SET Announcements

No. MD.147/2002 13 November 2002 Re:Management Discussion and Analysis For the Three- Month Period Operating Results ended September 30, 2002 To:President The Stock Exchange of Thailand Management Discussion and Analysis For the Three- Month Period Operating Results ended September 30, 2002 1.Report and Analysis of the Operating Results 1.1 Revenue 1.1.1 Services Income In the third quarter of the year 2002, the services income of the company was Baht 210.11 million, increasing by Baht 1.32 million or 0.63% compared to second quarter of this year but decreasing by Baht 14.22 million or 6.34% compared to the same period of last year. The number of flights of in the third quarter of 2002 was 24,901 flights, increased 131 flights and 1,097 flights which accounted for 0.53% and 4.61% compared to the last quarter and the same period last year,respectively. The major factor accounted for the slightly increase in services income from the last quarter and decreasing 6.34% from the same period last year would be the volume uplifts which was 868.9 million litres, increasing from 867.15 million litres or 0.20% from last quarter and decreasing from 882.12 million litres or 1.50% compared to the same period of last year. One of the supporting factors is that the third quarter is still in a low season period of aviation business or summer season which starting from April to October of each year, so there has been no material growth yet. Furthermore, apart from the reduction of flights from Qantas Airways and British Airways landed at Donmuang Airport starting from April 2002, the decreasing in fuel uplifts from the same period of last year was due to a high average growth rate of approximately 7.11% through out last year setting a high benchmark to compare. Moreover, there were some terrorist attacks in a few countries in South East Asia recently, therefore some countries issued warning statements to their people to be cautious in traveling to many countries in South East Asia including Thailand. However, those incidents did not cause a serious effect on Thai aviation business as evident by a slightly increase in fuel uplifts from the last quarter. For the first nine months of this year, the Company had a growth of volume uplifts of approximately 0.7% from the same period of last year. The other important factor accounted for the movement of services income would be the exchange rate. Since the Baht slightly depreciated against US Dollar from the average rate of Baht 42.79 per US Dollar in the second quarter to Baht 42.97 per US Dollar in the third quarter of 2002 which accounted for 0.43% depreciation whereas appreciated by 4.92% from Baht 45.19 per US Dollar compared to the same period of last year. 1.1.2 Rental Income The rental income of the third quarter of 2002 was Baht 9.02 million which comprised of office and pipeline receiving system rental to Fuel Pipeline Transportation Limited (FPT) of Baht 8.7 million, land and utilities system rental to Thai Petroleum Pipeline Co., Ltd. (THAPPLINE) of Baht 0.4 million and office rental to Thai Aviation Refueling Co., Ltd. (TARCO) of Baht 0.04 million. The rental income reduced Baht 3.31 million or 26.85% from the last quarter and reduced Baht 3.33 million or 26.96% from the same period last year. It was a result of a change in pipeline rental rate from a fixed rate of approximately Baht 40.04 million per year in 2001 to a variable rate of 28% of FPT's Jet A-1 transportation revenue in compliance with FPT's third debt restructuring. The revised rate has been effective since May 1, 2002, so the Company had to offset the decreased rental income in May and June with rental income in the third quarter. 1.1.3 Other Income Other income was Baht 10.01 million for the third quarter of 2002 which comprised of interest income from short term investment of approximately Baht 6.32 million and FPT interest and principal repayment as specified in the repayment schedule of the third debt restructuring of approximately Baht 3.61 million. 1.2 Expenses 1.2.1 Cost of Services Cost of services was Baht 84.83 million, increasing by Baht 8.51 million or 11.15% from the second quarter of 2002 and increasing by Baht 8.41 million or 11.01% compared to the same period of last year. A major factor leading to the increase in the cost of services from the previous quarter was an increase in pipeline rental charge paid to Airports of Thailand PLC. (AOT) of Baht 8.63 million which was the pipeline rental charged back from January 15 to September 30, 2002 according to AOT's additional investment in hydrant (phase 7). 1.2.2 Administrative Expenses Administrative expenses was Baht 32.26 million, decreasing by Baht 6.90 million or 17.62% from last quarter due to the decrease in advertising and public relations expenses of Baht 2.49 million and legal fee of Baht 2.20 million. Administrative expenses also decreased Baht 2.62 million or 7.51% from the same period of last year because there was no special expenses such as legal fee occurred in the third quarter of 2002. 1.3 Operating Results Net profit for three-month period ended September 30, 2002 was Baht 77.96 million, decreasing by Baht 12.74 million or 14.04% from the same period of last year as a result of various factors as discussed above. From the Company's operating results for the nine-month period ended September 30, 2002, the Company had net profit of Baht 246.58 milliom or earning per share of Baht 0.79 using weighted average number of shares. 2.Report and Analysis of Financial Status 2.1 Assets As at September 30, 2002, the Company and its subsidiary had total assets in the amount of Baht 1,811.87 million, reduced by Baht 32.17 million or 1.74% compared to the last quarter. The important details are as follows: 2.1.1 Cash and cash equivalent reduced from Baht 292.25 million in the second quarter of 2002 to Baht 106.75 million in the third quarter of 2002 as a result of the dividend payout from the first half of 2002 performance of Baht 85 million and investing in short term investment of Baht 60 million. The remaining was investment in Depot Project at Suvarnabhumi Airport of approximately Baht 105.14 million and investment in depot construction at Samui Airport of Baht 5.91 million. 2.1.2 Short term investment was Baht 766 million, rose Baht 60 million from investment in promissory notes of financial institutions which yielded higher return than bank deposit. 2.1.3 Investments accounted for under equity method was Baht 171.02 million, decreased by Baht 0.66 million from TARCO's performance. 2.2 Liabilities As at September 30, 2002, the Company and its subsidiary had total liabilities of Baht 299.27 million, decreased Baht 25.15 million or 7.75% compared to the last quarter due to the decrease in accrued expenses of approximately Baht 6.84 million. In addition, there was a decrease in liability under agreement to purchase rights of claim of Baht 17.296 million . At present, the Company had no long term liabilities from any financial institutions. 2.3 Shareholders' Equity As at September 30, 2002, shareholders' equity was Baht 1,512.60 million, decreasing from the last quarter of Baht 7.02 million due to the dividend payout of Baht 85 million and the third quarter net profit of Baht 77.96 million. Please be informed accordingly. Respectfully yours, (M.R. Supadis Diskul) Managing Director