ข่าวแจ้งตลาดหลักทรัพย์

- Translation - 1000 / 053 / 2005 March 7, 2005 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 December 31, 2004 Attachment : Management's Discussion and Analysis for Business Operations ending December 31, 2004 As 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 December 31, 2004 as attachment enclosed. Please be informed accordingly. Yours sincerely (Patiparn Sukorndhaman) Senior Executive Vice President Corporate Planning and Investor Relation Office Tel: 0-2335-4583 Management's Discussion and Analysis for Business Operations Ending December 31, 2004 General Information The Bangchak Petroleum Public Company Limited (BCP) was founded in 1985 by the government of General Prem Tinsulanonda, aimed to be managed in the same manner as a private company as well as to be a Thai owned oil company, which conducts its businesses for the benefits of the Thai people and society. At present, its businesses include retail and wholesale sales of finished oil products and manage an oil refinery with a capacity of 120,000 barrels per day, rebuilt replacing the previous one. The latest crude distillation unit was completed in 1994. The new refinery was designed to produce the clean fuel with efficient energy consumption and high production yield. Moreover, The Company has expanded its market base through approximately 1,100 of its service stations around the country, which comprise approximately 600 standard service stations and 500 community service stations. Business Overview in 2004 In 2004, the economy of the Asia pacific region continuously grew, which enhanced the demand for oil consumption and higher the gross refining margin, especially the sharply increase in refined products consumption of the petrochemical industry, consequently, the refined product prices together with crude oil prices increased throughout the year. Dubai crude oil price (the reference crude oil in Middle-East) was up for 7.5 $/BBL in average, in addition, Tapis crude oil price (the reference crude oil in Far-East) was up for 11 $/BBL. Moreover, the domestic competition tended to be released compared with that in the year 2003, since Thai economy continuously grew and the government also implemented price capped mechanism to fix the retail oil prices, which resulted to the lower price competitions in the service station market significantly. Thus, the Company increased the capacity utilization and sale volumes in all markets in order to serve the higher demand for oil consumption; in addition, the Company also increased the volumes of long residue fuel oil sending to upgrade at other refineries in order to increase the Company's revenues. 1.Explanation and Analysis of the Operating Results for the year 2004 compared with the year 2003 1.1 Net Profit (Loss) Analysis 1) Regarding to the business operations in 2004, net profit of the Company and its subsidiary were Baht 2,636 million, which composed of Baht 2,613 million of the Company's net profit and Baht 26 million of its subsidiary's net profit, The Bangchak Greennet, as well as, Baht 2 million of the connected-transaction for adjustment. 2) The Company's EBITDA was Baht +4,089 million, increased from Baht 1,553 million of last year EBITDA by Baht 2,536 million. Such profit resulted from the following factors: - EBITDA of the Refinery Business was Baht 3,456 million, increased from that of last year at Baht 906 million, since the Company had gross refining margin (excluding inventory gain/ loss) of 1.75 $/BBL, increased from that of last year at 1.41 $/BBL. These resulted from the increase in oil demand corresponding to the economic recovery and the sharply increase in refined products consumption of the petrochemical industry, which affected to the gasoline and diesel oil prices to increase at the higher rate comparing to crude oil prices. In addition, the Company has continuously performed the operation synergies with the other refineries in order to increase value addition of products and reduce cost. Moreover, the Company had gains from the changes of oil price and foreign exchange rate on crude and refined product inventories (Inventory gains) by Baht 2,176 million, comparing to that of Baht 52 million in the year 2003, since oil prices had continuously increased throughout the year. Therefore, the Company's total gross refining margin was 3.41 $/BBL, and the Company also increased the refinery utilization rate up to 90 KBD, which was higher than that of last year at 74 KBD. - EBITDA of Marketing Business was Baht 633 million, decreased from that of last year at Baht 647 million, since marketing margin, excluding Jet fuel, was Baht 0.43 per Liter, higher than that of last year at Baht 0.39 per Liter. This resulted from the Government's implementation of price capped mechanism to fix the retail oil prices and therefore there were lower price competition in the market. However, the Marketing business had recorded loss from selling Jet fuel by Baht 37 million, since the Jet fuel selling price formula is based on the average price of previous month, while the transferred price from Refining business unit to Marketing business unit is based on the current month. Therefore, during price up trend period; there always be a loss incurred for the marketing business. However, the result will be in opposite way if Jet fuel price is in a down trend period. 1.2 Income Analysis Total revenues of the Company and its subsidiary in 2004 were Baht 80,189 million, which composed of the Company's revenues of Baht 79,207 million and its subsidiary's revenues of Baht 7,229 million, adjusted by connected transaction of Baht 6,247 million. The major changes of revenues are as follows: 1) Revenue from sales was Baht 78,902 million, higher than that of last year by Baht 18,087 million, since total sale volumes increased by 17.6%, and average unit selling price increased by 14.8% (unit selling price was 11.62 Baht/ liter comparing to 10.12 Baht/ liter). 2) Gain from foreign exchange was Baht 128 million, lower than that of last year by Baht 165, which composed of Baht 139 million of foreign exchange gain from accounts receivable and Baht 12 million of foreign exchange loss from others transaction. These foreign exchange gain and loss were the results of the appreciation of Thai Baht from 39.7 Baht/USD at end of 2003 to 39.2 Baht/USD at end of 2004. 3) In 2004, the Company reversed loss from impairment of assets by Baht 47 million. Since the Company had recorded loss from impairment of unutilized assets in 2003, a part of it was shut down service stations, which were resumed the operations in 2004. Therefore, the Company has to reverse such loss from impairment of assets to be revenue in accordance with the accounting principle. 1.3 Expense Analysis Total expenses of the Company and its subsidiary in 2004 were Baht 76,768 million, which composed of the Company's expenses of Baht 75,810 million and its subsidiary's expenses of Baht 7,203 million, adjusted by connected transaction of Baht 6,244 million. The major changes of expenses are as follows: 1) Cost of good sold amounted Baht 74,148 million, increased by Baht 15,439 million, since total sale volumes increased to 116.6 KBD from 103.4 KBD of last year, as well as, the crude cost also continuously increased (Dubai crude oil price increased by 7.5 $/BBL in 2004) 2) Selling and administrating expenses amounted Baht 1,367 million, decreased by Baht 175 million, since the Company had incurred the extra reserve for doubtful debts of Baht 233 million in 2003 as the Business and financial restructuring plan. Therefore, the selling and administrative expenses in 2003 were in the abnormal high level. However, in case of excluding such extra reserve for doubtful debts, the selling and administrative expenses in 2004 would increase from that of last year by Baht 58 million, as the result of the higher of sale volumes, but Baht 40 million of lower advertising and promotion expenses. 3) Interest expense amounted Baht 787 million, decreased by Baht 241 million due to the financial restructuring program. Moreover, the company also recorded lower interest income of Baht 18 million, which decreased by Baht 17 million, since the Company received a working capital line from bank as the financial restructuring plan; therefore, the Company did not have to hold a lot of cash on hand for working capital purpose. 2.Explanation and Analysis of the Financial Position as of December 31, 2004 compared with December 31, 2003 2.1 Assets 1) At the end of 2004, total assets of the Company and its subsidiary were Baht 34,370 million, which composed of Baht 34,269 million of the Company's total assets and Baht 540 million of its subsidiary's total assets, adjusted by Baht 437 million of connected transactions of 15 days credit term. 2) At the end of 2004, the Company's total assets increased by Baht 5,738 million, comparing to that at the end of 2003. The major changes of assets are as follow: - Cash and cash equivalent amounted Baht 1,894 million, decreased by Baht 1,455 million, since the Company had to pay approximately USD 46 million or Baht 1,800 million of crude costs on January 6, 2004; therefore, the Company had to reserve cash on hand for this purpose at the end of 2003. -Trade accounts receivable amounted Baht 3,621 million, increased by Baht 827 million, due to the increasing of sale volumes and the higher selling prices of refined products. - Total inventories amounted Baht 9,947 million, increased by Baht 4,551 million, since the Company increased the inventory level by 244 million liters for supporting the expansion of sales and refinery utilization. In addition, the average prices of inventories also increased by 2.83 Baht/ liter. - The receivable from oil fund amounting Baht 1,343 million was the receivable from the implementation of the retail oil price capped mechanism at the service station, which normally has 45 days of credit term. - Intangible assets amounted Baht 1,449 million, increased by Baht 476 million, since the Company was allowed to extend the lease period at the state property for the refinery plant from 12 years to 30 years with the total leasehold fee of Baht 552 million as the business and financial restructuring plan. (it was recorded in the first quarter of 2004) 2.2 Liabilities 1) At the end of 2004, total liabilities of the Company and its subsidiary were Baht 24,589 million, which composed of Baht 24,489 million of the Company's total liabilities and Baht 537 million of its subsidiary's total liabilities, adjusted by Baht 437 million of connected transactions. 2) At the end of 2004, the Company's total liabilities decreased by Baht 961 million, comparing to that at the end of 2003. The major changes of liabilities are as follow: - At the end of 2004, total loans decreased by Baht 4,443 million, since the Company performed the financial restructuring by issuing and offering of Baht 3,000 million of newly ordinary shares in form of depository receipt (CSDR), as well as, Baht 4,000 million of the convertible debenture in form of depository receipt (CDDR), which were exercised to ordinary shares by 97 million shares or Baht 1,389 million during the year 2004. Total loans at the end of 2004 composed of the following: o Short-term loan from Krungthai Bank of Baht 2,000 million was the loan for working capital purpose. o Long-term loan of Baht 11,165 million composed of Baht 2,611 million of CDDR and Baht 7,800 million of long-term loans from Krungthai Bank (total long-term loan line was Baht 8,500 million), which will due in 1 year by Baht 191 million. In addition, the Company had Baht 2,510 million of bond and promissory note, which will reach the maturity in 1 year by Baht 1,565 million. - Trade accounts payable amounted Baht 7,583 million, increased by Baht 3,154 million, due to the higher crude oil prices (Dubai crude oil increased by 7.5 $/BBL) and the extra extension of crude payment schedule for 1 shipment. 2.3 Shareholders' Equity 1) At the end of 2004, total shareholders' equity of the Company and its subsidiary were Baht 9,781 million, which composed of Baht 9,780 million of the Company's total shareholders' equity and Baht 0.54 million of minority shareholders (total shareholders' equity of its subsidiary was Baht 3 million) 2) At the end of 2004, the Company's total shareholders' equity was 9,780 million, increased by Baht 6,699 million comparing to that at the end of 2003, since the Company could generate net profit of Baht 2,613 million and issued and offered the newly ordinary shares in form of depository receipt (CSDR) of Baht 3,000 million, as well as, some parts of depository receipts of convertible debenture (CDDR) were exercised to the ordinary share of 97 million shares or baht 1,389 million. Therefore, the Company had recorded these transactions as follow: - Quarter 1 o Increased paid-up registered capital from 522,040,940 shares at par 1 Baht/ share to 753,040,940 shares at par 1 Baht/ share, totaling Baht 753,040,940. This resulted from the issuing and offering of 231 newly ordinary shares in form of depository receipt (CSDR) on January 29, 2004. The Company had registered this new capital at Ministry of Commerce on February 3, 2004. o Recorded the premium on shares of 12 Baht/ share from issuing and offering of 231 newly ordinary shares, totaling Baht 2,693,820,103. - Quarter 2 o Transferred such premium on shares of Baht 2,389,126,110 to compensate all accumulated loss at the end of 2003 by Baht 2,389,126,110 in accordance with the resolution of the 2004 Annual Shareholders' Meeting, held on April 29, 2004. - Quarter 3 o Decreased the registered capital and paid-up registered capital of 189,617,759 shares at par 1 Baht/ share, totaling Baht 189,617,759, on July 6, 2004, which resulted from the cancellation of the excess shares from the security swap transactions. These decreases of capital would be equalized the number of shares held by SiamDR Co., Ltd. to the number of the CSDR issued and offered by SiamDR Co., Ltd. o Increased the registered capital of 24,000,000 shares on July 7, 2004, in order to support the issuing and offering of not exceeding 24 million shares of warrant, due to the Employee Stock Option Program, in accordance with the resolution of the 2004 annual shareholders' meeting, held on April 29, 2004. o Increased the paid-up registered capital of 28,108,385 shares at par 1 Baht/share, totaling Baht 28,108,385, on July 8, 2004. This resulted from the exercising of CDDR to ordinary shares at the end of quarter 2. - Quarter 4 o Increased the paid-up registered capital of 69,038,969 shares at par 1 Baht/share, totaling Baht 69,027,969, on October 7, 2004. This resulted from the exercising of CDDR to ordinary shares at the end of quarter3. 3. Explanation and Analysis of the Statement of Cash Flows for the year 2004 compared with the year 2003 3.1 In 2004, the Company and its subsidiary had the operating profits of Baht 3,245 million, which composed of Baht 3,217 million of the Company's operating profit and Baht 28 million of its subsidiary's operating profit. In addition, the Company and its subsidiary had cash and cash equivalent at the beginning of period amounted Baht 3,523 million, which composed of Baht 3,348 million of the Company's cash items and Baht 174 million of its subsidiary's cash items. Moreover, the Company used those cash in the Company's activities during the year by Baht 1,454 million which a part of it was the account payable between the Company and its subsidiary. Therefore, the Company and its subsidiary used cash during the year by Baht 1,310 million. Thus, cash and cash equivalents at ending period of the year 2004 were Baht 2,213 million which composed of Baht 1,894 million of the Company cash and cash equivalent and Baht 318 million of its subsidiary's cash and cash equivalent. 3.2 The Company had the operating profit of Baht 3,217 million and cash items at the beginning of period of Baht 3,348 million. These cash items were used in the Company's activities as follows: 1) Net cash used in operating activities was Baht 3,937 million, due to the increase in values of account receivable and oil inventories by Baht 5,353 million. Such increases resulted from the increasing of crude run and sale volumes, as well as, oil prices. In addition, the Company also had the account receivable from oil fund of Baht 1,343 million. 2) Net cash used in operating activities was Baht 602 million, due to the investments in fixed assets and equipments, as well as, the financial restructuring expenses. 3) Net cash used in financing activities was Baht 132 million, due to the repayment of loans which reached maturity during the year 2004 by using excess cash flow from operation. Thus, at the end of 2004, the Company had cash and cash equivalents of Baht 1,894 million, decreased by Baht 1,454 million comparing to that the end of 2003. 4.Factors and major influences that may affect the Company's performance or financial status in the future For oil business, important factors that affect the performance were the gross refining margin and marketing margin, which were driven by the demand for oil consumption correlating with the economic growth. In 2004, the regional economy tends to report a higher growth rate, in particular China, of which the economic performance has been in a continued expansion. The Thai economy is also expected to expand further, which would result in a rise in the oil demand for consumption also. The Company, therefore, foresees that the regional and domestic oil demand for consumption and production capacity would be in balance in 2005-2006. This will result to the significantly increase in gross refining margin and marketing margin. In addition, oil prices would still produce direct impact on the operations of the Company. It is probable that oil prices that have been on a rise since the end of 2003 would decline in some period of 2005. However, the Company foresees that crude oil prices and refined product prices still remain at high level due to the fact that the demand for oil consumption still grow continuously. Therefore, such declines of oil prices will be lower the value of oil inventories. In order to deal with such situation, the responsible team of the Company keeps a close watch on the situation and is ready to perform risk management on the matter. Although oil prices would continuously increase, the fuel oil price would increase at the lower proportion than that of the crude oil and other refined products; so that the Company's gross refining margin was depressed at a certain level. However, the Company could resolve a part of this effect by sending its fuel oil to upgrade at other refineries. However, it is necessary to the Company to attain the long-term resolution for reducing the fuel oil production in order to enhance the gross refining margin to the same level as the industries' numbers. Therefore, the Company currently has been studying feasibility of the product quality improvement project, which will reduce the fuel oil production yield to the nearly level as any other local and foreign refineries, as well as, improve the oil quality consistent with the new quality standard issued by the government in the year 2011. Furthermore, since the appreciation of Thai Baht against US dollar has had the tendency to continue, the Company's performance will get this effect as well, due to the fact that the Company's revenues were based on US dollar, as well as, the US dollar based assets, oil inventories, also greater than US dollar based liabilities, account payable. Therefore, the appreciation of Thai Baht will cause to the decrease in net assets. However, the Company believes that the appreciation of Thai Baht will occur in such a short period of time from the economy recession in the United States. Furthermore, the Company also has had the policy to adjust the proportion of assets and liabilities in US dollar to the nearly level.