Our Ref. 500374 May 15, 2007 Subject : To : Presentation of the Company s reviewed but unaudited Financial Statements and Consolidated Financial Statements for the quarter ended 31 March 2007 The President The Stock Exchange of Thailand We hereby present the Company s reviewed but unaudited Financial Statements and Consolidated Financial Statements for the quarter ended 31 March 2007. The operating results of the Company on stand-alone basis for the first quarter ended March 31, 2007 showed a net profit of Baht 18.264 million, a decrease of Baht 0.544 million or 2.89% comparing with Baht 18.808 million obtained during the same period last year. The net profit on the consolidated figures for the first quarter ended March 31, 2007 showed a net profit of Baht 30.986 million, a decrease of Baht 89.722 million or 74.33% comparing with Baht 120.708 million obtained during the same period last year. The decrease in net profit was contributed from : 1. The decrease in net profit of the company only for Baht 0.544 million in the first quarter of year 2007 as compared to the same quarter last year was partly contributed from the decrease of various types of income i.e. net interest and dividend income, bad debt recovery and profit from disposal of investment in securities obtained from debt restructuring for a total decreased amount of Bath 9.670 million, decreased from Baht 50.059 million in the first quarter of 2006 to Baht 40.389 million in the same period this year. At the same time, there were some types of income had increased i.e. fees and services income and income from the reversal of losses on impairment of assets that gave a rise to the total of these income for Baht 8.606 million, from Baht 0.753 million in 2006 to Baht 9.359 million in 2007. 2. The decrease in net profit for the consolidated figures in the first quarter of year 2007 compared to the first quarter of year 2006 was contributed from the profit from the subsidiary with an amount of Baht 25.445 million in the first quarter of year 2007 while in the first quarter of year 2006 a profit of Baht 101.901 million was recognized, making a decrease of profit for Baht 76.456 million. Besides, the decreasing share holding in the subsidiary from 100 percent to 50 percent in the first quarter of year 2007 also effected the consolidated net profit due to the allotment to minority interest according to the portion of their shareholding for 50 percent or Baht 12.722 million. In summary, the company s net profit for the company only in the first quarter of year 2007 of Baht 18.264 million or Baht 0.09 EPS compared to Baht 0.09 EPS obtained in the First quarter of year 2006. The net profit for the consolidated figures was Baht 30.986 million or Baht 0.15 EPS compared to Baht 0.60 EPS obtained in the first quarter of year 2006. Yours sincerely (Mrs.Kingthien Bang-Or) Director
(Reviewed Quarter-1 and Consolidated F/S (F45-3)) Report: Reviewed Quarterly Financial Statements BANGKOK FIRST INVESTMENT & TRUST PUBLIC CO.,LTD. The Consolidated Financial Statement Reviewed (In thousands) Ending 31 March Quarter 1 Year 2007 2006 Net profit (loss) 30,986 120,708 EPS (baht) 0.15 0.60 The Company Financial Statement Quarter 1 Year 2007 2006 Net profit (loss) 18,264 18,808 EPS (baht) 0.09 0.09 Type of report : Unqualified Opinion with an emphasis of matters Comment : Please see details in financial statements, auditor's report and remarks from SET SMART "The company hereby certifies that the information above is correct and complete. In addition, the company has already reported and disseminated its financial statements in full via the SET Electronic Listed Company Information Disclosure (ELCID), and has also submitted the original report to the Securities and Exchange Commission." Signature ( Mrs.Kingthien Bang-Or, Mrs.Tida Chonlavorn ) Position Directors Authorized to sign on behalf of the company
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY REVIEW REPORT AND INTERIM FINANCIAL STATEMENTS 31 MARCH 2007
Review report of Independent Auditor To the Shareholders of Bangkok First Investment & Trust Public Company Limited I have reviewed the accompanying consolidated balance sheet of Bangkok First Investment & Trust Public Company Limited and its subsidiary company as at 31 March 2007, and the related consolidated statements of income, changes in shareholders equity, and cash flows for the three-month periods ended 31 March 2007 and 2006; and the separate financial statements of Bangkok First Investment & Trust Public Company Limited for the same periods. These financial statements are the responsibility of the Company s management as to their correctness and the completeness of the presentation. My responsibility is to issue a report on these financial statements based on my reviews. I conducted my reviews in accordance with the auditing standard applicable to review engagements. This standard requires that I plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. I have not performed an audit and, accordingly, I do not express an audit opinion. Based on my reviews, nothing has come to my attention that causes me to believe that the accompanying financial statements are not presented fairly, in all material respects, in accordance with generally accepted accounting principles. Without qualifying on the financial statements referred to above, I draw attention to the matters discussed under the Notes to the financial statements presented as follows: - (a) As discussed in Note 4 to the financial statements regarding the impact of the Financial Sector Master Plan on the Company. (b) As discussed in Note 5 to the financial statements, during the year 2006, the Company received a letter from TAMC informing it that TAMC will terminate the transfer of Baht 153 million the non-performing loans secured by leasehold rights which are not qualified for transfer, with TAMC to adjust the value of its promissory note by the same amount. The Company s management has written to TAMC confirming its rights over such collateral as at the transfer date and confirming that the original transfer value is correct. As the date of this report, the dispute has still not been finalised.
(c) As discussed in Note 9.3 to the financial statements regarding the allowance for doubtful accounts, in December 2006, the Bank of Thailand modified its guidelines on the determination of provisions for non-performing loans which will become effective in three phases in 2006 and 2007. The Company already set up provisions against those receivables which fall under the criteria requiring provision to be recorded in 2006. The Company still in the process of estimating additional provisions would be required for 2007 in accordance with those guidelines. I have previously audited the consolidated financial statements of Bangkok First Investment & Trust Public Company Limited and its subsidiary company and the separate financial statements of Bangkok First Investment & Trust Public Company Limited for the year ended 31 December 2006, in accordance with generally accepted auditing standards and expressed an unqualified opinion on those statements under my report dated 20 February 2007 with draw attention the impact of financial master plan on the company, TAMC s notifications for a partly termination of the transfer of the nonperforming loans and a record of allowance for doubtful accounts according to the new Bank of Thailand s guidelines. The consolidated and separate balance sheets as at 31 December 2006, as presented herein for comparative purposes, formed an integral part of the financial statements which I audited and reported on. The Company has restated the separate financial statements to reflect the change in accounting policy for recording investments in subsidiary from the equity method to the cost method as described in Note 3 to the financial statements. In my opinion, the adjustments made for the preparation of such financial statements are appropriate and have been properly applied. I have not performed any other audit procedures subsequent to the date of that report. Ernst & Young Office Limited Bangkok: 11 May 2007 Ratana Jala Certified Public Accountant (Thailand) No. 3734
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY BALANCE SHEETS (Unit: Baht) Consolidated financial statements Separate financial statements Note 31 March 2007 31 December 2006 31 March 2007 31 December 2006 (Unaudited (Audited) (Unaudited (Audited) but reviewed) but reviewed) (Restated) ASSETS Cash and deposits at financial institutions 537,929,225 234,940,124 185,406,949 47,817,930 Loans to financial institutions - net 1,307,227,881 1,401,539,394 50,269,315 49,788,493 Securities purchased under resale agreements 2,280,000,000 506,000,000 2,280,000,000 506,000,000 Investments 8 Current investments - net 1,164,049,800 985,332,471 1,040,552,550 885,297,486 Long-term investments - net 1,506,563,829 1,746,757,116 1,494,919,329 1,735,251,466 Investment in a subsidiary - net 3 - - 399,999,860 399,999,860 Net investments 2,670,613,629 2,732,089,587 2,935,471,739 3,020,548,812 Receivables from the Clearing House 129,952,690 230,429,787 - - Loans, receivables and accrued interest receivables 9 Finance business loans and receivables 3,362,355,495 2,991,732,655 3,362,355,495 2,991,732,655 Securities business receivables 393,516,892 310,994,972 - - Total loans and receivables 3,755,872,387 3,302,727,627 3,362,355,495 2,991,732,655 Accrued interest receivables 18,235,564 10,861,256 18,235,564 10,861,256 Total loans, receivables and accrued interest receivables 3,774,107,951 3,313,588,883 3,380,591,059 3,002,593,911 Less: Allowance for doubtful accounts 10.1 (230,416,039) (231,589,931) (211,626,108) (212,800,000) Allowance for revaluation of debt restructuring 10.2 (1,335,636) (209,437) (1,335,636) (209,437) Net loans, receivables and accrued interest receivables 3,542,356,276 3,081,789,515 3,167,629,315 2,789,584,474 Properties foreclosed - net 11 58,274,623 52,607,573 58,274,623 52,607,573 Property, plant and equipment - net 12 71,761,979 74,545,515 5,525,994 5,872,354 Intangible assets - net 6,619,044 7,312,234 719,620 779,191 Other assets 13 73,155,353 52,930,486 39,954,879 32,585,985 TOTAL ASSETS 10,677,890,700 8,374,184,215 8,723,252,434 6,505,584,812 The accompanying notes are an integral part of the financial statements. DIRECTORS
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY BALANCE SHEETS (Continued) (Unit: Baht) Consolidated financial statements Separate financial statements Note 31 March 2007 31 December 2006 31 March 2007 31 December 2006 (Unaudited (Audited) (Unaudited (Audited) but reviewed) but reviewed) (Restated) LIABILITIES AND SHAREHOLDERS' EQUITY Borrowings and deposits 15 From public 6,994,392,892 4,561,264,395 6,994,392,892 4,561,264,395 From financial institutions 256,618,556 302,927,370 256,618,556 539,437,186 From foreign countries 6,737,871 6,817,203 6,737,871 6,817,203 Deferred interest expenses - (292,252) - (292,252) Total borrowings and deposits 7,257,749,319 4,870,716,716 7,257,749,319 5,107,226,532 Payables to the Clearing House 41,582,676 - - - Securities business payables 132,807,589 276,000,222 67,820 67,820 Accrued interest payables 50,786,266 39,838,414 55,049,778 42,892,112 Withholding tax payable 5,140,266 6,412,851 2,305,403 1,644,061 Corporate income tax payable 51,335,355 38,707,862 10,835,811 6,599,245 Accrued bonus 20,150,658 86,652,589 1,706,689 - Other liabilities 32,976,614 38,472,808 15,384,972 9,380,633 Total liabilities 7,592,528,743 5,356,801,462 7,343,099,792 5,167,810,403 Shareholders' equity Share capital Authorised share capital 300,000,000 ordinary shares of Baht 5 each 1,500,000,000 1,500,000,000 1,500,000,000 1,500,000,000 Issued and paid-up share capital 200,000,000 ordinary shares of Baht 5 each 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 Premium on ordinary shares of a subsidiary 375,980,360 375,980,360 - - Revaluation surplus (deficit) from revaluation of investments 16 16,195,335 (7,997,086) 15,674,665 (8,439,607) Retained earnings Appropriated - statutory reserve 112,500,000 112,500,000 60,000,000 60,000,000 Unappropriated 804,605,262 773,618,969 304,477,977 286,214,016 EQUITY ATTRIBUTABLE TO THE COMPANY S SHAREHOLDERS 2,309,280,957 2,254,102,243 1,380,152,642 1,337,774,409 EQUITY ATTRIBUTABLE TO MINORITY SHAREHOLDERS OF A SUBSIDIARY 776,081,000 763,280,510 - - TOTAL SHAREHOLDERS' EQUITY 3,085,361,957 3,017,382,753 1,380,152,642 1,337,774,409 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 10,677,890,700 8,374,184,215 8,723,252,434 6,505,584,812 0 0 0 0 The accompanying notes are an integral part of the financial statements.
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY INCOME STATEMENTS FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) Interest and dividend income Loans and deposits 77,515,052 59,686,647 57,987,548 46,767,756 Investments 56,991,302 34,400,663 56,819,195 34,258,042 Total interest and dividend income 134,506,354 94,087,310 114,806,743 81,025,798 Interest expenses Interest and discounts 75,358,881 40,405,773 78,772,188 40,977,192 Fees and charges 1,708,859 9,614,909 - - Total interest expenses 77,067,740 50,020,682 78,772,188 40,977,192 Net interest and dividend income 57,438,614 44,066,628 36,034,555 40,048,606 Bad debt recovery 3,000,000 5,096,385 3,000,000 5,096,385 Net interest and dividend income after bad debt and doubtful accounts 60,438,614 49,163,013 39,034,555 45,144,991 Non-interest income Brokerage fees 104,448,575 229,803,873 - - Gains on investments 20 1,861,879 4,973,377 1,353,557 4,913,977 Fees and services income 10,854,361 904,209 3,691,998 753,210 Reversal impairment of properties foreclosed 5,667,050-5,667,050 - Other income 271,448 1,679,499 108,227 1,069,764 Total non-interest income 123,103,313 237,360,958 10,820,832 6,736,951 Total net income 183,541,927 286,523,971 49,855,387 51,881,942 Non-interest expenses Personnel expenses 80,325,452 74,728,583 13,588,625 13,704,678 Premises and equipment expenses 20,862,476 16,037,429 2,456,042 2,936,494 Taxes and duties 4,497,510 2,863,908 3,724,051 2,545,753 Directors' remuneration 21 2,078,221 2,244,987 1,128,500 1,225,000 Fees and service charges of securities business 7,955,954 9,000,057 - - Other expenses 11,016,888 10,910,158 6,066,404 6,459,717 Total non-interest expenses 126,736,501 115,785,122 26,963,622 26,871,642 Income before income tax 56,805,426 170,738,849 22,891,765 25,010,300 Corporate income tax 22 (13,096,792) (50,030,359) (4,627,804) (6,202,415) Income after corporate income tax 43,708,634 120,708,490 18,263,961 18,807,885 Net income attributable to minority interest (12,722,341) - - - Net income for the period 30,986,293 120,708,490 18,263,961 18,807,885 Basic earnings per share Net income 0.15 0.60 0.09 0.09 The accompanying notes are an integral part of the financial statements.
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Restated) Cash flows from operating activities Net income 30,986,293 120,708,490 18,263,961 18,807,885 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Net income attributable to minority interest 12,722,341 - - - Depreciation and amortisation 7,364,980 5,298,824 435,007 546,686 Reversal of allowance for doubtful accounts (1,173,892) - (1,173,892) - Allowance for revaluation of debt restructuring 1,126,199 (37,012) 1,126,199 (37,012) Unrealised loss (gain) from revaluation of investments (479,718) - 7,606 - Amortisation of premium (discount) on investments in debentures (3,802,698) 1,155,839 (3,820,146) 1,138,391 Amortisation of discount on a subsidiary's subordinated convertible debentures - 1,040,820 - - Loss on disposal of equipment - 3,816-3,816 Reversal of allowance for impairment of properties foreclosed (5,667,050) - (5,667,050) - Increase in accrued interest receivables (16,802,925) (11,403,946) (15,864,977) (6,352,742) Increase in accrued interest payables 10,947,852 5,106,506 12,157,666 1,972,695 Income from operating activities before changes in operating assets and liabilities 35,221,382 121,873,337 5,464,374 16,079,719 (Increase) decrease in operating assets Loans to financial institutions 94,311,513 (268,188,836) (480,822) (480,822) Securities purchased under resale agreements (1,774,000,000) (300,000,000) (1,774,000,000) (300,000,000) Current investments 4,077,517 68,140,519 27,052,458 68,140,519 Receivables from the Clearing House 100,477,097 29,987,285 - - Loans and receivables (453,144,760) 184,758,746 (370,622,840) 67,520,625 Other assets (10,796,250) (7,454,302) 1,121,775 (22,753,318) Increase (decrease) in operating liabilities Borrowings from public 2,433,420,749 377,194,565 2,433,420,749 377,194,565 Borrowings from financial institutions (46,308,814) 27,194,088 (282,818,630) (190,050,390) Borrowings from foreign countries (79,332) (4,290,926) (79,332) (4,290,926) Payables to the Clearing House 41,582,676 (306,270,291) - - Securities business payables (143,192,633) 45,909,711 - - Other liabilities (60,643,217) 22,224,375 12,608,936 12,509,618 Net cash flows from (used in) operating activities 220,925,928 (8,921,729) 51,666,668 23,869,590 The accompanying notes are an integral part of the financial statements.
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY COMPANY STATEMENTS OF CASH FLOWS (Continued) FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2007 AND 2006 (Unit: Baht) Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 (Restated) Cash flows from investing activities Decrease (increase) in long-term investments 85,951,427 (24,079,281) 85,951,427 (24,135,921) Acquisition of equipment (3,888,254) (8,215,436) (29,076) (32,078) Proceeds from sales of equipment - 5,366-5,366 Acquisition of intangible assets - (934,620) - - Net cash flows from (used in) investing activities 82,063,173 (33,223,971) 85,922,351 (24,162,633) Net increase (decrease) in cash and cash equivalents 302,989,101 (42,145,700) 137,589,019 (293,043) Cash and cash equivalents at beginning of period 234,940,124 887,268,478 47,817,930 87,943,022 Cash and cash equivalents at end of period 7 537,929,225 845,122,778 185,406,949 87,649,979 Supplemental cash flows information: Cash paid during the period for Interest expenses 64,411,029 44,914,176 66,614,522 39,004,497 Corporate income tax 469,299 302,974 391,238 258,373 The accompanying notes are an integral part of the financial statements.
BANGKOK FIRST INVESTMENT & TRUST PUBLIC COMPANY LIMITED AND ITS SUBSIDIARY NOTES TO INTERIM FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2007 1. GENERAL INFORMATION Bangkok First Investment & Trust Public Company Limited ( The Company ) is a public company incorporated and domiciled in Thailand. The principal activity of the Company is the finance business while its subsidiary, BFIT Securities Public Company Limited, operates the securities business. Its registered address is 23rd Floor, Bangkok Insurance / Y.W.C.A. Building, 25 Sathon Tai Road, Thung Mahamek, Sathon, Bangkok. As at 31 March 2007, the Company has 67 employees (31 December 2006: 67 employees). BFIT Securities Public Company Limited ( The subsidiary ) was established to operate securities business. As at 31 March 2007, the subsidiary had a total of 5 branches in Bangkok and other provinces (31 December 2006: 4 branches) and had 332 employees altogether (31 December 2006: 335 employees). 2. BASIS OF FINANCIAL STATEMENTS PREPARATION 2.1 Basis for the preparation of the interim financial statements These interim financial statements have been prepared in accordance with Accounting Standards Pronouncement No. 41 Interim financial statements, with the Company choosing to present condensed interim financial statements. However, the Company has presented the balance sheets, and the statements of income, changes in shareholders equity, and cash flows in the same format as that used for the annual financial statements. The interim financial statements are intended to provide information additional to that included in the latest annual financial statements. Accordingly, they focus on new activities, events and circumstances so as not to duplicate information previously reported. These interim financial statements should therefore be read in conjunction with the latest annual financial statements. - 1 -
2.2 Basis of consolidation The basis of consolidation is the same as that for the consolidated financial statements for the year ended 31 December 2006, with there being no structural changes relating to the subsidiary company during this period. 2.3 Significant accounting policies The interim financial statements are prepared using the same accounting policies and methods of computation as used for the financial statements for the year ended 31 December 2006, except for the change in the accounting policy for recording investment in subsidiary in the separate financial statements from the equity method to the cost method, as described in Note 3 to the financial statements. 3. CHANGE IN ACCOUNTING POLICY FOR RECORDING INVESTMENTS IN SUBSIDIARY IN THE SEPARATE FINANCIAL STATEMENTS During the current period, the Company changed its accounting policy for recording investment in subsidiary in the separate financial statements from the equity method to the cost method, in compliance with Notification No. 26/2006 regarding Accounting Standard No. 44 Consolidated Financial Statements and Accounting for Investments in Subsidiaries (Amendment No. 1), issued by the Federation of Accounting Professions, under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method rather than the equity method. In this regard, the Company has restated the previous period s separate financial statements as though the investments in the subsidiary had originally been recorded using the cost method. The change has the effect of decreasing net income in the separate income statements for the three-month periods ended 31 March 2007 and 2006 by Baht 12.72 million (Baht 0.06 per share) and Baht 101.9 million (Baht 0.51 per share), respectively. The cumulative effect of the change in accounting policy has been presented under the heading of Cumulative effect of the change in accounting policy for investments in subsidiary in the separate statements of changes in shareholders equity. Such change in accounting policy affects only the accounts related to investments in subsidiary in the Company s separate financial statements, with no effect to the consolidated financial statements. - 2 -
4. FINANCIAL SECTOR MASTER PLAN On 28 July 2004, the Company and Finansa Credit Limited (FC) jointly submitted an application to the Bank of Thailand to set up a commercial bank. Under such application, FC was to serve as the lead institution and the Company as its merger partner. On 20 April 2005, the Company received a letter from the Bank of Thailand informing that its application to set up a commercial bank in accordance with the Financial Sector Master Plan had been rejected by the Ministry of Finance. As a result of these developments, the terms of the merger proposal approved by the shareholders of both institutions are no longer valid. The Bank of Thailand has assured the Company that its status will continue as a finance business in accordance with the revised Act on the Undertaking of Finance Business, Securities Business & Credit Foncier Business, B.E. 2522, and that domestic customers of the Company holding deposits, certificates of deposits or promissory note issued by the Company will continue to be guaranteed principal and interest repayments in accordance with regulations of the Financial Institutions Development Fund. Subsequently, the Bank of Thailand requested the Company to prepare a 3-year business plan covering its operations from 2005 to 2007. The Company submitted such business plan to the Bank of Thailand. The management of the Company expects the rejection of the application to set up a commercial bank have no impact on its finance business. - 3 -
5. THE EMERGENCY DECREE ESTABLISHING THAI ASSET MANAGEMENT CORPORATION In June 2001, the Government issued an Emergency Decree establishing Thai Asset Management Corporation (TAMC). Under this Emergency Decree, financial institutions may choose whether to join the scheme and transfer those of their non-performing assets which meet the stipulated conditions to TAMC, within the specified timeframe. The assets are to be transferred at a price equal to the value of the collateral or a price stipulated by the Board of TAMC and any future profits and responsibility for losses from the non-performing assets are to be shared. The Company s management agreed to join the scheme, and in October and November 2001 the Company transferred a total of 4 non-performing loans, with book values amounting to Baht 40.7 million and Baht 281.6 million, respectively, to the TAMC, in accordance with the prices stipulated by the Board of TAMC. The Company received promissory notes and did not suffer any loss as a result of the transfer of these loans. In March 2005, the Company adjusted the principal balance of the promissory note downward by Baht 0.7 million because the valuation of the non-performing loans transferred to TAMC had been higher than appropriate. The Company and TAMC will together share future profits and losses arising from TAMC s management of the non-performing assets. If losses are incurred on the transferred nonperforming assets under TAMC s management, the Company s maximum liabilities for such loss is limited to the equivalent of not more than 30% of the price at which the non-performing assets were transferred to TAMC, or approximately Baht 96.5 million. As at 31 March 2007, the Company had already set up allowance for possible loss amounting to Baht 96.5 million (31 December 2006: Baht 96.5 million). During the year 2006, the Company received a letter from TAMC informing it that TAMC would terminate the transfer of Baht 153 million of non-performing loans secured by leasehold rights which are not qualified for transfer, with TAMC to adjust the value of its promissory note by the same amount. The Company s management has written to TAMC confirming its rights over such collateral as at the transfer date and confirming that the original transfer value is correct. - 4 -
In addition, on 28 November 2006, the Company also received TAMC s loss sharing report for the end of the first 5 - year period. As at 31 March 2007, the Company s management believes that no significant loss will be incurred in addition to the provision already made by the Company. During the three-month period ended 31 March 2007, there is no additional payment for a partial redemption of the promissory note made by TAMC. The balance of promissory notes as at 31 March 2007 is Baht 193.6 million (31 December 2006: Baht 193.6 million). 6. RELATED PARTY TRANSACTIONS During the periods, the Company had significant business transactions with related parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. Below is a summary of those transactions (in addition to those already disclosed in other notes to the financial statements). (Unit: Million Baht) Consolidated Separate Financial statements Financial statements For the three-month For the three-month periods ended 31 March periods ended 31 March Transfer Pricing policy 2007 2006 2007 2006 Transactions with the subsidiary: BFIT Securities Plc. Interest expenses - - 3.4 0.6 At rate of 3.75%-4.00% p.a (2006: At rate of 2.75%-3.50% p.a) Brokerage fees - - 0.1 0.3 Rate of 0.25% of volume trade Transactions with related companies Interest incomes 1.1 1.3 1.1 1.3 At normal interest rate applicable to ordinary customers Interest expenses 7.4 1.8 7.4 1.8 At normal interest rate applicable to ordinary customers - 5 -
The balances of the accounts between the Company and those related companies are as follows: (Unit: Million Baht) Consolidated Separate Financial statements Financial statements 31 March 31 December 31 March 31 December Relationship 2007 2006 2007 2006 Transactions with the subsidiary: BFIT Securities Plc. Subsidiary company Securities business receivables - - - 1.9 Borrowing and deposits - - - 180.0 Borrowing and deposits for customer account 251.9 298.2 251.9 354.7 Accrued interest payables - - 4.3 3.1 Loans to related companies S.E.C. Auto Sales and Services Plc. Common director 49.9 49.9 49.9 49.9 Krungdhep Sophon Plc. An executive of the - 23.0-23.0 Company is the director in this company Borrowings and deposits from related companies Pridapramote Co., Ltd. Common director 260.0 130.2 260.0 130.2 S.E.C. Auto Sales and Services Plc. Common director 12.5 12.5 12.5 12.5 Jirola (Thailand) Co., Ltd. Common director 32.3 33.4 32.3 33.4 Hi-tech Network Co., Ltd. Common director 85.1 15.3 85.1 15.3 Boon Anek Co., Ltd. Common director 437.0 347.2 437.0 347.2 Excel Link Co., Ltd. Common director 10.0 10.0 10.0 10.0 Power Agricultural Industry Co., Ltd. Common director 32.0-32.0 - Sea Horse Plc. Common director with the subsidiary 1,595.0-1,595.0 - - 6 -
During the period, movements of borrowings and deposits from the subsidiary were as follow: Balance as at 1 January 2007 Separate financial statements Increase during the period Decrease during the period (Unit: Million Baht) Balance as at 31 March 2007 Borrowings and deposits from the subsidiary company BFIT Securities Plc. 180.0 30.0 210.0 - BFIT Securities Plc. for the customer s account 354.7-102.8 251.9 During the period, movements of loans to, borrowings and deposits from related parties were as follow: (Unit: Million Baht) Consolidated financial statements / Separate financial statements Balance as at 1 January 2007 Increase during the period Decrease during the period Balance as at 31 March 2007 Loans to related companies S.E.C. Auto Sales and Services Plc. 49.9 - - 49.9 Krungdhep Sophon Plc. 23.0 4.0 27.0 - Borrowings and deposits from related companies Pridapramote Co., Ltd. 130.2 130.0 0.2 260.0 S.E.C. Auto Sales and Services Plc. 12.5 - - 12.5 Com-Link Co., Ltd. - 60.0 60.0 - Jirola (Thailand) Co., Ltd. 33.4 0.4 1.5 32.3 Hi-tech Network Co., Ltd. 15.3 70.1 0.3 85.1 Boon Anek Co., Ltd. 347.2 90.0 0.2 437.0 Excel Link Co., Ltd. 10.0 - - 10.0 Krungthep Sophon Plc. - 4.0 4.0 - Power Agricultural Industry Co., Ltd. - 33.0 1.0 32.0 Sea Horse Plc. - 1,595.0-1,595.0-7 -
The transactions between the Company and the subsidiary and their executive officers from departmental manager level upward and/or connected persons with those persons are as follows: (Unit: Million Baht) Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December 2007 2006 2007 2006 Pricing policy Officers from departmental managers level upward Borrowings and deposits 47.3 43.4 47.3 43.4 At normal rate applicable to ordinary customer declared by the Company Loans 0.4 0.4 0.4 0.4 Deposit rate of 12-month promissory note of the Company as at 1 January of the year with no interest charged for car loans Related and/or connected persons with the officers from departmental managers level upward Borrowings and deposits 69.7 69.1 69.5 68.9 At normal rate applicable to ordinary customer declared by the Company Interest expenses on borrowings and deposits Officers from departmental managers level upward Related and/or connected persons with the officers from departmental managers level upward (Unit: Million Baht) Consolidated Separate financial statements financial statements For the three-month For the three-month periods ended 31 March periods ended 31 March 2007 2006 2007 2006 Pricing policy 0.5 0.3 0.5 0.3 At normal rate applicable to ordinary customer declared by the Company 0.9 1.5 0.9 1.5 At normal rate applicable to ordinary customer declared by the Company - 8 -
During the period, movements of loans to, borrowings and deposits from executive officers from departmental managers level upward and/or their connected persons were as follow: Balance as at 1 January 2007 Consolidated financial statements Increase during the period Decrease during the period (Unit: Million Baht) Balance as at 31 March 2007 Officers from departmental managers level upward Borrowings and deposits 43.4 4.1 0.2 47.3 Loans 0.4 - - 0.4 Related and/or connected persons with the officers from departmental managers level upward Borrowings and deposits 69.1 0.6-69.7 Balance as at 1 January 2007 Separate financial statements Increase during the period Decrease during the period (Unit: Million Baht) Balance as at 31 March 2007 Officers from departmental managers level upward Borrowings and deposits 43.4 4.1 0.2 47.3 Loans 0.4 - - 0.4 Related and/or connected persons with the officers from departmental managers level upward Borrowings and deposits 68.9 0.6-69.5-9 -
7. CASH AND CASH EQUIVALENTS (Unit: Baht) Consolidated Separate financial statements financial statements 31 March 2007 31 March 2006 31 March 2007 31 March 2006 Cash 54,000 50,000 20,000 20,000 Deposits at financial institutions 537,875,225 845,072,778 185,386,949 87,629,979 Total cash and cash equivalents 537,929,225 845,122,778 185,406,949 87,649,979 8. INVESTMENTS 8.1 Classified by type of investment (Unit: Baht) CONSOLIDATED 31 March 2007 31 December 2006 Cost/ Fair value/ Cost/ Fair value/ Book value Market value Book value Market value Current investments Trading securities Domestic marketable equity securities 22,974,940 22,230,000 - - Unit trust 100,000,000 101,267,250 100,000,000 100,034,985 Add: Allowance for change in valuation 522,310-34,985 - Total trading securities - net 123,497,250 123,497,250 100,034,985 100,034,985 Available-for-sale securities Government securities 88,843,185 88,664,663 48,526,786 48,595,536 Private sector debt securities 664,346,862 665,311,812 596,502,884 595,940,507 Total 753,190,047 753,976,475 645,029,670 644,536,043 Less: Allowance for change in valuation 786,428 - (493,627) - Total available-for-sale securities - net 753,976,475 753,976,475 644,536,043 644,536,043 Held-to-maturity debt securities - due within 1 year Government and state enterprise securities 248,580,685 199,988,483 Private sector debt securities 37,995,390 40,772,960 Total held-to-maturity debt securities due within 1 year 286,576,075 240,761,443 Current investments - net 1,164,049,800 985,332,471-10 -
(Unit: Baht) CONSOLIDATED 31 March 2007 31 December 2006 Cost/ Fair value/ Cost/ Fair value/ Book value Market value Book value Market value Long-term investments Available-for-sale securities Government and state enterprise securities 62,919,683 63,046,313 105,119,136 101,894,537 Private sector debt securities 845,092,857 854,590,779 927,875,670 925,468,471 Domestic marketable equity securities 53,991,657 59,563,363 39,594,941 44,785,370 Unit trust 149,023,565 149,569,912 124,075,180 117,276,385 Others 341 816 341 676 Total 1,111,028,103 1,126,771,183 1,196,665,268 1,189,425,439 Less: Allowance for change in valuation 15,743,080 - (7,239,829) - Total available-for-sale securities - net 1,126,771,183 1,126,771,183 1,189,425,439 1,189,425,439 Held-to-maturity debt securities Government and state enterprise securities 50,083,906 98,335,855 Private sector debt securities 188,618,874 317,905,956 Promissory notes from TAMC 193,607,000 193,607,000 Less: Allowance for possible loss (96,482,100) (96,482,100) Net 97,124,900 97,124,900 Total held-to-maturity debt securities 335,827,680 513,366,711 Other investments Domestic non-marketable equity securities 73,037,256 73,037,256 Less: Allowance for impairment loss (29,072,290) (29,072,290) Total other investments - net 43,964,966 43,964,966 Long-term investments - net 1,506,563,829 1,746,757,116-11 -
(Unit: Baht) THE COMPANY ONLY 31 March 2007 31 December 2006 Cost/ Fair value/ Cost/ Fair value/ Book value Market value Book value Market value Current investments Available-for-sale securities Government securities 88,843,185 88,664,663 48,526,786 48,595,536 Private sector debt securities 664,346,862 665,311,812 596,502,884 595,940,507 Total 753,190,047 753,976,475 645,029,670 644,536,043 Less: Allowance for changes in valuation 786,428 - (493,627) - Total available-for-sale securities - net 753,976,475 753,976,475 644,536,043 644,536,043 Held-to-maturity debt securities - due within 1 year Government and state enterprise securities 248,580,685 199,988,483 Private sector debt securities 37,995,390 40,772,960 Total held-to-maturity debt securities due within 1 year 286,576,075 240,761,443 Current investments - net 1,040,552,550 885,297,486 Long-term investments Available-for-sale securities Government and state enterprise securities 62,919,683 63,046,313 105,119,136 101,894,537 Private sector debt securities 834,825,297 844,434,079 917,590,662 915,286,271 Domestic marketable equity securities 53,403,457 58,075,563 39,006,741 43,461,920 Unit trust 149,023,565 149,569,912 124,075,180 117,276,385 Others 341 816 341 676 Total 1,100,172,343 1,115,126,683 1,185,792,060 1,177,919,789 Less: Allowance for changes in valuation 14,954,340 - (7,872,271) - Total available-for-sale securities - net 1,115,126,683 1,115,126,683 1,177,919,789 1,177,919,789 Held-to-maturity debt securities Government and state enterprise securities 50,083,906 98,335,855 Private sector debt securities 188,618,874 317,905,956 Promissory notes from TAMC 193,607,000 193,607,000 Less: Allowance for possible loss (96,482,100) (96,482,100) Net 97,124,900 97,124,900 Total held-to-maturity debt securities - net 335,827,680 513,366,711 Other investments Domestic non-marketable equity securities 73,037,256 73,037,256 Less: Allowance for impairment loss (29,072,290) (29,072,290) Total other investments - net 43,964,966 43,964,966 Long-term investments - net 1,494,919,329 1,735,251,466-12 -
8.2 Investment in subsidiary As at 31 March 2007 and 31 December 2006, the Company s investments in its subsidiary accounted for under the cost method according to the accounting policy as mentioned in note 3 to the financial statements are summarised below. Paid-up capital Shareholding percentage Cost method Type of 31 March 31 December 31 March 31 December 31 March 31 December Company s name Business 2007 2006 2007 2006 2007 2006 % % Thousand Baht Thousand Baht Investment in subsidiary BFIT Securities Plc. Security business 800,000 800,000 49.9999825 49.9999825 399,999.86 399,999.86 On 15 July 2005, the Company received a letter from the Bank of Thailand approving an extension to the period for which it may hold more than 10 percent of the issued shares of BFIT Securities Public Company Limited (BSEC), specifically at 99.99 percent of the total number of shares in issue at that time and in total not more than 39,999,986 shares. The extension is for 3 years, ending on 2 October 2008. A condition of the approval is that senior management of the Company from departmental manager level upward, major shareholders holding more than 0.5 percent of the issued capital of Bangkok First Investment & Trust Public Company Limited, or persons or partnerships related to such parties are prohibited from taking up shareholdings in BSEC unless the shares purchases are made in order to achieve compliance with the law or have been approved by the Bank of Thailand. In addition, the Company and entities in which the Company has controlling interest are prohibited from establishing or investing in any other company such that they hold more than 10 percent of issued shares, except with Bank of Thailand approval. Finally, the Company is to oversee the operations of BSEC and submit reports on the operations of BSEC to the Bank of Thailand. - 13 -
On 2 October 2006, the Board of Governors of the Securities and Exchange Commission approved the listing of BSEC s shares on the Stock Exchange of Thailand, and in November 2006, BSEC offered 200,005,000 ordinary shares to the shareholders of the Company, who have preemptive right, and to the general public. In addition, on 31 October 2006, the subordinated convertible debenture holders of BSEC exercised their rights to convert all of their debentures into 199,995,000 ordinary shares. As a result of the increase in BSEC s share capital to support the exercise of the debentures and the share offering described above, as at 31 March 2007 and 31 December 2006 the Company shareholding was equal to 50 percent of the total number of ordinary shares of BSEC in issue. As at 31 March 2007 and 31 December 2006, BSEC had share premium as a result of the exercise of debentures and capital increase totalling of Baht 717 million from which Baht 376 million were presented in the Company s consolidated financial statements. 8.3 As at 31 March 2007, the Company s promissory notes received from the TAMC as mentioned in Note 5 to the financial statements, amounted to Baht 97.1 million, net of allowance for possible loss, were recorded as part of long-term investments in the balance sheet, and classified as investments in held-to-maturity debt securities. Such promissory notes mature on 31 October and 30 November 2011. TAMC calculates interest on the notes based on five commercial banks quarterly average deposit rates as published by the Bank of Thailand at the end of each calendar quarter, and such interest is payable on an annual basis by issuing a one year non-negotiable promissory note avaled by the Financial Institutions Development Fund. TAMC reserves the right to extend the term of the promissory note as it deems appropriate. - 14 -
9. LOANS, RECEIVABLES AND ACCRUED INTEREST RECEIVABLES 9.1 Classified by loan type Consolidated financial statements 31 March 2007 31 December 2006 Separate financial statements 31 March 2007 (Unit: Baht) 31 December 2006 Finance business loans and receivables: Loans 3,186,517,079 2,814,107,604 3,186,517,079 2,814,107,604 Notes receivable - net 175,838,416 177,625,051 175,838,416 177,625,051 Total finance business loans and receivables 3,362,355,495 2,991,732,655 3,362,355,495 2,991,732,655 Add: Accrued interest receivables 18,235,564 10,861,256 18,235,564 10,861,256 Less: Allowance for doubtful accounts (211,626,108) (212,800,000) (211,626,108) (212,800,000) Allowance for revaluation of debt restructuring (1,335,636) (209,437) (1,335,636) (209,437) Net finance business loans and receivables and accrued interest receivables 3,167,629,315 2,789,584,474 3,167,629,315 2,789,584,474 Securities business receivables: Cash accounts 124,406,774 92,850,869 - - Credit balance accounts 250,320,187 199,354,172 - - Installment receivables 18,789,931 18,789,931 - - Total securities business receivables 393,516,892 310,994,972 - - Less: Allowance for doubtful accounts (18,789,931) (18,789,931) - - Net securities business receivables 374,726,961 292,205,041 - - Net loans, receivables and accrued interest receivables 3,542,356,276 3,081,789,515 3,167,629,315 2,789,584,474-15 -
9.2 Classified by type of business and classification Consolidated financial statements 31 March 2007 (Unit: Baht) Special Sub- Doubtful Pass mention standard Doubtful of loss Total Manufacturing and commerce 718,892,110 16,400,000 36,104,892-30,098,716 801,495,718 Real estate and construction 636,158,761 - - 19,756,350 25,808,408 681,723,519 Public utilities and services 612,556,233 251,469,862 - - - 864,026,095 Hire purchase 93,439,721 - - - - 93,439,721 Securities business receivables 374,726,961 - - 18,789,931-393,516,892 Others 908,697,242 122,662 10,000,000-3,755,766 922,575,670 Total 3,344,471,028 267,992,524 46,104,892 38,546,281 59,662,890 3,756,777,615 Add: Accrued interest receivables 18,177,595-57,969 - - 18,235,564 Less: Unearned income (905,228) - - - - (905,228) Total loans, receivables and accrued interest receivables 3,361,743,395 267,992,524 46,162,861 38,546,281 59,662,890 3,774,107,951 (Unit: Baht) Consolidated financial statements 31 December 2006 Special Sub- Doubtful Pass mention standard Doubtful of loss Total Manufacturing and commerce 698,972,100 17,000,000 36,599,021-30,098,716 782,669,837 Real estate and construction 469,488,493 - - 19,756,350 26,840,860 516,085,703 Public utilities and services 900,786,344 6,000,000 - - - 906,786,344 Hire purchase 50,000,000 - - - - 50,000,000 Securities business receivables 292,205,041 - - 18,789,931-310,994,972 Others 723,151,301 204,073 10,000,000-3,755,766 737,111,140 Total 3,134,603,279 23,204,073 46,599,021 38,546,281 60,695,342 3,303,647,996 Add: Accrued interest receivables 10,780,391-80,865 - - 10,861,256 Less: Unearned income (920,369) - - - - (920,369) Total loans, receivables and accrued interest receivables 3,144,463,301 23,204,073 46,679,886 38,546,281 60,695,342 3,313,588,883-16 -
(Unit: Baht) Separate financial statements 31 March 2007 Special Sub- Doubtful Pass mention standard Doubtful of loss Total Manufacturing and commerce 718,892,110 16,400,000 36,104,892-30,098,716 801,495,718 Real estate and construction 636,158,761 - - 19,756,350 25,808,408 681,723,519 Public utilities and services 612,556,233 251,469,862 - - - 864,026,095 Hire purchase 93,439,721 - - - - 93,439,721 Others 908,697,242 122,662 10,000,000-3,755,766 922,575,670 Total 2,969,744,067 267,992,524 46,104,892 19,756,350 59,662,890 3,363,260,723 Add: Accrued interest receivables 18,177,595-57,969 - - 18,235,564 Less: Unearned income (905,228) - - - - (905,228) Total loans, receivables and accrued interest receivables 2,987,016,434 267,992,524 46,162,861 19,756,350 59,662,890 3,380,591,059 (Unit: Baht) Separate financial statements 31 December 2006 Special Sub- Doubtful Pass mention standard Doubtful of loss Total Manufacturing and commerce 698,972,100 17,000,000 36,599,021-30,098,716 782,669,837 Real estate and construction 469,488,493 - - 19,756,350 26,840,860 516,085,703 Public utilities and services 900,786,344 6,000,000 - - - 906,786,344 Hire purchase 50,000,000 - - - - 50,000,000 Others 723,151,301 204,073 10,000,000-3,755,766 737,111,140 Total 2,842,398,238 23,204,073 46,599,021 19,756,350 60,695,342 2,992,653,024 Add: Accrued interest receivables 10,780,391-80,865 - - 10,861,256 Less: Unearned income (920,369) - - - - (920,369) Total loans, receivables and accrued interest receivables 2,852,258,260 23,204,073 46,679,886 19,756,350 60,695,342 3,002,593,911-17 -
9.3 Classified by loan classification in accordance with the Notification of Bank of Thailand - 18 - Separate financial statements 31 March 2007 (Unit: Thousand Baht) Loans outstanding Loans and after collateral or The rate Amount to be Allowance for accrued interest present value of of loan loss provided under doubtful accounts receivables expected cash flow allowance BOT s guideline already set up Pass 2,991,402 2,973,224 * 1% 29,732 29,732 Special mention 267,993 267,993 2% 5,360 5,360 Substandard - Non apply with the new guidelines of the BOT - - 20% - - - Apply with the new guidelines of the BOT 46,163-100% 5,163 5,163 Doubtful - Non apply with the new guidelines of the BOT 19,756 19,756 50% 67,613 67,613 - Apply with the new guidelines of the BOT - - 100% - - Doubtful of loss - Non apply with the new guidelines of the BOT - - 100% - - - Apply with the new guidelines of the BOT 59,663 59,815 100% 59,815 59,815 Provision in addition to the minimum requirement of BOT - - - 43,943 Total loans, receivables and accrued interest receivables 3,384,977 3,320,788 167,683 211,626 * The balance does not deduct the value of collateral which is deductible according to BOT regulation Separate financial statements 31 December 2006 (Unit: Thousand Baht) Loans and The rate Amount to be Allowance for accrued interest Loans outstanding of loan loss provided under doubtful accounts receivables after collateral allowance BOT s guideline already set up Pass 2,856,649 2,845,868 * 1% 27,304 27,304 Special mention 23,204 23,204 2% 464 464 Substandard - Non apply with the new guidelines of the BOT 46,680 26,046 20% 5,209 5,209 - Apply with the new guidelines of the BOT - - 100% - - Doubtful - Non apply with the new guidelines of the BOT 19,756 19,756 50% 67,613 67,613 - Apply with the new guidelines of the BOT - - 100% - - Doubtful of loss - Non apply with the new guidelines of the BOT - - 100% - - - Apply with the new guidelines of the BOT 60,695 60,848 100% 60,848 60,848 Provision in addition to the minimum requirement of BOT - - - 51,362 Total loans, receivables and accrued interest
receivables 3,006,984 2,975,722 161,438 212,800 * The balance does not deduct the value of collateral which is deductible according to BOT regulation As at 31 March 2007, the Company has set provision at 100% on receivables for which a court judgment has already been issued, for which a court order is being executed, and against which legal actions have been brought and receivables classified as sub-standard loans. For doubtful loans, the Company still applies provisioning rates at least 50% in accordance with the prior guidelines. Determination of the effect of additional provision that may be required under the new BOT guidelines in 2007 is in the process of analysing for conclusion. As at 31 March 2007, allowance for doubtful accounts of debts classified as doubtful includes an additional allowance which the Bank of Thailand ordered be set aside for a special mention receivable identified as a potential non-performing loan (31 December 2006: Classified as normal). The outstanding balances of loans after deduction of collateral value used in a calculation of allowance for doubtful accounts are in accordance with those per the Company s asset classification report submitted to the Bank of Thailand. These balances include loans to employees but exclude accrued interest receivables for loan classified as normal. 9.4 Non-performing and non-accrued loans and receivables 9.4.1 Non-performing loans and receivables As at 31 March 2007 and 31 December 2006, non-performing loans and receivables are as follows: (Unit: Thousand Baht) Consolidated Separate financial statements financial statements 31 March 31 December 31 March 31 December 2007 2006 2007 2006 Finance business loans and receivables 125,524 127,051 125,524 127,051 Securities business receivables 18,790 18,790 - - Total 144,314 145,841 125,524 127,051-19 -