6. attachment 6 aira-e edit · exchange (b/e) in total amount of baht 1,200 million, with terms of...

AIRA Factoring Public Company Limited

Context - Translation-

Page

Covering Letter 1

Executive Summary 3 Section1 : Type and details of transaction 5

1.1 Nature of the transaction 5 1.2 Transaction Date 6 1.3 Connected person and its relationship with the listed company 6 1.4 Size of transaction and benefits 7 1.5 Significant conditions related to the connected transaction. 8

Section 2 : General information of the AIRA Factoring Plc. 10

Section 3 : General information of the AIRA Securities Plc. 21

Section 4 : Rationales and Appropriateness of the transaction 27

Section 5 : Fairness of Benefits 32 Section 6 : Summary of opinions of the independent Financial Advisor 35

Attachment 6


Definition “The Company” or “AF” : AIRA Factoring Public Company Limited.

“AIRA” : AIRA Securities Public Company Limited

“AIRA-CAP” : AIRA Capital Public Company Limited.

“Independent Financial Advisor” or “IFA”

: SCMB Co.,Ltd

“SEC” : The Securities and Exchange Commission

“SET” : The Stock Exchange of Thailand. “Disclosure of Connected Transaction”

: Notification of Capital Market Supervisory Board No. Tor Jor. 21/2551 of The Securities and Exchange Commission Re: Rules of Entering into Connected Transactions and the Notification of the Board of Governors of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Connected Party Transactions B.E. 2546 (2003).


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ท่ี MB 010/57 2 April 2014 Subject : Opinion of the Independent Financial Advisor on Connected Transaction To Shareholders, AIRA Factoring Plc. Re : The Board of Directors’ Meeting of AIRA Factoring Plc. No.3/2014 held on 19 March 2014

and the Disclosure of Connected Transactions regarding the receipt of financial assistance, dated 20 March 2014 and 28 March 2014

According to the Board of Directors’ Meeting of AIRA Factoring Plc. No.3/2014 held on 19 March 2014, , the Board has approved the connected transaction on the receiving financial assistance from connected party, AIRA Securities Plc., which is connected person from having the same major shareholders , AIRA Capital Plc.. The connected transaction is the issuance and sale of the Bill of Exchange (B/E) in total amount of Baht 1,200 million, with terms of 5 years duration, which AIRA Securities Plc. will act as the buyer and/or seller , which is the normal business of the securities company, or the Holder of Bill of Exchange if the Company has sufficient liquidity and NCR of AIRA Securities Plc. has been maintained with its criteria. The AIRA Factoring Plc. will issue each Bill of Exchange when it is in need of financial support with the maximum duration of each B/E not over 6 months, and has policy to determine the interest rate from time to time. The interest rate, however, will not higher than the Money Market Rate Borrowing of one of these Banks which are The Bangkok Bank Plc. ,the Siam Commercial Bank Plc. and Thanachart Bank Plc., The objective of borrowing is to use for additional source of fund to provide the liquidity for normal business of the Company.

As the above mentioned transaction is deemed the connected transaction, the fifth category of connected transactions, regarding offer or receipt of financial assistance and as according to the notification of the Capital Market Supervisory Board TorChor 21/2551 re: Rules on Connected Transactions and concerning the calculation of connected transaction value under 11- (2) of Section 4 which stated that “ in case a listed company or a subsidiary receives a financial assistance from a connected person, calculation shall be made on the basis of an interest value and/or a profit such listed company or subsidiary must pay to the connected person”. Hence the size of this transaction can be calculated as of Baht 232.20 million which derived from the issuance of the Bill of Exchanges in total


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amount of Baht 1,200 million at the approximate interest rate of 3.87 % per year. ( which is the average 3-months short term loan (mainly the maturity of most B/E ) of The Bangkok Bank Plc. , The Siam Commercial Bank Plc. and The Thanachart Bank Plc. as at 19 March 2014 for 5 years. ) or equivalent to 65.52 % of Net Tangible Assets (NTA) as at 31 December 2013. ( when sum up with the approved transaction on 3 May 2013 which had interest paid of Baht 19.94 million or 5.63% of NTA, total interest paid is Baht 252.14 million or equal to 71.14 % of NTA as at 31 December 2013). Thus the value of the transaction is larger than Baht 20 million, or 3% of the Net Tangible Assets (NTA), so it is classified as connected transaction which has to seek approval from the Shareholders’ Meeting according to the Notification of the Capital Market Supervisory Board ,Tor.Chor 21/2551 re: Rules on Connected Transaction. Also in order to approve to a decision to enter into a connected transaction, a resolution of Shareholders’ Meeting must consist of at least three-fourths of the total votes of shareholders attending the meeting and having voting rights, excluding the portion of interested shareholders who have conflict of interest. In addition, the Company has to engaged to appoint an independent financial advisor to provide the opinions of the reasonableness of the transactions and also the fairness of the benefit , including the conditions of such financial assistance to present to the shareholders to consider and approve the connected transaction in this matter..

The Board of Directors’ Meeting No. 3/2014, which held on 19 March 2014, has resolution to appoint the SCMB Co.,Ltd to be the Company’s independent advisor to provide the opinions of the reasonableness of the transactions and also the fairness of the benefit , including the conditions of such transaction to receive financial assistance from the connected person to present to the shareholders of the Company to consider and approve the connected transaction in this matter.

The opinion of the independent Financial Advisor is based on the ground of information received from the Company included the public information from the website of the Securities and Exchanges Commission (www.sec.or.th) and the website of the Stock Exchange of Thailand (www.set.or.th) which the independent Financial Advisor has used their knowledge, ability and carefulness with their professional. Thus the opinions of the independent Financial Advisor is made based on assumptions that information and documents received, without any adjustment to main contents, and including the economic situation and related data incurred during the study, so In case there are significant changes in those factors, they may affect our opinion. The details of the information regarding to the connected transaction that the Company has received financial assistance from connected person are as follows :


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Executive Summary

Due to the fact that the financial assistance which the Company has received from the AIRA

Securities Plc. will be expired on 2 May 2014 , altogether with the Company has its plan to continuous expand its business, thus the funds for its operating activities ,may not be sufficient, and so the Company has to acquire additional sources of funds. In the Board of Directors’ Meeting No. 3/2014 on the date of 19 March 2014, the Board has approved the Company to enter into the connected transaction of receipt of financial assistance from AIRA Securities Plc. which is connected person to the Company, on the content that both companies have the same major shareholders which is AIRA Capital Plc. The connected transaction is mainly to increase more liquidity turnover to support the increase in the Company’s transaction volume. The entering into the receipt of financial assistance in this time is to issue and offer the Bill of Exchange (B/E) in total amount Baht 1,200 million, within 5 years. AIRA Securities Plc. will operate as the buyer and/or seller which is its normal business of such securities company, or may be the holder of the B/E in the case that AIRA Securities Plc. has sufficient liquidity and the NCR of AIRA Securities Plc. still can comply with the criteria. The Company will issue each B/E depending on its need of fund, with the tenor not more than 6 months. The interest policy which will be agreed from time to time will be set at the rate not higher the Money Market Rate of one of these three banks, which are The Bangkok Bank Plc. ,The Siam Commercial Bank Plc. and Thanachart Bank Plc. The receipt of financial assistance from connected person has been treated as connected transaction according to the Notification of the Capital Market Supervisory Board with the size of transaction of Baht 232.20 million or 65.52% of the Net Tangible Assets as at 31 December 2013 which its value of transaction is greaterr than Baht 20 million or more than 3.0% of the NTA. As a result, the Company has duties to disclose the Company’s transactions to the Stock Exchange of Thailand, to appoint independent Financial Advisor and also to organize the Shareholders’ Meeting to seek for the approval to enter into a connected transaction with the approval by the resolution of Shareholders’ Meeting consists of at least three-fourths of the total votes of shareholders attending the meeting and having voting rights, excluding the portion of interested shareholders who have conflict of interest.

The Independent Financial Advisor has provided their opinions that , in Factoring business , the sufficient of amount of funds with lower cost are the key factors to this business and they will enhance the Company to has high opportunity and apability to compete with other competitors. In the past, the Company has received the financial assistance from AIRA Securities Plc. since the year 2011, which the existing lines will be expired on 2 May 2014, which in case that the Company cannot find the new source of fund to replace the existing fund, the Company may have to face the problems to its business operation,


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not to mention about the future expansion plan. Thus the receipt of finance assistance from the AIRA Securities Plc. by means of the issuance and propose to sell the Bill of Exchange of total Baht 1,200 million , with the term within 5 years, will support the Company to be able to operate its business continuously and provide more flexibility and sufficient funds to support its expansion plan, is reasonable. For the quotation of interest rate which “ the policy is such interest rate will be agreed from time to time and that the interest rate will be set at the rate not higher than the Money Market Rate of one of these three Banks; The Bangkok Bank Plc. ,The Siam Commercial Bank Plc. and Thanachart Bank Plc. “ is also considered appropriate and fair since the Company will not have to pay the interest cost , from the finance assistance from AIRA Securities Plc., in the higher rate than the interest paid to its main financial institutions which totally represented 73.36 % of the total borrowings from all financial institutions. When considered the objectives and benefits that the Company will receive, include the advantages and disadvantages of the transaction, SCMB, the independent Financial Advisor, would like to summarize our opinion that the request to receipt financial assistance from AIRA Securities Plc. is reasonable and benefit to the Company’s operation which will result in the Company’s opportunity to generate higher revenue and profit, so that the Company’s financial status is more secure and also then has opportunity to yield a higher and continuous return to its shareholder. Thus the shareholders of the Company should vote in favor for this transaction by approve the receipt of financial assistance form AIRA Securities Plc., according to Board of Directors’ Resolution of No. 3/2014 on 19 March 2014, by means of issuance B/E and offer for sale ,in total sum Baht 1,200 million , with the period of facility not exceed 5 years from 3 May 2014 to 2 May 2019 , with the policy that the interest rate will be agreed from time to time and the rate will not higher than the Money Market Rate of one of these three banks, The Bangkok Bank Plc. ,The Siam Commercial Bank Plc. and Thanachart Bank Plc.


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Section 1 : Nature and details of transaction.

1.1 Nature of transaction

Currently, the Company has received supported loans from many financial institutions in total Baht

2,140 million and supported loan from AIRA Securities Plc. Baht 800 million which will be due on 3 May 2014. According to the Board of Directors’ resolution No. 2/2013 on 3 May 2013 has approved the 1 year working capital by offering the Bill of Exchange in the amount not exceed Baht 800 million, details are as follows :

Beneficiary : AIRA Securities Plc., Relationship : AIRA Securities Plc., is a subsidiary with 99.99 % held by its

major shareholder AIRA Capital Plc. Instrument : Bill of Exchange: B/E Total line : Baht 800 million Interest Rate : Market rate as the rate the Company get from other financial

institutions. Time : 1 year ( 3 May 2013 to 2 May 2014) Size of transactions : The total interest that the Company has to pay to AIRA

Securities Plc., during the period of lending is less than Baht 12 million

Rational of borrowing : additional fund to increase Company’s liquidity

Outstanding of B/E as : 1. Baht 200 million, from 11 September 2013 to 3 January 2014 At 31 December 2013 with the interest rate of 3.70 % per year. 2. Baht 300 million, from 18 November 2013 to 10 January 2014

with the interest rate of 3.60 % per year 3. Baht 120 million, from 19 December 2013 to 3 January 2014

with the interest rate of 3.40 % per year

As the finance assistance from AIRA Securities Plc., will be due on 2 May 2014 and also because the Company has a business expansion plan, so the Company may not have enough fund for its operation. The Company has then decided to ask for additional financial assistance from AIRA Securities Plc., from


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the existing line Baht 800 million in 1 year , to issue and offer sale of Bill of Exchange (B/E) within total Baht 1,200 million , time not exceed 5 year term ( from 3 May 2014 to 2 May, 2019. )

1.2 Date, month, year of transaction

5 years ( from 3 May 2014 to 2 May,2019. )

1.3 Connected person and relative with the listed company

Issuer : AIRA Factoring Plc, Beneficiary : AIRA Securities Plc, Relationship : As AIRA Capital Plc. holds more than 50% of shares in both

AIRA Securities Plc. and AIRA Factoring Plc.1 which is then considered that these companies are subsidiaries of AIRA Capital Plc., details are as follows :

1. As at 13 Jan 2014 , AIRA Capital Plc. holds 599,99,986 shares in AIRA Securities Plc. or equals to 99.99%

2. As at 6 Jan 2014 , AIRA Capital Plc. holds 29,607,617 shares in AIRA Factoring Plc., equals to 74.02%

Source : 1. Such ratio are defined according to Notification of the Boards of the Securities and Exchange :with regard to disclosure and undisclosed information re : offerings of shares

Below is a list of shareholders of AIRA Securities Plc. as at 13 January 2014 which is the list of shareholders registered with the Department of Business Development, the Ministry of Commerce Number Shareholders Amount % of share capital 1 AIRA Capital Plc. 599,999,986 99.99% 2 Other shareholders 14 0.01% รวม 600,000,000 100.00% Source : List of the Company Shareholders


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List of the shareholders of AIRA Factoring Plc.as at 6 Jan, 2014, which is latest book closing date. Number Shareholders Amount % of share capital

1 AIRA Capital Public Company Limited 29,607,617 74.02% 2 Mr. Wiwat Kongkasai 1,600,000 4.00% 3 Mrs. Piyaporn Vichitpun 1,565,700 3.91% 4 Mr. Kullawut Wiratmalee 1,255,000 3.14% 5 SUMMIT Corporation Company Limited 1,166,800 2.92% 6 Mr. Nares Chutijiravong 765,100 1.91% 7 Mr. Kunakorn Makchaidee 500,000 1.25% 8 Mr. Rungkarn Paisitpanitrakool 300,000 0.75% 9 Mrs. Nida Sae-Lee 291,000 0.73% 10 others 2,948,783 7.37%

Total 40,000,000 100.00% ที่มา : www.set.or.th

So AIRA Securities Plc. and AIRA Factoring Plc. have same major shareholders , AIRA Capital Plc. who holds 99.99 % and 74.02% of their registered shares consecutively. In addition, Mr. Wiwat Kongkasai an Summit Corporation Co.,Ltd , also who holds 4.00% and 2.92 % respectively of the total shares of the Company, which are also classified as connected person of the Company according to the notification of the Capital Market Supervisory Board ,Tor.Chor 21/2551 0concerning the connected transactions and also notification of the Board of Governors of The Stock Exchange of Thailand : the disclosure of information and operation of the listed companies in connected transactions in year 2003. . As a result, all these shareholders will be deemed as stakeholders in such connected transactions and so are not entitled to vote in a shareholders’ meeting , to approve this connected transaction..

1.4 Transaction Volume and Benefits

As the Company has intended to receive financial assistance from the connected person by issuance and sale of Bill of Exchange in total not exceed Baht 1,200 million, according to the notification of the Capital Market Supervisory Board , SEC , TorChor 21/2551 concerning the connected transactions re: the calculation of connected transaction value under 11 (2) which stated that “In case a listed company or a subsidiary receives a financial assistance from a connected person, calculation shall be made on the basis of an interest value and/or a profit such listed company or subsidiary must pay to the connected person “ According to the rule, the calculation of this connected transaction from 3 May 2014 to 2 May 2019 has the maximum value of approximately Baht 232.20 million, calculated from total


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amount of Baht 1,200 million , at the estimated interest of 3.87 % per year ( derived from average 3-months short term loan ( the term which most of B/E issued) from The Siam Commercial Bank Plc., The Bangkok Bank Plc. and Thanachart Bank Plc. as at 19 March 2014) with the term no longer than 5 years, the amount is equivalent to 65.52 % of Net Tangible Assets (NTA) as at 31 December ,2013. When sum up with the prior transaction approved on 3 May 2013 which the interest expense is Baht 19.94 million or 5.63 of the NTA, the total interest will be Baht 252.14 million or 71.14 % of NTA as at 31 December 2013, such transaction with the value higher than Baht 20 million or 3% of NTA , is then considered as the transaction which has to seek approval from the Shareholders’ Meeting, according to the notification of the Capital Market Supervisory Board, The Securities and Exchange Commission, TorChor 21/2551 re: Rules on Connected Transaction. Thus the Company has to disclose the related information of this connected transaction to The Stock Exchange of Thailand, to appoint the independent Financial Advisors and to organize the Shareholders’ Meeting to seek approval for a decision to enter into a connected transaction with the approval of at least three-fourths of the total votes of shareholders attending the meeting and having voting rights, excluding interested shareholder’s equity,

1.5 Summary of important conditions relate to the connected transaction.

The Board of Directors’ meeting No. 3/2014 held on 19 March 2014, approved the connected transaction of financial assistance from a connected person. The details of the transaction are as follow:

Issuer Beneficiary

: AIRA Factoring Plc. AIRA Securities Plc.

Total line : Baht 1,200.- million Terms : Not longer than 5 years ( 3 May 2014 – 2 May 2019๗ Instruments : AIRA Factoring Plc. will issue and offer Bill of Exchange

and AIRA Securities Plc. will purchase such B/E and/or sell which is its normal business of such securities company, or may be the holder of the B/E in the case that AIRA Securities Plc. has sufficient liquidity and the NCR of AIRA Securities Plc. still comply with the criteria. The Company will issue each B/E according to its need of fund, with the tenor not more than 6 months

Principal repayment : According to the time specified in B/E, without callable option.

Interest Rate : The policy is such interest rate will be agreed from time to


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time and that the interest rate will be set at the rate not higher the Money Market Rate of one of these three Banks, which are The Bangkok Bank Plc. ,The Siam Commercial Bank Plc. and Thanachart Bank Plc.

Collateral : None

Reason of borrowing : To be used as source of funds for working capital to support the increase of Company’s transaction volume.


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Section 2 : General business of AiRA Factoring Public Company Limited

2.1 General information Name of the Company : AIRA Factoring Plc. Former name : Dhanamitr Factoring Plc. Date of register : 6 Jan 1997 Registered number : 0107547000141 Original Registered number : 0107574700141 Business : Factoring business or providing short term lending by means of

discounting of receivables from the clients or transfer the rights to collect money

Head office Location : 319 Chamchuri Square, 20th floors, Phayathai Road Pathumwan Sub-District, Pathumwan Disrict, Bangkok 10330

Registered shares : Baht 200 million ( common shares of 40 million at par Baht 5 ) Paid-up shares : Baht 200 million ( common shares of 40 million at par Baht 5 )

As of 19 March 2014, The Company’s board of directors, as stated in the Registration Certificate, consists of 10 directors as follow: Number Names Positions

1 Mr. CHATCHAVAL BHANALAPH Chairman and Independent Director 2 Mrs. LADAVAN TANATANIT Chief of the Executive Committee and Director 3 Mr. WIWAT KONGKASAI Director and Chief Executive Officer 4 Mrs. NALINEE NGAMSETTHAMAS Director 5 Mr. KUNAKORN MAKCHAIDEE Director 6 Mr. WUTTHIPHUM JURANGKOOL Director 7 Mr. VISIT VONGRUAMLARP Director

8 Mrs. JANTIMA SIRISAENGTAKSIN Chief of the Audit Committee and Independent Director

9 Mr. SUWAT LAUPARADORACHAI Audit Committee, and Independent Director 10 Mr. POONSAK THIAPAIRAT Audit Committee, and Independent Director

The Authorized directors who are binding the Company consist of two of the following four: namely Mrs. Ladavan Tanatanit, Mrs. Nalinee Ngamsetthamas, Mr Wiwat Kongkasai and Mr. Wutthiphum Jurangkool, jointly co-sign together with the Company’s seal affixed.


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As at 31 December 2013, the Management team of the Company consists of 8 persons as follows: No. Names Position 1 Mr. WIWAT KONGKASAI Chief Executive Officer and Act on behalf of Managing

Director 2 Mr. KANOKKIT NAVASIRI Assistant Managing Director- Credit and Marketing Dept. 3 Mr. PORNPILAI BURASAI Assistant Managing Director- Credit and Marketing Dept. 4 Mr. JIRASAK ARKAWAT Assistant Managing Director – Operation Dept. 5 Mrs. PAISRI FAKCHAROENPHOL Senior Vice President of Accounting and Finance Dept. 6 Mr. SOMKIAT VACHANASATE Vice President of General Administration Dept. 7 Ms SOMJAI

AMORNCHAINOPPAKUN Head of Internal Audit and Compliance

8 Mrs. PERMSAK POONPERM Head of Risk Management AIRA Factoring Plc. was incorporated on 6 January, 1997 with its former name of “Dhanamitr

Factoring Plc. and initial investment of Baht 20 million, as a joint venture between Central Retail Corporation Ltd (50%) and the Siam Commercial Bank Plc. group (38%) and other shareholders of 12%. The Company’s objective is to provide factoring service business, mainly on the group of customers who are suppliers to the Modern Trade, as Central Retail Corporation Ltd is the important party in the retail markets and has many suppliers which are the target customers of factoring business while The Siam Commercial Bank Plc. has provided the financial support to the Company. Significant changes and developments of the Company are as follows:

Yr. 2001 : July : The Company has increased its registered capital from Baht 20 million to Baht 40 million, altogether with the changes in structure which resulted in change in major shareholders to 60% by Central group, 10% by SCB Group and another 10% by the Business Venture Promotion Co.Ltd.

Yr. 2003 : Sep : Increased its registered capital to Baht 80 million Yr. 2004 : Mar : The Company Transformed to a public limited company. Aug : The Company listed In the Stock Exchange of Thailand – MAI with the public offering

of share (IPO) of 4 million shares which resulted in the Company’s registered and paid up share of Baht 100 million, consists of 20 million of common shares. Major shareholders are Chirathivat Group 48%, Business Venture promotion Co.,Ltd 8 % and SCB Group of 4%. The listing in MAI is to raise its fund for operating working


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capital and also for the expansion of its services . It also made the Company to be more well known in the business market

Yr. 2006 : Sep : The Company has non-performing loans of Baht 52 million due to some customers and debtors had default in transferred of rights , thus cause some legal disputes between the Company , customers and debtors on the basis of breach of the rights transferred

Yr. 2011 : Feb : The 2 major shareholders of the Company, Chirathivat Group and the SCB Group had sold their shares of the Company to AIRA Capital Plc. in total amount of 11,470,200 shares or 57.35% of the Company through tender offer to Summit Corporation Co., Ltd and AIRA Capital Plc. which have purchased common shares of 4,543,400 shares or 22.72% of the total shares sold of the Company. However , the former major shareholders still continued their supports in the business transactions with the Group same as before , within 3 years from the date of such purchasing.

Sep: The Company has increased its registered share capital from Baht 100 million to Baht 200 million and changed its name from Dhanamitr Factoring Plc to AIRA factoring Plc.

Yr. 2013 : Feb: There was a change in major shareholders structure , resulting from Summit Corporation Co., Ltd has sold the shares of 6,420,000 ( equivalent to 16.05 % of paid-up capital) to AIRA Capital Plc. Thus , currently AIRA Capital Plc. now holds 29,607,617 shares or 74.02 % of total shares.

Apr: The Company has moved its office from 444 Olympia Thai Tower, 6th floor, Rajadapisek , Sam sane , Huay Kwang Bangkok to 319 Chamchuri Square, 20th floors, Phayathai Road, Pathumwan Sub-District, Pathumwan Disrict, Bangkok 10330

2.2 Overall Business of the Company

AIRA Factoring Plc. is an operator of Domestic Factoring service business, providing short-term financing by means of discounting of receivables from customers who transfer their rights to collect debts to the Company. Target customers of the Company are in many industries such as manufacturers / distributors of consumer products to the “Modern Trade” business. Currently, the Company has expanded its business to Automotive parts industry, which is one of the large and important industries of the country, with continuous growth. This industry is considered a good sector with many related parties involved and its nature of clear transactions which will also make the Company more efficiently to manage any related risks, hence this industry is expected to be an opportunity to increase the transaction volume of the Company.


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The Company’s strength is its long term experience in factoring business for more than 17 years, with knowledge and skills, and also because of supports from its major shareholders in the review of receivables which such customers also have trade transactions with those shareholders. Moreover, the Company can reduce its credit risk from the confirmation of rights transferred, which is the important part of the factoring business. In addition, in order to keep both the Company and its customers’ business to grow steadily and sustainably, the Company has its strategy to provide adequate information about customer’s management , to advise or recommend their customers to improve their operation i.e. Inventory management, materials procurement, receivables management including facilitating any expansion of credit lines etc. to increase the customers’ opportunity to run their business.

2.3 Company’s Revenue structure

The Company’s revenue structure can be classified according to the type of services as follow:

Type of Services Type of revenue Source of revenue Revenue from factoring service Interest income Domestic Factoring Fees and Services Fee for open credit line

Fee for purchasing right The comprehensive income’s structures of the Company from year 2010 -2013 are as follows

(Unit: Million Baht) Actual Comprehensive Income

2010 % 2011 % 2012 % 2013 % Revenue

Interest Income from factoring 105.23 77.00% 128.84 80.75% 139.64 79.91% 171.45 79.96% Fees and services 25.78 18.86% 26.05 16.32% 29.91 17.11% 33.41 15.58% Other income 5.65 4.13% 4.67 2.92% 5.21 2.98% 9.58 4.47%

Total 136.66 100.00% 159.55 100.00% 174.76 100.00% 214.43 100.00% Source : Company’s Information

2.4 Summary of Financial Statements and its operation

Financial Statements of The Company for the three consecutive years ended 31 December 2010-2013 , audited by Khun Rungnapa Lertsuwankul, Certified Public Accountant (Thailand) No. 3516 Ernst & Young Office Limited.


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(Unit: Million Baht) Actual Statement of Comprehensive

income 2010 % 2011 % 2012 % 2013 % Revenues Interest income from Factoring 105.23 77.00% 128.84 80.75% 139.64 79.91% 171.45 79.96% Fees and services Income 25.78 18.86% 26.05 16.32% 29.91 17.11% 33.41 15.58% Other income 5.65 4.13% 4.67 2.92% 5.21 2.98% 9.58 4.47% Total Revenues 136.66 100.00% 159.55 100.00% 174.76 100.00% 214.43 100.00% Expenses

Administrative Expenses 50.36 36.85% 62.74 39.32% 66.48 38.04% 68.37 31.88% Total Expenses 50.36 36.85% 62.74 39.32% 66.48 38.04% 68.37 31.88% Profit before finance cost and income tax expenses (EBIT) 86.30 63.15% 96.81 60.68% 108.28 61.96% 146.06 68.12%

Finance Cost 22.82 16.69% 41.20 25.82% 48.55 27.78% 65.66 30.62% Profit before income tax expenses ( EBT ) 63.49 46.46% 55.62 34.86% 59.73 34.18% 80.40 37.49%

Income Tax expenses 17.66 12.92% 4.30 2.70% 14.49 8.29% 15.67 7.31% Net Profit 45.83 33.54% 51.31 32.16% 45.25 25.89% 64.73 30.19% Revenue

During the year 2010-2013 , the Company’s revenues has tendency to increase continuously, mainly form the revenue from its core business which comprises of interest income from factoring and fees and services incomes.

In the year 2012, the Company’s revenue income from factoring was Baht 139.64 million, an increase of Baht 10.80 million from the year 2011 or a growth of 8.38%. The Company also earned Fees and services income of Baht 29.91 million, an increase of Baht 3.86 million or 14.82% increase from the year 2011 in line with the increase in factoring customers which grew continuously.

In the following year 2013, the Company’s revenue income from factoring was Baht 171.45 million, an increase of Baht 31.81 million from the year 2012 or a growth of 22.78%. The Company also earned Fees and services income of Baht 33.41 million, an increase of Baht 3.50 million or 11.70% increase from the year 2012.

Expenses


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During the consecutive year 2010-2013, the Company’s total expenses also raised continuously mainly from an increase in the Administrative Expenses which increase in consistent with the increase in revenue.

In the year 2012, Administrative Expenses was Baht 66.48 million, Baht 3.74 million increase, or 5.96% from the expenses in year 2011. This was due to the adoption of TAS 19 Employee Benefits regarding the personnel expenses to comply with the economic situation in 2012. In addition, the Company has provided allowance for bad debts and also wrote off some non-performing loans to expenses.

In the year 2013, Administrative Expenses was Baht 68.37 million, an increase of Baht 1.89 million increase, or 2.84 % from the expenses in year 2012 The increase was due to additional factoring customers which led higher expenses to be in line with customers’ volume.

Net Profit

During the year 2010 – 2013 , Net profits of the Company was Baht 45.83 million, Baht 51.31 million, Baht 45.25 million and Baht 64.73 million, consecutively , which equaled to 33.54% , 32.16% , 25.89 % and 30.19 % of total revenue, consecutively.

In the year 2012, the Company had the net profit of Baht 45.25 million, a decrease of Baht 6.06 million or 11.81% from the year 2011, due to the increase in finance cost and also company’s income taxes, hence the net profit in this year had decreased from the prior year.

In the year 2013, the Company had the net profit of Baht 64.73 million, an increase of Baht 19.48 million or 43.05% from the year 2012. The increase was attributed to the increase in operating revenue which was higher than the increase in administrative cost and finance cost.

(unit: million Baht)) Actual Financial statement

2010 % 2011* % 2012 % 2013 % Assets Current Asset Cash and cash equivalents 41.55 2.13% 23.38 1.47% 61.75 2.37% 87.43 3.04% Factoring receivables 1,843.68 94.55% 1,538.72 96.54% 2,409.20 92.34% 2,662.28 92.44% Current portion of loan receivable within one year 30.29 1.55% 21.62 1.36% 102.34 3.92% 34.57 1.20%


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2010 % 2011* % 2012 % 2013 % Other receivables 0.33 0.02% 0.01 0.00% 0.48 0.02% 0.12 0.00% Other current assets 0.22 0.01% 0.25 0.02% 0.21 0.01% 1.45 0.05% Total current assets 1,916.06 98.26% 1,583.97 99.38% 2,573.98 98.65% 2,785.84 96.73% Non-current assets Loans receivables 28.99 1.49% - 0.00% 22.98 0.88% 73.55 2.55% Equipment 3.90 0.20% 4.90 0.31% 5.00 0.19% 13.74 0.48% Deposits and guarantees 0.98 0.05% 0.99 0.06% 1.94 0.07% 1.19 0.04% Deferred tax assets - 0.00% 0.00% 5.27 0.20% 5.73 0.20% Total Non-current assets 33.87 1.74% 5.90 0.37% 35.19 1.35% 94.21 3.27% Total Assets 1,949.94 100.00% 1,589.87 100.00% 2,609.16 100.00% 2,880.05 100.00% Liabilities Current Liabilities Short term borrowing from financial institutions 1,587.00 81.39% 1,151.00 72.40% 2,116.53 81.12% 2,356.67 81.83% Retentions from factoring 69.05 3.54% 54.32 3.42% 50.83 1.95% 52.84 1.83% Other payables 5.41 0.28% 6.38 0.40% 5.31 0.20% 6.40 0.22% Income tax payable 9.72 0.50% 3.32 0.21% 8.44 0.32% 7.28 0.25% Other current liabilities 50.71 2.60% 34.30 2.16% 73.73 2.83% 87.41 3.03% Total Current Liabilities 1,721.88 88.30% 1,249.32 78.38% 2,254.84 86.42% 2,510.60 87.17% Non-Current Liabilities Provision for long term employee benefits - 0.00% 8.28 0.52% 12.75 0.49% 14.88 0.52% Other Non-Current Liabilities - 0.00% - 0.00% - 0.00% 0.16 0.01% Total Non-Current Liabilities - 0.00% 8.28 0.52% 12.75 0.49% 15.04 0.52% Total Liabilities 1,721.88 88.30% 1,257.60 79.10% 2,267.59 86.91% 2,525.64 87.69% Shareholders’ equity Share capital Registered 100.00 5.13% 200.00 12.58% 200.00 7.67% 200.00 6.94% Fully paid up 100.00 5.13% 200.00 12.58% 200.00 7.67% 200.00 6.94%


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2010 % 2011* % 2012 % 2013 % Share premium 35.84 1.84% 35.84 2.25% 35.84 1.37% 35.84 1.24% Capital contribution from parent company - 0.00% - 0.00% - 0.00% 0.10 0.00%

Retained earnings 92.21 4.73% 96.42 6.06% 105.73 4.05% 118.46 4.11% Appropriated –statutory reserve 10.00 0.51% 12.60 0.79% 14.90 0.57% 18.20 0.63% Unappropriated 82.21 4.22% 83.82 5.27% 90.83 3.48% 100.26 3.48% Shareholders’ equity 228.05 11.70% 332.27 20.90% 341.57 13.09% 354.41 12.31% Total liabilities and Shareholders’ equity 1,949.94 100.00% 1,589.87 100.00% 2,609.16 100.00% 2,880.05 100.00%

Note * present original (before restatement due to TAS12) Assets

As at 31 December 2010- 2013 , the Company had total assets of Baht 1,949.94 million, Baht 1,589.87 million, Baht 2,609.16 million and Baht 2,880.05 million, respectively. Most of the assets are factoring receivables of Baht 1,843.68 million, Baht 1,538.72 million, Baht 2,409.20 million and Baht 2,662.28 million which equaled to 94.55%, 96.78%, 92.34 % and 92.44% of total assets. These receivables are debtors from the factoring services of the Company.

As at 31 December 2012, Total assets of the company was Baht 2,609.16 million, an increase of Baht 1,019.29 million from the year 2011 (or 64.11% growth) attributed to the increase in Factoring receivables from the expansion of Company customer which yielded in the increase of factoring customers

In the following year 2013, Total assets of the company was Baht 2,880.05 million, an increase of Baht 270.89 million from the year 2012 (or 10.5 % growth), this was attributed to the Company expansion its market to the automotive part industry.

Liabilities As at the year ended 2010 - 2013 , the Company had total liabilities of Baht 1,721.88 million, Baht

1,257.60 million, Baht 2,267.59 million and Baht 2,525.64 million , respectively. Most of the liabilities were short term borrowings from financial institutions and connected companies with the total amount of Baht 1,587.00 million, Baht 1,151.00 million, Baht 2,116.53 million and Baht 2,356.67 million consecutively (which equivalent to 81.39%, 72.21 % , 81.12 % and 81.83% of total liabilities in each year.) The purpose of the short-term borrowing from financial institutions and connected companies were to support the working capital of the Company’s business, by using Promissory Notes and/or Bill of Exchange as


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instruments. The Company then has to bind with the conditions and covenants as stated in the lending agreements such as not to bring the Company’s assets to mortgage, pledge or to incur additional commitments and also to maintain level of some financial ratios.

As at 31 December 2012, total liabilities of the Company was Baht 2,267.59 million , an additional of Baht 1,009.99 million or 80.31 % growth. This was due to the short term borrowings from financial institutions and connected companies in the amount of Baht 965.53 million or an increase of 83.89% because of the expansion of Company’s customers, thus yielded in the increase in the receivables from factoring and the Company’s need of additional short term funds..

As at 31 December 2013, total liabilities of the Company was Baht 2,525.64 million , an incease of Baht 258.05 million or 11.38 % growth from the year 2012, mainly from the increase in short term borrowing to support the expansion in transactions volume in year 2013.

Shareholders’ Equity

During the years 2010-2013, the Company had its total Shareholders’ Equity increase continuously as a result from the increase in retained earnings every year. As at 31 December, 2013, the Company had retained earnings of Baht 118.46 million which Baht 100.26 million was unappropriated portion and the paid up share capital of Baht 200 million, which made total Shareholders’ Equity of Baht 354.41 million.

As at 31 December 2012 , total Shareholders’ Equity of the Company was Baht 341.57 million , an increase of Baht 9.31 million or 2.80% growth from the year 2011, as a result of the increase in retained earnings of 9.31 million, an increase of 9.65 %

As at 31 December 2013 , total Shareholders’ Equity of the Company was Baht 354.41 million , an increase of Baht 12.84 million or 3.76 % growth from the previous year, as a result of the increase in retained earnings of Baht 12.73 million, an increase of 12.04 % from the year 2012.

Financial Ratios

Financial Ratios unit 2010 2011 2012 2013

Liquidity Ratio Current Ratio time 1.11 1.27 1.14 1.11

Profitability Ratios Operating Profit Margin % 63.15% 60.68% 61.96% 68.12% Net Profit Margin % 33.54% 32.16% 25.89% 30.19% Return on Equity % 20.10% 15.44% 13.25% 18.26% Return on Assets % 2.35% 3.23% 1.73% 2.25%


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Financial Ratios unit 2010 2011 2012 2013 Efficiency Ratios

Assets turnover time 0.07 0.10 0.07 0.07 Fixed Assets turnover time 35.06 32.55 34.98 15.60

Leverage Ratios Total Liabilities to Total Assets ratio time 0.88 0.79 0.87 0.88 Total Liabilities to shareholders’ equity ratio time 7.55 3.78 6.64 7.13 Fully paid up shares to Total Assets ratio time 0.05 0.13 0.08 0.07 Interest coverage ratio time 3.78 2.35 2.23 2.22

Growth Ratios Growth ( reduced) in Revenue % - 16.75% 9.53% 22.70% Growth ( reduced) in Profit % - 11.96% (11.83%) 43.06% Growth ( reduced) in Total Asset % - (18.47%) 64.11% 10.38%

Liquidity Analysis

When looking at the Company’s liquidity to consider its ability to pay short term lending, the ratio in year 2013 was 1.11 times, an insignificantly decrease from the year 2012, which was 1.14 times, a decrease of 0.03 time. When considered the cash account of the Company, it maintained low level of cash balances. However, the reason that the Company current ratio was considered still normal because the Company has efficiency in management of the times of its lending and repayment to be in line with the Company’s repayment to financial institutions. The ratios also implied that the Company has sufficient current assets to repay their short term liabilities.. Current assets of the Company mainly are in forms of factoring receivables which the Company use the source of funds from financial institutions to provide its factoring business.

Profitability Analysis

Profitability Analysis in the year 2013 showed that the Company has operating profit margin of 68.12 %, an increase from which is only 61.96 % the year 2012 . This was due to the increase in revenue and also the efficiency to control administrative cost, thus the net profit margin of in year 2013 was 30.19%, comparing to 25.89 % from the previous year. For Return on Shareholders’ Equity and Return on Assets, the figures will show that In the year 2013, the Company has utilized the investment from shareholders’ equity and assets to generate net profit so the return on equity and return on assets are 18.26% and 2.25% respectively, the increase from prior year where the two returns were only 13.25% and 1.73%. The increases were in line with the growth in net profit.


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Operating Efficiency Analysis The analysis of the operating efficiency is to judge Company’s ability to manage its assets and

generate the revenue. In the year 2013 , the efficiency rates from the Assets turnover is 0.07 times , which remained constant as of year 2012, as the Company still had increase in the factoring receivables in the higher rate than its growth in revenue which yielded in the same efficiency as in the prior year. Also in the year 2013, the Company had return on fixed assets equal to 15.60 times , reduced from the rate of 34.98 times in the year 2012, a significant reduce of 19.38 times.

Analysis of Finance Policy.

The analysis of the finance policy is to analyze the source of funds financing the Company which will lead to know the directions of sources of financing including the ability to pay interest on its borrowing, In year 2013, the Company’s Total Debt to Total Equity ratio was equal to 0.88 times, a slightly increase from the ratio of 0.87 times in the year 2012, which is considered normal in business. However, as the Company’s business mainly relied on borrowing funds from financial institutions to use in its factoring business, thus the increase of liabilities and assets are in the same direction. The total liabilities to total equity ratio may not reflect any contingencies which the Company will have to pay in the future. In addition , total liabilities of the Company was considerably too high as its nature of business which need high cash working capital, hence the Company had to increase its short term financing from the financial institutions which then resulted in high finance cost. However, the interest coverage ratio of the Company is normal, as in the year 2013, such interest coverage ratio was equal to 2.22 times which showed that the Company still has sufficient operating profit to pay all the existing liabilities. Growth Analysis.

In the year 2013, the growth of the Company’s revenue was 22.70% with the increase in net profit of 43.06% , the growth of net profit was also in line with the growth of revenue. However, the growth rate of total of assets in the year 2013 has reduced to 10.38%


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Section 3 : General information of AIRA Securities Plc,

3.1 General information Name : AIRA Securities Plc, Registered date : 12 December 2007 Registered Number : 0107550000211 Business Operation : A full licensed securities firm, trade , buy, sell or exchange

securities according to the laws regarding securities and SET Head Office Location : 319 Chamchuri Square, 17th and 20th floors, Phayathai Road

Pathumwan Sub-District, Pathumwan Disrict, Bangkok 10330 Registered Shares : Baht 720 million ( common shares of 720 million at par Baht 1 ) Paid up Shares : Baht 600 million ( common shares of 600 million at par Baht 1)

As at 27 January 2014 , according to the registration certificate, the followings are the Company ‘s directors :

No. Directors’ name Position 1 Dr. Suphachai Phisitvanich Chairman of the Board 2 Mr. Nopporn Picha

Independent Director & Chairman of Audit Committee

3 Mr. Wisoot Karnchanapunyapong Director 4 Mrs. Chiraporn Chemnasiri Independent Director & Audit Committee 5 Ms. Nalinee Ngamsettamas

Director, and Chairman of the Executive Committee

6 Mr. Pairoj Laungthaleongpong Chief Executive Officer 7 Mr. Nakorn Kolsrichai Chief Marketing Officer 8 Assoc.Prof Anchalee Pipatanasern Independent Director & Audit Committee 9 Mr. Visit Vongruamlarp Director

The directors authorized to sign documents in binding the Company consist of Mr. Wisoot Karnchanapunyaponor or Ms. Nalinee Ngamsettamas or Mr. Pairoj Laungthaleongpong or Mr. Nakorn Kolsrichai , any two out of these four shall commonly sign together with the Company’s seal affixed


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As at 31 December 2013, the management team comprised of total six directors, as follows

No. Name Position 1 Mr. Pairoj Laungthaleongpong Chief Executive Officer 2 Mr. Nakorn Kolsrichai Chief Marketing Officer 3 Mr. Songpol Boonnak Managing Director 4 Mr. Salakul Prasertdee Managing Director 5 Mr. Nipon Suwanprasit Managing Director 6 Miss Supannee Janaraksa Senior Vice President of Accounting and Cashier

AIRA Securities Plc. was incorporated on 16 February, 2004 with initial investment of Baht 100 million, with its objective to run the business including trading services, investment advisor, underwriting and Derivatives Trading Service etc. The Company has full securities brokerage licenses cover all related services and is a member of the SET, broker No. 48., and was granted the Derivative Trading Licenses and also become a member of Thailand Future Exchange, TFEX.

The significant changes and development of the Company are as follows :

Feb Established with a paid-up capital of Baht 100 mm. Acquired 3 securities licenses from AIG Finance.

Sep Increased its capital to Baht 128 mm.

Yr.2004 :

Oct Increased its capital to Baht 300 mm. Jan Approval of the full securities brokerage license for running its operations. Apr Be the SET broker No. 48. July Initiated Wealth Management business.

Yr 2005 :

Sep Increased its capital to Baht 340 mm. Yr. 2006 : Nov Changed the management structure .

Apr Increased its capital to Baht 360 mm. Took over two financial advisory companies (Wholly-owned Subsidiaries) with highly experienced team and a decade of strong track records.

May Increased its capital to Baht 500 mm.

Yr. 2007 :

Dec Transformed to public limited company.


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Apr Increased its paid up capital to Baht 600 mm. Sep Granted the approval of TFEX lic nse and started to activate Private Fund

License.

Yr. 2008 :

Oct Granted type Kor securities license to operate securities, Increased its capital to Baht 720 mm. and has been filling to SEC for IPO approval and to list in the SET.

Mar Started operating "Institutional Trading Service" to serve both domestic and foreign institutions.

Started operating Global Trading Business in 2nd Quarter.

Yr. 2009 :

Jun Received the license to run Securities Borrowing and Lending business Received the license to operate Private Fund business

Yr. 2011 : Mar : Started of Single Account Trading System Yr. 2012 : Sep: Opening of the third and fourth branch at Sri Patum University and Muang Tong

Thani. respectively. Yr. 2013 : Jan: The AIRA Capital Plc. has set up the AIRA Advisory International (Singapore) Pte.Ltd,

a new Financial Advisor in Singapore.

3.2 Summary of Financial Status and its operation

Financial Statements of The Company for the three consecutive years ended 31 December 2010-2013 , reviewed by Khun Rungnapa Lertsuwankul Certified Public Accountant (Thailand) No. 3516 Ernst& Young Office Limited

(unit : million Baht ) Actual Comprehensive Income

2010 % 2011 % 2012 % 2013 % Income Brokerage Fee 215.00 60.82% 193.40 78.43% 46.82 83.29% 471.27 83.54% Fee & Services income 9.14 2.59% 21.41 8.68% 0.94 1.67% 15.82 2.80% Gain (Loss) on sales of investment 89.59 25.34% (4.20) -1.70% (0.98) -1.74% (9.62) -1.71% Interest & Dividends 22.50 6.37% 19.04 7.72% 6.46 11.49% 35.91 6.36% Interest on Margin Loan 13.61 3.85% 15.48 6.28% 2.69 4.78% 50.07 8.88% Other income 3.65 1.03% 1.47 0.59% 0.29 0.52% 0.71 0.12% Total Revenue 353.50 100.00% 246.61 100.00% 56.21 100.00% 564.16 100.00% Expenses Finance cost 9.89 2.80% 14.91 6.05% 4.77 8.48% 55.04 9.76%


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(unit : million Baht ) Actual Comprehensive Income

2010 % 2011 % 2012 % 2013 % Fees & Services Expenses 30.56 8.65% 28.84 11.70% 9.14 16.26% 47.63 8.44% Operating Expenses: Personnel expenses 167.63 47.42% 114.81 46.56% 27.43 48.80% 239.56 42.46% Building & Equipment Expenses 34.84 9.86% 35.11 14.24% 8.24 14.66% 56.49 10.01% Directors’ remuneration 1.88 0.53% 3.34 1.35% 0.91 1.61% 2.43 0.43% Other expenses 26.51 7.50% 31.61 12.82% 7.21 12.83% 42.63 7.56% Total Expenses 271.31 76.75% 228.62 92.71% 57.70 102.64% 443.79 78.66% Profit before income tax expenses (EBT) 82.19 23.25% 17.99 7.29% (1.48) -2.64% 120.37 21.34% Income tax expenses 18.10 5.12% 2.13 0.86% 0.38 0.67% 26.24 4.65% Net Profit 64.09 18.13% 15.86 6.43% (1.86) -3.31% 94.13 16.68%

Operating Performance During the year 2011-2013, AIRA Securities Plc. had an continuous increase trend in its total

revenue. Though the total revenue in 2011 has decreased from the year 2010, because in the year 2011, the Company has incurred loss from investment Baht 4.20 million while in year 2010, the Company earned profit of Baht 89.59 million. Revenue of AIRA Securities Plc. mainly comes from fees of brokerage and derivatives which continuous grew from Baht 193.40 million to Baht 214.18 million and Baht 471.27 million in the year 2012-2013 (or growth of 10.74% and 120.03% respectively). This was due to the recovery in investment situation. Moreover, the percentage of expenses to total revenue has decreased from 92.71% in year 2011 to only 78.66% in year 2013. As a result, the Company’s net profit during the year 2011-2013 continuously increase from Baht 15.86 million in the year 2011 to Baht 94.13 million in the year 2013, an increase in percent of net profit from 6.43% in the year 2011 to 16.68% in the year 2013.

(unit : million Baht) Actual Statement of financial

position 2010 % 2011 % 2012 % 2013 % Assets Cash & cash equivalents 385.51 27.66% 492.41 48.86% 124.41 7.07% 589.08 26.49% Receivables from Clearing House 4.59 0.33% 75.13 7.45% 181.01 10.29% 28.11 1.26%


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position 2010 % 2011 % 2012 % 2013 % Securities and derivative business receivable 612.56 43.96% 263.71 26.17% 1,031.36 58.65% 1,239.50 55.74% Investment -Net 228.26 16.38% 12.84 1.27% 249.44 14.18% 135.34 6.09% Investment in subsidiaries - 0.00% - 0.00% - 0.00% - 0.00% Equipment –Net 33.87 2.43% 29.63 2.94% 35.84 2.04% 70.68 3.18% Intangible Asset - Net 91.25 6.55% 92.86 9.21% 97.31 5.53% 103.27 4.64% Deferred tax assets - 0.00% - 0.00% 0.29 0.02% Other assets 37.50 2.69% 41.22 4.09% 38.93 2.21% 57.63 2.59% Total Assets 1,393.54 100.00% 1,007.79 100.00% 1,758.58 100.00% 2,223.61 100.00% Liabilities Borrowings from financial institutes - 0.00% - 0.00% 30.00 1.71% - 0.00% Payable to Clearing House 388.88 27.91% 81.16 8.05% 196.88 11.20% 382.46 17.20 Securities and derivatives business payable. 119.89 8.60% 51.30 5.09% 434.38 24.70% 125.12 5.63% Subordinated Debentures 200.00 14.35% 200.00 19.85% 400.00 22.75% 996.89 44.83% Provision for long-term employee benefits - 0.00% 1.42 0.14% 1.29 0.07% 1.80 0.08% Corporate Income Tax payables - 0.00% - 0.00% 11.10 0.63% 7.87 0.35% Other Liabilities 48.44 3.48% 22.47 2.23% 40.38 2.30% 49.43 2.22% Total Liabilities 757.21 54.34% 356.35 35.36% 1,114.02 63.35% 1,563.55 70.32% Owners’ equity Share Capital Authorized shares 720.00 51.67% 720.00 71.44% 720.00 40.94% 720.00 26.13% Paid-up shares 600.00 43.06% 600.00 59.54% 600.00 34.12% 600.00 21.77% Premium on shares 16.69 1.20% 16.69 1.66% 16.69 0.95% 16.69 0.61% Equity from parent 1.17 0.05%


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position 2010 % 2011 % 2012 % 2013 % company Other components of owners’ equity - 0.00% - 0.00% - 0.00% (19.80) -0.89% Retained Earning Appropriate - Statutory Reserve 5.69 0.41% 6.22 0.62% 8.16 0.46% 13.06 0.59% Unappropriated 13.95 1.00% 28.53 2.83% 19.71 1.12% 48.93 2.20% Total Owners’ equity 636.33 45.66% 651.44 64.64% 644.56 36.65% 660.05 29.68% Total Liabilities and owners’ equity 1,393.54 100.00% 1,007.79 100.00% 1,758.58 100.00% 2,223.61 100.00%

Financial Position During the year 2010 – 2013 , AIRA Securities Plc. has total assets of Baht 1,393.54 million, Baht

1,007.79 million , Baht 1,758.29 million and Baht 2,223.61 million, accordingly. Most of the assets were Securities and derivative business receivables , cash and cash equivalent and net investment, totaling represent 65.74 – 82.23 % of total assets. In the year 2011, the Company’s total cash and cash equivalent and net investment was Baht 385.51 million and then increased to Baht 589.08 million in the year 2013, due to the issuance of debt instrument and other borrowing to support the Company’s expansion of its business. In the year 2011, Total Asset has decreased as a result of decrease in Securities and derivative business receivables from Baht 612.56 million in year 2010 to Baht 263.71 million, due to the depression in investment as a result of the world economic. However, the investment situation has improved in year 2012-2013 thus Securities and Derivative business receivables has increase to Baht 1,031.36 million and Baht 1,239.50 million, respectively. The source of funds for the operation mainly comes from current liabilities, the issuance of debt instrument and borrowing. The percentage of total liabilities to total liabilities and equity increased from 36.07 % in the year 2011 to 70.32 % in the year 2013. The issuance of debt instrument and borrowing increased in line with the increase in Securities and derivative business receivable Total debt instrument and other borrowings increased from Baht 200 million in the year 2011 to Baht 996.89 million in the year 2013, as a result the Debt to Equity has increased from 0.56 time to 2.37 , on the same period of time. For overall Financial status of AIRA Securities Plc. was considered relatively strong by considering the Net Capital Rule in the period of 2010-2013 where the NCR was 109.72%, 507.83 %, 78.79% and 68.30%, consecutively.


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Part 4 : Rational of the transaction

4.1 Objective and benefits from the transactions.

Objective of the transaction

As AIRA Factoring Co.,Ltd ( AF) is a provider of short term borrowing through factoring services business, thus AF has purchased the discounted receivables from the rights of collection transferred, so AF also need sufficient short term source of funds with appropriated finance cost in order to run its business besides the Company’s equity.

Currently, AF has short term borrowings from 7 financial institutions, most of the borrowings are short term loan in terms of Promissory Notes, Overdrafts and Bill of Exchange from connected party, the details are as follows :

(unit: million) Type of Loans Financial Institutions

P/N OD B/E Total lines O/S as at

31 Dec. 2013 Bangkok Bank 650.00 20.00 - 670.00 440.00 Siam Commercial Bank

480.00 20.00 - 500.00 448.00

Thanachart 400.00 - - 400.00 349.00 ICBC 200.00 - - 200.00 200.00 Kasikorn 150.00 20.00 - 170.00 150.00 RHB 150.00 - - 150.00 150.00 Krung Thai 50.00 - - 50.00 - Total from financial institutions

2,080.00 60.00 - 2,140.00 1,737.00

AIRA - - 800.00 800.00 620.00 Total 2,080.00 60.00 800.00 2,940.00 2,357.00 Source : Company’s profile

Total short term borrowing and total outstanding of the lines, both from financial institutions and from AIRA Securities Plc ( AIRA) , most of the lines are highly utilized with 81.16% of total lines from the financial institutions as at 31 December, 2013 and the short term borrowing from AIRA will be due on 2 May 2014 in total amount of 77.50% of total line. With regard to the due of AIRA’s borrowing, thus the total lines of AF to support its operation will remain at Baht 2,140 million which may consider not enough for the


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current business operation. In addition, some lines from the financial institutions also have some conditions to the line such as not to lend over the quarter, the Bank’s policy to slow down in leasing and factoring etc. or some lenders charged the interest rate to higher level. For example , in year 2013, some of the financial institution quoted the interest rate of 5.00% per year while the large lenders proposed the maximum rate of 4.20 % per year. The amount of loan outstanding of Baht 2,140, million was considered to be not sufficient and may be the obstacle of the expansion plan. To ask for the additional line or new sources may be limited as the condition of Debt to Equity Ratio which as at 31 December 2013, the Company’s Debt to Equity Ratio was 7.13 . In addition to ask for the new credit lines from other institutions will need securities to guarantee ,notwithstanding the funds increased from the capital and money market, by means of capital increase and/or issuance of debt instruments in the current situation of the political conflict crisis and also because the procedure will take time and also incur quite high financial cost and expenses.

Thus to support the Company, AF, its future business’s growth and also to let them has enough source of funds , with the appropriate finance cost , to accommodate the expansion in the near future , AF needs to receive the financial assistance from AIRA by issue and offer to sell the Bill of Exchange in the amount of Baht 1,200 million, terms of 5 years from 3 May 2014 to 2 May 2019.to support for the Company’s operation plan which also include the expansion services to support the short term financing which is in the upper trend. The Company will emphasize on the new market by expand its customers’ base to the medium-sized and small customers and also stress on the growth in partnership’ business i.e. retails, and automotive parts. The expansion plan for the year 2014-2016 has been forecasted the total short term working capital of Baht 23,000 to Baht 32,000 million , accordingly and thus the Company should have additional funds for more than Baht 2,300 million. So the receipt of financial assistance from AIRA in this time, is part of additional funds to help the Company’s more liquidity in cash management to serve the operation within the next 5 years . However, the Company still has target to seek for additional finance source, especially from the Equity and Money market, the Company will then have sufficient source of funds with reasonable finance cost and also can distribute risk from depending on one specific source of funds.

Benefits of transactions

The receipt of the financial assistance from AIRA in form of issuance and propose to sale of Bill of Exchange in total Baht 1,200 million as mentioned above is part of the Company’s fund raising plan which will benefit the Company as follows :

1. The Company, AF, will have enough funds needed for its short term business plan for 1-3 years as the Company has target to expand its business and services continuously


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especially the medium and small customers who are qualified but lack of the financial supports i.e. retail partnership or automotive part industry. The Company’s target growth in year 2014-2016 will be average growth of 15% per year.

2. The Company will have higher financial liquidity and more choices of funds to decrease the dependent on the financial institutions which some of them, or in some period of time, have set the conditions and limits of the line.

3. The Company can manage its finance cost to be more efficiency and thus can compete with its competitors.

4. This will increase Company’s opportunity to expand its transaction volumes to increase its revenue and profit continuously.

4.2 Comparative advantages and disadvantages of entering into the transaction

Advantage of entering into this transaction 1) To increase financial fund for the Company for expansion of its business 2) It is an additional source of fund for the Company, to increase flexibility to manage finance

cost efficiently and also benefits to the business of the Company. 3) To diversify Company’s risk of dependence on the financial institutions which may have more

conditions and covenants in the credit utilization 4) The Company will be able to negotiate such conditions in the borrowings than when borrow

from the financial institutions or other short term supports such as no need for the asset guarantee, the length of the term and such the lower interest rate.

Disadvantage of entering into this transaction

1) To increase the additional expenses as from the financing cost 2) To increase the opportunity that the Company’s higher Debt to Equity ratio which will affect

the chance that the Company may breach the covenants with some finance institutions who has set the limitation of D/E Ratio

3) May have some risks about the repayment in case the Company does not have sufficient funds.


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4.3 Comparative advantages and disadvantages of Not entering into the transaction Advantage of NOT entering into this transaction.

1) For the Debt to Equity Ratio, the Company has lower risk to breach the borrowing conditions with the Siam Commercial Bank

2) The Company will not incur more finance cost in case it has not increased any borrowing.

Disadvantage of NOT entering into the transaction 1) Limited source of funds to use for its operation. High dependency on the financial institutes

which has more conditions and covenants such as annual review of credit lines, Negative Pledge and the limited Debt to Equity Ratio.

2) Limited sources of funds will lead to opportunity loss in expanding the Company’s business. 3) Raising funds from other sources, either from the equity or Money market has procedures and

time consumed and still cannot guarantee its success or the cost, thus the Company’s competitive potential is decrease.

4.4 Comparative advantages and disadvantages of entering into this transaction with connected party

Advantage of entering into the transaction with connected party 1) Ability to negotiate or ask for release in conditions or covenants re: the financial support

which is better and easier than to do with normal finance institutions or other source. This will increase the Company’s more liquidity in its operation and thus yields more benefit to the Company than the case of normal transaction.

2) Such connected party shall concern about overall benefits rather than third-party which will concern its maximum benefits.

3) The shareholders and other related parties will know the details of the transaction more than the normal outsider case, as the Company has to declare all the connected transactions to public according to the rules & regulations of the SET re: the connected transactions

Disadvantage of entering into the transaction with connected party

1) Possibility to negotiate the condition may not be in full force when comparing to the negotiation with the normal third parties.

2) The Company may take a risk in case that AIRA cannot provide the supported fund to the Company because of the AIRA:’s in short of liquidity or cannot find the investors to its B/E and/or incase the NCR is below the criteria.


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3) The company may lose its opportunity to find other financial sources with such lower cost or any better conditions.

4.5 Comparative advantages and disadvantages of entering into this transaction with third party

Advantage of entering into the transaction with third Party 1) The negotiation of conditions can be fully done for the optimum benefits of the Company. 2) Avoidance of Conflict of Interest. 3) Decrease the dependent on the parent company or connected company.

Disadvantage of entering into the transaction with third party 1) Ability or opportunity to negotiate or to waive in such conditions or covenants in the support of

finance is deemed less possible. 2) The outsiders shall consider to maximize his own interests or benefits without any concern

about the Company., 3) The procedures and timing in consideration is relatively longer.

From the purposes and benefits of the entering into the abovementioned transactions, the independent Financial Advisor has an opinion that the available of sufficient source of funds with such appropriate finance cost which is one of important key factors to the success of the Company’s operation, thus the plan to receive financial assistance from AIRA Securities Plc. in form of issuance and propose to sale of Bill of Exchange in total Baht 1,200 million for 5 years period is rational and yield such benefit to the Company’s operation.


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Section 5 Fairness of the benefit

Before the change in Construction of shareholders in year 2011, the Company has mainly used the source of finance form the financial institutions. Since AIRA Capital Plc., and Summit Corporation have been the major shareholders in the year 2011, the Company has started to receive the finance assistance form AIRA , started from Baht 500 million and Baht 800 million in the year 2012 which be due on 2 May 2014 . During the year 2012-2013, the source of use of fund and interest paid are summarized as follows:

As at 31 December 2011 (unit : million Baht)

Lenders

Total lines O/S as at 31 Dec. 2011

Range of interest paid in this year

First three main lenders * 1,450.00 1,093.00 2.85% - 4.80% Other lenders *** 735.00 58.00 2.85% - 4.95% Total loans from Financial Institutions

2,185.00 1,151.00

AIRA 500.00 - 3.20%** Total 2,685.00 1,151.00 * comprise of Bangkok Bank, Plc. ,and the Siam Commercial Bank Plc. and Thanachart Bank Plc. ** use of funds during March -July *** consist of Bank of Asia Plc. and Sin Asia Plc.

(unit : million Baht) Lenders Total lines O/S at the end of

31 Dec. 2012 Range of interest paid

in this year

First three main lenders * 1,620.00 940.00 4.00% - 4.80% Other lenders ** 885.00 380.00 3.59% - 4.90% Total loans from Financial Institutions

2,505.00 1,320.00

AIRA 800.00 800.00 3.65% Total 3,305.00 2,120.00 * comprise of Bangkok Bank, Plc. ,and the Siam Commercial Bank Plc. and Thanachart Bank Plc ** Consist of ICBC plc., Kasikorn That Plc. RHB Plc. and Krung Thai Plc.,


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As at 31 December 2013 (unit : million Baht)

Lenders Total lines O/S at the end of 31 Dec. 2013

Range of interest paid in this year

First three main lenders* 1,570.00 1,237.00 3.72% - 4.20% Other lenders** 570.00 500.00 3.59% - 5.30% Total loans from Financial Institutions

2,140.00 1,737.00

AIRA 800.00 620.00 3.40% - 3.85% Total 2,940.00 2,357.00

*comprise of Bangkok Bank, Thanachart Bank and the Siam Commercial Bank ** Consist of ICBC Plc., Kasikorn That Plc. RHB Plc. and Krung Thai Plc.,

As the interest rate of each financial institutions will be different according to its liquidity and finance cost. From the past, in order to select the funds from AIRA , the Company will consider from the amount need in that period of time and also the finance cost. In case that the financial support from other financial institutions may not sufficient and also because the finance cost of AIRA is lower than others’ lenders, the Company will conclude to use the financing source from AIRA . The details of the procedure to make its decision to select the financial support are as follow :

Guidelines to select the Lending lines The Company manage its Liquidity Risk through the management structure and Internal

Control procedures, with the Accounting and Finance Department to manage the fund, Projected cash inflow-outflow to determine the requirement to use each sources of funds of the Company in each timetable according to the business plan.

For the use of each funds, the Company will consider by take into account of these factors such as market liquidity, the loan interest, term, conditions and covenants of each financial institutions so the Company can get the return which is sufficient and appropriate.

In case that the Company needs to get the financial supports from the AIRA Securities Plc. , the Accounting and Finance Department will summarize overall liquidity market reports including the reasons and necessities to ask for such loan ,to submit to the Management to consider for the approval in accordance with the frame works and


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criteria which have been approved by the Company’s directors of the shareholders’ meeting, before taking any action. The Company has also assigned the Accounting and Finance Department to report the financial supports to the executive and Board of Directors in the Company’s time frame. Moreover, the Company also has the Internal Audit and Compliance to review all those transactions, and report to the Management and Audit Committee.

From the guidelines for selecting the source of funds , including the past records of the Company’s utilization and the range of interest paid, It was clearly that the three biggest lenders are Bangkok Bank Plc., Siam Commercial Bank Plc. and Thanachart Plc. which total lines is equivalent to 73.36% of total line from the financial institutions. The past records in three years with these banks also showed that the interest rate from these banks is lower than some other financial institutions. Therefore, in the Board’s meeting of 3/2014 on 19 March 2014 has approved the Company to receive financial supports from the AIRA securities Plc. by issuance and sell of the Bill of Exchange Baht 1,200 million, tenor not exceed 5 years from 3May 2014 to 2 May 2019,. Such B/E will commit the interest rate which total agreed form time by time, but not exceed the Money Market Rate of one of the Bank ( The Bangkok Bank Plc , Siam Commercial Bank Plc. and Thanachart Bank Plc.) which has agreed before the drawdown. The independent Financial Advisor has concluded their opinions that the reference to set the interest rate depending on the Money Market rate of the three banks is deemed reasonable and fair since the Company shall not have to pay the interest expenses from the financing assistance from AIRA Securities Plc in the higher rate than the amount paid to the three main banks which have supported 73.36% of total line from the financial institutions.


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Section 6 : Summary of opinion from the independent financial advisor.

In the factoring business, the amount of funds and the cost of funds play important factors which have higher impact to the Company’s success. The sufficient amount of funds together with the lower finance cost will yield in the Company’s opportunities to grow and also to compete with other competitors. In the past, the Company has received the financial assistance from the AIRA Securities Plc. since the year 2011. Currently the financial assistance is in total amount of Baht 800 million with the interest identified by “ market rate which the Company borrows from other financial institutions “ and this existing line will be due on 2 May 2014. If the Company cannot find any replacement then it may affect the Company and will be the obstacle to the expansion of the Company’s business in the near future. The Company’s request of financial assistance from AIRA Securities Plc. through the issuance of B/E Baht 1,200 million, which terms is less term 5 years, (from 3 May 2014 -2 May 2019) is reasonable to support the Company such sufficient funds to continue its business and also to support for the future expansion. Thus the received of the financial supports from AIRA Securities Plc. is considered reasonable. For the determine of such interest , it was agreed that the rate shall “ agreed for the rate from time to time, but the interest shall not exceed the Money Market Rate of one of the Bank ( The Bangkok Bank Plc ,The Siam Commercial Bank Plc. and Thanachart Bank Plc ) “ is also considered appropriate and fair because the Company will not have to bear interest expenses from the support of AIRA Securities Plc. at the higher rate than the rate paid to the three main banks which have supported 73.36% of total line from the financial institutions .

When consider from the objective and benefits together with the advantage and disadvantage as indicated in this report , SCMB Co.Ltd as the independent financial advisor would like to summarize our opinion that the receiving of financial assistance from AIRA Securities Plc. worth the reasons to benefit the Company in terms of opportunities to generate the increase in revenue and the profit which will make the Company’s financial position more solid and also to contribute continuous good return to shareholders. With all these factors, the shareholders of the Company should approve the Company’s financial assistance from AIRA Securities Plc. by the issuance the amount of Baht 1,200 million for the term 5 years from 3 May 2014 to 2 May 2019, with the interest rate of “agreed for the rate from time to time, but the interest shall not exceed the Money Market Rate of one of the Bank ( The Bangkok Bank Plc ,The Siam Commercial Bank Plc. and Thanachart Bank Plc ) “ according to Board of directors 3/2013 on 19 March 2014.


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Nonetheless, the final decision is at the discretion of the shareholders to vote in favor of the entering into this transaction which is in the consideration of each shareholder, thus the shareholder should study the information in the documents provided with this Invitation to attend the 2014 Annual General Meeting of Shareholders to make an appropriate resolution.

Yours sincerely, SCMB Company Limited

.............................................. ...................................................... (Mr. Vasut Bunchalaksi) (Mr. Praisun Wongsamit)

In the capacity of Operations Controller Managing Director

6. attachment 6 aira-e edit · exchange (b/e) in total amount of baht 1,200 million, with terms of...

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