) Information Memorandum : TTW

uncertainty may have a material adverse effect on the Company's operations, revenue, financial condition and results of operations. 4.2 Risks relating to corporatisation/privatisation of PWA Currently, there is still uncertainty concerning the privatisation of the waterworks sector which includes PWA. The Company cannot, forecast what the new elected government's policy relating to corporatisation/privatisation of state enterprises would be and, if PWA was corporatised or privatised, whether it would have any negative effect on the Company's operations, financial condition, results of operations and business prospects. Furthermore, after PWA's corporatisation/privatisation, there might be a change in the waterworks management policy, which may affect PWA's ability to support the Company in its application for licenses or consent from the relevant government authorities and in obtaining public utility services at a lower rate than normally enjoyed by the public or the lowest rate. This might affect the Company's ability to operate its business, results of operations, revenue and financial condition. 4.3 Changes in the State's policy on groundwater According to the report on the situation of groundwater and land subsidence and the directions for groundwater management in Bangkok and its Periphery of the Ministry of Natural Resources and Environment by the Department of Groundwater Resources, proposed to the Cabinet's meeting for its information on 11 September 2007, the situation of ground water and land subsidence have improved, thanks to the Government's various remedial and preventive measures regarding the groundwater crisis and land subsidence. However, the Department of Groundwater Resources, the Ministry of Natural Resources and Environment, which is the authority in charge, continues to strictly control the use of groundwater. Nonetheless, the Company cannot assure that there will not be any change in policy or that the groundwater use control measures in the crisis areas will not be relaxed. If such measures were relaxed to allow increased groundwater usage, the Company's revenue, financial condition and business prospects may be affected. 5 Risks relating to major shareholders Under the terms of the financing agreements between the Company and the financial institutions that have granted loans to the Company, two of the Company's shareholders, CH. Karnchang and Mitsui, agreed to pledge 1,077.4 million and 580.1 million of their shares, respectively, to the lenders. In addition, Bangkok Expressway Plc. agreed to pledge its 325.0 million shares in the Company to the lenders in accordance with the condition prescribed in the financing agreement to which Bangkok Expressway Plc. is a party. The numbers of shares pledged by the three Major Shareholders are equal to 27.0%, 14.5% and 8.1% of the fully paid-up shares after the initial public offering. All of such shares are pledged as security for three shareholders' debts to the creditors. The pledged shares are part of the shares subject to the lock-up period during which the sale of shares is prohibited under the SET rules. However, the SET Notification Re: Prohibition on the sale of shares and securities by a company's executives and shareholders during the lock-up period (No. 5), dated 20 February 2008, allows a financial institution as lender to force the sale of shares which is subject to the lock-up requirement only if the sale is to pay debt. Thus, if the Company or Bangkok Expressway Plc. defaults on these loan agreements, the Syndicate of Lenders may foreclose on those pledged shares which could be sold at a public auction. This could result in a change of the Company's major shareholders and control of the Company. The new major shareholders' policy may differ from the 2007 policy. Moreover, the sale of shares at a public auction could adversely affect the Company's share price, resulting in a decrease in the share price. Legal disputes 1. As at 27 February 2008, there are no legal disputes which may adversely impact the Company's assets for more than 5% of its shareholders' equity as at 31 December 2007 or may adversely affect the Company's business in any material respect. 2. Legal dispute relating to Pathum Thani Water In December 2006, a person (the plaintiff) began the legal proceedings against PWA (the first defendant) and Pathum Thani Water (the second defendant) in the Central Administrative Court, asking the court to reverse the arbitration award which dismissed the dispute in which the plaintiff claimed co- liability and compensation from PWA and Pathum Thani Water for Baht 64,474,000 in respect of trespass. In the plaint, the plaintiff asked the court to order the defendants to pay compensation of Baht 64,474,000 to the plaintiff. The plaintiff asserted in the plaint that the arbitration award was based on a mistake of facts and the arbitral tribunal failed to determine the compensation to which the plaintiff was entitled under the Act on Liability for Wrongful Acts of Officials, B.E. 2539 (1996), due to the damage suffered from the wrongful acts of administrative bodies in relation to the Water Production and Distribution Licence Agreement. At the current stage, the Central Administrative Court is investigating the facts relevant to the case in accordance with the legal procedure. No. of Employees of the Company and the Subsidiaries The total number of employees (including executives) as at 31 December 2007 was 224. Company Background The Company In 2000 On 11 September, the Company was incorporated under the name of VKCS (Thailand) Ltd. ("VKCS") (which later changed its name to Thai Tap Water Supply Ltd.) to engage in the business of land management and development for the purpose of carrying out the work under the Tap Water Production and Distribution Project (the "Project"), which was a 50:50 joint venture between the CH. Karnchang Group and the Thames Water Group (which consisted of Thames Water International Services Ltd., Thames Water International (Thailand) Ltd. and Thames Water Plc.), with Baht 100,000 registered paid-up capital (with the par value of Baht 100 per share). On 21 September, the Water Purchase and Sale Agreement was entered into with PWA for a term of 30 years under the Build-Own-Operate ("BOO") arrangement. In 2001 On 27 April, the Office of the National Water Resources Commission granted the Company permission to withdraw water from the Tha Chin River (previously known as the Nakorn Chaisri River) for its production of tap water for distribution to the public at the rate of 320,000 cubic metres per day. On 12 June, the Operation and Maintenance Agreement was entered into with Waterflow. In 2004 On 21 July, the Company started to sell tap water to PWA in accordance with the Water Purchase and Sale Agreement. In 2005 On 11 March, the Company received a concession to operate a waterworks business in Nakornpathom Province (in the districts of Nakorn Chaisri, Sampran and Phutthamonthon) and Samutsakorn Province (in the districts of Kratoomban and Muang Samutsakorn) from the Ministry of Natural Resources and Environment. On 2 August, the Thames Water Group disposed of all of their ordinary shares in the Company to CH. Karnchang, and all of their ordinary shares in Waterflow to C.K. Office Tower Ltd., whose majority shareholders are the same as those of CH. Karnchang. From September to December, CH. Karnchang disposed of 4.83%, 2.50% and 2.50% of its ordinary shares in the Company to Bangkok Expressway Public Company Limited, Bangkok Bank Public Company Limited and TMB Bank Public Company Limited, respectively, at the price of Baht 290 per share (with a par value of Baht 100 each). In 2006 On 27 February, Waterflow was bought, for Baht 700 million, from Advance Assets Associates Limited, a company incorporated in the British Virgin Islands and not related to the Company. On 24 March, Mitsui Water Holdings (Thailand) Ltd. ("Mitsui"), a non-affiliate of the Company, purchased 11,375,000 shares in the Company from CH. Karnchang; that was equal to 35% of the Company's total issued and paid-up shares, at the price of Baht 320 per share. On 6 July, the Company was converted into a public company and the par value of its shares was changed from Baht 100 per share to Baht 1 per share. In 2007 On 29 June, the Company purchased 10,698,283 ordinary shares in Pathum Thani Water, or 89.15% of its total shares, from CH. Karnchang. On 18 December, the Company acquired additional 1,061,452 ordinary shares in Pathum Thani Water, which was equal to 8.85% of the total paid-up capital in Pathum Thani Water. As a result, as at 31 December 2007, the Company held 98.0% of the total paid-up capital in Pathum Thani Water. Pathum Thani Water In 1995 On 29 May, Pathum Thani Water was incorporated under the name of PCKT (Thailand) Ltd. to engage in the business of procuring and developing land for the purpose of carrying out the work under the Tap Water Production and Distribution Project (the "Project"). Its registered paid-up capital was Baht 200 million (with the par value of Baht 100 per share). It was a joint venture between CH. Karnchang, Thames Water International (Thailand) Ltd., Berli Jucker Plc, Capital Rice Bovis Limited and PWA, each holding of 30%, 30%, 15%, 15%, 5% and 5% of the total shares, respectively. On 31 August, Pathum Thani Water and PWA entered into the Water Production and Distribution Licence Agreement, which is a Build-Own-Operate-Transfer contract, with a term of 25 years In 1996 On 24 January, the National Water Resources Commission granted the Company permission to withdraw water from the Chao Phraya River at the rate of 300,000 cubic metres per day for its production of tap water under the private participation in the improvement and expansion of Pathumthani-Rangsit waterworks project. In 1998 On 15 October, Pathum Thani Water began to produce and distribute tap water to PWA pursuant to the Water Production and Distribution Licence Agreement. In 2000 On 13 January, Pathum Thani Water received a concession from the Ministry of Interior to conduct waterworks operations in Pathumthani-Rangsit service areas in Pathumthani Province. In 2005 On 2 August, Thames Water International (Thailand) Ltd. sold all of its ordinary shares in Pathum Thani Water to Mahasiri Siam Ltd. In 2006 On 30 June, Berli Jucker Public Company Limited sold all of its ordinary shares in Pathum Thani Water to CH. Karnchang On 15 September, Pathum Thani Water signed the Water Purchase and Sale Agreement with PWA for the purchase and sale of tap water at the rate of 70,000 cubic metres per day. In 2007 On 25 January, Pathum Thani Water increased its registered capital from Baht 1,102 million to Baht 2,752 million through a rights offering. On 26 January, the Operation and Maintenance Agreement with Pathum Thani Operations Ltd. was terminated. Pathum Thani Water purchased all of BJT Water Co., Ltd. ("BJT")'s shares and signed the Operation and Maintenance Agreement with BJT. On 11 June, the registered capital was reduced on a pro rata basis from Baht 2,752 million to Baht 1,200 million. On 29 June, the major shareholder was changed from CH. Karnchang to the Company. Consequently, the Company held 89.15% of the total paid-up capital in Pathum Thani Water. On 18 December, CH. Karnchang, Capital Rice and the other persons sold to the Company the additional shares in Pathum Thani Water representing in aggregate 8.85% of the total issued shares in Pathum Thani Water. Investment in Subsidiaries as at 31 December 2007 is detailed as follows: Unit: Baht million Paid-up % of Investment Name Type of business capital shareholding amount 1. Pathum Thani Water Tap water production and 1,200 98 3,998.4 Co., Ltd. distribution 2. Waterflow Company Operation and maintenance of 10 100 700 Limited tap water production system 3. BJT Water Company Operation and maintenance of 50 98 305 Limited tap water production system (in which 100% of the total shares are indirectly held through Pathum Thani Water) History of the shareholding restructuring during the past five years of the following companies: The Company 26 September 10 November 29 November 27 February 2006 19 April 2004 1 August 2005 2 August 2005 2005 2005 2005 (Capital Increase)* CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang 15% 50% 100% 97.50% 92.67% 90.17% 90.34% (transferred from (transferred to (transferred to (transferred to (Baht 290 General Akkradej Bangkok Bank Pcl. Bangkok TMB Bank Pcl. per share) Sasiprapa 35%) 2.5% at Baht 290 Expressway Pcl. 2.5% at Baht 290 per share) 4.83% at Baht 290 per share) per share) Thames Water Thames Water - - - - - Group Group (transferred to 0.10% 0.10% CH. Karnchang 0.1% at no more than Baht 240 per share) Thames Water Thames Water - - - - - Group Group (transferred to 1% 1% CH. Karnchang 1% at no more than Baht 240 per share) Thames Water Thames Water - - - - - Group Group (transferred to 48.90% 48.90% CH. Karnchang 48.9% at no more than Baht 240 per share) General Akkradej - - - - - - Sasiprapa (transferred to 35% CH. Karnchang 35% at Baht 211.70 per share) - - - Bangkok Bank Pcl. Bangkok Bank Pcl. Bangkok Bank Pcl. Bangkok Bank Pcl. 2.50% 2.50% 2.50% 2.50% (transferred from CH. Karnchang) - - - - Bangkok Bangkok Bangkok Expressway Expressway Pcl. Expressway Pcl. Pcl. 4.83% 4.83% 4.84% (transferred from CH. Karnchang) - - - - - TMB Bank Pcl. TMB Bank Pcl. 2.50% 2.31% (transferred from CH. Karnchang) Remark: * On 27 February 2006 there was a capital increase and the shareholding structure was changed because the existing shareholders at that time did not exercise its pre-emptive right to purchase the shares. 6 July 2006 24 March 2006 6 June 2006 9 June 2006 19 June 2006 26 July 2006 (public conversion) CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang 55.34% 54.83% 54.32% 50.19% 50.19% 47.69% (transferred to (transferred to (transferred to (transferred to (transferred to Bangkok Mitsui 35% Bangkok Expressway Bangkok Expressway Bangkok Expressway Expressway Pcl. 2.5% at Baht 320 Pcl. 0.51% at Pcl. 0.51% at Pcl. 4.13% at at Baht 320 per share) per share) Baht 320 per share) Baht 320 per share) Baht 320 per share) - - - - - - - - - - - - - - - - - - - - - - - - Bangkok Bank Pcl. Bangkok Bank Pcl. Bangkok Bank Pcl. Bangkok Bank Pcl. Bangkok Bank Pcl. Bangkok Bank Pcl. 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Bangkok Bangkok Bangkok Bangkok Bangkok Expressway Bangkok Expressway Pcl. Expressway Pcl. Expressway Pcl. Expressway Pcl. Pcl. Expressway Pcl. 4.84% 5.35% 5.86% 10% 10% 12.50% (transferred from (transferred from (transferred from (transferred from CH. Karnchang 0.51%) CH. Karnchang 0.51%) CH. Karnchang 4.13%) CH. Karnchang 2.5%) TMB Bank Pcl. TMB Bank Pcl. 2.31% TMB Bank Pcl. 2.31% TMB Bank Pcl. TMB Bank Pcl. 2.31% TMB Bank Pcl. 2.31% 2.31% 2.31% Mitsui Mitsui Mitsui Mitsui Mitsui Mitsui 35% 35% 35% 35% 35% 35% (transferred from CH. Karnchang) Remark: The share sale and purchase prices mentioned above are the prices which CH. Karnchang disclosed in its circular to the SET. Pathum Thani Water 18 March 2004 2 August 2005 26 August 2005 30 June 2006 12 October 2006 PWA PWA PWA PWA PWA 5% 5% 5% 5% 5% Thames Water Group Mahasiri Siam Co., Ltd. Mahasiri Siam Co., Ltd. Mahasiri Siam Co., Ltd. Mahasiri Siam Co., Ltd. 38.60% 38.60% 34% 34% 28.02% (transferred from (transferred to (transferred to Thames Water Group) Capital Rice Trading CH. Karnchang Group Co., Ltd. 4.6%) 5.98% at Baht 73.50 per share) CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang CH. Karnchang 29.10% 29.10% 29.10% 36.60% 42.58% (transferred from (transferred from (more)