9. Internal Control

The Company strongly and continually emphasizes the importance of its
internal control system. The Board of Directors assigns the Audit
Committee to review and evaluate the internal control system and report
to the Board of Directors in order to ensure good corporate governance
with particular focus on the internal control areas, Organizational
Controls and Environmental Measures, Risk Management Measures,
Management Control Measures, Information and Communication Measures, and
Monitoring Measures, as follows:

9.1 Organizational Controls and Environmental Measures

The Company considers that a good organization structure and the quality
of the working environment are very important for an effective internal
control system. Therefore, the Company focuses on creating the
conditions and factors that facilitate the internal control system to
operate as the Company expects, and the Company encourages every
employee to understand the key features of the internal control system
as follows:

-   The Board of Directors is responsible for setting clear business
    goals. The Executive Management hold meetings to convert the
    business goals into short and long-term business plans and into the
    annual budget. Also, there is a regular review and notification to
    the management of all departments in order to ensure that their
    management is carried out in line with the established goals. The
    Company also assesses business operations on a quarterly basis to
    assess overall performance and improve the business plan. The annual
    budget is revised every six months.

-   To motivate and compensate the employees appropriately, the Company
    reviews the business goals of each operating level carefully by
    reviewing past performance, the economic situation in general as
    well as other factors impacting their ability to carry out their
    assigned duties efficiently.

-   The Company reviews the organizational structure with consideration
    to the efficiency of the Management, and notifies the employees of
    any changes to the structure.

-   The Company establishes guidelines on Code of Conduct, rules,
    practices and penalties for Management and employees.

-   The Company establishes policies and procedures concerning approval
    of transactions related to finance, procurement and asset management
    to prevent any misconduct.

-   The Company has a policy of Good Corporate Governance and sets
    principles and a business plan which take into consideration
    fairness in doing business with all related parties and
    stakeholders.

    2.  Risk Management Measures

The Company has specified clear and harmonized objectives; both at the
organizational and operational level in order for the Company to
accomplish its goals using the approved annual budget and available
resources. The Company constantly evaluates and manages all risks in
line with the current situation. In particular, Management conducts the
following actions on a regular basis:

-   Regularly arranges meetings for the purpose of evaluating the risks,
    and their causes, in the business operations; also regularly
    monitors situations which may trigger the risks in order to
    establish policies to prevent or minimize such risks.

-   The Company informs the supervisors of each department of the action
    plan based on the risk management policy in order for them to convey
    such information to each employee to ensure the most effective
    implementation. The Company also monitors the performance of risk
    management policy implementation.

    2.  Management Control Measures

The Company has policy and operational guidelines for Management to
ensure that the policies specified by the Management are complied with
and communicated to the Company’s employees as follows:

-   The Company specifies clearly in writing the scope of duties and
    authorized credit limit of each level of management.

-   The Company clearly divides the duties and responsibilities into the
    following three areas (i) approval (ii) booking and recording of the
    accounting information and (iii) safe keeping of property. These
    roles are separated in order to ensure the efficiency of
    cross-checking and monitoring.

-   The Company has strict and clear measures to govern any transactions
    entered into with its major shareholders, directors, executives or
    connected persons. The Company specifies that the related
    transactions between the Company itself or its subsidiaries and any
    person who may have a conflict of interest, must be subject to
    reasonable conditions, normal trading terms or market prices. Such
    transactions must also be presented to the independent Audit
    Committee on a quarterly basis in order for them to provide their
    comment on the rationale of such transactions. In the case of
    related transactions which are not in accordance with normal trading
    conditions, it is required that such a transaction must be submitted
    to the Audit Committee for consideration of its appropriateness, to
    provide comment on the transaction to the Board of Directors and/or
    shareholders, as the case may be, for their approval prior to the
    execution of the transaction. Also, such a transaction can only be
    approved by persons who do not have a conflict of interest in the
    transaction, after taking into consideration the benefits to the
    Company.

-   In the case that the transaction to be entered into with a connected
    person will commit the Company on a long term basis, it is required
    that such transaction be monitored to ensure compliance with the
    agreed conditions. In addition, the transaction must be reported to
    the Audit Committee for consideration of its appropriateness
    throughout the term of the agreement. The Audit Committee shall also
    determine measures to prevent any related persons from using the
    opportunity for their own benefit.

-   The Company monitors the operations of the Company’s subsidiaries
    and affiliates on a regular basis, as well as providing guidelines
    to the persons appointed as Directors or Management of such
    companies in order to ensure that these companies’ operations are in
    line with the Company’s goals. The Company has also set up a
    monitoring policy to ensure that the operations of the Company, its
    subsidiaries and affiliates comply with all relevant laws and
    regulations. The Company adopts preventive measures as appropriate
    to prevent any violation of the law.

    2.  Information and Communication Measures

The Company organizes its information system to cover the Company’s
performance at the company level, the financial reporting level, the
business unit level and the policy compliance level to ensure effective
communication to enhance achievement of the objectives and goals of the
Company. Communication of such information to the relevant persons is
extremely important and enhances the effectiveness of the internal
control system as follows:

-   The Company provides the Board of Directors with essential
    information to support their decision making. Such documents are
    delivered together with the invitation to the Board of Directors’
    meeting at least 7 days in advance of the meeting so that the Board
    of Directors have sufficient time to study such documents, except in
    an emergency case in which the documents cannot be delivered at
    least 7 days in advance.

-   The Company requires that the minutes of the Board of Directors’
    meetings contain appropriate details, which are the basis of the
    decisions made for each agenda item. Also, there is a record of
    Directors’ inquiries, comments and observations on each matter being
    considered during the Board meeting.

-   The Company keeps and categorizes all its accounting records and
    books in a manner that can be easily investigated. The accounting
    policy of the Company and the subsidiaries is determined in
    accordance with the main business operations of the Company and
    subsidiaries, and are not to be in violation of Generally Accepted
    Accounting Principles.

    2.  Monitoring Measures

The Company monitors compliance of the established goals on a regular
basis. The internal control system is continuously reviewed and improved
to be in line with changing situations and all errors are immediately
rectified as follows:

-   The Company monitors and evaluates the internal control system in
    the light of actual operations. The Board of Directors regularly
    conducts meetings to consider whether the performance result is
    different from the established goals, and proposes necessary
    operational guidelines so that the Company can rectify any errors in
    a timely manner. For the fiscal year 2010, other than the regular
    audit of the internal control system conducted by the internal
    control auditor, the Company also assigns Dharmniti Auditing Co.,
    Ltd., as an external auditor, to help improve the internal control
    system of the Company to be more efficient. Such external auditor
    has proceeded to audit the internal control system of the Company
    for the fiscal year 2010 on a quarterly basis; and reported the
    outcome of the audit to the Audit Committee of the Company.

-   The Company arranges an examination of compliance with the internal
    control system regularly by clearly specifying the internal control
    audit plan. The Company also requires that the internal audit
    function shall be under the direct supervision and report directly
    to the Audit Committee to ensure the integrity of the internal
    auditor’s performance.

-   If a material error is found, the relevant persons must report it to
    the Board of Directors or the Audit Committee to clarify the reasons
    and to propose a solution for the error. The Company requires that
    progress with the rectification of the error is monitored. The
    progress must be reported to the Board of Directors or the Audit
    Committee within a defined period of time.

May 27, 2010

Subject: Report on the Accounting Internal Control System

To: The Board of Directors
Tanayong Public Company Limited

With reference to the audit of the financial statements of Tanayong
Public Company Limited for the year ended 31 March 2010 as reported on
27 May 2010 to obtain the opinion that such financial statements and the
operational results are regulated in accordance with Generally Accepted
Accounting Principles, we confirm that the proper scope of review has
been based on the assessment of the Company’s internal control system.
We did not find any material irregularities in such system that may
affect our opinion on the financial statements and reports of the
Company. Any other immaterial suggestions to the opinion will be
documented in a separate letter later.

Nevertheless, the audit has been conducted on a sampling basis and the
assessment of the Company’s internal control system is intended for the
audit only, and therefore may not represent a complete overview of the
defects that may exist in the control system of the Company.

Yours faithfully,

- Signed -

Termphong Opanaphan
Certified Public Accountant (Thailand) No. 4501

Audit Committee Report

To the Shareholders and the Board of Directors of BTS Group Holdings
Public Company Limited.

The Audit Committee of BTS Group Holdings Public Company Limited (“the
Company”) consists of 3 Independent Directors, namely Lt. Gen. Phisal
Thepsithar as the Chairman of the Audit Committee, Pol. Maj. Gen. Vara
Ieammongkol and Mr. Chaiyasit Puvapiromquan as the Members of the Audit
Committee and Mrs. Duangkamol Chaichanakajorn as the Secretary to the
Audit Committee. The Audit Committee has the duties and responsibilities
as assigned by the Board of Directors in accordance with its Charter as
follows:

1. To review the Company’s financial reporting process to ensure that it
is accurate and adequate;

2. To review the Company’s internal control system and internal audit
system to ensure that the systems are suitable and efficient, to review
the independency of the internal audit unit, and to approve the
appointment, transfer or dismissal of the chief of the internal audit
unit or any other unit in charge of the internal audit;

3. To review the Company’s compliance with the law on securities and the
Stock Exchange, the Stock Exchange’s regulations, and the laws relating
to the Company’s business;

4. To consider, select and nominate an independent person to act as the
Company’s auditor, and to propose such person’s remuneration to the
Board of Directors, as well as to attend a meeting with the auditor
without the attendance of any Company management at least once a year;

5. To review the connected transactions, or the transactions that may
lead to conflicts of interest, to ensure that they are in compliance
with the law and the Stock Exchange’s regulations, and are reasonable
and for the utmost benefit of the Company;

6. To prepare, and to disclose in the Company’s annual report, the Audit
Committee Report which must be signed by the Chairman of the Audit
Committee and contain certain specified details; and

7. To perform any other act as assigned by the Board of Directors, with
prior consent of the Audit Committee.

In 2009/2010, the Audit Committee has performed the duties as follows:

1. Reviewed the Company’s financial reports, including quarterly and
annual financial statements as regards their accuracy and adequacy of
disclosure. The Audit Committee had meetings with the Company’s auditor
and found no material data indicating that the financial reports were
neither accurate nor trustworthy.

2. Reviewed and ensured the Company has an appropriate and efficient
internal control system and internal audit system by engaging an
external expert to evaluate the appropriateness and efficiency of the
internal control system and internal audit system. The overall result of
the evaluation showed that the Company has an adequate internal control
system in each of the Company’s activities to achieve the purpose and
goals of the Company and to manage the Company’s business.

3. Reviewed the Company’s operations to be in compliance with the law on
securities and the Stock Exchange, the Stock Exchange’s regulations, and
the laws relating to the Company’s business by having the Company engage
an external expert to evaluate the Company’s corporate governance and
compliance with the relevant laws and regulations. The overall
evaluation showed that the Company had good and efficient operations and
management processes in accordance with the principle of good corporate
governance.

4. Considered, selected and nominated independent persons to act as the
Company’s auditor by proposing to the Board of Directors to appoint any
one of Mr. Termphong Opanaphan, Certified Public Accountant (Thailand)
No. 4501, and/or Miss Thipawan Nananuwat, Certified Public Accountant
(Thailand) No. 3459, and/or Miss Siraporn Ouaanunkun, Certified Public
Accountant (Thailand) No. 3844 from Ernst & Young Office Limited to act
as the Company’s auditor for the fiscal year ended March 31, 2010 to
review and give opinion on the Company’s financial statements. The audit
fee was Baht 2,300,000. Such appointment and fee were approved by the
Board of Directors and the General Meeting of Shareholders of the
Company. In addition, all 3 members of the Audit Committee attended a
meeting with the auditor without the attendance of any management and
had the opinion that the Company’s auditors have performed their duties
properly.

5. Considered and reviewed the connected transactions in which the
auditors were of the opinion that such transactions were significant and
disclosed such transactions in the financial statements and notes to the
financial statements. The Audit Committee agreed with the auditor that
such transactions were reasonable.

6. During the period between April 1, 2009 and June 15, 2010, the Audit
Committee had a total of 6 meetings and the members of the Audit
Committee attended all these meetings.

7. Overall, the Audit Committee received full cooperation from the
relevant units and persons in performing their duties and, therefore,
was able to perform its duties efficiently.

8. Prepared this Audit Committee Report and disclosed the Report signed
by the Chairman of the Audit Committee in the Annual Report 2009/2010.

9. All members of the Audit Committee attended training sessions,
seminars and meetings regarding the roles and responsibilities of the
Audit Committee that were arranged by state agencies, the private
sector, professional councils or the Thai Institute of Directors in
order to enhance the knowledge and understanding of the Audit Committee
to perform their duties more efficiently.

10. The Extraordinary General Meeting of Shareholders No. 1/2010, held
on April 29, 2010 resolved to approve the Company to purchase ordinary
shares of Bangkok Mass Transit System Public Company Limited and to
acquire the entire business of a company whose entire business consists
of the investment in ordinary shares of Bangkok Mass Transit System
Public Company Limited. As a result, the Company holds 94.60% of the
shares in Bangkok Mass Transit System Public Company Limited and the
Company’s paid-up capital has been increased to Baht 35,781,271,787.00
and the Company registered the increase of its paid-up capital on May 4,
2010.

11. The Company registered its change of name from “Tanayong Public
Company Limited” to “BTS Group Holdings Public Company Limited” on May
4, 2010.

12. The Company issued and offered 19,032,004,098 newly issued ordinary
shares, with par value of Baht one per share, to the existing
shareholders and a group of financial institutional investors and a
group of clients of the securities companies who were the Company’s
underwriters, at the offering price of Baht 0.63 per share, totaling
Baht 11,990,162,581.74. As a result, the Company’s paid-up capital has
increased to Baht 54,813,275,885.00 and the Company registered the
increase of its paid-up capital on June 14, 2010.

- Lt. Gen. Phisal Thepsithar -

Chairman of the Audit Committee

June 15, 2010