AN

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Cap

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ANNUAL REPORT 2007

Contents

Contact Head office 21/3 Thai Wah Tower, Ground Floor, South Sathorn Road, Bangkok, 10120

Telephone : +66(0) 2285 0060 +66(0) 2285 0096 +66(0) 2677 3333

Facsimile : +66(0) 2285 0535

Website : www.cns.co.th

Bangna Branch

400 Moo 11, Phairojkijja Office Building, 6th Floor, Bangna-Trad Road Km 4,

Bangna, Bangkok, 10260

Telephone : +66(0) 2361 4576-79 +66(0) 2361 4581–87 +66(0) 2361 4566-67

Facsimile : +66(0) 2361 4568 +66(0) 2361 4575

Phra-Pinklao Branch 7/129 Central Plaza Pinklao Office Building, 9th Floor, Room 902 Tower A,

Baromrajchonnee Road, Arun-Amarin, Bangkok Noi, Bangkok, 10700

Telephone : +66(0) 2884 9068-79 +66(0) 2884 9059-60

Facsimile : + 66(0) 2884 9064 +66(0) 2884 9067

Ratchadaphisek Branch 19 SCB Park Plaza Tower III East, Mezzanine 2nd Floor, Ratchadaphisek Road,

Chatuchak, Chatuchak, Bangkok, 10900

Telephone : + 66(0) 2937 8375-87 +66(0) 2937 8383

Facsimile : + 66(0) 2937 8390 + 66(0) 2937 8391

Yaowaraj Branch 624 Yaowaraj Place Building, Ground Floor, Yaowaraj Road, Sampantawong,

Sampantawong, Bangkok, 10100

Telephone : +66(0) 2267 0103-27 +66(0) 2639 1500-34

Facsimile : +66(0) 2639 1533 +66(0) 2267 0123

1 Financial Highlights

2 Board of Directors

3 Message from The Chairman

6 Corporate Profile

9 Business Profile

18 Risk Management

22 Dividend Policy

23 Capital Structure

26 Organization Structure

27 Management Structure

36 Remuneration paid to the Management

37 Management Profile

42 Good Corporate Governance

47 Monitoring the use of and access to inside information

48 Corporate Social Responsibilities

49 Internal Control

50 Report of Audit Committee

52 Connected Transactions

60 Performance and Analysis of Financial Status

68 Report of the Board of Directors’ Responsibility in the Financial Statements

69 Report of Independent Auditor

70 Financial Statements

103 Remuneration of the Auditor

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Financial Highlights

RETURN ON EQUITY & RETURN ON ASSETS

0.00

4.00

8.00

12.00%

2004 2005 2006 2007ROEROA

9.91

7.55

4.603.73

2.97 2.47 2.86 2.34

0

2,000

4,000

6,000

2004

4,731

9323,7

99

2005 2006 2007

Million Baht

7854,3

95

3,610 4,2

23662

3,561

4,511

9203,5

91

ASSETS, LIABILITIES & EQUITY

MARKET SHARE & RANKING

DEBT TO EQUITY RATIO

Assets Liabilities Equity

4.00

2.00

0.00 2004 2005 2006 2007

6

13

1719

20

15

10

5

0Ranking

3.60%

2.91%2.61% 2.43%

%

20040.00

0.10

0.20

0.30

0.40Time

2005 2006 2007

0.250.22

0.19

0.26

Local Institution11.34%

Foreign14.10%

Retail74.56%

CUSTOMER BREAKDOWN 2007

NET CAPITAL RATIO (NCR)

0

200

400

600%

2004 2005 2006 2007

368.35%

508.82%545.42%

446.67%

Annual Report 2007

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Board of Directors

Mr. Suthep Peetakanont Chairman & Chairman of the Executive Board

Mr. Yuko Sashisaki Executive Director

Mrs. Wattanee Phanachet Chairman of the Audit Committee & Independent Director

Mr. Takeshi Nishida President

Mr. Yoshinori Go Director

Col. Ruangsub Kovindha Audit Committee Member & Independent Director

Mr. Pisit Tesabamroong Director

Mr. Prasert Virasathienpornkul Audit Committee Member & Independent Director

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Message from The Chairman

Starting from the first quarter to the third quarter of fiscal year 2007 (September, 2006 to August, 2007) both

investor sentiment towards and the level of trading volume on the Stock Exchange of Thailand (SET) remained

highly volatile owing to political uncertainty, the impact of government reforms and the appreciation of the

Baht which led the Bank of Thailand (BoT) to impose capital controls in December 2006. Nevertheless, during

the final quarter of fiscal year 2007 (from June to August 2007) the likelihood that the Thai political situation

would become clearer in the future brought about an improvement in the SET’s investment climate. The SET

index reached its peak for the fiscal year at 895.63 points while average daily trading volume for the entire

fiscal year increased by 2.41% to Baht 16,363 million when compared with the previous fiscal year.

During the past fiscal year, we at Capital Nomura Securities Public Company Limited (CNS) continued to

develop our business plans and policies with a focus on expanding our domestic and overseas client base, along

with improving the quality of our services, particularly in the area of internet trading business. We also

continued to diversify our sources of income by expanding revenue from other businesses apart from our

securities brokerage service. During fiscal year 2007, we were successful in opening over 2,422 new accounts.

In addition, our on-line internet trading volume increased from 5.12% to 8.30% of our total trading volume for

fiscal year 2007. Furthermore, we were also successful in launching the Samui Airport Property Fund which

generated fee income for CNS of about Baht 40 million.

As for our core securities brokerage business, this past fiscal year’s performance by category of customer was

as follows:

1. Retail investors – the total market trading volume generated by retail investors during the past

fiscal year was Baht 4,224,928 million, while our retail investors’ trading volume was Baht

145,531 million. This was equivalent to a market share of 3.44% vs. our market share for fiscal

year 2006 of 3.47%. Our policy for next year is to put a greater emphasis on expansion of our

retail client base, as well as to achieve more effective control over our costs and expenses.

Col. Ruangsub Kovindha Audit Committee Member & Independent Director

Annual Report 2007

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2. Domestic institutional investors - the total market trading volume generated by domestic institutional

investors for the past fiscal year was Baht 1,046,734 million, while our domestic institutional

investors’ trading volume was Baht 22,131 million for a market share of 2.11%. This represented a

rather substantial decline when compared with our market share of 2.98% in the previous fiscal year.

This sharp decline was caused primarily by some personnel problems in the Research Department in

early 2007 that went on to have a negative impact on our information and research service for

domestic institutional investors. Nonetheless, we expect to see some improvement in our

performance in the coming fiscal year now that these problems have started to ease.

3. Foreign institutional investors - the total market trading volume generated by foreign institutional

investors during the past fiscal year was Baht 2,779,202 million, while our foreign institutional

investors’ trading volume was Baht 27,511 million. This helped our market share increase slightly to

0.99% from 0.92% in the previous fiscal year. However, foreign institutional investors’ share of our

trading volume remained below our expectations. Thus, we are committed to developing this area of

our business and to continuously increasing our trading volume and market share in the next fiscal

year.

For fiscal year 2007, our brokerage fee income totaled 466.85 million baht for a decline of 8.42% year-on-year.

This brokerage fee income figure represented a market share of 2.43% that saw CNS ranked 19th amongst the

industry’s 38 securities firms. The breakdown of our trading volume by category of customer was as follows: retail

investors (74.56%), foreign investors (14.10%) and domestic institutional investors (11.34%).

As for our Securities Borrowing and Lending (SBL) service, which consists of short-selling services aimed at retail

investors, the progress made this past fiscal year has been satisfactory. We saw new SBL accounts surging by 20%

from 1,165 accounts to 1,400 accounts. Total borrowing and lending transaction volume for the entire fiscal year

amounted to Baht 1,769 million, increasing by Baht 638 million or 56% year on year.

As for our fixed income business, we were appointed as an underwriter for the Samui Airport Property Fund, and

for the first and second tranche of debentures for Preuksa Real Estate Public Company Limited. We were also

appointed as a selling agent for Gold Property Fund, as well as Major Cineplex Lifestyle Property Fund.

Furthermore, we were selected as a financial advisor for two companies who wanted to sell debentures and

property funds.

As a result of political uncertainty, the slowdown in the economy and fluctuating market sentiment, the

performance of our investment banking business segment weakened in the past fiscal year. This is reflected in

CNS having participated in only one co-underwriter deal out of a total of 14 initial public offerings (IPOs) during

the period. These negative factors also brought about delays in the listing of 3 companies where our CNS had been

appointed as the financial advisor in the fiscal year 2005 and 2006. However, we believe our investment banking

business will revive once the political situation becomes clearer following the general election that is scheduled for

the end of 2007.

Our derivative trading business in the past fiscal year received more attention from investors when compared to the

previous year as evidenced by the increase in average daily trading from Baht 315 million to Baht 1,746 million.

Meanwhile, the number of derivative trading accounts registered with our company increased by 89% from 214

accounts to 406 accounts. Note that our market share for derivative trading for the past fiscal year was 4.11%.

Hence, for fiscal year 2007 CNS was ranked as No. 8 among the 25 brokerage firms that provide derivative trading

services.

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The investment and management of our capital fund continued to be carried out in a careful and conservative manner

by investing in low-risk instruments. Meanwhile, our funds are carefully utilized to promote business expansion and

to support our core operations, such as credit balance, SBL, margin financing, underwriting of equity and fixed

income transactions, as well as our derivative trading business.

For the 2007 fiscal year, the company registered net profit of Baht 102.39 million, a slight decline when compared to

net profit of Baht 106.59 million in the 2006 fiscal year. However, if we exclude the provision for head office

relocation expenses of Baht 16 million recorded in July 2007, the net profit for 2007 fiscal year would have been Baht

7 million higher than the previous year.

In fiscal year 2008, we will continue to focus on expansion of our retail and institutional client base both domestically

and internationally, as well as on the development of our other aforementioned businesses. At the same time, we will

continue to improve the efficiency of our cost control measures. Our key development plans for the coming fiscal year

include the following:

nRelocating the CNS head office

nOpening new branches and relocating existing branches.

nRenovating existing branches to improve efficiency

nPreparing to provide services for Thai investors who wish to invest in foreign equity markets after the

necessary legislation is approved

nLaunching a new website (www.cnsrealtime.com) for internet trading to help facilitate internet trading

activities by our clients and expand transaction channels through other electronic devices such as mobile

phones and PDA

nChanging our SBL service system to Real Time Automatic Matching to facilitate short sell transactions

nCooperating with Nomura in conducting road shows for local and foreign institutional clients, training

CNS’s staff at Nomura branches overseas, as well as expanding our investment banking businesses in both

the equity and fixed income fields

Other key objectives for the coming fiscal year include enhancing the efficiency of our human resources in all

departments, improving the quality of our equity research reports, as well as organizing training sessions and seminars

to broaden investors and our employees’ knowledge. We will also continue to promote good corporate governance,

quality leadership and financial discipline as part of our commitment to delivering greater long-term shareholder

value.

Finally, on behalf of Capital Nomura Securities Public Company Limited’s Board of Directors, I would like to express

my sincere gratitude to our shareholders, clients, and staff for their continuous support, which encouraged us to work

for the greatest benefit of our company and our country.

Suthep Peetakanont

Chairman & Chairman of the Executive Board

Annual Report 2007

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Corporate Profile

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Business Profile

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Risk Management

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Dividend Policy

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Capital Structure

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Management Structure

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Remuneration paid to the Management

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Management Profile

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Good Corporate Governance

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Monitoring the use of and access to inside information

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Corporate Social Responsibilities

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Internal Control

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Report of Audit Committee

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Connected Transactions

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Performance and Analysis of Financial Status

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Report of the Board of Directors’ Responsibility in the Financial Statements

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Report of Independent Auditor

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Contents

Contact Head office 21/3 Thai Wah Tower, Ground Floor, South Sathorn Road, Bangkok, 10120

Telephone : +66(0) 2285 0060 +66(0) 2285 0096 +66(0) 2677 3333

Facsimile : +66(0) 2285 0535

Website : www.cns.co.th

Bangna Branch

400 Moo 11, Phairojkijja Office Building, 6th Floor, Bangna-Trad Road Km 4,

Bangna, Bangkok, 10260

Telephone : +66(0) 2361 4576-79 +66(0) 2361 4581–87 +66(0) 2361 4566-67

Facsimile : +66(0) 2361 4568 +66(0) 2361 4575

Phra-Pinklao Branch 7/129 Central Plaza Pinklao Office Building, 9th Floor, Room 902 Tower A,

Baromrajchonnee Road, Arun-Amarin, Bangkok Noi, Bangkok, 10700

Telephone : +66(0) 2884 9068-79 +66(0) 2884 9059-60

Facsimile : + 66(0) 2884 9064 +66(0) 2884 9067

Ratchadaphisek Branch 19 SCB Park Plaza Tower III East, Mezzanine 2nd Floor, Ratchadaphisek Road,

Chatuchak, Chatuchak, Bangkok, 10900

Telephone : + 66(0) 2937 8375-87 +66(0) 2937 8383

Facsimile : + 66(0) 2937 8390 + 66(0) 2937 8391

Yaowaraj Branch 624 Yaowaraj Place Building, Ground Floor, Yaowaraj Road, Sampantawong,

Sampantawong, Bangkok, 10100

Telephone : +66(0) 2267 0103-27 +66(0) 2639 1500-34

Facsimile : +66(0) 2639 1533 +66(0) 2267 0123

1 Financial Highlights

2 Board of Directors

3 Message from The Chairman

6 Corporate Profile

9 Business Profile

18 Risk Management

22 Dividend Policy

23 Capital Structure

26 Organization Structure

27 Management Structure

36 Remuneration paid to the Management

37 Management Profile

42 Good Corporate Governance

47 Monitoring the use of and access to inside information

48 Corporate Social Responsibilities

49 Internal Control

50 Report of Audit Committee

52 Connected Transactions

60 Performance and Analysis of Financial Status

68 Report of the Board of Directors’ Responsibility in the Financial Statements

69 Report of Independent Auditor

70 Financial Statements

103 Remuneration of the Auditor

AN

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Cap

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ANNUAL REPORT 2007