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MD&A

BackNov 30, 2006

Management Discussion and Analysis for the fiscal year ended September 30, 2006 and 2005 for Airports of Thailand Public Company Limited and its subsidiaries

1.Operating results of Airports of Thailand Public Company Limited and its subsidiaries (AOT)

In the fiscal year 2006, (October 1,2005-September 30, 2006), AOT has operating revenues of Baht 16,261.73 million, a year-on-year increase of Baht 1,367.34 million, or a 9.18 % rise due to a rise in aircraft, passenger, cargo movements. The operating expenses amount to Baht 9,420.07 million, a year-on-year increase of Baht 2,168.36 million, or a 29.90 % rise due to the employment of new employees and temporary workers to be placed at Suvarnabhumi Airport, electricity, water,outsourcing, public relations expenses at Suvarnabhumi airport and also the noise pollution study which effects nearby communities around Suvarnabhumi airport.

However, there is a gain on foreign exchange of Baht 2,853.47 million. An increase in interest income and other income is increased by Baht 209.88 and Baht 593.32 million respectively.The net profit is recorded at Baht 10,378.55 million, an increase of Baht 2,969.70 million, a 40.08 % rise from fiscal year 2005. Basic earnings per share is at Baht 7.26, higher than the last year which is at Baht 5.19

The comparison between key operating results of the fiscal years 2006 and 2005 is as follows:

Unit: Million (Baht)
2006
2005
Increase(Decrease)
% changes
Operating revenues
16,261.73
14,894.39
1,367.34
9.18
Aeronautical revenue
10,240.93
9,260.03
980.90
10.59
Non- aeronautical revenue
6,006.72
5,634.36
372.36
6.61
Hotel operating revenue
14.08
-
14.08
100.00
Operating Expenses
9,420.07
7,251.71
2,168.36
29.90
Operating Income
6,841.66
7,642.68
(801.02)
(10.48)
Gain (Loss) on foreign exchange
4,073.22
1,219.75
2,853.47
233.94
Earning before income tax
12,493.82
9,638.16
2,855.65
29.63
Net profit
10,378.55
7,408.85
2,969.70
40.08
Basic earnings per share (Baht)
7.26
5.19

AOT has aeronautical revenues of Baht 10,240.93 million, a year-on-year increase of Baht 980.90 million, or a 10.59% rise. The increase is attributable to:

- Landing and Parking Charges of Baht 3,468.48 million, a year-on-year increase of Baht 212.79 million or a 6.54% rise
- Passenger Service Charges of Baht 6,459.46 million, a year-on-year increase of Baht 767.42 million or a 13.48 % rise
- Aircraft Service Charges of Baht 312.99 million, a year-on-year increase of 0.69 million or a 0.22% rise

AOT has non-aeronautical revenues of Baht 6,006.72 million, a year-on-year increase of Baht 372.36 million or a 6.61 % rise. The increase is attributable to:

- Office and State Property Rental of Baht 962.72 million, a year-on-year increase of Baht 9.56 million or a1.02% rise
- Service Revenues of Baht 918.64 million, a year-on-year increase of Baht 59.08 million or a 6.87% rise
- Concession Revenues of Baht 4,125.36 million, a year-on-year increase of Baht 303.72 million or a 7.95% rise


In addition, AOT has started operating the Novotel Suvarnabhumi Airport Hotel since July 24, 2006. The hotel-related operating revenues of fiscal year 2006 are recorded at Baht 14.08 million.

AOT has total operating expenses of Baht 9,420.07 million, a year-on-year increase of Baht 2,168.36 million or a 29.90% rise, which can be shown as follows:

- Personnel Expenses of Baht 3,374.57 million, a year-on-year increase of Baht 640.53 million or a 23.43% rise due to an annual salary adjustment and the employment of new staff to be placed at Suvarnabhumi Airport and Novotel Suvarnabhumi Airport Hotel
- Operating Expenses of Baht 3,500.90 million, a year-on-year increase of Baht 1,270.67 million or a 56.97% rise due to a rise in electricity, water, outsourcing and public relations expenses at Suvarnabhumi Airport and also the noise pollution study which effects nearby communities around Suvarnabhumi Airport.
- Suvarnabhumi Airport Hotel's Operating Expenses of Baht 125.87 million. Cost of sales and services of Baht 12.35 million. Selling and administrative expenses of Baht 75.74 million.Depreciation of Baht 37.78 million.
- Repair and Maintenance Expenses of Baht 278.38 million, a year-on-year increase of Baht 51.66 million or a 22.79% rise due to the repair expenses of runways,taxiways,aviation bridges and others
- State Property Rental of Baht 740.32 million, a year-on-year increase of Baht 59.24 million or a 8.70% rise, which is risen in accordance with a rise in operating revenues
- Depreciation and Amortization of Baht 1,400.03 million, a year-on-year increase of Baht 20.39 million or a 1.48 % rise due to the operation of Suvarnabhumi Airport. The depreciation is up by Baht 49.30 million but some assets of Don Muang International Airport and other regional airports have reached the end of their useful life, leading an increase to be up by Baht 20.39 million.

However, AOT has a gain on foreign exchange of Baht 4,073.22 million, a year-on-year increase of Baht 2,853.47 million or a 233.94% rise due to the depreciation of US dollar and Yen,which can be shown as follows:

(Unit : Bath per 1 unit of foreign currency)

Currency
2006
2005
USD
37.6373
41.1075
JPY(:100)
32.0850
36.4959

AOT has an interest income of Baht 867.37 million, a year-on-year increase of Baht 209.88 million or a 31.92% rise due to an increase of interest rate. Other income has increased by Baht 711.57 million, a year-on-year increase of Baht 593.32 million or a 501.75% rise due to the penalty on delay of contract, dividend, service to subsidiary and other revenues. Corporate income tax is recorded at Baht 2,169.07 million, a year-on-year decrease of Baht 78.32 million or a 3.48% drop due to a gain on foreign exchange has been counted as an asset.

2. The financial statements of Airports of Thailand Public Company Limited and its subsidiaries as of September 30, 2006

As of September 30, 2006, AOT has total assets of Baht 150,505.06 million, an increase from the end of fiscal year 2005 (September 30, 2005) of Baht 15,984.27 million or a 11.88% rise. The assets comprise current assets and non-current assets, which account for 15.64% and 84.36% of total assets respectively. The assets can be elaborated in details as follows:

 
September 30, 2006
September 30, 2005
 
Million (Baht)
% of total assets
Million (Baht)
% of total assets
Total current assets
23,539.06
15.64
28,699.00
21.34
Investments
567.60
0.38
2,028.71
1.51
Property, plant and equipment-net
114,077.98
75.80
11,221.29
8.34
Assets under construction
4,670.14
3.10
89,210.53
66.32
Intangible assets
2,803.74
1.86
112.66
0.08
Other non-current assets
4,846.54
3.22
3,248.60
2.41

Assets under construction has decreased by Baht 84,540.39 million or a 94.77% drop as a result of the completion of Suvarnabhumi Airport and Novotel Suvarnabhumi Airport Hotel (AOT's subsidiary), where the amounts would have been recorded under Property, plant and equipment item.

AOT has total liabilities of Baht 79,436.22 million, a rise of Baht 9,396.93 million or a 13.42% rise, which comprise

 
September 30, 2006
September 30, 2005
 
Million (Baht)
% of total liabilities
Million (Baht)
% of total liabilities
Current liabilities (including current portion of long-term loans)
13,993.24
17.62
9,494.91
13.55
Long-term loans
55,942.02
70.42
54,299.38
77.53
Concession revenue
4,439.13
5.59
4,460.00
6.37
Other non-current liabilities
5,061.83
6.37
1,785.00
2.55

Current liabilities (including current portion of long-term loans) has increased from the end of fiscal year 2005 by Baht 4,498.33 million or a 47.38% rise because of the accrued payment of interim dividend for fiscal year 2006, accrued bonus, and also the repayment to contractors who are responsible for Suvarnabhumi Airport construction and others.

Long-term loans have increased from the end of fiscal year 2005 by Baht 1,642.64 million or a 3.03% rise due to the disbursement of loans for the construction of Suvarnabhumi Airport and Novotel Suvarnabhumi Airport Hotel

Non-current liabilities have increased from the end of fiscal year 2005 by Baht 3,276.83 million or a 183.58% rise due to the application of financial derivative of Cross Currency Swap in order to reduce the risk of currency exchange.

Shareholders' equity as of September 30, 2006 totals Baht 71,068.84 million, an increase from the end of fiscal year 2005 of Baht 6,587.34 million or a 10.22% rise mainly due to a rise in net operating income.

For cash flow position as of September 30, 2006, cash and cash equivalents totals Baht 19,759.67 million, an increase from the beginning of fiscal year 2006 (October 1, 2005) of Baht 342.81 million or a year-on-year increase of 1.77%

In short, the details of the sources and uses of funds are as follows:

- Net cash received from operating activities accounts for Baht 10,403.14 million.
- Net cash payment for investing activities accounts for Baht 14,492.38 million,mostly in the construction of Suvarnabhumi Airport and Novotel Suvarnabhumi Airport Hotel.
- Net cash received from financing activities accounts for Baht 4,432.04 million. Cash received from short and long-term loan has increased by Baht 8,622.94 million. Dividend payment is Baht 2,428.57 million and cash paid for repayment of long-term loan totals Baht 1,762.33 million.

 


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