MD&A for Q1/06

No. MD. 069/2006

May 10, 2006

Re:Management Discussion and Analysis
For the Three Month Period Operating Results ended March 31, 2006
To:President
   The Stock Exchange of Thailand

Management Discussion and Analysis
For the Three Month Period Operating Results ended March 31, 2006

1.Report and Analysis of the Operating Results
1.1 Revenue
1.1.1 Services Income
In Q1/2006, services income of the company was Baht 295.05 million,
increasing by Baht 27.86 million or 10.43% compared to that of the last year.
There are two major factors influent the services income which are volume of
fuel serviced and the exchange rate. In Q1/2006, the company had volume of
fuel serviced of 1,088.67 million litres, increasing 91.06 million litres or
9.13% from Q1/2005.
The other important factor accounted for the movement of services income is
the exchange rate. Thai Baht has been depreciated against US Dollar in Q1/2006
and positively affected the services income since the service fees are charged
in US Dollar based. Thai Baht depreciated against US Dollar from the average
rate of Baht 38.63 per US Dollar in Q1/2005 to Baht 39.04 per US Dollar in
Q1/2006 which accounted for 1.06% depreciation. Together with the increase in
volume serviced of 9.13%, the services income increased by 10.43%.

1.1.2 Rental Income
The rental income of Q1/2006 was Baht 10.03 million which comprised of
office and pipeline receiving system rental to Fuel Pipeline Transportation
Limited (FPT) of Baht 9.61 million and land and utilities system rental to
Thai Petroleum Pipeline Co., Ltd. (THAPPLINE) of Baht. 0.41 million. The
rental income decreased Baht 4.67 million or 31.80% from last year. The
decrease in rental income was due to the decrease in pipeline receiving system
rental to FPT of Baht 4.71 million which charged at a variable rate referenced
to FPT's Jet A-1 transportation revenue according to the decrease in volume of
fuel transported of 25.69% from Q1 of last year.

1.1.3 Other Income
Other income was Baht 25.98 million, mostly comprised of interest income from
short term investment of Baht 1.26 million, interest income from FPT of Baht
1.15 million, principal repayment as specified in the repayment schedule of the
third debt restructuring and principal prepayment received from FPT of
approximately Baht 3.49 million. Besides, there was guarantee fee from
TARCO of Baht 2.42 million and guarantee fee from JP-One of Baht 0.10 million.
Besides, there was gain from exchange rate of TARCO of Baht 15.35 million
recorded from the depreciation of the outstanding US Dollar loan.

1.2 Expenses
1.2.1 Cost of  Services
In Q1/2006, cost of services was Baht 101.15 million. Major items in cost of
services are pipeline rental charge from Airports of Thailand PLC. (AOT) of
Baht 18.71 million , land rental of Baht 4.59 million, maintenance expense of
Baht 5.30 million, insurance expenses comprised of all risk insurance of Baht
1.95 million and third party legal liability insurance of Baht 4.07 million,
depreciation of Baht 12.84 million, salary of Baht 21.23 million. Besides,
there was retirement benefit recorded as cost of service of Baht 12.45 million.
When comparing to Q1/2005, cost of services increased Baht 15.46 million or
18.04%. The main reason for the increase in cost of service was the increase
in pipeline rental charge paid to AOT of approximately Baht 8.18 million
according to the reversal of additional pipeline  rental in Q1/2005 which
caused less than usual pipeline rental in that period. Furthermore, the company
had some major increase expenses which were salary of Baht 2.46 million,
the retirement benefit of Baht 5.15 million, fuel for vehicle of Baht 1.07
million and utilities of Baht 1.18 million.
Other than increasing expenses, there was an important decreasing expense
which was depreciation expense of Baht 2.55 million.

1.2.2 Administrative Expenses
Administrative expenses was Baht 48.12 million, comprised of salary of Baht
14.91 million, retirement benefit of Baht 5.76 million, depreciation of Baht
3.55 million and computer supplies of Baht 4.34 million.
The Administrative expenses increased by Baht 6.65 million or 16.03% from Q1
of last year due to the increase in salary of Baht 1.90 million, retirement
benefit of Baht 3.71 million, and computer supplies of Baht 1.38 million.

1.2.3 Interest Expenses
The Company had the interest expenses in Q1/2006 of Baht 9.38 million which
comprised of the interest from long term loan from KBANK of Baht 800 million
of Baht 9.17 million and interest from financial lease of Baht 0.20 million.

1.3 Operating Results
Net profit for the first quarter ended March 31, 2006 was Baht 127.01 million,
increasing by Baht 10.93 million or 9.42% from Q1/2005 of Baht 116.08 million
as a result of various factors as discussed above and the earning per share
was Baht 0.30.

2.Report and Analysis of Financial Status
2.1 Assets
As at March 31, 2006, the Company and its subsidiaries had total assets in the
amount of Baht 6,814.21 million, increased by Baht 1,285.93 million or 23.26%
from that of last year. The important details are as follows:
2.1.1 Cash and cash equivalent increased from Baht 270.06 million at the end of
2005 to Baht 303.19 million as at Q1/2006 or increasing by Baht 33.14 million.
The details of important sources and uses of cash and cash equivalent are as
follows:
- The Company and its subsidiaries had cash flow from operations of Baht 196.16
million from net profit of Baht 127.01 million, adjusted with cash inflow items
such as depreciation of Baht 16.64 million, increase in retirement benefit of
Baht 17.91 million, decrease in account receivable of Baht 6.20 million,
decrease in other current assets of Baht 35.53 million and increase in other
current  liabilities of Baht 20.47 million.
Cash outflow items comprised of reversal of allowance for doubtful account of
Baht 3.49 million, unrealized gain from exchange rate of Baht 19.30 million
and decrease in account payable of Baht 4.88 million.
- Cash flow from investment was Baht 224.73 million mainly comprised of
investment in Depot and Into-plane of Baht 49.64 million, acquisition of land
for depot construction in Chiengmai of Baht 44.90 million, acquisition of 3
dispensors of Baht 39.75 million, investment in Hydrant of TARCO of Baht 47.78
million, investment in Pipeline transportation from Mukkasan to
Suvarnabhumi Airport of JP-One of Baht 33.44 million.
- Cash flow from financing was Baht 61.71 million. The Company had increase
in long term loan of Baht 63.13 million of which Baht 28 million was drown by
BAFS to invest in Depot and Into-plane Projects whereas TARCO drew long term
loan from US Dollar portion of USD 0.50 million and from THB portion of Baht
15 million causing increase in long term loan of Baht 19.02 million. The
remaining of Baht 16.11 million was unrealized exchange gain due to Baht
appreciation causing TARCO's long term loan to decrease.
2.1.2   Property, leasehold improvement and equipment was Baht 5,445.09
million comprised of the Company's property, leasehold improvement and
equipment of Baht 3,176.07 million and TARCO's and JP-One's work in progress
of Baht 1,598.54 million and 671.62 million, respectively.
2.1.3  Goodwill was incurred from the acquisition of TARCO's shares at the
price higher than its book value in August 2003. The goodwill was recorded
at Baht 768.01 million and will be amortized along with the concession period
for 30 years starting from the opening of Suvarnabhumi Airport.

2.2 Liabilities
As at March 31, 2006, the Company and its subsidiaries had total liabilities
of Baht 4,250.16 million, increased Baht 36.47 million or 0.87% compared to
that of the end of last year resulted in debt to equity ratio of 1.66 : 1
time. Liabilities comprised of major items as follows:
2.2.1 Account payable of Baht 38.05 million which comprised of account
payable - related company of Baht 27.91 million which was airport concession
fee collected from oil suppliers to pass to Airports of Thailand Plc. and
account payable - others of Baht 10.14 million.
2.2.2 Other current liabilities of Baht 227.15 million which comprised of major
items such as accrued corporate income tax of Baht 84.94 million and others of
Baht 112.74 million which mainly were account payable from construction of the
Company and its subsidiaries. Other current liabilities decreased Baht 20.66
million from last year.
2.2.3 Retention was Baht 352.59 million, comprised of the Company's retention
of Baht 192.87 million, TARCO's retention of Baht 110.42 million and JP-One's
retention of Baht 49.34 million.
2.2.4 Long term loan from bank of Baht 3,488.95 million comprised of :
- The first portion of Baht 800 million was long term loan from KBANK with
7 years time to maturity starting from 2004, interest rate of 4.65% fixed,
and 3 years grace period.
- The second portion of Baht 1,630 million was long term loan from BBL with
a total credit facilities of Baht 2,000 million used to finance Depot and
Into-plane projects with 10 years time to maturity starting from 2004,
interest rate of 3-month FDR +1.25% and 3 years grace period.
- The third portion was TARCO's loan for construction of Hydrant of Baht
988.95 million from BBL with a total credit facility of USD 8 million at
the rate of Libor+1.75% and Baht 700 million at the rate of 3- month Fixed
Deposit Rate +1.75%. The loan has 10 years time to maturity starting from
2002 and a grace period of 5 years.
- The remaining portion was JP-One loan for construction of Pipeline
transportation from Mukkasan to Suvarnabhumi Airport of Baht 70 million from
BBL with a total long term credit facility of Baht 120 million at the rate of
MLR-2.50%. The interest rate will increase 0.25% every 6 month from contract
date on December 1, 2005 until reach MLR-1%. A grace period is up to December
30, 2007 and the loan has approximately 7 years time to maturity.
Upon the completion of the drawdown period, the Company's Debt to Equity
Ratio will increase significantly. However, the Company has a policy to
maintain D/E Ratio in the level of not more than 2:1 time to maintain
financial flexibility and strength of financial status. Eventually, D/E Ratio
will drop rapidly after the opening of Suvarnabhumi Airport.

2.3 Shareholders' Equity
As at March 31, 2006, shareholders' equity was Baht 2,564.05 million,
increasing from last year by Baht 127.83 million due to the company's net
profit of Q1/2006 of Baht 127.01 million.

3.Major factors that may affect operating performance or financial status
The Company has contingent liability from providing a bank guarantee to
TARCO for a total loan of Baht 700 million and USD 8 million and interest
as well as other expenses incurred by a lender to force TARCO to pay its
liability. The liability will incur to the Company only for the remaining
amount not covered by the liquidation of TARCO's property, when TARCO has
defaulted the loan agreement and has been charged and forced to sell its
property by auction.
TARCO had net profit in Q1/2006 of Baht 13.45 million resulting from gain
from exchange rate of Baht 15.35 million and administrative expenses of Baht
1.89 million. TARCO had retained loss as at Q1/ 2006 of Baht 26.30 million.
At the end of Q1/2006, TARCO had liabilities in Thai Baht Currency of Baht 700
million and liabilities in US Dollar Currency of USD 7.42 million. TARCO had
registered and paid-up capital
of Baht 530 million.
The Company has contingent liability from providing a bank guarantee to JP-One
for a proportion of 50% of outstanding amount from total long term loan
facility of Baht 120 million. JP-One had net loss in Q1/2006 of Baht 1.10
million resulting from interest income of Baht 0.01 million and administrative
expenses of Baht 1.11 million. JP-One had retained loss in Q1/2006 of Baht
8.71 million. JP-One had registered and paid-up capital of Baht 600 million.

Please be informed accordingly.

Respectfully yours,


(M.R. Supadis Diskul)
Managing Director