SET Announcements

MD.100/2008 May 8, 2008 Re: Management Discussion and Analysis For the Three Month Period Operating Results ended March 31, 2008 To: President The Stock Exchange of Thailand Management Discussion and Analysis For the Three Month Period Operating Results ended March 31, 2008 1. Report and Analysis of the Operating Results For the three months period ended March 31, 2008, Bangkok Aviation Fuel Services Plc. or BAFS and its subsidiaries' net profit was Baht 140.8 million as compared to net income of Baht 162.6 million earned during the same period in 2007 which is decreasing by 13.4%. The details of changes are as follows: 1.1 Revenue In Q1/2008, total revenues of BAFS and its subsidiaries amounted to Baht 590.2 million, an increase of Baht 0.9 million or 0.2% when compared with that for the last year which details are follows. 1.1.1 Services Income Services income of BAFS and its subsidiaries amounted to Baht 573.4 million, an increase of 1.5% when compared with that for the last year. Which the major factors influent the increasing in services income of company's group were increased in volume of fuel serviced by 4.2% (y-o-y) to 1,217.2 million litres when compared with that for the last year. Moreover, in Q1/2008, TARCO, JP-One and IPS had services income at Baht 160.4 million, Baht 20.3 million and Baht 1.1 million respectively. 1.1.2 Rental Income The rental income of the consolidated financial statement of company's group was Baht 5.0 million for the Q1/2008, increasing by Baht 1.9 million or 61.1% compared to that of the last year. Which main reason is sharply increased in rental of pipeline receiving system of FPT due to the reopening of Don Mueang Airport for non-connected domestic flight since March 25, 2007. 1.1.3 Other Income Other income of the consolidated financial statement of company's group was Baht 11.8 million, decreasing by Baht 9.4 million or 44.3% compared to that of the last year. Mostly comprised of principal repayment as specified in the repayment schedule of debt restructuring and principal prepayment received from FPT of Baht 3.5 million, interest income from short term investment of Baht 3.1 million, guarantee fee from TARCO and JP-One at rate of 1% of outstanding loan of Baht 2.9 million and unrealized FX gain of Baht 3.6 million. Moreover for this quarter, BAFS received dividend income from JP-One's operation at the amount of Baht 3.8 million. 1.2 Expenses 1.2.1 Cost of Services For the consolidated financial statement of company's group in Q1/2008, cost of services was Baht 239.9 million, increasing by Baht 19.2 million or 8.7% compared to that of the last year. Major items which increased cost of services are 1) increasing in depreciation and amortization of Baht 8.0 million 2) increasing in salaries, over time and employee's retirement benefit of Baht 8.9 million 3) increasing in maintenance expenses of Baht 3.4 million. And this quarter cost of services of TARCO and JP-One of Baht 25.3 million and Baht 13.3 million respectively. 1.2.2 Administrative Expenses Administrative expenses for the consolidated financial statement of company's group in Q1/2008, was Baht 76.4 million, increasing by Baht 14.7 million or 23.7% compared to that of the last year. Which are comprised of 1) Extra ordinary item ; Revenue Department's fine expense of Airports of Thailand Plc. (AOT) in case of received transferring TARCO's common shares which AOT requested TARCO to be paid for 2) increasing in depreciation and amortization of Baht 3.8 million 3) increasing in salaries, over time and employee's retirement benefit of Baht 3.7 million 4) increasing in donation of Baht 1.6 million. Moreover, the administrative expenses of TARCO, JP-One and IPS of Baht 10.9 million, Baht 3.3 million and Baht 1.0 million respectively. 1.2.3 Interest Expenses The interest expenses for the consolidated financial statement of company's group in Q1/2008 was Baht 42.1 million which decreasing by Baht 11.5 million or 21.4% when compared to that of the last year. Mainly comprised of interest payment for long term loan of BAFS at amounted of Baht 27.0 million and interest payment for financial lease amounted to Baht 0.5 million. Besides that the interest expenses of long term loan and interest payment for financial lease of TARCO and JP-One are Baht 13.0 million and Baht 1.6 million respectively. 1.3 Operating Results Net profit for Q1/2008 of BAFS and its subsidiaries was Baht 140.8 million decreasing by Baht 27.8 million or 13.4% from last year of Baht 162.6 million which is equivalent an earning per share of Baht 0.28, as a result of various factors as discussed above. 2. Report and Analysis of Financial Status 2.1 Assets As at March 31, 2008 the Company's group had total assets in the amount of Baht 7,426.8 million, decreased by Baht 73.7 million or 1.0% from December 31, 2007. The important details are as follows: 2.1.1 Cash, cash equivalent and short term investment of the Company's group is Baht 741.9 million. The details of important sources and uses of cash and short term investment are as follows: - The Company's group had cash flow from operations of Baht 241.5 million from consolidated net profit of Q1/2008 of Baht 140.8 million adjusted with cash inflow items such as depreciation and amortization of Baht 86.0 million, allowance for retirement benefit of Baht 23.6 million, concession of subsidiary of Baht 6.4 million and decreased in others current asset of Baht 11.3 million. - Cash outflow items comprised of unrealized FX gain of Baht 3.6 million, allowance for bad debts of Baht 3.5 million and decreased in account payable of Baht 33.3 million. - Cash flow used in investment was Baht 83.2 million mainly comprised of investment in property, leasehold improvement and equipment of Baht 88.3 million, prepaid for construction of this quarter decreased by Baht 1.6 million. Besides, loan to and long-term receivable from related company's group decreased by Baht 3.5 million. - Cash flow used in financing was Baht 159.8 million which mainly was bank loan principle payment and financial lease payment at the amount of Baht 155.4 million including dividend paid to minority interest at the amount of Baht 3.8 million. 2.1.2 Property, leasehold improvement and equipment at March 31, 2008 was Baht 5,691.0 million comprised of TARCO's and JP-One's property, leasehold improvement and equipment of Baht 1,657.2 million and 666.6 million, respectively. 2.1.3 Concession of subsidiary was incurred from the acquisition of TARCO's shares at the price higher than its book value in August 2003. The concession of subsidiary was recorded at Baht 768.0 million and will be amortized along with the concession period for 30 years starting from the opening of Suvarnabhumi Airport. Up to March 31, 2008 this concession was Baht 729.4 million. 2.2 Liabilities As at March 31, 2008, the Company's group had total liabilities of Baht 4,241.0 million, decreased by Baht 219.9 million or 4.9% compared to ending of last year resulted in debt to equity ratio of 1.33 : 1 time. Liabilities comprised of major items as follows: 2.2.1 Account payable of Baht 42.5 million which comprised of account payable - related company's group of Baht 33.0 million and others account payable of Baht 9.5 million. 2.2.2 Portion of long term loan which to be paid of Baht 555.7 million which are comprised of long term loan which to be paid for BAFS of Baht 301.6 million, TARCO's long term loan which to be paid of Baht 230.1 million and JP-One's long term loan which to be paid of Baht 24.0 million. Besides that the financial lease which to be paid in one year was Baht 11.8 million. 2.2.3 Other current liabilities of Baht 166.6 million which comprised of major items such as accrued corporate income tax of Baht 116.9 million, other account payable of Baht 3.5 million and others of current liabilities of Baht 46.2 million. 2.2.4 Long term loan from bank of Baht 3,210.9 million decreased by Baht 193.4 million or 5.7% compared to ending of last year which comprised of : - The first portion of Baht 507.9 million was long term loan from KBANK. - The second portion of Baht 1,750.0 million was long term loan from BBL. - The third portion was TARCO's loan of Baht 863 million from BBL which comprised of USD 6.0 million that TARCO already swap to Baht 203.8 million and THB baht loan of 659.2 million. - The remaining portion was JP-One loan at amount of Baht 90.0 million from BBL. 2.3 Shareholders' Equity As at March 31, 2008, shareholders' equity of the Company's group was Baht 3,185.8 million, increasing from last year by Baht 146.2 million or 4.8%. 3. Major factors that may affect operating performance or financial status The Company's group has contingent liability from providing a bank guarantee to TARCO for outstanding amount from total long term loan of Baht 835.0 million and USD 7.6 million (including portion to be paid in one year) 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's group 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 Q1/2008 of Baht 80.4 million which was net profit margin at 50.1%. Resulting from services income of Baht 160.4 million, cost of services and administrative expenses of Baht 25.3 million and Baht 10.9 million respectively. Moreover, 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 which is Baht 57.0 million (including portion to be paid in one year) JP-One had net profit in Q1/2008 of Baht 2.4 million which was net profit margin at 11.9%. Resulting from services income of Baht 20.3 million compared with cost of services and administrative expenses was of Baht 13.3 million and Baht 3.3 million respectively. Please be informed accordingly. Yours sincerely, (M.R. Supadis Diskul) Managing Director Legal and Securities Division Tel 0-2834-8914 Fax 0-2834-8920