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A nnual Report 2003

www.finansa.com

Finansa Plc.

Finansa Plc. TISCO Tower, 16/F 48 North Sathorn Road Bangkok 10500, Thailand Tel. : (662) 697-3700, (662) 697-3800 Fax : (662) 266-6688

F i n a n s a Plc .

Finansa Jakarta Office PT Finansa Indonesia Wisma GKBI. 10/F J1.Jend.Sudirman No. 28 Jakarta 10210, Indonesia Tel. : (6221) 574-0770 Fax : (6221) 574-0780

Finansa Singapore Office Finansa Singapore Pte Ltd. #07-02 Commerce Point 3 Phillip Street, Singapore 048693 Tel. : (65) 6438-4700 Fax : (65) 6534-5157

Annual Report 2003

Finansa Hanoi Office Finansa Plc. 27 Ly Thai To St., Suite 16 Hanoi, Vietnam Tel. : (844) 824-7605/6 Fax : (844) 824-7608

Finansa Ho Chi Minh City Office ISBN : 947-92038-2-8

Designed & Photo by STYLE 0-2945-8051-6

Finansa Plc. Metropolitan Tower, 3/F 235 Dong Khoi St., District 1 Ho Chi Minh City, Vietnam Te. : (848) 825-0168/9 Fax : (848) 825-0167


Definition ■

Finansa (fanaensäe also fi‘naensäe)

n. management of money; monetary support for enterprise; the science of managing money matters, credit, etc.; (in plural) money resources, income, etc. < vt. to provide capital for; to obtain money, credit, capital for...

n. capitalist; entrepreneur, vt. apply or use (money) for profit; devote (time, etc.) to an enterprise, buy (something useful or other wise rewarding)

n. recommendation on how to act in matters of money; information; notice of transaction vt. give advice (to); recommend; inform


Table of Contents Finansa at a Glance Financial Highlights Statement of Chairman Board of Directors Principal Responsibilities of the Board of Directors and the Audit Committee Finansa Securities - 2003 Review Finansa Fund Management - 2003 Review Finansa Credit - 2003 Review Finansa Securiti es - Outlook for 2004 Finansa Fund Management - Outlook for 2004 Finansa Credit - Outlook for 2004 Finansa Plc. and Subsidiaries Expansion of Capital Base Report on the Board of Director没s Responsibility towards the Financial Statements Audit Committee没s Report Financial Statements and Statutory Information

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02 03 04 06 07 08 11 13 15 16 17 18 20 21 22


F inansa at a Glance Finansa Plc. is a leading, Bangkok-based merchant banking group providing a comprehensive range of financial services, primarily through three wholly owned subsidiaries. The Group was founded in 1991 and listed on the Stock Exchange of Thailand in 2002.

Finansa Securities Ltd. A SEC licensed securities company and full member of the Stock Exchange of Thailand. Finansa Securities is a recognized leader in investment banking in Thailand, offering an extensive range of tailored financial services and solutions to a substantial and diversified client base. Specialist services include: Financial Advisory Mergers and Acquisitions Financial Arranging and Project Finance Fairness Opinions Brokerage, Underwriting, Corporate and Financial Restructuring Private Placements and Public Offerings

Finansa Fund Management Ltd. Manages three direct investment funds and a regional distressed debt fund for a number of major overseas financial institutions. The Company has a particular strength in Private Equity in Thailand and has completed a number of significant investments in listed and unlisted companies. The successes of strategic investments have contributed to a strong performance track record. The four funds managed are: Siam Investment Fund The Vietnam Frontier Fund Siam Investment Fund II, L.P. The Asian Debt Fund

Finansa Credit Ltd. A licensed finance company regulated by the Bank of Thailand. The company has a full set of licenses covering commercial and consumer loans, advisory and deposit taking. Core activities include: Fixed Income Markets Structured Finance Products Corporate Lending Private Banking Services Asset-backed Finance Corporate Advisory Services

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F inancial Highlights As at or for the year ended December 31. In Baht millions except for per share data and ratios.

Operating Performance: Total Income EBITDA Net Profit Earnings per Share Dividend per Share* Return on Average Total Assets Return on Average Equity No. of Employees Total Income per Employee Net Profit per Employee *Proposed dividend, subject to shareholder approval

2003 1,513 869 579 5.59 0.5 8.9% 29.5% 196 7.7 3.0

2002 499 161 227 4.26 0.5 16.8% 26.4% 149 3.3 1.5

% Change 203% 438% 155% 31% 32% 133% 100%

2003 10,614 8,242 2,372 110 21.6

2002 2,405 848 1,556 100 15.6

% Change 341% 872% 52% 10% 39%

Financial Position: Total Assets Total Liabilities Total Equity No. of Shares in Issue Book Value Per Share

Revenue Breakdown: Business Activity

Revenues in 2003 % of Total Revenues

Financial Advisory and Investment Brokerage Finance Revenue on Other Total Investment Banking Investment Management

93 6%

251 17%

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453 30%

166 11%

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498 33%

51 1,513 3% 100%


Statement of the Chairman By any measure, 2003 was a remarkable affirmation of the post-Asian financial crisis strategy mapped out by Finansa. The resurgent Thai economy, the unusual stability in Thai politics and the outstanding performance of the Thai stock market coalesced into what may be remembered in retrospect as the çperfect stormé for investors, brokerage firms and investment banks in 2003. All businesses within the Finansa group showed strong gains in both market share and profitability, year on year, with group revenues as a whole growing by 200% and net income by 155%. The return on the groupûs enlarged equity was 29.5 %, demonstrating convincingly Finansaûs successful transformation from its previous agency role into a competent principal player. These numbers also reinforce the bottom line focus of the senior managers at Finansa. Later on in this report we highlight the emerging business profile of the group companies with specific focus on Finansa Securities, Finansa Fund Management and Finansa Credit; these three companies have developed in complementary ways as the key engines of growth for the group. ■ When Finansa went public in September 2002, the message we tried to communicate to the investing public was that Finansa, alone in the Thai financial services sector, had the opportunity to make a significant move from niche player to major force with the addition of a modest amount of new capital. Experienced people were mostly in place and the group structure was completed with the addition of Finansa Credit from the proceeds of the listing; all that was needed was time to gel the disparate parts of the group and, of course, favorable markets. If 2002 was the year of preparation, which culminated in the firmûs listing, 2003 became the year to prove the validity of the business plan. I hope you will agree that we did so, and in spades... ■ One of the features distinguishing Finansa from many other local financial firms over the years has been its dedication to investment banking and corporate finance in the broadest definition of the words. As the firm had no sales capability since its formation in 1991, its investment banking team was obligated to pursue transactions away from the capital markets. Other firms with larger sales forces were content to process IPOs and corporate bond deals; for many years, Finansa had to focus in every area except the capital markets. When the crisis decimated both the markets and the intermediaries, what was once a weakness became a strength for us. People and firms needed real help in recovering from the crisis and Finansa was able to provide our clients with money, restructuring advice, strategic planning....whatever it took to get those companies back on their feet again. This legacy of investment banking still prevails even with the return of the capital markets. ■ The decision to launch the brokerage business of Finansa was made in 2002 with a modest target of 1% market share by year-end 2003. In the event, our market share has reached 2.5-3% and overall market volumes were 5X what we had anticipated earlier in the year. For the year brokerage revenues reached 444 million baht up from a meager 22 million baht the year before. The truly impressive statistic to report is that this growth translates into revenue per sales employee of 19.3 baht. This is 3 times the industry average of 6.0 mil ion baht. ■

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The key to this has been the use of technology, specifically the introduction of an internet trading platform which addressed a clear market need: speed of execution. Although internet trading has existed in Thailand for several years, it has always represented a very small part of the total market turnover and a small part of every brokerûs volume each day. Traders have complained bitterly over slow execution and unreliable trading platforms and have avoided using the technology altogether. Finansa introduced a simple, but effective, solution geared to the active trader and rolled it out in late 2003. By the end of the year, over 70% of Finansaûs daily trading volume was being conducted over the internet and Finansa had became the leading internet broker in Thailand with an estimated 2.17% total market share. The introduction of this system generated benefits to both Finansa and our clients: 1) clients had their cost of execution reduced from 0.25% to 0.20% 2) many clients get frustrated when dealing with marketing staff and are much happier executing their own trades 3) Finansa does not have to pay marketing staff for internet trades and so the net revenues to the firm are higher for internet trades than normal ones despite the lower commission rate 4) operational risks are reduced as there are no errors attributable to Finansa staff as there can be sometimes with phone orders 5) smaller risk of failed trades. As we grow we expect to continue to rely on technology in ways similar to this to leverage our market penetration and enhance our returns. ■ In other businesses, specialist fund management continues to contribute meaningfully to our returns. Siam Investment Fund had an exceptional year and was able to pay significant dividends to its shareholders as a result; we expect to see similar dividends paid out in 2004 as a result of last yearûs market strength. Siam Investment Fund II (SIF II) was also able to harvest some of its initial investments and return cash to its shareholders; this is important in several ways: 1) Private Equity funds in Asia have not consistently been able to generate positive returns to shareholders; the recent success of SIF II after the previous success of Siam Investment Fund means that Finansa is alone in consistently generating positive returns to shareholders in its funds. 2) Success in these two initial funds will allow Finansa to raise more money for another private equity fund for Thailand once SIF II has been fully committed. 3) Finansa is a significant investor in all of its funds. This demonstrates commitment, but it also provides consistent long term recurring revenues from a unique and proprietary source. ■

Going forward, Finansa has been presented with a challenging, yet very exciting development. The Bank of Thailand has recently announced plans to pass a new master plan for the financial sector which would see the elimination of all finance companies. Each finance company wil have to choose between becoming a SME bank or a proper, full service bank; the differences are not trivial. A SME bank will have to have only minimal capital but it wil be severely restricted in which clients it may lend to; becoming a national bank wil require 5 bil ion baht in capital and strong evidence of capability on the part of the applying institution. We have made a decision to upgrade the subsidiary, Finansa Credit, into a full service national bank in conformance with the new master plan and seek Bank of Thailand approval once the rules have been formally announced. This transformation will undoubtedly be the focus and the theme of the group for the year 2004. ■

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of Directors Board E xecutive Directors

Eugene S. Davis: Co-founder and Chairman of Finansa Plc. Vorasit Pokachaiyapat: Co-founder and Managing Director of Finansa Plc. Varah Sucharitakul: Managing Director of Finansa Securities Ltd. Kenneth L. White: Managing Director of Finansa Credit Ltd.

Standing : (Left to Right) Kenneth L. White, Weerawong Chittmittrapap, Varah Sucharitakul, Vorasit Pokachaiyapat Siting : (Left to Right) Kannika Ngamsopee, Vitthya Vejjajiva, Eugene S. Davis

ndependent Directors and I Members of the Audit Committee Vitthya Vejjajiva: Ministry of Foreign Affairs; Chairman of the Audit Committee of Finansa Plc. Kannika Ngamsopee: Executive Vice President, Siam Commercial Bank Plc; Audit Committee of Finansa Plc. Weerawong Chittmittrapap: Partner, White & Case (Thailand) Ltd; Audit Committee of Finansa Plc.

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P rincipal Responsibilities of the Board of Directors

The Board of Directors has the authority and responsibility to review and approve policies for the Company. It must perform these duties in compliance with the governing laws, the objectives of the Company, the Articles of Association of the Company and resolutions of the meetings of shareholders. ■ The Board of Directors supervises the Management Committee, ensuring effective and efficient implementation of prescribed policies. ■ The Board has the authority to appoint the members of the Audit Committee and appoint authorized signatories. ■ The Board also has the authority and responsibility to establish credit limits and limits on trading exposures for the group companies. ■

P rincipal Responsibilities of the Audit Committee

The Audit Committee is responsible for reviewing the financial reporting process and disclosure of financial information to ensure it is correct and sufficient. ■ The Audit Committee reviews internal control systems and internal audit systems to ensure they are adequate and efficient. ■ The Audit Committee ensures the Company is in compliance with the regulations of the Securities Exchange Commission, the Stock Exchange of Thailand and the Bank of Thailand. ■ The Audit Committee recommends the appointment of the External Auditor and the level of fees. ■

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Finansa Securities - 2003 Review Baht Mil ion Year to 31 December 2003: Brokerage Revenue Fees and Service Income Gain (Loss) in Trading Securities Other Revenue Total Revenues Income Before Taxes As at 31 December 2003: Total Assets Paid-up Capital Shareholdersû Funds

2003

2002

444 251 2 6 703 374

22 101 0 2 125 32

2,761 450 671

1,091 200 172

. . . Broad-based revenue growth Finansa Securities in revenues in 2003 to a sharp rise in brokerage on both a buoyant ing market share, and banking fees, in turn a in the overall pace of

reported a 462% increase Bt703 million, driven by commission revenues, stockmarket and increasan increase in investment reflection of a pick-up capital markets issues. Equity Trading

. . . Rising up the brokerage rankings Finansa Securities launched its brokerage business in May 2002 and has quickly established a significant presence in providing securities services to institutional and retail clients. The companyûs market share has grown steadily from 0.8% in 4Q 2002 to 3.0% in 4Q 2003. As a result, its brokerage ranking has improved to 12 in 4Q 2003 from 30, a year earlier. For the year as a whole, the brokerage market share was 2.2%.

. . . Internet trading drives growth in commissions The gain in the companyûs brokerage market share was in large part due to the success of the internet trading platform introduced in 2003, though the institutional and çtraditionalé retail businesses also enjoyed solid gains. The success of Finansa Securitiesû internet business rests on identifying that many of the more active stock investors in the local market prefer speed of execution to availability and quantity of research information. By offering a çno fril sé service, Finansa Securities was able to reduce transaction execution times, while offering clients the benefits of the lower commission charge on internet trading. 2003 also saw the opening of two branch offices for Finansa Securities, one in Bangkok and one in Had Yai. These are helping to further expand the retail client base.

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. . . A buoyant market backdrop Meanwhile, turnover on the Stock Exchange of Thailand (SET) picked up dramatically through the year, reaching a record average daily turnover of Bt35bn in 4Q 2003. For the year as a whole, average daily turnover was Bt19bn, 128% higher than the corresponding turnover in 2002. The transaction volumes in late 2003 far exceeded earlier expectations and reflected a growing bullishness, particularly amongst local retail investors. The appetite for equity risk from retail investors grew throughout the year as the returns on the equity market grew. The surge in retail activity and share prices raised concerns amongst the SET authorities that a speculative bubble may be building. As a result, moves were made by the SET in the later part of the year to take the wind out of the sails of the day-trading investors, including warnings of curbs on net settlement activities. The effects, however, were temporary and the SET Index closed the year up 117%, making it one of the worldûs top performing stockmarkets in 2003.

. . . Investment Banking secures flagship mandates Finansa Securitiesû investment banking business also enjoyed a strong year, with deal activity spurred by the improving stockmarket and progress in government privatization. Keynote deals in 2003 for the company were (i) the advisory role in launch of the governmentûs Bt100 billion Vayupak Fund (ii) the Co-lead underwriting position in the public offering of shares in Siam City Bank, raising Bt8 billion (iii) the Bt20 billion debt restructuring of Thai Lube Base (iv) the Bt5 Investment Banki n g bil ion debt restructuring of Phayathai Hospital (v) the Bt12 billion debt restructuring of Jasmin International and (vi) the successful completion of the US$1.1 bil ion financing of the BLCP Power project.

. . . çVayupaké a ground breaking initiative çVayupaké was a groundbreaking initiative by the Thaksin Shinawatra government, providing for the transfer of government ownership in a number of securities to a Fund which financed the purchase with monies raised from the public. Finansaûs role was to advise on the structure of the Fund and on the valuations of shares being transferred to the Fund.

. . . Innovative structuring of Siam City Bank share sale The Siam City Bank transaction was especially noteworthy for the structure which involved a package of existing ordinary shares held by the Financial Institution Development Fund, and covered warrants which both boosted interest in the offering from potential investors and satisfied the Governmentûs desire to provide a mechanism to reduce the state ownership to under 50% over a period of time.

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. . . First Thai institution to win Asiamoney/Euromoney çDeal of the Yearé awards We would also highlight that Asiamoney and Euromoney named the BLCP Power financing as the Project Finance deal of 2003. The award reflects the scale and complexity of the transaction, involving a flexible US$ and Baht drawdown structure, and its successful conclusion. This was the first time that a Thai investment banking group has won this distinction and provided further recognition of the strengths of Finansa Securitiesû Investment Banking operations. Finansa Securities acted as the co-financial advisor on this transaction with ABN-AMRO Bank. Finansaûs role was to secure the local lending component and in the Equity Research event, the borrower had the flexibility to access the entire funding requirement of Bt47bn, locally, or access a portion of the funding in US Dollars. The work on this transaction started several years ago when the project was first proposed.

. . . Expanding presence in the debt markets Finansa Securities has also increased its activities in the debt markets with a series of transactions which include joint lead manager on debenture issues by Thai Olefins Plc. (Bt10,000 mil ion) and The Aromatics (Thailand) Plc. (Bt12,000 million). Finansa Securities was also active as financial advisor on the issue of a series of Bills of Exchange programmes, the most significant of which was a Bt2,000 mil ion facility for TA Orange Co. Ltd.

. . . Timely start to proprietary trading A stronger balance sheet and a positive view on the outlook for the Thai equity markets prompted Finansa Securities to hire two proprietary traders in the early part of the year to undertake principal positions on behalf of the firm. Though their investment mandates were designed to be different, one focused on momentum trading and one on çmid-capé value plays, both strategies proved successful.

. . . Broadening recognition of the research capabilities Finansa Securities recognizes the importance of developing a strong research capability to support its brokerage and investment banking activities. 2003 saw a significant expansion in the research output and increasing recognition from clients of the quality of the research services. Aside from the key role of research in the aforementioned investment Equity Sales banking mandates, an encouraging development has been the growth in interest in the research from overseas investment institutions.

. . . Expansion in staff and capital base 2003 was notable for the significant expansion in the scale of the Finansa Securities operations. Staffing increased from 56 at end 2002 to 105 at end 2003, with a sizeable part of the increase channeled into the brokerage activities. The paid-up capital base of Finansa Securities was also expanded in July 2003, from B200 million to Bt450 million, to facilitate the growth in breadth and depth of the business.

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Fund Management F inansa2003 Review Baht Mil ion Year to 31 December 2003: Fees and Service Income Interest and Dividend Income Other Revenue Total Revenues Income Before Taxes As at 31 December 2003: Total Assets Paid-up Capital Shareholders没 Funds

2003

2002

93 341 141 575 428

156 63 219 132

3,034 0.7 446

234 0.7 183

. . . Investment gains spur growth in fund management revenues Finansa Fund Management saw revenues rise 163% in 2003 to Bt575 million, driven primarily by income relating to principal trading activities. Overall Fees and Service Income declined due to the inclusion in 2002 of significant fees relating to a Thai restructuring transaction involving offshore debt. Fund Management fees benefited from the receipt of performance fees relating to the carried interest in Siam Investment Fund II, L.P., though suffered in Baht terms from the decline in the U.S. Dollar exchange rate. The core of the management fees remained broadly flat as the one new fund launched during the year, The Asian Debt Fund, closed on 31 December 2003 and did not therefore contribute to 2003 revenues. The annual fees on the existing funds are at fixed rates in U.S. Dollars and do not fluctuate with the movement in their respective asset values.

. . . Timely investment in Siam Investment Fund The decision to build the proprietary investment activities in Finansa Fund Management was in part based on the management没s positive view on the Thai equity market and in part based on the improved access to financing lines on more favorable terms following the listing of Finansa Plc. The single most important investment decision during the year was to acquire a c.40% stake in Siam Investment Fund in March 2003, close to the low point for the year of the Thai stockmarket. This investment has since returned c.50% in cash dividends in 2003 and the Net Asset Value per share of Siam Investment Fund, as at 31 December 2003, was stil 75% above the purchase cost to Finansa Fund Management.

. . . Acquired stake in The Vietnam Frontier Fund In August 2003, Finansa Fund Management acquired a significant stake in The Vietnam Frontier Fund. The dynamics of this Fund are far different from those of Siam Investment Fund as a large percentage of the assets in The Vietnam Frontier Fund are in unlisted investments. To the extent, however, that the Vietnamese stockmarket has picked up in recent months, international investor interest in Vietnam is growing and the Fund has been able to diversify investments into Thailand to catch a part of the rise in Thai equity values. The prospects for making a satisfactory return on this investment are good. This fund will terminate in July 2004 and the aim is to liquidate the investment between now and then, with scope for an initial distribution in the intervening period.

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. . . Launch of The Asian Debt Fund The decision to launch The Asian Debt Fund stemmed from a combination of objectives; leveraging the company没s expertise in this area and developing a regional fund management footprint. Finansa没s Asian Debt operations are centred in Finansa Singapore. This office was established in November 2002 with a former executive of Lazard Freres没s Asian Distressed Debt team. His capabilities in trading Asian debt complemented the trading activities in Thai debt being carried out within Private Equity the Finansa group. Recognising the considerable opportunities in the Asian Distressed Debt market, Finansa Fund Management sponsored a fund targeting this asset class. The Fund closed on 31 December with subscriptions of US$22.5m. The co-sponsors of the Fund are Aozora Bank and Japan Asia Investment Co.. The Fund, which targets Asia ex-Japan, is open-ended and the intention is to attract new investors as a track record is established.

. . . New investment and realizations in Siam Investment Fund II Within the existing Funds, Siam Investment Fund II saw the successful realisation of gains on strategic investments in Sansiri Plc. and Pranda Jewelry Plc. and a new investment, the sixth made by the Fund, in F&B Food Services Ltd., a food services distribution company targeting the catering sector. This Company was formerly a subsidiary of Royal Ahold N.V.. Having acquired control, Siam Investment Fund II plans further investment to establish the Company as the nationwide leader in this important and fast growing segment of the food services industry.

. . . Siam Investment Fund performs in line with the broad market Siam Investment Fund enjoyed a successful year with the Net Asset Value rising 136%, after adjustment for a succession of dividend payments. This rise was in line with a 136% rise in the SET Index in US Dollar terms over the period.

. . . Change in VFF mandate There was little change to the core portfolio of The Vietnam Frontier Fund in 2003, though one material change was to the mandate of the Fund, allowing it to invest a portion of its assets in Southeast Asia, outside of Vietnam. Finansa Fund Management took advantage of this relaxation to allocate funds to the Thai stockmarket. The benefits of the portfolio shift were not evident by year end, though are expected to be recognized in 1H 2004 with a material improvement in the net asset value of The Vietnam Frontier Fund.

. . . VFF to wind down in July 2004 The Vietnam Frontier Fund wil terminate in July 2004. While the loss of the fund management revenues from this Fund wil be significant, Finansa Fund Management is planning new fund initiatives which should more than compensate for the expiry of The Vietnam Frontier Fund.

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Finansa Credit - 2003 Review Baht Mil ion As at 31 December 2003: Total Assets Total Equity Capital Adequacy Ratio % Year to 31 December 2003: Total Revenue* Income Before Taxes* RoA% (average assets)** RoE% (average equity)** *2002 figures are for 4Q only **annualized for 2002

2003

2002

3,706 525 16.1%

1,091 350 65.6%

166 91 3.8% 20.8%

35 28 10.7% 36.0%

. . . First full year of Operations 2003 represented the first full year of operations for Finansa Credit. In the period dating from its October 1, 2002 acquisition and start up, the Company has identified and implemented a business strategy which targets affluent individuals and Finansa Group investment banking clients. Finansa Credit offers deposit products, operates a successful fixed income and derivatives portfolio and provides commercial credit to selected clients.

. . . Significant expansion in assets Total Assets stood at approximately Baht 3.7 billion as of December 31, 2003, a significant increase from THB 1.1 bil ion the previous year-end. The growth in assets was predominantly in the area of short and medium term debt instruments, combined with a steady expansion in commercial lending and the creation of a portfolio of listed equities. At the time of the Company没s acquisition, new lending activity was limited. Post-acquisition, this activity has been boosted, with a focus on leveraging the corporate relationships Funding across the Finansa Group. The approach to investment in equities is selective, with an emphasis on solid companies and modest valuations with attractive dividend yields. The equity exposure also broadens the asset profile.

. . . Broad funding base Corresponding to the increase in asset size, there has been a significant expansion in the deposit base. Finansa Credit continued to successfully attract individual and corporate deposits through the efforts of its experienced funding team and its strong financial position. Consequently, its loan to deposit ratio is one of the strongest in the industry. In addition, various financial institutions provided standby credit facilities that further assure the liquidity of Finansa Credit.

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. . . ROA meets expectations The Company generated a Profit Before Tax of Baht 91 million and a Pre-tax Return on Assets (ROA) of 3.8%. ROA and efficiency ratios were in line with management expectations and resulted in Finansa Credit achieving returns amongst the highest in the industry.

. . . Substantial provisioning cushion As of year-end 2003 Finansa Credit had non-performing assets (NPA) of Baht 386 million, equal to 10.4% of Total Assets. The bulk of the NPAs were in place at the time of the acquisition of the Company. Against these assets, Finansa Credit had total loan loss reserves of Baht 228 million, an amount equal to 120% of the Bank of Thailand provisioning requirement. Net of Provisions, the NPA portfolio was equal to 4.3% of Total Assets. These ratios reflect the conservative accounting treatment that Finansa has elected to employ, and reaffirms the high quality of the Companyûs Treasury risk assets. As collection efforts of NPA proceed through the legal foreclosure process, future earnings wil be positively impacted by recoveries.

. . . Implementing çbest practiceé risk management systems Finansa Credit has implemented a çbest practiceé credit risk rating system to measure the relative risks of customer counterparties, and to monitor credit exposures and overall portfolio quality.

. . . Strong capital ratios Capital funds of Finansa Capital totaled Baht 472 million as at year-end 2003. The CAR (capital funds to risk weighted assets) stood at 16.1%, more than double the statutory minimum of 8.0%. During the year Finansa Plc. injected additional capital funds of Baht 150 million in to Finansa Credit to support asset growth and to maintain one of the highest levels of CAR in the financial services industry.

. . . Financial Master Plan to change banking landscape During the latter part of the year the Bank of Thailand (BoT) and Ministry of Finance (MoF) announced plans to restructure the financial services industry. Finansa Credit will be affected in several ways. Firstly, finance companies will have the opportunity to submit an application to the BoT/MoF that will allow their operating licenses to be upgraded to those of a full service commercial bank. Secondly, it is expected that in order to qualify for a banking license, the smaller finance companies must also find at least one suitable merger partner. Finansa Credit has indicated its interest to become a bank and will actively pursue its options under the provisions of the Financial Master Plan (see Outlook for 2004).

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Finansa Securities - Outlook for 2004 . . . Growth in 2004 to be underpinned by broadening business base Growth in revenues at Finansa Securities in 2004 is expected to be underpinned by the increasing breadth and depth of the brokerage business, the recognized ability of the investment banking team to deliver successfully on larger and more demanding mandates and the profitable use of the Company没s own capital resources. In addition, management will continue to leverage business synergies and build on key business relationships, notably in the area of government privatizations. Four state enterprises are scheduled to list in 2004 and a further six in 2005. Though capital markets are by their nature unpredictable, Finansa Securities is well positioned to respond effectively to shifts in both market trends and customer requirements.

. . . Co-lead in Bangchak Petroleum Offering In investment banking, the year has started on a positive note with Finansa Securities acting as co-lead underwriter in the successful Bt7 billion offering of depository receipts by Bangchak Petroleum in January. Going forward, the Company has secured a number of both equity and debt mandates which are expected to come to market in the months ahead.

. . . New branch added in Bangkok In brokerage, the sales teams at both the Had Yai and Suriwomgse (Bangkok) branches have been expanded and a new branch on Phloenchit Road in Bangkok is scheduled to open in March. On the Internet Trading side, the focus is on upcountry expansion. The immediate challenge is technical as network availability and capacity are key issues in ensuring an improvement in the service currently available to potential clients from current competitors. To this end, Finansa Securities is in touch with the various service providers throughout Thailand to identify the most efficient and effective networks for supplying our Internet trading service. Taken together, branch expansion and growth in the Internet Trading business are expected to generate increasing market share in brokerage.

. . . Preparing for the challenges in 2004 and 2005 Key challenges in the year ahead will be securing a leadings position in the large number of Initial Public Offerings expected this year. Finansa Securities has started the year well with a co-lead position on the equity issue by Bangkok Petroleum and is confident of securing senior positions in other equity transactions in 2004.

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F inansa Fund Management Outlook for 2004

. . . Positive backdrop for new fund launches The combination of renewed interest amongst global investors in emerging Asia and a strong performance track record augurs well for the launch of new funds by Finansa Fund Management in 2004. Three new fund initiatives are currently under consideration.

. . . SIF III, a successor to SIF II 2003 was a successful year for Siam Investment Fund II, extending the successful track record established since the Fund was formed in 2001. With the sixth investment completed, and the Fund approaching full investment, attention will now turn to launching a successor fund, Siam Investment Fund III, L.P.. Capital Z, the core sponsor of Siam Investment Fund II, has expressed its interest in supporting a follow-up private equity fund. An intensive marketing effort will be launched in 2Q 2004.

. . . A new Vietnam fund Finansa management believes that the timing is right for the launch of a new Vietnam fund. Preliminary marketing enquiries in 2002 showed limited investor interest, however there are signs emerging that a small, focused Fund could be raised in the current climate. The proposed Fund would target equity investments in companies planning to list within a two to three year time frame.

. . . Scope to expand The Asian Debt Fund A third initiative to build fund management fees in 2004 will be to attract new investors to The Asian Debt Fund. A marketing initiative is expected to be launched mid-year.

. . . Establishing a domestic mutual fund company In addition to expanding the offshore fund management activities, the Finansa Group is looking to establish an onshore fund management business. Finansa views this business as a natural extension of its current activities and it wil round out Finansa没s fund management service offerings.

. . . BFIT provides shortcut to mutual fund license An application was submitted to the Securities Exchange Commission by Finansa Securities in November 2003 for a Mutual Fund Management license and the approval process was expected to take around six months. Since the year end, however, Finansa has announced that it intends to merge Finansa Credit with Bangkok First Investment and Trust Plc. (BFIT)

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Annual Report 2003


and take a 49.97% stake in the enlarged entity. BFIT has an existing provident fund management business and has already been awarded a mutual fund license. Logic would dictate that the fund management activities of the enlarged Finansa Group should be centralised within Finansa Fund Management and the practicalities of such a reorganisation are being assessed.

. . . Challenges in the mutual fund market place While accepting the strength of the incumbents in the domestic mutual fund arena, Finansa没s management sees an opportunity to participate in the overall growth of the mutual fund market and scope to launch innovative products into an otherwise bland landscape of product offerings. One potentially important development in the mutual fund industry is the planned liberalization of the life assurance market and the likely introduction of unit-linked insurance products. This will likely be a target area for the new mutual fund company, once the licensing procedures are completed.

Finansa Credit - Outlook for 2004 . . . Merger with BFIT Since the year end, Finansa Plc. has announced a plan to merge Finansa Credit with Bangkok First Investment and Trust Plc. (BFIT), the listed finance and securities company. This merger marks a strategic step towards the objective of establishing a bank as one of the pil ars of the Finansa Group.

. . . Finansa Plc to hold 49.97% of BFIT Under the terms of the proposed merger, Finansa Credit, the wholly owned FNS subsidiary, wil be sold to BFIT for Baht 687 million, equivalent to Book Value. Concurrently, BFIT has agreed to issue 99.90 mil ion new shares to Finansa Plc. at Baht 12.78 which will result in Finansa Plc holding 49.97% of the total outstanding shares in BFIT.

. . . BFIT wil apply for bank license FNS and BFIT have agreed that once the merger is approved by the Bank of Thailand, BFIT wil make an immediate application to upgrade BFIT to a universal bank in conformance with the regulations reforming the domestic banking system. Over time Finansa Plc. and BFIT have also agreed to raise the total capital of BFIT to 5 billion as required by the Bank of Thailand.

Finansa Plc. 17

Annual Report 2003


Plc. and SubsidiariesFinansa Expansion of Capital Base . . . Finansa Plc. In August 2003, shareholders of Finansa Plc. approved a private placement of 10 million new shares at Bt33 per share. This increased the number of shares in issue to 110 million. In August 2003, shareholders of Finansa Plc. approved the issue of 110 million warrants to shareholders of record as at 4th September 2003. Warrants were issued on the basis of one warrant for each ordinary share held. The warrants have a term of three years and an exercise price of Bt25. They were allotted at no cost to shareholders. As at 31 December 2003, no warrants had been exercised.

As at 31 December Shares in Issue (par Bt5) Shareholders没 Funds

2003 110m Bt2,372m

2002 100m Bt1,555m

Subsidiaries In July 2003, Finansa Plc. invested Bt250 million in new shares of Finansa Securities Ltd., raising the paid-up capital of this company from Bt200 million to Bt450 million In October 2003, Finansa Plc. invested Bt150 million in new shares of Finansa Capital Ltd., raising the paid-up capital of this company from Bt301 million to Bt451 million

Finansa Plc. 18

Annual Report 2003


Finansa Plc. - Price Performances of Ordinary Shares and Warrants

Note: The warrants started trading on the SET in September 2003

Finansa Plc. 19

Annual Report 2003


on the Board of Directors’ Report Responsibility towards the Financial Statements The Board of Directors is aware of the duties and responsibilities of directors of a listed company in ensuring that the financial reports of the company and its subsidiaries are prepared in accordance with generally accepted accounting principles in Thailand, utilizing appropriate accounting policies that are applied consistently. The accounting data is accurate, complete, comprehensive and sufficient to maintain and safeguard the Companyûs assets, and assure early identification of any possible weakness so as to prevent malfeasance or significant misconduct. Moreover, sufficient important information is disclosed in the footnotes to the financial statements. Throughout 2003, the Company has maintained an effective internal control system under the supervision and review of the independent Audit Committee and external auditor, both of whom were responsible for the accuracy and completeness of the financial reports and the internal control system to assure that the accounting data was recorded accurately, completely and carefully. The opinion of the Audit Committee on these matters is contained in the annual report. Based upon the Companyûs internal control system and the external auditorûs reports, the Board of Directors believes that the consolidated financial statements of the Company and its subsidiaries present completely, in all material respects, the financial position, the results of operations and cash flows for the year ended 2003 and also conform with generally accepted accounting principles.

(Eugene S. Davis) Chairman

(Vorasit Pokachaiyapat) Managing Director

Finansa Plc. 20

Annual Report 2003


Audit Committee’s Report 2003 The Audit Committee of Finansa Public Company Limited comprises of 3 independent non-executive directors, namely, Mr.Vitthya Vejjajiva as the Chairman of Audit Committee, Mrs.Kannika Ngamsopee and Mr.Weerawong Chitmittrapap as Audit Committee members. The Head of the Internal Audit Department serves as secretary to the committee and reports audit activities directly to the Audit Committee. In fiscal year 2003, the Audit Committees held 5 meetings. The following major issues were considered in accordance with the scope of duties and responsibilities assigned by the Board of Directors. 1. Review of the quarterly financial statements as well as the annual financial statements and consolidated financial statements of the Company and its subsidiaries including the correctness and completeness of information disclosure on the notes to financial statement. 2. Review of the internal control systems and the reports on auditing performed by the Internal Audit Department in accordance with the approved annual audit plan. 3. Review of the Companyûs operations in order to ensure compliance with the securities law, rules & regulations of the SET or any law concerning the Companyûs business. 4. Consideration of the Companyûs information disclosure about the transactions stipulated by law, connected transactions, related party transactions, including the transactions which may cause conflict of interest. 5. Recommendation to the Board of Directors for sharesholdersû meetingûs approval of the proposed appointment of Mr.Ruth Chaowanagawi or Ms. Rungnapa Lertsuwankul or Ms.Ratana Jala, certified public accountants from Ernst & Young Office Limited, as the Companyûs auditors for the year 2004, as well as remuneration therefor. It is the opinion of the Audit Committee that the Companyûs overall internal control system is satisfactory and the Companyûs management is in compliance with the relevant laws and regulations. The Financial Statements of the Company were prepared and presented with accurate and complete financial information in accordance with the generally accepted accounting principles. On behalf of the Audit Committee

(Vitthya Vejjajiva) Chairman of the Audit Committee

Finansa Plc. 21

Annual Report 2003


inansa Public Company Limited Fand Its Subsidiary Companies Report and Financial Statements 31st December, 2003 and 2002

Finansa Plc. 22

Annual Report 2003


Report of Independent Certified Public Accountants

To the Shareholders and Board of Directors of Finansa Public Company Limited ■

I have audited the accompanying consolidated balance sheets of Finansa Public Company Limited and its subsidiary companies as at 31st December, 2003 and 2002 and the consolidated related statements of earnings, consolidated change in shareholdersû equity and consolidated cash flow for the years then ended and the balance sheets of Finansa Public Company Limited as at 31st December, 2003 and 2002 and the related statements of earnings, change in shareholdersû equity and cash flow for the years then ended. These financial statements are the responsibility of the Companyûs management as to their correctness and 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 consolidated financial positions of Finansa Public Company Limited and its subsidiary companies as at 31st December, 2003 and 2002 and the consolidated results of its operations, the consolidated changes in shareholdersû equity and the consolidated cash flows for the years then ended and the financial positions of Finansa Public Company Limited as at 31st December, 2003 and 2002 and the results of its operations, the changes in shareholdersû equity and the cash flows for the years then ended in conformity with generally accepted accounting principles. ■ Without qualifying my opinion, I draw attention to Note 10 to the financial statements, the Company had significant transactions with its related parties. The effects of these transactions were reflected in the financial statements on the basis determined by the Company and the related parties.

Mr. Anurak Lelapiyamit Certified Public Accountant (Thailand) No. 3462 BDO Richfield Limited BANGKOK : 4th February, 2004

Finansa Plc. 23

Annual Report 2003


Finansa Public Company Limited and Its Subsidiary Companies Balance Sheets Note ASSETS CURRENT ASSETS Cash and cash equivalents Securities purchased under resale agreements Current investments Trading securities Available-for-sale securities Debt securities maturing within 1 year

4 5 6 6 11.2

Accounts transactions with securities company Trade accounts receivable - net 10.1 Loans, receivables and accrued interest receivable - net 7, 8, 10.1 Advance to related parties 10.1 Loans to subsidiary companies 10.1 Loans to financial institutions - net Properties foreclosed - net 9 Other current assets 10.1, 28.1 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Investments for using the equity method 10.1 Long-term investments in related companies 10.1 Other long-term investments - net 11 Available-for-sale securities Held to maturity debt securities Other securities Plant and equipment - net Goodwil - net Deferred income tax assets Other non-current assets TOTAL NON-CURRENT ASSETS

12 13 14

(Unit : Thousand Baht) As at 31st December Consolidated The Company Only 2003 2002 2003 2002

1,372,035 550,000

550,568 35,000

525,545 -

216,443 -

159,944 5,683 53,091 1,361,788 548,179 106,250 269,696 5,997 1,791,428 559,859 159,341 151,140 2,812 72,636 36,688 98,182 3,139,226 295,714 3,333 3,497 248,000 59,400 49,863 51,954 104,849 53,377 24,411 7,234,510 1,648,869 1,055,479

2,623 120,348 122,971 51,425 4,460 395,299

25,464 841,613

14,628 1,976,844 1,094,509 142,684 -

50,196 1,796,591 2,923 1,849,710 245,701 369,080 39,534 8,460 3,379,562

100 25,908 5,144 423 362 31,152 423 362 90,036 238,539 78,802 401,990 66,856 12,032 7,964 8,306 1,677 1,737 755,652 2,229,515 1,183,374

TOTAL ASSETS 10,614,072 2,404,521 3,284,994 1,578,673 The accompanying notes are an integral part of the financial statements Finansa Plc. 24

Annual Report 2003


Finansa Public Company Limited and Its Subsidiary Companies Balance Sheets (Countinued) Note LIABILITIES AND SHAREHOLDERSû EQUITY CURRENT LIABILITIES Short-term loans from financial institution Accounts transactions with securities company Securities business payable Current portion of borrowing and deposits Current portion of long-term loan Current portion of hire purchase payable Amount due to related company Other current liabilities Accrued bonus Corporate income tax payable Accrued interest expense Accrued expenses Others TOTAL CURRENT LIABILITIE NON-CURRENT LIABILITIES Long-term loan from related party Borrowings and deposits - net Long-term loan - net TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES

15 16, 10.1 17 10.1 14 10.1

10.1 16 17

(Unit : Thousand Baht) As at 31st December Consolidated The Company Only 2003 2002 2003 2002

710,118 594,908 1,090,862 2,733,702 349,423 6,454

602 32,806 575,467 387 -

380,000 50,000 -

387 -

136,790 106,529 23,027 65,872 57,569 389,787 5,875,254

34,962 2,901 4,536 16,245 8,051 66,695 675,957

12,477 7,417 103 5,497 7,345 32,839 462,839

4,547 2,487 12,332 3,922 23,288 23,675

229,995 2,136,668 2,366,663 8,241,917

15,120 156,966 172,086 848,043

450,000 450,000 912,839

23,675

SHAREHOLDERSû EQUITY Share capital 19 Registered share capital 220 million ordinary shares (2002 : 100 million ordinary shares) of Baht 5 each 1,100,000 500,000 1,100,000 500,000 Issued and paid-up share capital 110 million ordinary shares (2002 : 100 million ordinary shares) of Baht 5 each 550,000 500,000 550,000 500,000 Additional paid-in capital Premium on ordinary shares 20 965,864 685,864 965,864 685,864 Revaluation surplus (deficit) in investments (9,268) 2,434 (9,268) 2,434 Currency translation differences (28,130) 1,637 (28,130) 1,637 Retained earning Appropriated Legal reserve 21 40,301 11,370 40,301 11,370 Unappropriated 853,388 353,693 853,388 353,693 TOTAL COMPANYûS SHAREHOLDERSû EQUITY 2,372,155 1,554,998 2,372,155 1,554,998 MINORITY INTERESTS 1,480 TOTAL SHAREHOLDERSû EQUITY 2,372,155 1,556,478 2,372,155 1,554,998 TOTAL LIABILITIES AND SHAREHOLDERSû EQUITY 10,614,072 2,404,521 3,284,994 1,578,673 The accompanying notes are an integral part of the financial statements Finansa Plc. 25

Annual Report 2003


Finansa Public Company Limited and Its Subsidiary Companies Statements of Earnings INCOME Service income Finance and securities business income Brokerage fees Fees and services income Gain on sales of investment in securities Gain (loss) on disposal of properties foreclosed Written-off investment recovered Recovery of bad debts Interest and dividends Gain from sales of investment in loan receivable Gain from interest rate swap Other income

Note

(Unit : Thousand Baht) For the years ended 31st December Consolidated The Company Only 2003 2002 2003 2002

10.2

93,358

194,713

90,591

91,458

10.2

444,388 268,944 34,526 (499) 102,491 5,000 13,197 2,439 870,486 164,291 183,772 149,760 8,848 42,059 1,512,574

22,298 103,132 969 2,574 2,853 21,712 84,298 4,457 242,293 2,966 55,397 2,112 1,658 499,139

8,656 54,844 7,222 522,839 684,152

2,851 (2,684) 1,830 179,265 272,720

36,701

10,985

4,537

4,897

39,062 115,156 213,664 19,749 4,797 4,032 856 4,362 19,976 421,654 172,004 32,910 663,269

37,915 9,762 81,482 18,717 1,376 21,618 18,545 13,300 5,727 10,296 218,738 104,377 14,074 348,174

87,827 92,364

42,668 47,565

849,305 (127,080)

150,965 (512)

591,788 (5,161)

225,155 (2,649)

(146,088) 576,137 2,489

55,823 206,276 2,351

(8,001) 578,626 -

4,896 227,402 -

578,626 578,626

208,627 18,775 227,402

578,626 578,626

227,402 227,402

5.59 103,534

4.26 53,346

5.59 103,534

4.26 53,346

10.2 26.4

Interest income 10.2 Dividend income 10.2 Gain on sales of investment Other income Share of gain from investments for using the equity method TOTAL INCOME EXPENSES Cost of services Finance and securities business expenses Interest on borrowings Fee and services expenses Personnel expenses Premise and equipment expenses Taxes and duties Consultant fees and management fees Bad debts and doubtful accounts Impairment loss from properties foreclosed Contribution to rehabilitation fund Other expenses Service and administrative expenses 10.2 Goodwill amortization and written off 13 TOTAL EXPENSES EARNINGS BEFORE INTEREST EXPENSES, CORPORATE INCOME TAX AND MINORITY INTERESTS INTEREST EXPENSES 10.2 CORPORATE INCOME TAX BENEFIT (CORPORATE INCOME TAX) 14, 25 EARNINGS BEFORE MINORITY INTERESTS MINORITY INTERESTS EARNINGS BEFORE GAIN ON PART UNRECORDED OF CONSOLIDATED FINANCIAL STATEMENTS LOSS BEFORE PURCHASE OF SHARE NET EARNINGS FOR THE YEAR EARNINGS PER SHARE (BAHT) Net earnings for the year WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (THOUSAND SHARES) The accompanying notes are an integral part of the financial statements Finansa Plc. 26

Annual Report 2003


Finansa Plc. 27

Annual Report 2003

19 20

21

685,864 685,864 280,000 965,864

36,000 464,000 500,000 50,000 550,000

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

Net earnings for the year Legal reserve Dividend Ordinary shares Premium on ordinary shares Minority interest Balance as at 31st December, 2003

Net earnings for the year Legal reserve Ordinary shares Premium on ordinary shares Minority interest Balance as at 31st December, 2002 Unrecognized transactions in statement of earnings Revaluation deficit in investments for the year Currency translation differences

Balance as at 1st January, 2002 Unrecognized transactions in statement of earnings Revaluation surplus in investments for the year Currency translation differences

Note

(11,702) (11,702) (9,268)

6,056 6,056 2,434

(3,622)

Issued and Revaluation Premi u m on paid-up surplus (deficit) share capital ordinary shares in investments

(29,767) (29,767) (28,130)

1,637 1,637 1,637

-

Currency translation differences

28,931 40,301

11,370 11,370

-

578,626 (28,931) (50,000) 853,388

227,402 (11,370) 353,693

137,661

(1,480) -

1,480 1,480

-

(11,702) (29,767) (41,469) 578,626 (50,000) 50,000 280,000 (1,480) 2,372,155

6,056 1,637 7,693 227,402 464,000 685,864 1,480 1,556,478

170,039

Total

(Unit : Thousand Baht)

Retained earnings Appropriated Minority Legal reserve Unappropriated interest

For the year ended 31 December, 2003 and 2002

st

Finansa Public Company Limited and Its Subsidiary Companies Statements of Change in Shareholders , Equity Consolidated


685,864 685,864 280,000 965,864

464,000 500,000

Net earnings for the year Legal reserve 21 Dividend Ordinary shares 19 50,000 Premium on ordinary shares 20 st Balance as at 31 December, 2003 550,000 The accompanying notes are an integral part of the financial statements.

Net earnings for the year Legal reserve Ordinary shares Premium on ordinary shares Balance as at 31st December, 2002 Unrecognized transactions in statement of earnings Revaluation deficit in investments for the year Currency translation differences

-

Annual Report 2003

36,000

Balance as at 1st January, 2002 Unrecognized transactions in statement of earnings Revaluation surplus in investments for the year Currency translation differences

Note

(11,702) (11,702) (9,268)

6,056 6,056 2,434

(3,622)

Issued and Revaluation Premi u m on paid-up surplus (deficit) ordi n ary shares share capital in investments

(29,767) (29,767) (28,130)

1,637 1,637 1,637

-

Currency translation differences

28,931 40,301

11,370 11,370

-

578,626 (28,931) (50,000) 853,388

227,402 (11,370) 353,693

137,661

Retained earnings Appropriated Legal reserve Unappropriated

For the year ended 31 December, 2003 and 2002

st

Finansa Public Company Limited and Its Subsidiary Companies Statements ofThe Change in Shareholders , Equity Company Only

Finansa Plc. 28

(11,702) (29,767) (41,469) 578,626 (50,000) 50,000 280,000 2,372,155

6,056 1,637 7,693 227,402 464,000 685,864 1,554,998

170,039

Total

(Unit : Thousand Baht)


Finansa Public Company Limited and Its Subsidiary Companies

Statements of Cash Flow

(Unit : Thousand Baht) For the years ended 31st December Consolidated The Company Only

2003

2002

2003

2002

578,626

227,402

578,626

227,402

19,450 32,910 13,487 (1,480) 213 (6,002) (42,059) 233 27,322 (3,416)

10,394 16,057 5,855 14,074 1,480 (7) (6) 403 (4,830) (1,658) (522,839) (179,265) 3,032 216 538 (66,856) (4,068) (7,964) -

Cash flows from operating activities Net earnings for the year Adjustments to reconcile net earnings to net cash provided by (used in) operating activities : Depreciation and amortization Goodwil amortization and written off Bad debts and doubtful accounts Minority interests - statements of earnings Changes in value of debt securities maturing within 3 months Unrealized (gain) loss from valuation of investment Share of (gain) loss from investments for using the equity method (Gain) loss on sales of fixed assets (Increase) decrease in deferred income tax assets Currency translation differences - written off Changes in operating assets and liabilities (Increase) decrease in operating assets : Securities purchased under resale agreements Current investments Accounts transactions with securities company Trade accounts receivable Loans, receivables and accrued interest receivable Advance to related party Loans to subsidiary companies Loans to financial institutions Properties foreclosed Other current assets Increase (decrease) in operating liabilities : Accounts transactions with securities company Securities business payable Other current liabilities Net cash provided by (used in) operating activities

(515,000) (35,000) (1,209,693) (517,428) (32,499) (148,328) 7,257 (36,804) (18,401) (46,757) (2,844,112) (295,714) (11,899) (3,497) (248,000) 60,000 (28,398) 2,091 (51,954) (51,472) (48,445) (19,951)

(86,576) (44,676) (887)

594,306 602 1,058,056 32,806 295,207 51,015 9,551 (2,188,364) (718,893) (274,500)

15,247 (70,326)

Cash flows provided by (used in) investing activities : 31,223 (12,970) (400,000) (589,021) (698,929) (142,684) (1,818,462) (30,887) (61) (97) (175,664) (82,629) (176,396) (74,205) 420 200 420 (248,793) (258) (3,327) 26 280 (2,661,670) (521,090) (576,011) (663,043)

(Increase) decrease in investments for using the equity method (Increase) decrease in long-term investments in related companies (Increase) decrease in other long-term investments (Increase) decrease in fixed assets Cash from sales of fixed assets Increase) decrease in goodwill (Increase) decrease in other non-current assets Net cash provided by (used in) investing activities

The accompanying notes are an integral part of the financial statements. Finansa Plc. 29

Annual Report 2003


Finansa Public Company Limited and Its Subsidiary Companies

Statements of Cash Flow (Countinued)

(Unit : Thousand Baht) For the years ended 31st December Consolidated The Company Only

2003

2002

2003

2002

Cash flows provided by (used in) financing activities : Increase (decrease) in short-term loans from financial institutions Increase (decrease) in borrowing and deposit Increase (decrease) in short-term loans from subsidiary company Increase (decrease) in amount due to related company Increases (decrease) in long-term loans from related party Increase (decrease) in long-term loan Increase (decrease) in hire purchase payable Cash receipt from increase in share capital Dividend payment Net cash provided by (used in) financing activities Currency translation differences Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year Supplemental non monetary item from operating activities Increase in current investments Increase in accounts payable from purchasing of current investments Increase in loan to financial institution Increase in loans, receivables and accrued interest receivable Increase in allowance for doubtful accounts

710,118 380,000 2,231,264 732,433 (90,000) 6,454 (116,776) (116,776) (15,120) 15,120 2,486,091 500,000 (387) (589) (387) (589) 330,000 1,149,864 330,000 1,149,864 (50,000) (50,000) 5,698,420 1,780,052 1,159,613 942,499 (26,919) 1,637 821,467 541,706 309,102 209,130 550,568 8,862 216,443 7,313 1,372,035 550,568 525,545 216,443 (27,885) 27,885 (16,939) (168,653) 185,592 -

-

-

-

(39,064) 41,290 (2,226) -

-

-

-

152,113 15,420

39,841 16,666

5,058 7,174

2,791 4,971

Supplemental non monetary item from investing activities Impairment in assets of PT Finansa Indonesia Impairment in liabilities of PT Finansa Indonesia Net appreciation in assets and liabilities of PT Finansa Indonesia

Supplemental disclosures of cash flows information : Cash paid during the year Interest expense Income tax

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

Finansa Plc. 30

Annual Report 2003


F inansa Public Company Limited and Its Subsidiary Companies

Notes To Financial Statements Note 1 - General Information Finansa Public Company Limited was incorporated as a limited company under the Thai Civthil and Commercial Code on 7th December, 1989 and became a public company limited on 19 June, 2002. The major shareholder of the Company is Finansa Investment Advisors Ltd., incorporated in the Cayman Islands. The core business of the Company is to provide comprehensive financial advisory services to its related parties. Its office is situated at 48/29 and 48/32, 16th Floor Tisco Tower, North Sathorn Road, Bangrak, Bangkok. Consolidated The Company Only 2003 2002 2003 2002 Number of employees (persons) 196 149 34 34 Staff costs (Mil ion Baht) 302.51 171.00 37.31 21.09

Note 2 - Basis of Financial Statement Presentation The consolidated financial statements and the separate financial statements of the Company have been presented in accordance with the form of balance sheet and statement of earnings for public companies as required by the Department of Commercial Registration th dated 14 September, 2001 regarding The Brief Particulars in the Financial Statement B.E. 2544 (2001), issued under the Accounting Act, B.E. 2543 (2000). The consolidated financial statements included the financial statements of Finansa Public Company Limited and its subsidiary companies as follows:

Direct subsidiary companies: Percentage of Holding 2003 2002 Finansa Securities Limited

100

100

Finansa Fund Management Ltd. 100

100

Finansa (Cambodia) Limited

100

100

Finansa Credit Limited

100

100

Financial Information 2003

2002

Audited by the same auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Audited by another auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion

Audited by the same auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Audited by another auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion

Indirect subsidiary companies (çThe subsidiary companies of its subsidiary companyÊ): Percentage of Holding 2003 2002 PT Finansa (Indonesia) Holdings Ltd.

100

100

PT Finansa Indonesia

85

85

Finansa Singapore Pte Ltd.

100

100

PT Finansa Asset Management

95

95

Asian Debt Trading Ltd.

100

-

ADF Management, Ltd.

66.67

-

Financial Information 2003

2002

Audited by another auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Audited by another auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Prepared by the management

Audited by the same auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Audited by the same auditor which expressed an unqualified opinion Audited by another auditor which expressed an unqualified opinion -

Finansa Plc. 31

Annual Report 2003

-


Indirect subsidiary companies as at 31st December, 2003 are as follows : Companyûs Name Type of Business PT Finansa (Indonesia) Holdings Ltd. Holding company PT Finansa Indonesia Securities business Finansa Singapore Pte Ltd. Financial advisory PT Finansa Asset Management Investment management Asian Debt Trading Ltd. Holding company ADF Management, Ltd. Investment advisory

Country Relation Mauritius Shareholders and Co-management Indonesia Shareholders and Co-management Singapore Shareholders and Co-management Indonesia Shareholders and Co-management Cayman Islands Shareholders and Co-management Cayman Islands Shareholders and Co-management

Intercompany balances and transactions and investment in subsidiary companies have been eliminated from the consolidated financial statements. In preparation of the consolidated financial statements for the year ended 31st December, 2003, the Company 1. record a loss on impairment of investment in indirect subsidiary company - PT Finansa Indonesia, which reduces the carrying amount of assets to its recoverable amount. Goodwill of such subsidiary company is written off in the consolidated financial statements in full amount. 2. does not include the financial statements of indirect subsidiary company - ADF Management, Ltd. as the Companyûs management confirms that ADF Management, Ltd. has not yet commenced its operation during the year 2003 and the valuation of investment in such subsidiary company is immaterial. On 8th April, 2003, the subsidiary company - Finansa Fund Management Ltd. registered a new corporation namely çAsian Debt Trading Ltd.é in the Cayman Islands whose share capital has been registered in the amount of USD 50,000 at the par value of USD 1 for the purpose of trading in debt securities. The Board of Directors Meeting No. 3/2003 on 11th July, 2003 had resolved to approve the establishment of a company to engage in mutual fund and asset management businesses or the acquisition of an existing mutual fund company (in the case may be) at the purchase price or registered share capital upst to Baht 100 million of which 99.99% of share interests will be held by the Company. As at 31 December, 2003, the Company is in process of obtaining permission from The Office of the Securities and Exchange Commission. On 23rd July, 2003, The Company invested in a new subsidiary company - HT Dotcom Limited with the registered share capital of Baht 0.10 million. The Company had 99.94% shareholding of share capital for the purpose of internet cafe service. The consolidated financial statement for the nine-month period ended 30th September, 2003 included the financial statement of such subsidiary company. The Board of Directors Meeting of the subsidiary company - HT Dotcom Limited No. 2/2003 th th on 19 September, 2003 had resolved to discontinue its operations on 24 September, 2003 and the Company sold all investment in such subsidiary company on 4th December, 2003. The Extraordinary Shareholdersû Meeting of the subsidiary company - Finansa Securities Limited No. 1/2003 on 11th July, 2003 and No. 2/2003 on 28th July, 2003 had a special resolution to increase the registered share capital from Baht 200 million (20 million ordinary shares of Baht 10 each) to Baht 450 million (45 million ordinary shares of Baht 10 each). Suchthsubsidiary company registered the increased share capital with the Ministry of Commerce on 28 July, 2003. The subsidiary company - Finansa Securities Limited registered two new branches at 33/132 Wall Street Tower Office Condominium, 26th Floor Room 04 Surawongse Road, Suriyawongse, Bangrak, Bangkok and at 29 Lee Garden Plaza Building, 6th Floor Unit 601/1 Prachatipat Road, Sub-district Had-yai, District Had-yai, Songkhla on 28th July, 2003 and 24th September, 2003, respectively. Finansa Plc. 32

Annual Report 2003


The Extraordinary Shareholdersû Meeting of the subsidiary company - Finansa Credit Limited No. 3/2003 on 24th September, 2003 and the Extraordinary Shareholdersû Meeting No. 4/2003 on 9th October, 2003 had a special resolution to increase the registered share capital from Baht 301mil ion (6.02 mil ion ordinary shares of Baht 50) to Baht 451 million (9.02 million ordinary shares of Baht 50). Such subsidiary company registered the increased share capital with the Ministry of Commerce on 13th October, 2003. The registered share capital was called and fully paid-up at the same day.

Note 3 - Significant Accounting Policies 3.1 Revenues and expenses Service income is recognized on the basis of invoice value (excluding value added tax) of services rendered. Brokerage fees from securities business are recognized on trade date. Fees and services income are recognized when services are rendered. Gain (loss) on trading securities are recognized on trade date. Interest income is recognized on accrual basis, except for interest on loans and receivables, which are more than 3 months over due, are recognized on cash basis. Dividend income is recognized on the entitlement date of dividend declaration. For hire-purchase contracts commencing from 1st May, 2001, the Company recognizes income by using the annuity method over the period of hire-purchase contracts. On hire purchase contracts entered into prior to 1st May, 2001, incomes are calculated principally by the çsum-of-the-years-digité method. The difference of interest income under the two methods is immaterial. Income will not be recognized when hire purchase receivables are more than 3 months over due. Other income is recorded on accrual basis. Expenses are recorded on accrual basis. 3.2 Cash and cash equivalents Cash and cash equivalents include cash in hand and at banks and current investments in debt securities with maturity date not more than three months and without obligation. 3.3 Investments Investments in trading securities are stated at fair value. Fair value of marketable securities are computed from the last bid price in the Stock Exchange of Thailand on the last executed date. Investments in available-for-sale securities are stated at fair value. Changes in the valuation of investments are recorded in the separate shareholdersû equity. Gains or losses from sales of investments are recognized and included in determining earnings. Cost value of investments sold are computed by weighted average method. Investment in debt securities which are classified as held-to-maturity debt securities are carried at amortized cost. Investments in other securities are carried at cost. A test for impairment is carried out when there is a factor indicating that such investment might be impaired. If its recoverable amount is less than the carrying value of the investment, impairment loss is charged to the statement of income. Finansa Plc. 33

Annual Report 2003


3.4

3.5

3.6

3.7

3.8

3.9

3.10

Investments in subsidiary companies are stated by the equity method. The investment is initial y recorded at cost and wil be adjusted to increase or decrease with the share of gain or loss in investee company based on the percentage of the Company没s interest. Goodwil arising on acquisition of the subsidiary company is amortized on a straight-line method over 20 years. Allowance for doubtful accounts Allowance for doubtful accounts is based on the estimated losses that may result from uncollectable debts. The losses are based on a review of the current position of each debtor and overall loan portfolios, and on an analysis of the economic conditions, together with the requirement of the Bank of Thailand没s notifications of 莽Worthless of irrecoverabl e assets and other doubtful assets which may be worthless or irrecoverable茅 dated 28th February, 2003. Troubled debt restructuring Assets or equities received in settlement of debt are stated at the lower of the fair values of the assets or equities, less estimated selling expenses (if any), or the amount of investment in receivables (including accrued interest income). In case that the debt restructuring involves modification of terms of receivables, the fair value of the investment in receivables after restructuring is based on the net present value of the expected future cash flows, discounted by the Minimum Lending Rates (MLR) prevailing at the restructuring date. Losses arising from restructuring, less recorded allowance for doubtful accounts, are recognized in the statement of income when incurred. Legal fees and other direct costs incurred to effect the debt restructuring are expenses when incurred. Properties foreclosed Properties foreclosed are stated at the lower of cost and net realizable value. The net realizable value is assessment value, less estimated selling expenses. Provision for impairment loss wil be set up in the income statement when the recoverable amount is lower than cost. Depreciation Depreciation of plant and equipment is calculated by reference to their cost on a straight-line method at the rate of 5 - 33.33 percent per annum. Foreign currencies Exchange rates adopted :Foreign currency transactions during the year - at the rates ruling on the transaction dates. Assets and liabilities in foreign currency outstanding on the balance sheet date - at the rates ruling on the balance sheet date. Exchange gains and losses are included in determining earnings. Deferred golf membership fee Deferred golf membership fee is amortized by the straight-line method over 26 years, starting from the year 2001. Avals Avals comprise undertakings by the subsidiary company to pay bil s of exchange drawn on customers at due date. Avals are accounted for as off-balance sheet transactions and are disclosed as contingent liabilities and commitments. Finansa Plc. 34

Annual Report 2003


3.11 Deferred corporate income tax Deferred corporate income tax is recognized on the liability method. The timing difference is presented as deferred corporate income tax assets and liabilities in the balance sheet which is subject to change as the corporate income tax rate changes. 3.12 Impairment of assets The Company and its subsidiary companies will reduce the carrying amount of the Company and its subsidiary companies没 assets to theirs recoverable amount if, and only if, the recoverable amount of assets are less than theirs carrying amount. These reduction are impairment losses. 3.13 Earnings per share Earnings per share is determined by dividing the net earnings of the year by the weighted average number of ordinary shares issued during the year. 3.14 Accounting estimation The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.

Note 4 - Cash and Cash Equivalents

Cash on hand Cash at banks Current account Savings account Total cash on hand and cash at banks Debt securities maturing within 3 months Debt securities of private sector Government securities Add (less) : Allowance for changes in value Total debt securities Total cash and cash equivalents

Consolidated 2003 2002 124 127

(Unit : Thousand Baht) The Company Only 2003 2002 5 47

809,478 69,052 878,654

120,078 40,484 160,689

329,509 31,427 360,941

(118) 26,521 26,450

493,175 493,175 206 493,381 1,372,035

140,000 249,886 389,886 (7) 389,879 550,568

164,610 164,610 (6) 164,604 525,545

140,000 49,993 189,993 189,993 216,443

Certain cash at bank as at 31st December, 2003 and 2002 of Baht 2.76 million (USD 0.07 million) and Baht 0.61 mil ion (USD 0.01 million), respectively of Finansa Fund Management Ltd., the subsidiary company, are held for the purposes of working capital. These accounts were opened in the name of the related company and the joint names of certain directors of the subsidiary company and the related companies.

Note 5 - Securities Purchased under Resale Agreements

Government securities and Bank of Thailand bonds Finansa Plc. 35

Annual Report 2003

(Unit : Thousand Baht) Consolidated 2003 2002 550,000 35,000


Note 6 - Current Investments 6.1 Investments in trading securities (Unit : Thousand Baht) The Company Only 2003 2002 2003 2002 Cost / Cost / Cost / Cost / amortized Fair Value amortized Fair Value amortized Fair Value amortized Fair Value cost cost cost cost Consolidated

Marketable equity securities - domestic Debt securities of private sector Add (less) : Allowance for changes in value Total

48,293

53,117

6,859

5,683

48,267

53,091

2,629

2,623

106,825

106,827

-

-

-

-

-

-

4,826 159,944

159,944

(1,176) 5,683

5,683

4,824 53,091

53,091

(6) 2,623

2,623

6.2 Investments in available-for-sale securities (Unit : Thousand Baht) The Company Only 2003 2002 2003 2002 Cost / Cost / Cost / Cost / amortized Fair Value amortized Fair Value amortized Fair Value amortized Fair Value cost cost cost cost 320,617 322,126 Consolidated

Government securities Debt securities of private sector Marketable equity securities - domestic Add (less) : Allowance for changes in value Total

1,295,232 1,291,754

225,114

226,053

76,126 70,034 1,371,358 1,361,788

8 545,739 548,179

(9,570) 1,361,788 1,361,788

2,440 548,179

548,179

106,861 106,861 (611) 106,250

106,250 106,250

120,000

120,348

120,000 120,348

106,250

348 120,348

120,348

Note 7 - Loans, Receivables and Accrued Interest Receivables - Net 7.1 Classified by nature of business (Unit : Thousand Baht) Consolidated 2003 2002 Finance business loans and receivables Loans Bil receivables Hire purchase receivable Total finance business loans and receivables Less : Unearned income Add : Accrued interest receivable Less : Allowance for doubtful account Allowance for revaluation of debt restructuring Total finance business loans, receivables and accrued interest receivable - net

Finansa Plc. 36

Annual Report 2003

1,121,032 259,474 17,614 1,398,120 (5,096) 21,226 1,414,250 (169,436) (7,169)

153,495 124,429 2,400 280,324 (1,384) 2,505 281,445 (17,178) -

1,237,645

264,267


(Unit : Thousand Baht) Consolidated 2003 2002 Securities business receivable Securities business receivable - cash Securities business receivable - margin loan Securities business receivable - over due Total securities business receivable Add : Accrued interest receivable Total securities business receivable and accrued interest receivable Total loans, receivables and accrued interest receivable - net

1,277,836 558,871 64,847 1,901,554 27 1,901,581 3,139,226

30,834 613 31,447 31,447 295,714

7.2 Classified by maturities - only finance business (Unit : Thousand Baht) Consolidated 2003 2002 359,748 191,866 802,636 72,827 251,866 16,752 1,414,250 281,445

At call* Less than one year Over one year Total loans, receivables and accrued interest receivables

*Including loans with expired agreement. 7.3 Troubled debt restructuring During the year 2003, the subsidiary company - Finansa Credit Limited entered into trouble debt restructuring contracts with the following receivables:

Restructured receivables Total receivables

Consolidated Outstanding loan Number of balance before receivables restructuring Thousand Baht 3 57,432 117 1,417,950

receivables in the said subsidiary As at 31st December, 2003, the balance of restructured st company没s accounts is Baht 53.73 million (as at 31 December, 2002 : None) which are classified as normal and sub-standard receivable of Baht 18.52 million and Baht 35.21 million, respectively. For the year ended 31st December, 2003 the said subsidiary company received principal and interest repayment from the restructured receivable totalling Baht 3.7 million and there was no loss from restructuring. 7.4 On 1st January, 2003, the subsidiary company - Finansa Credit Limited had written back doubtful loss loans and receivables, which allowance for doubtful debts were fully reserved, and written off to bad debts account in accordance with the requirement of the notification th of the Bank of Thailand No. Sor Nor Sor (21) Wor 33/2546 dated 28 February, 2003 as follows :

Finansa Plc. 37

Annual Report 2003


(Unit : Thousand Baht) 149,747 18,486 168,233 (168,233) -

Loans and receivables Add : Accrued interest receivable Less : Allowance for doubtful accounts Net

Note 8 - Allowance for Doubtful Accounts (Unit : Thousand Baht) Consolidated 2003 Specially Sub- Doubtful Doubtful Normal menti oned standard loss Balance - beginning of year 740 10 4 34 1,194 Bad debts written back 168,233 Allowance for revaluation of debt restructuring (3,994) (3,175) Increase (decrease) in allowance for doubtful accounts 6,444 9 3,474 299 (32,932) Balance - end of year 3,190 19 303 333 136,495

General Total reserve 15,196 17,178 168,233 -

(7,169)

13,900 29,096

(8,806) 169,436

(Unit : Thousand Baht) Consolidated 2002 Specially SubDoubtful Normal menti oned standard Doubtful loss Balance - beginning of year 9,736 1 40 599 Increase (decrease) in allowance for doubtful accounts (8,996) 9 (36) (565) 1,194 Balance - end of year 740 10 4 34 1,194

General reserve 6,075

Total 16,451

9,121 15,196

727 17,178

Note 9 - Properties Foreclosed - Net (Unit : Thousand Baht) Consolidated 2003

2002

Beginning End Beginning End Additi o n Disposal Additi o n Disposal of year of year of year of year Properties received from settlement Immo vable assets 92,403 Less : Allowance for impairment (40,449) Properties foreclosed - net 51,954

4,409

(12,211)

4,409

5,711 (34,738) (27,149) (13,300) - (40,449) (6,500) 49,863 66,280 (13,300) (1,026) 51,954

Finansa Plc. 38

84,601

93,429

Annual Report 2003

-

(1,026) 92,403


Note 10 - Transactions with Related Parties The Company has certain transactions with its related parties. A portion of the Company没s assets, liabilities, revenues and expenses arose from transactions with certain related parties. These companies are related through investment, common shareholdings and/or directorships. The effects of these transactions are reflected in the financial statements on the basis determined by the Company and the related parties. 10.1 The Company has transactions and balances with its related parties as follows:

Note Trade accounts receivable - subsidiary company Finansa Fund Management Ltd. Loans, receivables and accrued interest receivable Siam Investment Fund Advance to related parties ADF Management, Ltd. Shareholder and director of subsidiary company Ms. Renee V.I. Wardhana Zecha Less : allowance for doubtful account Total Loans to subsidiary companies Finansa Fund Management Ltd. a) Finansa Securities Limited b) Total Other current assets Accrued dividend income Siam Investment Fund Siam Investment Partner, L.P. Siam Investment Fund II, L.P. Total Accrued interest receivable Finansa Securities Limited Finansa Fund Management Ltd. Total

Consolidated 2003 2002

(Unit : Thousand Baht) The Company Only 2003 2002

-

-

74,569

27,813

116,310

-

-

-

3,333

-

-

-

12,063 (12,063) 3,333

3,497 3,497

-

-

-

-

198,000 50,000 248,000

-

48,994 2,239 716 51,949

-

-

-

-

-

115 64 179

-

(Unit : Thousand Baht)

Finansa Plc. 39

Annual Report 2003


Note Other receivable Finansa Securities Limited Siam Investment Fund Total Investments for using the equity method Subsidiary companies Finansa Securities Limited Finansa Credit Limited Finansa Fund Management Ltd. Finansa (Cambodia) Limited ADF Management, Ltd.

Consolidated 2003 2002

The Company Only 2003 2002

2,224 2,224 54,173

-

3,792 2,224 6,016 6,195

-

24 24

-

819,457 687,121 470,187 79 1,976,844

330,411 520,981 242,920 197 1,094,509

24,371 1,069 25,440 25,464

14,078 550 14,628 14,628

1,976,844

1,094,509

402,402 216,057 198,204 24,950 841,613

95,038 47,646 142,684

-

-

5,800

-

-

-

6,454

-

-

-

24 24

-

116 116

-

-

15,120

-

-

c)

Associated companies Siam Investment Partners, L.P. Finansa Capital Ltd. Total Long-term investments in related companies d) Siam Investment Fund The Vietnam Frontier Fund The Asian Debt Fund, Ltd. Siam Investment Fund II, L.P. Total Current portion of borrowing and deposits Director and employees Amount due to related company Siam Investment Fund Other current liabilities Shareholder payable - subsidiary company Finansa (Cambodia) Limited ADF Management, Ltd. Total Long-term loans from related party Shareholder and director of subsidiary company Ms. Renee V.I. Wardhana Zecha e)

Finansa Plc. 40

Annual Report 2003

222 222


a) On 29th December, 2003, the Company had entered into a loan agreement with the subsidiary company - Finansa Fund Management Ltd. in the amount of USD 5 million which is equivalent to Baht 198 million for the purpose of investment in The Asian Debt Fund, Ltd. The loan repayment wil be made on call with interest rate of 6 month Libor + 2.75% per annum, payable every quarter. b) The Board of Director Meeting No. 7/2003 on 17th August, 2003 of the subsidiary company, Finansa Securities Limited, approved the subsidiary company to increase the credit line from the Company of Baht 150 million to Baht 600 million for the purpose of operating funds. As at 31st December, 2003, the subsidiary company has the outstanding balance of the borrowing from the Company of Baht 50 million, interest-bearing at the rate of 1.50 percent per annum. c) Investments for using the equity method (Unit : Thousand Baht) The Company Only 2003 Percentage Cost of Holding Method %

2002 Equity Percentage Cost Method of Holding Method %

Equity Method

484,709

819,457

100

234,709

330,411

Thailand Shareholder and Co-management 100

414,007

687,121

100

437,231

520,981

Cayman Shareholder and Islands Co-management 100

151,790

470,187

100

151,790

242,920

Finansa (Cambodia) Investment Cambodia Shareholder and Limited Advisory Co-management 100 Total

204 1,050,710

79 1,976,844

100

204 823,934

197 1,094,509

Company没s Name

Type of Business

Country

Subsidiary companies Finansa Securities Limited

Securities Business

Thailand Shareholder and Co-management 100

Finansa Credit Limited

Finance Business

Finansa Fund Investment Management Ltd. Advisory

Relation

(Unit : Thousand Baht) Consolidated Company没s Name

Type of Business

Subsidiary company ADF Management, Investment Ltd. Advisory Associated companies Siam Investment General Partner Partners, L.P. of a Fund Finansa Capital Ltd.

Investment Advisory

Country

Relation

2003 Percentage Cost of Holding Method %

Cayman Shareholder and Islands Co-management

66.67

Cayman Partner and Islands Co-management Cayman Shareholder and Islands Co-management

2002 Equity Percentage Cost Method of Holding Method %

Equity Method

24

24

-

-

-

50

4,150

24,371

50

11,468

14,078

35

14 4,164 4,188

1,069 25,440 25,464

35

15 11,483 11,483

550 14,628 14,628

Total

Finansa Plc. 41

Annual Report 2003


The financial information for recording investments in associated companies by the equity method in the financial statements is as follows :Financial information 2023 2002 Audited by the same auditor which Audited by the same auditor which expressed an unqualified opinion expressed an unqualified opinion Audited by the same auditor which Audited by the same auditor which expressed an unqualified opinion expressed an unqualified opinion

Siam Investment Partners, L.P. Finansa Capital Ltd.

d) Long-term investments in related companies (Unit : Thousand Baht) Consolidated Company没s Name

Type of Business

Country

Fund Fund Fund Fund

Cayman Islands Cayman Islands Cayman Islands Cayman Islands

Siam Investment Fund The Vietnam Frontier Fund The Asian Debt Fund, Ltd. Siam Investment Fund II, L.P. Total

2003 Percentage Cost of Holding % 49.48 402,402 64.79 216,057 22.22 198,204 3.14 24,950 841,613

2002 Percentage Cost of Holding % 21.43 95,038 3.14 47,646 142,684

During the year 2003, the subsidiary company - Finansa Credit Limited entered into two securities purchased under resale agreements with Finansa Fund Management Ltd. (FFM), a related company. Under these agreements, the subsidiary company bought units of Siam Investment Fund and resold at cost. The settlement of the transactions was made by offsetting amount due to each party pursuant to purchase and resale transaction on the closing date, without debt settlement. In addition, the Company has the right to receive dividend income as outlined in the agreement. The details of the two agreements are as follows: of purchased Purchased and Purchase date Resale date No. and resold units resold amount

30th Sep, 03 1st Oct, 03 30th Dec, 03 5th Jan, 04

185,429 208,305 393,734

60,000 100,000 160,000

Dividend income

7,380 8,216 15,596

(Unit : Thousand Baht) Dividend Dividend declaration date payment date

30th Sep, 03 31st Dec, 03

10th Oct, 03 9th Jan, 04

e) Loan from Ms. Renee V.I. Wardhana Zecha represents subordinated loan as at 31st December, 2003 of Baht 30,125,032, equivalent to USD 760,000 (2002 : Baht 15,119,755, equivalent to USD 350,000) which wil be matured on 30th November, 2005 (2002 : matured on 31st July, 2004) and could be accelerated if PT Finansa Indonesia没s Adjusted Net Working Capital (MKBD) meets with BAPEPAM requirement. The loan was subject to interest at the rate of 2% per annum. As at 31st December, 2003 such loan is considered to offset with cash and cash equivalent of PT Finansa Indonesia in preparation of the consolidated financial statements.

Finansa Plc. 42

Annual Report 2003


10.2 Revenue and expense transactions with related parties are as follows: (Unit : Thousand Baht) Consolidated The Company Only 2003 2002 2003 2002 Service income Finansa Fund Management Ltd. 45,000 39,348 Finansa Securities Limited 30,000 10,000 Finansa Credit Limited 15,000 3,000 PT Finansa Indonesia 50 PT Finansa (Indonesia) Holdings Ltd. 50 Finansa (Cambodia) Ltd. 50 Finansa Singapore Pte Ltd. 50 Finansa Capital Ltd. 36,938 47,173 The Vietnam Frontier Fund 35,668 37,224 391 672 Siam Investment Fund 20,752 21,501 Total 93,358 105,898 90,591 53,020 Securities business income Brokerage fees Siam Investment Fund 2,471 1,693 Director 250 62 Total 2,721 1,755 -

Interest and dividend Siam Investment Fund Interest income Finansa Credit Limited Finansa Securities Limited Finansa Fund Management Ltd. Total Dividend income Siam Investment Fund Siam Investment Fund II, L.P. Total Service and administrative expenses Brokerage fee Finansa Securities Limited Interest expenses Finansa Securities Limited

15,596

-

-

-

-

-

1,165 652 64 1,881

265 265

-

-

-

-

-

4,163

-

-

-

18

175,552 8,220 183,772

2,455

The Company entered into services agreements with 7 subsidiary companies to provide services in marketing, human resources,st information system management, accounting and finance etc. All agreements wil be expired on 31 December, 2003. The details of agreements are as follows:(Unit : Thousand Baht) Company没s name Commencing date Annual service fee Finansa Fund Management Ltd. 2ndnd January, 2003 45,000 Finansa Securities Limited 2 January, 2003 30,000 Finansa Credit Limited 2nd stJanuary, 2003 15,000 Finansa (Cambodia) Ltd. 1st August, 2003 50 PT Finansa Indonesia 1st August, 2003 50 PT Finansa (Indonesia) Holdings Ltd. 1st August, 2003 50 Finansa Singapore Pte Ltd. 1 August, 2003 50 Finansa Plc. 43

Annual Report 2003


Note 11 - Other Long - Term Investments - Net 11.1 Available-for-sale securities

Unit trusts Add : Allowance for changes in value Total

(Unit : Thousand Baht) Consolidated 2003 2002 Cost / Cost / amortized cost Market value amortized cost Market value 50,100 50,196 100 100 96 50,196

50,196

100

100

11.2 Held to maturity debt securities (Unit : Thousand Baht) Consolidated 2003 2002 Held to maturity debt securities Corporate bond - senior secured note Government and state enterprises securities Total Less : Debt securities maturing within 1 year Corporate bond - senior secured note Government and state enterprises securities Total debt securities maturing within 1 year Held to maturity debt securities - net

2,040,832 25,455 2,066,287

31,905 31,905

(254,599) (15,097) (269,696) 1,796,591

(5,997) (5,997) 25,908

As at 31st December, 2003, Asian Debt Trading Ltd., the subsidiary company of Finansa Fund Management Ltd. had the outstanding balance of investment in debt security, senior secured note of a company in the amount of USD 51.49 million, converted to Baht 2,040.83 mil ion. Such senior secured note will be due in the year 2011, and repayment will be made twice a year. All of such investment in debt security is pledged to long-term loan as mentioned in Note 17 to the financial statements. 11.3 Other securities (Unit : Thousand Baht) The Company Only 2002 2003 2002

Consolidated Type of Business Ordinary shares PT Bursa Efek Jakarta PT Bursa Efek Surabaya

Country

Stock Exchange Indonesia Company Stock Exchange Indonesia Company

PT Pemeringkat Efek Indonesia (Pefindo) Credit Rating Total ordinary shares Deposit with PT KPEI Clearing fund principal obligatory deposit Clearing fund interest obligatory deposit

Indonesia

Fixed deposits Total fixed deposit Total

Finansa Plc. 44

Annual Report 2003

2003 -

290

-

-

-

653

-

-

-

48 991

-

-

2,923 2,923 2,923

966 2,825 3,791 362 4,153 5,144

423 423 423

362 362 362


Clearing fund principal obligatory deposit relates to obligatory deposits with Bank Mandiri under the joint program of PT Kliring Penjaminan Efek Indonesia, at the rate of 2% from the issued and paid-up capital. Clearing fund interest obligatory deposit relates to interest income from clearing fund principal obligatory deposits. Interest income of the above deposits for the year ended 31st December, 2002, amounted to Baht 0.42 million (USD 0.01 million). As at 31st December, 2003, fixed deposit of the Company of Baht 0.42 million (2002 : Baht 0.36 mil ion) and of the subsidiary company, Finansa Securities Limited, of Baht 2.5 million have been pledged to secure against bank guarantees.

Note 12 - Plant and Equipment - Net Office Furniture Equipment and Fixture

(Unit : Thousand Baht) Consolidated Office Work Vehicles Building in Progress Total

Cost : As at 1st January, 2003 48,158 28,186 10,248 Purchase 30,861 2,567 1,945 Transfer in (out) 5,055 (1,559) Disposal (133) (4,572) Written-off (5,939) (1,747) st As at 31 December, 2003 78,002 27,447 7,621 Accumulated depreciation : 16,837 11,459 7,681 As at 1st January, 2003 Depreciation for the year 10,672 4,380 1,350 Depreciation - Disposal (29) (4,023) Depreciation - Written-off (4,845) (1,656) st As at 31 December, 2003 22,635 14,183 5,008 Net book value As at 31st December, 2003 55,367 13,264 2,613 st As at 31 December, 2002 31,321 16,727 2,567 Depreciation in the earnings statements for the years ended 31st December, 2003 31st December, 2002

39,719 93,511 1,624 134,854

47,965 (5,120) 42,845

126,311 176,849 (4,705) (7,686) 290,769

298 2,944 3,242

-

36,275 19,346 (4,052) (6,501) 45,068

131,612 39,421

42,845 -

245,701 90,036 19,346 10,290

As at 31st December, 2003, the gross carrying amount of the fully depreciated equipment that is stil in use is Baht 10.91 million (2002 : Baht 15 million) in the consolidated financial statements.

Finansa Plc. 45

Annual Report 2003


Office Furniture Equipment and Fixture

(Unit : Thousand Baht) The Company Only Office Work Vehicles Building in Progress Total

Cost : st As at 1 January, 2003 31,561 17,425 6,815 39,719 95,520 Purchase 30,566 2,409 1,945 93,511 47,965 176,396 Transfer in (out) 5,120 (1,624) 1,624 (5,120) Disposal (116) (4,572) (4,688) As at 31st December, 2003 67,131 18,210 4,188 134,854 42,845 267,228 Accumulated depreciation : 6,385 4,322 5,713 298 16,718 As at 1st January, 2003 Depreciation for the year 9,176 3,082 821 2,944 16,023 Depreciation - Disposal (29) (4,023) (4,052) st As at 31 December, 2003 15,532 7,404 2,511 3,242 28,689 Net book valst ue As at 31 December, 2003 51,599 10,806 1,677 131,612 42,845 238,539 st As at 31 December, 2002 25,176 13,103 1,102 39,421 78,802 Deprecist ation in the earnings statements for the years ended 31 December, 2003 16,023 31st December, 2002 5,820 During the year 2003, the Company entered into a purchase / sale agreement to acquire 4 condominium units (2002 : 2 condominium units) for office use at the price of Baht 93.50 million (2002 : Baht 37.11 million) in order to conform with conditions in the BOI promotional privileges. The Company has already registered and transferred the ownership of condominium units. As at 31st December, 2003, the gross carrying amount of the fully depreciated equipment that is still in use is Baht 4.37 million (2002 : Baht 4.81 million) in the separate financial statements.

Note 13 - Goodwill - Net (Unit : Thousand Baht) Consolidated Finansa Securities Finansa Fund PT Finansa Finansa Credit Total Limited Management Ltd. Indonesia Limited 234,709 108,000 18,387 287,231 648,327

Cost Book value as at ordinary share purchase date (49,021) (44,879) (5,589) (114,007) Goodwil 185,688 63,121 12,798 173,224 Accumulated goodwil amortization As at 1st January, 2003 27,701 1,984 991 2,165 Goodwil amortization during the year 9,285 3,157 613 8,661 st As at 31 December, 2003 36,986 5,141 1,604 10,826 Write-off goodwil 11,194 Goodwil - net As at 31st December, 2003 148,702 57,980 162,398 st As at 31 December, 2002 157,987 61,137 11,807 171,059 Goodwi l amortization and written off in the earnings statements for the year ended 31stst December, 2003 31 December, 2002 Finansa Plc. 46

Annual Report 2003

(213,496) 434,831 32,841 21,716 54,557 11,194 369,080 401,990 32,910 14,074


Book value of subsidiary companies as at ordinary share purchase date is approximate fair value of identified assets and liabilities as of purchase date. Majority of assets are monetary assets. Therefore goodwil is the difference between book value as of purchase date and purchase price.

Note 14 - Deferred Income Tax Assets Consolidated 2003 Tax Tax expense payable Net earnings for the year from activities under the non-promotional privileges 997,259 Timing difference - expenditure Add : Share of gain from for using the equity method Profit of subsidiary companies Goodwill amortization Allowance for changes in value of investments Allowance for doubtful account Allowance for changes in value of fixed assets Permanent difference - expenditure 1,957 Net earnings for tax calculation 999,216 Corporate income tax (270,936) Less : Profit of subsidiary companies 135,985 (134,951) Deferred corporate income tax assets Goodwill amortization (5,275) Allowance for changes in value of investments 1,559 Allowance for doubtful account (256) Allowance for changes in value of fixed assets 52 Total 138,871 Tax benefit from net taxable loss Corporate income tax paid in mid year Withholding income tax Corporate income tax payable

2002 Tax Tax expense payable

(Unit : Thousand Baht) The Company Only 2003 2002 Tax Tax Tax Tax expense payable expense payable

997,259

230,067

230,067

573,019

573,019

201,689

201,689

(543,940) 21,102

-

(192,700) 13,434

-

(543,940) 21,101

-

(192,700) 13,434

(6,003)

-

404

-

(4,830)

-

6

856

-

-

-

-

-

-

(238) 1,957 470,993 (138,871)

(4,691) 225,376 (58,036)

(4,691) 46,514 (13,341)

507 573,526 (143,381)

507 45,857 (11,464)

(10,157) 191,532 (47,883)

(10,157) 12,272 (3,068)

(138,871)

48,175 (9,861)

(13,341)

135,985 (7,396)

(11,464)

48,175 292

(3,068)

-

(3,359)

-

(5,275)

-

(3,359)

-

-

(121)

-

1,207

-

(1)

-

-

-

-

-

-

-

-

(138,871) 20,462

(13,341)

(13,341) 2,627

(11,464)

(11,464) -

(3,068)

(3,068) -

3,911 7,969 (106,529)

Finansa Plc. 47

4,096 3,717 (2,901)

Annual Report 2003

3,911 136 (7,417)

581 (2,487)


Consolidated 2003 2002 Statement of earnings Corporate income tax benefit (Corporate income tax) (134,951) Record tax benefit from Accumulated goodwil amortization - brought forward Allowance for changes in value of investments - brought forward 231 Depreciation 203 Allowance for changes in value of fixed assets 302 Tax benefit from taxable loss Less : Taxable loss over 5 year (11,268) Over record corporate income tax pervious year (605) Corporate income tax benefit (Corporate income tax) for the year (146,088)

Balance sheet Deferred corporate income tax assets arising from Timing difference Accumulated goodwil amortization Tax benefit from taxable loss Allowance for changes in value of investments Allowance for doubtful account Depreciation Total

(Unit : Thousand Baht) The Company Only 2003 2002

(9,861)

(7,396)

292

4,604

-

4,604

(238) 95,511 (34,209) 16

(605)

-

55,823

(8,001)

4,896

Consolidated 2003 2002

(Unit : Thousand Baht) The Company Only 2003 2002

13,238 27,246

7,963 58,674

13,238 -

7,963 -

(1,206) 256 39,534

121 98 66,856

(1,206) 12,032

1 7,964

The Company does not recognize different income tax liabilities from subsidiary companies没 profits because the Company has determined that the profits of the 4 subsidiary companies will not be distributed within 2005. The Company computed corporate income tax pursuant to the Royal Decree basis No. 387 which reduces the rate of corporate income tax from 30% to 25% of net profit for the five consecutive accounting periods commencing from the initial accounting period after the date the Company没s securities list in the Stock Exchange of Thailand in accordance with the law of Securities and Security Market. Rate of corporate income tax 2003 2002 % % 25 30 30 30

The Company The subsidiary companies

Finansa Plc. 48

Annual Report 2003


Note 15 - Short-term Loans from Financial Institutions Consolidated 2003 2002 380,000 330,118 710,118 -

Loans from open fund Loans from bank Total

(Unit : Thousand Baht) The Company Only 2003 2002 380,000 380,000 -

As at 31st December, 2003, the Company has outstanding balance of short term loans from two open funds by issuing bills of exchange maturity within 6 months in the amount of Baht 190 mil ion and 190 mil ion which interest rate is 3% per annum for supporting the business expansion in the future. As at 31st December, 2003, the subsidiary company - Finansa Fund Management Ltd. had outstanding balance of short-term loans from a foreign bank for investment in Siam Investment Fund amounting to USD 7.07 mil ion converted to Baht 280.12 million. The loan repayment will be made on call with interest charged at the rate outlined in the agreement. The subsidiary company - Finansa Securities Limited had borrowings from a local bank by issuing a promissory note at call amounting to Baht 50 million which interest rate is 1.50% per annum.

Notes 16 - Borrowings and Deposits - Net (Unit : Thousand Baht) Consolidated 2003 2002 2,963,697 732,433 (2,733,702) (575,467) 229,995 156,966

Borrowing and deposits - promissory note Current portion of borrowing and deposits Borrowing and deposits - net

Note 17 - Long-term Loan - Net

Long-term loan Current portion of long-term loan Long-term loan - net

Consolidated 2003 2002 2,486,091 (349,423) 2,136,668 -

(Unit : Thousand Baht) The Company Only 2003 2002 500,000 (50,000) 450,000 -

On 4th December, 2003, the Company was granted a credit line of Baht 500 mil ion by a commercial bank for the following purposes : a) To invest in its subsidiaries (in which the Company either directly or indirectly holds shares not less than 50%) involving in financing and/or securities business in the amount not exceeding Baht 300 mil ion. b) To acquire additional premises for the purpose of being a part of its office in the amount not exceeding Baht 150 million. c) To pay for general business purposes of the Borrower as working capital in the amount not exceeding Baht 50 million.

Finansa Plc. 49

Annual Report 2003


As at 31st December, 2003 the Company has drawn down such loan in full amount. The loan was subject to interest at the rate of 2.75% + fixed deposit rate per annum. The interest shall be monthly payment and the conditions of loan repayment are as follows: (Unit : Million Baht) Installment Repayment Date Amount 1 Within 12 months after the first utilization date 50 2 Within 18 months after the first utilization date 100 3 Within 24 months after the first utilization date 350 500 The said loan were secured by the Companyรปs condominiums and the subsidiary companyรปs units trust. In the year 2003, Asian Debt Trading Ltd., was granted a credit line of USD 80 mil ion by a commercial bank for the purpose of investment in debt security of a company. As at 31st December, 2003, Asian Debt Trading Ltd. had outstanding balance of such loan in the amount of USD 50.11 million, equivalent to Baht 1,986.09 million. The loan repayment and interest bearing are made in accordance with the terms and conditions outlined in the loan agreement. The loans are secured by investment in debt security of the aforementioned company in Note 11 to the financial statements.

Note 18 - Debentures The Extra Ordinary Shareholdersรป Meeting of the Company No. 1/2003 on 19th August, 2003 had resolution to approve the issuance and offering of the secured and/or unsecured and/or any types debentures with trustee and/or without trustee at a tenor of not more than 10 years in the amount of up to Baht 2,000 million to offer at once or divided into series of allotments of debentures to the public and/or specific investors and/or institutional investors as referred to in the notification of the Securities and Exchange Commission of which terms and conditions including details of this matter shall be considered by the Board of Directors or by the person who is assigned by the Board of Directors. As at 31st December, 2003, the Company has not yet issued such debentures.

Note 19 - Share Capital The Extra Ordinary Shareholdersรป Meeting No. 1/2003 on 19th August, 2003 had resolution to increase the Companyรปs registered share capital from Baht 500 million (100 million ordinary shares of Baht 5 each) to Baht 1,100 million (220 million ordinary shares of Baht 5 each). The Company registered the increased share capital with the Ministry of Commerce on 22nd August, 2003. The Company has allotted ordinary shares as follows: 1. The allotment of 10 mil ion newly issued ordinary shares were sold to 2 specific investors namely Morgan Stanley & Co. International Limited and Credit Suisse Singapore, 5 mil ion ordinary shares per each investor, at the offering price of Baht 33 per share on 25th August, 2003. The above specific investors wil be entitled to receive the allotment of warrants to purchase ordinary shares of the Company in this time. 2. The allotment of 110 million newly issued ordinary shares are reserved for the exercise of the warrants at the ratio of 1 ordinary share to 1 unit of warrant. Finansa Plc. 50

Annual Report 2003


Note 20 - Premium on Ordinary Shares (Unit : Thousand Baht) Consolidated and the Company Only 2003 2002 36 million ordinary shares - sale value of Baht 25 each in the year 2002 10 million ordinary shares - sale value of Baht 33 each in the year 2003 Less : 46 million ordinary shares (2002 : 36 million ordinary shares) - par value of Baht 5 each Less : Expenses for listing and IPO for the year 2002 Premium on ordinary shares

900,000

900,000

330,000

-

(230,000) 1,000,000 (34,136) 965,864

(180,000) 720,000 (34,136) 685,864

Expenses for listing represent financial advisory fees paid for assisting on the Initial Public Offering and listing the Company没s shares on the Stock Exchange of Thailand. The balance will be charged to paid-in capital in excess of par when receiving paid-in capital.

Note 21 - Legal Reserve Legal reserve represents the reserve which the Company appropriated under the provisions of the Public Limited Companies Act B.E. 2535, which requires the Company to appropriate at least 5% of its net income after deduction of the deficit brought forward (if any) as reserve fund until the reserve reaches 10% of the authorized share capital. This reserve is not available for dividend distribution.

Note 22 - Warrants The Extraordinary Shareholder没s Meeting No. 1/2003 on 19th August, 2003 had resolution to approve the issuance and offering of warrant to purchase ordinary shares of the Company to shareholders which can be summarized as follows: Category of warrants Type Maturity of warrants Number Offering method Offering price Exercise ratio Exercise price Exercise date

: Warrants to purchase ordinary shares of Finansa Public Company Limited No. 1 (FNS-W1). : Transferable warrant certificate with specified name of shareholders. : 3 years from the issue date. : 110 million units. : To be offered to existing shareholders of the Company whose name listed in the Company没s shares register as of 4th September, 2003 at the ratio of 1 existing share to 1 unit of warrant. : Baht 0 per unit. : 1 unit of warrant will be entitled to the purchase of 1 new ordinary share. : Baht 25 per share. : Every month on the last business day of each month and for the last exercise date, on the date of warrants matures 3 years.

Number of ordinary shares reserved for the exercise of warrant : 110 million shares. Secondary market : The warrants listed on the Stock Exchange of Thailand on 29th October, 2003. As at 31st December, 2003, no such warrants have been exercised. Finansa Plc. 51

Annual Report 2003


Note 23 - Financial Information by Segment Operational information is classified by type of business and type of geographic area of the Company and the subsidiary company in consolidated financial statements. (Unit : Thousand Baht) 2003 Financial Finance Eliminations and Investment Securities Total Business Business Advisory Income 1,396,809 715,675 164,209 (764,119) 1,512,574 Expenses (333,402) (377,502) (97,145) 144,780 (663,269) Interest expenses (127,165) 85 (127,080) Corporate income tax (8,120) (106,539) (31,429) (146,088) Minority interests 4 2,485 2,489 Net earnings for the year 928,122 231,638 35,635 (616,769) 578,626 Plant and equipment - net 239,147 5,345 1,209 245,701 (Unit : Thousand Baht)

Income Expenses Interest expenses Corporate income tax benefit (corporate income tax) Minority interests Loss before purchase of shares Net earnings for the year Plant and equipment - net

Financial and Investment Advisory 487,315 (168,740) (3,233)

Securities Business 130,694 (121,197) -

4,896 320,238 79,305

(7,748) 6 1,755 9,162

2003 Finance Eliminations Business 114,462 (233,332) (110,992) 52,755 2,721 58,675 62,145 1,569

2,345 18,775 (156,736) -

Total 499,139 (348,174) (512) 55,823 2,351 18,775 227,402 90,036

Note 24 - Changes in Foreign Exchange Rates and Hedges The Company had foreign currency assets not covered by hedging contracts in the separate financial statements as follows: (Unit : Thousand USD) 2003 2002 Assets Trade accounts receivable USD 549 549 Trade accounts receivable - subsidiary company USD 324 324 Loan to subsidiary company USD 5,000 -

Finansa Plc. 52

Annual Report 2003


Exchange rate adopted for the conversion of foreign currency assets is as follows:

Assets 1 USD

2003

(Unit : Baht) 2002

39.5385

42.9993

Note 25 - Promotional Privileges By virtue of the provisions of the Board of Investment Promotion Act B.E. 2520, and the promotion certificate No. 1394(2)/2545 dated 25th June, 2002, the Company was granted certain promotional privileges for its investment in its regional headquarters. The significant privileges which the Company was granted are as follows. - Corporate income tax exemption for profits derived from the BOI promoted activities in an amount not exceeding the sum invested (excluding the value of land and working capital) for a period of 5 years, starting from the date of having income from the promoted activities. The Company provide such services in the fourth quarter of the year 2002. The tax exemption period would therefore cover until the year 2007. - In case the Company incurs a loss during the tax exemption period, it is permitted to carry forward such loss to offset against future taxable profit for a period of 5 years after the tax exemption period. It may either deduct such loss against the profit of any one or more fiscal years. - Dividend received from the BOI promoted activities is exempted from income tax calculation during the tax exemption period above. - It is permitted to remit or repatriate foreign currency abroad. As a promoted business, the Company must strictly comply with the conditions provided for in the promotional certificate. Total service income of the Company was composed of: (Unit : Thousand Baht) The Company Only Domestic Sales under the promotional privileges 45,000 Sales under the non-promotional privileges 45,000

2003 Overseas 45,200

Total 90,200

Domestic 13,000

391 45,591

391 90,591

16,100 29,100

2002 Overseas Total 13,000 26,000 49,358 62,358

65,458 91,458

(Unit : Thousand Baht) The Company Only 2003 2002 Corporate income tax from the net profit under the non promotional privileges and non-tax exempted for the year

11,464

Finansa Plc. 53

Annual Report 2003

3,068


Note 26 - Disclosure of Financial Instruments 26.1 Off-balance sheet financial instruments The Company and subsidiary companies may utilise financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of their customers and to reduce their own exposure to fluctuations in foreign exchange rates and interest rates. These financial instruments may include commitments to extend credit, financial guarantees and forward foreign exchange contracts. These financial instruments are related to credit risk and foreign currency exchange risk at different levels. The contract or notional amounts of these financial instruments reflect the extent the Company and subsidiary companies may be involved in particular classes of financial instruments. Currently, the Company and subsidiary companies have not speculated in or engaged in the trading of any derivative financial instruments stated earlier. As at 31st December, 2003, the Company and subsidiary companies have no aval to bill. 26.2 Accounting policies Details of significant accounting policies and methods adopted, including criteria for recognition of revenues and expenses related to financial assets and financial liabilities are disclosed in Note 3 to the financial statements. 26.3 Credit risk Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a financial loss to the Company and subsidiary companies. In the case of recognized financial assets, the carrying amount presented in the assets of balance sheet, net of allowance for doubtful accounts represents maximum exposure to credit risk. Credit risk also arises from the possibility that a counterparty to off-balance sheet financial instru ments may not adhere to the terms of contract with the Company and subsidiary companies when settlement becomes due. In this regard, the Company and subsidiary companies strictly adheres to risk management guidelines as approved by the Company and subsidiary company. This includes engagement for transactions only with approved counterparties. 26.4 Interest rate risk Interest rate risk is the potential change in the value of financial assets, financial liabilities or net interest income as a result of market interest rate fluctuation. Interest rate risk is managed by matching term pricing to ensure that the desired profit margin is achieved and without exposure to market volatility as well as interest rate swap agreement. Most of the financial assets and financial liabilities of the Company and subsidiary companies are subject to fluctuations in interest rates in the market. Interest on loans and receivables is mainly based on floating rates. Loans and receivables summarized under fixed and floating interest rate classifications as follows: (Unit : Thousand Baht) Consolidated 2003 2002 Loans and receivables with fixed interest rate 15,088 52,825 Loans and receivables with floating interest rate 1,377,936 226,115 Total loans and receivables 1,393,024 278,940 The average balances of significant performing financial assets and financial liabilities including the average interest and dividend for the year ended 31st December, 2003 are summarized as follows: Finansa Plc. 54

Annual Report 2003


(Unit : Thousand Baht) Consolidated 2003 2002 Average Interest Average Average Interest Outstanding income rate Outstanding income balances balances % Significant performing financial assets Cash and deposits at financial institutions 331,343 Securities purchased under resale agreements 405,500 Investments in securities, net 1,516,646 Loans and receivables 673,359 Total 2,926,848 Significant financial liabilities Borrowings, deposits and bil s of exchange 2,441,933

Average rate %

3,188

0.96

20,123

265

1.32

5,743 68,574 19,646 97,151

1.42 4.52 2.92 3.32

22,500 312,313 770,664 1,125,600

1,409 5,022 76,883 83,579

6.26 1.61 9.98

40,787

1.67

1,036,780

37,414

3.61

During the year 2003, the subsidiary company - Finansa Credit Limited has entered into interest rate swap agreements with a commercial bank to reduce interest rate risk of investment in government and debt securities with fixed interest rate. These interest rate swap agreements entitle the said subsidiary company to receive / pay interest at float rate on notional amounts and oblige the said subsidiary company to pay / receive interest at fixed rate on the same amounts. The type of interest rate swap is based on the trend of interest rate expectation in the market. Under the interest rate swaps, the said subsidiary company agrees with a bank to exchange, at specified intervals, the difference between floating rate and fixed rate interest amounts calculated by reference to the agreed notional amounts. As at 31st December, 2003, the notional principal amount of an outstanding interest rate swap agreement is Baht 500 million. Regarding this agreement, the said subsidiary company is entitled to receive interest at floating rate which is linked to Thai Baht Swap Offer Rate and obliged to pay interest at fixed rate which is 4.05% per annum. This interest rate swap contract guaranteed by the parent company will be matured in December, 2008. The net fair value of the interest rate swap was (Unit : Thousand Baht) 2003 Unfavorable interest rate swap contract 752 The fair value of interest rate swap has been calculated using the rate quoted by the banker to terminate the contract at the balance sheet date. Gain from interest rate swap is made up as follows:

Gain from unwinding interest rate swap agreements Interest income Interest expense Total

Finansa Plc. 55

Annual Report 2003

(Unit : Thousand Baht) 2003 13,984 1,175 (1,962) 13,197


26.5 Liquidity risk The Company and subsidiary companies endeavor to match terms of assets and liabilities to mitigate liquidity risk. Gap management guidelines are also available from the Company and subsidiary companies没 treasury. Significant assets and liabilities analyzed by relevant maturity groupings are as follows: (Unit : Thousand Baht) Consolidated

Significant assets Cash and deposits at financial institutions Loan to financial institution - net Securities purchased under resale agreements Investment in securities - net Loans, receivables and accrued interest receivables - net Total financial assets Significant liabilities Borrowings and deposits

On demand

2003 Within 1 year

2002 Over 1 year

Over 1 year

Total

On demand

Within 1 year

61,668 -

-

-

61,668 -

59,400 16,880

-

-

59,400 16,880

220,034

550,000 1,106,862

550,000 432,874 1,759,770

-

35,000 105,895

453,738

35,000 559,633

188,044 469,746

799,864 2,456,726

249,737 1,237,645 191,866 682,611 3,609,083 268,146

72,828 213,723

16,752 470,490

281,446 952,359

163,295

2,662,172

229,995 3,055,462 121,146

535,893

75,897

732,936

Total

26.6 Foreign exchange risk As at 31st December, 2003 and 2002, the Company and its subsidiary companies had no significant financial instruments in foreign currencies. 26.7 Fair value Fair value represents the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm没s length transaction. The Company and its subsidiary companies have estimated the fair value of financial instruments as follows: Cash, deposits at financial institutions and loans to financial institutions The estimated fair value of cash, deposits at financial institutions, loans to related company which its remaining maturities are less than 90 days, loans to financial institutions, call and term loans to related company are based on the amount recognized in the balance sheets. Investments The fair value of investments in securities is estimated as the book value in accordance with the basis on the investment valuation. The fair value of accounts with securities companies and creditors没 accounts of securities business are estimated as in balance sheets due to short-term maturity. As at 31st December, 2003 and 2002, the Company and subsidiary companies had no material difference between the book value of financial instruments and theirs fair value.

Finansa Plc. 56

Annual Report 2003


Note 27 - Provident Fund The Company, together with subsidiary company and a related company, and its employees have jointly established a provident fund under the Provident Fund Act (B.E. 2530). The fund is contributed to both by the employees equivalent to 5% of their basic salaries and the Company also makes contribution to the fund at the same amount and is managed by TISCO Asset Management Company Limited. The fund will be paid to the employees upon termination in accordance with the rules of the fund. Consolidated 2003 2002 3,872 2,279

Contribution to the fund

(Unit : Thousand Baht) The Company Only 2003 2002 1,085 720

Note 28 - Commitments 28.1 The Company and its subsidiary companies have long-term lease commitments in respect of office space, with associated utilities and facilities payable, for the year from the balance sheet date as follows :

Consolidated 2546 2545 10,236 10,380 1,025 6,593 11,261 16,973

Within one year Over one year Total

(Unit : Thousand Baht) The Company Only 2546 2545 1,587 1,195 1,587 1,195

On 4th November, 2003, the Company entered into agreement to purchase additional 4 units of condominium for office building with a company at the price of Baht 107.82 mil ion. The Company has paid a deposit of Baht 10.78 million on the agreement date which was included in other current assets. The transfer of ownership will be made upon the conditions outlined in the agreement. 28.2 In the year 2004, the Company has entered into public relations consulting service agreement for public relations strategy and programme for 1 year starting from January, 2004. The monthly consulting service fee payment is Baht 100,000.

Note 29 - Bank Guarantees Consolidated 2003 2002 Bank guarantees on behalf of the Company and its Subsidiary companies

Finansa Plc. 57

2,923

361

Annual Report 2003

(Unit : Thousand Baht) The Company Only 2003 2002 423

361


Note 30 - Credit Facilities The subsidiary companies have been granted various bank facilities as follows: (Unit : Million Baht) Consolidated 2003 2002 Derivative Product 500 Clearing cheque facilities 260 30 Call loans 180 Banks overdrafts 90 40 Forward contracts 10 10 Total 1,040 80 Credit facilities of the subsidiary company - Finansa Credit Limited which is composed of Derivative Product, Call Loan and Bank overdraft amounting to Baht 500 million, 100 million and 20 mil ion, respectively are guaranteed by the Company.

Note 31 - Earnings Per Share The Company has determined profits of 4 subsidiary companies will not be distributed within 2005, so earnings per share is calculated by net earnings for the year before profit of subsidiary companies as follow: (Unit : Million Baht) The Company Only 2003 2002 Net earnings for the year 578,626 227,402 Less : Profit of subsidiary companies (522,839) (179,265) Net earnings for the year before profit of subsidiary companies 55,787 48,137 Earnings per share Net earnings for the year before profit of subsidiary companies 0.54 0.90

Note 32 - Subsequent Events The Board of Directors Meeting No. 2/2004 on 1st February, 2004 of the Company has resolved as follows : 1. Approved the disposal of 9.02 million shares (99.97% of the registered and paid-up capital) in Finansa Credit Limited to Bangkok First Investment & Trust Plc. (BFIT) at total price of Baht 687.12 mil ion subject to the approval of the Company没s shareholders meeting, the Ministry of Finance, the Bank of Thailand and other parties concerned. This transaction is not a connected transaction but this transaction is categorized as Category-2 transaction under the Notification of the Stock Exchange of Thailand, Re : Criteria, Procedures and Disclosure on Acquisition or Disposal of the Assets of Listed Companies.

Finansa Plc. 58

Annual Report 2003


2. Approved the purchase of 99.90 million newly issued ordinary shares (49.97% of the registered and paid-up capital) in Bangkok First Investment & Trust Plc. (BFIT) at 12.78 Baht per share, a total price of Baht 1,276.72 mil ion subject to the approval of the Companyรปs shareholders meeting, the Ministry of Finance, the Bank of Thailand and other parties concerned. This transaction is not a connected transaction but this transaction is categorized as Category-2 transaction under the Notification of the Stock Exchange of Thailand, Re : Criteria, Procedures and Disclosure on Acquisition or Disposal of the Assets of Listed Companies. 3. Approved the request of a white wash waiver in order not make a tender offer for the securities of Bangkok First Investment & Trust Plc. (BFIT) to the Office of the Securities and Exchange Commission (SEC) subject to the resolution of the shareholders meeting with the votes of not less than three-fourths of the total shares of the shareholders attending the meeting and having the rights to vote under the Notification of the Office of the Securities and Exchange Commission No. Sor Gor 4/2538 Re : Rules, Conditions and Procedures in seeking waiver of a tender offer of securities resolution of meeting of shareholders dated 15th March, 1995. 4. Approved the increase of registered capital of the Company from Baht 1,100 million to up to Baht 1,500 mil ion by issuing up to 80 million newly issued ordinary shares at the par value of Baht 5 each totalling up to Baht 400 million and approved the allotment of up to 80 mil ion newly issued ordinary shares at once or divided into series of allotments of the newly issued ordinary shares to specific investor(s) (not more than 35 persons in 12 months as referred to in the notification of the Securities and Exchange Commission) at the offering price of Baht 42 per share. The terms and conditions including details of this matter shall be considered by the Board of Directors or by Mr. Vorasit Pokachaiyapat, the Managing Director. 5. Following the notification dated 30th January, 2004 by the Bank of Thailand (BOT) regarding the application for the full-service bank, Finansa Public Company Limited declared its intention to have its wholly owned subsidiary, Finansa Credit Limited, merge with Bangkok First Investment & Trust PLC (BFIT). BFIT would then serve as the core unit to submit such application to the BOT. There will be the formal decision from the BOT regarding the change in BFIT major shareholder after the Companyรปs application is submitted to the BOT. However the Company could on its own be eligible to apply for a banking license if BFIT is not deemed eligible to serve as the core unit. In addition, the merger transaction which has been already approved by the Board of Director Meeting of Finansa Public Company Limited has not yet been approved by the Companyรปs shareholders, the Ministry of Finance and the BOT.

Note 33 - Reclassification Certain accounts in the financial statements for the year 2002 have been reclassified to conform to the current year classification with no effect on previously reported net earnings or shareholdersรป equity.

Note 34 - Approval of Financial Statements These financial statements have been approved by the Companyรปs Board of Directors.

Finansa Plc. 59

Annual Report 2003


Table of Contents Index of Abbreviations Overview of Business Operations Subsidiaries and Associated Companies Revenue Structure of the Company and its Affiliates Management Report Related Party Transactions for 2003 Board of Investment Privileges Capital Structure Management Structure Biographies of Directors and Management Scope of Duties of the Board of Directors Scope of Duties of the Audit Committee Scope of Duties of the Executive Committee Selection of Directors and Executives The Principles of Good Corporate Governance of 2003 Administration of Insider Information Internal Controls Risk Factors General Information Other References

Finansa Plc. 60

Annual Report 2003

61 62 66 67 68 71 76 77 77 79 83 84 84 85 86 92 92 93 96 97


Index of Abbreviations çADFé çADTé çCompanyé or çFNSé çFAMé çFCé çFCAMé çFCLé çFFMé çFIAé çFinansa Groupé çFINDOé çFINDO-Hé çFSé çFSLé ��SECé çSETé çSIFé çSIF IIé çSIPé çTADFé çVFFé

means means means means means means means means means means means means means means means means means means means means means

Finansa Plc. 61

ADF Management Limited Asian Debt Trading Limited Finansa Public Company Limited PT Finansa Asset Management Finansa Credit Limited Finansa (Cambodia) Limited Finansa Capital Limited Finansa Fund Management Limited Finansa Investment Advisors Limited The Company, its affiliates and subsidiaries PT Finansa Indonesia PT Finansa (Indonesia) Holdings Limited Finansa Singapore Pte. Ltd. Finansa Securities Limited Office of the Securities and Exchange Commission The Stock Exchange of Thailand Siam Investment Fund Siam Investment Fund II, L.P. Siam Investment Partners, L.P. The Asian Debt Fund The Vietnam Frontier Fund

Annual Report 2003


Overview of Business Operations Finansa Plc. and its subsidiaries conduct a comprehensive range of businesses providing financial, investment management and advisory services in Thailand and other countries in Southeast Asia. As the parent company, the Company provides support to its affiliates and subsidiaries in many respects including organizational administration, business and market planning, management and development of information technology and human resources, as well as research into investment opportunities and analysis of economic conditions. Such business activities of the Company, as regional headquarters of the group, are exempt from income taxes as per privileges granted by the Board of Investment. The activities of the Finansa Group can be divided into the following four main areas:

Investment Advisory and Management Providing services to Finansa-sponsored foreign funds engaged in direct investments and private equity investments in Thailand and the region.

Investment Banking. Providing financial advisory services including fund raising, business and debt restructuring, business alliance negotiations, business acquisitions, and project financing. Currently, these type of operations is carried out in Thailand and Indonesia.

Securities Providing securities related services such as brokerage, underwriting and trading. Currently, these areas of operation are carried out in Thailand and Indonesia.

Finance Providing services in the raising of debt financing for business expansion or restructuring. This business area is aimed at supporting and creating additional strengths in the group没s range of businesses. The following table summarizes the overall business operations of the Finansa Group: Business Group Investment Advisory & Management Investment Banking Securities Finance

Local Operations

Overseas Operations

FNS FSL FSL FC

FFM*, FCL*, ADF* FINDO, ADT, FS FINDO -

* Providing services to VFF, SIF I, SIF II and TADF

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Annual Report 2003


The Finansa Group consists of 13 companies and 2 representative offices (in Hanoi and Ho Chi Minh City in Vietnam). The 11 companies comprise 10 operating companies and 3 non-operating companies. As the regional headquarters of the group, the Company determines management and investment policies and support, controls, supervises and advises companies in the group in relation to business planning and management. The aim is to create overall coherence for the group没s various operations in investment advisory and management, securities, investment banking and finance. Following the group没s restructuring and the purchase of the finance company, the Finansa Group now consists of the following affiliates and subsidiaries:

ORGANIZATION CHART Finansa Public Company Limited (Thailand) 100%

99.99%

100%

Asian Debt Trading Ltd. (Cayman)

35%

Siam Investment Partners, L.P. (Cayman)

99.97%

Finansa Fund Management Ltd. (Cayman)

Finansa Securities Limited (Thailand)

35%

100%

Finansa Capital Ltd. (Cayman)

PT Finansa (Indonesia Holdings Ltd. (Mauritius)

100%

85%

PT Finansa Indonesia (Indonesia) 99%

PT Finansa Asset Management (Indonesia)

Finansa Plc. 63

Finansa (Cambodia) Ltd.

Finansa Credit Limited (Thailand)

Annual Report 2003

100%

Finansa Singapore Pte. Ltd. (Singapore)

66.67%

ADF Management Ltd. (Cayman)


The following shows the subsidiaries of the Company, divided into operating companies and non-operating companies

Companies Operating in Thailand (1) FSL has securities license no. (2) 476/2536 issued by the Ministry of Finance to conduct all types of securities business, namely: (1) acting as securities broker, (2) securities trading, (3) acting as investment advisor, and (4) securities offering and underwriting. In addition, FSL is a financial advisory company authorized by the SEC. It is Broker No. 33 with a paid-up capital, as of 31 December 2003, of Baht 450 million. ■ (2) FC, formerly Primus Finance Company Limited, was purchased on 1 October 2002 from Ford Credit International Inc. FC provides credit support for clients of the investment banking business. FC had paid up capital of Baht 451 mil ion, as of 31 December 2003. ■

Companies Operating Overseas (1) FFM, is a company incorporated in the Cayman Islands with paid-up capital of US$20,000. Shareholdersû equity as of 31 December 2003 was 11,245,199. It operates the business of investment and fund management for Finansa-sponsored foreign funds that wish to invest in Thailand and other countries in Southeast Asia. ■ (2) FCL is a special purpose limited liability company established to manage the investments of the SIF II Fund. It is incorporated in the Cayman Islands with paid-up capital of US$ 1,000 as of 31 December 2003. Other shareholders consist of Capital Z Investment, L.P., a US$3 billion fund of funds which holds 50% of FCLûs shares, ABN AMRO Capital Investment Asia Limited, a company in the ABN AMRO Group, which holds 15% of FCLûs shares and FFM, a subsidiary of the Company, which holds the remaining 35% of the shares. ■

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Annual Report 2003


(3) FINDO is a company incorporated in Indonesia with paid-up capital of 28.0 billion Rupiah or approximately US$2,917,022 as of 31 December 2003 of which 85% of the shares of the company are held by FFM. Its business activities include finance and securities businesses similar to those of FSL in Thailand. ■ (4) SIP is a special purpose vehicle established solely to manage the investments of the SIF II Fund. It is a limited partnership incorporated in the Cayman Islands with a capital contribution of US$1,229,677 as of 31 December 2003. Capital Z Investment, L.P. holds 50% of the total interest in the limited partnership, ABN AMRO Investment Asia Limited holds 15% and FFM holds the remaining 35% of the total interest as general partner of SIF II. ■ (5) FS is a company incorporated in Singapore with paid-up capital of US$ 143,554 as of 31 December 2003. FFM holds 100% of the total shares of the company. It operates in the business of distressed debt trading in the region. ■ (6) ADT is a company incorporated in the Cayman Islands on 8 April 2003 with the objective to support the debt trading business in Asian countries. FFM holds 100% of the total shares of the company. As of 31 December 2003 the company had a total registered capital of US$50,000 with a paid-up capital of US$ 1. ■ (7) ADF Management, Ltd. is a company incorporated in the Cayman Islands on 30 December 2003. ADF is a fund manager of TADF, of which FFM holds 66.67% of the total shares. As of 31 December 2003 the company had a total registered capital ofUS$900, however, this has not yet been paid up. ■

Non-Operating Companies (1) FINDO-H is a company incorporated in Mauritius, with a registered capital of US$100,000 and paid-up capital of US$10,000, as of 31 December 2003, with FFM as the sole shareholder of the company. The business of the company involves acquiring and holding shares in other companies. ■ (2) FCAM is a company incorporated in Cambodia with the objective to analyze and manage investments in Cambodia. As of 31 December 2003, the paid-up capital is 20 million Riel, or approximately US$8,000, with FNS holding 100% of the shares in the company. ■ (3) FAM is a company incorporated in Indonesia, with a registered and paid up capital of 20 million Rupiah, or approximately US$2,237 as of 31 December 2003. FINDO holds 99% of the total registered capital. ■

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Annual Report 2003


Subsidiaries and Associated Companies Company 1. Finansa Securities Ltd. 8th Floor, TISCO Tower, 48/14-15 North Sathorn Road, Bangkok 10500 Tel: 0-2697 3800 Fax: 0-2638 0301 2. Finansa Fund Management Ltd. P.O. Box 309 Ugland House, Grand Cayman, Cayman Islands, British West Indies 3. Finansa Credit Ltd. 8th Floor, TISCO Tower, 48/14-15 North Sathorn Road, Bangkok 10500 Tel: 0-2697 3900 Fax: 0-2697 3999 4. Finansa Cambodia Ltd. House No.13, Street 306, Phnom Penh, Kingdom of Cambodia 5. Asian Debt Trading Ltd. PO Box 309, Ugland House, Grand Cayman, Cayman Islands, British West Indies 6. ADF Management Ltd. PO Box 309, Ugland House, Grand Cayman, Cayman Islands, British West Indies 7. Finansa Capital Ltd. PO Box 309, Ugland House, Grand Cayman, Cayman Islands, British West Indies 8. Finansa Singapore Pte. Ltd. #07-02 Commerce Point, 3 Phil ip Street Singapore 048693

Type of Business

Type of Shares

Securities

Ordinary

Percentage of share holding 45 million shares 99.99%

Offshore fund investment advisor

Ordinary

20,000 shares

100%

Finance

Ordinary

9,020,000 shares

99.99%

Investment advisory business

Ordinary

100 shares

100%

Investment Banking

Ordinary

1 share

100%

Financial Advisory and Investment Management

Ordinary

7.5 million shares

66.67%

Financial Advisory and Investment Management

Ordinary

1,000 shares

35%

Investment Banking

Ordinary

250 shares

100%

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Annual Report 2003

No.of shares issued


Revenue Structure

of the Company and its Affiliates Type of Revenue

Operated by

% of shares held by the Company

Year 2003 Revenue

%

Financial Advisory And Investment Management

FNS / FFM

100

93.36

6.17

Investment Banking

FSL

99.99

250.83

16.58

Securities Business

FSL

99.99

453.46

29.98

Finance Business

FC

99.97

166.20

10.99

Revenue on investments

-

-

497.82

32.91

Other

-

-

50.90

3.37

Total Revenue

-

-

1,512.57

100

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Annual Report 2003


Management Report As a group, operations for the year ended 31 December 2003 resulted in a net profit of Baht 579 million or earnings per share of Baht 5.59. Net profit increased by Baht 352 million, an increase of 155%. The increase in net profit resulted mainly from: ■

1. Revenues of Finansa Securities Limited (FSL) increased by Baht 578 million due to branch expansion and increases in brokerage fees and investment banking fees. Two new branches were opened in Suravong and Hadyai, while. Increases in both total securities market turnover and an increase in the market share of FSL resulted in additional brokerage fees of Baht 422 million. Advisory fees also increased by Baht 150 million as FSL was actively involved in many large investment banking transactions. Operating expenses increased by Baht 236 mil ion. As a result, net profit of FSL increased by Baht 342 million. 2. Revenues of Finansa Fund Management Co. (FFM) increased by Baht 356 million due to an increase in interest income, dividends, and the share of profit from subsidiaries. However, service fees declined by Baht 63 mil ion as there was a large one off advisory transaction in the previous year. Operating expenses increased by Baht 60 mil ion while interest expense increased by Baht 122 million. Goodwill amortization also increased by Baht 11 mil ion. As a result, FFMûs net profit increased by Baht 163 million 3. Revenues of Finansa Credit Ltd. (FC) increased by Baht 52 million. Operating expenses declined by Baht 33 mil ion resulting in an increase in net profit of Baht 85 mil ion. The loan portfolio expanded by Baht 2,600 mil ion from last year while provision for bad debts declined as the company had already made sufficient provisions in 2002. The overall quality of the loan portfolio was high. 4. Total revenues of FNS increased by Baht 28 million. This reflected an increase in income and gains from investments together with a decline in service income. As FNS is the supporting center for its subsidiaries, operating expenses increased by Baht 52 million, which was higher than the increase in total revenues. A significant increase in operating expenses came mainly from personnel expenses and premises expenses together with an increase in goodwil amortization of Baht 12 million. 5. Corporate income tax was Baht 146 million in 2003, an increase of Bath 202 million from last year. This was as a result of the company applying TAS 56 çIncome Taxesé treatment resulting in a tax credit of Baht 56 mil ion in the previous year.

Profitability Ratios In 2003, net profit to total revenues of the group was 38.3% which was lower than that of last year when the ratio was 45.6%. This was due mainly to an increase in corporate income tax. However, the pre-tax profitability of the group was at 47.7% which was significantly higher than last year when the ratio was 30.1%. In addition, return on equity was 29.5% which was better than the 26.4 % of last year.

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Annual Report 2003


Financial Position Total assets increased 3.4 times from Baht 2,404 million in 2002 to Baht 10,614 million in 2003 due mainly to a rapid expansion of FNS没 subsidiaries. Current assets increased by Baht 5,586 million to Baht 7,234 million or 68% of total assets. Current assets are mainly comprised of; - Loans, receivables and accrued interest receivables of Baht 3,139 million increased by 9.6 times or Baht 2,843 mil ion as a result of the finance and securities business expansion. - Current investments of Baht 1,791 mil ion increased by 2.2 times or Baht 1,231 million due to an increase in short-term investment in corporate debentures. - Cash and cash equivalents of Bath 1,372 million and securities purchases under resale agreements of Baht 550 mil ion together increased by 2.3 times or Baht 1,336 million to support the increasing business volume. Non-current assets increased by Baht 2,642 million to Baht 3,380 milllion or 32% of total assets. Non-current assets are mainly comprised of; - Held to maturity securities which increased by Baht 1,818 mil ion to Baht 1,850 mil ion due to investments in debt securities by FFM - Long-term investment in related companies which increased by Baht 699 million to Baht 842 million as a result of investments by the company.

Liquidity The current and quick ratios of the group as of 31 December 2003 declined from last year. Ratios were 1.23 and 1.18 respectively, which compared to 2.44 and 2.27 a year earlier. This was due to the impact of additional debt financing, short-term deposits and securities business payables. As liquidity ratios have declined, management has placed strong emphasis on risk and liquidity management. FSL, which is a subsidiary of FNS, has to maintain its liquidity ratio in accordance with SEC regulations. As of 31 December 2003, FSL没s liquidity ratio was satisfactory. The net capital rule (NCR) percentage was 44%; This is significantly higher than the minimum 7% requirement set by the SEC. Under Bank of Thailand regulations, FC has to maintain its capital adequacy ratio at, at least, 8% of total assets. In addition, Tier 1 capital has to be more than 4% of total assets. As of 31 December 2003, the capital adequacy ratio of FC was 16%.

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Annual Report 2003


Sources of Funds Liabilities As of 31 December 2003, the total liabilities of the group were Baht 8,242 million, an increase of Baht 7,394 mil ion, or 8.7 times from last year. Current liabilities were Baht 5,875 million representing 76% of total liabilities while the remaining 29% were non-current liabilities of Baht 2,367 million. Current liabilities increased by Baht 5,199. Of these, 62% or Baht 3,218 million were an increase in short-term borrowings, current portion of deposits from the public and the current portion of long-term loans. The remaining 32% or Baht 1,652 mil ion was an increase in securities business payables and accounts transactions with securities companies. Non-current liabilities of the group increased by Baht 2,195 million due mainly to an increase in long-term investment by FFM.

Shareholdersรป Equity At the end of 2003, shareholdersรป equity was Baht 2,372 million, an increase of Baht 816 million or 52%, from last year. This was due mainly to an increase in retained earnings of Baht 529 million. In addition, there was additional paid-up capital of Baht 330 mil ion from a private placement of 10 million shares in 2003. As a result, the book value at the year end was Baht 21.60 per share compared to Baht 15.60 per share last year.

Capital Structure As of 31 December 2003, the Finansa group had a liabilities to capital ratio of 3.37 times comparing to the ratio of 0.54 times a year earlier. This was as a result of a rapid expansion of both FSL and FC in 2003. As businesses expanded, deposits from public with FC increased and the securities business payables of FSL increased. Nevertheless, both FC and FSL have maintained their capital adequacy ratios above the level required by regulations.

Potential Negative Impacts on Future Operation and Financial Position As the Finansa groupรปs main businesses concentrate on finance and investment, the groupรปs future depends heavily on the economic and political stability of Thailand, which in turn has a very strong impact on investorsรป confidence. In addition, in 2004, the Bank of Thailand and the Ministry of Finance have announced the Financial Sector Master Plan. This plan wil have a major impact on the overall financial industry as well as on Finansa Credit. Nevertheless, as the Finansa group has revenues in foreign currencies from offshore investments and activities, these wil help mitigate local negative factors. In addition, there will be an impact on capital from the warrant conversion. This is expected to occur gradually over time as warrants can be converted into shares on a monthly basis. Finansa wil be able to use the proceeds from warrant conversion to fund its growth.

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Annual Report 2003


Related Party Transactions for 2003 The related transactions occurring in 2003 as shown in the audited financial statements for the interval of 12-month are as follows: â&#x2013; 

1. Loans and Outstanding Items Description/Names of Related Parties (Relationship)

Nature of Transactions and Reasons

(1) Loans, receivables and Purchasing of investments accrued interest in SET receivable - Siam Investment Fund (2) Advance to related party Advance to ADF - The Asian Debt Fund Ltd. (3) Dividend Receivable - Siam Investment Fund - Siam Investment Partners L.P. - Siam Investment Fund II

Dividend and distribution income from investments

(4) Advance from related party A foreign Bank wrongly - Siam Investment Fund (SIF) transferred money From Siam Investment Fund to FFM account

(5) Shareholder payable - ADF Management Ltd.

Unpaid Capital for investment in ADF Management Ltd.

Finansa Plc. 71

Conditions T+3

Outstanding as of 31 December 2003 (Baht/mil ion) 116.31

FFM advanced pre-operating expenses for establishment of the Fund Siam Investment Fund announced a dividend payable on 9th January 2004. Siam Investment II L.P. and Siam Investment Partners, L.P. announced distribution of income on 12th January, 2004. SIF and FFM opened accounts with the same foreign bank. The bank wrongly transfered money to FFM. This amount, FFM has already transferred back to SIF. FFM invested in a 66.67% stake in ADF Management Ltd. established in November 2003 as a manager of TADF

Annual Report 2003

3.33

48.99 2.24 0.71

6.45

0.024


2. Investment in Subsidiaries Investment Value

Pricing pursuant to equity method (Baht/mil ion)

FNS holds 99% of the total capital in FSL as it wishes to conduct the securities business.

484.71

819.46

(2) Investment in subsidiaries/FFM FNS holds 100% of the total capital of FFM as it wishes to conduct offshore fund investment advisor business.

151.79

470.19

(3) Investment in subsidiaries/FC

FNS holds 99.97% of the total capital of FC as it wishes to conduct finance business.

587.23

687.12

(4) Investment in subsidiaries/ FCAM

FNS holds 100% of the total capital of FCAM as it wishes to conduct investment advisor business in Cambodia.

0.20

0.79

(5) Investment in subsidiaries/ ADF Management Ltd.

FFM holds 66.67% of the total capital of ADFM as it wishes to manage the ADF Fund

0.024

0.024

Description/Names of Investee Companies

Nature of Transactions and Reasons

(1) Investment in subsidiaries/FSL

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Annual Report 2003


3. Investment in Associates Description/Names of Investee Companies

Nature of Transactions and Reasons

Investment Value

Pricing pursuant to equity method (Baht/mil ion)

(1) Investment in associates/FCL

FFM holds 35% of the total capital in FCL pursuant to the management structure of SIF II Fund

0.014

1.07

(2) Investment in associates/SIP

FFM holds 50% of the total capital in SIP and has 35% of the total interest in the limited partnership pursuant to the management structure of SIF II.

4.15

24.37

Investment Value

Pricing pursuant to equity method (Baht/mil ion)

24.95

-

216.06

-

402.40

-

198.20

-

4. Other Investments Description/Names of Investee Companies

Nature of Transactions and Reasons

(1) Long-term investment / SIF II

FFM invested in a 3.14% interest in SIF II as part of a diversified long term investment strategy. FFM has a 64.79% stake in VFF as part of a diversified long term investment strategy. FFM has a 41.15% stake in SIF as part of diversified long term investment strategy. FFM has a 66.67% stake in ADF as part of diversified long term investment strategy

(2) Long-term investment / VFF

(3) Long-term investment / SIF

(4) Long-term investment / The Asian Debt Fund Ltd.

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Annual Report 2003


5. Revenues and Expenses Pricing pursuant to equity method (Baht/mil ion)

Description/Names of Investee Companies

Nature of Transactions and Reasons

Investment Value

(1) Service income / FCL FCL is investment manager of SIF II.

FFM received service fees from FCL.

Pursuant to the terms of the services agreement.

36.94

(2) Service income / VFF

FFM has received a management fee from VFF.

Pursuant to the terms of the services agreement.

35.67

(3) Service income / SIF

FFM has received a management fee from SIF.

Pursuant to the terms of the services agreement.

20.75

(4) Brokerage fee/SIF (related company)

FSL has received brokerage fees from SIF I for trading transactions.

Brokerage fee of 0.25%.

2.47

(5) Dividend / Distribution Income - SIF - SIF II

FFM received dividend / distribution income for the year 2003.

Pursuant to the year operation.

Finansa Plc. 74

Annual Report 2003

175.55 8.22


Related Transaction Policy for 2003 ■

The related party transactions are transactions that occurred in the ordinary course of business.

Necessity and reasonability of the related transactions The related party transactions are necessary and reasonably conducted in the best interest of the Company, The board of directors and audit committee of the Company were of the opinion that: ■

1. transactions between the Company and its wholly owned subsidiaries (more than 99% holding) were done in the ordinary course of business and at armûs length prices. 2. transactions between the Company, its subsidiaries (less than 99% holding) and its related parties were done in the ordinary course of business and at armûs length prices.

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Annual Report 2003


Board of Investment Privileges The Company has been granted privileges from the Board of Investment effective 1 May 2002. The investment promotion certificate No. 1394 (2)/2002 was received on 25 June 2002 in relation to the promotional activity of type 7.9: Regional Headquarters. The Company is the first finance and investment company in Thailand that has received such promotional privileges. These privileges, and associated conditions, are summarized below.

Important Privileges ●

Exemption from corporate income taxes on the net revenue from promoted operations up to the total of invested funds (excluding investments for land and working capital) for a period of 5 years from the commencement of earnings from the businesses under promotional privilege. The Company began such services within the 4th quarter of 2002, resulting in tax exemption being effective until 2007. Exemption from taxes imposed on dividends received from investments granted investment promotion to be included as part of the income tax throughout the exemption period of the corporate income tax. Permission to take out or remit foreign currencies out of Thailand.

Important Conditions Revenues from services provided to branches or subsidiaries onshore and offshore will be exempted from tax. At least half of the annual revenues must come from overseas. Thai nationals must hold not less than 51% of the total shares. The regional headquarters activity must have its branches or subsidiaries situated in not less than 5 countries. There must also be a training and development center for human resources. The annual operating expenses must not be lower than Baht 50 million. The promotional activity must invest at least Baht 40 million in real estate within 2 years from the issuance date of the investment promotion certificate The promotional activity must proceed to obtain an ISO 9000 certificate within 2 years from the commencement date of its operations, otherwise the exemption from corporate income tax will be revoked for a period of 1 year. Note: Tax exemption is only for the revenue from providing support to affiliates and subsidiaries in the areas of organizational administration, business and market planning, research in investment opportunities and analysis of the economy for investment, management and development in informational technology, human resources development and training, as well as providing advice and suggestions for various business operations. ●

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Annual Report 2003


Capital Structure As of 16 March 2004, the registered and paid up capital of the Company wae Baht 1,500 million, divided into 300 mil ion ordinary shares with a par value of Baht 5 per share; paid up capital was Baht 600,050,000.

Shareholders The list of major shareholders as of 15 March 2004 is as follows: Name 1. Morgan Stanley & Co. International Limited 2. Ms. Prapaipis Praditvekin 3. Mr. Vorasit Pokachaiyapat 4. Credit Suisse Singapore 5. Nationwide Life Assurance Co., Ltd. 6. M.L.Sudhiman Pokachaiyapat 7. Mr. Eugene S. Davis 8. The Viriyah Insurance Co., Ltd. 9. Natural Park Plc. 10. Credit Agricole Indosuez Luxembourg

Total

Number of shares

% of paid-up capital

27,762,300

23.13

7,450,000 6,880,000 6,632,000 5,000,000

6.21 5.73 5.53 4.17

4,500,000 4,400,000 4,375,700 4,000,000 2,275,000

3.75 3.67 3.65 3.33 1.90

73,275,000

61.07

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Annual Report 2003


Management Structure Directorship Structure The three bodies of committees are: i) the board of directors, ii) the executive committee, and iii) the audit committee with the following details: ■

Board of Directors ■

As of 15 March 2004, the board of directors consisted of the following 7 members: 1. Mr. Eugene S. Davis Chairman 2. Mr. Vorasit Pokachaiyapat Managing Director 3. Mr. Varah Sucharitakul Director 4. Mr. Kenneth Lee White Director 5. Mr. Vitthya Vejjajiva Director and Chairman of the Audit Committee 6. Mrs. Kannika Ngamsopee Director and Member of the Audit Committee 7. Mr. Weerawong Chittmitrapap Director and Member of the Audit Committee (Resigned on 1 February 2004) 8. Mr. Chanmanu Sumawong Director and Member of the Audit Committee (Appointed on 1 February 2004)

Executive Committee ■

As of 15 March 2004, the executive committee consisted of the following 4 members: 1. Mr. Eugene S. Davis Chairman 2. Mr. Vorasit Pokachaiyapat Managing Director 3. Mr. Varah Sucharitakul Executive Director 4. Mr. Kenneth Lee White Executive Director

Audit Committee ■

As of 15 March 2004, the Audit Committee consisted of the following 3 members: 1. Mr. Vitthya Vejjajiva Audit Committee Chairman 2. Mrs. Kannika Ngamsopee Director and Audit Committee 3. Mr. Weerawong Chittmitrapap Director and Audit Committee (Resigned on 1 February 2004) 4. Mr. Chanmanu Sumawong Director and Audit Committee (Appointed on 1 February 2004)

As of 15 March 2004, the management team consisted of the following 8 executives: 1. Mr. Eugene S. Davis Chairman and Executive Director 2. Mr. Vorasit Pokachaiyapat Managing Director 3. Mr. Varah Sucharitkul Executive Director 4. Mr. Kenneth Lee White Executive Director 5. Mrs. Pornnipa Hachaiyaphum Group Finance and Accounting Manager 6. Mr. Teerath Pratumsuwan Vice President of Direct Investment Department 7. Ms Rachanee Mahatdetkul Vice President of Direct Investment Department 8. Ms. Keiko Sebata Vice President of Direct Investment Department

Management Team of Finansa Plc.

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Annual Report 2003


of Directors Biographies and Management Name Mr. Eugene S. Davis Chairman and Executive Director

Education MBA in Finance and International Business, New York University, USA B.A. International Relations/French, University of Virginia, Charlottesville Va., USA M.S. Computer Information Systems, Bentley College, Waltham, Massachusetts, USA B.S. Managerial Economics and Industrial Management, Carnegie-Mellon University, Pittsburgh, Pennsylvania, USA Training Program: Directors Certification Program organized by the Thai Institute of Directors (IOD) Master of Business Administration, University of New Hampshire, USA B.Eng. (Mechanical Engineering), Chulalongkorn University, Bangkok L.L.C Training Program: Directors Certification Program organized by the Thai Institute of Directors (IOD) ●

Mr. Vorasit Pokachaiyapat Managing Director and Executive Director

● ●

● ●

Experience Finansa Plc. (present) Chase Manhattan (Thailand) Ltd. (1989 - 1991) The First Boston Corp., Tokyo, Japan (1984 - 1989) Lehman Brothers Kuhn Loeb, Inc., New York, USA (1981 - 1984) Finansa Plc. (present) Finansa Securities Ltd. (2002 - present) Chase Manhattan (Thailand) Ltd. (1990 - 1991) Thai Investment and Securities Public Co., Ltd. (1988 - 1990)

Mr. Varah Sucharitakul Executive Director

● ●

Finansa Plc. 79

Finansa Securities Ltd. (2001 - present) Finansa Plc. (2001 - present) The Cogeneration Plc. (1998 - 2000) Sithe Pacific Development (1997 - 2000) Finance One Plc. (1994 - 1997) Chase Manhattan Bank, Thailand (1990 - 1994)

Annual Report 2003


Name Mr. Kenneth Lee White Exceutive Director

Education MBA in International Business University of Puget Sound Tacoma, Washington, USA B.A. in International Business, Netherlands School of Business, Breukelen, The Netherlands Training Program: Directors Certification Program organized by the Thai Institute of Directors (IOD) Harvard Law School, Harvard University (LL.M.) Gonvil e and Caius College, Cambridge (M.A., LL.B.) Barrister-at-Law, Grayûs Inn ●

● ● ●

Experience Finansa Credit Ltd. (present) Finansa Plc. (2001- present) Pacific Siam Strategic Consulting Co., Ltd. (1992 - 2001) The Chase Manhattan Bank (1986 - 1992)

Mr. Vitthya Vejjajiva Director and Chairman of the Audit Comnittee

● ●

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Annual Report 2003

TA Plc. (present) Present positions: Chairman of the following:- Thailand - US Educational Foundation (Fulbright) - PLAN Foster Parents (Thailand) Foundation - Thailand Chapter of the Centre for Security Co-operaton in Asia and the Pacific (CSCAP) Permanent Secretary of Foreign Affairs, Ministry of Foreign Affairs (1991 - 1992) Ambassador to the United States (1988) Ambassador to Belgium and European Community (1984)


Name Mrs. Kannika Ngamsopee Director and Audit Comnittee

Education Master of Management, Sasin Graduate Institute of Business Administration, Chulalongkorn University B.B.A (Accounting) Thammasat University M.S. (Accounting) Thammasat University LL.B (Law) Thammasat University Training Program: Directors Certification Program organized by the Thai Institute of Directors (IOD) LLB. Bachelor of Law, Chulalongkorn University LL.M. University of Pennsylvania Thai Barrister-At-Law and first Thai lawyer admitted to the New York State Bar ●

● ●

Mr. Weerawong Chittmittrapap Director and Audit Comnittee (Resigned on 1 February 2004)

● ●

Mr. Chanmanu Sumawong Director and Audit Comnittee (Appointed on 1 February 2004)

LL.M., George Washington University M.C.L., American Practice, George Washington University LL.B., 2nd Class Honors, Thammasat University

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Experience Siam Commercial Bank Plc. (2001 - present) The Cogeneration Plc. (1999 - 2000) Sithe Pacific Development LLC. (1998 - 2000) Finance One Plc. (1995 - 1997) Peregrine & Nithi Finance and Securities Co., Ltd. (1994 - 1995) Bangkok Transit System Corp., Ltd. (1993 - 1994) Chase Manhattan Bank, N.A. (1982 - 1992) White & Case (Thailand) Ltd. (1993 - present) ITV Plc. (2001 - present) Berli Jucker Plc. (present) BT Securities Ltd. (present)

Hunton & Williams (Thailand) Ltd. (1998 - present) International Legal Counsellors Thailand Ltd. (1989 - 1997) Judge, Ministry of Justice, Thailand (1982 - 1989)

Annual Report 2003


Name Ms. Prapaipis Praditvekin Chief Operating Officer (Resigned on 1 March 2004)

Education B.A. in Accounting Thammasat University

● ●

Mrs. Pornnipa Hachaiyaphum Group Finance Accounting Manager (Appointed on 1 March 2004) Mr. Teerath Pratumsuwan Vice President of Direct Investment Department

Ms. Rachanee Mahatdetkul Vice President of Direct Investment Department

Mrs. Keiko Sebata Vice President of Direct Investment Department

Ms. in Finance, Chulalongkorn University BBA Accounting, Thammasat University Master Degree in Business Administration (Finance), The City University of New York (Baruch College) B.A. in accounting, Chulalongkorn University MBA, Santa Clara University, USA B.A. in Business Administration, Assumption University, Bangkok BSc. in Business Administration, Sophia University, Japan

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● ● ●

● ●

● ●

● ●

Experience Finansa Plc. (1993 - present) TNT Express Worldwide (Thailand) Co., Ltd. (1992 - 1993) Deloitte & Touche, Atlanta, USA (1990 - 1992) Finansa Plc. (March 2004 - present) Finansa Credit Ltd. (2002 - 2004) IFCT (1988 - 2002) Finansa Plc. (1995 - present) Siam Cement Plc. (1988 - 1992; 1994 - 1995)

Finansa Plc. (1994 - present) American Appraisal (Thailand) Co., Ltd. (1993 - 1994)

Finansa Plc. (1993 - present) James Capel Pacific, Tokyo, Japan (1987 - 1993)


cope of Duties of S the Board of Directors The Board of Directors has the responsibility of managing the Company in compliance with relevant laws, the business objectives, the Articles of Association and the resolutions of shareholdersĂť meetings. The responsibilities also include the formulation of policies and operating directions, financial management, risk management, and providing guidance and supervision to the management to operate efficiently and effectively and in accordance with the relevant policies. The interests of the shareholders will be taken into account in managing the Company. The Board of Directors also has the power to appoint a certain number of directors to be members of the executive committee to perform one or several tasks. â&#x2013;  The Board of Directors has empowered the directors authorized to sign for and bind the Company to independently conduct various matters. However, the matters set forth below require a prior resolution from the meeting of the shareholders. In the case that there is a conflict of interest with the Company or subsidiaries, the directors involved shall not have voting rights on such conflicting matters: (a) when resolution of the meeting of shareholders is required by law; and (b) matters in which directors may have an interest and a resolution of the meeting of shareholders is required by law or by the regulations of the Stock Exchange of Thailand. The matters specified below require a resolution of the Board of Directors and of the meeting of shareholders passed by a vote of not less than three-fourths of the total number of shareholders present at the meeting and entitled to vote; (a) the sale or transfer of whole or important parts of a business of the Company to other persons; (b) the purchase or acceptance of transfer of businesses of other companies or private companies to the Company; (c) the making, amending or canceling of contracts relating to the leasing out of the business of the Company, whole or certain important parts, the assignment to any other persons to manage the business of the Company or the amalgamation of the business with other persons with an objective towards profit and loss sharing; (d) the amendment of the Memorandum of Association or the Articles of Association of the Company; (e) the increase or decrease in registered capital of the Company; (f) the merger or liquidation of the Company; and (g) other matters specified by law. â&#x2013; 

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cope of Duties of S the Audit Committee The audit committee has the following duties and responsibilities which are in accordance with the rules and regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand. The audit committee shall report directly to the Board of Directors. (a) to ensure that the Company maintains accurate and sufficient financial statements; (b) to ensure that there is sufficient and efficient internal control and internal audit; (c) to ensure that the Company performs in accordance with the securities and exchange laws, regulations of the Stock Exchange of Thailand, and laws concerning the business of the Company; (d) to consider, select, and appoint the auditor and fix its remuneration; (e) to consider the disclosure of information of the Company for matters that may constitute a connected transaction or have any conflict of interest to be full and accurate; (f) to prepare the report of the Audit Committee to be disclosed in the annual report of the Company which shall be signed by the Chairman of the Audit Committee. â&#x2013; 

cope of Duties of S the Executive Committee â&#x2013; 

The executive committee has the following powers and responsibilities: (a) to consider and approve any loan or credit application in the ordinary course of business of the Company, e.g., expenses for investments or for any activity with a value not exceeding Baht 500 million or in an equivalent amount or in an amount authorized by the Board of Directors; (b) to establish organizational, management, and executive committee structures, which include all the details of the recruitment, training, employment and termination of the employees in the Company whose position is not higher than the managing director; (c) to appoint or remove any officers of the Company; (d) to prepare, recommend, and prescribe business policies and strategies to the Board of Directors for consideration and approval; (e) to formulate business plans, prescribe management authority, approve annual expenditure budgets and conduct the business pursuant to the business plan and strategy which are to be in line with the policies and directions approved by the Board of Directors; and (f) to perform any other duties as, from time to time, assigned by the Board of Directors.

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Selection of Directors and Executives At present, the Company is in the process of setting up a nominating committee; therefore, the selection of the persons who are to hold the positions of directors of the Company is not yet undertaken through the procedures of a nominating committee. However, the Board of Directors does select the directors of the Company in accordance with the qualifications specified in Section 68 of the Public Company Act, B.E. 2535 and in related notifications of the SEC. In addition, experience, knowledge and ability are also taken into consideration. The selected candidates wil then be nominated in a shareholdersû meeting for appointment. As of 31 December 2003, from the total number of 7 directors, the Company had 2 directors from the group of major shareholders, namely Mr. Eugene S.Davis and Mr. Vorasit Pokachaiyapat. ■

The election of the members of the Board of Directors are made at shareholdersû meetings pursuant to the following procedures: ■

Each shareholder may cast all of his/her votes to select one or more candidates, but the number of votes given to each candidate cannot be greater nor lesser than the number of votes given to the other (s). ■

The persons receiving the highest successive number of votes will be elected as directors until the permissible number of directors in the particular election is reached. In the case of an equal number of votes given to more than one candidate, which causes the number of directors to be greater than the permissible number, the chairman shall cast the deciding vote. ■

Remuneration of Executives Cash Remuneration Item Directors (as directors) Directors and Executives (as executives)

Persons 7 8

Amount (mil ion baht) 2.25 10.33

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Type of Remuneration Directorsû fees Wages and bonuses


The Principles of Good Corporate Governance of 2003 1. Policy on Corporate Governance The board of directors of the Company has emphasized good corporate governance in the belief that such governance will increase the companyûs capability and sustain confidence in the company among the shareholders, investors and other related parties Thus, after being transformed from a limited company into a public limited company, the Company has conducted its business using good corporate governance seriously and constantly. It started with making the executives and employees understand about the code of business conduct and operation in compliance with the rules and regulations of the Company and the authorities while assuring transparency and inspectability. The shareholders and stakeholders have been treated fairly by organizing a business code of conduct, operational manuals, rules and regulations to protect properties and rights of customers as well as procees and procedures for customersû complaints. Besides, the board of directors has also focused on internal audit and control by setting up an internal audit unit under the supervision of the audit committee to comply with the rules and regulations of the Stock Exchange of Thailand. The unit is for the purpose of considering and reviewing the Companyûs financial statements, examining and evaluating the Companyûs risk exposure as well as supervising the operations of other departments to assure they are following the rules and regulations of relevant authorities and the Company.

2. Shareholders: Rights and Equitable Treatment The Company has stipulated that the shareholdersû meetings follow the generally acceptable standard of arrangement of public companyûs shareholdersû meeting and public company law to ensure an equal treatment among participating shareholders. Shareholdersû meetings will not involve difficult or complicated procedures that could lessen the attendance of shareholders. In addition, the Company helps shareholders who intend to assign their rights to others by preparing a form of proxy as required by law and enclosing it in the invitation letter. The invitation letter, which details the agenda and information accompanying the agenda, is sent to shareholders at least 7 days prior to the meeting. Opinions of the directors will be provided for each agenda item. The minutes of meetings wil be prepared for shareholdersû review as well.

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3. Rights of Various Groups of Stakeholders The Company realizes the importance of protection of rights of stakeholders, which include shareholders, customers and employees, following the requirement of law and business code of conduct. Shareholders: every shareholder has an equal right to vote except for shareholders who have conflicts of interest in which they will have the right to vote only for the election of directors, but not on that particular matter. Customers: with the Companyûs code of conduct, the processing and procedure of customersû complaints are clearly and fairly stated, and responsible persons who deal with this regard have been assigned. Employees: the Company treats all employees with care and fairness and provides reasonable remuneration including welfare required by labor law. ●

4. Shareholdersû Meetings The Company has the policy to hold shareholdersû meetings within the timing required by law. That is to hold a general shareholdersû meeting within 4 months after the end of the fiscal year. In addition, the Company has also stated the policy for all of the directors to attend every shareholdersû meeting to answer questions at the meetings. The chairman of the meeting wil allocate time appropriate for each agenda item and encourage equal opportunities for shareholders to express their opinions and raise any questions at the meeting, according to the agenda and the issues presented to the meeting.

5. Leadership and Vision ●

At the strategic level of the company, the board of directors has taken part in developing the vision, the mission, the strategy, the business plan and the budget of the company in cooperation with the executives. Furthermore, the boards of director wil control the executives to follow the business plan, the strategy, and to target efficiently. The board of directors has assigned the audit committee, which consists of 3 qualified independent directors in accordance with the rules of the Stock Exchange of Thailand, to supervise the internal audit of the Company. The board of directors has assigned working teams for each operational function and supervises information disclosure. For example, with regard to the investment management business, the groupûs investment committee has been designated to assure the investments of the Company and its affiliates comply with the Companyûs policies.

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6. Conflicts of Interest The Company tries to avoid any transactions which would cause any conflict of interest. On the other hand, in case any activities do involve conflicts of interest, the Company has the policy to review and disclose relevant information to the public via the stock market. In addition, should any directors have conflicts of interest, the conflicted directors have to disclose relevant information to the meeting and do not have the right to vote on that particular matter. Transactions that may cause conflicts of interest The board of directors has stated its policy relating to transactions that may cause conflicts of interest and connected transactions. All such transactions have been informed and prudently considered to evaluate the reasonableness of entering into such transactions. The regulations of the Stock Exchange of Thailand have also been followed. The details of transactions, transaction value, related parties, reason and necessity are disclosed in form 56-1 and the annual report. Supervisory procedure against inside information exploitation - The Company reports to the Office of Securities and Exchange Commission on each personûs securities holding and the holding of securities by his or her spouse and minor children of securities in the Company, including changes in such holdings, pursuant to Section 59 of Securities and Exchange Act B.E. 2535. - The Company has the policy to prohibit the directors and executives from using inside information relating to financial and operational performance of the Company, which has not yet been disclosed to public, for their personal benefits. ●

7. Business Ethics The board of directors has prepared a code of business conduct and operational manual and disseminated these to the executives and employees of the Company and its affiliates. This is to ensure the accuracy, transparency and fairness of business conduct to related parties and customers, which is in accordance with good corporate governance. The practice of such code of conduct and manual has been followed up consistently and also disciplinary penalties have been stated.

8. Balance of Power for Non-Executive directors The board of directors comprises 7 persons, which include: Directors 4 persons from the Companyûs executives Audit committee 3 independent directors, representing more than 1/3 of all members of the Board of directors, responsible for considering and reviewing the Companyûs financial statements, information disclosure and internal control system, as well as examining and evaluating the Companyûs risk exposure. ● ●

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9. Aggregation or Segregation of Positions ●

The Managing Director is the representative of major shareholders who hold, in aggregate, approximately 40% of total issued and paid-up shares. Chairman of the board is not the Managing Director, but both persons are the representatives of the same group of major shareholders. The members of the board of directors comprise the audit committee, who are the independent directors representing more than 1/3 of the board of directors, for the purpose of balance of power and audit of business administration.

10. Remuneration of Directors and Executives The Company has emphasized on considering the reasonableness of such remuneration as follows: Remuneration for directors: the Company has clearly and transparently determined the remuneration provided to the directors, which is similar to that paid in the same industry. Such remuneration has to obtain a prior approval from the shareholdersû meeting. Remuneration for executives: the Company has determined the remuneration provided to executives in accordance with the principles and policies set by the board, which is also consistent with the performance of the Company and each of the executives. In 2003, the remuneration of Baht 12,582,000 was provided by the Company to the directors and executives, consisting of 11 persons, includes meeting fees, salaries and bonuses. This amount can be separated into Baht 2,250,000 for remuneration for directors and Baht 10,332,000 for remuneration for executives. Executive directors receive no board fees. ●

11. Board of Directorsû Meetings In 2003, there were five board of directorsû meetings. In each meeting of the board the meeting agenda items have been clearly identified prior to the meeting. The invitation letters were sent to the board of directors at least 7 days prior to the meeting date, Supporting documents were also provided with the invitation letter for the boardûs prior review. No. Name 1. Mr. Eugene S. Davis 2. Mr. Vorasit Pokachaiyapat 3. Mr. Varah Sucharitakul 4. Mr. Kenneth Lee White 5. Mr. Vitthaya Vejjajiva 6. Mrs. Kannika Ngamsopee 7. Mr. Weerawong Chittmittrapap

Title Chairman Managing Director Director Director Director and Audit Committee Chairman Director and Audit Committee Director and Audit Committee

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Attendance/Total Board Meetings 4/5 5/5 5/5 5/5 5/5 5/5 4/5


In addition, in every meeting of the audit committee and board of directors, the minutes of meetings have been prepared and all relevant documents have by been retained. In consideration of financial statements by the audit committee and by the board of directors, to inform them about available reviewing periods as well as the meeting date to consider and acknowledge the financial statements of each quarter in 2003, the Company has already determined the meeting dates and informed all members of the board.

12. Committees The Company has nominated the committees which include the audit committee, the executive committee and the investment committee for administering specific issues in detail. Each committee is composed of members with duties and responsibilities as follows: (1) Audit committee is comprised of 3 members responsible for considering and reviewing the Company没s financial statements, information disclosure and internal control system, as well as examining and evaluating the Company没s risk. Prior to each meeting, the meeting agenda is established and the invitation letter is sent to each member. In 2003, the Company arranged 5 meetings of the audit committee. (2) Executive committee is comprised of 4 members responsible for supervising relevant business operations assigned by the board of directors. (3) Group investment committee is comprised of 7 directors from each company in the group responsible for setting business policies and supervising investment of the Company and its affiliates. (4) Group risk management committee is comprised of 5 directors from each company in the group responsible for setting business policies and supervising investment of the Company and its affiliates.

13. Controlling System and Internal Audit The Company realizes the importance of the controll and internal audit system for the purpose of preventing the Company from any material damages and maintaining efficient operations. The Company has established the following procedures: (1) The Company has consistently evaluated significant business risk affecting the Company and has pursued a follow-up and risk mitigation process. (2) In controlling working operations of executives, the Company has stated, in a written document, the scope of duties and budget approval power for each level of those executives and has allocated responsibility for cross-auditing.

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(3) The Company has established an internal audit unit that has true independence in Its work. The unit is under the supervision of, and reports to, the audit committee in considering the adequacy of the internal control system and supervising business operations to comply with relevant laws and regulations. (4) The Company has stated and pursued an accounting policy which is consistent with the Thai accounting standards and considered most appropriate for the business. All documents accompanying accounting records are categorized and maintained.

14. Directorûs Reporting The board of directors is responsible for preparing the report of financial and operating analysis wihch compares each year to the previous year, while assuring accuracy, completeness, fact, reasonableness as well as Thailandûs generally acceptable accounting standards and the appropriate accounting policy. The report is disclosed in form 56-1 and in the annual report of the Company, which is distributed, together with the invitation letter, to the shareholders. The board of directors has established an efficient internal auditing system to ensure the accounting records are accurate, complete and adequate for maintaining for the Companyûs properties, and to identify any weakness to prevent the company from acting in bad faith or engaging in significant misconduct. To achieve this, the board of directors has nominated the independent audit committee to supervise the accuracy and completeness of the financial reports and the internal control system. The audit committeeûs opinion relevant to this matter is in the Companyûs annual report.

15. Relations with Investors The board of directors realizes that financial and non-financial information about the Company affect the decisions of the Companyûs investors and stakeholders. Therefore, the Company has assigned its executives to ensure that the Company discloses important information correctly, promptly and reliably in compliance with procedures and regulations required by law. The Company has continually held and pursued this disclosure policy. With regard to relations with investors, shareholders and analysts, one can get latest updated information by calling tel. 66 2697 3700 or through our website at http://www.finansa.com.

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Administration of Insider Information The Company has a policy of prohibiting its directors and executives from using insider information (in relation to the Companyûs financial condition and performance) which has yet to be disclosed to the public, in order to gain personal benefits (including in the trading of securities). The Company has informed its executives in all departments of their responsibility to report securities held by themselves, their companies, spouses and underage children, as well as changes in those holdings of securities, to the SEC in accordance with Section 59 and the penal provision in Section 275 of the Securities and Exchange Act, B.E. 2535. ■

Internal Controls Five audit committee meetings were held in 2003, which every member of the audit committee attended, except for Mr. Vitthaya Vejjajiva and Mr. Weerawong Chitmittrapap who missed one time each. ■

In the fourth board of directorsû meeting on 11 September 2003, in which all of the audit committee members were in attendance, the board of directors evaluated the internal control systems in 5 different areas, namely organization and environment, risk management, executivesû performance control, information technology systems and monitoring systems. The board is of the opinion that the Company has an internal control system in place which is sufficient and satisfactory to monitor the activities of the Company and its affiliates and which wil prevent their assets from being used improperly or without due authorization by the executives. ■

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Risk Factors . . . Personnel The Finansa Groupรปs business operations rely primarily on its people. Executive management has pursued a policy of recruiting, training and promoting lower-level executives as well as hiring experienced teams of personnel. This policy has contributed to the development of the business and has provided flexibility in allocating resources. This has reduced the potential adverse impact of a potential shortfall in personnel resources in any one area. Moreover, importance is placed on human resources by providing training in order to develop the knowledge and skills of the groupรปs personnel, both at the executive and at the operational levels. In addition, employee compensation is based upon relevant ability and performance and is set at a motivating level in accordance with market standards, which should help reduce the risk of turnover of personnel.

. . . Risks from Market Conditions The Finansa Groupรปs businesses and revenues are closely related to economic conditions and financial markets in Thailand and foreign countries, as well as changies in foreign exchange rates. Although in the short term, the prospects fir the Thai economy appear encouraging, the long term outlook remains uncertain, Any severe change in economic conditions may result in risks to the Finansa Groupรปs business operations, which could directly affect its performance and its financial status. However, such effects may be reduced since an economic downturn may create opportunities for the Company from other types of advisory services, such as financial advisory services for debt restructuring. The Finansa Groupรปs operations not only concentrate on operations in Thailand, but also in other countries, which helps to reduce the risk attributable to market conditions in one country. Moreover, there are plans to concentrate on other related businesses such as finance, securities brokerage and debt instrument and proprietary trading which may help reduce the risk from fluctuations in revenues and earnings.

. . . Foreign Exchange Risk As at 31 December 2003 Finansa Group had total foreign loans of US$ 57.18 million accounting for 27% of total liabilities. These loans were comprised of a US$ 50.11 mil ion term loan and $7.07mil ion foreign call loan. If the US dollar were to appreciate against the Thai baht, it would result in an increase in the amount of these loans in Thai baht terms. Finansa Group has, however, invested a part of the loan proceeds in debt instruments and foreign funds in order to hedge the foreign exchange risk. Moreover, a steady foreign income from advisory services and fund management services (relating to four funds), totaling around Baht 100 Mil ion per year, and other income from the foreign debt restructuring business are also important factors in countering the risk. In addition, the management, on occasion, wil manage the currency risk through forward transactions in the foreign exchange market.

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. . . Investment Risks As the Company has a policy to invest in short-term and long-term investments, fluctuations in the securities market and uncertain economic conditions may cause the value of these securities investments to decrease in accordance with the market environment. This may affect the investment portfolio and operational performance. In order to reduce such risks, the Company has formed an investment committee to establish and monitor investment policies for securities available for sale. Investment is conducted in a fashion that spreads the risks by investing a variety of securities. Investments are focused on companies with sound fundamentals, high liquidity, and strong financial performance. In addition, the Company has created measures to implement stop loss limits as well as a create reserves for impairment losses. For long term investments in funds, the risks can be reduced through the specific, internal policies of the various funds. Examples include investing in companies with stable cash flows, strong growth potential, as well as undervalued companies. The Company also places an emphasis on investments that wil grant a board seat so that Finansa can add value to the company in providing advice in the areas of financial management and corporate governance with a view to both improving profitability and lowering investment risk..

. . . As of 31 December 2003 the Company没s securities investments totaled Baht 1,791.43 million. Of this amount, 93% was invested in debt instruments with the remaining 7% in equity. Investments in long-term securities totaled Bt2,716.78 mil ion.

. . . Risks from Arrangement and Underwriting of Sales of Securities The uncertainty of the securities market environment may affect investors没 decisions in subscribing to securities to which affiliates of the Company act as underwriter. This may result in the risk of having unsold securities in the investment portfolio of the Company, and losses may be incurred after such securities are traded on the SET. As of 31 December 2003, FSL had acted as underwriter for various securities with an approximate aggregate value of Baht 4.5 bil ion. The underwriting fees received were insignificant when compared to the total revenues earned, at 5.5% of the total revenues earned. However, such risks may increase if this business grows in the future. To mitigate the risk from each underwriting, preliminary information on the companies offering the securities wil be examined and analyzed and a valuation will be conducted to derive a suitable price. The demand for the securities wil also be assessed to help determine the underwriting amount and efforts made to obtain a definitive confirmation of subscription from investors. Moreover, the Company can further reduce risk by seeking other financial institutions that are interested to become co-underwriters for the securities.

. . . Competition in the Securities Business There has been an adjustment in the fee structure for securities trading (subsequent to the liberation of fees) to a minimum required rate which is enforceable for a period of 3 years from 14 January 2002. This has reduced price competition. However, the securities business is still highly competitive and this may affect the securities business of the Finansa Group, which began its operations in mid-2002. In order to reduce the impact from competition, the operation of the securities business wil focus on competing on the basis of the quality of work provided, instead of the price, as well as determining target client groups different from those targeted by other securities companies. The Company targets domestic and foreign institutions as well as high net worth individuals. These client groups invest both medium and long-term and therefore need the service and advice from professionals with strong analytical backgrounds. The Company has a team of full-time analysts who provide up-to date and analytical research and has a strong sales force in providing sound advice and service to client groups in order to make a justified and thorough investment decision. In addition, the Company has a policy to control fixed costs, primarily operating costs, by using the Back Office Service Bureau (BSB) provided by the SET. This has allowed the Company to reduce overall costs and investments. Finansa Plc. 94

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. . . Termination or Amendment of an Advisory Services Agreement The Finansa Groupûs business and financial performance may be affected and may be different from expectations if revenue from the investment advisory and investment management services is impacted as a result of the termination of or change in the compensation terms. Therefore, the Finansa Group is exposed to the risk of a termination of an Agreement or a reduction in the compensation terms. Nevertheless, the past performance of the advisory and the investment management services provided to the Funds has in most cases generated high returns for shareholders in these funds. For this reason, the executives believe that such performance will help reduce the risk of termination or change. (Note: These foreign funds under the management of Finansa Group are not under the supervision of the Securities and Exchange Act and the Securities & Exchange Commission.)

. . . Investment in Overseas Affiliates The Finansa Group expanded its securities and investment banking businesses in Indonesia by purchasing FINDO in 2001, which had accumulated losses prior to the purchase. As of December 31, 2003, FINDO had an accumulated loss of 16,661 mil ion rupiah or approximately 69 million Baht. As the economic and political environment in Indonesia are subject to a high level of uncertainty the business performance in Indonesia may not be as expected and may affect the overall operational performance of Finansa Group. To date, emphasis has been placed on the areas where the Company has strong expertise and there has been a strict control of expenditure pending a clarification of the business opportunities and potential. . More generally, the Groupûs affiliates operating outside the country may incur capital risk if there is a need of a capital increase due to governmental restrictions in transferring foreign currencies out of Thailand. However, the Company assesses that the amount allowed by the BOT of US$10 million per year is sufficient for its affiliates in case a capital increase is necessary.

. . . Risks from Non-compliance with the Terms of the Tax Benefits The Company has been granted tax privileges from the Board of Investment (çBOIé) for its regional headquartersû activity. The revenue from the advisory services and assistance provided to companies in the Finansa Group will be exempt from income tax for a period of 5 years. The privileges are granted on the condition that the Company wil comply with the terms stipulated by the BOI. If the terms are not complied with, the tax privileges may be altered or terminated which may impact the Companyûs performance and would deviate from expectations. Currently, the Company has fulfil ed conditions such as maintaining a certain percentage shareholding of Thai individuals, opening branches or affiliates overseas, generating revenue from overseas, having a certain amount of expenses from operations and investing in the real estate sector. The only outstanding requirement that the Company is attaining ISO 9000 certification, which is in the process of being prepared. Currently, the Company is in the process of selecting a financial advisor and making the various preparations that are needed.

. . . Management Policies Influenced by Major Shareholders The major shareholders of the Company are Mr. Eugene Davis and Mr. Vorasit Pokachaiyapat who together own approximately 40% of the total outstanding shares of the company. This enables them to exert significant influence over the resolutions of shareholdersû meetings, except for specific important matters such as changing certain regulations and increasing or decreasing registered capital, for which the law requires three-fourths (3/4) of the votes. To monitor and balance the management control of the major shareholders, all of the other shareholders with the right to vote and attend the relevant meetings may jointly vote for the examination of certain matters. This is additional to the monitoring done by the audit committee, which works on behalf of the minority shareholders. Finansa Plc. 95

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General Information Company Name Head Office Location

Finansa Public Company Limited 16th Floor, TISCO Tower, 48/29, 48/32 North Sathorn Road, Khwang Silom, Khet Bangrak, Bangkok 10500, Thailand

Type of Business

The Company and its affiliates provide a range of financial and investment advisory services both within and outside the country and which can be divided into four types of businesses: 1) Financial Advisory Services and Investment Management; 2) Investment Banking; 3) Securities; and 4) Finance

Registered No.

40854500681

Telephone

(02) 697 3700, (02) 697 3800

Facsimile

(02) 266 6688

Home Page

www.finansa.com

Registered Capital

Baht 1,100 mil ion

Registered Paid-up Capital

Baht 550 mil ion

Registered Share Capital

220,000,000 Ordinary Shares

Par Value per share

Baht 5.00

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Other References Share Registrar Thailand Securities Depository Company Limited 4 , 6-7th Floor, The Stock Exchange of Thailand Building 62 Rachadapisek Road, Klongtoey, Bangkok 10110 Tel.: (02) 359 1200-1 Fax: (02) 359 1259 th

Auditor Mr. Anurak Lelapiyamit, Certified Public Accountants or Mr. Boonsri Techavarutama, Certified Public Accountants BDO Richfield Limited 191/41 New Ratchadapisek Road, 22nd Floor, CTI Tower Klongtoey, Bangkok 10110 Tel.: (02) 261 1251-4 Fax: (02) 261 1255


A nnual Report 2003

www.finansa.com

Finansa Plc.

Finansa Plc. TISCO Tower, 16/F 48 North Sathorn Road Bangkok 10500, Thailand Tel. : (662) 697-3700, (662) 697-3800 Fax : (662) 266-6688

F i n a n s a Plc .

Finansa Jakarta Office PT Finansa Indonesia Wisma GKBI. 10/F J1.Jend.Sudirman No. 28 Jakarta 10210, Indonesia Tel. : (6221) 574-0770 Fax : (6221) 574-0780

Finansa Singapore Office Finansa Singapore Pte Ltd. #07-02 Commerce Point 3 Phillip Street, Singapore 048693 Tel. : (65) 6438-4700 Fax : (65) 6534-5157

Annual Report 2003

Finansa Hanoi Office Finansa Plc. 27 Ly Thai To St., Suite 16 Hanoi, Vietnam Tel. : (844) 824-7605/6 Fax : (844) 824-7608

Finansa Ho Chi Minh City Office ISBN : 947-92038-2-8

Designed & Photo by STYLE 0-2945-8051-6

Finansa Plc. Metropolitan Tower, 3/F 235 Dong Khoi St., District 1 Ho Chi Minh City, Vietnam Te. : (848) 825-0168/9 Fax : (848) 825-0167


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