SET Announcements

MD.012/2009 February 18, 2009 Re: Management Discussion and Analysis For the One Year Period Operating Results ended December 31, 2008 To: President The Stock Exchange of Thailand Management Discussion and Analysis For the One Year Period Operating Results ended December 31, 2008 1. Report and Analysis of the Operating Results For the results of operations of the year 2008, Bangkok Aviation Fuel Services Plc. or BAFS and its subsidiaries' net profit was Baht 437.7 million as compared to net income of Baht 543.3 million earned during the same period in 2007 which is decreasing by 19.4% due to economics recession together with rising political tension in the country, leading to 10 days operating suspension of Suvarnabhumi and Don Mueang Airport in Nov. 25 - Dec. 4,2008. The main reasons for changes are as follows: 1.1 Revenue For the year 2008, total revenues of BAFS and its subsidiaries amounted to Baht 2,127.0 million, an decrease of Baht 131.1 million or 5.8% 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 2,058.9 million, an decrease of 5.8% when compared with that of last year. Which the major factor influent the decreasing in services income of company's group was decreased in volume of fuel serviced by 6.0% (y-o-y) to 4,312.8 million litres. Which service income of BAFS was Baht 1,404.3 million, TARCO's was Baht 571.6 million and JP-One's was 83.0 million respectively. 1.1.2 Rental Income The rental income of the consolidated financial statement of company's group in 2008 was Baht 19.3 million, decreasing by Baht 0.9 million or 4.5% compared to that of the last year. 1.1.3 Other Income Other income of the consolidated financial statement of company's group was Baht 48.8 million, decreasing by Baht 2.9 million or 5.6% compared to that of the last year. Which was comprised of gain on sold the land in Lad Krabang with a total area of 16 rai 3 ngarn and 70 square wah for Baht 14.6 million, principal repayment as specified in the repayment schedule of debt restructuring and principal prepayment received from FPT of Baht 19.7 million, interest income from short term investment in T-Bill of Baht 19.7 million, Unrealized FX. Gain of Baht 2.7 million which Baht 2.5 million was belonging to TARCO that came from interest rate and cross currency swap for US.$ long term loan . Moreover, BAFS's statement only, it received dividend income from TARCO's and JP-One's operation at the amount of Baht 131.2 million and Baht 3.8 million respectively. In 2008, Thai Baht appreciated against US$ from 34.6 Bt./US$ last year to 33.6 Bt./US$. For this reason, the company has realized FX. Loss at the amount of Baht 10.9 million, increasing from last year FX. Loss at Baht 0.8 million. Which Baht 7.5 million was result from Into-Plane business that has FX exposure in some part. Although Storage and Hydrant Pipeline Jet Fuel Transportation business was already quoted in Baht since Oct. 2006. And for the rest of FX loss came from TARCO's long term debts. 1.2 Expenses 1.2.1 Cost of Services For the consolidated financial statement of company's group in 2008, cost of services was Baht 941.3 million, increasing by Baht 26.0 million or 2.8% compared to that of the last year. Major items which increased cost of services are 1) increasing in depreciation and amortization of Baht 24.8 million 2) increasing in salaries and other employee's expense of Baht 20.3 million 3) increasing in Hydrant rental fee of Baht 2.4 million. However, Airport Concession Fee which is depend on uplift volume was decreasing by Baht 17.3 million and insurance premium for this year decreased by Baht 5.8 million. Moreover, TARCO's and JP- One's cost of services were Baht 105.1 million and Baht 63.3 million respectively. 1.2.2 Administrative Expenses Administrative expenses for the consolidated financial statement in 2008, was Baht 326.5 million, increasing by Baht 14.8 million or 4.7% compared to that of the last year. Which were comprised of 1) increasing in depreciation and amortization of Baht 11.8 million 2) increasing in salaries and other employee's expense of Baht 8.4 million and 3) increasing in consulting expense of Baht 2.9 million. Moreover, TARCO's and JP-One's administrative expenses were Baht 37.2 million and Baht 13.2 million respectively. 1.2.3 Interest Expenses The interest expenses for the consolidated financial statement in 2008 was Baht 163.7 million which decreasing by Baht 22.5 million or 12.1% when compared to that of the last year. Mainly comprised of interest payment for long term loan and interest payment for financial lease of BAFS at amounted of Baht 108.4 million. Besides that of these items was TARCO's and JP-One's which were Baht 48.9 million and Baht 6.4 million respectively. However, for this year, director remuneration and staff rewards was decreasing by Baht 5.2 million when compared to last year. 1.3 Operating Results Net profit for 2008 of BAFS and its subsidiaries was Baht 437.7 million decreasing by Baht 105.6 million or 19.4% from last year of Baht 543.3 million which is equivalent an earning per share of Baht 0.86, as a result of various factors as discussed above. 2. Report and Analysis of Financial Status 2.1 Assets As at December 31, 2008 the Company's group had total assets in the amount of Baht 7,060.6 million, decreased by Baht 439.8 million or 5.9 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 454.5 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 851.3 million from consolidated net profit of 2008 of Baht 437.7 million adjusted with cash inflow items such as depreciation and amortization of Baht 357.1 million, allowance for retirement benefit of Baht 47.2 million, amortization of concession of subsidiary of Baht 25.6 million, Amortization of right of use of leased land of a subsidiary at amount of Baht 0.2 million, decreased in account receivable and other current assets of Baht 59.1 million and Baht 3.9 million respectively. - Cash outflow items comprised of allowance for bad debts of Baht 19.7 million, unrealized FX gain of Baht 2.7 million, gain on disposal of equipment of Baht 16.3 million and decreased in account payables and other current liabilities of Baht 36.9 million. - Cash flow used in investment was Baht 262.3 million mainly comprised of incremental investing in JP-1 shares which was Baht 300.9 million leading stake of BAFS in JP-One up to 92.5%, purchased in other asset and equipment at amount of Baht 183.9 million, sold on land and equipment at amount of Baht 100.8 million. Besides that short term investments and loan to related company was decreased by Baht 139.0 million and Baht 19.7 million. - Cash flow used in financing was Baht 568.6 million which was dividend payment of Baht 239.7 million and long term loan principle payment at the amount of Baht 520.0 million that belonging to BAFS, Baht 194.4 million was belonging to TARCO and Baht 24.0 million was belonging to JP-One. Besides that this year the company have Baht 220.0 million long term loans for additional invested in JP-One's shares. 2.1.2 Property, leasehold improvement and equipment at December 31, 2008 was Baht 5,422.6 million comprised of TARCO's and JP-One's property, leasehold improvement and equipment of Baht 1,634.5 million and 648.6 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 December 31, 2008 this concession was Baht 710.1 million. 2.2 Liabilities As at December 31, 2008, the Company's group had total liabilities of Baht 4,069.8 million, decreased by Baht 391.1 million or 8.8% compared from December 31, 2007 and resulted in debt to equity ratio of 1.36 : 1 time. Liabilities comprised of major items as follows: 2.2.1 Account payable of Baht 49.7 million which comprised of account payable - related company's group of Baht 32.1 million and others account payable of Baht 17.6 million. 2.2.2 Portion of long term loan which to be paid of Baht 520.0 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 194.4 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 11.9 million which was belonging to BAFS Baht 8.9 million, TARCO's Baht 2.7 million and JP-One's Baht 0.9 million 2.2.3 Other current liabilities of Baht 117.2 million which comprised of major items such as accrued corporate income tax of Baht 35.1 million, other account payable of Baht 17.3 million and others of current liabilities of Baht 64.8 million. 2.2.4 Long term loan from bank of Baht 3,102.4 million decreased by Baht 301.9 million or 8.9% compared to ending of last year which comprised of : - The first portion of Baht 457.1 million was long term loan from KBANK which was semi-annual, principle repayment : Baht 50.8 million/period and will be due in 2014. - The second portion of Baht 1,600.0 million was long term loan from BBL which was quarterly, principle repayment : Baht 50.0 million/period and will be due in 2014. - The third portion of Baht 220.0 million was long term loan from NFS which was quarterly,principle repayment : Baht 6.3 million/period and the rest principle will be paid in last period which will be due in 2015. That first principle payment will be on March,2011. - The third portion was TARCO's loan of Baht 753.2 million from BBL which comprised of USD 4.8 million that TARCO already swap to Baht 163.2 million and THB baht loan of 590.0 million which was quarterly principle repayment and will be due in 2012. - The remaining portion was JP-One loan at amount of Baht 72.0 million from BBL which was monthly principle repayment and will be due in 2012. 2.3 Shareholders' Equity As at December 31, 2008, shareholders' equity of the Company's group was Baht 2,990.9 million, decreasing from last year by Baht 48.7 million or 1.6%. 3. Major factors that may affect operating performance or financial status 3.1 The Company's group has contingent liability from providing a bank guarantee to TARCO for outstanding amount from total long term loan of Baht 947.6 million. (including portion to be paid in one year) TARCO had net profit in 2008 of Baht 266.7 million which was net profit margin at 46.7%. Resulting from services income of Baht 571.6 million, cost of services and administrative expenses of Baht 105.1 million and Baht 37.2 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 since established which up to present the amount is Baht 48.0 million (including portion to be paid in one year) JP-One had net profit in 2008 of Baht 1.3 million which was decreasing by Baht 15.0 million or 91.8% and has net profit margin at 1.6%. Resulting from services income of Baht 83.0 million compared with cost of services and administrative expenses was of Baht 63.3 million and Baht 13.2 million respectively. For significant decreasing in net profit was due to 1) reduced by Baht 4.9 million in service income 2) increasing in land rental for pipeline since Sep. 2006 - Dec. 2008 by Baht 4.2 million which paid to AOT 3) increasing in BAFS's depot rental by Baht 3.4 million and increasing in filter equipment expense by Baht 0.8 million. Please be informed accordingly. Yours sincerely, (M.R. Supadis Diskul) Managing Director Legal and Securities Division Tel 0-2834-8914 Fax 0-2834-8920