Bmcl 06

1

BANGKOK METRO PUBLIC COMPANY LIMITED ë Annual Report ë 2 0 0 6

1. Vision, Mission, Quality Policyand Safety Policy

Companyûs Vision

To be one of the world leading mass rapid transit

operators with high quality of service.

Companyûs Mission

We will provide mass transit services to the

public with a safe, convenient, fast, reliable and punctual

metro system to alleviate traffic congestion, maintain

the environment and improve quality of life.

Quality Policy

The Company is committed to improving the

quality of service as part of our goal to become one of

the worldûs leading mass rapid transit operators. To

succeed in the said vision, the Company pledges to

develop and implement quality management system in

order to:

1. Provide rail mass rapid transit service that satisfies

customerûs expectations with safe, convenient, fast,

reliable and punctual metro system;

2. Continually improve quality of service and business

performance; and

3. Encourage employees to have the knowledge,

competency and commitment to their jobs needed

to provide safety and quality service.

The satisfaction of customers is essential for our

business. Our entire staff is committed to improving quality

so that we can better serve our customers and enhance

our overall performance.

Safety Policy

Safety is the heart of our mass transit railway

service. To ensure the safety of our passengers, our

contractors, and our own personnel, we are committed

to making continuous improvements in our safety

management system in order to:

1. Keep all possible risks associated with the

operation of the railway system as low as reasonably

practicable and comply with laws;

2. Ensure that all preventive and corrective measures

designed to minimize such risks are implemented

efficiently and effectively; and

3. Raise safety knowledge and safety awareness

among all those involved.

Safety is everyoneûs responsibility. It is imperative

that all our employees do everything they can to

maintain the highest standards of safety for the sake

of our passengers, our contractors and our own

personnel.

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Consolidated Financial Statements

Bangkok Metro Public Company Limited and Its Subsidiaries(Unit: Baht Million)

As at 31 December or For the years ended 31 December 2006 2005 2004

Total Assets 21,242 19,732 19,306

Total Liabilities 12,803 14,314 12,585

Paid-up Capital 11,950 7,350 7,250

Total Shareholdersû Equity 8,439 5,417 6,721

Shareholdersû Equity (excluding minority interest) 8,413 5,411 6,699

Fare Revenue (1) 1,229 990 443

Total Revenues 1,399 1,046 446

EBITDA (417) (715) (458.78)

Net Profit (Loss) (1,669) (1,716) (957)

Net Profit (Loss) per share (Baht) (0.19) (0.23) (0.14)

Book Value per Share (2) (Baht) 0.70 0.74 0.92

Weighted average number of ordinary shares (million shares) 8,860.07 7,347.12 7,030.49

Number of ordinary shares at the end of period (million shares) 11,950 7,350 7,250

Net Profit Margin (%) (119) (164) (215)

Debt to Equity Ratio (times) 1.52 2.64 1.87

Debt to Equity Ratio (3) (times) 1.20 1.84 1.84

Number of Employees at the end of period (4) (persons) 941 928 872

Notes : (1) The Company started to generate fare revenue from the official commencement for service on July 3, 2004;(2) Calculated by excluding the minority interest;(3) Debt to Equity Ratio calculated pursuant to the conditions in the Onshore Facilities Agreement, based on the

figures from the Companyûs unconsolidated financial statements by using total liabilities and contingent

liabilities net of the sponsor support: subordinated loan divided by the total of paid-up capital, share premium,

retained earnings (loss), reserves and sponsor support subordinated loan, but excluding the any amounts

attributable to revaluation of assets;(4) For the Company only, excluding the Subsidiaries

2. Financial Highlights

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250,000

200,000

150,000

100,000

50,000

0

4.50

4.00

3.50

3.00

2.50

2.00

1.50

Jan. 1 - Aug. 4Stored Value Cards: Discount of 15% (Baht 12-31)

Student Cards: Discount of 30% (Baht 10-25)Token (Baht 14-36)

Aug. 5 - Dec. 31Stored Value Cards: Discount of 15% (Baht 13-33)


Trip / dayAverage Trip per day

January - December 2006

Jan. 06152,304166,066123,404

Feb. 06153,075170,999115,236

Mar. 06167,160178,322135,071

Apr. 06142,412170,615110,180

May. 06145,460168,015104,451

Jun. 06167,328194,391113,203

Jul. 06160,310181,953120,959

Aug. 06160,542181,984108,129

Sep. 06156,133179,357109,686

Oct. 06170,123188,774130,954

Nov. 06172,808188,197130,489

Dec. 06152,741183,348104,280

Jan. 063.173.462.56

Feb. 063.223.552.54

Mar. 063.523.722.94

Apr. 063.023.562.40

May. 063.083.482.26

Jun. 063.513.922.42

Jul. 063.443.712.60

Aug. 063.583.762.46

Sep. 063.523.632.45

Oct. 063.643.742.94

Nov. 063.573.582.86

Dec. 063.183.732.32

Average Fare Revenue per dayJanuary - December 2006Fare Revenue (Baht Million/day)

7-day AverageWeekdaysWeekends &Holidays

7-day AverageWeekdaysWeekends &Holidays

Jan. 1 - Aug. 4Stored Value Cards: Discount of 15% (Baht 12-31)


Aug. 5 - Dec. 31Stored Value Cards: Discount of 15% (Baht 13-33)


Note : The company has adjusted fare rate pursuant to the Concession Agreement since August 5, 2006 (from Baht 14-36 to Baht 15-39)

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300,000275,000250,000225,000200,000175,000150,000125,000100,00075,00050,00025,000

Child: Cards/Token0%

Break Down : Stored Value Cards and Token in the year 2006

Ridership Per Day 2006Trips/Day

30-daysTravelingCards5%

Student Cards10%

AdultToken38%

Adult Cards45%

Elder: Cards/Token1%

Others1%

30-daysTraveling Cards 2%

Child: Cards/Token1%

Elder: Cards/Token2%

Others1%

Adult Cards28%

AdultToken59%

Student Cards7%

1 Ja

n 49

12 J

an 4

923

Jan

49

3 Fe

b 49

14 F

eb 4

925

Feb

49

8 M

ar 4

919

Mar

49

30 M

ar 4

910

Apr

49

21 A

pr 4

92

May

49

13 M

ay 4

924

May

49

4 Ju

n 49

15 J

un 4

926

Jun

49

7 Ju

l 49

18 J

ul 4

929

Jul 4

99

Aug

4920

Aug

49

31 A

ug 4

911

Sep

49

22 S

ep 4

93

Oct 4

914

Oct

49

25 O

ct 4

95

Nov

4916

Nov

49

27 N

ov 4

98

Dec

4919

Dec

49

30 D

ec 4

9

Ridership per dayWeekends and Holidays

Note : Others are Business Cards, 1-day Traveling Card, and 3-days Traveling Cards.: The Company distributed 30-days Traveling Cards since June 2006.

Working Days Weekends and Holidays

Ridership (The Highest and Lowest Number of Trips in the Year 2006)

The 3 highest number of trips The 3 lowest number of trips

1. June 9, 2006: 292,241 trips 1. April 14, 2006 : 39,263 trips- The Sixtieth Anniversary Celebrations of His Majestyûs - Long Holidays : Songkran Festival

Accession to the Throne2. June 30, 2006 : 255,970 trips 2. April 13, 2006 : 42,903 trips

- Event : 10th Saha Group Export & Trade Exhibition 2006 - Long Holidays : Songkran Festival3. March 31, 2006 : 238,097 trips 3. April 15, 2006 : 51,227 trips

- Event : Bangkok International Book Fair 2006 - Long Holidays : Songkran Festival

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3. Message from the Chairmanof the Board of Directors

Despite various risk factors on economic and political conditions in

the year 2006, particularly, such political change due to the administrative

reform by the Council for National Security (CNS) on 19 September 2006,

the Company still has managed to succeed in listing on the Stock

Exchange of Thailand on 21 September 2006. The Companyûs shares are

registered in Transportation & Logistics sector, with the paid-up capital of

Baht 11,950 Million, being regarded as shares with the value based on

market price among those top-ranked securities in Transportation &

Logistics sector, with the symbol çBMCLé for securities trading. On the

same date, the Mass Rapid Transit Authority of Thailand (MRTA) also

purchased 2,987.50 million shares of the Company, or representing 25

percent of the issued and paid-up capital, rendering the Company has a

stronger financial status.

As for the Companyûs operational results for the year 2006, the

fare revenue, which is the main revenue of the Company, has continued to

grow from the previous year with an increase by approximately 24 percent.

Although the number of passengers in this year is rather close to that of

the previous year, due to the adjustment of the fare rates under the

Concession Agreement, the Company is still committed to improving its

operation to meet the standards of the worldûs leading mass rapid transit

systems, including to pave the way for its growth and expansion in the

mass rapid transit sector with the metro service in order to accommodate

the mass rapid transit network extension projects of the public sector

which will be implemented in the near future. The Company is confident

that the mass transit rapid rail system will help improve the quality of life

for city people, save the energy and preserve the environment.

In 2006, the Company joined the Rail Solutions Asia 2006 organized

by Asian Railway Operators Association (AROA), the 7th Exhibition and

Conference for Railway Systems in the Asian Region, and was awarded an

honor by the International Association of Public Transport (UITP) to host

UITPûs 4th Training Programme which focused on the mass transit system

development through presentations and sharing of views among UITP

members worldwide. Moreover, the Company also participated in the 5th

UITP Asia-Pacific Congress and IPTS Conference, at Seoul, the Republic of

(Mr. Plew Trivisvavet)

Chairman of the Board of Directors

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Korea, in which UITP members in the Asia Pacific region actively participated

to share their experiences, news and information, including various

innovations.

In terms of provision of services, the Company has continued to

improve quality of the provision of services to accomplish the Companyûs

vision. The Company obtained the ISO 9001:2000 Quality Management

Systems in 2005 and in 2006, also obtained another TIS/OHSAS 18001

Occupational Health and Safety Management Systems as audited and

evaluated by TUV NORD (Thailand) Ltd. (TUV NORD) on 5 October 2006.

These certifications serve to assure the Companyûs dedication to the

quality and safety of the service. Furthermore, in 2006, which is the year of

the 60th Anniversary Celebrations of His Majesty the Kingûs Accession to

the Throne, all Thai people throughout the country have expressed homage

to our beloved King through such various activities as the commitment

to good deeds for His Majesty the King and the çSufficiency Economyé

lifestyle as initiated by His Majesty the King. In addition, the Company and

the Mass Rapid Transit Authority of Thailand jointly implemented the

çSave Energy for Our Beloved Kingé campaign by issuing a special edition

set of the stored value cards bearing the portrait of His Majesty the

King, the proceeds of which shall be presented to His Majesty the King.

Under the fluctuating circumstances of the countryûs economy and

politics during the year 2006, the Company has managed to achieve

various goals through the concerted efforts of all department staff, along

with good supports from various government agencies, financial institutions,

customers, investors, shareholders, including the public. On behalf of the

Board of Directors of the Company, I would like to take this opportunity to

express our gratitude to all parties concerned.

(Mr. Plew Trivisvavet)

Chairman of the Board of Directors

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4. The Board of Directors

Mr. Plew TrivisvavetChairman of the Board of Directors, Chairman of the Executive Committee, andNomination and Remuneration Committee Member

General Chetta ThanajaroDirector, Chairman of the AuditCommittee, and Chairman of theNomination and Remuneration

Committee

Mr. Vitoon TejatussanasoontornDirector, Audit committee Member,and Nomination and Remuneration

Committee Member

Lieutenant General

Surat SumrithDirector and

Audit Committee Member

Mr. Supong ChayutsahakijDirector, Executive Director, and

Chairman of the RiskManagement Committee

Dr. Sombat KitjalaksanaDirector, Executive Director,

Risk Management CommitteeMember, and Managing Director

Mrs. Vallapa AssakulDirector

Mrs. Nongnutch ThienpaitoonDirector

Mr. Ronnachit YaemsaardDirector

Mr. Somchai SirilertpanichDirector

Mr. Anukool TuntimasDirector and Executive Director

As at 31 December 2006

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5. Management Team

Dr. Sombat KitjalaksanaManaging DirectorActing Marketing & Commercial Development Director

Mr. Witoon HatairatanaOperations Director

Miss Pornpimol ChirtchoochaiAccounting & Finance Director

Miss Sattabusya MekvichaiHuman Resources & Administration Director



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6. General Information

6.1 Company Profile

Bangkok Metro Public Company Limited

Company Registration No. : 0107547000451 (previously 0107574700459)

Head Office : 189 Rama IX Road, Huai Khwang, Bangkok 10310, Thailand

(As registered Tel. : 66 (0) 2354 2000

at Ministry of Commerce) FAX : 66 (0) 2354 2040

Customer Relations Center

Tel. : 66 (0) 2624 5200

E-mail : [email protected]

Investor Relations

Tel. : 66 (0) 2354 2000 ext. 3733 - 3735

FAX : 66 (0) 2354 2000 ext. 3736

E-mail : [email protected]

Homepage : http://www.bangkokmetro.co.th

Type of Business : Mass Rapid Transit System Operator

Concessionaire of the M.R.T. Chaloem Ratchamongkhon Line Project

Registered Capital : Baht 11,950 million, divided into 11,950 million ordinary shares, at the par

value of Baht 1.00 per share

Issued and Paid-up Capital : Baht 11,950 million, divided into 11,950 million ordinary shares, at the par

value of Baht 1.00 per share

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6.2 The Company invested in its Subsidiaries through a shareholding ratio of at least 10 % of the number of

shares sold in each Subsidiary as at 31 January 2007 as follows:

Shares held byCompany Name Business Category Type of Total Number Par Value the Company

Shares of Shares Sold (Baht) Number (%)of Shares

1. Metro Mall Development Leasing of retail Ordinary 10,000,000 /1 10 6,400,000 64.00

Limited space for shops in

Head Office: the stations and in

587 Viriyathavorn Building, the park and ride

1st Floor, Sutthisarnvinitchai facility at Lat Phrao

Road, Dindaeng Subdistrict, Station

Dindaeng District, Bangkok

10400

Tel: 66 (0) 2275 4559

FAX: 66 (0) 2275 4314

http//www.metromall.co.th

2. Triads Networks Procurement of Ordinary 250,000 100 139,996 56.00

Company Limited advertisement boards

Head Office: or media in the

587 Viriyathavorn Building, trains and stations

9th Floor, Sutthisarnvinitchai

Road, Dindaeng Subdistrict,


10400

Tel: 66 (0) 2690 8391-94

FAX: 66 (0) 2690 8395

http//www.triadsnetworks.co.th

3. BMCL Network Limited /2 Rendering services Ordinary 15,000,000 /3 10 10,499,994 70.00

Head Office: and maintenance of

587 Viriyathavorn Building, telecommunications

12th Floor, Sutthisarnvinitchai system equipment in

Road, Dindaeng Subdistrict, the stations


10400

Tel: 66 (0) 2690 8200

FAX: 66 (0) 2690 8212

http//www.bmclnetwork.co.th

/1 As at 31 December 2006, Metro Mall Development Limited had issued and paid-up capital of Baht 91 Million, and had fullypaid-up capital of Baht 100 Million on 31 January 2007.

/2 BMCL Network Limited was previously named Radianz Communications Network Limited./3 As at 31 December 2006, BMCL Network Limited had issued and paid-up capital of Baht 127.50 Million, and had fully paid-up

capital of Baht 150 Million on 31 January 2007.

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6.3 Reference

Securities Registrar : Thailand Securities Depository Company Limited

2/7 Moo 4 Capital Market Academy Building

The Stock Exchange of Thailand, 2nd Floor

North Park Project, Vibhavadi Rangsit Road, Km. 27,

Tungsonghong Subdistrict, Laksi District, Bangkok 10210

Tel: 66 (0) 2596 9000, 66 (0) 2569 9302-11

or 62 The Stock Exchange of Thailand Building

4th and 7th Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand

Tel: 66 (0) 2229 2800 FAX: 66 (0) 2359 1259

Auditors : Miss Siraporn Ouaanunkun C.P.A. Registration No. 3844

Mr. Narong Puntawong C.P.A. Registration No. 3315

Mr. Supachai Panyawattano C.P.A. Registration No. 3930

Ernst & Young Office Limited

33rd Floor, Lake Rajada Office Complex

193/136-137 Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand

Tel: 66 (0) 2264 0777 FAX: 66 (0) 2264 0789-90

Legal Advisor : The Legists Ltd.

9th Floor, 990 Abdulrahim Place, Rama IV Road,

Silom, Bangrak, Bangkok 10500, Thailand

Tel: 66 (0) 2636 1111 FAX: 66 (0) 2636 0000

Financial Institutions : Krung Thai Bank Public Company Limited

TMB Bank Public Company Limited

Bank of Ayudhya Public Company Limited

Siam City Bank Public Company Limited

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7. Nature of Business

7.1 Background and Major DevelopmentsBangkok Metro Public Company Limited (the çCompanyé) was established on 18 February 1998, with an

initial registered capital of Baht 1,000,000, having CH. Karnchang Group as its major shareholder, to participate

in the bidding for the concession of the first underground mass rapid transit system project in Thailand, to

carry out the design, manufacture, supply, installation, testing and commissioning of the M&E Equipment for

the operation and maintenance of the metro. In this respect, the Company was granted the exclusive

concession for such project approved by the Council of Ministers on 28 March 2000 and 25 July 2000,

respectively.

On 1 August 2000, the Company entered into the Agreement for the MRTA Initial System

Project - Chaloem Ratchamongkhon Line (the çConcession Agreementé) with the Mass Rapid Transit Authority

of Thailand (çMRTAé). The Company has the exclusive right to collect fares and undertake activities and

commercial development, including advertising and leasing space in the project for a period of 25 years from

the date of issuance by the MRTA of the Notice of No Objection to commencement of revenue service, namely,

on 2 July 2004, which would end on 1 July 2029. The official commencement of operations is on 3 July 2004.

Under the Concession Agreement, the Company is obliged to make payment of remuneration from fares and

commercial development to the MRTA at the rates as mentioned in the Concession Agreement.

On 16 January 2003, the Company was granted investment promotion privileges for the M.R.T. Chaloem

Ratchamongkhon Line (Blue Line) under Promotional Certificate No. 1029(1)/2546. The privileges include

entitlement to 50% deduction of import duty on imported machinery according to specified conditions

and exemption from corporate income tax on net profit from promoted operations for a period of 8 years

commencing from the date of first earning operating income (3 July 2004). The Company was converted to a

public limited company on 11 May 2004. Their Majesties the King and Queen and HRH Princess Maha Chakri

Sirindhorn presided over the official opening ceremony of the M.R.T. Chaloem Ratchamongkhon Line (Hua

Lamphong - Bang Sue) on 3 July 2004.

The Company obtained the ISO 9001:2000 Quality Management Systems, and the TIS/OHSAS 18001

Occupational Health and Safety Management Systems as audited and evaluated by TUV NORD (Thailand) Ltd.

(TUV NORD) on 10 November 2005 and 5 October 2006, respectively, and on 21 September 2006, the

Company succeeded in listing its securities on the Stock Exchange of Thailand.

7.2 Business OverviewThe Companyûs revenue can be divided into two categories comprising revenue from fares and revenue

from commercial development.

ë Revenue from Fares

Revenue from fares is the Companyûs major revenue. The fare collection by the Company is

subject to the number of stations traveled by passengers. The fare rates of the metro as of the

commencement date would be in accordance with the basic reference fare rates in force at the time of

the revenue service commencement date. Under the Concession Agreement, the basic reference fare

∫√‘…—∑ √∂‰øøÑ“°√ÿß‡∑æ ®”°—¥ (¡À“™π) ë √“¬ß“πª√–®”ªï ë 2 5 4 9

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rates would be adjusted every 24 months based on the actual changes of the Bangkok Non-Food

Consumer Price Index compared to the basic reference fare rate as at 1 January 2002. At its first year

of service, the Company agreed to discount the fare rates by 15%.

ë Revenue from Commercial Development

Besides revenue from fares, the Company also generates revenue from commercial development,

which can be divided into two groups as follows:

1. The Company directly executed agreements with other companies by granting the following

rights:

- ATM service in all 18 stations to 8 commercial banks;

- Public telephone service to True Corporation Public Company Limited;

- Procurement or production of advertising media on Platform Screen Doors in all 18 sta-

tions to How Come Media Co., Ltd.

2. The Company granted the following rights to the Subsidiaries:

- Procurement of still image advertisement signboards to Triads Networks Co., Ltd.;

- Management of retail spaces to Metro Mall Development Limited;

- Service and maintenance of telecommunications system equipment to BMCL Network

Limited.

In return, the Company receives a share of gross revenues, as well as dividends from the

Subsidiaries.

Business Operations of the Subsidiaries

1. Triads Networks Co., Ltd.

Triads Networks Co., Ltd. was established on 22 March 2002, with an initial registered capital of Baht

15 million, to conduct the business of procuring and/or making advertising boards or other forms in all 18

stations and for all 19 trains. Triads Networks Co., Ltd. started to install advertisements inside trains in June

2005 and in stations in July 2005.

2. Metro Mall Development Limited

Metro Mall Development Limited was established on 9 February 2004, with an initial registered capital

of Baht 50 million, to conduct the business of leasing retail spaces in 11 stations and spaces in the basement

level of the Lat Phrao park and ride facility, covering the total commercial lease spaces of approximately

12,359 square metres (spaces for retail shops and sale promotions), starting with Sukhumvit Station on 9

September 2005, and Phahon Yothin Station on 16 December 2005.

3. BMCL Network Limited

BMCL Network Limited (formerly known as Radianz Communications Network Limited) was established

on 30 January 2004, with an initial registered capital of Baht 50 million, to conduct the business of servicing

and maintaining telecommunications system equipment in the stations. The company will start generating

revenue by the year 2007.

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Revenue Structure of the Companyûs Group

The Company had major revenue from fares since 3 July 2004. In June 2005, the Company started to derive

revenue from advertising services by Triads Networks Co., Ltd. Metro Mall Development Limited started generating

revenue from retail space leases in the third quarter of 2005, and BMCL Network Limited will start generating revenue

from telecommunications services in the year 2007.

(Unit: Million Baht)

Shareholding For the year For the year

Operated by percentage of 2006 2005

the Company Revenue % Revenue %

Revenue from train operations The Company - 1,229.50 87.89 990.39 /1 94.68

Revenue from advertising services Triads Networks 56.00 101.62 7.26 37.63 3.60

Revenue from telecommunications services BMCL Network 70.00 - - - -

Revenue from retail space leases Metro Mall

Development 64.00 23.02 1.65 4.75 0.45

Revenue from ATM and public telephone The Company - 20.41 1.46 10.96 1.05

services

Other income /2 The Company and - 24.39 1.74 2.27 0.22

its Subsidiaries

Total 1,398.94 100.00 1,046.00 100.00

Notes : /1 This comprised revenue from fares of Baht 969.91 million and revenue from fare compensation of Baht 20.48 million

from the MRTA, for the trial discount of fares from 7 January 2005 to 4 June 2005, whereby the MRTA agreed to

compensate the Company at 80% of the amount of actual daily revenue below the amount of revenue set out in the

memorandum of understanding./2 Other income in 2005 mostly comprised revenue from interest income and gain on sale of materials.

Other income in 2006 mostly comprised gain on sale of investment in the Subsidiaries in the amount of Baht 17.15

million and interest income.

Metro Mall Development Limited

(Registered capital of Baht 100 million

Paid-up capital of Baht 100 million)


(Registered capital of Baht 11,950 million

Paid-up capital of Baht 11,950 million)

BMCL Network Limited



Triads Networks Company Limited



64.00% 70.00% 56.00%

Shareholding Structure

As at 31 January 2007

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7.3 Procurement of Products and Services(1) Management of the Metro Project

The Company has engaged Joint Venture CKET as the project manager for the M.R.T. project

to manage technical operations, such as, procurement of the M&E Equipment as ordered from

manufacturers and acting as agent for liaison with contractors and relevant authorities regarding the

installation of the M&E Equipment. Joint Venture CKET is a joint venture between CH. Karnchang Public

Company Limited and Expert Transport Company Limited (an affiliate of CH. Karnchang Public Company

Limited Group, the major shareholder of the Company).

(2) Procurement and Maintenance of the M&E Equipment

Given the fact that the Company has the duties under the Agreement for the MRTA InitialSystem Project - Chaloem Ratchamongkhon Line, to design, manufacture, supply, install, test and

commission the M&E Equipment to ensure the readiness for the commencement of service to thepublic, the Company thus engaged third parties to manufacture and procure the M&E Equipment by wayof turnkey contracts. In essence, the manufacturer is responsible for the design, manufacture andinstallation of the system ready for use, including training for every level of the Companyûs staff. TheCompany engaged Lincas and Siemens, one of the worldûs largest modern electric train manufacturersand developers of railway systems from Germany, to manufacture the M&E Equipment. Lincas and

Siemens are responsible for the design, manufacture, supply, installation, testing and commissioning ofthe M&E Equipment, comprising the rolling stocks, power supply system, signaling and communicationsystem, automatic fare collection, Platform Screen Doors, maintenance equipment, signage and signals,as well as responsible for proposing train operation plans, the Companyûs management structure, arecruitment plan, and all requirements relating to train operations by way of training for every level of theCompanyûs staff to administer the train operations on their own. To ensure the confidence in the

provision of service, the Company has also engaged Lincas and Siemens for maintaining the M&EEquipment for a period of 10 years.

(3) M&E Equipment and Components of the Metro

These can be divided into two parts: civil infrastructure operated by the MRTA, and the M&EEquipment operated by the Company, as follows:Civil Infrastructure Operated by the MRTA

(3.1) StationsAll stations of the metro are supported by reinforced concrete structures which are 15-25

metres beneath the road surface. Each station has different levels and areas depending on thedepth of the station. There are three kinds of platforms, namely, central platform, side platform,and stack platform. Each station has a control room for the control, observation and monitoringof any malfunctions within the station.

(3.2) TunnelsUnderground tunnels are supported by reinforced concrete structures designed to be

flexible and water-resistant. The inner diametre is 5.7 metres, thickness is 30 centimetres andouter diametre is 6.3 metres. It is a two single tunnel system equipped with running rails, power

16


rails, maintenance walkways, a tunnel ventilation system, underplatform exhaust and heatdetector systems for the maximum safety for the train operations inside the tunnels.

(3.3) Ventilation SystemStations and tunnels have a ventilation system installed with ventilation fans on either

side of the station and within the tunnel for the safety of passengers. Fans control thetemperature and condition inside the stations and tunnels.

(3.4) Rails/TracksThere are two types of tracks, running rails and power rails or third rails, as follows:

- Running rails are double rails with 1.435 metres width (standard gauge) railway tracks arelaid and directly fixed to the track base, which is made of a reinforced concrete structurebetween Hua Lamphong and Bang Sue; railway sleepers are used in the depot as is thecase of the State Railway of Thailand.

- Power rails or third rails are laid parallel to either side of the running rails in order toconnect electricity from the source to the train, while the double running rails act as anelectric conductor back to the source.

M&E Equipment Operated by the Company

(3.5) Rolling Stocks

The Company has ordered 19 trains from Siemens, the worldûs leading electric train

manufacturer and assembler. The rolling stocks are made of robust and durable stainless steel

with modern style and would have a service life of approximately 30 years. Each train consists of

three carriages with a total of approximately 70-metre long, and can carry up to 900 passengers

with the transferring capacity of 40,000 passengers per hour per direction.

(3.6) Signaling and Communication System

A good signaling and communication system is necessary for safe, fast, reliable and

punctual train operations and is considered as an important factor of train management. The

control centre is located in the depot. Train operations are automatic computer system

supervised by engineers. In the stations, a radio communication system with direct phone

lines is used for officers to communicate so that passengers can immediately notify an

emergency. In case of any emergency to the officers, the automatic broadcasting system will

start to provide relevant information and direct the way out of the station.

(3.7) Supervisory Control and Data Acquisition System (SCADA) and Closed Circuit Television

Monitoring and supervision of the functions of the main equipment inside the stations and

tunnels, such as, the fire alarm system, cooling system, elevators and escalators, power supply

system within the station and power supply system for the locomotive system, tunnel lighting

system and ventilation system in the tunnels, are carried out by the SCADA installed at the

operation control centre. In case of any malfunction, an alarm will start immediately to notify the

officers in charge to rapidly and promptly check such system.

Closed circuit televisions are installed in various important spots inside the stations to

monitor for safety and playback to identify any incident. The closed circuit televisions are also

17


installed in the train operator cabin to monitor passengers entering and leaving trains while

docked at the stations to ensure safety before closing the doors.

(3.8) Automatic Fare Collection System (AFC)The AFC consists of tickets, token vending machines, ticketing offices and automatic

gates, with the following characteristics:1) Tickets are divided into two types: single journey tokens for a single trip, and stored

value cards, which are contactless smart cards for multiple journeys, suitable for regularpassengers.

2) Token Vending Machines (TVM)TVMs are located on the concourse level and issue only single journey tokens.

3) Ticketing OfficesTicketing offices are manned by officers and equipped with machines for issuing

both tokens and stored value cards of all types.4) Automatic Gates

The system is referred as a çcontactlessé system. Passengers enter or exit thesystem by using the ticket (token or stored value card) across the card readers located on

the top of the automatic gates within 10 centimetres, without any contact required toopen the gate.

(3.9) Platform Screen Doors (PSD)Glass PSDs spanning from the floor to the ceiling are installed along the length of the

platforms, between the platform and the train. This is for the safety of passengers while enteringand leaving the train so as to prevent any accident from passengers falling from the platforms or

injury from the train docking at the stations, as well as helping saving energy in respect of theair-conditioning system and minimising noise pollution.

(3.10) Power SupplyThe power supply is designed in accordance with international standards for safety

and reliability in the supply of power to all electrical equipment, such as, sub-stations andtransformers, which are necessary for supplying power to the train and in the stations and

the tunnels. The system is designed based mainly on safety and continuity of services.(3.11) Depot Building and Central Control Centre

The depot consists of the depot building, operation control centre building, rolling stockparking area, training centre and administration building and is located on a total area ofapproximately 300 rai on Rama IX Road, close to the Thailand Cultural Centre Station, owned bythe MRTA while the Company has the right to use the same throughout the Concession period.

The operation control centre is located in the same area as the depot. This centre is themost important component of the operation control system, namely, to control and direct everystation and every train to ensure safe, rapid and punctual operations. In case of any force majeurepreventing the functioning of this operation control centre, another back-up operation controlcentre located at the depot would control and direct the operation as normal.

18


(4) Types of Tickets and Current Fare Rates

Types Forms Types of Customers Value at

First Issue

1. Single Journey Token Adults and with discount for children Distance-

and elderly for one journey based

2. Adult Card General public Baht 200

3. Child/Elder Card - Children with a height of 90-120cm. Baht 200

- Elderly aged 60 years or older**

4. Student Card Student aged up to 23 years inclusive Baht 200

5. Business Card For the business organizations interested Baht 200

in issuing a large number of cards, please

directly contact the Marketing and

Commercial Development Department

6. 1 Day Traveling Card Unlimited number of journeys and Baht 120

distance within one day

7. 3 Days Traveling Card Unlimited number of journeys and Baht 230/2

distance within three days

8. 30 Days Traveling Card/1 Unlimited number of journeys within 30 days Baht 800

from first use. For the business organizations

interested in issuing a large number of cards,

please directly contact the Marketing and

Commercial Development Department.

Remark: /1 Trial distribution of the 30 Days Traveling Cards through organizations/agencies surrounding the train routes hascommenced in June 2006 with official distribution at all train stations in December 2006.

/2 The Company has adjusted the value of 3 Days Traveling Card from Baht 300 to Baht 230 since February 16, 2007.

19


Fare Rates based on the number of stations and the type of ticket

From 5 August 2006 to 2 July 2008

Fare Rates (Baht)

Single Journey Token Stored Value Cards

Children and Children and

Number of General Public Elderly** General Public Students Elderly**

Station(s) (Full Price) (50% Discount) (15% Discount) (30% Discount) (50% Discount)

1 15 8 13 10 8

2 17 9 14 12 9

3 20 10 17 14 10

4 22 11 19 15 11

5 24 12 20 17 12

6 26 13 22 18 13

7 28 14 24 20 14

8 31 16 26 22 16

9 33 17 28 23 17

10 35 18 30 24 18

11 37 19 31 26 19

12 39 20 33 27 20

13 39 20 33 27 20

14 39 20 33 27 20

15 39 20 33 27 20

16 39 20 33 27 20

17 39 20 33 27 20

Remark: ** The Company granted discount for passengers who are full 60 years of age or older at the rate of half the fare rates

applicable to the general public for a period of two years from 3 July 2006 to 2 July 2008 (the Agreement for the MRTA

Project - Chaloem Ratchamongkhon Line specifies that the Company shall collect fares from passengers who are 65

years of age or older at the rate of 50 percent of the fare rates applicable to the general public).

20


(5) Full Passenger Capacity of the M.R.T. Chaloem Ratchamongkhon Line

Table Indicating Full Passenger Capacity on the Metro

and Number of Passengers in the years 2005 - 2006

2005 2006

1-16 1 February - 1 January - 23-31

January/2 31 December/2 22 December/2 December/2

Number of Days of Service (Days) /1 16 334 356 9

Number of Trains in Service (Trains) 19 17 17 18

Full Passenger Capacity Per Day (Persons) 336,680 301,240 301,240 318,960

Full Passenger Capacity of the Metro (Persons) 5,386,880 100,614,160 107,241,440 2,870,640

106,001,040 110,112,080

Number of Actual Passengers of Service (Persons) 57,191,054 57,814,401

Utilization Rate Per Full Passenger Capacity 53.95% 52.51%

Notes: /1 The number of actual days of service in the year 2006 was 365 days and in the year 2005 was 350 days./2 In the year 2004 - 17 January 2005, the Company had 19 trains in operation.

After the train collision accident on 17 January 2005, the Company suspended its service operation during theperiod from 17 January 2005 - 31 January 2005, and resumed the service on 1 February 2005, with 17 trains inoperation. Regarding the damaged two trains, the Company completed the repair of one train which resumed theservice on 23 December 2006 while the repair of the other train is expected to be completed to resume the servicein the third quarter of the year 2007.

7.4 Industrial Conditions and CompetitionThe transport system directly affecting the Companyûs business includes personal cars, passenger

buses, microbuses and taxis. In the past several years, the fare rates for public transport, especially, normal

buses and air-conditioned buses, slightly changed. However, after the government cancelled its subsidy for

benzene and diesel prices in the years 2004 and 2005, respectively, the fare rates for public transports

increased accordingly, which also resulted in the increase in traveling expenses for personal cars. Moreover, in

the year 2006, the high oil price affected the growth rate of personal cars resulting in the decreased number

of newly registered personal cars from the previous year, not to mention the traffic congestion problems in

Bangkok. These factors encourage more people to use public transports. However, in the year 2006, there were

uncertain factors on politics and economy, the administrative reform, including the domestic unrest, which

concerned the people on safety and they minimized unnecessary traveling and spending as well as the

suspension of the opening of various real estate projects, which also caused the number of journeys by public

transports to decrease.

21


Government Policy towards the Expansion of the Mass Transit System

The government by the Office of Transport and Traffic Policy and Planning (OTP) completed the Urban

Rail Transportation Master Plan (URMAP) in 2000 and conducted further study in the practical implementation

in 2004, referred to as URMAP2. The purpose of this program was to reduce and alleviate the existing traffic

problems, which would help improving the countryûs economic and social conditions, as well as minimize the

environmental problems, whereby the government sector has a policy to expand the urban rail transportation

in Bangkok.

Mass Transit Projects

In 2005 and early 2006, the Council of Ministers (under Pol.Lt.Col. Thaksin Shinawatraûs administration)

passed resolutions to approve in principle implementation of 10 routes of the Mass Transit Projects as per the

details below:

Distance

Mass Transit Projects (Kilometres)

1. Purple Line (Bang Yai - Bang Sue and Bang Sue - Rat Burana) 43.00

2. Blue Line (Hua Lamphong - Bang Khae and Bang Sue - Tha Phra) 27.00

3. Orange Line (Bang Kapi - Bang Bamru) 24.00

4. Dark Red Line (Rangsit - Maha Chai) 65.00

5. Light Red Line (Taling Chan - Suvarnabhumi) 50.00

6. Dark Green Line (Taksin Bridge - Bang Wa and Mo Chit - Saphan Mai) 19.00

7. Light Green Line (National Stadium - Phran Nok and On Nut - Samut Prakan) 24.00

8. Yellow Line (Ladprao - Samrong) 32.00

9. Pink Line (Min Buri - Pak Kret - Khae Rai) 33.00

10. Brown Line (Bang Kapi - Min Buri) 9.50

ë In late 2006, after the administrative reform, the new Council of Ministers passes a resolution in its

meeting on 7 November 2006, granting approval in principle for development of the mass rapid transit system

in Bangkok and the outer areas in the order of priority, necessity and urgency as follows:

Project Implementation Timeframe : Years 2006 - 2012

for First Five Lines

Operation Method : To change from the whole operation by the government

to the government investment in construction of

infrastructure and civil work, and the concession to

private sector for train operations and investment in

signaling system and the trains.

Source of Funds : Loan from JBIC and other sources subject to joint

consideration by the Ministry of Finance and the

Bureau of the Budget.

22


Projects Distance Amount(Kilometres) (Million Baht)

1. Blue Line (Hua Lamphong - Bang Khae and Bang Sue - Tha Phra) 27.00 52,5812. Purple Line (Bang Yai - Bang Sue) 23.00 29,1603. Red Line (Bang Sue - Rangsit and Bang Sue - Taling Chan ) 41.00 53,9854. Light Green Line (On Nut - Samut Prakan) 14.00 14,9395. Dark Green Line (Mo Chit - Saphan Mai) 13.00 14,737

Total 118.00 165,402

The Council of Ministers approved the projects proposed by the Ministry of Transport and assigned the

Ministry of Transport to study in details, revise and design the respective projects to be completed as soon as

possible based on the Detailed Design. The Design & Build basis shall be restricted to the least possible degree

as necessary, in order to ensure the readiness for the project implementation in subsequent phases. The

Ministry of Transport and other relevant agencies shall further proceed with the aforesaid projects in

accordance with the procedures under the applicable regulations and laws both in terms of finance and

treasury, private participation or operation in the government undertaking, and promotion and preservation of

the environmental quality.

ë On 6 February 2007, the Council of Ministers considered and passed a resolution to approve the

operation plan of Project of the Public Rail System in Bangkok and the Outer Areas as proposed by the

Committee for the Work Procedure of the 5 Rail Projects, as follows:

Projects Environment Design/Revision of Bidding ConstructionImpact Assessment Bidding Documents Commencement

1. Red Line Approved Processed April 2007 October 2007Bang Sue - Taling Chan

2. Purple Line Pending consideration of Detailed design available / May 2007 December 2007Bang Yai - Bang Sue the ONEP* subject to revision of

documents3. Blue Line Bang Sue - Tha Phra Detailed design to be September 2007 April 2008

Bang Sue - Tha Phra and pending consideration of the completed around JulyHua Lamphong - ONEP*/ Hua Lamphong - Bang 2007Bang Khae Khae approved.

4. Red Line Approved/subject to further Detailed design available / October 2007 April 2008Bang Sue - Rangsit Section revision. subject to design revision

for Bang Sue Station5. Green Line Pending consideration of the Detailed design to be December 2007 June 2008

Mo Chit - Saphan Mai and ONEP* completed aroundBae Ring - Samut Prakan November 2007

6. Red Line Pending study Detailed design to be December 2007 June 2008Bang Sue - Makkasan - completed aroundHua Mak** December 2007

Remarks: * ONEP refers to the Office of Natural Resources and Environmental Policy and Planning.** This project was presented to the Council of Ministers in November 2006 which passed a resolution to include

such project in the suburban train operation plan. However, such project has not yet been considered by theCommittee.

23


Sources of Funds for the Projects

The Committee for the Work Procedure of the 5 Rail Projects appointed sub-committees for finance and

train operation which are currently pending consideration. It is expected to report the results regarding sources

of funds for construction at the stage of project approval for each line.

Project of the Public Rail System in Bangkok and the Outer Areas, 5 Rail Lines,

According to the Cabinet Resolution on November 7, 2006 and February 6, 2007

Bangkok Metro Public Company Limited, the Operator for the MRTA Blue Line,

which cover the Hua Lamphong - Queen Sirikit National Convention Centre - Bang Sue Route,

Total of 20 Kilometres Distance

24


The M.R.T. Projects currently under construction are as follows:

Projects Construction Section Responsible Distance Current Status

Agency (Kilometres)

1. Light Red Line Makkasan - Suvarnabhumi SRT 28 Under construction

2. Dark Green Line Taksin - Bang Wa BMA 3.7 Nearly completed

3. Light Green Line On Nut - Bae Ring BMA 5.25 Civil work

construction

The Companyûs policy on the provision of service for the extensions

The Company, as the only service provider of the metro in Thailand, intends to bid for the operation of

the metro extensions in accordance with the governmentûs policy, especially the provision of service of the Blue

Line Extension which extends from the Blue Line (Chaloem Ratchamongkhon Line) currently being operated by

the Company. Since the Company has experience in this business both in terms of administration of train

operations and signaling system, and has the skilled team and personnel, facilities and public utilities, including

the Depot Building, Central Control Centre, Administrative Building, to accommodate the future extension

projects, therefore, the Company has the advantage of preparation period, costs of investment and costs of

administration relatively lower than other operators, which will optimize the administration of the countryûs

resources.

25


8. Risk Factors

8.1 Risks relating to businesses of the Company and its Subsidiaries8.1.1 Risks relating to fare revenue

ë Passenger volume of the metroThe underground mass transit is a new form of the mass transit system in Thailand. In the

early stage of the service, people would need some time to become familiar with such newservice, whereby this also necessitate good feeder systems and business expansions surroundingthe routes. The volume of passengers of the metro depends upon several factors including thosebeyond the Companyûs control, such as, fare rates of other available alternative transit systems,road traffic congestion, oil prices, and business expansions surrounding the routes, which wouldserve the peopleûs destinations. Despite the independent expertûs forecast passenger volume, theCompany may not guarantee that the volume of passengers would meet the forecast. Continuingfailure to meet the forecast would give rise to negative impact on the volume of passengers ofthe metro as well as the Companyûs revenue.

ë Increase in revenue may not be in line with expensesUnder the Concession Agreement, the maximum fare rate to be charged by the Company

is determined in pursuance of a formula based on the Bangkok Non-Food Consumer Price Index,whereby the adjustment shall be made once every two years while the Companyûs costs mayincrease at any time during the operations.

8.1.2 Risks relating to commercial development revenueCommercial development revenue, which represents approximately 6% of the Companyûs total

revenue, throughout the Concession period of 25 years, may vary subject to the spending behavior ofcustomers and advertisers depending on several factors beyond the Companyûs control, such as,economic fluctuations, competition in the advertising media and retail space lease business, changesand amendment of laws and regulations governing such business operations in the metro, as well as theprogress in opening of retail shops in the stations. Therefore, commercial development revenue may notserve as an additional source of revenue for the Company.

However, the Companyûs three Subsidiaries which operate businesses relating to commercialdevelopment inside the stations are established through joint investment with business partners havingrequisite experience and expertise in the areas they operate businesses. The Company believes that theSubsidiariesû operations by experienced executives will lead to a satisfactory operation of its business.Furthermore, commercial development cost each year remains lower than commercial developmentrevenue.

8.1.3 Risks relating to fluctuation of cost of fareCost of fare is deemed to be the main expenditure of the Companyûs core business operation

which comprises maintenance costs for the metro (M&E contract and E&M contract), public utility cost,and staffûs salaries and welfare. In this regard, the maintenance costs under the M&E contract for 10years may be adjusted based on the German Consumer Price Index for Euro-denominated payments,and based on the Bangkok Consumer Price Index for Baht-denominated payments. In addition, the costof electricity used at stations and for train operations, which are the main costs of the public utilitycost, may be adjusted according to the electricity rates of the Metropolitan Electricity Authority.Moreover, as these main costs are fixed costs, the fluctuating volume of passengers would not causethese costs to vary accordingly.


26


8.1.4 The Company relies on Siemens and Lincas for manufacture and maintenance of its M&E EquipmentThe Company entered into an agreement for procurement of the M&E Equipment and an

agreement for maintenance of the M&E Equipment with Siemens and Lincas for a period of 10 yearsending in 2014. Thus, in the event where Siemens and Lincas are unable to provide such services tothe Company or there is any change in the maintenance agreement, the Companyûs business operationmay be adversely affected.

In the future, the Company has a policy to operate its business in the same manner as suchoverseas transit service providers in Singapore and Hong Kong, etc., namely to select and procure theM&E Equipment from other manufacturers of the equipment compatible with its existing system. It isalso the Companyûs policy to develop the quality of its personnel to have sufficient capabilities inworking with local and overseas equipment manufacturers and contractors in the maintenance andrepair of the M&E Equipment and the rail system to improve its efficiency without reliance on theexisting manufacturer.

8.1.5 Risks from terrorismOver the past years, there have been terrorist attacks in many regions of the world, such as, the

terrorist attacks in the United States of America on 11 September 2001, the terrorist attacks inLondon mass transit system, and the unrest circumstances in the south of Thailand, including theBangkok bomb blasts on 31 December 2006. It is thus possible that any one or several incidents statedabove may lead to a terrorist attack in the mass transit system in Thailand, which could affect theCompanyûs business operation.

However, as a precaution to mitigate possible impact, the Company has taken out insurancecoverage for such risk and implemented measures to prevent a variety of such incidents in the futureby means of review of train operations and emergency drills, including administration inside the stations,performance of train operators and control centre staff, joint training between train operators andcontrol centre staff, review of control centerûs operating manuals and emergency manuals. Moreover, theCompany regularly performed drills to ensure its preparedness for unusual events or emergencies by wayof simulation of such various situations as emergency in the stations, bomb threat and bomb blast inthe stations, trains out of order and stopping inside the tunnel, fire in the rolling stock, direction forpassengers off trains, evacuation, fire in the stations and fire inside the tunnel.

8.1.6 Risks relating to the Concession Agreement and the government supervisionGiven that the Company operates its businesses in accordance with the Concession Agreement

under the supervision of the MRTA, difference in the contractual partiesû interpretations on terms andconditions of the Concession Agreement may arise, for instance, in case of the Companyûs request foradjustment of the fare rates on 3 July 2006 under the Concession Agreement which specifies that theCompany shall be able to increase the fare rates since 3 July 2006 (2 years from the opening of thetrain operation service). However, the MRTA has the duty to comply with the procedures as stipulatedin the Mass Rapid Transit Authority of Thailand Act B.E. 2543 (2000) to announce the regulations toempower the Company to collect fares at the new rates within the time specified in the ConcessionAgreement. In this regard, the MRTA proposed the draft regulations to the Council of Ministers on 4 July2006, and such regulations shall be announced to the public 30 days in advance, therefore, the new farerates have officially become effective from 5 August 2006 onwards. This has caused the MRTA to askfor the Companyûs cooperation to collect fares at special rates during the period from 3 July 2006 to 4August 2006 based on the former fare rates.

27


Should the Company and the MRTA be unable to resolve any problem, the Company may requirea certain period of time to solve such problem, which would give rise to an impact on the Companyûsbusiness operation.

8.1.7 Risks relating to the government policy in the construction and operation of the mass transit railwaysystem

The government has a policy to expand the mass transit railway system to cover the BangkokMetropolitan area and its vicinity, whereby it was approved in principle to implement mass transitmegaprojects for 10 lines. In this regard, the present Council of Ministers has approved in principleguidelines for the development of the mass transit systems in the order of priority, necessity andurgency, with a plan to accelerate construction of the first five rail projects. However, it is currentlyuncertain as to the procedures and period for implementation according to the government plan. TheCompanyûs growth has been caused in part by the increased volume of passengers from the extensionsand the new lines of the mass transit system. Therefore, any delay by the government would affect theCompanyûs growth rate.

Furthermore, should the government have a policy requiring the Company to merge its businesswith other mass transit systems in the future under various terms and conditions, the Companyûsbusiness operation may be affected by such merger.

8.2 Other risks8.2.1 The Company is unable to pay dividend in the forthcoming period

Due to the fact that the MRTA Initial System Project requires quite a large amount of investmentand continued use of working capital at the early stage of its operation, the Company continues tosustain an operating loss during such period. The Company anticipates that it would not be able to paydividend in the forthcoming period.

8.2.2 Risks from the interest rate and foreign exchange rate fluctuationsAs at 31 December 2006, the Company had long-term loans amounting to Baht 10,890 million

extended by domestic banks at the interest rates ranging from the minimum lending rate (MLR) to MLRplus 0.25% per annum. The Company also had a loan amounting to Baht 1,003.09 million extended byCH. Karnchang Public Company Limited, which is the Companyûs major shareholder, at the interest rateof MLR plus 0.50% per annum. In this regard, if the interest rates increase, the Companyûs interestexpense obligation would be affected. In addition, the Company also incurred expenses in foreigncurrencies for the maintenance cost of the M&E Equipment, in the amount of approximately Euro 3.92million per year and insurance premiums of approximately US$ 3.16 million per year. Thus, should theBaht value depreciate, the Companyûs expenses would increase accordingly.

8.2.3 The Company relies on the financial support from its major shareholdersUnder the conditions stipulated in the sponsor support agreement, two major shareholders,

namely, CH. Karnchang Public Company Limited and Natural Park Public Company Limited, are requiredto provide financial support to the Company so as to maintain its liquidity in accordance with the loanagreement executed with the financial institutions. In the event where the Company does not receivethe required financial support, the Company may be in default on the conditions of its existing loanagreement, which would affect the Companyûs financial condition and results of its operations.

28


9. Capital Structure

9.1 Securities of the CompanyAs at 31 December 2006, the Company has the registered capital of Baht 11,950 million, divided into

11,950 million ordinary shares, with par value of Baht 1.00, as well as issued and paid-up capital of Baht

11,950 million.

9.2 Shareholders of the CompanyThe table below shows the shareholders of the Company as at 21 September 2006.

Name Number of Shares Held (shares) Percentage

1. Mass Rapid Transit Authority of Thailand 2,987,500,000 25.00

2. Public 2,756,442,400 23.07

3. CH. Karnchang Public Company Limited Group 2,337,860,296 19.56

- CH. Karnchang Public Company Limited 1,888,312,416 15.80

- Mahasiri Siam Company Limited /1 440,087,670 3.68

- Transit Expert Company Limited /2 9,460,210 0.08

4. Natural Park Public Company Limited Group 1,433,951,276 12.00

- Natural Park Public Company Limited 1,066,120,418 8.92

- Syntec Construction Public Company Limited 367,830,858 3.08

5. Bangkok Expressway Public Company Limited 1,194,092,607 9.99

6. Krung Thai Bank Public Company Limited 471,250,000 3.94

7. TMB Bank Public Company Limited 238,875,000 2.00

8. Siam City Bank Public Company Limited 114,562,500 0.96

9. Tokyu Construction Company Limited 100,000,000 0.84

10. Others 18,776,621 0.16

11. Directors, Executives and Staff 296,689,300 2.48

Total 11,950,000,000 100.00

Notes : /1 Mahasiri Siam Company Limited has a total of 9,000,000 shares, 7,747,788 shares of which or 86.09 % is

held by the Trivisvavet Family, and 1,252,212 shares of which or 13.91 % is held by other shareholders./2 Transit Expert Company Limited has a total of 10,000 shares, 9,993 shares of which or 99.93 % is held by

Mahasiri Siam Company Limited, and 7 shares of which or 0.07 % is held by other shareholders.

29


9.3 Dividend PolicyThe Board of Directors of the Company has a policy to pay dividends at the rate of approximately 40 %

of its net profits after deduction of all reserves as required by law and as required under the Onshore Facilities

Agreement, in particular after reserving funds for the repayment of the principal and interest for a period of

six months. As the Company has incurred losses during the initial years of revenue service and has had

accumulated losses, it is thus not able to pay dividends to its shareholders.

The Companyûs Subsidiaries have policy to pay dividends at the rate of approximately 40 % of net

profits after deduction of all reserves as required by law and pursuant to the Loan Agreement. The Board of

Directors of the Company will consider and propose the dividend payments to the Subsidiariesû boards of

directors for consideration and further submission to their shareholdersû meetings for approval, provided that

this will depend on the Subsidiariesû investment plans, requirements and other justifications which their

boards of directors deem appropriate.

30


10. Management Structure

10.1 Management StructureThe management structure of the Company comprises five committees, namely, the Board of Directors,

the Executive Committee, the Audit Committee, the Nomination and Remuneration Committee, and the Risk

Management Committee, as follows:

A. Board of Directors

As at 31 December 2006, the Board of Directors of the Company comprised 11 directors as follows:

Name Position

1. Mr. Plew Trivisvavet Chairman of the Board of Directors

2. General Chetta Thanajaro Chairman of the Audit Committee and Independent Director

3. Mr. Vitoon Tejatussanasoontorn Audit Committee Member and Independent Director

4. Lieutenant General Surat Sumrith Audit Committee Member and Independent Director

5. Mr. Supong Chayutsahakij Director

6. Dr. Sombat Kitjalaksana Director

7. Mrs. Vallapa Assakul Director

8. Mrs. Nongnutch Thienpaitoon Director

9. Mr. Ronnachit Yaemsaard Director

10. Mr. Somchai Sirilertpanich Director

11. Mr. Anukool Tuntimas Director

Nomination & Remuneration Committee

Risk Management Committee

Board of Directors Audit Committee

Executive Committee

Managing Director Internal Audit Division

Accounting and

Finance Division

Human Resources and

Administration DivisionOperations Division

Marketing andCommercial

Development Division

Office of the ManagingDirector


31


Dr. Sombat Kitjalaksana, as the Managing Director, shall be the secretary to the Company. The Office ofthe Managing Director is the division responsible for performing duties in taking care of the Board of Directorsûactivities, recording the minutes of the meetings, and duly and completely keeping the documents relating tothe meetings, including providing advice on relevant legal issues and regulations.

Roles and Duties of the Board of Directors(1) to supervise, monitor and manage the Companyûs operations to ensure compliance with laws as well as

the objectives and the Articles of Association of the Company and resolutions of the Companyûsmeetings of shareholders and to protect the interests of the Company, based on principles of goodcorporate governance as well as the rules and notifications of the Stock Exchange of Thailand and theOffice of the Securities and Exchange Commission;

(2) to set policies and strategies of the Company and to supervise, control and monitor to ensure that themanagement performs in compliance with such policies in an efficient and effective manner to give riseto the maximum economic value to the business and wealth to the shareholders;

(3) to hold the Companyûs annual ordinary general meeting of shareholders within no later than four monthsfrom the end of the Companyûs financial year and extraordinary general meetings of shareholders whenit deems necessary;

(4) to hold the Companyûs Board of Directors meetings quarterly, at which not less than 50% of the totalnumber of directors must attend the meeting to form a quorum. A majority vote is required for anydecision made at such a meeting and in the case of a tied vote, the chairman of the meeting will havea casting vote;

(5) to consider and approve the budget for the Companyûs annual investment and operations, includingmonitoring the utilisation of the Companyûs resources;

(6) to arrange for the preparation of proper, accurate and adequate financial and general significant reportsto the Companyûs shareholders, including confirming the review and certification of the informationcontained therein;

(7) to establish an efficient and effective internal control system, internal audit system and risk manage-ment measures, including regularly auditing such systems and measures;

(8) to consider the appointment of any sub-committees or other persons to manage the Companyûsoperations under the control of the Board of Directors of the Company, or to grant such authority tosuch persons for such period of time as the Board of Directors of the Company deems appropriate,provided that the Board of Directors of the Company may cancel, revoke, change or amend suchauthorities as appropriate;

(9) to consider the appointment of the authorised signatory directors of the Company, including theappointment of sub-committees as may be necessary and appropriate to operate the Company;

(10) to consider and clearly specify the division of roles, duties and responsibilities among the CompanyûsBoard of Directors, sub-committees and the management, including specifying the procedures andregularly communicating such roles, duties and responsibilities to directors, sub-committee members,the management and staff of the Company;

(11) to supervise and monitor the Executive Committee to ensure compliance with the policies specified bythe Board of Directors of the Company. The Executive Committee is authorised to approve any transac-tion that is binding on the Company worth up to Baht 50,000,000 (Baht fifty million), excludingtransactions which give rise to a conflict of interest with the Company and its Subsidiaries pursuant tothe notification of the Securities and Exchange Commission, including transactions which require ap-proval from the Companyûs shareholders in accordance with the notifications of the Securities andExchange Commission and the Stock Exchange of Thailand;

32


(12) to consider and specify the power, duties and responsibilities, procedures for the appointment andremoval, disciplinary actions, salary, welfare benefits, bonus, gratuities and other remuneration, includingexpenses and fringe benefits, of the Managing Director of the Company;

(13) to consider and approve interim dividend payments to the Companyûs shareholders from time to time asit deems appropriate and in accordance with the law;

(14) to approve the issuance of financial instruments and any other securities by the Company, to specifythe number, price, date, procedures and conditions in respect of the underwriting of such securitiesunder the law and/or as specified by the meeting of the shareholders of the Company, including theappointment of underwriters of such securities and underwriting agents.

Selection Procedures for the DirectorsThe Nomination and Remuneration Committee will consider selecting qualified persons to act as

directors and propose such persons to the Board of Directors for further submission to a meeting of theshareholders or to the Board of Directors of the Company for appointment in accordance with the Articles ofAssociation of the Company:

The Board of Directors of the Company must comprise at least five directors, of which not less thanone-half must reside in Thailand. The directors must have the qualifications as specified by law and beappointed by a meeting of shareholders of the Company in accordance with the following rules and procedures:1. Each shareholder shall be entitled to one vote per share;2. Each shareholder must use all of the votes under paragraph 1 to appoint one or more directors and may

not divide such votes among candidates;3. The number of votes received is ranked from highest to lowest and the directors will be appointed from

the highest to lowest according to the number of directors to be appointed by the Company at thattime. Any tied votes for the final vacancy shall be decided by a drawing of lots.

Attendance at Meetings of the Board of Directors

Name 2006Number of Meetings Attended Number of Meetings Held

1. Mr. Plew Trivisvavet /1 9 102. General Chetta Thanajaro /3 8 103. Mr. Vitoon Tejatussanasoontorn /3 10 104. Lieutenant General Surat Sumrith /3 6 105. Mr. Supong Chayutsahakij /1 9 106. Dr. Sombat Kitjalaksana /1 9 107. Mrs. Vallapa Assakul /3 9 108. Mrs. Nongnutch Thienpaitoon /3 6 109. Mr. Ronnachit Yaemsaard /1 9 1010. Mr. Somchai Sirilertpanich /2 8 1011. Mr. Anukool Tuntimas /1 9 10

Notes: Term of Office/1 Appointed as a director since 11 May 2004./2 Appointed as a director since 14 September 2004 until the Company received his resignation letter on 10 March

2005. The Company registered such resignation with the Ministry of Commerce on 23 March 2005. He wasre-elected as a director on 26 May 2005.

/3 Appointed as a director since 26 May 2005.

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B. Audit Committee

As at 31 December 2006, the Companyûs Audit Committee comprised three members, each of whom

met the qualifications as specified by the Stock Exchange of Thailand, as follows:

Name Position

1. General Chetta Thanajaro Chairman of the Audit Committee

2. Mr. Vitoon Tejatussanasoontorn Audit Committee Member

3. Lieutenant General Surat Sumrith Audit Committee Member

Role and Duties of the Audit Committee

(1) to ensure that the Companyûs financial reports are accurate and adequate;

(2) to ensure that the Company has suitable and efficient systems of internal control and internal audit;

(3) to consider, select, nominate, appoint and recommend remuneration for the Companyûs external auditors;

(4) to ensure that the Companyûs operations are full, adequate and appropriate in compliance with securities

and exchange law and regulations of the Stock Exchange, or laws, regulations, articles and policies

relating to the business of the Company;

(5) to consider the disclosure of information by the Company, in the case of connected transactions or

transactions that may give rise to a conflict of interest, to ensure accuracy and completeness;

(6) to prepare a report on the monitoring activities of the Audit Committee and disclose the same in the

Companyûs annual report, and have such Audit Committeeûs report signed by the Chairman of the Audit

Committee;

(7) to do any other act as prescribed by law or assigned by the Companyûs Board of Directors with the

approval of the Audit Committee.

Selection Procedures for Independent Members of the Audit Committee

The Nomination and Remuneration Committee will select persons with suitable qualifications as independent

members of the Audit Committee and propose such persons to the Board of Directors of the Company for

further submission to a meeting of the shareholders or the Board of Directors of the Company for appointment.

The Company shall have one Audit Committee, comprising at least three independent directors appointed for

a period of three years each. The qualifications of the independent directors and Audit Committee members

shall be in accordance with the minimum requirements as prescribed in the notifications of the SEC and the

Stock Exchange of Thailand, as follows:

Definition of the Independent Director

1. Holding shares in the Company of not exceeding five percent of the number of shares having voting

rights of the Company, parent company, subsidiaries, affiliated companies or juristic persons which may

have conflict;

2. Not being employee, staff nor advisor receiving regular salary or controlling person of the Company,

parent company, subsidiaries, affiliated companies or juristic persons which may have conflict;

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3. Not being a person having relationship by blood or by registration under laws in the capacity as parent,

spouse, sibling and offspring, including spouse of the offspring of any executive, major shareholder,

controlling person or nominated person to be an executive or controlling person of the Company or its

subsidiaries;

4. Having no business relationship with the Company, parent company, or subsidiaries, affiliated companies

or juristic persons which may have conflict in the manner which may obstruct the exercise of his/her

independent discretion and having no other characteristics which prevent the provision of independent

opinion regarding the Companyûs business operations.

Definition of the Audit Committee

1. Holding shares of not exceeding five percent of the paid-up capital of the Company, subsidiaries,

affiliated companies or associated companies, including shares held by related persons;

2. Being non-executive directors of the Company, subsidiaries, affiliated companies, associated companies

or major shareholders of the Company and being neither employee, staff nor advisor receiving regular

salary from the Company, subsidiaries, affiliated companies, associated companies or major shareholders

of the Company;

3. Being directors who neither have benefit nor interest, whether directly or indirectly, in both finance and

management of the Company, subsidiaries, affiliated companies or major shareholders of the Company,

including neither have benefit nor interest in such manner within one year prior to their appointment as

Audit Committee members, except where the Board of Directors of the Company has thoroughly

considered and deems that such previous benefit or interest shall not affect the independence in the

performance of duties and provision of opinions;

4. Being directors who are neither related persons nor close relatives of any executives or major shareholders

of the Company;

5. Being directors who are not appointed as representatives for protecting interest of the Companyûs

directors, major shareholders or shareholders who are related persons of any major shareholders of the

Company; and

6. Being able to independently perform the duties and provide opinions or report the performance of duties

as assigned by the Board of Directors, without being under control of any executives or major shareholders

of the Company, including related persons or close relatives of such persons.

C. Executive Committee

As at 31 December 2006, the Companyûs Executive Committee comprised four members, as follows:

Name Position

1. Mr. Plew Trivisvavet Chairman of the Executive Committee

2. Mr. Supong Chayutsahakij Member of the Executive Committee

3. Dr. Sombat Kitjalaksana Member of the Executive Committee

4. Mr. Anukool Tuntimas Member of the Executive Committee

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Role and Duties of the Executive Committee

(1) to set policies, appoint, specify authorities and their duties, supervise, monitor and liaise with, working

groups or special working groups or management groups, including considering and approving any

proposal by such working groups or management groups or special working groups;

(2) to approve any proposals by working groups or management groups or any working groups for the

benefits of the Companyûs management and business operations under the objectives of the Company;

(3) to enter into transactions binding the Company worth up to Baht 50,000,000 (Baht fifty million), but

excluding transactions which give rise to a conflict of interests with the Company or its Subsidiaries,

pursuant to the notification of the Securities and Exchange Commission, including transactions which

require approvals from the Companyûs shareholders in accordance with the notifications of the Securities

and Exchange Commission and the Stock Exchange of Thailand. Such transactions include the following:

a. undertaking any juristic acts which bind the Company;

b. withdrawing from any bank account of the Company and applying credit with the Companyûs

current banks or financial institutions, including the application to open accounts and/or other

forms of credit with any banks or financial institutions, as well as using the Companyûs securities

as security for such debts, regardless of whether registered or not;

c. undertaking joint investments on behalf of the Company with individuals, juristic persons, other

groups of persons under the law to proceed in accordance with the Companyûs objectives,

including other forms of investments, such as, share acquisitions and share swaps with other

juristic persons, as it deems appropriate;

d. undertaking feasibility studies of new projects as well as considering and approving projects as it

deems appropriate;

(4) to specify, consider and approve articles, regulations, policies on the management and business operations

of the Company or any operation binding on the Company;

(5) to give recommendations and advice and specify policies, powers and duties of the Managing Director,

working groups, special working groups and management groups;

(6) to approve, appoint, employ, remove, impose disciplinary actions, fix salaries, welfare benefits, bonuses,

gratuities and other remuneration, including expenses and fringe benefits of the officers or staff of the

Company holding positions of division heads or higher, including the Deputy Managing Director or

equivalent or the working groups, special working groups or management groups of the Company for

specific purposes;

(7) to perform any act as authorised by the Companyûs Board of Directors from time to time;

(8) to appoint persons or groups of persons to manage the Company under the control of the Executive

Committee or to grant authority to such persons or groups of persons to do any acts as the Executive

Committee deems appropriate and to change, amend, cancel or revoke such authorities;

(9) to appoint the advisory chairperson or advisors or advisory committees to the Executive Committee as

it deems appropriate and to fix the remuneration, allowance, welfare benefits, fringe benefits and other

expenses of such appointees as appropriate;

(10) to call meetings of the Executive Committee and/or specify regulations and articles of such meetings

as the Executive Committee or the Chairman of the Executive Committee deems appropriate;

36


(11) when the Chairman of the Executive Committee cannot perform the duties, the Chairman shall appoint

an acting Chairman to perform such duties on a case by case basis and such acting Chairman will have

the same power and duties as the Chairman of the Executive Committee;

(12) to consider and approve the authorities of the management of the Company according to the rules,

regulations and articles of the Company.

However, the Executive Committee does not have the power to approve any transactions or matters in

respect of which the Executive Committee or persons have a conflict, interest or conflict of interest with the

Company or its Subsidiaries, pursuant to the notification of the Securities and Exchange Commission.

Selection Procedures for the Executive Committee

The Board of Directors of the Company shall appoint the Executive Committee in accordance with the

Articles of Association of the Company, which provide that the Board of Directors of the Company may appoint

any other person to manage the Company under the control of the Board of Directors, provided that any such

person who is to be a member of the Executive Committee shall have the qualifications and capacity to

perform their duties.

D. Nomination and Remuneration Committee

As at 31 December 2006, the Nomination and Remuneration Committee of the Company comprised

three members as follows:

Name Position

1. General Chetta Thanajaro Chairman of the Nomination and Remuneration Committee

2. Mr. Plew Trivisvavet Member of the Nomination and Remuneration Committee

3. Mr. Vitoon Tejatussanasoontorn Member of the Nomination and Remuneration Committee

Role and Duties of the Nomination and Remuneration Committee

(1) to consider the nomination of persons with suitable qualifications as directors and to propose such

persons to the Board of Directors for further submission to a meeting of the shareholders of the

Company or the Board of Directors of the Company for appointment;

(2) to select a person suitable for the Managing Director position and propose such person to the Board of

Directors of the Company for appointment;

(3) to specify the rules for determination of remuneration of directors and the Managing Director;

(4) to determine and to propose the directorsû remuneration to a meeting of the shareholders of the

Company for approval;

(5) to propose the salary and adjustments and other remunerations of the Managing Director to the Board

of Directors of the Company for approval;

(6) to undertake other matters as assigned by the Board of Directors of the Company.

Selection Procedures for the Nomination and Remuneration Committee

The Board of Directors of the Company shall appoint members of the Nomination and Remuneration

Committee who shall hold such office for a period of three years.

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E. Risk Management Committee

As at 31 December 2006, the Risk Management Committee of the Company comprised four members

as follows:

Name Position

1. Mr. Supong Chayutsahakij Chairman of the Risk Management Committee

2. Dr. Sombat Kitjalaksana Member of the Risk Management Committee

3. Mr. Witoon Hatairatana Member of the Risk Management Committee

4. Miss Pornpimol Chirtchoochai Member of the Risk Management Committee

Role and Duties of the Risk Management Committee

(1) to consider and set the policies on risk management measures and plans for the operations of the

business and Subsidiaries;

(2) to monitor and assess the appropriateness of the overall risk management system of the Company;

(3) to prepare recommendations to the Board of Directors of the Company in respect of risk management,

standard practice, strategy, risk assessment in each matter and of the Company as a whole to ensure

efficient and effective risk management;

(4) to prepare risk reports for the Board of Directors of the Company;

(5) to carry out other matters as assigned by the Board of Directors of the Company.

Selection Procedures for the Risk Management Committee

The Board of Directors of the Company shall appoint members of the Risk Management Committee.

F. Management

As at 31 December 2006, the management of the Company comprised four members as follows:

Name Position

1. Dr. Sombat Kitjalaksana Managing Director and acting Marketing and

Commercial Development Director /1

2. Mr. Witoon Hatairatana Operations Director

3. Miss Pornpimol Chirtchoochai Accounting and Finance Director

4. Miss Sattabusya Mekvichai Human Resources and Administration Director

Note: /1 The Company is currently in the process of nominating Marketing and Commercial Development Director.

Role and Duties of the Managing Director

(1) to control and monitor all businesses of the Company and to ensure compliance with resolutions and

policies of the Board of Directors and the Executive Committee of the Company;

(2) to approve, appoint, remove, employ, impose disciplinary actions, fix salary, bonus, gratuities, welfare

benefits and other remuneration, including expenses and fringe benefits for management or staff with

salary (exclusive of other remuneration) of up to Baht 200,000 (Baht two hundred thousand) per month,

38


holding positions below division heads (excluding the Deputy Managing Director and division heads or

equivalent), and the Managing Director may delegate such power or duties to the working groups or the

Board of Directors, management group, group of persons or the management, as he deems appropriate;

(3) to have the power to enter into any transaction, binding on the Company, worth up to Baht 2,000,000

(Baht two million) for each transaction;

(4) to authorise the management of the Company, such as, the Deputy Managing Director, Assistant

Managing Director, the division heads or equivalent, to perform certain duties on behalf of the Managing

Director (such as, procurement, hiring and ordering payments) as he deems appropriate;

(5) to have the power to issue, amend, add, improve regulations, orders and work rules of the Company,

including employment, appointment, removal and disciplinary actions of staff and employees, fixing of

salaries and other remuneration, including gratuities and welfare benefits;

(6) to have the duty to submit the balance sheet, financial statements and profit and loss accounts to the

Board of Directors of the Company for approval;

(7) to undertake feasibility studies of new projects as well as consider and approve such projects as

assigned by the Executive Committee;

(8) if the Managing Director cannot perform his duties, to appoint the Deputy Managing Director or any

other person to perform his duties on his behalf and such appointee shall have the same power and

duties as the Managing Director;

(9) to appoint persons or groups of persons to manage the Company under the control of the Managing

Director or to grant such authority to such persons or groups of persons to do any acts as the

Managing Director deems appropriate, and to change, amend, cancel or revoke such authority;

(10) to propose any matter to the Board of Directors, the Executive Committee, the Audit Committee or

meetings of the shareholders of the Company for consideration, approval or other purposes as he deems

appropriate;

(11) to do other acts as assigned by the Board of Directors or the Executive Committee of the Company

from time to time.

However, the managing director does not have the power to approve any transactions or matters in

respect of which the managing director or other persons may have a conflict of interest with the Company or

its Subsidiaries, pursuant to the notification of the Securities and Exchange Commission.

Selection Procedures for Management and Staff

- The Managing Director will be appointed by the Board of Directors of the Company through the

nomination by the Nomination and Remuneration Committee;

- Management at the level of division head or higher will be nominated, selected and appointed by the

Executive Committee;

- Management whose salary does not exceed Baht 200,000 per month and holding a position lower

than division head will be nominated, selected and appointed by the Managing Director;

- The selection, nomination and recruitment of positions lower than manager or equivalent shall be carried

out by the Human Resources and Administration Division which will make the selection jointly with the

39


relevant division in accordance with the Companyûs operation regulations in relation to recruitment of

personnel. They shall recruit and appoint persons with knowledge, capacity and experience suitable to

carry out their duties for the Company.

Selection of Directors and Management of Subsidiaries

The Subsidiaries of the Company, BMCL Network Limited, Metro Mall Development Limited, and Triads

Networks Co., Ltd., do not have their own nomination committees. The selection of their directors is carried out

by their shareholders and the selection of the management is carried out by their respective boards of

directors, provided that their directors and management are suitably qualified without any prohibited characteristics

under Section 68 of the Public Limited Companies Act B.E. 2535 (1992).

10.2 Remuneration of Management10.2.1 Cash Remuneration

Remuneration of Directors of the Company

(Only remuneration as directors and members of the Audit Committee)

Name of Director 2006

Amount (Baht) Nature of Remuneration

1. Mr. Plew Trivisvavet /1 45,000 meeting allowance

2. Dr. Sombat Kitjalaksana /1 45,000 meeting allowance

3. Mr. Ronnachit Yaemsaard 285,000 monthly and meeting allowance

4. Mr. Supong Chayutsahakij /1 45,000 meeting allowance

5. Mr. Anukool Tuntimas /1 45,000 meeting allowance

6. Mr. Somchai Sirilertpanich 280,000 monthly and meeting allowance

7. Mrs. Nongnutch Thienpaitoon 270,000 monthly and meeting allowance

8. Mrs. Vallapa Assakul 285,000 monthly and meeting allowance

9. General Chetta Thanajaro

As Director 40,000 meeting allowance

As Chairman of the Audit Committee 615,000 monthly and meeting allowance

10. Mr. Vitoon Tejatussanasoontorn


As Audit Committee Member 380,000 monthly and meeting allowance

11. Lieutenant General Surat Sumrith


As Audit Committee Member 375,000 monthly and meeting allowance

TOTAL 2,790,000

Notes: /1 Remuneration was presented in the topic of Total Remuneration of the Executive Committee and

Executives

40


Total Remuneration of the Executive Directors and Management

Name 2006

Number of Amount Nature of Remuneration

Directors (Baht)

Total remuneration for executive directors 4 2,880,000 monthly

Total remuneration for management 4 12,027,680 salary, bonus, contributions

to the provident fund and

social security fund

TOTAL 7 /1 14,907,680

Note: çManagementé means the managers, top 4 executive positions inclusive, directly below the Managing

Director, excluding the accounting or finance manager./1 Dr. Sombat Kitjalaksana is both the Executive Directors and Management.

10.2.2 Other Remuneration

On 30 June 2005, the Extraordinary General Meeting of Shareholders No. 1/2005 resolved to

issue and offer 450,000,000 new capital increase shares to the directors, management and staff of

the Company (at the par value of Baht 1 each) and the Board of the Directors was authorised to

allocate these shares. During 26 - 28 December 2005, 296,689,300 shares were allocated to the

directors, management and staff of the Company. The shares so allocated to the directors,

management and staff will be subject to a silent period for 2 years from the date the Companyûs shares

start trading on the Stock Exchange of Thailand. The directors, management and staff will be permitted

to sell the shares at maximum of 50% of the locked-up shares every 12 months and 24 months

thereafter from the date the Companyûs shares start trading on the Stock Exchange of Thailand

which was 21 September 2006.

41


Number of Shares in Bangkok Metro Public Company Limited held by the Directors and Management


Name of Directors and Management Number of Shares Held (shares) Percentage of Shareholding (%)

1. Mr. Plew Trivisvavet 28,249,500 0.24

2. Dr. Sombat Kitjalaksana 15,000,000 0.13

3. Mr. Ronnachit Yaemsaard - -

4. Mr. Supong Chayutsahakij 15,000,000 0.13

5. Mr. Anukool Tuntimas 15,000,000 0.13

6. Mr. Somchai Sirilertpanich 15,000,000 0.13

7. Mrs. Nongnutch Thienpaitoon 15,000,000 0.13

8. Mrs. Vallapa Assakul 15,000,000 0.13

9. General Chetta Thanajaro 15,000,000 0.13

10. Mr. Vitoon Tejatussanasoontorn 15,000,000 0.13

11. Lieutenant General Surat Sumrith 15,000,000 0.13

12. Mr. Witoon Hatairatana 10,000,000 0.08

13. Miss Pornpimol Chirtchoochai 10,000,000 0.08

14. Miss Sattabusya Mekvichai 10,000,000 0.08

10.3 Corporate GovernanceThe Board of Directors of the Company realises the significant of the corporate governance for

improving the transparency and responsibilities of the Board of Directors and management, and increasingthe confidence of shareholders, investors and other related parties. The Company thus sets policies insupport of good corporate governance, which contains the following fundamental principles:1. Corporate Governance Policy

(1) Equal and fair treatment to shareholders and other interested parties.

(2) The Board of Directors is determined to create value added to the Companyûs business on along-term basis and to manage the business of the Company with due care and prudence, andto perform its duties with sufficient competency and efficiency, in order to optimise the benefitto the shareholders, to avoid conflicts of interest and to be responsible for their own decisionsand management.

(3) Management shall be transparent, allow for inspection and adequate information disclosure to all

parties concerned.(4) Management shall operate the business by considering risks that might arise in relation to its

business, and establishing appropriate risk control and management procedures.(5) The Company has set out a code of ethics for compliance by the directors and staff.

2. Shareholders: Rights and Equality

The Company recognises the rights of all shareholders to receive accurate, adequate and completeinformation in due time to enable them to make decisions in shareholdersû meetings. Prior to allshareholdersû meetings, the Company shall send a notice convening the meeting, together with meetingagenda, to the shareholders and include an opinion from the Board of Directors on each agenda. Such

42


notice will be sent at least seven days prior to any such meeting. The chairman of the meeting will allowthe shareholders to inspect the operations of the Company on an equal basis, enquire and give opinionsand other suggestions, and shall record issues that have been discussed and important opinions in theminutes of the meeting so that the shareholders will be able to examine such information. For shareholderswho are not able to attend a meeting in person, the Company will allow those shareholders to empowerthe Chairman of the Audit Committee to attend the meeting and vote on their behalf.

3. Rights of Stakeholders

The Company realises the importance of rights of all stakeholders, both internal stakeholders

(that is, staff and management of the Company and its Subsidiaries), and external stakeholders (that is,competitors, creditors, the government sector and other related agencies). The Company realises thatsupport from its stakeholders will create a competitive advantage and profit for the Company, which willhelp it to achieve its long-term success.

4. Shareholdersû Meetings

To convene a shareholdersû meeting, the Company will choose an appropriate place and time thatis convenient to shareholders. Directors, including the Chairman of the Audit Committee and theChairman of the Executive Committee, will attend the meeting to answer any related queries.

5. Leadership and Vision

The Companyûs Board of Directors shall have leadership skills, vision, knowledge, competence and

experience in various fields and be independent to make a decision in order to optimise their contributionsto the Company and the shareholders. The Board of Directors has been involved in setting (or approving)vision, mission, strategy, objectives, business plan, and budget of the Company and has also taken stepsto supervise management in carrying out the business plan and the budget efficiently and effectively inorder to maximise the economic value of the business and security for the shareholders.

6. Conflict of Interest

The Company recognises the significance of all transactions that may give rise to a conflict ofinterest, or are related party transactions. The Company has clearly specified a policy and regulations

and procedures for considering and approving such transactions in accordance with the law, includingthe regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand, andhas complied with good corporate governance principles to prevent conflicts of interests. The Companyhas also specified that any person who is connected to a transaction shall be required to inform theCompany of his/her connection to such transaction and shall not be involved in any consideration ordecision in relation to such transaction.

Furthermore, the Company has a policy and procedures relating to the use of insider informationby management to prevent exploitation of insider information by management for personal gain. TheCompany has arranged to educate management on their duties to report securities of the Companyheld by themselves or by their spouse and their minor children, including informing them of the relevantpenalties under the Securities and Exchange Act B.E. 2535 (1992). Management are also required toreport any changes in their securities holdings to the Securities and Exchange Commission under the

Securities and Exchange Act B.E. 2535 (1992). In addition, the Company has prohibited management

43


receiving insider information from taking any acts violating the provisions of the Securities and ExchangeAct B.E. 2535 (1992) and other related laws. The Companyûs work rules prohibit the Companyûs stafffrom disclosing confidential information of the Company to any third party, or from unlawfully exploitingtheir positions for the advantage of themselves or others. Any violation of such rules shall lead todisciplinary actions and may result in the dismissal of employment. However, to date, there has neverbeen any such incident of exploitation of information for personal advantage.

7. Code of Ethics relating to the Operation of the Business

The Company has issued a code of ethics of the management and staff as guidelines for suchpersons to perform their duties in accordance with the Companyûs mission, with integrity and fairness,including their treatment towards the Company, interested parties, the public, society, as well as the

government sector. The Company is in the process of conducting an annual survey of the compliancewith the said code of ethics.

8. Checks and Balances System for Directors who are not in the management

The Board of Directors consists of not more than 13 qualified persons, as follows:

- 5 directors who are in the management- 4 independent directors- 4 directors who are not in the management

The Company has four independent directors, representing approximately one-third of the Boardof Directors, as directors who are not in the management to provide checks and balances.

9. Combination or Separation of Positions

The Company plans to clearly separate the duties of the Companyûs Board of Directors, theExecutive Committee and the Managing Director under the assigned scope of work and authority. Theauthority, duties and responsibilities of the Executive Committee and the Managing Director will besubject to the supervision by the Board of Directors. In addition, the Chairman of the Board of Directors

shall not be the same person as the Managing Director, in order to separate the setting of thecorporate governance policy from the day-to-day management duties. The Company has also appointedan Audit Committee which consists of three independent directors to inspect the management of theCompany.

10. Remuneration of Directors and Management

Directorsû Remuneration : The Company has clearly and transparently set out its policy onremuneration of directors and the Managing Director. The remunerationof directors is at a comparable level to the remuneration of directors inother similar businesses, and at a sufficient and appropriate level forthe qualified positions of directors and the Managing Director.

Managementûs Remuneration : The remuneration of management, excluding the Managing Director,follows the principle and policy as specified by the Executive Committee,which also takes into account the performance of the Company and ofthe management.

44


11. Meetings of the Board of Directors

The Board of Directors will convene a meeting at least once every three months and mayconvene additional meetings as necessary. The agenda of the meetings will be clearly specified prior tothe meetings. The Company will also normally include in the agenda a section to acknowledge theCompanyûs performance. The Office of the Managing Director, which acts as the secretary to theCompany or the secretary to the Board of Directors, will, seven days prior to a meeting, send the notice

convening the meeting specifying the agenda, and will also send other supporting documents three daysprior to the meeting for the directors to have time to review the documents before attending themeeting.

12. Sub-Committees

The Company has established three sub-committees, namely, the Audit Committee, the Nominationand Remuneration Committee and the Risk Management Committee.

13. Internal Control and Audit Systems

The Company realises the significance of the arrangement for an internal control system. TheCompany thus has a manual of written rules and regulations governing work performance, with separationof duties and responsibilities for cross-checking purposes. The internal audit by the internal auditor can

be independently performed and accurately reported, including the follow-up action and improvement ofthe internal auditorûs performance. The Company has five areas of internal control, namely, organisationand environment; risk management; operational control of management; information technology andcommunications system; and monitoring system.

Furthermore, the results from internal audits shall be reported by the Audit Committee, which isappointed by the Board of Directors, at meetings of the Board of Directors. The Audit Committee shall

hold a meeting every quarter, prior to each meeting of the Board of Directors and shall present theresults of internal audits to the Board of Directors for its consideration.

14. Report of the Board of Directors

The Board of Directors realises the importance of reporting by indicating in its report on theresponsibilities of the Board of Directors towards the financial report in the annual report following theauditorûs report. In addition, financial data and general information, such as, shareholding structure, riskfactors, and connected transactions, shall be correctly disclosed to shareholders and general investorsin accordance with related laws and regulations.

15. Relationship with Investors

The Board of Directors realises the significance of the accuracy, completeness, transparency and

punctuality of information disclosure. All of the financial data, results of operations, and other relatedinformation, including important information that might affect price of the Companyûs securities must bedisclosed in accordance with the good corporate governance principles. Such information shall bereleased as news, so that investors and other related person can use the information for investmentdecisions, via the channels and media of the Stock Exchange of Thailand and the Office of theSecurities and Exchange Commission, including the website of the Company (http://

www.bangkokmetro.co.th). The Company has also established an Investor Relations Department, which

45


includes management and officers who are responsible for public relations. For information, investorsmay contact Investor Relations Department at Tel. 0-2354-2000 ext. 3733-3735 or E-mail Address:[email protected].

10.4 Insider Information SupervisionThe Company has set the following guidelines to prevent the use of insider information as per the

resolution of the Board of Directors Meeting No. 3/2005 held on 10 March 2005.

10.4.1 General

As the Company is a public limited company incorporated under the Public Limited Companies

Act B.E. 2535 (1992) and is intending to have an initial public offering of its shares, following the listing

of its shares on the Stock Exchange of Thailand, any sale or purchase of the Companyûs securities by

its management or staff based on material facts that may affect the market price of the shares or

securities, which have not yet been disclosed to public, and which have been obtained by their duties

or positions in the Company, would be considered as taking advantage of third parties, and may be

subject to a criminal penalty under the law.

Therefore, to prevent the Companyûs staff and directors, including the Company itself, from

encountering any such illegal acts which may violate such law, as well as to comply with good corporate

governance guidelines of the Company, the Companyûs Board of Directors has set guidelines to prevent

the use of insider information. Such guidelines will be revised from time to time as appropriate and all

directors, management and staff of the Company will strictly adhere to these guidelines with accountability

as well as causes and effects on a case by case basis. These guidelines and policies will be more strict

than the provisions of law, and will apply to directors, management and staff, including related persons.

10.4.2 Securities Sale and Purchase Using Insider Information

Prohibited Persons

Persons who should not sell or purchase securities pursuant to the guidelines to prevent the use

of insider information are as follows:

(1) Directors and management of the Company;

(2) Directors and management of the Companyûs Subsidiaries, including its affiliates;

(3) All staff of the Company and of the Companyûs Subsidiaries;

(4) Spouses and minor children of the directors and staff; and

(5) Relatives who live with such persons above.

Prohibited Securities

Securities refer to shares, share warrants, convertible debentures and transferable subscription

rights issued by the Company.

46


General Practice

(1) Prohibited persons as described above should not sell or purchase the securities under any

circumstances if they are aware or should be aware of material information that may affect the

market price of the Companyûs securities, which has not yet been disclosed to the public.

(2) Prohibited persons who are in possession of such material information due to their duties and

positions as the Companyûs staff shall not disclose such information to any other person while

such information has not yet been disclosed to the public, unless it is done in the performance

of their duties in the Company.

Specific Guidelines

In addition to the general guidelines to prevent the use of insider information, Prohibited Persons

shall also follow the following guidelines:

(1) Prohibited persons who are directly involved in the preparation of the Companyûs financial statements

and balance sheet, are prohibited any purchase or sale from the commencement of such preparation

until the day immediately following the disclosure date of such financial statements.

(2) Any directors, management or staff who have received the draft financial statements as referred

to above, are prohibited from selling or purchasing the Companyûs securities from the day that

they receive the draft financial statements until the disclosure date of the financial statements.

(3) Prohibited persons, who know or should have known that the Company will disclose material

information that may affect the market price of the Companyûs securities, are prohibited from

selling or purchasing the Companyûs securities from the day that they know or should have

known such information until the disclosure date of such information.

10.4.3 Report of Prohibited Persons

A. Duty to Prepare Reports

(1) Directors, managers or persons who hold management positions as specified in the Securities

and Exchange Act shall be required to prepare disclosure reports of their initial securities

holdings, and changes in such holdings, pursuant to the relevant laws and regulations,

together with such reports to the Company.

(2) Officers in the chief position or above shall report all acquisitions or disposals of securities

holdings equal to 5% or more of the total issued shares.

B. Reporting Procedures

(1) Directors, managers or persons as specified in paragraph A. (1) above who have the duty

under law to disclose their securities holdings, their spouseûs securities holdings, and their

minor childrenûs securities holdings to government agencies or regulators shall submit

copies of such reports to the Company on the same day.

(2) Officers as specified in paragraph A. (2) shall disclose their securities holdings and changes

in their own securities holdings as per paragraph B. (1) as well as holdings of their spouses

and their minor children, to the Company within seven business days from the date of

change in title to the Securities.

47


10.5 Internal ControlThe Company pays significant attention to the efficient internal control system to prevent and minimize

the risk which may arise, by establish the Internal Audit Division to review the operation systems in various

divisions of the Company in accordance with the annual audit plan as approved by the Audit Committee. On

26 February 2007, the Board of Directors and the Audit Committee of the Company in the Meeting No. 1/

2007, having all independent directors present at the Meeting, assessed the adequacy and suitability of the

Companyûs and the Subsidiariesû internal control systems, including the internal control evaluation guidelines.

Having inquired of the management, the Company concluded that the Companyûs internal control system is

adequate and suitable with respect to the following 5 areas: organisation and environment; risk management;

operational control of management; information technology and communications system; and monitoring

system, which would prevent the Companyûs and the Subsidiariesû assets from abusive or unauthorized usage

by the management. To date, there has never been any material fault. The details are as follows:

Organisation and Environment

The Company has an appropriate organisational structure that ensures the efficiency in the operation of

management. In addition, it has in place business goals and operational policies and guidelines which are clear

and assessible, and include written codes of conduct, to prevent potential damage to assets of the Company

and its Subsidiaries, including prevention of any misconduct by the Companyûs management and staff.

Risk Management

The Company has established a Risk Management Committee responsible for managing, reviewing and

maintaining the overall risk management system of the Company at an appropriate level. The Committee

provides suggestions to the Board of Directors in relation to risk management policies, standard practice and

strategy, and risk assessment in each matter and of the Company as a whole to ensure efficient and effective

risk management, as well as preparing risk reports to the Board of Directors for acknowledgement. In this

respect, a working group comprising the management in the manager level from all departments of the

organization has been established to set out the risk management plans for the entire organization for

submission to the Risk Management Committee to ensure that the Company has the adequate and suitable

internal control system.

Safety is the heart of our mass transit rail service. The Company has established the Safety Committee

to ensure the preparation, utilization, adjustment and improvement of safety management system with

efficiency and continuity. Moreover, there are four safety sub-committees, namely, risk control sub-committee,

operational rules and procedures sub-committee, contractors safety sub-committee and occupational health

and safety sub-committee.

Operational Control of Management

The Company clearly sets the scope of duties, responsibilities and transaction limits for each level of

management in writing. In addition, for any transactions with major shareholders, directors, management or

related parties, the Company has thorough guidelines in place to monitor and prevent any conflicts of interests

48


to optimise the Companyûs interests, including regularly monitoring the operations of the Subsidiaries and

establishing guidelines for the persons as nominated and appointed as directors or management in the

Subsidiaries to adhere thereto.

Information Technology and Communications System

The Company pays significant attention to its information technology and communications systemsto ensure that the Companyûs information is accurate, complete and adequate for the decision-making bythe management and the Board of Directors, and maintains a system for storage of accounting records and all

supporting documents in an organised manner, as well as using generally accepted accounting principles asappropriate to the nature of the Companyûs business. In this respect, the Company has established a workinggroup to supervise the security management for information technology, as well as prepare manuals on securitymanagement for information technology to cover various important issues in accordance with IEC 17799standard, such as, information technology property classification and protection, personnel standards fororganizational security, physical and environmental security, as well as communications and network for

computer management, rights to use information technology, information systems development, businesscontinuity management of information technology, etc.

Monitoring System

The Company regularly monitors the results of operations against the set targets. Any material differences

are reported to the Board of Directors/the Audit Committee for correction, which shall then be regularly

reported on the progress of the correction. In addition, the Company also has policies in place for the

management to immediately report to the Board of Directors any fraud, violation of law and other misconducts

which may materially affect the Companyûs reputation and financial condition.

In addition, the Company has the Quality Management Committee to plan and manage the preparation,

development and review of the Companyûs quality management system to ensure the suitability and continued

development of efficiency and effectiveness of the system. As a result, the Company has obtained the ISO

9001:2000 Quality Management Systems and the TIS/OHSAS 18001 Occupational Health and Safety

Management Systems as audited and evaluated by TUV NORD (Thailand) Ltd. (TUV NORD) on 10 November

2005 and 5 October 2006, respectively.

49

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED

ë Annual Report ë 2 0 0 6

11. Details of Board of Directors, Executivesand Controlling Persons of the Com

panyDetails of Board of Directors, Executives and Controlling Persons of the Company as of 31 December 2006

Name / Position Age Education Percentage of Relationship Work Experience (Past 5 years)(years) Qualification Shareholding Period Position Name of Department/

in the Company/Company (%) Type of Business

1. Mr. Plew Trivisvavet 61 - Master degree, M.Sc. (Electrical 0.24 - 2006-Present Chairman of the Board of Directors Thai Tap Water Supply- Chairman of the Board Engineering), Osaka University, Japan Public Company Limited

of Directors (1) - Directors Certification Program (DCP), 2004-Present Chairman of the Board of Directors, Bangkok Metro Public- Chairman of the Executive 50/2004, Thai Institute of Directors Chairman of the Executive Committee, Company Limited

Committee Association Nomination and Remuneration- Nomination and Committee Member

Remuneration 2004-Present Director BMCL Network LimitedCommittee Member 2002-Present Director and Chairman of the Executive Bangkok Expressway

Committee Public Company Limited1994-Present Chairman of the Executive Committee CH. Karnchang Public

and Chief Executive Officer Company Limited2. General Chetta Thanajaro 68 - Master of Arts (Political Science), 0.13 - 2005-Present Director, Chairman of the Audit Bangkok Metro Public

- Director Ramkhamhaeng University Committee, Company Limited- Chairman of the Audit - Directors Certification Program Chairman of the Nomination and

Committee (DCP), 33/2003 Remuneration Committee- Chairman of the - Directors Accreditation Program 2005-Present Director Advance Agro Public

Nomination and (DAP), 1/2003 Company LimitedRemuneration Committee - Finance for Non-Finance Director 2005-Present Chairman of the Audit Committee L.P.N. Platemill Public

Program, 2003 Company LimitedThai Institute of Directors Association 1996-Present President Advisor The Royal Development

Project3. Mr. Vitoon 66 - Bachelor of Commerce, 0.13 - 2005-Present Director, Audit Committee, Nomination Bangkok Metro Public

Tejatussanasoontorn Thammasat University and Remuneration Committee Company Limited- Director - Directors Certification Program (DCP), 1999-Present Director, Chairman of the Audit CH. Karnchang Public- Audit Committee 2/2000, Thai Institute of Directors Committee, Company Limited- Nomination and Association Remuneration Committee

Remuneration Committee 1991-Present Senior Executive Vice President Thai Asahi Glass PublicCompany Limited

1986-Present Executive Director Sakata-Thai CorporationCompany Limited

Note: (1) is an authorized director, together requiring two directors signing jointly and the Companyûs seal affixed.

50

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




4. Lieutenant General 57 - Military Science (Special Class), 0.13 - 2005-Present Director, Audit Committee Bangkok Metro PublicSurat Sumrith Chulachomklao Royal Military Academy Company Limited- Director - Directors Accreditation Program 2004-Present Special Expert of the office of the Office of the Permanent- Audit Committee (DAP), 40/2005, Thai Institute of Permanent Secretary for Defence Secretary for Defence

Directors Association 2003-2004 Advisor of the office of the Permanent Office of the PermanentSecretary for Defence Secretary for Defence

1999-2003 Expert of the office of the Permanent Office of the PermanentSecretary for Defence Secretary for Defence

5. Mr. Supong Chayutsahakij 65 - Honorable doctorate of Business 0.13 - 2006-Present Independent Director, Audit Committee Siam Steel International- Director (1) Administration (Management), Public Company Limited- Executive Director Rajabhat Phara Nakorn University 2004-Present Director, Executive Director Bangkok Metro Public

- Master of Management, Sasin Graduate Company LimitedInstitute of Business Administration of 2004-Present Chairman of the Board of Directors Metro Mall DevelopmentChulalongkorn University Limited

- Master of Engineering (Electrical), Chairman of the Board of Directors BMCL Network LimitedUniversity of Tokyo, Japan Chairman of the Board of Directors Triads Networks Company

- Directors Certification Program (DCP), Limited8/2001 Thai Institute of Directors 2003-Present Director, Bangkok Expressway PublicAssociation Vice Chairman of the Executive Board Company Limited

1994-2003 Managing Director Bangkok Expressway PublicCompany Limited

6. Dr. Sombat Kitjalaksana 49 - Ph.D. of Engineering (Soil Mechanic), 0.13 - 2006-Present Director CH. Karnchang Public- Director (1) University of Innsbruck, Austria Company Limited- Executive Director - Directors Accreditation Program (DAP), 2004-Present Director, Executive Director Bangkok Metro Public -Managing Director 36/2005, Thai Institute of Directors Company Limited

Association 2000-Present Managing Director Bangkok Metro PublicCompany Limited

2004-Present Director Metro Mall DevelopmentLimited

Director BMCL Network LimitedDirector Triads Networks Company

Limited2001-Present Executive Vice President, Business CH. Karnchang Public

Development Company Limited2000-Present Director, Executive Director Thai Tap Water Supply

Public Company Limited


51

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




7. Mrs. Vallapa Assakul 56 - Master of Economics, 0.13 - 2005-Present Director Bangkok Metro Public- Director University of Detroit, U.S.A, Company Limited

- Directors Accreditation Program 2004-Present Senior Executive Vice President, TMB Bank Public Company(DAP), 37/2005, Thai Institute Corporate and Investment Banking Group Limitedof Directors Association 2000-Present Director Kungwan Polyester

Company Limited1999-Present Director Peroxi Thai Company

Limited8. Mrs. Nongnutch 56 - Master of Business Administration 0.13 - 2006-Present Senior Executive Vice President - Krung Thai Bank Public

Thienpaitoon (Honors), Roosevelt University, U.S.A. Managing Director, Corporate Banking Company Limited- Director - Directors Accreditation Program (DAP), Group

41/2005, Thai Institute of Directors 2005-Present Director Bangkok Metro PublicAssociation Company Limited

2005-2006 First Executive Vice President, Krung Thai Bank PublicCorporate Banking Group Company Limited

2005-Present Director Advance Agro PublicCompany Limited

2002-Present Director TPT Petrochemicals PublicCompany Limited / TPTUtilities Company Limited

9. Mr. Ronnachit Yaemsaard 46 - Master of Comparative Jurisprudence, - - 2004-Present Director Bangkok Metro Public- Director Howard University, U.S.A. Company Limited

- Directors Accreditation Program (DAP), 2003-Present Deputy Governor Mass Rapid Transit35/2005, Thai Institute of Directors Authority of ThailandAssociation 2000-2003 Assistant Governor Mass Rapid Transit

Authority of Thailand10. Mr. Somchai Sirilertpanich 44 - Master of Business Administration, 0.13 - 2005-Present Director Bangkok Metro Public

- Director (1) Operation Management, University of Company LimitedScranton, Pennsylvania, U.S.A. 2004-Present Vice Chairman of the Board, and Syntec Construction Public

- Directors Accreditation Program (DAP), Managing Director Company Limited1/2003, Thai Institute of Directors 2001-Present Director Narai Phan CompanyAssociation Limited

2000-Present Director Siam Syntec PlannerCompany Limited


52

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




11. Mr. Anukool Tuntimas 39 - Master of Law, Chulalongkorn University 0.13 - 2006-Present Director CH. Karnchang Public- Director (1) - Master of Business Administration, Company Limited- Executive Director Kasetsart University 2004-Present Director, Executive Director Bangkok Metro Public

- Directors Certification Program (DCP), Company Limited43/2004, Thai Institute of Directors 2004-Present Director Metro Mall DevelopmentAssociation Limited

Director Triads Networks CompanyLimited

2001-Present Executive Vice President of Human CH. Karnchang PublicResource and General Administration Company LimitedDepartment

12. Mr. Witoon Hatairatana 49 - Master of Science (Business 0.08 - 2004-Present Operations Director Bangkok Metro Public- Operations Director Administration), California University Company Limited

of Pennsylvania, U.S.A. 2002-2004 Traffic Manager Bangkok Metro PublicCompany Limited

2000-2002 Managing Director Gear Banterng CompanyLimited

13. Miss Pornpimol Chirtchoochai 41 Master of Accounting, 0.08 - 2004-Present Director Metro Mall Development- Accounting and Finance Thammasat University Limited

Director Director BMCL Network LimitedDirector Triads Networks Company

Limited2002-Present Director Transit Expert Company

Limited2000-Present Accounting and Finance Director Bangkok Metro Public

Company Limited14. Miss Sattabusya Mekvichai 52 - Master of Public Administration, 0.08 - 2005-2006 Human Resources and Bangkok Metro Public

- Human Resources and Pennsylvania State University, U.S.A. Administration Director Company LimitedAdministration Director 2002-2005 Advisor to the Managing Director Bangkok Metro Public

Company Limited1997-2002 Director of Office of the Governor Expressway and Rapid

Transit Authority ofThailand

Note : (1) is an authorized director, together requiring two directors signing jointly and the Companyûs seal affixed.

53


12. Significant Activities in the Year 2006

Activities on the National

Childrenûs Day

Activities on the National Elderly Day Feeder Systems to the Metro Service

Rail Solutions Asia 2006 Host of the Training Programme for

Public Transport Managers of UITP

UITP Asia-Pacific Congress and

IPTS Conference in Seoul

Presentations of BMCL Infomation to

General Investors

Signing Ceremony of the Underwriting

Agreement for BMCL Ordinary Shares

Opening for Subscription for BMCL

Shares to Retail Investors

çSave Energy for Our Beloved Kingé

Project

First Trading Day of BMCL Ordinary

Shares

Analyst Meeting Quarter 3/2006

54


Significant Activities of the Company in the Year 2006:

January - National Childrenûs Day Event on January 14 at the Phahon Yothin Station, providing

knowledge regarding the mass rapid transit system and free journeys on the Metro for

children not taller than 120 centimeters.

April - National Elderly Day Event, providing free journeys on the metro for elderly who are 65

years of age or older during April 13-14.

May - Cooperation with the MRTA and the BMTA to administer buses to facilitate passengers to

and from the metro for convenience and promotion of the public transportation systems.

- Participation in the Rail Solutions Asia 2006 organized by the Asian Railway Operations

Association (AROA) or the 7th Exhibition and Conference for Railway Systems in the Asian

Region during May 17-19 at the Bangkok Convention Center, Central Plaza Ladprao, and

collaboration with the Office of Transport and Traffic Policy and Planning (OTP) and the

Mass Rapid Transit Authority of Thailand (MRTA) to join the Exhibition.

- Hosting of çThe 4th Training Programme for Public Transport Managersé of the International

Association of Public Transport (UITP) on çTechnological Innovations in Public Transport

and the Added-value for Operations and Customersé during May 22-24 at the Swissotel

Le Concord, Bangkok.

June - Participation in the 5th UITP Asia-Pacific Congress and IPTS Conference in Seoul, the

Republic of Korea, during June 18-23 and participation in the Asia-Pacific Committee

Meeting to share experiences, news and information in respect of the public transportation.

August - Presentation of BMCL securities information to general investors at the Stock Exchange

of Thailand on August 31 prior to opening the subscription for securities.

September - Signing of the underwriting agreement for BMCL ordinary shares at the Sukhothai Hotel

on September 6.

- Opening for subscription for the Companyûs ordinary shares to retail investors at the

Queen Sirikit National Convention Center Station on September 8.

- Launch of the çSave Energy for Our Beloved Kingé Project in collaboration with the MRTA

and Metro Mall to hold the Exhibition on His Majesty the Kingûs royal talents, from

September 1 to December 31.

- First trading day of the Companyûs shares on the Stock Exchange of Thailand on September

21 under the symbol çBMCLé.

November - Holding of the Quarter 3/2006 Meeting of Analysts on November 24 at the Administration

Building, Bangkok Metro Public Company Limited, to provide the analysts with clarifications

on information in respect of business, operations and operational results of the Company

and visit to the Companyûs Operations Control Center.

55


13. Route Map of the M.R.T.Chaloem Ratchamongkhon Line Project


56

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED


14. Related Party TransactionsTransactions with persons who may have conflict of interest in the years 2005 and 2006.

Persons/Juristicpersons who may Relationship Nature of Transaction Value Necessity/Details Opinion of the Audit Committeehave conflict of Transaction (Thousand Baht)

interest Year 2005 Year 2006

1. CH. Karnchang - CH. Karnchang Public Company Limited The Company

Public Company is a major shareholder of the Company, - Cost of fare 10,343.33 10,833.33 - The Company hired CH. Karnchang - CH. Karnchang Public Company Limited

Limited with 29.36% and 24.61% of shares in - Project and other 13,196.67 3,923.33 Public Company Limited for a total is an experienced and specialised

the Company, as at 31 December 2005 payables value of Baht 85 million, to maintain company in construction, and was also

and 31 December 2006, respectively. the existing civil infrastructure work in responsible for the civil infrastructure

- Mahasiri Siam Company Limited is a the area of the depot for 7 years work in relation to this project from Hua

major shareholder of the Company, with from 1 March 2004 to 28 February Lamphong Station to Phra Ram 9

12.39% of shares in the Company as at 2011. Payments are made quarterly. Station. The hiring was made in the

31 December 2005, and with 21.63% of The Company recognises these form of contract and payments are

shares in CH. Karnchang Public Company maintenance costs as cost of fare made according to the terms of the

Limited. Its shareholding proportion as at after the commencement of contract.

31 December 2006 after the offering of operations. - Benaim (UK) Limited, an engineering

the Companyûs shares to the public and consultant of the syndicated lenders,

MRTA decreased to 6.82%. opined that the construction and

- Mr. Plew Trivisvavet, an executive director maintenance costs are reasonable.

and in the management of CH. Karnchang

Public Company Limited, is the Chairman

of the Board of Directors and the

Chairman of the Executive Committee

of the Company.

- Dr. Sombat Kitjalaksana, a director,

executive director and Managing Director

of the Company, and Mr. Anukool

Tuntimas, a director and executive

director of the Company, are also in the

management of CH. Karnchang Public

Company Limited.

57

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




1. CH. Karnchang - CH. Karnchang Public Company Limited The Company

Public Company is a major shareholder of the Company, - Amounts due 92.72 - - The Company sold stored value cards - The transaction was conducted in the

Limited with 29.36% and 24.61% of shares in from related to CH. Karnchang Public Company ordinary course of business and the

(Continued) the Company, as at 31 December 2005 parties Limited and recognised such sales discount was at the same rate as for

and 31 December 2006, respectively. (relating to the as income when the cards were used. general customers.

- Mahasiri Siam Company Limited is a Companyûs sales

major shareholder of the Company, with of stored value

12.39% of shares in the Company as at cards)

31 December 2005, and with 21.63% of - Administrative 24.91 27.00 - In the year 2005, the Company paid - These were urgent works in respect of

shares in CH. Karnchang Public Company expenses Baht 24,909.60 for additional which CH. Karnchang Public Company

Limited. Its shareholding proportion as at (relating to the decorations around King Rama V Limited became familiar with the areas

31 December 2006 after the offering of Companyûs statue in front of the Administration and was capable of coordinating and

the Companyûs shares to the public and payment of Building, and in the year 2006, the completing the works in time.

MRTA decreased to 6.82%. additional Company paid Baht 27,000 for repair

- Mr. Plew Trivisvavet, an executive director decorations of the water pipes under the building.

and in the management of CH. Karnchang around King

Public Company Limited, is the Chairman Rama V statue

of the Board of Directors and the in front of the

Chairman of the Executive Committee Administration

of the Company. Building and

- Dr. Sombat Kitjalaksana, a director, payment for

executive director and Managing Director repair of the

of the Company, and Mr. Anukool water pipes

Tuntimas, a director and executive under the

director of the Company, are also in the building)

management of CH. Karnchang Public

Company Limited.

58

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




1. CH. Karnchang - CH. Karnchang Public Company Limited - Long-term 1,403,000.00 1,003,090.79 - The Company entered into loan - The transactions are in accordance

Public Company is a major shareholder of the Company, loans agreements with CH. Karnchang with the Sponsor Support Agreement.

Limited with 29.36% and 24.61% of shares in the - Accrued 35,752.81 62,062.32 Public Company Limited in the year The interest rate and terms of payment

(Continued) Company, as at 31 December 2005 and interest 2005, totaling 8 agreements, in the are in accordance with the conditions

31 December 2006, respectively. - Interest 35,752.81 115,290.11 total amount of Baht 1,403 million, as specified by the syndicated lenders.

- Mahasiri Siam Company Limited is a expenses and in the year 2006, totaling 6

major shareholder of the Company, with (arising from agreements, in the total amount of

12.39% of shares in the Company as at the Companyûs Baht 512 million. These loans were

31 December 2005, and with 21.63% of borrowing of subordinated and interest was

shares in CH. Karnchang Public Company loans from CH. charged at the rate of MLR+0.5% per

Limited. Its shareholding proportion as Karnchang annum, to finance the working capital.

at 31 December 2006 after the offering Public Company The principal and interest are due and

of the Companyûs shares to the public Limited as payable when the Company completely

and MRTA decreased to 6.82%. sponsor makes repayment of loans under the

- Mr. Plew Trivisvavet, an executive support) main agreement or when the Company

director and in the management of CH. has excess cash. However, the

Karnchang Public Company Limited, is Company made a partial repayment of

the Chairman of the Board of Directors loans in the amount of Baht 911.91

and the Chairman of the Executive million and the accrued interest in

Committee of the Company. the amount of Baht 89.98 million in

- Dr. Sombat Kitjalaksana, a director, September 2006.

executive director and Managing Director - Interest 3,050.25 - - The Company issued to CH. Karnchang

of the Company, and Mr. Anukool expenses Public Company Limited short-term

Tuntimas, a director and executive promissory notes totaling Baht 233

director of the Company, are also in the million, at the interest rate of MLR+

management of CH. Karnchang Public 1.0% per annum. However, such loan

Company Limited. had been converted to a long-term

loan since 30 December 2005.

59

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




1. CH. Karnchang - CH. Karnchang Public Company Limited Metro Mall

Public Company is a major shareholder of the Company, Development

Limited with 29.36% and 24.61% of shares in the Limited

(Continued) Company, as at 31 December 2005 and - Work under 210,262.96 238,134.69 - Metro Mall Development Limited hired - The contract was made with clear

31 December 2006, respectively. construction CH. Karnchang Public Company Limited terms of payment.

- Mahasiri Siam Company Limited is a (Project cost) for a project value of Baht 292.5 - CH. Karnchang Public Company Limited

major shareholder of the Company, with - Project 206,179.66 242,038.74 million to construct the interior of the is an experienced and specialised

12.39% of shares in the Company as at payables train stations to support the lease of company in this type of work and was

31 December 2005, and with 21.63% of - Advance 12,421.99 2,262.04 retail shops. However, since Metro Mall also responsible for the civil infrastructure

shares in CH. Karnchang Public Company payment for Development Limited has just started work in relation to each train station.

Limited. Its shareholding proportion as at construction to generate revenue from commercial CH. Karnchang Public Company Limited

31 December 2006 after the offering of - Construction 18,243.42 67,707.78 development, it is not yet able to pay has information of electric systems

the Companyûs shares to the public and Cost the construction cost. CH. Karnchang and civil work, which would enhance

MRTA decreased to 6.82%. - Interest 13,610.46 20,302.04 Public Company Limited has charged the efficiency in construction of such

- Mr. Plew Trivisvavet, an executive director expenses interest to Metro Mall Development project.

and in the management of CH. Karnchang - Accrued 17,203.16 37,505.20 Limited at the rate of MLR+1% per - A memorandum of agreement, dated 3

Public Company Limited, is the Chairman interest annum. June 2005, was executed amending

of the Board of Directors and the (arising from - Approval from the MRTA is required the original contract stipulating certain

Chairman of the Executive Committee hiring CH. for such construction, in relation to conditions and the interest rate arising

of the Company. Karnchang safety. from the delay in payment by Metro

- Dr. Sombat Kitjalaksana, a director, Public Company Mall Development Limited. The interest

executive director and Managing Director Limited to rate charged by CH. Karnchang Public

of the Company, and Mr. Anukool carry out Company Limited is in line with the rate

Tuntimas, a director and executive construction) that CH. Karnchang Public Company

director of the Company, are also in the Limited charges other customers and

management of CH. Karnchang Public close to the rate that Metro Mall

Company Limited. Development Limited may borrow from

commercial banks.

60

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




2. CK. Office Tower - CK. Office Tower Company Limited is an Metro Mall

Company Limited associated company with common Development

directors. Limited

- CK. Office Tower Company Limited has - Selling and 1,774.84 1,890.50 - Metro Mall Development Limited - This rental rate is comparable to the

interests in the Company through its administrative entered into an office space lease and rental rates charged by the lessor to

6.74% holding of shares in CH. expenses service agreement on the 1st floor, third party lessees, which range Baht

Karnchang Public Company Limited. - Project and - - covering a total area of 349.63 270-370 per square metre.

- The major shareholders of CK. Office other payables square metres, for a period of 3

Tower Company Limited are Mahasiri (arising from years, from 1 February 2004 until 31

Siam Company Limited, the Trivisvavet the rental of January 2007. The rental and service

Family and Mr. Anukool Tuntimas, holding office space charge rate is Baht 340 per square

25%, 62.5% and 12.5% in CK. Office and public metre per month.

Tower Company Limited, respectively. utilities

- Mr. Plew Trivisvavet, a director of CK. expenses)

Office Tower Company Limited, is the BMCL Network

Chairman of the Board of Directors and Limited

the Chairman of the Executive - Advance rental - 208.64 - BMCL Network Limited entered into - This rental rate is comparable to the

Committee of the Company. payment an office space lease and service rental rates charged by the lessor to

- Selling and 2,968.28 2,864.40 agreement on the 12th floor, covering other lessees.

administrative a total area of 651.24 square metres,

expenses for a period of 3 years, from 16

- Project and 284.13 - January 2004 until 15 January 2007.

other payables The rental rate and service charge is

(arising from Baht 320 per square metre per

the rental of month.

office space

and public

utilities

expenses)

61

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED



interest Year 2005 Year 20062. CK. Office Tower - CK. Office Tower Company Limited is an Triads Networks

Company Limited associated company with common Company Limited(Continued) directors. - Selling and 1,857.21 1,902.09 - Triads Networks Company Limited - This rental rate is comparable to the

- CK. Office Tower Company Limited has administrative entered into an office space lease and rental rates charged by the lessor tointerests in the Company through its expenses service agreement on the 9th floor, other lessees.6.74% holding of shares in CH. - Project and 1,299.11 15.31 covering a total area of 461.76 squareKarnchang Public Company Limited. other payables metres, for a period of 3 years, from 1

- The major shareholders of CK. Office (arising from June 2004 until 31 May 2007. TheTower Company Limited are Mahasiri the rental of rental and service charge rate is BahtSiam Company Limited, the Trivisvavet office space 300 per square metre per month.Family and Mr. Anukool Tuntimas, holding and public25%, 62.5% and 12.5% in CK. Office utilitiesTower Company Limited, respectively. expenses)

- Mr. Plew Trivisvavet, a director of CK.Office Tower Company Limited, is theChairman of the Board of Directors andthe Chairman of the ExecutiveCommittee of the Company.

3. Joint Venture - Joint Venture CKET is an associated The CompanyCKET company. - Cost of fare 58,000.00 43,000.00 - The Company hired Joint Venture - The transactions are in accordance

- Joint Venture CKET is a joint venture - Project and 70,620.00 - CKET, for a total value of Baht with the conditions of the Concessionbetween CH. Karnchang Public Company other payables 2,275.22 million, as project manager Agreement which requires the CompanyLimited and Expert Transport Company (arising from to oversee the design, supply, to appoint CH. Karnchang PublicLimited at 80% and 20%, respectively. project installation and testing of the M&E Company Limited, an affiliated company,

- CH. Karnchang Public Company Limited management Equipment and the train operations, or any other party, as project manager,holds 24.61% of shares in the Company. fees) and to continually oversee such subject to approval from the MRTA.

- Mahasiri Siam Company Limited, a major activities for a period of the first - The transactions are in the ordinaryshareholder of the Company, holds 90% 5 years after the commencement of course of business with paymentsof shares in Expert Transport Company the train services. The contract term made pursuant to the terms of theLimited. will expire in July 2009. Payments are relevant contract.

- Mr. Plew Trivisvavet, a director of Joint due and payable monthly. The - Joint Venture CKET has both Thai andVenture CKET, is the Chairman of the Company recognises these ongoing foreign teams with experience andBoard of Directors and the Chairman of costs as cost of fare after the expertise in engineering works, contractthe Executive Committee of the commencement of the train services. documents, which ensure that allCompany. contractors of the Company shall

comply with the contract.

62

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED



interest Year 2005 Year 20064. Expert Transport - Expert Transport Company Limited is an - Administrative - 75.70 - The Company paid accommodation - This accommodation rate is

Company Limited associated company with common expenses fee for the mass media seminar for comparable to the accommodationdirectors. the year 2006 in the amount of rate charged to other traders.

- Mahasiri Siam Company Limited, as Baht 75,700.93.major shareholder of the Company andCH. Karnchang Public Company Limited,holds 90% of shares in Expert TransportCompany Limited, while the remaining8.02% is held by the Trivisvavet Family.

- Mr. Plew Trivisvavet, a director of ExpertTransport Company Limited, is theChairman of the Board of Directors andthe Chairman of the ExecutiveCommittee of the Company.

5. Krung Thai Bank - At the end of the year 2005, Krung Thai The CompanyPublic Company Bank Public Company Limited held 9.86% - Fixed Deposit - 400,000.00 - Three-month fixed deposit of Baht - This is a transaction in the ordinaryLimited of shares in the Company and reduced 200 million, with interest rate of 4.75%; course of business and the price

its shareholding proportion to 9.48% at six-month fixed deposit of Baht 100 was at the same rate as applied tothe beginning of the year 2006. After million, with interest rate of 4.75%; and general customers.the offering of the Companyûs shares to twelve-month fixed deposit of Bahtthe public and the Mass Rapid Transit 100 million, with interest rate of 5%.Authority of Thailand (21 September - Amounts due - 541.75 - Service fee for consent to use of - This is a transaction in the ordinary2006), its shareholding proportion from related areas for installation of the automatic course of business and the pricedecreased to 3.94%. parties teller machines and collection of fee was at the same rate as applied to

- Mrs. Nongnutch Thienpaitoon, an for installation of the covers for the general customers.executive of Krung Thai Bank Public automatic teller machines.Company Limited, is a director of the - Accounts 4,735,658.05 4,257,000.00 - The Company entered into the - The terms are in the ordinary courseCompany. payable: Onshore Facilities Agreement with of business under which commercial

Long-term four Thai commercial banks, Krung banks lend to general large-sizedloans Thai Bank Public Company Limited, businesses.

- Interest 296,366.24 361,525.26 TMB Bank Public Company Limited,expenses Bank of Ayudhya Public Company

- Bank fees 146.40 - Limited and Siam City Bank PublicCompany Limited, for the totalamount of Baht 12,150 million to payfor the relevant project costs and theprocurement of the M&E Equipmentunder the Concession Agreement.

63

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED



interest Year 2005 Year 20065. Krung Thai Bank - At the end of the year 2005, Krung Thai The Company

Public Company Bank Public Company Limited held 9.86% - Letter of 163.99 216.82 - The Company has letters of guarantee - The terms are in the ordinary courseLimited of shares in the Company and reduced guarantee fees issued by Krung Thai Bank Public of business for the same nature of(continued) its shareholding proportion to 9.48% at Company Limited remaining in the transactions.

the beginning of the year 2006. After name of the Company as security, inthe offering of the Companyûs shares to favor of the Metropolitan Electricitythe public and the Mass Rapid Transit Authority for the installation ofAuthority of Thailand (21 September electric meters at the electricity sub-2006), its shareholding proportion stations around the depot and thedecreased to 3.94%. Administration Building. The bank fees

- Mrs. Nongnutch Thienpaitoon, an are at the rate of 1.5% per annum.executive of Krung Thai Bank Public - Bank fees 4,280.00 4,458.33 - The Company appointed Krung Thai - The fees are based on the ordinaryCompany Limited, is a director of the - Project and - 178.33 Bank Public Company Limited as the terms applied by the commercialCompany. other payables Facility Agent according to the terms banks in respect of major clients.

of the Onshore Facilities Agreement.The Company is required to pay feesat the rate specified in the fee letteras executed on the same date of theOnshore Facilities Agreement withthe four financial institutions. TheCompany still has the accruedexpenses for the period of 19-31December 2006.

- Commercial 1,292.00 2,448.00 - Krung Thai Bank Public Company - This is a transaction in the ordinarydevelopment Limited leased spaces for 17 course of business. The prescribedrevenue automatic teller machines (ATMs) rental rate is at the same rate as

from 11 March 2005 - 31 May 2008 applied to other customers.at the rental rate of Baht 12,000 permonth per machine. There was a one-time installation fee of Baht 10,000per machine which was the same rateand subject to the same terms asgeneral customers.

64

BANGKOK M

ETRO PUBLIC COMPAN

Y LIMITED




6. Mass Rapid - The Mass Rapid Transit Authority of The Company

Transit Authority Thailand held 2,987.5 million shares or - Remuneration - 2,188.70 - The Company agrees to pay - The transaction is in accordance

of Thailand 25.00% of shares in the Company at payable from remuneration to the Mass Rapid with the conditions of the Concession

the end of year 2006. revenue and Transit Authority of Thailand from the Agreement in which the Company is

- Mr. Ronnachit Yaemsaard, an executive others fare revenue and commercial required to comply with the same.

of MRTA, is a director of the Company. - Remuneration - 2,965.36 development revenue.

from fare

revenue

- Remuneration - 3,164.76

from

commercial

development

revenue

- Electricity - 106.55 - Electricity charges for elevators, park - The transaction is the expense

charges and ride building at the Lat Phrao which was made and paid under the

Station, including elevators for the Agreement.

basement.

65


Necessity and Justification of the Related Party TransactionsAt the Meetings of the Board of Directors No. 2/2006 on 22 February 2006; No. 5/2006 on 8 May 2006; No.

9/2006 on 11 August 2006; and No. 1/2007 on 26 February 2007, the Audit Committee jointly considered and

reviewed the related party transactions, with the Companyûs management, and opined that the transactions between

the Company and persons and/or juristic persons who may have a conflict of interest were justified and necessary for

the Companyûs business operations.

Measures or Steps for the Approval of Related Party TransactionsThe Company complied with the rules and regulations of the Securities and Exchange Commission and the

Stock Exchange of Thailand. In the case where the Company is entering into a related party transaction that may give

rise to a conflict of interest, such a transaction must be approved by the Board of Directors and the Audit Committee

would consider the justification of the transaction whilst taking into account the best interests of the Company. The

pricing and terms of the transaction must be based on the ordinary course of business and must be a fair price or

be comparable to the market price. Furthermore, any person who has any interest or who may have a conflict of

interest in connection with such transaction shall not be allowed to participate in the consideration and approval of

such transaction.

A related party transaction that is necessary and urgent with a transaction value of not exceeding Baht

100,000 or, if more than one transaction, in aggregate of not exceeding Baht 2,000,000 within a 12-month period,

may be carried out, provided that a report on each transaction must be made to the Audit Committee, indicating its

necessity and justification of the transaction.

Policy or Future Trend of Related Party TransactionsThe Company shall comply with the rules and regulations of the Securities and Exchange Commission and the

Stock Exchange of Thailand, including the rules on the disclosure of related party transactions as well as acquisition

and disposition of significant assets of the Company or its Subsidiaries and the accounting standards as prescribed

by the Federation of the Accounting Professions. If there are transactions which may give rise to conflict of interest

in the future, such as, hiring a group of persons who may have conflict of interest to carry out construction, project

management, project maintenance, the Board of Directors, with the Audit Committee, shall consider the necessity and

justification of such transactions, including the pricing and terms of the transactions, which must be based on the

ordinary course of business. The price must also be compared with the price applicable to third parties or the market

price. A person who has any interest shall not be allowed to participate in the consideration and approval of the

transactions. The Company has no policy to extend or guarantee a loan for a person who may have a conflict of

interest under the definition of the SEC.

In case that the Audit Committee does not have expertise to consider any particular related party transaction

which may take place, the Company shall arrange for an independent expert or the Companyûs auditor to opine on

such related party transaction to support the decision-making of the Board of Directors and/or the Audit Committee

or the shareholders, as the case may be. The Company will disclose the related party transactions in the notes to the

financial statements that have been reviewed or audited by the Companyûs auditor.

66


15. Management Discussion and Analysis of FinancialPosition and Results of Operations

15.1 Analysis of Results of OperationsBangkok Metro Public Company has commenced its service for train operations for a period of 2 years

and 6 months since 3 July 2004. The Company and its Subsidiaries presently generated the major revenue

from provision of the metro service, or representing 88% of total revenue, and the Company also generated

revenue from commercial development and other revenue, representing 12% of total revenue.

Total revenue for the year 2006 of the Company and its Subsidiaries amounted to Baht 1,398.94 million,

representing an increase of 33.74% as compared to that of the year 2005. Such increase was mainly due to

the increase in fare revenue in the year 2006 which amounted to Baht 1,229.50 million or representing an

increase of 24.14% because the Company applied the new fare rates since 5 August 2006, which was in

accordance with the conditions of the Concession Agreement, indicating that the Company is entitled to

adjust the fare rates every two years based on the rate of change in the Non-Food Consumer Price Index for

Bangkok. Furthermore, in the year 2005, the Company provided discounts in the form of the fixed fare rates of

Baht 10 for the first three stations and Baht 15 for four and more stations (during the period of 7 January

2005 - 4 June 2005), as well as discounts at the rates of 20% and 15% from the fare rates under the

Concession Agreement for stored value cards and tokens, respectively (during the period of 5 June 2005 - 30

September 2005).

The average daily volume of passengers in the year 2006 amounted to 158,396 passengers, representing

a decrease of approximately 3% as compared to that of the year 2005. In this regard, the volume of passengers

on working days fairly stayed at the level of 179,000 passengers per day, similar to that of the year 2005. On

the contrary, the average daily volume of passengers on holidays represented a decrease of 11%, which may be

due to the adjustment of the fare rates as well as the economic and political uncertainties, thereby resulting

in decrease in passengersû unnecessary traveling on holidays or use of other alternative transit systems.

However, the proportion of stored value card usage for fare payment, especially in working days, had a tendency

to continuously increase over the past two years, namely, representing an increase to 62% in the year 2006

from 49% in the year 2005, which showed the increased volume of regular customers.

Total expenses of the Company and its Subsidiaries mainly comprise cost of fare, commercial development

cost, amortisation of project costs and selling and administrative expenses. In the year 2006, the total

expenses (excluding interest expenses) amounted to Baht 2,012.38 million, representing an increase of Baht

140.72 million or 7.52% as compared to that of the year 2005 (excluding Baht 89 million as presented to Their

Majesties the King and the Queen, which was recorded as selling and administrative expenses in the year

2005). The total expenses of the Company and its Subsidiaries increased by Baht 140.72 million caused by the

increase in commercial development cost of Baht 60.19 million, as a result of the operation of commercial

development business throughout the entire year 2006 which corresponded to revenue from this business. The

selling and administrative expenses increased by Baht 58.20 million mainly due to advisory fees and expenses

for listing shares on the Stock Exchange of Thailand.

Interest expenses for the year 2006 of the Company and its Subsidiaries amounted to Baht 1,060.96

million, representing an increase of Baht 249.96 million or 30.82%, which were incurred from the long-term

loans of the Company. Even though the Company utilized Baht 2,115 million of the proceeds from capital


67


increase in September 2006 to partially repay the debts, loan interest rates (MLR) of the financial institution

lenders of the Company increased from that of the early year 2005 to the late year 2006 at the average rate

of approximately 2.25%.

The results of operations of the Company and its Subsidiaries over the past two years since the years

2004 (July - December 2004) and 2005 showed net losses of Baht 957.21 million and Baht 1,715.99 million,

respectively. In the year 2006, the Company sustained a loss of Baht 1,669.38 million, representing a decrease

of 2.72% as compared to that of the year 2005. The loss generated in the early years of operation is common

for investments in large-scale public infrastructure projects. The Companyûs initial revenue from operations was

insufficient to cover all expenses incurred which were mainly fixed costs, such as, maintenance costs, utility

costs, personnel costs and insurance costs. Moreover, the increased interest rates during the years 2005 to

2006 caused the Companyûs interest expense obligation to increase accordingly. The significant factors, which

would encourage more passengers to use the metro service, e.g., growth of real estate businesses surrounding

the routes, the metro extension projects as well as such behaviour of travelling by the mass transit system in

lieu of by personal cars, would take some time to have positive impact on the Companyûs operational results

in the future.

15.2 Analysis of Financial PositionAs at 31 December 2006, the Company and its Subsidiaries had total assets of Baht 21,241.70 million,

representing an increase of Baht 1,510.20 million or 7.65% from that of the year 2005. This was due to the

increase in such significant current assets as cash and short-term investment which increased by Baht

1,292.10 million, as a result of the Companyûs public offering of 1,315.81 million shares for capital increase and

sale of 2,987.50 million shares for capital increase to Mass Rapid Transit Authority of Thailand (MRTA) in

September 2006.

As at 31 December 2006, the Company and its Subsidiaries had total liabilities of Baht 12,802.83

million, representing a decrease of Baht 1,511.41 million or 10.56% from that of the year 2005. This was mainly

due to utilizing Baht 2,115 million of the proceeds from the capital increase in September 2006 to repay

long-term loans from financial institutions and long-term loans from shareholders.

As at 31 December 2006, shareholdersû equity of the Company and its Subsidiaries amounted to Baht

8,438.86 million, representing an increase of Baht 3,021.60 million or 55.78% from that as at the end of the

year 2005, as a result of the Companyûs offering of its shares for capital increase in the year 2006 as described

above.

LiquidityAs at 31 December 2006, the Company had cash and cash equivalents of Baht 1,734.77 million,

representing an increase of Baht 1,292.10 million as compared to that as at the end of the year 2005. The

net cash flow from operating activities decreased by Baht 1,461.11 million, with Baht 479.42 million used in

investing activities. The Company received the net cash flow from financing activities amounting to Baht

3,032.63 million, and from capital increase amounting to Baht 4,671.70 million, whereby a partial portion in

68


the total amount of Baht 2,115 million was utilized to repay long-term loans of financial institutions and loans

from shareholders.

As at 31 December 2006, the Company had its debt to equity ratio amounting to 1.52 times,

representing a decrease from 2.64 times in the year 2005, while the debt to equity ratio,/1 which was

calculated pursuant to the conditions in the long-term loan agreement as at the end of the year 2006

amounted to 1.20 times, representing a decrease from 1.84 times of the year 2005. In this regard, the

Companyûs overall financial liquidity was due to the capital increase in September 2006.

Remark: /1 Debt to equity ratio calculated pursuant to the conditions in the Onshore Facilities Agreement, based on the

figures from the Company only financial statements by using total liabilities and contingent liabilities net of the

sponsor support: subordinated loan, divided by the total of paid-up capital, share premium, retained earnings

(loss), reserves and the sponsor support: subordinated loan, but excluding any amounts attributable to revaluation

of assets.

Auditorûs FeeFor the fiscal year ended 31 December 2006, the audit fees paid to the Companyûs auditor, namely,

Ernst and Young Office Limited, totaled Baht 1,500,000.00, which included the audit fees of the Company and

the three Subsidiaries as detailed below:

Summary of the Company and the Subsidiariesû Audit Fees in 2006

Company Auditor Audit Fee (Baht)

Bangkok Metro Public Company Limited Siraporn Ouaanunkun 870,000.00

BMCL Network Limited Siraporn Ouaanunkun 130,000.00

Triads Networks Co., Ltd. Siraporn Ouaanunkun 260,000.00

Metro Mall Development Limited Siraporn Ouaanunkun 240,000.00

Total Audit Fees 1,500,000.00

The Company and such Subsidiaries had no other non-audit fees payable to the auditor, the auditing

firm of which the auditor is a member, and any person or business relating to the auditor and the auditing

firm of which the auditor is a member.

69


16. Report on Responsibilities of the Board ofDirectors towards the Financial Report

The Board of Directors realizes the significance of its duties and responsibilities in supervising the Companyûs

business to ensure good management in accordance with laws, detailed objectives and the Companyûs Articles of

Association, as well as resolutions of the shareholders meetings with integrity and prudence. The Board of Directors

protects the benefits of the Company and shareholders by ensuring that the Companyûs financial report contains

accurate and full accounting records that reflect the Companyûs actual financial position and results of its

operations.

The Board of Directors established the Audit Committee comprising independent directors fully qualified in

accordance with the requirements of The Stock Exchange of Thailand to review and ensure accuracy and

sufficiency of the financial report, including accurate and complete disclosure of related party transactions or

transactions with conflict of interest, in compliance with the requirements of The Stock Exchange of Thailand and

relevant rules and regulations. In this regard, the Audit Committee has already reported their performance to the

Board of Directors.

The Board of Directors is of the opinion that the financial statements for the year 2006 of the Company

and its Subsidiaries, which have been reviewed by the Audit Committee in conjunction with the management, and

audited by the Companyûs auditor, present fairly, in all material aspects, the financial position and the results of

operations of the Company and its Subsidiaries in accordance with generally accepted accounting principles.

(Mr. Plew Trivisvavet) (Dr. Sombat Kitjalaksana)

Director Director

70


The Ordinary General Meeting of Shareholders resolved to appoint the Audit Committee of Bangkok Metro Public

Company Limited, comprising three independent directors, namely, General Chetta Thanajaro, as the Audit Committee

Chairman, Lieutenant General Surat Sumrith and Mr. Vitoon Tejatussanasoontorn, as the Audit Committee members. In

the year 2006, the Audit Committee had four meetings with the high level executives and the management of the

Company to independently consider the issues as assigned by the Companyûs Board of Directors, in accordance with the

regulations of Bangkok Metro Public Company Limited on the rules and guidelines for practice of the Audit Committee in

line with the requirements of the Stock Exchange of Thailand, as may be summarized as follows:

1. The Audit Committee reviewed the quarterly and 2006 annual financial statements in compliance with generally

accepted accounting standards so as to ensure the correctness and reliability of the accounting system and its

financial reports, as well as the sufficient disclosure of information in the financial statements, including review of

related party transactions between the Company, and its subsidiaries and associated companies to ensure that

the Company has executed the transactions in the ordinary course of business and in accordance with the rules

as set forth by the Stock Exchange of Thailand, as well as disclosed sufficient information, for the benefits of

investors.

In review of the financial statements and compliance with applicable regulations and laws, the Audit

Committee is of the opinion that the Company has complied with the applicable laws, and its accounting system

and financial reports are correct and reliable.

2. The Audit Committee reviewed the evaluation of the Companyûs internal control system and the monitoring of

correction of material faults in the system by the Internal Audit Division, and then confirmed that the Company

has the internal control system which is sufficient for the business operations and achieves the objectives of the

internal control in respect of effectiveness and efficiency of its operation in resource utilization, reliability of the

financial reports and results of operations, compliance with laws, rules and regulations.

3. The Audit Committee supervised the internal audit to be in line with the approved plan by reviewing the audit

report for the year 2006 so as to ensure efficient and effective operation with good internal control system and

compliance with the law on securities and exchange or the law relating to the business of the Company, and follow

up the amendment in accordance with the audit report in material issues for the good corporate governance.

In addition, the Audit Committee has considered the audit plan for the year 2007 which was prepared based on

the Companyûs internal control evaluation and potential risk factors. The scope of the audit plan covers all material issues,

accommodates the prevention from possible risk, provides appropriate internal control for the corporate risk management

and brings optimum benefits to the Company and its shareholders.

Furthermore, the Audit Committee provided the opinion and proposed to the Board of Directors to seek approval

of the 2007 Ordinary General Meeting of Shareholders for appointment of either Miss Siraporn Ouaanunkun, Certified

Public Accountant No. 3844, and/or Mr. Narong Puntawong, Certified Public Accountant No. 3315, and/or Mr. Supachai

Phanyawattano, Certified Public Accountant No. 3930, of Ernst & Young Office Limited as the Companyûs auditor for

the year 2007, with the auditing fee in the total amount of not exceeding Baht 1,000,000.

General Chetta Thanajaro

Chairman of the Audit Committee

17. Audit Committeeûs Reportfor the Year 2006

71


BANGKOK METRO PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES

31 DECEMBER 2006 AND 2005

REPORT AND CONSOLIDATED FINANCIAL STATEMENTSREPORT AND CONSOLIDATED FINANCIAL STATEMENTS


72


Report of Independent Auditor

To The Board of Directors and Shareholders of


I have audited the accompanying consolidated balance sheet of Bangkok Metro Public Company Limited

and its subsidiaries as at 31 December 2006, and the related consolidated statements of income, changes in

shareholdersû equity and cash flows for the year then ended, and the separate financial statements of Bangkok Metro

Public Company Limited for the same period. These financial statements are the responsibility of the management of

the Company and its subsidiaries as to their correctness and the completeness of the presentation. My responsibility

is to express an opinion on these financial statements based on my audit. The financial statements of Bangkok Metro

Public Company Limited and its subsidiaries and the separate financial statements of Bangkok Metro Public Company

Limited as at 31 December 2005 and for the year then ended, as presented herein for comparative purposes, were

audited by another auditor in my office who, under his report dated 22 February 2006, expressed an unqualified

opinion on those financial statements.

I conducted my audit in accordance with generally accepted auditing standards. Those standards require that

I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial

position of Bangkok Metro Public Company Limited and its subsidiaries, and of Bangkok Metro Public Company Limited

as at 31 December 2006, the results of their operations, and cash flows for the year then ended in accordance with

generally accepted accounting principles.

Siraporn Ouaanunkun

Certified Public Accountant (Thailand) No. 3844

Ernst & Young Office Limited

Bangkok : 26 February 2007

73


BALANCE SHEETS


AS AT 31 DECEMBER 2006 AND 2005

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

(Unit : Baht)

Consolidated The Company Only

Note 2006 2005 2006 2005

ASSETS

CURRENT ASSETS

Cash and cash equivalents 7 1,534,774,542 442,679,757 1,519,074,796 439,214,530

Current investments 8 200,000,000 - 200,000,000 -

Trade accounts receivable 9 16,633,259 18,015,349 - -

Amounts due from related parties 6 5,249,106 3,694,862 5,232,876 9,389,769

Loan to a subsidiary 6 - - 17,847,681 -

Short-term loan to other company and accrued interest - 2,500,000 - -

Other current assets

Prepaid expenses 74,788,791 77,592,175 74,288,015 77,206,137

Advance payment for project

Related company 6 2,262,046 12,421,987 - -

Other companies 4,505,356 4,602,600 2,392,477 801,216

Value added tax refundable 6,794,761 6,751,387 - -

Other receivable 4,642,874 1,028,080 4,484,780 936,550

Unbilled input tax 9,751,693 8,300,466 - -

Accrued income 18,244,962 22,340,051 18,244,962 22,309,643

Inventory - tickets 9,212,778 28,048,676 9,212,778 28,048,676

Others 7,967,699 7,162,385 - 2,242

TOTAL CURRENT ASSETS 1,894,827,867 635,137,775 1,850,778,365 577,908,763

NON-CURRENT ASSETS

Investments accounted for under equity method 10 - - 59,951,174 66,079,297

Project costs, net 11 18,530,355,061 18,434,786,827 18,530,355,061 18,434,786,827

Non operating data communication equipment 373,826,836 302,419,964 334,209,389 262,802,517

Equipment, net 12 400,814,288 325,007,427 53,261,497 64,618,271

Other non-current assets

Goodwill, net 7,340,866 11,527,032 - -

Others 34,530,126 22,622,331 33,037,250 19,318,850

TOTAL NON-CURRENT ASSETS 19,346,867,177 19,096,363,581 19,010,814,371 18,847,605,762

TOTAL ASSETS 21,241,695,044 19,731,501,356 20,861,592,736 19,425,514,525

74


BALANCE SHEETS (Continued)




(Unit : Baht)


Note 2006 2005 2006 2005

LIABILITIES AND SHAREHOLDERSû EQUITY

CURRENT LIABILITIES

Bank overdraft and short-term loan from

financial institution 13 1,581,672 16,250,540 - -

Construction and other payable

Related parties 6 249,125,335 291,710,920 6,290,368 83,816,667

Other companies 409,810,525 299,988,130 382,470,599 286,886,683

Current portion of long-term loans 6, 14 330,000,000 110,000,000 330,000,000 110,000,000

Unearned fare box revenue 40,609,737 33,194,529 40,609,737 33,194,529

Deposits on stored value ticket 25,372,042 17,712,142 25,372,042 17,712,142

Other current liabilities

Withholding tax payable 5,474,916 5,229,886 4,050,858 4,747,245

Retention for construction 5,009,442 4,720,246 3,649,184 2,759,523

Accrued interest - related company 6 37,505,203 17,203,162 - -

Accrued expense 31,414,409 29,900,783 28,497,538 28,838,371

Others 6,923,176 3,561,930 2,638,406 2,040,861

TOTAL CURRENT LIABILITIES 1,142,826,457 829,472,268 823,578,732 569,996,021

NON-CURRENT LIABILITIES

Long-term loans, net of current portion 6, 14 10,560,000,000 12,004,500,000 10,560,000,000 12,004,500,000

Long-term loans from shareholder and

accrued interest 6, 15 1,065,153,112 1,438,752,812 1,065,153,112 1,438,752,812

Deferred leasehold right revenue 16,952,838 26,655,035 - -

Guarantee on rental and service agreement 14,764,424 14,653,000 - -

Provision for loss on investments 10 - - - 1,725,112

Other non-current liabilities 3,135,472 204,436 - -

TOTAL NON-CURRENT LIABILITIES 11,660,005,846 13,484,765,283 11,625,153,112 13,444,977,924

TOTAL LIABILITIES 12,802,832,303 14,314,237,551 12,448,731,844 14,014,973,945

75


BALANCE SHEETS (Continued)



(Unit : Baht)


Note 2006 2005 2006 2005

SHAREHOLDERSû EQUITY

Share capital 16

Registered

11,950,000,000 ordinary shares of Baht 1 each 11,950,000,000 11,950,000,000 11,950,000,000 11,950,000,000

Issued and paid up

11,950,000,000 ordinary shares of Baht 1 each

(2005 : 7,350,000,000 ordinary shares of Baht 1 each) 11,950,000,000 7,350,000,000 11,950,000,000 7,350,000,000

Share premium 968,445,115 600,051,778 968,445,115 600,051,778

Share subscription received in advance 16 - 296,689,300 - 296,689,300

Deficit (4,505,584,223) (2,836,200,498) (4,505,584,223) (2,836,200,498)

EQUITY ATTRIBUTABLE TO THE COMPANYûS SHAREHOLDERS 8,412,860,892 5,410,540,580 8,412,860,892 5,410,540,580

MINORITY INTEREST - equity attributable to minority

shareholders of subsidiaries 26,001,849 6,723,225 - -

TOTAL SHAREHOLDERSû EQUITY 8,438,862,741 5,417,263,805 8,412,860,892 5,410,540,580

TOTAL LIABILITIES AND SHAREHOLDERSû EQUITY 21,241,695,044 19,731,501,356 20,861,592,736 19,425,514,525


76


INCOME STATEMENTS


FOR THE YEARS ENDED 31 DECEMBER 2006 AND 2005

(Unit : Baht)


Note 2006 2005 2006 2005

REVENUES

Fare box revenue 17 1,229,498,758 969,908,851 1,229,498,758 969,908,851

Fare box compensation revenue 18 - 20,481,123 - 20,481,123

Commercial development revenue 17 145,049,613 53,337,532 58,240,273 23,820,815

Gain on sales of investment in a subsidiary 17,146,500 - 17,146,500 -

Other income 7,245,702 2,275,970 6,755,603 3,210,996

TOTAL REVENUES 1,398,940,573 1,046,003,476 1,311,641,134 1,017,421,785

EXPENSES

Costs of fare box 1,454,838,804 1,417,401,451 1,454,838,804 1,417,401,451

Cost of commercial development 94,110,407 33,921,037 59,629,623 27,576,637

Amortisation of project costs 156,605,134 171,711,851 156,605,134 171,711,851

Selling and administrative expenses 306,821,869 337,618,788 232,028,133 274,662,541

Share of loss from investments accounted for

under equity method - - 37,799,511 45,113,342

TOTAL EXPENSES 2,012,376,214 1,960,653,127 1,940,901,205 1,936,465,822

LOSS BEFORE INTEREST EXPENSES

AND CORPORATE INCOME TAX (613,435,641) (914,649,651) (629,260,071) (919,044,037)

INTEREST EXPENSES (1,060,962,637) (810,999,573) (1,040,123,654) (796,950,829)

CORPORATE INCOME TAX OF A SUBSIDIARY (2,931,285) - - -

LOSS AFTER CORPORATE INCOME TAX (1,677,329,563) (1,725,649,224) (1,669,383,725) (1,715,994,866)

NET INCOME ATTRIBUTABLE TO MINORITY INTEREST 7,945,838 9,654,358 - -

NET LOSS FOR THE YEAR (1,669,383,725) (1,715,994,866) (1,669,383,725) (1,715,994,866)

BASIC LOSS PER SHARE 21

Net loss (0.19) (0.23) (0.19) (0.23)

Weighted average number of ordinary shares (shares) 8,860,073,200 7,347,122,085 8,860,073,200 7,347,122,085


77


STATEMENTS OF CHANGESIN SHAREHOLDERSû EQUITY



(Unit : Baht)

Consolidated

Minority interest-

equity attributable

Issued and Share subscription to minority

paid-up Share received shareholders of

share capital premium in advance Deficit subsidiaries Total

Balance as at 1 January 2005 7,250,000,000 400,051,778 169,608,738 (1,120,205,632) 21,089,276 6,720,544,160

Issuance of additional ordinary shares

(Note 16) 43,463,754 86,927,508 - - - 130,391,262

Transfer share subscription received in

advance to issued and paid up share

capital 56,536,246 113,072,492 (169,608,738) - - -

Share subscription received in advance

(Note 16) - - 296,689,300 - - 296,689,300

Net loss for the year - - - (1,715,994,866) - (1,715,994,866)

Minority interest - equity attributable

to minority shareholders of subsidiaries - - - - (14,366,051) (14,366,051)

Balance as at 31 December 2005 7,350,000,000 600,051,778 296,689,300 (2,836,200,498) 6,723,225 5,417,263,805

Issuance of additional ordinary shares

(Note 16) 4,303,310,700 368,393,337 - - - 4,671,704,037

Transfer share subscription received in

advance to issued and paid up share

capital (Note 16) 296,689,300 - (296,689,300) - - -

Net loss for the year - - - (1,669,383,725) - (1,669,383,725)

Minority interest - equity attributable

to minority shareholders of subsidiaries - - - - 19,278,624 19,278,624

Balance as at 31 December 2006 11,950,000,000 968,445,115 - (4,505,584,223) 26,001,849 8,438,862,741


78


STATEMENTS OF CHANGESIN SHAREHOLDERSû EQUITY



(Unit : Baht)

The Company Only

Issued and Share subscription

paid-up Share received

share capital premium in advance Deficit Total

Balance as at 1 January 2005 7,250,000,000 400,051,778 169,608,738 (1,120,205,632) 6,699,454,884

Issuance of additional ordinary shares (Note 16) 43,463,754 86,927,508 - - 130,391,262

Transfer share subscription received in advance

to issued and paid up share capital 56,536,246 113,072,492 (169,608,738) - -

Share subscription received in advance (Note 16) - - 296,689,300 - 296,689,300

Net loss for the year - - - (1,715,994,866) (1,715,994,866)

Balance as at 31 December 2005 7,350,000,000 600,051,778 296,689,300 (2,836,200,498) 5,410,540,580

Issuance of additional ordinary shares (Note 16) 4,303,310,700 368,393,337 - - 4,671,704,037


to issued and paid up share capital (Note 16) 296,689,300 - (296,689,300) - -

Net loss for the year - - - (1,669,383,725) (1,669,383,725)

Balance as at 31 December 2006 11,950,000,000 968,445,115 - (4,505,584,223) 8,412,860,892


79


CASH FLOW STATEMENTS



(Unit : Baht)


2006 2005 2006 2005

Cash flows from (used in) operating activities

Net loss (1,669,383,725) (1,715,994,866) (1,669,383,725) (1,715,994,866)

Adjustments to reconcile net loss to net cash provided by

(paid from) operating activities :-

Depreciation and other amortisation 40,166,625 27,871,422 24,657,488 22,787,802

Amortisation on project costs 156,605,134 171,711,851 156,605,134 171,711,851

Amortisation of prepaid expenses 156,965,761 138,728,811 155,341,535 138,728,810

Amortisation of premium on forward contracts - (9,886,985) - (9,886,985)

Withholding tax deducted at source written off 3,380,993 - 3,380,993 -

Loss on sales of equipment 3,467 506,471 5,822 509,614

Unrealised gain on exchange (280,732) (859,341) (280,732) (895,515)

Gain on sales of investment in a subsidiary (17,146,500) - (17,146,500) -

Share of loss from investments accounted for

under equity method - - 37,799,511 45,113,342

Amortisation of goodwill 1,307,128 1,201,358 - -

Net income attributable to minority interest (7,945,838) (9,654,358) - -

Loss from operating activities before changes in operating

assets and liabilities (1,336,327,687) (1,396,375,637) (1,309,020,474) (1,347,925,947)

Operating assets decrease (increase)

Trade accounts receivable 1,382,090 (21,617,492) - -

Amounts due from related parties (1,554,244) 24,983,671 4,156,893 16,756,622

Withholding tax deducted at source (83,385) (1,871,281) (2,043,498) (1,132,417)

Accounts receivable under forward contracts - 21,377,081 - 21,377,081

Prepaid expenses (154,162,377) (159,836,577) (152,423,413) (159,854,023)

Other current assets 16,876,935 (32,382,252) 19,354,591 (25,682,025)

Other non-current assets (19,917,577) (6,272,695) (19,907,412) (6,272,395)

Operating liabilities increase (decrease)

Construction and other payable - related parties (115,761,286) 69,302,493 (79,713,770) 72,273,306

Construction and other payable - other companies 87,951,134 (67,400,506) 73,712,655 (72,504,604)

Unearned fare box revenue 7,415,208 11,332,235 7,415,208 11,332,235

Deposits on stored value ticket 7,659,900 9,626,550 7,659,900 9,626,550

Other current liabilities 52,068,540 77,883,231 26,807,387 62,172,976

Deferred leasehold right revenue (9,702,197) 4,545,035 - -

Other non-current liabilities 3,042,460 3,216,273 - -

Net cash flows used in operating activities (1,461,112,486) (1,463,489,871) (1,424,001,933) (1,419,832,641)


80


CASH FLOW STATEMENTS (Continued)



(Unit : Baht)


2006 2005 2006 2005

Cash flows from (used in) investing activities

Increase in current investments (200,000,000) - (200,000,000) -

Decrease (increase) in loans to other company 2,500,000 (2,500,000) - -

Increase in loans to a subsidiary - - (17,847,681) -

Increase in investment in subsidiaries - - (47,750,000) (42,439,980)

Acquisition of equipment (40,145,040) (48,996,358) (8,455,019) (23,138,537)

Proceeds from sales of equipment 7,834 3,900 - -

Decrease (increase) in advance payment for project 10,257,185 2,857,320 (1,591,261) -

Increase in project costs (252,173,368) (423,028,877) (252,173,368) (423,028,877)

Increase in non operating data communication equipment (47,115,302) - (47,115,302) -

Cash received from minority shareholders 47,250,000 3,080,000 31,500,000 -

Cash paid for purchasing shares from the minority shareholders - (14,499,980) - -

Net cash flows used in investing activities (479,418,691) (483,083,995) (543,432,631) (488,607,394)

Cash flows from (used in) financing activities

Increase (decrease) in bank overdraft and short-term loan

from financial institution (14,668,868) 16,250,540 - -

Increase (decrease) in long-term loans (1,224,500,000) 199,000,000 (1,224,500,000) 199,000,000

Increase (decrease) in long-term loans from shareholder (399,909,207) 1,403,000,000 (399,909,207) 1,403,000,000

Cash received from issuance of additional ordinary shares 4,671,704,037 130,391,262 4,671,704,037 130,391,262

Share subscription received in advance - 296,689,300 - 296,689,300

Net cash flows from financing activities 3,032,625,962 2,045,331,102 3,047,294,830 2,029,080,562

Net increase in cash and cash equivalents 1,092,094,785 98,757,236 1,079,860,266 120,640,527

Cash and cash equivalents at beginning of year 442,679,757 343,922,521 439,214,530 318,574,003

Cash and cash equivalents at end of year (Note 7) 1,534,774,542 442,679,757 1,519,074,796 439,214,530

Supplemental cash flows information

Cash paid during the year for Interest expenses 1,014,239,357 762,298,999 1,013,814,147 761,198,017

Corporate income tax and withholding tax deducted at source 5,267,001 1,871,281 2,043,498 1,132,417

Non-cash transactions


to issued and paid up share capital 296,689,300 - 296,689,300 -

Goodwill decrease from sales of investment in subsidiary 2,879,038 - - -

Purchase of equipment on credit 70,988,231 18,243,423 - -

Purchase of non operating data communication equipment

on credit 24,291,570 - 24,291,570 -


81


NOTES TO FINANCIAL STATEMENTS



1. GENERAL INFORMATIONBangkok Metro Public Company Limited (çThe Companyé) is a public company incorporated and

domiciled in Thailand. Its major shareholders are Mass Rapid Transit Authority of Thailand (MRTA) and

CH. Karnchang group of companies, which were incorporated in Thailand. The Company is principally engaged

in the operation of the MRTA Initial System Project - Chaloem Ratchamongkhon Line and commercial

development and its registered address is 189 Rama IX Road, Huai Khwang, Bangkok.

a) On 1 August 2000, the Company entered into çAgreement for the MRTA Initial System Project -

Chaloem Ratchamongkhon Lineé (çthe Concession Agreementé) with the Mass Rapid Transit Authority of

Thailand (çthe MRTAé) to design, manufacture, supply, install, test and commission of the M&E

Equipment and for the operation and maintenance of the MRTA Initial System. The Agreement is for 25

years from the date that MRTA issues a Notice of No Objection to Commencement of Revenue Service.

The MRTA Initial System was officially opened on 3 July 2004.

Under the Agreement, the Company has certain commitments to make payment of

remunerations to the MRTA which consist of remuneration from fares, remuneration from commercial

development, apportion of profit calculated from the Return on Equity (ROE) and any benefit from the

interest rate on a credit agreement which lower than the specified rate, at the rate as mentioned in the

Agreement. Furthermore, the Agreement stipulates the maintenance of the proportion of shareholding of

the main shareholders.

b) On 19 December 2001, the Company entered into a long-term loan agreement with a group of

domestic lenders formed by 4 commercial banks (Onshore Facilities Agreement). The loan agreement,

which was amended by the first, the second, the third and the forth supplemental agreements dated 27

January 2003 and 18 June 2003, 2 April 2004 and 30 July 2004, respectively, provides the following

5 credit facilities :

1) Tranche A Facility : A long-term loan facility of Baht 11,000 million for use in the payment of

project costs.

2) Tranche B Facility : A performance guarantee facility of Baht 150 million provided to guarantee

the Companyûs obligations to the MRTA under the Concession Agreement.

3) Tranche C Facility : A performance guarantee facility of Baht 60 million provided to guarantee the

Companyûs obligations to the relevant authorities in relation to the Project.

4) Tranche D Facility : A long-term loan facility of Baht 500 million for use in the payment of

additional costs incurred as a result of the program to accelerate the procurement of M&E

equipment and the depot modification. However, the Company had fully repaid such loan in

September 2006.

5) Tranche E Facility : A long-term loan facility of Baht 790 million for use in the payment of

additional expenses incurred under the M&E Equipment Contracts, additional fees incurred under

the Project Management Agreement, basic infrastructure works for the retail areas in relation to

82


the Commercial Development, additional equipments in stations, mobilization fees for the Civil

Infrastructure Maintenance Contracts and investment in the Commercial Development

Subsidiaries. Subsequently, the Company and the lenders agreed to reduce the loan facility to

Baht 650 million. However, the Company had fully repaid Baht 614.5 million of the loan balance

in September 2006.

2. BASIS OF PREPARATIONThe financial statements have been prepared in accordance with accounting standards enunciated

under the Accounting Profession Act B.E. 2547. The presentation of the financial statements has been made

in compliance with the stipulations of the Notification of the Department of Business Development dated 14

September 2001, issued under the Accounting Act B.E. 2543.

The financial statements have been prepared on a historical cost basis except where otherwise

disclosed in the accounting policies.

3. BASIS OF CONSOLIDATION3.1 The consolidated financial statements include the financial statements of Bangkok Metro Public

Company Limited and following subsidiary companies :

Assets as a Revenues as apercentage to the percentage to the

consolidated consolidated totalPercentage of Country of total assets as at revenues for the year

Companyûs name Nature of business shareholding incorporation 31 December ended 31 December

2006 2005 2006 2005 2006 2005

Percent Percent Percent Percent Percent Percent

Metro Mall Development Rental of retail space in 64.00 64.00 Thailand 1.58 1.36 1.78 0.47

Limited underground stations

BMCL Network Limited Telecommunications services in 70.00 100.00 Thailand 0.32 0.26 - -

underground stations (not yet

been commenced its

commercial operation)

Triads Networks Company Provision of advertising services 56.00 56.00 Thailand 0.24 0.26 7.01 3.50

Limited in underground stations

3.2 Material balances and transactions between the Company and its subsidiary companies have been

eliminated from the consolidated financial statement.

3.3 Investments in the subsidiary companies as recorded in the Companyûs books of account are eliminated

against the equity of the subsidiary companies. The resultant differences are amortised over a period of

10 years commencing as from the date of acquisition of the investment.

83


4. CHANGE IN ACCOUNTING POLICY/ADOPTION OF NEW ACCOUNTING STANDARDSIn October 2006, the Federation of Accounting Professions issued Notification No. 26/2006 regarding

Accounting Standard No. 44 çConsolidated Financial Statements and Accounting for Investments in Subsidiariesé

(Amendment No. 1), 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.

Entities which are not ready to adopt the cost method in 2006 can continue to use the equity method

through the end of 2006 and adopt the cost method as from 1 January 2007.

In this regard, the Company has elected to adopt the change in 2007. Adoption of the change in 2007

will necessitate the restatement of the Companyûs 2006 separate financial statements to be presented for

comparative purpose along with the financial statements for 2007. The restatement will have the effect of

decreasing net loss in the separate income statement for 2006 by approximately Baht 14 million (Baht 0.002 per

share) and increasing net worth in the balance sheet at 31 December 2006 by approximately Baht 50 million.

5. SIGNIFICANT ACCOUNTING POLICIES5.1 Revenues and expenses recognition

a) Fare box revenue recognitionSmart card and smart token sales are recognised as revenue when the services are

rendered. Prepaid value in stored value smart card is recorded as unearned fare box revenue inthe current liabilities in the balance sheet.

b) Commercial development revenueCommercial development revenue is recognised as income when service has been rendered.

c) Other revenues and expenses recognitionAn accrual basis of accounting was adopted in recognition of other revenues and expenses.

5.2 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, cash at bank, and all highly liquid investmentswith an original maturity of three months or less and not subject to withdrawal restrictions.

5.3 Trade accounts receivable

Trade accounts receivable are stated at the net realisable value.

5.4 Investments in subsidiaries

Investments in subsidiary companies are accounted for under the equity method.

5.5 Goodwill

Goodwill presented as an asset in the consolidated financial statements is the excess of thepurchase price over the net book value of investment in subsidiaries as of the acquisition date and is

recognized as expense in the statements of income within 10 years, by the straight-line basis.

5.6 Project costs and Unit of Throughput Amortisation Method (Unit of Production)All expenditures and other related expenses which are incurred to construct the System and to

enable it to become operational (çProject costsé) are capitalised as assets and will be depreciated overthe Concession Period upon the commencement of operation of the System. Such project costs include

84


management and consultant fees, design costs, electrical and mechanical works and rolling stockpurchased during the Concession Period, interest and other financing expenses. The Company has beenadopting the unit of throughput method of amortisation to amortise such project costs to be costs offare box in the income statement basing on the following unit of throughput amortisation formula :Amortisation for the period = Net project costs at the beginning of period x Percentage of

Passengers for the periodPercentage of Passengers = Current periodûs actual passengers for the period (Actual passengers for the current period +

Projected passengers during the remaining Concession Period)Net project costs at the = Total project costs - Accumulated amortisation as at beginning beginning of period of period

5.7 Equipment and depreciationEquipment are stated at cost less accumulated depreciation and allowance for loss on

impairment of assets (if any).Depreciation of equipment is calculated by reference to their cost on the straight-line basis over

the following estimated useful lives:Leasehold improvement Concession period of subsidiaryCommunication equipment 5 yearsAdvertising equipment 5 yearsFurniture and office equipment 3 - 5 yearsMotor vehicles 5 years

Depreciation is included in determining income.

No depreciation is provided on assets under installation.

5.8 Related party transactionsRelated parties comprise enterprises and individuals that control, or are controlled by, the

Company, whether directly or indirectly, or which are under common control with the Company.They also include associated companies and individuals which directly or indirectly own a

voting interest in the Company that gives them significant influence over the Company, keymanagement personnel, directors and officers with authority in the planning and direction of theCompanyûs operations.

5.9 Foreign currenciesForeign currency transactions are translated into Baht at the exchange rates ruling on the

transaction dates. Assets and liabilities denominated in foreign currencies outstanding at the balancesheet date are translated into Baht at the exchange rates ruling on the balance sheet date, Gains and

losses on exchange are included in determining income.

5.10 Impairment of assetsThe Company and its subsidiaries assess at each reporting date whether there is an indication

that an asset may be impaired. If any such indication exists, the Company and its subsidiaries make anestimate of the assetûs recoverable amount. Where the carrying amount of the asset exceeds its

85


recoverable amount, the asset is considered impaired and is written down to its recoverable amount.Impairment losses are recognised in the income statement. An assetûs recoverable amount is the higherof fair value less costs to sell and value in use.

5.11 Employee benefitsSalary, wages, bonuses and contributions to the social security fund and provident fund

are recognised as expenses when incurred.

5.12 Income TaxTax income is provided for in the accounts based on the taxable profits determined in

accordance with tax legislation.

5.13 Use of accounting estimatesPreparation of financial statements in conformity with generally accepted accounting principles

requires management to make estimates and assumptions in certain circumstances, affecting amountsreported in these financial statements and related notes. Actual results could differ from theseestimates.

6. RELATED PARTY TRANSACTIONSDuring the years, the Company and its subsidiaries had significant business transactions with related

parties, which have been concluded on commercial terms and bases agreed upon in the ordinary course ofbusinesses between the Company and those companies. Below is a summary of those transactions.

(Unit : Million Baht)

Consolidated The Company Only Transfer Pricing Policy

2006 2005 2006 2005

Transactions with subsidiary companies(eliminated from the consolidated financial

statements)Commercial development revenue - - 34.1 11.8 Contract pricesInterest income - - 1.2 - MLR + 0.5% per annumTransactions with related companiesCommercial development revenue 19.3 3.4 2.4 - Contract pricesProject construction costs 71.0 18.2 - - Contract pricesProject maintenance costs 10.8 10.3 10.8 10.3 Contract pricesProject management fees 43.0 62.1 43.0 62.1 Contract pricesCost of fare box and commercial development 6.1 - 6.1 - Contract pricesSelling and administrative expenses 6.7 6.6 - - Contract pricesInterest expense and related fee 501.8 350.3 481.5 336.7 Contract pricesSales of investment in a subsidiary 31.5 - 31.5 - Agreed between party

86


The balances of the accounts as at 31 December 2006 and 2005 between the Company and those related

companies are as follows:

(Unit : Baht)


2006 2005 2006 2005

Amounts due from related parties

Subsidiaries

- Triads Networks Company Limited - - 2,805,731 8,147,234

- Metro Mall Development Limited - - 988,817 1,149,815

- - 3,794,548 9,297,049

Related parties

- CH. Karnchang Public Company Limited - 92,720 - 92,720

- Tripple A Informedia Company Limited 3,602,142 3,602,142 - -

- Others 1,646,964 - 1,438,328 -

5,249,106 3,694,862 1,438,328 92,720

5,249,106 3,694,862 5,232,876 9,389,769

Loan to a subsidiary

- BMCL Network Limited - - 17,847,681 -

- - 17,847,681 -

Advance payment for construction - related company

- CH. Karnchang Public Company Limited 2,262,046 12,421,987 - -

2,262,046 12,421,987 - -

Construction and other payable - related parties

- CH. Karnchang Public Company Limited 245,962,072 219,376,333 3,923,333 13,196,667

- Joint Venture CKET - 70,620,000 - 70,620,000

- Others 3,163,263 1,714,587 2,367,035 -

249,125,335 291,710,920 6,290,368 83,816,667

Accrued interest - related company

- CH. Karnchang Public Company Limited 37,505,203 17,203,162 - -

37,505,203 17,203,162 - -

Long-term loans from shareholder and accrued interest

- CH. Karnchang Public Company Limited

Loans 1,003,090,793 1,403,000,000 1,003,090,793 1,403,000,000

Accrued interest 62,062,319 35,752,812 62,062,319 35,752,812

1,065,153,112 1,438,752,812 1,065,153,112 1,438,752,812

Part of çLong-term loansé

- Krungthai Bank Public Company Limited

Current portion 129,000,000 43,000,000 129,000,000 43,000,000

Long-term portion 4,128,000,000 4,692,658,050 4,128,000,000 4,692,658,050

4,257,000,000 4,735,658,050 4,257,000,000 4,735,658,050

87


As at 31 December 2006, the Company had loans to its subsidiary amounting to Baht 17.8 million, carrying

the interest rate at MLR plus 0.5 percent per annum, which were repayable at call.

During the year, the movement of loan to a subsidiary, long-term loans from shareholder and accrued interest

and long-term loans are as follows :

(Unit : Baht)

Consolidated

Balance During the year Balance

as at as at

1 January 2006 Increase Decrease 31 December 2006



Loans 1,403,000,000 512,000,000 (911,909,207) 1,003,090,793

Accrued interest 35,752,812 115,290,106 (88,980,599) 62,062,319

1,438,752,812 627,290,106 (1,000,889,806) 1,065,153,112



Long-term loans 4,735,658,050 - (478,658,050) 4,257,000,000

(Unit : Baht)

The Company Only

Balance During the year Balance

as at as at

1 January 2006 Increase Decrease 31 December 2006

Loan to a subsidiary and accrued interest

- BMCL Network Limited

Loans - 30,945,647 (13,097,966) 17,847,681

Accrued interest - 1,150,540 (1,150,540) -

- 32,096,187 (14,248,506) 17,847,681



Loans 1,403,000,000 512,000,000 (911,909,207) 1,003,090,793

Accrued interest 35,752,812 115,290,106 (88,980,599) 62,062,319

1,438,752,812 627,290,106 (1,000,889,806) 1,065,153,112



Long-term loans 4,735,658,050 - (478,658,050) 4,257,000,000

88


Directors and managementûs remuneration

In 2006 the Company and its subsidiaries paid salaries, meeting allowances and gratuities to their directors

and management totaling Baht 28 million (The Company only: Baht 18 million) (2005: Baht 32 million, The

Company only: Baht 21 million).

7. CASH AND CASH EQUIVALENTSThe Company has pledged its rights to receive deposits from bank accounts, which have outstanding

balances as at 31 December 2006 of approximately Baht 1,504.9 million (2005 : Baht 425.8 million) to a group

of lenders to secure the Companyûs long-term loans from the group of lenders.

8. CURRENT INVESTMENTSThese represent fixed deposit with banks, maturity of more than 3 months. The Company has pledged

its rights to received deposits from bank accounts to a group of lenders to secure the Companyûs long-term

loans from the group of lenders.

9. TRADE ACCOUNTS RECEIVABLEThe outstanding balances of trade accounts receivable of subsidiaries as at 31 December 2006 and

2005 are aged, based on due date, as follows:

(Unit : Baht)

Consolidated

2006 2005

Age of receivables

Not yet due 9,838,145 12,534,325

Past due

Up to 3 months 2,266,971 5,481,024

3 - 6 months 1,149,797 -

6 - 12 months 2,129,538 -

Over 12 months 1,248,808 -

Trade accounts receivable 16,633,259 18,015,349

89


10. INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD/PROVISION FOR LOSS OFINVESTMENTS

These represent investments in ordinary shares in the following subsidiary companies.

(Unit : Baht)

The Company Only


Carrying amounts Provision

Shareholding based on equity for loss on

Companyûs name Paid-up capital percentage Cost method investments

Percent

- Metro Mall Development Limited 91,000,000 64.00 64,000,000 6,926,342 -

- BMCL Network Limited 127,500,000 70.00 89,249,980 34,348,154 -

- Triads Networks Company Limited 25,000,000 56.00 14,000,000 18,676,678 -

167,249,980 59,951,174 -

(Unit : Baht)

The Company Only


Carrying amounts Provision

Shareholding based on equity for loss on

Companyûs name Paid-up capital percentage Cost method investments

Percent

- Metro Mall Development Limited 50,000,000 64.00 32,000,000 - (1,725,112)

- BMCL Network Limited 105,000,000 100.00 104,999,980 55,540,373 -

- Triads Networks Company Limited 25,000,000 56.00 14,000,000 10,538,924 -

150,999,980 66,079,297 (1,725,112)

Metro Mall Development Limited

On 10 November 2006, an extraordinary general meeting of the shareholders of a subsidiary, Metro Mall

Development Limited, approved the increase of its registered capital by Baht 50 million (5 million ordinary

shares of Baht 10 each) to Baht 100 million (10 million ordinary shares of Baht 10 each). The subsidiary

registered the increase of its capital with the Ministry of Commerce on 29 December 2006. The subsidiary

initially called up Baht 5 per share of the price of the new shares.

A meeting of the Board of Directors of the Company passed a resolution approving the purchase of

3.2 million of the additional ordinary shares of the subsidiary, such that the Company would continue to

hold a 64 percent interest in the equity of this subsidiary. In December 2006 the Company paid in the

called up capital of Baht 5 per share, or a total of Baht 16 million. However, it also paid in the remaining

uncalled portion of the shares, amounting to Baht 16 million at the same time.

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BMCL Network Limited

During the second quarter of the year 2006, the Company sold 3,150,000 ordinary shares in BMCL

Network Limited, equivalent to 30 percent of its share capital, to a director of that company at a price of Baht

10 per share, or for a total of Baht 31,500,000. The Companyûs interest in the equity of BMCL Network Limited

was thus decreased to 70 percent.

Meeting of the Board of Directors held on 10 November 2006 passed a resolution to purchase 3.15

million additional ordinary shares of Baht 10 each, or a total of Baht 31.5 million of BMCL Network Limited

(subsidiary). The Company continues to hold a 70 percent interest in the equity of this Company.

The Company has pledged certain share certificates of investments in these three subsidiaries with a

group of lenders to secure the Companyûs long-term loans from the group of lenders.

11. PROJECT COSTS(Unit : Baht)


2006 2005 2006 2005

M&E Equipment 12,380,567,755 12,159,394,518 12,380,567,755 12,159,394,518

Project management fees per agreement 2,464,094,957 2,464,094,957 2,464,094,957 2,464,094,957

Consultant fees 607,009,297 606,925,297 607,009,297 606,925,297

Depot building and administration building 1,255,892,166 1,255,892,166 1,255,892,166 1,255,892,166

Interest expenses 1,264,616,711 1,264,616,711 1,264,616,711 1,264,616,711

Others 1,011,482,530 980,566,399 1,011,482,530 980,566,399

Total 18,983,663,416 18,731,490,048 18,983,663,416 18,731,490,048

Less : Accumulated amortisation

of Project costs (453,308,355) (296,703,221) (453,308,355) (296,703,221)

Project costs, net 18,530,355,061 18,434,786,827 18,530,355,061 18,434,786,827

Amortised expenses included in the income

statements for the year 156,605,134 171,711,851 156,605,134 171,711,851

M&E Equipment and depot building and administration building will be transferred to the Mass Rapid

Transit Authority of Thailand after the end of concession agreement, of 25 years, on an Acquire Operate and

Transfer basis.

The Company has assigned the Projectûs M&E Equipment, depot building and administration building

to a group of lenders to secure the Companyûs long-term loans from the group of lenders.

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12. EQUIPMENT(Unit : Baht)

Consolidated

Equipment

and

leasehold Communication Advertising Office Office Motor Assets under

improvement equipment equipment equipment furniture vehicles construction Total

Cost:

31 December 2005 33,652,020 2,906,404 21,998,559 66,459,103 30,857,076 17,145,061 196,804,546 369,822,769

Additions 116,438 35,632 11,806,586 9,368,626 1,619,233 5,043,916 83,142,840 111,133,271

Disposals - - - (67,484) - - - (67,484)

Transfers 10,548,267 - - - - - (10,548,267) -

31 December 2006 44,316,725 2,942,036 33,805,145 75,760,245 32,476,309 22,188,977 269,399,119 480,888,556

Accumulated depreciation:

31 December 2005 630,854 880,953 1,552,205 27,652,595 6,983,240 7,115,495 - 44,815,342

Depreciation for the year 6,117,473 588,209 5,769,157 14,278,352 5,014,217 3,547,700 - 35,315,108

Depreciation on disposal - - - (56,182) - - - (56,182)

31 December 2006 6,748,327 1,469,162 7,321,362 41,874,765 11,997,457 10,663,195 - 80,074,268

Net book value:

31 December 2005 33,021,166 2,025,451 20,446,354 38,806,508 23,873,836 10,029,566 196,804,546 325,007,427

31 December 2006 37,568,398 1,472,874 26,483,783 33,885,480 20,478,852 11,525,782 269,399,119 400,814,288

Depreciation for the year:

2005 23,402,359

2006 35,315,108

92


(Unit : Baht)

The Company Only

Office Office Motor

equipment furniture vehicles Total

Cost:

31 December 2005 59,701,900 26,169,342 16,660,295 102,531,537

Additions 7,002,797 1,452,222 - 8,455,019

Disposals (61,194) - - (61,194)

31 December 2006 66,643,503 27,621,564 16,660,295 110,925,362

Accumulated depreciation:

31 December 2005 25,547,439 5,303,117 7,062,710 37,913,266

Depreciation for the year 12,559,797 4,053,215 3,192,959 19,805,971

Depreciation on disposal (55,372) - - (55,372)

31 December 2006 38,051,864 9,356,332 10,255,669 57,663,865

Net book value:

31 December 2005 34,154,461 20,866,225 9,597,585 64,618,271

31 December 2006 28,591,639 18,265,232 6,404,626 53,261,497

Depreciation for the year:

2005 18,318,739

2006 19,805,971

As at 31 December 2006, certain furniture and office equipment and motor vehicles items have been

fully depreciated but are still in use. The original cost of those assets amounted to approximately Baht 11.7

million (2005: Baht 6.64 million) (The Company only: Baht 11.7 million, 2005: Baht 6.64 million).

13. BANK OVERDRAFTS AND SHORT-TERM LOANS FROM FINANCIAL INSTITUTION(Unit : Baht)

Interest rate Consolidated The Company Only

(percent per annum) 2006 2005 2006 2005

Bank overdrafts MOR+0.5% 1,581,672 2,250,540 - -

Short-term loans from financial institutions 7.00% - 14,000,000 - -

Total 1,581,672 16,250,540 - -

Bank overdrafts of a subsidiary are guaranteed by a related company.

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14. LONG-TERM LOANSOn 19 December 2001, the Company entered into a long-term loan agreement with a group of

domestic lenders formed by 4 commercial bank as follow:

(Unit: Baht)

Loan Interest rate (% p.a.) Repayment schedule Consolidated The Company Only

2006 2005 2006 2005

Tranche A - 7.75 for the first 2 years from Repayment in quarterly 10,890,000,000 11,000,000,000 10,890,000,000 11,000,000,000

the date of the agreement installments commencing

- MLR+0.25 for the third year March 2006, with the final

until the Project Completion installment due in

Date December 2016

- MLR after the Project

Completion Date

Tranche D MLR + 0.25 Single lump sum in June 2017 - 500,000,000 - 500,000,000

Tranche E MLR + 0.5 Single lump sum in June 2017 - 614,500,000 - 614,500,000

Long-term loans 10,890,000,000 12,114,500,000 10,890,000,000 12,114,500,000

Less: Current portion (330,000,000) (110,000,000) (330,000,000) (110,000,000)

Long-term loans - net of current portion 10,560,000,000 12,004,500,000 10,560,000,000 12,004,500,000

The Company settled the balance of Tranche D Facilities and Tranche E Facilities, amounting to Baht

1,114.5 million, in full in September 2006.

The loans are secured by the mortgages of the Projectûs M&E Equipment, depot building and

administration building, pledges of the Companyûs share certificates, share certificates of investments in

subsidiaries, sponsors support, and the assignment of rights and obligations under the Concession Agreement

and the rights to receive deposits in bank accounts.

The loan agreement included covenants imposed by the lenders on, among other things, the proportion

of shareholding of the principal shareholders, changes of the Companyûs management, entering into other

loan agreements, entering into any new business or activity which is not related to the Project and the

maintenance of certain financial ratios.

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15. LONG-TERM LOANS FROM SHAREHOLDER AND ACCRUED INTEREST(Unit : Baht)


Loans Subordinated Loan Agreement date 2006 2005 2006 2005

CH. Karnchang Public Company Limited

1 11 March 2005 - 380,000,000 - 380,000,000

2 27 May 2005 - 150,000,000 - 150,000,000

3 27 July 2005 - 80,000,000 - 80,000,000

4 25 August 2005 28,090,793 330,000,000 28,090,793 330,000,000

5 28 October 2005 80,000,000 80,000,000 80,000,000 80,000,000

6 30 November 2005 50,000,000 50,000,000 50,000,000 50,000,000

7 23 December 2005 100,000,000 100,000,000 100,000,000 100,000,000

8 30 December 2005 233,000,000 233,000,000 233,000,000 233,000,000

9 17 April 2006 100,000,000 - 100,000,000 -

10 30 May 2006 60,000,000 - 60,000,000 -

11 16 June 2006 52,000,000 - 52,000,000 -

12 29 June 2006 100,000,000 - 100,000,000 -

13 28 July 2006 100,000,000 - 100,000,000 -

14 18 August 2006 100,000,000 - 100,000,000 -

Long-term loans form shareholder 1,003,090,793 1,403,000,000 1,003,090,793 1,403,000,000

Accrued interest 62,062,319 35,752,812 62,062,319 35,752,812

1,065,153,112 1,438,752,812 1,065,153,112 1,438,752,812

The loans carry interest at a rate close to MLR plus 0.5 percent per annum and principal and interestare to be paid after the Company has settled all indebtedness under the Onshore Facilities Agreement (as

discussed in Note 14) or when the Company has excess cash. However, the Company repaid Baht 911.91million of the loans and accrued interest amounting to 88.98 million in September 2006.

16. SHARE CAPITAL/SHARE SUBSCRIPTION RECEIVED IN ADVANCEDuring the first quarter of year 2005, through a share offering the Company allocated 43,463,754

additional ordinary shares to its existing shareholders at a price of Baht 3 per share, making a total of Baht

130.4 million. The Company registered the above paid up share capital with the Ministry of Commerce on 1March 2005 to be a paid up share capital of Baht 7,350 million, comprises of 7,350 million ordinary shares ofBaht 1 each.

On 29 April 2005, the Annual General Meeting of the Companyûs shareholders passed resolution toincrease the Companyûs registered share capital from Baht 7,350 million to Baht 10,400 million through theissuance of 3,050 million ordinary shares with a par value of Baht 1 each, to be allocated at the following basis.

a) 300 million ordinary shares are to be allocated and offered, in whole or in part, to directors, management,and employees of the Company. These may be made on one or several occasions. Any ordinary sharesremaining after the allocation are to be allocated by means of public offerings. These offers may be inThailand and/or abroad and made on one or several occasions. In this regard, the Executive Board or any

95


persons assigned by the Companyûs executive board are granted the authority to determine theallocation of offering rights, and all details and conditions in respect of the number of ordinary shares tobe offered in each occasion, the offer period, the payment of share subscriptions and the offer price.

b) 2,750 million ordinary shares are to be allocated and offered, in whole or in part, by the way of publicoffering, on one or several occasions. In this regard, the Executive Board or any persons assigned by theCompanyûs executive board are granted the authority to determine the allocation of offering rights, and

all details and conditions in respect of the number of ordinary shares to be offered in each occasion, theoffer period, the payment of share subscriptions and the offer price.

On 15 May 2005, the Company registered its increased registered share capital with the Ministry of

Commerce to be a registered share capital of Baht 10,400 million, comprise of 10,400 million ordinary sharesof Baht 1 each.

Subsequent to 30 June 2005, an extraordinary general meeting of the Companyûs shareholders passedresolutions regarding the Companyûs registered share capital, summarised as follows.a) Approved reductions of 300 million in the number of additional ordinary shares to be allotted and offered

to directors, management, and employees of the Company and 2,750 million ordinary shares to be

allotted and offered by the way of public offering, in order to comply with the allocation of the Companyûsshare capital to the Mass Rapid Transit Authority of Thailand.

b) Approved an increase of Baht 4,600 million in the Companyûs registered share capital, from Baht 7,350million to Baht 11,950 million, through the issuance of 4,600 million ordinary shares with a par value ofBaht 1 each. The allocation of the additional ordinary shares is to be as follows.1) 2,600 million ordinary shares are to be allocated and offered to the Mass Rapid Transit Authority

of Thailand at the price equivalent to par value of Baht 1 each.2) 450 million ordinary shares are to be allocated and offered, in whole or in part, to directors,

management, and employees of the Company at the price equivalent to par value. These may beoffered on one or several occasions. Any ordinary shares remaining after the allocation are to beallocated by means of public offerings. These offers may be in Thailand and/or abroad and madeon one or several occasions.

In this regard, the Executive Board or any persons assigned by the Companyûs executiveboard is granted the authority to determine the allocation of offering rights, and all details andconditions in respect of the number of ordinary shares to be offered on each occasion, the offerperiod, the payment of the share price and the offer price.

3) 1,550 million ordinary shares are to be allocated and offered to public. Any shares remaining afterthis allocation are to be allocated, in whole or in part, by means of private placement and/or to

institutional investors, in accordance with the relevant Notifications of the Securities andExchange Commission, on one or several occasions.

In this regard, the Executive Board or any persons assigned by the Companyûs ExecutiveBoard are granted the authority to determine the allocation of offering rights, and all details and

conditions in respect of the number of ordinary shares to be offered on each occasion, the offerperiod, the payment of the share price and the offer price.

96


On 1 July 2005, the Company registered the reduction of its registered share capital to Baht7,350 million, comprising of 7,350 million ordinary shares of Baht 1 each, with the Ministry of Commerce,as discussed in a) above.

On 4 July 2005, the Company registered the increase in its registered share capital to Baht11,950 million, comprising of 11,950 million ordinary shares of Baht 1 each, with the Ministry ofCommerce, as discussed in b) above.

During December 2005, the Companyûs directors, management and employees exercised theirrights to purchase 296,689,300 ordinary shares, as discussed in b) 2), at a price of Baht 1 per share,for a total of Baht 296,689,300. The remaining 153,310,700 ordinary shares will be allocated by meansof public offerings, as granted resolution by the extraordinary general meeting of the Companyûsshareholders. On 11 January 2006, the Company registered the increase in its paid up share capitalto Baht 7,646,689,300 comprising 7,646,689,300 ordinary shares with a par value of Baht 1 each, with

the Ministry of Commerce.The Company recorded proceeds of Baht 296,689,300 from the offering of the Companyûs

ordinary shares to its directors, management and employee as çShare subscription received in advanceéin the balance sheet as at 31 December 2005.

Subsequent to 1 February 2006, an extraordinary general meeting of the Companyûs shareholderspassed resolutions regarding the Companyûs registered share capital, summarized as follows.

1) Approved the cancellation of the resolution alloting 2,600 million additional ordinary shares foroffer to the Mass Rapid Transit Authority of Thailand.

2) Approved the cancellation of the allocation of the 153,310,700 remaining additional ordinaryshares to be offered to directors, management, and employees of the Company, and theirallocation to a public offering

3) Approved a reduction of 1,550 million in the number of additional ordinary shares to be allotted

and offered by the way of public offering.4) Approved the allocation and offer of 1,315,810,700 ordinary shares by way of public offering. Any

shares remaining after this allocation are to be allocated, in whole or in part, by means of privateplacement and/or to institutional investors, in accordance with the relevant Notifications of theSecurities and Exchange Commission, on one or several occasions.

In this regard, the Executive Board or any persons assigned by the Companyûs Executive

Board are granted the authority to determine the allocation of offering rights, and all details andconditions in respect of the number of ordinary shares to be offered on each occasion, the offerperiod, the payment of the share price and the offer price.

5) Approved the allocation and offer of 2,987,500,000 ordinary shares to the Mass Rapid TransitAuthority of Thailand at the price equivalent to par value of Baht 1 each.

Subsequent to 8 September and from 11 - 13 September 2006, the Company made a public offering

of the 1,315,810,700 additional shares at a price of Baht 1.31 per share, or for a total of Baht 1,723,712,017and on 18 September 2006 received payment of this share capital increment. All expenses related to theshare offering are presented as a deduction from the share premium. In addition, on 21 September 2006, theCompany received payment of the share capital increment from the Mass Rapid Transit Authority of Thailand

97


amounting to Baht 2,987,500,000. The Company registered the increase in its paid-up capital with theMinistry of Commerce on 21 September 2006.

17. FARE BOX REVENUE AND COMMERCIAL DEVELOPMENT REVENUEUnder the Concession Agreement, the Company has agreed to pay a fee to the MRTA based on the

apportionment of revenue from fares and revenue from commercial development to the MRTA as follows:-

17.1 Remuneration from Fares

- Annual Remuneration

The Company agrees to apportion revenue from fares to the MRTA on an annual basis,

commencing from the 11th year after commencement of the revenue-generating service until the

end of the contract period. Total commitments amount to Baht 43,567 million (inclusive of VAT),

with annual commitments in the amounts stipulated in the agreement.

- Percentage Remuneration

The Company agrees to apportion fares revenue to the MRTA in the form of monthly

payments, at a percentage of total revenue from fares (inclusive of VAT) from the year it commences

the revenue-generating service. The rates are 1 percent for the 1st - 14th years, 2 percent for

the 15th year, 5 percent for the 16th - 18thyears and 15 percent for the 19th - 25th years.

17.2 Remuneration from Commercial Development

- Annual Remuneration

The Company agrees to apportion revenue from commercial development to the MRTA on

an annual basis from the year it commences the revenue-generating service until the end of the

contract period. Total commitments amount to Baht 930 million (inclusive of VAT) with annual

payments to be made in the amounts stipulated in the agreement.

- Percentage Remuneration

The Company agrees to apportion 7 percent of annual revenue from commercial

development (inclusive of VAT) to the MRTA in the form of monthly payments, from the year it

commences the revenue-generating service until the end of the contract period.

18. FARE BOX COMPENSATION REVENUEOn 6 January 2005, the Company entered into a memorandum of agreement with the Mass Rapid

Transit Authority of Thailand (çthe MRTAé) regarding the Companyûs cooperation in the trial discounting of

the fare box rate of the MRTA Initial System Project - çChaloem Ratchamongkhon Lineé stipulated in the

Concession Agreement. The discounted fare box rates are to be effective during the period 7 January 2005

to 31 March 2005. In return the MRTA agreed to pay compensation to the Company at a rate of 80 percent

of any shortfall between the actual fare box revenue and the standard fare box revenue figure as stipulated

in the memorandum of agreement. The Company recorded a fare box compensation revenue of Baht 23.1

million as a revenue for the first quarter of year 2005.

On 20 May 2005, the Company received a letter from the MRTA regarding the period of the trial

discounting of the fare box rate of the MRTA Initial System. In the letter, the MRTA indicated that the discount

98


compensation period was to be suspended during the period of the accident when the MRT system service

was unable to run as normal. The MRTA also indicated that the discount compensation period would then

continue again from 21 March 2005 and would end on 4 June 2005.

Subsequently on 10 June 2005, the Company received another letter from the MRTA informing it thatthe discount compensation to be paid to the Company was approximately Baht 20.5 million. The Company hastherefore adjusted the fare box compensation revenue to equivalent to the said amount.

19. NUMBER OF EMPLOYEES AND RELATED COSTSConsolidated The Company Only

2006 2005 2006 2005

Number of employees at end of year (persons) 1,040 1,022 941 928

Employee costs for the year (Thousand Baht) 312,638 298,240 281,416 272,044

20. PROMOTIONAL PRIVILEGESThe Company was granted promotional privileges approved by the Board of Investment under the Thai

Investment Promotion Act B.E. 2520, for the MRTA Initial System Project - Chaloem Ratchamongkhon Line

(the blue line), under certificate No. 1029 (1)/2546 dated 16 January 2003 Subject to certain imposed

conditions, the main privileges include the following:

a) Permission to exemption of import duty on imported machinery according to specified condition.

b) Exemption of corporate income tax for net income from promotional privileges for a period of 8 years

from the date the promoted operations commenced generating revenues (3 July 2004) and exemption

of income tax on dividends paid from the profit of the operations throughout the period in which the

corporate income tax is exempted.

In case that there are losses incurred during the corporate income tax exemption period, the

Company is allowed to utilise the losses as a deduction against the net income of future years after the

expiry of the tax exemption period, but with a time limit of 5 years after that period.

The Companyûs operating revenues for the years are below shown divided according to promoted

and non-promoted operations.

(Unit : Baht)

The Company Only

Promoted operations Non-promoted operations Total

2006 2005 2006 2005 2006 2005

Revenues

Fare box revenue 1,229,498,758 969,908,851 - - 1,229,498,758 969,908,851

Fare box compensation revenue - 20,481,123 - - - 20,481,123

Commercial development revenue - - 58,240,273 23,820,815 58,240,273 23,820,815

Gain on sales of investment in a subsidiary - - 17,146,500 - 17,146,500 -

Other income - - 6,755,603 3,210,996 6,755,603 3,210,996

Total revenue 1,229,498,758 990,389,974 82,142,376 27,031,811 1,311,641,134 1,017,421,785

99


21. BASIC LOSS PER SHAREBasic loss per share is calculated by dividing the net loss for the year by the weighted average number

of ordinary shares in issue during the year.

22. SEGMENT INFORMATIONThe Company and its subsidiariesû business operations involve two principal segments: (1) the operation

of the MRTA Initial System Project - Chaloem Ratchamongkhon Line and (2) commercial development, which

comprises the rental of retail space, provision of advertising services and telecommunications services (not yet

commended its operation) in underground train stations. These operations are mainly carried on in Thailand.

The percentage of the total revenues from the various activities that comprise the commercial development

segment to the consolidated total is not material (i.e. less than 10 percent) so they are presented as a single

segment with commercial development. As a result, the financial information by segments is presented as

belonging only to the MRTA Initial System Project segment and to the commercial development segment.

Below is the consolidated financial information for the years ended 31 December 2006 and 2005 of the

Company and its subsidiaries by segment.


Consolidated for the year ended 31 December

The MRTA Commercial

Initial System development Elimination of

Project business Others inter-segment

segment Segment segments revenues Consolidation

2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Revenue from external customer 1,229 990 145 53 24 3 - - 1,398 1,046

Inter-segment revenues - - 34 12 2 1 (36) (13) - -

Total revenues 1,229 990 179 65 26 4 (36) (13) 1,398 1,046

Segment income (loss) (380) (595) (25) (47) 26 4 (2) (2) (381) (640)

Unallocated income and expenses:

Selling and administrative

expenses (232) (275)

Interest expenses (1,061) (811)

Corporate income tax (3) -

Minority interest 8 10

Net loss (1,669) (1,716)

100



Consolidated as at 31 December

The MRTA Commercial

Initial System development

Project business

segment Segment Total Elimination Total

2006 2005 2006 2005 2006 2005 2006 2005 2006 2005

Project costs, net 18,336 18,277 194 158 18,530 18,435 - - 18,530 18,435

Non operating data

communication equipment - - 374 302 374 302 - - 374 302

Equipment, net 53 65 348 260 401 325 - - 401 325

Unallocated assets 1,937 670

Total assets 21,242 19,732

Transfer prices between business segments are as set out in Note 6 to the financial statements.

23. PROVIDENT FUNDThe Company and its employees have jointly established a provident fund in accordance with the

Provident Fund Act B.E. 2530. Both employees and the Company contributed to the fund monthly at the rate

of 3 percent of basic salary. The fund, which is managed by TMB Bank Public Company Limited, will be paid

to employees upon termination in accordance with the fund rules. During the year 2006, the Company

contributed Baht 6.5 million (2005: Baht 5.9 million) to the fund.

24. COMMITMENTS AND CONTINGENT LIABILITIES24.1 Capital commitments

As at 31 December 2006, the subsidiary had capital commitments of approximately Baht 16

million, relating to the construction and design of infrastructure system of retail space in the

underground stations.

24.2 Long-term service commitments

The Company had commitments from The Procurement of M&E Equipment contracts and the

Maintenance of M&E Equipment and Trackwork contracts for the period of 10 years commencing from

the Commercial Operation date.

Future minimum service fees payable under these contracts, excluding escalation in accordance

with the general consumer price index, as at 31 December 2006 are as follows:Million Baht Million Euro

Payable within :1 year 147 42 to 5 years 587 15Thereafter 367 10

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24.3 Project management commitments

The Company had commitments from a project management agreement with a joint venture

from 2007 to 2009 as the agreement dated 15 August 2000 and a supplemental agreement dated 18

March 2004.

Future minimum project management fee payables under these contracts, excluding escalation

in accordance with the general consumer price index, as at 31 December 2006 are as follows:

Million Baht

Payable within :

1 year 36

2 to 3 years 48

24.4 Commitments from Contracts to repair and maintenance of infrastructure and civil works of the MRTA

Initial System Project

The Company had commitments from Contracts to repair and maintenance of infrastructure and

civil works of the MRTA Initial System Project - Chaloem Ratchamongkhon Line with a related company

and other 3 companies, totaling 5 contracts, under the contracts dated 6 November 2003 and 1 June

2004, for the period of 7 years.

Future minimum maintenance fees payable under these contracts as at 31 December 2006 are

as follows:

Million Baht

Payable within :

1 year 192

2 to 5 years 665

24.5 Commitments from Contracts to repair and maintenance of retail area of the MRTA Initial System

Project

The Company had commitments from Contracts to repair and maintenance of retail area of the

MRTA Initial System Project - Chaloem Ratchamongkhon Line with 2 companies, under the contracts

dated 1 September 2005 and 14 October 2005. These contracts will expire in 2011.

Future minimum maintenance fees payable under these contracts as at 31 December 2006 are

as follows:

Million Baht

Payable within :

1 year 26

2 to 5 years 89

24.6 Commitments from various services agreements

The Company had commitments from various services agreements. Future minimum service fees

payable under these agreement as at 31 December 2006 are as follows:

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Million Baht

Payable within :

1 year 52

2 years 8

24.7 Bank Guarantees

As at 31 December 2006, there were outstanding bank guarantees issued by banks on behalf of

the Company as follows :

ë A bank guarantee of Baht 150 million was issued to the MRTA in respect of certain performance

bonds required in the Concession Agreement.

ë Bank guarantees of Baht 32.4 million was issued to the Metropolitan Electricity Authority as

certain performance bonds in respect of electricity meters instalation at the power substations

in the Depot area and Administration Building.

25. FINANCIAL INSTRUMENTS25.1 Financial risk management

The Companyûs and its subsidiariesû financial instruments, as defined under Thai Accounting

Standard No. 48 çFinancial Instruments: Disclosure and Presentationsé, principally comprise cash and

cash equivalents, trade accounts receivable, amounts due from related parties, loans, investments, and

short-term and long-term loans. The financial risks associated with these financial instruments and how

they are managed is described below.

Credit risk

The Company and its subsidiaries are exposed to credit risk primarily with respect to trade

accounts receivable, amounts due from related parties, loans and other receivable. The Company and

its subsidiaries manage the risk by adopting appropriate credit control policies and procedures and

therefore does not expect to incur material financial losses. In addition, the Company and its

subsidiaries do not have high concentration of credit risk since it has a large customer base. The

maximum exposure to credit risk is limited to the carrying amounts of receivables, amounts due from

related parties, loans and other receivables as stated in the balance sheet.

Interest rate risk

The Companyûs and its subsidiariesû exposure to interest rate risk relates primarily to its cash at

banks, bank overdrafts and long-term borrowings. However, since most of the financial assets and

liabilities bear floating interest rates or fixed interest rates which are close to the market rate, the

interest rate risk is expected to be minimal.

Significant financial assets and liabilities as at 31 December 2006 classified by type of interest

rates are summarized in the table below, with those financial assets and liabilities that carry fixed

interest rates further classified based on the maturity date, or the repricing date if this occurs before

the maturity date.

103


Consolidated

Fixed

interest rates Floating Non-interest

within 1 year interest rate bearing Total Interest rate

(Million Baht) (% p.a.)

Financial Assets

- Cash and cash equivalents 245 1,238 52 1,535 0.50 - 4.75

- Current investments 200 - - 200 4.75 - 5.00

- Trade accounts receivable - - 17 17 -

- Amounts due from related parties - - 5 5 -

445 1,238 74 1,757

Financial liabilities

- Bank overdraft and short-term

loan from financial institution 2 - - 2 8.25

- Construction and other payable

Related parties - 242 7 249 9.00

Other company - - 410 410 -

- Long-term loans - 10,890 - 10,890 8.25

- Long-term loans from shareholder and accrued interest - 1,065 - 1,065 8.50

2 12,197 417 12,616

The Company Only

Fixed

interest rates Floating Non-interest

within 1 year interest rate bearing Total Interest rate

(Million Baht) (% p.a.)

Financial Assets

- Cash and cash equivalents 245 1,222 52 1,519 0.50 - 4.75

- Current investments 200 - - 200 4.75 - 5.00

- Amounts due from related parties - - 5 5 -

- Loan to a subsidiary - 18 - 18 8.50

445 1,240 22 1,742

Financial liabilities

- Construction and other payable

Related parties - - 6 6 -

Other company - - 382 382 -

- Long-term loans - 10,890 - 10,890 8.25

- Long-term loans from shareholder and accrued interest - 1,065 - 1,065 8.50

- 11,955 388 12,343

104


Foreign currency risk

Since the Company has a significant foreign currency risk in respect of construction payable. As

at 31 December 2006, outstanding balances of the Companyûs financial liabilities denominated in

foreign currencies denominated in euro amounting to EUR 2.08 million which have not yet been hedged

against foreign exchange risk (The majority of these liabilities are repayable within 1 year)

25.2 Fair values of financial instruments

Since the majority of the Companyûs and its subsidiariesû financial instruments are short-term in

nature or bear floating interest rates, their fair value is not expected to be materially different from the

amounts presented in the balance sheets.

A fair value is the amount for which an asset can be exchanged or a liability settled between

knowledgeable, willing parties in an armûs length transaction. The fair value is determined by reference

to the market price of the financial instrument or by using an appropriate valuation technique,

depending on the nature of the instrument.

26. RECLASSIFICATIONCertain amounts in the financial statements for the year ended 31 December 2005 have been

reclassified to conform to the current yearûs classifications, with no effect on previously reported net loss or

shareholdersû equity.

27. APPROVAL OF FINANCIAL STATEMENTSThese financial statements were authorised for issue by the Companyûs Board of Directors on 26

February 2007.

Bmcl 06

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