SET Announcements

MD.116/2009 August 13, 2009 Re: Management Discussion and Analysis For the Three Months Period Operating Results ended June 30, 2009 To: President The Stock Exchange of Thailand Management Discussion and Analysis For the Three Months Period Operating Results ended June 30, 2009 1. Report and Analysis of the Operating Results Although total revenues of BAFS and subsidiaries was affected from global recession, political turmoil in the country and the Pandemic (H1N1) 2009 flu, but from the exertion of Cost Reduction Program of management team and every level of employee such as volunteer cutting salary 5%-20% of management, reduction in cost of living and fringe benefit of staffs, lessen overtime rate etc. brought the results of operations of three months period ended June 30, net profit was Baht 123.3 million as compared to net income of Baht 124.2 million of the same period in last year which was only decreasing by Baht 1.0 million or 0.8% and increased by Baht 15.2 million from last quarter or 14.1% increased (q-o-q). The main reasons for changes are as follows: 1.1 Revenue For the three months period ended June 30, 2009, total revenues of BAFS and its subsidiaries amounted to Baht 482.3 million, an decrease of Baht 53.6 million or 10.0% 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 472.5 million, an decrease of Baht 55.8 million or 10.6% 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 12.1% (y-o-y) to 972.7 million litres from 1,106.0 million litres of last year. For Service income of BAFS was Baht 316.6 million, TARCO's was Baht 131.9 million and JP-One's was 23.9 million respectively. 1.1.2 Other Income 1.1.2.1 Rental Income The rental income of the consolidated financial statement of company's group in Q2/2009 was Baht 4.3 million, decreasing by Baht 0.7 million or 14.7% compared to that of the last year. 1.1.2.2 Other Income Other income of the consolidated financial statement of company's group was Baht 5.6 million, increasing by Baht 2.9 million or 105.0% compared to that of the last year. Which Baht 5.9 million came from decreased in FX loss as result of Thai Baht depreciated against US$ from 32.57 Bt./US$ last year to 34.57 Bt./US$. And Other income also comprised of principal repayment as specified in the repayment schedule of debt restructuring and principal prepayment received from FPT of Baht 5.5 million, interest income from short term investment of Baht 2.8 million, guarantee fee from TARCO and JP-One at rate of 1% of outstanding loan of Baht 2.4 million. 1.2 Expenses 1.2.1 Cost of Services For the consolidated financial statement of company's group in Q2/2009, Cost of services was Baht 205.2 million, decreased by Baht 17.4 million or 7.8% compared to that of the last year. Major items which decreased cost of services are 1) decreasing in salaries and other employee's expense of Baht 9.2 million 2) decreasing in maintenance expense by Baht 5.6 million 3) decreasing in Air port Concession Fee by Baht 5.1 million that was in line with dropping of volume. Moreover, TARCO's and JP-One's cost of services were Baht 26.5 million and Baht 16.1 million respectively. 1.2.2 Administrative Expenses Administrative expenses for the consolidated financial statement in Q2/2009, was Baht 53.4 million, decreasing by Baht 13.1 million or 19.7% compared to that of the last year which mainly came from the success in Cost Reduction Program of company. Major items which decreased administrative expenses are 1) decreasing in salaries and other employee's expense of Baht 13.3 million in spite of increasing in computer and security expense by Baht 1.0 million and Baht 0.9 million respectively. Depreciation and amortization expense was increased by Baht 0.1 million.Which TARCO's and JP-One's administrative expenses were Baht 7.2 million and Baht 3.1 million respectively. 1.2.3 Finance Costs Finance Costs for the consolidated financial statement in Q2/2009 was Baht 26.1 million which decreasing by Baht 14.2 million or 35.1% when compared to that of the last year as decreasing in market rate. Mainly comprised of interest payment for long term loan and interest payment for financial lease of BAFS at amounted of Baht 18.6 million. Besides that of these items was TARCO's and JP-One's which were Baht 6.5 million and Baht 1.1 million respectively. 1.3 Operating Results Net profit for Q2/2009 of BAFS and its subsidiaries was Baht 123.3 million decreasing by Baht 1.0 million or 0.8% from last year of Baht 124.2 million which is equivalent an earning per share of Baht 0.24, as a result of various factors as discussed above. For Q2/2009 Separate Financial Statement net profit of BAFS's was sharply decreased by Baht 130.5 million or 46.9% from last year to Baht 69.3 million. As a consequence of early recognized TARCO's dividend in Q1/2009. However, from dividend mismatched recognition on Separate Financial Statement didn't effected to the Company's Consolidated Financial Statement. Moreover the Board of Directors' Meeting No.3/2009 held on August 13, 2009 resolved to pay interim dividend from the first half of 2009's performance at the rate of Baht 0.13 per share or totaling Baht 66.3 million accounted to 33.1% of net profit of BAFS's Separate Financial Statement. 2. Report and Analysis of Financial Status 2.1 Assets As at June 30, 2009 the Company's group had total assets in the amount of Baht 6,928.2 million, decreased by Baht 498.6 million or 6.7% from March 31, 2009. The important details are as follows: 2.1.1 Cash, cash equivalent and short term investment of the Company's group is Baht 715.8 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 262.6 million from consolidated net profit before minority interest of Q2/2009 of Baht 129.9 million adjusted with cash inflow items such as depreciation and amortization of Baht 90.4 million, amortization of concession of subsidiary of Baht 7.0 million, reversal allowance for retirement benefit of Baht 9.9 million, decreased in account receivable and other current asset by Baht 26.7 million and Baht 5.7 million. And increased in account payable of Baht 20.6 million. - Cash outflow items comprised of decreased in other current liabilities of Baht 13.9 million and payment for income tax of Baht 54.1 million. - Cash flow used in investment was Baht 3.6 million which was decreased in short term investments and loan to related company by Baht 5.5 million, interest received of Baht 4.2 million, purchased in other asset and equipment at amount of Baht 2.6 million, and purchased in computer software of Baht 2.0 million. Besides that for Q2/2009 Separate Financial Statement of BAFS had dividend received from the operation in 2008 of TARCO ad JP-One at total amount of Baht 75.7 million (Detail in No.8 of Notes to Financial Statement). Moreover, in Q3/2009, BAFS will received dividend from the operation in 1H/2009 of TARCO at amount of Baht 58.0 million (Detail in No.24 of Notes to Financial Statement). - Cash flow used in financing was Baht 262.3 million which was dividend payment for 2H/2008 of the company at the amount of Baht 135.9 million, long term loan principle payment at the amount of Baht 107.4 million and interest payment was of Baht 19.1 million respectively. 2.1.2 Property, leasehold improvement and equipment at June 30, 2009 was Baht 5,232.4 million comprised of TARCO's and JP-One's property, leasehold improvement and equipment of Baht 1,604.0 million and 635.2 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 up to present this concession was Baht 697.4 million. 2.1.4 Right of use of land leased by a subsidiary was incurred from the acquisition of JP-One's shares at the price higher than its book value up to present this item was Baht 0.04 million 2.2 Liabilities As at June 30, 2009, the Company's group had total liabilities of Baht 3,828.8 million, decreased by Baht 121.3 million or 3.1% compared from March 31, 2009 and resulted in debt to equity ratio of 1.24 : 1 time. Liabilities comprised of major items as follows: 2.2.1 Account payable of Baht 78.1 million which comprised of account payable - related company's group of Baht 69.3 million and others account payable of Baht 8.8 million. 2.2.2 Portion of long term loan which to be paid of Baht 550.0 million which are comprised of long term loan which to be paid for BAFS of Baht 331.6 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 11.4 million which was belonging to BAFS Baht 8.3 million, TARCO's Baht 2.4 million and JP-One's Baht 0.7 million 2.2.3 Other current liabilities of Baht 101.1 million which comprised of major items such as accrued corporate income tax of Baht 60.1 million and others of current liabilities of Baht 41.0 million. 2.2.4 Long term loan from bank of Baht 2,812.4 million decreased by Baht 119.5 million or 4.1% compared to March 31, 2009 which comprised of : - The first portion of Baht 406.3 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 1,470.0 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 656.0 million from BBL which comprised of USD loan that TARCO already swap to Baht 136.0 million and THB baht loan of 520.0 million which was quarterly principle repayment and will be due in 2012. - The remaining portion was JP-One loan at amount of Baht 60.0 million from BBL which was monthly principle repayment and will be due in 2012. 2.3 Shareholders' Equity As at June 30, 2009, shareholders' equity of the Company's group was Baht 3,099.4 million, increasing March 31, 2009 by Baht 2.4 million or 0.1%. 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 850.5 million. (including portion to be paid in one year) TARCO had net profit in Q2/2009 of Baht 63.0 million which was net profit margin at 47.8%. Resulting from services income of Baht 131.9 million, cost of services and administrative expenses of Baht 26.5 million and Baht 7.3 million respectively. Moreover, the Company has contingent liability from providing a bank guarantee to JP-One for a proportion of 50.0% of outstanding amount from total long term loan since established which up to present the amount is Baht 42.0 million (including portion to be paid in one year) JP-One had net profit in Q2/2009 of Baht 3.8 million and has net profit margin at 15.9%. Resulting from services income of Baht 23.9 million compared with cost of services and administrative expenses was of Baht 16.1 million and Baht 3.1 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