SET Announcements

1600 / 026 / 2004 March 1, 2004 The Stock Exchange of Thailand 62, Ratchadapisek Road, Klongtoey Bangkok 10110 Attention : President of The Stock Exchange of Thailand Subject : Filing the Audited Financial Statements for the year ended December 31, 2003, and the business operation's explanation Attachment : 1. Audited Financial Statements for the year ended 2003 (Thai 1 Copy) 2. Audited Financial Statements for the year ended 2003 (English 1 Copy) According to " the Stock Exchange of Thailand's regulations related to Preparation and Filing of Financial Statements and Reports concerning Financial Status and Results of Business Operations of Listed Companies", the listed company is required to file an audited Financial Statements within 60 days following the end of each accounting period (in case that the listed company does not submit financial statements for quarter 4). And the listed company shall give reasons for the variation to SET, where the results of business operations in accordance with the profit and loss account varies more than 20 percent from that of the same period of the preceding year. In compliance with this regulation, The Bangchak Petroleum Public Company Limited (BCP) would like to file herewith its audited Financial Statements and the Auditors' Report for the period ending December 31, 2003, as well as, the additional business operation's explanation for the differences between the unaudited and audited financial statements as follows: 1. Regarding to the business operations in 2003, the Company's total revenues were Baht 61,262 million, increased by Baht 9,325 million comparing to that last year. EBITDA (excluded inventory gain/ loss and other items incurred from the business and financial restructuring) was Baht +1,502 million, increased by Baht 289 million. The details are as follows: 1.1 In 2003, Gross Refining Margin (not included inventory gain/ loss) increased by 0.18 $/BBL to approximately 1.49 $/BBL from 1.31 $/BBL in 2002, since the demand of oil consumption has continuously increased as the economic recovery, as well as, the Company has performed the operation synergies with the other oil companies in order to enhance revenues and reduce costs. However, the BCP's refinery utilization was still 74 KBD closed to that last year, since The Company emphasized only on the highly profit markets, such as, sales through service stations and industry market. The Company had gains from the changes of oil price and foreign exchange rate on crude and finished oil product inventories (Inventory gain) by Baht 52 million in 2003, comparing to that Baht 1,609 million in 2002. In addition, the Company also had the allowance for the doubtful debts of the advance payment of the fuel transportation fee (Tariff Prepayment) and the interest receivable from the Fuel Pipeline Transportation Co., Ltd. (FPT), as well as, the prepaid taxes from the Reformate importing totaling Baht 233 million, which were included in the selling and administrative expenses. Such factors decreased the Company's accounting gross margin. 1.2 In 2003, Sales through the Company's service stations increased by 17%, while the fuel oil sales in the industry market also increased by 7%. However, Jobber market sales decreased due to the low profit margin and JET fuel sales also decreased due to the spread of SARS. 1.3 Since the Company has expanded the period of BCP refinery's land rent from 12 years to 30 years, the Company could adjust the refinery depreciation period in accordance with the useful life of the refinery and such longer land rent period. Therefore, the 2003 depreciation of the refinery could reduce by Baht 300 million, which was recorded in the cost of sales. 2. According to the business and financial restructuring, at the end of 2003, the Company had performed the impairment of non-utilized assets and reserved the allowance for the doubtful debts of the Tariff Prepayment and others by Baht 987 million (non cash items). These would be recorded in the losses from the asset impairment by Baht 754 million (the impairment of unused lands waiting for sale and non-operating service stations) and in the selling and administrative expenses by Baht 233 million (allowance for the doubtful debts of the Tariff Prepayment and the interest receivable from FPT, as well as, the prepaid taxes from the Reformate importing). In addition, the Company also early redeemed the MOF's guaranteed bond, which incurred the early redemption fee by Baht 212 million. Therefore, the other items that resulted from the business and financial restructuring were Baht 1,199 million. 3. According to the business and financial restructuring, the Company consolidated the financial statement of subsidiary into the Company's financial statement in the accounting period of the year ended 2003. For the unaudited financial statement of company only, the Company had recognized the total amount of loss from the subsidiary (the total loss from subsidiary was Baht 26,625,905). However, the Company's auditor suggested that the Company should recognize the loss from the subsidiary not greater than the investment in common shares which the company owned Baht 2,386,161 since the Company does not have any obligation to repay the debt on behalf of the subsidiary. Therefore, the obligation of the Company will be limited not greater than the investment in common shares which the company owns. So the Company proceeded as the auditor's suggestion. 4. Consequently, in the year 2003, the Company posted the EBITDA (excluding the inventory gain and other incomes from business and finance restructuring) by Baht +1,502 million, the inventory gain by Baht 52 million, the gains from foreign exchange rate and others by Baht 103 million, the interest expense before financial restructuring by Baht 1,028 million, the interest income by Baht 36 million, and the depreciation and amortization expenses by Baht 740 million. These resulted to the Company's loss before the other items by Baht 74 million. In addition, the other items that occurred from the business and financial restructuring (refer to 2.) were Baht 1,199 million, therefore, the Company posted baht 1,275 million of net loss. 5. At present, the Company has already completed financial restructuring process by issuing and offering of Baht 7,000 million of the common shares and convertible debenture to the investors in term of depository receipt via Siam DR Co., Ltd., which already sold out on January 29, 2004. Moreover, the Company also received the loans of Baht 12,500 million from a commercial bank for using as working capital and long term loans for refinancing the high interest rate bonds. The loans will be withdrawn on the early March 2004. According to such financial restructuring, the Company's annual interest expense will be lower from Baht 1,100 million to Baht 700 million, as well as, the principal repayment will reduce to Baht 600 - 700 million per year. These will strengthen the financial status of the Company in accordance with the objective of the restructuring. Please be informed accordingly. Yours sincerely, (Watcharapong Saisuk) Assistant Vice President, Corporate Planning Office Corporate Planning Office Tel: 0-2335-4583