah situated
on Phahonyothin road, close to BTSC’s head office. Presently, the land
is under feasibility study stage to be developed into residential and
office buildings.

As of 29 March 2010, the land appraisal value was Baht 978 million.

  4.5.2.2 Properties that are Not Along the Mass Transit Route

(1) U Inchantree

The 4-star boutique hotel project on approximately 5 rai of land on
river frontage of the River Khwae will be developed under the name “U
Inchantree”, and be part of the U Hotels and Resorts chain. Currently,
the existing buildings of the hotel are in the process of renovation. A
centerpiece of the project will be to give prominence on the site to the
In-Chan tree which is more than 100 years old. The renovated hotel is
expected to begin service under the U brand in November 2010.

As of 29 March 2010, the land appraisal value was Baht 59 million.

(2) U Sathorn

U Sathorn is a hotel under the “U” brand which is located on
approximately 16.5 rai land in Soi Authakarnprasit, near Sathorn Road
and the central business district. This project will be developed into a
hotel on land leased for 30 years from the Treasury Department. At
present, the project is being designed for construction while waiting
for various government agencies to approve the construction. The
construction is expected to start in the third quarter of 2010.

(3) U Khao Yai / PrannaKiri

At present, the 20-rai U Khao Yai project located in Khao Yai,
Nakornratchasima is under feasibility study as to the exact
specifications of the future 4-star hotel. As of 29 March 2010, the land
appraisal value was Baht 8 million.

PrannaKiri is an associated land sub-division project next to the future
U Khao Yai hotel which occupies 625 rai of prime land. The exact use of
the land is under study.

As of 29 March 2010, the land appraisal value was Baht 270 million.

(4) Other Land Bank Assets

The Company also has other land plots where the Company is studying the
option to sell if it cannot find a better alternative to develop such
land for the benefit of the Company’s shareholders. Two of the major
assets being considered are 1) land at Kamala Beach in Phuket, a large
prime tract of 455-3-5.9 rai, connected to the beachfront, with the
appraisal value of Baht 1,630 million as of 29 March 2010 and 2) land at
Rama IX Bridge, a 27-2-10 rai land next to Chao Praya River with the
appraisal value of Baht 660 million.

3.  Media Business

With regard to advertising on BTS SkyTrain System, VGI plans to seek the
opportunity to manage the new advertising space on BTSC’s 12 new trains
which are expected to be in service by the end of 2010. Furthermore, VGI
will closely monitor the opportunity to manage advertising and
merchandising spaces on BMA’s SkyTrain stations such as Krung Thonburi,
Wongwienyai and future stations. This will require negotiations with the
relevant authorities.

In addition, VGI also plans to manage the advertising space on the 12
BRT stations of the first BRT line (Chong Nonsi-Ratchapruek) as well as
the 25 BRT buses for which BTSC won the bid for the bus and bus station
operation and maintenance contract from BMA.

With regards to advertising at retailing stores VGI has opportunity to
expand advertising space due to the continuous increase of retailing
stores. VGI will ensure the creation of value for each investment in
advertising space.