KimEng - Annual Report 2010

2010 Annual Report 2010
CONTENT
Pages
CORPORATE INFORMATION CHAIRMANS STATEMENT GOOD CORPORATE GOVERNANCE REPORT SHAREHOLDER STRUCTURE COMMITTEES AND MANAGEMENT STRUCTURE MARKET AND BUSINESS CONDITIONS RISK FACTORS AUDIT COMMITTEES REPORT FINANCIAL PERFORMANCE AND FINANCIAL INFORMATION REPORT REGARDING THE RESPONSIBILITY OF THE BOARD OF DIRECTORS FOR FIANCIAL REPORT AUDITORS REPORT
1 5 7 25 27 47 52 59 62
65 66
Information Corporate Information

Corporate Information
Honorary Chairperson
Mrs. Gloria Lee Kim Yew
Head Office
999/9 The Offices at Central World, Fl.20th-21st, 24th Rama 1 Road, Patumwan, Pathumwan, Bangkok 10330 Tel: 66(0)2658 6300 Fax: 66(0)2658 6301
Ngamwongwan Branch 30/39-50 The Mall Ngamwongwan Office Tower 14th Fl., Ngamwongwan Rd., Bangkhen, Nontaburi 11000 Tel : 0-2550-0577 Fax : 0-2550-0566 Bangkapi Branch 3106 N-Mark Plaza 3rd Fl. Ladphrao Rd. Klongjan Bangkapi, Bangkok 10240 Tel: Tel: 02-378-1144 02-378-1323
The Board of Directors

Mr. Yuth Vorachattarn Mr. Ronald Anthony Ooi Thean Yat Mr. Montree Sornpaisarn Mr. Judd Clark Kinne Ms. Boonporn Boriboonsongsilp* Mr. Pusit Kaewmongkolsri Mr. Tan pei-san Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan
*Has been appointed on December 16, 2009.
Company Registration No. Company

Bor Mor Jor 0107545000314
Homepage
www.kimeng.co.th
Corporate Secretary
Mr. Waranchai Jensiriwanich
*has been moved from Town In Town
Securities Registration Thailand Securities Depository (Thailand) Co., Ltd.

62 The Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110 Tel: 66 (0) 2359 1200
Branch on 30 August 2010
Seacon Square Branch 55 Seacon Square Tower G Fl., Room 1005, Srinakarin Rd., Nongbon, Pravej, Bangkok 10260 Tel : 0-2320-3600 Fax : 0-2320-3610 Yada Branch 56 Yada Tower 5th Fl., Silom Rd., Suriyawong, Bangrak, Bangkok 10500 Tel : 0-2632-8341 Fax : 0-2632-8395 Thapra Branch 99 The Mall Thapra Office Tower 13 Fl., Ratchadapisek-Thapra Rd., Bukkaloe, Thonburi, Bangkok 10600 Tel : 0-2876-6500 Fax : 0-2876-6531
Auditor
PricewaterhouseCoopers ABAS Limited 1. Mrs. Anothai Leekitwattana Certified Public Accountant, Registration No.3442 2. Mr. Sudwin Panyawongkhanti Certified Public Accountant, Registration No.3534 3. Mr. Boonlert Kamolchanokkul Certified Public Accountant, Registration No.5339 Fl.15th. Bangkok City Tower
Company Offices
Bangkok and Vicinities
Head Office 999/9 The Offices at Central World, 20th-21st, 24th Fl., Rama I Road, Patumwan, Pathumwan, Bangkok 10330 Tel: 66(0)2658 6300 Fax: 66(0)2658 6301
179/74-80 South Sathorn Rd. Silom, Bangrak Bangkok 10120 Tel : Fax : 66 (0) 2286 9999 66 (0) 2344 1000 66 (0) 2286 5050
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Thaniya Branch 52 Thaniya Plaza Tower Bangkok 10500 Tel : 0-2231-2700 Fax : 0-2231-2130 Bangkae Branch 275 Moo 1 The Mall Bangkae Tower 8th Fl., Petchkasem Rd., North Bangkae, 0-2804-4232 Bangkae, Bangkok 10160 Tel : Fax : 0-2804-4251 Pratunam Branch 831 City Complex Building, 5th Fl., Petchburi Rd., Ratchathavee, 0-2657-0830 Fashion Island Branch 5/5-6 Moo 7, Fashion Island Shopping Center BF Fl., Ramintra Rd., Kannayao, Bangkok 10230 Pinklao Branch 7/129 Central Pinklao Tower 3rd Fl. Room 302, United Center Branch 323 United Center Building, 17th Fl., Silom Rd., Bangrak, Bangrak, Bangkok 10500 Tel : 0-2231-2700 Fax : 0-2231-2130 Phahurad Branch 125, 125/1-6, 125/19-25 The Old Siam Plaza Tower 3rd Fl. Pahurad Rd., Wangburapapirom, Pranakorn, Bangkok 10200 Tel : 0-2225-0242 Fax : 0-2225-0523 Yaowaraj Yaowaraj Branch 215 Grand China Tower 4th Fl., Yaowaraj Rd., Samphantawong, Bangkok 10100 Tel : 0-2622-9412 Fax : 0-2622-383 Sathorn Nakorn Branch 100/46 Sathorn Nakorn Tower 24th Fl.C North Sathorn Rd., Silom, Bangrak, Bangkok 10500 Tel : 0-2636-7550-5 Fax : 0-2636-7565 Silom Branch Thaniya Building 4th Fl., Silom Rd, Suriyawong, Bangrak, Bangkok 10500 Tel : 0-2231-2700 Fax : 0-2231-2418 Baromratchonni Rd., Arunamarin, Bangkok Noi, Bangkok 10700 Tel : 0-2884-9847 Fax : 0-2884-6920 Tel : 0-2947-5800-5 Fax : 0-2519-5040 Srinakarin Branch 1145 Moo 5 Akepailin Tower 3rd Fl., Srinakarin Rd., North Samrong, Samutprakarn 10270 Tel : 0-2758-7003 Fax : 0-2758-7248 Bangkok 10400 Tel : Fax : 0-2657-0831 Future Park Rangsit Branch 94 Future Park Rangsit Tower, GF Fl., Phaholyothin Rd., Prachatipat, Pathumthani 12130 Tel : Fax : 0-2958-0591 0-2958-0590 Kasetsart University Branch 50 Faculty of Business Adminstration 1st Floor Ngamwongwan Road Lat Yao Jatujak Bangkok 10900 Tel: Fax: 0-2579-9880 0-2579-9840 20th Fl., Silom Rd., Suriyawong, Bangrak, Fortune Branch 5 Fortune Town Tower, Basement Fl., Ratchadapisak Rd., Dindang, Bangkok 10400 Tel : 0-2641-0977 Fax : 0-2641-0966 Ladpraw Branch 1693 Central Ladpraw Tower 11th Fl. 1105, 1106 Phaholyothin Rd., Ladpraw, Jatujak, Bangkok 10230 Tel : 0-2541-1411 Fax : 0-2541-1108
*Open on 1 October 2010
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Amarin Branch 496-502 Amarin Plaza Building., Bangkok 10330 Tel : 0-2256-9373 Fax : 0-22569374 Asoke Branch 159 Sermmit Tower 25th Fl., Chiangmai 1 Branch 244 Office Building 2nd-3rd Fl. Wowlai Rd. Haiya, Maung Chiangmai 50100 Tel : The Emporium Branch 622 The Emporium Tower Bangkok 10110 Tel : 0-2664-9800 Fax : 0-2664-9811 RCA Branch 45/1 Rama 9 Rd., Soi Soonvijai, Bangkapi, Huay Kwang, Bangkok 10320 Tel : 0-2203-1800 Fax : 0-2203-1809 The Crystal Cyber Branch 64/98-99 Praditmanutham Rd., Ladphrao, Bangkok 10230
*Has been canceled on August 4, 2010.
5th Fl.
Other Provinces
Nakon Ratchasima 2 Branch 1242/2 The Mall Office Tower 7th Fl. Room 3 A Mittrapap Rd., Nai Maung, Maung, Nakon Ratchasima 30000 Tel : 044-288-455 Fax : 044-288-466 Phuket Branch 22/39-40 Wanich Plaza Building, Laung Por Wat Chalong Rd., Talad Yai, Maung Phuket 83000 Tel : 076-355-730-6 Fax : 076-355-737
Ploenchit Rd., Lumpinee, Pathumwan,
Chantaburi Branch 203 Fl. 2rd Kwang Rd., Talad, Maung, Chantaburi 22000 Tel : 039-346-626 Fax : 039-346-631
Soi Sukumvit 21, Asoke Rd., North Klongtoey, Wattana, Bangkok 10110 Tel : 0-2665-7000 Fax : 0-2665-7050
053-284-000 Yala Branch 18 Songpheenong Rd., Sateng, Maung, Yala 95000 Tel : 073-255-494-6 Fax : 073-255-498 Rayong Branch 180/1-2 Samaphan Building, 2rd Fl., Sukumvit Rd., Cherng Nern, Maung, Rayong 21000 Tel : 038-862-022-9 Fax : 038-862-043 Lampang Branch 48/11-12 Montri Rd., Sobtui, Maung, Lampang 52100 Tel : 054-319-211 Fax : 054-319-216 Surin Branch 137/5-6 Sirirat Rd., Nai Maung, Maung, Surin 32000 Tel : 044-531-600-3 Fax : 044-519-378
Fax : 053-284-019 14th Fl., Chiangmai 2 Branch 201/3 Mahidol Rd., Haiya, Maung, Chiangmai 50100 Tel : 053-284-138-47 Fax : 053-202-695 Chonburi Branch 57/1-2 Paspetra Rd., Bangprasroy, Maung, Chonburi 20000 Tel : 038-792-479 Fax : 038-792-493 Nakon Ratchasima 1 Branch 14 Manas Rd., Nai Maung, Maung, Nakon Ratchasima 30000 Tel : 044-269-400 Fax : 044-269-410
Sukumvit Rd., Klongtun, Klongtoey,
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Samut Sakorn Branch 322/91 Akechai Rd., Mahachai, Maung, Samut Sakorn 74000 Tel : 034-837-190 Fax : 034-837-610 Samut Samut Songkram Branch 74/27-28 Soi Bangjakreng 4, Rama 2 Rd., Mae Klong, Maung, Samut Songkram 75000 Tel : 034-724-062-4 Fax : 034-724-068 Suratthani Branch 216/3 Moo 4 Chonkasem Rd., Makhamtia Rd., Maung, Suratthani 84000 Tel : 077-205-460 Fax : 077-205-475 Hat Yai 1 Branch 1, 3, 5 Soi Juti Uthit 3, Juti Anusorn Rd. Hat Yai, Songkhla 90110 Tel : 074-346-400-5 Fax : 074-239-509 Ubon Ratchathani Branch 191, 193 Aupparaj Rd., Nai Maung, Maung, Ubon, Ratchathani 34000 Tel : 045-265-631-8 Fax : 045-265-639 Aranyapratej Branch 44/4 Bamrungraj Rd., Aranypratej, Srakaew 27120 Tel : 037-226-347-8 Fax : 037-266-346
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STATEMENT CHAIRMANS STATEMENT

CHAIRMANS STATEMENT
We have to acknowledge that the excellent financial performance for the Year 2010 resulted from the combination of our great effort and luck. According to our business plan for the Year 2010, we aim to expand our business volume as well as our revenue base. This is because we expect that revenue from securities brokerage business will definitely decline as the Year 2010 is the first year securities brokerage fee would be determined on a sliding scale basis. In other words, if securities trading value stays the same, securities brokerage revenue will decline. Thus, we need to expand our market share in the securities brokerage business as well as looking for potential business opportunities. Luckily, trading activities on the SET became healthy and lively as total trading value in the Year 2010 rose by 58.80 % compared to that in the Year 2009. Total trading value rose from Baht 8.86 trillion in the Year 2009 to Baht 14.07 trillion in the Year 2010. Such high trading value was beyond our expectation as almost every business sector was adversely affected by domestic political turmoil between March to May 2010. Such adverse incident was a good test for the readiness of our operating system to run under abnormal situation or serious unrest such as demonstration around our head office located in the Offices of Central World. Due to such abnormal situation, we had to relocate our employees and some parts of our operation to our new temporary office for a month. Despite this, every of our executives and employees still demonstrated their responsibility and tolerance to work hard to serve our clients. We are proud we can serve our clients during the political crisis despite some obstacle and inconvenience. Ironically, during such abnormal period, our market share in the securities brokerage business increased. High trading value of the entire market was higher than our expectation despite domestic political crisis and unrest in the 3 southern provinces of the country. We can achieve our business objective as our market share in the domestic securities brokerage business rose from 10.68 % in 2009 to 12.76 % in 2010. Our securities trading value also rose from Baht 922,859 million in the Year 2009 to Baht 1,579,681 million in the Year 2010, an increase in terms of trading value by 71.17 % which was higher than that of the overall market. Other revenue also increased from Baht 245.07 million in 2009 to Baht 423.28 million in 2010. We also earned a Baht 51.67 million gain from trading derivative instruments in the Year 2010. Combination between our effort and luck resulted in an increase by 14.50 % in terms of our net profit. Our net profit rose from Baht 716.74 million in 2009 to Baht 820.77 million in 2010. Joint effort between our management and every employee as well as great support from our clients played an important role in helping us to maintain our position as No.1 domestic securities brokerage house for 9 years in a row. We were also awarded Best Broker 2010 Award from Finance Asia Magazine.
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STATEMENT CHAIRMANS STATEMENT

Our great success in the Year 2010 also resulted from one important factor that is tolerance of executives and employees who had to work under abnormal situation due to domestic political unrest as well as that of every client. In this opportunity, we would like to thank our executives, employees and clients and hope everyone will have a great time forever.
Yuth Vorachattarn
Chairman
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Report Good Corporate Governance Report

Good Corporate Governance Report

The Board of Directors of Kim Eng Securities (Thailand) Plc. has long put emphasis on good corporate governance system. The Board of Directors believes that good corporate governance would help to prevent potential serious damages caused by lack of good internal control system. Good corporate governance system also plays an important role in enhancing management efficiency and improving resources utilization. This will lead to sustainable growth for the Company and create value for all shareholders and stakeholders. For the Year 2010, the Company urged its employees to emphasize on instituting good corporate governance system in the organization. This is an ongoing activity from the Year 2008 that was the Year of Good Corporate Governance System in KIM ENG. The Company has urged all of its employees to act with thoroughness, care and integrity. The Company has also urged its management to set up an efficient, transparent and checkable management system. All of these have created confidence among shareholders, investors, stakeholders and all involved persons. Thus, in the Year 2009 and 2010, the Company was rated 5-Star for its good corporate governance system continuously. Evaluation of the Companys compliance with good corporate governance practices in the Year 2010 indicates that the Company complied with almost all of the good corporate governance practices except that in the area of shareholders meeting. This was because some foreign directors did not attend the shareholders meeting. Nevertheless, the Chairman, the Chief Executive Officer, the Chair of the Audit Committee, the Chair of the Remuneration Committee, the Chair of the Nomination Committee and the Chair of the Good Corporate Governance Committee attended the shareholders meeting. Details of the Companys compliance with good corporate governance practices are as follows:
Section 1 Shareholders Rights

The Board of Directors formulated a written corporate governance policy comprising policies regarding protecting shareholders rights and encouraging shareholders to utilize their rights, including basic rights and extra rights, such as rights to: receive profit contribution in the form of dividend; obtain accurate, adequate and transparent information for making investment decisions; vote on major issues related to the Company; express opinion in the shareholders meeting; participate in making decision regarding major change in the Company; and elect directors. For the Year 2010, the Company fulfilled the right of shareholders as follows: 1. Right to Receive Dividend
For the Year 2010, the Company made an interim dividend payment at the rate of Baht 0.25 per share, or a payout ratio of 51 %. Such payout ratio exceeded its specified
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dividend payout policy of at least 40 % of the Companys earnings after deducting all required legal reserves. For the Year 2009, the Company made a total dividend payment at the rate of Baht 1.25 per share, or a payout ratio of 99 %.
2.
Right to Attend the Shareholders Meeting 2.1 The Company allowed its shareholders to propose meeting agendas at least 3 months prior to the date of the shareholders meeting via the Companys website. 2.2 2.3 The Company allowed its shareholders to submit questions approximately 1 month prior to the date of shareholders meeting via its website. The Company notified resolutions of the meetings of the Board of Directors regarding date, time, place and meeting agendas 42 days prior to the date of shareholders meeting via the SET ELCID system. 2.4 The Company informed its shareholders via the SET ELCID System that it posted notice of its shareholders meeting on its website 30 days prior to the date of each meeting for thorough consideration. 2.5 The Company posted notice of shareholders meeting, including relevant information such as date, time, place, and meeting agendas, via its website 30 days prior to the date of meeting. 2.6 The Company asked Thailand Securities Depository Co., Ltd. (TSD), acting as the Companys securities registrar, to mail notices of shareholders meeting to all shareholders 15 days prior to the date of each meeting. 2.7 2.8 The Company continually updated information on its website for thorough consideration by its shareholders. The Board of Directors facilitated shareholders to exercise their rights in attending the shareholders meeting by prohibiting any acts that may limit or restrict shareholders access to Company information or the shareholders meeting. No immediate changes in information provided during the meeting are to be made or ad-hoc meeting agendas proposed. Shareholders who arrive late will be allowed to attend the shareholders meeting. 2.9 The chair of the meeting allowed shareholders convenient and adequate time to express their opinion for each agenda items and ask questions at the shareholders meeting. The Company disclosed minute of the meeting for shareholders review via its website. Details of the meeting could also be accessed via video posted on the Companys website. 2.10 In the shareholders meeting, the chairman of each sub-committee, namely the Chair of the Audit Committee, the Chair of the Nomination Committee, the Chair of the Remuneration Committee and the Chair of the Good Corporate Governance Committee, attend the meeting. Shareholders are allowed to ask questions on relevant issues. The Company has disclosed
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the minutes of the meeting for shareholders review via its website. Details of the meeting can also be accessed via video posted on the Companys website. 3. Right to Receive Information and News about the Company.
The Company has long put emphasis on disseminating information and news about the Company to its shareholders so that they could know progress and activities related to the business of the Company for their consideration. The Company disseminated information and news about its operation via Elcid System and its website. The Company disseminated accurate, quick, fair, reliable and timely information to all stakeholders.
Section 2 Fair and Equal Treatment to Shareholders

In the Year 2010, the Company put emphasis on equal treatment to all shareholders with no discrimination to any shareholders. The Company followed the SEC & the SET guidelines of good corporate governance practices. The Companys shareholders meeting was held on March 29, 2010 with details as follows: Before the Meeting 1. The Board of Directors formulated a policy allowing minor shareholders who hold no more than 2% of total paid-up shares which is better than SET guideline that allows shareholders with a 5% stake to propose additional meeting agenda items and names of persons to be elected as the Companys directors via its website three months prior to the date of the shareholders meeting. For 2010, the Company allowed minor shareholders to propose additional meeting agenda items and names of persons to be elected as Company directors via the Company website during the period between November 1, 2010 and January 31, 2010. The Company posted the news on the SET ELCID System on November 1, 2010. 2. In the case minor shareholders propose additional meeting agenda items, the Board of Directors will include such agenda(s) items in the shareholders meeting when it deems that such agenda(s) will benefit most shareholders. However, for the 2010 AGM, no minor shareholders proposed additional meeting agenda items. 3. In case minor shareholders propose the name of person to be nominated as director, the Nomination Committee will consider the qualifications of such proposed person in accordance with the specified guidelines. In the Year 2010, no minor shareholders proposed the name of person to be nominated as director. 4. The Board of Directors allowed shareholders to submit questions in advance via the Companys website prior to the date of the shareholders meeting. For the Year 2010, shareholders were allowed to submit questions from February 23, 2010 to March 25, 2010. Nevertheless, no questions were submitted by shareholders.
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5. In case shareholders cannot attend the meeting, the Company allows them to appoint a person or an independent director to vote on their behalf as a proxy. For the 2010 AGM,none of shareholders delegated any independent director but delegated other 127 persons. 6. The Company notified resolutions of the BOD meetings regarding date, time, place and meeting agendas 42 days prior to the date of shareholders meeting via the SET ELCID system. 7. The Company informed its shareholders via the SET ELCID System that it has posted the notice of the shareholders meeting on its website 36 days prior to the date of the meeting for their thorough consideration. 8. The Company publicized shareholders meeting information, including the date, time, place, and meeting agenda via its website 30 days prior to the date of the shareholders meeting. 9. The Company asked Thailand Securities Depository (Thailand) Co., Ltd. (TSD), acting as the Companys securities registrar, to mail the notice of the shareholders meeting to shareholders 15 days prior to the date of the meeting. 10. The Company posted a newspaper advertisement for at least three consecutive days prior to the date of shareholders meeting to inform shareholders of the meeting. On the Date of the Meeting 1. 2. The Company facilitates the meeting registration by using a computerized system to aid the registration process. The Company holds the shareholders meeting on the date, at the time and in the place that is convenient for shareholders to attend specified in the notice of the shareholders meeting. There will be no abrupt changes in the meeting place so shareholders would not be able to attend the meeting. 3. 4. 5. 6. 7. 8. The meeting chairman clarifies the quorum, explains the voting, vote-counting and balloting procedures and clearly discloses voting results on each agenda item. There shall be no ad-hoc meeting on agenda items to be proposed by shareholders, who are the Companys executives. The chair of the meeting will convene the meeting in accordance with the order as specified in the notice of the shareholders meeting. The chair of the meeting will allow shareholders to ask questions or express their views in a reasonable and adequate way. The chair of the meeting will urge the use of balloting cards in each meeting agenda item for transparency in vote-counting results. Each shareholder is allowed to exercise his/her rights in electing directors on an individual basis.
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the After the Meeting 1. The Companys Secretary will be responsible for preparing the minutes of the shareholders meeting with opinions of and questions from shareholders. The minutes of shareholders meeting would be re-checked for accuracy by the Companys executives and the Chairman. 2. The Company will publicize the minutes of the shareholders meeting in both paper and video formats via its website 7 days after the date of the meeting, so that shareholders who did not attend the meeting, can check and acknowledge details of the meeting on an equal basis. Preventive Policy regarding Use of Confidential Information 1. The Company has long realized that use of confidential information by insiders is unfair to shareholders. Thus, the Company formulated a formal policy and asked for cooperation from its directors, management and employees that may be exposed to the Companys nonpublic financial information not to trade the Companys securities 30 days prior to public dissemination of the Companys quarterly financial performance. In the Year 2010, no directors, management and employees who may be exposed to the Companys nonpublic financial information violated the Companys securities trading policy. 2. Directors and management are required to prepare disclosure reports of their securities holdings and changes in such holdings to the Office of the SEC in accordance with Section 59 of the Securities and Exchange Act. Directors and management are also required to submit such disclosure reports to the Board of Directors as well. In the Year 2010, all directors and management were in full compliance with such reporting requirement. 3. Any directors and management with any potential conflict of interest with the Company are required to disclose such conflict to the Board of Directors immediately. No directors or management with potential conflict of interest are allowed to attend the meeting approving the transaction which the Company will enter into with its interested persons. In the Year 2010, none of the directors and management had any potential conflict of interest with the Company.
Section 3 Rights and Roles of Stakeholders

1. The Company shall treat all stakeholders including shareholders, employees, clients, competitors, creditors, the society and the environment fairly in accordance with applicable laws and mutual agreements they have with the Company, taking into account their basic legal right. Shareholders: The Company put emphasis on generating profitability to provide a good investment return to all shareholders. The Companys dividend payment policy is to pay out at least 40% of net profit. The Company has encouraged shareholders to exercise their legal rights and will treat all shareholders equitably. Shareholders shall have the right to receive accurate and updated information about the Companys
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operations via its website on a regular basis. The Companys dividend payout ratio was 51 % for the Year 2010 and 99 % for the Year 2009. Both of which exceeded its specified dividend payment policy. Clients: The Company put emphasis on equal and fair treatment to all clients. The Company has provided high-quality services to its clients, keep their information confidential and disseminated sufficient, accurate and timely information to them. The Company has provided variety of products and services and continued to improve and develop them to satisfy their needs. In providing services, the Company takes into account the best interests of clients. The Companys securities trading officers urged their clients to trade with care and thoroughness and consider all relevant information carefully and thoroughly prior to making their investment decisions, not emphasizing their trading volume. This helps to prevent them from investing in manipulated stocks. Competitors: The Company treated all of its competitors fairly and equally and strictly complied with mutual agreements and member agreements as applicable under the relevant SEC and SET rules and regulations and ASCO agreements. Creditors: The Company fully complied with all conditions and terms under loan agreements and other agreements it entered into. The Company will never take advantage and try to create trust and support from all stakeholders. Employees: The Company provided fair and equal treatment and fair compensation, taking into account its operating performance and macroeconomic condition to its employees. The Company has provided its employees with good working environment and safety. The Company regularly provides its employees with knowledge about new products and services. Back-and front office employees are equipped with knowledge about new financial products and services so that they could continue to provide good services and products to clients. Society and environment: The Company regularly contributes to the good of the society and the environment. Regarding to contribution to the society, the Company has regularly provided knowledge about investment and savings so that solid financial foundation could be created for the Thai society. In regard to contribution to the environment, the Company engaged in many activities aimed to protect environment and to support social and religious activities. In the Year 2010, the Company complied with its policy to support social and environmental activities as follows: 1. Social Activities 1.1 Money donation to help Haiti earthquake victims through the Thai Red Cross Society on February 16, 2010.These donation will support International Federation of Red Cross and Red Crescent Societies.
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1.2 1.3 Corporate visit by undergraduate students from Kasetsart University on February 6, 2009 Aluminium lid donation to The Princess Mothers Medical Volunteer Foundation in order to generate prosthetic components on March 3, 2010. All officers participated in this donation and had been collected since end of 2009 until March 2010. 1.4 1.5 1.6 Corporate visit by undergraduate financial and banking students from Krirk University on July 22, 2010. Corporate visit by undergraduate students from Burapha University on August 6, 2010 Corporate visit by international students such as Australian, Korean, Japanese, Malaysian, and Thai from Siam University on August 9, 2010 1.7 1.8 1.9 Coperate visit by undergraduate business students from Thammasat University on August 18, 2010. Corporate visit by undergraduate statistics students from Kasetsart University on September 1, 2010. Money donation for flood victims at Phimai District Nakornratchasima in order to buy disaster relief package. 2. Human Supporting Activities - Blood donation every three months in March, June, September and December 3. Environment - Support Stop Global Warming Project by reducing and saving electricity use in the Company. In the Year 2010, the Company had no disputes with any group of stakeholder and was in full compliance with its operating policy.
2.
The Board of Directors has formulated and implemented clear policies and procedures in regard to potential fraudulent activities. Anyone who faces or sees potential fraudulent activities must inform the Compliance Department of these and they will in turn report them to the Audit Committee. All complaints will be kept confidential and the names of persons who make complaints will not be publicly disclosed. However, in Year 2010 there is no complaint in this area.
Transparency Section 4 Information Disclosure and Transparency

The Company put emphasis on disclosing accurate, sufficient and timely financial data and other necessary information to the public and all stakeholders on a fair and equal basis via various channels. In doing so, the Company did as follows:
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1. Efficiency Efficiency of Information Disclosure Process in accordance with the Rules of Listed Companies The Company has disclosed information in accordance with relevant rules via the SET ELCID System, 56-1 Form, 56-2 Form (Annual Report) and its website in both Thai and English. The Company continually updates such information. For the Year 2010, the Company strictly complied with relevant disclosure rules and was not penalized or sanctioned by relevant regulatory bodies due to improper disclosure of information. 2. Quality Quality of Financial Reports The Board of Directors prepared the Report regarding the Responsibility of the Board of Directors for Financial Reports that was accompanied by the Auditors Report in the Annual Report. This report is signed by the Chairman, the Chief Executive Officer and the Chief Operating Officer. The Company has disclosed such information on the Companys website. 3. Investor Relations 3.1 The Board of Directors has set up an Investor Relations Unit that is under the direct control of the Corporate Communications Department. The Investor Relations Unit is responsible for disseminating accurate, complete and timely data and news regarding the Companys activities to its shareholders, investors, securities analysts and the general public via various forms of media such as brochures, newspaper, radio, television, meetings and the website. The Investor Relations Unit also helps to facilitate shareholders in case they have difficulty contacting the Company. Investors can contact the Investor Relations Unit at Phone No.0-2658-6300 ext. 7401 - 7402 or by E-mail: CorporateCommunication@kimeng.co.th. 3.2 In the Year 2010, the Companys executives and the Investor Relations Unit provided the Companys information via 4-5 meetings with local and foreign institutional investors, 4 meetings with investors, securities analysts and mass media during operating results periods and 1-2 times in the annual operating plan announcements, public interview 4-5 times, as well as in 20 phone conversations.
Section 5 Responsibilities of the Board of Directors

1. Composition of the Board of Directors 1.1 The Board of Directors consists of 9 directors which composed of: 3 executive directors 6 non-executive directors (3 of whom are independent directors)
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The Company has long realized the importance of the appropriate composition of the Board of Directors, and nominates its directors in such a manner that there is a balance of power between executive and non-executive directors. The composition of the Board of Directors is such that independent directors will co-work with directors who represent the major shareholder and executive directors. The number of independent directors accounts for one-third of the total no. of directors, thus being in line with those as specified in good corporate governance principles as prescribed by the SET. The Chairman is also an independent director. The number of non-executive directors (6 persons) is higher than that of the executive directors (3 persons), so that independent directors can freely express their opinion and make decisions and the Board of Directors can perform their duties effectively. The Board of Directors appoints one secretary to the Board of Directors and one company secretary. The names of directors and duties & responsibilities of the Board of Directors are shown in the topic the Board of Directors and Management Structure on P.25 1.2 The Board of Directors consists of experts in many fields who possess a variety of knowledge, capability, professional experience, business moral and loyalty. They are willing to dedicate themselves for the good of the Company. 1.3 Each independent director has terms of holding office of 3 years each. Each independent director cannot hold terms of more three terms, or more than 9 years. There is an exception in case it deems to shareholders or the Board of Directors that some directors play an important role in growth and success of the Company. In such case, terms of office of such directors can be extended as appropriate. The Company policy regarding directors terms of office is clearly specified in its corporate governance policy. 1.4 The Board of Directors specified qualifications of Independent Directors that are in line with new rules and stricter that those required by the SEC and the SET. They are as follows: Holding shares not more than 0.5% of all voting rights of the Company, any companies in the Kim Eng Group or its associated companies; Not being a member of management, employee, staff member or advisor who receives a regular compensation from the Company, or controlling person of the Company, any company in the Kim Eng Group and its associated companies, or person with potential conflict of interest for at least one year prior to nomination; Having no business relationship or direct or indirect potential conflict of interest in terms of financial and general management of the Company, any company in the Kim Eng Group, its associated companies and other persons with potential conflict of interest that may interrupt his independent discretion or opinion on the Companys operations;
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Not being a person who has legal registered relationship in the form of close relative, major shareholder or controlling person of the Company, any company in the Kim Eng Group, its associated companies, persons with potential conflict of interest, or persons who are nominated to take care of the interest of major shareholder. 1.5 No directors of the Company can hold a directorship in more than 5 other listed companies. In case it is necessary for any director of the Company to hold a directorship in more than 5 other listed companies, he must obtain an approval from the Board of Directors beforehand. Details regarding holding directorships of directors are disclosed in the topic the Board of Directors and Management Structure on P.39 For 2010, no directors of the Company held directorships in more than 5 other listed companies. 1.6 There has been a separation of the position between the Chairman and the Chief Executive Officer to create a checks and balances mechanism, so that no one has absolute power. The Company has clearly specified roles, powers and duties of each person, such that the Chairman shall be an independent director and the leader in policy and corporate governance. The Chief Executive Officer shall be the leader in corporate and business management. 1.7 In case of an expiry in terms for holding office of any director, the Company allows minor shareholders to propose name(s) or person(s) to be nominated as a director (s), provided that such person(s) has the qualifications in line with the Companys rules. When complete information about the person(s) proposed to be the Companys director(s) is obtained, the Nomination Committee will consider their qualifications prior to proposing to the shareholders meeting for nomination. For the Year 2010, no minor shareholders proposed the name(s) of person(s) to be nominated as the Companys director(s). 2. SubThe Sub-Committees For transparency and independence in performing their duties, most members of the subcommittees are independent directors. Independent directors are appointed as the chair of each sub-committee. Details regarding sub-committees are showed in the topic the Board of Directors and Management Structure on P.25
3.
Roles, Duties and Responsibilities of the Board of Directors 3.1 In the Year 2010, the Board of Directors considered and approved important matters in relation to the Companys operation such as formulation of its vision, mission, strategy, financial objective, risk, operation plan and budget. The Board of Directors supervised, controlled and monitored the management to ensure they have run the Company in accordance with the specified policy and plan efficiently and effectively to enhance sustainable economic value for the
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Company, its shareholders and all stakeholders. Result of evaluation of the Companys performance indicates that it could still maintain a market share of not less than 10 % 3.2 The Board of Directors communicated the Companys strategy, objectives and operating result to directors/executives/staff throughout the organisation. The Company held a meeting to communicate its strategy, objectives and operating result to executives and management so that they could communicate the message to the departments under their supervision. The Company also communicated important messages via its Intranet System (Keplanet) and E-mail system. 3.3 The Board of Directors also formulated and approved the Companys written policy on corporate governance. In October 2006, the Board of Directors reviewed such policy. Evaluation of the Companys compliance with good corporate governance principles indicated that the Company complied with most of the principles, with details as discussed earlier. 3.4 The Board of Directors formulated a written business ethics and professional conduct to be used as reference by directors, executives and staffs in managing the Companys business. Compliance with such written business ethics and professional conduct is closely monitored. For the Year 2010, no market officers were found to violate the specified Code of Conduct. 3.5 The Board of Directors developed and implemented clear policy regarding conflict of interest. Good corporate governance policy shall be fully adhered to and accurate information shall be disclosed. 3.6 The Board of Directors developed and implemented risk management policy for the entire organization. Risk management team shall monitor relevant risk factors and report to the Board of Directors every month. Including risk review and assessment at least once a year. 3.7 The Board of Directors developed and implemented internal control and audit systems. The Board of Directors assigned and authorized the Compliance Unit to conduct audit and report result of audit to the Audit Committee prior to reporting to the Board of Directors. 4. Meeting of the Board of Directors 4.1 The Companys secretary sets up a meeting schedule for the whole year in advance and informs each director such meeting schedule so that they can arrange time to join the meeting. 4.2 In the Year 2010, the Board of Directors meetings were held 6 times. Details of the Board meeting are showed in the topic the Board of Directors and Management Structure on P.25 4.3 The Chairman and the Chief Executive Officer will co-consider determine meeting agenda items to be proposed for the Board of Directors meeting. Each director
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could propose a meeting agenda item independently. Each director may propose a meeting agenda to the Chairman via the company secretary or may propose a meeting agenda to the Board of Directors prior to the meeting. 4.4 Related document will be sent to all member of the Board of Directors at least 3 days prior to the date of meeting. Especially, for the important agendas the relevant documents shall be submitted to directors prior to the meeting for an adequate time to consider. 4.5 The Board of Directors can invite any involved executive or personnel for inquiry during the meeting. In the Year 2010, it was found that executive directors are the persons who were in charge of the matters and knew all information. Thus, the Board of Directors inquired directly from the in-charge executive directors. 4.6 After the Board of Directors meeting, the corporate secretary will arrange the distinctive minute of the meeting and notify to the related functions for their further actions and report the result of such actions to the Board again for their acknowledgement. 4.7 In each meeting, the Chairman lets each director express his opinion extensively and freely. Each director thus may express his opinion extensively and listen to others opinions. Each decision is made rationally and thoroughly. Although the Chairman allows each director to express opinion in the meeting extensively, each director presents his opinion concisely. Thus, it normally takes no more than 3 hours on average to run the meeting, which the Board of Directors considers that it is sufficient to consider each meeting agenda item thoroughly. 4.8 Good corporate governance report must be approved by the Board of Directors. On October 18, 2007, the Board of Directors meeting reached a resolution to appoint the Corporate Governance Committee that is responsible for formulating good corporate governance principles, monitoring, evaluating and promoting compliance with the Companys good corporate governance principles. Thus, the Good Corporate Governance Committee regarded the Year 2008 as KIM ENGs good corporate governance year. The good corporate governance campaign was initiated by various activities to persuade employees to be in compliance good corporate governance principles. 5. SelfSelf-Evaluation by the Board of Directors 5.1 The Board of Directors conducts self-evaluation once a year. Such self-evaluation will be conducted on an overall basis rather than a person-by-person one. Evaluation will be conducted on the following areas: Structure and Qualifications of the Board of Directors Roles, duties and responsibilities of the Board of Directors The Meeting of the Board of Directors
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Performance of Duties by the Board of Directors Relationship with Management Self-Development of Directors and Management Development
The company secretary is responsible for collecting and summarize results of evaluation before providing them to the Chairman. The Chairman will inform the results to the meeting of the Board of Directors and consult with all other directors to correct and improve any deficiencies or weaknesses found from the evaluation. 5.2 For the Year 2010, the Board of Directors conducted self-evaluation on November 12, 2010. Each area is evaluated by each director on a fair to good level. Only the topic Roles, Duties and Responsibilities of the Board of Directors regarding spending time sufficiently in corporate governance as the Board of Directors formulated is evaluated on a fair level. 5.3 To improve the deficiency as specified in 5.2, in the Year 2010, the Company will put more emphasis and spend more time in following good corporate governance policy as specified by the Board of Directors. 6. Remuneration and Compensation 6.1 Directors remuneration and compensation are determined based upon 4 criteria, namely 1) Comparison with the level of remuneration and compensation made to directors of other firms in the securities brokerage business 2) Role and responsibility of each director 3) the Companys overall operating performance and 4) Dividend payment made to shareholders. Director remuneration shall be considered by the Remuneration Committee and proposed to the Board of Directors and meeting of shareholders. Details of remuneration and compensation made to directors are showed in the topic the Board of Directors and Management Structure on P.36 6.2 Compensation and remuneration made to the Chief Executive Officer, determined based upon his duties, responsibilities, performance and the Companys operating performance, must be considered and approved by the Board of Directors. The Board of Directors evaluates performance of the Chief Executive Officer by comparing with the stated operating goals and objectives on an annual basis. During any operating year, the Management will compare the Companys actual operating performance with the stated operating goals and objectives and present the result of comparison in each Board of Directors meeting and prior to preparing operating budget for the next year. The Board of Directors will evaluate performance of the Chief Executive Officer on an annual basis.
7.
Corporate Governance Policy and Business Ethics
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The Board of Directors has put emphasis on good corporate governance system. The Good Corporate Governance Committee was established to determine and specify monitoring and evaluation guidelines and to promote implementation of and compliance with good corporate governance policies. The good corporate governance policies can be classified into 5 sections as follows: Shareholder Right Equal Treatment to Shareholders Roles of Stakeholders Disclosure and Transparency Responsibilities of the Board of Directors
The Company has disseminated its good corporate governance policies via its website to show its intent to operate under the good corporate governance practices to ensure its operation transparency. Employees are given a written good corporate governance manual and urged to work ethically and be in compliance with good corporate governance policies. In the Year 2010, the Good Corporate Governance Committee reviewed the good corporate governance policies and working ethics. The Good Corporate Governance Committee asked the compliance unit to review, amend and add the good corporate governance policies and working ethics as necessary prior to resubmission for consideration by the Good Corporate Governance Committee. The good corporate governance policies and working ethics were prepared in written form as a reference for reference by all employees. In the Year 2010, compliance with good corporate governance policies was evaluated. The result of evaluation indicates that the Company was in compliance with most of the specified guidelines and policies, except in the area of shareholders meeting. This was because some foreign directors did not attend the shareholders meeting. However, the Chairman, the Chief Executive Officer, the Chair of the Audit Committee, the Chair of the Remuneration Committee, the Chair of the Nomination Committee and the Chair of the Good Corporate Governance Committee attended the meeting.
8.
Internal Control and Audit System
The Board of Directors has put emphasis on having an efficient and effective internal control system. Approval and operation authorities are developed in written form. Operations of the back and the front office are clearly segregated. The compliance unit, which is under the direct control of the Audit Committee, shall monitor and ensure the Company has and is in compliance with the prescribed policies and guidelines regarding operating control, financial reporting, information technology as well as applicable rules and regulations as required by competent authorities. The compliance unit shall determine an audit plan that fully covers operation of all functions, and such plan shall be evaluated at least once a year. Sufficiency of internal control system shall also be evaluated at least once a year as well. In the Year 2010, the Company was in full compliance with
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its operating policies and applicable rules, regulations and guidelines as prescribed by competent authorities
9.
Conflict of Interest
The Board of Directors set up clear policy regarding consideration and approval of matters that may cause conflict of interest. Any interested directors shall disclose their conflict of interest prior to the meeting. Any interested directors are not allowed to attend or vote in the meeting. In case there may be any transactions or matters with material conflict of interest, the Board of Directors may assign the Audit Committee to consider and propose their opinion to the Board of Directors. In case the Audit Committee has no expertise in considering and providing their opinion regarding the transaction, the Board of Directors may assign an independent expert or the auditor to provide their opinion regarding the transaction for final consideration and approval by the Board of Directors or the shareholders meeting as the case may be. In the year 2010, there were two related transactions, and such transactions initially considered by the Audit Committee were later proposed to the Board of Directors for consideration. Such related transactions were disclosed on the financial statements.
10. 10. Risk Management Policy The Company may face both internal and external business risks in its operation. To deal with such risks, the Company has continually developed and implemented risk management system as follows: Overview of Risk Management Risk management at both policy and operating level shall be under the responsibility of each sub-committee. Operation of the Company is under the organizational structure, with check and balance mechanisms. Risk management policies and guidelines in each area are in written form for reference by management and employees. Such risk management system is developed on the basis of care and continual improvement, taking into account the best interest of shareholders, clients, employees and the society. Credit Risk
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Authority to extend margin loans is assigned to some particular authorized persons and committees. Margin loan extension will be evaluated on an annual and case-by-case basis. Create a unit that is independent from the Front Office to create check & balance mechanisms; In extending securities margin to trading clients, the Company will take into account the clients financial positions as well as collateral the clients put with the Company; The Company will not extend securities margin to risky clients. The Company developed and implemented clear policies in evaluating and selecting the clients to whom securities margin will be extended. Policies regarding initial margin and marginable securities are also clearly specified. The Company has put emphasis on debt collection. Market Risk: They can be classified into three categories, namely: Price Risk This is the risk that the value of the Companys investment portfolio may decline due to decline in the value of debt and equity securities the Company invests in. To deal with this kind of risk, the Company has developed and implemented the so-called Risk Management Policies and GuidelinesRisk GuidelinesRisk Market Risk with the aim to specify clear policies regarding securities investment and market risk management. Such policies have specified roles, duties and responsibilities management, of directors and management regarding policies regarding securities investment, investment
investment risk diversification, investment loss limit and etc. The Company has also developed and implemented the so-called risk ceiling level, level of warning signs and stop-loss trigger actions. Interest Rate Risk This is the risk caused by mismatch between the time gap before interest rates can be reset (for floating-rate contracts) and the term of contracts (for fixed-rate contracts). To deal with this risk, the Financial Department shall be responsible for monitoring changes and movements in interest rates as announced by many financial institutions and report to the Chief Financial Officer and other involved officers. This will allow the Company to reset its interest rates in line with changes in market interest rates.
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Exchange Rate Risk The Company has no material assets or liabilities denominated in foreign currencies. Liquidity Risk In regard to management of liquidity risk, it is realized that NCR is an important tool for measuring and monitoring the Companys liquidity risk. NCR is also used in specifying scope of transactions. Thus, the Risk Management Department is assigned to be responsible for closely monitoring NCR figures as prepared by the Accounting Department. Operational Operational Risk As operational risk is embedded in every kind of risk, the Company thus put emphasis on this kind of risk and has developed and implemented some measures to deal with it. The organizational structure with clear scope of authority and responsibility of each department and check and balance mechanisms are implemented. Standard working procedures in written form are developed and implemented, with the independent Compliance Unit under the direct control of the Audit Committee be responsible for auditing tasks. Creation and implementation of Business Continuity Management (BCM) and Business Continuity Planning (BCP) The Company has also prevented and transferred operating risks via insurance policies initiated with well-known insurance firms with strong financial positions. 11. 11. Development of Directors and Executives 11.1 In the Year 2010, Ms. Boonporn Boriboonsongsilp, the new director, was appointed, The Companys secretary prepared relevant documents and information that are important and necessary for the newly appointed director in acting in the capacity of directorship such as articles of association, rules and regulations regarding roles and duties of directors as specified by competent authorities. Information related to the Companys business characteristics and operating philosophies would be provided to the newly appointed director so that she can understand her role and duty as a director and overview of the Companys operation and scope of business. 11.2 The Company has prepared a succession plan for the Chairman and the Chief Executive Officer on both ad-hoc and permanent basis. On an ad-hoc basis, other executives will act in such capacity on a temporary basis. On a permanent basis, the Nomination Committee will consider and appoint qualified
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personnel later. In the year 2010, the succession plan was implemented in case Mr. Montree Sornpaisarn, the Chief Executive Officer, was selected as the Managing Director of the SET. 11.3 The Company encourages and facilitates training and development for its staff. In 2010, it sent the Companys secretary, legal officers and compliance officers to attend a training course regarding corporate governance. The Company urged its directors to attend the class aimed to improve and develop their knowledge and understanding the roles, duties and responsibilities of directors.
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Shareholder Structure
1. Share Capital of the Company
As at December 31, 2010, the Company had a total registered share capital of Baht 2,861,250,000 with total paid-up capital of Baht 2,854,072,500 comprised of 570,814,500 ordinary shares at par value Baht 5 each. In the Year 2008, KEST established a Treasury Stock plan. As of December 31, 2010, the total number of shares KEST reacquired was 1,645,200.
2. Shareholders
The Companys major shareholder is Kim Eng Holdings Limited that held 55.55 % of the Companys total paid-up capital. The followings are details on the Companys shareholders as at August 27, 2010 the latest book closing date. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Name KIM ENG HOLDINGS LIMITED THAI NVDR CO.,LTD NORTRUST NOMINEE LTD. TFB FOR MFC-THAI FUND INVESTMENT PLAN MS.SUPAPORN SUPAKORNPINYO CHASE NOMINEE LIMITED 1 MR.THAVEECHART JULANGOO TLT HOLDING CO.,LTD MRS.NANTHA RUNGNOPKHUNSRI MR.SUCHAY SRIPRUYAANUN OTHERS Total No. of Shares Held 315,862,471 36,421,333 13,135,900 7,835,800 3,000,000 3,000,000 2,800,000 2,740,000 1,687,500 1,330,000 180,796,296 568,609,300 55.55 6.41 2.31 1.38 0.53 0.53 0.49 0.48 0.30 0.23 31.80 100.00 %
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Kim Eng Holdings Limited (KEH) has 600,082,954 registered shares consisting of 577,093,954 common shares and 22,989,000 treasury shares. Its top-10 major shareholders as at 31 December 2010 are as follows: No. 1. 2. 3 4. 5. 6. 7. 8. 9. 10. 11. Name KIM ENG SECURITIES PTE LTD.* HSBC (SINGAPORE) NOMINEES PTE LTD.** MR. OOI THEAN YAT RONALD DBS NOMINEES PTE LTD. SHUN FUNG HOLDINGS (PRIVATE) LIMITED UNITED OVERSEAS BANK NOMINEES PTE LTD. CITIBANK NOMINEES SINGAPORE PTE LTD. OCBC NOMINEES SINGAPORE PTE. LTD. GLORIA LEE PETER ONG & CO PTE LTD. OTHERS Total No. of Shares Held 170,496,391 175,478,997 65,544,928 28,595,103 18,300,000 14,355,216 13,449,715 6,371,332 5,042,770 3,037,800 76,421,702 577,093,954 577,093,954 % 29.54 30.41 11.36 4.96 3.17 2.49 2.33 1.10 0.87 0.53 13.24 100
Remark:
168.48 million of Kim Eng Holdings Limited (KEH) shares registered in name of Kim Eng Securities Pte. Ltd. are beneficially held by Yuanta Securities Asia Financial Services Limited ("YSAF"). Yuanta Financial Holding Co., Ltd. ("YFHCL") and Yuanta Securities Co., Ltd. ("YSCL") are deemed to be interested in 168.48 million KEH shares beneficially held by YSAF. YSCL is a wholly-owned subsidiary of YFHCL and YSAF in turn is a wholly-owned subsidiary of YSCL. ** 168.30 million KEH shares registered in name of HSBC (Singapore) Nominees Pte Ltd. are beneficially held by Mitsubishi UFJ Securities Co., Ltd. (MUS). Mitsubishi UFJ Financial Group, Inc. (MUFJ) is deemed to be interested in 168.30 million shares beneficially held by MUS. MUS is a wholly-owned subsidiary of MUFJ.
3. Dividend Payment Policy

The Company has the policy of making dividend payment at a rate not less than 40% of its net profit after deduction of all reserves as specified by the Company. Dividend payment made each year depends upon the Companys investment plan, necessity and situation in the future. The Board of Directors can propose the final dividend payment during its board meeting and present to shareholders during a shareholders meeting for approval. The Board of Directors is authorized to decide an interim dividend payment, but needs to inform the shareholders at the next shareholders meeting.
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Committees and Management Structure Structure

Committees and Management Structure

The Companys management structure is comprised of the Board of Directors, the Management Committee, the Audit Committee and the Risk Management Committee. All of the Companys directors and management are qualified in accordance with Section 68 of the Public Limited Companies Act B.E.2535 and the Notification of the Securities & Exchange Commission No. Kor Jor 12/2543 regarding Obtaining for Approval and Approval for Issuance of Ordinary Shares dated March 22, 2000. The Companys management structure consists of the following sub-committees:
1. The Board of Directors

As at December 31, 2010, the Companys Board of Directors comprised of 9 directors as follows: Name 1. 2. 3. 4. 5. 6. 7. 8. 9. Mr. Yuth Vorachattarn Mr. Ronald Anthony Ooi Thean Yat Mr. Montree Sornpaisarn Mr. Judd Clark Kinne Ms. Boonporn Boriboonsongsilp Mr. Pusit Kaewmongkolsri Mr. Tan pei-san Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan Title Chairman and Member of the Audit Committee Director Director Director Director Director Director Director and Chairman of the Audit Committee Director and Member of the Audit Committee
Mr. Waranchai Jensiriwanich acts as the Corporate Secretary. Name Mrs. Gloria Lee Kim Yew Authorised Directors who can sign on behalf of the Company Authorised directors who can sign and bind the Company are any two of the following five directors, provided that they jointly sign with the Companys seal affixed: Mr. Ronald Anthony Ooi Thean Yat, Mr. Montree Sornpaisarn, Mr. Judd Clark Kinne, Mr. Pusit Kaewmongkolsri and Ms. Boonporn Boriboonsongsilp. Title Honorary Chairperson
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Scope of Power and Duties of the Board of Directors 1. To manage the Companys operations to ensure compliance with the objectives and articles of association of the Company and resolutions of the Companys meeting of shareholders with honesty and due care for the interests of the Company. 2. To set goals, guidelines, policies, operating plans and budget of the Company, control and supervise the administration of the Management Committee to ensure the management is performed competently and in compliance with the policies prescribed in an efficient manner. Exceptions to this are transactions such as increase/decrease of capital, issuance of debentures, selling or transferring the business of the Company in whole or in major part, buying or taking control of other companies, amending the memorandum of association or articles of association, and giving benefits to directors. In such matters, the Board of Directors needs to obtain approval from a shareholders meeting prior to carrying out such transactions. 3. The Board of Directors may, as deemed appropriate, elect some directors and management as the Management Committee, provided that they shall have power and duties to conduct the Companys business as designated by the Board of Directors. The Board of Directors shall elect one member of the Management Committee as Chairman of the Management Committee.
In the year 2010, the Board of Directors held 6 meetings. For the Companys best practice, there must be at least two-thirds of the Board of Directors members attending each session.
Details of the Board of Directors Meeting. Name 1. 2. 3. 4. 5. 6. 7. 8. 9. Mr. Yuth Vorachattarn Mr. Ronald Anthony Ooi Thean Yat Mr. Montree Sornpaisarn Mr. Judd Clark Kinne Ms. Boonporn Boriboonsongsilp Mr. Pusit Kaewmongkolsri Mr. Tan Pei-San Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan Number of Attendance 6 3 6 4 3 6 4 5 6
* Mr. Hwang Wei Cherng resigned from directorship on 2010 and was replaced by Ms. Boonporn Boriboonsongsilp. However, Mr.Hwang Wei Cherng has attended the first meeting of the Board of Directors 2010.
Duties Scope of Duties and Responsibilities of the Corporate Secretary 1. Prepare and maintain the following documents:
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a. Directors' Registry b. Notices for the Board of Directors' Meetings, Minutes of the Board of Directors Meetings and Annual Report of the Board of Directors c. Notices for the Shareholders' Meetings and Minutes of the Shareholders Meetings 2. 3. Maintain the Report on Stake Holding of Directors and Management. Carry out other tasks as assigned by the Board of Directors.
2. Management Committee
As at December 31, 2010, the Companys Management Committee is comprised of 5 directors as follows: Name 1. 2. 3. 4. 5. Mr. Montree Sornpaisarn Mr. Pusit Kaewmongkolsri Ms. Boonporn Boriboonsongsilp Mr. Ong Cheow Kheng Mr. Kosit Boonroungkaw
* Mr. Spachai Eakkul has retired on March 1, 2010.
Title Chairman of the Management Committee Member of the Management Committee Member of the Management Committee Member of the Management Committee Member of the Management Committee
Scope of Power and Duties of the Management Committee 1. To set the Companys goals, policies, operating plans and annual budget as proposed by the management prior to submitting to the Board of Directors for approval, including approval for amendment and addition of the Companys annual operating budget in the amount not to exceed Baht 1 million, when there is no Board of Directors meeting to approve such matters before informing all directors in the next meeting; 2. The Companys management that is responsible for conducting matters related to the Companys operation must report the following matters to the Management Committee from time to time; 2.1 Audit report from the SEC 2.2 Audit report from the SET 2.3 Internal audit report 2.4 Quality control report of the Company 2.5 Performance report as related to the Companys operating plan 3. To approve expenditures that are in excess of the amount that could be approved by authorized management. Such approval must be in line with the guidelines as set forth by the Board of Directors; 4. To approve major capital expenditures as specified in the Companys annual budget, or that approved by the Board of Directors;
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5. To approve opening of securities trading accounts and other transactions related to securities brokerage business. The Management Committee could sub-grant power to grantee, provided that such sub-granting is in line with the scope of power as authorized by the Board of Directors; 6. To approve in principal investment for business expansion and business venture with other firms and to inform such matters in the next Board of Directors meeting; 7. To provide advice to management in regards to financial, marketing, human resources management policies and other matters related to securities brokerage, securities underwriting, and investment banking businesses as well as new businesses; 8. To allocate allowances, benefits and compensations as approved by the Board of Directors to the Companys employees and any other persons who work for the Company; 9. To approve change of conditions of credit or settle debtors obligations;
10. To approve acquisition of office equipment, land and land improvement in the amount exceeding Baht 500,000. Such approval must be in accordance with scope of power as designated by the Board of Directors; 11. To approve appointment, transferal and termination of employment of management-level employees; 12. To perform any act as authorized by the Companys Board of Directors from time to time.
The Management Committee does not have the power to approve any transactions or matters where there is a conflict of interest with the Company or its subsidiary (if any). Disclosure of transactions with conflict of interest must be made to the Board of Directors for consideration. Scope of Power and Duties of the Management Committee is in accordance with guidelines for granting power by the Board of Directors that was authorized by the Board of Directors meeting No.12/2545 held on October 17, 2002. Any matters that are beyond the scope as specified above, the Management Committee cannot conduct such matters, except in case approval and assignment by the Board of Directors on a case-by-case basis. For the Year ended December 31, 2010, the Management Committee held meetings 41 times, and in each meeting, at least two-thirds of the Management Committee attended the meeting.
3. Audit Committee
The Audit Committee comprises of 3 directors as follows: Name 1. 2. 3. Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan Mr. Yuth Vorachattarn Title Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee
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Scope of Duties and Responsibilities of the Audit Committee 1. Review the Companys financial reports to ensure their accuracy and sufficient disclosure of information by coordinating with external auditors and management responsible for preparing quarterly and yearly financial reports. The Audit Committee may suggest issues or matters to be included for review or audit by the external auditors while auditing of Company is proceeding; 2. Review adequacy and effectiveness of internal control system and internal audit function, consider independence of internal audit function and approve nomination, transferal and relinquishment of position of head of internal audit function or other functions related to internal audit; 3. Review the Companys compliance with the Securities and Stock Exchange Act, rules and regulations of the Stock Exchange of Thailand or other laws relating to securities businesses; 4. Consider and advise on appointment of the external auditor of the Company, including the audit fee by considering the credibility, the adequacy of existing resources, the firms performance and experience of its professional staff. The Audit Committee has to participate in meeting with the external auditor without management participation at least once a year; 5. Consider connected transactions or other transactions with potential conflict of interest to ensure they are conducted properly in accordance with relevant SET rules for the best interest of the Company; 6. Conduct any other matters assigned by the Board of Directors and agreed by the Audit Committee such as reviewing the Companys financial and risk management policies, reviewing compliance with the Code of Conduct by the management and reviewing all important reports in conjunction with the management to be disclosed to the public as required by law (e.g. management report and management, discussion and analysis (MD&A)); 7. Report activities of the Audit Committee in the Companys annual report signed by the Chairman of the Audit committee. Such reports should include the following information: Opinion on accuracy, completeness and reliability of the Companys process of reporting and disclosing financial information; Opinion on sufficiency of the Companys internal control system; Supporting reasons whether or not the Companys external auditors should be reappointed; Opinion on the Companys compliance with the Securities and Stock Exchange Act, rules and regulations of the Stock Exchange of Thailand or other laws relating to its businesses; Other reports deemed appropriate to be disclosed to shareholders and general investors as assigned by the Board of Directors. the
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In 2010, the Audit Committee held 7 meetings, with details as follows:
Meeting No. Date of Meeting 1/2010 2/2010 3/2010 4/2010 5/2010 6/2010 7/2010 28/01/2010 31/03/2010 30/04/2010 29/06/2010 30/07/2010 28/10/2010 29/12/2010
Assoc.Prof.Dr. Paiboon Sareewiwatthana
Assoc.Prof.Dr. Preecha Jarunggidanan
Mr.Yuth Vorachattarn
Auditor (Audited 2009 Financial Statements) (Reviewed Q.1/10 Financial Statements) (Reviewed Q.2/10 Financial Statements) (Reviewed Q.3/10 Financial Statements)
4. The Nominating Committee

The Nominating Committee was set up in accordance with the resolution of the Board of Directors meeting No.2/2549 held on February 21, 2006. The Nominating Committee is comprised of 5 directors as follows: Name 1. 2. 3. 4. 5. Assoc.Prof.Dr. Preecha Jarungidanan Assoc.Prof.Dr. Paiboon Sareewiwatthana Mr. Yuth Vorachattarn Mr. Judd Clark Kinne Mr. Tan Pei-San Independent Director Member of the Nominating Committee and Independent Director Member of the Nominating Committee and Independent Director Member of the Nominating Committee Member of the Nominating Committee Title Chairman of the Nominating Committee and
Scope of Duties and Responsibilities of the Nominating Committee 1. To nominate qualified candidates as new directors or CEO.
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2. To determine the procedures and criteria for nomination of Companys directors or CEO to ensure transparency.
In 2010, the Nominating Committee held 1 meeting, with details as follows: Name Assoc.Prof.Dr. Preecha Jarungidanan Assoc.Prof.Dr. Paiboon Sareewiwatthana Mr. Yuth Vorachattarn Mr. Judd Clark Kinne Mr. Tan Pei-San No.1/2010 on February 11, 2010
5. Other Committees 5.1 The Compensation Committee

The Companys Compensation Committee is comprised of 5 directors as follows: Name 1. 2. 3. 4. 5. Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan Mr. Yuth Vorachattarn Mr. Tan Pei-San Mr. Judd Clark Kinne Independent Director Member of the Compensation Committee and Independent Director Member of the Compensation Committee and Independent Director Member of the Compensation Committee Member of the Compensation Committee Title Chairman of the Compensation Committee and
The Compensation Committee is responsible for formulating the Companys policies with regard to employment and compensation for employment or termination of employment to be granted or awarded to the Companys employees or directors, and determining the level of compensation and other remunerations to be granted to employees and directors. Scope of Power and Duties of the Compensation Committee To determine and set fair and clear compensation of any kind to be granted or awarded to directors and employees of the Company: To consider granting or awarding compensation of any kind to management as appropriate, including payment of bonus and payment in the form of securities granting:
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To conduct any activities deemed necessary and appropriate in conforming with compensation policy regarding form, procedures and details about allocating of securities to employees. The Chairman of the Compensation Committee would be responsible for providing any information necessary for conducting research in regard to employment to external advisors freely. The Compensation Committee would be responsible for controlling expenses incurred to employ such independent external advisors as well as considering and reviewing appropriate compensation rate, taking into account all relevant factors. The Compensation Committee would specify compensation base, increase in compensation and the overall compensation policy. The Compensation Committee will report such matters directly to the Board of Directors and provide opinion on the compensation to be made to senior management. The Compensation Committee would accept and listen to opinion as provided by the CEO and the COO, and provide recommendations to the Board of Directors for approval. In the year 2010, the Compensation Committee held two meetings, with details as follows: Name Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan Mr. Yuth Vorachattarn Mr. Judd Clark Kinne Mr.Tan Pei-San * Mr. Hwang Wei Cherng resigned from compensation directorship on 2010 and was replaced by Mr. Tan Pei San. However, Mr Hwang Wei Cherng has attended the first meeting of the Board of Directors 2010.
No.1/2010 on February 11, 2010
No.2/2010 No.2/2010 on August 13, 2010
5.2 The Underwriting Committee

The Underwriting Committee was set up in accordance with the resolution of the Board of Directors meeting No.11/2545 held on September 20, 2002. The Underwriting Committee, with authority and duties in approving the Company to act as lead underwriter or co-underwriter for both debt and equity securities, comprised of; Chief Executive Officer (CEO) Chief Financial Officer (CFO) Managing Director-Credit and Risk Control Department Managing Director-Retail Client Department Composition of the Committee
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Must consist of at least three members, one of whom must be the CEO who acts as the Chairman of the Underwriting Committee and is responsible for monitoring the activities of the Underwriting Committee.
Scope of Power and Duties of the Underwriting Committee To consider and approve the securities that include both debt and equity instruments the Company will act as lead underwriter or co-underwriter by considering Authorization for Placement & Underwriting Commitment Form that includes details about characteristics of instruments, business nature and operation of issuers as prepared by the Investment Banking Department: To consider and approve the Companys acting as the lead underwriter or co-lead underwriter. The majority of members of the Underwriting Committee must approve and vote for the transaction prior to the Companys acting as the lead underwriter or co-lead underwriter: To consider the impact of the Company commitment to firm underwriting of securities on financial risk, liquidity and Net Capital Rule (NCR) to ensure the Companys NCR will not fall below the level required the SEC: To establish guidelines for appropriate allocation of securities the Company acts as underwriter to local sales, institutional sales and investment banking departments: To perform any acts as designated by the Management Committee. The Underwriting Committee does not have the power to approve any transactions or matters where there is a conflict of interest with the Company or its subsidiary (if any). Disclosure of transactions with conflict of interest must be made to the Board of Directors for consideration.
5.3 The Risk Management Committee

The Risk Management Committee was set up in accordance with the Board of Directors resolution no. 7/2005 held on July 14, 2005, revised by the Board of Directors resolution no. 1/2010 held on February 11, 2010. Its members consist of the Companys directors and management as follows: Name 1. 2. 3. 4. 5. Mr.Supavee Thanasrisunee Mr. Judd Clark Kinne Mr. Tan Pei-San Mr. Pusit Kaewmongkolsri Mr. Ong Cheow Kheng Title Acting Chairman of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee Member of the Risk Management Committee
Scope of Duties and Responsibility of the Risk Management Committee The Risk Management Committees duties and responsibilities are as follows:
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1. To designate a person(s) with authority to grant credit line approval as well as the authority to do so; 2. To consider and approve operation of business in accordance with specific credit manuals; 3. 4. To consider deviation in various matters as well as authorized persons; To consider other issues related to the Companys risk factors as assigned by the Board of Directors. The Risk Management Committee also has authority in the following areas: 1. To determine and review policies, guidelines, procedures in regard to managing all risk factors affecting the Companys operating performance such as credit risk, market risk, operational risk etc; 2. To consider and approve credit line for securities trading and investment in financial instruments such as Futures and Option and review such amount of credit line; 3. To consider and make a decision on disputed amount of credit line in accordance with normal approval procedures; 4. To identify and specify list of highly risky securities as well as additional conditions clients need to fulfill prior to submission of trading orders for such securities; 5. To consider and approve any exceptional cases in relation to risk management issues.
In 2010, the Risk Management Committee held 2 meeting, with details as follows: Name 1. 2. 3. 4. 5. Mr. Supawee Thanasrisunee Mr. Judd Clark Kinne Mr. Tan Pei-San Mr. Pusit Kaewmongkolsri Mr. Ong Cheow Kheng
* Mr.Supachai Eakkul has retired on March 1, 2010.
Number of Attendance 2 2 2 2 2
5.4 The Good Corporate Governance Committee

The Good Corporate Governance Committee was set up in accordance with the resolution of the Board of Directors meeting No.6/2007 held on November 18, 2007. The Good Corporate Governance Committee consists of the members as follows: Name 1. 2. 3. Mr. Yuth Vorachattarn Assoc.Prof.Dr. Preecha Jarungidanan Assoc.Prof.Dr. Paiboon Sareewiwatthana Title Chairman of the Good Corporate Governance Committee Member of the Committee Member of the Committee
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4. 5. Mr. Montree Sornpaisarn Mr. Waranchai Jensiriwanich Member of the Committee Secretary of the Committee
Scope of Duties and Responsibilities of the Good Corporate Governance Committee 1. Determine good corporate governance principles and business ethics & professional conducts of directors, executives and employees; 2. Monitor, evaluate the result of conformance with good corporate governance principles and business ethics & professional conduct by of directors, executives and employees and provide any suggestions regarding such matters; 3. Arrange any activities to encourage directors, executives and employees to understand more about good corporate principles and realize the necessity to conform with specified business ethics and professional conduct; 4. To ensure full and fair disclosure of conformance with good corporate governance principles in the Companys annual report.
In the year 2010, the Good Corporate Governance Committee held 1 meetings with details as follows: Meeting No. 1/2010 Date 12/11/2010 Mr.Yuth Vorachattarn Assoc.Prof. Assoc.Prof.Dr.Preecha Jarungidanan Assoc.Prof. Assoc.Prof.Dr.Paiboon Sareewiwatthana Mr.Montree Sornpaisarn
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Management
As of December 31, 2010, the Company has 10 members of management as follows:
Name 1. Mr. Montree Sornpaisarn 2. Mrs. Boonporn Boriboonsongsilp 3. Mr. Pusit Kaewmongkolsri 4. Mr. Vikas Chandra Kawatra 5. Mr. Satit Wannasilpin 6. Ms. Aim-On Pinthawiruth 7. Ms. Wimol Chaipatikarn
Title Chief Executive Officer Chief Executive Officer Retail Business Development Chief Operating Officer Acting Chief Financial Officer Managing Director, Foreign Institution Sales Department Managing Director and Head of Research Department Senior Vice President, Accounting Department Vice President, Finance Department
Management who are not under SEC definition Name 8. Mr. Kosit Boonroungkaw 9. Mr. Ong Cheow Kheng 10. Mr. Wanchai Tanjasiri Clients 2 Advisers and Member of the Management Committee Assistant Managing Director, Business Development and Technical Analysis Department
* Mr. Supachai Eakkul has retired on March 1, 2010.
Title Deputy Managing Director, Local Securities
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6. Management Compensation
A. Monetary Compensation Directors Compensation Directors compensation has been determined on a fair and reasonable basis. The Remuneration Committee reviewed directors compensation, taking into account responsibility of each director, the Companys financial condition as well as level of compensation paid relative to those made by other companies in the same industry. Directors compensation consisted of meeting allowance and gratuity that were authorized and approved by the shareholders meeting. For the year ended December 31, 2010, the Companys Board of Directors was comprised of 9 directors, and the Company made compensation to all directors in the form of meeting allowances in the total amount of Baht 3,600,000 and a director gratuity for a total amount of Baht 55,000,000. For the total amount of director gratuity, Baht 5,000,000 of which was made to 3 members of the Audit Committee, and the remaining amount was made to other directors. Details of directors compensation are as follows: Unit: Baht Compensation for the 1. Mr. Yuth Vorachattarn 2. Mr. Ronald Anthony Ooi Thean Yat 3. Mr. Montree Sornpaisarn 4. Mr. Judd Clark Kinne 5. Ms. Boonporn Boriboonsongsilp 6. Mr. Pusit Kaewmongkolsri 7. Mr. Tan Pei San 8. Assoc.Prof.Dr. Preecha Jarunggidanan 9. Assoc.Prof.Dr. Paiboon Sareewiwatthana 10. Mr. Hwang Wei-Cherng* 11. Ms. Chao Tse Yang* Total
Boriboonsongsilp. ** Mr. Chao Tse Yang resigned from directorship on May 16, 2009 and was replaced by Mr. Tan Pei San.
Gratuity for the Year 2010 2,200,000 10,000,000 10,000,000 10,000,000 1,400,000 1,400,000 10,000,000 10,000,000 55,000,000
Year 2010 2,400,000 600,000 600,000 3,600,000
* Mr. Hwang Wei Cherng resigned from directorship on 2010 and was replaced by Ms. Boonporn
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Managements Compensation For the year 2010 ended December 31, 2010, the Company made compensation to 6 management (under the SEC definition) (excluding Senior Vice President of the Accounting Department and the Finance Department) and Mr. Ong Cheow Kheng (as a member of the Management Committee) in the form of salary and bonus for the total amount of Baht 184.19 million and contribution to the provident fund for a total amount of Baht 0.84 million. B. Other Compensation No other compensation.
7. Corporate Governance
The Board of Directors has a policy to adhere strictly to the Code of Best Practices for Directors of Listed Company as prescribed by the Stock Exchange of Thailand. The Company applies Principles of Good Corporate Governance throughout the organisation. It also set up good corporate governance culture starting by providing knowledge and understanding of good corporate governance to employees through various means so that the employees will realize the importance of such culture and integrate them into their work to ensure transparency and standardisation. This will be a basic principle before moving on to further development. The Companys progress in implementing good corporate governance will be evaluated periodically.
8.
Protection of Usage of Inside Information
The Company has a policy to prohibit management from using inside information regarding its operation result and financial condition yet to be disclosed to the public for securities trading and for their own interests. The Company informed its management their obligations in regard to disclosure of their holdings of securities of the Company in accordance with Section 59 and penalties as set out in Section 275 of the SEC Act B.E. 2535 As well, the Company also implemented other preventive measures with regard to usage of inside information including:
1. The Compliance Department will closely check and monitor Investment Banking Department Staffs (IB Staffs) possessing material nonpublic information yet to be disclosed to the public. Names of the clients firms to which such sensitive information belongs will be put under Watch List. As well, any IB staffs who possess material nonpublic information regarding their corporate clients are prohibited from divulging such information to outsiders and trading on such securities (in case corporate clients are listed firms). 2. In case the Company acts as the financial advisor for public offering of shares or for acquiring listed firms, names of client firms will be notified to the Compliance Department, and all IB staff will be prohibited from trading securities of such client firms.
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3. The Company has a policy to put a Chinese Wall between the Investment Banking Department and other departments. IB staffs are prohibited from divulging nonpublic information regarding corporate clients to securities marketing officers and securities research staff prior to an appropriate time. 4. In case the Companys Research Department has prepared research reports based on interviews with listed firms management, the Compliance Department will put the names of listed firms for which the Research Department has prepared research reports under a Watch List to check whether any involved persons take advantage of inside information. 5. In case the Research Department has prepared research reports for any listed firms, the Compliance Department will put the names of listed firms for which the Research Department has prepared research reports under Restricted List, and all the Companys staff will be prohibited from trading such securities three days prior to public dissemination of such reports. 6. The Companys management are required to disclose their holdings of securities of the Company in accordance with Section 59 and penalties as set out in Section 275 of the SEC Act B.E. 2535 7. Any Companys management or departments who obtain inside information regarding the Company are prohibited from divulging such information to outsiders or uninvolved persons, and from trading in the Companys securities one month prior to public dissemination of the Companys financial statements.
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Data Personal Data of the Companys Directors and Management
Board of Directors Name and Position at the Company Age Education % of Share Holding as of Dec 31, 2010* (Change in No. of Shares Held during the Year)**
1. Mr. Yuth Vorachattarn Chairman and Member of the Audit Committee 62 Master Degree in Economics, Thammasat University Jul.03 - present Bachelor Degree in Economics, Thammasat University Aug.02 2005 The Thai Institute of Directors Association: DCP #0 Jan.00-Jul.01 Feb.99-Jan 00 Jul. 01 - Mar.02 Jul.04 - present Jul.05 - present 0.045 (- shares) None Oct.02-present Chairman and Member of the Audit Committee, Kim Eng Securities (Thailand) Plc. Chairman, Siam Panich Leasing Plc. Chairman, Preecha Group Plc. Chairman of the Audit Committee, Saha Thai Steel Pipe Plc. Chairman, Family Know How Co., Ltd. Managing Director, Bangkok Metropolitan Bank. Manager, MAI. ASVP, Government Savings Bank.
Family Relationship among management Period
Experiences Work Experiences Position and Company
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Name and Position at the Company Age Education % of Share Holding as of Dec 31, 2010* (Change in No. of Shares Held during the Year)**
2. Mr. Ronald Ooi Thean Yat Director 57 Certified Public Accountant, The Institute of Chartered Accountants. Bachelor of Economics, University of New England, Australia 3. Mr. Montree Sornpaisarn Chief Executive Officer and Authorized Director MBA (Finance), Thammasat University Bachelor Degree in Engineering, Chulalongkorn University The Thai Institute of Directors Association: DAP #21/2004 Feb.00 - Sept.01 Sept.98 - Jan.00 Apr. 07 - Present May 05 - present 47 Chartered Financial Analyst (CFA) Mar. 08 - Present None Oct.01 - present Director and Chief Executive Officer, Kim Eng Securities (Thailand) Plc. Director and Member of Audit Committee, CVD Entertainment Plc. Director, Thailand Listed Companies Association Executive Director, Association of Securities Companies Managing Director (Investment Banking), Vickers Ballas (Thailand) Ltd. SVP, Investment Banking, SG Asia Finance and Securities Company Plc. Jan. 89-present None Aug. 98-present Director, Kim Eng Securities (Thailand) Plc. Director, Kim Eng Holdings Limited.
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4. Mr. Judd Clark Kinne Authorized Director 66 Master of International Management 0.175 (- shares) Nov 06 - present American Graduate School of International Management, Glendale, Arizona, USA 5. Ms. Boonporn Boriboonsongsilp Chief Executive Officer and Authorized Director Bachelor Degree in Mathematics, Chulalongkorn University Assistant Director, Marketing The Thai Institute of Directors Association: DCP #137/2010 Asia Credit Co.,ltd. 1989-1993 54 Master Degree in Statistics, Chulalongkorn University March 98-Dec 02 Managing Director, Local Securities Clients 1, Kim Eng Securities (Thailand) Plc. None Aug. 08 - present Jan.89 - Feb.98 None Nov.02 - present Director, Kim Eng Securities (Thailand) Plc. Director, KE Strategic Pte. Ltd Alternate Director, Kim Eng Holdings Limited Peregrine Securities Singapore Pte. Ltd.
Jan. 03 present
Director and Chief Executive Officer, Kim Eng Securities (Thailand) Plc.
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6. Mr. Pusit Kaewmongkolsri Chief Operating Officer, Acting Chief Financial Officer, Authorized Director Bachelor Degree in Accounting, Chulalongkorn University The Thai Institute of Directors Association: DAP #11/2004 7. Mr. Tan pei-san Director 40 Master Degree in Laws, Harvard Law School June 09 - present Bachelor of Arts (Law), Cambridge University June 08 - present None June 09 - present Director, Kim Eng Securities (Thailand) Plc. Director, ATR-Kim Eng Capital Partners Inc. Director, KE Capital Partners Pte. Ltd. 1982 Feb. 98 49 Master Degree in MIS, West Coast University. USA. Jul. 98 Jul. 02 None Jan. 03. - present Director and Chief Operating Officer, Kim Eng Securities (Thailand) Plc. Director, DBS Vickers (Thailand) Co.,Ltd AVP, Cmic Finance and Securities Co.,Ltd
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8. Assoc.Prof.Dr. Paiboon Sareewiwatthana Director and Chairman of the Audit Committee The Thai Institute of Directors Association: DCP #12/2001 9. Assoc.Prof.Dr. Preecha Jarungidanan Director and Audit Committee Member 65
Ph. D in Economics, University of MissouriColumbia, USA. Master of Economics, California State University, Long Beach, USA. Bachelor of Economics, Thammasat University The Thai Institute of Directors Association: DAP #9/2004 *Determined based on the no. of shares outstanding after taking into account the no. of repurchase shares. **Change in no. of shares outstanding during the year does not include new shares from exercising share warrants.
57
Ph. D in Finance, University of Mississippi, USA.
0.000 (-10,000 shares)
None
Oct.02-present Feb.01-present 1984 present
Director and Chairman of Audit Committee, Kim Eng Securities (Thailand) Plc. Member of the Audit Committee, Team Precision, Plc. Professor Level 9, NIDA
None
Oct.02 - present Present
Director and Audit Committee Member, Kim Eng Securities (Thailand) Plc. Director The Public Sector Development Commission Director and Audit Committee Member Thai-German Products Plc., Stars Microelectronics (Thailand) Plc.
Mar.01 - present
Expert in Business Economic, NIDA
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Market and Business Conditions Conditions

Market and Business Conditions

Brokerage Business
For the Year 2010, despite domestic political uncertainty that adversely affected investor confidence and sentiment in the SET, investment activities in the SET were still lively, thanks to domestic economic growth of 8 % and a low unemployment rate of 1 %. For the Year 2010, the SET Index rose from 734.54 on January 4, 2010 to close at 1,032.76 on December 30, 2010, an increase by 298.22 or 40.60 % in the Year 2010. The Year 2010 is the first year that domestic securities brokerage business is liberalized. Determination of securities brokerage fee on a sliding scale basis has implemented since January 2010. This resulted in a decline in securities brokerage rate by 30 % on average for the entire industry. Fortunately, a sharp increase in securities trading volume more than offset such decline in securities brokerage rate, thus resulting in increase in securities brokerage fee for the overall industry in the Year 2010. Average daily trading value on the SET for the Year 2010 was Baht 29,066 million, an increase from that for the Year 2009 which was Baht 18,266 million. In the Year 2010, the Company could still its highest market share in the domestic securities brokerage business, with a market share of 12.76 % of total trading value. For the Year 2010, trading by domestic retail investors, domestic institutional investors, foreign investors and securities broker (proprietary trading) accounted for 62 .0 %, 7.6 %, 18.40 % and 12.0 % of total trading value respectively.
The Business of Debt Issuance and Trading

For the Year 2010, total issuance amount of domestic debt instruments was Baht 11.62 trillion, an increase by 6.84 % in terms of issuance amount when compared to that in the Year 2009. Total outstanding amount of domestic debt instruments registered with the Thai BMA as of December 30, 2010 was Baht 6.76 trillion, an increase by 15.11 % when compared with that at the end of 2009. For the Year 2010, government bonds accounted for the highest portion of total domestic debts outstanding, with the outstanding amount of Baht 2.52 trillion. Amount of government bonds outstanding in 2010 increased by 18.41 % when compared with that in 2009. BOT bonds accounted for the second highest portion of total domestic debts outstanding, with the outstanding amount of Baht 2.41 trillion. This represented an increase by 32.54 % when compared with that in 2009. Amount of corporate debt instruments (including long-term and short-term bonds) outstanding was Baht 1.19 trillion. This represented an increase by 5.84 % when compared with that in 2009. Total amount of outright trading in the secondary market was Baht 16.61 trillion, or an average daily trading value of Baht 68,627 million. This represented an increase by 15 % when compared with that in 2009.
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In 2010, the Company raised funds via bill of exchange (BE) in order to expand business, with details as follows. Offering Amount No.1/2010 No.2/2010 No.3/2010 (MB) 755 593.5 325.5 Interest (%) 2.50 2.50 2.50 30 days (20 October 19 November, 2010) 29 days (19 November 17 December, 2010) 90 days (25 November 23 February, 2011) A A A Tenor Rating
Financial Advisory and Securities Underwriting Business

Trading activity in the SET for the Year 2010 increased substantially although the SET Index moved in a narrow range during the first five months of the year due to political turmoil during April to May. However, in the Year 2010, the SET was the second best performer in Asia, with the yearly return of 40.60 % thanks to domestic investor confidence and continual domestic and foreign fund inflows into the SET. For the Year 2010, the SET Index closed at 1,032.76, an increase by 40.60 % from that at the end of 2009. In 2010, the SET was the second best performer in Asia. The SET closed at the lowest point in February 2010 at 685.89 and closed at the highest point in November 2010 at 1,049.79 For the MAI, the index closed at 272.79, an increase by 26.70 % from that at the end of 2009. During the early months of 2010, the Thai bourse was adversely affected by several negative factors including internal factors such as suspension of industrial projects in the Map Ta Phut Industrial Estate by the Central Administration Court and domestic political tension and external factors such as fear that the Sub-Prime Crisis will spread to other regions, the Dubai Crisis and the public debt crisis in Greece. Despite such negative factors, the SET Index could still move in the narrow range thanks to positive factors such as recovery of the global economy, strong Asian economy and sound recovery of the domestic economy. Fund raising activities via the equity market in 2010 became strong thanks to recovery of the domestic economy and trading activity in the SET. For the Year 2010, 11 firms raised funds via IPO, with 4 companies listed on the SET and 7 companies listed on the MAI. Four new property funds, with total fund-raising amount of Baht 12,587.56 million, were listed on the SET. For the Year 2009, 17 new companies and 5 new property funds were listed on the Thai bourse. For the Year 2010, the Company acted as the financial advisor and lead underwriter for Dusit Thani Freehold and Leasehold Property Fund (DTCPF), with the fund-raising amount of Baht 4,094 million and the lead underwriter for an IPO of Universal Adsorbents&Chemicals Public Company Limited, with the fund-raising amount of Baht 120 million. For the Year 2010, total fund raising amount was Baht 77,768.06 million, an increase by 243 % from that in 2009. Sector with the highest fundraising amount was the property and construction material sector, with the total fund-raising amount of Baht 30,798.14 million. In the Year 2010, the Company acted as the lead underwriter for equity offering by BTS
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Group Holdings Plc., with the total amount of Baht 752 million and for equity offering by Somboon Advance Technology Plc., with the total amount of Baht 763 million. The Investment Banking Departments total income for the Year 2010 was Bath 48.92 million, an increase by 18.92 % from that of Baht 41.14 million in the Year 2009.
The Derivatives Agent Business

The Company was granted by the Ministry of Finance a license to operate business as a derivatives agent in accordance with the Derivatives Act B.E. 2546 (2003). As a derivatives agent, the Company has serviced individual clients and institutional clients since the launch of Thailand Futures Exchange (TFEX) on 28 April 2006. Currently, TFEX offers 5 exchanged-traded derivatives products, namely, SET50 Index Futures, SET50 Index Options, Single Stock Futures, Gold Futures and Interest Rate Futures. For the Year 2010, the total volume on TFEX was 4,519,436 contracts. The average daily volume of SET50 Index Futures in the year was 10,212 contracts, a decrease of 1.6% compared with that of 2009 for 10,381 contracts per day. For SET50 Index Options, the average daily volume was 443 contracts, an increase of 12.7% compared with that of 2009 for 393 contracts per day. For Single Stock Futures, the average daily volume was 4,006 contracts, an increase of 567.7% compared with that of 2009 for 600 contracts per day. For Gold Futures, the average daily volume was 4,014 contracts, an increase of 187.3% compared with that of 2009 for 1,397 contracts per day. For the new product, namely Interest Rate Futures that was launched on 18 October 2010, the average daily volume was 1 contract. Overall, investors in the derivatives market compose of domestic individual investors that accounted for 57.21% of total volume, domestic institutional investors that accounted for 32.70% of total volume and foreign institutional investors that accounted for 10.09% of total volume. For 2010, the Company ranked Number 3 for derivatives trading in term of market shares that accounted for 7.91% of the total volume in the derivatives market. The total volume for derivatives traded via the Company was 715,188 contracts The whole companys volume is from operating derivatives agent business on behalf of the clients only because the company has neither proprietary trading nor market making activities. The Company has long emphasized expanding its investor base in the derivatives market. It has continuously provided variety of training courses related to derivatives instruments to its clients and general investors. This is because the Company has always been aware that its long-term success in the derivatives business depends upon investors knowledge and understanding in derivatives trading strategies, return & risk related to derivatives investment and their abilities to apply derivatives instruments for investing and hedging purposes. The Company aims to grow concurrently with continuous expansion in the number of investors and client bases. Relating to derivatives investment strategies, the Company continues to produce and publicize daily derivatives research papers both for fundamental research and technical research. The recommendations of derivatives investment strategies are broadcasted in visual and audio forms via KELIVE
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TV to which the clients can access via the Internet and the clients can watch a morning live program on every business day or can access a recorded program later.
Derivative Warrant (DW)

The company Kim Eng Securities (Thailand) has a credit rating A by Fitch Ratings (Thailand) and is one of the first brokerage houses issuing DW in Thailand. The company first launched DWs by direct listing approach to trade in the Stock Exchange of Thailand (SET) on 29 October 2010 which are BANP42CA and PTT42CA. In 2010, the company had issued 12 DWs that earned good responses from investors. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Derivative Warrant BANP42CA PTT42CA BBL42CA PTTE42CA KBAN42CA SCB42CA BAY42CA PTTA42CA TOP42CA PTTC42CA PTT42CB BANP42CB Underlyin g Assets BANPU PTT BBL PTTEP KBANK SCB BAY PTTAR TOP PTTCH PTT BANPU 29 October 2010 29 October 2010 2 November 2010 2 November 2010 13 December 2010 14 December 2010 15 December 2010 16 December 2010 17 December 2010 20 December 2010 21 December 2010 22 December 2010 29 December 2010 29 December 2010 7 April 2011 25 March 2011 7 April 2011 7 April 2011 7 April 2011 30 May 2011 30 May 2011 30 May 2011 20 June 2011 20 June 2011 6 January 2011 6 January 2011 18 April 2011 31 March 2011 18 April 2011 18 April 2011 18 April 2011 3 June 2011 3 June 2011 3 June 2011 24 June 2011 24 June 2011 Date of Issuance Last Trading Date Date of Maturity
Nevertheless, the company recognizes that DW is a new product, hence, we have continuously provided a variety of training courses to the clients and general investors along with producing and publicizing daily DW research papers called Derivative Warrant Strategy Update. In addition, the recommendations and investment strategies are broadcasted in visual and audio forms via KELIVE TV to which clients can access via the internet to watch the program to educate the investors as well as marketing representatives for new knowledge and up-to-date situation. The issuance of Derivative Warrants In 2010, the company had issued derivative warrants as listed below; As of 31 December 2010, none of DW issued by Kim Eng Securities (Thailand) Public Company Limited listed above from No. 1- No. 12 has expired.
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Asset Management Business
The situation of the Thai asset management business as of December 31, 2010 is summarized as below:
Number of Asset Type of Mutual Fund NAV (Baht) Management Firms Mutual Fund Source: AIMC 2,031,655,085,374.55 21
Number of Funds 1,429
For the Year 2010, the asset management business grew at a satisfactory rate, with total NAV growing by approximately 10 % relative to that in 2009. Fixed-income funds accounted for more than 60 % of total NAVs whereas equity funds accounted for 22 % of total NAVs. It is noted that asset management firms that are affiliate of domestic commercial banks have had higher asset size under management thanks to their advantages in terms of distribution channel and client base that they can share with their parent companies.
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Risk Factors
Risk Factors
Fluctuations in the conditions of international and domestic economies, money markets and capital markets could materially affect the Companys revenue.
The Companys major source revenue is brokerage fee from securities and derivatives business that has been directly related to macroeconomic condition, movements of money and capital markets, trading volume on the Stock Exchange of Thailand (SET) and investor confidence, all of which are factors that are beyond control of the Company. In the Years 2007, 2008 and 2009, average daily trading values of the SET were Baht 17,436 , 16,118 and 18,226 million consecutively. For the Year 2010, average daily trading value of the SET was Baht 28,668 million, an increase by 57.29 % compared to that in the Year 2009. All factors, including internal and external ones, which adversely affected investor confidence alleviated. For the Years 2008, 2009 and 2010, the Companys total brokerage fees were Baht 1,511 ,2,116 and 2,450 million consecutively. Fluctuations in the economy, the money market and the capital market may be caused by a large number of factors that are beyond control of KEST, including civil unrest in the three most southern provinces of Thailand and political uncertainties. Such factors would negatively affect confidence of both domestic and foreign investors and, as a consequence, may adversely affect the volume of trading on the SET and the MAI, including the amount of funds to be raised and the number of new listings on the SET and the MAI. This could have a material adverse effect on KESTs business, financial condition and result of operation. KEST has mitigated such risk by providing some parts of compensation made to marketing officers and securities traders that vary with trading volume on the SET to reduce its fixed operating costs, expanding its brokerage client base to include both individual and institutional clients and generating revenue from variety of financial advisory services including securities offering, M & A, business takeovers, project feasibility studies, business valuation and securities underwriting. KEST also engages in other businesses to generate additional sources of revenue such as asset management, private fund management and securities borrowing & lending (SBL).
Risk due to Intense Competition in the Securities Business

Securities business has been a quite highly competitive business, especially in the area of securities brokerage one that has long been the Companys major source of revenue. The Stock Exchange of Thailand (SET) has changed brokerage fee structure, specifying a minimum brokerage fee at the rate of 0.25 % of total trading value for the period between January 14, 2002 and January 13, 2007. Later on December 25, 2006, the SET extended the period in which a minimum brokerage fee is still applied for another 5 years. Such period is classified into 1) For the first 3 years (January 1, 2007 to
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Risk Factors
December 31, 2009) in which a minimum brokerage fee of 0.25 % is still applied and 2) For the next 2 years (January 1, 2010 to December 31, 2011) in which brokerage fee is determined on a sliding scale basis. In other words, for the period between January 1, 2010 and December 31, 2011, the higher the trading value, the lower the rate of the brokerage fee is applied. Thus, from the Year 2010 on, the securities brokerage business will be a highly competitive business in terms of securities brokerage fee. To cope with the increasing level of competition in the securities brokerage business, the Company has put strong effort to improve every area of its service quality, especially Internet trading service. This is because brokerage fee applied to Internet trading has still been lower than that applied to traditional trading service (Internet trading brokerage fee is 60 % of that applied to traditional trading service). The Company has long focused on providing high-quality services with the aim to maintaining and expanding the existing client base. The Company has done so by increasing the quality of research publications, improving and developing skills and capabilities of staff in providing services and recommendations to clients. The Company has continuously upgraded its information system to well respond and satisfy fast-changing client needs. All of these have enabled the Company to be in a good position and well prepared for liberalization of the securities brokerage fee structure that will be effective on January 1, 2012, and thus intensify competition in the securities brokerage industry. Financial advisory and investment banking services and fees have also been competitive in terms of both service quality and advisory fee levels. KEST has provided variety of financial advisory services including securities offering, independent financial advisory, fund raising, M & A, business takeovers, business valuations etc, focusing on provision of high-quality services. The Company has continuously developed and upgraded advisory skills of its IB staff, and this enables it to provide highquality financial advisory services to clients on a continuous basis. KEST was also granted a license to operate business as a derivatives agent in accordance with the Derivatives Act B.E. 2546. It was selected as a member of Thailand Futures Exchange (TFEX) that was launched on April 28, 2006 and Thailand Clearing House (TCH) to operate business as a derivatives agent. This has helped to expand the Companys source of revenue.
In its securities brokerage business, the Company is highly dependent on a small number of large clients.
The Companys top 10 trading clients accounted for 18.95% of total securities brokerage fee income in the year 2009 and 21.77% in 2010. Had KEST lost such big trading clients, its securities brokerage fees for 2009 and 2010 would have fallen by 20.66% and 8.44%, respectively. However, one of the Companys top 10 trading clients was the Kim Eng Holdings Group that is also the major shareholder. Thus, it is quite unlikely that it will lose such a client. As KEST has long realised concentration risks, it has thus aimed to increase the number of trading accounts in order to expand its client base. For the year ended December 31, 2009 and 2010, the total number of KESTs client trading accounts was 73,200 and 90,000, respectively. For 2010, 89.76% of the Companys securities brokerage fees were
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Risk Factors
from retail trading business and the remainder from local and foreign institutions. Another source of the Companys operating revenue was from financial advisory and securities underwriting businesses that generated total revenue of Baht 49.59 million, a rise of 21.13 % from the 2009 level. This has helped to generate another source of operating revenue for the Company and allowed it to rely less on securities brokerage business.
Clients may default or delay payment for or transfer of securities and collateral for taking position in futures
For the year ending December 31, 2010, the Companys securities brokerage receivables totaled Baht 7,333.08 million, consisting of clients accounts of Baht 2,636.30 million, margin loans of Baht 4,355.98 million, securities borrowing and lending accounts of Baht 57.34 million and other receivables of Baht 260.06 million, with unearned interest revenue of Baht 34.28 million In addition, the Company had derivatives business receivables amounting Baht 15.20 million outstanding. It classified such securities and derivatives brokerage receivables as doubtful debt in the amount of Baht 277.13 million, accounting for 3.75% of its total securities and derivatives brokerage receivables. Of the total amount of doubtful debt, Baht 271.65 million, of which belonged to Nithiphat Securities Co., Ltd., was incurred prior to acquisition of the ordinary shares of that company by Kim Eng Holdings Limited in 1998, and Baht 5.48 million of which was incurred after the share acquisition by Kim Eng Holdings. The Company tries to collect all doubtful debts as fast as possible, and if it cannot do so, it will file a lawsuit against the defaulting receivables. For the total doubtful debt of Baht 277.13 million, Baht 14.48 and 262.65 million of which were classified as substandard and doubtful debts. The Company established an allowance for doubtful debt in the total amount of Baht 277.01 million, or 100% of the total doubtful debt. In the derivatives agent business, the Company may face the risk that collateral clients put up may not be sufficient to satisfy their debt obligations with TCH. Thus, KEST, as a derivatives agent, is obligated to follow and collect more collateral from clients to satisfy debts incurred as a result of loss from holding a position in futures. Nevertheless, KEST has implemented many policies aimed to mitigate default risk as a result of securities and derivatives trading. It has done so by focusing on selecting high-quality clients and specifying trading limits for securities and derivatives that well correspond to securities collateral amount, clients financial status, their abilities to repay debts, liquidity conditions and investment experience. KEST has regularly reviewed and closely monitored the receivables status.
Risk Associated with Margin Account under the Credit Balance System
In extending margin loans to securities trading clients, the Company may face the risk that margin clients may default their repayments, especially in the case that value of securities put as collateral
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Risk Factors
falls below their outstanding margin amount. Normally, such repayment default will not occur under the credit balance system as margin clients are required to maintain their maintenance margin in accordance with conditions as prescribed by the Company and relevant regulators. If the proportion of collateral to outstanding margin amount falls below the prescribed ratio, the procedures related to call margin and force sell will apply respectively. Nevertheless, some adverse abnormal situation may occur, thus leading to a sharp decline in value of securities put as collateral such that the system of maintenance margin cannot cope with it. To manage this risk, the Company formulates and applies clear and stringent policies in selecting securities allowed to be traded under margin system as well as prescribing initial margin for such securities. The Company does not allow its clients to trade risky/speculative securities under margin system. The Company also prescribes ceiling margin amount for each client in trading a particular securities. Margin loans amount as of December 31, 2008, 2009 and 2010 was Baht 788.40, 2,037.24 and 4,355.98 million respectively. Margin loans amount outstanding may vary each year, depending upon trading activities on the SET. For the period that margin loans amount outstanding sharply increases, the Company well realizes about potential risk associated with margin account. The Company well complies with policies/measures in dealing with this risk as described in the previous paragraph stringently. In the past, the Company never faces serious damage due to extending margin loans.
Any failure in computer systems may disrupt the Companys securities brokerage business operations
To operate its securities brokerage business, the Company relies heavily on its computer systems. Main computer systems that have supported the Companys operation of securities trading are comprised of 1) HiTrade that is connected to the SET for securities trading on a real-time basis. It enables securities marketing officers and clients to closely monitor share price movement, to submit trading orders and check trading order status. HiTrade is connected to the Internet, thus allowing clients to monitor share price movement and submit trading orders via the Internet as well. 2) The computer system that is connected to TFEX and enables securities marketing officers to submit trading orders for futures contracts on behalf of their clients and the computer system that is connected to SET Trade that allows clients to submit their trading orders via the Internet. 3) Share settlement systems for transactions between clients and TSD, namely the Securities Back Office Automation, or SBA. If the Companys computer systems fail, the operation of the Company in the securities brokerage service will be materially affected. To mitigate such risk, the Company set up a backup system as well as back ups of important information, both of which enable the Company to operate smoothly in case of a failure of the main system. To connect the main offices computer system and those of the branch offices, the Company has a back up leased line that can switch when the leased-line fails. As well, the Company has a contingency plan that allows the use of a back-up computer system when contingency plans are implemented.
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Risk Factors
As an underwriter, the Company is required to subscribe for unsubscribed securities that may expose it to large losses
In relation to investment banking business in which the Company acts as an underwriter, it assumes an underwriting risk that may require it to purchase any unsubscribed securities for its own account. This may be due to inappropriate pricing and fluctuations in both money and capital markets. If, in the future, the Company is required to purchase underwritten securities for its own account, it may result in significant losses that could have a material adverse effect on its financial condition, particularly the net capital ratio, and its results on operations. To mitigate this risk, prior to participating as an underwriter for any securities, the Company conducts a study and analysis of the business potential of issuers as well as client interest, and the Company will act as underwriter for securities only with minimal risk of securities under subscription. In case the Company acts as underwriter for securities at significant amounts, approval for securities underwriting from the Underwriting Committee needs to be obtained prior to the Companys acting as underwriter. In acting as underwriter and/or financial advisor, the Company has put emphasis on selecting clients. Prior to accepting any new clients, the Company will conduct a preliminary assessment and due diligence on the business potential as well as financial performance of the clients. The Companys IB staff are well accustomed with relevant applicable law and regulations, and this enables them to provide high-quality and accurate services to clients.
The Companys business may be affected by an error or the misconduct of an employee that is difficult to check and prevent
The Companys business is highly dependent upon its reputation and the trust of its clients. Employees are regularly in direct contact with clients and have knowledge of, or access to, the clients assets or information. Accordingly, when an employee does not carry out his or her duties in accordance with a clients orders or acts beyond his or her authority or does not act in compliance with the Companys rules and regulations including its compliance manual or commits misconduct in managing clients assets or uses the clients information without permission or other actions that may harm client interests, the Companys reputation and the trust of other clients may be adversely affected. The Company may also become liable for the losses incurred by the clients in question. In addition, certain actions may be made in breach of relevant laws or regulations and may result in the Company becoming liable to pay fines, losing its license or being subject to litigation, all of which may have a materially adverse effect on the Companys financial condition and result of operations. To deal with this risk, the Company has regularly monitored working activities of employees and will punish any employee who violates these Companys rules. In the Year 2008, there
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Risk Factors
was no case such that the Companys staff failed to comply with or violated applicable rules and regulations that may cause detrimental effects to the Companys operation.
The Company operates its businesses under stringent laws and regulations, including regulations that impose liability on its operations that could have an adverse effect on its results of operations and financial condition
The securities business is strictly controlled by laws and regulations from government authorities, the Office of the SEC and the SET. As a result, any establishment or change of government policy or of the supervisory roles of the relevant regulatory bodies may affect the Companys goals, competitiveness and business and could have a materially adverse effect on the business, financial condition and result of operations of the Company. Moreover, the Company may incur liabilities resulting from the operation of its business, such as from mistakes arising from the performance of its duties as financial advisor or underwriter or from its failure to comply with steps in accepting securities purchase or sales orders from clients. The Company can not insure that if the Company became liable, it would not face serious liability or a possible business license risk, either of which could have serious a material effect on its business and its reputation. To mitigate this risk, the Companys Internal Audit Department has closely monitored changes in laws and regulations relevant to the Companys businesses, and will closely control and check operations of each department in the Company to ensure they are in conformance with applicable laws and regulations. It will inform of changes in relevant regulations to all involved departments.
The Company is highly dependent on staff

The Company relies on experienced, knowledgeable and skilled employees in its business operations. At present, in a highly competitive business, with a limited number of experienced and skilled staff, there is intense competition to recruit appropriate qualified staff. To the extent that the Company is unable to retain these staff, the Companys business continuity may be affected to the detriment of its financial condition and result of operations. To counter this risk, the Company has provided its staff with good employee welfare, and long put emphasis on providing training courses for employees with the aim of enhancing employee skills. In addition, the Company has allocated warrants for staff in order to attract a very qualified workforce to continue working for the Company over the long term. In the Year 2010, the Company faced no problem regarding significant turnover of its staff.
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Risk Factors
under The Companys operations are under the control of the major shareholder
As at August 27, 2010, Kim Eng Holdings Limited, the Companys major shareholder, held a 55.55% equity stake in the Companys paid-up capital. Thus, Kim Eng Holdings Limited remains able to control shareholders resolutions in relation to key matters that are required by laws or articles of association of the Company to be passed by a majority vote of shareholders attending the meetings and entitled to vote, except for matters that are required by laws or articles of association of the Company to be passed by a three-fourths vote of shareholders. Therefore, other shareholders may not obtain sufficient votes to balance those of Kim Eng Holdings Limited. Nevertheless, the Company has appointed three independent directors that account for 30% of the Companys Board of Directors. They are responsible for monitoring and providing advice on the Companys operation to ensure it has operated transparently and accurately. Moreover, as a subsidiary of Kim Eng Holdings that has long been well known for its securities business with subsidiaries in Asia, Europe and the United States, KEST has been widely accepted by retail and institutional trading clients for its expertise and experience in the securities business.
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Audit Committees Report


The Audit Committee of Kim Eng Securities (Thailand) Plc., appointed by the Board of Directors, comprises of 3 independent directors, all of whom have possessed qualifications in line with the requirements of the Stock Exchange of Thailand (SET). They include; Name 1. 2. 3. Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof.Dr. Preecha Jarungidanan Mr. Yuth Vorachattarn Title Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee
For the Year 2010, the Audit Committee held 7 meetings to review the Companys operating performance and other activities as designated by the Board of Directors. All members of the Audit Committee participated in every meeting. Details of attendance are as follows: Meeting No. Date of Meeting 1/2010 2/2010 3/2010 4/2010 5/2010 28/01/2010 31/03/2010 30/04/2010 29/06/2010 31/07/2010 Assoc.Prof. Assoc.Prof.Dr. Paiboon Sareewiwatthana Assoc.Prof. Assoc.Prof.Dr. Preecha Jarungidanan
Mr.Yuth Vorachattarn
Auditor (Auditing 2009 Financial Statements) (Reviewing Q1/10 Financial Statements) (Reviewing Q2/10 Financial Statements) (Reviewing
6/2010 7/201
28/10/2010 29/12/201
Q3/10 Financial Statements) -
In particular meetings of the Audit Committee, the Management and/or external auditors were invited to attend such meetings. The results from the meetings were reported to the Board of Directors. Major activities of the Audit Committee in the year 2010 were as follows:
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The Audit Committee reviewed 2009 audited financial statements, Q1/2010 reviewed financial statements, Q2/2010 reviewed financial statements and Q3/2010 reviewed financial statements. The Audit Committee and PRICEWATERHOUSE COOPERS ABAS Limited, the Companys external auditor, held a meeting to review and discuss the audit result. The audit result indicates that the Companys financial statements were prepared in accordance with generally accepted accounting principles and provided adequate disclosure. The Companys external auditor provided independent opinion and suggestion about the matters the Company needs to improve and develop. The Audit Committee reviewed and approved the internal audit plan for the Year 2010. The Audit
Committee gave comments regarding the audit observation and provided guidelines for good corporate governance practices. The Audit Committee evaluated the Companys internal control system for completeness,
acknowledged and monitored the audit results. The Audit Committee was satisfied with the Companys internal audit program. All departments gave full cooperation to the audit program. The Management fully supported the internal audit program and asked all departments to rectify weaknesses, and as a result, the Companys operational effectiveness improved. The Audit Committee reviewed the Companys compliance with the rules, regulations and
requirements of the SEC and the SET and the Companys operating policies. The Audit Committee found no material deficiencies in relation to compliance with applicable regulations and the Companys operating policies. The Audit Committee reviewed the Companys audited financial statements for the Year 2009,
reviewed Q1/2010, Q2/2010 and Q3/2010 financial statements. The Audit Committee, together with the external auditor (PWC), evaluated the audit results in relation to generally accepted accounting principles to ensure accuracy, completeness, and adequacy of the financial statements. The external auditor also provided the opinion on areas for improvement. The Audit Committee asked the Company to conduct risk assessment based on the Risk-Based
Approach (RBA) in the area of general operation, information system, risk monitoring and etc. The Audit Committee verified the Companys compliance with relevant securities & exchange regulations and evaluated the Companys related party transactions to ensure they were conducted fairly and transparently. The Audit Committee reported the audit results to the Board of Directors on a regular basis. The Audit Committee selected and appointed an independent external auditor that has no business
relationship or interests with the Company, its subsidiary, its management, its major shareholder or any of their related persons. The Audit Committee proposed the external auditor for consideration by the Board of Directors prior to being nominated by the meeting of shareholders. The Audit Committee and the external auditor held a meeting to consider and approve the Companys financial statements with no management participating in such meeting. The Audit Committee reviewed and provided opinion regarding connected transactions and
transactions with potential conflict of interest in accordance with the requirement of the SEC and the SET. It is
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of the opinion of the Audit Committee that those transactions are fair and conducted on an arms length basis and sufficient disclosure was provided in the Companys notes to financial statements. The Audit Committee managed information disclosure about the Company, the Management and
major events via the Companys website (http://www.kimeng.co.th) for investors and interested general public. This is to support good corporate governance principles of the Company. The Audit Committee inspected potential fraudulent activities or actions in accordance with Section
89/25 of the Securities & Exchange Commission Act B.E.2535 that requires the auditor report directly to the Audit Committee in case any potential fraudulent activities or actions exist. The Audit Committee is required to provide initial investigation result to the SEC and the auditor within 30 days from the date on which the auditor reports potential fraudulent activities or actions to the Audit Committee. For the Year 2010, the auditor found no potential fraudulent activities or actions. It is of the opinion of the Audit Committee that the Company complied with the accounting standards as prescribed by the Association of Thai Accountants and regulations of the Stock Exchange of Thailand. The Audit Committee closely monitored the Companys operation to ensure transparency, which is consistent with good corporate governance practices. The Audit Committee ensured the Company has built and maintained appropriate internal control systems. The Audit Committee found no material deficiencies in the Companys operation and internal controls and systems, and this is consistent with the external auditors opinion. The Company provided sufficient information to all shareholders and interested persons and emphasized on developing internal control system and audit to ensure maximum benefits to all shareholders and stakeholders.
Paiboon Sareewiwattana
Chairman of the Audit Committee
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Performance Financial Performance and Information

Financial Performance and Information

For the Year 2010 from 1 January to 31 December 2010, the Company achieved a net profit of Baht 820.77 million, or an EPS of Baht 1.44, an increase by 14.51 % from the Year 2009 in which the Company achieved a net profit of Baht 716.74 million, or an EPS of Baht 1.26. For the Year 2010, the Company earned a total securities brokerage fee of Baht 2,499.99 million, an increase by Baht 383.63 million or 18.12% from that of Baht 2,116.36 million in the Year 2009. For the Year 2010, the Companys daily average trading value (excluding proprietary trading) was Baht 3,798 million whereas the SETs daily average trading value was Baht 17,777 million. In the Year 2010, the Company could still maintain its highest market share (12.76 %) in the securities brokerage business for nine consecutive years. For the Year 2010, the Companys revenue from derivatives brokerage business was Baht 188.52 million, a decline from that in the Year 2009 in which it earned a revenue from derivatives brokerage business of Baht 206.72 million. For the Year 2010, the Companys services and underwriting fee was Baht 63.03 million, a decline from that of Baht 63.66 million in the Year 2009. In the Year 2010, the Companys interest & dividend revenue were Baht 86.06 million, an increase from that in the Year 2009 of Baht 79.18 million. As of December 31, 2010, the Companys total assets were Baht 9,036.57 million, an increase by 26.81% from that as of December 31, 2009. The majority of the Companys assets were securities and derivatives receivables that may vary according to securities trading volume over the last three trading days of each fiscal year. Securities and derivatives receivables accounted for 78.63 % of the Companys assets as of December 31, 2010. Another major component of the Companys assets was cash & cash equivalent that accounted for 11.89 % of the Companys total assets as of December 31, 2010. As of December 31, 2010, the Companys sources of capital included liabilities of Baht 4,399.84 million and shareholders equity of Baht 4,636.73 million. Its debt-to-equity ratio stood at 0.95x, an increase compared to that of 0.57x as of December 31, 2009. The majority of the Companys liabilities was securities & derivatives payables that may vary according to trading situation in the SET. The Companys debt-to-equity ratios, without taking into account securities & derivatives payables, as of December 31, 2008, 2009 and 2010 were 0.09, 014 and 0.37 respectively. The Companys ROEs for the Year 2008, 2009 and 2010 were 13.47, 16.40 and 17.58 % consecutively. In the Years 2009 and 2010, the Company made total dividend payment of Baht 424.81 and 710.76 million respectively. For the Year 2010, the Company achieved an EPS of Baht 1.42, with a weighted average number of shares outstanding of 568,680,180 shares (taken into account number of repurchased shares of 1,645,200). Such weighted average number of shares outstanding were determined taking into account ESOP warrants totaling 27,250,000 units issued and offered to directors, executives and employees in 2006. Such warrants were fully exercised on February 28, 2010, the last exercise date of such warrants. For the Year 2010 ended December 31, 2010, the Company had a net cash flow from operating activities of Baht 681.24 million due mainly to an increase in securities and derivatives payables of Baht
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3,466.26 million thanks to healthy increase in trading volume in the SET in the Year 2010 relative to that in the Year 2009. The Company had a net cash flow used in investing activities of Baht 63.62 million as the Company invested in intangible assets and equipment of Baht 10.89 and 54.04 million consecutively. For the Year 2010, the Company had a net cash flow used in financing activities of Baht 381.69 million due mainly to dividend payment. For the Year 2010, the Company made a total dividend payment of Baht 710.76 million.
Financial Summary Financial Statements Unit: Thousands of Baht 2008 Total Assets Total Liabilities Total Shareholders Equity Securities Brokerage & Derivatives Receivables Total Revenue Net Profit Fully Diluted EPS () Weighted Average Number of Shares Outstanding (Thousands of Shares) (Diluted)* Note : * The Companys extraordinary shareholders meeting No.1/2005 held on December 6, 2005 approved issuance and offering of ESOP warrants to directors, executives and employees, with the offering amount of not exceeding 27.25 million units. Important features of the ESOP warrants include an offering price of Baht 0, the exercise price of Baht 7 and the exercise ratio of 1:1.Warrant holders are entitled to exercise their warrants on the last business day of every month during the tenor of warrants of 4 years. Warrant holders were first allowed to exercise their warrants on August 31, 2006. 1,964,686 533,234 0.94 565,649 2,567,166 716,738 1.26 569,218 3,111,449 820,767 1.44 568,680 5,342,035 1,129,534 4,212,501 1,554,032 2009 7,125,777 2,596,921 4,528,856 3,628,877 2010 9,050,099 4,398,199 4,651,900 7,105,547
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Key Financial Ratios 2008 Profitability Ratio Gross Profit Margin (%) Net Profit Margin (%) Return on Equity (%) Return on Investment (%) Efficiency Ratio Return on Assets (%) Total Assets Turnover (x) Financial Policy Ratio Liquid Assets to Total Assets Ratio (%) Earning Assets to Total Assets Ratio (%) Debt-to-Equity Ratio (x) Dividend Payout Ratio (%) Other Ratios Investment to Total Assets Ratio (%) Net Liquid Capital Ratio (%) (Calculated in accordance with the SECs rules) 4.83 376.41 4.20 180.26 2.32 97.43 52.31 81.63 0.27 85 30.65 80.25 0.57 99 3.85 86.51 1.25 NA 8.79 0.32 11.50 0.41 6.48 0.24 93.65 27.14 12.72 43.29 94.46 27.92 16.40 31.74 92.89 27.31 13.15 35.02 2009 2010
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Report Report regarding the Responsibility of the Board of Directors for Financial Report 2010 Annual Report 2010
Report regarding the Responsibility of the Board of Directors for Financial Report
The Board of Directors of Kim Eng Securities (Thailand) Plc. is responsible for the Companys financial statements and financial information as shown in its annual report for the year 2010. The Companys financial reports and information are prepared in compliance with the Generally Accepted Accounting Principles, with due care and carefulness. The Company has provided sufficient disclosure of important information in the notes to financial statements for the benefit of shareholders and general investors. For the purpose of preparing reliable and accurate financial statements and information, the Board of Directors has set up a risk management system to ensure accurate, complete and sufficient recording of accounting data for the purpose of asset custody and prevention of any fraud and unusual activities. As well, the Company set up an Audit Committee to review its accounting policies, sufficiency of the internal control systems, auditing and disclosure of financial data to ensure accurate, reliable and reasonable data regarding its financial status, revenue, expenses and cash flow. The Companys financial statements were audited by PricewaterhouseCoopers ABAS Limited. In auditing the Companys financial statements, the Board of Directors and the management provided data and documents necessary for the auditor to perform the auditing tasks and provide the opinion in accordance with applicable auditing standards. The auditors opinion already appears on the Companys annual report. It is the Board of Directors opinion that the financial statements of Kim Eng Securities (Thailand) Plc. ending December 31, 2010 are prepared in line with generally accepted accounting principles and relevant rules and regulations.
Yuth Vorachattarn
Chairman
Montree Sornpaisarn
Chief Executive Officer
Pusit Kaewmongkolsri
Chief Operating Officer
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KIM ENG SECURITIES (THAILAND) PUBLIC COMPANY LIMITED
CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS 31 DECEMBER 2010
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AUDITORS REPORT
To the Shareholders of Kim Eng Securities (Thailand) Public Company Limited
I have audited the accompanying consolidated and company balance sheets as at 31 December 2010 and 2009, and the related consolidated and company statements of income, changes in shareholders equity and cash flows for the years then ended of Kim Eng Securities (Thailand) Public Company Limited and its subsidiary and of Kim Eng Securities (Thailand) Public Company Limited. The companys management is responsible for the correctness and completeness of information in these financial statements. 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 audits 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 consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial positions as at 31 December 2010 and 2009, and the consolidated and company results of operations, and cash flows for the years then ended of Kim Eng Securities (Thailand) Public Company Limited and its subsidiary and of Kim Eng Securities (Thailand) Public Company Limited, respectively, in accordance with generally accepted accounting principles.
Anothai Leekitwattana Certified Public Accountant (Thailand) No. 3442 PricewaterhouseCoopers ABAS Limited Bangkok
10 February 2011
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Kim Eng Securities (Thailand) Public Company Limited Balance Sheets As at 31 December 2010 and 2009
Consolidated 2010 Notes Assets Cash and cash equivalents Long-term deposits at financial institutions Investments in debt and equity securities, net Investments in subsidiary Receivables from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Equipment, net Intangible assets Foreclosed properties Deposits Other assets Total assets
14 12 13 317,795,745 103,504,141 22,594,826 9,886,500 39,966,564 103,371,235 292,333,111 85,953,400 17,710,171 9,886,500 39,747,686 100,334,313 10, 11 7,105,547,280 3,628,876,591 7 8 9 136,499,187 121,204,741 299,541,977 449,209,340 6 1,348,757 1,347,570 5 1,074,851,436 2,201,405,991
The company only 2009 Baht 2010 Baht 2009 Baht
Baht
993,386,492
2,103,210,806
1,348,757
1,347,570
136,499,187 99,999,980 121,204,741
299,541,977 99,999,980 449,209,340
7,105,547,280
3,628,876,591
317,795,745 102,213,190 20,311,788 9,886,500 39,963,854 101,941,115
292,333,111 85,215,721 16,410,171 9,886,500 39,745,536 99,999,578
9,036,570,412
7,126,346,650
9,050,098,629
7,125,776,881
The notes to financial statements on pages 75 to 105 form an integral part of these financial statements. Back to Content 68
Kim Eng Securities (Thailand) Public Company Limited Balance Sheets As at 31 December 2010 and 2009
Consolidated 2010 Notes Liabilities and shareholders equity Liabilities Payables to Clearing House Securities and Derivatives business payables Derivative liabilities Debentures and other borrowings Provisions Accrued bonus expenses Accrued corporate income tax Accrued other expenses Liabilities under long-term lease Dividend payable Other liabilities Total liabilities Shareholders equity Share capital Authorised share capital 572,250,000 ordinary shares of Baht 5 each Issued and paid-up share capital 570,814,500 ordinary shares of Baht 5 each (2009: 570,145,000 ordinary shares of Baht 5 each) Premium on share capital Share subscriptions received in advance Premium on treasury stock Retained earnings Appropriated - reserve Unappropriated Less Treasury Stock Total shareholders equity Total liabilities and shareholders equity
20 20 295,431,144 969,568,034 (11,260,973) 4,636,729,377 9,036,570,412 258,225,862 911,941,340 (15,094,030) 4,528,858,001 7,126,346,650 2,854,072,500 523,570,729 5,347,943 2,850,725,000 522,468,329 591,500 2,861,250,000 2,861,250,000 19 18 17 23 15 16 2,679,693,495 44,599,460 324,324,152 34,453,333 457,218,493 246,147,912 57,454,894 19,969,154 916,404 39,888,177 4,399,841,035 1,951,545,484 34,653,183 305,887,293 184,968,424 38,037,512 16,903,198 916,404 22,077,183 2,597,488,649 495,175,561 42,499,968
The company only 2009 Baht 2010 Baht 2009 Baht
Baht
495,175,561 2,679,693,495 44,599,460 324,324,152 34,453,333 457,218,493 246,147,912 56,351,223 19,969,154 916,404 39,349,349 4,398,198,536
42,499,968 1,951,545,484 34,653,183 305,507,293 184,968,424 37,900,048 16,903,198 916,404 22,027,331 2,596,921,333
2,861,250,000
2,861,250,000
2,854,072,500 523,570,729 5,347,943 295,431,144 984,738,750 (11,260,973) 4,651,900,093 9,050,098,629
2,850,725,000 522,468,329 591,500 258,225,862 911,938,887 (15,094,030) 4,528,855,548 7,125,776,881
Kim Eng Securities (Thailand) Public Company Limited Statements of Income For the years ended 31 December 2010 and 2009
Consolidated Notes Revenues Brokerage fees Brokerage fees from Securities Business Brokerage fees from Derivatives Business Fees and services income Gain on trading in securities (Losses) from impairment of investment Gain (Losses) on trading in derivatives Interest and dividend income Interest on margin loans Other income Total revenues Expenses Expense on borrowings Fees and services expenses Bad debts and doubtful accounts (reversal) Operating expenses Personnel expenses Premises and equipment expenses Taxes and duties Management's remuneration Directors' remuneration and others Information and technology Other expenses Total expenses Profit before income tax Income tax Net profit for the year 55,363,143 157,572,198 (795,295) 1,040,701,940 259,340,799 7,341,095 218,373,860 65,850,000 34,280,759 116,354,549 1,954,383,048 1,157,401,249 351,807,648 805,593,601 35,279,333 111,239,283 (4,630,988) 848,043,421 248,801,250 4,545,946 178,441,015 50,510,295 29,536,017 66,419,236 1,568,184,808 999,966,088 284,794,787 715,171,301 2010 Baht 2009 Baht
The company only 2010 Baht 2009 Baht
2,499,989,317 188,517,763 63,032,825 48,603,158 51,666,393 86,055,019 155,454,662 18,465,160 3,111,784,297
2,116,360,289 206,719,832 63,655,397 25,459,648 (14,662,500) (166,000) 79,184,172 75,290,824 16,309,234 2,568,150,896
2,499,989,317 188,517,763 62,975,570 48,603,158 51,666,393 85,005,395 155,454,662 19,236,649 3,111,448,907
2,116,360,289 206,719,832 63,655,397 25,459,648 (14,662,500) (166,000) 77,865,570 75,290,824 16,642,930 2,567,165,990
55,363,143 156,738,494 (795,295) 1,030,169,645 258,869,807 7,306,466 218,373,860 65,850,000 31,079,849 115,918,520 1,938,874,489 1,172,574,418 351,807,648 820,766,770
35,279,333 110,724,283 (4,630,988) 846,474,349 248,742,705 4,509,811 178,441,015 50,510,295 29,533,812 66,157,003 1,565,741,618 1,001,424,372 284,686,373 716,737,999
25
Basic earnings per share (Baht) Diluted earnings per share (Baht)
26 26
1.42 1.42
1.26 1.26
1.44 1.44
1.26 1.26
Kim Eng Securities (Thailand) Public Company Limited Statements of Changes in Shareholders Equity For the years ended 31 December 2010 and 2009 Consolidated Attributable to equity holders of the parent Premium Share on subscriptions Legal and Unappropriated Treasury received Treasury stock retained stock in advance reserve earnings Baht Baht Baht Baht 5,347,943 5,347,943 591,500 (591,500) 258,225,862 41,038,339 (3,833,057) 295,431,144 911,941,340 805,593,601 (41,038,339) 3,833,057 (710,761,625) 969,568,034
Issued and paid-up share capital Baht Beginning balance at 1 January 2010 Net profit for the year Increase in share capital/share subscription (Note 19) Premium on treasury stock Appropriation of legal reserve (Note 20) Treasury stock (Note 19) Appropriation of treasury stock (Note 20) Dividend paid (Note 22) Ending balance at 31 December 2010 2,850,725,000 3,347,500 2,854,072,500
Premium on share capital Baht 522,468,329 1,102,400 523,570,729
Treasury stock Baht (15,094,030) 3,833,057 (11,260,973)
Total Baht 4,528,858,001 805,593,601 3,858,400 5,347,943 3,833,057 (710,761,625) 4,636,729,377
Issued and paid-up share capital Baht Beginning balance at 1 January 2009 Net profit for the year Increase in share capital/share subscription (Note 19) Appropriation of legal reserve (Note 20) Treasury stock (Note 19) Appropriation of treasury stock (Note 20) Dividend paid (Note 22) Ending balance at 31 December 2009 2,826,935,500 23,789,500 2,850,725,000
Consolidated Attributable to equity holders of the parent Premium Share on subscriptions Legal and Unappropriated Treasury received Treasury stock retained stock in advance reserve earnings Baht Baht Baht Baht 591,500 591,500 212,678,288 35,836,899 9,710,675 258,225,862 667,123,888 715,171,301 (35,836,899) (9,710,675) (424,806,275) 911,941,340
Treasury stock Baht (5,383,355) (9,710,675) (15,094,030)
Total Baht 4,214,070,250 715,171,301 34,133,400 (9,710,675) (424,806,275) 4,528,858,001
The notes to financial statements on pages 75 to 105 form an integral part of these financial statements.
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Kim Eng Securities (Thailand) Public Company Limited Statements of Changes in Shareholders Equity For the years ended 31 December 2010 and 2009 The company only Attributable to equity holders of the parent Premium Share on subscriptions Legal and Unappropriated Treasury received Treasury stock retained stock in advance reserve earnings Baht Baht Baht Baht 5,347,943 5,347,943 591,500 (591,500) 258,225,862 41,038,339 (3,833,057) 295,431,144 911,938,887 820,766,770 (41,038,339) 3,833,057 (710,761,625) 984,738,750
Issued and paid-up share capital Baht Beginning balance at 1 January 2010 Net profit for the year Increase in share capital/share subscription (Note 19) Premium on treasury stock Appropriation of legal reserve (Note 20) Treasury stock (Note 19) Appropriation of treasury stock (Note 20) Dividend paid (Note 22) Ending balance at 31 December 2010 2,850,725,000 3,347,500 2,854,072,500
Treasury stock Baht (15,094,030) 3,833,057 (11,260,973)
Total Baht 4,528,855,548 820,766,770 3,858,400 5,347,943 3,833,057 (710,761,625) 4,651,900,093
Issued and paid-up share capital Baht Beginning balance at 1 January 2009 Net profit for the year Increase in share capital/share subscription (Note 19) Appropriation of legal reserve (Note 20) Treasury stock (Note 19) Appropriation of treasury stock (Note 20) Dividend paid (Note 22) Ending balance at 31 December 2009 2,826,935,500 23,789,500 2,850,725,000
The company only Attributable to equity holders of the parent Premium Share on subscriptions Legal and Unappropriated Treasury received Treasury stock retained stock in advance reserve earnings Baht Baht Baht Baht 591,500 591,500 212,678,288 35,836,899 9,710,675 258,225,862 665,554,737 716,737,999 (35,836,899) (9,710,675) (424,806,275) 911,938,887
Treasury stock Baht (5,383,355) (9,710,675) (15,094,030)
Total Baht 4,212,501,099 716,737,999 34,133,400 (9,710,675) (424,806,275) 4,528,855,548
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Kim Eng Securities (Thailand) Public Company Limited Statements of Cash Flows For the years ended 31 December 2010 and 2009
Consolidated 2010 Baht Cash flows from operating activities Net profit before income tax for the year Adjustments to reconcile net profit to cash received (paid) from operating activities: Depreciation and amortisation Interest income Interest expense Allowance for doubtful account -other receivable (reversal) Retirement benefit (reversal) Impairment loss on investment Bad debts and doubtful accounts (reversal) (Gains) losses on revaluation of investments Unrealised gains on revaluation of derivative warrants Gains on disposal of equipment Amortisation of interest expenses on financial lease Loss from exchanging investment in debt to equity securities Operating profit before changes in operating assets and liabilities (Increase) decrease in operating assets Long-term deposits at financial institutions Short-term investments Receivables from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Foreclosed properties Deposits Other assets Increase (decrease) in operating liabilities Payables to Clearing House Securities and Derivatives business payables Provisions Accrued bonus expenses Accrued other expenses Other liabilities Derivative warrants Cash used in operating activities before received (paid) interest and income tax Interest received Interest paid Income tax paid Net cash used in from operating activities (576,449,957) 237,130,056 (51,296,714) (290,628,160) (681,244,775) (165,819,467) 148,767,128 (35,020,523) (172,470,596) (224,543,458) 452,675,593 728,148,011 (2,714,848) 151,331,200 10,943,169 17,810,994 50,794,075 (31,410,504) 1,205,183,915 164,862,396 1,455,861 4,378,808 (1,187) 135,901,136 328,004,599 (3,466,263,834) (25,462,634) (218,878) (7,450,500) (2,605) (19,902,799) (277,416,595) (2,067,009,070) (41,552,013) (130,000) (332,794) (24,094,284) 1,050,053,147 920,150,217 7,389,885 2,514,998 (795,295) 25,593,097 (6,194,615) (749,650) 1,126,095 1,457,003 (180,000) (291,502) 14,662,500 (4,630,988) (28,493,521) (510,838) 625,420 52,262,265 (244,188,933) 54,237,048 57,991,831 (153,642,686) 34,653,913 1,157,401,249 999,966,088 2009 Baht
1,172,574,418
1,001,424,372
51,947,456 (243,139,308) 54,237,048
57,943,641 (152,324,084) 34,653,913
7,389,885 2,514,998 (795,295) 25,593,097 (6,194,615) (749,650) 1,126,095 1,457,003
(180,000) (291,502) 14,662,500 (4,630,988) (28,493,521) (510,838) 625,420 -
1,065,961,132
922,878,913
(1,187) 135,901,136 328,004,599 (3,466,263,834) (25,462,634) (218,318) (6,943,670)
(2,605) (19,902,799) (277,416,595) (2,067,009,070) (41,552,013) (130,000) (330,644) (23,962,492)
452,675,593 728,148,011 (2,714,848) 151,711,200 10,643,581 17,322,018 50,794,075
(31,410,504) 1,205,183,915 164,482,396 1,418,419 4,332,030 -
(560,443,146) 236,002,367 (51,296,714) (290,628,160) (666,365,653)
(163,421,049) 147,544,644 (35,020,523) (171,934,972) (222,831,900)
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Kim Eng Securities (Thailand) Public Company Limited Statements of Cash Flows (Contd) For the years ended 31 December 2010 and 2009
Consolidated 2010 Baht Cash flows from investing activities Cash received (paid) for long-term investments Proceeds from disposals of equipment Purchases of equipment Purchases of intangible assets Cash paid for investment in subsidiary 91,554 1,212,877 (54,037,203) (10,889,907) (7,800,000) 1,261,946 (23,723,317) (3,421,437) (50) 2009 Baht
91,554 1,212,877 (53,241,084) (9,834,907) -
(7,800,000) 1,261,946 (22,952,617) (3,121,437) (50)
Net cash used in investing activities
(63,622,679)
(33,682,858)
(61,771,560)
(32,612,158)
Cash flows from financing activities Cash received from financial instututions Cash paid to financial institutions Cash received from other borrowings Cash paid to other borrowings Cash paid for financial lease Increase in share capital Cash received from selling of treasury stock Cash paid for treasury stock Dividend paid 19,746,000,000 (19,746,000,000) 1,397,186,268 (1,076,364,710) (4,786,434) 3,858,400 9,181,000 (710,761,625) (3,153,220) 34,133,400 (9,710,675) (424,806,275) 19,746,000,000 (19,746,000,000) 1,397,186,268 (1,076,364,710) (4,786,434) 3,858,400 9,181,000 (710,761,625) (3,153,220) 34,133,400 (9,710,675) (424,806,275)
Net cash used in financing activities
(381,687,101)
(403,536,770)
(381,687,101)
(403,536,770)
Net decrease in cash and cash equivalents Cash and cash equivalents, at beginning of the year
(1,126,554,555) 2,201,405,991
(661,763,086) 2,863,169,077
(1,109,824,314) 2,103,210,806
(658,980,828) 2,762,191,634
Cash and cash equivalents, at end of the year
1,074,851,436
2,201,405,991
993,386,492
2,103,210,806
Increase (Decrease) of assets with non-cash Equipment Intangible asset Motor vehicles under long-term lease Prepaid expense 2,387,194 (5,806) 7,852,390 5,528,990 4,287,249 9,528,053 2,387,194 (5,806) 7,852,390 4,862,371 4,287,249 9,528,053 -
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Kim Eng Securities (Thailand) Public Company Limited Notes to the Financial Statements For the years ended 31 December 2010 and 2009
General information
Kim Eng Securities (Thailand) Public Company Limited (the company) is a public limited company incorporated and resident in Thailand. The address of the companys registered office is as follows: 999/9 The Offices at Central World, 20th - 21st and 24th Floor, Rama 1 Road, Pathumwan, Bangkok, 10330. The company is listed on the Stock Exchange of Thailand. For reporting purposes, the company and its subsidiary are referred to as the Group. The company has 8 licenses for the securities business, which are brokering, trading, underwriting, investment advisory, corporate finance advisory, securities registrant, TFEX license and securities borrowing and lending. These group consolidated and company financial statements were authorised for issue by the Board of Directors on 10 February 2011.
Accounting policies
The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below:
2.1
Basis of preparation The consolidated and company financial statements are prepared in accordance with the Thai generally accepted accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting Profession Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act B.E. 2535. The presentation of the consolidated and company financial statements are prepared in accordance with the Securities and Exchange Commission Announcement Sor Tor/Nor. 26/2549 regarding financial statements presentation for securities company dated 29 June 2006. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The preparation of consolidated and company financial statements in conformity with Thai generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses in the reported period. Although these estimates are based on managements best knowledge of current events and actions, actual results may differ from those estimates. An English version of the consolidated and company financial statements have been prepared from the statutory financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language statutory financial statements shall prevail.
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Accounting policies (Contd)
2.2
New accounting standards, new financial reporting standards, new interpretation, amendments to accounting standards, and accounting framework a) Accounting framework The amendment of accounting framework is effective on 26 May 2010. b) New accounting standards, new financial reporting standards, new interpretation, and amendments to accounting standards The following new accounting standards, new financial reporting standards, new interpretation and amendments to accounting standards are mandatory for the accounting periods beginning on or after 1 January 2011 and 1 January 2013, but the Group has not early adopted them: Effective for the periods beginning on or after 1 January 2011 TAS 1 (Revised 2009) Presentation of Financial Statements TAS 2 (Revised 2009) Inventories TAS 7 (Revised 2009) Statement of Cash Flows TAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2009) Events after the Reporting Period TAS 11 (Revised 2009) Construction Contracts TAS 16 (Revised 2009) Property, Plant and Equipment TAS 17 (Revised 2009) Leases TAS 18 (Revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (Revised 2009) Borrowing Costs TAS 24 (Revised 2009) Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit plans TAS 27 (Revised 2009) Consolidated and Separate Financial Statements TAS 28 (Revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (Revised 2009) Interests in Joint Ventures TAS 33 (Revised 2009) Earnings per Share TAS 34 (Revised 2009) Interim Financial Reporting TAS 36 (Revised 2009) Impairment of Assets TAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2009) Intangible Assets TAS 40 (Revised 2009) Investment Property TFRS 2 Share-based Payment TFRS 3 (Revised 2009) Business Combinations TFRS 5 (Revised 2009) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRIC 15 Agreements for the Construction of Real Estate Effective for the periods beginning on or after 1 January 2013 TAS 12 Income taxes TAS 20 (Revised 2009) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates The Groups management has determined that the new accounting standards, new financial reporting standards and amendments to accounting standards will not significantly impact the financial statements being presented, except for the followings that the management is currently assessing the impact of applying this standard.;
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2.2
New accounting standards, new financial reporting standards, new interpretation, amendments to accounting standards, and accounting framework (Contd) b) New accounting standards, new financial reporting standards, new interpretation, and amendments to accounting standards (Contd)
TAS 16 (Revised 2009), the revised standard requires the entity to include in cost of PPE, an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has obligation to do. An entity requires that an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately. The revised standard also requires an entity to review useful life, residual value and depreciation method at least at each financial year-end. The Group will apply this standard from 1 January 2011. TAS 19 deals with accounting for employee benefit. The standard classifies employee benefit into 4 categories: a) short-term employee benefits b) post-employment benefits (including defined contribution plan and defined benefit plan) c) other long-term employee benefits and d) termination benefits. The standard requires the entity to measure the defined employee benefit plan and other long-term benefits by using the Projected Unit Credit method (PUC). An entity can choose to recognise any actuarial gain or loss for defined employee benefit plan either in other comprehensive income or profit and loss. Actuarial gain or loss for other long-term employee benefit shall recognise in profit and loss. The Group will apply this standard from 1 January 2011.
2.3
Group accounting - investment in subsidiary Subsidiary is the entity over which the Group has the power to govern the financial and operating policies generally accompanying a shareholder of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiary is consolidated from the date on which control is transferred to the Group and is no longer consolidated from the date the control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between group companies are eliminated, except for realised losses, which the Group identified that there is an objective evidence of impairment. Where necessary accounting policies of subsidiary have been changed to ensure consistency with the policies adopted by the Group. In the companys separate financial statements, investment in subsidiary is reported by using the cost method less impairment, if any. These consolidated financial statements include the balance sheets as at 31 December 2010 and 2009 and the related statements of income for the years ended 31 December 2010 and 2009 of Kim Eng Securities (Thailand) Public Company Limited (the company) and the Kim Eng Asset Management (Thailand) Company Limited (the Subsidiary). The Subsidiary registered under Thai law and engaged in managing a fund. The company started preparing the consolidated financial statements on 18 May 2007, when Kim Eng Asset Management (Thailand) Company Limited registered the business with Ministry of Commerce.
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2.4
Income and expenses recognition General income and expenses are recognised on an accrual basis. Brokerage fees Brokerage income are recognised when the underlying transaction is contracted. Fees and service income Fees and service income are recognised as income when the service has been substantially rendered. Underwriting income Underwriting income are recognised as income when securities are allotted. Interest and dividend income Interest income from investments are recognised on a time proportion basis using the effective interest method. Dividend income from investments are recognised when the right to receive payment is established. Interest on margin loans Interest on margin loans is recognised as income on the time proportion basis except for interest income from certain securities business receivables, which is recognised on a collection basis in accordance with an announcement of the office of the Securities and Exchange Commission, dated 15 February 2001, regarding the accounting for sub-standard loans. Interest expenses Interest expenses are recognised on a time proportion basis using the effective interest method.
2.5
Cash and cash equivalents Cash and cash equivalents are carried on the balance sheet at cost. Cash and cash equivalents comprise cash on hand, current and saving deposits, promissory notes, and other short-term highly liquid investments with original maturities within 3 months or under.
2.6
Securities lending and borrowing The company recorded its obligations to return borrowed securities which it has been lent as Securities borrowing payables and recorded securities lent to customers as Securities borrowing receivables. At the end of the period, the company adjusted fair value of borrowed securities by reference to the last offer price quoted on the Stock Exchange of Thailand on the last business day of the year and recorded in statement of income. Cash paid as collateral for securities borrowing is recorded as collateral assets. Fees on securities borrowing and lending are recognised on an accrual basis.
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2.7
Investments in debt and equity securities Investments other than investments in subsidiary are classified into the following four categories: 1. Trading investments, 2. Held to maturity investments, 3. Available for sale investments and 4. General investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. 1. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments for the purpose of these financial statements short term is defined as a year. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held to maturity. Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available for sale. Investments in non-marketable equity securities are classified as general investments.
2. 3. 4.
Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investments. Cost of investment includes transaction costs. Investments in available for sale and trading securities are presented at fair value less allowance for impairment, if any, in the balance sheet. Unrealised gains or losses resulting from changes in fair values of investment in available for sale securities and trading securities are included in the shareholders equity and in the statement of income, respectively. Fair value are calculated on the following basis: For marketable debt securities, fair values are calculated by referencing to the last bid prices on the last business day of the year. The rates are announced by the Thai Bond Market Association (Thai BMA). Fair values of other debt securities are calculated by referencing to the risk-free yield curve, adjusted by the appropriate risk premium. For marketable equity securities, fair values are calculated by referencing to last bid prices quoted on the Stock Exchange of Thailand on the last business day of the year.
Held to maturity debt securities are initially recognised at purchase price plus transaction costs and subsequently accounted for at amortised cost using effective interest method, less allowance for impairment, if any. General investment is stated at cost, less allowance for impairment, if any. An impairment review is carried out by the Group when there is a factor indicating that such investment might be impaired. If the carrying amount of the investment is higher than its recoverable amount, impairment loss is charged to the statement of income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of income. When a particular investment in securities is partly disposed, the carrying amount of the disposed portion is determined on the weighted average basis.
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2.8
Receivables from clearing house and payables to clearing house Receivables from clearing house comprises the net balance receivables from Thailand Securities Depository (TSD) in respect of securities trades settled through clearing house of TSD and the net receivable from Thailand Clearing House (TCH) including amounts pledged with TCH as security for derivatives trading. Payables to clearing house comprise the net balance payable to Thailand Securities Depository (TSD) in relation to securities trades settled through clearing house of TSD and the net payable to Thailand Clearing House (TCH). As at 15 February 2010 and onward, receivables from and payables to clearing House of Thailand securities Depository (TSD) in relation to securities trades will be settled through Thailand clearing House (TCH).
2.9
Securities business receivables and derivatives business receivable and allowance for doubtful accounts Securities business receivables and derivative business receivables are the net balances after deducting allowance for doubtful accounts and include interest receivables. Securities business receivables comprise cash accounts, margin accounts, guarantee deposits receivable, as well as other receivables such as overdue cash accounts and receivables which are the subject of legal proceedings, are undergoing restructuring or are being settled in installments. Derivative business receivables include other receivables which are derivative business receivable who subjected of legal proceeding, are undergoing restructuring or are being settled in installments. Allowance for doubtful accounts is determined based on the announcement of the Office of the Securities and Exchange Commissions Notification dated 15 February 2001, regarding the accounting for sub-standard loans. The announcement requires the Company categorise its loan portfolio into 3 categories subject to different minimum levels of provisioning. The announcement also imposes policies regarding collateral valuation for the purpose of setting allowance for doubtful accounts. Moreover, management also considers the financial position of each debtor which is based on managements experience and opinion. Bad debts written off or bad debts recovered are recorded as a decrease or an increase in the allowance for doubtful accounts.
2.10 Loans to employees under welfare program Loans to employees under welfare program are recognised initially at cash granted to employees. Loans to employees are subsequently stated at amortised cost using the contractual interest rate. The returned is recognised in the statement of income over the period of loan.
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2.11 Equipment and depreciation Equipment is initially recorded at cost and is subsequently shown at cost less accumulated depreciation as at the balance sheet date. Depreciation is calculated on the straight line method to write off the cost of each asset to its residual value over the estimated useful lives. Building improvement Furniture fixtures & equipment Motor vehicles 5 years 3 and 5 years 5 years
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference will be recorded as impairment loss in the statement of income. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. The Group depreciated the asset over the remaining useful life of the related asset. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit.
2.12 Intangible assets Expenditure on acquired intangible assets is capitalised and amortised using the straight-line method over their useful lives, generally over 5 years, except for TFEX member fee and mutual fund license, which are not amortised. Such intangible assets are not revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for impairment where it is considered necessary.
2.13 Foreclosed properties Foreclosed properties consist of immovable properties, which are stated at the lower of cost and recoverable amount. The excess of the carrying amount over recoverable amount is recognised as an impairment loss in statement of income. Gains or losses on disposals of such properties are recognised in the statement of income at the date of disposal.
2.14 Impairment of assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an assets fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Back to Content 81
2.15 Securities business payables and derivatives business payables Securities business payables and derivatives business payables are the obligations of the Group in respect of its securities and derivatives business with outside parties, such as the net payable balances of cash accounts and the obligations to deliver securities as a result of short or borrowing securities and the obligation to return the assets the Group hold as the securities borrowing collaterals.
2.16 Derivative warrants The Groups initially recognises the fair value of derivative warrants as financial liabilities and on the balance sheet date, derivative warrants presented at fair value in the balance sheets. Unrealised gains or losses resulting from changes in fair values of derivative warrants are included in the statements of income. Fair value of marketable derivative warrants are calculated by referencing to last offer prices quoted on the Stock Exchange of Thailand on the last business day of the year.
2.17 Borrowings Borrowings are recognised initially at fair value of proceeds received. Borrowings are subsequently stated at amortised cost using the effective yield method; any difference between proceeds and the redemption value is recognised in the statements of income over the period of the borrowings.
2.18 Financial instruments transactions Significant financial assets carried on the balance sheet include cash and cash equivalents, long-term deposits at financial institutions, investments in debt and equity securities, receivables from clearing house, securities and derivatives business receivables, and loans to employees under welfare program. Significant financial liabilities carried on the balance sheet include payables to clearing house, securities and derivatives business payables, derivative liabilities, debentures and other borrowings, and liabilities under long-term lease. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.
2.19 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when it is virtually certain after provision has been settled.
2.20 Provident fund The Group established a contributory registered provident fund for those employees who indicate their willingness to join, in accordance with the Provident Fund Act B.E. 2530. The Group operates a provident fund that the asset for which are held in a separate trustee-administered fund managed by independent fund manager. The provident fund is funded by payments from employees at the amount equal to 2% - 3% of the employees basic salary and by the Group at the amount equal to 2% - 8% of the employees basic salary depending on years of services. The contributions to the provident fund are charged to the statement of income in the year to which they relate.
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2.21 Employee benefits The Group provides for post employment benefits, payable to employees under Thai labour law. The amount payable in the future depends on the salary and years of services of the respective employees. The liability arising as a result of Thai labour law recorded as the present value of estimated future cash outflows using interest rates which have terms to maturities approximating the terms of the related liabilities.
2.22 Treasury Stocks Where the company or its subsidiaries purchases the companys equity share capital, the consideration paid including any attributable incremental external costs net of income taxes is deducted from total shareholders equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders equity.
2.23 Earnings (loss) per share Basic earnings (loss) per share is computed by dividing net income (loss) for the year by weighted-average number of paid-up ordinary shares in issue during the year. Diluted earnings (loss) per share is calculated by dividing net income (loss) for the year by sum of weighted average number of ordinary share to be issued for conversion of all dilutive potential ordinary shares into ordinary shares. The calculation assumes that conversion took place either at the beginning of the year or on the date the potential ordinary shares were issued.
2.24 Operating leases - where the Company is the lessee Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payment made under operating lease (net of any incentives received from the lessor) is charged to the statement of income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
2.25 Financing leases - where the Company is the lessee Leases of vehicles which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The vehicles acquired under finance leases is depreciated over the useful life of the asset.
2.26 Dividends Dividends are recorded in the consolidated and companys financial statements in the period in which they are approved by the shareholders. For the interim dividend are approved by the Board of Director. Back to Content 83
2.27 Related parties Enterprises and individuals that, directly or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.
2.28 Segment reporting Business segments mean segment provides services that are subject to risks and returns that are different from those of other business segments. Geographical segments mean segment that provides services within a particular economic environment that is subject to risks and returns that are different from those of components operating in other economic environments.
Critical accounting estimates, assumptions and judgements
Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Equipment and intangible assets Management determines the estimated useful lives and residual values for the Groups equipment and intangible assets. Management will revise the depreciation charge where useful lives and residual values are different to previously estimated, or its will write off or write down technically obsolete or assets that have been abandoned or sold. Employee benefits The Group has commitment on post-retirement benefits to employee on reaching retirement age. The present value of employee benefit liabilities recognised in balance sheet is determined on the present value of estimated future cash outflows for staff that is nearly reach retirement age. The assumptions used in determining the net year cost for employee benefits includes the salary and years of services of respective employees which are payable in the future year and discount rate(deposit rate). Any changes in these assumptions will impact the net year cost recorded for employee benefits. On a quarterly basis, the Group revises the appropriate discount rate, which represents the deposit rate that should be used to determine the present value of future cash flows to settle the nearly reach retired employee benefits.
Capital risk management
The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt obligations.
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Cash and cash equivalents Consolidated 2010 Baht Cash on hand Current and saving deposits Fixed deposits with remaining maturity less than 3 months Promissory notes with remaining maturity less than 3 months Less Deposits on behalf of customers Total cash and cash equivalents 518,408 1,381,852,700 34,000,000 2009 Baht The company only 2010 2009 Baht Baht 513,408 1,375,392,756 371,000 4,213,671,930 2,000,000,000
371,000 4,222,767,115 2,089,100,000
5,311,000,000 400,000,000 5,265,000,000 400,000,000 (5,652,519,672) (4,510,832,124) (5,647,519,672) (4,510,832,124) 1,074,851,436 2,201,405,991 993,386,492 2,103,210,806
The deposits on behalf of customers relate to cash deposited by customers which the Group has the obligation to repay to the customers on demand. In accordance with notification No. Sor Thor 44/2543 dated 12 September 2000, issued by the office of the Securities and Exchange commission, this amount was excluded from cash and cash equivalents held by the Group. As at 31 December 2009, deposits on behalf of customers include amount due to Kim Eng Securities Pte. Ltd. of Baht 0.01 million.
Long-term deposits at financial institutions Consolidated 2010 Baht Fixed deposit Restricted cash Total long-term deposits at financial institutions 6,881 1,341,876 1,348,757 The company only 2010 2009 Baht Baht 6,881 1,341,876 1,348,757 5,694 1,341,876 1,347,570
2009 Baht 5,694 1,341,876 1,347,570
As at 31 December 2010, fixed deposits of Baht 1 million (31 December 2009: Baht 1 million) are pledged as collateral to local banks for letter of guarantees.
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Investments in debt and equity securities, net Consolidated and Consolidated and the company only the company only 2010 2009 Cost/ Cost/ Amortised cost Fair value Amortised cost Fair value Baht Baht Baht Baht
Short-term investments Trading equity securities Trading - Unit trusts Available for sale equity securities Held to maturity debt securities due within 1 year Total Less Revaluation adjustments Less Investment on behalf of customers Total short-term investments, net Long-term investments General investments Held to maturity debt securities Total Less Impairment loss Total long-term investments, net Total investments in debt and equity securities
122,158,163 80,000,000 202,158,163 (2,787,636) (80,000,000) 119,370,527 31,791,160 31,791,160 (14,662,500) 17,128,660 136,499,187
119,211,875 80,158,652 199,370,527 (80,000,000) 119,370,527 24,288,339 24,288,339 24,288,339 143,658,866
80,864,760 200,000,000 280,864,760 280,864,760 31,791,160 1,548,557 33,339,717 (14,662,500) 18,677,217 299,541,977
80,864,760 203,941,752 284,806,512 284,806,512 20,424,928 20,424,928 20,424,928 305,231,440
As at 31 December 2010, the Group has investments in equity, which is used as collateral in court and classified as general investments, amounting to Baht 7,622,000 (31 December 2009: Baht 7,622,000) and presented in the balance sheet at cost. Fair value of investment in equity, amounting to Baht 12,060,500 (31 December 2009: Baht 8,533,500). As at 30 December 2009, the company transferred investment in equity securities from trading portfolio to available for sale, which was classified as short term investment. It was transferred at fair value on 30 December 2009, fair value of investment in trading equity securities became cost of investment in available for sale. There was no unrealised gain or loss after the date of transfer. Cost and amortised cost of debt securities according to their maturities is as follows; Baht Consolidated and the company only Mature within (year) 1 2-5 6 - 10 At 31 December 2009 Held-to-maturity debt securities 200,000,000 200,000,000 1,548,557 1,548,557 -
Over 10
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Investment in subsidiary
The companys investment in its subsidiary, which is company registered under Thai laws and operating in Thailand, is summarised below:
Paid-up share capital 2010 2009 Million Baht Million Baht 100 100 Percentage of holding 2010 2009 % % 99.99 99.99 Investment Cost method 2010 2009 Million Baht Million Baht 100 100
Name of company Kim Eng Asset Management (Thailand) Company Ltd
Type of business Asset management
Type of relationship Subsidiary
Receivables from Clearing House Consolidated 2010 Baht Receivables from Thai Securities Depositing Co., Ltd. (TSD) Receivables from Thai Clearing House Co., Ltd (TCH) Less Receivables from Clearing House on behalf of customers Total 335,771,322 The company only 2010 2009 Baht Baht 335,771,322 448,938,640 153,330,496
2009 Baht
448,938,640 153,330,496
(214,566,581) 121,204,741
(153,059,796) 449,209,340
(214,566,581) 121,204,741
(153,059,796) 449,209,340
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Securities and Derivatives business receivables
Balance of Securities business receivable as at 31 December 2010 and 2009 are as follows: Consolidated 2010 Baht Customers cash accounts Credit balance transactions Securities borrowing and lending Collateral assets Other receivables Total securities business receivables Add Accrued interest receivables Less Allowance for doubtful accounts (Note 11) Net securities business receivables and accrued interest receivables 2,636,297,388 4,355,976,757 57,341,380 23,402,500 260,058,252 7,333,076,277 34,281,211 (277,014,400) 7,090,343,088 The company only 2010 2009 Baht Baht 2,636,297,388 4,355,976,757 57,341,380 23,402,500 260,058,252 7,333,076,277 34,281,211 (277,014,400) 7,090,343,088 1,395,868,319 2,037,236,704 184,216,790 3,882,112 274,696,164 3,895,900,089 24,899,366 (292,043,784) 3,628,755,671
2009 Baht
1,395,868,319 2,037,236,704 184,216,790 3,882,112 274,696,164 3,895,900,089 24,899,366 (292,043,784) 3,628,755,671
As at 31 December 2010, the Group had loans and receivables totalling approximately Baht 277 million (31 December 2009: Baht 292 million) for which recognition of interest income had been discontinued in accordance with the Office of the Securities and Exchange Commissions notification dated 15 February 2001.
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Securities and Derivatives business receivables (Contd) Balance of Derivatives business receivables as at 31 December 2010 and 2009 are as follows: Consolidated 2010 Baht Derivative business receivables Less Allowance for doubtful accounts (Note 11) Derivative business receivables, net Total securities and derivatives business receivables 15,204,192 15,204,192 7,105,547,280 2009 Baht 120,920 120,920 3,628,876,591 The company only 2010 2009 Baht Baht 15,204,192 15,204,192 7,105,547,280 120,920 120,920 3,628,876,591
The Group has classified Securities and Derivatives business receivables in accordance with the notification of the Office of the Securities and Exchange Commission dated 15 February 2001, regarding the accounting for sub-standard loans as follows: Consolidated and the company only 2010 Allowance for doubtful accounts Total debts Amount set up Amount (including accrued by the required interest receivables) company by SEC Classifications Million Baht Million Baht Million Baht Normal debts Substandard debts Doubtful debts Total 7,105.43 14.48 262.65 7,382.56 14.36 262.65 277.01 262.65 262.65
Classifications Normal debts Substandard debts Doubtful debts Total
Consolidated and the company only 2009 Allowance for doubtful accounts Total debts Amount set up Amount (including accrued by the required interest receivables) company by SEC Million Baht Million Baht Million Baht 3,628.87 14.37 277.68 3,920.92 14.36 277.68 292.04 277.68 277.68
The Group had set up the allowance for doubtful debts based on the receivables classification at the rate higher than the minimum rate as suggested by the office of the Securities and Exchange Commission of Thailand, and also by reviewing the individual debtors repayment ability, taking into consideration the recovery risk and the value of the collateral. The substandard and doubtful debts (receivables and accrued interest receivables) are classified by aging as follows: Consolidated The company only 2010 2009 2010 2009 Million Baht Million Baht Million Baht Million Baht Up to 3 months Over 3 months to 6 months Over 6 months to 9 months Over 9 months to 12 months Over 1 year to 3 years Over 3 years 0.08 277.05 Back to Content 0.06 291.99 0.08 277.05 0.06 291.99 88
Kim Eng Securities (Thailand) Public Company Limited Notes to the Financial Statements For the years ended 31 December 2010 and 2009 277.13 Total
292.05
277.13
292.05
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Allowance for doubtful accounts Consolidated 2010 Baht Beginning balance of the year Add Doubtful accounts Less Write off Reversal of doubtful accounts Ending balance of the year 292,043,784 79,688 (14,004,375) (1,104,697) 277,014,400 2009 Baht The company only 2010 2009 Baht Baht 292,043,784 79,688 (14,004,375) (1,104,697) 277,014,400 296,674,772 38,495 (4,669,483) 292,043,784
296,674,772 38,495 (4,669,483) 292,043,784
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Equipment, net
Consolidated Building improvement Baht At 1 January 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2009 Opening net book amount Additions Transfers Disposals, net Depreciation charge Closing net book amount At 31 December 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2010 Opening net book amount Additions Transfers Disposals, net Depreciation charge Closing net book amount At 31 December 2010 Cost Less Accumulated depreciation Net book amount 206,300,087 (164,569,670) 41,730,417 Furniture fixtures & equipment Baht 427,719,672 (376,680,396) 51,039,276 Motor vehicles Baht 288,205 (121,690) 166,515 Financial Construction lease in progress Baht Baht 19,157,410 (10,319,834) 8,837,576 167,596
Total Baht 653,632,970
- (551,691,590) 167,596 101,941,380
41,730,417 5,338,485 1,315,010 (733,029) (22,106,594) 25,544,289
51,039,276 20,772,243 674,412 (17,938) (26,856,299) 45,611,694
166,515 (57,609) 108,906
8,837,576 9,528,053 (3,755,130) 14,610,499
167,596 1,899,838 (1,989,422) 78,012
101,941,380 37,538,619 (750,967) (52,775,632) 85,953,400
157,810,834 (132,266,545) 25,544,289
437,032,343 (391,420,649) 45,611,694
288,205 (179,299) 108,906
25,360,419 (10,749,920) 14,610,499
78,012
620,569,813
- (534,616,413) 78,012 85,953,400
25,544,289 5,775,593 3,866,469 (218,310) (13,187,256) 21,780,785
45,611,694 43,641,180 1,579,355 (244,917) (28,187,978) 62,399,334
108,906 (57,610) 51,296
14,610,499 7,852,390 (4,829,975) 17,632,914
78,012 7,007,624 (5,445,824) 1,639,812
85,953,400 64,276,787 (463,227) (46,262,819) 103,504,141
163,044,307 (141,263,522) 21,780,785
460,647,486 (398,248,152) 62,399,334
288,205 (236,909) 51,296
30,798,972 (13,166,058) 17,632,914
1,639,812
656,418,782
- (552,914,641) 1,639,812 103,504,141
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Equipment, net (Contd)

The company only Building improvement Baht At 1 January 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2009 Opening net book amount Additions Transfers Disposals, net Depreciation charge Closing net book amount At 31 December 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2010 Opening net book amount Additions Transfers Disposals, net Depreciation charge Closing net book amount At 31 December 2010 Cost Less Accumulated depreciation Net book amount 206,300,087 (164,569,670) 41,730,417 Furniture fixtures & equipment Baht 427,701,072 (376,676,965) 51,024,107 Motor vehicles Baht 288,205 (121,690) 166,515 Financial Construction lease in progress Baht Baht 19,157,410 (10,319,834) 8,837,576 167,596
Total Baht 653,614,370
- (551,688,159) 167,596 101,926,211
41,730,417 5,153,558 930,010 (733,029) (22,078,589) 25,002,367
51,024,107 20,571,470 674,412 (17,938) (26,836,114) 45,415,937
166,515 (57,609) 108,906
8,837,576 9,528,053 (3,755,130) 14,610,499
167,596 1,514,838 (1,604,422) 78,012
101,926,211 36,767,919 (750,967) (52,727,442) 85,215,721
157,240,907 (132,238,540) 25,002,367
436,812,970 (391,397,033) 45,415,937
288,205 (179,299) 108,906
25,360,419 (10,749,920) 14,610,499
78,012
619,780,513
- (534,564,792) 78,012 85,215,721
25,002,367 5,775,593 3,866,469 (218,310) (13,073,271) 21,352,848
45,415,937 42,845,061 1,579,355 (244,917) (28,059,116) 61,536,320
108,906 (57,610) 51,296
14,610,499 7,852,390 (4,829,975) 17,632,914
78,012 7,007,624 (5,445,824) 1,639,812
85,215,721 63,480,668 (463,227) (46,019,972) 102,213,190
162,474,380 (141,121,532) 21,352,848
459,631,994 (398,095,674) 61,536,320
288,205 (236,909) 51,296
30,798,972 (13,166,058) 17,632,914
1,639,812
654,833,363
- (552,620,173) 1,639,812 102,213,190
Initial cost of asset, which has already fully depreciated as at 31 December 2010, is Baht 470 million. The balance consists of building improvement Baht 116 million, furniture & fixture Baht 91 million, and computer Baht 263 million. Initial cost of asset, which has already fully depreciated as at 31 December 2009, is Baht 383 million. The balance consists of building improvement Baht 50 million, furniture & fixture Baht 64 million, and computer Baht 269 million.
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Intangible assets Consolidated Software under TFEX Mutual fund installation member fee license Baht Baht Baht 5,494,569 5,494,569 5,000,000 (1,679,452) 3,320,548
Computer software Baht At 1 January 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2009 Opening net book amount Additions Transfers Disposals, net Amortised amount Closing net book amount At 31 December 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2010 Opening net book amount Additions Transfers Write offs Amortised charge Closing net book amount At 31 December 2010 Cost Less Accumulated depreciation Net book amount 73,575,418 (63,885,461) 9,689,957
Total Baht
1,000,000 85,069,987 - (65,564,913) 1,000,000 19,505,074
9,689,957 3,071,437 3,660,251 (141) (5,216,199) 11,205,305
5,494,569 350,000 (3,660,251) 2,184,318
3,320,548 3,320,548
1,000,000 1,000,000
19,505,074 3,421,437 (141) (5,216,199) 17,710,171
61,771,945 (50,566,640) 11,205,305
2,184,318 2,184,318
5,000,000 (1,679,452) 3,320,548
1,000,000 69,956,263 - (52,246,092) 1,000,000 17,710,171
11,205,305 9,424,006 3,000,402 (5,999,446) 17,630,267
2,184,318 1,666,325 (3,000,402) (206,230) 644,011
3,320,548 3,320,548
1,000,000 1,000,000
17,710,171 11,090,331 (206,230) (5,999,446) 22,594,826
74,196,353 (56,566,086) 17,630,267
644,011 644,011
5,000,000 (1,679,452) 3,320,548
1,000,000 80,840,364 - (58,245,538) 1,000,000 22,594,826
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Intangible assets (Contd) The company only Software under TFEX installation member fee Baht Baht 5,494,569 5,494,569
Computer software Baht At 1 January 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2009 Opening net book amount Additions Transfers Write offs Amortised charge Closing net book amount At 31 December 2009 Cost Less Accumulated depreciation Net book amount For the year ended 31 December 2010 Opening net book amount Additions Transfers Disposals, net Amortised amount Closing net book amount At 31 December 2010 Cost Less Accumulated depreciation Net book amount 73,575,418 (63,885,461) 9,689,957
Total Baht
5,000,000 84,069,987 (1,679,452) (65,564,913) 3,320,548 18,505,074
9,689,957 3,071,437 3,660,251 (141) (5,216,199) 11,205,305
5,494,569 50,000 (3,660,251) 1,884,318
3,320,548 3,320,548
18,505,074 3,121,437 (141) (5,216,199) 16,410,171
61,771,945 (50,566,640) 11,205,305
1,884,318 1,884,318
5,000,000 68,656,263 (1,679,452) (52,246,092) 3,320,548 16,410,171
11,205,305 9,059,506 2,149,902 (5,927,484) 16,487,229
1,884,318 975,825 (2,149,902) (206,230) 504,011
3,320,548 3,320,548
16,410,171 10,035,331 (206,230) (5,927,484) 20,311,788
72,981,353 (56,494,124) 16,487,229
504,011 504,011
5,000,000 78,485,364 (1,679,452) (58,173,576) 3,320,548 20,311,788
Initial cost of computer software, which has already fully depreciated as at 31 December 2010, is Baht 44 million (31 December 2009: Baht 37 million).
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Other assets Consolidated 2010 Baht Clearing fund Accrued income Prepaid expenses Others Total 56,390,356 3,259,430 25,387,977 18,333,472 103,371,235 2009 Baht The company only 2010 2009 Baht Baht 56,390,356 3,230,652 24,716,334 17,603,773 101,941,115 48,735,007 14,968,702 17,501,098 18,794,771 99,999,578
48,735,007 15,064,820 17,502,473 19,032,013 100,334,313
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Debentures and other borrowings Consolidated and the company only Remaining period before maturity date Less than Over Over 1 year 1- 5 years 5 years 10 years Baht Baht Baht Baht -
Interest rate % Borrowings
Total Baht
2.5 324,324,152 324,324,152
- 324,324,152 - 324,324,152
As at 31 December 2010, the company has an outstanding of short term bill of exchanges, which are matured within 3 months after trade date. The bill of exchange was traded to individual customers.
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Provisions Consolidated 2010 Baht Opening balance Decrease during the year Closing balance 34,653,183 (199,850) 34,453,333 2009 Baht The company only 2010 2009 Baht Baht 34,653,183 (199,850) 34,453,333 34,944,685 (291,502) 34,653,183
34,944,685 (291,502) 34,653,183
As at 31 December 2010 and 2009, the provision comprised the obligations of the company to Nithipat Capital Public Co., Ltd., (Nithipat), the former parent company, of approximately Baht 10.63 million in case that Nithipat cannot collect their securities debts which have not been transferred as mentioned in the Asset Transfer Letter dated 14 August 1996. Additional provision is set up for the notification of approximately Baht 15.70 million from a customers account of Yuanta Securities (Thailand) Limited demanding the company to pay for damage claims from the event occurred before the customer were transferred to the company. As at 31 December 2010 the company has post employment benefits payable to employees under the Thai labour law for Baht 8.13 million (31 December 2009: Baht 8.32 million).
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Liabilities under long-term lease
Liabilities under long-term lease contracts represent finance lease for vehicles. The balance as at 31 December 2010 and 2009 comprise; Consolidated 2010 Baht Minimum lease payments obligation under long-term lease contracts Less Deferred interest 22,937,373 (2,968,219) 19,969,154 Current portion due within one year Portion due after one year 4,245,172 15,723,982 19,969,154 The company only 2010 2009 Baht Baht 22,937,373 (2,968,219) 19,969,154 4,245,172 15,723,982 19,969,154 19,452,166 (2,548,968) 16,903,198 4,385,353 12,517,845 16,903,198
2009 Baht
19,452,166 (2,548,968) 16,903,198 4,385,353 12,517,845 16,903,198
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Other liabilities Consolidated 2010 Baht VAT payable Withholding tax payable Others Total 14,454,803 13,849,519 11,583,855 39,888,177 The company only 2010 2009 Baht Baht 14,454,803 13,317,911 11,576,635 39,349,349 9,286,502 7,266,605 5,474,224 22,027,331
2009 Baht 9,286,502 7,313,737 5,476,944
22,077,183
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Share capital
During the year ended 31 December 2010, the warrant holders exercise their own rights, then the issued share capital increase for 669,500 shares. On 8 October 2008, the Board of Directors approved to buy back 56,000,000 ordinary shares (representing not more than 10% of the issued shares) at a price equivalent to the bid prices on the Stock Exchange of Thailand, within a total budget of no more than Baht 672 million, not exceed the companys retained earnings. The repurchase period should be done during 24 October 2008 to 24 April 2009. The method and period for selling of the treasury shares will be decided by the Board of Directors after the completion date of the buy back 6 months, but not more than 3 years and such sale will be made at a price of not less than 85 percent of the average closing prices of the 5 working days prior to the selling date. According to the Federation of Accounting Professions announcement no. Sor.Sor.Vor.Bor.Chor. 016/2548 dated 4 February 2005, it requires public limited companies that treasury shares to have retained earnings not less than the amount of the treasury shares remaining in the account. In the event the retained earnings is used to pay dividends, the retained earnings after the dividend payment should not be less than the treasury shares. This is to comply with the announcement of the Judicial Council, which deliberated the issue of treasury shares schemes under Section 66/1(2) of the Public Limited Companies Act B.E. 2535. The company had treasury shares of 2,205,200 shares representing 0.39 percent of the total sold shares outstanding on the date when the Board resoluted the share repurchase. The total treasury shares are Baht 15.09 million and the company has appropriated the retained earnings as the treasury shares reserve for the whole amount. During the year ended 31 December 2010, the company sold repurchased shares of 560,000 shares. The remaining outstanding shares were 1,645,200 shares, amounting to Baht 11.26 million. Consolidated and the company only Share subscription Ordinary Share received in shares premium advance Baht Baht Baht
2,821,552,145 23,789,500 (9,710,675) 2,835,630,970 3,347,500 3,833,057 2,842,811,527 512,715,929 9,752,400 522,468,329 1,102,400 5,347,943 528,918,672 591,500 591,500 (591,500) -
Number of shares Shares As at 1 January 2009 Issue of shares Less Treasury shares At 31 December 2009 Issue of shares Add Sold treasury shares Add Premium on treasury shares As at 31 December 2010
564,605,000 4,757,900 (1,423,100) 567,939,800 669,500 560,000 569,169,300
Total Baht
3,334,268,074 34,133,400 (9,710,675) 3,358,690,799 3,858,400 3,833,057 5,347,943 3,371,730,199
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Legal and treasury share reserve Consolidated 2010 Baht Opening balance Appropriation during the year Increase (decrease) treasury shares reserve Closing balance 258,225,862 41,038,339 (3,833,057) 295,431,144 The company only 2010 2009 Baht Baht 258,225,862 41,038,339 (3,833,057) 295,431,144 212,678,288 35,836,899 9,710,675 258,225,862
2009 Baht
212,678,288 35,836,899 9,710,675 258,225,862
Consolidated 2010 Baht Legal reserve Treasury share reserve Total 284,170,171 11,260,973 295,431,144
2009 Baht
The company only 2010 2009 Baht Baht 284,170,171 11,260,973 295,431,144 243,131,832 15,094,030 258,225,862
243,131,832 15,094,030 258,225,862
Under the Public Limited Companies Act B.E. 2535, the company is required to set aside as a legal reserve at least 5% of its net income after accumulated deficit (if any) until the reserve is not less than 10% of the registered share capital. The reserve is non-distributable as dividends.
21
Warrants
On 6 December 2005, the shareholders at an Extraordinary General Meeting of Shareholders approved the issuance of warrants to purchase the companys ordinary shares to its directors and/or staff at the maximum of 27.25 million units, free of charge. The exercise price of warrant is Baht 7 per share and they are exercisable in a ratio of 1 warrant to 1 ordinary share. The exercise date is at the last working day of each month throughout the 4 years term of warrants. The first exercisable date will be on 31 August 2006. During the year ended 2010, the warrants were exercised by directors and/or staff amounting to 551,200 units. As at 31 December 2010, the outstanding warrants, which have been allotted but not exercised, are 1,435,500 units (31 December 2009: 1,986,700 units). All rights to exercise are expired on 22 February 2010.
22
Dividends
An interim dividend of Baht 0.25 per share amounting to a total of Baht 142.15 million was approved at the Board of Directors Meeting on 11 August 2010. The dividend was paid on 10 September 2010. A dividend of Baht 1 per share amounting to a total of Baht 568.61 million was approved at the Annual Shareholders Meeting on 29 March 2010. The dividend was paid on 12 April 2010. An interim dividend of Baht 0.25 per share amounting to a total of Baht 141.87 million was approved at the Board of Directors Meeting on 13 August 2009. The dividend was paid on 11 September 2009. A dividend of Baht 0.50 per share amounting to a total of Baht 282.93 million was approved at the Annual Shareholders Meeting on 27 March 2009. The dividend was paid on 10 April 2009.
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Derivative liabilities
As at 31 December 2010, the company has outstanding derivatives warrants as follows:

The Consolidated and the company only Long position Short position Cost Fair value Cost No. of (Million (Million No. of (Million contracts Baht) Baht) contracts Baht) Derivative warrants 10 10 50,794,075 50,794,075
Fair value (Million Baht) 44,599,460 44,599,460
24
Provident fund
For the year ended 31 December 2010, the Groups contribution was amounting to Baht 21,389,970 (31 December 2009: Baht 19,383,796).
25
Income taxes
The annual tax rate used for the year ended 31 December 2010 and 2009 is 25% for the net profit Baht 300 million and 30% for the net profit exceed Baht 300 million.
26
Reconciliation of dilutive earnings per share

Consolidated Weighted average number of ordinary shares 2009 2010 2009 Baht Shares Shares 568,680,180 568,399,727 817,800
Net earnings 2010 Baht Basic earnings per share Net profit for the year Effect of dilutive potential ordinary shares Warrants Diluted earnings per share Net earnings of ordinary shareholders assuming the conversion of dilutive potential ordinary shares 805,593,601 -
Earnings per share 2010 2009 Baht Baht 1.42 1.26 -
715,171,301 -
805,593,601
715,171,301
568,680,180
569,217,527
1.42
1.26
Net earnings 2010 Baht Basic earnings per share Net profit for the year Effect of dilutive potential ordinary shares Warrants Diluted earnings per share Net earnings of ordinary shareholders assuming the conversion of dilutive potential ordinary shares 820,766,770 -
The company only Weighted average number of ordinary shares 2009 2010 2009 Baht Shares Shares 568,680,180 568,399,727 817,800
Earnings per share 2010 2009 Baht Baht 1.44 1.26 -
716,737,999 -
820,766,770
716,737,999
568,680,180
569,217,527
1.44
1.26
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Financial instruments
Interest rate risk Interest rate risk is the exposure to the risk associated with the effects of fluctuations in prevailing levels of market interest rates on the Group s financial instruments. As at 31 December 2010 and 2009, the outstanding balances of financial statements classified by type of interest rate are as follows: Unit : Million Baht Consolidated 2010 Fixed interest rate Remaining period before maturity date or repricing date Less than Over 1 year 1 - 5 years 5 years 779 1 57 837 57 324 4 385 16 16 -
Floating interest rates Financial assets Cash and cash equivalents Long-term deposits at financial institutions Receivable from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payable to Clearing House Securities and Derivatives business payables Derivative liabilities Debentures and other borrowings Liabilities under long-term lease Total 52 4,379 318 4,749 -
NonWithout performing interest debts 244 121 2,652 3,017 495 2,623 45 3,163 260 260 -
Total 1,075 1 121
Interest rate (%) Floating Fixed rate rate 0.25-1.75 1.615-1.65 0.50-0.95 5.50,8.50,18.25 -
7,348 0.8, 4.50-4.75 318 1.43,1.65 8,863 495 2,680 45 324 20 3,564 -
3.00,5,50,10.95 2.5 5.95-11.25
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Financial instruments (Contd)
Interest rate risk (Contd) Unit : Million Baht The company only 2010 Fixed interest rate Remaining period before maturity date or repricing date NonLess than Over Without performing 1 year 1 - 5 years 5 years interest debts Total 745 1 57 803 57 324 4 385 16 16 242 121 2,652 3,015 495 2,623 45 3,163 260 260 993 1 121
Floating interest rates Financial assets Cash and cash equivalents Long-term deposits at financial institutions Receivable from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payable to Clearing House Securities and Derivatives business payables Derivative liabilities Debentures and other borrowings Liabilities under long-term lease Total 6 4,379 318 4,703 -
Interest rate (%) Floating Fixed rate rate 0.25-1.60 1.65 0.50-0.95 5.50,8.50,18.25 -
7,348 0.8, 4.50-4.75 318 1.43,1.65 8,781 495 2,680 45 324 20 3,564 -
3.00,5.50,10.95 2.5 5.95-11.25
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Interest rate risk (Contd) Unit : Million Baht Consolidated 2009 Fixed interest rate Remaining period before maturity date or repricing date Less than Over 1 year 1 - 5 years 5 years 89 1 200 184 474 4 4 13 13 -
Floating interest rates Financial assets Cash and cash equivalents Long-term deposits at financial institutions Investments in debt securities Receivable from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payable to Clearing House Securities and Derivatives business payables Liabilities under long-term lease Total 1,790 2,041 292 4,123 184 184
NonWithout performing interest debts 322 449 1,396 2,167 42 1,768 1,810 2 275 277 -
Total 2,201 1 202 449 3,896 292 7,041 42 1,952 17 2,011
Interest rate (%) Floating Fixed rate rate 0.10-1.00 0.6,4.50-4.75 0.68,1.13 1.125 0.50-0.75 4.11 5.50,18.25 -
3.00,10.95 5.95-9.00
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Interest rate risk (Contd) Unit : Million Baht The company only 2009 Fixed interest rate Remaining period before maturity date or repricing date NonLess than Over Without performing 1 year 1 - 5 years 5 years interest debts Total 1 200 184 385 4 4 13 13 313 449 1,396 2,158 42 1,768 1,810 2 275 277 2,103 1 202 449
Floating interest rates Financial assets Cash and cash equivalents Long-term deposits at financial institutions Investments in debt securities Receivable from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payable to Clearing House Securities and Derivatives business payables Liabilities under long-term lease Total 1,790 2,041 292 4,123 184 184
Interest rate (%) Floating Fixed rate rate 0.10-1.00 0.50-0.75 4.11 5.50, 18.25 -
3,896 0.6, 4.50-4.75 292 0.68,1.13 6,943 42 1,952 17 2,011 -
3.00, 10.95 5.95-9.00
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Credit risk Credit risk is the exposure to the risk that the counterparties might discharge their obligations which could cause the group to incur financial loss. The main financial assets that potentially subject to the company to credit risk are securities and derivatives business receivables. The risk is managed by setting up appropriate credit limits and terms which are granted to each type of customers. Liquidity risk The maturity dates of financial instruments held as of 31 December 2010 and 2009, counting from the balance sheet date, are as follows: Unit : Million Baht Consolidated 2010 Within 1 year 779 1 121 2,732 39 3,672 1-5 years 138 138 Over 5 years 141 141 Nonperforming debts 260 260
At call Financial assets Cash and cash equivalents Long-term deposits at financial institutions Receivables from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payables to Clearing House Securities and Derivatives business payables Derivative liabilities Debentures and other borrowings Liabilities under long-term lease Total 296 4,356 4,652
Total 1,075 1 121 7,348 318 8,863
495 2,680 45 324 4 3,548
16 16
495 2,680 45 324 20 3,564
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Financial instruments (Contd) Liquidity risk (Contd) Unit : Million Baht The company only 2010 Within 1 year 745 1 121 2,732 39 3,638 1-5 years 138 138 Over 5 years 141 141 Nonperforming debts 260 260
At call Financial assets Cash and cash equivalents Long-term deposits at financial institutions Receivables from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payables to Clearing House Securities and Derivatives business payables Derivative liabilities Debentures and other borrowings Liabilities under long-term lease Total 248 4,356 4,604
Total 993 1 121 7,348 318 8,781
495 2,680 45 324 4 3,548
16 16
495 2,680 45 324 20 3,564
Unit : Million Baht Consolidated 2009 Within 1 year 89 1 200 449 1,584 37 2,360 1-5 years 120 120 Over 5 years 135 135 Nonperforming debts 2 275 277
At call Financial assets Cash and cash equivalents Long-term deposits at financial institutions Investments in debt securities Receivables from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payables to Clearing House Securities and Derivatives business payables Liabilities under long-term lease Total 2,112 2,037 4,149
Total 2,201 1 202 449 3,896 292 7,041
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42 1,952 4 1,998
13 13
42 1,952 17 2,011 102
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Financial instruments (Contd) Liquidity risk (Contd) Unit : Million Baht The company only 2009 Within 1 year 1 200 449 1,584 37 2,271 1-5 years 120 120 Over 5 years 135 135 Nonperforming debts 2 275 277
At call Financial assets Cash and cash equivalents Long-term deposits at financial institutions Investments in debt securities Receivables from Clearing House Securities and Derivatives business receivables Loans to employees under welfare program Total Financial liabilities Payables to Clearing House Securities and Derivatives business payables Liabilities under long-term lease Total Fair value 2,103 2,037 4,140
Total 2,103 1 202 449 3,896 292 6,943
42 1,952 4 1,998
13 13
42 1,952 17 2,011
When a financial instrument is traded in an active market such as trading and available-for-sale investments, publicly traded derivatives, and its quoted market price provides the best evidence of fair value. The quoted market price for an asset held or liability to be issued is usually the current bid price and, for an asset to be acquired or liability held, it is the current offer or asking price. The carrying amount of financial instruments, which are cash and cash equivalent, long-term deposits at financial institution, securities and derivative business receivables less any estimated credit adjustments, payables to clearing house, securities and derivative business payables, debentures and other borrowings are considered to approximate their fair value. Since financial instruments are predominantly subject to market interest rate. Information on the fair values of derivative liabilities is included in Note 23. 28 Related party transactions Information with respect to related parties is as follows: Nature of relationship Kim Eng Holdings Limited Mitsubishi UFJ Securities Co., Ltd. Kim Eng Securities Pte. Ltd. Kim Eng Securities (Hong Kong) Limited Kim Eng Investment Limited Kim Eng Corporate Finance Pte. Ltd. Kim Eng Asset Management (Thailand) Company Limited Back to Content Parent company Shareholder of parent company Fellow subsidiary Fellow subsidiary Fellow subsidiary Fellow subsidiary Subsidiary 103
28
Related party transactions (Contd) During the years ended 31 December 2010 and 2009, the company had significant business transactions with related companies. These transactions can be summarised as follows:
Consolidated 2010 2009 Million Baht Million Baht The company only 2010 2009 Million Baht Million Baht 45 17 120 27 Transfer price policies
Brokerage fee income - Kim Eng Securities Pte. Ltd. - Kim Eng Securities (Hong Kong)Limited Information technology service expenses - Kim Eng Holdings Limited
45 17
120 27
At the rate set by the Stock Exchange of Thailand
At the price agreed upon by both parties referencing the market price.
Consulting service fee - Kim Eng Corporate Finance Pte. Ltd. - Kim Eng Securities Pte. Ltd. Reimbursement expenses - Mitsubishi UFJ Securities Co., Ltd. Borrowing Fees - Kim Eng Holdings Limited Dividends - Kim Eng Holdings Limited - Kim Eng Investment Limited Rental and Service - Kim Eng Asset Management (Thailand) Company Limited
9 2 3 1 395 2
3 1 6 237 1
9 2 3 1 395 2
3 1 6 237 1
At contract price At contract price At actual price At actual price
0.3
At cost
The outstanding balances of the above transactions, as presented in the balance sheets are as follows: Consolidated 2010 2009 Million Baht Million Baht Securities business receivables - Kim Eng Securities Pte. Ltd. - Kim Eng Securities (Hong Kong) Limited Other receivable - Mitsubishi UFJ Securities Co., Ltd. - Kim Eng Securities Pte. Ltd. - Kim Eng Securities USA, Inc. Prepaid consulting fee - Kim Eng Securities Pte Ltd. Securities business payables - Kim Eng Securities Pte. Ltd. - Kim Eng Securities (Hong Kong) Limited Accrued Consulting fee - Kim Eng Corporate Finance Pte. Ltd. 17 4 0.3 0.7 10 130 1 4 0.4 12 14 95 1 The company only 2010 2009 Million Baht Million Baht 17 4 0.3 0.7 10 130 1 4 0.4 12 14 95 1
As at 31 December 2010, the company has provided loans amounting to 0.3 million (31 December 2009: Baht 15 million) to employees under the definition of the Securities and Exchange Commission. Interest is charged at the rate charged to other employees under the same scheme. As at 31 December 2010, the company invested in a mutual fund which the subsidiary is a fund manager. The investment balance is Baht 80,000,000. (Note 7). Back to Content 104
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Related party transactions (Contd) The outstanding contracts with related companies can be summarised as follows; On 1 July 2003, the company signed the information technology service agreement with the parent company in Singapore for a period of 1.5 years and has been committed to pay fee at the rate specified in the agreement. If no termination is made by either party when due, the agreement is automatically renewed for another year. As at 31 December 2010, Kim Eng Holding Ltd. guaranteed the overdraft facilities amounting to Baht 30 million. There is no outstanding balance as at 31 December 2010. As at 24 September 2009, the company has entered to the consulting service agreement with Kim Eng Corporate Finance Pte. Ltd. The service fee is upon completion progress and limited at 1 million Singapore Dollar. The contract has been approved by Board of Directors Meeting No.4/2009 on 13 August 2009. On 19 October 2009, the company has entered into a contract with Kim Eng Securities Pte. Ltd. to provide consulting services regarding derivative warrant business. The related services provided include consulting, training, transfer knowledge and techniques which regarding to derivative warrants and included the risk management control. An agreed profit and loss will be shared. The contract has a continuing service for 5 years starting from the contract effective date. The total value of contract is USD 1 million. The contract has been approved by Board of Directors Meeting No.4/2009 on 13 August 2009. Later, the company revised the service fee by diminishing it amounting to USD 0.5 million. The profit and loss is not shared. The revision contract was dated 12 August 2010. As at 31 December 2010, the Company and its subsidiary entered into a rental agreement for office and services. The contract expiration is on 23 December 2013.
29
Commitment The Group entered into the long-term lease agreements for office and services and motor vehicles. The future aggregate minimum lease payments under these agreements are as follows: Consolidated 2010 2009 Million Baht Million Baht The company only 2010 2009 Million Baht Million Baht 78 54 42 174 71 25 7 103
No later than 1 year Later than 1 year but not later than 2 years Later than 2 years Total 30 Business/geographical segment information
79 55 43 177
71 25 7 103
The companys operation involves mainly in Securities brokering and service provision and is operated only in Thailand, accordingly, no business/geographical area segment information is presented. 31 Contingent liabilities As at 31 December 2010, the company has outstanding borrowing stocks through securities borrowing and lending business from an asset management company, amounting to Baht 19,167,500 (31 December 2009: Baht 1,183,750). These stocks were borrowed from that asset management company, lent to and returned from companys customers. However, these outstanding stocks were during the process of returning to such asset management company. Back to Content 105

KimEng - Annual Report 2010

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2010 Annual Report 2010

Information Corporate Information

The Board of Directors

Company Registration No. Company

*has been moved from Town In Town

Securities Registration Thailand Securities Depository (Thailand) Co., Ltd.

Branch on 30 August 2010

Bangkok and Vicinities

Information Corporate Information

*Open on 1 October 2010

Information Corporate Information

Ploenchit Rd., Lumpinee, Pathumwan,

Sukumvit Rd., Klongtun, Klongtoey,

Information Corporate Information

STATEMENT CHAIRMANS STATEMENT

STATEMENT CHAIRMANS STATEMENT

Report Good Corporate Governance Report

Good Corporate Governance Report

Section 1 Shareholders Rights

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Section 2 Fair and Equal Treatment to Shareholders

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Section 3 Rights and Roles of Stakeholders

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Transparency Section 4 Information Disclosure and Transparency

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Section 5 Responsibilities of the Board of Directors

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Corporate Governance Policy and Business Ethics

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Internal Control and Audit System

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3. Dividend Payment Policy

Committees and Management Structure Structure

Committees and Management Structure

1. The Board of Directors

Committees and Management Structure Structure

Committees and Management Structure Structure

Committees and Management Structure Structure

Committees and Management Structure Structure

Committees and Management Structure Structure

Assoc.Prof.Dr. Paiboon Sareewiwatthana

Assoc.Prof.Dr. Preecha Jarunggidanan

4. The Nominating Committee

Committees and Management Structure Structure

5. Other Committees 5.1 The Compensation Committee

Committees and Management Structure Structure

No.1/2010 on February 11, 2010

No.2/2010 No.2/2010 on August 13, 2010

5.2 The Underwriting Committee

Committees and Management Structure Structure

5.3 The Risk Management Committee

Committees and Management Structure Structure