SET Announcements

1600 / 102 / 2002 November 20 , 2002 The Stock Exchange of Thailand 62, Ratchadapisek Road, Klongtoey Bangkok 10110 Attention : President of The Stock Exchange of Thailand Subject : Management's Discussion and Analysis for Business Operations ending September 30, 2002 Attachment : Management's Discussion and Analysis for Business Operations ending September 30, 2002 According to that the Office of the Securities and Exchange Commission has fostered listed companies in the Stock Exchange of Thailand to conduct a Management's Discussion and Analysis for Business Operations every quarter so as to enable investors to better understand in the Company's financial status and business operations- apart from the sole financial data in financial statements, as well as to enable investors to adequately access information for decision in a security investment, which is in compliance with the adequate information disclosure in the good corporate governance program ; The Bangchak Petroleum Public Company Limited (BCP), a listed company in the Stock Exchange of Thailand, has concentrated on transparent business operation harmonious with the good corporate governance program. Therefore, the Company would like to conduct and submit Management's Discussion and Analysis for Business Operations ending September 30, 2002 as attachment enclosed Please be informed accordingly. Yours sincerely (Mr. Chokchai Atsawarangsalit) Corporate Planning Manager Corporate Planning Office Tel: 0-2335-4583 The Bangchak Petroleum Public Company Limited Management's Discussion and Analysis Ending September 30, 2002 The Company's financial status and business operations 1.Financial Statements and Ratios 1.1 Financial Statements THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED BALANCE SHEETS AS OF SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 UNIT : BAHT percent1/ UNIT : BAHT percent1/ SEPTEMBER 30,2002 DECEMBER 31,2001 (REVIEWED) (AUDITED) ASSETS Current Assets Cash and cash 472,504,048 1.79 2,749,700,315 10.42 equivalents Current investments 141,200,446 0.53 130,847,788 0.50 Trade accounts 2,631,767,310 9.94 1,672,320,655 6.34 receivable, net Inventories 6,346,925,484 23.98 4,011,323,681 15.20 Other current assets Materials and 368,993,999 1.39 409,923,479 1.55 supplies, net Others 257,472,941 0.97 431,543,813 1.64 Total Current Assets 10,218,864,228 38.61 9,405,659,731 35.64 Non-Current Assets Investments for using 15,094,794 0.06 25,037,376 0.09 the equity method Other long-term 4,855,592 0.02 4,916,126 0.02 investments Tariff prepayment 185,770,217 0.70 188,708,087 0.71 Property, plant and 13,954,677,726 52.72 14,720,899,830 55.78 equipment, net Intangible assets 1,076,992,783 4.07 1,117,098,698 4.23 Other non-current assets Investment - 684,781,266 2.59 674,047,780 2.55 service station Deferred income tax 57,411,066 0.22 49,808,176 0.19 Others 271,569,364 1.03 206,785,108 0.78 Total Non-Current 16,251,152,808 61.39 16,987,301,181 64.36 Assets TOTAL ASSETS 26,470,017,036 100.00 26,392,960,912 100.00 Note 1/Percent on Total Assets THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED BALANCE SHEETS AS OF SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 UNIT : BAHT percent1/ UNIT : BAHT percent1/ SEPTEMBER 30,2002 DECEMBER 31,2001 (REVIEWED) (AUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Bank overdrafts and 106,621,238 0.40 231,516,587 0.88 short-term loans from financial institutions Trade accounts 2,773,747,122 10.48 1,128,970,583 4.28 payable Current portion 8,255,000,000 31.19 3,764,663,976 14.26 of long-term loans Short-term loans 2,511,905,000 9.49 938,000,000 3.55 Other current liabilities Accrued excise 150,521,844 0.57 278,122,903 1.05 tax and oil stabilization fund Accrued expenses 448,764,665 1.70 557,358,437 2.11 Others 338,026,189 1.28 382,545,620 1.45 Total Current 14,584,586,058 55.10 7,281,178,106 27.59 Liabilities Non-Current Liabilities Long-term loans 8,842,500,000 33.41 16,266,671,616 61.63 Other non-current liabilities Long term liabilities 164,107,743 0.62 182,960,763 0.69 for service station lease rights Pension fund reserve 181,993,958 0.69 168,194,586 0.64 Others 69,033,588 0.26 62,818,942 0.24 Total Non-Current 9,257,635,289 34.97 16,680,645,907 63.20 Liabilities Total Liabilities 23,842,221,347 90.07 23,961,824,013 90.79 Shareholders' Equity Share capital Authorized share 7,720,409,400 29.17 7,720,409,400 29.25 capital Common stock 772,040,940 shares par value at Baht 10 per share Issued and paid-up 5,220,409,400 19.72 5,220,409,400 19.78 share capital Common stock 522,040,940 shares par value at Baht 10 per share Additional Paid-in capital Premium on share 2,007,950,671 7.59 2,007,950,671 7.61 capital Surplus on fixed 3,292,675,617 12.44 3,556,765,260 13.48 assets revaluation Retained earnings (Accumulated Deficit) Appropriated Legal reserve 547,594,555 2.07 547,594,555 2.07 Unappropriated -8,440,834,554 -31.89 -8,901,582,987 -33.73 Total Shareholders' 2,627,795,689 9.93 2,431,136,899 9.21 Equity TOTAL LIABILITIES 26,470,017,036 100.00 26,392,960,912 100.00 AND SHAREHOLDERS'EQUITY Note 1/Percent on Total Liabilities and Shareholders' Equity THE BANGCHAK PETROLEUM PUBLIC COMPANY LIMITED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 FOR THE THREE MONTHS 2002 2001 (Revised) UNIT : BAHT percent1/ UNIT : BAHT percent1/ Revenues Sales 13,979,823,773 99.84 12,402,170,018 99.24 Other incomes Interest income 10,811,239 0.08 3,549,997 0.03 Gain from foreign - 70,633,882 0.57 exchange fluctuations Gain from crude oil - 99,096 0.00 and product oil price hedging contract Others 10,699,819 0.08 18,646,151 0.15 Share of profits 1,017,670 0.01 2,159,076 0.02 from investments for using the equity method Total Revenues 14,002,352,501 100.00 12,497,258,220 100.00 percent2/ percent2/ Expenses Cost of sales 13,212,762,582 93.10 12,657,727,567 94.85 Selling and 277,107,578 1.95 283,660,469 2.13 administrative expenses Interest expenses 382,625,669 2.70 332,417,296 2.49 Other Expenses Depreciation 71,209,198 0.50 71,295,443 0.53 Loss from foreign 166,838,937 1.18 - exchange fluctuations Loss from crude oil 81,989,648 0.58 - and product oil price hedging contract Share of losses from - - investments for using the equity method Total Expenses 14,192,533,612 100.00 13,345,100,775 100.00 percent1/ percent1/ Profit (Loss) before -190,181,111 -1.36 -847,842,555 -6.78 Income Tax Expenses Income tax -3,638,450 -0.03 -2,822,926 -0.02 Net Profit (Loss) -186,542,661 -1.33 -845,019,629 -6.76 Earnings Per Share -0.36 -1.62 Note 1/Percent on Total Revenues 2/Percent on Total Expenses 1.2 Financial Ratios Quarter 3/2002 (Reviewed) Liquidity Ratio Current Ratio Times 0.70 Quick Ratio Times 0.27 Cash Flow Liquidity Times -0.01 Receiveable Turnover Times 5.31 Collection Period Days 17.32 Inventory Turnover Times 2.08 Inventory Turnover Period Days 44.19 Account Payable Turnover Times 4.76 Payment Period Days 19.31 Cash Cycle Days 42.20 Profitability Ratio Gross Profit Margin Percent 5.49 Net Profit Margin Percent -1.33 Return on Equity Percent -7.10 Efficiency Ratio Return on Total Assets Percent -0.70 Assets Turnover Times 0.53 Financial Policy Ratio Debt to Equity Times 9.07 2.Explanation and Analysis of the Operating Results for Quarter 3/2002 compared with Quarter 3/2001 2.1 Income Analysis In quarter 3/2002, the Company posted a total revenue of BHT. 14,002 million, increasing by BHT. 1,505 million or 12.0 percent compared to the same period of the year 2001. The details are as follows ; 1) Revenue from sales amounting BHT. 13,980 million was higher than the previous year's same period BHT. 1,578 million or 12.7 percent, which was resulted from the Company's total sales in this quarter increasing by 21.2 percent from long residue and gasoline component delivery for cracking into clean oil products and optimizing gasoline blending respectively at Thai Oil and Esso refineries aimed to create more value-added. Though, an average unit sales price decreased by 6.7 percent, when compared with the same quarter last year. 2) Other incomes totaled BHT. 22 million, down BHT. 71 million from quarter 3, 2001 due to the followings. - In quarter 3 last year, the Company gained from its liability of the foreign currency loans and trade accounts payable due to the Baht appreciation against US. Dollar, while, in quarter 3 this year, the Baht depreciation against US. Dollar led to loss from foreign exchange fluctuations appeared in the expense part. - Regarding the interest income, it increased by BHT. 7 million stemming from that the Company set up the cash reserve for the long-term debt repayment falling due in the late of quarter 3. 2.2 Expense Analysis In quarter 3/2002, the Company's total expenses were BHT. 14,193 million, up BHT. 848 million or 6.4 percent, when compared with the same quarter last year. Total expenses comprised cost of sales 93.10 percent, selling and administrative expenses 1.95 percent, interest expenses 2.70 percent and other expenses 2.26 percent and increased from the followings. 1) Cost of sales totaling BHT. 13,213 million was higher than quarter 3, 2001 BHT. 555 million or 4.4 percent because of an increase in sales, although the oil price per unit declined by 13.1 percent. Concerning the production cost, the Company continues its endeavor to reduce this cost, which it was able to reduce around BHT. 57 million (a 8% decline comparing to the same quarter last year) in this quarter, owing to an efficiency improvement together with an expansion in cooperation with the other refineries. 2) Interest expenses rose by BHT. 51 million due to the increase in interest expenses covering the premium paid to International Bank for Reconstruction and Development (IBRD) for having prepaid its foreign loan totaling BHT. 88 million before maturity. This prepayment was approved by the Ministry of Finance who will undertake to seek a long- term Baht loan as substitute in order to reduce interest cost and the potential risk on foreign exchange fluctuations. According to the aforementioned implementation, the Ministry of Finance has arranged a short-term loan of USD. 35 million from under the EURO COMMERCIAL PAPER PROGRAMME (ECP) as bridge financing with the interest rate of 1.78 percent per annum. This has enabled the Company to reduce its interest expenses. (The IBRD's lending rate leveling at 7 percent) 3) Other expenses increased BHT. 249 million mainly from reasons as follows ; - The Company had a loss of BHT. 167 million from an increase in the Company's liability of its foreign currency loans and trade accounts payable following the Baht depreciation against US. Dollar of about 1.80 BHT./USD, when compared to the exchange rate at the beginning of the quarter. - There was the expense from crude oil and product oil price hedging (FORWARDS) amounted to BHT. 82 million, since the Company would like to reduce risk from loss on oil price volatility. Nevertheless, the actual oil price trend in quarter 3 was contrary to the Company's forecast; thus, the expense was incurred in this transaction. 2.3 Net Profit (Loss) Analysis The Company had a net loss of BHT. 187 million as a result of loss from foreign exchange fluctuations BHT. 167 million. The said net loss was lower than the same period last year BHT. 658 million as well as Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) stayed at BHT. +454 million, which, if deducted by interest expense, the Company still generated profit. This improvement was due mainly to the followings. 1) Sales The Company's sales both in retail and industrial markets for this quarter this year increased by 15.1 percent compared with the same quarter last year. This has been resulted from the upgrading of the image of the Company's service stations and convenience stores and improving the services to achieve optimum customers' satisfaction. Besides this, the Company has developed and launched its new fuel oil product "The Fuel Oil: Low Concarbon" which, compared to the other ordinary fuel oil, is cleaner and has lower level of emissions which reduces the maintenance costs for the factories that use it, and also lessens the problem of air pollution. 2) Production In this quarter, the Company succeeded in increasing its refining capacity utilization by 5.4 percent compared with the same period last year. The Company continues its endeavor to expand the cooperation with the other refineries so as to reduce cost and increase the income. Continuous effort in trying to improve the efficiency of the refinery is also being made. 3.Explanation and Analysis of the Financial Position as of September 30, 2002 compared with December 31, 2001 3.1 Asset Analysis As of September 30, 2002, total assets slightly rose by BHT. 77 million from the previous period ended December 31, 2001. The items that significantly increased are followings. 1) Trade accounts receivable increased in the amount of BHT. 960 million, mainly from materially increasing oil price adjustment together with a rise in sales from long residue and gasoline component delivery for cracking into clean oil products at other refineries. According to the Company's accounting system, this transaction was recorded as sales; consequently, it caused higher trade accounts receivable. 2) Higher inventories totaling BHT. 2,336 million were primarily due to continuously increasing oil price adjustment about 8 USD/BBL (a 44 percent increase) since last year as well as an increase in stock volumes about 14 percent. 3.2 Liability Analysis As of September 30, 2002, total liabilities fell by BHT. 120 million from the previous period ended December 31, 2001. Regarding long-term loans, they decreased by BHT. 7,424 million owing to loans repayment amounting BHT. 2,934 million with the remaining resulted from translation of long- term loans into long-term loans due within 1 year up BHT. 4,490 BHT. In additions, trade accounts payable increased by BHT. 1,645 million, mainly coming from increasing oil price adjustment and receiving clean oil products as proceeds of the cooperation with other refineries. According to the Company's accounting system, this transaction was recorded as purchase. 3.3 Shareholder's Equity Analysis Retained earnings for the nine-month period this year were BHT. 461 million. Hence, shareholder's equity was up to BHT. 2,628 million.