fns 07

Finansa (fanaensäe also fi ’naensäe)

n. management of money; monetary

support for enterprise; the

science of managing money matters,

credit, etc.; (in plural) money resources,

income, etc. <vt. to provide capital for;

to obtain money, credit, capital for...

n. capitalist; entrepreneur, vt. apply

or use (money) for profi t; devote

(time, etc.) to an enterprise, buy

(something useful or otherwise

rewarding) n. recommendation on

how to act in matters of money;

information; notice of transaction

vt. give advice (to); recommend; inform

Defi nition

Financial Highlights 3

Finansa Group 4

Statement of the Chairman 6

Strategy Review 8

Principal Responsibilities of the Board of Directors 9and the Audit Committee

Board of Directors 10 2007 Operational Highlights 12

Asset Management - 2007 Review and 2008 Outlook 13

Investment Banking and Brokerage - 2007 Review and 2008 Outlook 19

Finance Business - 2007 Review and 2008 Outlook 23

Report on the Board of Directors’ Responsibility 26towards the Financial Statements 2007

Report of the Audit Committee for the year 2007 27

Financial Statements and Statutory Information 28

Overview of Business Operations 125

Subsidiaries and Associated Companies 129

Management Report 2007 131

Related Party Transactions for 2007 135

Board of Investment Privileges 140

Shareholder Structure and Management 141

Biographies of Directors and Management 146

The Good Corporate Governance Compliance Report of 2007 151

Administration of Insider Information 158

Internal Controls 158

Remuneration of Auditor 158

Risk Factors 159 Index of Abbreviations 162

General Information 163

Table of Contents

3FINANSA PLC. - Annual Report 2007

Financial HighlightsC o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s

Operated

by

% of shares held

by the Company Revenue % Revenue %

As at or for the years ended December 31,

Operating Performance

(Baht million)

Consolidated 2007 2006 2005

Total Income 1,553 1,321 1,164

EBITDA 122 (19) 320

Net Profit (Loss) (285) (183) 102

Earnings (Loss) per Share (Baht) (2.30) (1.48) 0.82

Dividends per Share (Baht) - - 0.50

Return on Average Total Assets (%) (3.2%) (2.0%) 1.1%

Return on Average Shareholders’ Equity (%) (11.1%) (6.2%) 3.3%

No. of Employees 471 461 287

Total Income per Employee 3.3 2.9 4.1

Net Profit (Loss) per Employee (0.6) (0.4) 0.4

Financial Position

(Baht million)

2007 2006 2005

Total Assets 8,803 8,945 9,573

Total Liabilities 6,442 6,165 6,462

Total Shareholders’ Equity 2,361 2,780 3,111

No. of Shares in Issue 125,010,100 125,010,100 125,010,100

Book Value Per Share 19.1 22.5 25.2

Revenue Structure (Baht million)

Financial Advisory and FNS 177 11.4 197 14.9

Investment Management FFM 100 299 19.2 348 26.4

Businesses FAM 100 63 4.1 45 3.4

Investment Banking Business FSL 100 60 3.9 162 12.3

Securities Business FSL 100 378 24.3 201 15.2

Finance Business FC 100 245 15.8 271 20.5

Others 331 21.3 97 7.3

Total Revenue 1,553 100.0 1,321 100.0

Type of Revenue 20062007

4 FINANSA PLC. - Annual Report 2007

Finansa Group

100%100%100%100%100%100%

Finansa AssetManagement Ltd.

Finansa AssetManagement Ltd.

Finansa Credit Ltd.Finansa Credit Ltd.Finansa Securities Ltd.Finansa Securities Ltd.

A SEC licensed securities

company and full member

of the Stock Exchange of

Thailand. Finansa Securities is a

recognized leader in investment

banking in Thailand, offering

an extensive range of tailored

financial services and solutions,

including

• Financial Advisory

• Project Finance

• Brokerage

• Private Placement and

Public Offerings

• Mergers and Acquisitions

• Fairness Opinions

• Corporate and Financial

Restructuring

A SEC licensed securities

company and full member

of the Stock Exchange of

Thailand. Finansa Securities is a

recognized leader in investment

banking in Thailand, offering

an extensive range of tailored

financial services and solutions,

including

• Financial Advisory

• Project Finance

• Brokerage

• Private Placement and

Public Offerings

• Mergers and Acquisitions

• Fairness Opinions

• Corporate and Financial

Restructuring

A licensed finance company

regulated by the Bank of

Thailand. Finansa Credit has

a full set of licenses covering

commercial and consumer loans,

advisory services and deposit

taking. Core activities include:

• Deposit Taking Services

• Fixed Income Investment

• Asset-backed Finance

• Structured Finance Products

• Private Banking Services

• Secured Lending to

Individuals

• Corporate Advisory Services

• Hire-purchase Automobile

Finance

A licensed finance company

regulated by the Bank of

Thailand. Finansa Credit has

a full set of licenses covering

commercial and consumer loans,

advisory services and deposit

taking. Core activities include:

• Deposit Taking Services

• Fixed Income Investment

• Asset-backed Finance

• Structured Finance Products

• Private Banking Services

• Secured Lending to

Individuals

• Corporate Advisory Services

• Hire-purchase Automobile

Finance

Finansa Asset Management

engages in all main types of asset

management services:

• Mutual Funds

• Provident Funds

• Private Funds

• Foreign Invested Funds


engages in all main types of asset

management services:

• Mutual Funds

• Provident Funds

• Private Funds

• Foreign Invested Funds

..


Representative Office • Ho Chi Minh City

100%100%

Finansa FundManagement Ltd.

Finansa FundManagement Ltd.

Manages three investment funds

for a number of major local and

overseas financial institutions.

Finansa Fund Management

has a particular strength in

Private Equity in Thailand and

Vietnam.

• Siam Investment Fund II,

L.P.

• Siam Investment Fund III,

L.P.

• The Vietnam Equity Fund

Manages three investment funds

for a number of major local and

overseas financial institutions.


has a particular strength in

Private Equity in Thailand and

Vietnam.

• Siam Investment Fund II,

L.P.

• Siam Investment Fund III,

L.P.

• The Vietnam Equity Fund

Finansa Hong Kong Ltd.Finansa Hong Kong Ltd.

Finansa Capital Ltd.Finansa Capital Ltd.

100%100%

Representative Office • Hanoi

50%


Statement of the Chairman

Going into 2007, we were cautious on the business

outlook for financial services in Thailand and it

was therefore no surprise that the year proved a

challenging one. Business confidence in Thailand,

which had been set back by the military coup in

September 2006, suffered further on a series of

badly-received policy initiatives implemented under

the military-backed government, including foreign

capital controls, a proposed review of the Foreign

Business Act and compulsory licensing of selected

pharmaceutical products. Bilateral relations with

overseas lending institutions were affected by the

coup and this in turn impacted the scope to fund

and implement large-scale, government-backed

projects. Certain external developments were also

less than favorable, notably the continued rise in oil

prices and the sub-prime and CDO (collateralized

debt obligations) crisis which erupted mid-year in

the U.S. Though Thai banks had limited exposure

to CDOs, select instances were highly publicised

and this proved unsettling for the local financial

markets. A further negative development was

the rise in non–performing loans in the banking

system through the year. It was no surprise then

that Thailand’s economy performed poorly in

league tables for the region in 2007 with growth

lagging behind, and sometimes far behind, its

regional counterparts.

Finansa’s business performance in 2007 reflected the

challenging local environment. While each of the

individual business units within the group aimed to

position themselves to weather continued difficult

conditions, the Group reported a loss for the year

of Bt285m against a loss of Bt183m reported for

2006. The result for the Group in 2007 is clearly

disappointing, though it is important to go behind

the bottom-line number to recognize that despite

the negative earnings, there was encouraging

progress in selected parts of the group and there

were material distortions to reported earnings from

significant one-off items.

On the positive side, there was an encouraging

performance from Finansa’s brokerage business,

where increased market share drove a welcome

recovery in profitability at Finansa Securities. It

is no surprise, that the Investment Banking unit

within Finansa Securities had a tough year, in terms

of generating revenues, with no material equity

IPO issues hitting the stock market. However,

the investment banking team was retained on a

number of significant advisory mandates, including

advising bidders for the upcoming Independent

Power Producer concessions and advising on

the amalgamation of Rayong Refinery and The

Aromatics (Thailand).

On the negative side, efforts to turn around Finansa

Credit (FC) after a poor 2006, took longer and

were more costly than envisaged. The corporate

loan experience has been disappointing, to say

the least. New senior management was installed at

FC in 2007 and the business steered away from

corporate to retail lending. The initial results have

been encouraging. FC is now generating an interest

margin that is satisfactory and on a loan portfolio

that is improving in overall quality.

FC’s 2007 results were impacted heavily by loan

loss provisions of Bt275m necessitated by the Bank

of Thailand’s application of IAS-39 accounting

standards. To maintain an appropriate capital

structure, Bt330m of new Tier I capital was injected

during the year by shareholders.


Asset Management enjoyed a material contribution

from performance fees earned on the Vietnam

Equity Fund, however the Thai private equity

business suffered a setback with the premature

termination of Siam Investment Fund III, L.P.,

due to failure to attract sufficient new investors

to make the fund a viable size. The onshore fund

management business saw a material increase in

revenues with a corresponding significant increase

in costs as resources were added to improve

operations and service quality.

One material development in Asset Management

was the decision to sell the Group’s 67% interest

in ADF Management Ltd. (ADF), the Singapore-

based manager of The Asian Debt Fund. In late

2007, Finansa agreed to a management buyout of

its ownership interest. This sale was completed in

4Q 2007 generating a profit of close to USD8m.

The success of this transaction justifies the earlier

decision to diversify Finansa’s business away from

Thailand.

A second significant offshore initiative has been

the effort to invest in a business opportunity in

China. Though the shape and nature of transaction

has changed, the justification for this investment

in terms of time and resources devoted to date is

expected to become apparent in the year ahead.

Going into 2008, the immediate outlook for

the Group is better than it was going into 2007.

Despite the sharp setbacks in global stockmarkets in

January of this year and continued high volatility in

global equity prices since then, the Finansa Group

companies are on more solid ground, individually,

and better placed to weather challenging markets.

Though we now have an elected government eager

to accelerate economic activity, we do not expect

a sharp rebound in economic growth in 2008. We

believe it will take time for business confidence to

recover. The business trends, however, should be

positive.

More encouragingly, the Thai economy appears

well placed to outperform many of its regional

rivals. Two years of cautious policies have resulted

in Thai banks and businesses being in generally

good shape, financially.

A key objective for the Group in 2008 is a return

to profitability and after a challenging period over

the past two years, this would seem within clear

reach.

(Dr. Virabongsa Ramangkura)

Chairman


Since listing in 2002, Finansa has built a diverse financial services platform capable of delivering an extensive range of financial services to a broad customer base. Much time and energy has been invested in improving service quality and delivering innovative products. The progress of the business to date, however, while encouraging at many levels, has not yet translated into the desired positive impact on “Return on Equity” or creation of shareholder value. Part of the reason is the environment in which the Group operates. Thailand has not been “easy” in terms of the recent poor economic performance and the regulatory environment is evolving in a way that has yet to translate into benefits for both operators and users. The increasing complexity and cost of regulation is a global phenomenon which is a particular challenge to a company such as Finansa, which is relatively small and operates across different segments covered by different regulators.

Efforts to diversify the business geographically have started to yield positive results, notably in the recent divestment of ADF Management (ADF). Moreover, management has been active in pursuing a business opportunity in China. This particular project is expected to generate a material return on exit in 2008 and, together with the funds available from ADF, provide a strong capital base for further offshore initiatives.

In Thailand, management will continue to seek business synergies across the Group and some headway is expected in areas such as private banking and in better leveraging the substantial provident fund member client base. However, we now recognize that business synergies are not

Strategy Review

in themselves sufficient to drive a meaningful improvement in shareholder returns. And while a hoped-for improvement in the Thai economy may provide some respite, there are longer term issues of growing a range of businesses that are small in absolute and relative terms, in an increasingly complex and costly-to-implement regulatory environment.

In the light of the structural challenges facing the Group, management is giving increased attention to ensuring that each business unit is viable in the long term in its own right. For the managers of the individual businesses, this means looking beyond the immediate business opportunities to reflect on the future of their respective industry segments and how their business landscapes will evolve over the next three to five years. The implication is that select businesses within the Group may have to look at mergers and acquisitions with competitors as a strategy to achieve sustainable profitability in the longer term. We would view this as an objective that has benefits to all stakeholders.

At the group level, management emphasis going forward will be on value optimization and, ultimately, value recognition of the individual businesses and investments.

(Mr. Vorasit Pokachaiyapat)Managing Director


Principal Responsibilities of the Board of Directors

• Th e Board of Directors has the authority and

responsibility to review and approve policies for

the Company. It must perform these duties in

compliance with the governing laws, the objectives

of the Company, the Articles of Association of

the Company and resolutions of the meetings of

Shareholders.

• Th e Board of Directors supervises the Management

Committee, ensuring eff ective and effi cient

implementation of prescribed policies.

• Th e Board has the authority to appoint the

members of the Audit Committee and appoint

authorized signatories.

• Th e Board also has the authority and responsibility

to establish credit limits and limits on trading

exposures for the group companies.

Principal Responsibilities

Principal Responsibilities of the Audit Committee

• Th e Audit Committee is responsible for reviewing

the fi nancial reporting process and disclosure of

fi nancial information to ensure it is correct and

suffi cient.

• Th e Audit Committee reviews internal control

systems and internal audit systems to ensure they

are adequate and effi cient.

• Th e Audit Committee ensures the Company is

in compliance with the regulations of the Offi ce

of the Securities and Exchange Commission, the

Stock Exchange of Th ailand and the Bank of

Th ailand.

• Th e Audit Committee recommends the

appointment of the External Auditor and the level

of fees.

o f t h e B o a r d o f D i r e c t o r s a n d A u d i t C o m m i t t e e


Board of Directors

1. Dr. Virabongsa Ramangkura Chairman

2. Mr. Vorasit Pokachaiyapat Managing Director

3. Mr. Eugene S. Davis Director

4. Mr. Varah Sucharitakul Director

Dr. Virabongsa Ramangkura Mr. Vorasit Pokachaiyapat

Mr. Eugene S. Davis Mr. Varah Sucharitakul


5. Mr. Kenneth Lee White Director

6. Mr. Vitthya Vejjajiva Director, Chairman of the Audit Committee and Independent Director

7. Mrs. Kannika Ngamsopee Director, Member of the Audit Committee and Independent Director

8. Mr. Chanmanu Sumawong Director, Member of the Audit Committee and Independent Director

Mr. Kenneth Lee White Mr. Vitthya Vejjajiva

Mrs. Kannika Ngamsopee Mr. Chanmanu Sumawong


2007 Operational Highlights

Overview

Business conditions in the fi nancial services industry in Th ailand remained diffi cult in 2007 with local investors and companies, in general, cautious against an unsettled political and economic backdrop. In the event, Finansa Plc. generated a 17% increase YoY in Total Income to Bt1.55bn and Operating Profi ts rose from Bt16m in 2006 to Bt295m in 2007. Reported Earnings Before Tax, however were impacted by material one-off , non-cash items totaling Bt535m. Th ese included a high level of additional provisions at Finansa Credit. As a result, the Company reported a Loss After Tax of Bt285m versus a loss of Bt183m in 2006.

Brokerage and Investment Banking

Though the securities market enjoyed higher turnover and a pick-up in share prices, much of the improvement revolved around strong, foreign institutional inflows. The Thai retail investor remained relatively subdued, while capital raising and IPO activity by Thai companies were negligible. Finansa Securities performed well in the circumstances, generating a net profit of Bt33m versus a loss of Bt2m for 2006. Earnings were driven mainly by strong growth in brokerage revenues, in turn reflecting an improvement in brokerage market share to 1.7%, from 1.1% in 2006.

Investment Banking encountered tough conditions in 2007, though mandates undertaken by Finansa Securities reinforced its position as a leading financial advisor and arranger in the petrochemical, energy and telecommunications sectors.

Asset Management

Aggregate assets under management for the onshore and offshore businesses fell to US$669m from US$958m at the start of the year, due primarily to the sale of the Group’s 67% interest in ADF Management Ltd. (ADF). ADF enjoyed strong growth and assets rose to c.US$275m by end 2006. In late 2007, Finansa agreed to a management buyout of its ownership interest. This sale was completed in 4Q 2007 generating a profit of close to USD8$. ADF aside, Finansa’s offshore fund management business contracted following the decision to terminate the successor fund to Siam Investment Fund II, L.P., reflecting low interest from international institutions in Thai private equity. Assets under management at Finansa’s onshore fund management business were broadly flat in Baht terms.

Overall, asset management generated a net profit of Bt292m for 2007 versus a net loss of Bt90m for 2006. In addition to the gain on the sale of ADF, Finansa’s offshore business earned significant performance fees from the Vietnam Equity Fund. Though the onshore business recorded a small profit, the income figure hides sharp increases in revenues and costs, the rise in costs reflecting substantial investment in systems and personnel to position FAM for future growth

Finance

Finansa Credit lost Bt258m in 2007 after losing Bt51m in 2006. The unsatisfactory 2007 performance was attributable largely to loan loss provisions of Bt275m necessitated by the Bank of Thailand’s application of IAS-39 accounting standards. The aggressive provisioning will, however, fully meet Bank of Thailand requirements through to Basel II implementation. To maintain an appropriate capital structure, Bt330m of new Tier I capital was injected during the year by shareholders.

More encouragingly, Finansa Credit initiated a hire purchase automobile finance business in early 2007, shifting the business emphasis from corporate to retail lending. The retail loan portfolio is growing rapidly, while maintaining satisfactory asset quality. Moreover, the duration of the deposit base is lengthening to better match average loan duration, while the proprietary investment activities have been substantially reduced.


Asset Management

Asset management fees decline 2% YoYFees from asset management declined 2% YoY in 2007, having risen 109% in 2006. The setback reflected

the decline in fees to the offshore fund management company, Finansa Fund Management (FFM), from the

Vietnam Equity Fund, following the end of the Fund’s commitment period in July 2007 and the decision to

close Siam Investment Fund III, L.P following a disappointing response from investors and recognition by

the General Partners that the initial closing size, of US$24m, was too small for the Fund to be economic.

Meanwhile, Finansa Asset Management (FAM), the domestic provident and mutual fund company was

able to increase its fees by 42% to Bt64m and the domestic business increased its share of overall asset

management fees from 10% in 2006 to 15% in 2007.

2 0 0 7 R e v i e w a n d 2 0 0 8 O u t l o o k

Combined Asset Management Businesses* 2007 2006As at or for the year ended 31 December Baht Million Baht Million

Balance SheetAssetsTotal current assets 132 354

Investments 2,257 2,123

Other assets 50 63

Total assets 2,439 2,540

Liabilities and Shareholders’ EquityTotal liabilities 1,215 1,879

Shareholders’ equity 1,224 661

Total liabilities and shareholders’ equity 2,439 2,540

Statements of IncomeService income 425 434

Other operating income 421 145

Total income 846 579

Operating expenses (501) (448)

Operating income 345 131

Losses from Forex & impairments of investments (24) (234)

Interest expense (48) (75)

Share of income (loss) from associated companies 45 87

Income (loss) before tax 318 (91)

Income tax (1) 8

Minority interest (25) (7)

Net income (loss) 292 (90)

Return on Average Assets 11.7% (3.6%)

Return on Average Equity 31.0% (12.3%)

* Combining the reports from Finansa Fund Management Ltd. and subsidiaries and Finansa Asset Management Ltd.


Other Income surges on ADF sale in 4QOther Operating Income surged 149% YoY in 2007 to Bt421m, following the sale of FFM’s 67% stake in

ADF Management, through a management buy out. The transaction closed in 4Q 2007 and the gain on

the sale was close to US$8m. ADF Management is the manager of The Asian Debt Fund. In exiting this

investment, FFM will lose a future stream of income, though the valuation supported an exit at this time.

FAM generates small profit in 2007FAM generated net income of Bt2m in 2007 versus Bt1m in 2006. Though only marginally profitable, the

income figure hides sharp increases in revenues and costs, the rise in costs reflecting substantial investment

in systems and personnel to position FAM for future growth. We would highlight the hiring of senior

investment professionals, strengthening of the Compliance Team and implementation of new and more

sophisticated operational and risk management systems.

Asset Management businesses generate strong earningsWith the gains in Other Income and sharp reduction in losses on Foreign Exchange, the combined asset

management businesses generated net earnings of Bt292m in 2007 versus a loss of Bt90m in 2006.

Asset Management : Business Review

Group AUM decline in 2007Group assets under management (AUM) declined in 2007 to US$669m from US$958m at the start of the

year, due primarily to the sale of the Group’s 67% interest in ADF Management Ltd., as mentioned above.

ADF was established in 2003 as an offshore fund management unit with its flagship fund investing in

distressed debt instruments in Asia (ex-Japan). ADF enjoyed strong growth and assets rose to c.US$275m

by end 2006. Late in 2007, Finansa agreed to a management buyout of its ownership interest. This sale was

completed in 4Q 2007.

Contraction in Thai Private Equity businessIn terms of the offshore funds, FFM’s AUM, as measured by the amounts which determine management

fees, also declined in 2007. Marketing efforts aimed at building up commitments to Siam Investment Fund

III, L.P., the successor fund to Siam Investment Fund II, L.P., were unsuccessful. As indicated earlier, the

fund’s sponsors subsequently determined that the initial closing commitments of US$24m were insufficient

to fulfill the Fund’s mandate and the decision was taken to close the Fund and relieve investors of their

commitments. The lack of interest in Thai Private Equity amongst foreign institutions was largely a reflection

of the relatively lackluster economic climate prevailing in Thailand and the limited opportunities in terms of

deal flow, both in terms of size and number of potential transactions.


Repositioning the Vietnam businessFFM’s AUM also dropped in relation to Vietnam, although the decline here was a response to a policy

decision by management to reposition the fund business, moving away from a strict private equity mandate

to a more flexible mandate and investment structure. The decision to change direction was a result of the

dramatic change in the investment climate in Vietnam following the launch of the Vietnam Equity Fund

(VEF) in 2005. VEF had a strict private equity mandate which proved difficult to execute in a market that

was being flooded with new fund launches and valuations were moving up rapidly. In the event, VEF was

able to invest just 35% of its Euros15.2m in commitments in its first two years of operations and with little

scope to make further investments, FFM asked the shareholders of VEF to close the fund, thereby allowing

FFM to launch a new fund with a less restrictive mandate. This request was approved and the new fund, The

Finansa Vietnam Fund (FVF) will be launched in 1H 2008. Unlike VEF, FVF has an open-ended structure

that will allow AUM to expand in line with market conditions and performance.

FAM’s AUM flat in Baht termsIn terms of the onshore funds, Finansa Asset Management (FAM), the domestic asset management business

targeting mutual and provident funds, saw AUM fall 2% in 2007 to Bt21.5bn. In US$ terms, assets rose

5% from US$608m to US$636m.


Funds Under Management Fund Type Structure Launch Maturing Assets

US$m

Assets

US$m

%

Change

Onshore FundsFinansa Asset Management

2007 2006

Provident Funds Provident Open 1969 n.a. 527 549 (4%)

Mutual Funds Mutual Open 2004 n.a. 39 26 48%

Finansa Global

Allocation Fund

Finansa Global

Commodities Fund

Foreign

Invested Fund

Foreign

Invested Fund

Open

Open

2005

2007

n.a.

n.a.

44

26

33

-

33%

-

Sub-Total 636 608 5%

Offshore Funds


Siam Investment Fund Thai Equity Closed 1996 Closing - 1 (100%)

Siam Investment Fund II Thai Private

Equity

LP 1999 2009 27 30 (10%)

Siam Investment Fund III Thai Private

Equity

LP 2005 Closing 2 24 (92%)

Vietnam Equity Fund Vietnam

Equity

Closed 2005 Closing 4 20 (80%)

Sub-Total 33 75 (56%)

ADF Management

The Asian Debt Fund

- A, B and C shares

Distressed

Debt in Asia

ex-Japan

Open 2003 n.a. n.a. 265 -

The Asian Debt Fund

- H shares

High Yield

debt in Asia

ex-Japan

Open 2005 n.a. n.a. 10 -

Sub-Total n.a. 275 -

Onshore 636 608 5%

Offshore 33 350 (91%)

Total 669 958 (30%)


Provident fund business remains highly competitiveThe provident fund business remains ferociously competitive with little underlying growth in industry assets

and minimal fees. FAM’s strategy has been to introduce innovative provident fund products and to upgrade its

investment capability, which has yielded results in terms of improved investment performance. Nevertheless,

these improvements have yet to be fully recognized by the market and it has proved challenging to expand

this business. In the event, two relatively large accounts were lost during the year and despite some successes

with new accounts, provident fund AUM declined 10% in 2007 from Bt19.8bn to Bt17.8bn.

Success in growing the FIF businessMore encouragingly, FAM’s mutual fund business is growing strongly, helped by the success of the FAM

Global Commodities Fund, the first Foreign Invested Fund (FIF) in Thailand targeting this asset class. The

FAM Global Commodities Fund was launched in February 2007 and by the end of the year, AUM had

reached Bt890m. FAM’s flagship FIF, the FAM Global Allocation Fund had a satisfactory performance in

US$ terms, but this proved lackluster in Thai Baht terms, which hindered its progress in terms of growing

AUM. Nevertheless, the AUM of the Global Allocation Fund rose 27% over the year to Bt1.5bn. Overall,

FAM’s AUM in FIF grew 103% over the year to Bt2,374m.

Shift in fund mix aids profitabilityThough the overall AUM at FAM was little changed in 2007, the shift in the fund mix towards mutual funds

(including FIFs) is significant as this is leading to an improvement in fund management margins in the

onshore business. Mutual funds accounted for 17% of AUM at the end of the year, while their contribution

to FAM’s revenues has grown to 40%.

Asset Management: 2008 Outlook

Focus on growing AUM in VietnamThe key objectives of the offshore asset management business in 2008 will be to grow AUM in the Finansa

Vietnam Fund and to engineer satisfactory exits for the residual investments in Siam Investment Fund II,

L.P.(SIF II) and Siam Investment Fund III, L.P (SIF III). There are six investments remaining in SIF II and

one in SIF III. Of these seven investments, three are at the final stages of being sold.

Marketing The Finansa Vietnam Fund poses a challenge The marketing of the Finansa Vietnam Fund is proving challenging as Finansa Fund Management does not

maintain an extensive marketing network. However the strong track record of the Vietnam Equity Fund,

the long experience of the Vietnam investment team, an open-ended investment structure and a carefully

designed mandate that draws on the lessons learned over many years of investing in Vietnam provide, in our

view, a compelling investment case.

Performance Fees from the Vietnam Equity FundThe residual investments in the Vietnam Equity Fund are expected to be sold during 2008 and this will

trigger payment of performance fees as the returns have far exceeded the target hurdle rate of 8% p.a. The

amount of fees payable will be determined by the size of the final distribution by the Fund, however the

figure should be significant.


FAM aims to grow both the mutual and provident fund businessesThe key objectives of the onshore asset management business in 2008 are to expand the mutual fund

business with an increasing focus on developing a retail client base and to expand AUM in the provident

fund business, after the setback in 2007.

Expansion of FIF product range to aid marketingFAM is preparing to launch two new FIFs in 2008, a global infrastructure fund and a global real estate fund.

These funds will complement existing funds and provide FAM with a suite of funds covering all major asset

classes. The expanded product range should support FAM’s marketing activities, both for provident funds

and mutual funds.

Launching a domestic money market fundFAM will also launch a money market fund in 2008 which will be an important product for developing

the retail client business. It will also be an important product in terms for improving the management and

returns on cash held within the provident fund business.

A strengthening competitive positionWhile product innovation, such as “Employee’s Choice” in provident funds strengthened FAM’s competitive

position in 2007, areas requiring further improvement included investment performance and client support.

A new Chief Investment Officer was recruited in July 2007 and the firm has invested heavily throughout the

year in IT service support. The improvement in investment performance in 2H 2007 has been material and

bodes well for fund marketing in 2008.

Strengthening retail distribution capabilityTo date, the growth in the mutual fund business has been supported by allocation of assets from provident

fund accounts. 2007 saw the first, material contribution from external sales. During 2007, Finansa Securities

established a separate sales team that will promote all Finansa-related products and this sales team will be a

key driver of mutual fund sales to the retail market.


Finansa Securities Limited 2007 2006As at or for the year ended 31 December Baht Million Baht Million

Balance Sheet

AssetsCash and cash equivalents 371 351

Receivable from the Clearing House 309 37

Securities business receivables and accrued interest receivables - net 819 575

Other assets 230 362


Liabilities and Shareholders’ EquityPayable to the Clearing House 182 -

Securities business payables 577 390

Other liabilities 183 182

Total liabilities 942 572

Shareholders’ equity 787 753


Statement of IncomeBrokerage fees 343 216

Fees and services income 82 162

Gains (losses) on trading in securities 16 (17)

Interest, dividend and other income 33 37

Total income 474 398

Total expenses (425) (399)

Income (loss) before income tax 49 (1)

Income tax (16) (1)

Net income (loss) 33 (2)

Return on Average Assets 2.2% (0.2%)

Return on Average Equity 4.3% (0.3%)

59% rise in brokerage revenues drives 19% rise in overall salesFinansa Securities’ (FSL) overall revenues rose 19% in 2007 to Bt474m, driven by a 59% rise in brokerage

revenue, which benefited from a general improvement in stock market turnover and a gain in FSL’s market

share. Brokerage revenue accounted for 72% of total revenue in 2007 against 54% in 2006. FSL’s Fees and

Service Income fell 49% in 2007 to Bt82m, reflecting both a slowdown in overall equity capital markets

activity in 2007 and FSL’s success the prior year in managing the Rayong Refinery IPO, the largest equity

offering in Thailand in 2006. FSL also saw a modest turnaround in its proprietary trading activities, reversing

losses incurred in 2006.

Return to profitability in 2007 with Net Income of Bt33m Strong revenue growth, a positive contribution from proprietary trading and a tight control of costs resulted

in FSL generating a Profit After Tax of Bt33m in 2007 against a loss of Bt2m in 2006. While revenues rose

Investment Banking and Brokerage2 0 0 7 R e v i e w a n d 2 0 0 8 O u t l o o k


19% YoY, Employee Costs rose 7% YoY, representing 51% of total revenues in 2007 versus 57% in 2006.

Investment Banking and Brokerage : Business Review

Several prestigious mandates won in 2007FSL’s reputation as a leading investment bank in Thailand has been reinforced by several major mandates

awarded in 2007. These included:

• Financial advisor of Rayong Refinery Plc. in the amalgamation with The Aromatics (Thailand) Plc.

• Financial advisor of Rayong Refinery Plc. for its Baht 7,000 million debt arrangement

• Financial advisor of PTT Plc. for the feasibility study and valuation of potential investment in an

overseas aromatics plant

• Financial advisor of Thai Telco Holdings Ltd. for the shareholding restructuring of UCOM and DTAC,

the listing of DTAC and the delisting of UCOM

• Financial advisor of Electricity Generating Plc. for its Independent Power Production (IPP) bidding

• Financial advisor of S.E.C. Auto Sales and Services Plc. for the rights offering of warrants and offering

of warrants to executive, management and employees

Limited new issue activity caps revenue potentialOne feature of the investment banking industry in 2007 was the absence of major new issue activity in the

Thai equity capital market. This was a constraint on the growth of FSL investment banking revenues during

the year.

Brokerage market share increases to 1.7% The brokerage business of Finansa Securities improved its performance in 2007 in a challenging industry

environment. Brokerage market share climbed from 1.11% in 2006 to 1.71% in 2007. The improving

trend was also evident in the rise in market share during the year from 1.63% in 1H 2007 to 1.75% in

2H 2007. Underpinning the growth YoY in market share was the impact of a full year’s contribution from

the news sales teams added in mid-2006, growth in the total number of accounts (from 5,300 to 7,900),

increased interaction with investors through hosting more frequent investment seminars and an increasing

contribution from Internet trading.


SET trading value rises 7% YoYOverall trading volumes in the Stock Exchange of Thailand rose 7% with average daily trading volume of

Bt17,436bn in 2007 versus Bt16,327bn in 2006.

Internet commission accounts for 13% of total FSL commissionFSL’s Internet trading commissions rose 14% in 2007 and now represent 13% of FSL’s overall brokerage

commissions. For the industry as a whole, the share of total trading contributed by Internet trading has

increased significantly from 6% to 16% of total trading volume due primarily to the introduction of new

regulations which lowered the minimum commission on Internet trades. FSL saw the number of Internet

trading accounts increase by close to 80% YoY in 2007 and the company’s ranking in terms of market share

in this segment improved from 17 in 2006 to 15 in 2007.

Ongoing efforts to improve productivity Given expectations of another sluggish year, management reinforced efforts to streamline costs and improve

productivity. Measures taken to control costs included closing one branch (FSL now has 14 branches) and

maintaining tight controls over headcount. The total staff of FSL at end 2007 was 283 versus 315 at end

2006.

Establishing a foreign client capabilityThroughout 2006 and 2007 FSL’s brokerage business was focused on retail, domestic clients, however a key

hiring was made in late 2007 to establish a foreign institutional business. As part of this initiative, Finansa

Securities entered a strategic tie-up with a broker in Singapore to provide an international trading platform

capable of executing foreign institutional trades. This platform is able to execute trades at a competitive

commission rate as the tie-up is exclusive. This business unit will be an important element in the growth

in business in 2008. While % share of trading volume by foreign investors remained flat in 2007, foreign

activity accounting for a significant 32% of overall trading volume versus 33% in 2006.

FSL’s Market Share VS TotalTrading Volume(Btmn) %Share


Investment Banking and Brokerage: 2008 Outlook

Continued focus on added value advisory servicesFor 2008, the Investment Banking team will continue the strategy of 2007, focusing on securing mandates

in M&A and in structured and project finance, with a special focus on the power sector where the team

has unique expertise. In achieving its goals, the team can draw on an expanding track record of successful

transactions which demonstrate an expertise in value added advisory services and innovative financing

solutions.

Scope for a pickup in IPO activityOn the equity side, management is hopeful of a recovery in IPO activity following the reinstatement of a

democratically elected government and the potential for greater certainty in policy direction and execution.

The team has a pipeline of equity mandates that are set to launch as and when market conditions become

favorable.

Aiming to further expand market share in brokerageA key objective in 2008 will be to continue to increase market share in brokerage. Gains in market share are

expected to come through the expansion of international business on the trading platform introduced at end

2007, expansion in the Internet-based business following platform improvements and further increases in

the number of retail client accounts, reflecting improvements in product and service levels. The FSL research

effort has been refined and repositioned, incorporating a broader financial advisory element.

Applying for membership of TFEXFSL is planning to apply to join TFEX, the Thai futures exchange, giving it a capability to trade derivative

products. Having TFEX membership will give FSL more efficient access to new products and also help

attract sales staff.

Opportunities in SBL In addition, business opportunities are expected to open up in stock borrowing and lending following an

expected relaxation in regulatory controls over this activity in the first half of 2008.

Exploring a tie-up in VietnamFSL is also assessing the potential for a business tie-up with a brokerage firm in Vietnam. Discussions are

ongoing, which may lead, as a first step, to a technical services agreement. FSL is well placed to provide

support to a Vietnamese firm with ambitions to develop a strong retail sales capability. Co-operation

will also extend to cross border sales initiatives, as regulations allow and cross border investment banking

activities.


Finance Business 2 0 0 7 R e v i e w a n d 2 0 0 8 O u t l o o k

Finansa Credit Limited 2007 2006As at or for the year ended 31 December Baht Million Baht Million

Balance Sheet

Assets

Cash and cash equivalents 772 829

Investments - net 665 1,294

Loans, receivables and accrued interest - net 2,579 1,946

Other assets 204 114


Liabilities and Shareholders’ Equity

Liabilities 3,688 3,738

Shareholders’ equity 532 445


Statements of Income Interest and dividend income 243 288

Interest expenses (155) (219)

Net interest and dividend income 88 69

Bad debt and doubtful accounts (275) (55)

Net interest and dividend income after bad debt and doubtful accounts (187) 14

Non - interest income 9 (3)

Total income (178) 11

Non - interest expenses (117) (83)

Income (loss) before income tax (295) (72)

Income tax 37 21

Net income (loss) (258) (51)

Return on Average Assets (6.1%) (1.1%)

Return on Average Equity (52.8%) (11.1%)

Capital Adequacy 15.2% 13.9%

Non - performing Assets / Total assets 12.2% 6.5%

Loan Loss Reserve as a % of NPA 80.5% 51.3%

Loan Loss Reserve as a % of BoT Requirement 104.7% 139.0%

Bt275m loan loss provision behind 2007 lossIn 2007, Finansa Credit (FC) generated a loss after taxes of Bt258m versus a loss of Bt51m for the previous

year. The unsatisfactory 2007 performance was attributable largely to Loan Loss Provisions of Bt275m

necessitated by the Bank of Thailand’s application of IAS-39 accounting standards and the related introduction

of severe qualitative measures to identify potential NPL credit exposures. This aggressive provisioning will

fully meet Bank of Thailand requirements through to Basel II implementation.


Bt330m increase in capitalTo maintain an appropriate capital structure, Bt330m of new Tier I capital was injected during the year by

shareholders.

Finance: Business Review

Initiated automobile finance business in 1Q 2007In Q1 2007, FC initiated a hire purchase automobile finance business. By Q4, this unit was fully operational

and productive. Credit quality of the hire purchase portfolio has been strictly controlled. Personnel and

other costs associated with this new business strategy were mostly responsible for a Bt34 million growth of

Operating Expenses. The move into automobile finance represents a strategic shift from a focus on corporate

to a focus on retail lending within the finance business.

Deposit base strengthened at a cost to spreadsFC was able to significantly expand its consumer deposit base while lengthening its deposit maturities.

While this strategy greatly reduced the Company’s funding and maturity gapping risks, it also contributed

to a narrowing of interest spreads. FC closed out its fixed income proprietary investment activities in July

2007 to eliminate past earnings volatility, and to deploy surplus liquidity to support the growth of the hire-

purchase portfolio.

BoT provisioning standards met, though some deterioration in asset qualityAs of year-end 2007 FC had non-performing assets (NPA) of Bt517m, equal to 12.2% of Total Assets.

Against these assets FC had total loan loss reserves of Bt405.4m, an amount equal to 105% of the Bank of

Thailand’s provisioning requirements. During the year progress was achieved by resolving Bt39m of NPAs.

However, Bt171m of new NPAs were added as the financial condition of several borrowers deteriorated

caused in part by the deteriorating economic and investment environment. Export related borrowers were

particularly affected by the strengthening of the Thai Baht against the US Dollar.

Maintaining strong capital adequacy ratiosThe Capital Funds of Finansa Credit totaled Bt583m as of year-end 2007. The CAR (capital funds to risk

weighted assets) stood at 15.2%, versus the regulatory minimum of 8.0%. In 2007, the Ministry of Finance

approved requests to inject Bt330m of additional capital funds by the parent company, Finansa PLC. The

additional capital will enable Finansa Credit to retain one of the highest CAR ratios in the industry.

Further strengthening of Governance and Risk ManagementDuring 2007 FC undertook measures to upgrade its governance and credit risk management systems. A

Compliance Manager and an Internal Audit Manager were appointed and Quarterly Risk Management

meetings were held to revise credit risk and market risk policies and to oversee the implementation of

improved safeguards and operating procedures. FC’s Audit Committee met regularly with management,

the internal audit staff and the external auditors to monitor the Company’s risk management capabilities

in anticipation of the implementation by the Bank of Thailand of the Basel II guidelines. FC also revised

its credit risk policies to emphasize lower-risk consumer lending, reducing higher-risk commercial lending

exposures and fixed income proprietary investments.


Finance: Outlook for 2008Strategic Business Plan submitted to the Bank of ThailandFinansa Credit has submitted a comprehensive Strategic Business Plan to the Bank of Thailand outlining its

operating objectives as a finance company. Its key assumptions are predicated on the Company remaining as

a licensed finance company with its customer deposits guaranteed by the Financial Institutions Development

Fund. The recently enacted revisions to the banking laws reaffirm FC’s lending and deposit taking licenses.

FC will also be subject to Basel II regulations that will be fully implemented by the Bank of Thailand in 2009,

along with the implementation of a deposit insurance scheme. It is anticipated that the Bank of Thailand

will at some point in the future permit Finansa Credit to upgrade its operations to be a Retail Bank.

Focus on consumer lending going forwardFC expects to significantly increase its consumer lending activities, particularly through hire purchase

automobile finance and secured personal loans. Its distribution channels for these products will utilize

the Group’s overall customer base, including over 240,000 provident fund customers with Finansa Asset

Management. The sale of deposit and investment products will employ similar channels of distribution.

Targeting a return to profitability in 2008In 2008 FC is expected to return to profitable operations. The expansion of the Company’s retail deposit

base and the continued growth of its hire purchase portfolio will provide a solid earnings platform for future

years. Less defensive funding strategies will improve deposit margins and reduce the costs of carrying excess

liquidity positions. The recovery of excess loan provisioning costs from prior years, reduction of the NPL

portfolio and a more favorable interest rate environment should also contribute favorably.


Th e Board of Directors is responsible for the supervision of fi nancial statements preparation of the Company

and its subsidiaries to be disclosed to the investors in a timely manner and for ensuring the accounting data is

presented with accuracy and transparency. Th e fi nancial reports of the Company and its subsidiaries are prepared in

accordance with generally accepted accounting principles in Th ailand, by applying appropriate accounting policies

consistently. Moreover, suffi cient important information is disclosed in the notes to the fi nancial statements.

Th e Board of Directors has empowered the Audit Committee and the Certifi ed Public Accountants to freely review

the internal control and the accuracy of the fi nancial reporting. Th e opinion of the Audit Committee on such

matters is presented in the Report of the Audit Committee in the annual report.

Based upon the Company’s internal control system supervised by the Audit Committee and the external auditor’s

reports, the Board of Directors believes that the consolidated fi nancial statements of the Company and its subsidiaries

present completely, in all material aspects, the fi nancial position, the results of operations and cash fl ows for the

year ended 2007 and are also in conformity with generally accepted accounting principles.

(Dr. Virabongsa Ramangkura)

Chairman

(Mr. Vorasit Pokachaiyapat)

Managing Director

Report on the Board of Directors’Responsibility towards the

Financial Statements 2007


Report of the Audit Committee for the year 2007

The Audit Committee of Finansa Public Company Limited comprises 3 independent non-executive

directors, namely, Mr.Vitthya Vejjajiva as the Chairman of Audit Committee, Mrs.Kannika Ngamsopee and

Mr.Chanmanu Sumawong as Audit Committee members.

During most of 2007 the Head of the Internal Audit Department served as secretary to the committee and

reported audit activities directly to the Audit Committee. With effect from 29 November 2007 the Audit

Commitee determined to outsource internal audit functions to KPMG Phoomchai Business Advisory Ltd.

In the year 2007, the Audit Committee held 5 meetings and all members attended the meetings except Mr.

Chanmanu Sumawong who missed 1 meeting. The following major issues were considered in accordance

with the scope of duties and responsibilities assigned by the Board of Directors.

1. Review the quarterly financial statements as well as the annual financial statements and consolidated

financial statements of the Company and its subsidiaries including the accuracy and completeness of

information disclosed on the notes to financial statement.

2. Review the internal control systems and the auditing reports performed by the Internal Audit

Department in accordance with the approved annual audit plan.

3. Review the Company’s operations in order to ensure compliance with the securities law, rules and

regulations of the SET or any law concerning the Company’s business.

4. Consider the Company’s information disclosure about the transactions stipulated by law, connected

transactions, related party transactions, including the transactions which may cause conflict of

interest.

5. Recommend to the Board of Directors for shareholders’ meeting approval of the proposed appointment

of Dr. Suphamit Techamontrikul, Certified Public Accountant Registration No.3356 or Mr. Permsak

Jerajakwattana, Certified Public Accoutant Registration No.3427 or Mr. Niti Jungnitnirunda,

Certified Public Accountant Registration No. 3809 from Deloitte Touche Tohmatsu Jaiyos Audit

Co., Ltd. as the Company’s auditors for the year 2008.

The Audit Committee is of the opinion that the Company has an internal control system which is satisfactory

that the Company’s operation is in compliance with relevant laws and regulations, and that the financial

statements of the Company were prepared and presented with accurate and sufficient material information

in accordance with the generally accepted accounting principles.

On behalf of the Audit Committee

(Mr. Vitthya Vejjajiva)

Chairman of the Audit Committee


Finansa Public Company Limited and Its Subsidiaries

Report and Financial Statements

31 December 2007


To the Shareholders of Finansa Public Company Limited

I have audited the accompanying consolidated balance sheet of Finansa Public Company Limited and its subsidiaries as at 31 December 2007, the related consolidated statements of income, changes in shareholders’ equity and cash flows for the year then ended, and the separate financial statements of Finansa Public Company Limited for the same period. These financial statements are the responsibility of the Company’s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated financial statements of Finansa Public Company Limited and its subsidiaries, and the separate financial statements of Finansa Public Company Limited for the year ended 31 December 2006 were audited by another auditor in the same office as mine, who under her report dated 23 February 2007 expressed an unqualified opinion on those financial statements but drew attention to the matters regarding (a) maintaining the status of being a finance company of a subsidiary, (b) allowance for doubtful accounts as recorded by the subsidiary engaging in the finance business. In December 2006 the Bank of Thailand changed its guidelines in determining provision for non-performing loans, which require a 100% provision on the shortfall of the carrying value of the loans and the present value of future cash expected to be collected from the debtors or from collateral disposal, to be fully recorded in 2006 and 2007. The subsidiary already set aside a full provision for debtors falled under the criteria to recognise in 2006. The amount of provision to be additionally set up in 2007 according to the guidelines could not be determined at that stage and it might have a significant impact to the financial statements and the capital adequacy of the subsidiary, and (c) the Company and its subsidiaries having transactions with their related parties, the effects of which were reflected in the financial statements on the basis determined by the Company, its subsidiaries and their related parties.

I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Finansa Public Company Limited and its subsidiaries and of Finansa Public Company Limited as at 31 December 2007, the results of their operations and cash flows for the year then ended in accordance with generally accepted accounting principles.

Without qualifying my opinion on the aforementioned financial statements, I draw attention to the following matters;

(a) As discussed in Note 1.2 to the financial statements regarding business operation of a subsidiary engaging in finance business.

(b) As discussed in Note 19 to the financial statements that the value of deferred tax assets outstanding on the balance sheet date is subject to the ability of the subsidiaries to generate future taxable profits in order to benefit from unutilised tax losses within the required time frame, and

(c) As discussed in Note 41 to the financial statements regarding the Company and its subsidiaries having transactions with their related parties, the effects of which were reflected in the financial statement on the basis determined by the Company, its subsidiaries and their related parties.

Rungnapa Lertsuwankul

Certified Public Accountant (Thailand) No. 3516Ernst & Young Office Limited

Bangkok : 28 February 2008

Report of Independent Auditor


(Unit : Th ousand Baht)

Consolidated fi nancial statements Separate fi nancial statements

Note 2007 2006 2007 2006 (Restated)ASSETSCURRENT ASSETSCash and cash equivalents 6 317,695 346,984 35,449 120,000

Securities purchased under resale agreements 7 700,000 760,000 - -

Current investments 8 Trading securities 466,410 648,244 62,577 28,039

Available-for-sale securities 503,665 1,272,367 - 121,940

Current investments - net 970,075 1,920,611 62,577 149,979

Receivable from the Clearing House - Th ailand Securities

Depository Center 309,396 36,941 - -

Loans, receivables and accrued interest receivables -

fi nance and securities businesses - current portion 9, 10, 41.2 2,192,510 2,118,401 - -

Loans to other parties - current portion 11 119,830 116,941 102,330 85,365

Short-term loans and advances to related parties 41.2, 41.3 18,865 13,314 141,170 90,217

Receivables tranferred from another securities company - 12,099 - -

Deposit for investment 22 531,075 - - -

Service income receivables

Related parties 41.2 - 152,636 839 701

Other parties 14,624 11,661 2 -

Total service income receivables 14,624 164,297 841 701

Other current assets 12, 41.2 101,805 180,926 10,416 33,822

TOTAL CURRENT ASSETS 5,275,875 5,670,514 352,783 480,084

NON-CURRENT ASSETS

Deposits subject to restrictions 13 897 871 896 871

Investment in subsidiaries and associated companies 14 254,146 346,512 1,842,874 1,329,676

Long-term investments in related parties 15 39,689 48,793 - -

Long-term investments 8

Available-for-sale securities 875,233 1,193,203 - -

Held-to-maturity debt securities 100,000 100,000 - -

General investments 243,819 169,951 73,313 98,313

Long-term investments - net 1,219,052 1,463,154 73,313 98,313

Loans, receivables and accrued interest receivables - fi nance

and securities businesses - net of current portion 9, 10, 41.2 1,194,192 403,193 - -

Loans to other parties - net of current portion 11 40,797 45,745 40,797 45,745

Long-term loans to a related party 41.2, 41.3 - - - 594,544

Service income receivable from a related party 41.2 - - 227,375 193,670

Properties foreclosed - net 16 40,740 28,225 - -

Premises and equipment - net 17 329,760 375,591 222,663 261,961

Goodwill - net 18 173,061 322,865 - -

Guarantees for derivative contracts 38.1 3,377 3,609 - -

Deferred income tax assets 19 111,675 116,396 - 39,165

Intangible assets - net 20 66,243 71,406 43,316 56,215

Other non-current assets 53,994 48,359 807 2,374

TOTAL NON-CURRENT ASSETS 3,527,623 3,274,719 2,452,041 2,622,534

TOTAL ASSETS 8,803,498 8,945,233 2,804,824 3,102,618

Th e accompanying notes are an integral part of the fi nancial statements.


Balance Sheets As At 31 December 2007 and 2006



Balance Sheets (Continued)As At 31 December 2007 and 2006



Note 2007 2006 2007 2006

(Restated)

LIABILITIES AND SHAREHOLDERS’ EQUITYCURRENT LIABILITIESBills of exchange - net 23, 41.2, 41.3 1,042,458 656,852 1,109,388 725,732

Bank overdrafts 98,335 - - -

Short-term loans 24 25,000 25,000 - -

Payable to the Clearing House - Th ailand Securities

Depository Center 181,626 - - -

Securities business payables 25, 41.2 577,319 374,452 - -

Current portion of liabilities under fi nance lease agreements 26 5,351 4,525 - -

Current portion of borrowings and deposits 27, 41.2, 41.3 3,175,804 3,363,112 - -

Current portion of long-term loans 28 120,000 230,000 120,000 230,000

Other current liabilities

Accrued bonus 52,381 78,389 8,824 14,206

Accrued interest expenses 22,066 27,518 84 1,603

Accrued expenses 62,165 204,190 13,814 3,925

Others 38.1, 41.2 83,812 58,394 58,617 30,105

Total other current liabilities 220,424 368,491 81,339 49,839

TOTAL CURRENT LIABILITIES 5,446,317 5,022,432 1,310,727 1,005,571

NON-CURRENT LIABILITIES

Liabilities under fi nance lease agreements

- net of current portion 26 8,772 12,338 - -

Borrowings and deposits - net of current portion 27 192,282 128,317 - -

Long-term loans - net of current portion 28 795,314 1,002,520 - 120,000

TOTAL NON-CURRENT LIABILITIES 996,368 1,143,175 - 120,000

TOTAL LIABILITIES 6,442,685 6,165,607 1,310,727 1,125,571





Note 2007 2006 2007 2006

(Restated)

SHAREHOLDERS’ EQUITY

Share capital

Registered share capital

300,000,000 ordinary shares of Baht 5 each 1,500,000 1,500,000 1,500,000 1,500,000

Issued and paid-up share capital

125,010,100 ordinary shares of Baht 5 each 625,051 625,051 625,051 625,051

Additional paid-in capital

Premium on ordinary shares 1,266,066 1,266,066 1,266,066 1,266,066

Revaluation defi cit on investments (63,737) (24,393) - -

Translation adjustment (225,564) (145,325) - -

Retained earnings

Appropriated

Statutory reserve 29 69,304 69,304 69,304 69,304

Treasury stock reserve 30 25,037 25,037 25,037 25,037

Unappropriated (defi cit) 689,693 974,296 (466,324) 16,626

Treasury stocks (1,490,300 ordinary shares) 31 (25,037) (25,037) (25,037) (25,037)

EQUITY ATTRIBUTABLE TO

THE COMPANY’S SHAREHOLDERS 2,360,813 2,764,999 1,494,097 1,977,047

MINORITY INTEREST - 14,627 - -

TOTAL SHAREHOLDERS’ EQUITY 2,360,813 2,779,626 1,494,097 1,977,047

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 8,803,498 8,945,233 2,804,824 3,102,618


DIRECTORS


Balance Sheets (Continued)As At 31 December 2007 and 2006


(Unit : Th ousand Baht except earnings per share expressed in Baht)

Consolidated fi nancial statements Separate fi nancial tatements

Note 2007 2006 2007 2006

(Restated)

REVENUESFinancial and investment advisory businesses income 41.1.1 475,993 545,011 277,849 511,653

Finance business income 245,040 271,397 - -

Securities business income 41.1.1 437,927 363,287 - -

Asset management business income 63,490 45,013 - -

Gain on disposal of subsidiaries 14.3 268,931 - - -

Other income 41.1.1 16,686 9,382 15,133 17,069

Share of income from investments in associated companies 44,440 87,232 - -

TOTAL REVENUES 1,552,507 1,321,322 292,982 528,722

COSTS AND EXPENSES

Financial and investment advisory businesses costs and expenses 293,048 256,413 74,818 74,718

Finance business costs and expenses 201,476 246,850 - -

Securities business costs and expenses 338,862 303,977 - -

Asset management business costs and expenses 36,416 31,406 - -

Servicing and administrative expenses 565,576 429,883 112,410 116,406

Impairment loss on investments 8.1, 14.2 97,000 161,321 487,000 22,014

Loss from letter of guarantee issued by a subsidiary 38.1 13,363 - - -

Goodwill amortisation and impairment loss on goodwill 18 149,804 22,051 - -

TOTAL COSTS AND EXPENSES 1,695,545 1,451,901 674,228 213,138

EARNINGS (LOSS) BEFORE INTEREST EXPENSES,

INCOME TAX AND MINORITY INTEREST (143,038) (130,579) (381,246) 315,584

INTEREST EXPENSES 41.1.1 (96,843) (88,828) (62,539) (67,729)

INCOME TAX 19 (19,908) 43,852 (39,165) 15,592

EARNINGS (LOSS) BEFORE MINORITY INTEREST (259,789) (175,555) (482,950) 263,447

NET INCOME ATTRIBUTABLE TO MINORITY

SHAREHOLDERS OF SUBSIDIARIES (24,814) (7,342) - -

NET INCOME (LOSS) (284,603) (182,897) (482,950) 263,447

EARNINGS PER SHARE 32

Basic earnings per share

Net income (loss) (Baht per share) (2.30) (1.48) (3.91) 2.13



Statements of IncomeFor the Years Ended 31 December 2007 and 2006

34FIN

AN

SA PLC. - A

nnual Report 2007

Finansa Public Company Limited and Its SubsidiariesDetails of Items in Statements of Income

For the Years Ended 31 December 2007 and 2006

(Unit : Thousand Baht)

Consolidated financial statements Separate fi nancial statements

2007 2006 2007 2006

Note

Financial

and

investment

advisory

businesses

Finance

business

Securities

business

Asset

Management

business

Total Financial

and

investment

advisory

businesses

Finance

business

Securities

business

Asset

Management

business

Total Financial and

investment

advisory

businesses

Financial

and

investment

advisory

businesses

REVENUES (Restated)

Brokerage fees 41.1 .1 - - 337,213 - 337,213 - - 204,514 - 204,514 - -

Fees and services income 41.1 .1 363,101 5,455 60,201 63,455 492,212 391,057 4,924 161,912 44,808 602,701 139,090 140,911

Gains (losses) on trading in securities / investments 18,538 (3,131) 15,746 - 31,153 53,461 (33,814) (17,273) - 2,374 5,259 (19,127)

Interest and dividend 41.1 .1 94,354 242,716 7,925 35 345,030 100,493 287,969 2,567 205 391,234 133,500 389,869

Interest on margin loans - - 16,842 - 16,842 - - 11,567 - 11,567 - -

Gain on interest rate swap contracts - - - - - - 12,318 - - 12,318 - -

Total revenues 475,993 245,040 437,927 63,490 1,222,450 545,011 271,397 363,287 45,013 1,224,708 277,849 511,653

COSTS AND EXPENSES

Borrowings expenses - 143,278 5,234 - 148,512 - 200,231 4,987 - 205,218 - -

Fees and services expenses 55,542 - 22,830 1,181 79,553 32,984 - 30,705 951 64,640 3,791 4,162

Personnel expenses 237,506 32,126 242,408 31,154 543,194 223,429 18,557 227,484 26,751 496,221 71,027 70,556

Premises and equipment expenses - 4,875 66,323 4,010 75,208 - 2,837 39,505 3,618 45,960 - -

Taxes and duties - 9,387 2,067 71 11,525 - 9,741 1,296 86 11,123 - -

Contributions to the Financial Institutions Development Fund - 11,810 - - 11,810 - 15,484 - - 15,484 - -

Total costs and expenses 293,048 201,476 338,862 36,416 869,802 256,413 246,850 303,977 31,406 838,646

74,818 74,718

The accompanying notes are an integral part of the financial statements.

35FIN

AN

SA PLC. - A

nnual Report 2007



Consolidated fi nancial statements

Note

Issued andpaid-up

share capital

Premium on

ordinary shares

Revaluation defi cit

on investments

Translationadjustment

Retained earnings

Appropriated - statutory

reserve

Appropriated - treasury stock

reserve UnappropriatedTreasury stocks

Minorityinterest Total

Balance as at 31 December 2005 - before adjustment

625,051 1,266,066 (76,925) (5,687) 69,304 25,037 1,256,905 (25,037) 14,118 3,148,832

Adjustment of retained earnings 35 - - - - - - (37,952) - - (37,952)

Balance as at 31 December 2005 - after adjustment 625,051 1,266,066 (76,925) (5,687) 69,304 25,037

1,218,953 (25,037) 14,118 3,110,880

Unrecognised items in statement of income Revaluation defi cit on investments - - (5,559) - - - - - - (5,559)

Translation adjustment - - - (139,638) - - - - (763) (140,401)

625,051 1,266,066 (82,484) (145,325) 69,304 25,037 1,218,953 (25,037) 13,355 2,964,920

Recognised revaluation defi cit on investments in statement of income - - 58,091 - - - - - -

58,091

Net loss - - - - - - (182,897) - 7,342 (175,555)

Dividend paid - - - - - - (61,760) - - (61,760)

Dividend paid to minority shareholders of the subsidiary - - - - - - - - (6,070) (6,070)

Balance as at 31 December 2006 625,051 1,266,066 (24,393) (145,325) 69,304 25,037 974,296 (25,037) 14,627 2,779,626

Unrecognised items in statement of income Revaluation defi cit on investments - - (39,344) - - - - - - (39,344)

Translation adjustment - - - (80,239) - - - - - (80,239)

625,051 1,266,066 (63,737) (255,564) 69,304 25,037 974,296 (25,037) 14,627 2,660,043

Net loss - - - - - - (284,603) - 24,814 (259,789)

Dividend paid to minority shareholders of the subsidiary - - - - - - - - (10,934) (10,934)

Minority interest of disposed subsidiaries 14.3 - - - - - - - - (28,507) (28,507)

Balance as at 31 December 2007 625,051 1,266,066 (63,737) (255,564) 69,304 25,037 689,693 (25,037) - 2,360,813

Finansa Public Company Limited and Its Subsidiaries Statements of Changes in Shareholders’ Equity


36FIN

AN

SA PLC. - A

nnual Report 2007


Separate fi nancial statements

Note

Issued andpaid-up

share capital

Premium on

ordinary shares

Revaluation defi cit

on investments

Translationadjustment

Retained earnings

Appropriated - statutory

reserve

Appropriated - treasury stock

reserveUnappropriated

(defi cit)Treasury stocks Total

Balance as at 31 December 2005 - as previously reported

625,051 1,266,066 (76,925) (5,687) 69,304 25,037 1,256,905 (25,037) 3,134,714

Cumulative eff ect of the change in accounting policy for investments in subsidiaries and associated companies 4 - - 77,667 5,687 - - (1,404,014) - (1,320,660)

Adjustment of retained earnings 35 - - - - - - (37,952) - (37,952)

Balance as at 31 December 2005 - as restated

625,051 1,266,066 742 - 69,304 25,037 (185,061) (25,037) 1,776,102

Unrecognised items in statement of income

Revaluation defi cit on investments - - (742) - - - - - (742)

625,051 1,266,066 - - 69,034 25,037 (185,061) (25,037) 1,775,360

Net Income - as restated - - - - - - 263,447 - 263,447

Dividend paid - - - - - - (61,760) - (61,760)

Balance as at 31 December 2006 - as restated

625,051 1,266,066 - - 69,304 25,037 16,626 (25,037) 1,977,047

Balance as at 31 December 2006 - as previously reported

625,051 1,266,066 (24,393) (145,325) 69,304 25,037

974,296

(25,037) 2,764,999

Cumulative eff ect of the change in accounting policy for investments in subsidiaries and associated companies 4 - - 24,393 145,325 - - (957,670) - (787,952)

Balance as at 31 December 2006 - as restated 625,051

1,266,066 - - 69,304 25,037 16,626 (25,037)

1,977,047

Net loss - - - - - - (482,950) - (482,950)

Balance as at 31 December 2007 625,051 1,266,066 - - 69,304 25,037 (466,324) (25,037) 1,494,097

Finansa Public Company Limited and Its Subsidiaries Statements of Changes in Shareholders’ Equity (Continued)






Note 2007 2006 2007 2006

(Restated)CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) (284,603) (182,897) (482,950) 263,447

Adjustments to reconcile net income (loss) to net cash

provided by (used in) operating activities

Net income attributable to minority shareholders of subsidiaries 24,814 7,342 - -

Shares of profi ts from investments in associated companies (44,440) (87,232) - -

Goodwill amortisation and impairment loss on goodwill 18 149,804 22,051 - -

Depreciation and amortisation 84,198 70,437 51,675 54,226

Amortisation of discounts received on investments (15,499) (17,139) (8,855) (7,097)

Amortisation of discounts paid on bills of exchange 47,016 35,841 50,061 38,754

Bad debt and allowance for doubtful accounts 277,968 52,527 - -

Impairment losses on investments 8.1, 14.2 97,000 161,321 487,000 22,014

Gain on disposal of subsidiaries 14.3 (268,931) - - -

Loss from letter of guarantee issued by a subsidiary 38.1 13,363 - - -

Unrealised (gains) losses on revaluation of investments (5,544) (24,419) 654 7,203

Unrealised gains on interest rate swap contracts - (12,138) - -

(Gains) losses on disposal of fi xed assets 4,369 (324) 3,848 347

Unrealised (gains) losses on exchange (1,579) (15,484) - 48

(Increase) decrease in deferred income tax assets 4,721 (48,876) 39,165 (15,592)

Income (loss) from operating activities before changes in

operating assets and liabilities 82,657 (38,990) 140,598 363,350

(Increase) decrease in operating assets

Securities purchased under resale agreements 60,000 1,110,000 - -

Current investments 895,985 (286,691) 16,394 367

Receivable from the Clearing House - Th ailand Securities

Depository Center (272,455) 18,977 - -

Loans, receivables and accrued interest receivables - fi nance

and securities businesses (1,153,322) (516,188) - -

Advances to related parties (31,981) (5,279) (953) (106)

Receivables transferred from another securities company 12,099 (12,099) - -

Service income receivables 149,673 (137,021) (33,845) (62,200)

Other current assets 40,062 (59,604) 23,406 (18,479)

Properties foreclosed - 4,500 - -

Guarantees for derivative contracts - 68,812 - -

Other non-current assets (29,915) (4,946) (19) (4,909)

Increase (decrease) in operating liabilities

Payable to the Clearing House - Th ailand Securities

Depository Center 181,626 (18,597) - -

Securities business payables 202,867 177,879 - -

Other current liabilities 15,500 162,946 31,500 (19,048)

Net cash provided by operating activities 152,796 463,699 177,081 258,975



Statements of Cash FlowsFor the Years Ended 31 December 2007 and 2006




Note 2007 2006 2007 2006

(Restated)

CASH FLOWS FROM INVESTMENT ACTIVITIES

Cash paid for deposit for investment (188,440) - - -

Increase in short-term loans to related parties - - (28,654) (166,133)

(Increase) decrease in loans to other parties 10,854 161,779 (3,222) 175,855

(Increase) decrease in deposits subject to restrictions (26) 19,980 (25) (20)

(Increase) decrease in investments in subsidiaries

and associated companies 136,806 (92,998) (330,000) -

(Increase) decrease in long-term investments in related parties 9,104 269,761 - (3,148)

(Increase) decrease in long-term investments 202,687 (252,634) - 10,000

Cash paid for acquisition of fi xed assets and intangible assets (40,204) (117,681) (3,575) (13,291)

Proceeds from disposal of fi xed assets 418 4,165 249 3,435

Net cash provided by (used in) investing activities 131,199 (7,628) (365,227) 6,698

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received (paid) on bills of exchange issued 338,590 (153,991) 333,595 (137,157)

Cash received from bank overdrafts 98,335 - - -

Installment paid on liabilities under fi nance lease agreements (5,985) (3,463) - -

Decrease in borrowings and deposits (123,343) (373,752) - -

Repayment of long-term loans (343,525) (40,000) (230,000) (40,000)

Dividends paid - (61,760) - (61,760)

Dividends paid to minority shareholders of the subsidiary (10,934) (6,070) - -

Net cash provided by (use in) fi nancing activities (46,862) (639,036) 103,595 (238,917)

Net increase (decrease) in cash and cash equivalents 237,133 (182,965) (84,551) 26,756

Translation adjustment (80,239) (139,638) - -

Less : Cash and cash equivalents of the disposed subsidiaries 14.3 (186,183) - - -

Cash and cash equivalents - beginning of the years 346,984 669,587 120,000 93,244

Cash and cash equivalents - end of the years 317,695 346,984 35,449 120,000

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

Cash paid during the years for:

Interest expense 249,837 287,463 64,059 67,684

Income tax 6,384 46,790 678 908

Non-cash items:

Bad debt written off 995 13,857 - -

Decrease in loans and receivables by foreclosure of collaterals 11,743 - - -

Assets acquired under fi nancial lease agreements 2,039 19,585 - -

Off seting proceeds to be received on disposal of subsidiaries with

payments required on deposit for investment 342,635 - - -

Increase in investment in a subsidiary by conversion of long-term

loan to a subsidiary to redeemable preference shares - - 573,198 -



Statements of Cash Flows(Continued)For the Years Ended 31 December 2007 and 2006


1. GENERAL INFORMATION

1.1 Information of the Company and signifi cant subsidiaries

(a) Finansa Public Company Limited (“the Company”) was incorporated as a limited company under

Th ai laws on 7 December 1989, registered the change of its status to a public limited company on

19 June 2002 and listed on the Stock Exchange of Th ailand on 25 September 2002. Its registered

offi ce is located at No. 48/29 and 48/32, 16th Floor, Tisco Tower Building, North Sathorn Road,

Silom, Bangrak, Bangkok. Th e Company operates its business in Th ailand and its principal

activity is to invest in and provide fi nance and management advisory services to its affi liated and

related parties. As at 31 December 2007, the Company has 62 employees (31 December 2006:

71 employees) and personnel expenses for the year amounted to Baht 71 million (2006: Baht 70

million).

(b) Finansa Credit Limited, which is a 100% owned subsidiary of the Company, was incorporated as

a limited company under Th ai laws and operates its fi nance businesses in Th ailand. Its registered

offi ce is located at No. 48/21-22, 12A Floor, Tisco Tower Building, North Sathorn Road, Silom,

Bangrak, Bangkok. As at 31 December 2007, Finansa Credit Limited has 60 employees (31

December 2006: 26 employees) and personnel expenses for the year amounted to Baht 31 million

(2006: Baht 18 million).

(c) Finansa Securities Limited, which is a 100% owned subsidiary of the Company, was incorporated

as a limited company under Th ai laws and operates in Th ailand. Its principal activities are

securities brokerage, securities trading, securities underwriting, and fi nancial and investment

advisory services. Its registered offi ce is located at No. 48/45, 20th Floor, Tisco Tower Building,

North Sathorn Road, Silom, Bangrak, Bangkok. As at 31 December 2007, there are 15 branches

in Bangkok and other provinces (31 December 2006: 14 branches) and the subsidiary has 283

employees (31 December 2006: 315 employees) and personnel expenses for the year amounted

to Baht 242 million (2006: Baht 227 million).

(d) Finansa Asset Management Limited, which is a 100% owned subsidiary of the Company, was

incorporated as a limited company under Th ai laws. Th e Company operates securities business in

Th ailand and has been granted licenses to operate 2 types; private fund management and mutual

fund management. Its registered offi ce is located at No. 48/21 and 48/24, 12A Floor, Tisco Tower

Building, North Sathorn Road, Silom, Bangrak, Bangkok. As at 31 December 2007, Finansa

Asset Management Limited has 59 employees (31 December 2006: 43 employees) and personnel

expenses for the year amounted to Baht 31 million (2006: Baht 27 million).

(e) Finansa Fund Management Ltd., which is a 100% owned subsidiary of the Company, was

incorporated as an exempted company with limited liability in the Cayman Islands. Its principal

activity is to provide investment advisory and fund management services. Its registered address

is P.O. Box 309, Ugland House, South Church Street, George Tower, Grand Cayman, Cayman

Islands, British West Indies. As at 31 December 2007, Finansa Fund Management Ltd. has 7

employees (31 December 2006: 6 employees) and personnel expenses for the year amounted to

Baht 13 million (2006: Baht 9 million).

1.2 Maintaining the status of being a fi nance company of a subsidiary/Th e Deposit Insurance Agency Act

B.E. 2551

On 28 July 2004, Finansa Credit Limited, a subsidiary, submitted an application for establishment of a

new commercial bank, with Bangkok First Investment & Trust Public Company Limited to be merged

with or acquired by the subsidiary and later the Ministry of Finance notifi ed the subsidiary, in its letter


Notes to Financial StatementsFor The Years Ended 31 December 2007 and 2006


dated 12 April 2005, that the subsidiary did not satisfy certain criteria of the commercial bank application

process and therefore the application has not been approved, while a letter from the Bank of Th ailand

dated 18 April 2005 stated that the subsidiary still continues to operate as a fi nance company under the

revised Act on the Undertaking of Finance Business, Securities Business and Credit Foncier Business B.E.

2522 and that the holders of certifi cates of deposits and promissory notes, as issued by the subsidiary in

its fund raising activities are still guaranteed for both principal repayments and related interest payments

in accordance with regulations of the Financial Institutions Development Fund. However, the Deposit

Insurance Agency Act B.E. 2551, which was published in the Royal Gazette on 13 February 2008, has

the signifi cant content with regard to the cancellation of the guarantee of deposits and related interest in

accordance with the regulations of the Financial Instituting Development Fund by which the protection

limit will be gradually reduced over a 4-year period such that it will stand at Baht 1 million per depositor

per fi nancial institution from the fi fth year, after such Act becomes eff ective, onwards.

Th e management of the subsidiary does not expect the rejection of the above application and the

enforcement of the Deposit Insurance Agency Act to impact on its fi nance business operations.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Basis for preparation of the fi nancial statements

Th e fi nancial statements have been prepared in accordance with accounting standards enunciated under

the Accounting Profession Act B.E. 2547, except for early adoption of Accounting Standard No. 56

“Accounting for Income Tax” which is in line with International Accounting Standard (IAS) No. 12

“Income Taxes” (Revised 1996) and the presentation of the fi nancial statements has been made in

compliance with the stipulations of the Notifi cation of the Department of Business Development dated

14 September 2001, issued under the Accounting Act B.E. 2543.

Th e fi nancial statements have been prepared on a historical cost basis except where otherwise disclosed

in Note 5 to the fi nancial statements regarding signifi cant accounting policies.

2.2 Basis of Consolidated fi nancial statements

(a) Th ese Consolidated fi nancial statements include the fi nancial statements of Finansa Public

Company Limited and the following subsidiaries, which were incorporated in Th ailand and

overseas:-


Total assets as a

Total revenue as a

percentage to the

Percentage of Country of Nature of percentage to the consolidated totals for

shareholding as at registration Business consolidated totals as at the years ended

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31 December

2007

31

December

2006

Subsidiaries held directly by the Company

Finansa Credit Limited 100 100 Th ailand Finance business 47.9 46.8 16.2 22.1

Finansa Securities Limited 100 100 Th ailand Securities business 16.5 12.3 28.2 29.1


Limited

100 100 Th ailand Asset Management

business

0.4 0.4 4.2 3.6


Ltd.

100 100 Cayman

Islands

Investment advisory

and investment

businesses

25.9 24.4 32.6 22.2

Prospect SPC Company

Limited

100 100 Th ailand Providing services - 0.1 0.1 -

Finansa (Cambodia) Ltd. 100 100 Cambodia Investment advisory - - - -

Finansa Hong Kong Limited 100 100 Hong Kong Business advisor - - - -

Subsidiaries held indirectly by the Company

PT Finansa (Indonesia)

Holdings Ltd.

100 100 Mauritius Investment business - - - -

Finansa Singapore Pte Ltd. - 100 Singapore Investment advisory - 0.1 - -

ADF Management, Ltd. - 66.7 Cayman

Islands

Investment advisory - 2.6 15.3 19.2

BLR Management Pte Ltd. - 66.7 Singapore Investment business - - 1.6 3.2

Finansa Investment

Consulting (China) Co.,

Ltd.

100 - Th e People’s

Republic of

China

Advisory businesses 0.4 - - -

Finansa Science and

Technology (Beijing)

Co., Ltd.

100 - Th e People’s

Republic of

China

Development research

and businesses

technical advisory

0.4 - - -

(b) Th e fi nancial statements of the subsidiaries incorporated overseas are translated into Th ai Baht at the

exchange rates ruling on the balance sheet dates for assets and liabilities, and at the monthly average

exchange rates for revenue and expense items. Th e resultant diff erences have been shown under the

caption of “Translation adjustments” in shareholders’ equity.

(c) Material balances and transactions between the Company and its subsidiaries have been eliminated from

the consolidated fi nancial statements.

(d) Investments in the subsidiaries as recorded in the Company’s books of account are eliminated against the

shareholders’ equity of the subsidiaries. Th e resultant diff erence is amortised over a period of 20 years

commencing as from the date of acquisition of the subsidiaries.

(e) In September 2007, Finansa Hong Kong Limited invested a 100% equity interest in Finansa Investment

Consulting (China) Co., Ltd., which was incorporated in Th e People’s Republic of China on 22 March

2007 with the objective of engaging in advisory and investment businesses.

(f ) In November 2007, Finansa Fund Management Ltd., invested a 100% equity interest in Finansa Science

and Technology (Beijing) Co., Ltd. which was incorporated in the People’s Republic of China on


21 May 2007 with the objective of engaging in research and development of computer software, the sale

of its products, technical consulting, technical service and the technical training of the relevant software

products.

(g) On 21 November 2007, Finansa Fund Management Ltd., a subsidiary, entered into the Share Purchase

Agreement, whereby the subsidiary agreed to sell investments in Finansa Singapore Pte. Ltd. and ADF

Management, Ltd. and its subsidiary to a director of those subsidiaries whereby 19 December 2007 is

the date that the Company released all obligations from these subsidiaries and all terms and conditions

under the Share Purchase Agreement are fulfi lled. However, the consolidated fi nancial statements for

the year ended 31 December 2007 included statement of income of those subsidiaries for the nine-

month period ended 30 September 2007 since the management believes that the operating performance

of the disposed subsidiaries as from 1 October 2007 to 19 December 2007, being the date the Company

lost control over those subsidiaries, is considered immaterial.

(h) Th e fi nancial statements for the year ended 31 December 2007 of Finansa (Cambodia) Ltd., PT Finansa

(Indonesia) Holdings Ltd., Finansa Hong Kong Limited, Finansa Investment Consulting (China) Co.,

Ltd. and Finansa Science and Technology (Beijing) Co., Ltd., as included in the consolidated fi nancial

statements, were audited by other auditors and the statement of income for the nine-month period

ended 30 September 2007 of Finansa Singapore Pte Ltd. and ADF Management, Ltd. and its subsidiary,

as included in the consolidated fi nancial statements, were not audited by their auditors and therefore the

management accounts are included in the consolidated fi nancial statements.

3. ADOPTION OF NEW ACCOUNTING STANDARDS

Th e Federation of Accounting Professions has issued Notifi cations No. 9/2550, 38/2550 and 62/2550 regarding

Accounting Standards. Th e Notifi cations mandate the use of the following new Accounting Standards.

3.1 Th ai Accounting Standards (“TAS”) which are eff ective for the current year

TAS 44 (revised 2007) Consolidated fi nancial statements and Separate Financial Statements

TAS 45 (revised 2007) Investments in Associates

TAS 46 (revised 2007) Interests in Joint Ventures

Th ese accounting standards become eff ective for the fi nancial statements for fi scal years beginning on or

after 1 January 2007. Since 1 January 2007, the Company changed its accounting policy for recording

investments in subsidiaries and associated companies in the separate fi nancial statements in order to

comply with the Th ai Accounting Standards (revised 2007) No. 44, 45 and 46, as discussed in Note 4

to the fi nancial statements.

3.2 Th ai Accounting Standards which are not eff ective for the current year

TAS 25 (revised 2007) Cash Flow Statements

TAS 29 (revised 2007) Leases

TAS 31 (revised 2007) Inventories

TAS 33 (revised 2007) Borrowing Costs

TAS 35 (revised 2007) Presentation of Financial Statements

TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors

TAS 41 (revised 2007) Interim Financial Reporting

TAS 43 (revised 2007) Business Combinations

TAS 49 (revised 2007) Construction Contracts

TAS 51 Intangible Assets


Th ese accounting standards will become eff ective for the fi nancial statements for fi scal years beginning on

or after 1 January 2008. Th e Company’s management has assessed the eff ect of these revised accounting

standards and believes that they will not have any signifi cant impact on the fi nancial statements for the

year in which they are initially applied.

4. CHANGE IN ACCOUNTING POLICY FOR RECORDING INVESTMENTS IN SUBSIDIARIES AND

ASSOCIATED COMPANIES IN THE SEPARATE FINANCIAL STATEMENTS

Since 1 January 2007, the Company changed its accounting policy for recording investments in subsidiaries

and associated companies in the separate fi nancial statements from the equity method to the cost method, in

compliance with Accounting Standard No. 44 (Revised 2007) regarding “Consolidated fi nancial statements

and Separate Financial Statements”, under which investments in subsidiaries, jointly controlled entities and

associates are to be presented in the separate fi nancial statements under the cost method.

In this regard, the Company has restated the previous period’s separate fi nancial statements as though the

investments in the subsidiaries and associated companies had originally been recorded using the cost method.

Th e change has the eff ects of increasing net losses in the separate statement of income for the year ended 31

December 2007 by Baht 198 million (Baht 1.61 per share) and decreasing net losses in the separate statement

of income for the year ended 31 December 2006 by Baht 446 million (Baht 3.61 per share). Th e cumulative

eff ect of the change in accounting policy has been presented under the heading of “Cumulative eff ect of

the change in accounting policy for investments in subsidiaries and associated companies” in the separate

statements of changes in shareholders’ equity.

Such change in accounting policy aff ects only the accounts related to investments in subsidiaries and associated

companies in the Company’s separate fi nancial statements, with no eff ect to the consolidated fi nancial

statements.

5. SIGNIFICANT ACCOUNTING POLICIES

5.1 Revenue and expense recognition

(a) Brokerage fees

Brokerage fees on security trading are recognised as revenue on the transaction dates.

(b) Fees and service income

Fees and service income are recognised as revenue on an accrual basis with reference to the stage

of completion.

(c) Interest on margin loans - Securities business

Interest on margin loans is recognised on an accrual basis, but where there is uncertainty as to the

collectability of loans and interest the subsidiary ceases accrual.

In the following cases, collectability of loans and interest is considered to be uncertain.

(1) Loans which are not fully collateralised.

(2) Installment loans with repayments scheduled less frequently than every 3 months and for

which principal or interest is overdue by more than 3 months.


(3) Installment loans with repayments scheduled no less frequently than every 3 months, unless

there is a clear evidence and a high degree of certainty that full repayment will be received.

(4) Debtors are troubled fi nancial institutions.

(5) Other debtors from which interest payment is overdue by 3 months or more.

Th ese conditions are based on the guidelines stipulated by the Offi ce of Securities and Exchange

Commission in Notifi cation No. Kor Th or. 33/2543 dated 25 August 2000, amended by

Notifi cation No. Kor Th or. 5/2544 dated 15 February 2001.

(d) Interest and discounts on loans - Finance business

Th e subsidiary recognises interests and discounts on loans on an accrual basis over the term of the

loans, based on the amount of principal outstanding. For loans on which principal or interest

payments have been defaulted for more than three months past the due date, the recognition of

interest income is ceased, recorded accrued interest is reversed from the subsidiary’s accounts and

interest thenceforth recognised as revenue on a cash basis.

Th e subsidiary generally recognises interest income on restructured loans on the same accrual basis

used for loans discussed above, with reference to the interest rates stipulated in the agreements

(excluding interest charged and suspended to be payable in the future). However, loans that are

subject to monitoring for compliance with restructuring conditions are recognised as revenue on a

cash basis until the debtor is able to comply with the restructuring conditions for a period of not

less than three months or three installments, whichever is longer.

Interest or discounts which are already included in the face value of notes receivable or loans are

deferred and taken up as income evenly over the term of the notes or loans.

(e) Hire-purchase income

A subsidiary recognises revenue under hire-purchase contracts by using the eff ective interest rate

method.

(f ) Gains (losses) on trading in securities/investments

Gains (losses) on trading in securities/investments are recognised as revenue or expenses on the

transaction dates.

(g) Interest and dividend on investments

Interest is recognised as interest accrues based on the eff ective yield rate method. Dividend income

is recognised when the right to receive the dividend is established.

(h) Interest on borrowings and deposits

Interest on borrowings and deposits is charged as expense on an accrual basis.

(i) Expenses

Expenses are recognised on an accrual basis.


5.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, cash at banks and all highly liquid investments with an

original maturity of three months or less and not subject to withdrawal restrictions or pledge/guarantee

commitments.

5.3 Recording and derecording customers’ assets

For internal control purposes, cash received from the customers of a subsidiary for securities trading in

terms of cash balances is recorded as a liability and when such amounts of money are then deposited with

fi nancial institutions, they are recorded as the subsidiary’s assets. Th erefore, as at the balance sheet dates,

the subsidiary derecords these amounts by off setting the asset and liability balances so that the fi nancial

statements presents only assets of the subsidiary.

5.4 Securities purchased under resale agreements/securities sold under repurchase agreements

Securities purchased under resale agreements or securities sold under repurchase agreements are recorded

at cost and as assets or liabilities as appropriate. Interest income from securities purchased under resale

agreements and interest expenses from securities sold under repurchase agreements are recognised as

revenue or expenses on an accrual basis over the term of the respective agreements.

5.5 Current and long-term investments

Th e Company and its subsidiaries present the values of investments, which are not investments in

subsidiaries and associated companies, according to their types as follows :-

(a) Investments in securities held for trading are classifi ed as current investments and presented at fair

value. Gains or losses arising from changes in the carrying amounts of securities are included in

statements of income.

(b) Investments in available-for-sale securities, both held as current and long-term investments, are

determined at fair value. Changes in the carrying amounts of securities are recorded as a separate

item in shareholders’ equity until the securities are sold, when the changes are then included in


(c) Investments in debt securities expected to be held to maturity, which are classifi ed as current and

long-term investments according to their remaining periods to maturity, are recorded at amortised

cost. Th e premium/discount on debt securities is amortised by the eff ective interest rate method

with the amortised amount presented as an adjustment to interest income.

(d) Investments in non-marketable equity securities, which are treated as general investments, are

classifi ed as long-term investments and valued at cost less allowance for impairment loss (if any).

(e) Investments in related parties are classifi ed as long-term investments and valued at cost less

allowance for impairment loss (if any).

Th e fair value of marketable securities is based on the latest bid price on the last working day of the year

as quoted on the Stock Exchange of Th ailand. Th e fair values of government bonds, state enterprise

bonds and private sector debt securities are determined based on the yield rates quoted by the Th ai Bond

Market Association or other fi nancial institutions, as appropriate. Th e fair value of investment units is

determined from their net asset value.


Th e weighted average method is used for computation of the cost of investments.

In the event the Company and its subsidiaries reclassify investments in securities, such investments are

adjusted to their fair value as at the reclassifi cation dates. Diff erences between the carrying amount of the

investments and their fair value on those dates are recognised as gains or losses in statements of income

or recorded as a revaluation surplus or defi cit on investments in shareholders’ equity, depending on the

type of the reclassifi ed investment.

5.6 Receivable from/payable to the Clearing House

Receivable from/payable to the Clearing House comprises the net balance receivable/ payable from

Th ailand Securities Depository Center (TSD) in respect of securities trading settled through the Clearing

House of TSD.

5.7 Securities business receivables and allowance for doubtful accounts

Securities business receivables comprise the net receivable balances of cash accounts and margin accounts,

as well as other receivables such as overdue cash accounts and securities receivables which are under legal

proceedings, are undergoing restructuring or are being settled in installments.

Securities business receivables are presented at debt balances, including accrued interest receivables, and

deducted with allowance for doubtful accounts. A subsidiary has provided an allowance for doubtful

accounts based on a review of the debtor’s ability to make repayment, taking into consideration recovery

risk and the value of the collateral. An allowance is set aside for doubtful accounts not fully covered

by collateral and/or those which may not be fully collected. Th e subsidiary classifi es its debtors and

provides relevant allowance for doubtful accounts in accordance with the following guidelines.

(a) Loans and receivables classifi ed as “loss” are to satisfy the following criteria :-

(1) Loan balances which the subsidiary has already made every eff ort to collect, but which

remain unpaid and which the subsidiary has already written-off in accordance with tax

law.

(2) Loan balances which the subsidiary has forgiven.

(b) Loans and receivables classifi ed as “doubtful” are defi ned as the uncollateralised portion of the

value of a debt which meets the following criteria :-

(1) General loans, troubled fi nancial institution loans, and other loans for which the collateral

value is less than the loan balance.

(2) Installment loans with repayments scheduled less frequently than every 3 months and for

which principal or interest is overdue by more than 3 months.

(3) Installment loans with repayments scheduled no less frequently than every 3 months unless

there is a clear evidence and a high degree of certainty that full repayment will be received.

(c) Sub-standard debt is defi ned as the collateralised portion of loans which meets the criteria in (b)

above.

Loans classifi ed as “loss” will be written-off when identifi ed. Allowance for doubtful accounts will be set


aside for loans classifi ed as “doubtful” at not less than 100% of the loan balance. Th e above guideline

is in accordance with Notifi cation No. Kor Th or. 33/2543 of the Offi ce of the Securities and Exchange

Commission, dated 25 August 2000, which was amended by Notifi cation No. Kor Th or. 5/2544 dated

15 February 2001.

5.8 Securities borrowing

A subsidiary records its obligations to return borrowed securities which it has sold short as “Securities

borrowing payables” in the balance sheets. At the end of the year, the balance of securities borrowing

payables for which securities have been sold short, is adjusted based on the latest off er price quoted

on the Stock Exchange of Th ailand. Gains or losses arising from such adjustments are included in

statements of income. Cash paid as collateral for securities borrowing is recorded as “Guarantee deposit

receivables”, which is presented as a part of “Loans, receivables and accrued interest receivables of fi nance

and securities businesses” in the balance sheets. Fees for securities borrowing are recognised as expenses

on an accrual basis over the borrowing periods.

5.9 Finance business loans and receivables and allowance for doubtful accounts

A subsidiary presents loans and receivables at principal balances, excluding accrued interest receivable.

Unrecognised deferred income and discounts on loans are deducted from the principal balances.

Th e subsidiary provides allowances for doubtful accounts and loss from debt restructuring in accordance

with the Notifi cations of the Bank of Th ailand (“BoT”) and adjusts these by the additional amount

which is expected not to be collectible based on an analysis and assessment of the current status of the

debtors, taking into consideration the recovery risk and the value of collateral.

On 21 December 2006, the BoT revised its guidelines in determining allowance for doubtful accounts

and the value of collateral to be deducted against the carrying value of the debt balances of non-performing

debtors. Under the new guidelines, the fi nance company is required to set aside a 100% provision on

the shortfall of the carrying value of the loans and the present value of expected future cash fl ows from

debt collection or from collateral disposal, whereby the BoT also determines a discount rate of 7% per

annum to be used in determining the present value, the period of time of cash expected to be received

from collateral disposal for each case, and the following timeline for implementing these provisioning

guidelines.

(a) During the second half-year period of 2006 provisions are to be made for receivables from debtors

for which a court judgment has already been issued, for which a court order is being executed, and

against which legal actions have been brought.

(b) During the half-year period ended 30 June 2007 provisions are to be made for receivables from

debtors that are classifi ed as doubtful of loss and doubtful.

(c) During the period ended 31 December 2007 provisions are to be made for receivables from

debtors that are classifi ed as substandard.

Th e subsidiary is required to set provision for “pass” loans (including restructured loans) and “special

mention” loans, at minimum rates of 1% and 2%, respectively, of the loan balances (excluding accrued

interest receivable) net of collateral value, in accordance with the BoT’s guidelines.

Provision additionally set aside is recognised as an expense in statement of income for each relevant

period.


Amounts written off as bad debts are deducted from the allowance for doubtful accounts and if recovery

is made from bad debts, the recovered amount is added to the allowance for doubtful accounts or taken

up as revenue, as appropriate.

5.10 Troubled debt restructuring – Finance business

A subsidiary records troubled debt restructuring transactions in accordance with accounting Standard

No. 34 “Accounting for Troubled Debt Restructuring”.

If payment of debt is received through the transfer of property, fi nancial instruments, or shares in the

debtor company as a result of a debt to equity swap, the subsidiary records the assets received at their

fair value less estimated selling expenses (if any), but not exceeding the outstanding balances of principal

and accrued interest receivables. Losses arising from diff erences between the book value of the debt and

the value of the transferred assets are recorded in the statements of income, taking into account existing

allowance for doubtful accounts.

If debt restructuring includes a relaxation of debt repayment conditions, the subsidiary determines the

loss arising from the revaluation of the book value of the debtor on the basis of the present value of the

future cash fl ows to be received under the new conditions, using the interest rate for prime customers in

discounting. Any amount by which the newly determined book value is lower than the existing book

value taking into account existing allowance for doubtful accounts is recorded as “Revaluation allowance

as a result of debt restructuring”. If the existing allowance is inadequate, the diff erence is recorded as an

expense in the statement of income for the year in which the debt is restructured. Th e subsidiary adjusts

the revaluation allowance for debt restructuring at the end of every year by re-calculating the net present

value of expected cash fl ows, discounted by the interest rate for prime customer at the end of the year.

Losses from troubled debt restructuring arising as a result of reductions of principal and accrued

interest receivables taking into account the existing allowance for doubtful accounts are expended in the


5.11 Investments in subsidiaries and associated companies


Investments in subsidiaries and associated companies except for investments in which the Company

and its subsidiaries intend to hold temporarily, as presented in the consolidated fi nancial statements, are

accounted for under the equity method. Th e excess of loss over cost of investment in subsidiaries and

associated companies is presented as liability under the caption of “Provision for loss on investment in

subsidiaries and associated companies” in the balance sheets. Excess of cost of investments in subsidiaries

over their net book values at the acquisition date is amortised on a straight-line basis over a period of

20 years.


Investments in subsidiaries and associated companies as presented in the separate fi nancial statement at

cost loss allowance for impairment loss (if any).

5.12 Properties foreclosed

Properties foreclosed are stated at the lower of cost at the acquisition date or net realisable value, which

is the latest appraisal value less estimated selling expenses (if any). Cost of properties foreclosed, at the


acquisition date, is stated at fair value less estimated selling expenses, and is not to exceed the outstanding

balance of principal and accrued interest receivables.

Gains (losses) on disposals of properties foreclosed are recorded as revenues or expenses in the statements

of income when the ownership is transferred. Impairment loss is recognised as an expense in the


5.13 Premises and equipment/depreciation

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and

equipment is calculated by reference to their costs on a straight-line basis over the estimated useful lives

as follows :-

Offi ce buildings 20 years

Offi ce equipment 3 and 5 years

Furniture & fi xtures 5 years

Vehicles 5 years

Depreciation is included in statements of income and no depreciation is provided for assets in

progress.

5.14 Intangible assets and amortisation

Intangible assets, which are computer softwares, are stated at cost less accumulated amortisation.

Amortisation of intangible assets is calculated by reference to their costs on a straight-line basis over

estimated useful lives of 5 and 10 years.

Th e amortised amount is included in statements of income.

5.15 Deferred golf membership fee

A subsidiary presents golf membership fee as a deferred asset awaiting amortisation. Th e amortisation is

made on a straight-line basis over 26 years, starting from 2001.

5.16 Securities business payables

Securities business payables are the obligations of the subsidiary in respect of its securities business

transacted with outside parties, such as the net payable balances of cash accounts and so on.

5.17 Long-term lease agreements

Leases of assets which transfer substantially all the risks and rewards of ownership to the leases are

classifi ed as fi nance leases. Finance leases are capitalised at the lower of the fair value of the leased

property or the present value of the minimum lease payments. Th e outstanding rental obligations, net

of fi nance charges, are recorded as long-term liabilities, while the interest element is charged to the

statements of income over the lease periods. Th e assets acquired under the fi nance lease is depreciated

over the useful lives of the lease assets.

5.18 Provisions

Provisions are recognised when the Company and its subsidiaries have a present obligation as a result of


a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be required to

settle the obligation and a reliable estimate of the amount of the obligation can be made.

5.19 Treasury Stock

Treasury stock is stated at cost and presented as a deduction item in shareholders’ equity in the balance

sheets. Gains on any disposal of treasury stock are determined by reference to the carrying amount

and are presented as premium on treasury stock. Losses on disposal of treasury stock are determined

by reference to the carrying amount and are fi rst recorded as a deduction item against any existing

premium on treasury stock. Any losses remaining after elimination of the premium are then deducted

from retained earnings.

5.20 Related party transactions

Related parties comprise enterprises or individuals that control or are controlled by the Company and

its subsidiaries, whether directly or indirectly, or which are under common control with the Company

and its subsidiaries.

In addition, related parties include associated companies and individuals which directly or indirectly

own a voting interest in the Company that gives them a signifi cant infl uence over the Company and its

subsidiaries, key management personnel, and directors and offi cers with authority in the planning and

direction of the Company and its subsidiaries operations, together with close members of the families of

such persons and companies which are controlled or infl uenced by them, whether directly or indirectly.

5.21 Foreign currencies

Foreign currency transactions during the years have been translated into Baht at the rates ruling on the

transaction dates. Assets and liabilities in foreign currencies outstanding on the balance sheet dates have

been translated into Baht at the rates ruling on the balance sheet dates.

Exchange gains and losses are included in statements of income.

5.22 Impairment of assets

Th e Company and its subsidiaries assess at each reporting date whether there is an indication that an

asset may be impaired. If any such indication exists, the Company and its subsidiaries make an estimate

of the asset’s recoverable amount. Where the carrying amount of the asset exceeds its recoverable amount,

the asset is considered impaired and is written down to its recoverable amount. Impairment losses are

recognised in the statements of income. An asset’s recoverable amount is the higher of fair value less costs

to sell and value in use.

5.23 Employee benefi ts

Salary, wages, bonuses and contributions to the social security fund and provident fund are recognised

as expenses when incurred.


5.24 Income tax

Th e Company and its subsidiaries adopt a deferred income tax accounting policy, whereby deferred tax

assets are recognised for all deductible temporary diff erences and unused tax losses to the extent that it

is probable that future taxable profi t will be available against which the temporary diff erences can be

utilised.

5.25 Use of accounting estimates

Preparation of fi nancial statements in conformity with generally accepted accounting principles requires

the Company’s management to make estimates and assumptions in certain circumstances, aff ecting

amounts reported in these fi nancial statements and related notes. Actual results could diff er from these

estimates.

6. CASH AND CASH EQUIVALENTS

As at 31 December 2007, bank deposits of an overseas subsidiary totaling USD 0.11 million, or approximately

Baht 3.8 million (31 December 2006: USD 0.25 million, or approximately Baht 9.2 million) are deposited

in accounts opened under the names of related parties, directors of the Company, or directors of the related

parties.

7. SECURITIES PURCHASED UNDER RESALE AGREEMENTS



31 December 2007 31 December 2006

Government bonds and Bank of Th ailand bonds 700,000 760,000

Securities purchased under resale agreements 700,000 760,000


8. INVESTMENTS

8.1 Classifi ed by investment type




Cost/ Cost/

Carrying

value Fair value

Carrying

value Fair value

Current investments

Trading Securities

Government and state enterprise securities - - 166,667 163,492

Private sector debt securities

Bills of exchange 50,000 - 50,000 -

Domestic marketable equity securities

Listed securities 63,429 62,577 30,601 28,798

Warrants - - - 300

Depository receipts 16,893 17,933 16,893 11,890

Overseas marketable equity securities

Investment units 340,920 385,900 394,459 443,764

Total 471,242 466,410 658,620 648,244

Add: Allowance for revaluation 45,168 - 39,624 -

Less: Allowance for impairment (50,000) - (50,000) -

Trading securities - net 466,410 466,410 648,244 648,244

Available-for-sale securities

Government securities 198,943 198,925 185,672 185,631


Debentures 301,120 304,740 972,034 971,624

Bills of exchange 90,000 - 90,000 72,000


Listed securities - - 35,481 30,210

Overseas marketable equity securities

Listed securities - - 49,411 12,902

Total 590,063 503,665 1,332,598 1,272,367

Add(less): Allowance for revaluation 3,602 - (1,599) -


Available-for-sale securities - net 503,665 503,665 1,272,367 1,272,367

Current investments - net 970,075 970,075 1,920,611 1,920,611





Cost/ Cost/

Carrying

value Fair value

Carrying

value Fair value

Long-term investments



Debentures - - 211,455 205,605

Synthetic collateralized debt obligation 886,858 813,559 928,969 930,734


Investment units 62,949 61,674 62,950 56,864

Total 949,807 875,233 1,203,374 1,193,203

Less: Allowance for revaluation (74,574) - (10,171) -

Available-for-sale securities - net 875,233 875,233 1,193,203 1,193,203

Held-to-maturity debt securities


Promissory notes 100,000 100,000

Held-to-maturity debt securities 100,000 100,000

General investments

Domestic non-marketable equity securities 98,313 98,313

Overseas non-marketable equity securities 170,506 71,638

General investments 268,819 169,951

Less: Allowance for impairment (25,000) -

General investments - net 243,819 169,951

Long-term investments - net 1,219,053 1,463,154

Investments - net 2,189,127 3,383,765





Cost/ Cost/

Carrying

value Fair value

Carrying

value Fair value

Current Investments

Trading securities


Listed securities 63,429 62,577 29,823 28,039

Less: Allowance for revaluation (852) - (1,784) -

Trading securities - net 62,577 62,577 28,039 28,039


Government and state enterprise securities - - 49,940 49,940


Bills of exchange 90,000 - 90,000 72,000

Total 90,000 - 139,940 121,940


Available-for-sale securities - net - - 121,940 121,940

Current investments - net 62,577 62,577 149,979 149,979

Long-term investments

General investments

Domestic non-marketable equity securities 98,313 98,313

General investments 98,313 98,313


Long-term investments - net 73,313 98,313

Investments - net 135,890 248,292


(1) As at 31 December 2007 and 2006, the Company had investments in bills of exchange with face

values totaling Baht 90 million issued by Picnic Corporation Public Company Limited (“the

issuer”). Such bills of exchange matured in November 2005.

Th e Company took legal action against the issuer and on 28 July 2006, the Court of First Instance

rendered a judgement that the issuer was to repay the full amount of outstanding principal and

interest thereon to the Company. Later on 22 September 2006, the issuer appealed the judgement

rendered by the Court of First Instance with the Appeal Court and fi led a petition to stay execution

and the Appeal Court later issued a directive requesting the issuer to place a security for the full

amount of the outstanding principal and interest thereon with the Court. Th e issuer off ered

ordinary shares of a company to be a security. However, the Appeal Court rejected such shares

and has requested for other security to be placed with the Court for which the Court would

consider on 26 November 2007. However, the issuer could not place a new security with the

Court within the specifi ed date, the Court therefore ordered cancelling the petition fi ling to

stay execution of the issuer. Currently, the Company is in process of taking compulsion to seize

assets of the issuer as repayment according to Court’s judgement. Th e Company’s management

therefore consider setting an additional allowance for loss on impairment amounting to Baht 72

million in the fourth quarter of 2007.

As at 31 December 2007 and 2006, allowance for impairment loss on these bills of exchange

totalled Baht 90 million and 18 million, respectively.

(2) As at 31 December 2007 and 2006, the Company has investments in 3,960,000 preference

shares of Th ai Telco Holdings Limited (“Th ai Telco”) at cost of Baht 10 per share, a total of Baht

39.6 million. Th is constitutes 9.9% of total issued and paid up share capital of Th ai Telco. Th e

Company is not permitted to dispose of such preference shares or create any lien over them,

unless it has been granted approval in accordance with the conditions specifi ed in the articles of

association of Th ai Telco. In addition, on 18 October 2005 the Company entered into a put and

call option agreement with another shareholder of Th ai Telco whereby the Company has a put

option to sell shares to this shareholder and such shareholder has a call option to buy shares from

the Company at the pre-determined prices, throughout the 10-year term of the agreement. Th e

agreement can be renewed every 10 years.

(3) As at 31 December 2007, Finansa Fund Management Ltd. (a subsidiary) had an investment of

Euro 18.0 million or equivalent to Baht 887 million (31 December 2006: Euro 19.5 million or

Baht 929 million) in Synthetic Collateralized Debt Obligation, an overseas debt security issued

by an overseas fi nancial institution, which bears interest at the rates of 3 month-Euribor plus

1.75 and 2.15 percent per annum, payable quarterly. Th ese investments are expected to mature in

December 2015. In addition, the subsidiary has pledged such debt securities to secure borrowings

from such fi nancial institution, as referred to in Note 28.2 to the fi nancial statements.

(4) By the resolution of the Company’s Board of Directors’ meeting held on 14 August 2007, it is

resolved to acknowledge its plan to dispose of an investment in a related company. Its carrying

value as at 31 December 2007 is Baht 33.7 million (cost less allowance for impairment). Up

to the authorisation date of these fi nancial statements, the Company has not yet disposed such

investment and the Company’s management believes that the realisable value from the disposal of

such investment will not signifi cantly diff er from its carrying value.


(5) Trading volumes of securities and derivative contracts for the year ended 31 December 2007, can

be summarised as follow:

(Unit: Million Baht)

For the year ended 31 December 2007

Consolidated Separate

fi nancial statements fi nancial statements

Listed equity securities classifi ed as current investments

- Buy 1,452 1,255

- Sell 1,479 1,238

(Unit: No. of contracts executed)


Consolidated Separate

fi nancial statements fi nancial statements

SET 50 Index Futures Contracts

- Long 170 170

- Short 170 170


8.2 Classifi ed by remaining period to maturity of debt securities

As at 31 December 2007 and 2006, the Company and its subsidiaries had investments in debt securities,

except those held as trading securities, classifi ed by remaining periods to maturity as follows :-

(Unit: Th ousand Baht)



Remaining periods Remaining periods

Less than

1 year (1) 1 - 5 years

Over 5

years Total

Less than

1 year (1) 1 - 5 years

Over 5

years Total


Government and state enterprise securities

198,943 - - 198,943 185,672 - - 185,672


Debentures 43,139 257,981 - 301,120 252,138 931,351 - 1,183,489

Bills of exchange 90,000 - - 90,000 90,000 - - 90,000

Synthetic collateralized debt

obligation - - 886,858 886,858 - - 928,969 928,969

Total 332,082 257,981 886,858 1,476,921 527,810 931,351 928,969 2,388,130

Add(less): Allowance for revaluation 46 3,556 (73,299) (69,697) (873) (5,428) 1,765 (4,536)

Less: Allowance for impairment (90,000) - - (90,000) (18,000) - - (18,000)

Available-for-sale securities - net 242,128 261,537 813,559 1,317,224 508,937 925,923 930,734 2,365,594

Held-to-maturity debt securities


Promissory notes - 100,000 - 100,000 - 100,000 - 100,000

Held-to-maturity debt securities - 100,000 - 100,000 - 100,000 - 100,000

Total investments in debt securities 242,128 361,537 813,559 1,417,224 508,937 1,025,923 930,734 2,465,594

(1) Including defaulted bills of exchange of Baht 90 million.





Remaining periods Remaining periods

Less than

1 year (1)

1 - 5

years

Over 5

years Total

Less than

1 year (1)

1 - 5

years

Over 5

years Total


Government and state enterprise

securities

- - - - 49,940 - - 49,940


Bills of exchange 90,000 - - 90,000 90,000 - - 90,000

Total 90,000 - - 90,000 139,940 - - 139,940

Less: Allowance for impairment (90,000) - - (90,000) (18,000) - - (18,000)

Available-for-sale securities - net - - - - 121,940 - - 121,940

Total investments in debt securities - - - - 121,940 - - 121,940

(1) Including defaulted bills of exchange of Baht 90 million.

8.3 Investments in companies having problems relating to fi nancial position and operating results

As at 31 December 2007 and 2006, the Company and its subsidiaries had the following investments in

companies having problems relating to fi nancial position and operating results as follow:-




No. of

companies Cost

Carrying

value

Allowance

for

impairment

No. of

companies Cost

Carrying

value

Allowance

for

impairment

Defaulted private sector

debt securities 2 140,000 - 140,000 2 140,000 72,000 68,000

Total 2 140,000 - 140,000 2 140,000 72,000 68,000




No. of

companies Cost

Carrying

value

Allowance

for

impairment

No. of

companies Cost

Carrying

value

Allowance

for

impairment

Defaulted private sector

debt securities 1 90,000 - 90,000 1 90,000 72,000 18,000

Total 1 90,000 - 90,000 1 90,000 72,000 18,000


8.4 Investments in equity securities where the Company and its subsidiaries hold 10 percent or more of the

investee’s paid-up capital and not classifi ed as investments in subsidiaries and associated companies are

as follows :-


Consolidated and Separate fi nancial statements


Company’s name

Type of

business

Percentage of

investments Cost

Percentage of

investments Cost

% %

Finansa Life Assurance Co., Ltd. Life insurance 10.0 58,713 10.0 58,713

Total investments 58,713 58,713


Investment - net 33,713 58,713

8.5 Th e Company and its subsidiaries have the following investments in funds, where they hold more than

10 percent of the fund’s registered and paid-up capital :-




Percentage of Percentage of

Name of the Fund Type of fund investments Book value investments Book value

% %

Presented as investments in trading

securities

Th e Asian Debt Fund, Ltd. - Class A Debt Securities Fund 2.07 40,290 5.73 215,713

Th e Asian Debt Fund, Ltd. - Class H Debt Securities Fund 68.06 300,630 50.03 178,746

Add: Allowance for revaluation 44,980 49,305

385,900 443,764

Presented as investments in related

parties

Siam Investment Fund(1) Equity Securities Fund 57.48 124,778 57.48 147,609

Less: Allowance for impairment (124,778) (147,609)

- -

(1) Being in process of liquidation





Percentage of Percentage of

Name of the Fund Type of fund investment Book value investment Book value

% %

Presented as investments in related

parties

Siam Investment Fund(1) Equity Securities Fund 8.0 1,144 8.0 2,876


- -

(1) Being in process of liquidation

9. LOANS, RECEIVABLES AND ACCRUED INTEREST RECEIVABLES

For the purpose of balance sheet presentation in compliance with the Notifi cation of the Department of

Business Development, items due within one year are to be presented as current assets and items due longer

than one year are to be presented as non-current assets. Th e Company and its subsidiaries therefore present

“Loans, receivables and accrued interest receivables” as follows:-




Loans and receivables 3,788,466 2,648,193

Add: Accrued interest receivables 9,604 10,797

Less: Allowance for doubtful accounts (411,368) (137,396)

Loans, receivables and accrued interest receivables - net 3,386,702 2,521,594

Less: current portion (2,192,510) (1) (2,118,401) (1)

Loans, receivables and accrued interest receivables - net

of current portion 1,194,192 403,193

(1) Since the subsidiaries could not allocate allowance for doubtful accounts between that for the current portion

of loans, receivables and accrued interest receivables and that for the long-term portion, the whole amount

of allowance for doubtful accounts was therefore deducted against current portion of loans, receivables and

accrued interest receivables.


9.1 Classifi ed by loan type




Finance business loans and receivables

Loans 2,156,626 2,030,665

Notes receivable 9,671 13,501

Hire-purchase receivables 903,848 26,435

Total loans and receivables 3,070,145 2,070,601

Less: Unearned income (93,180) (2,530)


Total loans, receivables and accrued interest receivables 2,984,524 2,077,734


Net fi nance business loans, receivables and accrued interest

receivables 2,579,090 1,946,304

Securities business receivables

Cash customer’s accounts 441,983 342,529

Margin loans 363,584 224,955

Guarantee deposit receivable - 6,672

Other receivables 5,934 5,966

Total securities business receivables 811,501 580,122


Total securities business receivables and accrued interest

receivables 813,546 581,256


Net securities business receivables and accrued

interest receivables 807,612 575,290

Net loans, receivables and accrued interest receivables -

fi nance and securities businesses 3,386,702 2,521,594


9.2 Classifi ed by the remaining period of the contract




At call (including defaulted contracts) 623,558 419,213

Not over 1 year 1,980,320 1,836,584

Over 1 year 1,194,192 403,193

Total loans, receivables and accrued

interest receivables 3,798,070 2,658,990

9.3 Classifi ed by type of business and loan classifi cation



31 December 2007

Special Sub- Doubtful

Pass mention standard Doubtful of loss Total

Finance business

Manufacturing and commerce 1,149,450 1,262 100,000 - 112,718 1,363,430

Real estate and construction 317,382 - - 7,000 217,939 542,321

Public utilities and services 157,128 448 93,000 - 77,409 327,985

Housing loans 6,179 - - - 5,392 11,571

Hire purchase receivables 597,086 3,455 - - - 600,541

Others 137,937 - - - 739 138,676

Total fi nance business 2,365,162 5,165 193,000 7,000 414,197 2,984,524

Securities business

Securities business receivables 807,612 - - 5,934 - 813,546

Total loans, receivables and

accrued interest receivables 3,172,774 5,165 193,000 12,934 414,197 3,798,070




31 December 2006

Special Sub- Doubtful

Pass mention standard Doubtful of loss Total

Finance business

Manufacturing and commerce 1,014,539 - - 71,229 44,047 1,129,815

Real estate and construction 380,866 - 112,788 - 142,976 636,630

Public utilities and services 177,069 - - - 6,140 183,209

Housing loans 9,254 - - - 5,946 15,200

Hire purchase receivables 41,300 - - - - 41,300

Others 70,498 - - - 1,082 71,580

Total fi nance business 1,693,526 - 112,788 71,229 200,191 2,077,734

Securities business

Securities business receivables 575,290 - - 5,966 - 581,256

Total loans, receivables and

accrued interest receivables 2,268,816 - 112,788 77,195 200,191 2,658,990

9.4 Finance business loans classifi ed in accordance with the Notifi cation of the Bank of Th ailand (“BoT”)

As at 31 December 2007 and 2006, allowance for doubtful accounts of fi nance business loans and

receivables classifi ed by debt classifi cation are as follows :-



31 December 2007

Allowance for doubtful account

Debt balance

(including

accrued interest

receivables)

Debt

balance after

collateral

Th e minimum

rate of loan loss

provisioning per

BoT

Minimum

amounts required

under BoT’s

guidelines

Amounts

provided in the

accounts

%

Pass 2,365,162 1,578,606 1 15,786 15,786

Special mention 5,165 5,165 2 103 103

Sub-standard 193,000 160,450 (1) 100 160,450 160,450

Doubtful 7,000 7,000 (1) 100 7,000 7,000

Doubtful of loss 414,197 203,863 (1) 100 203,863 203,863

Total 2,984,524 1,955,084 387,202 387,202

Add: Additional provision, that is in excess of the BoT’s

minimum requirement, for debts which may not

be collectible 18,232

Total allowance for doubtful accounts 405,434

(1) Value of collateral is determined in accordance with the BoT’s new guidelines as discussed in Note 5.9 to

the fi nancial statements.




31 December 2006

Allowance for doubtful account

Debt balance

(including accrued

interest receivables)

Debt balance

after collateral

Th e minimum

rate of loan loss

provisioning per

BoT

Minimum

amounts required

under BoT’s

guidelines

Amounts

provided in the

accounts

%

Pass 1,693,526 708,153 1 7,082 7,082

Special mention - - 2 - -

Sub-standard 112,788 - 20 - -

Doubtful 71,229 30,110 50 15,055 15,055

Doubtful of loss 200,191 72,374 (1) 100 72,374 72,374

Total 2,077,734 810,637 94,511 94,511

Add: Additional provision, that is in excess of the BoT’s minimum

requirement, for debts which may be not collectible 36,919

Total allowance for doubtful accounts 131,430

(1) Value of collateral deducted from debt balances of debtors, for which a court judgement has already been issued or a court

order is being executed, and against which legal actions have been brought, is determined in accordance with the BoT’s new

guidelines as discussed in Note 5.9 to the fi nancial statements.

In December 2006 the BoT revised its guidelines in determining allowance for doubtful accounts as

discussed in Note 5.9 to the fi nancial statements. As at 31 December 2006, a subsidiary engaging in

the fi nance business set up provision at a rate of 100% of the shortfall between the carrying value of

debt balances and the present value of cash expected to be received from collateral disposal for debtors

which a court judgment has already been issued or a court order is being executed, and against which

legal actions have been brought in accordance with the BoT’s new guidelines. For the remaining non-

performing loans classifi ed as “doubtful of loss”, “doubtful” and “sub-standard”, the subsidiary provided

provision based on the existing guidelines at the rates not lower than 100%, 50% and 20% of the

collateral shortfall, respectively. However, in 2006 the subsidiary set up a certain amount of additional

provision in anticipation of those required in 2007 by new guidelines.


9.5 Securities business receivables classifi ed in accordance with the Notifi cation of the Offi ce of the Securities

and Exchange Commission

As at 31 December 2007 and 2006, a subsidiary engaging in the securities business had classifi ed securities

business receivables and related accrued interest receivables (after eliminating the outstanding balances

between related parties) in accordance with the Notifi cation of the Offi ce of the Securities and Exchange

Commission regarding accounting for non-performing receivables of securities company as follows :-


Allowance for doubtful

accounts


accounts in excess of

Debt balances set up by the subsidiary SEC requirement

31 December

2007

31 December

2006

31 December

2007

31 December

2006

31 December

2007

31 December

2006

Doubtful debts 5,934 5,966 5,934 5,966 - -

Total 5,934 5,966 5,934 5,966 - -

As at 31 December 2007 and 2006, such subsidiary had securities business receivables of approximately

Baht 6 million and Baht 6 million, respectively, on which the recognition of income on an accrual basis

had been suspended.

9.6 Unearned income, which is presented net of fi nance business loans and receivables, is as follows :-




Unearned income on discounted bills - 7

Unearned hire-purchase income 93,180 2,523

Total 93,180 2,530

9.7 Loans and receivables on which the subsidiaries ceased recognition of income




Finance business loans and receivables (including

accrued interest receivables) 514,197 271,420

Securities business receivables 5,934 5,966

Total loans and receivables on which the

subsidiaries have ceased recognition of income 520,131 277,386

Percentage of total loans, receivables and accrued

interest receivables 14% 10%


9.8 Non-performing loans of fi nance business



31 December

2007

31 December

2006

Finance business loans and receivables (principal only) 608,526 376,292

Percentage of total loans and receivables - fi nance business 20% 18%

As at 31 December 2007 and 2006, the above non-performing loans were presented in accordance with

the Notifi cation of the BoT dated 16 January 2003, defi ning the non-performing loans to be the debts

classifi ed as “sub-standard”, “doubtful” and “doubtful of loss” and excluding outstanding loans for which

debt restructuring agreements have been made and conditions to upgrade to “pass” class or “special

mention” class in accordance with the Bank of Th ailand’s criteria have already been fulfi lled.

9.9 Troubled debt restructuring - the subsidiary engaging in the fi nance business

For the years ended 31 December 2007 and 2006, a subsidiary which is a fi nance company, entered into

troubled debt restructuring contracts, which are summarised below.



For the years ended 31 December

2007 2006

Number

of

debtors

Outstanding

balances before

restructuring

Number

of

debtors

Outstanding

balances before

restructuring

Restructured debts 1 80,000 - -


Details of debts restructured during the years ended 31 December 2007 and 2006 are as follows :- (Unit: Th ousand Baht)



Type of debt

restructuring

Number

of

debtors

Outstanding

balances before

restructuring

Outstanding

balances after

restructuring

Type of

assets

transferred

Fair value

of assets

transferred

(Gain)losses

from debt

restructuring

Settlement by cash and

assets transferred - - - - - -

Modifi cation of repayment

conditions 1 80,000 80,000 - - -

Combination of various

methods - - - - - -

Total debts restructured

during the year 1 80,000 80,000 - -

Loans and accrued interest

receivables - Finance

business as at

31 December 2007 3,286 2,984,524




Type of debt

restructuring

Number

of

debtors

Outstanding

balances before

restructuring

Outstanding

balances after

restructuring

Type of

assets

transferred

Fair value

of assets

transferred

(Gain)losses

from debt

restructuring

Settlement by cash and

assets transferred - - - - - -

Modifi cation of

repayment conditions - - - - - -

Combination of various

methods - - - - - -

Total debts restructured

during the year - - - - -

Loans and accrued

interest receivables -

Finance business as at

31 December 2006 1,298 2,077,734

In cases where the troubled debt restructuring involves modifi cation of the terms and the repayment

conditions, the fair value of the loans after restructuring is determined based on the net present value

of expected future cash fl ows, discounted by the interest rates charged to prime customers. As at 31

December 2007 and 2006, the subsidiary had no losses from the revaluation of restructured debts.


For the year ended 31 December 2007, the subsidiary recognised interest income on restructured debts

totaling Baht 5.3 million (2006: Baht 2.0 million) and collected principal and interest totaling Baht

33.8 million (2006: Baht 10.4 million).

As at 31 December 2007 and 2006, the subsidiary had the following outstanding loans and accrued

interest receivables. (Unit: Th ousand Baht)



Number of

debtors Amount

Number of

debtors Amount

Restructured loans 2 88,691 2 37,153

Normal loans 3,284 2,895,833 1,296 2,040,581

Total loans and accrued interest receivables 3,286 2,984,524 1,298 2,077,734

As at 31 December 2007 and 2006, the subsidiary had no commitment to provide additional loans to its

restructured debtors after debt restructuring.

9.10 Loans and receivables which have problems with fi nancial position and operating results

As at 31 December 2007 and 2006, a subsidiary engaging in fi nance business had the following loans

and receivables (including accrued interest receivables) due from companies which have problems with

their fi nancial position and operating results.


Number of debtors Debt balances Collateral


accounts under BoT’s

guidelines as provided

in the accounts

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31

December

2007

31

December

2006

Debtors, who have repayment

problems or have defaulted 46 49 514 384 232 282 283 87


10. ALLOWANCE FOR DOUBTFUL ACCOUNTS




Special- Sub- Doubtful Additional

Pass mention standard Doubtful of loss provision Total

Balance - beginning of the year 7,082 - - 21,021 72,374 36,919 137,396

Bad debt written off - - - - (995) - (995)

Bad debt recovery - - - (32) - - (32)

Increase(decrease) in bad debt

and doubtful accounts during

the year 8,704 103 160,450 (8,055) 132,484 (18,686) 275,000

Transfer to allowance for doubtful

accounts for other assets - - - - - (1) (1)

Balance - end of the year 15,786 103 160,450 12,934 203,863 18,232 411,368




Special- Sub- Doubtful Additional

Pass mention standard Doubtful of loss provision Total

Balance - beginning of the year 7,078 - - 11,049 59,881 20,718 98,726

Bad debt written off - - - - (13,857) - (13,857)

Bad debt recovery - - - (2,473) - - (2,473)

Increase in bad debt and

doubtful accounts during

the year 4 - - 12,445 26,350 16,201 55,000

Balance - end of the year 7,082 - - 21,021 72,374 36,919 137,396


11. LOANS TO OTHER PARTIES

As at 31 December 2007 and 2006, the Company and its subsidiaries had outstanding loans to other parties

as follows:-



31 December

2007

31 December

2006

31 December

2007

31 December

2006

Loans to other parties

- Short-term 111,830 108,941 94,330 77,365

- Long-term 48,797 53,745 48,797 53,745

Total 160,627 162,686 143,127 131,110

Less: Current portion (119,830) (116,941) (102,330) (85,365)

Loans to other parties - net of current portion 40,797 45,745 40,797 45,745

During the year ended 31 December 2007, the Company and its subsidiaries had movements of loans to other

parties as follow :-




31 December

2006 Increase Decrease

Eff ect from

exchange rate

31 December

2007


Short-term 108,941 30,861 27,972 111,830

Long-term 53,745 1,000 5,948 48,797

Total 162,686 31,861 33,920 160,627




31 December


Eff ect from

exchange rate

31 December

2007


Short-term 77,365 30,861 13,896 94,330

Long-term 53,745 1,000 5,948 48,797

Total 131,110 31,861 19,844 143,127


12. OTHER CURRENT ASSETS



31 December

2007

31 December

2006

31 December

2007

31 December

2006

Dividend receivables - 70 - -

Accrued interest receivables 21,676 28,335 427 12,549

Prepaid expenses 8,593 6,512 1,358 1,048

Refundable value added tax 19,388 1,551 - -

Prepaid corporate income tax 17,478 29,713 - -

Other receivables - related parties - 14,048 - 15,202

Maintenance margin deposits -

derivative markets

5,362 81,389 5,362 1,628

Guarantee for investment 12,317 - - -

Others 16,991 19,308 3,269 3,395

Total other current assets 101,805 180,926 10,416 33,822

13. DEPOSITS SUBJECT TO RESTRICTIONS

As at 31 December 2007 and 2006, the Company had pledged bank deposits amounting to Baht 0.9 million

and Baht 0.9 million, respectively, to secure bank guarantees issued by the banks on behalf of the Company.


14. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES

14.1 Investments in associated companies in the consolidated fi nancial statements

As at 31 December 2007 and 2006, the Company and its subsidiaries had investments in the following

entities and funds which are associated companies and accounted for under equity method in the

consolidated fi nancial statements.



Percentage of shareholding Cost

Carrying value under

equity method

Companies’ name

Nature of

business Country

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31

December

2007

31

December

2006

% %

Siam Investment Partners, L.P. General

Partner of a

fund

Cayman

Islands

50.00 50.00 10,147 11,025 9,709 10,650

Finansa Capital Ltd. Investment

Advisory

Cayman

Islands

50.00 50.00 500 534 1,280 232

JP-One Asset Co., Ltd. Providing oil

transportation

service by

pipeline

Th ailand 26.83 26.83 163,430 163,430 165,955 164,450

Th e Vietnam Equity Fund Fund Cayman

Islands

26.38 26.38 24,242 62,928 51,168 145,169

Siam Investment Fund III ,

L.P. (SIF III)

Fund Cayman

Islands

41.66 (1) 41.66 (1) 26,744 25,847 14,371 15,283

Siam Investment Partners

III, L.P.

General

Partner of

SIF III

Cayman

Islands

50.00 (3) 50.00 (3) 12,118 10,858 11,663 10,728

Total investment in associated companies 237,181 274,622 254,146 346,512

(1) Determined based on shares held directly as a Limited Partner and indirectly as a General Partner.(2) Equity accounting is made based on rates and formula of profi t/loss sharing arrangement as specifi ed in the prospectus.(3) Th e percentage shown is profi t sharing percentage while capital contribution by Finansa Fund Management Ltd. as a Limited Partner

is 95% of the capital of the business.

(2)

(2) (2)

(2)


14.2 Investments in subsidiaries in the separate fi nancial statements

As at 31 December 2007 and 2006, the Company had investments in the following subsidiaries, which

are accounted for under cost method in the separate fi nancial statements.



Companies’ names

Nature of

business Country

Paid-up share capital Percentage of shareholding

Carrying value under cost

method

Dividends received

For the years ended

31 December 31 December 31 December 31 December 31 December 31 December 31 December

2007 2006 2007 2006 2007 2006 2007 2006

% %

Subsidiaries

Finansa Securities

Limited

Securities

business

Th ailand 450,000 450,000 100 100 484,709 484,709 - 315,000

Finansa Credit Limited Finance

business

Th ailand 511,000 451,000 100 100 917,231 587,231 - -

Finansa Asset

Management Ltd.

Asset

Management

business

Th ailand 100,000 100,000 100 100 108,200 108,200 - -

Finansa Fund

Management Ltd.

Investment

advisory

business

Cayman

Islands

690

(ordinary

shares)

690

(ordinary

shares)

100 100 151,790 151,790 101,025 -

5,732

(preference

shares)

- 100 - 573,198 - - -

Prospect SPC Co., Ltd. Investment

business

Th ailand 10 10 100 100 10 10 - -

Finansa (Cambodia)

Ltd.

Investment

advisory

business

Cambodia 192 192 100 100 204 204 - -

Finansa Hong Kong

Limited

Advisory

business

Hong

Kong

512 512 100 100 512 512 - -

Investments in subsidiaries 2,235,854 1,332,656 101,025 315,000


Investments in subsidiaries - net 1,842,874 1,329,676

(a) On 28 March 2007, the Company (“the Lender”) entered into four convertible loan agreements

with Finansa Fund Management Ltd., a subsidiary, (“the Borrower”), whereby loans of USD 14.4

million or Baht 573.2 million which the Company had granted to the subsidiary under four loan

agreements in prior years are to be converted into convertible loans of the same amounts. Under

the convertible loan agreements, the loans may be converted, at the option of the Lender, to

redeemable preference shares at the subscription price of USD 100 per share. Th e Lender is then

entitled at any time after the date of an allotment of the redeemable preference shares to redeem

such preference shares at the subscription price plus interest at the rate of 6-month LIBOR +

2.75% per annum compounded. Th e Company exercised its right to convert the loans into

144,073 redeemable preference shares on 28 March 2007.

(b) On 31 December 2007, the Company reviewed the value of an investment in Finansa Credit

Limited, a subsidiary, since such subsidiary incurred a high operating loss in 2007. Th e Company

therefore set provision for impairment loss on an investment in such subsidiary amounting to

Baht 385 million and recognised it in the statement of income for the year ended 31 December

2007. Th is resulted in the carrying value of an investment in such subsidiary in the separate

fi nancial statements to be equal to net asset value of such subsidiary as at 31 December 2007.


14.3 Disposal of subsidiaries

On 21 November 2007, Finansa Fund Management Ltd. (a subsidiary) entered into the Share Purchase

Agreement (“SPA”) as the seller with a director of the subsidiaries being disposed and two companies

directly and/or indirectly owned by such director (collectively called “the purchaser”) whereby the

subsidiary agreed to sell its shares in its two subsidiaries for the total considerations of USD 10 million.

(a) 250,000 ordinary shares of Finansa Singapore Pte Ltd (“FS”), which represent the entire issued

and paid-up share capital of FS, and

(b) 600 ordinary shares in ADF Management, Ltd. (“ADFM”), which represent 66.7% of the issued

and paid-up share capital of ADFM.

Th e Purchaser shall pay USD 3.3 million on completion of the sale and purchase of the Sale Shares and

the remaining shall be paid in installments within 4 years. However, later on 19 December 2007 the

seller and the purchaser executed the deed of discharge on 19 December 2007 whereas the Company

and the subsidiary agreed to be paid immediately USD 10 million under the SPA, by undertaking loans

the Group of company of the purchaser has granted to a company incorporated in the People’s Republic

of China and the purchaser fully paid and discharged under the SPA. Th e loans undertaken are then

accumulated as a part of the deposit payment as required for the China Investment as referred to in

Note 22 to the fi nancial statements. Th e subsidiary had a gain of approximately Baht 269 million on

disposal of the subsidiaries recognised in the statement of income for the year ended 31 December 2007.

Disposed subsidiaries had total revenues included in the consolidated fi nancial statements as referred to

in Note 42 to the fi nancial statements.


Th e net asset values of the disposed subsidiaries are as follows: (Unit: Th ousand Baht)

ADF

Management

Ltd. and its

subsidiary

Finansa

Singapore

Pte Ltd. Total

Assets

Cash and cash equivalents 178,829 7,354 186,183

Trade and other receivables 68,082 40,000 108,082

Property, plant and equipment 2,165 3,361 5,526

Financial assets at fair value through profi t or loss 50,325 - 50,325

Other assets 144 1,679 1,823

Total assets 299,545 52,394 351,939

Liabilities

Trade and other payable 214,017 35,331 249,348

Other liabilities - 380 380

Total liabilities 214,017 35,711 249,728

Net asset value 85,528 16,683 102,211

Less: Minority interest (28,507) - (28,507)

Th e Company’s equity interest in subsidiaries 57,021 16,683 73,704

Selling price 342,635

Th e Company’s equity interest in subsidiaries (73,704)

Gain on disposal of subsidiaries 268,931

Selling price 342,635

Less: Cash and cash equivalents of disposed

subsidiaries (186,183)

Net proceeds from disposal of subsidiaries 156,452


15. LONGTERM INVESTMENTS IN RELATED PARTIES



Companies’ names

Nature of

Business Country Percentage of shareholding Investments (cost method) Percentage of shareholding Investments (cost method)

31 December

2007

31 December

2006

31 December

2007

31 December

2006

31 December

2007

31 December

2006

31 December

2007

31 December

2006

% % % %

Siam Investment

Fund (2)

Fund Cayman

Islands

57.48 57.48 124,778 147,609 8.00 8.00 1,144 2,876

Siam Investment

Fund II, L.P.

Fund Cayman

Islands 4.13 (1) 4.13 (1) 45,119 48,793 - - - -

Long-term investments in related parties 169,897 196,402 1,144 2,876

Less: Allowance for impairment (130,208) (147,609) (1,144) (2,876)

Long-term investments in related parties

- net 39,689 48,793 - -

(1) Determined based on shares held directly as a limited partner and indirectly as a general partner.

(2) Th is fund is in process of being liquidated.

Th e Company pledged 1,215,250 investment units of Siam Investment Fund to secure long-term loan from a

commercial bank, as discussed in Note 28.1 to the fi nancial statements.

16. PROPERTIES FORECLOSED

Properties foreclosed are the assets seized from debtors with long overdue loan and hire purchase balances or

received from restructured debtors in settlement of debts.

Properties foreclosed for the years ended 31 December 2007 and 2006 can be summarised as follows :-




Beginning

balances Additions DisposalsEnding

balances

Obligations

with regard to

buyback options

or fi rst refusal

rights

Immovable properties 35,804 15,515 - 51,319 -

Less: Allowance for impairment (7,579) (3,000) - (10,579) -

Properties foreclosed - net 28,225 12,515 - 40,740 -





Beginning

balances Additions Disposals

Ending

balances

Obligations

with regard to

buyback options

or fi rst refusal

rights

Immovable properties 47,871 - (12,067) 35,804 -

Less: Allowance for impairment (15,146) - 7,567 (7,579) -

Properties foreclosed - net 32,725 - (4,500) 28,225 -


17. PREMISES AND EQUIPMENT



Offi ce

building

Offi ce

equipment

Furniture

and

fi xtures Vehicles

Assets in

progress Total

Cost

31 December 2006 268,683 166,859 62,636 35,307 3,828 537,313

Acquisition/Transfer in

during the year 22 17,637 9,112 7,509 5,247 39,527

Decrease from disposal of

subsidiaries - (5,309) (6,381) - - (11,690)

Written-off / Transfer out/

disposal during the year (5,612) (8,434) (560) - (8,889) (23,495)

31 December 2007 263,093 170,753 64,807 42,816 186 541,655

Accumulated depreciation

31 December 2006 49,804 76,224 22,424 10,771 - 159,223

Depreciation for the year 17,238 30,853 10,904 6,410 - 65,405

Decrease from disposal of

subsidiaries - (3,170) (2,697) - - (5,867)

Written-off /transfer out/

disposal (2,673) (6,669) (86) - - (9,428)

31 December 2007 64,369 97,238 30,545 17,181 - 209,333

Allowance for impairment

31 December 2006 - 956 1,543 - - 2,499


for the year - 86 (23) - - 63

31 December 2007 - 1,042 1,520 - - 2,562

Net book value

31 December 2006 218,879 89,679 38,669 24,536 3,828 375,591

31 December 2007 198,724 72,473 32,742 25,635 186 329,760

Depreciation included in statements of income for the years ended

31 December 2006 56,073

31 December 2007 65,405




Offi ce

building

Offi ce

equipment

Furniture

and

fi xtures Vehicles

Assets in

progress Total

Cost

31 December 2006 268,683 94,889 13,055 8,168 - 384,795

Acquisition 22 908 55 - 186 1,171

Written-off /disposal (5,612) (7,121) - - - (12,733)

31 December 2007 263,093 88,676 13,110 8,168 186 373,233

Accumulated depreciation

31 December 2006 49,804 58,062 10,353 4,615 - 122,834

Depreciation for the year 17,238 16,470 1,729 1,185 - 36,622

Written-off /disposal (2,673) (6,213) - - - (8,886)

31 December 2007 64,369 68,319 12,082 5,800 - 150,570

Net book value

31 December 2006 218,879 36,827 2,702 3,553 - 261,961

31 December 2007 198,724 20,357 1,028 2,368 186 222,663

Depreciation included in statements of income for the years ended

31 December 2006 40,747

31 December 2007 36,622

Th e Company has mortgaged offi ce condominium units having a total net book value of Baht 104 million and

Baht 111 million, respectively, as at 31 December 2007 and 2006 as collateral against credit facilities granted

by a commercial bank as discussed in Note 28.1 to the fi nancial statements.

As at 31 December 2007 and 2006, a subsidiary has assets under fi nance lease agreements with a net book value

of Baht 15.4 million and Baht 17.5 million, respectively.

As at 31 December 2007 and 2006, the original costs of the fully-depreciated equipment that is still in use are

Baht 58 million and Baht 29 million, respectively (the Company only: Baht 42 million and Baht 13 million,

respectively).


18. GOODWILL



Finansa

Securities

Limited

Finansa Fund

Management

Ltd.

Finansa

Credit

Limited

Finansa Asset

Management

Ltd. Total

Goodwill as at acquisition date

Cost 234,709 108,000 287,231 108,200 738,140

Book value as at acquisition dates (49,021) (44,879) (114,007) (89,212) (297,119)

Goodwill 185,688 63,121 173,224 18,988 441,021

Accumulated amortisation of goodwill

31 December 2006 64,839 14,609 36,810 1,898 118,156

Goodwill amortised during the year 9,285 3,156 8,661 949 22,051

31 December 2007 74,124 17,765 45,471 2,847 140,207


31 December 2006 - - - - -

Provision for loss on impairment - - 127,753 - 127,753

31 December 2007 - - 127,753 - 127,753

Goodwill - net

31 December 2006 120,849 48,512 136,414 17,090 322,865

31 December 2007 111,564 45,356 - 16,141 173,061

Goodwill amortised and charged to the income statements for the years ended

31 December 2006 22,051

31 December 2007 22,051

Provision for loss from impairment charged to the income statements for the years ended

31 December 2006 -

31 December 2007 127,753

On 31 December 2007, the Company reviewed the value of goodwill from an investment in Finansa Credit

Limited, a subsidiary, since such subsidiary incurred a high operating loss in 2007. Th erefore, the Company set

aside a full provision for loss on impairment in goodwill from this subsidiary outstanding on that date totaling

Baht 128 million and recognised it as an expense in statement of income for the year ended 31 December

2007.


19. DEFERRED INCOME TAX ASSETS/CORPORATE INCOME TAX

(Unit: Th ousand Baht)Consolidated fi nancial

statements

Separate fi nancial

statements

31 December

2007

31 December

2006

31 December

2007

31 December

2006

Deferred income tax assets

Occurred from timing diff erences of :-

Benefi ts from tax losses 79,888 77,915 - 34,219

Allowance for revaluation on investments 15,985 21,981 - 4,946

Allowance for doubtful accounts 10,893 16,500 - -

Others 4,909 - - -

Deferred income tax assets 111,675 116,396 - 39,165

In 2007 the Company and a subsidiary set aside provision for impairment loss on deferred income tax assets

amounting to Baht 97 million and recognised it (presented as a deduction of tax benefi t on current year’s tax

loss) in statement of income. Such impairment loss was estimated at the corporate income tax rate of 30%

of the amount of unutilised tax losses the Company and a subsidiary expected not to be able to utilise within

5 years. As at 31 December 2007 and 2006, deferred income tax assets mainly arose from tax losses not yet

utilised by the subsidiaries. Such tax losses can be used as tax credits against taxable profi ts in the year the

subsidiaries have but with in a fi ve-year period. Management expects that the subsidiaries will have future

taxable profi ts to utilise the remaining unutilised tax losses within the required time frame.


Consolidated fi nancial

statements

Separate fi nancial

statements

For the years ended

31 December

For the years ended

31 December

2007 2006 2007 2006Income tax

Income tax on taxable profi ts (15,334) (4,708) - -

Recording of tax benefi ts from :

Benefi ts from tax losses 1,934 48,380 (34,219) 34,219

Allowance for revaluation on investments (5,850) 7,768 (4,946) 5,399

Allowance for doubtful accounts (5,567) 16,438 - -

Others 4,909 (24,026) - (24,026)

Less: Write-off of tax losses carried forward

longer than 5 years - - - -

Income tax for the years (19,908) 43,852 (39,165) 15,592


Corporate income tax rates


% %

Th e Company 25 25

Th e domestic subsidiaries 30 30

Th e overseas subsidiary (Singapore only) 18 20

20. INTANGIBLE ASSETS



Remaining periods

as at 31 December

2007

31 December

2006

Addition Amortisation

31 December

2007

Computer softwares 1 month to 9 years

10 months

71,406 11,798 (16,961) 66,243


Remaining periods

as at 31 December

2007

31 December

2006

Addition Amortisation

31 December

2007

Computer softwares 1 month to 4 years

6 months

56,215 2,405 (15,304) 43,316

21. QUALITY OF ASSETS

21.1 Classifi cation of assets in accordance with the Notifi cation of the Bank of Th ailand

As at 31 December 2007 and 2006, classifi cation of the assets of a subsidiary, which is a fi nance company,

is made in accordance with the Notifi cation of the Bank of Th ailand as follows :-



Loans, receivables

and accrued interest

receivables Investments Properties foreclosed Other assets Total

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31

December

2007

31

December

2006

31

December

2007

31

December

2006

Pass 2,365 1,694 - - - - - - 2,365 1,694

Special-mention 5 - - - - - - - 5 -

Sub-standard 193 113 - - - - - - 193 113

Doubtful 7 71 - - - - - - 7 71

Doubtful of loss 414 200 2 14 8 8 3 - 427 222

Total 2,984 2,078 2 14 8 8 3 - 2,997 2,100

Less: Allowance for

doubtful accounts (405) (131)

2,579 1,947


21.2 Classifi cation of assets in accordance with the Notifi cation of the Offi ce of the Securities and Exchange

Commission (SEC)

As at 31 December 2007 and 2006, a subsidiary, which is a securities company, classifi ed its securities

business receivables, accrued interest receivables and allowances for doubtful accounts (after eliminating

the outstanding balances between related parties) as follows :-


Debt balances


accounts set up by the

subsidiary


accounts in excess of

SEC requirements

31 December 31 December 31 December

2007 2006 2007 2006 2007 2006

Doubtful 6.0 6.0 6.0 6.0 - -

Sub-standard - - - - - -

Total 6.0 6.0 6.0 6.0 - -

22. DEPOSIT FOR INVESTMENTS

As at 31 December 2007, Finansa Fund Management Ltd. has deposit totaling USD 15.7 million (or

approximately Baht 531 million) paid to a company incorporated in the People Republic of China (“PRC”) as

a part of its investment in a company incorporated in the PRC (“China Investment”). A part of such deposit

was paid by off setting loans affi liated companies of such company have with the Group of companies of the

purchaser of subsidiaries from Finansa Fund Management, Ltd., as described in Note 14.3 to the fi nancial

statements.

In order to secure such deposit, Finansa Public Company Limited entered into the Security Agreement with

another PRC company whereby such company agreed to pledge its shares in a company listed in the Hong

Kong Stock Exchange.

Later on 22 February 2008, the subsidiary entered into the Settlement Agreement to terminate its China

Investment transactions mentioned above and receive back USD 18 million within 30 days after the agreement

date.


23. BILLS OF EXCHANGE

Bills of exchange issued by the Company are charged interest at the rates with reference to the Money Market

rate. Th e outstanding balances as at 31 December 2007 and 2006 can be summarised below.



Issued to

31 December

2007

31 December

2006

31 December

2007

31 December

2006

Related parties 130,000 130,000 199,000 200,000

Provident funds 192,000 224,000 192,000 224,000

Limited companies 470,000 200,000 470,000 200,000

Individuals 260,000 115,669 260,000 115,669

Total 1,052,000 669,669 1,121,000 739,669

Discounts paid (9,542) (12,817) (11,612) (13,937)

Bills of exchange - net 1,042,458 656,852 1,109,388 725,732

24. SHORTTERM LOANS



31 December

2007

31 December

2006

31 December

2007

31 December

2006

Loans from individuals 25,000 25,000 - -

Total 25,000 25,000 - -

As at 31 December 2007 and 2006, Finansa Fund Management Ltd., an overseas subsidiary, had short-term loans

from an individual amounting to Baht 25 million which are due at call and subject to interest at the rate of 3.5

percent per annum.

25. SECURITIES BUSINESS PAYABLES



31 December

2007

31 December

2006

31 December

2007

31 December

2006

Securities business payables of

securities brokerage business 577,319 369,652 - -

Securities borrowing payables - 4,800 - -

Total 577,319 374,452 - -


26. LIABILITIES UNDER FINANCE LEASE AGREEMENTS

As at 31 December 2007 and 2006, liabilities under fi nance lease agreements included the following :



31 December

2007

31 December

2006

Liabilities under fi nance lease agreements 15,605 19,228

Less: Deferred interest under fi nance lease agreements (1,482) (2,365)

Liabilities under fi nance lease agreements - net 14,123 16,863

Installments due within 1 year 5,351 4,525

Installments due longer than 1 year 8,772 12,338

Liabilities under fi nance lease agreements - net 14,123 16,863

Movement of liabilities under fi nance lease agreements for the year ended 31 December 2007 included the

following:




31 December


31 December

2007

Liabilities under fi nance lease agreements 19,228 2,362 (5,985) 15,605

Less: Deferred interest under fi nance lease

agreements (2,365) (323) 1,206 (1,482)

Liabilities under fi nance lease agreements - net 16,863 2,039 (4,779) 14,123

27. BORROWINGS AND DEPOSITS

As at 31 December 2007 and 2006, a subsidiary, which operates a fi nance business, had borrowings and

deposit balances as follows :- (Unit: Th ousand Baht)


31 December

2007

31 December

2006

Borrowings and deposits - promissory notes 3,368,086 3,491,429

Less: Current portion of borrowings and deposits (3,175,804) (3,363,112)

Borrowings and deposits - net of current portion 192,282 128,317


28. LONGTERM LOANS



31 December

2007

31 December

2006

31 December

2007

31 December

2006

Long-term loans 915,314 1,232,520 120,000 350,000

Less: Current portion of long-term loans (120,000) (230,000) (120,000) (230,000)

Long-term loans - net of current portion 795,314 1,002,520 - 120,000

Movement of long-term loans for the year ended 31 December 2007 are summarised below.



Consolidated

fi nancial statements

Separate fi nancial

statements

Balance as at 31 December 2006 1,232,520 350,000

Less: Loan repayments (343,525) (230,000)

Add: Recognition of unrealised loss on exchange 26,319 -

Balance as at 31 December 2007 915,314 120,000

28.1 Outstanding borrowings denominated in Baht as at 31 December 2007 and 2006 amounted to Baht 120

million and Baht 350 million, respectively, are secured by offi ce condominium units and the investment

units held by a subsidiary. Th e loan covenant requires the Company to maintain an average debt to

security ratio of not more than 0.8 during the two weeks before each quarter-end date (calculated on a

weekly basis).

28.2 As at 31 December 2007, Finansa Fund Management Ltd. (the subsidiary) had a long-term loan of

Euro 16.1 million or equivalent to Baht 795 million (31 December 2006: Euro 18.5 million or Baht

882 million) from an overseas fi nancial institution. Such loan is secured by Synthetic Collateralized

Debt Obligation, as referred to in Note 8.1 (3) to the fi nancial statements. In addition, in case that

market value of such debt securities has gain or loss in excess of USD 200,000 or its equivalent in other

currencies, the subsidiary has to receive or place, as the case may be, the amount of such excess with such

fi nancial institution.

29. STATUTORY RESERVE

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside

a statutory reserve at least 5 percent of its net income after deducting accumulated defi cit brought forward

(if any) until the reserve reaches 10 percent of the registered capital. Th e statutory reserve is not available for

dividend distribution.

30. TREASURY STOCK RESERVE

Under the Notifi cation of the Offi ce of Securities and Exchange Commission No. Gor Lor Tor. Chor Sor.

(Wor) 2/2548 and the Notifi cation of the Federation of Accounting Professions No. Sor. Sor Wor Bor Chor.

016/2548, public companies buying back their own shares (treasury shares) must have retained earnings in an


amount of not less than the outstanding balance of the treasury shares. If retained earnings are appropriated for

dividend payment, the balance of retained earnings after such appropriation must not less than the balance of

the treasury shares. Th e Company proceeded in accordance with these guidelines and appropriated an amount

equivalent to the amount paid to acquire the shares from its retained earnings to the treasury stock reserve.

31. TREASURY STOCKS

On 12 May 2005, the Board of Directors of the Company approved a program to buy back its own shares up

to 12,501,000 shares (par value of Baht 5 each), or 10 percent of the total number of shares in issue, with a

budget of Baht 300 million, for liquidity surplus management purposes. Th e shares were to be bought back on

the Stock Exchange of Th ailand during 30 May 2005 to 30 November 2005, and can be resold after 6 months

from the date of treasury share buy back completion but within 3 years. In the event that the Company does

not or is unable to dispose of the treasury shares within such period, the Company will reduce its share capital

by cancelling the remaining unsold treasury shares.

As at 31 December 2007 and 2006, the Company has 1,490,300 ordinary shares held as treasury stocks totaling

Baht 25.04 million, representing 1.19 percent of total issued share capital.

32. EARNINGS PER SHARE

Earnings per share as presented in the statements of income is basic earnings per share, which is determined

by dividing net profi ts (losses) by the weighted average number of ordinary shares in issue during the years, net

of number of the treasury stocks held by the Company.

33. NUMBER OF EMPLOYEES AND RELATED COSTS


2007 2006 2007 2006

Number of employees at end of years 470 473 62 71

Employee costs for the years (Th ousand Baht) 543,194 496,221 71,027 70,556

34. PROVIDENT FUND

Th e Company, its subsidiaries and employees have jointly established provident funds in accordance with

the Provident Fund Act B.E. 2530. Th e Company and its subsidiaries and employees contributed to the

funds monthly at the rate of 5 - 7 percent of basic salary. Th e funds, which are managed by Finansa Asset

Management Limited and ING Funds (Th ailand) Co., Ltd., will be paid to employees upon termination in

accordance with the funds’ rules. For 2007 and 2006, the Company and its subsidiaries contributed Baht

13.1 million and Baht 9.9 million, respectively (Th e Company only : Baht 3.1 million and Baht 2.6 million,

respectively) to the funds.

35. ADJUSTMENT OF RETAINED EARNINGS

On 3 May 2006, a Government Authority, which regulates fi nancial institutions informed in its letter to a

subsidiary that the subsidiary has 4 interest rate swap contracts, which did not qualify as hedging transactions

and thus the subsidiary was required to classify them as trading transactions and measure them at fair value

whereby additional losses resulting from measuring those transactions would be made against defi cit of the

subsidiary. Th erefore, the subsidiary recognised additional losses of approximately Baht 38 million (net of


related deferred tax) against defi cit brought forward at the beginning of year 2006.

36. CAPITAL FUNDS

As at 31 December 2007 and 2006, the capital funds maintained by a subsidiary in accordance with the

resolution of the Section 4 of the Act on the Undertaking of Finance Business, Securities Business and Credit

Foncier Business B.E. 2522, were as follows :-



Tier 1 capital

Paid-up share capital 511,000 451,000

Premium on share capital 394,000 124,000

Statutory reserve 4,700 4,700

Defi cit (380,111) (122,230)

Deferred tax assets (87,632) (50,968)

Total Tier 1 capital 441,957 406,502

Tier 2 capital

Provision for assets classifi ed as “Pass” 15,786 7,082

Less : Revaluation defi cit on investment in equity securities (1,354) (11,406)

Total Tier 2 capital 14,432 (4,324)

Total capital fund 456,389 402,178

Capital funds as discussed above are calculated based on the Bank of Th ailand’s guidelines.

37. ENCUMBRANCE OF ASSETS

37.1 As at 31 December 2007 and 2006, the Company has pledged bank deposits amounting to Baht 0.9

million with a bank to secure bank guarantees issued by the bank on behalf of the Company.

37.2 As at 31 December 2007 and 2006, the Company has mortgaged offi ce condominium units and pledged

investments units in Siam Investment Fund to secure long-term loans, as discussed in Note 28.1 to the

fi nancial statements.

37.3 As at 31 December 2007 and 2006, the Company has an investment in preference shares of a company

with a book value of Baht 39.6 million, which is subject to restrictions as discussed in Note 8.1(2) to the

fi nancial statements.

37.4 As at 31 December 2007 and 2006, a subsidiary has pledged investments of Euro 18.0 million and Euro

19.5 million, respectively in Synthetic Collateralized Debt Obligation as collateral for loans as discussed

in Note 28.2 to the fi nancial statements.

37.5 As at 31 December 2007, the Company has pledged 50,000 preference shares of Finansa Fund

Management Ltd. to secure guarantee agreement with an overseas fi nancial institution, as discussed in

Note 40 to the fi nancial statements.

37.6 As at 31 December 2006, ADF Management, Ltd., a subsidiary of Finansa Fund Management Ltd., had

investment in Th e Asian Debt Fund, Ltd. amounting to USD 0.55 million, or equivalent to Baht 19.9


million which it has had a commitment to transfer to the Investment Team of Th e Asian Debt Fund,

Ltd. and is subject to a two-year lock-up period. Such investment was recorded as an integral part of

other non-current assets. During the year, Financial Fund Management, Ltd. sold its investment in ADF

Management, Ltd., as discussed in Note 14.3 to the fi nancial statements therefore there was no such

commitment as at 31 December 2007.

38. COMMITMENTS

38.1 Off -balance sheet commitments

As at 31 December 2007 and 2006, the Company and its subsidiaries had signifi cant off -balance sheet

commitments as follows :-




Baht

Foreign

Currency Total Baht

Foreign

Currency Total

Aval to bills 92 - 92 - - -

Loan guarantees 47 - 47 50 - 50

Other commitments

Interest rate cap

Floating rate payee 1,800 - 1,800 1,800 - 1,800

Forward exchange contracts

Bought - - - - 198 198

Credit default swap contract

Sold - 675 675 - 722 722

Total 1,939 675 2,614 1,850 920 2,770




Baht

Foreign

Currency Total Baht

Foreign

Currency Total

Interest rate cap

Floating rate payee 900 - 900 900 - 900

On 17 January 2006, an overseas subsidiary, as a protection seller, entered into a credit default swap

contract on a 5-year Kingdom of Th ailand bond with notional amount of USD 20 million with an

overseas fi nancial institution whereby it will receive a return at a fi xed rate as specifi ed in the contract

per annum based on the notional amount, payable quarterly. Th e contract will mature on 20 March

2011. Th e subsidiary is required to pay an initial margin of USD 100,000 as a guarantee under the

contract and if the market value loss of the credit default swap contract exceeds the initial margin, the

subsidiary is required to increase the amount of the initial margin guarantee to cover the shortfall. As

at 31 December 2007, the subsidiary has an initial margin of USD 100,000 or equivalent to Baht 3.4

million (31 December 2006: USD 100,000 or equivalent to Baht 3.6 million) shown as “guarantees for

derivative contracts” in the balance sheets.


In 2007, the subsidiary engaging in the fi nance business recognised a loss of approximately Baht 13.4

million with respect to outstanding letters of guarantee issued to a debtor, which is non-performing

as at the balance sheet date. Th e subsidiary’s management estimated such loss, which was recorded as

“Provision for liabilities” and included as a part of “Other current liabilities” in the balance sheets, based

on the outstanding guarantees and the possibility of claims that might be called against the subsidiary

from the benefi ciaries of such letters of guarantee.

38.2 Commitment under operating agreements

As at 31 December 2007 and 2006, the Company and its subsidiaries had commitments in respect

of offi ce rental and related service contracts, for which the future rental and service fees are payable as

follows:-



31 December

2007

31 December

2006

31 December

2007

31 December

2006

Within 1 year 33 33 - -

Over 1 year 13 37 - -

Total 46 70 - -

38.3 Commitments under guarantee agreement

As at 31 December 2007 and 2006, the Company and an overseas subsidiary have commitments to pay

fees under the guarantee agreement made with an overseas fi nancial institution, as detailed in Note 40


38.4 Commitment under lease agreement

As at 31 December 2007 and 2006, a subsidiary has the following commitment for minimum lease

payment to be payable in each future year under non-cancellable fi nance lease agreements with the lease

term of longer than one year.



Amount

Year 2007 2006

2007 - 5.7

2008 6.3 5.7

2009 6.3 5.7

2010 2.8 2.1

2011 0.2 -

15.6 19.2

38.5 Other commitments

Finansa Securities Limited

(1) As at 31 December 2007 and 2006, the subsidiary is required to pay the Stock Exchange of

Th ailand a monthly securities trading fee of Baht 50,000 and at a rate of 0.005 percent of the

trading volume.

(2) As at 31 December 2007 and 2006, the subsidiary is required to pay a service fee to Th ailand

Securities Depository Company Limited for rendering securities operation services on behalf of

this subsidiary. Th e monthly service fee is Baht 9,000 and at the rates according to each type of

services.

(3) As at 31 December 2007 and 2006, the subsidiary is required to pay a fee to the Offi ce of the

Securities and Exchange Commission (“SEC”) for its business operations as licensed whereby

this subsidiary is charged a fee at a rate of 1 percent of the totals of brokerage fees plus fee and

service income. Such fees shall not be less than Baht 500,000 per annum and not more than Baht

5,000,000 per annum.

(4) As at 31 December 2007 and 2006, the subsidiary is required to pay contributions to the

Compensation Fund for Clearing and Settlement, which is overseen by Th ailand Securities

Depository Company Limited, on a monthly basis, at the rate of 0.008, 0.012 or 0.016 percent

of its net settlement value each month and the monthly contributions shall not be less than Baht

1,000 per month.

(5) As at 31 December 2007 and 2006, the subsidiary is required to pay contributions to the Securities

Investor Protection Fund, which is overseen by the Stock Exchange of Th ailand on a monthly

basis, at a rate of 0.0005 percent.

Finansa Credit Limited

(1) As at 31 December 2007 and 2006, the subsidiary is required to pay a fee to the Financial

Institutions Development Fund at the rate of 0.4 percent per annum on the outstanding balance

of deposits taken from the public.


Finansa Asset Management Ltd.

(1) As at 31 December 2007 and 2006, the subsidiary has a commitment under an on-line information

service agreement amounting to USD 33,825 every two years and USD 2,550 quarterly,

respectively.

(2) As at 31 December 2007 and 2006, the subsidiary is required to pay a fee to the Offi ce of the

Securities and Exchange Commission (“SEC”) with regard to the operation of businesses as

licensed by the SEC whereby the Company is charged a fee at a rate of 1 percent of total fee and

service income but the fee shall not be less than Baht 500,000 per annum and not more than Baht

5,000,000 per annum.

(3) As at 31 December 2007, the subsidiary has a Computer Program License Agreement which

requires remuneration and system maintenance fees totalling Baht 1.2 million (31 December

2006 : nil).

39. BANK GUARANTEES

As at 31 December 2007 and 2006, there were outstanding bank guarantees of Baht 0.9 million and 0.9 million,

respectively, issued by banks on behalf of the Company in the normal course of business of the Company.

40. GUARANTEE AGREEMENT

On 14 December 2004, the Company and an overseas subsidiary entered into the Master Guarantee Agreement

with an overseas fi nancial institution whereby the overseas fi nancial institution agrees to guarantee debt

instruments issued by the Company in an amount not exceeding Baht 1,000 million. Th e guarantee period is

from 15 January 2005 to 15 January 2010, and extendable for a further 2 years ending 15 January 2012. Th e

Company and its subsidiary have commitments to pay the following fees over the guarantee period.

(a) Guarantee fee at the rate of 2 percent per annum of the utilised portion of the facility and, whenever the

credit rating of the Company is lower than that on the agreement date, an additional 0.15 basis points

will be charged for each notch it has fallen,

(b) Monitoring fee of EUR 10,000 per annum,

(c) If the Company does not utilise the full amount of the facility, the Company and its subsidiary have to

pay a commitment fee at the rate of 1 percent of the unutilised portion per annum, and

(d) If the Company does not utilise the full amount of the facility and cancel the remaining facility, the

Company and its subsidiary have to pay a cancellation fee at the rate of 1 percent of the cancelled

amount.

Furthermore, the Company has been required to maintain various fi nancial ratios as specifi ed in the agreement

since 15 January 2005, and to report such ratios to the fi nancial institution every quarter-end. Th e Company

has pledged 50,000 preference shares of Finansa Fund Management Ltd. as security against the guarantee

agreement.

However, as at 31 December 2007, the Company had a debt service coverage ratio of 0.4 to 1, which breached

the required covenant. Th e Company’s management will request for a waiver from the fi nancial institution


and expects that the waiver will be granted as earlier during the year. However, should the Company not be

able to get the waiver, the management believes that it will not have a signifi cant impact to the consolidated

and separate fi nancial statements for the year ended 31 December 2007 since the guarantee agreement is for

short-term bills of exchange issued by the Company, which is presented as “Current Liabilities” in the balance

Sheet.

As at 31 December 2007, the Company and its subsidiary already utilised such guarantee facility of Baht 240

million (31 December 2006: Baht 200 million) for bills of exchange issued by the Company.

41. RELATED PARTY TRANSACTIONS

41.1 Signifi cant business transactions incurred during the years

During the years, the Company had signifi cant business transactions with its related parties which

have been concluded on commercial terms and bases agreed upon in the ordinary courses of businesses

between the Company and those parties. Below is a summary of those transactions.

41.1.1 Amounts of related party transactions incurred during the years ended 31 December 2007 and

2006 were as follows :-




statements

Separate fi nancial

statements

For the years ended

31 December

For the years ended

31 December Pricing policies

Relationship 2007 2006 2007 2006

Income from fi nancial and

investment advisory businessess

Management fee and service

income


Ltd.

Subsidiary - - 69,000 69,000 At the prices/rates

agreed by both

parties, which is

determined based

on estimated time

spent and cost

incurred for each

company plus

margin

Finansa Securities Limited Subsidiary - - 41,000 44,000

Finansa Credit Limited Subsidiary - - 21,000 18,000


Limited

Subsidiary - - 7,000 7,000

Finansa Singapore Pte Ltd. Subsidiary - - 600 800

Finansa (Cambodia) Ltd. Subsidiary - - 140 140

Finansa Hong Kong Limited Subsidiary - - 140 140


Holdings Ltd.

Subsidiary - - 140 140

Finansa Science & Technology Subsidiary - - 35 -

(Beijing) Co., Ltd.

Finansa Investment Consulting Subsidiary - - 35 -

(China) Co., Ltd.

Th e Asian Debt Fund, Ltd. Related

by way of

shareholding

236,862 238,314 - - See Note 41.1.5 (a)

Finansa Capital Ltd. Associated

company

15,875 22,003 - - See Note 41.1.5 (b)

Th e Vietnam Equity Fund Related

by way of

shareholding

32,973 14,463 - - See Note 41.1.5 (c)

Siam Investment Fund Related

by way of

shareholding

- 4,742 - - See Note 41.1.5 (d)

285,710 279,522 139,090 139,220




statements

Separate fi nancial

statements

For the years ended

31 December

For the years ended


Relationship 2007 2006 2007 2006

Interest income

Finansa Credit Limited Subsidiary - - 3,435 2,606 Same rates the

subsidiary

pays to general

depositors

Finansa Securities Limited Subsidiary - - 1,359 171 5.00 % per

annum

Finansa Fund Management Ltd. Subsidiary - - 12,216 46,687 6-month Libor +

2.75%, Average

MLR – 1%

- - 17,010 49,464

Income from securities business

Brokerage fees Same rates the

subsidiary

charges

to general

customers

Finansa Life Assurance Co.,

Ltd.

Related by way

of shareholding

82 198 - -

Siam Investment Fund Related by way

of shareholding

56 33 - -

Siam Investment Fund II, L.P. Related by way

of shareholding

95 - - -

Related persons Directors of

the Company

and its related

companies,

including

persons

with close

relationships to

these directors

1,562 1,916 - -

1,795 2,147 - -

Other income

Rental income Market prices

Finansa Credit Limited Subsidiary - - 5,431 3,361



Limited

Subsidiary- - 4,599 4,333

- - 13,628 17,037



Consolidated

fi nancial statements

Separate fi nancial

statements

For the years ended

31 December

For the years ended


Relationship 2007 2006 2007 2006

Interest expenses

Finansa Securities Limited Subsidiary - - 182 6,708 4.875 - 5.00% per annum

(2006: 4.25% - 5.25%

per annum)


Limited

Subsidiary - - 2,779 2,393 5.00% - 6.00% per

annum (2006: 3.60%

- 6.00%

per annum)

Prospect SPC Co., Ltd. Subsidiary - - 42 520 5.90% per annum

Finansa Life Assurance Co., Ltd. Related by way

of shareholding

4,551 3,320 4,551 3,320 4.50% - 6.00% per annum

(2006: 5.00% - 6.00%

per annum)

JP-One Asset Co., Ltd Associated

Company

1,397 512 - - Same rates the subsidiary

pays to general depositors

Related persons Directors of

the Company

and its related

parties,

including

persons

having close

relationship

with these

directors

2,430 1,720 - - Same rates the subsidiary

pays to general depositors

8,378 5,552 7,554 12,941

41.1.2 For year ended 31 December 2007, the Company and its subsidiaries paid salary, meeting

allowance and gratuities to their directors and management totaling Baht 61.3 million (Th e

Company only : Baht 19.2 million).


41.1.3 Th e Company, its subsidiaries and related parties/persons have securities trading transactions

via a subsidiary engaging in the securities business. Th e amounts of brokerage fees paid to that

subsidiary for the years ended 31 December 2007 and 2006 are as follows :-


For the years ended

31 December

2007 2006

Brokerage fee paid to a subsidiary engaging in securities business Th e Company, subsidiaries and related parties/persons 8.1 13.5

Th e Company only 6.2 10.9

41.1.4 In 2007, the Company has entered into service agreements with 10 subsidiaries (2006: 8

subsidiaries). Th ese contracts require the Company to provide services, including management,

marketing, and other business operation support, to the subsidiaries. Th e Company charged

service fees for each subsidiary for the years ended 31 December 2007 and 2006 as follows :-


2007 2006

Company Name Period of contract Annual Fee Period of contract Annual Fee

Finansa Fund Management Ltd. 1 January - 31 December

2007

69,000 1 January - 31 December

2006

69,000

Finansa Securities Limited 1 January - 31 December

2007


2006

44,000

Finansa Credit Limited 1 January - 31 December

2007


2006

18,000


Limited

1 January - 31 December

2007


2006

7,000

Finansa Singapore Pte Ltd. 1 January - 30 September

2007

600 1 January - 31 December

2006

800

Finansa (Cambodia) Ltd. 1 January - 31 December

2007


2006

140

Finansa Hong Kong Limited 1 January - 31 December

2007


2006

140


Holdings Ltd.

1 January - 31 December

2007


2006

140

Finansa Science & Technology

(Beijing) Co., Ltd.

1 October - 31 December

2007

35 - -

Finansa Investment Consulting

(China) Co., Ltd.

1 October - 31 December

2007

35 - -

41.1.5 Overseas subsidiaries have entered into service agreements with their related parties as follows :-

(a) ADF Management, Ltd. (“ADFM”) entered into an advisory agreement with Th e Asian

Debt Fund, Ltd. (“TADF”). TADF pays a monthly advisory fee to ADFM in an amount

equal to 1.5% of the net asset value of TADF.

(b) Finansa Fund Management Ltd (“FFM”) entered into a service agreement with Finansa


Capital Ltd. (“FCL”), an associated company of which FFM agrees to provide the

personnel, services and facilities required by FCL and FCL agrees to pay an annual fee

equal to the sum of (i) direct or attributable costs and deductions, and (ii) indirect costs

and deductions with respect to the services provided by FCL. Th e fee is to be determined

on the basis of FCL’s operating budget.

(c) FFM entered into an investment advisory agreement with Th e Vietnam Equity Fund

(“VEF”) where VEF pays to FFM an advisory fee, payable monthly in advance, in an

amount equal to:

(i) During the commitment period 15 July 2005 to 15 July 2008, 2% per annum of

the committed capital.

(ii) Th ereafter, 2% per annum of (a) the amount of the remaining committed capital

less (b) amounts written off by VEF with the approval of the Board of Directors.

Following the second Amendment Agreement of VEF, advisory fee is changed, eff ective

from 1 July 2007 onwards, to be an amount equal to 2% per annum of (i) the committed

capital currently invested by the Fund plus (ii) the amount of committed capital at the

time of payment which is for a follow-on investment currently existed.

In addition, FFM is also entitled to receive a performance fee of 20% of the amount

by which distributions to shareholders exceed the rate of return as specifi ed in the

agreement.

(d) FFM entered into an investment advisory agreement with Siam Investment Fund by

which FFM will receive an annual fee equal to the sum of (i) advisory fees in an amount

equal to 2 percent per annum of the contributed capital of the respective funds, and (ii)

performance fees of 20 percent of the amount by which distributions to shareholders

exceed the rate of return as specifi ed in the agreement. However, there was no advisory

fee charged for 2007 since Siam Investment Fund is in process of being liquidated.

41.1.6 On 31 March 2006, the Company entered into an agreement to be assigned rights over

receivables due from a debtor of a subsidiary engaging in fi nance business. Th e transfer price

is equal to the outstanding balance on the assignment date of approximately Baht 57 million.

Th e outstanding balance due from that debtor as at 31 December 2007 and 2006 amounted

to approximately Baht 48 million and Baht 54 million, respectively, which is presented under

the caption of “Loans to other parties” in the balance sheets. Th e repayment will be made on a

monthly basis until 2011. Th ere is no provision set up because this debtor has no overdue status

and the management expects no loss will be incurred.

41.1.7 During 2006, a subsidiary had the following transactions with a related party which is the fund

being in the process of liquidation.

(a) Purchased 360,000 ordinary shares of a company, which are non-marketable equity

securities for Baht 38.43 million.

(b) Being transferred of claims over receivables by court’s judgement to settle the amounts of

Baht 7.53 million due to the subsidiary by that fund.


41.2 Outstanding balances at the balance sheet dates

Th e outstanding balances of transactions between the Company and its subsidiaries with their related

parties as at 31 December 2007 and 2006 can be summarised as follows :-



Relationship

31 December

2007

31 December

2006

31 December

2007

31 December

2006

Loans, receivables and accrued interest receivables - fi nance and securities businesses

Related persons Directors of the

Company and its related

parties, including

persons having close

relationship to these

directors

15,616 11,380 - -

15,616 11,380 - -

Short-term loans and advances to related parties


Finansa Credit Limited Subsidiary - 40,000 -

Prospect SPC Co., Ltd. Subsidiary - - 70 -



Finansa Fund Management Ltd. Subsidiary - - - -

Finansa Capital Ltd. Associated company 7,434 2,853 - -

Th e Vietnam Equity Fund Related by way of

shareholding

268 1,249 - -

Siam Investment Fund II, L.P. Related by way of

shareholding

923 - - -

Siam Investment Fund III, L.P. Related by way of

shareholding

9,592 9,189 - -

Related persons Directors of the

Company and its related

parties, including

persons having close

relationship to these

directors

645 23 - -

18,862 13,314 141,170 90,217

Service income receivables - presented as current assets



Finansa Singapore Pte Ltd. Subsidiary - - - 215

PT Finansa (Indonesia) Holdings Ltd Subsidiary - - - 37

Finansa Science & Technology (Beijing) Co., Ltd. Subsidiary - - 37 -

Finansa Investment Consulting (China) Co., Ltd. Subsidiary - - 37 -

Th e Asian Debt Fund, Ltd. Related by way of

shareholding

- 152,636 - -

- 152,636 823 701




Relationship

31 December

2007

31 December

2006

31 December

2007

31 December

2006

Other current assets

Accrued interest receivables

Finansa Securities Limited Subsidiary - - 53 75

Finansa Credit Limited Subsidiary - - 12 -

Finansa Fund Management Ltd. Subsidiary - - - 12,153

- - 65 12,228

Other receivables

Finansa Securities Limited Subsidiary - - - 15,202

Th e Vietnam Frontier Fund Related by way of

shareholding and having

common director

- 14,048 - -

- 14,048 - 15,202

- 14,048 65 27,430

Long-term loans to a related party

Finansa Fund Management Ltd. Subsidiary - - - 594,544

- - - 594,544

Service income receivable - presented as non-current assets

Finansa Fund Management Ltd. Subsidiary - - 227,375 193,670

- - 227,375 193,670

Bills of exchange

Finansa Securities Limited Subsidiary - - 18,547 -

Finansa Asset Management Limited Subsidiary - - 48,383 49,399

Prospect SPC Co., Ltd. Subsidiary - - - 19,480

Finansa Life Assurance Co., Ltd. Related by way of

shareholding

128,978 29,809 128,978 29,809

128,978 29,809 195,908 98,688

Securities business payables

Related persons Directors of the Company

and its related parties,

including persons having

close relationship with these

directors

203 449 - -

203 449 - -

Borrowings and deposits

JP-One Asset Co., Ltd. Associated company 35,000 45,000 - -

Finansa Life Assurance Co., Ltd. Related by way of

shareholding

60,000 - - -




close relationship with these

directors

87,466 20,517 - -

182,466 65,517 - -




Relationship

31 December

2007

31 December

2006

31 December

2007

31 December

2006

Other current liabilities

Accrued interest payables

JP-one Asset Co., Ltd. Associated company 55 113 - -

Finansa Life Assurance Co.,

Ltd.

Related by way of

shareholding

90 - - -




close relationship with

these directors

295 169 - -

440 282 - -

Other account payable

Finansa Securities Limited Subsidiary - - 10,855 -

Share subscription payables


440 282 10,882 27

Even though service income receivables from Finansa Fund Management Ltd., a subsidiary, are payable

at call, the Company intends not to call service income receivables from Finansa Fund Management

Ltd., within 1 year counting from the balance sheet date. Th e Company therefore presented loans to and

service income receivables from such subsidiary as non-current assets in the balance sheets.

41.3 Movements of intercompany loans and borrowings

41.3.1 Short-term loans and advances to related parties

During the year ended 31 December 2007, the Company and its subsidiaries had movements

of short-term loans and advances to related parties as follows :-





31 December


Eff ect from

exchange

rate

31 December

2007

Finansa Capital Ltd. 2,853 28,512 (23,747) (184) 7,434

Th e Vietnam Equity Fund 1,249 4,405 (5,305) (81) 268

Siam Investment Fund II, L.P. - 923 - - 923

Siam Investment Fund III, L.P. 9,189 995 - (592) 9,592

Related persons 23 765 (141) (2) 645

13,314 35,600 (29,193) (859) 18,862




31 December


Eff ect from

exchange

rate

31 December

2007

Finansa Securities Limited 90,000 890,000 (880,000) - 100,000

Finansa Credit Limited - 2,676,000 (2,636,000) - 40,000

Prospect SPC Co., Ltd. - 197 (127) - 70

Finansa (Cambodia) Ltd. 176 129 - - 305

Finansa Hong Kong Limited 41 754 - - 795

Finansa Fund Management Ltd. - 39 (39) - -

90,217 3,567,119 (3,516,166) - 141,170

41.3.2 Long-term loans to related parties

During the year ended 31 December 2007, the Company had movements of long-term loans

to related parties as follows :-




31 December


Eff ect from

exchange

rate

31 December

2007

Finansa Fund Management Ltd. 594,544 - (594,544) - -

594,544 - (594,544) - -


On 28 March 2007, the Company converted loans granted to Finansa Fund Management Ltd.

of Baht 573 million into investments in redeemable preference shares of such subsidiary, as

discussed in Note 14.2 to the fi nancial statements.

41.3.3 Borrowings

During the year ended 31 December 2007, the Company and its subsidiaries had movements

of borrowings from related parties as follows :-




31 December


Amortisation

of premium/

discount

31 December

2007

Bills of exchange

Finansa Life Assurance Co., Ltd. 29,809 314,618 (220,000) 4,551 128,978

29,809 314,618 (220,000) 4,551 128,978

Borrowings and deposits

JP-one Asset Co., Ltd. 45,000 30,000 (40,000) - 35,000

Finansa Life Assurance Co., Ltd. - 60,000 - - 60,000

Related persons 20,517 79,649 (12,700) - 87,466

65,517 169,649 (52,700) - 182,466




31 December


Amortisation

of premium/

discount

31 December

2007

Bills of exchange

Finansa Securities Limited - 184,456 (166,989) 1,080 18,547

Finansa Asset Management Limited 49,399 96,205 (100,000) 2,779 48,383

Prospect SPC Co., Ltd. 19,480 - (19,522) 42 -

Finansa Life Assurance Co., Ltd. 29,809 314,618 (220,000) 4,551 128,978

98,688 595,279 (506,511) 8,452 195,908


42. FINANCIAL INFORMATION BY SEGMENT

Th e Company and its subsidiaries have been operating in four principal business segments ; (1) Financial

and investment advisory businesses, (2) Finance business (3) Securities business and (4) Asset management

business, which are organised and managed separately and carried out in various geographical areas. Although

its subsidiaries are registered and incorporated in various countries, their ultimate assets and investments are

mainly in Asia. Th erefore, no geographical segment information is presented.

Th e fi nancial information of the Company and its subsidiaries for the years ended 31 December 2007 and

2006 were presented by business segment as below.



Financial and

investment Asset

Elimination

of

advisory Finance Securities management inter-segment

businesses business business business revenues Consolidation

Revenue from external

customers 744,924 245,040 437,927 63,490 - 1,491,381

Inter segment revenues 156,236 - 36,444 2,779 (195,459) -

Total revenues 901,160 245,040 474,371 66,269 (195,459) 1,491,381

Segment income 512,282 30,087 130,552 25,254 (76,596) 621,579

Unallocated income

and expenses :

Other income 16,686

Servicing and

administrative

expenses (565,576)

Impairment loss on

investments (97,000)

Loss on letter of

guarantee issued

by a subsidiary (13,363)

Goodwill

amortisation (149,804)

Share of profi ts

in associated

companies 44,440

Interest expenses (96,843)

Income tax (19,908)

Minority interest (24,814)

Net loss (284,603)


As discussed in Note 14.3 to the fi nancial statements regarding the disposed subsidiaries during the year,

engaged in fi nancial and investment advisory businesses, revenue information under the “Financial and

investment advisory business” segment can be separated as follows :-



Th ese of

the existing

companies

Th ese of the

disposed

subsidiaries

Gain on

disposal of

subsidiaries Total

Revenue from external customers 214,574 261,419 268,931 744,924

Inter segment revenue 152,355 3,881 - 156,236

Total revenue 366,929 265,300 268,931 901,160



Financial and

investment Asset

Elimination

of

advisory Finance Securities management inter-segment

businesses business business business revenues Consolidation

Revenue from external

customers 545,011 271,397 363,287 45,013 - 1,224,708

Inter segment revenues 178,881 (398) 33,852 2,383 (214,718) -

Total revenues 723,892 270,999 397,139 47,396 (214,718) 1,224,708

Segment income 393,649 4,319 83,451 11,658 (107,015) 386,062

Unallocated income

and expenses :

Other income 9,382

Servicing and

administrative

expenses (429,883)

Impairment loss on

investments (161,321)

Goodwill

amortisation (22,051)

Share of profi t

in associated

companies 87,232

Interest expenses (88,828)

Income tax 43,852

Minority interest (7,342)

Net loss (182,897)


Transfer prices between the Company and its subsidiaries are set out in Note 41 to the fi nancial statements.

Asset and liability information of the Company and its subsidiaries as at 31 December 2007 and 2006 were

presented by business segment as follows:-


As at 31 December 2007

Financial

and

investment Asset

advisory Finance Securities management

businesses business business business Eliminations Consolidation

Assets

Loans, receivables

and accrued

interest

receivables

- fi nance and

securities

businesses, net - 2,579,090 818,469 - (10,857) 3,386,702

Loans to other

parties 160,627 - - - - 160,627

Investments - net 4,515,995 665,160 40,526 48,383 (2,787,102) 2,482,962

Premises and

equipment - net 226,595 9,191 87,650 6,324 - 329,760

Intangible assets 43,316 5,145 11,750 6,032 - 66,243

Other assets 1,119,469 961,268 770,508 26,429 (500,471) 2,377,203

Total assets 6,066,002 4,219,854 1,728,903 87,168 (3,298,430) 8,803,497

Total liabilities 2,563,454 3,688,018 942,380 10,745 (761,913) 6,442,684




Financial and

investment Asset

advisory Finance Securities management

businesses business business business Eliminations Consolidation

Assets

Loans,

receivables

and accrued

interest

receivables

- fi nance and

securities

businesses,

net - 1,946,304 575,290 - - 2,521,594

Loans to other

parties 162,686 - - - - 162,686

Investments

- net 4,446,214 1,294,241 176,589 49,399 (2,187,373) 3,779,070

Premises and

equipment

- net 270,578 5,934 90,739 8,340 - 375,591

Intangible assets 56,214 2,500 12,274 418 - 71,406

Other assets 1,437,679 934,351 470,458 24,313 (831,915) 2,034,886

Total assets 6,373,371 4,183,330 1,325,350 82,470 (3,019,288) 8,945,233

Total liabilities 3,072,958 3,737,716 571,771 7,690 (1,224,528) 6,165,607

43. PROMOTIONAL PRIVILEGES

By virtue of the provisions of the Board of Investment Promotion (“BoI”) Act B.E. 2520, under the promotion

certifi cate No. 1394(2)/2545 dated 25 June 2002, the Company was granted certain promotional privileges for

its investments in its regional headquarters. Signifi cant privileges granted to the Company are as follows :-

(a) Corporate income tax exemption for profi ts derived from the BoI-promoted activities in an amount not

exceeding the sum invested excluding the value of land and working capital for a period of 5 years, starting

from the date of fi rst earning income from the promoted activities. Since the Company commenced its

provision of such services in the fourth quarter of the year 2002, the tax exemption will be valid until

2007.

(b) If the Company incurs losses during the tax exemption period, it is permitted to carry forward such loss

to off set against future taxable profi t for a period of 5 years after the tax exemption period. It may deduct

such loss against the profi t of any one or more fi scal years.

(c) Dividend received from profi ts generated by the BoI-promoted activities is exempted from income tax

during the tax exemption period.

(d) Th e Company is permitted to remit or repatriate foreign currency abroad.

Th e Company must strictly comply with the conditions stipulated in the promotional certifi cate.


Total service income of the Company for the years ended 31 December 2007 and 2006, classifi ed by the BoI-

promoted and non-BoI activities as follows :-



For the year ended 31 December 2007 For the year ended 31 December 2006

Domestic Overseas Total Domestic Overseas Total

Revenue from BoI-promoted

activities 57,500 58,450 115,950 69,000 70,220 139,220

Revenue from non-BoI activities 11,500 11,640 23,140 1,691 - 1,691

69,000 70,090 139,090 70,691 70,220 140,911

44. FINANCIAL INSTRUMENTS

44.1 Financial risk management

Th e Company’s and its subsidiaries’ fi nancial instruments, as defi ned under Th ai Accounting

Standard No. 48 “Financial Instruments: Disclosure and Presentations”, principally comprise cash and cash

equivalents, securities purchased under resale agreements, investments, receivable from the Clearing

House, loans and receivables-fi nance and securities businesses, loans to other parties, short-term/long-

term loans and advances to related parties, receivables transferred from another securities company,

service income receivables, deposits subject to restrictions, guarantee for derivative contracts, deposit for

investment, bills of exchange, securities business payables, liabilities under fi nance lease agreements,

short-term/long-term loans and deposits. Th e fi nancial risks associated with these fi nancial instruments

and how they are managed is described below.

Credit risk

Th e Company and its subsidiaries are exposed to credit risk with respect to (a) lending,

(b) investments in debt securities and (c) credit terms given to customers. Th e Company and its

subsidiaries therefore manage and control the risk by having in place the lending and investment policies,

credit control procedures and credit term policy. Th e Company and its subsidiaries therefore expect such

risk will be at the manageable level. However, the subsidiary engaging in the fi nance business has loan

concentration risk as most of the loans are granted to customers in (a) manufacturing and commerce

industry (b) hire-purchase receivables, and (c) real estate and construction industry.

Th e maximum exposure to credit risk is limited to the carrying amounts of the outstanding

balances of those transactions as stated in the balance sheet. In addition, such subsidiary has the credit-

related risk, which relates to off -balance sheet commitments incurred as a result of loan guarantees and

other guarantees. As at 31 December 2007 and 2006, a subsidiary had commitments from aval to bills

and loan guarantees totalling of Baht 139 million and Baht 50 million, respectively. As at 31 December

2007, provision for liabilities approximately of Baht 13.4 million was recorded by the subsidiary based

on an estimation of losses for letter of guarantee issued by the subsidiary as described in Note 38.1 to the

fi nancial statements (31 December 2006 : nil).

Interest rate risk

Th e Company and its subsidiaries expose to interest rate risk primarily with respect to cash and cash

equivalents, securities purchased under resale agreements, investments in debt securities, loans and

receivables, loans to other parties, deposit subject to restrictions, bills of exchange, liabilities under

fi nance lease agreements, borrowings and deposits and so on. Although most of the Company’s fi nancial


assets and liabilities bear fi xed interest rates but those fi nancial assets and liabilities have remaining

periods to repricing dates and/or maturity dates within one year and/or available for sale or trading in

debt securities, thus the interest rate risk is expected to be low.

As at 31 December 2007 and 2006, fi nancial assets and liabilities classifi ed by interest rate types, are as

follows :-



Outstanding balances of fi nancial instruments as at 31 December 2007

DescriptionFloating

interest rateFixed

interest rateNon-interest

bearing Total

Financial assets

Cash and cash equivalents 125 1 192 318

Securities purchased under resale agreements - 700 - 700

Investments (1) 956 479 1,343 2,778

Receivables from the Clearing House - Th ailand Securities Depository Center - - 309 309

Loans and receivables - fi nance and securities businesses (2) 532 2,809 450 3,791

Loans to other parties 48 113 - 161

Short-term loans and advances to related parties - - 19 19

Deposit for investment - - 531 531

Service income receivables - - 15 15

Deposits subject to restrictions - 1 - 1

Guarantees for derivative contracts 3 - - 3

Financial liabilities

Bills of exchange - 1,042 - 1,042

Bank overdraft 98 - - 98

Short-term loans - 25 - 25

Payable to the Clearing House - Th ailand Securities Deposit Center - - 182 182

Securities business payables - - 577 577

Liabilities under fi nance lease agreements - 14 - 14

Borrowings and deposits - 3,368 - 3,368

Long-term loans 915 - - 915

Financial derivatives

Interest rate cap (3)

Floating rate payee 1,800 (4) - - 1,800

Credit default swap contracts - Sold - 675 - 675

(1) Of investments bearing no interest, the Company and its subsidiaries already set aside allowance for impairment loss

of Baht 295 million.(2) Of the loans and receivables, totals of Baht 252 million carrying interest at fl oating rates and Baht 257 million

carrying fi xed interest rates are loans and receivables from which the subsidiary has ceased recognition of income.(3) Amounts shown are notional amounts used as a base in calculating interest. Th ere is no settlement of notional

amount. (4) Of the notional amounts of Baht 900 million, there is no interest received during the fi rst 2-year investment period

until 1 October 2007.




Outstanding balances of fi nancial instruments as at

31 December 2006

Floating Fixed Non-interest

Description interest rate interest rate bearing Total

Financial assets


Securities purchased under resale agreements - 760 - 760

Investments (1) 1,293 1,235 1,507 4,035

Receivables from the Clearing House - Th ailand

Securities Depository Center - - 37 37

Loans and receivables - fi nance and securities businesses (2) 638 1,662 349 2,649


Short-term loans and advances to related parties - - 13 13

Receivables transferred from another securities company - 12 - 12

Service income receivables - - 164 164


Guarantees for derivative contracts 4 - - 4


Bills of exchange - 657 - 657

Short-term loans - 25 - 25

Securities business payables - - 374 374

Liabilities under fi nance lease agreements - 17 - 17

Borrowings and deposits - 3,491 - 3,491

Long-term loans 1,083 150 - 1,233



Floating rate payee 1,800 (4) - - 1,800

Forward exchange contracts - Bought - - 198 198

Credit default swap contracts - Sold - 722 - 722

(1) Of investments bearing no interest, the Company and its subsidiaries already set aside allowance for impairment of

Baht 256 million.(2) Of the loans and receivables, totals of Baht 123 million carrying interest at fl oating rates and Baht 141 million

carrying fi xed interest rates are loans and receivables from which the subsidiary has ceased recognition of income.(3) Amounts shown are notional amounts used as a base in calculating interest. Th ere is no settlement of notional

amount. (4) Of the notional amounts of Baht 900 million, there is no interest received during the fi rst 2-year investment period

until 1 October 2007.





31 December 2007



Financial assets

Cash and cash equivalents 28 - 7 35

Investments (1) - - 2,488 2,488


Short-term loans and advances to related

parties - 140 1 141


Long-term loans to related party - - - -

Service income receivables from related party - - 228 228


Bills of exchange - 1,109 - 1,109

Long-term loans 120 - - 120


Interest rate cap(2)

Floating rate payee 900 - - 900(1) Of the investments bearing no interest, the Company set aside allowance for impairment of Baht 509 million.

(2) Amounts shown are notional amounts used as a base in calculating interest. Th ere is no settlement of notional

amount.





31 December 2006



Financial assets

Cash and cash equivalents 7 - 113 120

Investments (1) - 50 1,552 1,602


Short-term loans and advances to related parties - 90 - 90

Long-term loans to related party 595 - - 595


Service income receivables from related party - - 194 194


Bills of exchange - 726 - 726

Long-term loans 200 150 - 350



Floating rate payee 900 - - 900(1) Of the investments bearing no interest, the Company set aside allowance for impairment of Baht 24

million.(2) Amounts shown are notional amounts used as a base in calculating interest. Th ere is no settlement of

notional amount.


As at 31 December 2007 and 2006 the fi xed interest rate fi nancial instruments which have new repricing

dates or maturity dates (whichever are sooner) after the balance sheet dates, are as follows:-




Remaining periods to repricing dates

or maturity dates

Description At call

Less

than

1 year

1 – 5

years

Over 5

years

No

maturity Total

Interest

rate

Financial assets %

Cash and cash equivalents 1 - - - - 1 2.25

Securities purchased under resale

agreements - 700 - - - 700 3.3

Investments 17 242 220 - - 479 1.2-35.0

Loans and receivables - fi nance and

securities businesses (1) 471 1,438 891 9 - 2,809 3.8-24.0

Loans to other parties 18 94 1 - - 113 5.0-9.5

Deposits subject to restrictions - 1 - - - 1 0.5


Bills of exchange - 1,042 - - - 1,042 4.25-6.25

Short-term loans 25 - - - - 25 3.5

Liabilities under fi nance lease

agreements - 5 9 - - 14 7.75

Borrowings and deposits 160 3,016 192 - - 3,368 2.8-5.5

Financial derivative

Credit default swap contracts - Sold - - 675 - - 675 0.31

(1) Of the loans and receivables, totals of Baht 107 million and Baht 150 million for which the new

repricing date or maturity date (whichever is sooner) are under “at call” and “less than 1 year”,

respectively, are loans and receivables from which the subsidiary has ceased recognition of income.






or maturity dates

Description At call

Less

than

1 year

1 – 5

years

Over 5

years

No

maturity Total

Interest

rate

Financial assets %

Cash and cash equivalents 4 - - - - 4 3.25

Securities purchased under resale

agreements - 760 - - - 760 4.9

Investments - 406 582 247 - 1,235 1.2-11.0

Loans and receivables – fi nance and

securities businesses (1) 323 1,317 22 - - 1,662 4.0-21.0

Loans to other parties 18 91 - - - 109 5.0-9.5

Receivables transferred from another

securities company 12 - - - - 12 6.0



Bills of exchange - 657 - - - 657 5.1-6.5

Short-term loans 25 - - - - 25 3.5

Liabilities under fi nance lease

agreements - 5 12 - - 17 8.0

Borrowings and deposits 371 2,992 128 - - 3,491 2.5-5.7

Long-term loans - 150 - - - 150 4.0

Financial derivative

Credit default swap contracts - Sold - - 722 - - 722 0.31

(1) Of the loans and receivables, totals of Baht 91 million and Baht 50 million for which the new

repricing date or maturity date (whichever is sooner) are under “at call” and “less than 1 year”,

respectively, are loans and receivables from which the subsidiary has ceased recognition of income.






or maturity dates

Description At call

Less

than

1 year

1 – 5

years

Over 5

years

No

maturity Total

Interest

rate

Financial assets %

Loans to other parties - 94 1 - - 95 9.0-9.5

Short-term loans and advances to

related parties 140 - - - - 140 2.75-4.875



Bills of exchange - 1,109 - - - 1,109 4.5-5.5





or maturity dates

Description At call

Less

than

1 year

1 – 5

years

Over 5

years

No

maturity Total

Interest

rate

Financial assets %

Investments - 50 - - - 50 4.9

Loans to other parties - 77 - - - 77 9.4-9.5

Short-term loans and advances to

related parties 90 - - - - 90 5.0



Bills of exchange - 726 - - - 726 5.1-6.5

Long-term loans - 150 - - - 150 4.0


In addition, the average balances of the fi nancial assets and liabilities of a subsidiary engaging in fi nance

business which generate revenues and incur expenses, respectively, calculated based on the average

balances outstanding during the years, and the average interest and dividend rate for the years ended 31

December 2007 and 2006, are as follows :-


For the year ended

31 December 2007

For the year ended

31 December 2006

Average Interest Average Average Interest Average

outstanding and rate outstanding and rate

Description balance dividend (Percent) balance dividend (Percent)

Performing fi nancial assets

Cash and cash equivalents 81 - - 98 - 0.3

Loans to fi nancial institutions - - - 95 5 5.1

Securities purchased under

resale agreements 586 24 4.1 1,280 63 4.9

Investments 1,196 62 5.2 1,204 69 5.7

Loans and receivables 2,406 156 6.5 1,990 151 7.6

Guarantees for derivative

contracts - - - 86 5 5.5

Performing fi nancial liabilities

Borrowings and deposits 3,642 155 4.2 4,206 192 4.6

Liquidity risk

Liquidity risk is the risk that the Company and its subsidiaries will be unable to liquidate fi nancial assets and/or

procure suffi cient funds to discharge obligations in a timely manner, resulting in a fi nancial loss.

Th e periods to the maturity dates of fi nancial instruments held as of 31 December 2007 and 2006, counting from

the balance sheet date, are as follows :-





Within 1 - 5 Over No

Description At call 1 year years 5 years maturity Total

Financial assets

Cash and cash equivalents 318 - - - - 318

Securities purchased under resale agreements - 700 - - - 700

Investments (1) 676 242 458 973 429 2,778

Receivables from the Clearing House -

Th ailand Securities Depository Center - 309 - - - 309

Loans and receivables - fi nance and

securities businesses (2) 610 1,987 1,115 79 - 3,791

Loans to other parties 18 102 41 - - 161


parties 19 - - - - 19

Deposit for investment - 531 - - - 531

Service income receivables 15 - - - - 15

Deposits subject to restrictions - 1 - - - 1

Guarantees for derivative contracts - - 3 - - 3


Bills of exchange - 1,042 - - - 1,042

Bank overdraft 98 - - - - 98

Short-term loans 25 - - - - 25

Payable to the Clearing House - Th ailand

Securities Depository Center - 182 - - - 182

Securities business payables - 577 - - - 577

Liabilities under fi nance lease agreements - 5 9 - - 14

Borrowings and deposits 160 3,016 192 - - 3,368

Long-term loans - 120 - 795 - 915

(1) Of the investments at call and no maturity, the Company and its subsidiaries set aside allowance for impairment

of Baht 270 million and Baht 25 million, respectively.

(2) Of the loans and receivables which mature at call, less than 1 year and in 1-5 years of Baht 246 million

and Baht 222 million and Baht 41 million, respectively, represent default loans from which a subsidiary

has ceased recognition of income. Th erefore, the term of loan repayment depends upon the results of debt

restructuring.







Financial assets


Securities purchased under resale agreements - 760 - - - 760

Investments (1) 785 467 1,106 1,263 414 4,035

Receivables from the Clearing House -

Th ailand Securities Depository Center - 37 - - - 37

Loans and receivables - fi nance and securities

businesses (2) 412 1,835 297 105 - 2,649

Loans to other parties 18 99 46 - - 163


parties 13 - - - - 13

Receivables transferred from another securities

company 12 - - - - 12

Service income receivables 159 5 - - - 164


Guarantees for derivative contracts - - 4 - - 4


Bills of exchange - 657 - - - 657

Short-term loans 25 - - - - 25

Securities business payables - 374 - - - 374

Liabilities under fi nance lease agreements - 5 12 - - 17

Borrowings and deposits 371 2,992 128 - - 3,491

Long-term loans - 230 120 883 - 1,233

(1) Of the investment at call, the Company and its subsidiaries set aside allowance for impairment of Baht 256

million.

(2) Of the loans and receivables which mature at call and in 1-5 years of Baht 173 million and Baht 50 million,

respectively, represent default loans from which a subsidiary has ceased recognition of income. Th erefore, the

term of loan repayment depends upon the results of debt restructuring.







Financial assets


Investments (1) 91 - - - 2,397 2,488

Loans to other parties - 102 41 - - 143

Short-term loans and advances to related parties 141 - - - - 141

Long-term loans to related parties - - - - - -


Service income receivables from related parties 228 - - - - 228


Bills of exchange - 1,109 - - - 1,109

Long-term loans - 120 - - - 120

(1) Of the investments at call and no maturity, the Company set aside allowance for impairment of Baht 91

million and Baht 418 million, respectively.






Financial assets


Investments (1) 93 50 - - 1,459 1,602

Loans to other parties - 85 46 - - 131

Short-term loans and advances to related parties 90 - - - - 90

Long-term loans to related parties - - - - 595 595


Service income receivables from related parties - - - - 194 194


Bills of exchange - 726 - - - 726

Long-term loans - 230 120 - - 350

(1) Of the investments at call and no maturity, the Company set aside allowance for impairment of Baht 21

million and Baht 3 million, respectively.


Foreign exchange risk

Foreign exchange risk is the risk that changes in foreign exchange rates may result in changes in the value

of fi nancial instruments, and fl uctuations in revenues or the value of fi nancial assets and liabilities.

As at 31 December 2007 and 2006, the Company and its subsidiaries had foreign currency-denominated

assets and liabilities, which had not been hedged against foreign exchange risk, as follow :-

(Unit: in Th ousand unit)


31 December

2007

31 December

2006

31 December

2007

31 December

2006

Assets

US dollars 34,066 29,273 34 14,513

Euros 19,105 21,315 - -

Australian dollars - 1,898 - -

Vietnamese Dong 81,589 943,203 - -

Liabilities

US dollars 4,489 5,681 - -

Euros 16,320 18,671 - -

As at 31 December 2007 and 2006, average foreign exchange rates are summarised below :-

31 December

2007

31 December

2006

Baht/US dollar 33.7673 36.0932

Baht/Euro 49.3305 47.4592

Baht/Australian dollar 29.5494 28.5499

Baht/Vietnamese Dong 0.0021 0.0023

Equity position risk

Equity position risk is the risk that changes in the market prices of equity securities may result in changes

in the value of investments, and fl uctuations in revenues and/or the value of investments in equity

securities. Th e Company and its subsidiaries have the equity position risk, occurs from the investments

in domestic and overseas marketable equity securities, which the Company and its subsidiaries recognised

those investments at fair value in the balance sheet dates. Th e maximum amount of exposure to such risk

is the carrying value of those investments as at the balance sheet date.

44.2 Fair value of fi nancial instruments

Fair value represents the amount for which an asset could be exchanged or a liability settled between

knowledgeable and willing parties in an arm’s length transaction. Th e Company and its subsidiaries have

estimated the fair value of fi nancial instruments as follows :-


Cash and cash equivalents

Th e fair value of cash and cash equivalents are estimated equal to their carrying value.

Securities purchased under resale agreements/securities sold under repurchase agreements

Th e fair values of the securities purchased under resale agreements/the securities sold under repurchase

agreements are considered to approximate their carrying value since the interest rates approximate the

market interest rates and the maturity dates are within one month.

Investments

Th e fair values of the investments calculated, based on criteria as described in Notes 5.5 and 5.11 to the

fi nancial statements, except that the fair value of the held-to-maturity debt securities are estimated to be

the present value of cash to be received by the Company and its subsidiaries, discounted by the market

interest rate.

Loans, receivables and accrued interest receivables – fi nance business

Th e fair values of loans, receivables and accrued interest receivables are considered to approximate their

respective carrying values of loans, receivables and accrued interest receivables as described in Note 5.9



Th e fair values of loans to other parties are considered to approximate their respective carrying values

since their interest rates approximates the market interest rates plus risk premium.

Securities business receivables/Receivables transferred from another securities company/ Receivables

from the Clearing House/Short-term loans and advances to related parties

Th e fair values of securities business receivables, receivables transferred from another securities company,

receivables from the Clearing House and short-term loans and advances to related parties are considered

to approximate their respective carrying values since they have short maturities and/or their interest rates

are approximate to the market interest rates.

Deposit for investment

Th e fair value of deposit for investment is considered to approximate its respective carrying value.

Payables to the Clearing House/Securities business payables

Th e fair values of payables to the Clearing House and securities business payables are considered to

approximate their respective carrying values since they have short maturities.

Bills of exchange/Bank overdraft/Short-term loans/Borrowings and deposits

Th e fair values of bills of exchange, bank overdraft, short-term loans and borrowings and deposits are

considered to approximate their respective carrying values since their interest rates approximate the

current market interest rates and/or their maturities are short.


Liabilities under fi nance lease agreements

Th e fair values of liabilities under fi nance lease agreements are considered to approximate their respective

carrying values since their interest rates approximate the market interest rates.

Long-term loans

Th e fair values of long-term loans are considered to approximate their respective carrying values since

they carry fl oating market interest rates.

As at 31 December 2007 and 2006, the fair values of fi nancial assets and liabilities of the Company and

its subsidiaries, which are estimated in accordance with the criteria as mentioned above, are as follows:-


31 December 2007


statements

Separate fi nancial

statements

Description

Carrying

amount Fair value

Carrying

amount Fair value

Financial assets


Securities purchased under resale agreements 700 700 - -

Investments - net 2,483 2,483 1,979 1,979


Securities Depository Center 309 309 - -


businesses 3,387 3,387 - -

Loans to other parties 161 161 143 143

Short-term loans and advances to related parties 19 19 141 141

Deposit for investment 531 531 - -

Service income receivables 15 15 228 228

Deposits subject to restrictions 1 1 1 1

Guarantees for derivative contracts 3 3 - -


Bills of exchange 1,042 1,042 1,109 1,109

Bank overdraft 98 98 - -

Short-term loans 25 25 - -

Payable to the Clearing House - Th ailand


Securities business payables 577 577 - -

Liabilities under fi nance lease agreements 14 14 - -

Borrowings and deposits 3,368 3,368 - -

Long-term loans 915 915 120 120



31 December 2006


statements

Separate fi nancial

statements

Description

Carrying

amount Fair value

Carrying

amount Fair value

Financial assets


Securities purchased under resale agreements 760 760 - -

Investments - net 3,779 3,775 1,578 1,578




businesses 2,522 2,522 - -

Loans to other parties 163 163 131 131

Short-term loans and advances to related parties 13 13 90 90

Receivables transferred from another securities

company

12 12 - -

Service income receivables 164 164 194 194

Deposits subject to restrictions 1 1 1 1

Long-term loans to related party - - 595 595

Guarantees for derivative contracts 4 4 - -


Bills of exchange 657 657 726 726

Short-term loans 25 25 - -

Securities business payables 374 374 - -

Liabilities under fi nance lease agreements 17 17 - -

Borrowings and deposits 3,491 3,491 - -

Long-term loans 1,233 1,233 350 350

44.3 Financial derivatives

Th e Company and its subsidiaries entered into fi nancial derivative contracts in the normal course of

their businesses to manage the risks of the Company and its subsidiaries because of fl uctuations in

interest rates and exchange rates.


As at 31 December 2007 and 2006, fi nancial derivatives of the Company and its subsidiaries as classifi ed

by their maturities can be summarized as follows :-




Less than Over Less than Over

1 year 1 year Total 1 year 1 year Total

Interest rate cap

- Floating rate payee - 1,800 1,800 - 1,800 1,800

Forward exchange contracts

- Bought - - - 198 - 198

Credit default swap contract

- Sold - 675 675 - 722 722




Less than Over Less than Over

1 year 1 year Total 1 year 1 year Total

Interest rate cap

- Floating rate payee - 900 900 - 900 900

45. SUBSEQUENT EVENTS

As discussion in Note 22 to the fi nancial statements, on 22 February 2008 the subsidiary entered into the

Settlement Agreement to terminate its China Investment transactions and receive back USD 18 million within

30 days after the agreement date.

46. APPROVAL OF FINANCIAL STATEMENTS

Th ese fi nancial statements have been approved for issue by the Company’s Board of Directors on 28 February

2008.


Overview of Business Operations

Finansa Plc. and its subsidiaries provide a

comprehensive range of fi nancial services in the areas

of fund management, investment management and

advisory, securities brokerage, corporate fi nance to

selected corporate, institutional, individual customers

as well as funds in Th ailand and other countries in

Southeast Asia. As the parent company, the Company

provides support to its affi liates and subsidiaries in

many respects including organizational administration,

business and market planning, management and

development of information technology and human

resources, as well as research into investment

opportunities and analysis of economic conditions.

Such business activities of the Company, acting as the

regional headquarters of the group, are exempt from

income taxes as per privileges granted by the Board of

Investment. Th e activities of the Finansa Group can

be divided into the following four main areas:

Investment Advisory and ManagementProviding services to Finansa-sponsored foreign

funds engaged in direct investments, private equity

investments and investment in debt instruments in

Thailand and the region. In addition, providing

services to Thai provident funds, mutual funds and

private funds launched by the Group.

Investment BankingProviding financial advisory services including

fund raising, business and debt restructuring,

business alliance negotiations, business acquisitions,

and project financing. Currently, these types of

operations are carried out in Thailand only.

SecuritiesProviding securities related services such as

brokerage, underwriting and trading. Currently,

these areas of operation are carried out in Thailand

only.

FinanceProviding a wide range of loans covering commercial

and consumer loans, deposit taking and proprietary

fixed income and equity portfolios services. This

business area is aimed at supporting and extending

the group’s range of businesses and is carried out in

Thailand only.

Business Group Local Operations Overseas Operations

Investment Advisory & Management* FNS, FAM FFM**, FCL**, FHK

Investment Banking FSL

Securities FSL

Finance FC

* Excluding SIP and SIP III as they are not major providers of investment advisory and management business.** Providing services to SIF II, SIF III and VEF

The following table summarizes the overall business operations of the Finansa Group:


The Finansa Group consists of 14 companies and 2 representative offices (in Hanoi and Ho Chi Minh City

in Vietnam). The 14 companies comprise 4 local operating companies, 5 overseas operating companies and

5 non-operating companies. As the regional headquarters of the group, the Company determines management

and investment policies and support, controls, supervises and advises companies in the group in relation to

business planning and management. The aim is to create overall coherence for the group’s various operations

in investment advisory and management, securities, investment banking and finance. The Finansa Group

now consists of the following affiliates and subsidiaries:

100% 100% 99.40% 100% 100% 100%100%

Finansa PublicCompany Limited

(Thailand)

Finansa

Securities

Limited

(Th ailand)

Finansa

Credit

Limited

(Th ailand)

Finansa Asset

Management

Limited

(Th ailand)

Prospect

SPC

Limited

(Th ailand)

Finansa

(Cambodia)

Ltd.

(Cambodia)

Finansa

Hong Kong

Ltd.

(Hong Kong)

Finansa Fund

Management

Ltd.

(Cayman)

50% 50% 50% 100%

Siam Investment

Partners, L.P.

(Cayman)

Siam Investment

Partners III, L.P.

(Cayman)

Finansa

Capital Ltd.

(Cayman)

Finansa

Science and

Technology

(Beijing) Co., Ltd.

(China)

PT Finansa

(Indonesia)

Holdings Ltd.

(Mauritius)

Finansa

Investment

Consulting

(China) Co., Ltd.

(China)

100%100%


Companies Operating in Thailand

(1) Finansa Securities Limited (FSL) has

securities license no. (2) 476/2536 issued by the

Ministry of Finance to conduct all types of securities

business, namely: (1) acting as securities broker,

(2) securities trading, (3) acting as investment

advisor, and (4) securities offering and underwriting.

In addition, FSL is a financial advisory company

authorized by the SEC. It is Broker No. 33 with a

paid-up capital, as of 31 December 2007, of Baht

450 million.

(2) Finansa Credit Limited (FC), formerly

Primus Finance Co., Ltd, was purchased on 1

October 2002 from Ford Credit International Inc.

FC is a licensed financial institution regulated by

the Bank of Thailand. Its public deposits are

guaranteed by the FIDF, a government deposit

insurance organization. FC operates with a full

compliment of finance licenses, covering

commercial and consumer loans, deposit taking,

and corporate advisory services. As of 31 December

2007, FC had paid up capital of Baht 511

million.

(3) Finansa Asset Management Limited

(FAM), formerly known as Krungdhep Thanathon

Asset Management Co., Ltd. Finansa acquired

9,999,993 of FAM shares or 100% of total paid-

up capital from BFIT Securities Plc. in January

2005. FAM has mutual fund and private fund

licenses and is primarily involved in managing

domestic provident funds. At year-end 2007, FAM

had paid up capital of Baht 100 million.

Companies Operating Overseas

(1) Finansa Fund Management Limited (FFM)

is a company incorporated in the Cayman Islands

with paid-up capital of US$20,000 as of 31

December 2007. It operates the business of

investment and fund management for Finansa-

sponsored foreign funds that wish to invest in

Thailand and other countries in Southeast Asia.

(2) Finansa Capital Limited (FCL) is a special

purpose limited liability company established to

manage the investments of SIF II and SIF III. It is

incorporated in the Cayman Islands with paid-up

capital of US$1,000 as of 31 December 2007.

Shareholders consist of Capital Z Investment, L.P.,

a USD2.25 billion private equity fund which holds

50% of FCL’s shares and FFM, a subsidiary of the

Company, which holds the remaining 50% of the

shares.

(3) Siam Investment Partners, L.P. (SIP) is a

special purpose vehicle established solely to manage

the investments of SIF II. It is a limited partnership

incorporated in the Cayman Islands with a capital

contribution of USD575,030 as of 31 December

2007. Capital Z Investment, L.P. holds 50% of

the total interest in the limited partnership and

FFM holds the remaining 50%.

(4) Siam Investment Partners III, L.P. (SIP

III) is a special purpose vehicle established solely to

manage the investments of SIF III. It is a limited

partnership incorporated in the Cayman Islands,

of which Capital Z Investment, L.P. holds 50% of

the total interest in the limited partnership and

FFM holds the remaining 50%.


(5) Finansa Hong Kong Limited (FHK) is

a company incorporated in Hong Kong on 13

December 2004 with the objective to conduct

advisory business. As of 31 December 2007, the

company had a total registered and paid-up capital

of HK$100,000.

In November 2007, FFM sold its entire holding in

Finansa Singapore Limited and ADF Management

Limited together with BLR Management Pte. with

total book value of USD2.2million to a director of

the disposed subsidiaries at USD 10 million.

Non-Operating Companies

(1) Finansa (Cambodia) Limited (FCAM) is a

company incorporated in Cambodia with the

objective to analyze and manage investments in

Cambodia. As of 31 December 2007, the paid-up

capital is 20 million Riel, or approximately

USD8,000, with FNS holding 100% of the shares

in the company.

(2) PT Finansa (Indonesia) Holdings Limited

(FINDO-H) is a company incorporated in

Mauritius, with a registered capital of USD100,000

and paid-up capital of USD10,000, as of 31

December 2007, with FFM as the sole shareholder

of the company. The business of the company

involves acquiring and holding shares in other

companies.

(3) Prospect SPC Limited (PSPC) is a company

incorporated in Thailand on 23 September 2005

with the objective to conduct investment business.

As of 31 December 2007, the company had a total

registered and paid-up capital of Baht10,000.

(4) Finansa Investment Consulting (China)

Co., Ltd. (FIC) is a company incorporated in

China in March 2007 with the objective to provide

consulting, investment and financial services in the

People’s Republic of China. As of 31 December

2007, the company had a total registered capital of

USD7.08million which will be reduced to

USD1million after receiving the approval from the

Authority with FHK as the sole shareholder.

(5) Finansa Science and Technology (Beijing)

Co., Ltd. (FST) is a company incorporated in

China in May 2007 with the objective to provide

technical consulting and services in the People’s

Republic of China. As of 31 December 2007 with

FFM as the sole shareholder, the company had a

total registered and paid-up capital of USD 1

million.


Subsidiaries and Associated Companies

CompanyType of business

Type of shares

No. of shares issued

% of share

holding

1. Finansa Securities Ltd.

48/45 TISCO Tower,

North Sathorn Road, Silom, Bangrak,

Bangkok 10330

Tel. (662) 697-3800

Fax (662) 638-0300

Securities Ordinary 45 million shares 100%

2. Finansa Fund Management Ltd.

P.O. Box 309 Ugland House,

South Church Street, George Town,

Grand Cayman, Cayman Islands,

British West Indies

Offshore fund

investment

advisory

Ordinary 20,000 shares 100%

3. Finansa Credit Ltd.

48/21-22 TISCO Tower Floor 12A


Bangkok 10500

Tel. (662) 352-4200

Fax (662) 352-4299

Finance Ordinary 10,220,000

shares

100%

4. Finansa Asset Management Ltd.

48/21, 48/24 TISCO Tower Floor 12A


Bangkok 10500

Tel. (662) 352-4000

Fax (662) 352-4099

Fund

management

Ordinary 10,000,000 shares 100%

5. Finansa (Cambodia) Ltd.

House No.13, Street 306,

Phnom Penh, Kingdom of Cambodia

Investment

advisory

Ordinary 100 shares 100%

6. Finansa Capital Ltd.




British West Indies

Financial

advisory and

investment

management

Ordinary 1,000 shares 50%


CompanyType of business

Type of shares

No. of shares issued

% of share

holding

7. Finansa Hong Kong Ltd.

6/F., Greenwich Centre

260 King’s Road, Hong Kong

Advisory Ordinary 100,000 shares 100%

8. Siam Investment Partners, L.P.




British West Indies

General

partner of a

fund

- - 50%

9. PT Finansa (Indonesia) Holdings Ltd.

Suite G12, St. James Court,

St. Denis Street, Port Louise,

Mauritius

Investment Ordinary 1,000 shares 100%

10. Prospect SPC Co., Ltd.

48/29, 48/32 TISCO Tower Floor 16


Bangkok 10500

Investment Ordinary 1,000 shares 99.40%

11. Siam Investment Partners III, L.P.




British West Indies

General

partner of

a fund

- - 50%

12. Finansa Investment Consulting

(China) Co., Ltd.

Room 703, Tower C2, Oriental Plaza

1 East Chang An Avenue

Beijing 1007381 China

Consulting,

investment

and financial

services

- - 100%

13. Finansa Investment and Technology

(Beijng) Co., Ltd.

Room 210, No.2 (B) Building

11 Zhong Guang Cun Nan Da Jie

Haidian District

Beijing 1000081 China

Technical

consulting

and advisory

services

- - 100%


Management Report 2007

Th e Company’s consolidated statement of earnings for 2007 shows a net loss of Bt 284.6m or a loss per share of Bt

2.3, compared with a net loss of Bt 182.9m recorded in 2006, an increase in net loss of Bt 101.7m or 56%. Th e

Company recorded income from business operations totaling Bt 1,552.5m, increased by Bt 231.2m or 17% from Bt

1,321.3m last year. Cost, servicing and administrative expenses and interest expense were Bt 1,257.2m, decreased

by Bt 47.9m from Bt 1,305.0m in 2006. Th us, the Company and subsidiaries had a profi t from operations of Bt

295.3m, up by Bt 279.0m from a gross profi t of Bt 16.3m recorded last year.

However, the gain in operating profi t was off set by loan loss allowances to comply with the Bank of Th ailand

(BoT)’s guidelines in preparation for IAS39 and qualitative loan classifi cation Bt 275m, goodwill written off Bt

149.8m, impairment for investments Bt 97m, and provision for a letter of guarantee Bt 13.4m, resulting in a net

loss of Bt 284.6m for the year. By comparison, only impairment for investments Bt 161.3m, loan loss allowances

Bt 52.3m and goodwill written off Bt 22.1m were recorded in 2006.

Th e 2007 operational performance of the Company and its subsidiaries is summarised below.

1. Finansa recorded total income from fi nancial and investment advisory businesses of Bt 476.0m, representing

31% of total earnings of the Group. Th is was a drop of Bt 69.0m or 13% from 2006 resulting from declines

in gains on trading in securities/investments, fees and services income and interest and dividend income of Bt

34.9m, Bt 28.0m and Bt 6.1m, respectively.

Costs and expenses of Finansa’s fi nancial and investment advisory businesses amounted to Bt 293.0m, Bt

36.6m or 14% higher than in 2006 due mainly to increases of Bt 22.5m in fees and services expenses and Bt

14.1m in personnel expenses. Gross income earned from the fi nancial and investment advisory businesses was

therefore Bt 183.0m, Bt 105.6m or 37% lower than that in 2006.

2. Th e fi nance business generated total income of Bt 245.0m or 16% of the Group’s income, representing a

decrease of Bt 26.4m or 10% from 2006. Whilst an expansion in the lending portfolio especially in hire-

purchase loans led to a rise in interest income from hire-purchase, total interest and dividend income dropped

by Bt 45.3m following a decrease in the investment portfolio as well as a drop in interest rates in the market.

Th ere was no gain from interest rate swap contracts while Bt 12.3m was recorded last year. However, loss on

trading in securities/investment dropped by Bt 30.7m from 2006.

Th e fi nance business’ costs and expenses totaled Bt 201.5m, a fall of Bt 45.4m or 18% from 2006 because of a

decrease in borrowing expenses totaling Bt 57.0m following a decline in interest rates in the market. Personnel

expenses increased by Bt 13.6m from an expansion in hire-purchase business. Th erefore, Finansa’s fi nance

business reported a gross profi t of Bt 43.5m. However, after deducting Bt 275m of provisions for bad debts

and doubtful accounts set up following the BoT’s guidelines in preparation for IAS39 and qualitative loan

classifi cation and Bt 13.4m of provision for a letter of guarantee, the Company and subsidiaries reported a net

loss of Bt 244.9m from the fi nance business.

3. Income from securities business was Bt 437.9m, representing 28% of total earnings of the Group. Th e amount

reported was higher than that of 2006 by Bt 74.6m or 21% due to a rise in brokerage fees of Bt 132.7m

following an increase in brokerage market share from an average of 1.1% in 2006 to an average of 1.7% in

2007. Fees and services income from investment banking dropped by Bt 101.7m owing to the unfavorable

market situation.

Costs and expenses of the securities business amounted to Bt 338.9m, an increase of Bt 34.9m or 12% from

last year. Such rise came from an increase of Bt 26.8m in premises and equipment expenses as all 15 branches

recorded costs for the whole year and Bt 14.9m in personnel expenses following an increase in trading volume.

As a result, Finansa recorded gross earnings from the securities business at Bt 99.0m, representing an increase

of Bt 39.7m or 67% from that in 2006.


4. Th e asset management business generated total income of Bt 63.5m, or 4% of the Group’s income, mostly fees

and service income.

Costs and expenses of the asset management business totaled Bt 36.4m, slightly increased from that in 2006. Total cost consisting of personnel expenses, premises and equipment expenses and other expenses of Bt 31.2m, Bt 4.0m and Bt 1.2m, respectively. As a result, Finansa reported a gross profi t from the asset management business of Bt 27.1m compared to a gross profi t of Bt 13.6m recorded in 2006, representing a rise of 99%.

In 2007, Finansa disposed three of its subsidiaries which are Finansa Singapore Pte. Ltd. and ADF Management, Ltd. and its subsidiary (BLR Management Pte. Ltd.) Gain from the disposal was Bt.268.9m.

Impact from new accounting policy for investment in subsidiaries and associated companies

Since 1 January 2007, the Company changed its accounting policy for recording investments in subsidiaries and associated companies in the separate fi nancial statements from the equity method to the cost method, in compliance with Accounting Standard No. 44 (Revised 2007) regarding “Consolidated fi nancial statements and Separate Financial Statements”, under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate fi nancial statements under the cost method.

In this regard, the Company has restated the previous period’s separate fi nancial statements as though the investments in the subsidiaries and associated companies had originally been recorded using the cost method. Th e change has the eff ects of increasing net losses in the separate statement of income for the year ended 31 December 2007 by Bt 198m (Bt 1.61 per share) and decreasing net losses in the separate statement of income for the year ended 31 December 2006 by Bt 446m (Bt 3.61 per share). Th e cumulative eff ect of the change in accounting policy has been presented under the heading of “Cumulative eff ect of the change in accounting policy for investments in subsidiaries and associated companies” in the separate statements of changes in shareholders’ equity.

Th is change in accounting policy aff ects only the accounts related to investments in subsidiaries and associated companies in the Company’s separate fi nancial statements, with no eff ect to the consolidated fi nancial statements.

Profi tability Ratios

In 2007, Finansa recorded a net loss of Bt 284.6m or basic loss per share of Bt 2.30, compared with a net loss of Bt 182.9m or basic loss per share of Bt 1.48 in 2006. Net profi t to total income of the group was (18.3%) compared with (13.8%) in 2006. Th is resulted mainly from a larger increase in non-cash expense items even though the gross profi t recorded this year is higher. In addition, the return on average assets and return on average equity were

(3.2%) and (11.1%), respectively.

Financial Position

31 Dec 2007 31 Dec 2006Change

Amount %

Total Assets 8,803.5 8,945.2 (141.7) (2)

Liabilities and shareholder’s equity

• Total liabilities

• Total shareholders’ equity

6,442.7

2,360.8

6,165.6

2,779.6

277.1

(418.8)

4

(15)

Total Liabilities and Shareholders’ equity 8,803.5 8,945.2 (141.7) (2)

(Bt.million)


As of 31 December 2007, the Company and its subsidiaries had total assets of Bt 8,803.5m, a drop of Bt 141.7m or

2% from year-end 2006. Th e main components of the assets were Bt 5,275.9m of current assets and Bt 3,527.6m

of non-current assets representing 60% and 40% of total assets, respectively. Th e main items having signifi cant

changes are as follows.

• Loans, receivables and accrued interest receivables - fi nance and securities businesses totaled Bt 3,386.7m,

rose by Bt 865.1m or 34% from last year due to the expansion of the fi nance business loans, cash customer’s

account and margin loans.

• Net investments stood at Bt 2,483.0m, decreasing by Bt 1,296.1m or 34% from year-end 2006. Th e breakdown

of investments was Bt 970.1m of current investment (down by Bt 950.5m or a 50% drop from redemption

and the Group’s policy to reduce non-core business), Bt 293.8m of investments in associated companies and

funds (down by Bt 101.5m or a 26% drop from a decline in a fund’s investment portfolio) and Bt 1,219.1m

of long-term investments (down by Bt 244.1m or a 17% drop from disposal and additional impairment).

• Securities purchased under resale agreements, all of which were government bonds and BoT bonds, amounted

to Bt 700.0m, a drop of Bt 60.0m or 8% from the end of 2006.

• Deposit for investment was Bt 531.1m.

Liquidity

Cash and cash equivalents of the Company and its subsidiaries as of year-end 2007 totaled Bt317.7m, representing

a drop of Bt29.3m from year-end 2006 due to the following activities.

• Net cash from operating activities totaled Bt 152.8m resulting from changes in key operating assets and

liabilities, i.e. loans, receivables and accrued interest receivables rose by Bt 1,153.3m, current investments fell

by Bt 896.0m and securities business payables rose by Bt 202.9m.

• Net cash from investing activities totaled Bt 131.2m, coming mainly from cash received from a decrease of

Bt 348.6m in long-term investments, investments in subsidiaries and associated companies and investments

in related parties whilst cash paid out included Bt 188.4m for deposit for investment and Bt 40.2m for the

purchase of fi xed assets.

• Net cash used in the fi nancing activities totaled Bt 46.9m, resulting from cash paid out to repay long-term

loans and borrowings and deposits of Bt 343.5m and Bt 123.3m, respectively while cash increased from the

Company’s bills of exchange issuance of Bt 338.6m.

Th e current ratio of the Group as of 31 December 2007 was 0.97, declining from 1.13 as of year-end 2006. Th is

was due to reductions in liquid securities which are current investment securities and Government bonds and Bank

of Th ailand bonds. Th e Company management has placed a strong emphasis on risk and liquidity management.

Finansa Securities Ltd., a subsidiary, has to maintain its liquidity ratio in accordance with SEC’s net capital rule

(NCR). As of 31 December 2007, the subsidiary’s NCR was 68.9%, which is signifi cantly higher than the minimum

7% requirement set by the SEC.

Sources of Funds

Liabilities

As of 31 December 2007, the total liabilities of the Group were Bt 6,442.7m, an increase of Bt 277.1m, or 5%

from year-end 2006. Current liabilities were Bt 5,446.3m, representing 85% of total liabilities while the remaining

15% were non-current liabilities of Bt 996.4m. Th e major items having signifi cant changes are as follows.

• Bills of exchange were Bt 1,042.5m, rising by Bt 385.6m or 59% from the end of 2006.

• Long-term loans were Bt 915.3m, decreasing by Bt 317.2m or 26% from year-end 2006.


• Securities business payables and payable to the Clearing House stood at Bt 758.9m, rising by Bt 384.5m or

103%.

• Borrowings and deposits stood at Bt 3,368.1m, increasing by Bt 123.3m.

Shareholders’ Equity

At year-end 2007, shareholders’ equity was Bt 2,360.8m, a decrease of Bt 418.8m or 15% from 2006. Th is was

due mainly to a drop in retained earnings of Bt 284.6m derived from the net loss incurred in the year, a rise in

translation adjustment of Bt 80.2m and a rise in revaluation defi cit on investments of Bt 39.3m.

In 2005, the Board of Directors of the Company approved a program to buy back its own shares for liquidity surplus

management purposes. At year-end 2007, Finansa had bought back 1.49 million shares for a total consideration

of Bt25.0m. In this regards, the Company has already appropriated its retained earnings in the same amount. As

a result, the book value at year-end 2007 was Bt 19.1 per share compared to Bt 22.5 per share a year earlier.

Capital Structure

As of 31 December 2007, the Group’s capital structure comprised Bt 6,442.7m in liabilities and Bt 2,360.8m in

shareholders’ equity, resulting in a debt to equity ratio of 2.7 times comparing to a ratio of 2.2 times the previous

year. Th e major source of funds on the liabilities side were borrowings and deposits and bills of exchange while the

major uses of funds were loans and receivables and investments in liquid assets.

Under Bank of Th ailand regulations, Finansa Credit Ltd., a subsidiary, has to maintain its capital adequacy ratio of

at least 8% of total assets. In addition, Tier 1 capital has to be more than 4% of total assets. As of 31 December

2007, the subsidiary’s capital adequacy ratio was 15.2% and Tier I capital was 14.7%.

Credit Rating

In January 2007, Fitch Ratings (Th ailand) Limited affi rmed its National long-term and short-term credit ratings

for FNS of ‘BBB(tha)’ and ‘F3(tha)’, respectively with negative outlook.

In November 2007, Fitch Ratings (Th ailand) affi rmed its National Short-term rating of ‘F2(tha)’ of the Company’s

up to Bt 1 billion bill of exchange program with a maturity of up to 270 days.

Major Factors Which May Aff ect Future Operation and Financial Position

Major factors which may aff ect the future operation and fi nancial position of the Group are already mentioned in

the section on “Risk Factors”.


Related Party Transactions for 2007

Th e related transactions occurring in 2007 as shown in the audited fi nancial statements as of 31 December 2007

are as follows:

1. Outstanding Items

Description/Names of Related Parties (Relationship)

Nature of Transactions and

ReasonsConditions

Outstanding as of

31 Dec 2007(Bt. million)

(1) Loan, receivables and accrued interest receivables - securities business/fi nance business• Directors of the company and its

related parties, including persons having close relationship to these directors

• Outstanding balances of securities purchased (FSL)

• Outstanding balance of loans (FC)

Term of payment : T+3 days

As specifi ed in the agreements

15.60

(2) Advance to related parties• Finansa Capital Ltd.

• Siam Investment Fund II, L.P.

• Siam Investment Fund III, L.P.

• Th e Vietnam Equity Fund

• Directors of the company and its related parties, including persons having close relationship to these directors

Advance to FCL

Advance to SIF II

Advance to SIF III

Advance to VEF

Advance to directors

Operating expense and professional fee expenses from FFM to FCL Operating expense from FFM to SIF IIOperating expense and organizational expenses from FFM to SIF IIIOperating expense from FFM to VEFOperating expenses to directors

7.43

0.92

9.59

0.27

0.64

(3) Bills of exchange• Finansa Life Assurance Co., Ltd. Purchased B/E issued by

FNS 4.50%-5.00% interest rate, due February 2008 and March 2008

128.98

(4) Securities business payable• Directors of the company and its

related parties, including persons having close relationship with these directors

Outstanding balances of securities sold

Term of payment : T+3 days 0.20

(5) Borrowings and deposits• JP-One Asset Co., Ltd.• Finansa Life Assurance Co., Ltd• Directors of the company and its


Deposit of FC from directors /related persons

Same condition as other customers

35.0060.0087.47


2. Investment in Subsidiaries

Description/Names of Investee Companies

Nature of Transactionsand Reasons

Investment Value as of


(1) Investment in subsidiaries/FSL FNS holds 100% of the total capital in FSL 484.71

(2) Investment in Subsidiaries/FFM FNS holds 100% of the total capital in FFM as it wishes to conduct off shore fund investment advisory business. (Debt/equity conversion of Bt. 573.20 million in 1st quarter 2007 and dividend payment of Bt. 101.02 million in 4th quarter 2007)

724.99

(3) Investment in Subsidiaries/FC FNS holds 100% of the total capital in FC as it wishes to conduct fi nance business. (Increased capital of Bt. 330 million and booked impairment of investment Bt. 385 million in 2007)

917.23

(4) Investment in Subsidiaries/FCAM FNS holds 100% of the total capital in FCAM as it wishes to conduct investment advisory business in Cambodia. (Impairment of investment Bt.0.79 million)

0.20

(5) Investment in Subsidiaries/FHK FNS holds 100% of the total capital in FHK as it wishes to conduct advisory business in Hong Kong. (Impairment of investment Bt.5.6 million for FHK’s subsidiary in Th e People’s Republic of China)

0.51

(6) Investment in Subsidiaries/FAM (Formerly Krungthep Thanathon Asset Management Co., Ltd.)

FNS holds 100% of the total capital in FAM as it wishes to conduct asset management business.

108.20

(7) Investment in Subsidiaries/PSPC FNS holds 100% of the total capital in PSPC as it wishes to conduct investment business.

0.01


Nature of Transactions and

ReasonsConditions

Outstanding as of


(6) Accrual interest• JP-One Asset Co., Ltd.• Finansa Life Assurance Co., Ltd• Directors of the company and its


Interest receivable of FC from directors/related persons

Same condition as other customers

0.050.090.29


4. Other Investments

Description/Names ofInvestee Companies

Nature of Transactionsand Reasons

Investment Valueas of 31 Dec 2007

(Bt. million)

(1) Long-term investment/SIF FFM and FNS have a 57.48% stake in SIF as part of a diversifi ed long term investment strategy.

-(Cost 124.78, full

impairment )

(2) Long-term investment/SIF II FFM has a 4.13% stake in SIF II as part of a diversifi ed long term investment strategy.

45.12

3. Investment in associated companies

Description/Names of Investee Companies

Nature of Transactions and Reasons

Investment Value as of


Pricing pursuant to equity

method as of31 Dec 2007(Bt. million)

(1) Investment in associates/Siam Investment Partners, L.P.

FFM holds 50% 10.15 9.71

(2) Investment in associates/Finansa Capital Ltd.

FFM holds 50% 0.50 1.28

(3) Investment in associates / JP-One

Assets Co., Ltd.

FFM holds 26.83% 163.43 165.95

(4) Investment in associates / The

Vietnam Equity Fund

FFM holds 26.38% (Partially returned of capital and proceeds from investment)

24.24 51.17

(5) Investment in associates / Siam

Investment Fund III, L.P.

FFM holds 41.66% 26.74 14.37

(6) Investment in associates / Siam

Investment Partners III, L.P.

FFM invests in SIP III as it is a

General Partner of SIF III

12.12 11.66


5. Revenues and Expenses


Nature of Transactions and Reasons Conditions

For the Year ended


(1) Service income/TADF(Fund under management)

ADF has received a management fee from TADF

Pursuant to the terms of the services agreement.

236.86

(2) Service income/FCL(Associated company)

FFM has received service fee from FCL for SIF II and SIF III management.


15.87

(3) Service Income/VEF (Fund under management)

FFM has received management fee from VEF.


32.97

(4) Brokerage fee• Finansa Life Assurance Co., Ltd.• Siam Investment Fund• Siam Investment Fund II• Directors of the company

and its related parties, including persons having close relationship with these directors

FSL has received brokerage fee for trading transactions.

Same rate charges to general customers

0.080.060.091.56

(5) Interest expense• Finansa Life Assurance Co., Ltd.

• JP-One Asset Co., Ltd.

• Directors of the company and its related parties, including persons having close relationship with these directors

Interest expenses on B/E

Interest expense on P/N (FC)

Interest expense on P/N (FC)

Interest rate range of 4.5%-6.0% p.a. Same rate pays to general customersSame rate pays to general customers

4.55

1.40

2.43


Related Transaction Policy for 2007

The related party transactions are transactions that occurred in the ordinary course of business.

Necessity and reasonability of the related transactions

The related party transactions are necessary and reasonably conducted in the best interest of the Company.

The board of directors and audit committee of the Company were of the opinion that:

1. transactions between the Company and its wholly

owned subsidiaries (more than 99% holding)

were done in the ordinary course of business and

at arm’s length prices.

2. transactions between the Company, its

subsidiaries (less than 99% holding) and its

related parties were done in the ordinary course

of business and at arm’s length prices.

Related Transaction Policy

The Company has set the policies on related transactions

based on the rules and regulations set forth by the Stock

Exchange of Thailand concerning related transactions

of listed companies and transfers of assets by listed

companies. In the case that there is a conflict of interest

with the Company or subsidiaries, the directors involved

shall not have voting rights on such conflict matters.

Future Related Transactions

It is the Audit Committee duties to consider and ensure

the accuracy and completeness of information disclosure

on related transactions or transactions which may cause

conflicts of interest. Additional responsibilities are to

review and ensure the Company adopts proper and

effective internal control and internal audit systems; and

complies with the laws on securities exchange, the SET’s

regulations, or other laws relating to its business.


Th e Company has been granted privileges from the Board of Investment eff ective 1 May 2002. Th e investment

promotion certifi cate No. 1394 (2)/2002 was received on 25 June 2002 in relation to the promotional activity of

type 7.9: Regional Headquarters. Th e Company is the fi rst fi nance and investment company in Th ailand that has

received such promotional privileges. Th ese privileges, and associated conditions, are summarized below.

Important Privileges

• Exemption from corporate income taxes on the

net revenue from promoted operations up to the

total of invested funds (excluding investments

for land and working capital) for a period of 5

years from the commencement of earnings from

the businesses under promotional privilege. Th e

Company began such services within the 4th

quarter of 2002, resulting in tax exemption

being eff ective until 2007.

• Exemption from taxes imposed on dividends

received from investments granted investment

promotion to be included as part of the income

tax throughout the exemption period of the

corporate income tax.

• Permission to take out or remit foreign currencies

out of Th ailand.

Important Conditions

• Revenues from services provided to branches or subsidiaries onshore and off shore will be exempted from

tax.

• At least half of the annual revenues must come from overseas.

• Th ai nationals must hold not less than 51% of the total shares.

• Th e regional headquarters activity must have its branches or subsidiaries situated in not less than 5 countries.

Th ere must also be a training and development center for human resources.

• Th e annual operating expenses must not be lower than Baht 50 million.

• Th e promotional activity must invest at least Baht 40 million in real estate within 2 years from the issuance

date of the investment promotion certifi cate.

• Th e promotional activity must proceed to obtain an ISO 9000 certifi cate within 2 years from the

commencement date of its operations, otherwise the exemption from corporate income tax will be revoked

for a period of 1 year. In this regard, the Company has been awarded an ISO 9001:2000 Certifi cate in

December 2007.

Note: Tax exemption is only for the revenue from providing support to affi liates and subsidiaries in the areas of organizational administration, business and market planning, research in investment opportunities and analysis of the economy for investment, management and development in informational technology, human resources development and training, as well as providing advice and suggestions for various business operations.

Board of Investment Privileges


Shareholder Structure

Shareholders

As of 31 December 2007, the registered capital of the Company was Baht 1,500 million, divided into 300

million ordinary shares with a par value of Baht 5 per share; paid up capital was Baht 625,050,500.

The list of major shareholders as of 4 April 2007 is as follows:

Name Number of shares % of paid up capital

1. Thailand Securities Depository Co., Ltd. 21,366,600 17.09

2. Morgan Stanley & Co.

International Limited* 18,977,100 15.18

3. Mr. Vorasit Pokachaiyapat 6,880,000 5.50

4. UBS AG Singapore,

Branch-PB Securities Client Custody 5,418,000 4.33

5. M.L.Sudhiman Pokachaiyapat 4,500,000 3.60

6. The Viriyah Insurance Co., Ltd. 4,090,000 3.27

7. Thai N.V.D.R. Co., Ltd. 2,257,300 1.81

8. Miss Apinya Pokachaiyapat 2,140,000 1.71

9. Mr. Sirisuk Sonsopon 1,939,200 1.55

10. Mr. Aat Atthakraweesunthorn 1,876,800 1.50

Total 69,445,000 55.54

*Holding 17,250,000 shares in the name of Finansa Investment Advisors Limited (FIA) in which Mr. Eugene S. Davis and Mr. Vorasit Pokachaiyapat are major shareholders.

Dividend payment policy

The Company and its subsidiaries have a policy to pay dividends at 30% of the net profit after taxes, or

as it may deem appropriate, except in cases where there are other necessities and such payments would

significantly affect the normal operations of the Company. Shareholders who receive dividend payments

from activities under the investment promotional privilege will be exempt from income tax payments on

such dividends.

Shareholder Structure and Management

15.1815.1818,977,100 18,977,100

2.2. Morgan Stanley & Co.Morgan Stanley & Co.

International Limited* International Limited*

3.273.274,090,000 4,090,000 6. The Viriyah Insurance Co., Ltd. 6. The Viriyah Insurance Co., Ltd.

10. Mr. Aat Atthakraweesunthorn 1,876,800 1.50 10. Mr. Aat Atthakraweesunthorn 1,876,800 1.50

Total 69,445,000 55.54

8. Miss Apinya Pokachaiyapat 2,140,000 1.718. Miss Apinya Pokachaiyapat 2,140,000 1.71

4. UBS4. UBS AG Singapore, AG Singapore,

Branch-PB Securities Client Custody 5,418,000 4.33Branch-PB Securities Client Custody 5,418,000 4.33


Management Structure

As of 31 December 2007, the three bodies of committees are: i) the Board of Directors, ii) the Executive

Committee, and iii) the Audit Committee with the following details:

Board of Directors

The Board of Directors consisted of the following 8 members:

1. Dr. Virabongsa Ramangkura Chairman


3. Mr. Eugene S. Davis Director

4. Mr. Varah Sucharitakul Director

5. Mr. Kenneth Lee White Director

6. Mr. Vitthya Vejjajiva Director, Chairman of the Audit Committee and

Independent Director

7. Mrs. Kannika Ngamsopee Director, Member of the Audit Committee and


8. Mr. Chanmanu Sumawong Director, Member of the Audit Committee and


Scope of Duties of the Board of Directors

The Board of Directors has the responsibility of managing the Company in compliance with relevant

laws, the business objectives, the Articles of Association and the resolutions of shareholders’ meetings. The

responsibilities also include the formulation of policies and operating directions, financial management,

risk management, and providing guidance and supervision to the management to operate efficiently and

effectively and in accordance with the relevant policies. The interests of the shareholders will be taken into

account in managing the Company. The Board of Directors also has the power to appoint a certain number

of directors to be members of the executive committee to perform one or several tasks.

The Board of Directors has empowered the directors authorized to sign for and bind the Company to

independently conduct various matters. However, the matters set forth below require a prior resolution

from the meeting of the shareholders. In the case that there is a conflict of interest with the Company or

subsidiaries, the directors involved shall not have voting rights on such conflicting matters:

(a) when resolution of the meeting of shareholders is required by law; and

(b) matters in which directors may have an interest and a resolution of the meeting of shareholders

is required by law or by the regulations of the Stock Exchange of Thailand.

The matters specified below require a resolution of the Board of Directors and of the meeting of shareholders

passed by a vote of not less than three-fourths of the total number of shareholders present at the meeting

and entitled to vote;

(a) the sale or transfer of whole or important parts of a business of the Company to other persons;


(b) the purchase or acceptance of transfer of businesses of other companies or private companies to the

Company;

(c) the making, amending or canceling of contracts relating to the leasing out of the business of the

Company, whole or certain important parts, the assignment to any other persons to manage the

business of the Company or the amalgamation of the business with other persons with an objective

towards profit and loss sharing;

(d) the amendment of the Memorandum of Association or the Articles of Association of the

Company;

(e) the increase or decrease in registered capital of the Company;

(f ) the merger or liquidation of the Company; and

(g) other matters specified by law.

In this regard, treasury stocks hold by the Company have no voting rights.

Executive Committee

The Executive Committee consisted of the following 4 members:


2. Mr. Eugene S. Davis Executive Director

3. Mr. Varah Sucharitakul Executive Director

4. Mr. Kenneth Lee White Executive Director

Scope of Duties of the Executive Committee

The Executive Committee has the following powers and responsibilities:

(a) to consider and approve any loan or credit application in the ordinary course of business of the

Company, e.g., expenses for investments or for any activity with a value not exceeding Baht 500

million or in an equivalent amount or in an amount authorized by the Board of Directors;

(b) to establish organizational, management, and executive committee structures, which include all

the details of the recruitment, training, employment and termination of the employees in the

Company whose position is not higher than the managing director;

(c) to appoint or remove any officers of the Company;

(d) to prepare, recommend, and prescribe business policies and strategies to the Board of Directors

for consideration and approval;

(e) to formulate business plans, prescribe management authority, approve annual expenditure

budgets and conduct the business pursuant to the business plan and strategy which are to be in

line with the policies and directions approved by the Board of Directors; and

(f ) to perform any other duties as, from time to time, assigned by the Board of Directors.


Audit Committee

The Audit Committee consisted of the following 3 members:

1. Mr. Vitthya Vejjajiva Audit Committee Chairman

2. Mrs. Kannika Ngamsopee Audit Committee member

3. Mr. Chanmanu Sumawong Audit Committee member

Scope of Duties of the Audit Committee

The Audit Committee has the following duties and responsibilities which are in accordance with the rules and

regulations of the office of the Securities and Exchange Commission and the Stock Exchange of Thailand.

The Audit Committee shall report directly to the Board of Directors.

(a) to ensure that the Company maintains accurate and sufficient financial statements;

(b) to ensure that there is sufficient and efficient internal control and internal audit;

(c) to ensure that the Company performs in accordance with the securities and exchange laws,

regulations of the Stock Exchange of Thailand, and laws concerning the business of the

Company;

(d) to consider, select, and appoint the auditor and fix their remuneration;

(e) to consider the disclosure of information of the Company for matters that may constitute a

connected transaction or have any conflict of interest to be full and accurate;

(f ) to prepare the report of the Audit Committee to be disclosed in the annual report of the Company

which shall be signed by the Chairman of the Audit Committee.

Management Team of Finansa Plc.

As of 31 December 2007, the management team consisted of the following 8 executives:


2. Mr. Eugene S. Davis Executive Director

3. Mr. Varah Sucharitakul Executive Director

4. Mr. Kenneth Lee White Executive Director

5. Mr. James Marshall Chief Investment Officer

6. Mr. Jonathan Bradley Truslow Chief Operating Officer

(Supervises finance and accounting areas)

7. Mrs. Phaisri Kraiboon Assistant Managing Director

8. Mr. Vikrom Leenabanchong Assistant Managing Director


Selection of Directors and Executives

The Board of Directors selects the directors of the Company in accordance with the qualifi cations specifi ed in Section

68 of the Public Company Act, B.E. 2535 and in related notifications of the SEC. In addition, experience,

knowledge and ability are also taken into consideration. The selected candidates will then be nominated in

a shareholders’ meeting for appointment. As of 31 December 2007, from the total number of 8 directors, the

Company had 2 directors from the group of major shareholders, namely Mr. Eugene S. Davis and Mr. Vorasit

Pokachaiyapat.

The election of the members of the Board of Directors is made at shareholders’ meetings pursuant to the

following procedures:

• One shareholder has one vote for one share held by he/she.

• Each shareholder may cast all of his/her votes to select one or more candidates, but the number of votes

given to each candidate cannot be greater nor lesser than the number of votes given to the other(s).

• The persons receiving the highest successive number of votes will be elected as directors until the

permissible number of directors in the particular election is reached. In the case of an equal number

of votes given to more than one candidate, which causes the number of directors to be greater than the

permissible number, the chairman shall cast the deciding vote.

In terms of the selection process of independent directors, when the independent directors are due to retire

from their term of office or when there is a need to nominate more independent directors, the current members

of the Board of Directors will consult with one another to select qualified persons who have experience,

knowledge and expertise suitable and beneficial to the Company and also meet the minimum qualifications

set forth below. Nominees will be proposed to the Board of Directors’ Meeting or the Shareholders’ Meeting

for consideration pursuant to the Company’s Articles of Association.

Qualifications of independent director are as follows:

(a) Holding shares representing not more than 5 percent of all voting rights of the Company, parent

company, subsidiary company, associated company or any juristic person who may have a conflict

of interest.

(b) Not being an employee, staff member, advisor who receives a regular salary from the Company, or

controlling person of the Company, parent company, subsidiary company, associated company or

any juristic person who may have a conflict of interest.

(c) Not being a connected person, by virtue of a blood relationship or legal marriage in the form of

fatherhood, motherhood, spouse, brother, sister, son and daughter, including spouse of son or

daughter, of the executives, major shareholder, controlling person or persons who are about to be

nominated as executives or controlling persons of the Company or its subsidiary.

(d) Having no business relation with the Company, parent company, subsidiary company, associated

company or any juristic person who may have a conflict of interest in a way that may interrupt the

exercise of independent discretion as well as the giving of independent opinion on the Company’s

operations.


Biographies of Directors and Management

Name Age

%

Holding

in FNS

Education Experience

Dr. Virabongsa Ramangkura

Chairman

64 - • Doctor of Law

(Honorary), Webster

University, U.S.A

• Ph.D. (Economics),

University of

Pennsylvania, U.S.A

• M.A. (Economics),

University of

Pennsylvania, U.S.A

• First Class Honors,

B.A. (Political Science),

Chulalongkorn

University, Th ailand

• Directors Certifi cation,

Th ai Institute of Directors

Association (IOD)

present • Member of the National

Legislative Assembly

• Chairman, Finansa Plc.

• President, Bangkok Expressway Plc.

• Chairman of the Executive Board,

Advance Agro Plc.

• Advisor of the Board of the

Bangkok Bank Plc.

• Director, Th ailand Development

Research Institute Foundation

• Director, Polyplex (Th ailand) Plc.

• Director, IRPC Plc.

Mr. Vorasit Pokachaiyapat

Managing Director

Authorized Director

Executive Director

45 9.10% • M.S. Computer

Information Systems,

Bentley College, U.S.A

• B.S. Managerial

Economics and Industrial

Management,

Carnegie-Mellon

University, U.S.A



Association (IOD)

present • Managing Director, Finansa

Plc.

• Director, SE-Education Plc.

2002 - 2007 Director, Finansa Securities Ltd.

2002 - 2004 Director, Finansa Credit Ltd.

1990 - 1991 Associate, Chase Manhattan

(Th ailand) Ltd.

1988 - 1990 Head of Securities Research, Th ai

Investment and Securities Public

Co., Ltd.

Mr. Eugene S. Davis

Authorized Director

Executive Director

52 - • MBA in Finance and

International Business,

New York University,

U.S.A

• B.A. International

Relations/ French,

University of Virginia,

Charlottesville, U.S.A

• Certifi cate of Attendance,

Director Accreditation

Program, Th ai Institute

of Directors Association

(IOD)

present Executive Director, Finansa Plc.

2000 - present Director, Finansa Securities Ltd.

2001 - 2007 Director, Pranda Jewelry Plc.


1989 - 1991 Managing Director, Chase

Manhattan (Th ailand) Ltd.

1987 - 1989 Chairman, Asian Primary Dealers

Committee of U.S. Fixed Income

Securities

1984 - 1989 Director of Fixed Income

Trading, Th e First Boston Corp.,

Japan


Name Age

%

Holding

in FNS


Mr. Varah Sucharitakul

Authorized Director

Executive Director

44 - • Master of Business

Administration,

University of New

Hampshire, U.S.A

• B.Eng. (Mechanical

Engineering),

Chulalongkorn



Th ai Institute of

Directors Association

(IOD)

2006 - present Executive Director, Finansa

Securities Ltd.

2001 - 2006 Managing Director, Finansa

Securities Ltd.

2001 - present Executive Director, Finansa Plc.


1998 - 2000 Executive Director, Th e

Cogeneration Plc.

1997 - 2000 Executive Vice President of Finance,

Sithe Pacifi c Development L.L.C

1994 - 1997 Senior Vice President-Head of

Project Finance, Finance One Plc.

1990 - 1994 Second Vice President, Chase

Manhattan Bank, Th ailand

Mr. Kenneth Lee White

Authorized Director

Executive Director

62 - • MBA in International

Business, University of

Puget Sound, Tacoma,

Washington, U.S.A

• B.A. in International

Business, Netherlands

School of Business,

Breukelen, Th e

Netherlands


Th ai Institute of

Directors Association

(IOD)

• Fellow Membership, Th ai

Institute of Directors

Association (IOD)

2007 - present Governor, Th e American Chamber

of Commerce in Th ailand

2005 - present • Director, Finansa Credit Ltd.

• Audit Committee Member,

Goodyear (Th ailand) Plc.

2004 - present Director, Finansa Asset

Management Ltd.

2002 - present • Executive Director, Finansa Plc.

• Director, Loxbit Plc.

1998 - present Director and Chairman of

the Audit Committee, Minor

International Plc.

2003 - 2007 Director, Finansa Life Assurance

Co.,Ltd.

1998 - 2005 Director and Chairman of

the Audit Committee, Minor

Corporation Plc.

2001 - 2003 Director, Th e Th ai Institute of

Directors Association (IOD)

1986 - 1992 General Manager, Th e Chase

Manhattan Bank, Th ailand


Name Age

%

Holding

in FNS


Mr. Vitthya Vejjajiva

Director

Chairman of the Audit

Committee


72 - • Harvard Law School,

Harvard University

(LL.M.)

• Gonville and Caius

College, Cambridge

(M.A., LL.B.)

• Barrister-at-Law, Gray’s

Inn

• Chairman 2000, Th ai

Institute of Directors

Association (IOD)

2002 - present Chairman of the Audit Committee,

Finansa Plc.

2007 - present Chairman of the Audit Committee,

Finansa Securities Ltd.

present Chairman of the Audit Committee,

TA Plc.

present Member of the National Legislative

Assembly

present Chairman:-

• “K” Line (Th ailand) Ltd.

and affi liates

• Th ailand’s Chapter of the

Centre for Security

Co-operation in Asia and

the Pacifi c (CSCAP)

1991 - 1992 Permanent Secretary of Foreign

Aff airs, Ministry of Foreign Aff airs

1988 Ambassador to the United States

1984 Ambassador to Belgium and

European Community

Mrs. Kannika Ngamsopee

Director

Audit Committee

Member


52 - • M.S. (Accounting),

Th ammasat University,

Th ailand

• Master of Management,

Sasin Graduate

Institute of Business

Administration of

Chulalongkorn


• B.B.A (Accounting) 2nd

Class Honors, Th ammasat


• LL.B (Law), Th ammasat




Association (IOD)

2002 - present Audit Committee Member, Finansa

Plc.


Securities Ltd.

present Chief Audit and Compliance Offi cer,

Siam Commercial Bank Plc.

1999 - 2000 Director, Th e Cogeneration Plc.

1998 - 2000 Chief Financial Offi cer, Sithe

Pacifi c Development LLC.

1995 - 1997 Assistant Managing Director,

Finance One Plc.

1994 - 1995 General Manager, Peregrine &

Nithi Finance and Securities Co.,

Ltd.

1993 - 1994 Senior Vice President -Finance,

Bangkok Transit System Corp., Ltd.

1982 - 1992 Vice President, Chase Manhattan

Bank


Name Age

%

Holding

in FNS


Mr. Chanmanu Sumawong

Director

Audit Committee

Member


51 - • Th ai Barrister at Law,

Th ailand

• LL.M., George

Washington University,

U.S.A

• M.C.L., American

Practice, George

Washington University,

U.S.A

• LL.B., 2nd Class Honors,

Th ammasat University,

Th ailand


Plc.


Securities Ltd.

1999 - present Partner, Hunton & Williams

(Th ailand) Ltd.

1998 - 1999 Legal Counsellor, Hunton &

Williams (Th ailand) Ltd.

1996 - 1997 Partner, International Legal

Counselors Th ailand Ltd.

1989 - 1996 Legal Counsellor, International

Legal Counsellors Th ailand Ltd.

1982 - 1989 • Secretary of the Central

Labour Court

• Judge, Th ailand Ministry of

Justice, Nakorn Ratchasima

Privincial Court; Nakorn

Ratchasima Juvenile Court;

Surin Municipal Court

Mr. James Marshall

Chief Investment Offi cer

53 0.0002% • Member of the Securities

and Investment Institute

of the U.K

2004 - present Chief Investment Offi cer, Finansa

Plc.

2005 - present Director, Finansa Asset

Management Ltd.

1999 - 2004 Director of Research, Finansa

Group

1992 - 1997 Head of Research, Nomura

International Ltd./India/ Bangkok

Mr. Jonathan Bradley

Truslow

Chief Operating Offi cer

47 - • MA. (Mathematics),

Magdalen College,

Oxford, U.K

• BA. (Mathematics),

Magdalen College,

Oxford, U.K



Association (IOD)

2005 - present Chief Operating Offi cer, Finansa

Plc.

2001 - 2005 Executive Vice President, Asia Bank

Plc.

2000 - 2001 Senior Manager, Deloitte

Consulting Ltd.


Name Age

%

Holding

in FNS


Mrs. Phaisri Kraiboon

Assistant Managing Director

60 0.04% • MBA, Chulalongkorn


• B.A. in Political

Science - Public

Finance (2nd

Class Honors),

Chulalongkorn


2004 - present Assistant Managing Director,

Finansa Plc.

2003 - present Director, Finansa Securities Ltd.

2001 - 2003 Executive Vice President -

Operations, Finansa Securities Ltd.

1992 - 2001 Vice President - Operations, Chase

Manhattan Bank

Mr. Vikrom Leenabanchong

Assistant Managing Director

(Head of Investment

Banking)

40 0.0008% • MBA, Operations,

Research, California

State University,

Hayward, U.S.A

• Bachelor degree

of Engineering,

(Civil Engineering),

Kasetsart University,

Th ailand

2006 - present Assistant Managing Director (Head

of Investment Banking), Finansa

Plc.

2005 - 2006 Vice President of Direct

Investment, Finansa Plc.

2003 - 2005 Vice President - Investment

Banking, Finansa Credit Ltd.

2000 - 2003 Vice President Investment Banking,

Finansa Securities Ltd.


The Good Corporate Governance ComplianceReport of 2007

1. Th e Rights of Shareholders

Th e Board of Directors recognizes and emphasizes the importance of the basic rights of shareholders as the

Company’s investors as well as owners. Th e basic rights of shareholders include the right to purchase, sell or

transfer shares, the right to share the profi ts of the Company, the right to receive suffi cient information, the

right to participate in shareholders’ meetings, the right to give opinions and the right to participate in major

decision making of the Company such as dividend payment, appointment or removal of directors, appointment

of independent auditors, approval on important transactions which eff ect the Company’s business direction and

adjustments to the Company’s Memorandum of Association and Articles of Association.

Apart from the above basic rights, the Company undertakes many other matters to promote and facilitate the rights

of shareholders. An annual shareholders’ meeting is held within four months from the end of the previous year’s

accounting period. Th e Company sends out a notice to all shareholders at least 14 days in advance and publishes

the meeting notice in a newspaper 3 days prior to the scheduled meeting of shareholders. Attached to the notice

are a complete set of supporting documents with suffi cient information for voting on all agenda items.

Meetings will be carried out in line with the Company’s Articles of Association and according to the announced

agenda. During meetings, the Chairman will off er all shareholders an equal opportunity to ask questions and give

suggestions. Directors and management will be present to answer shareholders’ queries. Important issues and

suggestions are including in the minutes of meetings which will be prepared for shareholders’ review.

Shareholders’ meetings’ venues will be set to facilitate shareholders. In 2007, the General Meeting of Shareholders

was held at the Pan Pacifi c Hotel located on Rama 4 Road in Bangkok which is an easy place for shareholders to

attend. Meetings will not involve diffi cult or complicated procedures or incur any cost to shareholders.

In 2007, the Company held one General Meeting of Shareholders on 25 April 2007. A total of 50 shareholders

and representatives through proxy letters which held totally 45,871,460 shares or 37.14% of the total issued and

paid-up 123,519,800 shares (deducting treasury stocks of 1,490,300 shares) were present at the meeting as well as

four directors including the Chairman of the Board, Managing Director, Director and the Chairman of the Audit

Committee. Th e Chairman carried out the meeting according to the agenda and encouraged all shareholders to vote,

ask questions, express opinions and give suggestions on all business matters of the Company. Th e Chairman and

directors clearly explained and answered every important inquiry from shareholders, and welcomed shareholders’

suggestions for business operations.

Th e Secretary to the Board records the minutes of the meeting, accurately and comprehensively, including

signifi cant details, e.g., meeting resolutions, questions and opinions of the meeting. Th e minutes of the meeting

will be presented in the next shareholders’ meeting for approval and sent to offi cial regulatory agencies within the

designated time period.

2. Th e Equitable Treatment of Shareholders

Th e Company has a policy to treat all shareholders on an equal and fair basis. Th e Company has appointed 3

independent directors to ensure fair treatment of minority shareholders. Minority shareholders can express their

opinions and give suggestions or complaints to independent directors who will inspect these opinions or complaints

and arrange further appropriate measures. All shareholders are welcome to attend shareholders’ meetings and to

express their views, ask questions or make suggestions.


Th e Company will avoid adding other agenda items besides the ones already presented to shareholders, especially

important agenda items that shareholders need time to review prior to making any decision. Shareholders unable

to participate in the meeting have the option to appoint proxies who could be independent directors or any other

person instructed to attend the meeting. Proxy forms are enclosed in the invitation letter.

Voting procedures are transparently carried out according to the scheduled agenda. Each shareholder has the right

to vote for the election of each director as well as other important agenda items, e.g., related party transactions or

acquiring or disposing of assets, etc.

Th e Company has prepared a code of conduct placing high signifi cance on the protection of the Company and

its subsidiaries’ confi dential information. Disciplinary penalties have been stated for executives and employees

who use inside information for their personal benefi t or use inside information in ways that expose the Company

to any damage. Such actions include verbal warning, written warning, probation, dismissal and termination of

employment. Employees are prohibited from buying, selling, transferring or accepting the transfer of the Company

shares or entering into any other transaction by using confi dential and/or inside information as this may incur

harm, either directly or indirectly, to the Company.

Th e Company has set up measures to prevent insider trading by directors, executives and employees (including

their spouses and minor children) who have access to signifi cant inside information. A silent period policy for

securities trading by these personnel is stipulated for a period of one month prior to the Company’s disclosure of

quarterly and annually fi nancial statements. In addition, the Company has informed its directors and executives of

their responsibility to report their ownership of securities issued by the Company as well as punishment pursuant

to Section 59 of Securities and Exchange Act B.E. 2535 and the regulations of the Stock Exchange of Th ailand.

Moreover, for every purchase or sale of securities issued by the Company, these personnel have to report their

ownership of the Company shares including those under the possession of their spouses and minor children to

the Offi ce of the Securities and Exchange Commission within three days pursuant to Section 59 of Securities and

Exchange Act B.E. 2535.

3. Th e Role of Stakeholders

Th e Company realizes the importance of protecting the rights of all stakeholders following the requirements of the

law and business code of conduct as follows:

• Shareholders: Th e Company is determined to achieve good operating performance to create

shareholders satisfaction, with due consideration to the growth of the Company’s

value over the long term. Th e Company discloses all information in a transparent

and trustworthy manner. In addition, every shareholder has an equal right to vote

except for shareholders who have confl icts of interest in which they will have the right

to vote only for the election of directors, but not on that particular matter.

• Employees: Th e Company treats all employees with care and fairness and provides reasonable

remuneration including welfare as required by the Labor Law. Th e Company also

supports the enhancement of its employees’ capabilities and promotes a decent

business culture, teamwork and favorable and secure working atmosphere.

• Customers: Th e Company focuses on providing high quality services, treating customers’

information as confi dential and ensuring that the process and procedure on customers’

complaints is clearly and fairly stated, and that responsible persons are assigned to

deal with any such complaints.

• Competitors: Th e Company follows the rule of fairness in competing with others and avoids any

wrongdoing toward its competitors.


In summary, the Company abides by all relevant laws and regulations to ensure the rights of all stakeholders are

well protected.

4. Disclosure and Transparency

Th e Board of Directors realizes the importance of information disclosure and has set up policies to ensure that all

disclosed information is accurate, complete and transparent. Such information includes fi nancial and non-fi nancial

information about the Company that are in line with the Offi ce of the Securities and Exchange Commission and

the Stock Exchange of Th ailand that aff ect the share price as well as the decisions of the Company’s investors and

stakeholders. Th erefore, the Company has disseminated important and adequate information including Form 56-1

Report to shareholders, investors and the general public via the SET Community Portal. In addition, the annual

reports and operational performance are also posted on the Company’s website (www.fi nansa.com).

Th e Board of Directors takes responsibility for the consolidated fi nancial statements of the Company and its

subsidiaries as well as fi nancial information disclosed in its annual report. Financial statements are prepared in

accordance with generally accepted accounting principles in Th ailand, by utilizing appropriate accounting policies

and applied consistently. Moreover, suffi cient important information is disclosed in the notes to the fi nancial

statements. Th e Audit Committee reviews the quality of fi nancial reporting and the adequacy of the internal

control system and ensures that suffi cient signifi cant information is disclosed in the notes to the fi nancial statements.

Th e views of the Audit Committee on such matters are presented to the Board and to the shareholders’ meeting,

respectively.

5. Responsibilities of the Board of Directors

1. Structure of the Board of Directors

Th e Company’s Board of Directors is comprised of qualifi ed persons who possess knowledge and abilities and

play an important role in establishing the Company’s policies and image as a whole. In addition, the Board’s

responsibilities extend to freely supervising, auditing and monitoring the Company’s performance toward

designated policies.

To achieve a balance of power within the Company and proper checking of management, the Board of Directors

comprises 8 directors with 4 non-executives directors, representing half of the total number of directors on the

Board. Non-executive directors are not authorized to sign on behalf of the Company or any of its subsidiaries.

Furthermore, the Audit Committee comprised 3 independent directors, representing more than 1/3 of all

members of the Board of Directors. Th is Board composition can assure that the directors will perform their

duties as representatives of the shareholders fairly and independently with proper checks and balance.

Th e Company has established the term of offi ce for directors in the Articles of Association. At each General

Meeting of shareholders, one-third of the directors – or if their number is not a multiple of three, then the

number nearest to one-third – must retire from the offi ce. In the fi rst and second years following listing,

directors who shall retire decided by drawing lots; after that directors who have been in offi ce the longest shall

retire fi rst. Th e retiring directors may also be re-elected.

2. Committees

As of 31 December 2007, the Company has nominated several committees which include the Audit Committee,

the Executive Committee, the Group Investment Committee and the Group Risk Management Committee


for administering specifi c issues in detail.

Each committee is composed of members with duties and responsibilities as follows:

(1) Th e Audit Committee is comprised of 3 members responsible for considering and reviewing the

Company’s fi nancial statements, information disclosure and internal control system, as well as examining

and evaluating the Company’s risk.

(2) Th e Executive Committee is comprised of 4 members responsible for supervising relevant business

operations assigned by the Board of Directors.

(3) Th e Group Investment Committee is comprised of 7 directors from each company in the group responsible

for setting business policies and supervising investment of the Company and its affi liates.

(4) Th e Group Risk Management Committee is comprised of 5 directors from each company in the group

responsible for setting risk management guidelines and policies of the Company and its affi liates.

3. Role and responsibilities of the Board of Directors

Th e Board of Directors is comprised of persons who have knowledge, ability, working experience and leadership

skill. Th e Board takes part in developing the vision, mission, strategies, policies and business directions as well

as overseeing that the Company’s business undertakings are in compliance with relevant law, objectives, rules

and regulations and the resolutions of shareholders’ meetings.

• Policy on Corporate GovernanceTh e Board of Directors emphasizes the importance of practicing good corporate governance as stipulated by

the Offi ce of the Securities and Exchange Commission and the Stock Exchange of Th ailand. Compliance

with good corporate governance principles is reviewed annually. Th e Board also reviews the Company’s

corporate governance policy and report of compliance at least once a year.

• Business EthicsTh e Board of Directors has prepared a code of conduct and operational manual and disseminated these to

the executives and employees of the Company and its affi liates. Th is is to ensure the accuracy, transparency

and fairness of business conduct to related parties and customers, which is in accordance with good corporate

governance. Th e practice of such code of conduct and manual has been followed up consistently and also

disciplinary penalties have been stated.

• Confl ict of InterestTh e Board of Directors places importance on the consideration of transactions with possible confl icts

of interest, connected transactions, related parties transactions as well as administration of insider

information.

Th e Board of Directors and the Audit Committee have a stated policy relating to transactions that may

cause confl icts of interest and connected transactions. All such transactions have to be informed to the

Board and prudently considered to evaluate the reasonableness of entering into such transactions. Th e

regulations of the Stock Exchange of Th ailand must also be followed. Prices and conditions have to be set

on an arm’s length basis. In addition, should any directors have confl icts of interest, the confl icted directors

have to disclose relevant information to the meeting and do not have the right to vote on that particular

matter. Th e details of transactions, transaction value, related parties, reason and necessity are disclosed in

form 56-1 and the annual report.

As for the supervisory procedure against inside information exploitation, the Company has a policy to

prohibit the directors and executives from using inside information relating to the fi nancial and operational


performance of the Company, which has not yet been disclosed to public, for their personal benefi t. Th e

Company also reports to the Offi ce of Securities and Exchange Commission on each person’s securities

holding and the holding of securities by his or her spouse and minor children of securities in the Company,

including changes in such holdings, pursuant to Section 59 of Securities and Exchange Act B.E. 2535.

• Internal ControlTh e Company maintains internal control through the following procedures:

(1) Th e Company has consistently evaluated signifi cant business risk aff ecting the Company and has

pursued a follow-up and risk mitigation process.

(2) In controlling working operations of executives, the Company has stated, in a written document,

the scope of duties and budget approval power for each level of those executives and has allocated

responsibility for cross-auditing.

(3) Th e Company has stated and pursued an accounting policy which is consistent with the Th ai

accounting standards and considered most appropriate for the business. All documents accompanying

accounting records are categorized and maintained.

(4) Th e Internal Audit Department and KPMG Phoomchai Business Advisory Ltd. (“KPMG”), an

outsource independent internal auditor, have true independence in their work in reviewing that all

main business and fi nancial operations are in compliance with relevant laws and regulations and

performed with effi ciency. Th e Internal Audit Department and KPMG are under the supervision

of, and report to, the Audit Committee in considering the adequacy of the internal control system

and supervising business operations to comply with relevant laws and regulations. In addition, the

Company also assigns Ernst & Young Offi ce Limited to review the internal control system and to

give any suggestions for an improvement of the system.

Th e internal audit report and the report of the auditor show that there are no signifi cant areas of concern

and the Company has an internal control system which is suffi cient to safeguard against any use of the

Company’s assets by the executives and employees for personal interest.

• Risk ManagementRealizing the importance in managing risks that may aff ect operational performance, the Company

regularly reviews and assesses important risk factors as well as monitors and establishes measures to lessen

these risks. In this regards, the Company has established the Group Risk Management Committee which

is comprised of 5 directors from each company in the group responsible for setting risk management

guidelines and policies of the Company and its affi liates.

In addition, annually evaluate and review of the internal control systems have been carried out in order to

make improvements and enhance its operating performance.

• Directors’ ReportingTh e Audit Committee has a responsibility to review the Company’s fi nancial reports which are submitted

quarterly by the Accounting Department. Th e Audit Committee reviews and approves these fi nancial

reports and proposes to the Board of Directors for further approval.

Th e Board of Directors is responsible for supervising the preparation and timely disclosure of the fi nancial

statements of the Company and its subsidiaries. Such fi nancial reports must be accurate, transparent and

comprehensive and must be disclosed within the applicable statutory reporting deadline. Th e fi nancial

reports of the Company and its subsidiaries are prepared in accordance with generally accepted accounting

principles in Th ailand, by utilizing appropriate accounting policies and applied consistently. Moreover,

suffi cient important information is disclosed in the notes to the fi nancial statements.


Th e Board of Directors has empowered the Audit Committee and the Certifi ed Public Accountants to

freely review the internal control and the accuracy of the fi nancial reporting. Th e opinion of the Audit

Committee on these matters is contained in the annual report.

Based upon the Company’s internal control system supervised by the Audit Committee and the external

auditor’s reports, the Board of Directors believes that the consolidated fi nancial statements of the

Company and its subsidiaries present completely, in all material respects, the fi nancial position, the results

of operations and cash fl ows for the year ended 2007 and are in conformity with the generally accepted

accounting principles.

4. Board of Directors’ Meetings

Th e Company sets out meeting schedules for the Audit Committee and the Board of Directors to consider

fi nancial statements of each quarter for the next year in advance. In 2007, there were 9 Board of Directors’

meetings and 5 Audit Committee’s meetings. In each meeting, the meeting agenda items were clearly identifi ed

prior to the meeting. Th e invitation letters were sent to the Board of Directors and the Audit Committee

members at least 7 days prior to the meeting date. Supporting documents were also provided with the invitation

letter for the Board’s prior review. Attendance records of each director are as follows.

Name

Attendance (Attendance/Total Meetings)

Board of Directors Meeting Audit Committee Meeting

1. Dr. Virabongsa Ramangkura 9/9 -

2. Mr. Eugene S. Davis 5/9 -

3. Mr. Vorasit Pokachaiyapat 9/9 -

4. Mr. Varah Sucharitakul 8/9 -

5. Mr. Kenneth Lee White 7/9 -

6. Mr. Vitthaya Vejjajiva 7/9 5/5

7. Mrs. Kannika Ngamsopee 9/9 5/5

8. Mr. Chanmanu Sumawong 9/9 4/5

In addition, in every meeting of the Audit Committee and Board of Directors, the minutes of meetings were

prepared and all relevant documents were retained and are available to be reviewed by relevant parties.

5. Assessment by the Board of Directors

Th e Board of Directors has assessed the Managing Director’s performance by taking into consideration the

Company’s operating performance, business undertaking according to established policies as well as the overall

business and economic environment.

6. Remuneration to Directors and Executives

Th e Company has clearly and transparently determined the remuneration provided to the directors, which is

similar to that paid in the same industry. Such remuneration has to obtain prior approval from the shareholders’

meeting. In 2007, remuneration of directors is set at the same level as in 2006 as follows:


Position2006 2007

Meeting fee Annual fee Meeting fee Annual fee

1. Chairman 50,000 Baht 800,000 Baht 50,000 Baht 800,000 Baht

2. Directors 25,000 Baht 280,000 Baht 25,000 Baht 280,000 Baht

3. Chairman of the Audit Committee 25,000 Baht 100,000 Baht 25,000 Baht 100,000 Baht

4. Audit Committee members 25,000 Baht 70,000 Baht 25,000 Baht 70,000 Baht

Th e Executive Directors waived the rights to the above mentioned meeting fee and annual fee.

Th e Company has determined the remuneration provided to executives in accordance with the principles

and policies set by the Board, which is also consistent with the performance of the Company and each of the

executives.

In 2007, the Company provided remuneration including meeting fee and annual fee to 8 directors as shown

below.

Name Meeting fee Annual fee

1. Dr. Virabongsa Ramangkura 500,000 Baht 800,000 Baht

2. Mr. Eugene S. Davis - -

3. Mr. Vorasit Pokachaiyapat - -

4. Mr. Varah Sucharitakul - -

5. Mr. Kenneth Lee White - -

6. Mr. Vitthaya Vejjajiva 325,000 Baht 380,000 Baht

7. Mrs. Kannika Ngamsopee 350,000 Baht 350,000 Baht

8. Mr. Chanmanu Sumawong 325,000 Baht 350,000 Baht

Remuneration provided to executives in 2007 is as follow.

Type of Remuneration Person Amount

Salaries 8* 15,466,500 Baht*

Bonuses 3 2,208,000 Baht

Total 17,674,500 Baht

Note: * Including 2 executives who resigned in March and December 2007.


Administration of Insider Information

The Company has a policy of prohibiting its directors and executives from using insider information (in

relation to the Company’s financial condition and performance) which has yet to be disclosed to the public,

in order to gain personal benefits (including in the trading of securities). The Company has informed its

executives in all departments of their responsibility to report securities held by themselves, their companies,

spouses and minor children, as well as changes in those holdings of securities, to the SEC in accordance with

Section 59 and the penal provision in Section 275 of the Securities and Exchange Act, B.E. 2535.

Internal Control

Five audit committee meetings were held in 2007, which every member of the audit committee attended,

except for Mr. Chanmanu Sumawong who missed one time due to other important business mission.

In the first Board of Directors’ meeting no. 1/2008 on 28 February 2008, in which all of the three Audit

Committee members were in attendance, the Board of Directors evaluated the internal control systems

in five different areas, namely organization and environment, risk management, executives’ performance

control, information technology systems and monitoring systems. The Board is of the opinion that the

Company has an internal control system in place which is sufficient and satisfactory to monitor the activities

of the Company and its affiliates and which will prevent their assets from being used improperly or without

due authorization by the executives.

Remuneration of Auditor

In 2007, the remuneration for external auditors comprised:

1. Audit Fee

The Company and its subsidiaries have paid audit fees to:

• Certifi ed auditors of the Group in the past accounting year totaling Baht4,890,000.

• Th e respective audit company or its independent, contracted auditors, including individuals or business

entities related to the auditors and their respective audit companies totaling Baht -0- for the past accounting

year, and will have to pay Baht -0- in the future for unfi nished services in the previous year.

2. Non-audit Fee

The Company and its subsidiaries have paid non-auditing fees for special purpose audit engagement and

compliance audit engagement to:

• Certifi ed auditors of the Group for the past accounting year totaling Baht -0-, and will have to pay

Baht250,000 in the future for unfi nished services in the previous year.

• Th e respective audit company or its independent, contracted auditors, including individuals or business

entities related to the auditors and their respective audit companies totaling Baht -0- for the past accounting

year, and will have to pay Baht -0- in the future for unfi nished services in the previous year.


Risk Factors

Personnel

The Finansa Group’s business operations rely primarily on its people. Executive management has pursued a

policy of recruiting, training and promoting junior executives as well as hiring experienced teams of personnel.

This policy has contributed to the development of the business and has provided flexibility in allocating

resources. This has reduced the potential adverse impact of a potential shortfall in personnel resources in

any one area. Moreover, importance is placed on human resources by providing training in order to develop

the knowledge and skills of the Group’s personnel, both at the executive and at the operational levels. In

addition, employee compensation is based upon relevant ability and performance and is set at a motivating

level in accordance with market standards, which should help reduce the risk of turnover of personnel.

Risks from Market Conditions

The Finansa Group’s businesses and revenues are closely related to economic conditions and financial

markets in Thailand and foreign countries, as well as changes in foreign exchange rates. Any severe change

in economic conditions may result in risks to the Finansa Group’s business operations, which could directly

affect its performance and its financial status. However, such effects may be reduced since an economic

downturn may create opportunities for the Company from other types of advisory services, such as financial

advisory services for debt restructuring. The Finansa Group’s operations not only concentrate on operations

in Thailand, but also in other countries, which helps to reduce the risk attributable to market conditions in

one country. Within Thailand, the Group has diversified into different business lines such as finance and

securities brokerage which also helps reduce the risk from fluctuations in revenues and earnings.

Foreign Exchange Risk

The Finansa Group consists of several subsidiaries that are registered and incorporated in foreign countries

and therefore has foreign currency-denominated assets and liabilities. As of 31 December 2007, the

Company and subsidiaries had significant foreign currency-denominated assets and liabilities which had not

been hedged against foreign exchange rate risk as shown below.

(Thousand unit)

Assets Liabilities

US dollars 34,066 4,489

Euros 19,105 16,320

At year-end 2007, Finansa had foreign long-term loans totaled Euro16.1m, which is secured by Synthetic

Collateralized Debt Obligation amounted to Euro18.0m. The loan accounted for 12% of total liabilities of

the Group. The management, on occasion and case by case, will manage the currency risk to keep the risk

at a low level.


Investment Risks

As the Company has a policy to invest in short-term and long-term investments, fluctuations in the securities

market and uncertain economic conditions may cause the value of these securities investments to decrease

in accordance with the market environment. This may affect the investment portfolio and operational

performance. In order to reduce such risks, the Company has formed an investment committee to establish

and monitor investment policies for securities available for sale. Investment is conducted in a fashion that

spreads the risks by investing in a variety of securities. Investments are focused on companies with sound

fundamentals, high liquidity, and strong financial performance. In addition, the Company has created

measures to implement stop loss limits as well as reserves for impairment losses. For long term investments in

funds, the risks can be reduced through the specific, internal policies of the various funds. Examples include

investing in companies with stable cash flows, strong growth potential, as well as undervalued companies.

The Company also places an emphasis on investments that will grant a board seat so that Finansa can add

value to the company in providing advice in the areas of financial management and corporate governance

with a view to both improving profitability and lowering investment risk.

As of 31 December 2007, the Company and its subsidiaries registered net investment in securities of

Bt2,483m. Classified by investment objective, they consisted of current investments of Bt970m (39%),

investments in associated companies and funds of Bt294m (12%) and long-term investments of Bt1,219m

(49%). Investments classified by type of securities comprised debt instruments of Bt1,417m (57%) and

equity instruments of Bt1,066m (43%).

Risks from Arrangement and Underwriting of Sales of Securities

The uncertainty of the securities market environment may affect investors’ decisions in subscribing to

securities to which affiliates of the Company act as underwriter. This may result in the risk of having unsold

securities in the investment portfolio of the Company, and losses may be incurred after such securities are

traded on the SET. In 2007, the political situation created an unfavorable environment for such transactions;

therefore, the risk associated was minimal. However, such risks may increase if this business grows in the

future.

To mitigate the risk from each underwriting, preliminary information on the companies offering the securities

will be examined and analyzed and a valuation will be conducted to derive a suitable price. The demand for

the securities will also be assessed to help determine the underwriting amount and efforts made to obtain a

definitive confirmation of subscription from investors. Moreover, the Company can further reduce risk by

seeking other financial institutions that are interested to become co-underwriters for the securities.

Competition in the Securities Business

The Securities and Exchange Commission Board approved a temporary extension of the current minimum

securities brokerage fees which are 0.15% for internet trading and 0.25% for normal trading for another

three years starting from 1 January 2007. During the following two years, the fee will be changed to a

sliding scale, and then the fees will be fully negotiable. This has increased competition in providing internet

trading services. To reduce the impact from competition, Finansa will focus on competing on the basis of

the quality of work provided, instead of price, and determining target client groups with potential.


Termination or Amendment of an Advisory Services Agreement

The Finansa Group’s business and financial performance may be affected and may be different from

expectations if revenue from the investment advisory and investment management services is impacted as a

result of the termination of or change in the compensation terms. Therefore, the Finansa Group is exposed

to the risk of a termination of an Agreement or a reduction in the compensation terms. Nevertheless, the

past performance of the advisory and the investment management services provided to the Funds has in

most cases generated high returns for shareholders in these funds. For this reason, the executives believe

that such performance will help reduce the risk of termination or change. (Note: Foreign funds under the

management of Finansa Group are not under the supervision of the Securities and Exchange Act and the

Office of the Securities and Exchange Commission.)

Management Policies Influenced by Major Shareholders

The major shareholders of the Company are Mr. Eugene Davis and Mr. Vorasit Pokachaiyapat who together

own approximately 30% of the total outstanding shares of the Company. This enables them to exert

significant influence over the resolutions of shareholders’ meetings, except for specific important matters

such as changing certain regulations and increasing or decreasing registered capital, for which the law requires

three-fourths (3/4) of the votes. To monitor and balance the management control of the major shareholders,

all of the other shareholders with the right to vote and attend the relevant meetings may jointly vote for the

examination of certain matters. This is additional to the monitoring done by the Audit Committee, which

works on behalf of the minority shareholders.


Index of Abbreviations

“ADF” means ADF Management, Limited

“BLR” means BLR Management Pte. Ltd.

“Company” or “FNS” means Finansa Public Company Limited

“FAM” means Finansa Asset Management Limited

“FC” means Finansa Credit Limited

“FCAM” means Finansa (Cambodia) Limited

“FCL” means Finansa Capital Limited

“FFM” means Finansa Fund Management Limited

“FHK” means Finansa Hong Kong Limited

“FIA” means Finansa Investment Advisors Limited

“FIC” means Finansa Investment Consulting (China) Co., Ltd.

“Finansa Group” means The Company, its affiliates and subsidiaries

“FINDO-H” means PT Finansa (Indonesia) Holdings Limited

“FS” means Finansa Singapore Pte Limited

“FSL” means Finansa Securities Limited

“FST” means Finansa Science and Technology (Beijing) Co., Ltd.

“PSPC” means Prospect SPC Limited

“SEC” means Office of the Securities and Exchange Commission

“SET” means The Stock Exchange of Thailand

“SIF” means Siam Investment Fund

“SIF II” means Siam Investment Fund II, L.P.

“SIF III” means Siam Investment Fund III, L.P.

“SIP” means Siam Investment Partners, L.P.

“SIP III” means Siam Investment Partners III, L.P.

“VEF” means The Vietnam Equity Fund


Jeneral Information

Company Name Finansa Public Company Limited

Head Offi ce Location 16th Floor, TISCO Tower, 48/29, 48/32 North Sathorn Road, Khwang Silom, Khet Bangrak, Bangkok 10500, Th ailand

Type of Business Th e Company and its affi liates provide a range of fi nancial and investment advisory services both within and outside the country and which can be divided into four types of businesses: 1) Investment Advisory and Investment Management 2) Investment Banking 3) Securities 4) Finance

Registered No. 40854500681

Telephone (662) 697-3700, (662) 697-3800

Facsimile (662) 266-6688

Home Page www.fi nansa.com

Registered Capital Baht 1,500 million

Registered Paid-up Capital Baht 625 million

Registered Share Capital 300 million Ordinary Shares

Par Value per share Baht 5.00

Share Registrar Th ailand Securities Depository Company Limited 4th, 6-7th Floor, Th e Stock Exchange of Th ailand Building 62 Ratchadapisek Road, Klongtoey, Bangkok 10110 Tel.: (66) 0-2359-1200-1 Fax: (66) 0-2359-1259

Auditor Ms. Ratana Jala, Certifi ed Public Accountant (Th ailand) No.3734 or Ms. Rungnapa Lertsuwankul Certifi ed Public Accountant (Th ailand) No.3516 or Mr. Narong Pantawong Certifi ed Public Accountant (Th ailand) No.3315 Ernst & Young Offi ce Limited 33rd Floor, Lake Rajada Offi ce Complex 193/136-137 Rajadapisek Road, Klongtoey, Bangkok 10110 Tel.: (66) 0-2264-0777 Fax: (66) 0-2264-0789-90

fns 07

Documents

finansa securities

finansa credit

finansa assetmanagement

management report

finansa fanaense

finansa group100

total revenue

financial statements