Bfit 02

BFIT A N N U A L R E P O R T 2 0 0 25

To: Shareholders

The Audit Committee is responsible for any duties assigned by the Board of Directors. Theultimate responsibility is to ensure that the Company, listed in the Stock Exchange ofThailand, has a good governance as well as the appropriate and efficient internal controlsystem. The Audit Committee also supervises and makes sure that the disclosure offinancial reports is complete, transparent, adequate and reliable including the relatedtransactions that may create the conflict of interests. In addition, the Company’soperates within the scope of rules and regulations and the relating law.

The Audit Committee comprises 3 members as follows:

1. Mr. Pramote Pasuwat Chairman of the Audit committee 2. Mr. Pradit Rodloythuk Audit Committee 3. Dr. Nathapachara Chiarawongse Audit Committee

The Audit Committee meetings were held 4 times in 2002 and once in early 2003 toreview the quarter and annual financial statements. The meetings were attended by theManagement, the External Auditors, the Internal Auditors, and the Compliance Officersof Company and its subsidiary, BFIT Securities Co., Ltd.. The Audit Committee inquiredabout the details of the financial statement that may influence the Company’s operationsuch as the generally accepted accounting principles. With regard to the Internal ControlSystem, the Audit Committee has received reports from Internal Audit Department andits subsidiary regularly, and also the reports from regulated agencies; for example: theBank of Thailand. In conclusion, there was no action that would have a significanteffect on the Company.

The Audit Committee agreed to propose the financial statements ending at December 31,2002 audited by an external auditor to the Board of Directors and the shareholdersmeeting respectively. Moreover, the Audit Committee proposed to the Board of Directorsto appoint Ernst & Young Office Limited, represented by one of these auditors namelyMr. Sophon Permsirivallop, Mr. Narong Puntawong, or Miss Ratana Jala, as the auditor ofthe Company and its subsidiary for the accounting year ending on December 31, 2003.

Report from the Audit Committee (TRANSLATION)

On behalf of the Audit Committee

(Pramote Pasuwat)Chairman of the Audit Committee

February 24, 2003

Pramote Pasuwat


Unit : Thousand Baht 2002 2001 2000

Total Assets 7,300,088 7,290,323 6,971,470Total Liabilities 6,041,860 6,214,103 5,979,575Shareholders’ equity 1,258,228 1,076,220 991,895Interest and dividend income 387,202 388,622 435,697Non-interest income (Loss) 165,852 124,866 52,713Total income 553,054 513,488 488,410Net income (Loss) 397,235 278,023 270,361Net earnings (Loss) 162,583 77,841 77,064Number of shares (Thousand shares) 100,000 100,000 100,000

Financial ratio

Net profit margin (%) 29.40 15.16 15.78Return of Equity (%) 13.93 7.53 8.12Return of Total Assets (%) 2.23 1.09 1.13Earnings (Loss) per share(Baht per share) 1.63 0.78 0.77Dividend per share (Baht per share) 0.30 0.00 0.00Book value per share (Baht per share) 12.58 10.76 9.92BIS Ratio (%) 21.29 18.68 17.40Net Capital Rule Ratio (%) 522.29 176.46 410.86

Financial Status and Operating Performances


Name and address of the CompanyBangkok First Investment & Trust Public Company Limited (BFIT)Registration No. : PCL 146Type of Business Finance BusinessHead Office : 23rd Floor, Bangkok Insurance Building,

25 Sathon Tai Road, Thung Mahamek, Sathon,Bangkok 10120

Tel : 0-2677-4300Fax : 0-2677-4301Home Page : www.bfit.co.th

Subsidiary

BFIT Securities Company Limited (BFITSEC)Registration No. : (Kor) 21/2543Type of Business Securities BusinessHead Office : 22nd Floor, Bangkok Insurance Building,

25 Sathon Tai Road, Thung Mahamek, Sathon,Bangkok 10120

Tel : 0-2677-4330Fax : 0-2677-4331

Silom Branch : 8th Floor, Bangkok Insurance Building, Silom,302 Silom Road, Silom, Bangrak, Bangkok 10500

Tel : 0-2237-8000Fax : 0-2237-8095

General Information

Investment in Companies (10 per cent or higher)Ordinary Shares:

Type of Amount - Per cent Book Value Registered Paid-upCompany Name Business at cost of Capital Capital

(Mil. Baht) Holding (Mil. Baht) (Mil. Baht) (Mil. Baht)

BFIT Securiti es Co.,Ltd . Securities 399.99 99.99 411.76 400.00 400.00


Other ReferencesShare Registrar

Thailand Securities Depository Company Limited62 The Stock Exchange Building, 4th , 6th -7th Floor Ratchadapisek RoadKlongtoey Sub district, Klongtoey District, Bangkok 10110Tel. 0-2359-1200Fax. 0-2359-1259

AuditorsMr. Sophon Permsirivallop, Certified Public Accountant (Thailand) No.3182 and/orMr. Narong Puntawong , Certified Public Accountant (Thailand) No. 3315 and/orMiss Rungnapa Lertsuwankul, Certified Public Accountant (Thailand) No. 3516Ernst & Young Office Limited193/136-137 Lake Rajada Office ComplexNew Rajadapisek Road, Bangkok 10110Tel 0-2264-0777

Legal advisor-None -

Capital StructureRegistered capital Baht 1,500 million, divided into 150 million shares

of Baht 10 par valueIssued and paid-up capital Baht 1,000 million, divided into 100 million shares

of Baht 10 par value

Major ShareholdersTop ten major shareholders as of October 4, 2002 are as follows:

Name Number of % of Holdingshares

1. China Development Industrial Bank Inc. 49,500,000 49.502. HSBC International Trustee (Singapore) Ltd. 6,586,400 6.593. Thailand Securities Depository Co.,Ltd. for depositor 4,969,984 4.974. Bangkok Bank Plc. 3,750,000 3.755. Mr. Chone Sophonpanich 3,636,700 3.646. Miss Aruvarn Tiewtranon 3,184,000 3.187. Bangkok Insurance Plc. 3,108,595 3.118. Miss Valai Dilokvanich 2,906,786 2.919. Mrs. Boonsri Sophonpanich 2,033,450 2.03

10. Mrs. Mae Damrongchaitham 1,980,000 1.98

Source: Thailand Securities Depository Co.,Ltd.


Type of Business

BFIT holds four finance licenses as follows:

• Business of finance for commerce• Business of finance for development• Business of finance for disposition and consumption• Business of finance for housing

Moreover, BFIT is approved to act as financial advisor and debenture holderrepresentative, and/or trustee.BFIT has already separated its securities business to BFIT Securities Co., Ltd.(BFITSEC),a wholly own subsidiary of BFIT. BFITSEC holds four securities licenses as follows:

• Business of brokerage for buying and selling of securities• Business of trading in securities• Business of providing investment advice• Business of managing sale of securities

In addition, BFITSEC is allowed to manage provident funds under the private fundlicense, financial advisor, mutual fund selling agent, and securities registrar approvedby the Office of Securities and Exchange Commission.

Income Structure

Interest and dividend income

Loans and deposits 176.02 31.83 190.50 37.10 245.60 50.29

Investments 211.18 38.18 198.12 38.58 190.10 38.92

Total Interest and dividend income (1) 387.20 70.01 388.62 75.68 435.70 89.21

Less :

Interest expenses (177.38) (32.07) (178.89) (34.84) (225.44) (46.16)

Bad debt and doubtful accounts (2.24) (0.40) (134.61) (26.21) (459.68) (94.12)

Bad debt recovery 23.80 4.30 78.04 15.20 - -

Loss from debt restructuring - - - - (0.55) (0.11)

Reversal entry of doubtful

accounts re debts restructuring - - - - 467.62 95.74

Net Interest and dividend income 231.38 41.84 153.16 29.83 217.65 44.56

Non-interest income

Brokerage fees 79.87 14.44 18.08 3.52 49.46 10.13

Gain (loss) on investments 41.70 7.54 67.72 13.19 (33.08) (6.77)

Fees and services income 41.75 7.55 33.81 6.59 29.82 6.10

Other income 2.53 0.46 5.26 1.02 6.51 1.33

Total Non-interest income (2) 165.85 29.99 124.87 24.32 52.71 10.79

Total Income (1) + (2) 553.05 100.00 513.49 100.00 488.41 100.00

Consolidated Financial Statements 2002 2001 2000

Mil. Baht % Mil. Baht % Mil. Baht %


Business Operation

The businesses of BFIT and BFITSEC are separated pursuant to licenses as follows:

Bangkok First Investment & Trust PCL (BFIT)

• Money Market Investment• Commercial Lending and Project Finance• Financial Advisory Services• Debenture Holder Representative• Treasury and Investment in Securities

BFIT Securities Co., Ltd. (BFITSEC)

• Securities Trading Service• Mutual Fund Selling Agent Service• Bond Dealing• Provident Fund Management Services• Financial Advisory Services• Securities Underwriting• Securities Registrar• Securities Proprietary Trading

BFIT’s Financial ServicesMoney Market Investment

BFIT provides investment in the form of deposits in promissory notes for general public,corporate entities, foundations and associations that have surplus fund in the minimumamount of Baht 10,000 upwards with interest rates that are competitive with moneymarket conditions and with maturities ranging from call to any fixed terms. BFIT’spromissory notes can be used as collaterals for loans and are acceptable by generalfinancial institutions.

Moreover, BFIT also occasionally deals in a wide range of financial instruments suchas corporate notes, bills of exchange, bank-accepted bills, promissory notes issued bydomestic leading company in consideration of our customers’ benefits.

Commercial Lending

BFIT provides a wide range of commercial loan facilities to its clients, such as, loans forworking capital with various short-term maturities and/or loans to financeinventory or receivables.

Medium and long term loan facilities are also available to finance expansion or capitalexpenditures, both through direct lending or loan syndication. Interest rates on allfacilities can be established at fixed rate or floating rate through out the life of thefacilities. In addition, BFIT also provides aval and guarantee facilities to its clients.


Project Finance

A well-planned capital structure with acceptable debt to equity ratio is the key to asuccessful long term undertaking. Professional guidance, planning and structuring areimportant and contribute to a successful, profitable and financially sound operation.BFIT can assist in a number of project studies, including planning and evaluation,financial structuring for newly established entities as well as expansion projects ofexisting establishments. In addition, BFIT can also be appointed as financial advisor forthe issuance of common shares, preferred shares, warrants, debentures and stateenterprise bonds and as arranger, to help sell these securities to both the general publicand to specific institutional investors.

BFIT’s financial services are not limited to the role of financial consultant or financialadvisor. It can also extend to actual direct funding or arranging funds from otherfinancial institutions or through syndication. The services can also be extended throughBFITSEC for underwriting the issuance of equity shares or debts instruments, of whichBFIT can act as the financial advisor to ensure the success of fund raising.

Financial Advisory Services

BFIT and BFITSEC, a subsidiary, can provide financial advisory service for public limitedcompanies or private limited companies who desire to raise fund from the primarymarket through issuing equity securities, debt instruments or other securities via thepublic offering or the private placement in accordance with the definition of theSecurities and Exchange Commission as well as listing securities on the Stock Exchangeof Thailand. These services also include performing the due diligence and advisingthe proper fund raising exercise.

Besides, BFIT and BFITSEC are authorised to act as a financial advisor for the businesstake-over, the securities delisting, and other transactions that require an opinion ofa financial advisor pursuant to the notification of the Securities and ExchangeCommission and/or the Stock Exchange of Thailand, and the relevant authorities.

Debenture Holder Representative

As a debenture holder representative, BFIT offers service on behalf of debenture holdersto monitor the issuer’s compliance with the terms and conditions of the debentures forthe benefits of debenture holders. At present, we provide our service to 3 listedcompanies for debentures amounting to Baht 4,700 million.

Treasury and Investment in Securities

BFIT invests in securities in both primary and secondary market such as commonshares, government bonds, state enterprise bonds, corporate debentures, bills ofexchange, and etc.


BFITSEC’s Securities ServicesSecurities Trading Service

BFIT Securities Co., Ltd. is the broker numbered 27 in the Stock Exchange of Thailandunder the abbreviation “BFITSEC”. We provide brokerage services for both local andoverseas investors with cash or credit balance accounts. We employ efficient andreliable operation system together with up-to-date information technology andmaintain a pool of qualified and experienced staffs to help client to make informeddecisions and deliver quality service to them. Securities trading services include thefollowings:

- Broker and Dealer ServiceClient can opt to open securities trading account with us through conventionaltrading account, for direct contact with BFITSEC staff, or internet tradingaccount (available within 2003), for convenient and flexible trading.

- Securities Trading Advisory ServiceOur experienced marketing officers and certified analysts can offer professionaladvice to keep our clients make well-informed decisions in their trading ofsecurities.

- Securities financing.

Mutual Fund Selling Agent Service

BFITSEC also provides alternative investment products, besides direct trading ofsecurities through broker, as Mutual Fund Selling Agent. We have been approved by theOffice of the Securities and Exchange Commission (SEC) to operate as mutual fund sellingagent since the beginning of 2002. Currently, we are appointed as selling agent for OneAsset Management Co.,Ltd. and BBL Asset Management Co.,Ltd. for a total of 16 funds.

Bond Dealing

BFITSEC is a member of the Thai Bond Dealing Centre number 7 and provides bonddealing service for individual and juristic investors. The Thai Bond Dealing Centre offerssecondary market bond trading and improves the liquidity of the debt market.


Provident Fund Management Services

BFIT was one of the two leading finance and securities companies which pioneeredprovident fund management services since its inception in 1969. BFIT was also selectedby the Ministry of Finance to be one of the first ten authorized fund managers. After theseparation of the finance business and securities business in accordance with theMinistry of Finance’s policy, BFITSEC obtained private fund license from the Ministry ofFinance on December 26, 2000. Provident fund management business was transferredfrom BFIT to BFITSEC since March 30, 2001. Our provident fund management servicesinclude:

- advisory services on legal and tax aspects- establishment and registration services- administration services- management services

With more than 33 years experience in providing this service, BFITSEC recognizes thatthe provident fund will form an essential part of the members savings to support theirlife style after retirement or termination of employment. In managing the funds,we focus on maintaining security and consistent long-term return as the priorities, andwe are pleased to have earned the trust and satisfaction from our customers. At present,we manage funds for 276 companies, 9 of which are financial institutions, and we areamongst the top 10 fund management companies in the industry with approximatelyBaht 11,888 million under management.

Securities Underwriting

BFITSEC (formerly operated under Bangkok First Investment & Trust PCL.) has been thepioneer in the development of equity and debt market in Thailand since incorporation 31years ago. BFITSEC has participated in the establishment of the Stock Exchange ofThailand and the Thai Bond Dealing Centre. With vast experience and well recognizedtrack record in the securities business, BFITSEC can provide a complete range ofunderwriting services for every type of securities; common and preferred shares,corporate debentures, convertible debentures, warrants and state enterprise bonds.BFITSEC’s placing power and placing strategy for diversified investor groups will ensurethe success and optimum diversification of the issue.

Securities Registrar

BFITSEC provides securities registrar service to several entities in both private and publicsectors. At present, we provide our service to state enterprises, listed and non-listedcompanies for state enterprises bonds and corporate debentures amounting to Baht16,000 million.

Securities Proprietary Trading

From time to time, BFITSEC invests a portion of the surplus funds in a diversifiedportfolio of investments including listed and non-listed entities.


Important Changes during the Year

In 2002, BFIT Securities Co.,Ltd., a subsidiary, is allowed to act as mutual fund sellingagent and financial advisor by the Office of Securities and Exchange Commission OnJanuary 16, 2002 and March 22, 2002 respectively.

Industry Situation and Competition

Finance Industry in 2002In 2002, the finance industry undergone some notable changes. Firstly, the number ofinstitutions within this sector was reduced to 19 from 21 in April 2002 due to the closureof a credit foncier and the upgrade of Ekachart Finance Pcl to a bank. As a result, totalgross loans of finance companies as of 31 December 2001 of 169.652 billion baht wasreduced to 148.951 billion baht by the end of April 2002. Regardless, total financecompanies’ outstanding gross loans grew only marginally over the twelve-month periodfrom January to December adding just 4.88 per cent from 169.65 billion baht at thebeginning of the year to 177.94 billion baht ending December.

Secondly, for the most part of the year, excluding the loans of the two finance companieswhich were closed eventually, the sectors that show significant loan growth were hirepurchase and leasing, securities trading and margin loans, and short term lending. Hirepurchase credits enjoyed a particularly robust growth in 2002 growing from 46.12 billionbaht to 80.32 billion baht, or a growth of 74 per cent year on year, in tandem with thegrowth in sales of new vehicles as the automobile industry picked up over the year. In2002, in excess of 400,000 units of new vehicles were sold in the domestic market incomparison with 297,000 units in 2001.

The growth in securities trading and margin loans resulted from a resurgence ofinvestment activities at the Stock Exchange of Thailand saw trading volume jumped to8.5 billion baht in 2002 on average per day, as compared to 6 billion baht average in2001. Investors interest in the SET increased as the result of their anticipation of bettereconomic performance in 2002. True to expectation, the Thai GDP grew 5.2 per cent forthe whole year. Securities trading was particularly heavy in the first half of the year.

The growth of securities trading and margin loans are the loan that the financecompanies provide for securities. In 2002, the growth of securities business was highbecause the average trading volume in the Stock Exchange of Thailand increasedfrom 6 billion baht in 2001 to 8 billion baht in 2002. The said growth resulted fromthe economic recovery which represented the Growth Domestic Products increasingto 5.2 per cent in 2002.


Finance companies also showed an interesting trend in 2002. As there were fewopportunities to lend in the traditional lending channels, short term lending came backin fashion. Instruments such as Notes and Bills of Exchange have made some revival in2002, with increasingly more companies issuing them to finance their operations. Manyfinance companies offered facilities through purchasing of such instruments, andadvances through these instruments jumped by 7.31 per cent.

Corporate lending activities remained constrained as many finance companies continuedto restructure and recover their problem loans. Over the 12-month period, endingDecember 2002, lending to the corporate sector declined from 94.38 billion bahtto 70.98 billion baht, or a reduction of 24.80 per cent. Mortgage lending showed asimilar trend as competition from banks had limited the participation of financecompanies in this sector. Outstanding gross loans suffered a 23.46 per cent declineover the same period, down from 17.15 billion baht to 13.13 billion baht. As financecompanies normally have a higher cost of funding, it is harder for them to competewith banks, which enjoined a lower funding source. Also, finance companies inherentlycould not match their funding and lending activities as efficiently as the banks inlonger term loans.

It is also interesting to note that the persistent low interest rate environmentactually accelerated the repayment of loans as borrowers could secure new loans at lowercost from other financial institutions. Thus, all financial institutions were pressured tonarrow the spread they charged their customers in order retain them. Lower yield fromloans, early repayment, as well as loan write-off on problem debtors all contributed tothe lower gross loan amount from the corporate sector in 2002.

Interest Rate Trend

The Bank of Thailand lowered the benchmark 14-day government bond rates twice in2002 to 1.75 per cent. A depressed interest rate trend complied with ample liquiditywithin the financial system, and the Bank of Thailand’s desire to boost domesticconsumption prompted an easing monetary policy. Large private commercial banks,confronted with limited lending opportunities despite excess liquidity, reduced interestrates across the board. The MLR was lowered to 6.75 per cent, while the savings depositrate was lowered to 1.50 per cent. Banks are expected to lower their interest ratesfurther in 2003. However, they are expected to maintain an interest rate spread of5.25 per cent, which they have done since the beginning of 2000.

Non-Performing Loans

Outstanding non-performing loans of finance companies decreased by 2.87 billion bahtfrom December 2001 to November 2002, or a reduction of 18.59% over the eleven-month period from 15.45 billion baht to 12.58 billion baht. Of which, 3.17 billion bahtwere new non-performing loans, while 4.72 billion baht were restructured loans thathad relapsed to non-performing loans. However, over the same period, 4.84 billion bahtof non-performing loans were restructured, while 5.78 billion baht of impaired loanswere reclassified due to a combination of reasons, such as, transfer to performingcategory, transfer to Thai Asset Management Corporation (TAMC), full provision,principal repayment, and write-off. The non-performing loans of the finance sector as


of November 2002 was at 7.82% of total loans under the previous definition. However,the Bank of Thailand, following the recommendation of international ratings agenciesand to conform with international standards, reverted to the more conservativedefinition of non-performing loans as of December 2002. Under the new definition,non-performing loans would include loans classified as substandard, doubtful, doubtfulof loss and loss, including doubtful of loss loans, which have already been written offearlier but not yet been written back. Outstanding non-performing loans of the financesector as of 31 December 2002 accounted for 25.50 billion baht or 14.73% of total loansunder the new definition.

Outlook of Finance Industry

In view of the heigthened competition and fewer opportunities to expand their loan base,finance companies will be forced to resort to cost cutting measures in order to operateefficiently. Funding and liquidity management will pose a challenge. Companies withexposure to hire purchase and leasing loans may see a higher level of non-performingloans if the interest rate starts to rise. It is also expected that their growth in hirepurchase lending in 2003 will be moderate as demand for new cars starts to decline.Finance companies will have to diversify their revenue stream by focussing more on feebased income such as financial advisory, financial restructuring, and fund managementactivities.

Securities Business in 2002

Trading in the Stock Exchange of Thailand in 2002 improved significantly from 2001.The average daily trading volume for the year jumped from baht 6.44 billion in 2001 tobaht 8.36 billion in 2002. At its peak the SET index reached 430.67 on 14 June, from thelowest level at 302.38 on 2 January.

The pick up of investment activities, particularly in the first half, were attributable toa number of factors. Firstly, investors anticipated that the Thai economy would improveconsequent to the implementation of new fiscal measures. Anticipating economicrecovery, foreign investors poured in money into the local bourse, attracted by the lowvaluation in comparison with other regional markets. The SET registered foreign net buyposition in excess of 17 billion baht in 2002 in comparison with a net sell of close to 6billion baht in 2001. Secondly, encouraged by the low interest rate available, as a resultof the easing monetary policy, consumer spending rose sharply. As well, the flow offunds searching for investments offering better return than bank deposits also benefitedthe SET to some extent.

A stable government, better corporate governance, continuing improvement in debtrestructuring and in the tackling of the problem of non-performing assets, and improve-ment of the legal infrastructure also supported the investment climate as a whole.

In the second half of 2002, the SET index consolidated, generally due to the slowdownof the world economy and the concerns about the weakness of the United States’economy. On top of that, the fear of terrorist threats and the heightened geo-politicaltensions between the United States and Iraq and the Korean Peninsular also dampenedinvestors’ sentiment.


Competition Intensifying

However, even after the SET had reestablished the minimum commission rates,competition in the securities industry remained keen. In 2002, a number of sub-brokerswere encouraged by the SET to upgrade to full brokers and were offered steep discount inmembership fee. Previously, a brokerage membership fee could cost 200 million baht,but the new fee were only 30 million baht. This prompted many sub-brokers namely,Trinity Securities Co., Ltd., Bualuang Securities Co., Ltd., Finansa Securities Co., Ltd.,Credit Suisse First Boston Securities (Thailand) Ltd., CLSA Securities (Thailand) Ltd.,Asset Plus Securities Public Co., Ltd., and HSBC Securities (Thailand) Ltd., to upgrade tofull brokers. Meanwhile, new players also joined in the fray with the set-up of IBSecurities Co., Ltd., Syrus Securities Co., Ltd. and Globex Securities Co., Ltd.. As theresult, there were 36 brokers at the end of 2002 as compared with 27 in 2001. Notsurprisingly competition for qualified personnel in marketing, investment banking, andresearch also intensified.

Brokerage Fee

With the reintroduction of a minimum fixed brokerage fee charges (0.2% for onlinetrading accounts and 0.25% for regular accounts) on 14 January 2002, performances ofmost brokers have swung back into the black in 2002 after having posted losses in 2001when brokerage fee was fully liberalised. The minimum fee structure would be in placeuntil early 2005.

Revival of Investment Banking

The resurgence in trading volume and the pick up of the SET index prompted manycompanies, including state enterprises, to raise fund in the bourse. Altogether therewere 22 IPOs in 2002 compared with 9 in 2001. In terms of value, 10.22 billion baht incapital was raised in 2002 versus 31.25 billion baht in 2001. The extraordinarily largerfigure in 2001 was due to PTT, which alone raised almost 30 billion baht in capital inDecember 2001. Excluding PTT, IPO fund raised grew by 5.8 times year on year.

Outlook for Securities Business

Securities trading in the SET will be affected if a war breaks out in the Middle East.The severity of which will depend on the duration of the conflict as well as the extent ofdamage to the oil industry. High oil prices are the anathema of the world economy,which Thailand will not be immuned from. However, competition in the securitiesbusiness will still be keen, and the industry may see more mergers, or even takeover bynew operators. Given the fierce competition, brokers must adapt to the new reality andimprovements with respect to services offer to customers, provision of quality research,implementation of cost control measures, and diversification of revenue source to otherfee based income will be necessary. This situation may even be more severe if the marketconsolidates further should the average daily trading volume in the SET in 2003 drops tolevel lower than those in 2002.


Risk Factors

The following risk factors might affect the issuer and the holders of securities:

External Factors: Of late, the ongoing geopolitical tensions and war in the Middle Eastand the unsetting situation in Korean Peninsula has caused the consequential rise in oilprices, and cloud the global economic outlook. The slowdown of the world economy asthe result of the slowdown of the US, Japanese, and European economies may havenegative impacts on Thailand’s exports and GDP growth. In addition, any change in thelocal rules and regulations as stipulated by the Bank of Thailand, the Office of Securitiesand Exchange Commission and the Stock Exchange of Thailand also are considered risksthat are beyond the control of any company.

Internal Risk Factors: the degree of the internal risks are variable:

1. Interest Rate: Interest rate volatility can normally affect the interest spread.The larger the interest spread the higher the net earnings for the company. If theinterest spread is low due to excess liquidity and when lending must be carefullymonitored, the company will have lower bargaining power, and hence can also havenegative impacts on the earnings. Nevertheless, the company is closely monitoringthe interest rate movement in order to effectively set the most suitable strategy offixing both the lending and deposit rates.

Interest rate volatility also affects investments in debt instruments such as bondsand debentures. If the market interest rates move higher, the expected returnson the investments in bonds would also increase. Hence, the market price of thebonds would fall. Under such situation, the company might choose to reduce itsrisks exposure via adjustment to the duration of the bonds portfolio and selectinggood quality bonds that have liquidity for trading.

As at the end of 2002, the company’s investments for sales in both short-termand long-term bonds at market value excluding accrued interest were Baht2,145.64 million. If the market interest rates rise or fall by 1.00 percent it wouldaffect the market value of the bonds for sale portfolio by 2.23 percent of theinvestment value in opposite direction. However, if the company holds the bondsfor sale until maturity the cost of the investment in the bonds will not be affectedby the interest rate volatility.

In addition, the company also has investments in bonds that are intended tohold until redemption worth Baht 1,189.02 million. In this case, interest ratevolatility does not have any effect on the company’s accounting. The yield of theinvestment will be equivalent to the rate of return on the investment.

2. Lending Risk: This arises from loans that default in payment of interest or principal,effectively becoming a non-performing loan resulting from losses incurred by thedebtor due to several factors including an economic slump, the fall of purchasingpower of consumers, or excess production capacity.

Hence, the company has to adopted conservative lending policy covering all itslending activities. Lending is focused on medium to large corporations whichnormally have lesser financial risks than the small business operators and individualborrowers. The company utilizes its credit analysts who scrutinize the customers’


financial status and make proposals to the credit committee for final creditapproval. The line of authority and credit approval process is clearly defined. Inorder to reduce the concentration risk in any particular industry, the companyadopts the credit policy of lending out to several industries that have high growthpotential. This credit policy is also in line with the rules and regulations asstipulated by the Bank of Thailand.

Notwithstanding the fact that the company has been adopting a proactive policyin risk management through a credit committee, all doubtful accounts are closelymonitored. The company’s debt restructuring committee is ready to resolve andspeed the recovery of non-performing loans and to provide assistance for alldoubtful accounts. If the company needs to set aside provisions it will carry out thisstrictly in accordance with the Bank of Thailand requirements. In some cases, thecompany has even surpassed the requirement of setting the provision whichindicates its proactive and conservative role in taking on such action.

3. Foreign Exchange: The depreciation of the Baht can have adverse effects on thecompany’s foreign debt obligations. The larger the depreciation the higher the valueof the debts. Presently, the company does not have any foreign exchange risks asthere are no foreign currency debts. The company had fully written down the onlyinvestment in a non-listed equity which is denominated in foreign currency.

4. Capital Adequacy: The company’s capital fund is primarily used for extending newcredits and for making further investments through the most proper and effectiveallocation of funds. The company maintains a capital-to-risk assets ratio which ishigher than that required by the Bank of Thailand. The capital adequacy risk factoris closely monitored on a daily basis by the responsible credit control section of theloan and placement department which checks and re-examines the outstandingbalance to ensure that they are in line with the approved credit.

The company’s investment in equity are monitored so that the value of the initialinvestment cost does not exceed 60 per cent of the capital fund at any one time,excluding those equity that have been derived from debt restructuring. To controlthe single credit risk factor, the company also factors in the investment in equityand debts instrument with credit extension. The responsible credit officer mustmake sure that the total exposure of each customer does not exceed that requiredby the Bank of Thailand.

As at the end of 2002, the company’s capital-to-risk assets ratio was at a highlevel of 21.29 per cent, in comparison with the Bank of Thailand’s requirement of8.0 per cent. Hence, there is more than sufficient capital adequacy for new lendingand further investments, including provisions for assets deterioration in theforeseeable future.

However, the Bank of Thailand requires that the shareholders’ equity positionshould at no time be less than 75 per cent of paid-up capital. Should the capitalfund fall below the 75 per cent level of the company’s paid-up capital, the Bank ofThailand prohibits the company to borrow new funds or to take deposits fromthe public, unless a special approval has been given. As a precaution to reduce suchrisks, the company has obtained approval from its shareholders and also from


the Bank of Thailand and has resolved to raise the registered capital by another45 million shares with a par value of 10 baht. The company can call for this newissues to be paid up until the end of 2003.

5. Mismatch between Source of Funds and Utilization of Funds: A mismatch betweenthe source of funds and utilization of funds could affect the liquidity of thecompany. As at the end of 2001, the company’s major source of funds came fromdeposits. Of this, 77.66 per cent are deposits with a duration of less than 12 monthswhich is quite typical within the industry. Whereas, about 51.25 per cent of thecompany’s lending is longer than one-year period and is mainly concentrated in themanufacturing and commerce sectors. Although most of the deposits are short term,a majority of them are rolled over automatically upon maturity, hence providingthe company with a steady source of funds. The company’s success in increasingits depositor base for the over 12-month deposit accounts from 15.73 per cent oftotal deposits in 2001 to 22.34 per cent in 2002 helped to minimize the impacton mismatch between its source and uses of funds.

It should be noted that the proportion of deposits or lending on the above-mentioned are calculated based on the remaining period of contract accordingto notes to financial statements of the company only.

6. Liquidity Risk: A liquidity risk will arise when the company cannot make paymenton its debt when it is due. The company utilizes a risk control system that complieswith the Bank of Thailand requirement that states that liquid assets must bemaintained at not less than 6 per cent of the company’s total borrowings from thepublic, both domestic and overseas. These liquid assets can be cash deposits withthe Bank of Thailand, government and state enterprise bond holdings and cashdeposits at locally-registered financial institutions.

When there is a need for cash, for example in case of debt repayment on thepromissory notes at expiration or expansion of new credits, the responsibledepartment will know in advance and will maintain sufficient liquidity for suchmatters. By reviewing the daily financial status report, the company is able toeffectively manage its liquidity. In an emergency case or there is no advance notice,the company has established an emergency backup account with financialinstitution to provide liquidity. However, given the current excess liquidity in themarket, the company does not have any liquidity problem. As at December 31, 2002the company’s liquidity ratio was at 41.14 percent of outstanding borrowings anddeposits as mentioned in financial statements of the company only.

7. Market Volatility Risk: Stock market volatility that has an negative impact on the SETIndex and trading turnover will bear directly on the brokering business income andweigh on the company’s investment portfolio. There can also be repercussions tothe financial advisory business income which might decline. The combination ofnegative factors put pressure on the management to search for new sources ofincome that are within the legal limits, and to reduce expenditures that are deemedunnecessary. Staff rotation instead of new recruits are the norm in the presentindustry situation.


8. Risk arising from investing in listed securities: The majority of company’s investmentin shares are non-listed companies’ shares with some listed shares acquiring fromdebt restructuring. Direct investment in listed securities is done through BFITSEC.This type of investment has the risk of market price volatility as adjustment to thepricing in every accounting period is required to account for market valuation.However, the majority of these investments are focused on listed securities withsound fundamentals and those that pay dividends. Hence, the effects of marketprice volatility is somewhat minimal. Moreover, the investment committee also hasa policy to stop loss when the listed security’s share price falls below a designatedlevel, in order to prevent further losses from incurring.

9. Risk arising from reliance on large customers: The securities brokerage business hasthe risk of being reliant on large customers as the 10 largest customers make up asignificantly high proportion of the trading turnover in relation to the totaltrading volume. If the company were to lose this group of value customers thenits income from securities brokerage business will be affected. Hence, there is apolicy to reduce risks arising from concentrating in any one group of customers.This will be done through expanding the customer base via the means of internettrading, for example, and educating and providing up-to-date information for themarketing officers. In addition, there might be new recruits to provide moreeffective assistance to the existing marketing staffs during the time when themarket trend is positive.

10. Competition Risk: Mergers and business closure of several brokerage firms haveleft behind a number of licenses for sale. In addition, sub-brokers will be allowedto upgrade to member of the SET if they pay the fees as required by the SET.Hence, if the market environment improves the brokering business will have morecompetitors. Under such situation, the company will try to reduce its risks in thefuture competitive environment through the expansion of its customer base andstrengthen services to customers.

11. Management Risk: The majority of management executives have been employed withthe company for a long time and possess high experience and knowledge about thenature of the business. The fact that the management has steered the companythrough the economic crisis of the past few years has been evident. In accordancewith the company policy of decentralization the management has continued toprovide and transfer knowledge and experience to the mid-level managementofficers in attempting to reduce risks.

12. IT System Risks: A modern IT system-linked database with high accuracy andtimely service is very crucial in the decision-making process for the day-to-daybusiness operation amid the intense competition in the industry. Such systemis designed as follows:

12.1 Workflow and Database: These have been developed internally by the company’sstaffs who have been responsible for the efficiency and effectiveness of thesystems to provide support for all the needs of the end-users. Concurrently,the IT system is being upgraded on a continual basis and in line with localindustry standards to underpin the increasing demand and competitive edgeof the securities business.


12.2 System Hardware: The company has set up a contingency backup plan for allits computer hardwares including the peripheral equipment. A back-up systemhas been developed to safeguard the company’s databases. A set of stand-bycomputer system is available in the event that the central computer systemfails, so that the daily business operation would not be affected.

12.3 System Network: A modern local area network (LAN) system is currently in useto provide interactive on-line access for all users within the company.A network firewall is also in place to prevent any illegal entry. Moreover, thecompany’s system network has the capability to link up with other outsidesources such as the Stock Exchange of Thailand and the Bank of Thailand.A contingency plan and a backup system network have been prepared andwould be ready to provide support and ensure that the daily businessoperation can run smoothly should the existing LAN network faces a link-updifficulty with the external sources.

12.4 Trained Staffs: The company has well-trained and skilled IT staffs whocontinue to receive support from the management in terms of training andworkshop attendance in order to lift each staff member’s efficiency andknowledge about this fast-changing global technology.

13. Risk arising from staffs: The majority of staffs have been employed with thecompany for a long time and have accumulated extensive professional experience.However, given the highly competitive nature of the company’s business amidthe fast-changing investment conditions over the past few years, some staffs mightfind it difficult to adjust to the changes. Hence, the company has introduced apolicy to provide training and orientation for further development of its humanresources. New staffs with special skills and knowledge are also being recruitedto help lift the efficiency of the business operation.


Inve

stm

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Management StructureThe company has 3 committees comprising of the board of directors, the executivecommittee, and the audit committee.

Authority of Board of Directors

The board of directors, in conducting the business of the company, shall comply withall laws, the objects and the articles of association of the company, and the resolutionsof the shareholders’ meeting, and summon a general meeting of shareholders and anextraordinary general meeting. However, in case any activities require, pursuant torelevant rules and regulations, the approval of the shareholders before entering intosuch transactions, the board of directors shall comply with such rules and regulations.

As of December 31, 2002, the company has an advisor and a board of directorscomprising of 10 directors. All of them have no kinship. List of the board of directors isas follows:

Advisor to the Board of Directors

Mr. Choedchu Sophonpanich

The Board of Directors

1. Mr. Paisal Sricharatchanya Chairman of Board of Directors2. Mr. Pramote Pasuwat Director and Independent Director3. Mr. Pradit Rodloytuk Director and Independent Director4. Dr. Natthapachara Chiarawongse Director5. Mr. Chiang Sung Director6. Ms. Chia-li Hu Director7. Mr. Samuel Shih Director8. Mr. Kah-Hua Yeo Director9. Mr. Chokechai Tanpoonsinthana Director

10. Mr. Puck Bhengsri Director and Secretary

Authority of Executive Committee

The executive committee shall have the power to manage the business and theoperations of the company as specified under Article 26 and subject to the discretion ofthe board of directors.

As of December 31, 2002, the executive committee comprised of 4 members as follows:1. Mr. Samuel Shih Chairman of the Executive Committee2. Mr. Chokechai Tanpoonsinthana Member of the Executive Committee3. Mr. Kah-Hua Yeo Member of the Executive Committee4. Mr. Puck Bhengsri Member of the Executive Committee

Management


Authority and Responsibilities of Audit Committee

The audit committee has the scope of duties and responsibilities as set forth bythe board of directors as follows:

• Oversee the company’s financial reporting process in which the financialstatements must be correct, sufficient, and credible;

• Ensure that the company has adequate and effective internal control system;• Select the auditor and fix their remuneration;• Ensure that the company performs in compliance with all relevant laws and

regulations;• Ensure that the company does not engage in any activities that may lead to a

possible conflict of interest.• Operate any duties assigned by the board of directors; and• Prepare an audit committee report and disclose in the company’s annual

report.As of December 31, 2002, the audit committee comprised of 3 members as follows:

1. Mr. Pramote Pasuwat Chairman of the Audit Committee2. Mr. Pradit Rodloytuk Member of the Audit Committee3. Dr. Natthapachara Chiarawongse Member of the Audit Committee

Executives

As of December 31, 2002, all of executives are as follows:1. Mr. Chokechai Tanpoonsinthana Managing Director2. Mr. Samuel Shih Deputy Managing Director3. Miss Aruvarn Tiewtranon Senior Vice President Investment

Advisory Department4. Mr. Ovart Phanprechakij Vice President Credit Department5. Mr. Manop Himakorn Vice President Operation

Department6. Mr. Thanasarn Ampatemee Assistant Vice President Credit Department7. Mrs. Choochit Teyateeti Assistant Vice President Credit Department8. Mrs. Numpetch Sabaichai Assistant Vice President Personnel Department9. Miss Wimon Chiramongkolgarn Assistant Vice President Information

Technology Department10. Miss Yuphadee Tulanonda Manager Treasury Department11. Mrs. Sirisook Chutanondha Manager Trustee Department12. Mr. Kanokporn Liewsuwan Manager Legal Department13. Mr. Yingyong Sunkatiprapha Manager Audit Department


Recruitment of Directors and Executives

The company has no nominating committee. The selection process in appointing adirector or an executive is as follows:

Component and Appointment of the Board of Directors

According to the articles of association of the company, the board of directors shallcomprise of not more than 11 directors, provided that at least half of all directors musthave their resident in Thailand.

The directors shall be elected at the general meeting of shareholders, provided that eachshareholder shall have a number of votes equal to one share per one vote. Eachshareholder shall exercise all the votes he has to elect one or more persons as directorsbut he shall not split his votes in favor of any candidates. The person receiving thehighest number of votes in the respective order of the votes shall be elected as directorsup to the total number of directors required or to be elected at such time. In theevent that a number of persons received an equal number of votes for the lastdirectorship exceeds the number of directors the company required or to be elected atsuch time, the chairman of the meeting shall have a casting vote. At every annualgeneral meeting, one-third, or the number nearest to one-third, of the directors shallretire from office.

Component and Appointment of the Executive Committee

According to the articles of association of the company, the executive committee shallcomprise of not more than 5 members nominated by the board of directors.

Component and Appointment of the Audit Committee

The board of directors shall appoint the audit committee who meet all the qualificationsprescribed by the Stock Exchange of Thailand. The term of service of the auditcommittee is 3 years.

Appointment of Assistant Managing Director or Higher Level

Such appointments shall be approved by the board of directors.


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9.M

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ber

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ram

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ai I

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tute

of

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ctor

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ocia

tion

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.B.A

. (Q

uant

itat

ive

Anal

ysis

& F

inan

ce)

-M

.S.

(Civ

il En

gine

erin

g)Un

iver

sity

of

Wis

cons

in (

Mad

ison

Cam

pus)

-B.

E. (

Civi

l Eng

inee

ring

), C

hula

long

korn

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vers

ity

Incr

ease

(De

crea

se)

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ng t

he y

ear

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f De

c 31

,200

2

Num

ber

of s

hare

held

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rien

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ion

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e

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-Pr

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tAu

thor

ized

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ctor

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kok

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estm

ent &

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ublic

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pany

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ited

2000

-Pr

esen

tDi

rect

or a

nd D

eput

y M

anag

ing

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ctor

BFIT

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urit

ies

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pany

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2001

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esen

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rect

orTh

e Th

ai B

ond

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ing

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re20

00-

Pres

ent

Dire

ctor

Inve

stm

ent

Bank

ing

Club

,As

soci

atio

n of

Sec

urit

ies

Com

pany

1997

-Pr

esen

tEx

ecut

ive

Dire

ctor

Siam

Cit

y In

sura

nce

Com

pany

Lim

ited

1999

-20

00As

sist

ant

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agin

g Di

rect

orBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d19

93-

1999

Dire

ctor

and

Man

ager

of

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orat

e Fi

nanc

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part

men

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

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lic C

ompa

ny L

imite

d

10.

Mr.

Puck

Bhe

ngsr

i

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ctor

and

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reta

ry

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0-

-Di

rect

or C

erti

ficat

ion

Prog

ram

cla

ss 1

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02Th

ai I

nsti

tute

of

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ctor

Ass

ocia

tion

-M

.S.

(Inv

estm

ent)

, Pa

ce U

nive

rsit

y, N

ew Y

ork,

U.S

.A.

-M

.B.A

., L

ong

Isla

nd U

nive

rsit

y, N

ew Y

ork,

U.S

.A.

-B.

A. (

Acco

unti

ng),

Chu

lalo

ngko

rn U

nive

rsit

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ease

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ear

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f De

c 31

,200

2

Num

ber

of s

hare

held

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rien

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ucat

ion

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e/Po

siti

on

1999

-Pr

esen

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or a

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eput

y M

anag

ing

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ctor

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kok

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t Inv

estm

ent &

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pany

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2000

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thor

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ctor

BFIT

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pany

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1999

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resi

dent

, Ov

erse

a Bu

sine

ss D

epar

tmen

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ina

Deve

lopm

ent

Indu

stria

l Ban

k In

c.,

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an19

97-

1999

Bran

ch M

anag

erRe

publ

ic N

atio

nal B

ank,

Tai

pei B

ranc

h19

96-

1997

Mar

keti

ng M

anag

erBa

ngko

k Ba

nk,

Shan

ghai

, Ch

ina

1994

-19

96Br

anch

Man

ager

Stan

dard

Cha

rter

ed B

ank,

Xia

men

, Ch

ina

2.M

r. Sa

mue

l Shi

hDi

rect

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ndDe

puty

Man

agin

g Di

rect

orCh

airm

an o

f th

e Ex

ecut

ive

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mit

tee

--

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rect

or C

erti

ficat

ion

Prog

ram

cla

ss 1

6/20

02Th

ai I

nsti

tute

of

Dire

ctor

Ass

ocia

tion

-Ba

chel

or o

f Bu

sine

ss (

Bank

ing)

Tam

kang

Uni

vers

ity,

Tai

pei,

Taiw

an

2000

-Pr

esen

tDi

rect

or a

nd M

anag

ing

Dire

ctor

Bang

kok

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t Inv

estm

ent &

Tru

st P

ublic

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pany

Lim

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2000

-Pr

esen

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thor

ized

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ctor

BFIT

Sec

urit

ies

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pany

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ited

2001

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rect

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wan

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otel

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pany

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ited

2000

-Pr

esen

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rect

or a

nd M

embe

r of

the

Aud

it C

omm

itte

eTh

ai S

tanl

ey E

lect

ric P

ublic

Com

pany

Lim

ited

1998

-Pr

esen

tDi

rect

or a

nd S

ecre

tary

Gen

eral

Asso

ciat

ion

of F

inan

ce C

ompa

nies

2000

-20

02Di

rect

orTh

aila

nd S

ecur

itie

s De

posi

tory

Com

pany

Lim

ited

.19

98-

2002

Gove

rnor

The

Stoc

k Ex

chan

ge o

f Th

aila

nd19

98-

1998

Exec

utiv

e Di

rect

or a

nd D

irect

orTh

e Th

ai B

ond

Deal

ing

Cent

re19

91-

2000

Dire

ctor

and

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ista

nt M

anag

ing

Dire

ctor

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

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pany

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ited

1.M

r. Ch

okec

hai T

anpo

onsi

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ctor

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of t

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tee

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-Di

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or C

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ram

cla

ss 3

/200

0Th

ai I

nsti

tute

of

Dire

ctor

Ass

ocia

tion

-M

.B.A

. (Q

uant

itat

ive

Anal

ysis

& F

inan

ce)

-M

.S.

(Civ

il En

gine

erin

g)Un

iver

sity

of

Wis

cons

in (

Mad

ison

Cam

pus)

-B.

E. (

Civi

l Eng

inee

ring

), C

hula

long

korn

Uni

vers

ity

Exec

utiv

e as

of

Dece

mbe

r 31

, 200

2

2000

-Pr

esen

tSe

nior

Vic

e Pr

esid

ent,

Inve

stm

ent

Advi

sory

Dep

artm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

1996

-20

00Vi

ce P

resi

dent

and

Man

ager

,In

vest

men

t Ad

viso

ry D

epar

tmen

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

3.M

iss

Aruv

arn

Tiew

tran

onSe

nior

Vic

e Pr

esid

ent

Inve

stm

ent

Advi

sory

Dep

artm

ent

3,18

4,00

0-

-B.

S. in

B.A

. (A

ccou

ntin

g)Yo

ungs

tow

n St

ate

Univ

ersi

ty, Oh

io, U

.S.A

.


1991

-Pr

esen

tVi

ce P

resi

dent

, Cr

edit

Dep

artm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

4.M

r. Ov

art

Phan

prec

haki

jVi

ce P

resi

dent

Cred

it D

epar

tmen

t

40,0

00-

-M

.B.A

. (F

inan

ce)

Roos

velt

Uni

vers

ity,

Chi

cago

, Il

linoi

s, U

.S.A

.-

B.A.

- C

omm

erce

(Fi

nanc

e an

d Ba

nkin

g)Th

amm

asat

Uni

vers

ity

1991

-Pr

esen

tAs

sist

ant

Vice

Pre

side

nt,

Cred

it D

epar

tmen

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d5.

Mr.

Than

asar

n Am

pate

mee

Assi

stan

t Vi

ce P

resi

dent

Cred

it D

epar

tmen

t

1,72

7-

-M

.B.A

. (F

inan

ce)

Univ

ersi

ty o

f De

troi

t, U

.S.A

.-

B.S.

(Ec

onom

ics

and

Busi

ness

Adm

inis

trat

ion)

Mc

Pher

son

Colle

ge,

U.S

.A.

Incr

ease

(De

crea

se)

Duri

ng t

he y

ear

As o

f De

c 31

,200

2

Num

ber

of s

hare

held

Expe

rien

ceEd

ucat

ion

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e/Po

siti

on

2000

-Pr

esen

tAs

sist

ant

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Pre

side

nt,

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it D

epar

tmen

tBa

ngko

k Fi

rst I

nves

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rust

Pub

lic C

ompa

ny L

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d19

92-

2000

Cred

it O

ffic

er, Cr

edit

Dep

artm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

6.M

rs. Ch

ooch

it T

eyat

eeti

Assi

stan

t Vi

ce P

resi

dent

Cred

it D

epar

tmen

t

--

-M

.B.A

. (B

usin

ess)

Univ

ersi

ty o

f M

isso

uri,

Colu

mbi

a, U

.S.A

.-

B.A.

(Ac

coun

ting

)

Tham

mas

at U

nive

rsit

y

2000

-Pr

esen

tVi

ce P

resi

dent

, Op

erat

ion

Depa

rtm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

1990

-20

00M

anag

er,

Oper

atio

n De

part

men

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

7.M

r. M

anop

Him

akor

nVi

ce P

resi

dent

Oper

atio

n De

part

men

t

--

-B.

A. (

Acco

unti

ng)

-B.

A. (

Com

mer

ce)

Tham

mas

at U

nive

rsit

y

2000

-Pr

esen

tAs

sist

ant

Vice

Pre

side

nt, Pe

rson

nel D

epar

tmen

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d19

91-

2000

Man

ager

, Pe

rson

nel D

epar

tmen

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

8.M

rs. Nu

mpe

tch

Saba

icha

iAs

sist

ant

Vice

Pre

side

ntPe

rson

nel D

epar

tmen

t

--

-B.

A. -

Com

mer

ce (

Fina

nce

and

Bank

ing)

Tham

mas

at U

nive

rsit

y

2000

-Pr

esen

tAs

sist

ant

Vice

Pre

side

nt,

Info

rmat

ion

Tech

nolo

gy D

epar

tmen

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d19

91-

2000

Supe

rvis

or, Co

mpu

ter

Depa

rtm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

9.M

iss

Wim

on C

hira

mon

gkol

garn

Assi

stan

t Vi

ce P

resi

dent

Info

rmat

ion

Tech

nolo

gyDe

part

men

t

1,00

0-

-M

.S.

(CIS

)As

sum

ptio

n Un

iver

sity

-B.

S. (

Stat

isti

cs)

Tham

mas

at U

nive

rsit

y

2000

-Pr

esen

tM

anag

er,

Trea

sury

Dep

artm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

1990

-20

00Tr

easu

ry O

ffic

erBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

10.

Mis

s Yu

phad

ee T

ulan

onda

Man

ager

Trea

sury

Dep

artm

ent

4,00

0-

-B.

A. (

Econ

omic

s)Th

amm

asat

Uni

vers

ity


2000

-Pr

esen

tM

anag

er, Tr

uste

e De

part

men

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d19

98-

1999

Supe

rvis

or, D

eben

ture

hold

er R

epre

sent

ativ

e Di

visi

on,

Oper

atio

n De

part

men

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d19

86-

1998

Supe

rvis

or,

Cred

it D

ivis

ion,

Ope

rati

on D

epar

tmen

tBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

11.

Mrs

. Si

riso

ok C

huta

nond

haM

anag

erTr

uste

e De

part

men

t

2,70

0-

-Ba

chel

or o

f La

ws

Ram

kham

haen

g Un

iver

sity

-B.

A. (

Econ

omic

s)Th

amm

asat

Uni

vers

ity

Incr

ease

(De

crea

se)

Duri

ng t

he y

ear

As o

f De

c 31

,200

2

Num

ber

of s

hare

held

Expe

rien

ceEd

ucat

ion

Nam

e/Po

siti

on

2000

-Pr

esen

tM

anag

er,

Lega

l Dep

artm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

1993

-20

00Le

gal O

ffic

erBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

12.

Mr.

Kano

kpor

n Li

ewsu

wan

Man

ager

Lega

l Dep

artm

ent

--

-Ba

chel

or o

f La

ws

Ram

kham

haen

g Un

iver

sity

2000

-Pr

esen

tM

anag

er, Au

dit

Depa

rtm

ent

Bang

kok

Firs

t Inv

estm

ent &

Tru

st P

ublic

Com

pany

Lim

ited

1993

-20

00In

tern

al A

udit

orBa

ngko

k Fi

rst I

nves

tmen

t & T

rust

Pub

lic C

ompa

ny L

imite

d

13.

Mr.

Ying

yong

Sun

kati

prap

haM

anag

erAu

dit

Depa

rtm

ent

--

-B.

A. (

Acco

unti

ng)

Tham

mas

at U

nive

rsit

y


Board of Directors of BFIT Securities Co., Ltd. - the subsidiary of the Company

As of December 31, 2002, the board of directors comprised four directors as follows:

1. Mr. Kah-Hua Yeo Chairman2. Mr. Chokechai Tanpoonsinthana Director3. Mr. Samuel Shih Director4. Mr. Puck Bhengsri Director

Executives of BFIT Securities Co., Ltd.

As of December 31, 2002, all of executives are as follows:

1. Mr. Kah-Hua Yeo Managing Director2. Mr. Puck Bhengsri Deputy Managing Director3. Mr. Raywat Okanurak Vice President Securities Trading

Business Department4. Mr. Wichian Proongpanish Vice President Corporate Finance

Department5. Mrs. Pajaree Punyashthiti Vice President Provident Fund Marketing and

Client Service Department6. Mr. Pranai Tanthasesthi Vice President Provident Fund

Investment Department7. Mrs. Ratanaporn Horpaopan Vice President Information Technology

Department8. Mrs. Suriya Satawan Vice President Operation Department9. Miss Sirirat Wongwattana Assistant Vice President Research Department

(Resigned on February 1, 2003)10. Mr. Suthipong Sucharittanonta Assistant Vice President Office of Managing

Director11. Mr. Sittha Siripanich Assistant Vice President Personnel Department12. Mr. Wittaya Punchanavanich Manager Compliance Department13. Miss Woranuch Vichitpinyo Manager Audit Department

Interest of Directors in any Contracts Made by the Company during theYear 2002The company has an overdraft facility agreement with Bangkok Bank Public CompanyLimited of which Dr. Natthapachara Chiarawongse, a director, is a Senior Vice Presidentof Foreign Exchange Trading Department.


Remuneration of Directors and Executives

Remuneration to Members of the Board of Directors

In 2002, the remuneration to members of the board of directors are as follows:

Names of Directors Remuneration (Baht)

Board Audit CommitteeMember Member

1 Mr. Paisal Sricharatchanya 1,000,000.002 Mr. Pramote Pasuwat 100,000.00 150,000.003 Mr. Pradit Rodloytuk 100,000.00 150,000.004 Dr. Natthapachara Chiarawongse 100,000.00 150,000.005 Mr. Chiang Sung 22,739.736 Ms. Chia-li Hu 22,739.737 Mr. Samuel Shih 100,000.008 Mr. Kah-Hua Yeo 100,000.009 Mr. Chokechai Tanpoonsinthana 100,000.00

10 Mr. Puck Bhengsri 100,000.0011 Mr. Allen J.Lin 77,054.7912 Ms. Kate M.Wu 77,054.79

Total 1,899,589.04 450,000.00

Remuneration to Members of the Board of Directorsof BFIT Securities Co., Ltd.

- None -

Remuneration to Executives of the Company

Salary and Bonus (13 persons) 24,343,610.00 BahtContributions to Provident Fund (12 persons) 798,534.00 BahtOther 69,725.02 Baht

Total 25,211,869.02 Baht

Remuneration to Executives of BFIT Securities Co., Ltd.

Salary and Bonus (14 persons) 18,992,736.00 BahtContributions to Provident Fund (13 persons) 578,514.00 BahtOther 170,905.19 Baht

Total 19,742,155.19 Baht

Other Remuneration to Executives of the Company and Its Subsidiary

- None -


Corporate GovernancePolicy on Corporate Governance

The Board of Directors recognizes the importance of good corporate governance andshall work to promote good corporate governance. Increasing transparency andmanagerial efficiency following the practice on good corporate governance shouldstrengthen the confidence of clients, employees, shareholders, and other related parties.

The Board of Directors has a policy on Corporate Governance in writing, which prescribespolicy, duty and composition of the board, the practice of the board, and the relations ofthe board including the code of ethics according to the 15 principles of a good corporategovernance.

Shareholders Rights, Various groups of Stakeholders andShareholders’ Meetings

The Board of Directors believes that shareholders’ meetings see equal treatments forall shareholders. The meetings are not of any difficult procedures and do not incurexcessive expenses. Enough material information and opinion of the Board of Directorsare presented together with the notices of the meetings. The chairman who isnon-executive and does not hold any shares and the chairman of the audit committeewho is independent non-executive and does not hold any shares are available toreceive proxy from shareholders who are not be able to attend and vote in theshareholders’ meetings.

Previous meetings of shareholders have seen allocations of appropriate time andencouraged equal opportunities for shareholders to express their opinions and raisequestions. Not all directors attended the meetings of shareholders.

The Board of Directors believes that legal rights of stakeholders, including clients,employees, shareholders and other related parties are protected and treated fairlywith care.

Board of Directors, Leadership, and Vision

Number of Directors

The Board of Directors has the qualifications and is well-balanced in the proportion of 10qualified directors as follows: four executive directors, four non-executive directors, andtwo independent non-executive directors, which are believed that the Board of Directorshad balance of power for non-executive Directors.

The Board of Directors possess leadership, vision, and decision-making independence forthe best interests of the company and the shareholders at large. Resolutions of the Boardof Directors are accepted and carried out by the management and employees of thecompany and its subsidiary.

The chairman and the managing director are separate positions. The chairman isnon-executive and does not hold any shares while the managing director does holdan insignificant amount of shares. No director is granted unlimited power.


Remuneration of Directors

Remuneration for the directors should be determined with transparency and should seekapproval from the shareholders’ meeting. The company discloses the remuneration fordirectors and executives in the annual report. The managing directors of the companyand of its subsidiary are responsible for setting compensations of their employees.

Board of Directors’ Meetings

The Board of Directors meets every quarter after the audit committee reviews thefinancial statements and the external auditor reviews or audits the financial statementsas the case may be. Members of the board also meet with the management andemployees of various working units in order to study and discuss certain matters andissues prior to the meetings.

Conflict of Interests

The Board of Directors believes that material and important information and issues ofpossible conflict of interest are fully disclosed.

Business Ethics

The Board of Directors has already provided the code of ethics for directors, themanagement, and employees of the company and its subsidiary to follow and beingobserved.

Internal Control and Risk Management

The Board of Directors believes that the company and its subsidiary have stablecontrolling systems in which financial, operations, risk management, and compliancecontrols are reviewed and maintained. The company has an internal audit department tooversee financial, operations, and compliance controls. In 2003, a risk managementcommittee comprising employees of the company and its subsidiary will be set up toidentify, measure, control, and monitor risks in the financial and operations of thecompany and its subsidiary. Risk factors have already been identified and disclosed inthe annual report.

Director's Reporting

The Board of Directors has realized the importance of preparing the creditableand official financial statements. The Board of Directors shall provide report indicatingits responsibilities to prepare financial statements, which cover important topics ofCode of Best Practice for Directors of Listed Companies as prescribed by the StockExchange of Thailand.

Committees

The Board of Directors provides for an audit committee comprising two independentnon-executive directors and a non-executive director and for a risk managementcommittee comprising the management and employees of the company and itssubsidiary. Moreover, for the benefits of personnel management, the Board of Directors


shall consider to provide the remuneration committee in order to consider, monitor, andpropose the appropriate benefits structure of employees.

Relations with Investors

The Board of Directors believes that the company has already disclosed importantinformation correctly, timely, and transparently. The company however does not providean investor relations unit because the company is still trying to cut expenses.

Control of Internal Information UsageThe company and its subsidiary have a policy and measure to prevent a conflict ofinterest that may arise from utilizing the internal information. The organizationstructure and the scope of power and duties are clearly prescribed. The sections that theconflict of interest may occur are separated. The internal control department and thecompliance department are directly and independently reported to the board of directorsand the managing director. The risk and control unit was set up to review and keep saferecord of any contracts pursuant to the “information control and safe-keeping standard”.

In addition, directors and executives are responsible for reporting their securitiesholding according to the Securities and Exchange Act B.E. 2535, section 246, andrelevant notification of the Office of Securities and Exchange Commission.

The compliance department is also responsible for monitoring the daily securitiestrading of executives and employees.

The company has set penal provisions for employees who contravenes or fails to complywith the rules by issuing a written caution, cutting the salary, reducing or cutting thebonus, freezing the salary, and dismissing an employee.

The aforementioned policy and measure to prevent the conflict of interest and the rulesand regulation regarding the information control are able to manipulate executives andemployees not to use internal information for their own or other benefits.


Internal ControlIt is opinion of the Board of Directors that the Company has adequate and appropriateinternal control system which are summarized as follows:

Section 1: Organizational Control and Environment Measures

The organizational structure is composed of departments that are competent to supportthe business efficiently and effectively. The segregation of authorities and linemanagement is clearly prescribed for check and balance. The operation of the Companyis directed by the Managing Director with supervision from the Executive Committee. Inhiring new human resources, the Company sets up clear job descriptions, the rules andregulations regarding the discipline, and the code of ethics including disciplinaryprovisions in case of violation.

Furthermore, the operating manuals are revised as and when amendment in proceduresor recommendations from the Compliance Department are implemented.

With regard to the human resource development, the Company has a policy to encouragestaffs to take training courses to enhance knowledge and improve work aptitude as andwhen appropriate.

Section 2: Risk Management Measures

In the absence of the Risk Management Committee, the Managing Director and the Boardof Directors are responsible for the monitoring and controlling via the direct reports orother committees. Guided by prudence in loan and investment policy under theexperienced management team, the Company runs the business conservatively.As a result, the internal and external risks are managed effectively.

However, in 2003 the Board of Directors will consider the set up of the Risk ManagementCommittee to oversee and manage the operational risk of the Company.

Section 3: Management Control

The Management performs its duties carefully, complying with the scope of authoritiesand duties assigned. The process involves careful review and approval by the Board ofDirectors or designated Executives to ensure undue risks are avoided.

Additionally, proper segregation of duties to ensure the person who process the work arenot the same as the ones who authorize approvals, are in place to enforce a good checkand balance.

In order to prevent potential conflict of interest involving the directors, majorshareholders, and related persons, all transaction must be approved by the authorizedpersons who are not connected to such transactions and equitable treatments to allclients are observed.

It is the Company’s policy to respect and comply with all relevant laws and regulations.


Section 4: Information and Communication Measures

The Company has adequate information technology system. For reference, thedocuments are required for booking accounting transactions. The Company adopts thegenerally accepted accounting principles and the documents and reports are kept safely.

Besides, regular financial statements are either audited or reviewed by the certifiedpublic accountants approved by the Bank of Thailand and the Office of Securities andExchange Commission, prior to distribution to the public.

The Company prepares all the important information to allow for sufficient considerationand submits to the Board of Directors and shareholders timely prior to the meetings.

Section 5: Monitoring System

The Audit Committee of the Company is independent and responsible for the accuracyof the Company’s financial statements and ensuring, sufficient and reliable internalcontrol system is in line with the Company’s business goals and that the Companycomplies with all relevant laws and regulations.

The Company prepares the business plan for each year taking into account the Company’sobjective and prevailing economic condition. The business plan is submitted to theBoard of Directors for approval before implementation. Actual results are monitored andcompared to the plan.

Related Party Transactions

The Company and its subsidiary have no policy to encourage transactions betweenrelated parties. In the event there is any transaction, the conditions would be the sameas for other normal business transactions except loans to employees of the Company andthose of its subsidiary which form part of the fringe benefits to the employees. In theyear 2002, related party transactions of the Company and its subsidiary were disclosed inthe Notes to Financial Statements No.24.


Explanation and Analysis of The Financial Status

Correction of Accounting Errors and Change in Accounting Policy1. In the second quarter of 2002, the Company had amended the accounting record

which recorded profit of Baht 4.262 million, realized from portfolio transfer(from investments in “available-for-sale securities” account to “held-to-maturitysecurities” account) to the profit and loss account in year 2000. This treatmentdid not comply with the Accounting Standards Pronouncement No 40 which requiresthat the differences between the carrying costs of investments and their fair valueon the transfer date be presented as revaluation surplus or deficit as separate item inshareholder equity, and be amortized over the remaining period until the maturity ofsecurities. To adjust for this error, the Company has had to restate the previous year’sfinancial statements presented for comparative purpose and adjust the broughtforward balance of retained earnings as though the Company had complied with TheAccounting Standards Pronouncement. The adjustment has the effect of increasingand decreasing the net earnings for the years ended December 2002 and 2001 byBaht 814,217 and Baht 87,819 respectively and is adjusted to the interest anddividend from investment account. The cumulative effects of the adjustment up tothe beginning of the year 2002 and 2001 are to decrease the brought forwardretained earnings of 2002 and 2001 by Baht 3,054,807 and 2,966,988 respectivelyand to increase the brought forward balance of revaluation surplus on investment of2002 and 2001 by Baht 3,054,807 and 2,966,988 respectively.

2. In the third quarter of 2002, the Company had amended the accounting recordbooked in September 2000 which record profit of Baht 77.178 million from sale ofgovernment bonds at market prices to one commercial bank and subsequentlypurchased a similar quantity and value of such bonds from that bank, also at marketprices. The Company had disclosed the transactions in the notes to financialstatements and the transactions involved actual transfer of the bonds and actualcash receipts and payments and was conducted in accordance with marketconditions. However, the Office of the Securities and Exchange Commission hadreviewed the transactions through the notes to the financial statements and hadasked the Company to amend the transactions to be a repurchase transactionsand adjusted the accounting record to be complied with the Accounting Frameworkbased on the principle of substance over legal form. The adjustment in accountingresulted in the cumulative effects of reducing the balances of retained earnings atthe beginning of the year 2002 and 2001 by Baht 47.613 million and Baht 58.288million and increasing the balances of revaluation surplus on investments byBaht 47.613 million and Baht 58.288 million respectively. All are accounting recordsunder shareholders’ equity and have no effect on the total shareholders’equity. The adjustment has also affected the interest income from investmentsaccount by increasing the income by Baht 10.476 million and Baht 10.676 million in2002 and 2001 respectively. Profit from investment also increased by Baht 6.052million in 2002.

3. In the second quarter of 2002, the Company changed its deferred income taxaccounting, ceasing its previous practice because it did not enable the Company toestimate the reasonable recoverable value of deferred income tax assets.

and Operational Performance for Year 2002


Furthermore, the deferred income tax accounting policy, although complying withInternational Accounting Standards, is not yet required under Thai AccountingStandards. In changing this policy the Company had to restate the previous year’sfinancial statements and adjusts the brought forward balance of retained earnings asthough the Company had never adopted the accounting policy. This results in thereduction of retained earnings at the beginning of 2002 and 2001 by equal amountof Baht 27.90 million and revaluation on investment is now stated without the effectof deferred income tax.

Summary of Operational PerformanceThe Company’s consolidated financial statements in 2002 which included the effects ofadjustment in accounting as mentioned earlier showed a net profit of Baht 162.583million, an increment of Baht 84.743 million or 108.87% from 2001’s Baht 77.841million. The increase in profitability were contributed mainly from lower and minimumprovision for bad debts in 2002 compare to 2001 and hence, increase the net interestand dividend income after provision for bad debts, increase in brokerage fee incomein 2002 as the result of minimum brokerage fee charge at 0.25% imposed by the StockExchange of Thailand (“SET”) since mid January 2002 and the improvement in tradingactivities in SET during the first half year of 2002. The improvement in these mainsources of incomes enabled the Company to register more than 100% increment innet profit for the year 2002 compare to 2001 despite the increase in non-interestrelated expenses.

Total Incomes Structure

Major incomes of the Company comprise of interest and dividend incomes mainlyfrom finance business, and non-interest incomes contributed mostly from securitiesbusiness. In 2002, these two major incomes recorded total of Baht 553.053 million,an increase of Baht 39.565 million or 7.71% from 2001’s Baht 513.488 million.The increase was contributed from the increment in non-interest incomes by Baht 40.985million while interest and dividend income slightly decreased by Baht 1.420 million.

In addition to the two major sources of income, the Company also recorded income frombad-debts recovery. In 2002, the amount was Baht 23.804 million, down from Baht78.040 million recorded in 2001. Details of the incomes were as follow:-

(1) Interest and Dividend incomes

In 2002, total interest and dividend incomes were at Baht 387.202 million, Baht 1.420million or 0.365% down from Baht 388.622 million obtained in 2001. Interest fromloans and deposits constituted Baht 176.021 million, a 7.60% or Baht 14.482 milliondecrease from 2001’s Baht 190.503 million as the result of loans repayment andcontinuing decline in lending rate together with the difficulty in loan expansion becauseof competition in the market especially for potential clients who have sound financialposition and good operating records. In addition, with declining interest rate, listedcompanies or companies who have good operating records, opted to issue corporatedebentures to be placed directly to public instead of borrowing from financialinstitutions. This event added to the difficulty in loan expansion since the Company’s


clients base are always these corporations who have sound financial position. The amountof loans and receivables for finance business were reduced from Baht 2,682.46 million atyearend 2001 to Baht 2,284.07 million at yearend 2002 or down by Baht 398.39 million.Interest income from loans and deposits from finance business totaled to Baht 173.824million and from securities business added another Baht 2.198 million in 2002.

Interest and dividend income from investments in 2002 increased from Baht 198.120million in 2001 to Baht 211.18 million, an Baht 13.060 million or 6.59% increment.The figures had already taken into the effects of accounting adjustment for portfoliotransfer and sale transactions of government bonds with one commercial bank in 2000and had been corrected in 2002 of which Baht 11.290 million and Baht 10.588 million inadditional interest income from investments were added in 2002 and 2001 respectively.Hence, the increment in interest and dividend income from investments in 2002 werecontributed mostly from additional investments in debts securities and additionalinvestments through the repurchase market. In 2002, interest income from therepurchase market increased from Baht 8.666 million in 2001 to Baht 20.112 million,an increase of Baht 11.446 million due to active investment in this market because offunds available from loans repayment and increasing in fund borrowings anddeposits from public.

(2) Non-Interest Incomes

Total non-interest incomes in 2002 amounted to Baht 165.852 million, Baht 40.986million or 32.82% increment from 2001’s Baht 124.866 million. Finance businessaccounted for Baht 36.329 million and securities business contributed additionalBaht 129.523 million. For finance business, these incomes were from gains fromsecurities investment of Baht 21.264 million which was mostly from sales of debtssecurities; fees and services incomes generated from advisory services and bondholders’ representative of Baht 14.199 million and from other incomes of Baht 0.866million. In all, non-interest incomes from finance business declined from Baht 50.684million obtained in 2001 due mostly to the lower gains from securities investment andother incomes. For securities business, non-interest incomes in 2002 registered Baht55.341 million or 74.60% increment from 2001’s Baht 74.182 million to Baht 129.523million. The rise was mainly contributed from the surge in brokerage fee income whichjumped from Baht 18.080 million in 2001 to Baht 79.868 million in 2002, an increase ofBaht 61.788 million or 341.75%. This was the result of minimum brokerage fee rate of0.25% imposed by the SET since mid January 2002 together with the favourabletrading activities in SET during the first half year of 2002 whereas in 2001, thenegotiable brokerage fee rate had caused competition among brokerage houses andhence lowered the brokerage fee income. Fee and service incomes in which providentfund management contributed the most also registered higher income figure atBaht 27.546 million in 2002 compare to Baht 18.345 million in 2001 stemming mainlyto the increase in assets under management. Securities gain under securities businessdropped from Baht 36.847 million in 2001 to Baht 20.440 million in 2002 due mainly tobearish market in the second half of 2002. Other incomes in securities business also rosefrom Baht 0.909 million in 2001 to Baht 1.669 million in 2002.


Operating Expenses

Operating expenses comprise of interest expense which is the main expense underfinance business and non-interest expense which is the major expense under securitiesbusiness and secondary expense under finance business. Details of the operatingexpenses in 2002 were:-

(1) Interest Expenses

According to the consolidated financial statements, interest expenses in 2002 amountedto Baht 177.381 million, a slightly decrease of Baht 1.512 million or 0.845% compare to2001’s Baht 178.893 million. However, when considering the average outstanding ofborrowings and deposits in 2002 which yielded Baht 6,104.19 million versus Baht 5,553.47million in 2001, the average costs of borrowings had been lowering from 3.22% in 2001to 2.91% in 2002 because of continuing decline in interest rate throughout 2002.

For finance business which included deposits taken from the subsidiary company,interest expenses in 2002 declined from Baht 179.586 million in 2001 to Baht 177.924million in 2002. Average cost of interest had been lowered from 3.12%in 2001 down to average of 2.81% in 2002.

(2) Non-Interest Expenses

Non-interest expenses in the consolidated financial statements for 2002 totaled to Baht234.652 million, an increase of Baht 34.470 million or 17.22% compare to Baht 200.182million in 2001. Baht 120.827 million was from finance business and Baht 113.825million was from securities business.

The Baht 120.827 million in non-interest expenses under finance business in 2002represented Baht 15.527 million increase from Baht 105.300 million incurred in 2001.The increment were contributed from the rise in personal expenses by Baht 6.367 millioncaused by adjustment in salary base together with average higher bonus paymentbecause of better operating performance in this year; the jump on impairment losses onassets expenses which increased from Baht 3.154 million in 2001 to Baht 12.433 millionin 2002 or an increase of Baht 9.279 million. This included the provision for interest tobe received under the promissory notes issued by TAMC for Baht 6.880 million. Othernon-interest expenses under finance business including premises and equipmentexpenses, taxes and duties expenses, directors’ remuneration and other expenses wereslightly changed from 2001’s levels.

Non-interest expenses under the securities business increased by Baht 18.943 million orfrom Baht 94.882 million in 2001 to Baht 113.825 million in 2002, a 19.96% increment.The increases were mainly from the rise in personal expenses of Baht 14.977 million andfrom premises and equipment expenses of Baht 4.614 million while tax and dutiesexpenses and other expenses declined slightly compare to 2001’s figures. The surge inpersonal expenses were from adjustment in salaries during the year in order to complywith market, more bonus paid to employees especially securities marketing officersbecause of higher brokerage fee generated during the year and the increase in personelsduring the year.


Net Profit

The Company registered net profit both on the stand-alone and the consolidatedfinancial statements at Baht 162.583 million, up Baht 84.742 million representing108.86% increase from 2001’s Baht 77.841 million. Finance business grossed Baht 138.529million, an increase of Baht 50.706 million from 2001’s Baht 87.823 million andsecurities business added additional Baht 24.054 million, an increase of Baht 34.037million compare to net losses of Baht 9.983 million in 2001. Major factors whichaffected the improvement in profitability were:-

(1) Finance business

The improvement in profitability was contributed by lower provision for bad debts ofonly Baht 2.242 million in 2002 compare to Baht 134.612 million in 2001. Althoughthe amount of bad debts recovery only registered at Baht 23.804 million in 2002versus Baht 78.040 million in 2001, the Company managed to post higher net interestand dividend income after bad debts provision in 2002 at Baht 223.026 million, animprovement of Baht 80.586 million compared to Baht 142.440 million obtained in2001. Hence, everthough non-interest income posted a decline from Baht 50.684million in 2001 to Baht 36.330 million in 2002 and non-interest expenses soaredfrom Baht 105.300 million in 2001 to Baht 120.827 million in 2002, finance businessstill managed to registered net profit of Baht 138.583 million in 2002 compare to Baht87.823 million in 2001.

(2) Securities business

Securities business registered Baht 24.054 million in net profit for 2002, an increase ofBaht 34.037 million compare to net losses of Baht 9.983 million in 2001. The majorcontributions to the improvement in profitability were the increases in brokerage feeand provident fund management fee incomes.

The net profit of Baht 162.583 million in 2002 represented earning per share atBaht 1.63 per share, Baht 0.85 per share increase from 2001’s Baht 0.78 per share.


Cash and deposits at financial institutions 82.60 1.13 85.37 1.17 -2.77

Loans to financial institution 50.29 0.69 - - +50.29

Securities purchased under agreement to resale 1,175.00 16.10 660.00 9.05 +515.00

Net investment in securities 3,557.11 48.73 3,546.14 48.64 +10.97

Net loans, receivable and accrued interest receivables 2,216.79 30.37 2,623.76 35.99 -406.97

Property foreclosed - net 92.58 1.26 98.14 1.35 -5.56

Other assets 125.72 1.72 276.91 3.80 -151.19

Total assets 7,300.09 100.00 7,290.32 100.00 +9.77

December 31, 2002 December 31, 2001 Change

Mil. Baht % Mil.Baht % Mil.Baht

Financial PositionAssets

Total assets of the Company as of December 31, 2002 amounted to Baht 7,300.088million, Baht 9.766 million or 0.134% over Baht 7,290.322 million at yearend 2001(restated). The change in total assets was minimum.

Major assets of the Company comprised of cash and deposits at financial institution,securities purchased under resale agreements, investment in securities, loans,receivables and accrued interest receivables and other assets. Details of the majorassets were

At yearend 2002, the Company had securities purchased under agreement to resalewhich were transacted through the repurchase market operated by The Bank of Thailandtotaled to Baht 1,175.00 million or 16.10% of total assets. This was due to therepayment of loans which enabled the Company to have excess cash for this investmentand Company’s policy to maintain 6-10% of borrowings and deposits in near cashsecurities. Cash and deposits at financial institutions and loans to financial institutionwhich added up to Baht 132.89 million at yearend 2002, put the near cash assets toapproximately 17.92% of total assets.


1. Domestic marketable equity securities 20.03 79.24 -59.21

plus allowance for change in valuation 4.91 2.70 +2.21

Total domestic trading equity securities 24.94 81.94 -57.00

2. Available-for-sale securities

2.1 Private-sector debts securities due within 1 year 266.74 134.14 +132.60

2.2 Private-sector debts securities due more than 1 year 1,164.25 872.93 +291.32

2.3 Government and state enterprise bonds 583.05 662.13 -79.08

2.4 Domestic marketable equity securities 61.46 78.25 -16.79

2.5 Other securities 50.40 9.75 +40.65

Total investment costs 2,125.90 1,757.20 +368.70

plus allowance for change in valuation 148.21 128.06 +20.15

Total available-for-sale securities 2,274.11 1,885.26 388.85

3. Held-to-maturities securities

3.1 Government and state enterprise bonds 308.42 462.49 -154.07

3.2 Private-sector debts securities 569.25 730.28 -161.03

3.3 Promissory notes from TAMC 322.35 322.35 -

Total held-to-maturity securities 1,200.02 1,515.12 -315.10

less Allowance for impairment loss and possible loss (11.00) - -11.00

Total net held-to-maturity securities 1,189.02 1,515.12 -326.10

4. Domestic non-marketable equity securities 69.04 63.82 +5.22

Total investment in securities 3,557.11 3,546.14 +10.97

Net investment in securities of Baht 3,557.11 million at yearend 2002 remained in thesame level at yearend 2001. The costs, revaluation surplus and provision for possibleloss of the investments were as follows:-

2002 2001 Change

Unit : Baht million

At yearend 2002 compare to yearend 2001, investment portfolio evidenced moreinvestments in private sector debt securities under the available for sale account whichincreased by Baht 368.70 million to Baht 2,125.90 million at yearend 2002 and hadprovision for revaluation surplus of Baht 148.21 million. For debt securities underheld-to-maturity account, the amount had been reduced from Baht 1,515.12 million atyearend 2001 to Baht 1,200.02 million at yearend 2002 or Baht 315.10 million decreasebecause of redemption. Allowance for possible loss of Baht 5 million for TAMC andadditional allowance for impairment loss of Baht 6 million brought total net held-to-maturity securities down to Baht 1,189.02 million. Trading securities which were shareslisted in the Stock Exchange of Thailand was at Baht 20.13 million down Baht 59.12million from yearend 2001 of Baht 79.24 million because of divestment in the first halfyear of 2002. For domestic non-marketable securities, The amount was Baht 69.04million, Baht 5.22 million increase from Baht 63.82 million at yearend 2001 due to theincrease in value taking into consideration of net book value, net assets value and otherfactors but not exceeding the original costs of investment.


Finance business loans and receivables 2,284.07 2,682.46 -398.39

Securities business receivables 90.56 101.56 -11.00

Accrued interest 28.58 34.52 -5.94

Total loans, receivable and accrued interest 2,403.21 2,818.54 -415.33

Less : allowance for doubtful accounts (175.00) (160.00) -15.00

revaluation allowance for debt restructuring (11.42) (34.78) +23.36

Net loans, receivable and accrued interest 2,216.79 2,623.76 -406.97

Loans, receivables and accrued interest receivables netted from allowance for doubtfulaccounts and allowance for revaluation of debt restructuring totaled to Baht 2,216.79million, a decline from Baht 2,623.76 million at the end of 2001 or Baht 406.97 milliondecrease with the following details:-

2002 2001 ChangeMil. Baht Mil. Baht Mil. Baht

The decrement in net loans, receivables and accrued interest receivables incurredmostly from decline in loans and receivables in finance business in the amount of Baht398.39 million due to the repayments of loans while the extension of new loans couldnot cope up with the repayments resulting in the amounts of loans and receivables atthe end of 2002 less than that of 2001. Debtors in the securities business also decreasedfrom Baht 101.56 million at the end of 2001 to Baht 90.56 million at the end of 2002,a decrease of Baht 11.00 million. Allowance for doubtful accounts and allowance forrevaluation of debt restructuring together decreased from Baht 194.78 million at the endof 2001 to Baht 186.42 million at the end of 2002 or net decrease of Baht 8.36 million.The Company was still cautious in making new lending while the Company’s customersbase which were mostly medium to large companies and with strong financial positionhad better edges in bargaining for a better interest rate.

Liabilities

Consolidated financial statements showed that at the end of 2002, the Company’sliabilities totaled to Baht 6,041.86 million, a decline from Baht 6,214.10 million at theend of 2001 or Baht 172.24 million decrease resulting from the dwindle of borrowingsand deposits by Baht 10.17 million, trading transactions with securities companies byBaht 103.75 million, securities business payables by Baht 25.28 million, accruedinterest payables by Baht 22.07 million and other liabilities by Baht 10.97 million.Borrowings and deposits which are the company’s main liabilities amounted to Baht5,911.83 million at yearend 2002 and accounted for 97.85 % of total liabilities of whichBaht 5,520.44 million represented borrowings and deposits from public, an increase byBaht 399.74 million from Baht 5,120.70 million at yearend 2001, from financialinstitutions of Baht 354.00 million, Baht 361 million drop from Baht 715.00 million asat yearend 2001 and from foreign countries of Baht 37.39 million, a decline by Baht48.90 million from Baht 86.29 million at yearend 2001. Since the beginning of 2002,overall interest rate had declined continuously and deposits from financial institutionswhich were mostly from life insurance companies had been withdrawn to invest in thelong term securities that yield better return while at the same time general public hadincreased the deposits by concentrating on long term deposits. Although the figure oftotal borrowings and deposits at the end of 2002 of Baht 5,911.83 million was less than


Baht 5,922.00 million at yearend 2001 by merely Baht 10.17 million but averageborrowings and deposits throughout 2002 was at Baht 6,104.19 million which was higherthan the average borrowings and deposits in 2001 of Baht 5,553.47 million by Baht550.72 million, hence, despite continuous decrease of interest throughout 2002, thecompany was still trusted by public to place their deposits with.

Shareholders’ Equity

Consolidated and the Company only financial statements as of December 31, 2002showed that shareholders’ equity of the company was at Baht 1,258.23 million, higherthan December 31, 2001 (revision) by Baht 182.01 million as a result of net profit ofBaht 162.58 million and the increase of revaluation surplus on investments ofBaht 19.43 million. Details in shareholders’ equity account at yearend 2002 comprisedof issued and paid up share capital of Baht 1,000 million, revaluation surplus oninvestments of Baht 150.55 million, statutory reserve of Baht 10.00 million andunappropriated retained earnings of Baht 97.68 million. The Company has set upBaht 8.80 million statutory reserve from net profit (5.41 % of net profit) in 2002 andwhen included with the statutory reserve of Baht 1.20 million at the end of 2001, theamount then rose to Baht 10.00 million. The statutory reserve was in accordance withPublic Company Act. Unappropriated retained earnings of Baht 97.68 million camefrom net profit for the year of Baht 162.58 million less statutory reserve of Baht 8.80million and retained losses at the end of 2001 of Baht 56.10 million. The revaluationsurplus on investments of Baht 150.55 million at the end of 2002 derived from thedifference between available-for-sale securities’ market price at the end of 2002 versuscost of securities and profit from portfolio transfer with the following details:

Surplus from debt securities 131.60 - 131.60

Surplus (loss) from equity securities & warrants (7.40) 23.98 16.58

Surplus from other securities 0.04 - 0.04

Gain from transferring of securities accounts 2.33 - 2.33

Total surplus from change in valuation on investments 126.57 23.98 150.55

Finance business Securities business TotalMil. Baht Mil. Baht Mil. Baht


Manufacturing and Commerce 1,022.01 42.53 1,328.21 47.12

Real estate and construction 383.52 15.96 374.37 13.28

Utilities and services 400.80 16.68 640.10 22.71

Housing loans 0.15 - 0.21 0.01

Others 569.14 23.68 442.37 15.69

Total 2,375.62 98.85 2,785.25 98.82

Plus : accrued interest 28.59 1.19 34.52 1.22

Less : prepaid discount received (0.99) (0.04) (1.23) (0.04)

Total loans, receivables and accrued interest 2,403.22 100.00 2,818.54 100.00

‡ß‘π„Àâ°Ÿâ¬◊¡µ“¡ß∫°“√‡ß‘π√«¡ 2545 2544·¬°µ“¡ª√–‡¿∑∏ÿ√°‘® ≈â“π∫“∑ —¥ à«π(%) ≈â“π∫“∑ —¥ à«π(%)Consolidated statement 2002 2001

Loans classified by type of business Mil. Baht % Mil. Baht %

Assets Quality, Liquidity, Reserves,and Capital Fund RequirementsLoans

A. Concentration of loans as classified by type of business.

Total loans, receivables and accrued interest receivables fell from Baht 2,818.54 millionat the end of 2001 to Baht 2,403.22 million at the end of 2002 due mainly to thedebt repayments under manufacturing and commerce sector that was reduced by Baht306.20 million to Baht 1,022.01 million and utilities and services sector that dropped byBaht 239.30 million from Baht 640.10 million at the end of 2001 to Baht 400.80 million.The decrement apart from debt repayments was also caused by limitation of loanexpansion since the companies with strong financial position had issued debenturesinstead of borrowing from financial institutions. The concentration of loans by businesscategories remained relatively unchanged from yearend 2001 with manufacturing andcommerce held the major part at Baht 1,022.01 million or 42.53 %, real estate andconstruction at 15.96%, utilities and services at 16.68% and others at 23.68% whichincreased from 15.69% as at the end of 2001 mainly from personal loans.


Normal 2,015.53 1,994.10 1% 19.94 19.94

Special mentioned - - 2% - -

Sub-standard - - 20% - -

Doubt 102.21 63.13 50% 31.57 31.57

Doubtful loss 256.67 13.33 100% 13.33 123.49

Loss - - 100% - -

Total classified assets 2,374.41 2,070.56 64.84 175.00

B. Classification of loans and allowance for doubtful accounts.

In accordance with the Bank of Thailand’s rules and regulations, finance business hasclassified debtor accounts into 6 classes and had set up the minimum provisionaccording to this classification by which provision required by BOT was calculatedfrom the debtor account after deducting collateral value. As at December 31, 2002,classification of loans and provision for doubtful accounts in financial statements of thecompany only were as follow:-

Classifications

Loans and Net loans Allowance for doubtful accounts (Mil. Baht)

accrued after % Provision Amount to be Amount

interest deduction required by provide under already set up

receivables collateral BOT BOT’S

value guideline

Notes :- 1. Including loans to financial institutions but excluding staff loans.2. Including loans to financial institutions and staff loans.

(1) (2)

According to provision required by BOT, total amount to be provided under BOT’sguideline was Baht 64.84 million but the company had set up a total of Baht 175.00million for the provision which was above the minimum requirement by Baht 110.16million or 169.89%. Net loans after deduction collateral value had included loans tocompany’s employees and loans to financial institutions but excluding accrued interestexcept for normal loans and special mentioned loans, of which the collateral values hadnot been deducted.

Non-Performing Loans (NPLs)

Consolidated and the company only financial statements showed that the company hadnon-performing loans at the end of 2002 and 2001 of Baht 417.43 million and Baht303.53 million respectively of which Baht 405.98 million represented loans andreceivables of finance business and Baht 11.45 million of securities business at the endof 2002 (Baht 291.99 million and Baht 11.54 million as at the end of 2001).

Increase in NPLs at the end of 2002 incurred partly from the revision of the calculationof NPLs by BOT of which financial institutions had to add back bad debts that hadalready been written off for loans with remaining balance and outstanding loans thatwere classified as sub-standard, doubtful, doubtful loss and loss to be NPLS of thatfinancial institution. The change in definition of NPLs and adding back loans that hadalready written off for recalculation had raised NPLs at the end of 2002 over 2001. NPLsat the end of 2002 accounted for 17.32 % of total loans and receivables of which Baht58.95 million represented loans that had been written off and bringing total principalfor loans and receivables, to Baht 2,410.54 million for calculation only.


Quality of Investments in Securities

At the end of 2002 and 2001, the Company had net investment in securities of Baht3,557.11 million and Baht 3,546.13 million respectively representing an increase of Baht10.98 million as per details shown in the company’s investments in securities of whichsuch investments as at the end of 2002 had included gain on revaluation of investmentsof Baht 148.22 million. This figure was unrealized gain from the comparison betweenmarket values and carrying costs at the end of 2002 for securities that were recorded ininvestments for sale of both long and short terms as per details described undershareholders’ equity and represented for 6.97% of costs in the investments for saleaccount of Baht 2,125.90 million. Therefore, it could be concluded that besides return inthe forms of interest and dividend, the company’s investment in securities for sale as atthe end of 2002 also yielded 6.97% unrealized gain. Held-to-maturity debt securities atcost as at the end of 2002 of Baht 1,189.02 million had already deducted Baht 6.00million for allowance for impairment loss. Allowance for possible loss from TAMC’spromissory notes amounted to Baht 5.00 million while the quality of promissory notesfrom TAMC of Baht 322.347 million will depend on TAMC’s ability to manage the assetsthat had been transferred from the Company and other expenses that incurred in whichover a period of time, the value of the assets transferred will be depreciated andexpenses will be increased so does allowance for possible loss. Allowance for possibleloss of Baht 5.00 million was based on the assumption that TAMC would be able to sellthe assets that were transferred from the Company in 2003. The remaining held-to-maturity debt securities consisted of government and state enterprise securities of Baht308.42 million, private sector debt securities of Baht 569.25 million less allowance forimpairment loss of Baht 6.00 million leaving net of Baht 563.25 million. Most securitiesunder held-to-maturity account had higher accounting yield than market yield. Hence atthe end of 2002, the remaining risk was the repayment ability for corporate debenturesin which as of December 31, 2002, allowance for impairment loss of Baht 6.00 millionwas sufficient for such risk under current information.Company’s Liquidity

As at the end of 2002, the Company had a total Baht 2,532.55 million of liquid assetsunder the definition of BOT or 41.14 % of total borrowings of Baht 6,155.78 million(including borrowings from The Subsidiary Company) which was much higher than the6.00% requirement stipulated by the BOT. The mentioned liquid assets consisted of cashdeposits at the BOT in the amount of Baht 37.64 million, deposits at banks withoutobligations of Baht 31.11 million, Thai Government Bonds without obligations ofBaht 967.51 million, debentures or bonds or debt instruments that principal and interestwere guaranteed by Ministry of Finance and without obligations of Baht 839.25 millionand debentures or bonds of government agencies or state enterprises that were foundedby special acts or of the Industrial Finance Corporation of Thailand without obligationsof Baht 657.04 million. The mentioned liquid assets had included securities purchasedunder resale agreements of Baht 1,175.00 million and TAMC’s promissory notes ofBaht 317.35 million.


Remarks 1) Including loans to securities business of Baht 90.56 million not over 1 year.2) Only principal not including allowance for revaluation of Baht 131.5 million.3) Since investment in bond repurchase market had duration of not more than 14 days

as of December 31, 2002, it was classified as at call.

Call 26.56 0.45 575.83 - 1,175.00 +1,724.27

< 1 year 4,509.96 76.29 628.12 460.90 - -3,420.94

> 1 year 1,375.31 23.26 1,170.68 2,742.20 - +2,537.57

Total 5,911.83 100.00 2,374.63 3,203.10 1,175.00 +840.90

Period Deposit % Loans (1) Investments (2) Bonds (3) Gap.in debt repurchased

securities market

Baht : million

Sources of fund in the forms of deposits or borrowings from general public at the end of2002 totaled to Baht 5,911.83 million of which Baht 26.56 million or 0.45% representedat call, Baht 4,509.96 million or 76.29 % due within 1 year and Baht 1,375.31 million or23.26% due over 1 year. The ratio of deposits based on the remaining period of contractsat the end of 2001 was call: not over 1 year: over 1 year at 1.78 : 82.12 : 16.09. It canbe seen that long term deposit had an increasing trend. Uses of fund in the forms ofloans, investments in debt instruments and in bonds repurchase market were still notmatch in maturity profile with the sources of fund as there were loans under call basisand short term investments not more than 14 days in the high ratio while those of notmore than 1 year were low compare to maturity profile of sources of fund which wascommon for finance business since clients preferred short term deposits. However, whenconsider the Company’s liquidity position by the definition of BOT, at the end of 2002the Company had total of liquid assets of Baht 2,532.55 million or 41.14 % of totalborrowings (including borrowings from securities business). Therefore, the Company hadno liquidity problem due to mismatch of sources and uses of fund since it maintainedsubstantial liquid assets.

Relationships between sources and uses of fund

The Company’s sources of fund come from deposits or borrowings from general publicand its own capital while its uses of fund are mostly spent in the investment insecurities, and loans. As at the end of 2002, the mentioned sources and uses of fundcould be divided according to the aging of deposits, debt instruments and loans in theconsolidated financial statements as the following:-

Reserves and Capital Fund Requirements

Capital Adequacy Ratio

At yearend 2002, the Company had capital-to-risk assets ratio of 21.29%, compare tothe BOT’s requirement of 8.0%.

Net Capital Rule

At the end of 2002, BFIT Securities Co., Ltd. maintained its net capital rule ratio at522.29% which was higher than 7.0% stipulated by the Office of Securities andExchange Commission.


BANGKOK FIRST INVESTMENT AND TRUST PUBLIC COMPANY LIMITEDAND ITS SUBSIDIARY

REPORT AND FINANCIAL STATEMENTS31 DECEMBER 2002 AND 2001


Report of Independent Auditor

To the Board of Directors and Shareholders of

Bangkok First Investment and Trust Public Company Limited

I have audited the accompanying consolidated balance sheets of Bangkok First Investment and Trust Public Company Limited

and its subsidiary as at 31 December 2002 and 2001 and the related consolidated statements of earnings, changes in shareholders’

equity, and cash flows for the years then ended; and the separate financial statements of Bangkok First Investment and Trust

Public Company Limited for the same years. 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 audits.

I conducted my audits 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 audits provide 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 Bangkok

First Investment and Trust Public Company Limited and its subsidiary and of Bangkok First Investment and Trust Public Company

Limited as at 31 December 2002 and 2001 and the results of their operations and cash flows for the years then ended in accordance

with generally accepted accounting principles.

Rungnapa Lertsuwankul

Certified Public Accountant (Thailand) No. 3516

Ernst & Young Office Limited

Bangkok : 20 January 2003


BANGKOK FIRST INVESTMENT AND TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY

BALANCE SHEETS

AS AT 31 DECEMBER 2002 AND 2001

(Unit : Baht)

CONSOLIDATED THE COMPANY ONLY

Note 2002 2001 2002 2001

(Restated) (Restated)

ASSETS

Cash and deposits at financial institutions 5 82,600,428 85,370,073 68,757,353 52,239,671Loans to financial institution 6 50,288,493 - 50,288,493 -Securities purchased under resale agreements 7 1,175,000,000 660,000,000 1,175,000,000 660,000,000Investments 8

Current investments - net 486,724,386 747,974,331 461,780,028 666,033,943Long-term investments - net 3,070,388,475 2,798,169,962 2,999,676,701 2,729,979,610Investment in subsidiary - net - - 411,765,335 380,674,968

Net investments 3,557,112,861 3,546,144,293 3,873,222,064 3,776,688,521Trading transactions with securities companies 5,231,259 130,304,480 - -Loans, receivables and accrued interest receivables 9

Finance business loans and receivables 2,284,068,932 2,682,457,627 2,284,068,932 2,682,457,627Securities business receivables 90,561,501 101,560,547 11,470,786 12,657,690

Total loans and receivables 2,374,630,433 2,784,018,174 2,295,539,718 2,695,115,317Accrued interest receivables 28,585,271 34,516,842 28,585,271 34,516,842

Total loans, receivables and accrued interest receivables 2,403,215,704 2,818,535,016 2,324,124,989 2,729,632,159Less : Allowance for doubtful accounts 10 (175,000,000) (160,000,000) (175,000,000) (160,000,000)

Allowance for revaluation of debt restructuring 10 (11,425,583) (34,778,114) (11,425,583) (34,778,114)Net loans, receivables and accrued interest receivables 2,216,790,121 2,623,756,902 2,137,699,406 2,534,854,045

Property foreclosed - net 11 92,583,500 98,136,911 92,583,500 98,136,911Property, plant and equipment - net 12 39,056,405 48,099,059 16,737,959 20,780,494Prepaid corporate income tax 10,165,686 23,851,739 7,577,650 22,810,757Other assets

Accrued interest receivables - net 36,345,181 44,312,451 36,345,181 44,312,451Others 34,914,216 30,346,712 12,306,267 12,617,997

Total Other assets 71,259,397 74,659,163 48,651,448 56,930,448TOTAL ASSETS 7,300,088,150 7,290,322,620 7,470,517,873 7,222,440,847

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



BALANCE SHEETS (Continued)

AS AT 31 DECEMBER 2002 AND 2001

(Unit : Baht)


Note 2002 2001 2002 2001


LIABILITIES AND SHAREHOLDERS’ EQUITY

Borrowings and deposits 14From public 5,520,444,949 5,120,701,114 5,520,444,949 5,120,701,114From financial institutions 354,000,000 715,000,000 597,954,463 850,072,605From foreign countries 37,385,531 86,293,918 37,385,531 86,293,918 Total borrowings and deposits 5,911,830,480 5,921,995,032 6,155,784,943 6,057,067,637

Trading transactions with securities companies 14,278,977 118,044,861 - -Securities business payables 41,472,702 66,742,688 492,649 492,649Accrued interest payables 29,843,352 51,914,449 29,873,486 51,931,335Other liabilities

Suspense accounts 4,606,403 20,339,202 4,606,403 20,339,202Others 39,828,129 35,066,476 21,532,285 16,390,112 Total other liabilities 44,434,532 55,405,678 26,138,688 36,729,314

Total liabilities 6,041,860,043 6,214,102,708 6,212,289,766 6,146,220,935Shareholders’ equity

Share capital 15, 16 Authorised share capital

150,000,000 ordinary shares of Baht 10 each 1,500,000,000 1,500,000,000 1,500,000,000 1,500,000,000 Issued and paid-up share capital

100,000,000 ordinary shares of Baht 10 each 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Revaluation surplus on investments 17 150,545,482 131,120,084 150,545,482 131,120,084 Retained earnings

Appropriated - statutory reserve 18 10,000,000 1,200,000 10,000,000 1,200,000 Unappropriated (deficit) 97,682,625 (56,100,172) 97,682,625 (56,100,172)

Total shareholders’ equity 1,258,228,107 1,076,219,912 1,258,228,107 1,076,219,912TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 7,300,088,150 7,290,322,620 7,470,517,873 7,222,440,847

OFF-BALANCE SHEET ITEMS - CONTINGENCIES 23Aval to bills 38,560,587 113,873,080 38,560,587 113,873,080Guarantees 12,980,544 12,980,544 12,980,544 12,980,544




STATEMENTS OF EARNINGS

FOR THE YEARS ENDED 31 DECEMBER 2002 AND 2001

(Unit : Baht)


Note 2002 2001 2002 2001


Interest and dividend income

Loans and deposits 176,021,479 190,502,663 173,823,582 189,515,880Investments 211,180,493 198,119,551 205,563,949 189,082,597 Total interest and dividend income 387,201,972 388,622,214 379,387,531 378,598,477

Interest expenses

Interest and discounts 176,007,255 177,580,541 176,550,072 178,273,504Fees and charges 1,373,494 1,312,888 1,373,494 1,312,888 Total interest expenses 177,380,749 178,893,429 177,923,566 179,586,392 Net interest and dividend income 209,821,223 209,728,785 201,463,965 199,012,085

Bad debt and doubtful accounts (2,242,052) (134,612,406) (2,242,052) (134,612,406)Bad debt recovery 23,804,415 78,040,034 23,804,415 78,040,034

Net interest and dividend income after bad debt and

doubtful accounts 231,383,586 153,156,413 223,026,328 142,439,713Non-interest income

Brokerage fees 79,867,571 18,080,429 - -Gains on investments 19 41,703,816 67,717,352 21,264,002 30,870,127Share of profit (loss) of investment in equity method - - 24,054,197 (9,983,411)Fees and services income 41,745,618 33,807,543 14,199,365 15,461,866Other income 2,534,564 5,260,838 866,005 4,352,147 Total non-interest income 165,851,569 124,866,162 60,383,569 40,700,729 Total net income 397,235,155 278,022,575 283,409,897 183,140,442

Non-interest expenses

Personal expenses 120,226,974 98,881,508 51,456,282 45,088,550Premises and equipment expenses 42,007,513 37,219,607 11,759,342 11,586,099Taxes and duties 13,671,657 12,671,406 13,534,460 12,501,959Directors’ remuneration 20 2,339,589 2,668,614 2,339,589 2,668,614Impairment loss on assets 12,433,269 3,153,500 12,433,269 3,153,500Other expenses 43,973,356 45,587,328 29,304,158 30,301,108 Total non-interest expenses 234,652,358 200,181,963 120,827,100 105,299,830

Net earnings for the year 21 162,582,797 77,840,612 162,582,797 77,840,612Basic earnings per share

Net earnings 1.63 0.78 1.63 0.78



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STATEMENTS OF CASH FLOWS


(Unit : Baht)


2002 2001 2002 2001


Cash flows from operating activities

Net earnings 162,582,797 77,840,612 162,582,797 77,840,612 Adjustments to reconcile net earnings to

net cash provided by (used in) operating activities :-

Depreciation 15,242,352 14,626,275 5,704,156 5,589,045Bad debt and doubtful accounts 2,242,052 134,612,406 2,242,052 134,612,406Bad debt recovery (12,147,006) (39,435,605) (12,147,006) (39,435,605)Allowance for revaluation of debt restructuring (4,446,739) (5,166,490) (4,446,739) (5,166,490)Transfer of preferred shares and promissory note

from debt restructuring - (19,839,120) - (19,839,120)Share of (profit) loss of investment in equity method - - (24,054,197) 9,983,411Unrealised gain on investments in securities (7,442,380) (19,742,229) (5,235,195) (10,368,422)Amortisation of discount on debentures 20,114,227 10,755,597 20,114,227 10,755,597Loss on impairment of investments in securities 7,446,523 - 7,446,523 -Allowance for possible loss arising from receivable from TAMC 5,000,000 - 5,000,000 -Adjustment for apportionment of input tax of

subsidiary company - 4,119,589 - -Impairment loss on assets 12,433,269 3,153,500 12,433,269 3,153,500(Gain) loss on disposal of equipment (416,208) 28,316 (14,806) 289,404Written - off of equipment 232 25,648 - 11,738Decrease in accrued interest receivables 7,018,983 5,544,944 7,018,983 5,544,944Increase (decrease) in accrued interest payables (22,071,097) 3,296,902 (22,057,849) 3,288,687

Earnings from operating activities before changes

in operating assets and liabilities 185,557,005 169,820,345 154,586,215 176,259,707 (Increase) decrease in operating assets

Loans to financial institution (50,288,493) - (50,288,493) - Securities purchased under resale agreements (515,000,000) (147,000,000) (515,000,000) (147,000,000) Current investments 263,457,130 (107,423,219) 204,253,915 (92,858,927) Trading transactions with securities companies 125,073,221 (130,304,480) - - Loans and receivables 403,239,897 263,874,880 393,427,755 319,292,896 Other assets 9,118,549 1,656,818 15,544,837 6,855,680 Increase (decrease) in operating liabilities

Borrowings from public 399,743,835 (54,288,619) 399,743,835 (320,195,327) Borrowings from financial institutions (361,000,000) 134,000,000 (252,118,142) 269,072,605 Borrowings from foreign countries (48,908,387) 65,150,194 (48,908,387) 65,150,194 Trading transactions with securities companies (103,765,884) 68,511,886 - - Securities business payables (25,269,986) 22,945,139 - (150) Other liabilities (7,522,800) (8,067,085) (7,142,280) (7,301,076) Net cash from operating activities 274,434,087 278,875,859 294,099,255 269,275,602




STATEMENTS OF CASH FLOWS (Continued)


(Unit : Baht)


Note 2002 2001 2002 2001


Cash flows from investing activities

Increase in long-term investments (271,420,010) (287,940,950) (275,934,758) (292,972,710) Cash paid for purchase of equipment (7,097,774) (5,715,098) (1,705,201) (2,514,276) Cash received from disposal of equipment 1,314,052 1,734,761 58,386 47,329

Net cash used in investing activities (277,203,732) (291,921,287) (277,581,573) (295,439,657)Cash flows from financing activities

Net cash from financing activities - - - -Net increase (decrease) in cash and cash equivalents (2,769,645) (13,045,428) 16,517,682 (26,164,055)Cash and cash equivalents at beginning of year 85,370,073 98,415,501 52,239,671 78,403,726Cash and cash equivalents at end of year 26 82,600,428 85,370,073 68,757,353 52,239,671

Supplemental cash flows information :-

Cash paid during the year for

Interest expenses 198,078,352 175,143,109 198,607,921 174,984,817Withholding tax 3,844,675 2,552,529 2,297,621 1,588,052

Non-cash transactions :-

Transfer from current investments to be long-term investments - 54,013,451 - -Loans and receivable and NCD written off 6,147,844 145,249,761 6,147,844 145,249,761Transfer of liabilities relating to provident fund management

business and securities registrar business to subsidiary - - - 742,126Transfer of securities for loans settlement 8,698,660 22,415,334 8,698,660 22,415,334Transfer of preferred shares and promissory note from

debt restructuring - 19,839,120 - 19,839,120NCDs recovery - 58,950,000 - 58,950,000Investment received from transfer of debt to Thai Asset

Management Corporation - 322,347,000 - 322,347,000Net liabilities increased from apportionment of input tax

of subsidiary - 2,237,238 - -Net assets decreased from apportionment of input tax

of subsidiary - 1,929,179 - -




NOTES TO FINANCIAL STATEMENTS


1. GENERAL INFORMATION

(a) Bangkok First Investment and Trust Public Company Limited was incorporated as a public company limited under

Thai laws. Its major shareholder is China Development Industrial Bank Inc., a company existing under Taiwanese laws.

The Company operates its business in Thailand and its principal activity is the finance business while its wholly-owned

subsidiary, BFIT Securities Company Limited, operates the securities business. Its registered office is located at 23rd Floor,

Bangkok Insurance / Y.W.C.A. Building, 25 Sathon Tai Road, Thung Mahamek, Sathon, Bangkok.

During 2000, the Company separated its finance and securities businesses, establishing a new securities company to

administer the securities business operations under the name “BFIT Securities Company Limited”, on 7 July 2000, with

capital of Baht 400 million. The Company has invested in 39,999,994 ordinary shares of BFIT Securities Company

Limited at Baht 10 each, representing nearly 100 percent of the shares of this company.

On 1 October 2000 the Company transferred assets of Baht 215.5 million and liabilities of Baht 32.3 million

relating to its securities business to BFIT Securities Company Limited (the subsidiary) at their book value as at

30 September 2000.

Subsequently, on 12 December 2000, the Company changed its Thai name. from ù ù∫√ ‘… —∑‡ß ‘π∑ÿπÀ≈—°∑√—æ¬å°√ÿß‡∑æ∏π“∑√ ®”°—¥ (¡À“™π)ûû to ùù∫√‘…—∑‡ß‘π∑ÿπ °√ÿß‡∑æ∏π“∑√ ®”°—¥ (¡À“™π).ûû The Company’s only remaining

operations are finance business operations. As at 31 December 2002, the Company has 75 employees

(2001 : 70 employees).

BFIT Securities Company Limited, a subsidiary of the Company, was established to operate securities business.

As at 31 December 2002, that company has 147 employees (2001 : 135 employees).

During 2001 the Company transferred assets of Baht 1.1 million and liabilities of Baht 2.5 million relating to its

provident fund management business and securities registrar business to the subsidiary at their book values as at 29

March 2001 and 30 September 2001, respectively.

(b) In June 2001 the Government issued an Emergency Decree establishing Thai Asset Management Corporation (TAMC).

Under this Emergency Decree, financial institutions may choose whether to join the scheme and transfer those of their

non-performing assets which meet the stipulated conditions to TAMC, within the specified timeframe. The assets are

to be transferred at a price equal to the value of the collateral or a price stipulated by the Board of TAMC and any

future profits and responsibility for losses from the non-performing assets are to be shared. The Company’s

management agreed to join the scheme and in October and November 2001, the Company transferred a total of 4

non-performing loans, with book values amounting to Baht 40.7 million and Baht 281.6 million, respectively, to the

TAMC, in accordance with the prices stipulated by the Board of TAMC. The Company did not suffer any loss as a result

of the transfer of these loans.

The Company and TAMC will together share future profits and losses arising from TAMC’s management of

the non-performing assets. If there are any losses under TAMC’s management the maximum share of the loss from

the non-performing assets transferred for which the Company may be liable is equivalent to not more than 30% of

the price at which they were transferred to TAMC, or approximately Baht 96.7 million. As at the balance sheet date,

the amount of such loss cannot be estimated; however, the Company has already set up allowance for possible loss

amounting to Baht 5 million as at 31 December 2002.


(c) Although Thailand’s economic crisis has eased to a certain extent in the current year, financial restructuring within the

business community is still prevalent and subject to readjustment. The residual effects of the crisis could affect the

recoverable value of assets and the collection of loans and receivables, and the end result of these uncertainties cannot

be ascertained at this time. However, the accompanying financial statements reflect management’s current assessment

of the impact to date of the economic situation on the financial positions of the Company and its subsidiary. Actual

results could differ from management’s current assessments.

2. BASIS FOR THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

These consolidated financial statements include the balance sheets of Bangkok First Investment and Trust Public Company

Limited (hereinafter referred to as “the Company”) and BFIT Securities Company Limited (hereinafter referred to as

“the subsidiary”) as at 31 December 2002 and 2001 and the related statements of earnings for the years then ended as

presented below :-

(Unit : Percentage)

Income of the

subsidiary as a percentage

Assets of the subsidiary of total income included

as a percentage of total assets in consolidated earnings

Percentage of shares held included in consolidated statements for the years

by the Company as at 31 December balance sheets as at 31 December ended 31 December

2002 2001 2002 2001 2002 2001

BFIT Securities Company Limited 99.999985 99.999985 6.1 7.5 32.7 31.7

The outstanding balances and transactions between the Company and its subsidiary, the Company’s investment in the

subsidiary and the shareholders’ equity of the subsidiary have been eliminated from the consolidated financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with accounting standards pronounced by the

Institute of Certified Accountants and Auditors of Thailand, which are effective under the Accounting Act B.E. 2543 and in

accordance with the notifications of the Bank of Thailand and the Office of the Securities and Exchange Commission.

Significant accounting policies adopted by the Company and its subsidiary are summarised below :-

3.1 Revenue recognition

(a) Interest and discounts on loans

Interest income on loans is recognised over the term of the loan based on the amount of principal outstanding.

No accrual is made for certain loans which are not qualified for recognition of interest under an accrual basis in

accordance with notifications of the Bank of Thailand.

Interest income on restructured loans of the Company is recognised on the same accrual basis as used for loans

described above. However for loans that are subject to monitoring for compliance with restructuring conditions,

the Company recognises interest income on a cash basis until the borrower is able to comply with the

restructured conditions for a period of not less than three months or three installments, whichever is longer.


Interest income on margin loans is recognised over the term of the loan based on the amount of principal

outstanding. No accrual is made for certain loans which are not qualified for recognition of interest under an

accrual basis in accordance with notifications of the Office of the Securities and Exchange Commission and the

Stock Exchange of Thailand, taking into consideration of other relevant factors.

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

taken up as income evenly throughout the term of the notes or loans.

(b) Interest and dividends on investments in securities

Interest on investment is recognised as income on an accrual basis. Dividends from securities are recognised as

income when the dividends are declared.

(c) Brokerage fee

Brokerage on securities trading is recognised as income on the transaction dates.

(d) Gains (losses) on trading in securities

Gains (losses) on the trading in securities are recognised as income or expense on the transaction dates.

(e) Fees and services incomes

Fees and services incomes are recognised as income on an accrual basis.

3.2 Interest expenses

Interest expenses are charged to earnings on an accrual basis. Interest included in the face value of the notes payable is

recorded as deferred interest and amortised to expenses evenly throughout the term of the notes.

3.3 Allowance for doubtful accounts and allowance for revaluation of debt restructuring

The Company sets aside an allowance for doubtful accounts and an allowance for revaluation of debt restructuring

based on the guidelines laid down in the Bank of Thailand’s Notification, adjusted by the additional amount which is

expected to be not collectible. Judgement of the adequacy of the amount of allowance for doubtful accounts is based

on the results of an evaluation of the current status of the debtors, taking into account the requirements under the

notifications of the Bank of Thailand pertaining to classification of loans, provisioning rates for each classification, the

valuation of the collateral and classification adjustments for restructured loans.

For the subsidiary, the classification of debtors and allowances for doubtful accounts are based on the guidelines laid

down in the Notification of the Office of the Securities and Exchange Commission and other relevant factors.

3.4 Troubled debt restructuring

Under the Company’s accounting policy for troubled debt restructuring, if payment of debt is received through the

transfer of property or financial instruments, or if equity security in the debtor’s business is received as a result of a debt

to equity swap, the Company records the assets received at their fair value. Losses arising from differences between

the book value of the debt and the fair value of the assets are recorded in the earnings statement, taking into account

the existing allowance for doubtful accounts.


If debt restructuring includes the provision of a waiver of debt repayment conditions to the debtor, the Company will

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

of the future cash flows to be received under the new conditions, applying the Minimum Loan Rate (MLR) of Bangkok

Bank Public Company Limited for discounting. Any amount by which the newly determined book value is lower than

the previous book value, including interest receivable, is recorded as a loss from restructuring in the earnings statement.

Losses from troubled debt restructuring arising from reductions of principal and interest are included in the earnings

statement.

3.5 Investments in securities

Investments in securities held for trading are presented at fair value. Gains or losses arising from changes in the value of

securities are included in determining earnings.

Investments in available-for-sale securities, both held for short term and long term, are presented at fair value. Changes

in the value of securities are shown as a separate item in shareholders’ equity until the securities are sold, and the

changes are then included in determining earnings.

Investments in debt securities which are intended to be held to maturity, whether due within one year or more than one

year, are presented at amortised cost.

The premium / discount on debt securities is amortised using the effective rate method, with the amortised amount

presented as an adjustment to the interest income.

Investments in non-marketable equity securities which are classified as other investments are valued at cost.

The fair value of securities listed on the Stock Exchange of Thailand is based on the latest bid price of the last working

day of the year as quoted on the Stock Exchange of Thailand.

The fair value of government bonds, government guaranteed state enterprise bonds, state enterprise bonds and

corporate debentures which are listed on the Thai Bond Dealing Center is determined using the average bid yield quoted

by the Thai Bond Dealing Center on the last working day of the accounting period. If no average bid yield is available,

then the yield on the latest transaction is used, providing this was not more than one month, and that there have been

no significant changes in the economic situation between the date of the latest transaction and the valuation date.

The fair value of government bonds, government guaranteed state enterprise bonds, state enterprise bonds and

corporate debentures which are not listed on the Thai Bond Dealing Center or listed but are not active securities, is

determined using the government bond yield curve on the last working day of the accounting period as a benchmark,

adjusted by an appropriate risk premium.

Calculation of the fair value of government bonds, government guaranteed state enterprise bonds, state enterprise

bonds and corporate debentures is determined using the formula quoted by the Thai Bond Dealing Center.

Loss on impairment of investments in available-for-sale securities, debt securities, both due within one year and

expected to be held to maturity, and non-marketable equity securities, is included in determining earnings when the

carrying amount exceeds its recoverable amount.


Investment in the subsidiary is accounted for by the equity method.

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

In the event of the Company and the subsidiary reclassifying investments, the investments are valued at their fair value

prevailing on the reclassification date. Differences between the carrying amount of the investments and their fair value

on that date are recorded as gains (losses) in the statements of earnings, or as revaluation surplus (deficit) on

investments presented as a separate item in shareholders’ equity and amortised over the remaining period to maturity

of the debt security.

3.6 Foreign currencies

Foreign currency transactions during the year have been translated into Baht at the rates ruling on the transaction dates.

Assets and liabilities in foreign currency outstanding on the balance sheet date have been translated into Baht at the

rates ruling on the balance sheet date.

Exchange gains and losses are included in determining earnings.

3.7 Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation.

Depreciation of plant and equipment is calculated by reference to their costs on a straight-line basis over the following

estimated useful lives :-

Buildings 20 years

Computers and equipment 3 - 5 years

Furniture, fixtures and installations 5 years

Vehicles 5 years

No depreciation has been provided for land.

3.8 Property foreclosed

Prior to 2002 properties foreclosed were stated at the lower of cost or net realisable value with reference to the latest

appraisal value.

Effective 1 January 2002, the Company has changed its accounting policy with respect to the treatment of property

foreclosed received as a result of debt restructuring. Property foreclosed is thus recorded at its fair value, minus

estimated selling expenses, but this is not to exceed the balance of the debt legally claimable, in accordance with the

reply made by the Institute of Certified Accountants and Auditors of Thailand to an enquiry.

Gains (losses) on disposal of property foreclosed are recorded as income or expenses in the statement of earnings when

the disposal is made. Impairment loss is recognised in the statement of earnings.

3.9 Sales of bills of exchange

Sales of bills of exchange that carry no acceptances or aval from financial institutions with recourse clause are recorded

as liabilities under the caption of “Liabilities under commercial papers sold”. The amount of debt recorded upon the


purchase of the bills will be credited when the bills are due and collected.

3.10 Financial instruments

The Company and the subsidiary have no policy to speculate in or engage in the trading of any financial derivative

instruments.

Financial instruments presented in the balance sheets consist of cash and deposits at financial institutions, loans to

financial institution, securities purchased under resale agreements, investments, trading transactions with securities

companies, loans and receivables, borrowings and deposits, and securities business payables. The accounting policy

used for each accounting transaction has been separately shown under the related caption.

3.11 Basic earnings per share

Basic earnings per share is calculated by dividing net earnings for the year by the weighted average number of ordinary

shares held by outside parties in issue during the year.

3.12 Cash and cash equivalents

For the purposes of the statements of cash flows, cash and equivalents include all kinds of cash in hand and at banks,

but excludes negotiable certificates of deposit (NCDs).

3.13 Provident fund

The Company, the subsidiary and their employees have jointly registered a provident fund scheme under the Provident

Fund Act B.E. 2530. The fund is contributed to by the Company, its subsidiary and their employees at the rate of 6%

of salaries. The fund is managed by NFS Asset Management Company Limited and will be paid to the employees

upon termination in accordance with the rules of the fund.

3.14 Use of accounting estimates

Preparation of financial statements in conformity with generally accepted accounting principles requires management

to make estimates to certain accounting transactions, affecting amounts reported in the financial statements and notes

related thereto. Subsequent actual results may differ from these estimates.

4. CORRECTIONS OF ERRORS AND CHANGE IN ACCOUNTING POLICY

4.1 Corrections of errors

4.1.1 Transfer of investment portfolio

In 2000 the Company included gains realised from the transfer of investments in the “available-for-sale

securities” account to the “held-to-maturity securities” account in determining earnings. This treatment did not

comply with the Accounting Standards Pronouncement No. 40 “Accounting for Investments in Debts and Equity

Securities”, which requires that differences between the carrying amount of investments and their fair value on

the transfer date be presented as revaluation surplus or deficit as separate item in shareholders’ equity, and be

amortised over the remaining period until the maturity of the securities. To adjust for this error the Company has


had to restate the previous year’s financial statements, presented herein for comparative purpose and adjust

the brought forward balance of retained earnings as though the Company had complied with the Accounting

Standards Pronouncement. The adjustment has the effect of increasing and decreasing the net earnings for

the years ended 31 December 2002 and 2001 by Baht 814,217 and 87,819, respectively. The cumulative

effects of the adjustment up to the beginning of the years 2002 and 2001 are to decrease the brought forward

balance of retained earnings of 2002 and 2001 by Baht 3,054,807 and Baht 2,966,988, respectively, and to

increase the brought forward balance of revaluation surplus on investment of 2002 and 2001 by Baht 3,054,807

and Baht 2,966,988, respectively. These cumulative effects have been presented under the heading of

“Cumulative effects of the errors adjustments” in the statements of changes in shareholders’ equity.

4.1.2 Purchase and sale of government bonds

In September 2000 the Company sold government bonds to a commercial bank and subsequently purchased

a similar quantity and value of such bonds back from that bank. The Company decided to sell the bonds because

their rate of return had decreased. After selling the bonds, the Company reconsidered and decided to reinvest

the proceeds from the bond sale in low risk securities. It thus reinvested in the government bonds, purchasing

them back from the commercial bank in a greater quantity than that sold. The bond trading involved actual

transfer of the bonds and actual cash receipts and payments and was conducted in accordance with market

conditions. However, the Office of the Securities and Exchange Commission was of the opinion that the Company’s

sale of the bonds to the commercial bank and subsequent repurchase of a similar quantity and value of such

bonds back from that bank, could be considered that the Company did not have a real intention to sell the

bonds. The recording of the bond sales transaction thus did not comply with the Accounting Framework based

on the principle of substance over legal form, which requires transactions to be recorded in accordance with

their substance and real economic basis, not only in accordance with their legal form, and the Company should

therefore record the transaction as a loan secured by securities. To adjust for this error the Company has had to

restate the previous year’s financial statements, presented herein for comparative purposes, and adjust the

brought forward balance of retained earnings as though the Company had always complied with the above

Accounting Framework. The adjustment has the effect of increasing the net earnings for the years ended 31

December 2002 and 2001 by Baht 16,527,394 and 10,675,641, respectively. The cumulative effects of the

adjustment up to the beginning of the years 2002 and 2001 are to decrease the balances of retained earnings

brought forward to 2002 and 2001 by Baht 47,612,658 and Baht 58,288,299, respectively, and to increase the

balances of revaluation surplus on investment brought forward to 2002 and 2001 by Baht 47,612,658 and Baht

58,288,299, respectively. These cumulative effects have been presented under the heading of “Cumulative

effects of the errors adjustments” in the statements of changes in shareholders’ equity.

4.2 Change in accounting policy

In 2002 the Company changed its deferred income tax accounting policy, ceasing its previous practice

because it did not enable the Company to reasonably estimate the recoverable value of deferred tax assets.

Furthermore the above accounting policy, although complying with International Accounting Standards, is not

yet required under Thai Accounting Standards. In changing this policy the Company had to restate the previous

year’s financial statements, presented herein for comparative purposes, and adjust the brought forward balance

of retained earnings as though the Company had never adopted the accounting policy. The cumulative effects

of the change up to the beginning of the years 2002 and 2001 have been presented under the heading of

“Cumulative effect of the change in accounting policy related to income tax accounting” in the statements of

changes in shareholders’ equity. However, tax privilege of the Company is still remaining.


5. CASH AND DEPOSITS AT FINANCIAL INSTITUTIONS

(Unit : Baht)


2002 2001 2002 2001Cash in hand 13,793 29,134 8,576 9,139Deposits at financial institutions 82,586,635 85,340,939 68,748,777 52,230,532Total cash and deposits at financial institutions 82,600,428 85,370,073 68,757,353 52,239,671

6. LOANS TO FINANCIAL INSTITUTION

(Unit : Baht)

CONSOLIDATED AND THE COMPANY ONLY

2002 2001Call loans - -Term loans 50,000,000 -Total loans 50,000,000 -Add : Accrued interest receivable 288,493 -Total loans to financial institution 50,288,493 -

7. SECURITIES PURCHASED UNDER RESALE AGREEMENT

(Unit : Baht)


2002 2001Government and Bank of Thailand bonds 1,175,000,000 650,000,000State enterprise bonds - 10,000,000Total 1,175,000,000 660,000,000


8. INVESTMENTS

(Unit : Baht)

CONSOLIDATED

2002 2001Cost/ Fair value/ Cost/ Fair value/

Book value Market value Book value Market value


Current investments

Trading securities :

Domestic marketable equity securities 20,037,729 24,944,358 79,240,944 81,940,388 Add : Allowance for change in valuation 4,906,629 - 2,699,444 - Total trading securities 24,944,358 24,944,358 81,940,388 81,940,388 Available-for-sale securities :

Debt securities due within 1 year

Private-sector debt securities 266,738,455 267,723,426 134,143,947 135,637,697 Total debt securities due within 1 year 266,738,455 267,723,426 134,143,947 135,637,697 Add : Allowance for change in valuation 984,971 - 1,493,750 - Total available-for-sale securities 267,723,426 267,723,426 135,637,697 135,637,697 Held-to-maturity debt securities :


Government and state enterprise securities - 151,399,437 Private-sector debt securities 194,056,602 378,996,809

Total debt securities due within 1 year 194,056,602 530,396,246 Total held-to-maturity securities 194,056,602 530,396,246 Current investments – net 486,724,386 747,974,331


(Unit : Baht)

CONSOLIDATED




Long-term investments

Available-for-sale securities :

Government and state enterprise securities 583,048,388 660,111,906 662,131,844 759,361,859Private-sector debt securities 1,164,256,147 1,217,804,555 872,928,507 893,737,697Domestic marketable equity securities 61,462,164 78,040,255 78,250,787 86,422,194Others 50,397,000 50,437,130 9,743,000 10,103,915Total 1,859,163,699 2,006,393,846 1,623,054,138 1,749,625,665Add : Allowance for change in valuation 147,230,147 - 126,571,527 -

Total available-for-sale securities 2,006,393,846 2,006,393,846 1,749,625,665 1,749,625,665Held-to-maturity debt securities :

Debt securities due over 1 year :

Government and state enterprise securities 308,421,414 311,093,807Private-sector debt securities 375,189,633 351,287,896Less : Allowance for impairment loss (6,000,000) -Net 369,189,633 351,287,896Receivable from TAMC 322,347,000 322,347,000Less : Allowance for possible loss (5,000,000) -Net 317,347,000 322,347,000

Total debt securities due over 1 year 994,958,047 984,728,703Total held-to-maturity debt securities 994,958,047 984,728,703Other investments :

Domestic non-marketable equity securities 69,036,582 63,815,593Foreign non-marketable equity securities - 1

Total other investments 69,036,582 63,815,594Long-term investments – net 3,070,388,475 2,798,169,962


(Unit : Baht)

THE COMPANY ONLY




Current investments



Private-sector debt securities 266,738,455 267,723,426 134,143,947 135,637,697Total debt securities due within 1 year 266,738,455 267,723,426 134,143,947 135,637,697Add : Allowance for changes in valuation 984,971 - 1,493,750 -

Total available-for-sale securities 267,723,426 267,723,426 135,637,697 135,637,697Held-to-maturity debt securities :


Government and state enterprise securities - 151,399,437Private-sector debt securities 194,056,602 378,996,809

Total debt securities due within 1 year 194,056,602 530,396,246Total held-to-maturity debt securities 194,056,602 530,396,246Current investments - net 461,780,028 666,033,943

Long-term investments


Government and state enterprise securities 583,048,388 660,111,906 662,131,844 759,361,859Private-sector debt securities 1,164,256,147 1,217,804,555 872,928,507 893,737,697Domestic marketable equity securities 14,724,634 7,328,481 26,998,509 18,231,842Others 50,397,000 50,437,130 9,743,000 10,103,915Total 1,812,426,169 1,935,682,072 1,571,801,860 1,681,435,313Add : Allowance for changes in valuation 123,255,903 - 109,633,453 -

Total available-for-sale securities 1,935,682,072 1,935,682,072 1,681,435,313 1,681,435,313


(Unit : Baht)

THE COMPANY ONLY




Held-to-maturity debt securities :

Debt securities due over 1 year

Government and state enterprise securities 308,421,414 311,093,807Private-sector debt securities 375,189,633 351,287,896Less : Allowance for impairment loss (6,000,000) -Net 369,189,633 351,287,896Receivable from TAMC 322,347,000 322,347,000Less : Allowance for possible loss (5,000,000) -Net 317,347,000 322,347,000

Total debt securities due over 1 year 994,958,047 984,728,703Total held-to-maturity debt securities 994,958,047 984,728,703Other investments :

Domestic non-marketable equity securities 69,036,582 63,815,593Foreign non-marketable equity securities - 1

Total other investments 69,036,582 63,815,594Long-term investments – net 2,999,676,701 2,729,979,610

8.1 As at 31 December 2002 and 2001 the Company’s debt securities can be classified by the remaining period to maturity as

presented below :-

(Unit : Million Baht)


2002 2001Maturity Maturity

> 1-5 Over > 1-5 Over

1 year years 5 years Total 1 years years 5 years Total

Available-for-sale securities

Government and state

enterprise securities - 491.3 91.7 583.0 - 611.2 50.9 662.1 Private-sector debt securities 266.8 971.4 192.9 1,431.1 134.1 750.5 122.4 1,007.0 Total 266.8 1,462.7 284.6 2,014.1 134.1 1,361.7 173.3 1,669.1 Add : Allowance for change in valuation 0.9 97.5 33.1 131.5 1.4 99.4 18.7 119.5 Total 267.7 1,560.2 317.7 2,145.6 135.5 1,461.1 192.0 1,788.6Held-to-maturity debt securities

Government and state

enterprise securities - 308.4 - 308.4 151.4 111.1 200.0 462.5 Private-sector debt securities - net 194.1 208.9 160.3 563.3 379.0 202.4 148.9 730.3 Receivable from TAMC - net - - 317.3 317.3 - - 322.3 322.3 Total 194.1 517.3 477.6 1,189.0 530.4 313.5 671.2 1,515.1Total debt securities 461.8 2,077.5 795.3 3,334.6 665.9 1,774.6 863.2 3,303.7


8.2 The Company’s investments in its subsidiary and related company as at 31 December 2002 and 2001 are summarised

below :-

(Unit : Thousand Baht)

Cost Equity method

Paid-up

Type of Type of share % of

Name business invested security Relationship capital shareholding 2002 2001 2002 2001Subsidiary

BFIT Securities Co., Ltd. Security business Ordinary share Subsidiary 400,000 100% 400,000 400,000 411,765 380,675

Related company

Tawana Hotel Co., Ltd. Hotel Preference share Common director 33,909 9.99% 563 563 - -

8.3 The followings are the investments in other securities in which the Company holds not less than 10 percent, but not over

20 percent of the issued shares of the investee companies :-


THE COMPANY ONLY

2002 2001Amount Amount

including including

Nature of premium Percentage premium Percentage

business and discount of holding and discount of holding

% %Ordinary shares :

Security Printers Company Limited Printing - - 0.1 10.0

8.4 During the current year, the Company has increased (formerly decreased) the value of its investments in other securities

by approximately Baht 5.2 million (2001 : Baht 10.4 million), taking into consideration net book value, net asset value

and other factors. The gain is included in determining earnings.

8.5 During the current year, the Company transferred its investment of Baht 87.2 million in debt securities from available-

for-sale securities to held-to-maturity securities. The Baht 0.3 million unrealised gain on the transfer is shown as a

separate item in shareholders’ equity and amortised over the remaining period to maturity of the debt securities, in the

same manner as premiums or discounts on debt securities.

During 2001, the Company had transferred its investments as presented below :-

a) The Company had transferred its investment of Baht 29.5 million in debts securities from available-for-sale

securities to held-to-maturity securities, resulting in a transfer gain of Baht 6.9 million. The gain is taken up as

interest income throughout the term of the debts securities which mature in the last quarter of 2001.

b) The Company had transferred its investment of Baht 58.7 million in debt securities from held-to-maturity

securities to available-for-sale securities. The transferred gain amounted to Baht 1.3 million. The Company had

sold the securities afterwards.


During 2001, the subsidiary transferred investments of Baht 54.0 million in its “trading securities” account to its

“available-for-sale securities” account. The Baht 3.8 million gain on the transfer was included in determining earnings.

8.6 During 2002, the Company has received 22.5 million ordinary shares of six listed companies in settlement of

outstanding debts, under debt restructuring agreements and/or Central Bankruptcy Court judgments. The Company

recorded these shares at their fair value, amounting to Baht 8.7 million. Subsequently the Company sold all of its

ordinary shares in two listed companies for Baht 8.699 million, leaving 22.2 million ordinary shares of four listed

companies with total fair value of Baht 5.

During 2001, the Company had received securities in accordance with the debt restructuring agreement as presented

below :-

a) The Company had received 4.6 million convertible preferred shares in accordance with the debt restructuring

agreement in payment of the defaulted debentures. The Company recorded these shares at their fair value,

amounting to Baht 7.4 million, resulting in a gain of Baht 7.4 million. The Company can exercise its conversion

rights during the year 2004 - 2007, converting 25 percent of the shares each time.

b) The Company had received 5.7 million listed common shares to settle an outstanding loan, in accordance

with a debt restructuring agreement. The Company recorded these shares at their fair value, amounting to

Baht 16.4 million.

c) The Company had restructured debt securities with a book value of Baht 5.8 million for which the issuer has

defaulted on interest payment. The restructuring involved the conversion of the debt securities to 0.37 million

listed common shares and 0.08 million non-listed common shares of the issuer’s related companies.

The Company recorded the investments at their fair value of Baht 5.5 million and 0.3 million, respectively.

8.7 In October and November 2001 the Company transferred 4 doubtful receivables to the Thai Asset Management

Corporation (TAMC) as described in Note 1 b). The TAMC confirmed the value of the transferred assets in its letters

dated 7 May 2002 and 6 June 2002, and is to issue Baht 322.3 million in promissory notes to the Company.

The Company and TAMC will together share future profits and losses arising from TAMC’s management of

the non-performing assets. If there are any losses under TAMC’s management the maximum share of loss from

the non-performing assets transferred for which the Company may be liable is equivalent to not more than 30% of

the price at which they were transferred to TAMC, or approximately Baht 96.7 million. As at the balance sheet date,

the amount of such loss cannot be estimated; however, the Company has already set up allowance for possible loss

amounting to Baht 5 million as at 31 December 2002.

During the third quarter of the current year the Company received promissory notes from the TAMC for

Baht 322.3 million, maturing on 31 October and 30 November 2011. TAMC shall calculate interest based on five

commercial banks’ quarterly average deposit rates as announced by the Bank of Thailand at the end of each quarter of

the calender year, and will pay interest on an annual basis by issuing one year non-negotiable promissory note

which is avaled by FIDF. TAMC reserves the right to extend the term of promissory note as deemed appropriate.

The Company included the promissory notes in long-term investment in the balance sheet and classified the notes as

security under held to maturity securities.


9. LOANS, RECEIVABLES AND ACCRUED INTEREST RECEIVABLES

9.1 Classified by loan type

(Unit : Baht)


2002 2001 2002 2001Finance business loans and receivables :

Loans 2,060,917,145 2,451,246,102 2,060,917,145 2,451,246,102Notes receivable - net 223,151,787 231,211,525 223,151,787 231,211,525Total finance business loans and receivables 2,284,068,932 2,682,457,627 2,284,068,932 2,682,457,627Add : Accrued interest receivables 28,585,271 34,516,842 28,585,271 34,516,842Less : Allowance for doubtful accounts (175,000,000) (160,000,000) (175,000,000) (160,000,000)

Allowance for revaluation of debt restructuring (11,425,583) (34,778,114) (11,425,583) (34,778,114)Net finance business loans and receivables

and accrued interest receivables 2,126,228,620 2,522,196,355 2,126,228,620 2,522,196,355Securities business receivables :

Customers’ accounts 36,135,597 58,762,779 - -Other receivables – credit balance system 42,955,118 30,140,078 - -Installment receivables 11,470,786 12,657,690 11,470,786 12,657,690Total securities business receivables 90,561,501 101,560,547 11,470,786 12,657,690Net loans, receivables and accrued interest receivables 2,216,790,121 2,623,756,902 2,137,699,406 2,534,854,045

As at 31 December 2002 and 2001, the securities business receivables in the separate financial statements of the

Company are debtors currently subject to legal action and making repayments under the original agreements, which

must be retained at the finance company. The Company has not set up an allowance for possible loan loss for the

receivables for the reasons described in Note 13 to the financial statements.

9.2 Classified by remaining period of contract

(Unit : Baht)


2002 2001 2002 2001

At call 575,828,024 560,440,583 575,828,024 560,440,583Not over 1 year 537,556,093 1,032,741,602 537,556,093 1,032,741,602Over 1 year 1,170,684,815 1,089,275,442 1,170,684,815 1,089,275,442Total finance business loans and receivables 2,284,068,932 2,682,457,627 2,284,068,932 2,682,457,627


9.3 Classified by type of business and classification

(Unit : Baht)

CONSOLIDATED

2002Special Sub-

Normal mentioned standard Doubtful Doubtful loss Total

Manufacturing and commerce 874,576,537 - - 95,000,000 52,435,857 1,022,012,394Real estate and construction 230,634,720 - - 7,000,000 145,889,102 383,523,822Public utilities and services 400,798,109 - - - - 400,798,109Housing loans 147,728 - - - - 147,728Others 510,984,529 - - - 58,151,024 569,135,553Total 2,017,141,623 - - 102,000,000 256,475,983 2,375,617,606Add : Accrued interest receivables 28,373,545 - - 211,726 - 28,585,271Less : Unearned income (987,173) - - - - (987,173)Total loans, receivable and accrued

interest receivables 2,044,527,995 - - 102,211,726 256,475,983 2,403,215,704

(Unit : Baht)

CONSOLIDATED

2001Special Sub-


Manufacturing and commerce 1,029,143,754 - 50,000,000 111,979,500 137,082,000 1,328,205,254Real estate and construction 147,608,246 37,173,828 80,539,709 9,500,000 99,543,250 374,365,033Public utilities and services 622,096,549 - 18,000,000 - - 640,096,549Housing loans 210,269 - - - - 210,269Others 379,884,885 83,055 193,859 213,000 61,996,550 442,371,349Total 2,178,943,703 37,256,883 148,733,568 121,692,500 298,621,800 2,785,248,454Add : Accrued interest receivables 33,846,936 458,180 - 211,726 - 34,516,842Less : Unearned income (1,215,177) - - (15,103) - (1,230,280)Total loans, receivable and accrued

interest receivables 2,211,575,462 37,715,063 148,733,568 121,889,123 298,621,800 2,818,535,016


(Unit : Baht)

THE COMPANY ONLY

2002Special Sub-


Manufacturing and commerce 874,576,537 - - 95,000,000 52,435,857 1,022,012,394Real estate and construction 230,634,720 - - 7,000,000 145,889,102 383,523,822Public utilities and services 400,798,109 - - - - 400,798,109Housing loans 147,728 - - - - 147,728Others 431,893,814 - - - 58,151,024 490,044,838Total 1,938,050,908 - - 102,000,000 256,475,983 2,296,526,891Add : Accrued interest receivables 28,373,545 - - 211,726 - 28,585,271Less : Unearned income (987,173) - - - - (987,173)Total loans, receivable and accrued

interest receivables 1,965,437,280 - - 102,211,726 256,475,983 2,324,124,989

(Unit : Baht)

THE COMPANY ONLY

2001Special Sub-


Manufacturing and commerce 1,029,143,754 - 50,000,000 111,979,500 137,082,000 1,328,205,254Real estate and construction 147,608,246 37,173,828 80,539,709 9,500,000 99,543,250 374,365,033Public utilities and services 622,096,549 - 18,000,000 - - 640,096,549Housing loans 210,269 - - - - 210,269Others 290,982,028 83,055 193,859 213,000 61,996,550 353,468,492Total 2,090,040,846 37,256,883 148,733,568 121,692,500 298,621,800 2,696,345,597Add : Accrued interest receivables 33,846,936 458,180 - 211,726 - 34,516,842Less : Unearned income (1,215,177) - - (15,103) - (1,230,280)Total loans, receivable and accrued

interest receivables 2,122,672,605 37,715,063 148,733,568 121,889,123 298,621,800 2,729,632,159


9.4 Classified by classification type


THE COMPANY ONLY

2002Loans and Percentage as Amount to be Allowance for

accrued interest Loan outstanding laid down in provided under doubtful accounts

receivables after collateral allowance BOT’s guideline already set up

Normal 2,015,530 1,994,094 1% 19,941 19,941Special mentioned - - 2% - -Sub-standard - - 20% - -Doubtful 102,212 63,132 50% 31,566 31,566Doubtful loss 256,671 13,334 100% 13,334 123,493Total loans, receivables and accrued

interest receivables 2,374,413 2,070,560 64,841 175,000


THE COMPANY ONLY

2001Loans and Percentage as Amount to be Allowance for

accrued interest Loan outstanding laid down in provided under doubtful accounts

receivables after collateral allowance BOT’s guideline already set up

Normal 2,122,673 2,095,691 1% 20,957 20,957Special mentioned 37,715 37,257 2% 745 745Sub-standard 148,733 60,194 20% 12,039 12,194Doubtful 121,889 69,773 50% 34,887 34,887Doubtful loss 298,622 3,222 100% 3,222 91,217Total loans, receivables and accrued

interest receivables 2,729,632 2,266,137 71,850 160,000

The allowance for doubtful accounts to be provided in accordance with the Bank of Thailand’s guideline was determined

based on the outstanding balance of loans, net of collateral, in accordance with the asset classification report which the

Company prepared and submitted to the Bank of Thailand. Under normal and special mentioned loans, the amount

included loans to financial institution and loans to employees but excluded accrued interest and the value of collateral in

the calculation.


9.5 Non-performing and Non-accrued loans and receivables

9.5.1 Non-performing loans and receivables

On 16 January 2003, the Bank of Thailand revised the definition of “Non-Performing Loans” with retroactive

effect to the end of 2002. The new definition includes loans and receivables classified as Substandard,

Doubtful, Doubtful loss and Loss, including all original outstanding of those loans and receivables which had

been partially written off as non-performing loans. As a result, the total balance of non-performing loans and

receivables as at 31 December 2002 is higher than it would have been under the previous definition.

As at 31 December 2002 and 2001 non-performing loans and receivables are as follows :-



2002 2001 2002 2001Finance business loans and receivables 405,983 291,986 405,983 291,986Securities business receivables 11,448 11,543 11,448 11,543 Total 417,431 303,529 417,431 303,529

Non-performing loans and receivables are presented in accordance with the report on overdue loans and

receivables prepared by the Company for submission to the Bank of Thailand.

As at 31 December 2002, non-performing loans and receivables of the Company constitute 17.32% of total

loans and receivables, including all original outstanding of those loans and receivables which had been partially

written off for Baht 58.95 million (2001 : 10.91%).

9.5.2 Non-accrued loans

As at 31 December 2002, non-accrued loans and receivables of the Company totaled Baht 340.03 million

( 2001 : Baht 433.11 million, including 3 loans amounting to Baht 129.58 million which were not regarded as

non-performing loans but on which the Company was required to stop recognising interest income in

accordance with stipulations made by the Bank of Thailand).

9.6 As at 31 December 2002 and 2001, the Company has loans, receivables and accrued interest receivables from

companies which have problems in relation to financial status and operating results, for which the Company has set

aside allowance for doubtful accounts as presented below :-



Allowance for

Number of loans Amount Collateral doubtful accounts

2002 2001 2002 2001 2002 2001Listed companies under going

rehabilitation 3 2 37.6 19.0 - 7.2 0.2


9.7 Troubled debt restructuring

For the year ended 31 December 2002, the Company recognised interest income from restructured receivables of

Baht 79.2 million and collected principal and interest of Baht 297.7 million.

As at 31 December 2002, the balance of restructured receivables in the Company’s accounts amounts to Baht 1,039.8

million. The majority of these are now reclassified as “Normal receivable”.

The discount rate used for the debt restructuring of the Company is the MLR of Bangkok Bank Public Company Limited.

The outstanding loan balances as at 31 December 2002 can be summarised as below :-

Number of debtors Million Baht

Loans being restructured 3 70.0Normal loans 9,531 2,214.1Total loans 9,534 2,284.1

The Company was not able to estimate the amount of future losses as a result of the restructuring of loans which are

currently subject to debt restructuring.

10. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND ALLOWANCE FOR REVALUATION ON DEBT

RESTRUCTURING

10.1 Allowance for doubtful accounts

(Unit : Baht)


2002Special Sub-


Balance - beginning of year 20,956,910 745,000 12,194,000 34,887,000 91,217,090 160,000,000Allowance for doubtful accounts - - - - 19,518,153 19,518,153Bad debts written-off - - - - (6,147,844) (6,147,844)Transfer from allowance for

revaluation on debt restructuring - - - - 18,905,792 18,905,792Others (1,015,964) (745,000) (12,194,000) (3,321,137) - (17,276,101)Balance – end of year 19,940,946 - - 31,565,863 123,493,191 175,000,000


(Unit : Baht)


2001Special Sub-


Balance - beginning of year 22,148,000 - 30,474,000 100,419,500 30,744,777 183,786,277Allowance for doubtful accounts (1,191,090) 745,000 (23,702,890) (65,532,500) 224,293,886 134,612,406Bad debts written-off - - - - (145,249,761) (145,249,761)Others - - 5,422,890 - (18,571,812) (13,148,922)Balance – end of year 20,956,910 745,000 12,194,000 34,887,000 91,217,090 160,000,000

10.2 Allowance for revaluation on debt restructuring


CONSOLIDATED AND

THE COMPANY ONLY

2002 2001Balance - beginning of year 34,778 35,063Increase during the year 1,479 12,491Decrease during the year (24,831) (12,776)Balance - end of year 11,426 34,778

As at 31 December 2002, the Company has set up allowances for doubtful accounts totaling approximately

Baht 175.0 million (2001 : Baht 160.0 million) and allowance for revaluations on debt restructuring totaling

approximately Baht 11.4 million (2001 : Baht 34.8 million), which is Baht 110.2 million (2001 : Baht 88.2 million)

more than the allowance required in accordance with the Bank of Thailand’s guidelines. The management of the

Company believes that this allowance for doubtful accounts and allowance for revaluation on debt restructuring are

sufficient to cover the losses that might be incurred as a result of inability to make collection from receivables.

11. PROPERTY FORECLOSED

Property foreclosed represents land, leasehold rights and land and buildings thereon transferred to the Company to redeem

debt securities for which scheduled interest payments had been defaulted on and to repay loans. The values of the assets

are presented at fair value less estimated selling expenses, provided that this balance does not exceed the outstanding debt

per the rights of claim by law.

As at 31 December 2002 and 2001, details of property foreclosed are as follows :-

(Unit : Baht)


2002 2001Balance - beginning Balance - end Balance - beginning Balance - end

Type of property foreclosed of year Additions of year of year Additions of year

Immovable assets 101,290,411 - 101,290,411 101,290,411 - 101,290,411Less : Allowance for loss

on impairment (3,153,500) (5,553,411) (8,706,911) - (3,153,500) (3,153,500)Total property foreclosed - net 98,136,911 (5,553,411) 92,583,500 101,290,411 (3,153,500) 98,136,911


12. PROPERTY, PLANT AND EQUIPMENT

(Unit : Baht)

CONSOLIDATED

Computer and Furniture and

Land Building equipment fixtures Vehicles Installation Total

Cost

31 December 2001 1,548,000 2,231,040 112,190,223 15,024,668 16,289,903 34,111,514 181,395,348Acquisitions - - 2,806,495 160,800 3,469,355 661,124 7,097,774Disposals - - (12,445,630) (205,378) (2,990,207) - (15,641,215)Written-off - - (9,953) - - (633,943) (643,896)31 December 2002 1,548,000 2,231,040 102,541,135 14,980,090 16,769,051 34,138,695 172,208,011Accumulated depreciation

31 December 2001 - 675,114 99,656,321 7,885,232 9,324,959 15,754,663 133,296,289Depreciation - disposals - - (12,326,124) (163,384) (2,253,863) - (14,743,371)Depreciation - written-off - - (9,725) - - (633,939) (643,664)Depreciation charges for the year - 111,551 5,068,306 2,107,566 2,601,375 5,353,554 15,242,35231 December 2002 - 786,665 92,388,778 9,829,414 9,672,471 20,474,278 133,151,606Net book value

31 December 2002 1,548,000 1,444,375 10,152,357 5,150,676 7,096,580 13,664,417 39,056,40531 December 2001 1,548,000 1,555,926 12,533,902 7,139,436 6,964,944 18,356,851 48,099,059Depreciation for the years ended 31 December

2002 15,242,352 2001 14,676,275

The book value, before accumulated depreciation, of plant and equipment which was fully depreciated but still in use as at 31

December 2002 amounted to approximately Baht 95.5 million per the consolidated financial statements.


(Unit : Baht)

THE COMPANY ONLY

Computer and Furniture and

Land Building equipment fixtures Vehicles Installation Total

Cost

31 December 2001 1,548,000 2,231,040 9,450,432 6,357,920 8,798,072 11,480,643 39,866,107Acquisitions - - 589,562 44,639 1,071,000 - 1,705,201Disposal - - (3,167,897) (205,378) - - (3,373,275)31 December 2002 1,548,000 2,231,040 6,872,097 6,197,181 9,869,072 11,480,643 38,198,033Accumulated depreciation

31 December 2001 - 675,114 6,634,776 3,044,638 5,073,942 3,657,143 19,085,613Depreciation - disposal - - (3,166,311) (163,384) - - (3,329,695)Depreciation charges for the year - 111,551 1,102,880 972,237 1,267,374 2,250,114 5,704,15631 December 2002 - 786,665 4,571,345 3,853,491 6,341,316 5,907,257 21,460,074Net book value

31 December 2002 1,548,000 1,444,375 2,300,752 2,343,690 3,527,756 5,573,386 16,737,95931 December 2001 1,548,000 1,555,926 2,815,656 3,313,282 3,724,130 7,823,500 20,780,494Depreciation for the years ended 31 December

2002 5,704,156 2001 5,589,045

The book value, before accumulated depreciation, of plant and equipment which was fully depreciated but still in use as at 31 December 2002

amounted to approximately Baht 7.0 million per the financial statements of the Company.

13. CLASSIFICATIONS OF ASSETS

13.1 Classification of assets under the Bank of Thailand’s guidelines

As at 31 December 2002 and 2001, the Company classified its assets and made allowances against those assets in

accordance with the Bank of Thailand’s guidelines as presented below :-


Allowance for doubtful accounts

Amount to be provided Amount

Debt balance Provision under BOT’s guideline already set up

2002 2001 required by BOT 2002 2001 2002 2001

Loans and receivables

Normal 1,994.1 2,095.7 1% 19.9 21.0 19.9 21.0Special mentioned - 37.3 2% - 0.7 - 0.7Sub-standard - 224.7 20% - 12.0 - 12.2Doubtful 102.2 121.9 50% 31.6 34.9 31.6 34.9Doubtful loss 256.7 303.3 100% 13.3 3.2 123.5 91.2 Total Classified Assets 2,353.0 2,782.9 64.8 71.8 175.0 160.0Allowance for revaluation

on debt restructuring - - 11.4 4.8 11.4 34.8Total 2,353.0 2,782.9 76.2 106.6 186.4 194.8


The assets classified above are presented in accordance with the assets classification report which the Company

prepared and submitted to the Bank of Thailand.

The Company does not set up any allowance for possible loan losses for securities business receivables since BFIT

Securities Company Limited must compensate for any losses, in accordance with its acceptance of ultimate liabilities

agreement, and full provision has already been made by the subsidiary.

13.2 Classification of assets in accordance with the Notification of the Office of the Securities and Exchange

Commission (SEC)

As at 31 December 2002 and 2001, the subsidiary classified its securities business receivables, and accrued interest

receivables and allowances for doubtful accounts as presented below :-


Allowance for Allowance for doubtful

Receivables and accrued doubtful accounts accounts recorded

interest receivables as required by SEC by the subsidiary

2002 2001 2002 2001 2002 2001Normal debts 79.1 88.9 - - - - Total 79.1 88.9 - - - -

14. BORROWINGS AND DEPOSITS

14.1 Classified by source of borrowings and deposits

(Unit : Baht)

CONSOLIDATED

2002 2001

Promissory Certificate Promissory Certificate

notes of deposit Others notes of deposit Others

From public 5,520,444,949 - - 5,120,701,114 - -From financial institutions 354,000,000 - - 715,000,000 - -From foreign countries 37,385,531 - - 86,293,918 - -Total borrowings and deposits 5,911,830,480 - - 5,921,995,032 - -

(Unit : Baht)

THE COMPANY ONLY

2002 2001

Promissory Certificate Promissory Certificate

notes of deposit Others notes of deposit Others

From public 5,520,444,949 - - 5,120,701,114 - -From financial institutions 597,954,463 - - 850,072,605 - -From foreign countries 37,385,531 - - 86,293,918 - -Total borrowings and deposits 6,155,784,943 - - 6,057,067,637 - -


14.2 Classified by the remaining period of contracts

(Unit : Baht)


2002 2001 2002 2001

At call 26,563,452 105,591,452 270,517,915 240,664,057Not over 1 year 4,509,954,494 4,863,367,321 4,509,954,494 4,863,367,321Over 1 year 1,375,312,534 953,036,259 1,375,312,534 953,036,259Total borrowings and deposits 5,911,830,480 5,921,995,032 6,155,784,943 6,057,067,637

14.3 Classified by the currency and the residency of depositors

(Unit : Baht)

CONSOLIDATED

2002 2001

Local Foreign Total Local Foreign Total

Baht currency 5,874,444,949 37,385,531 5,911,830,480 5,835,701,114 86,293,918 5,921,995,032Total borrowings

and deposits 5,874,444,949 37,385,531 5,911,830,480 5,835,701,114 86,293,918 5,921,995,032

(Unit : Baht)

THE COMPANY ONLY

2002 2001

Local Foreign Total Local Foreign Total

Baht currency 6,118,399,412 37,385,531 6,155,784,943 5,970,773,719 86,293,918 6,057,067,637Total borrowings

and deposits 6,118,399,412 37,385,531 6,155,784,943 5,970,773,719 86,293,918 6,057,067,637

15. SHARE CAPITAL AND ORDINARY SHARE WARRANTS

Share capital

The Extraordinary General Meeting of shareholders held on 16 December 1999 passed a resolution to increase the registered

capital of the Company from Baht 1,050 million to Baht 1,500 million through the issuance of 45,000,000 ordinary shares at a

par value of Baht 10. The shares are to be offered to existing shareholders as per their preemptive rights, with details of the

offering placed at the discretion of the Board of Directors. The Company registered the increase in capital with the Ministry of

Commerce on 10 March 2000. The capital has not yet been called up.

Warrants to subscribe for ordinary shares

The Meeting of Shareholders held on 22 April 1998 passed resolution to issue an additional 35,000 warrants to directors

and executive-level employees (together with the 15,000 warrants previously approved on 29 April 1994, making a total of

50,000 warrants). Each warrant has a term of 5 years, can be exercised to purchase 100 ordinary shares and is issued at the

discretion of the Board of Directors. However, up to the date of this report, there has been no allocation of these warrants.


16. CAPITAL FUND

As at 31 December 2002 and 2001, the capital funds maintained by the Company in accordance with Section 4 of the Act on

Undertaking of Finance Business, Securities Business and Credit Foncier Business, B.E. 2522, were as follows :-

(Unit : Baht)

THE COMPANY ONLY

2002 2001

Tier 1

Issued and fully paid share capital 1,000,000,000 1,000,000,000Statutory reserve 1,200,000 -Retained earnings (deficit) – unappropriated 48,212,182 (17,499,276)Unrealised loss on securities held for investment of equity securities - (6,745,021)Tier 2

Reserve for assets classified as “normal” 19,941,000 20,956,910Total capital fund 1,069,353,182 996,712,613

On 25 October 2001, an Extraordinary General Meeting of the Company’s shareholders passed a resolution for the

Company to transfer general reserve, statutory reserve and premium on share capital to eliminate Baht 931,800,000

of the Company’s deficit.

17. REVALUATION SURPLUS ON INVESTMENTS

(Unit : Baht)


2002 2001 2002 2001


Balance - beginning of year 131,120,084 111,942,360 131,120,084 111,942,360Increase in the value of securities

during the period 20,149,842 19,089,905 13,113,672 2,151,831Increase in deferred gains from

transferring investment port 293,672 6,868,439 293,672 6,868,439Amortised deferred gains from

transferring investment port (1,018,116) (6,780,620) (1,018,116) (6,780,620)150,545,482 131,120,084 143,509,312 114,182,010

Increase in revaluation surplus on

investment of the subsidiary - - 7,036,170 16,938,074Balance - end of year 150,545,482 131,120,084 150,545,482 131,120,084


18. STATUTORY RESERVE

Under section 116 of the Public Companies Act B.E. 2535, the Company is required to set aside as a statutory reserve at

least 5% of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10% of the

registered share capital. The statutory reserve is not available for distribution as dividend payment.

19. GAINS ON INVESTMENTS

(Unit : Baht)


2002 2001 2002 2001


Unrealised gain from trading securities 2,207,185 5,548,919 - -Loss from impairment of investments (7,446,523) - (7,446,523) -Possible loss arising from NPL management of TAMC (5,000,000) - (5,000,000) -Unrealised gain on transfer of investment portfolio - 3,824,888 - -Unrealised gain from revaluation of other investments 5,235,195 10,368,422 5,235,195 10,368,422

(5,004,143) 19,742,229 (7,211,328) 10,368,422Net realised gain from securities trading 46,707,959 47,975,123 28,475,330 20,501,705Total 41,703,816 67,717,352 21,264,002 30,870,127

20. DIRECTORS’ REMUNERATION

Directors’ remuneration represents the benefits paid to the Company’s directors in accordance with Section 90 of the

Public Limited Companies Act, exclusive of salaries and related benefits payable to directors who hold executive positions.

21. CORPORATE INCOME TAX

No corporate income tax is payable on the earnings for the years ended 31 December 2002 and 2001 of the Company and the

subsidiary since tax losses brought forward from previous years exceed net earnings for the years.

22. PROVIDENT FUND

During 2002 Baht 4,031,341 has been contributed to the fund by the Company and its subsidiary (The Company only :

Baht 1,662,392).


23. CONTINGENT LIABILITIES AND COMMITMENTS

23.1 Contingent liabilities and commitments of the Company and its subsidiary, including those already shown in the balance

sheet, consist of the following :-

(Unit : Baht)

CONSOLIDATED AND

THE COMPANY ONLY

2002 2001

Aval to bills 38,560,587 113,873,080Guarantees – other 12,980,544 12,980,544Total contingent liabilities and commitments 51,541,131 126,853,624

The Company has transferred non-performing loans amounting to approximately Baht 322.3 million to the Thai

Asset Management Corporation (TAMC), as discussed in Note 1 b). The Company is still jointly liable for a share of the

gains or losses arising from TAMC’s management of the non-performing assets, at the end of fifth and tenth year,

starting from 1 July 2001. The potential gain or loss cannot be estimated at this time. The maximum loss for which the

Company may be liable is equivalent to 30 percent of the transfer price, or approximately Baht 96.7 million. However,

as at 31 December 2002 the Company has set up allowance for possible loss amounting to Baht 5 million.

23.2 On 14 June 2002, a holder of the debentures for which the Company is the trustee sued the Company, as second

defendant, for the amount of Baht 1.2 million. The debenture holder claimed that the Company was responsible

for collection from the debenture issuer and was to be treated together as debtor with the issuer. However,

the Company contends that the Company is not responsible for collection from the issuer for onward payment to

the debentures holders, and that its responsibility as trustee is for oversight only under the articles pertaining

to the rights and obligations of the debenture holder and issuer. Since the Company has carried out its duty as

trustee to protect the interests of the debenture holders conscientiously, in accordance with the above articles, the

Company has no responsibility for the financial liabilities of the issuer to the holder. Therefore the Company’s

management believes that no liability will arise for the Company. At this time, the case is at the stage of taking

evidence from the plaintiff’s witnesses.

23.3 As at 31 December 2002 the Company and the subsidiary have outstanding commitments under long-term building

and equipment rental and service agreements amounting to Baht 42.0 million (The Company only : Baht 14.5 million).

23.4 The Company is obliged to make contributions to the Fund for the Rehabilitation and Development of Financial

Institutions, at the rate of 0.2 percent of the total outstanding balance of the Company’s deposits, borrowings,

and liabilities arising from borrowings, as of the last day of the previous period of 6 months. Contributions are to

be made every 30 June and 31 December.

23.5 The subsidiary is required to pay a membership fee to the Stock Exchange of Thailand. This consists of a monthly fee

of Baht 50,000 and a payment of 0.005 percent of the trading volume.

23.6 As at 31 December 2002, the subsidiary has commitment in respect of software licensing agreement totaling

USD 10,000.


24. RELATED PARTY TRANSACTIONS

The Company had significant business transactions with its subsidiary and related companies (related by way of common

shareholders and/or common directors).

Transactions occurring during the years ended 31 December 2002 and 2001 can be summarised as below :-


CONSOLIDATED THE COMPANY ONLY Pricing policy

2002 2001 2002 2001

Transactions with the subsidiary

Interest expenses - - 1.0 2.1 Market interest rate

Receipts from transfer of assets relating to

provident fund management and

securities registrar business - - - 1.1 Net book value

Purchase of computers and

other equipment - - - 1.5 Market price

Transactions with related parties

Interest expenses 0.6 1.2 0.6 1.2 Market interest rate

Furthermore, in 2002 the Company purchased Baht 20 million of debentures from the subsidiary on the same date and at

the same price that the subsidiary had purchased them.

The outstanding balances of transactions between the Company, the subsidiary and related parties can be summarised as

below :-



Relationship 2002 2001 2002 2001

Borrowing from the subsidiary

BFIT Securities Co., Ltd. Subsidiary company - - 243.9 135.0Borrowing from related parties

The Thai Securities Depository Co., Ltd. By way of common director - 10.0 - 10.0 up to 27 May 2002

Association of Securities Companies By way of common director 4.9 8.6 4.9 8.6 The Stock Exchange of Thailand By way of common director - 15.1 - 15.1

up to 27 May 2002

Thai Bond Dealing Center By way of common director 14.7 - 14.7 - Association of financial institutions By way of common director 1.0 - 1.0 -Other

Other account payable – BFIT Securities

Co., Ltd. - - 0.4 0.7

During the year BFIT Securities Company Limited, which is a subsidiary, and related parties which have directors in common

with the Company, had average month-end outstanding deposit balances with the Company amounting to Baht 246.7 million

and Baht 50.3 million, respectively (2001 : Baht 192.6 million and Baht 36.7 million, respectively).


The Company has the following loans to and borrowings from management employees from departmental manager

level upward :-



2002 2001 2002 2001 Pricing policy

Officers from departmental

manager level upward

Borrowings 26.1 24.9 22.5 23.8 Market interest rate

Loans 2.0 2.5 1.4 1.9 Deposit rate of 12-month promissory

note of the Company, as at 1 January

of the year. No interest charged for

car loans.

The average outstanding balance of loans from and borrowings to management employees from departmental manager

level upward, calculated from the outstanding balances at the end of each month, were as follows :-



Borrowings 25.5 22.4Loans 2.2 1.6

25. FINANCIAL INFORMATION BY SEGMENT

The results of the Company and its subsidiary’s operations by segment for the years ended 31 December 2002 and 2001 are as

follows :-


For the years ended 31 December

Finance business Securities business Total Elimination entries Total

2002 2001 2002 2001 2002 2001 2002 2001 2002 2001

(Restated) (Restated) (Restated)

Net interest and dividend

income after bad debt and

doubtful accounts 223 144 8 10 231 154 - - 231 154Non-interest income 60 39 130 75 190 114 (24) 10 166 124

283 183 138 85 421 268 (24) 10 397 278Non-interest expenses (121) (105) (113) (95) (234) (200) - - (234) (200)Net earnings for the year 187 68 (24) 10 163 78


The Company’s financial information by segment as of 31 December 2002 and 2001 is as follows :-


Finance business Securities business Total Elimination entries Total

2002 2001 2002 2001 2002 2001 2002 2001 2002 2001

Investments in securities – net 3,873 3,777 96 150 3,969 3,927 (412) (381) 3,557 3,546Net loans, receivables and

accrued interest receivables 2,138 2,535 79 89 2,217 2,624 - - 2,217 2,6246,011 6,312 175 239 6,186 6,551 (412) (381) 5,774 6,170

Other assets 1,770 1,256 (244) (136) 1,526 1,120Total assets 7,956 7,807 (656) (517) 7,300 7,290

26. CASH AND CASH EQUIVALENTS

(Unit : Baht)


2002 2001 2002 2001

Cash in hand 13,793 29,134 8,576 9,139Deposits at financial institutions 82,586,635 85,340,939 68,748,777 52,230,532Total cash and cash equivalents 82,600,428 85,370,073 68,757,353 52,239,671

27. Financial Instrument

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity

instrument of another enterprise.

27.1 Credit risk

Credit risk is the risk that the party to a financial instrument will fail to discharge an obligation and cause the Company

and the subsidiary to incur a financial loss. The Company and the subsidiary disclose significant concentrations of credit

risk in Note 9. The amount of maximum credit risk exposure is the carrying amount of the financial assets less provision

for losses as stated in the balance sheet. The exposure to risk from off-balance sheet derivative financial instruments is

shown in Note 23.


27.2 Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates

and it will affect the results of the Company and the subsidiary’s operations and their cash flows.


Consolidated as at 31 December 2002

Outstanding balances of financial instrument

Floating Fixed

interest rate interest rate No interest Total

Financial assets

Cash and deposits at financial institutions - - 82.6 82.6Loans to financial institutions - 50.3 - 50.3Securities purchased under resale agreements - 1,175.0 - 1,175.0Net investments in securities 534.3 2,635.4 387.4 3,557.1Trading transactions with securities

companies – receivables - - 5.2 5.2Loans and receivables 1,039.1 948.0 387.5 2,374.6Financial liabilities

Borrowings and deposits - 5,911.8 - 5,911.8Trading transactions with securities

companies - payables - - 14.3 14.3Securities business payables - 8.7 32.8 41.5


The Company Only as at 31 December 2002

Outstanding balances of financial instrument

Floating Fixed

interest rate interest rate No interest Total

Financial assets

Cash and deposits at financial institutions - - 68.8 68.8Loans to financial institution - 50.3 - 50.3Securities purchased under resale agreements - 1,175.0 - 1,175.0Net investments in securities 534.3 2,635.4 703.5 3,873.2Loans and receivables 1,039.1 905.0 351.4 2,295.5Financial liabilities

Borrowings and deposits - 6,155.8 - 6,155.8Securities business payables - - 0.5 0.5


The periods of time from the balance sheet date to the repricing or maturity dates (whichever dates are earlier) of

financial instruments which have fixed interest rates are as follows :-



Repricing or maturity date

0-3 3-12 1-5 Over 5 No

%Financial assets

Loans to financial institution - - - 50.3 - - 50.3 3.90Securities purchased under resale

agreements - 1,175.0 - - - - 1,175.0 1.5313 - 1.75Net investments in securities - 155.9 120.0 1,734.5 625.0 - 2,635.4 2.55 - 11.5625Loans and receivables 278.8 400.7 72.0 175.4 21.1 - 948.0 2.50 - 12.00Financial liabilities

Borrowings and deposits 26.6 2,773.6 1,736.3 1,375.3 - - 5,911.8 0.50 - 3.50Securities business payable 8.7 - - - - - 8.7 1.00


The Company only as at 31 December 2002

Repricing or maturity date

0-3 3-12 1-5 Over 5 No

%

Financial assets

Loans to financial institution - - - 50.3 - - 50.3 3.90Securities purchased under resale

agreements - 1,175.0 - - - - 1,175.0 1.5313 - 1.75Net investments in securities - 155.9 120.0 1,734.5 625.0 - 2,635.4 2.55 - 11.5625Loans and receivables 235.8 400.7 72.0 175.4 21.1 - 905.0 2.50 - 12.00Financial liabilities

Borrowings and deposits 270.6 2,773.6 1,736.3 1,375.3 - - 6,155.8 0.25 - 3.50

27.3 Liquidity risk

The periods of time from the balance sheet date to the maturity dates of financial instruments held as of 31 December

2002 are as follows :-

At call months months years years maturity Total Interest rates

At call months months years years maturity Total Interest rates




Non

0-3 3-12 1-5 Over 5 No performing

At call months months years years maturity Loans Total

Financial assets

Cash and deposits at financial

institutions 82.6 - - - - - - 82.6Loans to financial institution - - - 50.3 - - - 50.3Securities purchased under resale

agreements - 1,175.0 - - - - - 1,175.0Net investments in securities 82.7 341.7 120.0 2,077.5 795.4 139.8 - 3,557.1Trading transactions with

securities company – receivables 5.2 - - - - - - 5.2Loans and receivables 314.9 405.5 132.1 410.2 760.5 - 351.4 2,374.6Financial liabilities

Borrowings and deposits 26.6 2,773.6 1,736.3 1,375.3 - - - 5,911.8Trading transactions with securities

companies - payables 14.3 - - - - - - 14.3Securities business payables 41.5 - - - - - - 41.5Off-balance sheet items

Aval to bills - 12.9 25.7 - - - - 38.6Guarantees 13.0 - - - - - - 13.0


The Company only as at 31 December 2002

Non

0-3 3-12 1-5 Over 5 No performing

At call months months years years maturity Loans Total

Financial assets

Cash and deposits at financial

institutions 68.8 - - - - - - 68.8Loans to financial institution - - - 50.3 - - - 50.3Securities purchased under resale

agreements - 1,175.0 - - - - - 1,175.0Net investments in securities 57.8 341.7 120.0 2,077.5 795.4 480.8 - 3,873.2Loans and receivables 235.8 405.5 132.1 410.2 760.5 - 351.4 2,295.5Financial liabilities

Borrowings and deposits 270.6 2,773.6 1,736.3 1,375.3 - - - 6,155.8Securities business payables 0.5 - - - - - - 0.5Off-balance sheet items

Aval to bills - 12.9 25.7 - - - - 38.6Guarantees 13.0 - - - - - - 13.0


27.4 Foreign exchange risk

As of 31 December 2002, the Company and the subsidiary do not have any material financial instruments in

foreign currencies.

27.5 Fair value

Fair value represents the amount for which an asset could be exchanged or a liability settled between knowledge-

able, willing parties in an arm’s length transaction. The Company and its subsidiary have estimated the fair value of

financial instruments as presented below :-

a) Financial assets

The method used for determining the fair value is dependent upon the characteristics of the financial

instruments. The fair values of financial assets, including cash, deposits at banks and loans and receivables

are presented as the amount stated in the balance sheet, which is considered to approximate their

respective carrying value since the financial instruments carry interest at rates close to market interest rates.

Financial instruments that have standard terms and conditions which are traded on an active and liquid

market, such as investments in securities, have their fair values determined by the quoted market price.

b) Financial liabilities

The fair values of financial liabilities, including borrowings and deposits, are considered to approximate their

respective carrying values for the same reasons as described above.

As at 31 December 2002, there are no material differences between the book value of financial instruments

and their fair value.

The fair value of off - balance sheet items cannot be reasonably determined and thus it has not been disclosed.

28. PRESENTATION

The presentation of the financial statements has been made in compliance with the requirement of the Notification of

the Bank of Thailand relating to the format of the financial statements of finance, finance and securities and credit foncier

companies dated 10 May 2001.

Certain amounts in the financial statements, as presented herein for comparative purpose, have been reclassified to conform to

the current year classifications, with no effect on previously reported net earnings or shareholders’ equity.

29. APPROVAL OF FINANCIAL STATEMENTS

These financial statements have been approved by the Company’s directors.

Documents

Bfit 02