) IFA's Opinion regarding the connected transaction of TTW

14.40%1/ Return on equity (%) 18.64% 21.39% 20.82% Efficiency ratios 6.62%1/ Return on assets (%) 6.41% 6.27% 7.43% 11.87%1/ Return on fixed assets (%) 9.84% 10.60% 12.78% 0.21 1/ Assets turnover (times) 0.16 0.18 0.20 Financial policy ratios Debt to equity ratio (times) 1.75 2.96 1.15 1.21 1.73 1/ Interest coverage (times) 2.70 3.56 4.84 Leverage ratio (cash basis) (times) 0.50 0.29 0.46 0.07 Dividend payout ratio (%) 38.11% 17.66% 44.06% 0.00% Note: 1/ Annualized for comparative purpose. Page 32 of the total 92 pages The Opinion Report of the Independent Financial Advisor Analysis of performance and financial position of the Company and its subsidiaries Performance Income from sale of tap water Almost all revenues of TTW are revenues from sales of tap water to PWA. During 2006-2008, revenues from sales of tap water amounted to Bt. 1,697.8 million, Bt. 2,567.0 million and Bt. 3,569.3 million, respectively, representing the growth rate of 25.2%, 51.2% and 39.0% from the previous year respectively. The growth in 2007 and 2008 resulted from purchase of PTW's ordinary shares in the amount of 98% of the paid-up capital and recognition of PTW's income since July 2007. The other contributing factors were rising water demand as well as increase of MOQ and selling price of tap water. In the 3-month period of 2009, total revenues were recorded at Bt. 956.51 million, up 11.43% from Bt. 858.42 million in 2008 due mainly to increase in income from sales of tap water by approximately 11.61% from the corresponding period of the previous year. This was attributable to the increase of tap water sales to PWA and upward adjustment of selling price to Bt. 23.55/cu.m. Revenues from sales of tap water in this period amounted to Bt. 943.03 million or 98.59% of total revenues. Service income Service income is generated from BJT, a subsidiary of PTW that produces tap water for Amata City Industrial Estate. The Company started recognizing the said income since 2007 which accounted for Bt. 23.04 million, Bt. 36.01 million and Bt. 9.79 million or represented 0.88%, 0.99% and 1.02% of total revenues during 2007-2008 and the 3-month period of 2009, respectively. Cost of tap water sales and cost of service Cost of tap water sales and cost of service mainly are depreciation of production assets, electricity, chemical cost, rent of land for laying raw water pipes, labor cost and supplies. During 2006-2008, cost of tap water sales and cost of service amounted to Bt. 496.1 million, Bt. 780.8 million and Bt. 1,176.9 million respectively representing 29.2%, 30.1% and 32.6% of revenue from sale of tap water and service income, respectively. The increase in 2007 and 2008 was caused by recognition of cost of sale of PTW and BJT according to the investment period. The cost of sale moved up due to rising production volume that necessitated use of more chemicals and electricity. The Company and its subsidiaries also incurred cost of infrastructure maintenance of Bt. 63.7 million. In the 3-month period of 2009, cost of tap water sales and cost of service rose by 15.19% from Bt. 262.09 million in the same period of 2008 to Bt. 301.91 million or 31.69% of revenues from sales of tap water and service income. This was due mainly to increase of tap water sales to PWA according to the rising MOQ from 250,000 cu.m./day in the 3-month period of 2008 to 300,000 cu.m./day in the 3-month period of 2009, hence higher Page 33 of the total 92 pages The Opinion Report of the Independent Financial Advisor production costs such as electricity and chemicals. Other expense was maintenance of water production plant and distribution station of PTW that moved up by Bt. 5 million. The Company also refunded to PWA the tap water fee discount which accumulated from July 21, 2004 to January 21, 2009 in the amount of Bt. 25.7 million. Selling and administrative expenses Selling and administrative expenses during 2006-2008 rose by 101.3%, 19.1%, and 34.5% to Bt. 105.1 million, Bt. 125.1 million and Bt. 168.2 million, representing 6.1%, 4.8%, and 4.6% of total revenues, respectively. The increase of selling and administrative expenses in 2007 resulted from inclusion of PTW's selling and administrative expenses from July to December 2007 and expenses relating to investment in PTW such as borrowing fee, engagement of legal advisor and independent appraiser, etc. In 2008, apart from the selling and administrative expenses of PTW for the whole year of 2008, there were costs of maintenance of the access road to production plant and expenses on shares listing on the SET. In the 3-month period of 2009, selling and administrative expenses moved up by 42.82% from Bt. 24.22 million in the same period of the previous year to Bt. 34.59 million or 3.62% of total revenues. This was due to increase in the Company's selling and administrative expenses, i.e. personnel expense, legal advisory fee, advertising cost, as well as expenses and fees relating to debentures issue. Finance cost and interest expenses Finance cost and interest expenses surged from Bt. 437.0 million in 2006 to Bt. 670.6 million in 2007 representing 25.4% and 25.6% of total revenues, respectively. This was because finance cost of PTW from July to December was included in the Company's consolidated financial statements and the MLR in 2007 edged up from the previous year. In 2008, finance cost and interest expenses increased further to Bt. 728.7 million owing to inclusion of PTW's finance cost for the whole period in the consolidated financial statements. However, the Company's finance cost dropped by Bt. 51.7 million or 9.2% resulting from short-term loan repayment of Bt. 3,000 million and long-term loan repayment of Bt. 1,028.8 million. PTW also repaid long-term loan of Bt. 418 million. Finance cost and interest expenses for the 3-month period of 2009 increased by 21.94% from Bt. 210.04 million in the same period of the previous year to Bt. 256.13 million, representing 26.78% of total revenues, due mainly to prepayment of long-term loan of Bt. 5,839.8 million with a prepayment fee of Bt. 116.8 million and financial representative cost of subsidiary of Bt. 3.0 million. The Company repaid short-term loan of Bt. 3,000 million in May 2008, hence no interest expense on such loan. Page 34 of the total 92 pages The Opinion Report of the Independent Financial Advisor Net profit The Company's profitability is satisfactory with gross profit margin of 70.8%, 69.9%, 67.4% and 68.31% in 2006-2008 and the 3-month period of 2009, respectively. The net profit amounted to Bt. 674.4 million, Bt. 920.1 million, Bt. 1,358.4 million, and Bt. 305.8 million respectively over the said periods, which led to a net profit margin of 39.2%, 35.1%, 37.3% and 32.0%, respectively. The consistent increase in net profit resulted from the above- mentioned factors. Financial position Assets Total assets in 2006-2008 and as of March 31, 2009 amounted to Bt. 10,681.9 million, Bt. 18,681.2 million, Bt. 17,894.6 million and Bt. 19,063.3 million, respectively, of which around 83%-89% were non-current assets. Considerable growth of non-current assets from Bt. 9,375.3 million in 2006 to Bt. 16,538.9 million in 2007 was ascribed to the Company's purchase of PTW's ordinary shares in the amount of 98% of its paid-up capital. Major assets were assets for production of tap water that must be transferred at end of concession-net of Bt. 4,258.2 million and rights to produce and sell tap water-net of Bt. 3,079.6 million. In 2008, non-current assets decreased by Bt. 585.3 million as a result of depreciation of property, plant and equipment and amortization of rights to produce tap water which must be transferred at end of concession, and rights to operate tap water production and distribution business. As of March 31, 2009, major non-current assets are property, plant and equipment, net of Bt. 8,853.6 million, assets for production of tap water that must be transferred at end of concession, net of Bt. 4,074.2 million, and rights to produce and sell tap water, net of Bt. 2,836.1 million. The asset turnover stayed rather low at 0.13 times, 0.16 times, 0.18 times and 0.19 times during 2006-2008 and as of March 31, 2009, respectively. This however is considered normal for infrastructure business which requires huge investment and generates income according to the agreement period. Current assets in 2006-2008 and as of March 31, 2009 were posted at Bt. 1,306.6 million, Bt. 2,142.3 million, Bt. 1,940.9 million and Bt. 3,277.9 million, respectively. Major current assets were cash and cash equivalents, current investments, restricted bank deposits, trade accounts receivable and trade accounts receivable mainly from PWA. Liabilities In 2006-2008 and as of March 31, 2009, the Company had total liabilities of Bt. 6,792.1 million, Bt. 13,966.4 million, Bt. 9,558.2 million and Bt. 10,418.2 million, representing 63.58%, 74.76%, 53.41% and 54.65% of total assets, respectively. Most were long-term loans from financial institutions. Nevertheless, in the 3-month period of Page 35 of the total 92 pages The Opinion Report of the Independent Financial Advisor 2009, the Company issued debentures in the total amount of Bt. 7,000 million for loan repayment, leading debts to financial institutions to decline from Bt. 9,309.35 million in 2008 to Bt. 3,286.40 million as of March 31, 2009. Shareholders' equity The shareholders' equity in 2006-2008 and as of March 31, 2009 was recorded at Bt. 3,889.9 million, Bt. 4,714.8 million, Bt. 8,336.4 million and Bt. 8,645.0 million representing 36.42%, 25.24%, 46.59% and 45.35% respectively. Increase in the shareholders' equity was attributed to its yearly profitability. In 2008, the Company increased its capital through issuance of 700 million ordinary shares to the public at Bt. 4.20 per share, totaling Bt. 2,940 million, which led premium on net share value (after securities offering fee) to grow to Bt. 2,637.77 million. At year-end of 2006-2008 and as of March 31, 2009, the debt to equity ratio was 1.75 times, 2.96 times, 1.15 times, and 1.21 times respectively, which was considered moderate. Liquidity Cash flows from operating activities increased from Bt. 740.2 million in 2006 to Bt. 1,617.6 million in 2007 and Bt. 2,695.5 million in 2008 resulting from consistent profit. As for investing activities, the Company invested an amount of Bt. 3,859.4 million in PTW in 2007. Cash flows from financing activities came from Bt. 3,998.3 million of loan from financial institutions for investment in PTW's ordinary shares. In 2008, the Company recorded net cash flows used in financing activities of Bt. 2,828.9 million with proceeds obtained from share capital increase of Bt. 2,854.8 million. The Company also paid short- and long-term loans of Bt. 4,451.2 million and dividend of Bt. 598.5 million. Liquidity ratio as of March 31, 2009 rose to 5.04 times from 1.69 times, 0.46 times and 1.43 times in 2006- 2008 respectively, which is considered favorable. A sharp rise in liquidity ratio as of March 31, 2009 was due to increase of cash from debenture issue. 1.6.8 Industry situation and competition Thailand has a total area of about 320.70 million rai and the average precipitation of 1,482.37 millimeters. Precipitation is a source of water, i.e. surface water from river and canal and groundwater. Water volume in the country totals approximately 745,085 million cubic meters. Volume of water from sources that are natural flows like river and canal approximates 200,830 million cubic meters. As such, Thailand needs water system management. Out of the total areas, 60.29 million rai or 18.80% has potential to be developed into irrigation area. In 2008, the development of about 28.35 rai was completed. Details are as follows: Page 36 of the total 92 pages The Opinion Report of the Independent Financial Advisor Volume of Proportion of Potential Irrigation Average water from irrigation area areas areas Water volume Watershed precipitation natural flows against (million (million (million cu.m.) (mm.) sources potential areas rai) rai) (million cu.m.) (%) 1. Salawin, Kok, Ping, Wang, Yom, Nan 1,451.37 185,957.36 45,747.66 10.35 5.12 49.48 2. Khong, She, Moon 1,438.32 252,816.31 48,804.64 28.25 6.22 22.03 3. Chao Phraya, Sakaekrang, Pasak, 1,155.44 120,301.11 33,120.42 11.93 11.68 97.96 Tha Chin, Mae Klong, Petchburi, west coast area 4. Pranchin Buri, Bang Pakong, Ton Le 1,761.80 68,177.18 26,703.53 5.02 2.67 53.17 Sap, east coast area 5. East coast of the South, Ta Pe, 1,604.93 117,833.70 46,453.85 4.75 2.65 55.76 Songkhla Lake, Pattani Lake, west coast of the South Total 1,482.37 745,085.66 200,830.10 60.29 28.35 47.01 Source: Information of irrigation project 2008, Department of Water Resources, Ministry of Natural Resources and Environment The above table indicates that the central region has developed most of its potential areas into irrigation areas despite lower precipitation compared to other regions. Water consumption in Thailand is mainly for industry, agriculture and household. Major water sources are precipitation, irrigation system and tap water, depending on the purpose of water usage. Quality of water for consumption is improved through tap water production process which relies on the sources, i.e. irrigation system, rivers or underground water wells. In Thailand, tap water business for Bangkok, Samut Prakan, and Nonthaburi is operated by the Metropolitan Waterworks Authority ("MWA") and for the provincial areas by the Provincial Waterworks Authority ("PWA"). The past performance of PWA is shown in the table below: 2004 2005 2006 2007 1. No. of consumers at year-end (person) 2,214,103 2,306,962 2,479,776 2,628,470 2. Normal increase rate (%) 8.88 9.20 8.39 6.85 3. Actual production volume (million cu.m.) 858.07 944.99 1,016.46 1,111.61 4. Distribution volume (million cu.m.) 827.11 909.43 981.18 1,077.13 5. Volume of sale (million cu.m.) 606.11 678.09 722.21 794.68 6. Loss rate in distribution system (%) 26.63 25.26 26.31 26.12 7. Average consumption (cu.m./person/day) 0.82 0.85 0.84 0.86 Source: PWA's annual report 2007 Privately owned companies can also produce tab water by applying for a concession from the Department of Water Resources, Ministry of Natural Resources and Environment. The water sources can be surface water Page 37 of the total 92 pages The Opinion Report of the Independent Financial Advisor sources, private reservoirs, rivers, seas and underground water wells. As of May 27, 2009, the Department of Water Resources granted such concession to 66 private companies, classified by region and size of tap water system as follows: Areas Size of tab water system (no. of Total capacity Concession period (no. of companies) companies) (cu.m./day) Small Medium Large Total 5 10 15 25 Total years years years years 1) Operators granted concession with the concession still valid - 34 companies North 2 - - 2 1,988 2 - - - 2 Central 4 4 5 13 1,017,714 5 - - 8 13 East 6 - - 6 6,350 2 - 3 1 6 North East 1 - - 1 930 1 - - - 1 South 11 1 12 16,857 10 - 1 1 12 Total 24 5 5 34 1,043,839 20 - 4 10 34 2) Operators with expired concession and in the process of renewal request to the Cabinet - 32 companies North 9 1 - 10 10,779 6 3 1 10 Central 17 1 1 19 61,019 1 17 - 1 19 East 1 - - 1 600 - 1 - - 1 North East - - - - - - - - - - South 2 - - 2 1,537 2 2 Total 29 2 1 32 73,935 1 26 3 2 32 Notes: 1. Small tap water system has production capacity of not over 3,000 cu.m./day. 2. Medium tap water system has production capacity in a range of 3,001 - 15,000 cu.m./day. 3. Large tap water system has production capacity of over 15,000 cu.m./day. Hence, from the past, there are some industrial estates which have not themselves operate the tap water production and water treatment to the entrepreneurs, but have hired the other private company to operate such service such as Amata City Industrial Estate hires BJT which is the subsidiary of Pathum Thani Water, to produce tap water and render service of water treatment for companies in such industrial estate, and Bang-poo Industrial Estate hire Global Utilities Services Co., Ltd. and Global Environmental Technology Co., Ltd. to produce tap water and render service of water treatment respectively. BLDC's tap water production project is located in Bangpa-in Industrial Estate in Ayutthaya Province which is under supervision of IEAT. IEAT also operates industrial estate business with other entrepreneurs in Ayutthaya Province such as Ban Wah (Hi-tech) Industrial Estate and Saharattana Nakhon Industrial Estate. Details are as follows: Page 38 of the total 92 pages The Opinion Report of the Independent Financial Advisor Area for sale/rent (rai) Remaining industrial Tap water/ Treatment Water fee Waste water area (rai) Groundwater system (Bt./cu.m.) treatment fee system (cu.m./day) (Bt./cu.m.) General I-EA-T General I-EA-T (cu.m./day) Zone Free Zone Zone Free Zone 1. Bangpa-in 1/ 1,172 166 17.31 10.77 48,000 12,000* 22.50 7.00 - 9.00 2. Ban Wah 2/ 1,034 592 145.00 - 21,000 16,800 13.50 8.00 3. Saharattana Nakhon 3/ 867 - 405.00 - 11,960 16,800 22.00 8.00 (more)