Table of Content

Transcription

Table of Content

Table of Content
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Supporting Documents of Agenda
y Copy of the Minutes of Annual General Meeting of Shareholders
1
No. 97 held on April 9, 2009
(Attachment to agenda 1)
y Information Circular on Business Purchase and/or Share Acquisition and/or
16
Share Holding of Nine Companies in GE Money Thailand
y Information Circular on the purchase or accept the business transfer of CFG
60
Services Co., Ltd. by acquiring its shares.
y Information Circular on Entire Business Transfer of Ayudhya Card Services
63
Co., Ltd.

Supporting Documents for Meeting Attendance
y Proxy Form B. with barcode
y Practice Guideline for Shareholder Meetings
y Information of Directors nominated by the Bank to be appointed
as proxy
y The Bank’s Articles of Association relating to the Extraordinary
General Meeting of Shareholders No. 2/2009
y Process for attending the Meeting
y Map of the Meeting venue
Please Contact Us :
Corporate Secretariat Department
Telephone : 0 2296 4442-3, 0 2296 4453-5 Fax 0 2683 1460
E-mail
: [email protected]
See Attachment
64
67
70
Inside rear cover
Outside rear cover
No.
CORS (Thor) 509/2009
10 August, 2009
Re:
Notification of the Extraordinary General Meeting of Shareholders No. 2/2009
To:
The Shareholder
Bank of Ayudhya Public Company Limited
The Board of Directors of Bank of Ayudhya Plc (the “Bank”) at the Meeting No. 7/2009 on
July 22, 2009 resolved that the Extraordinary General Meeting of Shareholders (“EGM”) No.
2/2009 be held on Thursday August 27, 2009 at 14.00 hours in the Multipurpose Conference
Room, 9th Floor, Head Office Building, 1222 Rama III, Bang Phongphang, Yan Nawa, Bangkok.
The agendas of the Meeting are set out as follows:
Agenda 1
To adopt the Minutes of the Annual General Meeting of Shareholders (“AGM”)
No. 97 held on April 9, 2009
Fact and reason: The Bank has already completed the Minutes of AGM No. 97 held
on April 9, 2009 and filed the same to the relevant government agencies within the
prescribed timeline. The Minutes has also been published in the www.krungsri.com,
the copy of which is attached herewith (details as per attachment to agenda 1).
Board of Directors’ opinion: The Board of Directors has considered and opined
that the aforesaid Minutes of the Meeting is accurately recorded and therefore
resolved to propose to the EGM No. 2/2009 for adoption.
Agenda 2
To consider and approve the Bank to execute business purchase and/or share
acquisition and/or shareholding of Krungsriayudhya Card Co., Ltd., Tesco Card
Services Co., Ltd., GE Capital (Thailand) Limited, Total Services Solutions Plc,
General Card Services Co., Ltd., Tesco Life Assurance Broker Co., Ltd., Tesco
General Insurance Broker Co., Ltd., Quality Life Assurance Broker Co., Ltd. and
Quality General Insurance Broker Co., Ltd. including Service Agreements with
all above-mentioned companies and Financing Agreements with Krungsriayudhya
Card Co., Ltd., Tesco Card Services Co., Ltd., GE Capital (Thailand) Limited,
Total Services Solutions Plc and General Card Services Co., Ltd.
Fact and reason: To strengthen the Bank’s universal banking platform and enhance
its visibility in the retail banking market, the Bank wishes to acquire businesses by
share purchase and/or acquire and/or hold shares of companies within GE Money
Thailand group i.e. Krungsriayudhya Card Co., Ltd., Tesco Card Services Co., Ltd.,
GE Capital (Thailand) Limited, Total Services Solutions Plc, General Card Services
Co., Ltd., Tesco Life Assurance Broker Co., Ltd., Tesco General Insurance Broker Co.,
Ltd., Quality Life Assurance Broker Co., Ltd. and Quality General Insurance Broker
Co., Ltd. for the total value of THB 13,793.0 mm subject to any adjustment of the book
value as at the transaction date. In this respect, the Bank will also execute Service
Agreements with all above-mentioned companies and Financing Agreements with
Krungsriayudhya Card Co., Ltd., Tesco Card Services Co., Ltd., GE Capital (Thailand)
Limited, Total Services Solutions Plc and General Card Services Co., Ltd.
Under the Capital Market Supervisory Board’s Notification Re: Rules on Entering into
Material Transactions Deemed as Acquisition or Disposal of Assets, the above
transaction is considered an acquisition of assets with the specific value requiring only
notification to the shareholders, not an approval from the shareholders. However, upon
calculation of size or value of the transaction under the Capital Market Supervisory
Board’s Notification Re: Rules on Entering into Connected Transaction and to comply
with Section 107 of the Public Limited Companies Act B.E. 2535, the Bank is required
to obtain the shareholders’ approval for the transaction execution. Therefore, it is
resolved to propose this to the EGM No. 2/2009 for approval by which KT ZMICO
Securities Co., Ltd. is appointed as an independent financial advisor to provide
opinions in relation to the transaction (details as per attachment to agenda 2).
Audit Committee’s opinion: The Audit Committee opined that this transaction is
justifiable with the price and condition being fair.
Board of Directors’ opinion: The Board of Directors, without participation by those
having conflict of interest, resolved to propose the EGM No. 2/2009 to consider and
approve the Bank to execute business purchase by share purchase and/or share
acquisition and/or shareholding of Krungsriayudhya Card Co., Ltd., Tesco Card
Services Co., Ltd., GE Capital (Thailand) Limited, Total Services Solutions Plc,
General Card Services Co., Ltd., Tesco Life Assurance Broker Co., Ltd., Tesco
General Insurance Broker Co., Ltd., Quality Life Assurance Broker Co., Ltd. and
Quality General Insurance Broker Co., Ltd. including Service Agreements with all
above-mentioned companies and Financing Agreements with Krungsriayudhya Card
Co., Ltd., Tesco Card Services Co., Ltd., GE Capital (Thailand) Limited, Total Services
Solutions Plc and General Card Services Co., Ltd. and also to authorize the Board of
Directors or a group of individuals or any person authorized by the Board of Directors
to perform any necessary and relevant actions in relation to the above-mentioned
transaction.
Agenda 3
To consider and approve the Bank to execute the purchase or accept the
business transfer of CFG Services Co., Ltd. by acquiring its shares.
Fact and reason: To enhance the Bank’s opportunity in expanding new retail
customer base as well as the Bank’s expertise in the new business, the Bank wishes to
purchase or accept the transfer of business by purchase of 100% of the total issued and
subscribed shares of CFG Services Co., Ltd. providing title loan and auto sale and lease
back services from AIG Consumer Finance Group (AIG CFG and representatives of
AIG CFG) with the total value of THB 18.0 mm (contractual value).
Neither size nor nature of the above transaction requires the shareholders approval
according to the Capital Market Supervisory Board’s regulations. However, to
comply with Section 107 of the Public Limited Companies Act B.E. 2535 and
Section 43(2) of the Financial Business Act B.E. 2551, it is resolved to propose this
to the EGM No. 2/2009 for approval (details as per attachment to agenda 3).
Board of Directors’ opinion: It is considered appropriate to propose to the EGM
No. 2/2009 to consider and approve the Bank to purchase or accept the transfer of
business of CFG Services Co., Ltd. by acquiring 100% shares of its total shares sold
with the total value of THB 18.0 mm (contractual value) and to authorize the Board
of Directors or other person authorized by the Board of Directors to execute any
necessary and relevant actions in relation to the above-mentioned transaction.
Agenda 4
To consider and approve the Bank to accept the entire business transfer of Ayudhya
Card Services Co., Ltd.
Fact and reason: Reference is made to the share acquisition of AIG Card (Thailand)
Co., Ltd. (thereafter renamed to Ayudhya Card Services Co., Ltd “AYCS”) by the
Bank of 100% of the total shares issued and subscribed as approved by the
Extraordinary General Meeting of Shareholders No. 1/2009 on March 12, 2009. The
Bank has evaluated the business model options and business structure of AYCS by
taking into account the maximizing of benefits to the Bank and the shareholders, and
it was concluded that the entire business of AYCS should be transferred to the Bank
by means of Entire Business Transfer (EBT).
Neither size nor nature of the above transaction requires the shareholders approval
according to the Capital Market Supervisory Board’s regulations. However, to comply
with Section 107 of the Public Limited Companies Act B.E. 2535, it is resolved to
propose this to the EGM No. 2/2009 for approval (details as per attachment to agenda 4).
Board of Directors’ opinion: It is considered appropriate to propose to the EGM
No. 2/2009 to consider and approve the Bank to accept the business transfer of AYCS
by means of Entire Business Transfer (EBT) and to authorize the President and CEO,
Chief Financial Officer and Head of Consumer Banking to jointly approve, execute
and undertake any necessary and relevant actions so as to complete the transfer of
AYCS’s entire business to the Bank including to determine the transfer date.
Agenda 5
Other business (if any)
Please be invited to attend the Meeting on the date, time and venue stated above. For those
who may unable to be in attendance in person, you may nominate any individual person as proxy
to attend and vote on your behalf. In this respect, please proceed in accordance with the details as
stated in “Procedures for the Shareholders Meeting”.
The Bank has determined the list of the shareholders entitled to attend the EGM No.
2/2009 to be as of Wednesday August 5, 2009 (Record Date) and gathered all the names according
to Section 225 of Securities and Exchange Act by closing the register book suspending share
transfer (Closing Date) on Thursday August 6, 2009.
Yours sincerely,
(Mrs. Thidarat Sethvaravichit)
Corporate Secretary
By order of the Board of Directors
Attachment to Agenda 1
Minutes of the Annual General Meeting of Shareholders No. 97
April 9, 2009
The Meeting was held at the Multipurpose Conference Room, 9th floor, Head Office Building,
1222, Rama III Road, Bang Phongphang, Yan Nawa, Bangkok.
Mr. Veraphan Teepsuwan
Mrs. Thidarat Sethvaravichit
Chairman to the Board of Directors, chaired the Meeting
(Chairman)
Corporate Secretary, recorded the Minutes
of the Meeting
The Chairman informed the Meeting that there were 1,209 shareholders attending the meeting,
both in person and by proxy, representing 4,261,837,770 shares or 70.16% of the Bank’s total ordinary
shares sold. A quorum was thus constituted.
The Meeting was open at 14.00 hrs.
Before proceeding with the agenda, the Chairman informed the Meeting that all 10 Bank
Directors attended the Meeting and introduced them one by one as follows:
Three Non-Executive Directors
(1) Mr. Veraphan
Teepsuwan
y Chairman
(2) Mr. Chet
Raktakanishta
y Director
(3) Mr. Pornsanong Tuchinda
y Nomination and Remuneration Committee Member
Four Independent Directors
(4) Mr. Surachai
Prukbamroong
y Chairman of the Audit Committee
(5) Mr. Karun
Kittisataporn
y Chairman of Nomination and Remuneration
Committee
(6) Mr. Virat
Phairatphiboon
y Audit Committee Member / Nomination and
Remuneration Committee Member
(7) Mr. Yongyuth
Withyawongsaruchi
y Audit Committee Member
Three Executive Directors
(8) Mr. Tan Kong Khoon
y President and CEO
(9) Mrs. Janice Rae Van Ekeren
y Chief Financial Officer
(10) Mr. Pongpinit
Tejagupta
y Head of Distribution
Senior executives of the Bank were also introduced as follows:
(1) Mr. Amornsak
Noparumpa
y Senior Advisor
(2) Mr. Virojn
Srethapramotaya
y Head of Corporate Banking
(3) Mr. Poomchai
Wacharapong
y Head of SME Banking
(4) Mr. Roy Agustinus Gunara
y Head of Consumer Banking
(5) Mr. Tinnawat
Mahatharadol
y Head of Treasury
(6) Mr. Chandrashekar Subramanian
y Chief Risk Officer
Krishoolndmangalam
(7) Mrs. Wanna
Thamsirisup
y Head of Operations
(8) Mr. Sudargo
Harsono
y Head of Corporate Marketing
(9) Miss Nopporn
Tirawattanagool
y Head of Human Resources
-1-
(10) Dr.Yaowalak
Poolthong
(11) Mr. Apirom
(12) Mr. Somrit
(13) Miss Phawana
Noi-Am
Srithongdee
Niemloy
Head of Corporate Communications and Investor
Relations
y Head of Information Technology
y Head of Special Project Human Resources
y General Counsel
y
In addition, Dr. Suphamit Techamontrikul of Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd.
as the Bank’s auditor; the representative of Norton Rose (Thailand) Limited as the inspector who would
ensure that this Annual General Meeting of Shareholders (“AGM”) is transparent and complies with
applicable laws and the Bank’s Articles of Association; and the representative of the Thai Investors
Association were also introduced.
Subsequently, the Chairman assigned the Corporate Secretary to explain to the shareholders
about the voting procedure to ensure smooth meeting process as follows:
y Before casting votes on each agenda, the Bank will allow the shareholders to make inquiries
or provide opinions on issues related to that agenda. In this regard, a shareholder has to raise
his/her hand and the Chairman will invite the shareholder to make an inquiry or provide an
opinion.
y In casting votes, one share shall have one vote. For those who would like to object, disapprove
or abstain from voting on a particular issue, they have to raise their hands, except for the
election of Directors in Agenda 5 which all ballots of approval, disapproval and abstention
will be collected.
y For those who have arranged for proxies to attend the Meeting and vote on their behalf, their
votes of approval, disapproval and abstention have been duly recorded in the computer prior
to the Meeting.
The Chairman informed the Meeting that today Meeting would be conducted as per the given
agendas, details of which appear in the Notification of the AGM No. 97 delivered to the shareholders in
advance, but to facilitate the shareholders in considering each agenda, the Corporate Secretary was assigned
to summarize the details for the shareholders.
The Meeting proceeded with the following agendas:Agenda 1 To adopt the Minutes of the Extraordinary General Meeting of Shareholders (“EGM”) No.
1/2009 held on March 12, 2009
The Corporate Secretary reported that the EGM No. 1/2009 was held on March 12, 2009 as per
the details in the copy of the Minutes of the Meeting which was sent to the shareholders together with the
Notification of the Annual General Meeting of Shareholders No. 97. A copy of the Minutes has also been
delivered to the relevant government agencies e.g. the Stock Exchange of Thailand, the Bank of Thailand,
the Ministry of Finance, the Ministry of Commerce within the prescribed timeline and it has also been
disseminated on www.krungsri.com.
The Board of Directors considered it appropriate to propose that the AGM No.97 adopt the
Minutes of the EGM No. 1/2009 which have been accurately recorded.
The Corporate Secretary informed the Meeting that the Board of Directors was willing to answer
and welcome the shareholders’ inquiries and suggestions. It appeared that no shareholder raised inquiries or
made suggestions on this agenda.
-2-
A motion was made for the Meeting’s consideration and adoption.
After due consideration, the Meeting adopted the Minutes of the EGM No. 1/2009 held on
March 12, 2009 as proposed.
Details of the votes were as follows:
Vote
(1) Approved
(2) Disapproved
(3) Abstained
Total
Number of Votes
(1 share = 1 vote)
% of the total voting right of the
shareholders present and entitled to vote
4,178,086,776
97.86
-
-
91,540,992
2.14
4,269,627,768
100.00
Agenda 2 To acknowledge the Board of Directors’ Annual Report
The Corporate Secretary reported that the Board of Directors’ Annual Report 2008 presents the
Bank’s overall performance of the year 2008 and other relevant information. The Bank has already
distributed the Annual Report to the shareholders in the form of CD-ROM together with the Notification of
the AGM No. 97. However, the Annual Report in a publication form is also available upon request and will
be distributed to all shareholders present at the AGM No. 97.
The Board of Directors considered it appropriate to report the Bank’s overall performance and
other relevant information of the year 2008 to the AGM No. 97 for acknowledgement.
A motion was made for the Meeting’s consideration and acknowledgment.
After due consideration, the Meeting acknowledged the Bank’s overall performance of the
year 2008 as proposed.
Vote
(1) Approved
(2) Disapproved
(3) Abstained
Total
Number of Votes
(1 share = 1 vote)
4,178,204,666
97.86
-
-
91,540,992
2.14
4,269,745,658
100.00
-3-
Agenda 3 To consider and approve the 2008 Bank’s Balance Sheets and Profit and Loss Statements
for the fiscal year ended December 31, 2008
The Corporate Secretary reported that the 2008 Bank’s Balance Sheets and Profit and Loss
Statements for the fiscal year ended December 31, 2008 have been agreed by the Audit Committee and
audited and certified by the Bank’s auditor, details of which appear in the Annual Report 2008 delivered to
the shareholders in the form of CD-ROM together with the Notification of the AGM No. 97.
The Board of Directors considered it appropriate to propose that the AGM No. 97 consider and
approve the 2008 Bank’s Balance Sheets and Profit and Loss Statements for the fiscal year ended December
31, 2008 which have been agreed by the Audit Committee and audited and certified by the Bank’s auditor.
A motion was made for the Meeting’s consideration and approval.
After due consideration, the Meeting approved the 2008 Bank’s Balance Sheets and Profit
and Loss Statements for the fiscal year ended December 31, 2008 which have been agreed by the Audit
Committee and audited and certified by the Bank’s auditor.
Vote
(1) Approved
(2) Disapproved
(3) Abstained
Total
Number of Votes
(1 share = 1 vote)
4,178,339,692
97.85
-
-
91,803,876
2.15
4,270,143,568
100.00
Agenda 4 To consider the performance allocation and dividend payment for the period ended
December 31, 2008
The Corporate Secretary reported that from the Bank’s performance for the period ended
December 31, 2008 which has been agreed by the Audit Committee and audited and certified by the Bank’s
auditor, the Bank’s net profit is THB 2,928,609,910.10 (Two Thousand Nine Hundred Twenty Eight Million
Six Hundred Nine Thousand Nine Hundred Ten Baht and Ten Satang) or THB 0.50 per share. The
performance can be allocated as follows:
The Bank’s net profit for 2008
Plus retained earnings brought forward from 2007
Accumulated profit for annual allocation
Less interim dividend payment for 6,026,047,417 shares at
THB 0.15 per share which the Bank allocated for the
period ended June 2008
Total net profit for allocation
-4-
THB
THB
THB
2,928,609,910.10
3,154,333,617.48
6,082,943,527.58
THB
THB
903,907,112.55
5,179,036,415.03
Therefore, the Bank can pay dividend to the shareholders according to Section 115 of the Public
Limited Companies Act B.E. 2535 (1992) and Article 41 of the Bank’s Articles of Association. The Bank’s
dividend policy states that the dividend shall be paid to the shareholders at the rate of 30-60% of the Bank’s
net profit as the Board of Directors sees appropriate.
Subject to Section 116 of the Public Limited Companies Act B.E. 2535 (1992), a company shall
allocate not less than five percent of its annual net profit less the accumulative loss brought forward (if any)
until the reserve fund attains an amount of not less than ten percent of the registered capital, unless the
articles of association of the company or other laws require a larger amount of reserve fund. In this respect,
the Bank is required to allocate partial net profits of the year 2008 as reserve fund and allocate the remaining
net profits as follows:
1) Dividend payment for the period ended December 2008
to the shareholders for the total of 6,074,143,747 shares
with the value of THB 0.15 per share
2) Legal reserve (not less than 5% of the annual net profits)
3) Retained earnings carried forward
Total profits to be allocated
THB
THB
THB
THB
911,121,562.05
147,000,000.00
4,120,914,852.98
5,179,036,415.03
approve the performance allocation for the year ended December 31, 2008, the allocation of annual profit of
THB 147,000,000 (One Hundred Forty Seven Million Baht Only) as reserve fund, and the dividend payment
for the period ended December 2008 to the shareholders for the total of 6,074,143,747 ordinary shares at the
rate of THB 0.15 per share in the total amount of THB 911,121,562.05 (Nine Hundred Eleven Million One
Hundred Twenty One Thousand Five Hundred Sixty Two Baht and Five Satang). The Bank determined the
list of the shareholders entitled to receive dividend payment on Tuesday, April 21, 2009 (Record Date) and
gathered all the shareholders names according to Section 225 of the Securities and Exchange Act by closing
the share register to suspend a share transfer (Closing Date) on Wednesday, April 22, 2009, and the dividend
will be paid by Wednesday, April 29, 2009.
After due consideration, the Meeting approved the performance allocation for the year
ended December 31, 2008, the allocation of annual profit of THB 147,000,000 (One Hundred Forty
Seven Million Baht Only) as reserve fund, and the dividend payment for the period ended December
2008 to the shareholders for the total of 6,074,143,747 ordinary shares at the rate of THB 0.15 per
share in the total amount of THB 911,121,562.05 (Nine Hundred Eleven Million One Hundred
Twenty One Thousand Five Hundred Sixty Two Baht and Five Satang). The Bank has determined
the list of the shareholders entitled to receive dividend payment on Tuesday April 21, 2009 (Record
Date) and gathered all the names according to Section 225 of the Securities and Exchange Act by
closing the share register to suspend a share transfer (Closing Date) on Wednesday, April 22, 2009
and the dividend will be paid by Wednesday, April 29, 2009 as proposed.
-5-
Vote
(1) Approved
(2) Disapproved
(3) Abstained
Total
Number of Votes
(1 share = 1 vote)
4,178,600,413
18,100
91,540,992
4,270,159,505
97.86
2.14
100.00
Agenda 5 To consider and elect Directors
The Chairman stated to the Meeting that with regard to the election of Directors in Agenda 5, he
and two Directors i.e. Mr. Surachai Prukbamroong and Mr. Pornsanong Tuchinda who would retire by
rotation in this Meeting would be out of the meeting room to allow the shareholders to freely provide their
opinions and cast their votes. For this agenda, Mr. Karun Kittisataporn, Director and Chairman of the
Nomination and Remuneration Committee, would act as the Chairman of the Meeting.
5.1 The election of Directors to replace the retired by rotation Directors
The Corporate Secretary reported that in this AGM No. 97, three Directors of the Bank namely
Mr.Veraphan Teepsuwan (Non-Executive Director), Mr.Surachai Prukbamroong (Independent Director) and
Mr. Pornsanong Tuchinda (Non-Executive Director) shall retire by rotation. The Nomination and
Remuneration Committee thus proposed that the Board of Directors nominate these Directors to be reelected as the Directors of the Bank for another term. Their personal profiles appear in Agenda 5 supporting
documents included in the Notification of the AGM No. 97.
In this connection, the Bank had given an opportunity to the shareholders to nominate qualified
persons to be elected as the Directors pursuant to the procedures as prescribed on the Bank’s website for the
period from December 19, 2008 to January 19, 2009. It appeared that no shareholder nominated any person
to be elected as Director.
The Board of Directors without participation by interested Directors agreed with the
recommendation of the Nomination and Remuneration Committee that it is appropriate to nominate to the
AGM No.97 Mr. Veraphan Teepsuwan (Non-Executive Director), Mr. Surachai Prukbamroong (Independent
Director) and Mr. Pornsanong Tuchinda (Non-Executive Director) who retired by rotation, to be re-elected
as the Directors of the Bank for another term subject to approval from the Bank of Thailand and other relevant
agencies.
and welcome the shareholders’ inquiries and suggestions.
The Shareholder asked how many term(s) of office these three Directors who would be retired
by rotation in this Meeting have hold? and do the Bank’s regulations limit the number of terms of Director
office?
The Chairman of the Nomination and Remuneration Committee explained that the Bank’s
regulations do not specify the number of term(s) of Director office, but contain the practice for Director
retirement that if a 72-year-old Director is still in the office, he can hold office until his term of office ends;
and if a Director nominated to be re-elected is less than 72 years old, he is entitled to be re-elected.
-6-
The Shareholder asked whether the Nomination and Remuneration Committee and the Board
of Directors have taken into account the performance of the Directors before nominating them to the AGM
for re-election and in which respect?
The Chairman of the Nomination and Remuneration Committee explained that their
performance has been considered. Each Director’s performance of directorship work such as establishment
of the Bank’s strategies, monitoring of the Bank’s operating results and management is satisfactory.
No shareholder made or provided an additional inquiry or suggestion on this agenda.
After due consideration, the Meeting re-elected Mr. Veraphan Teepsuwan (NonExecutive Director), Mr. Surachai Prukbamroong (Independent Director) and Mr. Pornsanong
Tuchinda (Non-Executive Director), who retired by rotation, as the Directors of the Bank for another
term subject to approval from the Bank of Thailand and other relevant agencies.
Vote
Number of Votes
(1 share = 1 vote)
1. Mr. Veraphan Teepsuwan (Non-Executive Director)
(1) Approved
4,179,606,601
(2) Disapproved
44,503
(3) Abstained
91,823,221
Total
4,271,474,325
2. Mr. Surachai Prukbamroong (Independent Director)
(1) Approved
4,140,890,536
(2) Disapproved
38,822,300
(3) Abstained
91,779,943
Total
4,271,492,779
3. Mr. Pornsanong Tuchinda (Non-Executive Director)
(1) Approved
4,179,605,000
(2) Disapproved
48,780
(3) Abstained
91,843,709
Total
4,271,497,489
5.2
97.85
2.15
100.00
96.94
0.91
2.15
100.00
97.85
2.15
100.00
The election of Director to fill in the Board’s vacancy
The Corporate Secretary reported that currently, there is a Board’s vacancy due to the
resignation of Miss Phanporn Kongyingyong (Non-Executive Director) effective on October 31, 2007 prior
to the expiration of her office term (actually in the AGM No. 97). The Nomination and Remuneration
Committee has therefore selected and nominated Mr. Mark John Arnold, a competent and legitimate
qualified candidate to the Board of Directors for proposing him to the AGM No. 97 for election as the Bank
Director (Non- Executive Director) to fill in the Board’s vacancy subject to approval from the Bank of
Thailand and other relevant agencies. His personal profile appears in Agenda 5 supporting document included in
the Notification of the AGM No. 97.
-7-
elect Mr. Mark John Arnold, a competent and legitimate qualified candidate as the Bank Director (NonExecutive Director) to fill in the Board’s vacancy as proposed by the Nomination and Remuneration
Committee, subject to the approvals from the Bank of Thailand and other relevant agencies.
The Shareholder asked would Mr. Mark John Arnold have time to manage the Bank’s business
or attend the Board of Directors meetings since his personal profile in the Notification of the AGM No. 97
indicates that he holds the position of executive both in Romania and Hungary?
The Chairman of the Nomination and Remuneration Committee explained that at present,
Mr. Mark is working in Thailand so that there would have no problem of time.
The Corporate Secretary explained further that Mr. Mark has already resigned from the
executive of Budapest Bank (GE Money).
The Shareholder asked is there any rule or regulation on the ratio of Thai and foreign
Directors? and what is such ratio?
General Counsel replied that the Financial Institution Business Act B.E. 2551 (2008)
prescribes that any commercial bank shall have foreign directors in the number of not more than onequarter of all directors, unless relaxation is obtained from the Bank of Thailand. In this regard, if Mr. Mark
is counted, the Bank will have three foreign Directors out of all 11 Directors, which slightly exceeds the
specified number. However, the Bank has requested and obtained relaxation from the Bank of Thailand for
having foreign Directors in excess of one-quarter of all Bank Directors.
The Shareholders asked can the Bank procure additional competent foreigners to jointly
manage the Bank’s business?
The Chairman of the Nomination and Remuneration Committee explained that procurement of
additional foreigners to jointly manage the Bank’s business must be reasonable for the maximum benefit of
the Bank and its shareholders subject to approval from the Bank of Thailand.
After due consideration, the Meeting elected Mr. Mark John Arnold, a competent and
legitimate qualified candidate, as the Bank Director (Non-Executive Director) to fill in the Board’s
vacancy as proposed by the Nomination and Remuneration Committee, subject to approval from the
Bank of Thailand and other relevant agencies.
-8-
Vote
Number of Votes
(1 share = 1 vote)
Mr. Mark John Arnold (Non-Executive Director)
(1) Approved
4,175,836,968
(2) Disapproved
97.80
-
212,220
(3) Abstained
Total
95,448,701
2.20
4,271,497,889
100.00
Before starting Agenda 6, the three Directors returned to their seats and Mr. Veraphan
Teepsuwan, the Chairman of the Board, acted as the Chairman of the Meeting.
Agenda 6 To consider and approve the Directors’ remuneration
The Corporate Secretary reported that the Board of Directors with endorsement by the
Nomination and Remuneration Committee considered it appropriate to propose that the AGM No. 97
consider and approve the remuneration for directors consisting of the retainer fee, attendance fee and pension
(annual remuneration), including remuneration of directors who also serve in other committees. This
remuneration is at the same rate as approved by the AGM No. 96. Details of the remuneration are as follows:
Structure of Directors’ Remuneration of 2009
Position
Retainer Fee
per
per
month
year
Attendance Fee
per month
per
year
Pension
per month
per
year
Total
remuneration
per
person/month
Unit : Baht
Total
remuneration
per person/
year
Board of Directors
1. Chairman
180,000.- 2,160,000.80,000.- 960,000.- 111,900.- 1,342,800.371,900.2. Non-Executive Director
120,000.- 1,440,000.57,600.- 691,200.60,000.720,000.237,600.3. Independent Director
120,000.- 1,440,000.57,600.- 691,200.60,000.720,000.237,600.4. Executive Director
38,000.- 456,000.60,000.720,000.98,000.5. Corporate Secretary
25,000.300,000.25,000.Remark Mr. Tan Kong Khoon and Mrs. Janice Rae Van Ekeren, the two Executive Directors who are GE representatives do not receive any
remuneration from the Bank in compliance with GE regulations
Committees
1. Audit Committee
- Chairman of the Audit
42,000.- 504,000.42,000.Committee
- Audit Committee
39,600.- 475,200.39,600.Member
2. Nomination and
Remuneration Committee
- Chairman of The
42,000.- 504,000.42,000.Nomination and
Remuneration
Committee
- Nomination and
39,600.- 475,200.39,600.Remuneration
Committee Member
-9-
4,462,800.2,851,200.2,851,200.1,176,000.300,000.-
504,000.475,200.-
504,000.-
475,200.-
Independent Directors or Non-Executive Directors who are also committee members will be
remunerated as follows:
Amount of total remuneration
Position
per person/year
(1) Independent Director who is also the Chairman of the Audit
THB 3,355,200.Committee or the Chairman of the Nomination and Remuneration
Committee
(2) Independent Director or Non-Executive Director who is also an
THB 3,326,400.Audit Committee Member or a Nomination and Remuneration
Committee Member
(3) Independent Director who is also an Audit Committee Member and
THB 3,801,600.a Nomination and Remuneration Committee Member
In case of a partial term of office, the remuneration will be paid on a pro rata basis. The above
rates are put into effect from the year 2009 onwards and shall be effective until a meeting of shareholders
resolves otherwise.
approve the 2009 Director’s remuneration consisting of the retainer fee, attendance fee and pension (annual
remuneration), including the remuneration of directors who also serve in other committees as proposed by
the Nomination and Remuneration Committee.
and welcome the shareholders’ inquiries and suggestions on this agenda.
The Shareholders asked which standard is applied by the Bank in calculating the Directors’
pension? and is the Directors’ pension based on the Bank’s profit?
The Chairman of the Nomination and Remuneration Committee explained that the Directors’
pension is calculated based on the average director remuneration of the industry i.e. banks having the same
or similar size as the Bank. This pension is fixed and is not a bonus nor depends on a profit or loss of the
Bank.
The Shareholder asked would the Directors receive the pension if the Bank suffers a loss?
The Chairman explained that the pension is a partial salary of a Director. After obtaining
approval from a meeting of shareholders, if the Bank suffers a loss, the Directors remain entitled to receive
the pension. If in subsequent years, the Bank still suffers a loss, the Nomination and Remuneration
Committee will review and propose to the Board of Directors and a meeting of shareholders the appropriate
rate for consideration in which Independent Directors will participate.
The Shareholder asked is it possible to decrease the Directors’ remuneration to compensate the
Bank’s dividend rate which is quite low when compared to those of other banks?
The Chairman explained that the Board of Directors will devote itself to work harder and find
the measures to support the Bank’s profitability so as to enable the Bank to pay a higher rate of dividend to
the shareholders. It can be seen that the current rate of Directors’ remuneration is not high and equal to
those of the previous year.
- 10 -
After due consideration, the Meeting approved the 2009 Director’s remuneration
consisting of the retainer fee, attendance fee and pension (annual remuneration), including the
remuneration of directors who also serve in other committees as proposed by the Nomination and
Remuneration Committee.
Vote
(1) Approved
(2) Disapproved
(3) Abstained
Total
Number of Votes
(1 share = 1 vote)
4,144,632,201
35,161,211
91,666,738
4,271,460,150
97.03
0.82
2.15
100.00
Agenda 7 To consider and appoint the Auditor(s) and approve the audit fee
The Corporate Secretary reported that in compliance with Section 120 of the Public Limited
Companies Act B.E. 2535 (1992) stating that “the Annual General Meeting of Shareholders shall annually
appoint the company’s auditor and determine the annual audit fee. It is possible for the former auditor to be
re-appointed”. The Audit Committee proposed that the Board of Directors nominate the auditor(s) of the
Bank and 9 subsidiary companies for the fiscal year 2009 for appointment to ensure consistency with the
consolidated supervision and approve the audit fee as follows:
1) To appoint Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd. by Dr. Suppamit
Techamontrikul, Registration No. 3356 and/or Mr. Niti Jungnitnirundr, Registration No. 3809 and/or Mr.
Chawala Tienprasertkit, Registration No. 4301 as the auditor(s) of the Bank and 9 subsidiary companies for
the fiscal year 2009 with the audit fee of THB 17,079,000 (Seventeen Million Seventy Nine Thousand Baht
Only), including Cayman Islands Branch. The audit fee is divided into THB 8,850,000 (Eight Million Eight
Hundred Fifty Thousand Baht Only) for the Bank and THB 8,229,000 (Eight Million Two Hundred Twenty
Nine Thousand Baht Only).
2) To appoint KPMG LAO Co., Ltd. as the auditor of the Vientiane branch for the fiscal year
2009 for another term, with the audit fee of USD 6,500 and appoint Deloitte Touche Tohmatsu, Hong Kong
as the auditor of the Hong Kong Branch for the fiscal year 2009 for another term, with the audit fee of HKD
456,000.
However, the above audit fees do not include VAT or other taxes.
After the Audit Committee, the Accounting Department and the Audit Department jointly made
consideration and selection of the auditor(s), they agreed that the selected auditors are qualified in
compliance with the criteria stipulated by the Bank of Thailand and the Office of the Securities and
Exchange Commission, as well as those stipulated by the Audit Committee. Moreover, these auditors neither
hold any positions i.e. directors, employees, contract staff or any other positions in the Bank nor have any
relationships or stake-holding with the Bank, executives, major shareholders or related parties of the Bank in
a manner that may affect their independent performance. These three auditors have already been approved
by the Bank of Thailand for the fiscal period of 2009.
The Board of Directors considered it appropriate to propose that the AGM No. 97 appoint the
auditor(s) of the Bank and subsidiary companies for the fiscal year 2009 and approve the audit fee as
proposed by the Audit Committee.
- 11 -
The Shareholder asked are the audit fees proposed by the Bank or by the auditor? and is it
possible to maintain the same audit fees during this economic situation?
The Chairman of the Audit Committee explained that the audit fees initially proposed by the
auditor was higher than the rates proposed to the Meeting, but the Bank tried to negotiate to decrease such
figure. Even though the Bank’s audit fee for the year 2009 increases by around four percent, the total audit
fee of the Bank and its subsidiaries decreases by 10 percent due to the fact that the Bank integrated three
subsidiaries into one so that at present, the Bank has 9 subsidiaries.
The Shareholder asked would the audit fee increase every year?
The Chairman of the Audit Committee explained that subject to law, the audit fee shall be
determined every year, but the rates proposed to the Meeting will be fixed for two years i.e. 2009-2010 as
negotiated with the Bank’s auditor to be in line with the current economic situation.
The Shareholder asked whether the period for audit fee adjustment meets the general standard
since the companies in the lower market adjust their audit fees every three to five years and also asked
about the audit period.
The Chairman of the Audit Committee explained that there is no standard audit fee, but it
depends on the volume of work and direction of individual organization.
The Bank’s Auditor explained further about the audit period that if considering the
consolidation supervision which the Bank has additional subsidiary companies by acquiring shares of AIG
Retail Bank Public Company Limited (“AIGRB”) and AIG Card (Thailand) Co., Ltd. (“AIGCC”) and the
change of accounting standards to the International Accounting Standards or IAS 39, the audit period is
therefore longer. In addition, the audit of a commercial bank normally takes more time than a general listed
company since two audits and two reviews a year are to be conducted, including the special audit as
required by the Bank of Thailand.
The Shareholder asked whether Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd. has a branch
in Vientiane, Lao People’s Democratic Republic since if the Bank uses an auditor company having the
office both in Bangkok and Vientiane, better coordination and cost saving can be expected.
President and CEO stated that the recommendation made by the shareholder is advantageous
and the Bank would accept it for consideration.
The Chairman of the Audit Committee explained that the Bank engages KPMG LAO Co., Ltd.
as the auditor for the Vientiane Branch since Lao PDR law prescribes that only auditor companies
registered in Lao PDR can be engaged, and Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd. has not yet
registered in Lao PDR.
The Shareholder asked about the details on the audit fees indicated on page 215 of the Annual
Report 2008.
- 12 -
The Chairman of the Audit Committee explained that clause 1. on page 215 of the Annual
Report 2008 shows the audit fees paid by the Bank and its subsidiaries in the previous year. This figure is
the 2007 expense.
The Chairman explained further that the first item is the audit fees paid by the Bank to the
auditor in Thailand and the second item amounting to more than THB 2.0 mm is the audit fee paid to
Deloitte Touche Tohmatsu, Hong Kong.
After due consideration, the Meeting appointed the auditor(s) of the Bank and subsidiary
companies for the fiscal year 2009 and approved the audit fees as proposed by the Audit Committee.
Vote
(1) Approved
(2) Disapproved
(3) Abstained
Total
Number of Votes
(1 share = 1 vote)
4,179,850,448
4
91,649,337
4,271,499,789
97.85
2.15
100.00
Agenda 8 To consider other businesses (if any)
The Corporate Secretary informed the Meeting that the Board of Directors was willing to
answer and welcome the shareholders’ inquiries and suggestions.
The Shareholder asked about the management’s preventive measures to ensure that the Bank
can pass the 2009 economic crisis which may bring the financial and management risks and the operational
results may not meet the specified goal and asked about the net profit of the 2009 first quarter and the 2009
tendency.
President and CEO explained that in this 2009, the Bank’s management team has to face the
greater difficulty in managing the Bank’s business for achieving the goal. However, the Bank plans to
expand its portfolio by around five to six percent. Furthermore, the Bank has attained the greater growth rate
from the acquisition of shares in AIGRB and AIGCC which is likely the good foundation for successful
implementation of the 2009 business plan.
In addition, the Bank has managed its expenses to be more effective by decreasing the marketing
and advertising expenses while maintaining necessary expenses for the customers and has developed and
improved the measures for NPL prevention since late 2008 by arranging Bank’s employees to closely follow
up the loan customers for the purpose of early problem prevention. Due to high liquidity and continuous
implementation of the measures to stimulate sound performance, it is expected that the Bank can pass the
economic crisis.
The Shareholder asked which financial tool brings the revaluation deficit on investments of
THB 143 mm. shown on pages 121 and 151, the Banks’ financial statements in the Annual Report 2008.
- 13 -
President and CEO explained that the revaluation deficit on investment on pages 121 and 151 in
the Annual Report 2008 mainly results from a loss from investment in listed securities in the various markets
and an adjustment of the fair value evaluation methodology to mark-to-market, thereby showing a loss in the
account. However, the Bank has the policy to hold said securities to their maturity dates. The loss figure
will be deducted from the capital account to ensure that the Bank has sufficient fund in case the Bank has to
liquidate such investment account.
The Shareholder asked the reason why the Bank invested in the hybrid instruments as shown on
page 151 of the Annual Report 2008 and observed that generally, loss figures will be in a bracket, but the
unrealized loss on hybrid instruments of THB 2,034 mm on page 151 is not in a bracket. Therefore, it is
proposed that the same procedure should be applied throughout the document to prevent the readers from
confusion.
President and CEO explained that the said information is of the year 2008. Currently, the Bank
does not invest in any hybrid instruments because the Bank has already sold all CDS in its portfolio and
provided 100 percent reserve for CDOs. In regard to recording the said loss figure, it is in accordance with
the accounting standard.
The Shareholder asked about the progress on acquisition of shares in AIGRB and AIGCC and
about the Bank’s confidence in expansion of the consumer and personal loan market that such loans would
not become NPL.
President and CEO explained that in regard to the acquisition of shares in AIGRB and AIGCC,
the Bank signed the contract on April 8, 2009 and details related thereto are being proceeded by the Bank
and AIG Group.
With respect to the expansion of the consumer and personal loan market, it can be seen that the
Bank has had its own portfolio, but the purchase of shares from AIG Group represents only 20 percent
thereof and helps strengthen the Bank’s business. In addition, employees of AIGRB and AIGCC are greatly
competent and experienced.
The Shareholder asked in the President and CEO’s opinion, if the operating results attain the
specified goal, would the price of the Bank’s shares increase? and to what extent? This is because the
current price of the Bank’s shares is around THB 9.0 per share which is lower than the par value and reflects
the Bank’s operating results.
President and CEO explained that in the current volatile stock market, the share price cannot
reflect the actual operating results. Although the performance is good, it is difficult to resist the market
situation. However, the Bank is still driving for good performance since it is believed that if the market is
more stable, the price of the Bank’s shares should be also higher. The present book value of the Bank’s
shares is around THB 14.0 per share.
The Shareholder asked about the status of AIGRB minor shareholders after the Bank purchased
shares in AIGRB as she is a minor shareholder of the Bank and AIGRB? and does the Bank has the policy to
purchase shares from the AIGRB minor shareholders?
The Chairman explained that the Bank will give an opportunity to the AIGRB minor
shareholders to sell their shares to the Bank but pursuant to the proper procedure.
- 14 -
No further issue or question was raised. The Chairman then thanked all shareholders for their
attendance at the Meeting and declared the Meeting closed.
(At the AGM No. 97 on April 9, 2009, there were 1,341 shareholders attending the Meeting,
both in person or by proxy, representing 4,271,540,137 shares or 70.32% of all ordinary shares sold.)
The Meeting was declared closed at 15.30 hrs.
- Veraphan Teepsuwan (Mr. Veraphan Teepsuwan)
Chairman of the Meeting
-Thidarat Sethavaravichit(Mrs. Thidarat Sethavaravichit)
Minutes Taker
Certified Copy
(Mrs. Thidarat Sethavaravichit)
Corporate Secretary
- 15 -
Information Circular on Business Acquisition and/or Purchase and/or Holding of Shares of
companies in GE Money Thailand i.e. Krungsriayudhya Card Co., Ltd., Tesco Card Services
Co., Ltd., GE Capital (Thailand) Limited, Total Services Solutions Plc, General Card
Services Co., Ltd., Tesco Life Assurance Broker Co., Ltd., Tesco General Insurance Broker
Co., Ltd., Quality Life Assurance Broker Co., Ltd. and Quality General Insurance Broker
Co., Ltd. including Service Agreements with all above-mentioned companies and Financing
Agreements with Krungsriayudhya Card Co., Ltd., Tesco Card Services Co., Ltd., GE
Capital (Thailand) Limited, Total Services Solutions Plc and General Card Services Co., Ltd.
The Extraordinary Board of Directors Meetings of Bank of Ayudhya Public Company
Limited (“Bank”) No. 5-7/2009 held on July 9, 20 and 22, 2009 passed the resolution to approve
and to propose for consideration and approval at the Extraordinary General Meeting of
shareholders of shares of companies in No. 2/2009 the following transactions:
1. The business acquisition by share purchase and/or share acquisition and/or holding (the
“Acquisition Transaction”) GE Money Thailand (“GEMT”) with the following details:
Core GEMT Entities:
100% of GE Capital (Thailand) Limited (“GECT”) from General Electric
Capital Corporation (“GECC”);
50% of Krungsriayudhya Card Company Limited (“KCC”) from GECT
and/or its transferee and/or through acquisition of GECT. The Bank also
currently holds 50% of KCC;
49% of Tesco Card Services Limited (“TCS”) from GECT and/or its
transferee and/or through acquisition of GECT with an option to acquire
additional 1% of TCS;
100% of General Card Services Limited (“GCS”) from GE Capital
International Holdings Corporation (“GECIH”) and/or GECIH’s affiliate
that may be newly formed under the Thai law;
100% of Total Services Solutions Public Company Limited (“TSS”) from
GECIH;
Non-Core investments companies:
25% of Quality General Insurance Broker Company Limited (“QGIB”)
which is held by GECT
25% of Quality Life Assurance Broker Company Limited (“QLAB”) which
is held by GECT
100% of Tesco General Insurance Broker Company Limited (“TGIB”)
which is held by TCS
100% of Tesco Life Assurance Broker Company Limited (“TLAB”) which
is held by TCS
2. The provision of financing support for GECT, KCC, TCS, GCS and TSS in an amount of
not more than Baht 60,000 million. The financing support will be used to refinance all
current existing borrowings, including borrowings from General Electric and/or its
affiliates (“GE”).
3. The establishment of services agreement (“Services Agreement”) for services to be
provided by GE to GEMT and by GEMT to GE during an agreed transition period, on an
arms-length basis, as necessary to enable GEMT entities to continue operating as
standalone businesses after the completion of the Acquisition Transaction.
4. Commencement of the due diligence exercise of GE’s commercial loan portfolio of
approximately Baht 1.0 billion, in view that the Bank will consider acquiring such
portfolio in the future, under terms and conditions which will be negotiated.
- 16 -
5. The authorization of the Board of Directors or a group of persons or person authorized
by the Board of Directors to have the power to contact, negotiate, revise, and/or amend
the agreements and/or documents in relation to the Acquisition Transaction, as well as to
do any necessary or relevant acts as deemed necessary to complete or in relation to the
Acquisition Transaction
Material terms of the above transactions are as appeared below which will not be binding
until the agreed conditions precedent have been met.
As General Electric Company (“GE”) is the major shareholder in GECIH and GECC,
through GE subsidiaries and GE is a major shareholder of the Bank through GECIH, the entering
into the Transactions is thus considered as connected transactions and acquisition and disposition
of assets under the rules of the Capital Market Supervisory Committee. The Bank would like to
report the information of its connected transactions and acquisition and disposition of assets as
follows:
1.
Date of Transaction
The Acquisition Transactions will take place after being approved by the Shareholders’
meeting of the Bank currently scheduled to be held on 27 August 2009, subject however to
preliminary and major conditions which can be summarized as follows:
1. Receipt of any required approvals from the Bank of Thailand, Thai Ministry of
Finance and any other relevant authorities of the Bank acquisition of the GE Money Businesses;
2. Approval by the Bank of Thailand for the conversion from THB to USD and
subsequent repatriation of the purchase price;
3. The absence of a material adverse change; and
4. The following businesses having been wound up or carved out from GEMT entities;
4.1 Bangkok Capital Venture Co., Ltd.
4.2 Bangkok Capital Equity Co., Ltd.
4.3 Thailifestyle Dot Com Co., Ltd.
4.4 GE Capital Service (Thailand) Co., Ltd.
4.5 GE Capital Auto Services Co., Ltd.
4.6 The commercial portfolio that is held in the GE Capital Thailand and
TSS entities, and
4.7 GE Corporate Treasury cash pooling activities conducted under GECT.
In addition, key terms and conditions of the preliminary termsheet are summarized as
follows:
Technical Assistance
To ensure seamless transition of the operations of the GEMT entities post acquisition,
the transactions would include mutual services to be provided to and by the GEMT entities
during an agreed transition period of not exceeding 12 months unless the parties agree that, in a
particular case, a longer transition is required. The services, which will be provided on an armslength basis on terms to be agreed, will include, but not limited to, the following services:
1) Provision of information technology (IT) services including:
a. Usage of Vision Plus
b. Usage of Firewall
c. Oracle Finance
d. Oracle HR
e. Other security software
f. Other software and hardware to be mutually agreed
2) Provision of other IT services and operational matters to be mutually agreed
3) The Bank will also provide IT and other operational services to GE to be mutually
agreed as currently other entities of the GE group that is not part of GEMT are using
the services provided by GEMT.
- 17 -
Additional Share Purchase by GE
GE may seek to acquire in the secondary market shares up to an additional 2% of Bank’s
paid-up common share capital on a fully diluted basis. The Bank will endeavor to assist GE with
any arrangements or approvals required in connection therewith to the extent permitted by
applicable regulations
Non Compete
GE will agree to a reasonable non compete for a period of 5 years in relation to the
carrying on in Thailand of a consumer finance business similar to that carried on by GEMT
entities as at closing date.
2.
The Parties Involved
2.1
Relevant Parties
A.
Purchaser:
Bank of Ayudhya Plc
Seller:
General Electric Capital Corporation (“GECC”)
GE Capital International Holdings Corporation (“GECIH”)
GE Capital (Thailand) Limited (“GECT”)
B.
Financing
Lender:
Borrower:
Bank of Ayudhya Plc
GE Capital (Thailand) Limited
Krungsriayudhya Card Company Limited
Tesco Card Services Limited
General Card Services Limited
Total Services Solutions Public Company Limited
C.
Services Agreements
1)
Services Agreement for services to be provided by GE and/or its affiliates to GEMT
Service Provider:
GE and/or its affiliates
User:
GEMT entities
2)
Services Agreement for services to be provided by GEMT to GE and/or its affiliates
Service Provider:
GEMT entities
User:
GE and/or its affiliates
2.2
Parties who are Connected Persons
A.
Names of Connected Persons and Relationships
GE currently is a major shareholder in the Bank, GECC and GECIH by holding
2,000,000,000 shares of the Bank or 32.926% of paid up shares through GECIH. GE’s holdings
in GEMT are as follow:
• Core GEMT Entities
• 2,750,000 shares in GECT representing 100% of paid up shares, via GECC
• 55,000,000 shares in KCC representing 50% of paid up shares, via GECT
• 75,800,000 shares in GCS representing 100% of paid up shares, via GECIH
• 3,822,000 shares in TCS representing 49% of paid up shares, via GECT
• 132,600,002 shares in TSS representing 100% of paid up shares, via GECIH
• Investment in other companies held by GECT and TCS (Non-Core Entities)
• 5,000 shares in QGIB representing 25% of paid up shares, via GECT
• 5,000 shares in QLAB representing 25% of paid up shares, via GECT
• 770,000 shares in TGIB representing 100% of paid up shares, via TCS
- 18 -
•
20,000 shares in TLAB representing 100% of paid up shares, via TCS
Furthermore, senior executives or directors with signatory power of the Bank who are
executives or directors with signatory powers in GEMT entities are as follow:
• Mr. Piriyah Wisedjinda is a senior executive of the Bank as well as a director
with signatory powers in GECT, TSS, GCS, QGIB and QLAB.
• Ms. Voranuch Dejakaisaya is a senior executive of the Bank as well as director
with signatory powers in GECT, TSS, and GCS
• Mr. Pongpinit Tejagupta is a director of the Bank as well as director in KCC
• Mr. Roy Agustinus Gunara is a senior executive of the Bank as well as director
in KCC
• Mr. Sudargo Harsono is a senior executive of the Bank as well as director in
KCC
B.
Nature and Scope of Interests of Connected Persons
The interest of the connected persons will be reflected in the shareholdings as mentioned above.
The following diagram represents the current shareholding structure of GEMT entities:
General Electric Capital Corporation
100%
GE Capital International Holdings Corporation
100%
100%
GCS
GECT
100%
32.93%
TSS
Companies to acquire shares directly
50%
49%
KCC
TCS
25%
50%
KCC
100%
QGIB
QLAB
Companies to acquire shares
indirectly through GECT
(Initial Structure)
Bank
TGIB
25%
100%
TLAB
According to the preliminary negotiation result, it is expected that the shareholding
structure of GEMT after share acquisition will be as follows:
- 19 -
GE Capital International Holdings Corporation
32.93%
50%
Bank
100%
GECT
GCS
50%
TCS
25%
100%
QGIB
3.
TSS
49%
KCC
QLAB
100%
100%
TGIB
25%
100%
TLAB
General Characteristics of the Transactions
The Bank’s strategy is to focus its growth in the retail banking segment. Two specific
business lines that the Bank targets for expansion are the credit card and personal loan businesses.
GE has offered to sell its shareholding in GEMT entities to the Bank. The Bank has
assessed the Acquisition Transaction and believes it to be beneficial to the Bank and its
stakeholders.
Transaction 1:
The Acquisition Transaction
Details of the business acquisition by share purchase and/or share acquisition and/or
shareholding are as follows:
1.1
GECT Shares Acquisition
Acquired Shares
Sellers
Acquirer
Par Value
Number of shares to be acquired
Number of Shares as
Percentage of Total Issued
Shares
Completion Date
Ordinary shares of GE Capital (Thailand) Limited
General Electric Capital Corporation and other shareholders
Bank of Ayudhya Public Company Limited and/or its
designated persons
Baht 100 per share
2,750,000
100
The parties are targeting completion within 2009 and will use
their best endeavors to cause completion to occur as soon as
reasonably practicable, subject to Conditions to Completion
- 20 -
Payments
The purchase price shall be paid on completion of the
Acquisition Transaction as to be agreed upon by the parties.
Any adjustments to the purchase price must be paid within
the period to be reasonably agreed by the parties in the
Definitive Agreements
Note
The acquisition of GECT does not include the commercial
finance business with the net asset value of approximately
negative Baht 142 million
1.2
KCC Shares Acquisition / Indirect Shares Acquisition
Acquired Shares
Sellers
Acquirer
Par Value
Number of shares
Number of Shares as
Shares
Ordinary shares of Krungsriayudhya Card Company Limited
GE Capital (Thailand) Limited and other shareholders and/or
transferee and/or indirect acquisition through GECT
designated persons
Baht 10 per share
55,000,000
50
Completion Date
Payments
1.3
TCS Shares Acquisition / Indirect Shares Acquisition
Acquired Shares
Sellers
Acquirer
Par Value
Number of shares
Number of Shares as
Shares
Completion Date
Ordinary shares of Tesco Card Services Limited
GECT and/or transferee and/or indirect acquisition through
GECT
designated persons
Baht 100 per share
3,822,000
49
- 21 -
Payments
Note
1.4
Bank has an option to acquire additional 1% share of TCS
GCS Shares Acquisition
Acquired Shares
Sellers
Acquirer
Par Value
Number of shares
Number of Shares as
Shares
Ordinary shares of General Card Services Limited
General Electric Capital International Holdings Corporation
and other shareholders and/or GECIH’s affiliate that may be
newly form under the Thai law
designated persons
Baht 10 per share
75,800,000
100
Completion Date
Payments
1.5
TSS Shares Acquisition
Acquired Shares
Sellers
Acquirer
Number
Number of shares
Ordinary and preferred shares of Total Services Solutions
Public Company Limited
GE Capital International Holdings Corporation and other
shareholders
designated persons
Baht 10 per share
117,200,013 ordinary shares
15,399,989 preferred shares
Number of Shares as
Shares
100
Completion Date
- 22 -
Payments
Note
The acquisition of TSS does not include commercial finance
business with net asset value of approximately Baht 502
million
1.6
QGIB Shares Acquisition (Indirect)
Acquired Shares
Shareholder
Par value
Number of shares
Number of Shares as
Shares
1.7
Shareholder
Par value
Number of shares
Number of Shares as
Shares
Ordinary shares of Quality Life Assurance Broker Company
Limited
GE Capital (Thailand) Limited and other minorities
Baht 100 per share
5,000
25
TGIB Shares Acquisition (Indirect)
Acquired Shares
Shareholder
Par value
Number of shares
Number of Shares as
Shares
1.9
25
QLAB Shares Acquisition (Indirect)
Acquired Shares
1.8
Ordinary shares of Quality General Insurance Broker
Company Limited
GE Capital (Thailand) Limited and other minorities
Baht 100 per share
5,000
Ordinary shares of Tesco General Insurance Broker
Company Limited
Tesco Card Services Limited and other minorities
Baht 100 per share
770,000
100
TLAB Shares Acquisition (Indirect)
Acquired Shares
Sellers
Par value
Number of shares
Ordinary shares of Tesco Life Assurance Broker Company
Limited
Tesco Card Services Limited and other minorities
Baht 100 per share
20,000
- 23 -
Number of Shares as
Shares
100
1.10
The Acquisition Transaction is with respect to the Consumer Finance Business only
GE is a conglomerate with many lines of businesses. In the financial services sector, GE
has operations in both the consumer finance business and the commercial finance business. It is
the intention of the Bank to acquire only the consumer finance business. However, as GE also
books some of its commercial finance business under GEMT, namely in GECT and TSS,
therefore prior to the Acquisition Transaction, GE will have to remove the commercial finance
assets and businesses from the GEMT entities first.
1.11
Acquisition Price
The Total acquisition price of this Acquisition Transaction is equal to
(i)
Baht 13,793 million; which is the summation of
(a) 100% of paid up shares of GECT, 50% of paid up shares of KCC and 49%
of paid up shares of TCS at a total purchase price approximately of Baht
10,444 million
(b) 100% of paid up shares of GCS at a purchase price approximately of Baht
806 million
(c) 100% of paid up shares of TSS at a purchase price approximately of Baht
2,543 million
(ii)
Actual purchase price will reflect any changes in the book value of GECT, KCC,
TCS, GCS and TSS from 31 December 2008 to closing date. As at 31 December
2008, the book value of the entities in the proportion that is acquired by the Bank
is Baht 12,647 million.
Prior to the completion of the Acquisition Transaction, GECT may pay dividends to its
shareholders as appropriate and mutually agreed among the parties. Any dividend payments will
decrease the shareholders’ equity and hence decrease the acquisition price of GEMT shares. The
Bank may consider using discount in the acquisition price to increase capital in GECT as
appropriate.
Transaction 2:
Financing
The Bank will provide financing support GECT, KCC, GCS, TCS and TSS
with total amount of not more than Baht 60,000 million. The financing support will be used to
refinance all current existing borrowings, including borrowings from GE. The terms and
conditions of the financing facilities will be in accordance with the standard the Bank currently
uses in providing financing facilities to its subsidiaries and affiliates.
Transaction 3:
Services Agreement
To ensure seamless transition of the operations of the GEMT entities post
acquisition, GEMT will enter into a Services Agreement with GE entities during the transition
period of not exceeding 12 months unless the parties agree that, in a particular case, a longer
transition is required. The terms and conditions of the Services Agreement will be on an armslength basis, which will include, but is not limited to, the following services:
1) Provision of information technology (IT) services including:
a. Usage of Vision Plus
b. Usage of Firewall
c. Oracle Finance
d. Oracle HR
e. Other security software
f. Other software and hardware to be mutually agreed
- 24 -
2) Provision of other IT services and operational matters to be mutually
agreed
3) The Bank will also provide IT and other operational services to GE to be
mutually agreed as currently other entities of the GE group that is not part of GEMT are using
the services provided by GEMT.
The final terms and conditions of the Services Agreement shall be agreed
subsequent to the shareholders’ approval of the Bank on 27 August 2009. In any case, the terms
and conditions shall be on an arms-length basis, the details of which shall be agreed through
further negotiations. The Audit Committee shall consider and approve the terms and conditions
of the Services Agreement after the details of the terms and conditions are agreed.
4.
Details of Assets Acquired
GE Money Thailand is currently one of the largest consumer finance companies in
Thailand with over 15 years’ experience in this fast developing market. GE Money Thailand
offers a wide range of consumer finance products to over 3 million customer accounts and over
6,000 dealers. The products offered include personal loan and installment finance and credit card.
GE Money is also the largest credit card issuer in Thailand with over 1.75 million cards in
circulation.
Entity
GE Capital (Thailand)
Segment
Credit Card
Personal Loan
Sales Finance
Krungsriayudhya Card Co., Ltd.
Credit Card
Personal Loan
Credit Card
Credit Card
Total Services Solutions Plc.
Personal Loan
Sales Finance
Collection Services
Product
First Choice Visa
QuikCash
Tesco Personal Loan
First Choice
Krungsri GE Credit Card
Home Pro Credit Card
Dream Loan
Tesco Lotus Visa Card
Central Credit Card
Robinson Credit Card
Central Personal Loan
Power Buy
N.A.
Detail of the Core GEMT Companies
4.1
4.1.1
General Information
Company Name:
Type of Business:
Consumer finance business
Head Office:
87/1 Capital Tower All Season Place, Floor 1-6,
8-10 Wireless Road, Lumpini, Pathumwan,
Bangkok
Registration Number:
105537133562
Home Page:
http://www.gemoney.co.th
- 25 -
4.1.2
Business Overview
GECT is a fully owned subsidiary of GE, through General Electric Capital Corporation
(“GECC”). GECT is primarily engaged in consumer financing business. Its principal business
activities encompass:
- Credit card
- Personal loan
- Installment finance
For the financial year 2008, GECT had a net income of Baht 450.0 million, total net
loans and accrued interest receivables of Baht 23,558.5 million, total assets of Baht 39,301.8
million, and total shareholders’ equity of Baht 9,500.4 million. The applicable shareholders’
equity relating to consumer finance business is Baht 8,801.1 million.
4.1.2.1 Products and Services
1)
First Choice is one of the most widely-recognized GE’s brands. It is aimed to tap
the fast growing unsecured personal loans market with its unique “One Card Fits
All Needs” value with its convenient and flexible features. This product line is
comprised of:
a. First Choice card – it contains both installment and personal loan features. It
targets lower income group with the maximum credit line of Baht 300,000
and loan tenor up to 36 months
b. First Choice Visa card – it contains credit card, installment and personal loan
features. For First Choice Visa Silver card, its target group is middle income
group with average income range of Baht 15,000 – 29,999 per month. Target
group for First Choice Gold Card is middle to high income individuals with
average income above Baht 30,000 per month. Both cards offer a credit line
of up to Baht 1,000,000 and loan tenor up to 60 months
2)
QuikCash is an unsecured open-ended installment loan targeting individual
customers with average income above Baht 8,000, who need emergency cash for
multi-purpose use with 24/7 access via the Bank’s ATM network. The
differentiation point for this product is its speed and customer’s flexibility of
choosing payment due date.
3)
Tesco Personal Loan is also an unsecured open-ended installment loan for
individuals with average income of Baht 8,000. The product is mainly
distributed via Tesco Lotus Counters and is crosssold through Tesco’s Visa card
base.
4.1.2.2 Distribution channels
GECT has relationships and distributes its products through over 5,991 local dealers, 419
direct sales agents, 45 telesales agents, and 24 First Choice branches throughout Thailand.
Additionally, customers can apply online via www.firstchoice.co.th.
4.1.3
Summary of Financial Status
Important financial information of GECT for the fiscal year 2006, 2007, and 2008 as
appeared in the audited financial statements are as follow:
(Unit: Baht Million)
2006
2007
2008
Total Income
9,154.8
10,354.0
8,908.7
Operating expenses
6,285.6
8,465.2
6,340.0
Interest Expenses
2,031.1
1,999.3
1,726.5
Income Tax
242.5
(390.0)
392.3
Net Income (Loss)
596.6
279.4
450.0
- 26 -
2006
Net Income (Loss) / Share (Baht)
2007
2008
476.5
223.5
360.0
Total Assets
48,204.6
49,494.3
39,301.8
Total Liabilities
40,354.7
40,443.9
29,801.5
7,849.9
9,050.4
9,500.4
6,279.9
7,240.3
7,600.3
Shareholders’ Equity
Book Value / Share (Baht)
Note: figures are rounded
4.1.4 Details of GECT’s registered capital, paid-up capital, Board of Directors, major
shareholders and their shareholding ratio
GECT has registered capital of Baht 275,000,000 and paid up capital of Baht
125,000,000. The share has a par value of Baht 100 with 2,750,000 outstanding shares.
Board of Directors of GECT
1. Mr. Philip Cheng Chong Tan
2. Mr. Gilbert Shigehisa Niwa
3. Mr. Rohit Khanna
4. Mr. Piriyah Wisedjinda
5. Ms. Voranuch Dejakaisaya
6. Ms. Somboon Anurootnatesiri
7. Mr. Safee Kapasi
8. Ms. Niyada Korpajarasoontorn
Director
Director
Director
Director
Director
Director
Director
Director
Shareholders of GECT
Name
1. General Electric Capital Corporation
2. 6 Minority shareholders
Shares
2,749,988
12
Percent holding
100.0
0.0
4.1.5
Investments of GECT
GECT has investments in the following companies
• KCC (see 4.2)
• TCS (see 4.3)
• QGIB which engages in the brokerage services for non-life insurance products.
GECT and minority shareholders holds 25% share in this company with total
investments of Baht 500,000
• QLAB which engages in the brokerage services for life insurance products.
GECT and minority shareholders holds 25% share in this company with total
investments of Baht 500,000
4.2
4.2.1
General Information
Company Name:
Type of Business:
Head Office:
Wireless Road, Lumpini, Pathumwan, Bangkok
105539096311
Home Page:
http://www.krungsrigecard.com
- 27 -
4.2.2
Business Overview
KCC was founded as a joint venture between GE Capital (Thailand) and the Bank in
February 2001. Each partner holds 50% of the total issued shares. KCC primarily operates in
credit card business. Products offered include Krungsri GE Visa Card, Krungsri Mastercard and
Home Pro Visa Card. In 2004, Dreamloan, personal loan product, was introduced to the market
as a new product line to broaden its business to tap the growing consumer lending segment.
For the financial year 2008, KCC had a net income of Baht 50.2 million, total net loans
and accrued interest receivables of Baht 14,958.9 million, total assets of Baht 16,387.4 million,
and total shareholders’ equity of Baht 2,030.7 million.
1)
Krungsri GE Credit Card associates with both Visa and MasterCard. It targets
highly affluent individuals with minimum monthly incomes of Baht 15,000 for
Classic card, Baht 30,000 for Gold card and Bt 70,000 for Platinum card.
2)
Krungsri GE Lady’s MasterCard primarily targets trendy women ages 25-35
with minimum monthly income of Baht 30,000. In addition to offering special
discounts from a variety of merchants with high appeal, namely clothing,
jewelry, cosmetics, health and spa.
3)
Krungsri GE Visa Doctor Card primarily targets doctors as every 0.3% of total
spending through this card will be donated to the Continued Educational Funds
for Doctors.
4)
HomePro Visa Credit Card primarily targets highly affluent individuals, ages 3045 looking to renovate or decorate their home.
5)
Krungsri GE Business Prestige MasterCard for targets SME business operators.
6)
Dreamloan is an unsecured open-ended installment loan targeting all Krungsri
GE cardholders.
KCC’s key distribution channels are through the 583 Bank’s branches, 33 Home Pro
branches and 46 direct sale agents. Additionally, customers can apply online via
www.krungsrigecard.com.
4.2.3
Important financial information of KCC for the fiscal year 2006, 2007, and 2008 as
2006
2007
2008
Total Income
3,097.3
3,376.4
3,640.8
Operating expenses
1,937.2
2,682.3
2,719.1
Interest Expenses
791.0
782.4
728.3
Income Tax
184.5
(68.0)
143.3
Net Income (Loss)
184.5
(20.3)
50.2
1.7
(0.2)
0.5
Total Assets
15,740.3
16,210.4
16,387.4
Total Liabilities
14,031.1
14,229.8
14,356.6
1,709.3
1,980.6
2,030.8
15.5
18.0
18.5
Note: Figures are rounded
- 28 -
4.2.4 Details of KCC’s registered capital, paid-up capital, Board of Directors, major
KCC has registered capital of Baht 1,100,000,000 and paid up capital of Baht
1,100,000,000. The capital is divided into 110,000,000 shares with par value of Baht 10 each.
Board of Directors of KCC
1. Mr. Pongpinit Tejagupta
2. Mr. Tinnawat Mahatharadol
3. Mr. Sukdee Chongmankhong
4. Ms. Wanvimol Kanoktanaporn
5. Mr. Roy Agustinus Gunara
6. Ms. Preeyanuch Sayasaywee
7. Ms. Saranya Vajakul
8. Mr. Sudargo Harsono
Director
Director
Director
Director
Director
Director
Director
Director
Shareholders of KCC
Name
1. GE Capital (Thailand) Limited
2. Bank of Ayudhya Plc
3. 7 Minority shareholders
4.3
4.3.1
General Information
Number of Shares Percent holding
54,999,991
50.0
54,999,996
50.0
13
0.0
Company Name:
Type of Business:
Head Office:
Wireless Road, Lumpini, Pathumwan, Bangkok
105544058872
Home Page:
http://www.tescolotusfinance.com
4.3.2
Business Overview
TCS was founded as a joint venture between GECT and Ek-Chai Distribution System
Co., Ltd. (“EDS”) in 2001. EDS’s parent company is an operator of Tesco Lotus, one of
Thailand’s leading hypermarket chains in Thailand. GE holds 49% of paid-up shares of TCS.
TCS operates credit card business issued under Tesco Lotus Visa Card.
For the financial year 2008, TCS had a net income of Baht 96.2 million, total net loans
and accrued interest receivables of Baht 7,220.2 million, total assets of Baht 8,400.7 million, and
total shareholders’ equity of Baht 1,170.9 million.
1)
Tesco Visa Classic Card targets middle income individuals with an average
income of Baht 15,000 – 30,000. It provides credit lines up to Baht 500,000 for
each cardholder.
2)
Tesco Visa Gold Card targets middle to high income individuals with an average
income of more than Baht 30,000. It provides credit lines up to Baht 1,000,000
for each cardholder.
TCS’s key distribution channels are Tesco hypermarket and compact hypermarket stores.
Additionally, customers can apply online via www.tescolotusfinance.com
- 29 -
4.3.3
Important financial information of TCS for the fiscal year 2006, 2007 and 2008 as
2006
2007
2008
Total Income
1,753.8
1,897.2
1,936.0
Operating expenses
1,027.6
1,589.3
1,453.3
415.7
370.3
324.5
84.1
(14.7)
62.0
226.6
(47.7)
96.2
29.4
(6.1)
12.3
Total Assets
8,346.4
8,470.9
8,400.7
Total Liabilities
7,380.9
7,396.1
7,229.7
965.5
1,074.8
1,170.9
123.8
137.8
150.1
Interest Expenses
Income Tax
Net Income (Loss)
4.3.4 Details of TCS’s registered capital, paid-up capital, Board of Directors, major
TCS has registered capital of Baht 780,000,000 and paid up capital of Baht 780,000,000.
The capital is divided into 7,800,000 shares with par value of Baht 100 each.
Board of Directors of TCS
1. Mr. Richard Smothers
2. Mr. Gwyn Sundhagul
3. Carl Julian Hargrave
4. Dr. Darmp Sukontasap
5. Mr. Patrick David Graham
6. Mr. Teeravuth Suphanaseriporn
Director
Director
Director
Director
Director
Director
Director
Director
Shareholders of TCS
Name
2. Ek-Chai Distribution System Co., Ltd.
3. 4 Minority Shareholders
Shares
3,821,993
3,978,000
7
Percent Holding
49.0
51.0
0.0
4.3.5
TCS Investments
TCS has the following investments in subsidiaries:
Investments in TGIB which engages in the non-life insurance brokerage business.
TCS holds 100 percent of the paid up shares of Baht 2,000,000
Investments in TLAB which engages in the life insurance brokerage business. TCS
holds 100 percent of the paid up shares of Baht 77,000,000
4.3.6
TCS Joint Venture Agreement
In the case of share acquisition of TCS which is a joint-venture between GECT and EkChai Distribution Co., Ltd., the joint-venture agreement stipulates that the agreement
expires on May 31, 2011 and automatically renews for another 5 years. In the event that
any parties wishes to terminate the agreement before the automatic renewal, the party
- 30 -
must give prior notice of not less than 18 months prior May 31, 2011 or in November
2009. Ek-Chai Distribution Co., Ltd. may exercise its right to terminate the agreement.
However, the purchase price of TCS has already factored in the possibility of the
termination.
4.4
4.4.1
General Information
Company Name:
Type of Business:
Head Office:
8 Wireless Road, Lumpini, Pathumwan,
Bangkok
105538010910
Home Page:
http://www.centralcard.com
4.4.2
Business Overview
GCS is a fully owned subsidiary of GE Group. GCS is primarily engaged in consumer
financing business. Currently, GCS is providing private label credit card services to Central
Group companies, one of the most prominent in Thailand with strong brand and quality and
affluent customer segment.
For the financial year 2008, GCS had a net loss of Baht 95.0 million, total gross loans
and accrued interest receivables of Baht 12,479.9 million, total assets of Baht 13,520.5 million,
and total shareholders’ equity of Baht 948.0 million.
1)
Central Credit Card is an unsecured revolving credit facility. It is co-branded
with Central Department stores with 4 different product offerings – private label
credit card, classic MasterCard, gold MasterCard and platinum MasterCard.
2)
Robinson Visa Card was launched in February 2006. It is co-branded with
Robinson Department stores with 2 different product offerings – classic and gold
cards.
3)
Central Personal Loan is an unsecured open-ended installment personal loan
targeting all Central and Robinson cardholders. The offered credit line is from
Baht 30,000 to Baht 3,000,000. Its loan tenor is in the range of 6-60 months.
Currently, GCS’s key distribution channels are via the 14 Central department stores and
20 Robinson branches. Additionally, customers can apply online via www.centralcard.com.
4.4.3
Important financial information of GCS for the fiscal year 2006, 2007, and 2008 as
2006
2007
2008
Total Income
3,082.4
3,361.2
3,288.0
Operating expenses
2,305.3
3,682.5
2,843.8
590.3
599.2
545.0
97.7
(288.0)
(5.8)
Interest Expenses
Income Tax
- 31 -
2006
Net Income (Loss)
2007
2008
89.0
(632.6)
(95.0)
1.2
(8.4)
(1.3)
Total Assets
14,096.0
14,711.6
13,520.5
Total Liabilities
12,643.1
13,668.5
12,572.5
1,452.9
1,043.0
948.0
19.2
13.8
12.5
4.4.4 Details of GCS’s registered capital, paid-up capital, Board of Directors, major
GCS has registered capital of Baht 758,000,000 and paid up capital of Baht 758,000,000.
The capital is divided into 75,800,000 shares with par value of Baht 10 each.
Board of Directors of GCS
1. Mr. Montri Sithiyavanich
Director
Director
Director
Director
Director
Shareholders of GCS
Name
1. GECIH
Shares
75,799,994
6
4.5
Total Services Solutions Public Company Limited
4.5.1
General Information
Percent
100.0
0.0
Company Name:
Total Services Solutions Public Company
Limited
Type of Business:
Collection services
Head Office:
87/1 Capital Tower and 87/2 CRC Tower, All
Season Place, Wireless Road, Lumpini,
Pathumwan, Bangkok
10750000065
4.5.2
Business Overview
TSS was previously named GE Money Retail Bank Public Company Limited. In January
2007, the banking license was returned to the Ministry of Finance and the company’s name was
changed to “Total Services Solutions Public Company Limited”. Currently, the company is
principally engaged in providing collection services.
For the financial year 2008, TSS had a net income of Baht 350.6 million, total assets of
Baht 2,037.9 million, and total shareholders’ equity of Baht 1,810.7 million. The applicable
shareholders’ equity excluding the commercial finance business is Baht 1,308.3 million.
4.5.3
Important financial information of TSS for the fiscal year 2007, and 2008 as appeared in
the audited financial statements are as follow:
- 32 -
2007
2008
Total Income
4,030.7
1,690.0
Operating expenses
1,857.7
1,184.8
Interest Expenses
618.5
0.2
Income Tax
455.4
154.4
1,099.1
350.6
2.8
3.0
2,163.0
2,037.9
702.9
227.2
1,460.1
1,810.7
Net Income (Loss)
Total Assets
Total Liabilities
3.7
15.4
Note:
1) Figures are rounded
2) Financial performance are only shown for 2007 and 2008 as TSS was operating as a
commercial bank in 2006 and performance in 2006 is not directly comparable.
4.5.4 Details of TSS’s registered capital, paid-up capital, Board of Directors, major
TSS has registered capital of Baht 1,326,000,020 and paid up capital of Baht
1,326,000,020. The capital is divided into 117,200,013 ordinary shares and 15,399,989 preferred
shares with par value of Baht 10 each.
Board of Directors of TSS
3. Ms. Suwanna Jakraworavudh
6. Mr. Rohit Khanna
Director
Director
Director
Director
Director
Director
Shareholders of TSS
Name
Ord Shares
1. GECIH
117,200,013
-
Pref Shares
15,399,941
48
Total
132,599,954
48
Percent
100.0
0.0
Details of Investments in Non-Core Companies
4.6
Quality General Insurance Broker Company Limited
4.6.1
General Information
Company Name:
Quality General Insurance Broker Company
Limited
Type of Business:
Non-Life Insurance Business
Head Office:
87/2 CRC Tower, All Season Place, Wireless
Road, Lumpini, Pathumwan, Bangkok
0105550024682
- 33 -
4.6.2
Business Overview
Founded in March 2007, QGIB engages in selling non-life insurance policies to GECT,
KCC and GCS’s customers.
For the financial year 2008, QGIB had a net income of Baht 425,693, total assets of Baht
158,857,036, and total shareholders’ equity of Baht 1,791,145.
4.6.3
Important financial information of QGIB for the fiscal year 2007 and 2008 as appeared
in the audited financial statements is as follow:
(Unit: Baht)
2007
2008
Total Income
43,444
97,277,376
677,992
96,504,735
Interest Expenses
0
10,617
Income Tax
0
336,331
(634,548)
425,693
(31.7)
21.3
Total Assets
3,958,450
158,857,036
Total Liabilities
2,592,998
157,065,891
1,365,452
1,791,145
68.3
89.6
Operating expenses
Net Income (Loss)
Net Income (Loss) / Share
Book Value / Share
4.6.4 Details of QGIB’s registered capital, paid-up capital, Board of Directors, major
QGIB has registered capital of Baht 2,000,000 and paid up capital of Baht 2,000,000.
The capital is divided into 20,000 ordinary shares with par value of Baht 100 each.
Board of Directors of QGIB
1. Ms. Pimporanee Ratanavaraha
2. Ms. Varangkana Hirunyasiri
Director
Director
Director
Director
Shareholders of QGIB
Name
1. Mr. Peerapong Somboonvaranond
Shares
14,997
4,997
6
4.7
Quality Life Assurance Broker Company Limited
4.7.1
General Information
Percent
75.0
25.0
0.0
Company Name:
Quality Life Assurance Broker Company
Limited
Type of Business:
Life Insurance Business
Head Office:
0105550024712
- 34 -
4.7.2
Business Overview
Founded in March 2007, QLAB engages in selling life insurance policies to GECT, KCC
and GCS’s customers.
For the financial year 2008, QLAB had a net income of Baht 8,042,285, total assets of
Baht 263,746,009, and total shareholders’ equity of Baht 8,951,404.
4.7.3
Important financial information of QLAB for the fiscal year 2007 and 2008 as appeared
in the audited financial statements is as follow:
(Unit: Baht)
2007
Total Income
2008
43,607
219,294,780
1,134,488
207,604,406
Interest Expenses
0
10,617
Income Tax
0
3,637,472
(1,090,881)
8,042,285
(54.5)
402.1
Total Assets
3,756,965
263,746,009
Total Liabilities
2,847,846
254,794,605
909,119
8,951,404
45.5
447.6
Operating expenses
Net Income (Loss)
Book Value / Share
4.7.4 Details of QLAB’s registered capital, paid-up capital, Board of Directors, major
QLAB has registered capital of Baht 2,000,000 and paid up capital of Baht 2,000,000.
Board of Directors of QLAB
1. Ms. Pimporanee Ratanavaraha
2. Ms. Varangkana Hirunyasiri
Director
Director
Director
Director
Shareholders of QLAB
Name
1. Ms. Sunisa Somboonvaranond
3. Mr. Atthapol Chermjitpong
4. Mr. Wichet Kanmee
Shares
7,999
4,997
4,000
3,000
4
4.8
Tesco General Insurance Broker Company Limited
4.8.1
General Information
Percent
40.00
25.00
20.00
15.00
0.00
Company Name:
Tesco General Insurance Broker Company
Limited
Type of Business:
Non-Life Insurance Business
- 35 -
Head Office:
0105548157255
4.8.2
Business Overview
TGIB was previously named TCS General Insurance Broker Company Limited. The
company’s name was changed to Tesco General Insurance Broker Company Limited according
to its extraordinary general meeting of shareholders on June 13, 2006. It primarily engages in
selling non-life insurance policies to TCS’s customers.
For the financial year 2008, TGIB had a net income of Baht 1.1 million, total assets of
Baht 96.7 million, and total shareholders’ equity of Baht (28.3) million.
4.8.3
Important financial information of TGIB for the fiscal year 2006, 2007 and 2008 as
(Unit: Baht)
2006
Total Income
2007
2008
4.4
39.9
83.2
27.4
44.7
81.8
0.5
3.1
0.3
(23.5)
(7.8)
1.1
(1,177.3)
(392.4)
55.3
Total Assets
39.9
48.2
96.7
Total Liabilities
61.5
77.6
125.1
(21.6)
(29.4)
(28.3)
(1,078.9)
(1,471.3)
(1,416.0)
Operating expenses
Interest Expenses
Net Income (Loss)
Book Value / Share
4.8.4 Details of TGIB’s registered capital, paid-up capital, Board of Directors, major
TGIB has registered capital of Baht 77,000,000 and paid up capital of Baht 77,000,000.
Board of Directors of TGIB
1. Ms. Apinya Svan-Ariyaskul
2. Mr. Patchana Sunthornphusit
3. Mr. David Paul James
4. Ms. Sukanya Chienwittayakun
5. Ms. Jariya Koonlinthip
Director
Director
Director
Director
Director
Shareholders of TGIB
Name
1. Tesco Card Services Limited
Shares
769,993
7
- 36 -
Percent
100.0
0.0
4.9
Tesco Life Assurance Broker Company Limited
4.9.1
General Information
Company Name:
Tesco Life Assurance Broker Company Limited
Type of Business:
Life Insurance Business
Head Office:
0105548157263
4.9.2
Business Overview
TLAB was previously named TCS Life Assurance Broker Company Limited. The
company’s name was changed to Tesco Life Assurance Broker Company Limited according to
its extraordinary general meeting of shareholders on June 13, 2006. It primarily engages in
selling life insurance policies to TCS’s customers.
For the financial year 2008, TLAB had a net income of Baht 10,775,974, total assets of
Baht 25,448,995, and total shareholders’ equity of Baht 12,584,812.
4.9.3
Important financial information of TLAB for the fiscal year 2006, 2007 and 2008 as
(Unit: Baht)
2006
Total Income
43,554
15,502,592
117,455
140,497
369,881
1,968
4,488
3,026
(57,691)
(101,431)
10,775,974
(2.9)
(5.1)
538.8
2,052,446
2,045,502
25,448,995
142,177
236,664
12,864,183
1,910,269
1,808,838
12,584,812
95.5
90.4
629.2
Interest Expenses
Net Income (Loss)
Total Liabilities
2008
61,732
Operating expenses
Total Assets
2007
Book Value / Share
4.9.4 Details of TLAB’s registered capital, paid-up capital, Board of Directors, major
TLAB has registered capital of Baht 2,000,000 and paid up capital of Baht 2,000,000.
Board of Directors of TLAB
1. Ms. Apinya Svan-Ariyaskul
2. Mr. Patchana Sunthornphusit
3. Mr. David Paul James
4. Ms. Sukanya Chienwittayakun
5. Ms. Jariya Koonlinthip
Director
Director
Director
Director
Director
Shareholders of TLAB
Name
1. Tesco Card Services Limited
Shares
19,993
7
- 37 -
Percent
100.0
0.0
5.
Total Value of Consideration
The transactions have the following value
1. The Total acquisition price of this Acquisition Transaction is equal to Baht 13,793
million; which is the summation of
(a) 100% of paid up shares of GECT, 50% of paid up shares of KCC and 49%
of paid up shares of TCS at a total purchase price approximately of Baht
10,444 million
(b) 100% of paid up shares of GCS at a purchase price approximately of Baht
806 million
(c) 100% of paid up shares of TSS at a purchase price approximately of Baht
2,543 million
Actual purchase price will reflect any changes in the book value of GECT, KCC,
TCS, GCS and TSS from 31 December 2008 to closing date. As at 31 December 2008,
the book value of the entities in the proportion that is acquired by the Bank is Baht
12,647 million.
Prior to the completion of the Acquisition Transaction, GECT may pay
dividends to its shareholders as appropriate and mutually agreed among the parties. Any
dividend payments will decrease the shareholders’ equity and hence decrease the
acquisition price of GEMT shares. The Bank may consider using the discount in the
acquisition price to increase capital in GECT as appropriate.
2. Financing Support GECT, KCC, TCS GCS and TSS in the amount of not more than
Baht 60,000 million
3. The value of the Services Agreement will be based on arms-length basis.
6.
Rule to Determine Value of Consideration
The value of consideration was determined through negotiation between the Bank and
GE / related parties. The Bank also analyzed the transaction using the Dividend Discount Model,
Comparable Acquisition Methodology, and Trading Comparables Methodology.
7.
Benefits to the Bank
After acquiring shares of companies in GEMT, the expected benefits to be received by
the Bank can be summarized as follows:
7.1
Strengthening the Bank’s universal banking platform in retail banking business
GEMT has an established consumer lending platform with a proven track record for more than
15 years and has a prominent position in Thailand’s personal loan, sales finance and credit card
market. Currently, GEMT is a leader in Thai consumer finance market, with a market share of
15% in the personal loan market, 28% in the sales finance market and 17% in the credit card
market.
GEMT’s brands, such as First Choice and krungsri GE Card, are widely recognized across
Thailand. It also has a strong partnership network and has built relationship with over 6,000
dealers. Its nationwide network and strong sales teams also enhance the Bank’s customer touch
points and its visibility in the retail banking market.
By acquiring these businesses with their well-developed platform and strong presence among
Thai consumers, the Bank will strengthen its competitiveness and product offerings. This is in
line with the Bank’s strategy of pursuing growth in the retail segment and becoming a leading
universal bank.
7.2
Potential return and synergistic value enhancements
The inclusion of GEMT’s retail portfolios into the Bank will facilitate the continued growth of
the retail loan portfolio representing an enhancement to the Bank’s return profile.
- 38 -
In addition, significant operational synergies are available through cost savings from access to
the Bank’s lower cost of funds, nationwide distribution network and ability to rationalize the
costs via economies of scale. Moreover, the acquisition will result in a more effective capital
deployment.
7.3
Significant cross-selling opportunities to a large diversified customer base
GEMT has served over 3,000,000 customer accounts across Thailand. With this acquisition, the
Bank will gain an immediate access to a broader, more diverse customer base.
In addition, with GEMT’s superior technological platform in business intelligence and customer
relationship management, the Bank can obtain customer insight and optimize campaign
efficiency. The large, diversified customer base, with the help of efficient CRM technology
represents considerable revenue enhancement and cross-selling opportunities for the Bank.
7.4
Acquisition of knowledge, expertise and experienced personnel in retail business
GEMT is managed by a team of highly experienced and committed personnel with a proven
track record, on average, over 12 years in the finance industry and over 14 years working
experience with multinational corporations. This included financial crisis of 1997 when GEMT
still achieved healthy growth. With their breadth and depth of expertise ranging across all
products and operational platforms in consumer finance market, they can manage the company
and maintain its leading position in adverse market conditions.
7.5
Operational benefit and efficiency from acquiring world-class technology and
operating platforms
This acquisition will provide the Bank access to best-in-class technological platforms
and management systems which are scalable for increased volume. These infrastructures include
global standard risk framework, portfolio management tools, automated origination systems,
credit underwriting and account servicing systems which will enhance the Bank’s operational
efficiency and competitiveness and position the Bank for future growth.
7.6
Eliminating potential conflict of interests
The Bank is a leading financial service provider with the target of expanding its coverage
in the retail segment, while GE is also a leading financial service provider in Thailand as well as
the Bank’s major shareholder. GE’s current shareholding structure can lend itself to potential
conflict of interest between the Bank and GE. This Acquisition Transaction will allow GE to
consolidate its holding in the retail market. GE will pursue its interests in financial services in
Thailand through the Bank, which will eliminate any potential conflict of interests. The
Acquisition Transaction affirms GE’s support for the Bank’s further development and growth.
8.
Sources of Financing
All investments will be financed with the internal funds of the Bank.
9.
Directors with Related Interest
Mr. Tan Kong Khoon, Mrs. Janice Rae Van Ekeren, Mr. Pornsanong Tuchinda, and Mr. Mark
John Arnold are the directors who have a conflict of interest. The said directors did not
participate in consideration and abstained from voting.
10.
Transaction Described Above is Considered a Transaction Relating to Connected
Transactions Subject to an Approval of the Shareholders’ Meeting
The Transactions are considered as connected transactions in accordance with the
notification of the Capital Market Supervisory Committee.
- 39 -
Since GECIH, which is the Bank’s major shareholder holding 32.926 % of the Bank total
issued shares, and GECC are subsidiaries of GE, the Acquisition Transaction is therefore a
connected transaction.
For the calculation under the Connected Transaction Rule, the total value of the
transaction up to Baht 73,793 million whereas the net tangible assets of the Bank at 31 March
2009 is Baht 74,895 million. Therefore, the total transaction value size calculated from the
payment of GEMT’s shares, the consideration paid or received under Services Agreement and
the Bank’s financing to GEMT is up to 98.5% which exceeds 3 percent of the net tangible assets
of the Bank as at 31 March 2009.
Therefore, the Bank is required to propose the Transactions to the Extraordinary General
Meeting of Shareholders No.2/2009 for further consideration and approval. A resolution of the
Shareholders Meeting to approve the Transactions must be passed by three-fourths of total votes
of shareholders attending the meeting and having voting rights, excluding shareholders with
related interest.
In the meantime, an independent financial advisor (“IFA”), KT Zmico Securities Co.,
Ltd., must provide its opinion regarding the soundness of this transaction and whether it
represents a fair price before proposing it to the Audit Committee and Shareholders to support
their decision-making. The Bank will send the IFA’s report together with the notice to attend the
Shareholders’ Meeting to the SEC at least five business days before sending it to the
shareholders
In addition, the Acquisition Transaction and the Financing are considered as the
acquisition of assets transaction under the Acquisition and Disposition of Assets Rule because it
is a transaction whereby a listed company acquires assets, the highest value of which is
calculated according to the net tangible asset method. The net tangible asset of GEMT entities for
the period ending December 31, 2008 was Baht 13,805.5 million, whereas the net tangible asset
of the Bank for the period ending March 31, 2009, was Baht 74,894.5 million. The value of the
Acquisition Transaction calculated in accordance with the requirement in the Acquisition and
Disposition of Assets Rule, is 18.4% which exceeds 15 percent but not more than 50 percent.
Therefore, the Bank is not subject to shareholders’ approval. Nevertheless, the Bank will propose
the Transactions to the Extraordinary General Meeting of Shareholders No.2/2009 for further
consideration and approval.
The Bank’s related persons, direct or indirect, are not entitled to vote in the
Extraordinary General Meeting of Shareholders No.2/2009 are below :
a. GE Capital International Holdings Corporation with 2,000,000,000 shares.
b. Mr. Pongpinit Tejagupta and his related persons with 140,938 shares.
11.
Opinion of the Bank’s Board of Directors and Audit Committee
11.1
Opinion of the Bank’s Board of Directors
The Board of Directors of the Bank is of the opinion that entering into (i) the Acquisition
Transaction for GEMT entities (ii) the financing support for GECT, KCC, TCS, GCS and TSS
(iii) the Services Agreement with GE and/or its affiliates are appropriate and of benefit to the
Bank. The directors who have an interest, namely, Mr. Tan Kong Khoon, Mrs. Janice Rae Van
Ekeren, Mr. Mark John Arnold, and Mr. Pornsanong Tuchinda, did not attend and vote on this
agenda. In this regard, the Meeting resolved to propose all the matters resolved in this agenda to
the Extraordinary Shareholders Meeting for consideration and approval and approved the
submission of the application to the Bank of Thailand, the Securities and Exchange Commission,
The Capital Market Supervisory Committee, the Stock Exchange of Thailand, the Office of
- 40 -
Insurance Commission, and relevant government agencies (if any). In addition, the execution of
the transactions is subject to conditions to be agreed by the parties including obtaining necessary
approvals and waivers from the Bank of Thailand, the Office of Insurance Commission, and
relevant government agencies and approval from the shareholders’ meeting.
11.2
Opinion of the Bank’s Audit Committee
The Audit Committee does not have a different opinion from that of the other Directors
of the Board.
- 41 -
Information Memorandum disclosed pursuant to
the Notification of Acquisition and Disposition of Assets
1.
Information on the Bank and its Operations
Bank of Ayudhya Public Company Limited was set up on January 27, 1945 with a
registered capital of Baht 1 million and launched its operations on the 1st of April of the same
year. It was registered in the Stock Exchange of Thailand on September 26, 1977 and changed
its status to a public company limited on September 28, 1993 under registration title no.
0107536001079.
In January 2007, GE Capital International Holdings Corporation (GECIH) became a
shareholder of the Bank with a stake of 29 percent, and later increased its holding to 33 percent
in July 2007 which is considered as the most significant change of the Bank’s shareholding
structure and management in its history. The partnership benefits the Bank in many ways: it
gives the Bank a stronger capital base; GE, a leading corporation from the USA, has the ability to
increase the Bank’s strength in the long run; technology and knowledge transfer would enable
the Bank to compete with other leading Thai and regional banks; management systems and world
class corporate governance will assist the Bank in adapting to the changing landscape of financial
industry in Thailand.
As of June 30, 2009, The Bank currently has 14 subsidiaries and affiliate companies with
structure as follows:
- 42 -
Shareholders’ Structure of BAY in Subsidiaries and Affiliates
Classified by Type of Business (As of 30 June 2009)
Bank of Ayudhya Plc.
Supporting Business
Financial Business
99.99%
99.99%
99.99%
99.99%
99.99%
Ayudhya Capital
Lease Co., Ltd. (1)(2)
Nature of business
- Auto Financing
Ayudhya Asset
Management
Co., Ltd.
Nature of business
- Purchase or
Acceptance of
transfers of NPAs
of FIs, including
collateral to be
managed and
further disposed
of
Ayudhya Fund
Management
Co., Ltd.
Nature of business
- Asset
management
business
Ayudhya Factoring
Co., Ltd.
Nature of business
- Factoring business
for corporate
customers
Ayudhya
Development
Leasing Co., Ltd.
Nature of business
- Leasing and Hire
Purchase for
corporate customers
Ayudhya Hire (1)(2)
Purchase Co.,Ltd.
Nature of business
- Sale and Lease
Back of used cars
Ayudhya Capital(3)
Auto Lease Plc.
Nature of business
- Auto financing
Ayudhya Card
Services Co., Ltd.
Nature of business
- Credit card
- Personal loans and
Auto financing
AIG Retail Bank
Plc.
Nature of business
- Retail Bank
99.99%
99.99%
99.99%
99.99%
Siam Realty and
Services Co., Ltd.
Nature of business
- Car rental and
personnel service
for the Bank and
associated
companies
KS Law Office Co.,
Ltd. (1)(2)
Nature of business
- Legal service for
99.99%
the bank and
associated
companies
99.76%
Ayudhya Auto
Lease Plc.
Nature of business
- Auto Financing
99.55%
Ayudhya Securities
Plc.
Nature of business
- Securities
business
86.33%
Krungsriayudhya
Card Co., Ltd.
Nature of business
- Credit card and
personal loans
business
49.99%
Remarks:
(1)
On December 5, 2008, the subsidiary transferred its entire business to Ayudhya Capital Auto Lease Plc.
(2)
Currently, the subsidiary is in the process of liquidation.
(3)
Formerly known as “GE Capital Auto Lease Plc”
- 43 -
The Bank’s objective is to become a universal bank, with the intention of attaining a
leadership position in the financial services industry. In addition to financial services being
offered by the Bank directly, a greater variety of financial services are offered by its subsidiaries
to meet all the customer’s needs and to be the top choice among customers. It will also continue
to expand its assets, loans and deposit base to gain larger market share.
In 2008, the Bank achieved its business objectives, due to both organic and inorganic
growth, resulting in a more balanced loan mix of corporate, SME and retail loans. The Bank aims
to increase its retail loan portion to 50% of total loans by the end of 2010. This is to ensure that
its loan portfolio has better risk-diversified structure with a larger number of customers and
higher yielding loans at the same time
Besides from growing income from its main business through credit extension, the Bank
will strive to generate more fee and service-based income through its sale network and from
cross selling other financial products and services of its subsidiaries and group’s business
alliance. In addition, the Bank will continue to mark a progress in asset quality improvement,
mainly from reducing non-performing loans (NPL) and expediting the sale of existing NPL and
NPA.
2
List of the management and list of the first 10 shareholders as at the closing date of
share register book
2.1
Board of Directors
As of 31 July 2009, Bank’s Board of Directors consists of 11 members, as follows:
Members of the Board of Directors
Position
Mr. Veraphan Teepsuwan
Chairman of the Board
Mr. Tan Kong Khoon
Director
Ms. Janice Rae Van Ekeren
Director
Mr. Pongpinit Tejagupta
Director
Mr. Pornsanong Tuchinda
Director
Mr. Chet Raktakanishta
Director
Mr. Mark John Arnold
Director
Mr. Surachai Prukbamroong
Independent Director
Mr. Karun Kittisataporn
Mr. Virat Phairatphiboon
Mr. Yongyuth Withyawongsaruchi
2.2
Executive Committee
As of 31 July 2009, Bank’s Executive Committee consists of 13 members, as follows:
Members of the Executive Committee
Position
Mr. Tan Kong Khoon
Chairman
Vice Chairman
Mr. Chandrashekar Subramanian
Director
Krishoolndmangalam
- 44 -
Members of the Executive Committee
Position
Mr. Piriyah Wisedjinda
Director
Mr. Virojn Srethapramotaya
Director
Ms. Phawana Niemloy
Director
Mr. Poomchai Wacharapong
Director
Mr. Sudargo Harsono
Director
Mr. Roy Agustinus Gunara
Director
Ms. Wanna Thamsirisup
Director
Ms. Voranuch Dejakaisaya
Director
Dr. Yaowalak Poolthong
Director
Ms. Nopporn Tirawattanagool
Director
2.3
Executives
As of 31 July 2009, Bank’s Executives are as follows:
Executives
Position
Mr. Tan Kong Khoon
President and Chief Executive Officer
Head of Distribution
Mr. Virojn Srethapramotaya
Head of Corporate Banking
Mr. Poomchai Wacharapong
Head of SME Banking
Chief Financial Officer
Ms. Phawana Niemloy
General Counsel
Mr. Roy A. Gunara
Head of Consumer Banking
Mr. Chandrashekar
Chief Risk Officer
Subramanian
Krishoolndmangalam
Mr. Sudargo Harsono
Chief Marketing Officer
Ms. Wanna Thamsirisup
Head of Operations
Ms. Nopporn Tirawattanagool
Head of Human Resources
Dr. Yaowalak Poolthong
Head of Corporate Communications &
Investor Relations
Mr. Somrit Srithongdee
Head of Special Project Human Resources
Ms. Voranuch Dejakaisaya
Head of Information Technology
Mr. Nuttawit Boonyawat
First Executive Vice President
Mr. Sansrit Yenbamrung
Ms. Preeprame Seriwongse
Mr. Sirichai Leelakitkul
Executive Vice President
Mr. Kheeseng Anansiriprapha
Mr. Kriengkrai Viriyaatthakit
- 45 -
Executives
Position
Mr. Pisuthi Amyongka
Mr. Nanthasit Leksrisakul
Mr. Tak Bunnag
Ms. Maleewan Phongsathorn
Ms. Montira Arayangkoon
Ms. Duangdao Wongpanitkrit
Mr. Sindre Ulvund
Mr. John Howard Harker
Mr. Tanyapong
Thamavaranukupt
Ms. Salisa Hanpanich
Ms. Krongthip Suthasoonthorn
Ms. Siriporn Ambhanwong
Mr. Saengchart
Wanichwatphibun
Mr. Thodsaporn Rattanamastip
2.4 Major Shareholders
As of the latest closing date for dividend payment, April 22, 2009, the top 10
shareholders are as follows:
Rank
Shareholders
Number of Shares
% of Total
Shares
2,000,000,000
32.926
1.
GE Capital International Holdings
Corporation
2.
Thai NVDR Co., Ltd.
756,401,127
12.453
3.
Stronghold Assets Co., Ltd.
166,536,980
2.742
4.
The Great Luck Equity Co., Ltd.
166,478,940
2.741
5.
GL Asset Co., Ltd.
166,414,640
2.740
6.
BBTV Satelvision Co.,Ltd.
166,151,114
2.735
7.
BBTV Asset Management Co., Ltd.
163,112,900
2.685
8.
BBTV Television and Radio Co., Ltd.
160,788,920
2.647
9.
Mahakij Holdings Co., Ltd.
158,726,810
2.613
10.
Tun Rung Rueng Co.,Ltd.
157,889,440
2.599
- 46 -
3
The statement relating to the responsibility of directors with respect to the
information in documents sent to the shareholders
The person authorized by the Board of Directors, has carefully examined the information
in this information memorandum and found no reasonable ground to believe that the information
is not true, incomplete and false, mislead or omit any fact that should have been expressly
disclosed in material respects.
4
Where there is an opinion of an independent expert (e.g. appraiser of assets), the
report of the expert shall include information as required by the Exchange and the
qualifications of the expert, shareholding in and relationship of the expert with the
listed company and the parties, permission of the expert for the disclosure of the
opinion and the date of the opinion.
- None -
5
(1)
The total amount of debt instruments having been issued and those not
having been issued pursuant to the resolution of the shareholders meeting which
authorizes the board of directors of the listed company to consider issuing them for
sale as it deems appropriate
As of March 31, 2009, the Bank issued debt instruments consisting of
subordinated debentures, senior debentures and bills of exchange totaling Baht 80,319.0
million, classified into short-term debt instruments of Baht 7,732.0 million and long-term
debt instruments of Baht 72,587.0 million.
The debt instruments that have not been issued pursuant to the resolution of the
shareholders meeting is worth about USD 4,025.0 mm or Baht 131,361.0 mm
(2)
The total amount of loans with specified repayment period, including the
liability to place assets as collateral
Short-Term Borrowings
CONSOLIDATED AND SEPARATE FINANCIAL
STATEMENTS
March 31, 2009
Domestic Foreign
December 31, 2008
Total
Domestic Foreign
Total
Senior securities floating rate
notes
(US$ 150.0 million)
-
5,329
5,329
-
5,243
5,243
Bills of exchange
2,403
-
2,403
3,767
-
3,767
Other borrowings
4
-
4
4
-
4
7,736
3,771
Total short-term borrowings
2,407
5,329
5,243
9,014
Short-term borrowings consist of the following:

On October 18, 2006, the Bank had Baht 4 million of borrowings with maturity on
December 31, 2009, at the fixed interest rate of 0.50% per annum.

On November 14, 2006, the Bank issued senior securities floating rate notes in the
amount of USD 150 million with a maturity in 2009 and carrying an interest rate of
LIBOR-6 month plus 0.24% per annum, payable semi-annually in May and
November of each year.
- 47 -

During April 25, 2008 to December 9, 2008, the Bank issued Baht 3,767 million of
bills of exchange with maturities on January 5, 2009 to September 14, 2009, at the
fixed interest rates of 3.00%-4.10% per annum and the Bank had made partial
repayment in amount of Baht 2,030 million.

During January 8, 2009 to March 31, 2009 the Bank had issued Baht 666 million of
bills of exchange with maturities on June 2, 2009 to January 7, 2010, at the fixed
interest rates of 1.1%-2.9% per annum.
Long-Term Borrowings
CONSOLIDATED AND SEPARATE FINANCIAL
STATEMENTS
March 31, 2009
Domestic Foreign
December 31, 2008
Total
Domestic Foreign
Total
Subordinated Debentures #5
12,000
-
12,000
12,000
-
12,000
Senior securities
57,387
-
57,387
57,387
-
57,387
Bill of exchange
3,200
-
3,200
3,200
-
3,200
Other borrowings
240
-
240
256
-
256
72,827
-
72,827
72,843
-
72,843
Total long-term borrowings
Long-term borrowings consist of the following:

On November 5, 2003, the Bank issued subordinated debenture #5 in the amount of
Baht 12,000 million with a maturity in 2013 at the fixed rate of 4% per annum for
the years 1-5 and 4.75% per annum for the years 6-10, payable quarterly on the fifth
of February, May, August and November of each year. The Bank has the right to
redeem debenture #5 before the maturity date subject to the approval of the Bank of
Thailand.

On October 26, 2007, the Bank issued uncollateralized senior securities in 2 tranches
with interest payable quarterly in January, April, July and October of each year, as
follows:
Tranche
1
2

Maturity date
Oct. 26, 2010
Oct. 26, 2011
Interest rate
4.25%
4.50%
Amount (Million Baht)
6,899
4,633
On March 18, 2008, the Bank issued uncollateralized senior securities in 3 tranches
with interest payable quarterly in March, June, September and December of each
year, as follows:
Tranche
1
2
3
Maturity date
Mar. 18, 2010
Mar. 18, 2011
Mar. 18, 2012
- 48 -
Interest rate
3.85%
4.00%
4.25%
9,924
5,157
3,665

On June 5, 2008, the Bank issued uncollateralized senior securities in 2 tranches with
interest payable quarterly in March, June, September and December of each year, as
follows:
Tranche
1
2

Maturity date
Jun. 5, 2010
Jun. 5, 2011
Interest rate
4.25%
4.50%
16,265
3,933
On December 2, 2008, the Bank issued uncollateralized senior securities in 1 tranche
with interest payable quarterly in March, June, September and December of each
year, as follows:
Tranche
1
Maturity date
Dec. 2, 2011
Interest rate
5.10%
6,912

During May 12, 2008 to August 5, 2008, the Bank issued Baht 3,200 million of bills
of exchange with maturities on May 13, 2010 to May 23, 2011, at the fixed interest
rates of 3.40% - 4.67% per annum.

During April 29, 2003 to September 30, 2008, the Bank had Baht 256 million of
borrowings with maturities on June 27, 2010 to March 31, 2015, at the fixed interest
rates of 0.00% - 0.50% per annum and the Bank had made partial repayment in the
amount of Baht 16 million.
(3)
The total value of debts in other categories, including overdrafts, indicating
the liability to place assets as collateral
As of March 31, 2009 and December 31, 2008, the Bank had other debts of Baht
11,532.0 mm and Baht 12,578.0 mm respectively.
(4)
Indebtedness to be incurred in the future
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
December 31, 2008
Baht
Foreign
Total
Baht
Foreign
Total
Currencies
Currencies
2,469
2,469
2,557
2,557
8
480
488
2
478
480
33,807
878
34,685 33,208
851
34,059
200
5,945
6,145
365
3,326
3,691
Avals to bills
Guarantees of loans
Other guarantees
Letters of credit
Exchange rate contracts
Bought
Sold
Currency swap contracts
Bought
10,297
Sold
682
Interest rate swap
Bought
12,600
Sold
600
Unused overdraft limit
46,906
Others
3,088
Total
110,657
57,226
55,577
57,226
55,577
-
56,895
62,316
56,895
62,316
2,087
11,419
12,384
12,101
10,686
682
2,077
11,688
12,763
12,370
15,940 12,600
3,585
600
46,906 44,996
4,339
39
251,845 105,735
4,141
3,093
2,104
146,969
16,741
3,693
44,996
2,143
252,704
3,340
2,985
1,251
141,188
- 49 -
SEPARATE FINANCIAL STATEMENTS
March 31, 2009
December 31, 2008
Baht
Foreign
Total
Baht
Foreign
Total
Currencies
Currencies
2,769
2,769
2,857
2,857
8
480
488
2
478
480
33,819
878
34,697 33,220
851
34,071
200
6,012
6,212
365
3,469
3,834
Avals to bills
Guarantees of loans
Other guarantees
Letters of credit
Exchange rate contracts
Bought
Sold
Currency swap contracts
Bought
10,297
Sold
682
Interest rate swap
Bought
12,600
Sold
600
Unused overdraft limit
46,906
Others
3,088
Total
110,969
57,226
55,577
57,226
55,577
-
56,895
62,316
56,895
62,316
2,087
11,419
12,384
12,101
10,686
682
2,077
11,688
12,763
12,370
15,940 12,600
3,585
600
46,906 44,996
4,339
39
252,224 106,047
4,141
3,093
2,104
147,112
16,741
3,693
44,996
2,143
253,159
3,340
2,985
1,251
141,255
As at March 31, 2009 and December 31, 2008, the Bank has commitments for
information technology in the amounts of Baht 386 million and Baht 306 million,
respectively.
As at March 31, 2009 and December 31, 2008, the Bank has liabilities under
securities to be delivered of Baht 3,070 million and Baht 0, respectively, presented as
part of the contingencies.
6
Other information that may materially affect the decision of investors (if any)
- None -
7
Financial projections in the present year (if any), including assumptions on trade,
economics, industry and review of the figures by a certified public auditor and the
opinion of an independent financial advisor that the projections have been carefully
prepared
- None -
8
Interests or connected transactions between the listed company and directors,
management and shareholders directly or indirectly holding shares amounting to
10 percent to more, including the nature of the transaction or the interests;
The Bank has business transactions with subsidiaries, associated and related companies.
These transactions are with companies that have shareholding and/or major shareholders and/or
joint directors with the Bank and with related persons. Such related transactions are in the normal
course of business for the Bank and are priced at market and in common with the same
conditions as other customers, including the allowance for doubtful accounts policy. The Bank
has complied with the same BOT regulations as those granted to other debtors.
- 50 -
8.1
Loans to, commitments and deposits with certain officers from the levels of departmental
chief upward and the companies in which they and/or the Bank directors and/or their related
parties and/or the Bank owned 10% or more of each company’s paid-up capital are as follows:
March 31, 2009
December 31, 2008
114,878
121,021
1,149
1,210
380
456
4,248
3,062
Loans
Allowance for doubtful accounts
Commitments
Deposits
Certain information related to the aforementioned loans and commitments as at March 31, 2009
and December 31, 2008, are as follows:
March 31, 2009
Total Amount
(Baht Million)
Loans
114,878
Maturity Date
Apr. 2, 2009
Aug. 5, 2032
Outstanding Balance
Secured
Unsecured
(Baht Million) (Baht Million)
to
21
Commitments
380
Dec. 12, 2008
Apr. 4, 2010
115,237
to
As at March 31, 2009, the Bank charges interest rates at 0.75% - 6.50% p.a. on loans to
these related parties.
December 31, 2008
Total Amount
(Baht Million)
Loans
121,021
Maturity Date
Jan. 5, 2009
Jun. 30, 2034
Outstanding Balance
Secured
Unsecured
to
47
Commitments
456
121,430
Oct. 31, 2008 to
Apr. 4, 2010
As at December 31, 2008, the Bank charged interest rates at 1.63% - 8.50% p.a. on loans
to these related parties.
8.2
In addition to 8.1, the Bank has loans to, commitments and deposits with the companies
which are related to the directors and/or major shareholders of the Bank as identified by having
the same executive officers as the Bank and/or the companies in which the directors and/or
shareholders of the Bank having significant voting right either direct or indirect.
March 31, 2009
December 31, 2008
5,831
8,202
56
80
277
342
9,811
7,489
Loans
Allowance for doubtful accounts
Commitments
Deposits
- 51 -
Certain information related to the aforementioned loans and commitments as at March 31, 2009
and December 31, 2008, are as follows:
March 31, 2009
Total Amount
(Baht Million)
Loans
5,831
Maturity Date
Apr. 16, 2009
Jun. 18, 2013
Outstanding Balance
Secured
Unsecured
to
217
Commitments
277
Apr. 10, 2009 to
May. 22, 2017
Total Amount
(Baht Million)
Maturity Date
5,891
December 31, 2008
Loans
8,202
Jan. 16, 2009
Jun. 18, 2013
Outstanding Balance
Secured
Unsecured
to
216
Commitments
342
8,328
Jun. 30, 2008 to
May. 22, 2017
Interest rates on loans as at March 31, 2009 and December 31, 2008, equal to 1.19% 6.00% p.a. and 4.46% - 6.00% p.a., respectively.
9
Pending material lawsuits or claims.
In respect of dispute cases between the Bank and other persons which are currently
pending the court proceedings, no such case may negatively impact the Bank’s assets with the
value higher than 5% of the shareholders’ equity as of December 31, 2008 or significantly impact
the Bank’s operations or arise from the Bank’s normal business operation.
10
Summaries of material contracts during the past 2 years
10.1
For the year ended December 31, 2007
(a)
On January 3, 2007, the Bank accepted the assets and liabilities transfer of TSS
or formerly known as GE Money Retail Bank Plc according to the conditions of the
business partnership agreement with GE Group and the Bank made payment as follows:
Loans
Fixed Assets
Deposits
Interest
Purchase Price Paid
10.2
2,036
43
(1,061)
2
1,020
For the year ended December 31, 2008
(a)
On January 31, 2008, the Bank signed the agreement to acquire shares of GE
Capital Auto Lease Plc (currently known as Ayudhya Capital Auto Lease Plc) operating
- 52 -
the auto sale and lease back business with the contractual investment value of Baht
16,180.0 mm and the Bank has already made payment.
10.3
For the year ended July 31, 2009
(a)
On February 5, 2009, the Bank signed the agreement to acquire shares of AIG
Retail Bank Plc, operating the retail banking business with the contractual investment
value of Baht 2,036.0 mm and the Bank has already made payment.
(b)
On February 5, 2009, the Bank signed the agreement to acquire shares of AIG
Card (Thailand) Co., Ltd. (currently known as Ayudhya Card Services Co., Ltd.)
operating the credit card and personal loan businesses with the contractual investment
value of Baht 19.0 mm and the Bank has already made payment.
(c)
On July 9, 2009, the Bank signed the agreement to acquire shares of CFG
Services Co., Ltd., operating the auto hire purchase and collateral loan businesses with
the contractual investment value of Baht 18.0 mm and the Bank has not made payment
yet.
11
The opinion of the Board of Directors of the company relating to the sufficiency of
cash flow. Where cash flow is not sufficient, the sources of funds to resolve the
situation shall also be included
The Board of Directors has resolved to use the Bank’s internal fund which is sufficient to
this investment.
12
Summary of financial statements during the past 3 years and the present year until
the latest quarter, as well as the explanation and analysis of financial condition and
operating result in the past year and the present year until the latest quarter
including risk factor which may affect the profit of the listed company
Balance Sheet
ASSETS
Cash
Interbank and money market
items
Securities purchased under
resale agreement
Investment, net
Loans and accrued interest
receivable
Loans
Accrued interest payable
Total loans and accrued interest
receivable
Less Allowance for doubtful
accounts
Less Revaluation allowance
for debt restructuring
Net loans and accrued interest
receivable
Properties foreclosed, net
Customers’ liabilities under
acceptances
2006
2007
2008
Mar. 31, 2009
“Unaudited”
19,557,999
19,199,531
20,419,455
19,351,409
78,500,804
33,559,509
84,854,345
100,686,960
13,000,000
71,088,121
76,000,000
54,950,484
57,229,054
56,609,056
460,288,315
2,397,294
450,355,576
2,071,837
557,077,228
1,682,914
535,126,420
1,554,704
462,685,609
452,427,413
558,760,142
536,681,124
(28,321,930)
(33,980,181)
(31,410,158)
(32,565,342)
(489,640)
(1,238,771)
(897,460)
(861,692)
433,874,039
23,830,515
417,208,461
23,522,924
526,452,524
21,370,609
503,254,090
20,764,799
1,967,248
1,646,697
664,826
541,905
- 53 -
Property, premises and
equipment, net
Intangible assets, net
Other assets
Total Assets
2006
2007
2008
Mar. 31, 2009
“Unaudited”
16,362,467
8,160,409
666,341,602
15,892,874
2,630,113
7,765,349
652,375,942
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
563,495,937 499,627,178
20,498,060
16,272,816
items
Liabilities payable on demand
1,363,561
2,140,947
Total borrowings
19,578,112
39,418,774
Bank’s liabilities under
acceptances
1,967,248
1,646,697
3,076,916
Provision
612,240
14,590,392
9,215,745
Other liabilities
619,195,581 574,309,044
Total Liabilities
Shareholders’ equity
Minority interest
Total Shareholders’ Equity
Total Liabilities and
15,894,792
11,307,051
6,169,085
734,579,147
537,353,510
524,387,749
20,003,348
1,672,752
81,856,903
23,787,438
1,865,510
80,562,834
664,826
388,908
18,168,993
541,905
342,116
16,795,454
660,109,240
648,283,006
46,374,259
771,762
47,146,021
77,854,312
212,587
78,066,899
85,269,721
97,708
85,367,429
86,201,599
94,542
86,296,141
666,341,602
652,375,942
745,476,669
734,579,147
3,245,143
3,037,196
2,956,742
1,680,582
7,639,372
242,612,570
2,056,521
3,690,631
243,919,764
1,216,912
6,144,756
241,526,099
Off Balance Sheet Items - Contingencies
Aval to bills and guarantees of
2,410,317
loans
Liabilities under unmatured
import bills
1,824,141
Letter of credit
6,002,782
Other contingencies
348,907,338
ASSETS
Cash
items
Securities purchased under
resale agreement
Investment, net
Loans and accrued interest
receivable
Loans
Total loans and accrued interest
receivable
Less Allowance for doubtful
16,085,231
11,339,641
7,060,984
745,476,669
SEPERATED FINANCIAL STATEMENTS
2006
2007
2008
Mar. 31, 2009
“Restated”
“Unaudited”
19,548,140
19,197,131
20,416,524
19,347,151
78,350,738
33,232,186
84,122,967
100,122,311
13,000,000
74,667,679
76,000,000
65,110,329
84,331,906
83,666,580
459,266,700
2,178,816
444,962,498
1,863,504
540,442,537
1,580,155
516,252,493
1,508,238
461,445,517
(22,332,344)
446,826,002
(28,271,416)
542,022,692
(22,828,654)
517,760,731
(24,043,662)
- 54 -
accounts
Less Revaluation allowance
for debt restructuring
Net loans and accrued interest
receivable
Properties foreclosed, net
Customers’ liabilities under
acceptances
Property, premises and
equipment, net
Intangible assets, net
Other assets
Total Assets
2006
2007
2008
Mar. 31, 2009
“Restated”
“Unaudited”
(488,259)
(1,237,921)
(896,757)
(860,997)
438,624,914
15,620,775
417,316,666
15,236,926
518,297,281
13,146,938
492,856,072
12,795,373
1,967,248
1,646,697
664,826
541,905
15,424,353
7,353,909
664,557,757
15,053,815
1,201,001
6,628,658
650,623,408
15,535,299
1,459,698
4,600,595
742,576,034
15,222,691
1,436,909
3,717,443
729,706,435
540,746,814
527,902,875
19,195,209
1,672,663
81,856,903
21,226,119
1,865,152
80,562,834
664,826
388,908
12,577,924
541,905
342,116
11,532,365
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
563,673,100 500,406,034
17,443,856
14,652,147
items
Liabilities payable on demand
1,363,561
2,140,947
Total borrowings
21,295,656
39,126,050
Bank’s liabilities under
acceptances
1,967,248
1,646,697
3,069,721
Provision
612,240
12,033,501
7,693,185
Other liabilities
Total Liabilities
Minority interest
Total Liabilities and
616,506,326
570,617,616
657,103,247
643,973,366
48,051,430
48,051,430
80,005,792
80,005,792
85,472,787
85,472,787
85,733,069
85,733,069
664,557,757
650,623,408
742,576,034
729,706,435
3,845,143
3,337,196
3,256,742
1,680,582
7,591,871
243,325,163
2,056,521
3,833,653
243,932,358
1,216,912
6,211,894
241,538,693
Off Balance Sheet Items - Contingencies
Aval to bills and guarantees of
loans
3,010,317
Liabilities under unmatured
import bills
1,824,141
Letter of credit
6,002,782
Other contingencies
354,316,615
Income Statements
Interest and Dividend Income
Interest on loans
2006
2007
2008
Mar. 31, 2009
“Unaudited”
27,105,788
- 55 -
26,329,318
25,900,433
5,959,913
Interest on interbank and
money market items
Hire purchase and financial
lease income
Investments
Total interest and dividend
income
Interest Expenses
Interest on deposits
money market items
Interest on short-term
borrowings
Interest on long-term
borrowings
Total Interest Expenses
Interest and Dividend Income,
net
Bad Debt and Doubtful Accounts
Loss on Debt Restructuring
Non-Interest Income
Gain (Loss) on investments
Expense from equity interest
in associated company
Fee and service income
Acceptances, aval and
guarantees
Others
Gain on exchange
Gain (Loss) on sales of
properties foreclosed
Income from investments in
receivables
Other income
Total Non-Interest Income
Non-Interest Expenses
Personnel expenses
Premises and equipment
expenses
Taxes and duties
Fees and service expenses
Directors’ remuneration
Contributions to the Financial
Institution Development Fund
and Deposit Protection Agency
Other expenses
Total Non-Interest Expenses
Income (Loss) before Income
Tax
2006
2007
2008
Mar. 31, 2009
“Unaudited”
4,650,923
3,726,070
2,381,856
400,845
1,164,178
2,804,678
1,643,586
3,365,463
10,439,645
2,440,723
2,846,113
461,234
35,725,567
35,064,438
41,162,657
9,668,105
15,729,257
14,110,712
10,792,245
2,604,380
304,937
357,040
898,783
173,345
87,563
104,261
689,241
62,583
556,058
16,677,816
870,187
15,442,200
2,214,496
14,594,765
777,320
3,617,628
19,047,750
11,070,431
290,544
19,622,238
8,588,584
3,776,332
26,567,892
5,422,176
637,615
6,050,477
1,935,045
42,604
1,405,903
(668,515)
(2,255,036)
1,988
31,034
(197)
(7,760)
85,187
57,575
4,760,925
702,913
43,070
5,399,141
1,003,838
49,404
7,438,035
860,218
11,622
1,887,507
204,190
445,136
551,159
(742,038)
75,270
951,014
799,312
9,153,812
457,540
760,678
7,546,714
303,278
523,992
6,170,092
81,823
83,070
2,430,657
5,155,159
6,995,197
8,113,523
2,122,296
3,328,485
1,457,605
895,683
36,983
3,557,843
1,508,344
1,291,593
33,294
4,173,924
1,308,872
2,604,144
34,591
968,465
283,758
712,056
8,234
2,279,946
2,112,687
15,266,548
2,209,883
3,067,404
18,663,559
2,061,872
2,927,134
21,224,060
518,670
583,300
5,196,779
1,574,039
(3,859,523)
5,454,132
1,306,706
- 56 -
Income Tax Expenses
Net loss of a subsidiary
company from former
shareholders
Net Income (Loss)
Attributable to
Equity Holders of the Bank
Minority Interest
Net Income (Loss)
Basic Earnings (Loss) per Share
(Baht)
Diluted Earnings (Loss) per
Share (Baht)
Interest and Dividend Income
Interest on loans
money market items
Hire purchase and financial
lease income
Investments
Total interest and dividend
income
Interest Expenses
Interest on deposits
money market items
Interest on short-term
borrowings
Interest on long-term
borrowings
Total Interest Expenses
Interest and Dividend Income,
net
Bad Debt and Doubtful Accounts
Loss on Debt Restructuring
Non-Interest Income
Gain (Loss) on investments
Expense from equity interest
in associated company
Fee and service income
Acceptances, aval and
guarantees
Others
Gain on exchange
2006
2007
2008
Mar. 31, 2009
“Unaudited”
67,414
123,914
559,587
282,102
105,410
1,612,036
(3,983,437)
4,894,545
1,024,604
1,666,395
(54,359)
1,612,036
(3,991,979)
8,542
(3,983,437)
4,896,034
(1,488)
4,894,545
1,027,768
(3,164)
1,024,604
0.58
(0.76)
0.83
0.17
0.47
(0.71)
0.83
0.17
2006
2007
2008
Mar. 31, 2009
“Restated”
“Unaudited”
27,297,148
27,176,123
28,585,457
6,911,646
4,594,306
3,721,524
2,377,826
400,027
2,784,111
3,380,238
2,984,895
461,110
34,675,566
34,277,885
33,948,178
7,772,783
15,665,093
14,116,569
10,812,422
2,611,819
165,621
244,389
365,544
157,920
87,487
92,368
378,005
62,583
556,058
16,474,259
870,187
15,323,514
2,214,496
13,770,467
777,320
3,609,642
18,201,306
5,978,144
361,334
18,954,372
7,723,137
3,776,863
20,177,711
4,062,238
637,762
4,163,141
1,187,389
42,611
(1,365,108)
(924,957)
(2,328,298)
41,975
-
-
-
-
62,070
4,446,863
702,913
50,578
4,655,949
1,003,795
54,647
5,127,956
860,143
11,622
1,275,934
204,149
- 57 -
Gain (Loss) on sales of
properties foreclosed
Income from investments in
receivables
Other income
Total Non-Interest Income
Non-Interest Expenses
Personnel expenses
Premises and equipment
expenses
Taxes and duties
Fees and service expenses
Directors’ remuneration
Contributions to the Financial
Institution Development Fund
and Deposit Protection Agency
Other expenses
Total Non-Interest Expenses
Income (Loss) before Income
Tax
Income Tax Expenses
Net loss of a subsidiary
company from former
shareholders
Net Income (Loss)
Attributable to
Equity Holders of the Bank
Minority Interest
Net Income (Loss)
2006
2007
2008
Mar. 31, 2009
“Restated”
“Unaudited”
116,686
94,903
272,917
21,742
224,632
4,188,056
507,159
5,387,428
291,626
4,278,990
37,417
1,592,839
4,125,523
5,703,035
6,421,919
1,692,291
2,805,552
1,316,374
840,909
20,128
3,161,919
1,392,487
1,094,045
20,267
3,415,778
1,241,031
1,273,163
25,955
791,217
276,788
370,150
6,489
2,266,722
1,983,275
13,358,482
2,209,883
2,769,425
16,351,061
2,061,872
2,317,353
16,757,070
518,670
467,499
4,123,104
2,691,403
7,821
(3,509,262)
8,909
2,999,632
71,022
402,876
42,130
2,683,582
(3,518,170)
2,928,610
360,746
2,683,582
2,683,582
(3,518,170)
(3,518,170)
2,928,610
2,928,610
360,746
360,746
0.93
(0.67)
0.50
0.06
0.75
(0.63)
0.50
0.06
Basic Earnings (Loss) per Share
(Baht)
Diluted Earnings (Loss) per
Share (Baht)
Management Discussion and Analysis
Summary of Financial Performance and Status
In the first quarter of 2009, amidst an economic slowdown resulting from the global
financial crisis, Bank of Ayudhya Pcl and its subsidiaries recorded a satisfactory operating
performance. The operating profit before provisioning for doubtful accounts and taxes was Baht
3,285 million representing an increase of Baht 365 million or 12.5% year over year when
compared to 1Q/08. While net interest and dividend income and non-interest income increased
by 5.9% and 13.4%, respectively, non-interest expenses grew by 5.2%. After setting aside Baht
1,978 million in provision for bad debt and doubtful account and Baht 282 million for taxes, a
net profit of Baht 1,025 million was posted representing a flat growth year-on-year.
- 58 -
Compared to the prior quarter, the 1Q/09 operating profit before provisioning for
doubtful accounts and taxes increased by a Baht 515 million or 18.6%. Net profit increased by
179 million or 21.2%. This was mainly attributable to a 55.6% increase in non-interest income
and a 7.9% reduction in non-interest expenses in spite of 11.6% decrease in net interest income,
which was mainly due to the impact of macro environment causing a decrease in loan
outstanding as well as consequence of the sharp decline in interest rates.
As a result of the global financial crisis and domestic political concerns, the Bank’s
consolidated balance sheet shrank slightly. As of March 31, 2009, the total assets of the Bank
and its subsidiaries were Baht 734,579 million, a decrease of Baht 10,898 million or 1.5% as
compared to December 31, 2008. This was due primarily to a decrease in loans of Baht 21,951
million or 3.9% resulting from lower loan demand in line with the contraction of the economy.
Assets were partially offset by an increase in interbank and money market items of Baht 15,833
million or 18.7%.
Total liabilities were Baht 648,283 million, a decrease of Baht 11,826 million or 1.8%,
mainly due to a decrease in deposits of Baht 12,966 million or 2.4% and borrowings of Baht
1,294 million or 1.6%, partially offset by an increase in money market items of Baht 3,784
million. The movement in funding was in line with loans and the Bank’s liquidity remains strong.
Total shareholders’ equity rose to Baht 86,296 million, an increase of Baht 928 million or 1.1%
as compared to December 31, 2008, due primarily to an increase of 1Q/09 net income of Baht
1,025 million offset by the decrease of the revaluation deficit on investments of Baht 55 million
and the decrease in land and building revaluation of Baht 41 million.
The Bank and subsidiaries’ off balance sheet items as of March 31, 2009 totaled Baht
251,845 million, a decrease of Baht 859 million or 0.3% due mainly to a decrease in other
contingencies by Baht 2,394 million as a result of a decrease in the level of FX transactions
partially offset by an increase in letter of credit of Baht 2,454 million.
For statutory capital, the Bank changed the method of capital calculation from Basel I to
Basel II effective on December 31, 2008 as required by the Bank of Thailand. As of March 31,
2009, the Bank’s capital totaled Baht 95,089 million or equivalent to 15.57% of risk-weighted
assets with 12.94% in Tier 1 capital. The Bank’s capital base remained at healthy level, thus
supporting further potential inorganic growth strategy in the Bank.
- 59 -
Information Circular on the purchase or accept the business transfer
of CFG Services Co., Ltd. by acquiring its shares.
1.
Date of transaction
Bank of Ayudhya Public Company Limited (“Bank”) will hold the meeting of shareholders to
approve this traction on August 27, 2009. This transaction will be undertaken after obtaining
approval from the Extraordinary General Meeting of Shareholders No. 2/2009 to be held on
August 27, 2009 and the Bank of Thailand. It is expected that the transaction will be taken
place in September 2009.
2.
Related parties and relationship to the Bank
Purchaser
Seller
Relationship to the Bank
3.
Bank of Ayudhya Plc ("Bank")
AIG Consumer Finance Group (“AIG CFG”) and its
representatives
-None-
Nature of transaction
The Board of Directors approved the acquisition or acceptance of transfer of the business of
CFGS which provides title loan and auto sale and lease back services. The total value of
purchasing 100% of all shares sold in CFGS from AIG CFG and its representatives is Baht
18.0 million (contractual value).
4.
Details of asset acquired
4.1
Business overview
CFGS was first established on October 24, 2006 under the Thai-US Amity Treaty.
On March 8, 2007, CFGS acquired all operating assets excluding the loans portfolio from Srisawad
International (1991) Co., Ltd. CFGS has continued to operate SI’s business since the acquisition.
Srisawad International (1991) Co., Ltd. (“SI”) was established in 1991 to provide title
loan and auto sale and lease back services to upcountry customers. The loans are secured by vehicles
i.e. motorcycles, passenger cars, pickup trucks, commercial trucks, and farm tractors. The “Srisawad
Ngern-Tid-Lor” brand is well recognized among its customer segment with a nationwide network of
133 branches.
Following the acquisition of the operating assets of SI, AIG CFG held a 82.4% share
in CFGS. In December 2008, CFGS acquired the remaining 17.6% share, in CFGS, resulting in AIG
CFG becoming the sole shareholder in CFGS. As of December 31, 2008, CFGS had paid-up capital
of Baht 182.2 million divided into 1,600,000 ordinary shares of Baht 100 each and 222,000 preferred
shares of Baht 100 each and 163 branches in 71 provinces nationwide with a total loans portfolio of
Baht 1,462.9 million.
- 60 -
4.2
Summary of financial information
Significant financial information of CFGS for the fiscal years of 2007 and 2008 as
disclosed in the audited financial statements and unaudited financial information for the first quarter
of 2009 are as follows:
Total Revenues
Total Expenses
Net Profit (Loss)
Net Profit (Loss)/Ordinary Share
(Baht/share)
Total Assets
Total Liabilities
Book Value/Ordinary Share (Baht/share)
Note: Figures are rounded.
5.
2007
(December 31)
208.9
338.1
(164.1)
(123)
2008
(December 31)
479.3
958.2
(554.6)
(348)
2009
(March 31)
130.0
110.0
(1.3)
(1)
1,806.2
1,290.0
516.2
387
2,006.0
1,822.5
183.5
115
1,803.6
1,621.4
182.2
114
Rule to determine value of consideration
The price is agreed between the purchaser and the seller, and the purchaser applies the
Dividend Discount Model for comparison and verification.
6.
Benefits to the Bank
6.1
Expansion of customer base and entering to a new market
The acquisition or acceptance of transfer of the business of CFGS (“acquisition”) will
allow the Bank to access to a new customer group as foundation for future growth. Most of CFGS
customers are in upcountry, a segment currently underserved by commercial banks.
As CFGS is an established leader in the title loan and auto sale and lease back
businesses and the Srisawad brand has been renowned and widely accepted by customers for more
than 15 years, the Bank can use this business opportunity to launch a new channel business and to
access a new group of customers. Additionally, the Bank can develop a wide range of standard
financial products in response to the demand of the market and customers, in particular, micro finance
business.
The acquisition is also in line with the Bank’s strategy to increase its retail loan
portfolio.
6.2
Know-how and capability to manage a new business
The acceptance of transfer of employees with knowledge, expertise and experience in
the title loan and auto sale and lease back businesses will help drive the management and potentiality
of these businesses and will be beneficial to the Bank since the business of CFGS is different from
commercial banking business, hence, an expert management team is required.
After acquisition of SI in 2007, the management team from AIG Group was sent to
CFGS. Subsequently, the number of branches increased from 133 branches in 2006 to 135 branches
- 61 -
in 2007 and 163 branches in 2008 and the loan portfolio expanded from Baht 851.3 million in 2007 to
Baht 1,462.9 million in 2008 or at a growth rate of 71.8%. The experience of the management team
will assist the Bank in further growing its businesses.
6.3
Synergy value from the acquisition
From this acquisition, the Bank will gain the benefit in terms of cost, both financial
and management, and other benefits from the economies of scales such as IT system. Furthermore,
the acquisition will also result in a more effective capital deployment for the Bank.
7.
Sources of financing
All investments will be from the internal funds of the Bank.
8.
Board of Directors' opinion on the transaction
The Board of Directors approved the Bank’s acquisition or acceptance of business transfer by
purchasing and holding 100% of all shares sold in CFGS to enhance the Bank's long term business
strength and to propose the matter to the extraordinary meeting of shareholders for consideration and
approval as detailed below:
1.
To approve the Bank’s acquisition or acceptance of business transfer by purchasing
100% of all shares sold in CFGS held by AIG CFG and its representatives, with the total transaction
value of Baht 18.0 million (contractual value).
2.
In acquiring or accepting a transfer of business by purchasing shares in CFGS and
taking any other related actions after acquisition or acceptance of business transfer as mentioned
above, to assign the Board of Directors or any person designated by the Board of Directors to have the
power:
2.1 To determine and/or change details, method, timeframe, operational procedure or
conditions in relation to the acquisition or acceptance of business transfer by purchasing shares in
CFGS; and
2.2 To contact, negotiate, change, amend, enter into and/or sign any contracts and/or
documents in relation to the acquisition or acceptance of business transfer by purchasing shares in
CFGS, apply for permission, provide information, file documents with the Ministry of Commerce, the
Bank of Thailand and/or any other relevant authorities, do any related or necessary actions in all
respects as deems appropriate, including the power to request relaxation for compliance with
regulations under the applicable laws and amend and/or change any statement or wording as per an
order, opinion or recommendation of the Registrar, Department of Business Development, Ministry of
Commerce and/or any other official agency.
2.3 To take any other related or necessary actions to ensure successful investment in
acquiring or accepting a transfer of the business by means of purchasing shares in CFGS.
- 62 -
Information Circular on Entire Business Transfer of Ayudhya Card Services Co., Ltd.
With reference to the Extraordinary General Meeting of Shareholders No. 1/2009 on March 12, 2009, it
was resolved that the Bank acquires 100% of the total shares sold of AIG Card (Thailand) Co., Ltd.,
thereafter changed its name to Ayudhya Card Services Co., Ltd. (AYCS).
Following the share acquisition, the Bank has evaluated the business structure and business model options of
AYCS by taking into consideration the maximizing of the benefits to the Bank and the shareholders.
Subsequently, the Extraordinary Board of Directors Meeting No. 6/2009 on July 20, 2009 resolved that the
Bank proceeds with the entire business transfer of AYCS which operates Credit Card, Personal Loan and
Auto Sale and Lease Back businesses. The information of businesses as at June 30, 2009 to be transferred
from AYCS are as follows:
(THB mm)
Loan and Accrued Interest
Reserve for loan loss
Net Loan
Other Assets
Total Assets
7,104
(408)
6,696
552
7,248
Borrowing
Other Liabilities
Total Liabilities
Shareholders Equity
Total Liabilities and Equities
6,750
357
7,107
141
7,248
For the aforesaid transfer of business, neither size nor value of the transaction requires the shareholders’
approval under the Notification of the Capital Market Supervisory Board Re: Rule on Entering into
Material Transactions Deemed as Acquisition or Disposal of Assets. However, to comply with Section
107 of the Public Limited Companies Act B.E. 2535, the Bank is to propose to the Extraordinary General
Meeting of Shareholders No. 2/2009 to consider and approve the Bank to accept the business transfer of
AYCS by means of entire business transfer and authorize the President & CEO, CFO and Head of
Consumer Banking to jointly approve, execute and undertake necessary and relevant actions so as to
complete the transfer of AYCS’s entire business to the Bank, including to determine the transfer date.
- 63 -
Practice Guideline for Shareholders Meetings
•
Registration and presentation of documents before attending the meeting
On the meeting date, the shareholders or proxies can register and present documents for
examination from 12.00 hours at the Mutipurpose Conference Room, 9th floor, Head Office Building of
Bank of Ayudhya Public Company Limited.
The Bank will use the barcode system for registration, all participants are required to present
the document with barcode delivered to the shareholders, together with the notification of the
meeting in the registration process.
The participants shall present the following documents (as the case may be) to the Bank officers for
registration before attending the meeting:
Shareholder
1. General person
1.1 In case of attending
the meeting in person
1.2 In case of proxy
2. Juristic person
2.1 In case a juristic
person’s authorized
director attends the
meeting in person
Required Documents
Valid “card” with a shareholder photograph issued by the government
agency such as:
a. Identification card (ID card)
b. Government/state enterprise officer card
c. Driving license
d. Passport
a. Original proxy form and allonge attached to the notification of the
meeting, which has been completed and signed by the shareholder and
the proxy with THB 20.0 duty stamp affixed
b. Certified true copy of the shareholder’s ID card
c. Certified true copy of the proxy’s ID card
a. ID card of the authorized director
b. Copy of the Affidavit issued by the Department of Business
Development, Ministry of Commerce for no longer than 60 days until
the day before meeting date and certified true copy by the authorized
director, in the number as specified with the company seal affixed (if
any)
2.2 In case of granting
proxy
a. Proxy form with barcode which has been completed and signed by the
authorized director granting the proxy with the company seal affixed (if
any) and duty stamp of THB 20.0
b. Copy of the Affidavit issued by the Department of Business
Development, Ministry of Commerce for no longer than 60 days until
the day before meeting date and certified true copy by the authorized
director, in the number as specified with the company seal affixed (if
any)
c. Certified true copy of ID card of the authorized director who signs the
proxy form
d. Certified true copy of the proxy’s ID card
3. Shareholder with nonThai nationality or
juristic person
Established under
foreign law
The requirements in Clauses 1 and 2 shall apply mutatis mutandis to any
shareholders or participants with non-Thai nationality or to any juristic
persons established under foreign law (as the case may be), provided that:
a. The shareholder or representative (director) or the proxy who is a
general person and attends the meeting shall present his/her ID card to
the officer before attending the meeting.
b. Copy of document issued by the government agency of the country in
which the juristic person was registered; or copy of document prepared
by the juristic person indicating details of name, head office and
- 64 -
Shareholder
Required Documents
signatory persons of such juristic person and condition or limitation of
signatory power, with notary public certification.
c. A Thai-translation version shall be attached to the original document in
English.
4. In case of deceased
shareholder
The estate administrator shall attend the meeting in person or by proxy:
a. The provision in Clause 1 shall apply mutatis mutandis.
b. A court order of estate administrator appointment certified by the
authorized person, which is issued no longer than 6 months until the
day before meeting date, shall be presented.
5. In case of minor child
His/her father-mother or legitimate guardian shall attend the meting in
person or by proxy:
b. A copy of the minor shareholder’s house registration shall be presented.
6. In case of incompetent
or quasi-incompetent
shareholder
His/her custodian or guardian shall attend the meeting in person or by
proxy:
b. A court order of custodian or guardian appointment certified by the
authorized person, which is issued no longer than 6 months until the
day before meeting date, shall be presented.
Remark:
•
(1) In case a participant changes his/her name/surname, the evidence of such change shall be
shown.
(2) A duty stamp will be provided by the Bank.
(3) The Bank reserves the right to authorize only the persons with complete and accurate
documents to attend the meeting. In case of appointment of proxy, a proxy form shall be
in accordance with the form specified below.
Granting of proxy to attend the meeting and vote on behalf of shareholders
There are three proxy forms for shareholders meetings pursuant to the Department of Business
Development Notification, Re: Proxy Forms (No. 5) B.E. 2550 (2007) dated February 2, 2007 as detailed
below:
Type
Form A
Description
General, simple and non-complicated
Indicate the name and details of the shareholder (grantor) and proxy
Grant the proxy the right to consider and vote on behalf of the shareholder (grantor) in all
respects as the proxy deems appropriate
Form B
Address matters for proxy in detail
A shareholder (grantor) can authorize his/her proxy to consider and vote all matters as the
proxy deems appropriate; or a shareholder (grantor) can indicate which matter he/she
authorizes the proxy to vote on his/her behalf.
Consist of two documents i.e. proxy form and allonge
Form C
Use only in case a shareholder is a foreign investor and appoints his/her custodian in
Thailand
Consist of two documents i.e. proxy form and allonge
The proxy form attached hereto is Proxy Form B. Proxy Form A and C can be downloaded at
www.krungsri.com.
- 65 -
In case any shareholder wishes to grant the Bank’s director as his/her proxy to attend the meeting and
vote on his/her behalf, the Bank would like to nominate the following directors for your discretion:
1. Mr. Veraphan Teepsuwan
2. Mr. Surachai Prukbamroong
3. Mr. Yongyuth Withyawongsaruchi
Chairman of the Board; or
Independent Director/
Chairman of the Audit Committee; or
Independent Director/
Member of the Audit Committee.
Detailed information of each director appears at the end of this document. Please indicate the name
of director to be appointed as your proxy in the proxy form. After completing, marking and signing
the said proxy form, please put it in a business reply service envelop attached to the notification of the
meeting and return to the Corporate Secretary by Tuesday, 25 August 2009.
•
Voting and counting of votes
The Chairman or a designated person will inform the meeting of the method for voting and counting
of votes before entering the meeting process.
1. Voting
- One share for one vote
- In casting vote in each agenda, the Chairman will request the shareholders who wish to make
an objection or abstain from voting to raise their hands.
Should there be any shareholders wish to make an objection, disapproving or abstaining
from voting, the Bank officer will give ballots only to such shareholders and then collect
the ballots for counting votes. Any shareholders do not raise their hands for objection,
disapproval or abstention, it shall be deemed that they approve the matter as proposed by
the Chairman.
In the event that no shareholder raises the hands for objection, disapproval or abstention,
it shall be deemed that the meeting unanimously resolves to approve the matter as
proposed by the Chairman, unless the shareholders have marked in the proxy forms that
they wish to make an objection, disapprove or abstain from voting. In this regard, the
Bank has already recorded the number of votes on objection, disapproval and abstention
in each agenda.
2. Counting of votes
- The Bank uses the barcode system for counting votes.
- In counting votes cast in each agenda, the Bank will count the number of disapproving votes
cast by and abstention of the shareholders attending the meeting in person and by proxy which have
already been recorded in advance at the time of registration. These votes will be deducted from the
number of all shares held by the shareholders attending the meeting and having the right to vote in each
agenda.
- After finishing the casting of votes in each agenda, the Chairman or a designated person shall
notify the meeting of the voting result of each agenda by addressing the number of approving votes,
disapproving votes and abstentions and in percentage of all shares held by the shareholders attending the
meeting and having the right to vote.
If any participant who casts his/her votes in advance wishes to go out of the meeting room, please contact
the Bank officer. If not, it shall be deemed that he/she votes for such agenda.
- 66 -
Information of directors nominated by the Bank for the Shareholders to appoint as Proxy
Chairman
Age
:
67 years
Nationality
:
Thai
Address
:
187 The Ascott, Sathorn Road, Yan Nawa, Sathorn, Bangkok 10120
Education
:
y BBA Economics, Boston University, U.S.A.
y MBA Northeastern University, U.S.A.
Work experience
:
1990 - 2005
1999 - 2004
1994 - 2004
Chairman
Chairman
Chairman
Apr 2006 – Jan 2007
Director
Current position at the Bank
:
Jan 2007 - Present
Chairman
Other positions currently held
:
Nov 2006 - Present
2003 – Present
1999 - Present
1995 - Present
1983 - Present
Chairman
Vice Chairman
Chairman
Chairman
Director
Director or executive positions in
other companies which may result
in conflicts of interests
:
None
Agenda of connected transaction
:
None
- 67 -
Royal Porcelain Plc
Ayudhya Securities Plc
Ayudhya Investment and Trust
Plc
Bank of Ayudhya Plc
Siam City Cement Plc
Eastern Star Real Estate Plc
Ayudhya Insurance Plc
Ayudhya Allianz C.P. Life Plc
Bangkok Broadcasting & T.V.
Co., Ltd.
Age
: 70 years
Nationality
: Thai
Address
: 95/4 Boromrajchonnee Road, Aroonamarin,
Bangkok-Noi, Bangkok 10700
Education
: y Bachelor of Accounting and Bachelor of Commerce,
Thammasat University
y Certificate of Bank Examiner, Bank of Examination School,
Federal Deposit Insurance Corporation, U.S.A.
y Certificate of Pacific Rim Bankers Program, University of
Washington, U.S.A.
y Certificate of Senior Management, University of California,
Berkeley, U.S.A.
y Certificate of Senior Executive Program, Sasin Graduate
Institute of Business Administration of Chulalongkorn
University
y Certificate of Financial Executive, The Thai Institute of
Banking and Finance Association, The Thai Bankers’ Association
Work experience
: 1959 – 1998
The Bank of Thailand (39 years) :
- Senior Director, Bank Examination and Analysis
Department
- Senior Director, Deposit and Bond Department
- Senior Director, Administrative Department
- Senior Deputy Director, Deposit and Bond
Department
- Deputy Director, Bank Supervision and
Examination Department
- Head of Financial Institute Examination and
Analysis Division
- Head of Business Division, Southern Branch
- Assistant Head of Bank Supervision and
Analysis Division
- Head of Bank Supervision Section
- Bank Examiner
: 1999 – Present
Independent Director and Chairman of the
Audit Committee
: 1999 – Present
Independent Director and Chairman of the
Audit Committee Ayudhya Insurance Plc
: None
Agenda of connected transaction
: None
- 68 -
3. Mr. Yongyuth Withyawongsaruchi
Age
: 68 years
Nationality
: Thai
Address
: 4/262 Sahakorn Village, Moo 4 Soi 11
Seri-Thai Road, Klongkum, Baungkum, Bangkok 10240
Education
: Bachelor of Accounting (Honor) and Bachelor of Commerce
(Honor), Thammasat University
Work experience
: Apr 2003 - Jan 2009
1997 – 2002
1976 – Apr 2005
1971 – 1976
1966 – 1971
Independent Director and Audit Committee
Member Eastern Star Real Estate Plc
Director, Siam Realty and Services Co., Ltd.
Bank of Ayudhya Plc (29 years):
- Director
- Executive Director
- Executive Vice President
- Senior Vice President & Vice President,
Audit Department
- Senior Vice President & Vice President,
Accounting Department
- First Assistant Vice President, Accounting
Department
- Assistant Vice President, Accounting
Department
- Chief Division of Analyst
Internal Audit Department, Asia trust Bank
(5 years)
Department of Commercial Bank
Examination and Analysis, the Bank of
Thailand (5 years)
: Apr 2005 – Present
Independent Director and Audit
Committee Member
: Apr 2003 – Present
Independent Director and Chairman of
the Audit Committee Media of Medias Plc
: None
- 69 -
The Bank’s Article of Association in the part relating to the
Extraordinary General Meeting of Shareholders No. 2/2009
CHAPTER 3 : TRANSFER OF SHARES
ARTICLE 13.
During the period of twenty-one days prior to the date of each general meeting of
shareholders, the Company may suspend the registration of share transfers by
notifying the shareholders at the head office and at every branch office not less than
fourteen days before the date the Company commences to suspend the registration of
the share transfer.
CHAPTER 6 : GENERAL MEETING OF SHAREHOLDERS
ARTICLE 28.
The Board of Directors shall hold the annual ordinary meeting of shareholders within
four months from the end of the accounting year of the Company.
Meetings of shareholders other than that mentioned in the above paragraph shall be
called extraordinary meetings. The Board of Directors may call an extraordinary
meeting of shareholders whenever the Board deems appropriate.
ARTICLE 31.
In calling a general meeting of shareholders, the Board of Directors shall send notices
for the meeting specifying the place, date, time, agenda of the meeting, as well as the
subject matters to be submitted to the meeting together with appropriate details stating
clearly which matters will be for information, for approval or for consideration, as the
case may be, including the opinions of the Board of Directors in such matters, to the
shareholders and the Registrar for their information not less than seven days before the
date of the meeting. Furthermore, publication of notices calling a meeting shall also be
made in a newspaper for a period of three consecutive days and not less than three
days before the date of the meeting.
ARTICLE 32.
Shareholders have the right to attend and vote at the general meeting of shareholders,
and may authorize other persons with legal capacity to attend and vote at any meeting
of shareholders on their behalf, provided that the instrument appointing a proxy be
made in the form specified by the Registrar and signed by the shareholder and the
proxy. The instrument appointing a proxy shall be submitted to the Chairman of the
Board of Directors or the person designated by the Chairman of the Board of Directors
at the place of the meeting before the proxy attends the meeting.
ARTICLE 33.
At a general meeting of shareholders, there shall be shareholders and/or proxies (if
any) present at the meeting in a number of not less than twenty- five persons or not
less than half of the total number of shareholders, whichever is the lower. In either
case such shareholders shall hold shares totaling not less than one-third of the total
number of shares sold in order to constitute a quorum, unless otherwise stipulated by
the Laws.
Upon lapse of one hour from the time fixed for any general meeting of shareholders,
the number of shareholders present is still insufficient to form a quorum as provided in
the first paragraph, and if such general meeting of shareholders was requested by the
shareholders, such meeting shall be cancelled. If such meeting of shareholders was not
called by the shareholders' request, the meeting shall be called again, and notices
calling the meeting shall be sent to shareholders not less than seven days in advance of
the date of the meeting. In the subsequent meeting, no quorum is required.
- 70 -
ARTICLE 34.
The Chairman of the Board of Directors shall be the chairman of the general meeting
of shareholders. If the Chairman is absent or is unable to perform his duties, and if a
vice-chairman is present, he shall act as chairman. If there is no vice-chairman or if
there is one but he is not able to perform his duties, the shareholders shall elect one
among themselves to be chairman of that general meeting.
ARTICLE 35.
The chairman of the general meeting of shareholders has the duty to conduct the
meeting in compliance with the Laws and this Articles of Association governing the
meeting. In this regard, the meeting shall be conducted in the order of the agenda
stated in the notice of a meeting, unless the shareholders' meeting resolved to change
such order with a vote of not less than two-thirds of the number of shareholders
attending the meeting.
ARTICLE 36.
Unless otherwise stipulated by this Articles of Association or by the Laws, the
decision or the resolution of the shareholders' meeting shall be passed by the majority
vote of the shareholders who attend the meeting and vote. For the purpose of voting,
each share shall be counted as one vote. In case of a tie of votes, the chairman of the
meeting shall be entitled to a casting vote.
If any shareholder has special interest in any matter on which the meeting shall pass
resolution, he shall have no right to vote on such matter, except to vote on election of
directors.
In case where any shareholder holds more than five percent of the total number of
shares sold without having been granted an exception or permission under the Laws,
he shall only be entitled to vote at the shareholders' meeting on account of the portion
of shares that is not in excess of five percent of the total number of shares sold or the
proportion allowed by the Laws.
CHAPTER 9 : THE LAST CHAPTER
ARTICLE 53. bis
Where the Company or any of its subsidiaries enters into a connected transaction, or
any transaction relating to acquisition or disposition of material assets of the Company
or its subsidiaries, as defined in the notifications of the Stock Exchange of Thailand
governing the connected transactions of listed companies or the acquisition and
disposition of material assets of listed companies, as the case may be, the Company
shall also comply with such rules and procedures as stipulated by such notifications.
- 71 -
Procedure for Attending the EGM No. 2/2009
Shareholders of BAY
IR Group
Document Preparation Counter
Check the accuracy of documents
and stick a duty stamp (starting at 12.00 hrs.)
Registration Counter Nos. 1-8
Individual persons attending the Meeting
in person
Registration Counter Nos. 9 - 14
Proxies of individual persons, juristic
persons & custodians
Present personal documents
Present an instrument of proxy
Register
Enter the Meeting Room
The Chairman declares the Meeting open
(14.00 hrs.).
The Chairman proposes each agenda to the Meeting.
Is there any shareholder vote against
or for any such agenda?
Yes
The officials give ballots to the shareholders.
No
The officials collect ballots for deduction.
Summarize the number of votes casted
Announce the voting result to the Meeting
OPINION OF INDEPENDENT FINANCIAL ADVISOR
RELEVANT TO CONNECTED TRANSACTIONS
The business acquisition and/or share acquisition and/or shareholding in GE Money Thailand,
The provision of financing support for GEMT Core Companies and
Agreement on the services to be provided by GE to the Core GEMT and
the Technical services to be provided by Core GEMT to GE
Proposed to
Shareholders
by
KT ZMICO Securities Co., Ltd.
6th August 2009
Opinion Of Independent Financial Advisor Relevant To Connected Transactions
Content
Page
Definitions
1
Background
2
A brief profile of the Bank
4
1.
2.
Business acquisition and/or share acquisition and/or share holding of GEMT entities and provision
of financial support to GEMT core entities in the amount of not more than Bt. 60 billion
9
1.1
Summary of characteristics and details of the transaction
9
1.1.1
Characteristics of the transaction
9
1.1.2
Details of the transaction
10
1.2
Characteristics of securities
16
1.3
Value of consideration
33
1.4
Source of funds
34
1.5
Reasonableness and advantages of the transaction
34
1.6
Fairness of price and conditions of the transaction
39
1.7
Conclusion of the IFA’s opinions
80
Fairness of price and conditions of the Agreement on the services to be provided by GE to
the GEMT Core Companies and the services to be provided by GEMT Core Companies to GE
81
2.1
Nature of the transaction
81
2.2
Reasonableness of the transaction
81
2.3
82
2.4
82
Definitions
Unless otherwise specified or defined, the following definitions apply to this document.
SET
IFA
The Bank or BAY
:
:
:
:
GEMT Entities
GEMT Core Companies
Services Agreement
:
:
:
Office of the SEC
ADLC
AIG CFG
AIGCC
AIGRB
AYCL
AYHP
BCE
BCP
EDS
CPN
GCS
GE
GECAI
GECAL
GECAS
GECC
GECFH
GECIH
GECS
GECT
GEMT
KCC
QGIB
QLAB
TCS
TGIB
TLAB
TLD
TSS
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
The Stock Exchange of Thailand
Transaction of business acquisition and/or share acquisition and/or
shareholding in GEMT entities
GECT, KCC, TCS, GCS, TSS, QGIB, QLAB, TGIB, TLAB
GECT, KCC, TCS, GCS, TSS
Agreement on services to be provided by GE to the Core GEMT and the
services to be provided by Core GEMT to GE
Office of the Securities and Exchange Commission
Ayudhya Development Leasing Co., Ltd.
AIG Consumer Finance Group
AIG Card (Thailand) Co., Ltd.
AIG Retail Bank Plc.
Ayudhya Capital Lease Co., Ltd.
Ayudhya Hire Purchase Co., Ltd
Bangkok Capital Equity Co., Ltd.
Bangkok Capital Venture Co., Ltd.
Ek-Chai Distribution System Co., Ltd.
Central Pattana Plc.
General Card Services Co., Ltd.
General Electric and its affiliates
General Electric Capital Asia Investments, Inc.
GE Capital Auto Lease Plc.
GE Capital Auto Services Co., Ltd.
General Electric Capital Corporation
GECF Holdings (Thailand) Ltd.
General Electric Capital International Holding Corporation
GE Capital Service (Thailand) Co., Ltd.
GE Capital (Thailand) Co., Ltd.
GE Money Thailand
Krungsriayudhaya Card Co., Ltd.
Quality General Insurance Broker Co., Ltd.
Quality Life Assurance Broker Co., Ltd.
Tesco Card Services Ltd.
Tesco General Insurance Broker Co., Ltd.
Tesco Life Assurance Broker Co., Ltd.
Thailifestyle Dot Com Co., Ltd.
Total Services Solutions Plc.
-1-
6th August 2009
Subject: Opinion of Independent Financial Advisor on connected transactions of Bank of Ayudhya Plc.
To:
The Audit Committee, Independent Directors and Shareholders
(Translation)
Background
Bank of Ayudhya Plc. (“the Bank” or “BAY”) plans to enhance business growth with focus on expanding retail
banking customer base and developing a universal banking platform. The targeted business lines for expansion are
credit card and personal loan businesses. Therefore, the Bank’s Extraordinary Board of Directors’ Meeting No. 5/2552
on July 9th, 2009, Extraordinary Board of Directors’ Meeting No. 6/2552 on July 20th, 2009 and Extraordinary Board of
Directors’ Meeting No. 7/2552 on July 22nd, 2009 (only non-interested directors were present at the meeting and cast
their votes, whereas interested directors, namely Mr. Tan Kong Khoon, Mrs. Janice Rae Van Ekeren, Mr. Pornsanong
Tuchinda, and Mr. Mark John Arnold, did not attend and vote at the meeting) approved the entering into the following
transactions:
1. The business acquisition and/or share acquisition and/or shareholding in GE Money Thailand ("GEMT")
(the "Acquisition Transaction") with the following details:
1.1 GEMT Core Companies:
•
100% of the total paid-up shares of GE Capital (Thailand) Ltd. ("GECT") from General Electric
Capital Corporation ("GECC") and other minority shareholders;
•
50% of the total paid-up shares of Krungsriayudhya Card Co., Ltd. ("KCC") from GECT and
other minority shareholders and/or share transferee from GECT. The Bank currently already
holds 50% of KCC’s shares*;
•
49% of the total paid-up shares of Tesco Card Services Ltd. ("TCS") from GECT and/or share
transferee from GECT with an option to acquire additional 1% of TCS’s total shares sold*;
•
100% of the total paid-up shares of General Card Services Ld. ("GCS") from General Electric
Capital International Holdings Corporation ("GECIH") and other minority shareholders and/or
GECIH’s affiliate that may be newly incorporated under the Thai law;
•
100% of the total paid-up shares of Total Services Solutions Plc. ("TSS") from GECIH and other
minority shareholders.
(* Bank may indirectly hold shares in KCC and TCS through GECT)
1.2 Non-Core Investment Companies indirectly acquired through GEMT Core Companies:
•
25% of the total paid-up shares of Quality General Insurance Broker Co., Ltd. ("QGIB") which is
held by GECT
•
25% of the total paid-up shares of Quality Life Assurance Broker Co., Ltd. ("QLAB") which is
held by GECT
•
100% of the total paid-up shares of Tesco General Insurance Broker Co., Ltd. ("TGIB") which is
held by TCS
•
100% of the total paid-up shares of Tesco Life Assurance Broker Co., Ltd. ("TLAB") which is
held by TCS
The total value of the Acquisition Transaction of GEMT Core Companies is Bt. 13,793 million, of which
the actual value is subject to adjustments to reflect changes in the book value from December 31st, 2008 until closing
date. However, prior to closing, GECT may payout the dividend to the shareholders, which could result in a decrease
of the book value and the acquisition price.
2. The provision of financing support for GECT, KCC, TCS, GCS and TSS (“GEMT Core Companies”) in an
amount not more than Bt. 60 billion. The financing support will be used for refinancing all existing borrowings,
including borrowings from General Electric and its affiliates ("GE").
-2-
3. The execution of service agreements for services to be provided by GE to GEMT and services to be
provided by GEMT to GE during an agreed transition period, on an arm's length basis, as necessary to enable GEMT
Entities to continue operating credit card and personal loan businesses as standalone businesses after the completion
of the Acquisition Transaction (“Service Agreements”) (Details in 2.1 Nature of the transaction).
The Acquisition Transaction will take place after it is approved by the Bank’s shareholders' meeting to be
held on August 27, 2009, subject however to preliminary and major conditions which can be summarized as follows:
1. Receipt of any required approvals from the Bank of Thailand, Thai Ministry of Finance, Office of
Insurance Commission and any other relevant authorities such as other contract parties, namely Central Pattana Plc.
(“CPN”) and Ek-Chai Distribution System Co., Ltd. (“EDS”), etc.;
2. Approval by the Bank of Thailand for the conversion from THB to USD and subsequent remittance of the
proceeds from share payment;
3. The absence of any material adverse changes; and
4. The following companies and/or businesses having been wound up or carved out from GEMT entities
•
Bangkok Capital Venture Co., Ltd. (“BCP”)
•
Bangkok Capital Equity Co., Ltd. (“BCE”)
•
Thailifestyle Dot Com Co., Ltd. (“TLD”)
•
GE Capital Service (Thailand) Co., Ltd. (“GECS”)
•
GE Capital Auto Services Co., Ltd. (“GECAS”)
•
GECF Holdings (Thailand) Ltd. (“GECFH”)
•
The commercial portfolio that is held in the GE Capital Thailand and TSS entities
•
GE Corporate Treasury cash pooling activities conducted under GECT
Connected transactions and acquisition/disposal of assets
GE is a major shareholder of the Bank through GECIH, owning 2,000,000,000 shares or 32.93% of total paidup shares. GECIH is a fully-owned subsidiary of GE. Senior executives or directors with signatory powers of the Bank
are also executives or directors with signatory powers in GEMT entities. (See more details in 1.1.2.2 Parties who are
Connected Persons.) Therefore, the Acquisition Transaction, the execution of service agreement, and provision of
financing support to GEMT are considered connected transactions under the Notification of the Board of Governors of
the SET regarding Disclosure of Information and Other Acts of Listed Companies Concerning the Connected
Transactions 2003. The transaction value consists of 1) Acquisition Transaction of Bt. 13,793 million 2) The provision of
financing support for GEMT in an amount not more than Bt. 60 billion. As of December 31st, 2008, Bank will have to
refinance Bt. 33,360.8 million of which Bt. 28,300.8 million and Bt. 5,060 million will be used to refinance GE and third
parties’ existing loans respectively and 3) Services Agreement. The total transaction value according the IFA’s
assessment, compared to total net tangible assets of the Bank as of March 31st, 2009 of Bt. 74,894.55 million, is
62.96%, which exceeds 3% of total net tangible assets of the Bank and over Bt. 20 million. As such, the transaction
value calculated by IFA is different from 94.8% calculated by the Bank and informed to the SET on July 9th, 2009 as
the Bank calculated the transaction value on the provision of financing support of Bt. 60 billion. The transactions are
categorized as connected transactions of SET-listed companies. The Bank is obliged to seek approval for the
transaction from the shareholders’ meeting. Approval must be given by a vote of not less than three-fourths of the total
number of votes of the shareholders who attend the meeting and are eligible to vote, excluding the shareholders with
conflict of interests.
Moreover, according to the Notification of the Board of Governors of the Stock Exchange of Thailand
regarding the Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and
Disposition of Assets, 2004, the maximum value of acquisition of assets, calculated based on the value of assets
acquired, is 18.43% which is categorized as Class 2 Transaction the value of which is equal or greater than 15% but
lower than 50%. The Bank is required to circulate a written notice of its decision to enter into a Class 2 transaction to
its shareholders within 21 days from the date of disclosure of information to the SET and the notice must contain at
least the information specified by the SET. Under the said notification, the entering into such transactions does not
require approval of the shareholder’s meeting. However, Bank will propose those transactions to the Bank’s
shareholders’ meeting to consider and approve the transaction.
-3-
The Bank has appointed KT ZMICO Securities Co., Ltd. (“Independent Financial Advisor” or “IFA”) to provide
opinions to the Bank’s shareholders regarding the said transactions. KT ZMICO Securities Co., Ltd. is a financial
advisor approved by the Office of the Securities and Exchange Commission (“Office of the SEC”) and also
independent from the Bank and/or it subsidiaries and/or related companies as well as the parties involved in these
transactions.
Restrictions of the IFA’s opinions
1. The IFA opinions has been rendered based on information, assumptions and documents obtained from
the Bank and its representatives, interviews with the Bank’s executives and its representatives, publicly available
information, resolutions of the Bank’s Board of Directors on the transactions, as well as financial information, other
related documents and information prepared by the management and financial advisor of the Bank. No separate
examination has been performed to verify the correctness or completeness of the said information and documents.
We therefore are unable to provide a verification or guarantee on the correctness and completeness of the
information obtained from the Bank, and/or its executives, and/or representatives of the Bank. For all assumptions
presented in the report, IFA have considered available information and evaluated such information to the highest
standard of professional practice.
2. Scope of the IFA’s work does not include evaluation of any assets and liabilities, examination of debt
quality based on actual information in the past to calculate the loss rate net of recovery of the Bank, GEMT Entities,
BCP, BCE, TLD, GECS, GECAS and GECFH, or any special audit of the assets and liabilities.
3. Financial projections, including preparation of the assumptions,and evaluation of the share value of
GEMT Core Companiesare based on information, documents and assumptions provided by the Bank and its
financial advisor. Our opinion is rendered based on the highest standard of professional practice in due
consideration to the information provided. Any material changes of the information may affect our opinions, and the
correctness of information cannot be verified.
A brief profile of the Bank
Overview
Bank of Ayudhya Plc. was established on January 27th, 1945 with an initial capital of Bt. 1 million and started
operation on April 1st, 1945. It was listed on the SET on September 26th, 1977.
The Bank’s three core businesses consist of deposits, lending, and other services such as trade financing,
AVAL, letter of guarantee, exchange risk hedging, investment banking, advisory services, cash management, foreign
exchange, domestic and international funds transfer, ATM and debit cards, credit cards, bancassurance, and mutual
funds/debt and equity securities investments.
As of end 2008, the Bank had a registered capital of Bt. 70,894 million, of which Bt. 60,741 million was paid
up. The Bank currently has a total of 582 branches of which 277 are in the Bangkok Metropolitan area, 302 upcountry,
and three overseas. Its Headquarter is located at 1222 Rama III Road, Bang Phongphang, Yan Nawa, Bangkok.
Highlights in 2008 – April 2009
In 2008, the Bank acquired shares in the following companies:
1. The Bank acquired an additional 7,050,000 shares in Ayudhya Development Leasing Co., Ltd. (“ADLC”), its
subsidiary, leading to a total holding of 70,497,496 shares or 99.99% of total paid up shares.
2. The Bank entered into the Share Sale Agreement with General Electric Capital Asia Investments, Inc.
("GECAI") to acquire 104,500,000 shares of GE Capital Auto Lease Plc. (“GECAL”) from GECAI and other shareholders in
the amount of Bt. 16.180 billion. The assets of GECAL also include hire-purchase portfolio of TSS transferred to GECAL on
September 27th, 2007.
In addition, the Bank established Ayudhya Hire Purchase Co., Ltd. (“AYHP”) on January 24th, 2008 to operate
hire purchase business on used cars (sale and lease back), including business under the brand Car4Cash of GECAL.
The Bank owns a 99.99% stake in AYHP, which also entered into the Asset Purchase Agreement with GECAL to
acquire sales-and-leaseback receivables from GECAL.
-4-
In December 2008, the Board of Directors of the Bank approved the entire business transfer of two
subsidiaries, engaging in the similar businesses, to GECAL. The transferred subsidiaries were Ayudhya Capital Lease
Co., Ltd., operating the new car and inventory financing and leasing business, and AYHP, operating the refinancing
business.
In April 2009, the Bank acquired 99.55% of shares in AIG Retail Bank Plc. ("AIGRB"), operating retail banking
business, and 100% of shares in AIG Card (Thailand) Co., Ltd. ("AIGCC") engaging in credit card and personal loans
under the supervision of the Bank of Thailand, from AIG Consumer Finance Group ("AIG CFG") and its subsidiaries.
The total consideration for these acquisitions was Bt. 1,605 million.
Shareholding and operations of BAY group members as of 30th June 2009
The Bank has 14 subsidiaries and associated companies, which can be divided into two groups, i.e.
financial business group and support business group, as shown in the below diagram:
Financial business group
99.99%
Ayudhya Capital Lease Co., Ltd.
(1) (2)
Type of business:
Auto hire purchase
Ayudhya Asset Management Co.,
Ltd.
99.99%
Type of business:
Purchase or acceptance of
transfer of NPAs, including
collateral, from financial
institutions for management or
re-disposal
99.99%
99.99%
99.99%
Ayudhya Fund Management Co.,
Ltd.
Type of business:
Fund management
Ayudhya Factoring Co., Ltd.
Type of business:
Factoring to corporate entities
Ayudhya Development Leasing
Co., Ltd.
Type of business:
Leasing and hire purchase to
corporate entities
Support business group
Ayudhya Hire Purchase Co., Ltd. (1) (2)
Type of business:
Hire purchase for used car sale and
lease back business
Ayudhya Capital Auto Lease Plc.
(formerly GE Capital Auto Lease
Plc.)
Type of business:
Auto financing
Ayudhya Card Services Plc.
Type of business:
- Credit Card
- Personal loan and Auto
financing
AIG Retail Bank Plc.
Type of business:
Retain Banking
99.99%
99.99%
99.99%
99.99%
99.99%
99.76%
Ayudhya Auto Lease Plc.
Type of business:
Auto financing
Ayudhya Securities Plc.
Type of business:
Securities business
Krungsriayudhya Card Co., Ltd.
Type of business:
Credit cards and personal loans
Notes:
Transferred to Ayudhya Capital Auto Lease Plc. on December 5th, 2008
(2)
Currently under liquidation process
(1)
-5-
Siam Realty and Services Co.,
Ltd.
Type of business:
Car rent and manpower
services to BAY group
86.33%
49.99%
K.S. Law Office Co., Ltd. (2)
Type of business:
Legal and legal
documentation services to
BAY group
Major shareholders and shareholding
BAY’s top 10 major shareholders as of April 22nd, 2009:
Name
1. GE Capital International Holdings Corporation
2. Thai NVDR Co., Ltd.
3. Stronghold Assets Co., Ltd.
4. The Great Luck Equity Co., Ltd.
5. GL Asset Co., Ltd.
6. BBTV Satelvision Co.,Ltd.
7. BBTV Asset Management Co., Ltd.
8. BBTV Television and Radio Co., Ltd.
9. Mahakij Holdings Co., Ltd.
10. Tun Rung Rueng Co.,Ltd.
Source: The Stock Exchange of Thailand
No. of Shares
2,000,000,000
756,401,127
166,536,980
166,478,940
166,414,640
166,151,114
163,112,900
160,788,920
158,726,810
157,889,440
%
32.93
12.45
2.74
2.74
2.74
2.74
2.69
2.65
2.61
2.60
The Board of Directors as of July 10th, 2009:
Name
Position
Relationship with shareholder
2. Mr. Tan Kong Khoon
3. Ms. Janice Rae Van Ekeren
4. Mr. Pornsanong Tuchinda
6. Mr. Chet Raktakanishta
7. Mr. Mark John Arnold
8. Mr. Karun Kittisataporn
Chairman of the Board
President and Chief Executive Officer
Director
Director
Director
Director
Director
Chairman of the Audit Committee and
10. Mr. Virat Phairatphiboon
Member of the Audit Committee and
11. Mr. Yongyuth Withyawongsaruchi Member of the Audit Committee and
Source: The Stock Exchange of Thailand and www.bol.co.th
-6-
No. of shares
held in BAY
Representative of GE Group
Director of KCC
-
-
-
-
-
-
Summary of financial position and performance during 2006-2008 and the first quarter ended March 31st, 2009
Consolidated financial statements
Statement of income
2006
Interest and dividend income
Interest expense
Net interest and dividend income
Non-interest income
Non-interest expense
Operating profit
Bad debt and doubtful accounts
Profit (Loss) before minority interest
Net profit (loss)
Basic earnings (losses) per share (Unit: Baht)
Financial position
Loans
Deposits
Total liabilities
Total assets
Key financial ratios
Gross profit margin (%)
Net profit margin (%)
Return on assets (%)
Return on equity (%)
Debt to equity ratio (time)
Loans to borrowings (%)
Loans to deposits (%)
Note: * Annualized for comparative purpose
2007
2008
(Unit: Bt. million)
Q1/2009
35,726
16,678
19,048
9,154
15,267
12,935
11,070
35,064
15,442
19,622
7,547
18,664
8,505
8,588
41,163
14,595
26,568
6,170
21,224
11,514
5,422
9,668
3,617
6,051
2,431
5,197
3,285
1,935
1,507
1,666
0.58
(3,983)
(3,992)
(0.76)
4,895
4,896
0.83
1,205
1,208
0.17
460,288
563,496
619,196
47,146
666,342
450,356
499,627
574,309
78,067
652,376
557,077
537,354
660,109
85,367
745,477
535,126
524,388
648,283
86,296
734,579
53.10
3.71
0.25
3.81
13.13
79.17
82.11
54.97
(9.37)
(0.61)
(6.38)
7.36
83.80
90.55
61.96
10.34
0.70
5.99
7.73
89.99
103.98
65.50
8.47
0.55*
4.77*
7.51
88.44
102.34
Operating performance
In 2008, the Bank and its subsidiaries recorded 17.4% growth in interest and dividend income compared
with the previous year. This resulted from increase of retail loan portfolio which gave high yields and improvement of
asset quality. In the first quarter of 2009, net interest and dividend income of the Bank and its subsidiaries went down
by 11.6% compared to the fourth quarter of 2008 due to decreases in loans and interest rates.
Net interest margin for the first quarter of 2009 stayed at 3.53%, which was close to 3.56% in the first quarter
of 2008, but dropped by 0.54% compared to the previous quarter. This was because a sharp decrease in interest
rates since December 2008 which immediate and negative affected the majority the floated rate loan portfolio while
there is a lagging effect on funding costs as of which the majority of deposits are fixed term deposit..
Assets
As of December 31st, 2008, the Bank and its subsidiaries’ total assets increased by 14.3% from December
2007. The key driver is increase in loan of Bt. 106,722 million or 23.7%. The strong loan growth was attributed to
inorganic growth from the GECAL acquisition of Bt. 78,249 million, organic loan growth in corporate, SME and retail
loans of Bt. 43,969 million as well as NPL reduction of Bt. 15,496 million, resulting from sales, settlements and writeoffs. Consequently, the Bank’s loan portfolio grew significantly.
-7-
As of March 31st, 2009, total assets of the Bank and subsidiaries dropped by 1.5% from the end of 2008 with
a decrease in loans and an increase in interbank and money market items. This was because the Bank has adopted a
prudent liquidity management policy to be aligned with the economic condition and gear up for the acquisition of AIG
Retail Bank Plc. and AIG Card (Thailand) Co., Ltd.
Loans by business sector
Consolidated financial statements
Corporate
SME (M+S)
Retail
- Hire purchases
- Housing loans
- Personal loans & others
Total
As of
Mar. 31st, 09
190,160
165,538
As of
Dec. 31st, 08
203,326
171,865
100,721
68,438
10,269
535,126
103,584
68,087
10,215
557,077
Change
Bt. million
%
(13,166)
(6.5)
(6,327)
(3.7)
(2,863)
351
54
(21,951)
(2.8)
0.5
0.5
(3.9)
As of March 31st, 2009, total loans decreased from December 2008 by 3.9% to Bt. 535,126 million owing to
the economic slowdown which caused a sharp drop in loan demand while repayment continued. At the same time, the
downward movement in interest rate enticed large corporations to issue more corporate bonds as an alternative
source of funding.
Liabilities
As of December 31st, 2008, total liabilities increased by 14.9% from the prior year, resulting from growth in
deposits and borrowings. Interbank and money market items and borrowings surged by 82.9% through the issuance
of unsubordinated debentures in the amount of Bt. 53,638 million, with tenors of 2, 3 and 4 years and interest rates
ranging from 3.85% to 5.10% per annum.
As of March 31st, 2009, total liabilities dropped by 1.8% from the end of 2008, which was ascribed mainly to
a decrease of 2.4% in deposits as lower deposit interest rates in the market which led depositors to consider
alternative investment options.
As of December 31st, 2008, shareholders’ equity increased by 9.4% from December 2007 due to an increase
of Bt. 3,917 million in the issued and paid-up share capital and ordinary share premium gained from warrant
conversions, and an increase in net income for the year 2008 of Bt. 4,896 million net of the increase in the revaluation
deficit on investments of Bt. 141 million and the interim dividend paid during 2008 of Bt. 904 million.
As of March 31st, 2009, the shareholders’ equity rose by 1.1% from the end of 2008 because net income for
the quarter grew by Bt. 1,025 million whereas value of investment in available-for-sale securities and revaluation of
land and premises dropped by Bt. 55 million and Bt. 41 million respectively.
-8-
Details of the transaction and the IFA’s opinions on each transaction are as follows:
1.0 Business acquisition and/or share acquisition and/or share holding of GEMT entities and provision of financial
support to GEMT core entities in the amount of not more than Bt. 60 billion
1.1 Summary of characteristics and details of the transaction
1.1.1 Characteristics of the transaction
Type
Parties involved
Relationship of the parties
involved and the Bank
Shares and financing
Business acquisition and/or share acquisition and/or share holding of GEMT entities and
provision of financial support to GEMT core entities
Acquisition transaction
Buyer:
BAY
Seller:
GECC, GECT and GECIH
Financing transaction
Lender:
BAY
Borrower:
GECT, KCC, TCS, GCS, and TSS
The parties involved are considered connected persons of the Bank as GE is a major
shareholder of the Bank through GECIH, owning 2,000,000,000 shares or 32.93% of total
paid-up shares. GE has 100% shareholding in GECC and indirect shareholding in GECIH
and GECT via GECC. Senior executives or directors with signatory powers of the Bank are
also executives or directors with signatory powers in GEMT entities. (See more details in
1.1.2.2. Parties who are connected persons.)
1. Shares
GEMT core entities
y 2,750,000 shares in GECT representing 100% via GECC and other minority
shareholders at Bt. 100 par value.
y 55,000,000 shares in KCC representing 50% via GECT and other minority
shareholders and/or the transferee of GECT at Bt. 10 par value*
y 75,800,000 shares in GCS representing 100% via GECIH and other minority
shareholders and/or company in the group of GECIH, which may be a newly
established juristic person under the Thai law at Bt. 10 par value.
y 3,822,000 shares in TCS representing 49% via GECT and other minority shareholders
and/or the transferee of GECT at Bt. 100 par value (The Bank’s Board of Directors’
meeting also approved the Bank to acquire additional 1%of total paid-up shares.) *
y 132,600,002 shares in TSS representing 100% via GECIH and other minor
shareholders at par value of Bt. 10.
(* Bank may indirectly hold shares in KCC and TCS through GECT)
Investment in other companies shares held by GECT and TCS
y 5,000 shares in QGIB representing 25% by GECT at par value of Bt. 100.
y 5,000 shares in QLAB representing 25% by GECT at par value of Bt. 100.
y 770,000 shares in TGIB representing 100% by TCS at par value of Bt. 100.
y 20,000 shares in TLAB representing 100% by TCS at par value of Bt. 100.
2. Financing
The Bank will provide financial support to GEMT core entities up to Bt. 60 billion as
deemed appropriate. This is purposed to be used for refinancing all existing
borrowings, including those from GE. The financing conditions will be the same as
those provided to the Bank’s subsidiaries and other companies in its group.
-9-
Transaction value
Source of financing
Size of transaction
according to the SET
Notification
Others
/1
The value of the acquisition transaction is Bt. 13,793 million/1. The actual price is
adjustable to the changes in book value from December 31st, 2008 until the transaction
date.
y The value of the financing transaction is up to Bt. 60 billion. However, the transaction
value of the financing transaction calculated by IFA is based on Bt. 33,360.8 million
since, as of December 31st, 2008, Bt. 28,300.8 million and Bt. 5,060 million will be used
to refinance GE and third party’s existing loans
Internal funds of the Bank
The size of the connected transaction is 62.96%.
y
The size of the asset acquisition transaction by Asset value approach is 18.43%. However,
Bank will propose those transactions to the Bank’s shareholders’ meeting to consider
according to the Notification of the Board of Governors of the SET regarding the Disclosure
of Information and Other Acts of Listed Companies Concerning the Acquisition and
Disposition of Assets, 2004.
The Bank acquired and disposed of assets within a 6-month period prior to the agreement
to enter into this transaction. However, the said transaction had been approved by the
Bank’s shareholders’ meeting. Thus, the calculation of the size of the transaction this time
does not include the transaction made during the 6 months earlier.
Share payment is divided into 2 portions, i.e.:
- Fixed Premium of Bt. 1,023,000,000 combined with the book value as per the financial statements as of December 31, 2008 (Bt.
12.647 billion); and
- USD 3,500,000 at the exchange rate of Bt. 35.18/USD 1. However, the payment for the transaction will be subject to the exchange rate
at the transaction date. In case that the exchange rate is lower than Bt. 35.18/USD 1, Bank shall make a payment at the exchange rate
lower than those rate. In addition, Bank continuously monitors the change in exchange rate in order to buy or sell USD currency in the
event the currency fluctuation. Thus, Bank may enter into the forward contract in order to not make payment at the exchange rate over
Bt. 35.18/USD 1.
1.1.2 Details of the transaction
1.1.2.1 Date of transaction
The Bank’s Extraordinary Board of Directors’ Meeting No. 5/2552 on July 9th, 2009, the
Extraordinary Board of Directors’ Meeting No. 6/2552 on July 20th, 2009, and the Extraordinary Board of Directors’
Meeting No. 7/2552 on July 22nd, 2009 approved the Bank to enter into the transaction of share acquisition from GEMT
entities in the amount of Bt. 13.793 billion and the provision of financial support in the amount of up to Bt. 60 billion.
As of December 31st, 2008, GEMT entities recorded total borrowings of Bt. 49.417 billion of
which Bt. 16.056 billion was from the Bank. As such, Bt. 28,300.8 million and Bt. 5,060 million will be used to refinance
GE and third party’s existing loans, respectively.
The connected transaction will take place after the Bank obtain approval from its
shareholders' meeting to be held on August 27th, 2009 and it will try to complete the transaction by December 31, 2009
or earlier. The preliminary and major conditions that must be satisfied are summarized as follows:
1. Receipt of any required approvals from the Bank of Thailand, Thai Ministry of Finance,
Office of Insurance Commission and/or any other relevant authorities such as other contract parties, namely Central
Pattana Plc. (“CPN”) and Ek-Chai Distribution System Co., Ltd. (“EDS”), etc. to enable the acquisition transaction;
2. Approval by the Bank of Thailand for the conversion from THB to USD and subsequent
remittance of the proceeds from share payment;
3. The absence of any material adverse changes; and
- 10 -
4. The following companies and/or businesses having been wound up or carved out from
GEMT entities as they are not related to the business requirements:
y
Companies that have been wound up or carved out from GEMT entities:
1.
Company
Bangkok Capital Venture Co., Ltd. (“BCP”)
2.
Bangkok Capital Equity Co., Ltd. (“BCE”)
3.
Thailifestyle Dot Com Co., Ltd. (“TLD”)
4.
5.
GE Capital Service (Thailand) Co., Ltd. (“GECS”)
GE Capital Auto Services Co., Ltd. (“GECAS”)
Current status
GECT sold its stake in BCP to a third party in February 2008 and no longer
shareholding in BCP.
BCE engaged in debt collection business but has stopped the operation
since February 2007.
TLD engaged in property holding business. It sold the business to a
company in 2008.
GECS has not yet been in operation since its inception.
GECS has not yet been in operation since its inception.
The commercial portfolio in GECT and TSS i.e. account receivables under
financial lease agreements, account receivables under operation lease agreements, hire purchase account receivables,
etc., and
y
GE corporate treasury cash pooling activities conducted under GECT.
After GE Group has liquidated or craved out the above GEMT entities which do not
have similar nature of business as those to be acquired by the Bank, no further conflict of interests or competition is
expected from the carved out businesses.
y
Other conditions are:
1. Technical assistance
To ensure seamless transition of the operations of the GEMT entities post-acquisition,
the Bank will enter into the service agreement with GE during an agreed transition period on an arm's length basis.
2. Additional purchase of 2% of the Bank’s shares by GE
GE has expressed its intention to acquire additional shares of the Bank in the
secondary market of up to 2% of the Bank’s total paid-up shares (equivalent to Bt. 2,113.82 million according to the
market value as of July 24th, 2009). In such case, the Bank will coordinate with related agencies such as the Bank of
Thailand to facilitate GE’s request for the regulatory approval. GE has the obligation to file such application by itself.
3. No business competition
GE has agreed not to compete with the Bank in the consumer finance businesses of
similar nature to GEMT entities in Thailand for a period of 5 years from the date of the transaction completion.
1.1.2.2 Parties involved
Acquisition transaction
Buyer:
BAY
Seller:
GECC, GECT, GECIH
Financing
Lender:
BAY
Borrower:
GECT, KCC, TCS, GCS, and TSS
- 11 -
The Seller is considered connected person to the Bank because:
1. GE currently is a major shareholder in the Bank, owning 2,000,000,000 shares of the
Bank or 32.93% of total paid-up shares through GECIH. GE has 100% shareholding in GECC and indirect shareholding
in GECIH via GECC.
•
GEMT core entities:
- 100% shareholding in GECIH by GECC
- 2,750,000 shares held in GECT representing 100% by GECC
- 55,000,000 shares held in KCC representing 50% by GECT
- 3,822,000 shares held in TCS representing 49% by GECT
- 75,800,000 shares held in GCS representing 100% by GECIH
- 132,600,002 shares held in TSS representing 100% by GECIH
•
Investment in other companies held by GECT and TCS
- 5,000 shares held in QGIB representing 25% by GECT
- 5,000 shares held in QLAB representing 25% by GECT
- 770,000 shares held in TGIB representing 100% by TCS
- 20,000 shares held in TLAB representing 100% by TCS
2. Furthermore, senior executives or directors with signatory powers of the Bank who are
executives or directors with signatory powers in GEMT entities are as follows:
• Mr. Piriyah Wisedjinda is the Head of Distribution of the Bank as well as director
with signatory powers in GECT, TSS, GCS, QGIB and QLAB.
• Mrs. Voranuch Dejakaisaya is the Head of Information Technology of the Bank as
well as director with signatory powers in GECT, TSS, and GCS
• Mr. Pongpinit Tejagupta is Director of the Bank as well as director of KCC.
• Mr. Roy Agustinus Gunara is the Senior executive of the Bank as well as director
of KCC
• Mr Sudargo Harsono is the Senior executive of the Bank as well as director of KCC
3. The Bank has representative directors from GE Group as follows:
• Mr. Tan Kong Khoon, President and CEO
• Mrs. Janice Rae Van Ekeren, Director
• Mr. Pornsanong Tuchinda, Director
• Mr. Mark John Arnold, Director
1.1.2.3 Type and size of the transaction
The transactions includes the share acquisition worth Bt. 13.793 billion in which GECC,
GECT and GECIH are the Seller, and the provision of financial support in the amount of up to Bt. 60 billion to GEMT core
entities. The transaction value, according to the notification of the Bank of the SET on July 9th, 2009, is Bt. 73.793 billion
or 94.8% of net tangible assets This sum includes the total provision of financial support in the amount of up to Bt. 60
billion
However, the transaction value calculated by IFA is Bt. 47,153.8 million since Bt. 13,793 will
be used for the acquisition transaction.As of December 31st, 2008, a total of Bt. 28,300.8 million and Bt. 5,060 million will
be used to refinance GE and third party’s existing loans. The transaction value is therefore 62.96% which exceeds 3%
of total net tangible assets of the Bank and is over Bt. 20 million. GEMT core entities are connected persons as detailed
in 1.1.2.2. The transaction is thus categorized as connected transaction under the Notification of the Board of
Governors of the SET regarding Disclosure of Information and Other Acts of Listed Companies Concerning the
Connected Transactions 2003. In this regard, the Bank is obliged to seek shareholders approval for the transaction,
which must be given by a vote of not less than three-fourths of the total number of votes of the shareholders who attend
the meeting and are eligible to vote. Shareholders with conflicts of interests cannot vote on this matter.
- 12 -
The transaction is also considered an acquisition and disposition of assets according to the
Notification of the Board of Governors of the Stock Exchange of Thailand regarding the Disclosure of Information and
Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets, 2004 with details as follows:
Unit: Bt. million
Net tangible assets
Net profits
For the 3-month period ended
March 31st, 2009
BAY
74,894.55
1,024.60
Assets
For the year ended December 31st, 2008
734,579.15
GECT
9,500.35
449.96
KCC
1,957.99
50.18
TCS
1,157.19
96.17
39,301.83
16,387.39
8,400.66
GCS
947.99
(95.02)
13,520.45
TSS
1,810.70
350.63
2,037.89
Value of net tangible assets of GEMT core entities (as of Dec. 31st, 2008) divided by value of net tangible
assets of the Bank (as of Mar. 31st, 2009)
=
18.43%
2. Net profit value basis
=
Net profit of GEMT core entities (as of Dec. 31st, 2008) divided by net profit of the Bank (as of Mar. 31st,
2009)*
=
17.85% **
Notes: * For comparative purpose, net profit of the Bank (as of Mar. 31st, 2009) is annualized using net profit for the 12-month period from
April 1st, 2008 to March 31st, 2009, which amounts to Bt. 4,888.98 million.
** Only transactions with positive figures are included.
3. Consideration value
=
Total value of the acquisition of assets and provision of financial support
basis
Total asset value of the Bank (as of Mar. 31st , 2009)
=
6.42%
1. Asset value basis
=
The transaction size calculated by the consideration value basis and the net profit value basis is 6.42% and
17.85% respectively. Due to net loss recorded by GCS in 2008 as shown in the above table, the acquisition value of –
1.94% is not included in the calculation of the transaction size. The transaction value by the asset value basis is
18.43%, which is the highest value obtained. It is therefore categorized as Class 2 transaction the value of which is
equal or greater than 15% but less than 50%. Under the said Notification, the entering into such transaction does not
require approval of the shareholder’s meeting. However, the Bank will propose the transactions to the Bank’s
shareholders’ meeting to consider according to the Notification of the Board of Governors of the SET regarding the
Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets,
2004 as well.
The following diagram shows the current shareholding structure of GE:
GE
100%
GECC
100%
GECIH
100%
GCS
100%
100%
GECT
32.93%
TSS
BAY
50%
50%
25%
49%
TCS
KCC
100%
TGIB
- 13 -
QGIB
100%
TLAB
25%
QLAB
Details of the acquisition transaction are as follows:
1. Share acquisition
Share acquisition
Acquired securities
GECT
Ordinary shares of
GECT
GECC and other
minority
shareholders
KCC
Ordinary shares of
KCC
GECT and other
minority
shareholders
and/or the share
transferee from
GECT /or indirectly
hold through GECT
TCS
Ordinary shares
of TCS
GECT and other
minority
shareholders
and/or the share
transferee from
GECT /or
indirectly hold
through GECT
Acquirer (Buyer)
Par value (per share)
No. of acquired shares
BAY
Bt. 100
2,750,000 ordinary
shares
BAY
Bt. 10
55,000,000
ordinary shares
BAY
Bt. 100
3,822,000
ordinary shares
% of total no. of shares
Others
100
The acquisition of
GECT shares does
not include the net
assets of
commercial
loan of Bt. (142)
million*
50
The Bank may hold
KCC shares via
GECT.
Shareholder to sell
shares
GCS
Ordinary shares of
GCS
GECIH and other
minority
shareholders
and/or its
subsidiaries which
may be juristic
person newly
incorporated under
Thai law
BAY
Bt. 10
75,800,000
ordinary shares
TSS
Ordinary shares and
preferred shares of TSS
GECIH and other
minority shareholders
BAY
Bt. 10
117,200,013 ordinary
shares
15,399,989 preferred
shares
100
The acquisition of TSS
does not include the
commercial loan
portfolio of Bt. 502
million.*
49
100
The Bank may
hold KCC shares
via GECT. The
Bank has an
option to acquire
additional
1% of TCS’s paidup shares.
Completion date
Both contract parties target to complete share acquisition within 2009 or the soonest possible on the best effort
basis, subject to conditions precedent agreed upon by both parties.
Source: *Report on the balance sheet of the commercial finance operations prepared by KPMG.
2. Indirect share acquisition
Indirect acquisition
Acquired securities
QGIB
Ordinary shares of QGIB
Shareholders
GECT and other minority
shareholders
Bt. 100
5,000 shares
25
Par value (per share)
No. of shares acquired
% of shares acquired
QLAB
Ordinary shares of
QLAB
GECT and other
Bt. 100
5,000 shares
25
- 14 -
TGIB
Ordinary shares of
TGIB
TCS and other
Bt. 100
770,000 shares
100
TLAB
Ordinary shares of
TLAB
TCS and other
Bt. 100
20,000 shares
100
The shareholding of the Bank after the share acquisition is shown in the diagram below:
Case 1: The Bank has direct shareholding in KCC and TCS.
GE
100%
GECC
100%
GECIH
32.93%
BAY
100%
100%
GECT
25%
TCS
KCC
QGIB
QLAB
GCS
TSS
100%
100%
25%
100%
100%
49%
TGIB
TLAB
Case 2: The Bank has indirect shareholding in KCC and TCS via the acquisition of GECT.
GE
100%
GECC
100%
GECIH
32.93%
BAY
100%
GECT
50%
50%
KCC
25%
QLAB
100%
100%
TSS
GCS
49%
25%
QGIB
TCS
100%
TGIB
100%
TLAB
- 15 -
1.2 Characteristics of securities
GE Group
GE Group, based in the USA, engages in technology, media and financial service businesses and offers
products and services solutions ranging from aviation, energy, water supply and processing technologies, security
systems,healthcare, financial services for businesses and consumers, media content, and high technology materials.
GE Group serves customers in more than 100 countries with over 300,000 employees across the globe.
GE Energy
Energy
Oil & gas
Water supply and
Process
Technologies
GE Technology

GE Capital
Aviation
Financial services in Asia,
Enterprise Solutions
Europe, Middle East and
Healthcare
Africa
Transportation
Aviation services
Financing service for energy
business
Property business
NBC Universal

Cable
Film
International media
Network
Sports and
Olympics
GE Consumer & Industrial
Appliances
Electrical Distribution
Lighting equipment
GE in Thailand
GE has the following business groups in Thailand:
• GE Infrastructure
• GE Commercial finance
• GE Industrial
• GE After Sales Service
•
•
•
•
GE International
GE Money
CNBC Asia Pacific
GE Healthcare
Commercial Finance (GECF)
GECF Group provides credits under financial and operational lease contracts and factoring service for SMEs
and companies in general. The assets, employees and financial management of GECF are totally separated from those
of GEMT.
GE Money Thailand (GEMT)
GEMT is the largest credit card operator and provider of personal loans in Thailand. GEMT is part of GE
Capital with more than 2.2 million credit cards in its operations. Being in the business for over 15 years, GEMT has over
3 million customers and more than 6,000 dealers in Thailand. Its products include personal loan, installment finance
and credit card, e.g. credit card issued jointly with Central Group and Robinson, credit card issued by its joint venture
companies such as EDS, BAY (Krungsri Credit Card), etc. GECIH is a strategic partner of the Bank, holding 32.93% of
the Bank’s shares.
Retail loan businesses in GEMT Group are as follows:
Company
GECT
KCC
TCS
GCS
TSS
Business
Provision of retail loans i.e. credit card, personal loan and
installment loan
Provision of retail loans i.e. credit card and personal loan
Provision of retail loans i.e. credit card
Provision of retail loans i.e. credit card, personal loan and
installment loan
Debt collection for companies in GEMT Group
Product
First Choice, QuikCash and Tesco Personal Loan
Krungsri-GE VISA and Mastercard Cards, HomePro VISA
card and Dream Loan
Tesco Credit Card
Central Credit Card / Robinson VISA Card and Powerbuy
Card
-
In addition, QGIB and TGIB are licensed non-life insurance brokerage companies. QGIB is a broker for
customers of GECT, KCC and GCS while TGIB is a broker for customers of TCS.
QLAB and TLAB are licensed life insurance brokerage companies. QLAB is a broker for customers of GECT,
KCC and GCS while TLAB is a broker for customers of TCS.
- 16 -
For QGIB and QLAB, the Bank’s management plans to close down these two companies while the
management does not have a policies regarding TGIB and TLAB yet.
The operational performance of GEMT core entities for the year 2008 ended December 31st is shown in the
table below:
Unit: Bt. mil.
GECT
KCC
TCS
GCS
TSS
Total
revenues
8,909
3,641
1,936
3,288
1,690
Total
expenses
6,340
2,719
1,453
2,844
1,185
Interest
expense
1,726
728
324
545
0.2
Net profit
450
50
96
(95)
351
Assets
39,302
16,387
8,401
13,520
2,038
Liabilities
29,801
14,357
7,230
12,572
227
Shareholders’
equity
9,500
2,031
1,171
948
1,811
Details of securities to be purchased by the Bank are as follows:
1.2.1 GECT
Nature of business
GECT is primarily engaged in retail financing business including credit card, personal loan,
installment loan under the name First Choice, QuikCash and Tesco Personal Loan. GECT serves as cash pooling for GE
group of companies in Thailand. Before entering into the acquisition transaction, GECT is required to carve out all of
cash pooling from GECT.
Products and Services
1) First Choice is one of the most widely-recognized GE brands. It is aimed to tap the fast growing
unsecured personal loans market with its unique "One Card Fits All Needs". This product line comprises:
y
First Choice card - it contains both installment and personal loan features. It targets lower
income group with the maximum credit line of Bt. 300,000 and loan tenor up to 36 months.
y
First Choice Visa card - it contains credit card, installment and personal loan features. For
First Choice Visa Silver card, its target group is middle income group with average monthly income range of Bt. 15,000 29,999. Target group for First Choice Gold Card is middle to high income individuals with average income above Bt.
30,000 per month. Both cards offer a credit line of up to Bt. 1,000,000 and loan tenor up to 60 months
2) QuikCash is a personal loan targeting individual customers with average income above Bt. 8,000,
who need emergency cash via the Bank's ATM network. The differentiation point for this product is its speed and
customer's flexibility of choosing payment due date.
3) Tesco Personal Loan is also a loan for individuals with average income of Bt. 8,000. The product
is mainly distributed via Tesco Lotus counters and is crosssold through Tesco's Visa card base.
As of December 31st, 2008, its credit card customers totaled 9,552 accounts. The 3-in-1 First Choice
customers recorded growth due to its wide service features covering credit card, cash advance and personal loan while
the 2-in-1 QuikCash card does not contain credit card feature.
Distribution channels
GECT has relationships and distributes its products through over 5,991 local dealers, 419 direct
sales agents, 45 telesales agents, and 24 First Choice branches throughout Thailand. Additionally, customers can
apply online via www.firstchoice.co.th.
- 17 -
Board of Directors of GECT as of June 11th, 2009:
Name
Position
3. Mr. Rohit Khanna
5. Mrs. Voranuch Dejakaisaya
6. Ms. Somboon Anurootnatesiri
7. Mr. Safee Kapasi
Director
Director
Director
Director / Senior Executive of the Bank who has vested interest
Director
Director
Director
Director
Registered capital
each.
GECT has a registered capital of Bt. 275 million divided into 2,750,000 shares at par value of Bt. 100
Major shareholders and shareholding proportion
Major shareholder of GECT as of April 30th, 2008 is as follows:
Name
No. of shares
2,749,988
12
2,750,000
1. GECC
2. Others
รวม
%
100.00
100.00
Summary of financial status and operational performance for the years 2006-2008 ended December 31st:
Balance Sheet
Unit: Bt. million
Balance sheets
Assets
Account receivables – credit card
Account receivables – installment loan
Account receivables – personal loan
Account receivables under financial lease
contract
Account receivables under operation lease
agreement
Claims account receivables
Total Assets
Liabilities
Loans from financial institutions
Loans from related companies
Total Liabilities
Issued and paid-up capital
Retained earnings
2006
Amount
%
2007
Amount
%
2008
Amount
%
12,714
11,362
26.37
23.57
13,575
10,232
27.42
20.67
371
14,407
7,023
0.94
36.66
17.87
2,090
4.34
2,238
4.52
1,579
4.02
110
101
48,205
0.23
0.21
100.00
146
49,494
0.29
100.00
178
39,302
0.45
100.00
6,700
30,855
40,355
13.90
64.01
83.72
4,950
32,415
40,444
10.00
65.49
81.71
3,720
23,313
29,801
9.47
59.32
75.83
125
7,725
7,850
0.26
16.03
16.28
125
8,925
9,050
0.25
18.03
18.29
125
9,375
9,500
0.32
23.85
24.17
- 18 -
Statements of income
Unit: Bt. million
2006
2007
Amount
Revenues
Interest Income on personal loans
Interest income on installment loans
Rental income on operating leases
Interest income on finance leases
Collection and service fee income
Management fee income
Interest income
Other incomes
Total Revenues
Total Expenses
Net profit for the year
Net earning per share (Bt.) – par value of
Bt. 100 each
%
2,921
2,662
140
155
1,018
1,143
1,021
95
9,155
6,286
596
31.91
29.08
1.52
1.69
11.11
12.48
11.15
1.04
100.00
68.66
6.51
476.48
Amount
3,071
3,318
124
136
1,085
1,084
984
553
10,354
8,465
279
223.53
%
9.66
32.04
1.20
1.31
10.48
10.47
9.50
5.34
100.00
81.93
2.71
2008
Amount
2,319
3,437
63
143
1,239
746
860
103
8,909
6,340
450
%
26.03
38.58
0.70
1.60
13.91
8.37
9.65
1.15
100.00
71.17
5.05
359.97
Financial ratios
Audited financial statements
For the year ended December 31st
2006
2007
2008
15.49
17.09
16.15
6.51
2.70
5.05
7.63
3.31
4.85
8.04
9.26
9.40
5.14
4.47
3.14
10.57
14.69
9.99
Net Interest margin (%)
Net interest income to assets (%)
Debt to equity (%)
Doubtful debt to total loans (%)
1.2.2 KCC
Nature of business
KCC was founded as a joint venture between GECT and the Bank in February 2001. Each partner
holds 50% of the total issued shares. KCC primarily operates credit card business. Products offered include Krungsri
GE Visa Card, Krungsri Mastercard and Home Pro Visa Card. In 2004, Dream Loan, a personal loan product, was
launched in the market as a new product line to broaden its business to tap the high-growth consumer customer
segment.
1) Krungsri GE Credit Card associates with both Visa and MasterCard. It targets highly affluent
individuals with monthly incomes of over Bt. 15,000 for Classic card, over Bt. 30,000 for Gold card and over Bt 70,000
for Platinum card.
2) Krungsri GE Lady's Titanium MasterCard primarily targets trendy women ages 25-35 with
monthly income of over Bt. 30,000. It offers special discounts from a variety of merchants with high appeal, namely
clothing, jewelry, cosmetics, health and spa.
3) Krungsri GE Visa Doctor Card primarily targets medical doctors as every 0.2% of total spending
through this card will be donated to the Continued Educational Funds for Doctors.
4) HomePro Visa Credit Card primarily targets highly affluent individuals, ages 30-45 looking to
renovate or decorate their home.
5) Krungsri GE Business Prestige MasterCard for SME businesses.
- 19 -
6) Dream Loan is a personal loan targeting all Krungsri GE cardholders.
KCC's key distribution channels are through the 582 Bank branches, 33 Home Pro branches and 46
direct sale agents. In addition, customers can apply online via www.krungsrigecard.com.
Board of Directors of KCC as of June 11th, 2009:
Name
Position
2. Mr. Tinnawat Mahatharadol
3. Mr. Sukdee Chongmankhong
4. Ms. Wanvimol Kanoktanaporn
5. Mr. Roy Agustinus Gunara
7. Ms. Saranya Vajakul
8. Mr. Sudargo Harsono
Director / Director and senior advisor of the Bank who has vested interest
Director
Director
Director
Director
Director
Registered capital
each.
KCC has registered capital of Bt. 1.1 billion divided into 110,000,000 shares with par value of Bt. 10
Major shareholders of KCC as of April 30th, 2009 are listed below:
Name
No. of shares
54,999,991
54,999,996
13
110,000,000
1. GECT
2. BAY
3. Others
Total
%
50.00
50.00
100.00
Balance Sheets
Unit: Bt. Million
2006
Amount
Assets
Account receivables – debt collection agent
Total Assets
Liabilities
Loans from shareholders
Total Liabilities
Retained earnings
%
2007
Amount
%
2008
Amount
%
13,208
1,882
69
15,740
83.91
11.95
0.44
100.00
13,167
1,791
77
16,210
81.23
11.05
0.48
100.00
13,044
1,915
56
16,387
79.60
11.69
0.34
100.00
12,716
14,031
80.79
89.14
12,708
14,230
78.40
87.78
12,764
14,357
77.89
87.61
1,100
609
1,709
6.99
3.87
10.86
1,100
881
1,981
6.79
5.43
12.22
1,100
931
2,031
6.71
5.68
12.39
- 20 -
Statements of Income
Unit: Bt. Million
2006
Amount
Revenues
Interest income
Commission income
Cash advance service income
Other income
Total Revenues
Total Expenses
Net earning per share (Bt.) – par value of Bt. 10 each
2007
Amount
%
2,161
69.78
625
20.19
139
4.48
172
5.55
3,097
100.00
1,937
62.54
185
5.96
1.68
%
2,264
67.05
743
22.00
148
4.39
222
6.56
3,376
100.00
2,682
79.44
(20)
(0.60)
(0.18)
2008
Amount
%
2,267
62.26
743
20.40
146
4.00
485
13.33
3,641
100.00
2,719
74.69
50
1.36
0.46
Financial ratios
2006
2006
2006
8.00
8.22
8.69
5.96
(0.60)
1.36
11.41
(1.10)
2.48
9.26
9.27
9.44
8.21
7.18
7.07
6.01
8.23
5.99
Debt to equity (%)
1.2.3 TCS
Nature of business
TCS was founded as a joint venture between GECT and EDS, and engaged in the credit card
business, namely Tesco Lotus Visa Card.
1) Tesco Visa Classic Card targets middle income individuals with an average income of Bt. 15,000
- 30,000. It provides credit lines up to Bt. 500,000 for each cardholder.
2) Tesco Visa Gold Card targets middle to high income individuals with an average income of over
Bt. 30,000. It provides credit lines up to Bt. 1,000,000 for each cardholder.
At present, TCS has a total of 404,252 accounts of Tesco Lotus Visa card.
TCS's key distribution channels are the current 567 Tesco hypermarket and compact hypermarket
stores nationwide. Additional, customers can apply online via www.tescolotusfinance.com.
Board of Directors of TCS as of June 11th, 2009:
Name
1.
2.
3.
4.
5.
6.
7.
8.
Mr. Richard Smothers
Mr. Gwyn Sundhagul
Mr. Carl Julian Hargrave
Dr. Darmp Sukontasap
Mr. Patrick David Graham
Mr. Teeravuth Suphanaseriporn
Ms. Preeyanuch Sayasaywee
Ms. Niyada Korpajarasoontorn
Position
Director
Director
Director
Director
Director
Director
Director
Director
- 21 -
Registered capital
each.
TCS has registered capital of Bt. 780 million divided into 7,800,000 shares with par value of Bt. 100
Major shareholders of TCS as of September 5th, 2008 are listed below:
Name
No. of shares
3,821,993
3,978,000
7
7,800,000
1. GECT
2. EDS
3. Others
Total
%
49.00
51.00
100.00
The Bank’s Board of Directors’ meeting gave approval for the Bank to purchase an additional 1% of
total paid-up shares of TCS. (Source: Information memorandum on connected transaction)
Balance Sheets
Unit: Bt. million
2006
Amount
Assets
Account receivables – debt collection agent
Total Assets
Liabilities
Total Liabilities
Retained earnings
%
2007
Amount
%
2008
Amount
%
7,415
29
451
8,346
88.85
0.35
5.41
100.00
7,254
601
8,471
85.63
7.09
100.00
7,220
267
8,401
85.95
3.18
100.00
6,795
7,381
47.08
88.43
6,490
7,396
76.62
87.31
6,607
7,230
78.65
86.06
780
186
966
9.35
2.22
11.57
780
295
1,075
9.21
3.48
12.69
780
391
1,171
9.28
4.65
13.94
Unit: Bt. million
Revenues
Interest income
Fee and commission income
Cash advance service income
Collection fee income
VISA card incentive income
Annual membership income
Other income
Total Revenues
Total Expenses
2006
Amount
1,202
310
55
62
32
28
68
1,756
1,028
229
29.35
- 22 -
%
68.43
17.64
3.13
3.56
1.82
1.57
3.87
100.00
58.51
13.04
2007
Amount
2008
%
1,185
62.45
373
19.65
51
2.71
188
9.88
12
0.64
30
1.60
58
3.07
1,897
100.00
1,589
83.77
(48)
(2.52)
(6.12)
Amount
%
1,185
61.23
362
18.71
50
2.58
175
9.02
6
0.33
67
3.47
90
4.65
1,936
100.00
1,453
75.07
96
4.97
12.33
Financial ratios
2006
9.52
13.04
26.90
10.24
7.64
5.07
Debt to equity (%)
2007
9.68
(2.52)
(4.68)
9.69
6.88
8.22
2008
10.81
4.97
8.56
10.21
6.17
5.74
1.2.4 GCS
Nature of business
GCS is a wholly owned subsidiary of GECIH. GCS is primarily engaged in consumer financing
business. It provides private label credit card service to Central Group, one of the top department store chains in
Thailand.
1) Central Credit Card offers four different product types – private label credit card (for use in
Central Department stores only), classic MasterCard, gold MasterCard and platinum MasterCard.
2) Robinson Visa Card was launched in February 2006, with two different product offerings classic and gold cards.
3) Central Personal Loan is an installment personal loan targeting all Central and Robinson
cardholders. The offered credit line is from Bt. 30,000 to Bt. 3,000,000. Its loan tenor is in the range of 6-60 months.
4) Installment Loan offers Powerbuy Card
Currently, GCS's key distribution channels are via the 14 Central department stores and 21 Robinson
branches. Additionally, customers can apply online via www.centralcard.com and www.robinsonvisacard.com
Board of Directors of GCS as of June 11th, 2009:
Name
1.
2.
3.
4.
5.
Position
Mr. Montri Sithiyavanich
Mrs. Voranuch Dejakaisaya
Mr. Gilbert Shigehisa Niwa
Director
Director
Director
Registered capital
each.
GCS has registered capital of Bt. 758 million divided into 75,800,000 shares with par value of Bt. 10
Major shareholder and shareholding proportion
Major shareholder of GCS as of April 30th, 2009 is listed below:
Name
No. of shares
75,799,994
6
75,800,000
1. GECIH
2. Others
Total
- 23 -
%
100.00
100.00
Balance Sheets
Unit: Bt. million
2006
Amount
Assets
Account receivables – installment loan
Total Assets
Liabilities
Loans from financial institutions
Loans from related companies
Total Liabilities
Retained earnings
%
2007
Amount
%
2008
Amount
%
7,945
3,274
2,235
14,096
56.36
23.22
15.86
100.00
8,349
3,216
2,001
14,712
56.75
21.87
13.61
100.00
7,760
2,687
2,032
13,520
57.39
19.88
15.03
100.00
559
10,360
12,643
3.97
73.50
89.69
1,665
1,215
8,696
13,669
11.32
8.26
59.11
92.91
1,340
2,107
6,937
12,572
9.91
15.58
51.31
92.99
758
695
1,453
5.38
4.93
10.31
758
285
1,043
5.15
1.94
7.09
758
190
948
5.61
1.41
7.01
Unit: Bt. million
2006
Amount
Revenues
Interest income on credit card receivables
Interest income on installment loan receivables
Interest income on personal loan receivables
Commission fee income
Other income
Total revenues
Total Expense
%
973
31.56
686
22.26
433
14.04
532
17.26
179
5.80
280
9.09
3,082
100.00
2,305
74.79
89
2.89
1.17
2007
Amount
1,052
776
461
607
300
164
3,361
3,683
(633)
(8.35)
%
31.30
23.09
13.71
18.07
8.93
4.89
100.00
109.56
(18.82)
2008
Amount
1,063
706
446
556
255
263
3,288
2,844
(95)
(1.25)
Financial ratios
2006
9.69
2.89
6.32
11.21
8.70
6.40
Debt to equity (%)
- 24 -
For the year ended December 31
2007
2008
10.55
10.88
(18.82)
(2.89)
(50.69)
(9.55)
11.73
11.83
13.10
13.26
11.17
7.50
%
32.32
21.47
13.55
16.90
7.75
8.00
100.00
86.49
(2.89)
1.2.5 TSS
Nature of business
TSS was previously known as GE Money Retail Bank Public Company Limited, a GEMT group
company. It offered a wide range of consumer financing products such as automobile finance, mortgage loan,
equipment finance, etc. After GE invested in the Bank via GECIH, and the transfer of certain assets and liabilities of TSS
to the Bank, TSS returned its retail banking license to the Ministry of Finance in January 2007. And after transferred of
the hire purchase and financing portfolios to GECAL in September 2007, TSS no longer possessed any financing
portfolios. Currently, TSS is principally engaged in providing debt collection services.
Board of Directors of TSS as of June 11th, 2009:
Name
1.
2.
3.
4.
5.
6.
Position
Mrs. Voranuch Dejakaisaya
Ms. Suwanna Jakraworavudh
Mr. Gilbert Shigehisa Niwa
Mr. Rohit Khanna
Director
Director
Director
Director
Registered capital
each.
TSS has registered capital of Bt. 1.326 billion divided into 132,600,020 shares with par value of Bt. 10
Major shareholder of TSS as of September 5th, 2008 is listed below:
Name
No. of shares
Ordinary shares
Preferred shares
117,200,013
15,399,941
48
117,200,013
15,399,989
1. GECIH
2. Others
Total
%
100.00
100.00
Balance Sheets
Unit: Bt. million
Assets
Account receivables under hire purchase agreement
Account receivables – collection service to related
companies
Short-term loan to related companies
Total Assets
Liabilities
Long-term loan from related companies
Total Liabilities
Retained earnings
2006
Amount
%
2007
Amount
%
2008
Amount
%
12,815
75.54
3
0.12
1
0.04
16,965
100.00
568
1,115
2,163
26.25
51.53
100.00
539
1,233
2,038
26.45
60.52
100.00
11,279
13,132
66.48
77.40
703
32.50
227
11.15
5,304
(1,470)
3,834
31.26
(8.66)
22.60
1,326
134
1,460
61.30
6.20
67.50
1,326
485
1,811
65.07
23.78
88.85
- 25 -
Unit: Bt. million
2006
Amount
Revenues
Collection service income
Service income
Interest income on investment
Interest income on hire-purchase receivables
Interest income on home mortgage receivables
Other income
Total Revenues
Total Expenses
2007
%
335
21.91
119
7.78
861
56.32
127
8.29
87
5.70
1,529
100.00
1,965
128.54
(1,255)
(82.09)
(2.44)
Amount
2008
%
1,494
37.07
148
3.67
9
0.22
668
16.58
2
0.04
1,710
42.42
4,031
100.00
1,858
46.09
1,099
27.27
2.81
Amount
%
1,232
72.89
80
4.73
0.02
0.02
0.00
378
22.34
1,690
100.00
1,185
70.10
351
20.75
2.99
1.2.6 QGIB
Nature of business
GCS's customers.
Founded in March 2007, QGIB engages in selling non-life insurance policies to GECT, KCC and
Board of Directors of QGIB as of June 11th, 2009:
Name
1.
2.
3.
4.
Ms. Pimporanee Ratanavaraha
Ms. Varangkana Hirunyasiri
Mr. Philip Cheng Chong Tan
Position
Director
Director
Director
Registered capital
QGIB has registered capital of Bt. 2 million divided into 20,000 shares with par value of Bt. 100 each.
Major shareholders of QGIB as of September 5th, 2008 are listed below:
Name
1. Mr. Peerapong Somboonvaranond
2. GECT
3. Others
Total
No. of shares
14,997
4,997
6
20,000
- 26 -
%
75.00
25.00
100.00
Balance Sheets
Unit: Bt. thousand
2007
Amount
Assets
Cash and deposit at financial institutions
Trade account receivables
Total Assets
Liabilities
Trade account payables
Account payables – related companies
Total Liabilities
Retained earnings
2008
%
Amount
%
19
3,958
0.47
100.00
83,010
10,921
158,857
52.25
6.87
100.00
490
2,593
12.38
65.51
59,550
94,066
157,066
37.49
59.21
98.87
2,000
(635)
1,365
50.52
(16.03)
34.49
2,000
(209)
1,791
1.26
(0.13)
1.13
Unit: Bt. thousand
2007
Amount
Revenues
Brokerage income
Interest income
Total Revenues
Total Expenses
2008
%
Amount
43
100.00
43
100.00
678
1,560.61
(635) (1,460.61)
(31.73)
97,145
133
97,277
96,505
426
21.28
%
99.86
0.14
100.00
99.21
0.81
1.2.7 QLAB
customers.
Nature of business
Founded in March 2007, QLAB engages in selling life insurance policies to GECT, KCC and GCS's
Board of Directors of QLAB as of June 11th, 2009:
Name
1.
2.
3.
4.
Position
Ms. Pimporanee Ratanavaraha
Ms. Varangkana Hirunyasiri
Mr. Philip Cheng Chong Tan
Director
Director
Director
Registered capital
QLAB has registered capital of Bt. 2 million divided into 20,000 shares with par value of Bt. 100 each.
- 27 -
Major shareholders of QLAB as of September 5th, 2008 are listed below:
Name
1.
2.
3.
4.
5.
No. of shares
7,999
4,997
4,000
3,000
4
20,000
Ms. Sunisa Somboonvaranond
GECT
Mr. Atthapol Chermjitpong
Mr. Wichet Kanmee
Others
Total
%
40.00
25.00
20.00
15.00
100.00
Balance Sheets
Unit: Bt. thousand
2007
Amount
Assets
Account receivables – related companies
Total Assets
Liabilities
Account payables – related companies
Total Liabilities
Retained earnings
2008
%
Amount
%
19
3,757
0.50
100.00
199,211
15,949
42
263,746
75.53
6.05
16.07
100.00
887
2,848
23.60
75.80
42,396
205,447
254,795
16.07
77.90
96.61
2,000
(1,091)
909
53.23
(29.04)
24.20
2,000
6,951
8,951
0.76
2.64
3.39
Unit: Bt. thousand
2007
Amount
Revenues
Brokerage income
Total Revenues
Total Expenses
2008
%
0.37
44
100.00
1,134
2,601.62
(1,091)
(2,501.62)
(54.54)
Amount
219,014
219,295
207,604
8,042
402.11
%
99.87
100.00
94.67
3.67
1.2.8 TGIB
Nature of business
TGIB engages in selling non-life insurance policies. Formerly it was named TCS General Insurance
Broker Co., Ltd. The company’s extraordinary shareholders’ meeting on June 13, 2006 approved the change of name to
Tesco General Insurance Broker Co., Ltd. TGIB sells non-life insurance policies to TCS’s customers.
- 28 -
Board of Directors of TGIB as of June 11th, 2009:
1.
2.
3.
4.
5.
Name
Ms. Apinya Svan-Ariyaskul
Mr. Patchana Sunthornphusit
Mr. David Paul James
Ms. Sukanya Chienwittayakun
Ms. Jariya Koonlinthip
Position
Director
Director
Director
Director
Director
Registered capital
TGIB has registered capital of Bt. 77 million divided into 770,000 shares with par value of Bt. 100 each.
Major shareholder of TGIB as of December 23rd, 2008 is listed as follows:
Name
No. of shraes
769,993
7
770,000
1. TCS
2. Others
Total
%
100.00
100.00
Summary of financial status and operational performance for the years 2006-2008:
Balance Sheets
Unit: Bt. thousand
2006
Amount
Assets
Trade account receivables – related companies
Loans to related companies
Total Assets
Liabilities
Short-term loans from related companies
Total Liabilities
Retained earnings
2007
%
Amount
%
2008
Amount
%
32,285
1,418
39,930
80.85
3.55
100.00
16,154
24,209
48,161
33.54
50.27
100.00
3,078
31,795
47,961
96,733
3.18
32.87
49.58
100.00
30,517
22,908
61,507
76.43
57.37
154.04
25,302
40,840
77,587
52.54
84.80
161.10
78,186
125,054
80.83
129.28
2,000
(23,578)
(21,578)
5.01
(59.05)
(54.04)
2,000
(31,426)
(29,426)
4.15
(65.25)
(61.10)
2,000
(30,320)
(28,320)
2.07
(31.34)
(29.28)
Unit: Bt. thousand
2006
Amount
Revenues
Brokerage income
Interest income
Total Revenues
Total Expenses
Net earning per share (Bt.) – par value of Bt. 100
each
4,139
78
4,355
27,434
(23,546)
%
95.03
1.78
100.00
629.94
(540.66)
(1,177.28)
- 29 -
2007
Amount
39,483
457
39,940
44,701
(7,849)
(392.43)
2008
%
98.86
1.14
100.00
111.92
(19.65)
Amount
82,042
861
83,158
81,766
1,106
55.29
%
98.66
1.03
100.00
98.33
1.33
1.2.9 TLAB
Nature of business
TLAB engages in selling life insurance policies. It was formerly named TCS Life Assurance Broker
Co., Ltd. The company’s extraordinary shareholders’ meeting on June 13th, 2006 approved the change of the name to
Tesco Life Assurance Broker Co., Ltd. TLAB sells life insurance policies to TCS's customers.
Board of Directors of TLAB as of June 11th, 2009:
Name
1.
2.
3.
4.
5.
Position
Ms. Apinya Svan-Ariyaskul
Mr. Patchana Sunthornphusit
Mr. David Paul James
Ms. Sukanya Chienwittayakun
Ms. Jariya Koonlinthip
Director
Director
Director
Director
Director
Registered capital
TLAB has registered capital of Bt. 2 million divided into 20,000 shares with par value of Bt. 100 each.
Major shareholder of TLAB as of September 5th, 2008 is listed as follows:
Name
No. of shares
19,993
7
20,000
1. TCS
2. Others
Total
%
100.00
100.00
Summary of financial status and operational performance for the years 2006-2008:
Balance Sheets
Unit: Bt. thousand
2006
2007
Amount
Assets
Total Assets
Liabilities
Total Liabilities
Retained earnings
%
Amount
2008
%
Amount
%
37
11
2,052
1.80
0.56
100.00
36
2,046
1.78
0.02
100.00
75
2,108
25,449
0.29
8.28
100.00
142
6.93
23
237
1.12
11.57
8,450
12,864
33.20
50.55
2,000
(90)
1,910
97.44
(4.37)
93.07
2,000
(191)
1,809
97.78
(9.35)
88.43
2,000
10,585
12,585
7.86
41.59
49.45
Unit: Bt. thousand
2006
2007
Amount
Revenues
Brokerage income
Interest income
Total Revenues
Total Expenses
Net earning per share (Bt.) – par value of Bt.
100 each
%
26
36
62
117
(58)
41.35
58.65
100.00
190.27
(93.45)
(2.88)
- 30 -
Amount
2008
%
7
37
44
140
(101)
(5.07)
15.38
84.62
100.00
322.58
(232.89)
Amount
15,380
122
15,503
370
10,776
538.80
%
99.21
0.79
100.00
2.39
69.51
Consumer credit and credit card spending market
Overview of personal spending and credit card usage
The below table shows a summary of personal spending, credit card usage, and advance cash withdrawal
as compared with GDP:
Personal spending (Bt. mil.)1
Growth (% p.a.)
Credit card usage (Bt. mil.) 2
Growth (% p.a.)
Advance cash withdrawal (Bt. mil.)3
Growth (% p.a.)
Gross Domestic Product (GDP) (Bt. mil.) 1
Credit card usage to personal spending (%)
Personal spending to GDP (%)
Credit card usage to GDP (%)
Advance cash withdrawal to GDP3 (%)
2004
3,711,286
9.6
266,042
23.2
48,228
42.2
6,489,476
7.2
57.2
4.1
0.7
2005
4,060,414
9.4
340,463
28.0
63,826
32.3
7,092,893
8.4
57.2
4.8
0.9
2006
4,376,585
7.8
410,961
20.7
82,428
29.1
7,841,297
9.4
55.8
5.2
1.1
2007
4,561,528
4.2
474,480
15.5
97,076
17.8
8,493,311
10.4
53.7
5.6
1.1
20084
4,992,234
9.4
540,004
13.8
100,400
3.4
9,102,785
10.8
54.8
5.9
1.1
Q1/20094
1,195,809
(1.7)
131,743
1.4
23,028
(2.01)
2,179,730
6.0
54.9
6.0
1.1
Note
1
Retroactive data adjustment by the BOT at year-end 2008
2
Credit card usage includes only the use of affinity cards of commercial banks, branches of foreign commercial banks in
Thailand, and non-bank credit card operators, and excludes advance cash withdrawal
3
Advance cash withdrawal includes only advance cash withdrawal using affinity cards of commercial banks, branches of
foreign commercial banks in Thailand, and non-bank credit card operators. The BOT started collecting the data in early 2003.
4
Data of 2008 and Q1/2009 are preliminary projections.
Source: BOT
In 2008, personal consumption spending rose to Bt. 4.99 trillion from Bt. 3.71 trillion in 2004 with compound
annual growth rate (CAGR) of 7.7% during 2004-2008. Credit card usage grew from Bt. 266.042 billion in 2004 to Bt.
540.004 billion in 2008, representing CAGR of 19.4% during 2004-2008. For credit card usage and advance cash
withdrawal, the 15.5% growth in 2007 dropped to 13.8% in 2008 due to the economic and political uncertainties which
impaired consumer confidence and spending.
In Q1/2009, personal spending decreased by Bt. 20.264 billion or 1.7% compared with the same period inf
2008 due to consumers’ lack of confidence in the domestic economic and political situations.
Regarding the credit card usage to personal consumption spending ratio, the ratio increased from 7.2% in
2004 to 10.8% in 2008 due to credit card usage giving more convenience and more safety compared tocash. The
operators also offered many incentives and launched campaigns to encourage credit card spending. More specialty
and variety of cards were introduced. In Q1/2009, the credit card usage to personal spending ratio moved up from
Q1/2008 by 6%.
Personal spending to GDP ratio stayed rather stable at approximately 56-57% during 2004-2006. The ratio
dropped to 54% at year-end 2007 and rose to 55% in 2008. This indicated that consumers slowed down their spending
amid the economic downturn with weak consumer confidence. However, the ratio later moved up continuously, which
has implied an upward trend as credit card usage has remained low despite a growth from 4.1% in 2004 to 5.9% in
2008. Meanwihle, the advance cash withdrawal to GDP ratio rose from 0.7% in 2004 to 1.1% in 2008.
In Q1/2009, the personal spending to GDP ratio has been unchanged at 54.9% compared with the
corresponding period in 2008. The credit card usage to GDP ratio and the advance cash withdrawal to GDP ratio in
Q1/2009 increased slightly to 0.4% and 0.1% respectively. This is an indication that consumers’ concerns about the
economic recession had dampened their spendings.
- 31 -
1. Personal loans
Summary of personal loans compared with GDP is shown below:
GDP (Bt. million)
2005
200
2007
2008
Q1/2009
7,092,893
7,841,297
8,493,311
9,102,785
2,179,730
1
154,362
188,285
211,805
229,137
224,915
Growth (% p.a.)
-
22
12
8
5.2
2.2
2.4
2.5
2.5
2.6
Personal loans (Bt. million)
Personal loans to GDP (%)
1
Note: The BOT started collecting the data in early 2005.
Source: BOT
Personal loan market grew by 8% from Bt. 211.805 billion at year-end 2007 to Bt. 229.137 billion at
year-end 2008. The personal loan to GDP ratio in 2008 was equal to 2.5% which was equal to the ratio in 2007.
In Q1/2009, personal loan market grew by 5.2% year on year. The personal loan to GDP ratio in
Q1/2009 moved up slightly by 1.01%.
Major competitors of GEMT entities in personal loan business are commercial banks and other
financial firms such as AEON Thana Sinsap (Thailand) Plc., Easy Buy Plc., etc.
2. Credit card business of GEMT core entities compared with the market
Here are the figures representing credit card business of the company compared with the market:
2004
2005
2006
2007
Market spending on credit cards1, 2 (Bt. mil.)
266,042
340,643
410,961
474,480
Spending on credit cards of GEMT entities 1, 2 (Bt. mil.)
45,568
71,043
84,105
95,508
Spending on credit cards of GEMT entities compared with the
17.13
20.86
20.47
20.13
market (%)
Market card account receivables1 (Bt. mil.)
102,390
133,175
161,546
171,705
Card account receivables of GEMT entities (Bt. mil.)
19,409
26,701
29,798
30,132
Card account receivables of GEMT entities compared with the
18.96
20.05
18.45
17.55
market (%)
Number of cards in the market (million accounts) 1
6.61
8.28
9.51
10.75
Number of cards of GEMT entities (million accounts)
1.23
1.46
1.55
1.74
Number of cards of GEMT entities compared with the market (%)
18.61
17.63
16.30
16.19
Market cash advance (Bt. mil.)
48,228
63,826
82,428
97,076
Cash advance of GEMT entities (Bt. mil.)
4,792
7,996
8,507
8,642
Cash advance of GEMT entities compared with the market (%)
9.94
12.53
10.32
8.90
3
Market card account receivables in default for 3 months or more
3,017
4,087
5,501
(Bt. mil.)
Card account receivables in default for 3 months or more of
336
498
736
GEMT entities (Bt. mil.)
Card account receivables in default for 3 months or more of
11.14
12.18
13.38
GEMT entities compared with the market (%)
Note
1
Only affinity cards of commercial banks, branches of foreign commercial banks in Thailand, and non-bank credit card operators
2
Credit card usage excludes advance cash withdrawal.
3
The BOT started collecting data on loan receivables in default for 3 months or more on March 31, 2005
Source: BOT
- 32 -
2008
540,004
102,202
18.93
183,080
29,520
16.12
11.83
3.00
16.82
100,400
8,276
8.24
4,961
613
12.36
For credit card business, major competitors of GEMT core entitles are commercial banks and other
financial companies.
In 2008, all companies were affected by many factors including interest rates volatility, sluggish
economic condition, and high competition. However, under these circumstances, GEMT core entitles were able to
maintain their market shares. The diagrams below show market shares of GEMT core entities classified by credit value
in each credit group:
Personal loan market share
BAY, exclude KCC
Easy Buy
Aeonts
KTC
Standard Chartered
Citibank
SCB
GEMT
2%
5%
8%
9%
10%
13%
15%
15%
Credit card market share
Aeonts
HSBC
KBANK
SCB
Citibank
KTC
GEMT
5%
6%
11%
11%
13%
16%
17%
Installment finance market share
Cetelem
Easy Buy
Aeonts
GEMT
12%
19%
22%
28%
Source: BOT
1.3 Value of consideration
The Bank will enter into the acquisition transaction for a consideration of Bt. 13.793 billion (The book value of
shares of GECT, KCC, TCS, GCS and TSS with respect to the relevant share proportion totals Bt. 12.647 billion as of
December 31st, 2008.). The Bank expects to complete the acquisition transaction within 2009 after the Bank’s
shareholders’ meeting approves the transaction. In case of any adjustment to the share price, the Bank will make
additional payment or receive refund within the period to be agreed by the parties involved.
The provision of financial support for GEMT core entities in the amount of not more than Bt. 60 billion will be
used to refinance GE and third parties’ existing loans totaled Bt. 33.360.8 billion (as of December 31st, 2008). The terms
and conditions of lending will be the same as those given to the subsidiaries and affiliates of the Bank. In this regard,
the extra funds will be reserved for accommodating the business expansion of GEMT entities in the future.
- 33 -
1.4 Source of funds
The Bank will use its internal funds for the acquisition transaction and provision of financial support. Based
on data as of December 31, 2008, the Bank requires a total amount of approximately Bt. 47.154 billion to fund the
payment in the transaction.
According to the company-only financial statements for the first quarter of 2009 ended March 31st, 2009, the
Bank recorded cash of Bt. 19.351 billion and interbank and money market items of Bt. 100.687 billion. Such amounts of
funds are liquid and are in excess of the minimum reserves required by the BOT. Therefore, the Bank will have
adequate cash to enter into the transaction.
1.5 Reasonableness and benefits of the transaction
1.5.1 Purpose and necessity of the transaction
1) It is the Bank’s policy to offer universal banking services and enhance the potential to penetrate
retail banking customer base. GEMT entities have been in the business for over 15 years and are among the leaders in
personal loan, installment credit and credit card businesses with market share of 15%, 28% and 17% respectively.
2) The Bank targets to increase its retail or consumer loan portfolio to 50% of total loan portfolio by
the end of 2010. This is to ensure that its risk are more diversified, with a larger customer base and higher yield loan
portfolio at the same time.
1.5.2 Advantages and disadvantages of entering into the Transaction
1) Advantages
• Competitiveness and expansion of retail loan portfolio
The purchase of shares of GEMT entities will strengthen competitiveness and expand retail
banking customer base. This is in line with the aim to increase retail loan portfolio to ensure that the Bank’s loan
portfolios are better balanced with a risk-diversified structure. In addition, it will add new product lines that carry wellknown brands and trademarks.
will be as below:
After the acquisition transaction, retail loan account receivables in three additional products
Unit: Bt. million
GECT
Credit card
371
Personal loan
7,023
Installment loan
14,407
Total
21,801
st
Note: Data as of December 31 , 2008
KCC
13,044
1,915
14,959
TCS
7,220
7,220
GCS
7,760
2,033
2,687
12,480
Total
28,395
10,971
17,094
56,460
• Increase in consideration and benefits
The acquisition transaction will enhance the Bank’s profitability and businesses due to an
increasing in loan portfolio from the retail customer base with higher yields. Net interest margin (NIM) and net interest
income to assets ratio of GECT entities compared with those of banks during the past three years are shown in the
following tables:
Net interest margin (NIM) during 2006-2008:
BAY
GECT
KCC
TCS
GCS
Net interest margin (NIM) %
2007
2.82
17.09
8.22
9.68
10.55
2006
2.34
15.49
8.00
9.52
9.69
- 34 -
2008
3.13
16.15
8.69
10.81
10.88
Net interest income to assets ratio (%) during 2006-2008:
2006
1.96
8.04
9.26
10.24
11.21
BAY
GECT
KCC
TCS
GCS
Net interest income to assets ratio (%)
2007
2.22
9.26
9.27
9.69
11.73
2008
2.51
9.40
9.44
10.21
11.83
The average yields from retail loans are higher than those from corporate loans due to the
unsecured nature and higher risks. According to the BOT Notification, credit card and personal loan operators can not
charge the interest at the rates of over 20% and 28%, respectively.
Impacts on the operating income and profit of the Bank
With the increase in shareholding in the five companies in the total amount of no less than
51% (except TCS), the Bank’s operating income and profit in the consolidated financial statements will increase due to
the increase in income and profit of GECT, KCC, GCS and TSS, which are the Bank’s subsidiaries. The following table
presents the imitation of revenues and net profit before and after entering into the transaction based on the assumptions
and net profit of the Bank and GEMT entities in 2008:
Unit: Bt. million
Before the Acquisition Transaction
%
Revenues Net profit
shareholding
47,333
4,896
50
3,640
50
-
After the Acquisition Transaction
%
Revenues
Net profit
shareholding
47,333
4,896
100
8,909
450
100
7,280
100
49
949
47
100
3,288
(95)
100
1,690
350
(1,232)
-
BAY
GECT
KCC
TCS
GCS
TSS
Adjustment: Related transaction concerning the
revenue and expense of debt collection service
Total
50,973
4,946
68,217
5,748
Note: This is preliminary figure only, and may not guarantee the result after the acquisition transaction, as it is regardless of all inter-company
transactions and may not conform with the accounting method.
For the shareholders, profit sharing in form of dividend and right to vote at the meetings of
GEMT entities will increase due to the Bank’s increase in both direct and indirect shareholding. The Bank will need an
investment of approximately Bt. 13.793 billion.
The Bank, as a major shareholder of GEMT entities, will gain from the operations of each
company which will expand with more distribution channels through the Bank’s wide networks and financial support
from the Bank. In addition, the acquisition transaction is one way to efficiently use the large amount of funds from the
investments made by GE in 2007. The Bank will also benefit from lending to GEMT entities which give higher yields
compared with those from deposits with the BOT and interbank money market.
Summary of borrowings of GEMT entities as of December 31, 2008:
Lender
Amount (Bt. million)
GE Group
28,301 *
BAY
16,056
Others
5,060
Total
49,417
* Excluding loans which GECT provided to its subsidiaries, KCC and TCS
- 35 -
• Increase in cross selling channels to penetrate GEMT entities’ customers base
GEMT entities serve more than three million accounts in all groups of customers with
products that can respond to demand of high, middle and low-income people. The Bank will be able to introduce its
financial products and services to a broader, more diverse customer base as well as benefit from over 6,000 dealers of
GEMT at Home Pro, Tesco Lotus stores, Central Department Stores, Robinson Department Stores and Power Buy shops
nationwide. Moreover, the Bank will gain access to the superior technological platform of CRM technology and other
know-how to develop its cross-selling and create new business opportunities through support from the broad networks
and good business relationship with the said leading retail chains.
• Acquisition of world-class technology and experienced personnel in retail business
This transaction will provide the Bank with access to best-in-class technological platforms
and management systems which are scalable for increased volume and business expansion in the future. These
infrastructures include global standard risk framework, automated origination systems, portfolio management tools,
credit underwriting, account servicing systems, CRM system and information technology which will enhance the Bank's
operational efficiency and competitiveness for further development and growth.
With the acquisition transaction, the Bank’s retail loan business will be strengthened with a
team of highly experienced and committed personnel with proven track records in the credit card and personal loan
market from GEMT entities.
• Elimination of potential conflict of interests
The Bank is a leading financial service provider with the target of expanding its coverage in
the retail segment, while GE is one of the largest retail loan service providers in Thailand as well as the Bank's major
shareholder. GE's current shareholding structure can lead itself to potential conflict of interest between the Bank and
GE. This acquisition transaction will allow GE to consolidate its holding in the retail business market. GE will pursue its
interests in financial services in Thailand through the Bank, which will eliminate any potential conflict of interests.
2) Disadvantages
• Impacts on the financial position of the Bank
The Bank expects to spend an amount of Bt. 13,793 million in the acquisition transaction which will totally come from its
internal funds. The Bank will have to arrange funds to finance GEMT core entities in the amount of up to Bt. 60 billion.
This will reduce the Bank’s liquidity and increase overall risk assets.
The purchase of shares of GEMT entities and provision of financial support after the share
purchase will lead to a decrease in tier 1 capital and capital adequacy ratios (CAR) from 12.94% and 15.57%
respectively based on the data as of March 31, 2009 to 11.82% and 14.23% respectively. Despite lower liquidity and
CAR, the rates are still higher than the minimum capital requirement of the BOT and in the range of standard level
compared with other commercial banks.
• Accounting effects
With the acquisition transaction, there may be an amount of goodwill, which is calculated
from the difference between the total value of the acquisition transaction and the fair value of the assets and liabilities of
GEMT core entities on the date of transaction. According to the accounting standard, on the date of transaction, the
Bank has to record the value of the acquired shares of GEMT entities that may be higher than the fair value of assets
and liabilities. The difference between the cost of acquisition and the fair value of assets and liabilities will be recorded
as goodwill and be recognized as assets in the financial statements of the Bank. The Bank has to amortize the goodwill
and record the amount in the statement of income. The period of amortization depends on the period in which the Bank
gains economic benefits from the assets. This will affect the statement of income and may impair the dividend payment
capability. However, the amortization of goodwill is merely an accounting figure that has no impact on the cash flows of
the Bank.
- 36 -
The following are the valuation of goodwill and possible amortization. The figures so
worked out are the assumption only. The actual goodwill and amortization will be figured out on the date of the
transaction which may differ from the following assumption:
Estimated value of acquisition
Less : Assumption of fair value of the acquired shares
Estimated goodwill
Bt. 13,793 million
Bt. 12,647 million
Bt. 1,146 million
1.5.3 Advantages and disadvantages of entering into the transaction with connected persons compared
with third party
1) Advantages of entering into to transaction with connected persons compared with third party
Combining the businesses of GEMT core entities with those of the Bank will enhance
competitiveness and drive business growth as GEMT entities are leaders in personal loan, installment loan and credit
card businesses with widely recognized brands such as First Choice card, Central Card, Robinson Visa, Krungsri Credit
Card, Tesco Lotus Card, etc. GEMT entities have served more than 3 million customer accounts in various target
groups. The Bank will therefore benefit from acquiring GEMT entities from GE. Other third parties in Thailand have no
comparable companies that would be available for acquisition..
2) Disadvantages of entering into to transaction with connected persons compared with third party
• Disclosure of information on the transaction
Entering into the transaction with connected persons may cause conflict of interest and the
Bank is required to disclose detailed information of the transaction, while the entering into the transaction with a third
party will not cause any of such problems.
1.5.4 Other considerations
1. Risk from the terms of the share purchase agreement– The share purchase agreement is still
being negotiated and will be completed after approval of the shareholders. Details of the agreement have not yet been
officially agreed upon. There is a risk that details of the agreement may not benefit the shareholders in the long run.
However, the Bank has already signed the Term Sheet with GE and will negotiate the terms of the share purchase
agreement in line, but not limited to, the concepts of the said Term Sheet.
2. Risk from change of employee policy – The IFA has been informed that there is in the process of
negotiation of the employee policy in order to ensure optimum benefits for both parties. Nevertheless, we view that it
may impact on the Bank’s employee expense in the future.
3. Risk from the Bank’s failure to obtain approvals from the BOT, the Ministry of Finance, the Office
of Insurance Commision, regulatory institutes and/or any related authorities such as other agreement parties in the
transaction., i.e. CPN and EDS
4. Risk from restrictions in doing marketing of its retail loan business with other department stores
or retail shops apart from the parties involved.
5. Risk from decrease in retail loan account receivables as it is likely that the Bank and GEMT
entities will have duplicated customer accounts. According to the criteria of the BOT, the credit line amount for each
credit card holder or personal loan amount must not exceed 5 times the average monthly income or average cash
inflows to the deposit account. Therefore, after the acquisition transaction, the Bank will have to consider and manage
the personal loan amount in compliance with BOT’s regulations.
6. Risk from higher or lower payment than the amount stated in the information memorandum. The
payment amount for the Acquisition Transactionม specified in the information memorandum is Bt. 13,793 million.
According to the Term Sheet, the payment will be made in Thai baht and USD as follows:
1) , Bt. 1,023 million plus the book value of GEMT core entities, amounting to Bt. 13,670
million; and
- 37 -
2) USD 3,500,000 at the exchange rate of Bt. 35.18/USD 1. However, the payment for the
transaction will be subject to the exchange rate at the transaction date. In case that the exchange rate is lower than Bt.
35.18/USD 1, Bank shall make a payment at the exchange rate lower than those rate. In addition, Bank continuously
monitors the change in exchange rate in order to buy or sell USD currency in the event the currency fluctuation. Thus,
Bank may enter into the forward contract in order to not make payment at the exchange rate over Bt. 35.18/USD 1.
7. The acquisition transaction is more complicated than any other acquisition in the past as it
involves multiple companies. This also necessitates the restructuring of organization and internal management system
as well as information system to ensure smooth and efficient operations; hence a large amount of expenses is expected.
8. The joint venture agreement between GECT and EDS will expire in May 2011 and is renewable
automatically for another 5 years. A party that intends to terminate the contract is required to send a notice at least 18
months in advance. In this regard, the Bank will incur risk or uncertainties regarding the business operations of TCS as
follows:
- Risk associated with the purchasing/selling price of TCS’s shares: In case the joint venture
agreement expires without renewal, the Bank has right to buy from or sell TCS shares to EDS. Nonetheless, the
purchase/selling price is not clearly determined. It is likely that the Bank may have to raise funds to buy TCS shares from
EDS. In the case of the sell TCS shares, Bank may sell the shares at lower price than the purchase price. However, the
Bank currently has no plan to purchase additional TCS shares from EDS.
- Risk from change of joint venture agreement party: According to the condition on
termination of agreement, the Bank has the right to buy from or sell TCS shares to EDS which may lead to change of
agreement party. For instance, if the Bank purchases shares from EDS and has 100% shareholding in TCS, Tesco Lotus
may terminate the commercial service agreement with TCS, which provides loans to Tesco Lotus’ customers. As a
result, there will be adjustment of card features as well as name of card. Tesco Visa card contains features that relate to
Tesco Lotus in term of benefits and promotions for the card usage. Tesco Visa card holders may no longer enjoy those
privileges, leading to decrease in the number of card holders and credit volume as well as incurring expense on
changing card for customers. If TCS fails to seek other business alliance that will jointly issue credit card for such a
large number of customers as those handled by EDS, the shareholding in TCS may no longer generate income yields to
the Bank in the future.
In case EDS purchases TCS shares from the Bank and has 100% shareholding, the
commercial service agreement with the Bank will be terminated.
- Risk from investments for TCS’ business expansion: The Bank will incur risks from
investments to expand credit volume and business. This is because if the joint venture agreement expires and EDS
intends to take up TCS shares portion owned by the Bank, EDS will become the TCS’s major shareholder with 100%
stake. Investments by the Bank in the future may not generate maximum benefits in the long run, since the Bank may no
longer gain benefits as regards financing, customer base contribution and distribution channels for TCS.
9. Since the term sheet specified that GE has agreed not to compete with the Bank in the retail loan
business in Thailand, which is of similar nature to the business of GEMT entities for a period of 5 years from the date of
the transaction completion. At the end of such period, GE may decide to return to retail loan business. The conflict of
interest from the existing shareholder structure may occur since the Bank’s major shareholder may operate the same
business or compete with the Bank. The Bank may have a risk that they are not allowed to offer securities by means of
public offering due to its conflict shareholding structure.
- 38 -
Opinion Report of Independent Financial Advisor on Connected Transactions
1.6
1.6.1 Fairness of price
To evaluate the fair value of the Acquisition Transaction, the IFA has studied information in the
documents obtained from the Bank and its representatives such as the Annual Registration Statement (Form 56-1),
annual report, financial statements, etc. Our evaluation is also based on other information obtained from the Bank and
its representatives including interviews with executives and representatives of the Bank, resolutions of the Board of
Directors approving the transactions, as well as financial information, documents and other relevant information
prepared by the management and financial advisor of the Bank, including publicly disclosed information. Our opinions
are rendered based on the assumption that the said information and documents are true and correct.
Preparation of financial projections, assumptions, and evaluation of the fair value of the Acquisition
Transaction are based on information, documents and assumptions provided by the Bank and its representatives.. Any
material changes of this information may affect our opinions, and the correctness of information cannot be verified.
Scope of the IFA’s work does not include evaluation of any assets and liabilities of the Bank, GEMT
Entities, and investment companies of GEMT, or any other special audit of the assets and liabilities.
The IFA has studied and evaluated the fair value of the transaction using various approaches to
identify the fairness of the price of the Acquisition Transaction. Details are as follows:
1.6.1.1 Book Value Approach
1.6.1.2 Adjusted Book Value Approach
1.6.1.3 Market Comparable Approach
1.6.1.3.1 Price to Book Value Ratio Approach
1.6.1.3.2 Price to Earnings Ratio Approach
1.6.1.4 Discounted Cash Flow Approach
1.6.1.5 Dividend Discount Model
However, the historical market price approach is not applicable here as GEMT Entities are not listed
on the stock exchange and the market value of their shares cannot be identified.
The following is the calculation of the fair price of the Acquisition Transaction with respect to the
acquisition portion approved by the Bank’s Board of Directors only.
1.6.1.1 Book Value Approach
This approach reflects the book value of the shareholders’ equity of GEMT Entities
according to the audited financial statements dated December 31, 2008 of each company. The valuation of the share
price, for the Board-approved acquisition portion, is shown in the below table:
1. GE Capital (Thailand) Co., Ltd.: GECT
According to the audited financial statements as of December 31, 2008, GECT invested in nine subsidiaries as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Tesco Card Service Co., Ltd.1
Krungsriayudhya Card Co., Ltd. 1
Bangkok Capital Equity Co., Ltd.2
GE Capital Service (Thailand) Co., Ltd.2
GE Capital Auto Service Co., Ltd.2
Thailifestyle Dot Com Co., Ltd.2
GECF Holding (Thailand) Co., Ltd.2
Quality General Insurance Broker Co., Ltd.3
Quality Life Assurance Broker Co., Ltd.3
Total
TCS
KCC
BCE
GECS
GECAS
TLS
GECF
QGIB
QLAB
- 39 -
Shareholding
(%)
49
50
100
100
100
30
100
25
25
Paid-up capital (Bt.
mil)
780.00
1,100.00
0.10
2.00
2.00
0.20
0.10
2.00
2.00
1,888.40
Cost price
(Bt. mil)
382.20
548.98
0.10
2.00
2.00
0.06
0.10
0.50
0.50
936.44
Notes:
1 The Bank will either purchase shares of TCS and KCC or hold shares through GECT.
2. According to the information disclosed to the SET, the subsidiaries, namely BCV, BCE, GECS, GECAS, TLS and GECF, will
be wound up or carved out of GEMT Entities. However, from the audited financial statements dated December 31, 2008,
GECT already sold all the shares in BCV to a third party. A copy of the list of GECAS’s shareholders also shows GECC as a
shareholder owning 100% of GECAS’s total paid-up capital while the list of GECF’s shareholders indicates that GECAS is
also a 100% shareholder of GECF. As such, GECT is no longer a shareholder of GECAS and GECF. For TLS, there has been
no clear plan after the Acquisition Transaction yet.
3 The Bank will have indirect shareholding in QGIB and QLAB through GECT.
With the acquisition of 100% of paid-up GECT shares from GECC, the Bank will obtain indirect shareholding in two
companies, i.e. 1) 25% of total paid-up shares of QGIB and 2) 25% of total paid-up shares of QLAB. The purchase of
GECT shares does not include commercial finance such as account receivables under financial lease agreements and
account receivables under operation lease agreements. The Bank’s objective is to increase retail loan portion, and
exclude other unrelated businesses. Thus, the shareholders’ equity of GECT after excluding investments in subsidiaries,
commercial finance, and adjusted for the cash pooling is as follows:
According to the audited financial statements as of December 31, 2008:
Bt. 125.00 million
Retained earnings
Bt. 9,375.35 million
Total shareholders’ equity as of December 31, 2008
Less Investments in KCC and TCS
Bt. (931.18) million
Less Investments in subsidiaries to be wound up or carved out from GEMT Entities
Bt. (4.26) million
1
Add Commercial finance
Bt. 141.94 million
Add Cash pooling from other businesses operated by GECT
Bt. 94.26 million
Total shareholders’ equity after non-purchased portion
1
Note:
We have adopted the adjustment figures prepared by KPMG, which conforms with the audited financial
statement as of 31st December 2008 prepared by KPMG. Commercial finance is added back as it was
negative and GECT’s equity value will increase from the carving out of the cash pooling businesses which
has negative equity value as well..
2. Krungsriayudhya Card Co., Ltd.: KCC
According to the audited financial statements as of December 31, 2008, the book value of KCC was as follows:
Retained earnings
Bt. 930.75 million
3. Tesco Card Services Co., Ltd.: TCS
According to the audited financial statements as off December 31, 2008, the book value of TCS was as follows:
Bt. 780.00 million
Retained earnings
Bt. 390.95 million
4. General Card Services Co., Ltd.: GCS
According to the audited financial statements as of December 31, 2008, the book value of GCS was as follows:
Bt. 758.00 million
Retained earnings
Bt. 189.99 million
Bt. 947.99 million
- 40 -
5. Total Services Solution Plc.: TSS
The purchase of TSS shares in this transaction does not include commercial finance, i.e. account receivables under hire
purchase agreements, as the Bank plans to acquire consumer finance related business only, and exclude irrelevant
assets and liabilities in cash pooling activities from TSS. The relevant shareholders’ equity of TSS is detailed as follows:
According to the audited financial statements as of December 31, 2008:
Retained earnings
Bt. 484.70 million
1
Less Commercial finance
Bt. (502.40) million
Total shareholders’ equity after non-purchased portion
Note: 1 We have adopted the adjustment figures prepared by KPMG, which conforms with the audited financial
statement as of 31st December 2008 prepared by KPMG.
From the evaluation of the transaction value with respect to the acquisition portion approved
by the Bank’s Board of Directors only, the fair value of GEMT Core Companies is as follows:
Company
GECT
KCC
TCS
GCS
TSS
Acquisition by BAY
(%)
100.00
50.00
49.00
100.00
100.00
Total
Book value
(Bt. million)
8,801.12
1,015.38
573.77
947.99
1,308.30
12,646.55
The book value of GEMT Core Companies with respect to the acquisition portion approved
by the Bank’s Board of Directors only is Bt. 12,646.55 million.
1.6.1.2 Adjusted Book Value Approach
The shareholders’ equity is adjusted by the value of assets and liabilities as well as the
factors taking place after the date of the financial statements and the increase or decrease in contingent liabilities (if
any). Using this method, the adjustment is made to the audited financial statements as of December 31, 2008 of each of
the GEMT Core Companies. Details are as follows:
The IFA has made the following adjustment:
- Guarantee agreement: GECT has contingent liabilities with the Bank for the issue of letter of guarantee for the
Metropolitan Electricity Authority and others in the total amount of Bt. 1 million.
The book value of GECT after adjustment is as follows:
Shareholders’ equity after non-purchased portion (See 1.6.1.1.)
Less Contingent liabilities
Bt. 1.00 million
Net shareholders’ equity after adjustment
The IFA considers that there is no adjustment to the book value needed.
The book value of KCC is as follows:
Shareholders’ equity as of December 31, 2008
Adjustment
- 41 -
- million
The IFA has made the following adjustment:
-
Investment in subsidiaries: TCS has investments in its subsidiaries, TGIB and TLAB. The investments are recorded
by the equity method in the amount of Bt. 2 million each. However, according to the audited financial statements
dated December 31, 2008 of TGIB and TLAB, both companies had the shareholders’ equity of Bt. (28.32) million
and Bt. 10.78 million respectively, causing a decrease in the value of TCS’s investments in TGIB. We have thus
adjusted the said item to reflect the present value of investments in subsidiaries.
The book value of TCS after adjustment is as follows:
Less Decrease in value of investments in TGIB
Bt. (2.00) million
The IFA considers that no adjustment is necessary.
The book value of GCS after adjustment is as follows:
Adjustment
Bt. 947.99 million
- million
Bt. 947.99 million
5. Total Services Solutions Plc.: TSS
The IFA considers that the adjustment of book value is not necessary.
The book value of TSS after adjustment is as follows:
Shareholders’ equity after non-purchased portion (See 1.6.1.1.)
Adjustment
- million
From the evaluation of the transaction value with respect to the acquisition portion approved
by the Bank’s Board of Directors only, the fair value of GEMT Core Companies are as follows:
Company
GECT
KCC
TCS
GCS
TSS
Acquisition by BAY
(%)
100.00
50.00
49.00
100.00
100.00
Total
Book value
(Bt. million)
8,800.12
1,015.38
572.79
947.99
1,308.30
12,644.58
By the adjusted book value approach, the book value of core GEMT entities with respect to
the acquisition portion approved by the Bank’s Board of Directors only is Bt. 12,644.58 million.
1.6.1.3 Market Comparable Approach
This approach compares the market value and the book value or net profit of each GEMT
Core Companies with companies in similar businesses. The IFA considers that SET-listed companies that are market
comparables of the GEMT Core Companies are AEON Thana Sinsap (Thailand) Plc. (“AEONTS”), Krungthai Card Plc.
(“KTC”), and banks that offer credit card and/or installment loan and/or personal loan services, comprising Bank of
Ayudhya Plc. (“BAY”), Bangkok Bank Plc. (“BBL”), Kasikornbank Plc. (“KBANK”), Siam Commercial Bank Plc. (“SCB”),
Siam City Bank Plc. (“SCIB”), and TMB Bank Plc. (“TMB”). By this method, we have applied two ratios, the price to book
value (P/BV) ratio and the price to earnings (P/E) ratio. The calculation is shown below:
- 42 -
1.6.1.3.1 Price to Book Value (P/BV) Ratio
The book value of the shareholders’ equity is multiplied by the average price to
book value (P/BV) ratio of the market comparables.
The book value of each of the GEMT Core Companies as shown in 1.6.1.1 is
multiplied by the average P/BV ratio of the market comparables over the past 7 days, 15 days, 30 days, 90 days, 180
days, 270 days and 360 days starting from July 8, 2009 (the day before the Bank’s Board of Directors’ approval of the
transaction) and by the proportion of shares to be acquired. The result is tabulated below:
AEONTS
KTC
BAY
BBL
KBANK
SCB
SCIB
TMB
Average P/BV ratio (times)
Fair value (Bt. million)
GECT
KCC
TCS
GCS
TSS
Total
Source: Setsmart
7 days
1.45
0.35
1.03
1.13
1.34
1.86
0.82
0.79
1.10
15 days
1.47
0.35
0.99
1.12
1.33
1.87
0.78
0.80
1.09
9,655
1,114
629
1,040
1,435
13,873
9,577
1,105
624
1,032
1,424
13,762
Average P/BV ratio over retroactive period
30 days
90 days
180 days
1.51
1.26
1.20
0.35
0.33
0.34
0.96
0.79
0.75
1.08
0.94
0.87
1.31
1.12
1.09
1.88
1.66
1.58
0.75
0.57
0.48
0.80
0.60
0.57
1.08
0.91
0.86
9,503
1,096
619
1,024
1,413
13,655
7,981
921
520
860
1,186
11,469
7,565
873
493
815
1,125
10,870
270 days
1.35
0.49
0.99
1.01
1.25
1.79
0.58
0.75
1.03
360 days
1.58
0.63
1.20
1.13
1.46
2.02
0.68
0.96
1.21
9,027
1,041
588
872
1,342
12,971
10,621
1,225
692
1,144
1,579
15,262
The value of share of each of the GEMT Core Companies with respect to the acquisition
portion approved by the Bank’s Board of Directors only is in the following range:
Company
GECT
KCC
TCS
GCS
TSS
Total
Acquisition by BAY
(%)
100.00
50.00
49.00
100.00
100.00
Value range
(Bt. million)
7,565 – 10,621
873 – 1,225
493 - 692
815 – 1,144
1,125 – 1,579
10,870 – 15,262
By using the average P/BV ratio in a range of 0.86 - 1.21 times, the fair value of core GEMT
entities with respect to the acquisition portion approved by the Bank’s Board of Directors ranges between Bt. 10,870
million and Bt. 15,262 million.
1.6.1.3.2 Price to Earnings (P/E) Ratio
The net profit is multiplied by the average P/E ratio of the market comparables.
The net profit of each of the GEMT Core Companies stated in the consolidated
financial statements for the year 2008 is multiplied by the average P/E ratio of the market comparables over the pass 7
days, 15 days, 30 days, 90 days, 180 days, 270 days and 360 days starting from July 8, 2009 (the day before the
Bank’s Board of Directors’ approval of the transaction) and by the proportion of share to be acquired. The result is
tabulated below:
- 43 -
Average P/E ratio over retroactive period
30 days
90 days
180 days
6.84
5.49
5.11
5.49
4.39
4.20
16.91
13.70
12.11
9.88
8.35
7.70
10.47
8.47
7.79
12.24
10.24
9.23
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.31
8.44
7.69
7 days
15 days
270 days
360 days
AEONTS
6.70
6.74
5.70
6.43
KTC
5.44
5.38
5.60
7.10
BAY
18.19
17.45
12.46
12.46
BBL
10.36
10.24
8.71
9.72
KBANK
10.71
10.66
8.75
10.04
SCB
12.15
12.19
10.31
12.32
SCIB
n.a.
n.a.
n.a.
n.a.
TMB
n.a.
n.a.
n.a.
n.a.
Average P/E ratio (times)1
10.59
10.44
8.59
9.68
Fair value
(Bt. million)
GECT
4,767
4,699
4,637
3,798
3,461
3,865
4,354
KCC
266
262
259
212
193
215
243
TCS
499
492
486
398
362
405
456
GCS2
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
TSS
3,714
3,662
3,613
2,960
2,697
3,012
3,393
Total
9,246
9,116
8,994
7,367
6,714
7,496
8,447
1
Notes: The P/E of SCIB and TMB is not available due to their operating at a net loss, we thus not consider P/E of SCIB and TMB in the
calculation.
2
Since GCS incurred loss in 2008, this approach is not applicable to the company.
Source: Setsmart
The value of share of each of the GEMT Core Companies with respect to the acquisition
portion approved by the Bank’s Board of Directors is in the following range:
Company
GECT
KCC
TCS
GCS
TSS
Total
Acquisition by BAY
(%)
100.00
50.00
49.00
100.00
100.00
Value range
(Bt. million)
3,461 – 4,767
193 - 266
362 - 499
n.a.
2,697 – 3,714
6,714 – 9,246
Using the average P/E ratio range of 7.69 – 10.59 times, the fair value of core GEMT entities
with respect to the acquisition portion approved by the Bank’s Board of Directors ranges between Bt. 6,714 million –
9,246 million.
1.6.1.4 Discounted Cash Flow Approach
This approach takes into account the companies’ future operation results. The share value
is estimated by calculating the expected free cash flow and terminal value using the appropriate discount rate.
The IFA has selected the free cash flow to equity (FCFE) method instead of the free cash
flow to firm (FCFF) method as the GEMT group is categorized into the industry sector that requires liabilities
management. Interest on liabilities is considered cost of operations that leads to interest spread. The company’s gross
margin is generated from interest spread between interest rate on credit card and personal loan businesses and interest
expense on liabilities. Therefore, the FCFE method is more appropriate to the nature of business of the GEMT group
than the FCFF method which focuses on asset management.
IFA estimates cash flow from equity from the projected financial statements for the year
2009-2013 of each of the GEMT group, assuming each company’s operations on a going concern basis without any
material changes and under the current economic and business circumstances.
- 44 -
Assumptions of financial projection

Interest income
Interest income of GECT is divided into two groups, installment loan and personal loan.
Loans receivable and Interest income rate in the past years classified by credit type are presented in the table below:
Credit type1
2006
2007
2008
2
Installment loan
NEA (Bt. million)
13,719
15,138
16,238 3
4
Interest rate (% p.a.)
21.75
23.00
21.93
Personal loan
NEA (Bt. million)
12,944
11,951
7,730
24.90
24.67
23.56
Total
NEA (Bt. million)
26,663
27,089
23,968
23.29
23.77
22.56
Notes: 1 As this transaction does not include commercial finance, i.e. operation lease agreements and financial lease agreements, interest
income from these loans is not hereby factored in.
2 Net earning assets (NEA) are loans receivable deducted by unearned interest before allowance for doubtful accounts.
3 Installment loans in 2008 comprised installment loans of Bt. 15,837 million and credit card loans of Bt. 401 million. The projection
combines the two amounts as GECT has issued 3-in-1 FirstChoice card which contains credit card, installment loan and cash
advance features.
4 Interest rate is the interest rate in a particular year to the average NEA in the current year and that of the previous year.
Changes in the overall installment loans receivable depend on the economic growth,
household income and spending, accounts of the existing and new borrowers, and debt payment (run-off). The debt
payment consists of principal repayment and bad debt write-off. The number of shops accepting installment loan cards
and branch expansion of these shops also impacted on changes in installment loans. It is expected that installment
loans this year will be affected by the economic downturn. The IFA has determined that the growth of installment loans
in 2009 to be equal to that of 2008 due to the economic impacts and negative factors that continue from 2008. For 20102013, the installment loan growth is projected to be equivalent to the average growth of 2006-2008 which reflects the
expansion of GECT’s installment loans in the past. Interest rate over the projected period is equal to the average interest
rate during 2006-2008 which presents its income earning ability in the past.
With respect to the Office of the National Economic and Social Development Board’s report1,
the Thai economy is projected to start to gradually recover from the trough experienced during the first half of the year.
The main factors attributing to this improvement is due to the recovery of the world economy, the stimulus packages
launched by the government, the decline of price of goods and services and the low interest rate. The said report is also
consistent with Kasikorn Research Center2 who expected GDP in Q2/2009 to slightly improved as a result of the
accelerated disbursement of public consumption through stimulus package, including policy to deal with unemployment
to mitigate layoffs. Kasikorn Research Center expected that GDP in Q3/2009 will decline at a decreasing rate and turn
positive in Q4/2009, provided that government expenditure and disbursement stimulus packages occurs as planned. It
is also expected that the Thai economy will grow between 2% to 3% in 2010. Furthermore, Siam City Research3 has
forecasted that the Thai economy in 2010 will stabilized compared to 2009 which in turn will enhance the export sector.
The Thai economy in 2010 is forecasted to have positive growth in the range of 0.5% to 2.5%. Economic growth will lead
to an increase in household income which in turn will result to higher spending rate.
The growth of personal loans tends to slow down as GECT plans to combine personal loan,
installment loan and credit card features into one card. This will lower the growth of “QuikCash” which is the only
personal loan product of the company. As for Tesco personal loan, its customers mainly are people shopping at Tesco
1
Source: The Office of the National Economic and Social Development Board dated May 25, 2009
Source: Kasikorn Research Center, K-Econ Analysis No. 2581 dated July 31, 2009
3
Source: Bangkok Business Online, dated July 2, 2009
2
- 45 -
Lotus stores. The loan growth thus relates to the expansion of Tesco Lotus branches. The growth of personal loan
during 2009-2013 is expected equal to the average growth during 2007-2008 to reflect a decline in personal loan
according to the company’s policy. Interest rate over the projected period is equal to the average interest rate of 20062008 which presents its income earning ability in the past.
Assumption on the growth of NEA and interest rate classified by credit type:
Type
Past
2007
2006
Installment loan
Growth of NEA (%)
Personal loan
Growth of NEA (%)
Total loans
Growth of NEA (%)
2008
2009
Projection
2011
2010
2012
2013
27.45
21.75
10.34
23.00
7.27
21.93
7.27
21.22
15.02
21.22
15.02
21.22
15.02
21.22
15.02
21.22
23.05
24.90
(7.67)
24.67
(35.32)
23.56
(21.50)
24.38
(21.50)
24.38
(21.50)
24.38
(21.50)
24.38
(21.50)
24.38
25.28
23.29
1.60
23.77
(11.52)
22.56
(2.01)
22.14
5.59
21.93
8.01
21.74
9.92
21.60
11.38
21.49
The table below summarizes the percentage of NEA of installment loan and personal loan
during 2006-2008 and during the projected period of 2009-2013.
NEA (Bt. million)
- Installment loan
- Personal loan
Total NEA
% of NEA
- Installment loan
- Personal loan
Total percentage
2006
Past
2007
Projection
2011
2008
2009
2010
13,719
12,944
26,663
15,138
11,951
27,089
16,238
7,730
23,968
17,418
6,068
23,486
20,034
4,764
24,798
23,044
3,740
26,783
26,505
2,936
29,441
30,486
2,305
32,791
51.45
48.55
100.00
55.88
54.12
100.00
67.75
32.25
100.00
74.16
25.84
100.00
80.79
19.21
100.00
86.04
13.96
100.00
90.03
9.97
100.00
92.97
7.03
100.00
2012
2013
The IFA employs the average NEA at the beginning and the end of period as the basis for
calculating interest income on installment loan and personal loan. The rationale behind this is that the interest income is
earned during the year and thus if the NEA at the end of period is used, the projected interest income may be
inaccurate.
The interest income classified by credit type is as follows:
Unit: Bt. million
Past
2007
Projection
2011
2006
2008
2009
2010
2012
2013
Installment loan
Average NEA
12,242
14,429
15,688
16,828
18,726
21,539
24,774
28,496
Interest rate on average NEA (% p.a.)
21.75
23.00
21.93
21.22
21.22
21.22
21.22
21.22
1
Interest income
2,662
3,318
3,440
3,572
3,974
4,571
5,258
6,048
Personal loan
Average NEA
11,732
12,448
9,841
6,899
5,416
4,252
3,338
2,620
Interest rate on average NEA (% p.a.)
24.90
24.67
23.56
24.38
24.38
24.38
24.38
24.38
Interest income
2,921
3,071
2,319
1,682
1,320
1,037
814
639
Total interest income
5,583
6,389
5,759
5,254
5,295
5,608
6,072
6,687
Note: 1 Interest income on installment loan in 2008 comprised interest income on installment loan and credit card loans of Bt. 3,437
million and Bt. 3 million respectively. The projection combines the two amounts of interest income as GECT has issued 3-in-1
FirstChoice card which contains credit card, installment loan and cash advance features.
- 46 -

Non-interest income
Non-interest income consists of:
1) Collection and service fee income – This includes late payment fee, credit utilization fee,
front-end fee, etc. Collection and service fee income is set at equal to the average rate of collection fees and service
income to the average NEA over the retroactive periods multiplied by the average NEA of the year. Details are as
follows:
Unit: Bt. million
Past
2007
4.04
2006
4.46
2008
4.85
2009
4.44
2010
4.44
Projection
2011
4.44
2012
4.44
% of collection fees and service income
to the average NEA
Fees and service income (Bt. million)
1,070
1,085
1,239
1,055
1,073
1,146
1,250
- Collection fee income
n.a.
629
553
541
551
588
641
- Service fee income
n.a.
456
686
514
522
558
608
Note: The division of collection fees and service fees is based on the past data obtained from the assignee of the Bank.
2013
4.44
1,383
710
673
2) Management fee income - As GECT handles some common operations for the whole
GEMT group such as risk management, finance, operations, and information technology, to save the management cost
of the group, it accordingly charges management fee from the subsidiaries and related companies. After this
transaction, GECT will continue handling these tasks for KCC, TCS and GCS. As such, management and service
expenses of KCC, TCS and GCS will be management fee income of GECT. (See the assumption on management and
service expenses of KCC, TCS and GCS.)
Unit: Bt. million
2006
165
91
91
347
Management fee income from KCC
Management fee income from TCS
Management fee income from GCS
Total management fee income
Past
2007
175
110
437
772
2008
189
90
359
638
2009
174
95
274
543
2010
180
97
273
550
Projection
2011
184
102
279
565
2012
188
107
285
581
2013
193
113
291
597
3) Interest income – GECT earns interest income on loans to related companies.
However, after this transaction, the Bank will replace GECT in providing financial support to related companies. GECT
will no longer generate interest income on loans to related companies. The average interest rate in 2009 is projected at
5.95%, which is equal to the average interest rate over the past three years on outstanding loans as of December 31,
2008, computed up to the end of September 2009 (expected closing date).
Unit: Bt. million
2006
6.24
1,021
Interest income
entering into this transaction.
4)
Past
2007
5.53
962
2008
6.10
860
2009
5.95
237
Projection
2010
2011
-
2012
2013
-
-
Dividend income - GECT will earn no dividend income from its subsidiaries after
5) Other income - Other income such as sales promotion income is set at equal to
the average of other income to average NEA over the past three years multiplied by the average NEA of the given year.
Details are as follows:
% of other income to average NEA
Other income (Bt. million)
2006
0.15
36
Past
2007
0.10
26
2008
0.07
19
- 47 -
2009
0.11
25
Projection
2010
2011
0.11
0.11
26
28
2012
0.11
30
2013
0.11
33

Interest expense
The amount of loans is determined by loan growth and leverage ratio at 9.77 times, which is
the leverage ratio of the market comparables of GECT, namely AEONTS, KTC, and banks that offer credit card and/or
installment loan and/or personal loan such as BAY, BBL, KBANK, SCB, SCIB and TMB in 2008.
Unit: time
Leverage Ratio
AEONTS
6.75
KTC
8.42
BAY
8.73
BBL
9.55
KBANK
11.47
SCB
9.71
SCIB
10.18
TMB
13.36
Avg.
9.77
To evaluate the funding cost, one should take into consideration the term length of loan and
creditworthiness of the Company. For GEMT, the loan tenor matching its own asset is 1 - 3 years. At present, the rate of
return of the government bond with the same tenor is between 1.14% – 2.38% and spread for companies with
creditworthiness of AA and A for issuing debt securities with maturity of not more than 3 years are 0.99% and 1.84%,
respectively. As a result, possible cost of funded would be between 2.13% - 4.22%. Moreover, based on the Bank’s
notes of financial statements ended March 31, 2009, the Bank has supported its subsidiaries at interest rate of not more
than 4%. However, we have projected GECT’s cost of fund based on its interest expense in 2008 to reflect the current
cost of fund.
Nevertheless, as at 31st December 2008, the total loans from related parties was Bt. 27,033
million, of which Bt. 17,382 million were from facilities provided by GE with the condition of commitment fees on any
unutilized portion at the rate of 0.25% per annum and guarantee fees on any utilized portion at the rate of 1% per
annum. Since the IFA has set the assumption of amount of loans based on loan growth and leverage ratio, the amount of
loan to be drawdown will be equal to the actual amount of loan drawdown. As a result, the commitment fess on any
unutilized portion will not be incurred. Furthermore, since the Bank will replace GE in providing financial support to
GECT, GECT will have no burden regarding the guarantee fees. Consequently, interest expense is projected based on
the interest expense occurred in 2008 deducted by commitment and guarantee fee, resulting net interest rate of 4.56%
per annum.
Interest expense (% p.a.)
Interest expense (Bt. million)
Note:
1
2006
5.78
2,031
Past
2007
5.28
1,978
2008
5.36
1,726
2009
4.651
1,071
2010
4.56
872
Projection
2011
4.56
932
2012
4.56
1,013
2013
4.56
1,117
Interest expense in 2009 is a total sum of interest expense paid to the existing lenders and the Bank while
that of 2010-2013 is interest paid only to the Bank, which will be the sole lender of GECT.
Interest expense rate is conservatively projected. After entering into the transaction, the Bank
will support its subsidiaries with interest expense rate of not more than 4% p.a. (based on Bank’s financial statements as
of Q1 2009)

Doubtful expense
The company has a policy to set allowance for doubtful accounts for the expected nonrecoverable based on the past collection record and review of the receivable status. Doubtful expense in 2007 was
higher than that of 2006 and 2008 due to the BOT’s change of minimum payment of credit card customers from 5% to
10%. This also affects installment loan customers who usually also hold credit card. When customers are required to
make more credit card payment, their ability to service installment debts has been lowered, which necessitates greater
provision expense. The IFA has set provision expense over the projected period in the amount equal to the percentage
of doubtful expense to the average NEA of 2006 and 2008 multiplied by the average NEA of the given year. The
amounts are shown in the table below:
% of doubtful expense to average NEA
Doubtful expense (Bt. million)
2006
11.91
2,854
Past
2007
15.90
4,273
- 48 -
2008
10.74
2,741
2009
11.32
2,686
2010
11.32
2,733
Projection
2011
11.32
2,920
2012
11.32
3,183
2013
11.32
3,523

General and administrative expenses
Some items of the general and administrative expenses of GECT are expenses paid to the
parent company on a sharing basis such as management and service expenses. However, after this transaction, GECT
will not incur expenses to be paid to the parent company. The remaining general and administrative expenses are as
follows:
1)
Variable costs
- Collection expense: GECT has engaged TSS as debt collector to collect late
payment fee from customers. The service fee payable to TSS is equal to the late payment fee charged by GECT.
Normally, TSS is unable to collect all payments from customers as some negotiate for waiver or reduction. As a result,
collection expense of GECT is higher than collection income, representing approximately 120% of such collection
income (based on the average of the past data obtained from the assignee of the Bank). Therefore, collection expense
to be paid to TSS is set at 120% of collection income over the projected period.
- Facilities and service charge expenses, marketing and advertising expenses, tax
and duties, customer service and collection expenses, and other expenses are equal to the percentage of each
expense item to the average NEA over the past three years from 2006 to 2008 multiplied by the average NEA of the
given year. Details are as follows:
Unit: % of average NEA
Facilities and service charge expenses
Marketing and advertising expenses
Tax and duties
Customer service and collection expenses
Others
2006
0.38
0.73
1.57
2.01
0.98
Past
2007
0.56
0.72
1.06
0.20
0.93
2008
0.65
0.89
1.02
0.86
0.97
2009
0.53
0.78
1.22
1.02
0.96
2010
0.53
0.78
1.22
1.02
0.96
Projection
2011
0.53
0.78
1.22
1.02
0.96
2012
0.53
0.78
1.22
1.02
0.96
2013
0.53
0.78
1.22
1.02
0.96
2) Fixed costs comprise personnel expenses, office management expenses and rent.
Personnel expenses in 2009 are set to decrease by 15% due to the lay-off in early 2009 and then to increase by 2% per
year throughout the remaining projected period, which is close to the growth rate of the basic consumer price index
during 2006-2008.
The office management expenses and rent are set to grow by 2% per year throughout
the projected period, which is close to the growth rate of the basic consumer price index during 2006-2008.
Unit: % of growth
Personnel expenses
Office management expenses
Rent
2009
(15.00)
2.00
2.00
- 49 -
2010
2.00
2.00
2.00
Projection
2011
2.00
2.00
2.00
2012
2.00
2.00
2.00
2013
2.00
2.00
2.00
Summary of general and administrative expenses is tabulated below:
Unit: Bt. million
Past
Projection
2006
2007
2008
2009
2010
2011
2012
2013
Variable costs
1,478
2,196
1,890
1,748
1,779
1,900
2,071
2,292
1
Collection expenses
1,132
640
677
688
735
802
887
Facilities and service charge expenses
92
150
167
126
128
137
150
166
Marketing and advertising expenses
176
194
228
186
189
202
220
244
Tax and duties
376
285
260
288
293
313
342
378
Customer service and collection expenses
482
55
219
243
247
264
288
319
Others
352
380
376
228
232
248
270
299
Fixed costs
788
1,123
1,113
989
1,008
1,028
1,049
1,070
Personnel expenses
545
822
863
734
748
763
778
794
Office management expenses
188
211
167
170
174
177
181
184
Rent
55
90
83
85
86
88
90
92
Total operating expenses
2,266
3,319
3,003
2,737
2,787
2,929
3,120
3,362
Note: 1 Collection expenses during 2006-2008 is not entirely the payments to TSS. However, for the projected period of 2009-2013, the
amount is the entire payments to TSS.

Depreciation
Depreciation of leasehold improvement and equipment is recorded as expense in the
statement of income by the straight-line method, based on the useful life of the assets as follows:
Unit: Bt. million
Depreciation
2009
139

2010
89
2011
49
2012
54
2013
59
Capital expenditure
Capital expenditure in the current year is equal to depreciation expense of leasehold
improvement and equipment in the past year. Therefore, capital expenditure is equivalent to the expense substituting
the assets depreciated in the previous year to ensure the usable condition of property and equipment.
Unit: Bt. million
Capital expenditure
2009
167

2010
139
2011
89
2012
49
2013
54
Capital structure policy
The IFA has established the capital structure based on those of the market comparables of
GECT, namely AEONTS, KTC, BAY, BBL, KBANK, SCB, SCIB and TMB whose leverage ratio averaged 9.77 times in
2008. The leverage ratio of GECT is thus set at 9.77 times throughout the projected period.

Investments in other companies with shareholding by GECT
GECT owns 5,000 shares in QGIB or 25% of total paid-up shares at par value of Bt. 100
each, and 5,000 shares in QLAB or 25% of total paid-up shares at par value of Bt. 100 each. For conservative
projection, the IFA sets value of the said investments at zero as the management plans to wind down these two
companies.

calculation is as below:
Discount rate
The cost of equity (Ke) is projected based on the Capital Asset Pricing Model (CAPM). The
Ke
Ke
Rf
=
is
is
Rf + βL (Rm – Rf)
Return on equity
Risk free rate, which is 3.70% based on the average yield of the 10-year
government bond as of July 15, 2009 (source: The Thai Bond Market
Association)
- 50 -
Rm
is
βL
is
Average rate of return on investment in the stock exchange over the past 10
years from 1998 to 2008, which is 9.17%, reflecting the average rate of return
covering both the boom and bust market conditions.
Leveraged Beta calculated by:
βL
= βU [1 + (1-t) * Target D/E]
βU
= Unleveraged Beta, average of the market comparables of
GECT, namely AEONTS, KTC, BAY, BBL, KBANK, SCB,
SCIB, and TMB, which is 0.1465.
=
βcomparables
[1+ (1-t) * D/Ecomparables]
βcomparables
0.4990
0.6333
1.4746
0.9891
1.1413
1.2002
1.1871
1.3436
D/Ecomparables
t
βU
0.0932
0.1023
0.2299
0.1416
0.1370
0.1692
0.1599
0.1392
0.1465
AEONTS
6.2195
30%
KTC
7.4180
30%
BAY
7.7326
30%
BBL
8.5506
30%
KBANK
10.4686
30%
SCB
8.7082
30%
SCIB
9.1767
30%
TMB
12.3637
30%
คาเฉลี่ย
8.8297
Source: βcomparables and D/E comparablesfrom Bloomberg
t
= Corporate income tax of 30%
Target D/E = Total interest-bearing liabilities to shareholders’ equity, which
is 8.83 times, the average interest-bearing liabilities to
shareholders’ equity of AEONTS, KTC, BAY, BBL, KBANK,
SCB, SCIB, and TMB.
Leveraged Beta is obtained from adjustment of Unleveraged Beta using a 30% corporate
income tax on income before tax and the average debt to equity ratio of the market comparables as follows:
βL = 0.1465 [1 + (1-0.30)*8.83] = 1.0522
The result is Leveraged Beta of 1.0522 times, which is used in the calculation of return on
equity of the company as below:
Ke = 3.70% + 1.0522 (9.17% - 3.70%)
= 9.45%
Cash flows to equity from the financial projection based on the above assumptions are as
follows:
Unit: Bt. million
Net profit
Add back non-cash items:
Depreciation
Doubtful expense
Changes of working capital:
Loans receivable
Others
Capital expenditure
Net debt repayment
Cash flow to equity
2006
596
2007
279
2008
450
- 51 -
2009
509
2010
429
2011
451
2012
517
2013
592
139
2,686
89
2,733
49
2,920
54
3,183
59
3,523
(2,326)
(332)
(167)
2,571
3,108
(3,901)
114
(139)
1,057
371
(4,723)
176
(89)
1,600
366
(5,555)
232
(49)
2,053
410
(6,528)
294
(54)
2,601
457
The terminal value of GECT figured out by the perpetual growth formula is as follows:
Terminal value
= Cash flow of equity in 2013 x (1+g) / (Ke – g)
Whereas
g
= Fixed growth rate of 1%
Ke
= 9.45%
Shareholders’ equity = Present value of free cash flow of equity + present value of the
terminal value of GECT
From the calculation, the present value of the terminal value is Bt. 3,475 million. The valuation
of GECT based on the above data and assumptions is Bt. 7,480 million.

Interest income
Interest income of KCC is divided into two groups, i.e. credit card loan and personal loan.
Loans receivables and interest income in the past classified by credit type is presented in the table below:
Type
2006
2007
2008
NEA1 (Bt. million)
13,730
13,776
13,594
2
13.68
13.34
n.a.3
Personal loan
NEA (Bt. million)
1,993
2,008
2,088
23.20
21.48
n.a.3
Total loans
NEA (Bt. million)
15,723
15,784
15,682
14.69
14.37
14.41
Notes: 1 Net earning assets (NEA) is loans receivable deducted by unearned interest before allowance of doubtful accounts.
2
Interest rate is interest rate in a particular year to the average NEA in the current year and that of the previous year.
3
There was no data on interest income classified by type of loan in 2008.
Credit card loan
Growth of credit card loan and personal loan of KCC is attributable to increase of distribution
channels and target groups as well as branches of the Bank, number of customers at the Bank, expansion of Home Pro
branches, and increase of SMEs. However, the credit growth in 2008 decelerated due to the economic recession.
The IFA projects the credit card loan growth in 2009 to be the same as that in 2008 as
impacts from the economic downturn are expected to continue. The projection for the year 2009-2013 is based on the
average growth of credit card loan during 2006-2008. The interest rate is estimated at 13.51% per year, which is the
average interest rate in 2006-2007. In terms of personal loan, the growth rate over 2009-2010 is projected at equal to the
average growth of 2007-2008. The growth rate of 2011-2013 is zero since the company has a policy to decrease
personal loan. The interest rate is conservatively projected at 21.00%. The interest rate on total loans is close to the past
record.
Assumption on the growth of NEA and interest rate classified by credit type:
2006
Credit card loan
Growth of NEA (%)
Personal loan
Growth of NEA (%)
Total loans
Growth of NEA (%)
Past
2007
2008
2009
2010
Projection
2011
2012
2013
9.15
13.68
0.33
13.34
(1.32)
n.a.
(1.32)
13.51
2.72
13.51
2.72
13.51
2.72
13.51
2.72
13.51
77.54
23.20
0.78
21.48
3.99
n.a.
2.38
21.00
2.38
21.00
21.00
21.00
21.00
14.75
14.69
0.39
14.37
(0.65)
14.41
(0.83)
14.51
2.68
14.51
2.35
14.48
2.36
14.46
2.37
14.44
- 52 -
The table below summarizes the percentage of NEA of credit card loan and personal loan
during 2006-2008 and during the projected period of 2009-2013:
NEA (Bt. million)
- Credit card loan
- Personal loan
Total NEA
% of NEA
- Credit card loan
- Personal loan
Total percentage
2006
Past
2007
2008
13,730
1,993
15,723
13,776
2,008
15,784
13,594
2,088
15,682
13,415
2,138
15,552
13,780
2,189
15,968
14,155
2,189
16,343
14,540
2,189
16,729
14,936
2,189
17,125
87.33
12.67
100.00
87.28
12.72
100.00
86.69
13.31
100.00
86.25
13.75
100.00
86.29
13.71
100.00
86.61
13.39
100.00
86.92
13.08
100.00
87.22
12.78
100.00
2009
2010
Projection
2011
2012
2013
The IFA uses the average NEA at the beginning and the end of period as the basis for
calculating interest income on credit card loan and personal loan. The rationale behind this is that the interest income is
inaccurate.
Unit: Bt. million
Credit card loan
Average NEA
Interest rate to average NEA (% p.a.)
Interest income
Personal loan
Average NEA
Interest income

2006
Past
2007
2008
2009
2010
Projection
2011
13,154
13.68
1,800
13,753
13.34
1,834
13,685
N/A
N/A
13,504
13.51
1,824
13,597
13.51
1,837
1,557
23.20
361
2,161
2,000
21.48
430
2,264
2,048
N/A
N/A
2,267
2,113
21.00
444
2,268
2,163
21.0 0
454
2,291
2012
2013
13,967
13.51
1,887
14,347
13.51
1,938
14,738
13.51
1,991
2,189
21.00
460
2,347
2,189
21.00
460
2,398
2,189
21.0 0
460
2,451
Non-interest income
Non-interest income of KCC is divided into four groups as follows:
1) Commission income is charged on each credit card use for goods or service payment.
The commission income is equal to the average of the commission income to the average NEA in the past periods
multiplied by the average NEA of the given year. Details are as follows:
Commission income to average NEA (%)
Commission income (Bt. million)
2006
4.25
625
Past
2007
4.72
743
2008
4.72
743
2009
4.56
713
2010
4.56
719
Projection
2011
4.56
737
2012
4.56
755
2013
4.56
772
2) Cash advance service income is charged from customers who withdraw cash advance
from ATM. The cash advance fee income is equal to the average cash advance fee income to the average NEA over the
past three years multiplied by the average NEA of the given year.
Cash advance service income to average NEA (%)
Cash advance service income (Bt. million)
2006
0.94
139
Past
2007
0.94
148
- 53 -
2008
0.93
146
2009
0.94
146
2010
0.94
148
Projection
2011
2012
0.94
0.94
151
155
2013
0.94
159
3) Collection fee income is fee collected from customers who make late payment. The
collection fee income is equal to the average of collection income to the average NEA in the past periods multiplied by
the average NEA of the given year.
Collection income fee to average NEA (%)
Collection income (Bt. million)
2006
0.49
72
Past
2007
1.16
183
2008
1.03
163
2009
1.10
172
Projection
2010
2011
1.10
1.10
173
177
2012
1.10
182
2013
1.10
186
4) Other income includes marketing service income, master service income and annual fee.
Other income is estimated at equal to the average of other income to the average NEA over the past three years
multiplied by the average NEA of the given year.
Other income to average NEA (%)
2006
0.68
100
Past
2007
0.53
83
2008
0.98
155
2009
0.63
99
Projection
2010
2011
0.63
0.63
99
102
2012
0.63
104
2013
0.63
107
Projection
2011
737
151
177
102
1,168
2012
755
155
182
104
1,195
2013
772
159
186
107
1,224
The projected non-interest income is summarized below:
Unit: Bt. million
Commission income
Cash advance fee income
Collection income
Other income
Total income

2006
625
139
72
100
936
Past
2007
743
148
183
83
1,112
2008
743
146
163
155
1,206
2009
713
146
172
99
1,129
2010
719
148
173
99
1,139
Interest expense
The amount of loans is determined by loan growth and the leverage ratio at 9.77 times, which
is the leverage ratio in 2008 of the market comparables of KCC, namely AEONTS, KTC, and banks that offer credit card
and/or installment loan and/or personal loan such as BAY, BBL, KBANK, SCB, SCIB, and TMB.
As at 31st December 2008, the total loans from related parties was Bt. 12,764 million, of
which Bt. 1,764 million were from facilities provided by GE with the condition of commitment fees on any unutilized
portion at the rate of 0.25% per annum. Since the IFA has set the assumption of amount of loans based on loan growth
and leverage ratio, the amount of loan to be drawdown will be equal to the actual amount of loan drawdown. As a result,
the commitment fess on any unutilized portion will not be incurred. Consequently, interest expense is projected based
on the interest expense occurred in 2008 deducted by commitment fee, resulting net interest rate of 5.68% per annum.
Past
Projection
2006
2007
2008
2009
2010
2011
2012
2013
1
6.69
6.15
5.72
5.70
5.68
5.68
5.68
5.68
791
782
728
730
742
761
778
796
Note: 1
Interest expense in 2009 is a total sum of interest expense paid to the existing lenders and the Bank while that of 2010-2013 is
interest paid only to the Bank, which will be the sole lender of KCC.
Interest expense rate is conservatively projected. After entering into the transaction, the Bank
will support its subsidiaries with interest expense rate of not more than 4% p.a. (based on Bank’s financial statements as
of Q1 2009)
- 54 -

Doubtful expense
The company has a policy to set allowance of doubtful accounts for the expected nonrecoverable based on the past collection record and review of the receivable status. Doubtful expense in 2007 was
10%. The IFA has set provision expense over the projected period in the amount equal to the percentage of doubtful
expense to the average NEA of 2006 and 2008 multiplied by the average NEA of the given year. The amounts are
shown in the table below:

2006
6.01
884
Past
2007
8.23
1,296
2008
5.99
942
2009
6.00
937
2010
6.00
945
Projection
2011
6.00
969
2012
6.00
992
2013
6.00
1,015
The general and administrative expenses consist of:
1) Variable costs
- Collection expense: KCC has engaged TSS as debt collector to collect late payment
fee from customers. Collection expense paid to TSS is approximately 128% of the collection fee income (based on the
average of the past data obtained from the assignee of the Bank). Therefore, collection expense to be paid to TSS is set
at 128% of collection fee income throughout the projected period.
- Marketing expenses, management service expense, and other expenses are set
equal to the percentage of each expense item to the average NEA over the past three years from 2006 to 2008
Past
Projection
2006
2007
2008
2009
2010
2011
2012
2013
Marketing expenses
2.44
2.91
4.98
3.44
3.44
3.44
3.44
3.44
1
Management service expense
1.12
1.11
1.19
1.14
1.14
1.14
1.14
1.14
2
Others
1.53
2.31
2.31
2.05
2.05
2.05
2.05
2.05
Notes: 1 Management service expense of KCC is management fee income of GECT (see assumptions on GECT’s management fee income).
2
Other variable costs are advisory fee, tax and duties, etc.
2) Fixed costs include personnel expenses and office maintenance and are set to grow 2%
per year throughout the remaining projected period.
Unit: % growth rate
Personnel expenses
Office maintenance
2009
2.00
2.00
2010
2.00
2.00
Projection
2011
2.00
2.00
2012
2.00
2.00
2013
2.00
2.00
3) One time charge is card replacement fee arising from the cancellation of existing cards
bearing the GE logo. The charge is expected at Bt. 72 million, to be paid out by 2009.
Unit: Bt. million
2009
One time charge
2010
72
- 55 -
Projection
2011
-
2012
-
2013
-
-
Unit: Bt. million
Past
2006
2007
2008
Variable costs
826
1,219
1,572
Collection expenses
77
221
221
Marketing expenses
358
459
794
Management service expense 1
165
175
189
Other expenses
225
364
368
Fixed costs
196
188
205
Personnel expenses
55
40
63
Office maintenance
141
148
142
One time charge
Total general and administrative expenses
1,022
1,407
1,777
1
Note: Management and service expense of KCC is management fee income of GECT

2009
1,232
219
526
174
313
209
64
145
72
1,513
2010
1,267
221
543
180
323
213
66
148
1,480
Projection
2011
1,299
227
556
184
331
218
67
151
1,517
2012
1,330
232
570
188
339
222
68
154
1,551
2013
1,361
238
583
193
347
226
70
157
1,587
Depreciation
Depreciation of fixtures and equipment is recorded as expense in the statement of income
by the straight-line method, based on the useful life of the assets as follows:
Unit: Bt. Million
Depreciation
2009
2

2010
2
2011
3
2012
3
2013
3
Capital expenditure
Capital expenditure in the current year is equal to depreciation of fixtures and equipment
written off in the past year. Therefore, capital expenditure is tantamount to the expense substituting the assets amortized
in the previous year.
Unit: Bt. million
Capital expenditure
2009
3

2010
2
2011
2
2012
3
2013
3
KCC, namely AEONTS, KTC, BAY, BBL, KBANK, SCB, SCIB, and TMB whose leverage ratio averaged 9.77 times in
2008. The leverage ratio of KCC is thus set at 9.77 times throughout the projected period.

Discount rate
The cost of equity (Ke) is projected based on the Capital Asset Pricing Model (CAPM) using
the same calculation formula as that for GECT. The KE is estimated to be 9.45.
follows:
Cash flow to equity from the financial projection based on the above assumptions are as
Unit: Bt. million
Net profit
Depreciation and amortization
Doubtful expense
Loans receivable
Others
Capital expenditure
Net debt repayment
Cash flow to equity
2006
185
2007
(20)
2008
50
- 56 -
2009
193
2010
181
2011
188
2012
190
2013
193
7
937
8
945
3
969
3
992
3
1015
(835)
84
(3)
100
483
(1,370)
20
(2)
366
148
(1,327)
21
(2)
312
163
(1,342)
20
(3)
306
166
(1,389)
22
(3)
327
168
The terminal value of KCC figured out by the perpetual growth formula is as follows:
Terminal value
= Cash flows to equity in 2013 x (1+g) / (Ke – g)
g
Ke
= 9.45%
Shareholders’ equity = Present value of cash flow to equity + present value of the
terminal value of KCC
Whereas
The present value of the terminal value is Bt. 1,276 million. Based on the above data and
assumptions, the valuation of KCC is estimated to be Bt 2,188 million and, 50% of KCC equals to Bt. 1,094 million.

Interest income
Interest income of TCS is generated from credit card loan of TCS, with the target groups
being customers of Tesco Lotus. Here are the volumes of credit card loan and interest rate over 2006-2008:
2006
2007
2008
NEA1 (Bt. million)
7,839
7,644
7,397
2
16.53
15.30
15.76
1
Note:
Net earning assets (NEA) is loans receivable deducted by unearned interest before allowance for doubtful accounts.
2
Interest rate is the interest rate in a particular year to the average NEA in the current year and that of the previous year.
Factors contributing to changes in Tesco Lotus Visa credit card loan are the economic
expansion, household income, and growth in Tesco Lotus branches. However, the expansion of Tesco Lotus outlets
does not necessarily lead the growth of credit card loan as around 90% of Tesco customers pay in cash, while only the
rest 10% use the credit cards. Therefore, to reduce the volatility of those factors and for a conservative projection, we
expect the Tesco Lotus Visa credit card loan to grow in 2009 at the same rate as that of 2008, considering that
consumers will remain stringent in their spending amid the economic uncertainties. For 2010-2013, the credit card loan
will grow by the average increase rate of 2006-2008, whereas the interest rate throughout the projected period is
projected at the average rate over 2006-2008, which reflects the company’s ability to generate such return in the past.
Assumption on the growth of NEA and interest rate is as follows:
Type
% growth of NEA
NEA (Bt. million)
2006
17.59
7,839
16.53
Past
2007
(2.17)
7,644
15.30
2008
(0.47)
7,397
15.76
2009
(0.47)
7,363
15.87
2010
4.98
7,730
15.87
Projection
2011
4.98
8,115
15.87
2012
4.98
8,519
15.87
2013
4.98
8,944
15.87
calculating interest income. The rationale behind this is that the interest income is earned during the year and thus if the
NEA at the end of period is used, the projected interest income may be inaccurate. The interest income is projected as
follows:
Unit: Bt. million
Average NEA
Interest income
2006
7,269
16.53
1,202
Past
2007
7,742
15.30
1,185
- 57 -
2008
7,521
15.76
1,185
2009
7,380
15.87
1,171
Projection
2010
2011
7,546
7,922
15.87
15.87
1,197
1,257
2012
8,317
15.87
1,320
2013
8,731
15.87
1,385

Non-interest income
Non-interest income consists of:
1) Collection fee income is fee collected from customers who make late payment. The
collection fee income is equal to the average of collection income to the average NEA in the past periods multiplied by
the average NEA of the given year.
Collection fee income to average NEA (%)
Collection fee income (Bt. million)
2006
0.86
62
Past
2007
2.42
188
2008
2.32
175
2009
2.37
175
2010
2.37
179
Projection
2011
2.37
188
2012
2.37
197
2013
2.37
207
2) Commission income is fee charged on each credit card usage. The fee and Commission
income is equal to the average of the commission income to the average NEA in the past three years multiplied by the
average NEA of the given year. Details are as follows:
2006
4.26
310
Past
2007
4.78
370
2008
4.82
362
2009
4.62
341
2010
4.62
348
Projection
2011
4.62
366
2012
4.62
384
2013
4.62
403
3) Other income includes special fees from VISA card, annual fees and cash advance
service income (exclusive of shareholder support). Other income is estimated at equal to the average of other income to
the average NEA over the past three years multiplied by the average NEA of the given year. Details are as follows:
2006
1.79
130
Past
2007
1.53
118
2008
2.19
165
2009
1.84
135
2010
1.84
138
Projection
2011
1.84
145
2012
1.84
153
2013
1.84
160
2010
179
348
138
666
Projection
2011
188
366
145
699
2012
197
384
153
734
2013
207
403
160
771
Unit: Bt. million
2006
62
310
130
502
Commission income
Other income
Total

Past
2007
188
370
118
675
2008
175
362
165
702
2009
175
341
135
651
Interest expense
is the leverage ratio in 2008 of the market comparables of TCS, namely AEONTS, KTC, BAY, BBL, KBANK, SCB, SCIB
and TMB. Besides, the interest rate of 4.96% p.a., which is the interest rate borne by TCS in 2008, is applied throughout
the projected period.
Past
Projection
2006
2007
2008
2009
2010
2011
2012
2013
1
6.61
5.58
4.96
4.96
4.96
4.96
4.96
4.96
416
370
325
321
322
338
354
372
Note: 1
interest paid only to the Bank, which will be the sole lender of TCS.
Interest expense rate is conservatively projected. After the transaction, Bank has ability to
support TCS with interest expense rate of approximately 4.5% p.a. which is higher than the rate chargeable by the Bank
to its subsidiaries which will be 100% acquired by the Bank (the Bank will hold up to 49% of TCS’s paid up capital with
the right to acquire an additional 1%)
- 58 -

Doubtful expense
recorded at about 8.22%, which was higher than that of 2006 and 2008 due to the BOT’s change of minimum payment
of credit card customers from 5% to 10%, thus necessitating an increase in doubtful expense. The IFA has set doubtful
expense over the projected period in the amount equal to the percentage of doubtful expense to the average NEA of
2006 and 2008. The amounts are shown in the table below:
2006
5.07
378

Past
2007
8.22
638
2008
5.74
432
Projection
2010
2011
5.41
5.41
408
429
2009
5.41
399
2012
5.41
450
2013
5.41
472
The general and administrative expenses consist of variable costs and fixed costs as follows:
1) Variable costs
- Collection expense: TCS has engaged TSS to collect late payment fees from
customers. The service fee payable to TSS is equal to the late payment fee charged by TCS from its customers and thus
is set to be 100% of the collection fee income throughout the projected period (based on the average of the past data
obtained from the assignee of the Bank).
- Marketing expenses and commission expenses, management service expense, and
other expenses are set equal to the percentage of each expense item to the average NEA over the past three years
from 2006 to 2008 multiplied by the average NEA of the given year. Details are as follows:
Past
2007
5.18
2006
3.41
2008
6.36
2009
4.98
Marketing expenses and commission
expenses
Management service expense 1
1.25
1.42
1.20
1.29
Others
1.40
1.25
1.18
1.28
1
Note:
Management service expense of TCS is management fee income of GECT.
2010
4.98
Projection
2011
4.98
2012
4.98
2013
4.98
1.29
1.28
1.29
1.28
1.29
1.28
1.29
1.28
2) Fixed costs consist of personnel expenses and improvement expense on leasehold and
office equipment. Such costs are set to grow 2% per year throughout the projected period which is close to the growth
rate of the basic consumer price index during 2006-2008.
Unit: % growth rate
Personnel expense
Improvement expense on leasehold and office equipment
2009
2.00
2.00
2010
2.00
2.00
Projection
2011
2.00
2.00
2012
2.00
2.00
2013
2.00
2.00
Summary of the projected general and administrative expenses is tabulated below:
Unit: Bt. million
Variable costs
Collection expense
Marketing expenses and commission expenses
Others
Fixed costs
Personnel expenses
Improvement expense on leasehold and office
equipment
2006
514
73
248
91
102
133
38
95
Past
2007
792
184
401
110
97
156
51
105
2008
844
188
478
90
88
173
85
88
2009
732
175
368
95
94
176
87
90
2010
749
179
376
97
96
180
88
92
647
948
1,017
909
929
- 59 -
Projection
2011
786
188
395
102
101
184
90
93
970
2012
825
197
414
107
106
187
92
95
2013
866
207
435
113
112
191
94
97
1,013
1,057

Depreciation
Depreciation of building and equipment is recorded as expense in the statement of income
Unit: Bt. million
Depreciation
2009
4

2010
5
2011
5
2012
6
2013
7
Capital expenditure
Capital expenditure in the current year is equal to depreciation of building and equipment
written off in the past year. Therefore, capital expenditure is tantamount to the expense substituting the assets
depreciated in the previous year.
Unit: Bt. Million
Capital expenditure
2009
4

2010
4
2011
5
2012
5
2013
6
TCS, namely AEONTS, KTC, BAY, BBL, KBANK, SCB, SCIB, and TMB whose leverage ratio averaged 9.77 times in
2008. The leverage ratio of TCS is thus set at 9.77 times throughout the projected period.

Investments in other companies with shareholding by TCS
TCS owns 770,000 shares in TGIB or 100% of total paid-up shares at par value of Bt. 100
each, and 20,000 shares in TLAB or 100% of total paid-up shares at par value of Bt. 100 each. For conservative
projection, the IFA sets value of the said investments at zero as the policies regarding both companies have not been
set yet.
Discount rate
The cost of equity (Ke) is projected based on the Capital Asset Pricing Model (CAPM), using
the same calculation formula as that for GECT. The Ke derived is 9.45.
Cash flows to equity from the financial projection based on the above assumptions are as
follows:
Unit: Bt. million
Net profit
Depreciation and amortization
Doubtful expense
Loans receivable
Others
Capital expenditure
Net debt repayment
Cash flow to equity
Whereas
2006
228
2007
(48)
2008
97
2009
57
2010
133
2011
144
2012
154
2013
166
4
399
5
408
5
429
6
450
7
472
(112)
281
(4)
(257)
369
(754)
6
(4)
307
102
(791)
6
(5)
325
112
(831)
6
(5)
341
122
(872)
6
(6)
358
131
The terminal value of TCS figured out by the perpetual growth formula is as follows:
Terminal value
= Cash flows to equity in 2013 x (1+g) / (Ke – g)
g
Ke
= 9.45%
Shareholders’ equity = Present value of free cash flows to equity + present value of the
terminal value of TCS
assumptions, the valuation of TCS is estimated to be Bt. 1,676 million and, 49% of TCS equal to Bt. 821 million.
- 60 -

Interest income
Interest income of GCS is divided into three groups, credit card loan, installment loan, and
personal loan. Loans receivable and interest income in the past classified by credit type is presented in the table below:
Credit type
2006
2007
2008
1
Credit card loan
NEA (Bt. million)
8,210
8,697
8,107
2
12.46
12.45
12.65
Installment loan
NEA (Bt. million)
3,588
3,692
2,962
20.11
21.32
21.22
Personal loan
NEA (Bt. million)
2,384
2,257
2,242
18.57
19.86
19.81
Total
NEA (Bt. million)
14,183
14,647
13,311
15.44
15.88
15.84
1
Notes: Net earning assets (NEA) are loans receivable deducted by unearned interest before allowance for doubtful accounts.
2
Interest rate is the interest rate in a particular year to the average NEA in the current year and that of the previous year.
Changes in loans receivable of GCS relate to growth in receivables and loan repayments by
existing customers, which include principal repayment and bad debt write-off. The economic downturn in 2007-2008
and the BOT’s upward adjustment to the minimum payment rate imposed on credit cards resulted in a drop in GCS’s
credit extension in those years. Furthermore, GCS has a restraint to increase loans due to a lack of financial support
from GE which adversely affected by economic crisis especially in liquidity crunch. The management however expects
that after the share acquisition by BAY, the Bank will provide assistance for the company in terms of financial support
and cost reduction. Hence, the historical data and figures from the past financial statements might not truly reflect
GCS’s total operational efficiency in the future.
Taking into account GCS management’s views and comparison with past data, we have
adjusted the 2009 growth to match the economic condition by expecting negative loan growth and revising downward,
on a conservative basis, some of the management’s projection, as well as projecting the interest rate based on the
average rate over the past three years. IFA consider the growth of NEA assumption with support from Bank reasonable.
Assumption on the growth of NEA and rate of interest on credits is as follows:
2006
Credit card loan
% growth of NEA
Installment loan
% growth of NEA
Personal loan
% growth of NEA
Total loans
% growth of NEA
Past
2007
2008
2009
2010
Projection
2011
2012
2013
10.40
12.46
5.08
12.45
(7.05)
12.65
(4.00)
12.52
2.81
12.52
2.81
12.52
2.81
12.52
2.81
12.52
10.94
20.11
2.90
21.32
(19.77)
21.22
(3.00)
20.89
2.00
20.89
2.00
20.89
2.00
20.89
2.00
20.89
4.81
18.57
(5.34)
19.86
(0.67)
19.81
(0.67)
19.41
2.00
19.41
19.41
19.41
19.41
9.83
15.44
3.27
15.88
(9.12)
15.84
(3.22)
15.56
2.49
15.57
2.15
15.55
2.16
15.52
2.17
15.49
- 61 -
The table below summarizes the percentage of NEA of credit card loan, installment loan and
personal loan during 2006-2008 and during the projected period of 2009-2013:
NEA (Bt. million)
- Credit card loan
- Installment loan
- Personal loan
Total NEA
% of NEA
- Credit card loan
- Installment loan
- Personal loan
Total percentage
2006
Past
2007
2008
8,211
3,588
2,384
14,183
8,697
3,692
2,257
14,647
8,107
2,962
2,242
13,311
7,783
2,873
2,227
12,883
8,001
2,931
2,271
13,203
8,226
2,989
2,271
13,487
8,457
3,049
2,271
13,778
8,695
3,110
2,271
14,076
57.89
25.30
16.81
100.00
59.38
25.21
15.41
100.00
60.90
22.25
16.84
100.00
60.41
22.30
17.29
100.00
60.60
22.20
17.20
100.00
60.99
22.16
16.84
100.00
61.38
22.13
16.49
100.00
61.77
22.09
16.14
100.00
2009
2010
Projection
2011
2012
2013
calculating interest income on installment loan and personal loan. The rationale behind this is that the interest income is
inaccurate.
Unit: Bt. million
2006
Credit card loan
Average NEA
Interest income
Installment loan
Average NEA
Interest income
Personal loan
Average NEA
Interest income

Past
2007
2008
2009
2010
Projection
2011
2012
2013
7,808
12.46
973
8,454
12.45
1,052
8,402
12.65
1,063
7,945
12.52
994
7,892
12.52
988
8,114
12.52
1,016
8,342
12.52
1,044
8,576
12.52
1,073
3,411
20.11
686
3,640
21.32
776
3,327
21.22
706
2,918
20.89
609
2,902
20.89
606
2,960
20.89
618
3,019
20.89
631
3,079
20.89
643
2,330
18.57
433
2,091
2,321
19.86
461
2,289
2,250
19.81
446
2,214
2,234
19.41
434
2,038
2,249
19.41
437
2,031
2,271
19.41
441
2,075
2,271
19.41
441
2,116
2,271
19.41
441
2,158
Non-interest income
Non-interest income of GCS is divided into four groups as follows:
1) Commission income is charged on each credit card use for goods or service payment. The
commission income is equal to the average of the commission income to the average NEA in the retroactive periods
2006
4.62
625
Past
2007
4.21
607
- 62 -
2008
3.98
556
2009
4.27
560
Projection
2010
2011
4.27
4.27
558
570
2012
4.27
583
2013
4.27
595
2) Cash advance fee income is charged from customers who withdraw cash advance from
ATM. The cash advance fee income is equal to the average of cash advance fee income to the average NEA over the
past periods multiplied by the average NEA of the given year.
Cash advance fee income to average
NEA (%)
Cash advance fee income (Bt. million)
2006
1.02
Past
2007
0.41
2008
0.37
2009
0.60
139
59
51
79
Projection
2010
2011
0.60
0.60
79
81
2012
0.60
2013
0.60
82
84
3) Collection income is fee collected from customers who make late payment. The collection
income is equal to the average of collection income to the average NEA in the retroactive periods multiplied by the
average NEA of the given year.
Collection income to average NEA (%)
Collection income (Bt. million)
Past
2007
2.08
300
2006
1.32
179
2008
1.82
255
2009
1.95
256
2010
1.95
255
Projection
2011
1.95
261
2012
1.95
266
2013
1.95
272
4) Other income includes sales promotion income, marketing service income, financial
service income and annual fee. Since GCS began to earn a growing income from marketing service in 2008 and will
pursue this service in the future, it is more suitable to base the projection on the 2008 data than on the average of past
periods.
2006
0.74
100
Past
2007
0.73
106
2008
1.51
212
2009
1.36
178
Projection
2010
2011
1.36
1.36
178
182
2012
1.36
185
2013
1.36
186
2012
583
82
266
185
1,116
2013
595
84
272
186
1,140
Unit: Bt. million
2006
625
139
179
100
991
Commission income
Cash advance fee income
Collection income
Other income
Total income

Past
2007
607
59
300
106
1,072
2008
556
51
255
212
1,074
2009
560
79
256
178
1,072
2010
558
79
255
178
1,068
Projection
2011
570
81
261
182
1,093
Interest expense
is the leverage ratio in 2008 of the market comparables of GCS, namely AEONTS, KTC, BAY BBL KBANK SCB SCIB and
TMB.
As at 31st December 2008, the total loans from related parties was Bt. 10,384 million, of
which Bt. 6,937 million were from facilities provided by GE with the condition of commitment fees on any unutilized
portion at the rate of 0.25% per annum and guarantee fees on any utilized portion at the rate of 1% per annum. Since
the IFA has set the assumption of amount of loans based on loan growth and leverage ratio, the amount of loan to be
drawdown will be equal to the actual amount of loan drawdown. As a result, the commitment fess on any unutilized
portion will not be incurred. Furthermore, since the Bank will replace GE in providing financial support to GECT, GECT
will have no burden regarding the guarantee fees. Consequently, interest expense rate is projected based on the
interest expense occurred in 2008 deducted by commitment and guarantee fee which is 4.13% per annum.
- 63 -
Past
Projection
2006
2007
2008
2009
2010
2011
2012
2013
1
5.74
5.33
4.96
4.55
4.13
4.13
4.13
4.13
590
599
545
465
417
423
429
437
1
Note:
interest paid only to the Bank, which will be the sole lender of GCS.
Interest expense rate is conservatively projected. After the transaction, Bank has ability to
support its subsidiaries with interest expense rate of not more than 4% p.a. (based on Bank’s financial statement as of
Q1 2009)

Doubtful expense
10%.. The IFA has set provision expense over the projected period in the amount equal to the percentage of doubtful
expense to the average NEA of 2006 and 2008 multiplied by the average NEA of the given year. The amounts are
shown in the table below:

2006
6.40
867
Past
2007
11.17
1,610
2008
7.50
1,049
2009
6.95
910
Projection
2010
2011
6.95
6.95
907
928
2012
6.95
948
2013
6.95
968
The general and administrative expenses consist of:
1) Variable costs
- Collection expense: GCS has engaged TSS as debt collector to collect late payment
fee from customers. Collection expense paid to TSS is approximately 143% of the collection fee income (based on the
average of the past data obtained from the assignee of the Bank). However, collection expense to be paid to TSS is set
at 130% of fee income throughout the projected period, which is the rate close to that of GECT and KCC.
- Marketing expenses, management service expense, and other expenses are set
equal to the percentage of each expense item to the average NEA over the past three years from 2006 to 2008
Past
2006
2007
2008
2009
Marketing expense
3.04
3.27
3.43
3.25
1
0.67
3.03
2.57
2.09
Others 2
2.51
2.71
2.60
2.61
Notes: 1 Management service expense of GCS is management fee income of GECT.
2
Other variable costs are advisory fee, tax and duties, etc.
2010
3.25
2.09
2.61
Projection
2011
3.25
2.09
2.61
2012
3.25
2.09
2.61
2013
3.25
2.09
2.61
2) Fixed costs include personnel expenses and office maintenance expense and are set to
grow 2% per year throughout the remaining projected period, which is close to the growth rate of the basic consumer
price index during 2006-2008.
Unit: Bt. million
Personnel expense
Office maintenance
2009
2.00
2.00
- 64 -
2010
2.00
2.00
Projection
2011
2.00
2.00
2012
2.00
2.00
2013
2.00
2.00
Unit: Bt. million
2006
1,039
196
412
91
340
399
144
255
1,438
Variable costs
Collection expenses
Marketing expenses
Other expenses
Fixed costs
Personnel expenses
Office maintenance

Past
2007
1,821
521
472
437
391
255
57
198
2,076
2008
1,573
372
479
359
363
222
62
160
1,795
2009
1,373
333
425
274
341
226
63
163
1,599
2010
1,367
331
424
273
340
231
65
166
1,598
Projection
2011
1,399
339
433
279
348
236
66
170
1,635
2012
1,429
346
443
285
355
240
67
173
1,669
2013
1,460
354
452
291
363
245
68
177
1,705
Depreciation
Depreciation of fixtures and equipment is recorded as expense in the statement of income
Unit: Bt. million
Depreciation
2009
7

2010
8
2011
9
2012
10
2013
11
Capital expenditure
Capital expenditure in the current year is equal to depreciation of fixtures and equipment
in the previous year.
Unit: Bt. million
Capital expenditure
2009
7

2010
7
2011
8
2012
9
2013
10
GCS, namely AEONTS, KTC, BAY, BBL, KBANK, SCB, SCIB, and TMB whose leverage ratio averaged 9.77 times in
2008. The leverage ratio of GCS is thus set at 9.77 times throughout the projected period.

Discount rate
The cost to equity (Ke) is projected based on the Capital Asset Pricing Model (CAPM) using
the same calculation formula as that for GECT. The Ke derived is 9.45.
follows:
Unit: Bt. million
Net profit
Depreciation
Doubtful expense
Loans receivable
Others
Capital expenditure
Net debt repayment
Cash flow to equity
2006
89
2007
(633)
2008
(95)
- 65 -
2009
119
2010
112
2011
117
2012
118
2013
119
7
910
8
907
9
928
10
948
11
968
(560)
(93)
(7)
(339)
38
(1,179)
44
(7)
122
6
(1,239)
39
(8)
161
5
(1,244)
40
(9)
143
5
(1,270)
41
(10)
210
69
The terminal value of GCS figured out by the perpetual growth formula is as follows:
Terminal value
= Cash flow to equity in 2013 x (1+g) / (Ke – g)
g
Ke
= 9.45%
Shareholders’ equity = Present value of free cash flow to equity + present value of the
terminal value of GCS
Whereas
The terminal value is Bt. 525 million. Based on the above data and assumptions, the
valuation of GCS is Bt. 599 million.

Income from debt collection service
TSS has since 2008 provided the debt collection service for the related companies. Hence,
its major income is from collection income (73% of its total revenues in 2008). To suit TSS’s business operations, we
have accounted for only the income from retail loan collection service and the interest income from loans, and did not
factor into our projection the income and expenses irrelevant to the collection service business.
Since GECT, KCC, TCS and GCS are to book the income from debt collection from their
customers and to pay the collection expense to TSS, we have projected the income from debt collection service of TSS
based on the projected expenses on loan collection of the individual companies, with the outcome as follows (please
refer to the assumption on collection expense of GECT, KCC, TCS and GCS):
Unit: Bt. million
Past
GECT
KCC
TCS
GCS
Total income from debt
collection service

2007
568
221
184
521
2008
451
221
188
372
1,494
1,232
677
219
175
333
688
221
179
331
Projection
2011
735
227
188
339
1,404
1,420
1,489
2009
2010
2012
2013
802
232
197
346
882
238
207
354
1,577
1,686
Interest income
After this transaction, BAY will grant financial support to companies in the GEMT group and,
thus, TSS will, as from end-2009, no longer generate interest income from loans. IFA have accordingly projected the
interest income from loans until the end of September 2009 at Bt. 17 million, based on the interest income projection
which is equal to the interest income earned in 2008 and also on the financial support granted to the GEMT group which
is estimated to be a half of that granted in 2008.

Other income
Other income includes the reimbursement from GE for personal expenses of GE personnel
seconded to BAY. However, this income will not continue post acquisition as it has not related to the Income from debt
collection service. Therefore, we will project other income in 2009 at Bt. 287 million which is the same as the
reimbursement amount in 2008 and not consider other income since 2010 onwards.
- 66 -

Operating expenses
Operating expenses are broken down into four groups: personnel expenses, collection
service & legal expense, technology expense, and other expenses.
Collection service & legal expense, technology expense, and other expenses are made by
multiplying the percentage of such expense to total collection service income in 2008 by the collection service income
in each year. We did not recognize income of 2007 because of the huge proportion of other income which is not related
to the collection service income in such year.
For personnel expenses, TSS had personal expenses of GE personnel seconded to BAY.
Such expenses will not continue post acquisition as it has not related to the income from debt collection service. To
value conservatively, we project personnel expenses in 2009 by multiplying the proportion of personnel expenses to
collection service income in 2008 by collection service income in 2009. However, we will not consider such expense
effect in valuating personnel expenses in year 2010-2013 as it will not continue post acquisition.
% of operating expenses to total collection service income
Past
Projection
2008
2009
2010
2011
2012
43.30
43.30
36.36
36.36
36.36
25.23
25.23
25.23
25.23
25.23
4.95
4.95
4.95%
4.95
4.95
16.39
16.39
16.39
16.39
16.39
Personnel expenses
Collection service & legal expense
Technology expense
Other expenses
Operating expenses (Bt. million)
Projection
2009
2010
2011
608
516
541
354
358
376
70
70
74
230
233
244
1,261
1,178
1,235
Past
2008
Personnel expenses
Collection service & legal expense
Technology expense
Other expenses
Total operating expenses

568
331
65
215
1,179
2012
574
398
78
259
1,309
2013
36.36
25.23
4.95
16.39
2013
613
425
84
276
1,398
Depreciation
Depreciation of building and equipment is recorded as expense in the statement of income
Unit: Bt. Million
Depreciation
2009
15

2010
15
2011
15
2012
15
2013
15
Capital expenditure
Capital expenditure in the current year is equal to depreciation of building and equipment
in the previous year to ensure the usable condition of the building and equipment.
Unit: Bt. Million
Capital expenditure
2009
15
2010
15
- 67 -
2011
15
2012
15
2013
15

Discount rate
The cost of equity (Ke) is projected based on the Capital Asset Pricing Model (CAPM) using
the same calculation formula as that for GECT. The derived Ke is at 9.45%.
follows:
Unit: Bt. Million
Net profit
Depreciation
Accounts receivable
Short-term loans from related companies
Others
Capital expenditure
Cash flow to equity
Whereas
2009
312
2010
2011
2012
2013
170
178
188
201
15
15
15
15
15
(38)
1,233
109
(15)
1,617
(7)
0
2
(15)
164
(28)
0
7
(15)
156
(36)
0
9
(15)
161
(45)
0
11
(15)
167
The terminal value of TSS figured out by the perpetual growth formula is as follows:
Terminal value
= Cash flow to equity in 2013 x (1+g) / (Ke – g)
g
Ke
= 9.45%
Shareholders’ equity = Present value of free cash flow to equity + present value of the
terminal value of TSS
assumptions, the valuation of TSS is Bt. 3,226 million.
Conclusion of the fair value estimation by the discounted cash flow (DCF) approach
The fair value of the transaction with respect to the acquisition portion approved by BAY Board
of Directors only, projected by the DCF method for the individual Core GEMT Companies, comes out as follows:
Company
GECT
KCC
TCS
GCS
TSS
Total
Acquisition by BAY
(%)
100.00
50.00
49.00
100.00
100.00
Fair value
(Bt. million)
7,480
1,094
821
599
3,226
13,220
1.6.1.5 Dividend Discount Model
This approach identifies the present value of dividend payable by each company based on
the target leverage ratio. The determination of leverage ratio will enable each company to reasonably manage its
financial structure in each period. The target leverage ratio is set from the average of leverage ratios of the market
comparables of the GEMT group, namely AEONTS, KTC and banks that operate credit card and/or installment loan
and/or personal loan services such as BAY, BBL, KBANK, SCB, SCIB and TMB, with their leverage ratio averaging 9.77
times in 2008.
The IFA applies the same assumptions as DCF to DDM.
- 68 -
The dividend payment of GECT is subject to the target leverage ratio, meaning that the dividend
payable by GECT must not cause the target leverage ratio to exceed the target set of 9.77x.
In this dividend payment projection, it is assumed that GECT will pay the dividend to the
greatest extent possible that will not lead the target leverage ratio to surpass the limit set or the value of shareholders’
equity to be lower than the desired amount under the capital structure management policy. In addition, for conservative
purpose, we have assumed that the value of investments in QGIB and QLAB is zero as the management plans to wind
down the two companies.
The projection of the annual dividend payment of GECT can be shown as below:
Unit: Bt. million
2006
2007
2008
2009
2010
2011
2012
2013
Total assets
48,205
49,494
39,302
23,855
25,159
27,138
29,684
32,909
Total liabilities
40,355
40,444
27,033
18,977
20,034
21,634
23,687
29,541
Paid-up capital
125
125
125
125
125
125
125
125
7,850
9,050
9,500
2,441
2,575
2,777
3,038
3,368
Leverage ratio (time)1
6.14
5.47
4.14
9.77
9.77
9.77
9.77
9.77
Retained earnings at beginning of period
9,375
2,316
2,450
2,652
2,913
Add: Net profit during the period
509
429
451
517
592
Retained earnings before dividend payment
9,884
2,475
2,901
3,169
3,505
Less: Dividend payment
7,568
295
249
256
262
Retained earnings at end of period required for
2,316
2,450
2,652
2,913
3,243
maintaining the target leverage ratio
Note: 1, Figures in 2006-2008 are actual leverage ratio and figures in 2009-2013 are target leverage ratio
The terminal value of GECT can be calculated by the perpetual growth formula as follows:
Terminal value
=
Dividend payable to shareholders in 2013 x (1+g) / (Ke – g)
Whereas
g
=
Fixed growth rate of 1%
Ke
=
9.45%
=
Present value of dividend payable to shareholders + present value of the
terminal value of GECT
From the calculation, the present value of the terminal value is Bt. 1,990 million. The valuation of
GECT is Bt. 9,686 million.
We have also conducted a sensitivity analysis on the projected dividend payable to the
shareholders, using a discount rate of 1% plus/minus the base case rate and a terminal growth rate of 1% plus/minus
the base case rate. The sensitivity results can be presented as follows:
Unit: Bt million
Discount rate
8.45%
9.45%
10.45%
Growth rate of terminal value
0%
1%
9,847
10,147
9,458
9,686
9,132
9,310
2%
10,540
9,975
9,530
By using the discount rate of between 8.45% and 10.45% and the terminal value growth rate of
0% – 2%, valuation of GECT is in a range of Bt. 9,132 million – Bt. 10,540 million.
- 69 -
To provide further information for the bank’s shareholders, we have performed sensitivity
analysis on the projected dividend payable to the shareholders for base case (discount rate of 9.45% and terminal
growth rate of 1%) by varying the target leverage ratio by decreasing 1X and increasing 1X from the base target
leverage ratio of 9.77X. The valuation of GECT can be summarized as below:
Unit: Bt million
8.77X
9,193
Target leverage ratio
9.77X
9,686
10.77X
10,087
By adjusting the target leverage ratio of between 8.77X and 10.77X, the valuation ranges from
Bt. 9,193 million - Bt. 10,087 million.
The dividend payment of KCC is subject to the target leverage ratio, meaning that the dividend
payable by KCC must not cause the target leverage ratio to exceed the target set of 9.77x.
In this dividend payment projection, it is assumed that KCC will pay the dividend to the greatest
extent possible that will not lead the target leverage ratio to surpass the limit set or the value of shareholders’ equity to
be lower than the desired amount under the capital structure management policy.
The projection of the annual dividend payment of KCC can be shown as below:
Unit: Bt. Million
2006
2007
2008
2009
2010
Total assets
15,740
16,210
16,388
16,080
16,519
Total liabilities
14,031
14,230
14,357
14,434
14,829
Paid-up capital
1,100
1,100
1,100
1,100
1,100
1,709
1,981
2,031
1,646
1,691
1
Leverage ratio (time)
9.21
8.18
8.07
9.77
9.77
931
546
193
181
1,124
727
578
136
Retained earnings at end of period required for maintaining
546
591
the target leverage ratio
Note: 1 Figures in 2006-2008 are actual leverage ratio and figures in 2009-2013 are target leverage ratio
Whereas
2011
16,894
15,165
1,100
1,729
9.77
591
188
779
150
629
2012
17,261
15,494
1,100
1,767
9.77
629
190
819
153
667
2013
17,653
15,846
1,100
1,807
9.77
667
193
860
153
707
The terminal value of KCC can be calculated by the perpetual growth formula as follows:
Terminal value
= Dividend payable to shareholders in 2013 x (1+g) / (Ke – g)
g
Ke
= 9.45%
Shareholders’ equity = Present value of dividend payable to shareholders + present
value of the terminal value of KCC
assumptions, the valuation of KCC is Bt. 2,124 million and, at 50% of KCC’s total paid-up shares, would be Bt. 1,062
million.
- 70 -
Total shares
Discount rate
0%
8.45%
9.45%
10.45%
1%
2,185
2,360
1,990
2,124
1,832
1,936
2%
2,591
2,293
2,065
50% of total shares
Discount rate
0%
8.45%
9.45%
10.45%
1%
1,092
1,180
995
1,062
916
968
2%
1,295
1,146
1,032
By using the discount rate of between 8.45% and 10.45% and the terminal growth rate of 0% –
2%, the valuation of KCC is in a range of Bt. 1,832 million – Bt. 2,591 million and at 50% of KCC’s total paid-up shares,
ranges from Bt. 916 million to Bt. 1,295 million.
leverage ratio of 9.77X. The valuation of KCC can be illustrated as below:
Unit: Bt million
8.77X
1,992
9.77X
2,124
10.77X
2,231
50 % of total shares
Unit: Bt million
8.77X
996
9.77X
1,062
10.77X
1,115
By adjusting the target leverage ratio of between 8.77X and 10.77X, the results ranges from Bt.
1,992 million - Bt. 2,231 million and by calculating at 50% of KCC’s total paid-up shares would range from Bt. 996
million - Bt. 1,115 million
The dividend payment of TCS is subject to the target leverage ratio, meaning that the dividend
payable by TCS must not cause the target leverage ratio to exceed the target set of 9.77x.
In this dividend payment projection, it is assumed that TCS will pay the dividend to the greatest
be lower than the desired amount under the capital structure management policy. In addition, for conservative purpose,
we have assumed that the value of investments in TGIB and TLAB is zero as policies regarding both companies have
not been set yet.
- 71 -
The projection of the annual dividend payment of TCS can be shown as below:
Unit: Bt. million
2006
2007
2008
2009
2010
2011
Total assets
8,346
8,471
8,401
7,808
8,185
8,585
Total liabilities
7,381
7,396
7,230
7,009
7,347
7,707
Paid-up capital
780
780
780
780
780
780
966
1,075
1,171
799
838
879
Leverage ratio (time) 1
8.64
7.88
7.17
9.77
9.77
9.77
391
19
58
57
133
144
448
152
201
428
95
103
19
58
99
Whereas
2012
9,006
8,084
780
922
9.77
99
154
253
111
142
2013
9,447
8,480
780
967
9.77
142
166
308
121
187
The terminal value of TCS can be calculated by the perpetual growth formula as follows:
Terminal value
g
Ke
= 9.45%
value of the terminal value of TCS
The present value of the terminal value is Bt. 918 million. Based on the above data and
assumptions, the valuation of TCS is Bt. 1,622 million and, at 49% of TCS’s total paid-up shares, would be Bt. 795
million.
Total shares
Discount rate
8.45%
9.45%
10.45%
0%
1%
1,669
1,808
1,516
1,622
1,393
1,475
2%
1,989
1,755
1,576
49% of total shares
Discount rate
0%
8.45%
9.45%
10.45%
1%
818
886
743
795
682
723
2%
975
860
772
0% – 2%, the valuation of TCS is in a range of Bt. 1,393 million – Bt. 1,989 million and, at 49% of TCS’s total paid-up
shares, would range from Bt. 682 million to Bt. 975 million.
leverage ratio of 9.77X. The valuation of TCS can be illustrated as below:
- 72 -
Unit: Bt million
8.77X
1,526
9.77X
1,622
10.77X
1,700
50 % of total shares
Unit: Bt million
8.77X
748
9.77X
795
10.77X
833
By adjusting the target leverage ratio of between 8.77X and 10.77X, the results ranges from Bt.
1,526 million - Bt. 1,700 million and at 50% of TCS’s total paid-up shares would range from Bt. 748 million - Bt. 833
million
The dividend payment of GCS is subject to the target leverage ratio, meaning that the dividend
payable by GCS must not cause the target leverage ratio to exceed the target set of 9.77x.
In this dividend payment projection, it is assumed that GCS will pay the dividend to the greatest
be lower than the desired amount under the capital structure management policy.
The projection of the annual dividend payment of GCS can be shown as below:
Unit: Bt. million
2006
2007
2008
2009
2010
2011
Total assets
14,096
14,712
13,520
13,133
13,417
13,739
Total liabilities
12,643
13,669
12,572
12,075
12,238
12,434
Paid-up capital
758
758
758
758
758
758
1,453
1,043
948
1,058
1,179
1,305
Leverage ratio (time) 1
9.70
14.10
14.26
9.77
9.77
9.77
190
309
421
119
112
117
309
421
538
0
0
0
309
421
538
Whereas
GCS is Bt. 524 million.
2012
14,046
12,613
758
1,433
9.77
538
118
656
0
656
2013
14,359
12,889
758
1,470
9.77
656
119
775
64
712
The terminal value of GCS can be calculated by the perpetual growth formula as follows:
Terminal value
g
Ke
= 9.45%
value of the terminal value of GCS
The terminal value is Bt. 483 million. Based on the above data and assumptions, the valuation of
- 73 -
the base case rate. The results of the sensitivity analysis can be presented as follows:
Unit: Bt million
Discount rate
0%
1%
543
616
468
524
408
452
8.45%
9.45%
10.45%
2%
712
594
505
0% – 2%, the valuation of GCS is in a range of Bt. 408 million – Bt. 712 million.
leverage ratio of 9.77X. The valuation can be illustrated as below:
Unit: Bt million
8.77X
0
9.77X
524
10.77X
791
By adjusting the target leverage ratio of between 8.77X and 10.77X, the results accordingly
range from Bt. 0 million - Bt. 791 million. Since GCS’s leverage ratio in 2008 is 14.26X which is very high comparing to
8.77X. Therefore, in the sensitivity analysis, GCS can not pay any dividend in projection period in 2009 – 2013 in case of
target leverage ratio at 8.77X
Assumption of financial projection
As the nature of business of TSS is different from all other GEMT companies described above
and its major source of income is from debt collection service provided to its affiliates, whereas a majority of the balance
sheet items is cash or equivalent, the dividend discount model approach is not suitable for the valuation of TSS.
IFA views that the DCF approach, which focuses on future performance and cash flow of a
business, is more suitable for the valuation of TSS.
Conclusion of the fair value estimation by the dividend discount model approach
The fair value of the transaction with respect to the acquisition portion approved by BAY Board
of Directors only, projected by the dividend discount model approach (base case discount rate of 9.45% and terminal
growth rate of 1%) for the individual Core GEMT Companies can be shown as follows:
Company
GECT
KCC
TCS
GCS
TSS
Total
Acquisition by BAY (%)
100.00
50.00
49.00
100.00
100.00
- 74 -
9,686
1,062
795
524
n.a.
12,067
Conclusion of the DCF sensitivity analysis – discount rate and terminal growth rate
Unit: Bt million
Discount rate
0%
1%
2%
8.45%
12,300
12,829
13,522
9.45%
11,664
12,067
12,575
10.45%
11,138
11,453
11,839
Note: The DDM sensitivity analysis excludes value of TSS which is used DCF for valuation.
0% – 2%, the valuation is in a range of Bt. 11,138 million – Bt. 13,522 million.
Conclusion of the DCF sensitivity analysis – target leverage ratio
Unit: Bt million
8.77X
10,937
9.77X
12,067
10.77X
12,826
Note: The DDM sensitivity analysis excludes value of TSS which is used DCF for valuation.
By using the target leverage ratio between 8.77X and 10.77X, the valuation is in a range of Bt.
10,937 million – Bt. 12,826 million.
Conclusion of the share valuation with respect to the acquisition portion approved by BAY Board of Directors only
Valuation approach
1. Book value
2. Adjusted book value
3. Market comparable
3.1 Price to book value ratio
3.2 Price to earnings ratio
4. Discounted cash flow
5. Dividend discount model
12,647
12,645
10,870 – 15,262
6,714 – 9,246
13,220
12,067
Remark
Exclusive of GCS
Exclusive of TSS
Our opinions on the share valuation by the above approaches can be summarized as below:

Book value approach
Book value approach is based on data of the financial statement which reflects past
performances and value of current assets. However, this approach does not reflect the profitability and operational
prospects of the business in the future, nor the overall economic and industrial trends, thus lowering its reasonableness
for the share valuation. Therefore, IFA deems that this approach is not appropriate for the share valuation.

Adjusted book value approach
Despite some adjustments to the financial statement items, which can better reflect the net
asset value based on the current market price than the book value approach, this method takes into account neither the
profitability prospects nor the ability to achieve the business plan nor the competitiveness and future business
operations. It only demonstrates the book value at a given period of time. Thus, we view that this approach is not
suitable for the share valuation.

Market comparable approach
Market comparable approach uses share price of comparable companies traded in SET to
compare with book value and net income of each company in GEMT group for setting up the appropriate ratio in
valuation process.
- 75 -
IFA views that this approach does not reflect the future business prospects, but bases the
valuation on the financial position at a certain period in time. Therefore, this approach is not in line with each company’s
policy for future change from sales and purchase of shares and change in shareholders. Besides, this approach
focuses on the fair value of short-term investments, whereas this transaction is a long-term investment. Hence, it should
not be used as the primary valuation method. The IFA deems that this method is not appropriate for the share valuation.

Discounted cash flow (DCF)
The valuation is based on assumptions obtained from the Bank and its representatives,
interviews with its management and assignees, industry information and all other reference information used for
preparing the financial projection. Such information may change in the future due to either internal or external factors.
Moreover, the valuation is based primarily on the assumptions for financial projection.
Nonetheless, though the DCF approach reflects the expected future performance, certain
constraints still exist, considering the required provision for bad debts and the target leverage ratio. For instance, in
order to fund its credit expansion, each of the GEMT Core Companies will need to utilize some of the equity in order to
maintain the leverage ratio and thus will be unable to make a full payout to the shareholders. As such, the cash flow
estimated by this method still cannot reflect the actual cash flow of shareholders. Accordingly, we deem that this
approach cannot fully demonstrate the value of GEMT shares.

Dividend discount model (DDM)
Similarly to the DCF, the valuation by this approach is based on the assumptions obtained
from the Bank and its representatives, interviews with its management and assignees, industry information and all other
reference information used for preparing the financial projection. In our opinion, the DDM is suitable for the share
valuation since it can well reflect the future profitability prospects of each of the GEMT Core Companies. The dividend
payout computed by this method can cope with the flaws existing in the DCF approach as it can provide for the impacts
from the bad debt provision and the target leverage ratio to be aligned with the capital and risk management policy and
can eliminate the constraints associated with fund requirement for the credit and business expansion and bad debt
provisioning. Thus, the DDM method truly reflects the ability to pay cash flow to the shareholders and better exhibits
future returns to the shareholders.
However, we have not factored the past dividend payment policy of each of the GEMT Core
Companies into our valuation, considering that it will unlikely affect the total share valuation because after the share
acquisition by the Bank the said policy may change as deemed fit and in line with the management policy in each
period.
For TSS, since it operates a different type of business from other affiliates and its major
source of income is from the lending business, whereas a majority of the balance sheet items is equivalent to cash, the
DDM approach is not suitable for the valuation of TSS. As its income is primarily from debt collection service provided
to its affiliates, we view that the DCF approach, which focuses on the future performance and cash flow, is more suitable
for TSS valuation.
We recommend that the best method to value the Core GEMT Companies shares is by
using the sum of parts valuation, with the DDM approach applied to GECT, KCC, TCS and GCS; and the DCF
approach to TSS. By so doing, the fair value of the transaction is calculated to be Bt. 15,293 million.
- 76 -
Shown below is a summary of the share valuation of the individual companies with respect
to the acquired portion approved by BAY Board of Directors:
Company
GECT
KCC
TCS
GCS
TSS
Total
Fair value
(Bt. million)
9,686
1,062
795
524
3,226
15,293
Valuation approach
DDM
DDM (at 50%)
DDM (at 49%)
DDM
DCF
Impacts of the joint venture agreement between EDS and GECT
The IFA has obtained additional information regarding the joint venture agreement between EDS and
GECT pursuant to the resolution (amended) of the Bank’s Extraordinary Board of Directors Meeting No. 6/2552 on July
21, 2009, with details as follows:
“Where the shareholding in TCS is concerned, the joint venture agreement between EDS and GECT
states that the agreement will expire on May 31, 2011 and is automatically renewable for another five years and that any
party may terminate the agreement by giving a notice at least 18 months in advance.”
We have accordingly value TCS in case EDS terminates the agreement and acquires TCS shares
acquired by BAY (49%) on May 31, 2011. The valuation is based on the same assumptions applied in the TCS share
valuation in case of agreement renewal by EDS as described above, except for the following assumptions:
- Incomes and expenses in the statement of income are projected for a period up to May 31, 2011.
The price of 49% of TCS’s paid-up shares to be sold by BAY to EDS on the termination date (May 31, 2011) is valued at
Bt. 548 million. This price is calculated from the present value of TCS fair value, in case EDS renews the agreement,
deducted by present value of cash flows in 2552 up to May 31, 2011.
The termination of the agreement will pose the following impacts on the fair value of TCS:
Unit: Bt. million
2009
Total income of TCS
Agreement renewal
1,822
Agreement termination
1,822
Net profit of TCS
Agreement renewal
57
57
Dividend
Agreement renewal
428
428
TCS Selling Price
Agreement renewal
1
Note: Present value of Bt. 441 million applying discount rate at 9.45%
2010
1,863
1,863
133
133
95
95
-
Projection
2011
1,956
804
144
115
103
97
5481
2012
2,054
154
111
-
2013
2,156
166
121
-
Termination of the agreement will result in a drop in the present value of the net dividend obtainable
by the shareholders, using the DDM approach and the discount rate of 9.45%, to Bt. 990 million (the sum of Bt. 549
million, which is the present value of dividends in 2552 up to May 31, 2011, and Bt. 441 million, which is the present
value of 49% of TCS’s paid-up shares to be sold by BAY to EDS on the termination date (May 31, 2011)). By calculating
at 49% of TCS’s total paid-up shares, the amount to be acquired by the Bank, the present value of the net dividend
would be Bt. 710 million (the sum of Bt. 269 million, which is 49% of the present value of dividends in 2552 up to May
31, 2011, and Bt. 441 million, which is the present value of The price of 49% of TCS’s paid-up shares to be sold by BAY
to EDS on the termination date (May 31, 2011)).
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as follows:
The agreement termination will also affect the projected fair value of some companies in GEMT group
1. Impact on GECT: GECT serves as a central unit for the group’s internal management to save the
administrative expenses for the whole group. GECT therefore earns management service income from its affiliates.
Having all other assumptions remained unchanged, the agreement termination will cause GECT no longer earn such
income from TCS from June 1, 2011, which in turn results to a decrease in its management service income and net profit
and also in dividend payout to the shareholders.
Unit: Bt. million
Projection
2011
2012
2013
Management service
Agreement renewal
95
97
102
107
113
income from TCS
95
97
42
Net profit of GECT
Agreement renewal
546
505
533
605
689
546
505
491
530
610
Dividend payable
Agreement renewal
7,568
295
249
256
262
7,568
295
207
181
183
Note: For conservative projection, the general and administrative expenses in the case of agreement termination have not been adjusted.
2009
2010
The agreement termination will result in a drop in the present value of the net dividend obtainable
by the shareholders, valued by the DDM approach, to Bt. 8,949 million using the discount rate of 9.45% and the terminal
growth rate of 1%.
2. Impacts on TSS: TSS earns debt collection service income from TCS. If such agreement is
terminated, TSS will no longer earn such income from TCS since June 1, 2011 onwards. All else being equal, this
causes a decrease in its collection service income, net profit, and eventually cash flow obtainable by the shareholder.
Unit: Bt. million
Projection
2009
2010
2011
2012
2013
Collection service
Agreement renewal
175
179
188
197
207
income from TCS
175
179
77
Net profit of TSS
Agreement renewal
312
170
178
188
201
312
170
165
165
177
cash flow of the
Agreement renewal
1,617
164
156
161
167
shareholders
1,617
164
178
164
146
Note: For conservative projection, IFA did not make any discount on the general and administrative expenses in the case of agreement
termination.
Termination of the agreement will result in a drop in the present value of the net dividend obtainable
by the shareholders to Bt. 3,067 million, applying the DCF approach with the discount rate of 9.45% and the terminal value
growth rate of 1%.
Below is the conclusion of the share valuation in case of the joint venture agreement renewal and
termination of the each company in GEMT group with respect to the acquisition portion approved by BAY Board of
Directors only:
Company
GECT
KCC
TCS
GCS
TSS
Total
Agreement renewal
9,686
8,949
1,062
1,062
759
710
524
524
3,226
3,067
15,293
14,312
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Valuation approach
DDM
DDM (at 50%)
DDM (at 49%)
DDM
DCF
The transaction fair value in the case of agreement renewal is valuated at Bt.15,293 million, which
is higher than the agreed transaction price of Bt. 13,793 million by Bt.1,500 million. In the case of agreement
termination, the fair value drops to Bt.14,312 million, which is still higher than the agreed transaction price of Bt. 13,793
million by Bt. 519 million.
However, the fair value estimated is based on the information obtained from interviews with the
executives and representatives of the Bank, financial statements of the individual companies, and other information
available from the Bank and its representatives, including publicly disclosed information. IFA cannot verify or guarantee
the correctness or completeness of the information provided by the Bank and/or its executives and assignees. Our
opinions are given based on the assumption that the said information and documents are true and correct and also on
the circumstance and information known at present. Therefore, if there are any changes in the economic condition or
other external factors that impact the operations of the individual GEMT Core Companies or any material internal
changes in the companies, the fair value of the GEMT Core Companies will likely deviate from the IFA’s valuation.
IFA has given our opinions on this transaction within the purview of the Bank’s universal banking
strategy and the elimination of the conflict of interest between the Bank and the GEMT group, which have the same
major shareholder. The enhancement of its business potential will help generate returns to the Bank’s shareholders in
the long run. As such, this share valuation is made on a going concern basis, adopting the assumptions and
information provided by the Bank and its representatives without any special audit of the assets and liabilities of the
GEMT group and with the points of considerations as described in Item 1.5.4.
1.6.2 Appropriateness of the transaction conditions
As of the date of this report, BAY and GE have not yet executed the share sale and purchase
agreement and the financial support agreement. Hence, there are certain conditions not yet concluded in writing such
as the payment terms and the employee transfer. However, IFA has identified the appropriateness of the transaction
conditions based on the term sheet on the transaction and the inquiries with the Bank’s management so as to provide
primary information for the shareholders on the reasonableness of the conditions. The conditions will be set out in detail
in the share sale and purchase agreement, which is expected to be signed by August 2009.
1. Share acquisition
BAY will purchase shares of the GEMT Core Companies at Bt. 13,793 million after having
obtained approval from the shareholders and the Bank of Thailand, with a target of completing this transaction by end of
2009. The actual transaction price is subject to adjustments according changes in the book value prevailing from
December 31, 2008 until the transaction date. After making the payment, the Bank will engage an auditor to perform an
audit review of the accounts. GE group would have already restructureed its business to remove commercial finance
business from its structure. If there is any changes in the net assets value, the two parties agree to make an extra
payment or a refund according to the said increase or decrease in the net asset value. IFA views that such condition is
reasonable.
However, we recommend that the share sale and purchase agreement sets out a condition
preventing the GE from operating the retail loan business that will lead to competition among themselves in the future;
otherwise, there will be a conflict of interest. Another concern is the transfer of GEMT employees to BAY without posing
a conflict between them.
2. Financial support and assistance
Under the share acquisition transaction, BAY will provide financial support and assistance of up
to Bt. 60,000 million to the GEMT Core Companies after approval is obtained from the Bank’s shareholders.
The GEMT entities have been provided with credit facilities primarily from the GE group, with the
interest charged at the rate applicable to the GE group members. Apart from this, BAY has also extended loans to the
GEMT entities. The Bank has made the decision on the credit amount and interest rate based chiefly on the credit rating
and collateral of the GE group.
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After BAY becomes a major shareholder of the GEMT Core Companies, it is considered
reasonable for the Bank to repay the existing loans of these companies to the GE group since the latter is no longer the
major shareholders of these companies. Moreover, the Bank’s terms and conditions for financing facilities to the GEMT
Core Companies will be on the same basis as those offered to its subsidiaries and affiliates. We consider that the
financial support and assistance which the Bank will provide after becoming the GEMT group’s major shareholder is
appropriate.
1.7
Taking into account the information, including the objectives, advantages and disadvantages, and
reasonableness of the transaction, and the fairness and appropriateness of the transaction conditions discussed above,
we are of the opinion that the Bank’s acquisition of shares of the GEMT Core Companies from the existing shareholder
at the price of Bt. 13,793 million is reasonable and the Bank has sufficient liquidity to cover the said share purchase.
By entering into this transaction, the Bank will not only be able to grow its retail loan business, but also
benefit from the transfer of technology and skilled personnel from GEMT, hence boosting its competitive edge in the
retail banking segment and reaching the goal of becoming a universal bank. Additionally, to acquire shares in the
GEMT group will help to eliminate conflict of interests between the Bank and GE.
As regards the transaction value, we consider it appropriate as the shares are valued by the sum of parts
valuation method, with the DDM approach applicable to GECT, KCC, TCS, and GCS and the DCF approach to TSS, on
a going concern basis. However, the IFA did not perform a special audit of the assets and liabilities of the GEMT group
and there are points of considerations as described in Item 1.5.4.
After the transaction, the Bank will become the major shareholder of the GEMT group and will provide
financial support to the GEMT Core Companies in a total amount not exceeding Bt. 60,000 million. Under the subsidiary
companies business management policy, the Bank will give full financial support based primarily on the individual
subsidiaries’ profitability prospect, the appropriateness and adequacy of funding sources, and the financial position of
the Bank. Such financial support will enable the GEMT Core Companies to carry on and grow their businesses. The
Bank still has sufficient liquidity to render the said financial assistance and will, in turn, generate income from providing
loans to the GEMT group, the returns from which will be greater than those yielded from deposits with the Bank of
Thailand and the interbank money market.
Based on the reasons above, we deem that the enhancement of its competitiveness through the making of
this transaction will help generate returns to the Bank’s shareholders in the long term. We also recommend that the
shareholders vote in favor of this transaction, considering the reasonableness of the transaction and the fairness of its
price and conditions.
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2. Fairness of price and conditions of the Agreement on the services to be provided by GE to the GEMT Core
Companies and the services to be provided by GEMT Core Companies to GE
2.1 Nature of the transaction
Type of transaction
Relevant parties
Agreement period
Value of consideration
1. Agreement on the services to be provided by GE to the GEMT Core Companies under
the scope of service, including but not limited to the following:
y Vision Plus
y Firewall
y Oracle Finance
y Oracle HR
y Security system
y Other applications and computer equipment as to be mutually agreed
2. Information technology service and services relevant to other operations as to be
mutually agreed
3. The Bank or the GEMT Core Companies, after the acquisition transaction, shall provide
the GE group with the IT service and services relevant to other operations as mutually
agreed since the non-GEMT members of the GE group have currently used the system
employed in the GEMT group.
Item 1 & 2
User
: GEMT Core Companies
Provider
: GE
Item 3
User
: GE
Provider
: GEMT Core Companies
To be determined after approval is obtained from BAY shareholders’ meeting to be held on
August 27, 2009
To be determined after approval is obtained from BAY shareholders’ meeting to be held on
August 27, 2009
Connected persons and their related parties
After the share acquisition, theGEMT Core Companies will become the Bank’s subsidiaries. Therefore, the
above service agreement will be deemed as a transaction made between the Bank and GE, whereas GE is the major
shareholder of the Bank, indirectly owning through GECIH 2,000,000,000 shares or 32.93% of the Bank’s paid-up
capital, and also of GECC, through a 100% shareholding, and GECIH and GECT, through indirectly holding. (See
further details in 1.1.2.2 Details of the transaction.)
2.2
Reasonableness of the transaction
2.2.1 Objective and necessity
The GEMT Core Companies will, after the acquisition, become members of the BAY group. To
enable them to continue their credit card and personal loan businesses during the transition period without interruption,
the Bank needs to enter into this transaction with GE to make certain that they are provided with the following services:
1. IT facilities
y
Vision Plus
y
Firewall
y
Oracle Finance
y
Oracle HR
y
Security system
y
Other applications and computer equipment as to be mutually agreed
2. Information technology service and services relevant to other operations as to be mutually
agreed.
3. The Bank or the GEMT Core Companies, after the acquisition transaction, shall provide the GE
group with the IT service and services relevant to other operations as mutually agreed since the non-GEMT members of
the GE group have currently used the system employed in the GEMT group.
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According to the Term Sheet, the agreement period and service fee shall be agreed subsequent to
the BAY’s shareholders’ meeting on August 27, 2009. It is agreeable that the agreement will be concluded on an arm’s
length basis, whereby the price and conditions shall be the same as those executed by the Bank with any other nonrelated service providers. The Audit Committee shall consider and approve the price and terms and conditions of the
Services Agreement after the details of the terms and conditions are agreed.
2.2.2 Advantage and disadvantage of the transaction
1) Advantage
The execution of the service agreement between GE and the Core GEMT Companies will
contribute to the latter’s business continuity and mitigation of risk associated with the potential impacts and problems
arising from changes of IT and IT-related systems that might cause an error or delay in the business operations during
the transition period.
2) Disadvantage
The execution of the service agreement will result in the Bank relying solely on GE for the IT
services.
2.3
Since the payment terms have not yet been concluded and the information on investment funding and
service charge payable by the Bank and GE group is not available. As preliminarily informed by the Bank, the GE group
and Bank agree to execute this transaction on an arm’s length basis. However, IFA views that criteria and service fee,
changed by GE shall not be higher than the past. The service fee charged by Bank shall not be lower than the past.
Given that the service fee charge by GE and charged by Bank is a reasonable price and reliable service
quality and an optimal benefit to the Bank when compared with other service providers’, we deem that the transaction
conditions are acceptable.
2.4
We recommend that the shareholders should approve the Bank to execute the agreement on the services to
be provided by GE to the GEMT Core Companies and the services to be provided by GEMT Core Companies to GE with
the nature of the transaction and payment terms as tentatively agreed upon. Our reason is that the transaction will
enable business operation of the GEMT Core Companies during the transition period to continue without interruption.
However, the Bank should seek its Audit Committee’s consideration on such transaction after it has finalized the
investment funding and service charge. The Bank should also make sure that the conditions are set out with fairness of
price for the maximum benefit of the shareholders of both the Bank and the GEMT Companies.
Accordingly, we recommend that the shareholders of the Bank should vote in favor of this transaction for the
benefit of the shareholders in the long term as the transaction is considered reasonable and the value and conditions
fair.
However, the final decision as to whether to approve the transaction rests with the shareholders. It is our
duty, as the IFA, to disclose the Bank’s information pertaining to the transaction and provide our opinions based
primarily on the information obtained from the Bank, the industry data available from external sources, and the
interviews with the Bank’s management and staffs. However, we have not verified the accuracy and completeness of
the information. If the information is not true and correct or changes materially in the future, it might then affect our
opinions. Therefore, we will not be liable for any damage that may arise from the incorrectness or incompleteness of the
information or the material change in the industry that will impact the investments and the expected benefits.
The shareholders can study the information in all documents accompanying the notice of shareholders’
meeting so that they could properly make a final decision at their own discretion.
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We have provided our opinions on the connected transactions based on the study and analysis conducted
in accordance to accepted professional standards and in the interest of the shareholders.
Yours sincerely,
Chaipatr Srivisarvacha
(Chaipatr Srivisarvacha)
Chief Executive Officer
Wichan Rattanakittiaporn
(Wichan Rattanakittiaporn)
Licensed Financial Advisor
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