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AEONTS reports a net profit of 287 million baht with 27% growth y-y and passed the board resolution to approve acquisition of 3 related companies

BackJun 25, 2012

Bangkok, June 25, 2012, AEON Thana Sinsap (Thailand) Public Company Limited ("AEONTS") - Thailand's consumer finance business leader - announced the financial results for the 1st quarter ended May 20, 2012 with a consolidated net profit of 287 million, 27% growth from Q1/2011.

Mr. Yasuhiko Kondo, Managing Director noted: "The growth of credit card spending and personal loan business was supported by economic recovery after the severe floods abated as well as 300-baht minimum wage adjustment since April 2012. We have focused on increasing customer base together with expanding financial service network in order to enhance the customers' satisfaction and facilitate customers' ability to access more financial channel. Besides cashing through KBank ATMs, AEON members will be able to cash through 7-11, new service channel, which will be available soon. However, the Company still keeps cautious consideration in loan approval by mainly focusing on quality of customers"

In the 1st quarter FY2012, the Company reported revenues of 2,791 million baht, increasing by 13% yoy. Breakdown of revenues were as followings: Credit Card 39%, Loans 52%, and Hire Purchase 2%. Meanwhile total expenses were 2,417 million baht, increasing by 13% yoy, which was in line with total revenues growth. Consequently, net profit in the first three months FY2012, recorded at 287 million baht, increasing 27% y-y and 42% q-q.

Total assets amounted to 45,434 million baht, a 4 % increase from the end of FY2011, mainly attributed to the portfolio of net accounts receivable which shared 83 % of total assets. Total liabilities amounted to 39,020 million baht increased from the end of FY2011 by 4 %. To support business growth, total borrowing was 36,668 million baht. Total shareholders' equity increased to 6,413 million baht, 5% growth from the end of FY2011. As of May 20, 2012, book value was 25.7 baht per share and Debt to Equity ratio was 6.1 times. Return on Equity and Return on Asset for the first three months were 18.3% and 2.6%, respectively.

As at May 20, 2012, the Company' total cards reached 6.33 million cards (including 2.04 million credit cards and 4.29 million member cards), increased by 433,000 cards from May 20, 2011. For AEONTS networks, the Company has 90 branches and 348 ATMs to support customers' convenience nationwide. Moreover, total dealers have reached more than 15,500 shops.

In addition, The meeting of Board of Directors of AEON Thana Sinsap (Thailand) Plc. ("AEONTS") No. 4/2012 which was held on June 25, 2012 passed the resolution to approve the acquisition of 99.99% shares in 3 related companies from ACS Capital Corporation Limited ("ACS Capital"), which is a major shareholder of AEONTS holding 19.2% in AEONTS, as follows:

Company
Nature of Business
Acquisition Price
ACS Insurance Broker (Thailand) Company Limited ("ACSB") Provide non-life insurance brokerage service
Company website:
http://www.acsbroker.co.th
Latest audited book value as at December 31, 2011, adjusted with any transaction that reflect changes to the total equity from January 1, 2012 until the transaction date, however, the acquisition price shall not exceed Baht 100.00 million
ACS Life Insurance Broker (Thailand) Company Limited ("ACSL") Provide life insurance brokerage service
Company website:
http://www.acsbroker.co.th
Latest audited book value with adjustments as mentioned above; however, the acquisition price shall not exceed Baht 70.00 million
ACS Servicing (Thailand) Company Limited ("ACSS") Providing professionally debt collection services
Company website: http://www.acsservicing.co.th
Latest audited book value with adjustments as mentioned above; however, the acquisition price shall not exceed Baht 190.00 million

Therefore, the total acquisition price for the 3 related companies shall not exceed Baht 360.00 million.

Financial Summary (As at December 31, 2011)

(Unit: Million Baht)
ACSB
ACSL
ACSS
Total Assets
166.82
109.41
217.04
Total Equity
62.78
42.66
153.87
Total Revenue
125.73
70.97
320.86
Net Income
27.61
21.85
29.31

Expected Benefits to AEONTS

1. Enhance financial performance of AEONTS

The combined net income of the 3 companies for the fiscal year 2011 ended December 31, 2011 was Baht 78.77 million which represents approximately 35.45% of the net income to owner of AEONTS for the last 12 months ended May 20, 2012. If AEONTS acquires the 3 companies, the net income of AEONTS will increase by the combined net income of the 3 companies and will enhance the financial performance and cash flow of AEONTS.

2. Eliminate connected transactions and potential conflict of interests

At present, there are several related party transactions between AEONTS and the 3 companies, including the management fee income concerning the support of back office (Accounting, Administration, Personnel, Promotion, Legal, and system support). Moreover, the business operation of the 3 companies relies on the resources of AEONTS, including sale channel and payment through AEONTS branches and credit cards, including providing majority of the collection service to AEONTS. The acquisition of the 3 companies will eliminate the connected transactions and any potential conflict of interests once the 3 companies become the subsidiaries of AEONTS.

However, as the transactions are considered as asset acquisition transactions and connected transactions, therefore, according to the size, AEONTS is required to obtain approval from the shareholders' at the EGM which will be held on August 10, 2012 to enter into the transactions.

For detailed information, investors can refer to the information memorandum according to the following link: http://aeonts.listedcompany.com/newsroom/2012-06-25_AEONTS03_EN.pdf