BTS Group Holdings: Investor Relations Quarterly...

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INVESTOR RELATIONS QUARTERLY REVIEW: ISSUE 18 BTS GROUP HOLDINGS PLC

2Q 14/15 (For the quarter ended 30 Sep 2014) (Ended June 2010)

AT A GLANCE

SHARE INFORMATIONA

Shares Outstanding 11,914.2mn sharesG Free FloatE 58.1% Par Value THB 4.0 / ShareF Market Capitalisation THB 121.8bn / USD 3.7bnB YTD daily traded valueD THB 516.2mn / USD 15.8mnB Stock Identifiers

Stock Exchange Symbol BTS Bloomberg / Reuters BTS TB / BTS.BK

REVENUE BY BUSINESS UNIT

GROSS PROFIT BY BUSINESS UNITC

Source: Company

BTS LAST 12 MONTHS SHARE PRICE PERFORMANCEA:

EQUITY MARKETSH 3 MO 6 MO 12 MO

BTS TB 15.6% 25.3% 14.3% SET Transport Index 8.9% 19.6% 12.2% SET Index 3.7% 12.5% 10.1% NIKKEI 225 10.8% 16.2% 17.1% HANG SENG -3.8% 7.6% 2.7% FTSE 100 -1.7% -4.1% -3.3% S&P 500 5.4% 8.3% 14.3%

CURRENCY MARKETSH 3 MO 6 MO 12 MO

USD vs THB -2.0% -1.4% -0.4% EUR vs THB 4.9% 9.7% 9.4% THB vs JPY -9.1% -9.9% -7.8% THB vs HKD 2.0% 1.5% 0.4% THB vs SGD -1.3% -1.8% -1.8% THB vs GBP -3.3% -4.5% -3.1%

FROM THE EDITOR

Dear Investment Community,

In 2Q 14/15, operating revenue (including share of net profit from BTSGIF) increased by 7.3% QoQ to THB 1,871.5mn following improvement across all four business units. Operating EBITDA also improved 7.1% QoQ to THB 738.7mn, however, this improvement was not reflected at a net profit level, with net recurring profit declining by 1.0% QoQ to THB 761.8mn on account of a reduction in interest and investment income from previous quarter. Core network ridership grew 6.6% QoQ from the seasonal low of 1Q to 54.6mn passenger trips and also increased 2.1% YoY. The average fare also increased 0.6% YoY. Year-to-date ridership growth is tracking at 2.0% YoY (below our targeted 5-8% forecast for the fiscal year) and average fare at 3.5% YoY (above our targeted 1% growth for the fiscal year). We still maintain our guidance of 6-9% revenue growth at the Core Network for FY 14/15 although YTD figures indicate it will be at the lower end of this range. O&M income also increased 36.3% YoY to THB 392.2mn from the full quarter effect of the operation of the Green line extension which began operations in December 2013 and the additional scope of work in BRT contract. Our Media business continued its recovery with 2Q 14/15 revenue increasing 4.4% QoQ to THB 787.0mn. The expectation is that this recovery will continue. The fact that 2Q 14/15 revenue was still 7.1% lower than the corresponding quarter last year would also indicate this likelihood. However, in spite of this, VGI has reduced its target revenue growth for the fiscal year (compared to last year) from 13-17% growth to 0-3% growth. This revision is mainly on account of reduced advertising spend on the back of both consumption slowdown and political disruption in 1H 14/15 together with a slower-than-expected subsequent recovery. This revised forecast also excludes any impact from acquisitions (which are accounted for at a net profit level) and assumes that Tesco Lotus will not renew its sales floor contract with VGI from when it expires in February 2015. Despite this weakness, BTS-related Media remains a relative pillar of strength. Revenue from BTS-related Media increased both 3.2% QoQ and 3.6% YoY to THB 441.6mn. BTS-related Media continues to generate 56.1% of VGI’s revenue and 80.1% of gross profit. We are optimistic that VGI will see future benefit from its parent company’s ability to secure future rail concessions. Within the Modern Trade sector, we are also pleased to confirm that VGI has been able to renew its contract with Big C until 2019 as well as sign a new contract with FamilyMart. Finally, on 31 October 2014, VGI’s Board of Directors also withdrew the resolution to subscribe to new shares in SET-listed company Tong Hua Communications PCL (TH). This was on account of the target company’s inability to fulfil the agreed terms and conditions. Within October, the Company announced 2 separate deals which brought more clarity to BTS Groups’ property strategy. More details can be seen in the Company’s public releases as well as in the presentation, which is available for downloading at http://bts.listedcompany.com/slides.html. In summary however, the approach is to partner with SET listed property players, namely Sansiri (SIRI TB) for residential real estate (within 500m of mass transit stations) as well as Natural Park (NPARK TB) for Commercial real estate. The latter deal remains subject to corporate approvals. Following successful execution of these transactions, BTS will have i) recognized gains on sale of assets to the benefit of existing BTS Group shareholders ii) partnered with real estate players with expertise in their respective sectors iii) retained a major economic stake in the development of those assets and iv) done so using only its existing assets as equity without the need for further investment. Finally, since the Board of Directors approved a Share Repurchase programme on 8 August 2014, the Company has subsequently repurchased approximately 95.8mn shares (or 0.8% of the issued shares of the Company) from the market for a total consideration of THB 925.2mn at an average price of approximately THB 9.65 per share. The programme lasts until 24 February 2014 and the Company is mandated to buy up to 600mn shares (or approximately 5.04% of issued shares). Yours faithfully,

Daniel Ross

Financial Director

MEDIA

42%

PROPERTY

18%

MASS TRANSIT

33%

SERVICES

8%

MEDIA

43%

MASS TRANSIT

37%

SERVICES

7%

PROPERTY

13%

http://bts.listedcompany.com/slides.html




BTS GROUP FINANCIAL SUMMARY (CONSOLIDATED)

INCOME STATEMENT FOR 3-MONTH PERIOD (THB mn) 2Q 14/15 2Q 13/14 % YoY

Operating revenue 1,871.5 2,276.2 (17.8)% Other recurring income 437.7 391.1 11.9% Total recurring revenue 2,309.1 2,667.3 (13.4)%

Operating costs 793.0 1,083.2 (26.8)% Operating selling and administrative expenses 457.3 446.5 2.4% EBITDA 1,178.4 1,573.2 (25.1)%

Operating EBITDA 738.7 840.9 (12.2)%

Finance cost 112.0 173.9 (35.6)% Non-operating gain (loss) (10.3) 337.7 (103.0)% EBT 942.7 1,301.4 (27.6)%

Income tax 191.2 212.9 (10.2)% Minority interests 118.1 141.2 (16.3)% Net income (loss) to equity holders of the parent 633.3 947.3 (33.1)%

EPS (THB per share) 0.0530 0.0821 (35.4)%

STATEMENT OF FINANCIAL POSITION (THB mn) 30 SEP 14 31 MAR 14 % Change

Cash and cash equivalents 5,955.7 7,469.5 (20.3)%

Current investments 20,505.2 23,762.7 (13.7)%

Trade and other receivables 1,451.8 1,419.5 2.3%

Real estate development costs-net 2,462.8 2,483.8 (0.8)%

Accrued income 470.9 375.6 25.4%

Other current assets 959.8 908.5 5.6%

Total current assets 31,806.2 36,419.6 (12.7)%

Investments in associates 14,215.4 14,454.8 (1.7)%

Other long-term investment-net 4,900.3 6,411.8 (23.6)%

Investment in properties - net 3,080.0 3,096.6 (0.5)%

Property, plant and equipment-net 8,241.7 7,676.1 7.4%

Other non-current assets 9,062.1 9,066.1 0.0%

Total non-current assets 39,499.5 40,705.4 (3.0)%

Total assets 71,305.7 77,125.0 (7.5)%

Short-term loan from financial institution 220.0 200.0 10.0%

Trade accounts payable 2,379.4 1,847.8 28.8%

Current portion of long-term loan 22.0 16.0 37.5%

Current portion of long-term debentures 1,466.2 3,609.8 (59.4)%

Other current liabilities 2,427.2 2,997.4 (19.0)%

Total current liabilities 6,514.7 8,671.1 (24.9)%

Long-term loan - net of current portion 1,193.5 1,202.0 (0.7)%

Long-term debentures-net of current portion 1,344.0 2,808.8 (52.2)%

Long-term provision - related party 1,353.3 1,275.6 6.1%

Deferred tax liabilities 2,964.7 3,010.7 (1.5)%

Other non-current liabilities 1,296.1 1,296.4 0.0%

Total non-current liabilities 8,151.6 9,593.4 (15.0)%

Total liabilities 14,666.3 18,264.5 (19.7)%

Issued and fully paid shares (mn shares) 15,913.1 15,913.1 0.0%

Issued and fully paid capital 47,656.9 47,656.9 0.0%

Share premium (discount) 1,797.2 1,797.2 0.0%

Retained earnings 1,435.1 4,228.6 (66.1)%

Other component of shareholder's equity 4,309.4 3,705.0 16.3%

Equity attributable to company's shareholders 55,198.6 57,387.8 (3.8)%

Non-controlling interest - equity attributable to minority 1,440.7 1,472.8 (2.2)%

Total shareholders' equity 56,639.4 58,860.5 (3.8)%

Total liabilities and shareholders' equity 71,305.7 77,125.0 (7.5)%




BTS GROUP FINANCIAL SUMMARY (CONSOLIDATED)

CASH FLOW STATEMENT FOR 6-MONTH PERIOD (THB mn) 2Q 14/15 2Q 13/14 % YoY

EBT 1,917.3 15,657.4 (87.8)%

Plus Profit before tax from discontinued operation - 30.4 N.A.

Total 1,917.3 15,687.8 (87.8)%

Cash from operating activities 1,080.1 2,271.4 (52.4)%

Cash paid for interest expenses (202.0) (279.1) N.A.

Cash paid for corporate income tax (1,064.4) (261.8) N.A.

Cash received for return of corporate income tax - 28.0 N.A.

Net cash from (used in) operating activities (186.3) 1,758.5 (110.6)%

Net cash from investing activities 3,661.0 9,804.8 (62.7)%

Net cash used in financing activities (6,188.9) (8,055.4) N.A.

Increase in translation adjustment 1.3 0.6 116.7%

Net increase (decrease) in cash (2,712.8) 3,508.5 (177.3)%

Cash at beginning of the period 8,668.5 3,513.3 146.7%

Cash at the end of the period 5,955.7 7,021.8 (15.2)%

KEY FINANCIAL RATIOS

PROFITABILITY RATIOS 2Q 14/15+ 2Q 13/14*

1Q 14/15

Gross operating profit margin (%) 57.6% 52.4% 55.9% Selling and administrative expenses to operating sales ratio (%) 24.4% 19.6% 22.8% Operating EBITDA margin (%)A 39.5% 36.9% 39.5% Accounting EBITDA margin (%) 50.6% 51.4% 52.1% Recurring pre-tax profit margin (%)B 41.2% 36.1% 43.0% Net recurring profit margin (%)B 32.9% 28.1% 33.7% Accounting net profit margin (%)C 35.6% 35.5% 32.6% ROA (%)D 3.5% 19.1% 3.8% ROE (%)E

4.5% 27.4% 4.9%

LIQUIDITY RATIO

Current ratio (times)

4.88x 3.80x 4.20x

LEVERAGE RATIOS

Total liabilities to total asset (times) 0.21x 0.21x 0.24x Total liabilities to total equity (times) 0.26x 0.27x 0.31x Net debt to equity (times) (0.03 x) (0.01 x) 0.01x Net debt to operating EBITDA (times) (0.61 x) (0.08 x) 0.12x Interest coverage (times)F

6.60x 4.84x 5.16x

PER SHARE RATIOSG

Basic earnings per share (THB) 0.0530 0.0821 0.0546 Operating cash flow per share (THB) (0.045) 0.091 0.030 Free cash flow per share (THB) (0.078) 0.018 0.015 Enterprise value per share (THB) 10.45 9.49 9.43 Book value per share (THB) 4.74 5.21 4.94

NOTE:

* Includes profit from discontinued operation

+ Restated to reflect effects from TFRIC 12 and TFRIC 4

A Excludes non-operating items

and interest income

B Calculated based on recurring

profit (before MI) / total

recurring revenue

C Calculated based on

accounting net profit (before

MI) / total accounting revenue

includes shares of income from

investments in associates

D Calculated based on


MI) / average total assets

E Calculated based on


MI) / average total

shareholders’ equity

F Calculated based on

operating EBITDA / finance cost G Calculated based on

weighted average number of

shares at par value of THB 4.0

per share




FINANCIAL HIGHLIGHTS

Quarterly ridership; 54.6mn trips in 2Q 14/15, 2.1% growth YoY and 6.6% growth QoQ

Average fare also increased 0.6% YoY to THB 26.6 per trip

Share of net profit from investment in BTSGIF units in 2Q 14/15 increased by 24.6% YoY or THB 42.8mn to THB 217.2mn

Train Operation & Maintenance (O&M) revenue rose 36.3% YoY to THB 392.2mn primarily from the opening of new Silom line extension and the

additional scope of work in BRT contract

Media business revenue of THB 787.0mn in 2Q 14/15, a 4.4% increase QoQ, yet a 7.1% decrease YoY

Property business revenue of THB 330.9mn in 2Q 14/15, dropping 61.7% YoY mainly from fewer transferred condominium units

Services business revenue1 rose by 39.1% YoY to THB 144.2mn mainly from the revenue generated from ChefMan Restaurants

Net recurring profit margin (before MI) improved to 32.9% in 2Q 14/15 compared to 28.2% in 2Q 13/14

Net income attributable to the equity holders of the Company dropped 33.1% YoY to THB 633.4mn due to the gain on sales of assets in 2Q 13/14 and a

decrease of revenue from sales of real estate

ACCOUNTING AND RECLASSIFICATION

From 1 April 2014, the Company and its subsidiaries (together, the “Group”) have adopted TFRIC 12 – Service Concession Arrangements. This new standard

provides accounting guidelines for concession operators for recognising and measuring the obligations and related rights in public-to-private service

concession arrangements. BTSC (the subsidiary) provides services to procure electric trains (infrastructure) to be used in the provision of public services and to

operate and maintain this infrastructure for a specified period of time under the 30-year O&M contract. BTSC is paid for its services over the period of the

arrangement which is a public-to-private service concession arrangement. BTSC’s management, therefore, considers this arrangement under the 30-year O&M

contract to be within the scope of TFRIC 12. The effects of the changes are recognised retrospectively in the financial statements. For more information, please

refer to Notes 1 and 2 to 2Q 14/15 financial statements.

SIGNIFICANT EVENTS

8 August 2014: the Board of Directors of BTS Group approved a share repurchase programme not exceeding THB 6,000mn (or approximately 5% of the

total issued shares). The repurchase period covers the duration of 6 months from 25 August 2014 until 24 February 2015. As of 9 September 2014, which

is the latest share repurchase reporting date, the Company had repurchased 0.8% of total issued shares in the amount of THB 925.2mn.

6 October 2014: The Board of Directors approved in principle for the Company to consider the disposal of shares in two subsidiaries; BTS Assets Co., Ltd.

(BTSA) and Kamkoong Property Co., Ltd. (KKP) that engage in real estate business. BTS Group will receive in exchange for considerations in the form of

newly issued ordinary shares and warrants of Natural Park Public Company Limited (NPARK) and/or an amount of cash if appropriate. The completion of

the transaction is subject to due diligence, NPARK’s shareholders’ approval for entry into the proposed transactions together with a whitewash

resolution, as well as Company’s Board of Directors’ approval.

15 October 2014: The Executive Committee approved (1) the entry into the Strategic Alliance Framework Agreement with Sansiri Public Company Limited

(SIRI) to exclusively partner together on the developments of residential projects for sale located within 500m of all rail mass transit stations, (2) to

establish a 50:50 joint venture company with SIRI to develop the first residential project near BTS Mo Chit Station and (3) to sell approximately 5-rai

(8,000sqm) of land to the joint venture for the development of the first project.

2Q 14/15 QUARTERLY PERFORMANCE

The Group recorded consolidated total revenue of THB 2,106.6mn in 2Q 14/15, falling 27.0% or THB 779.9mn YoY from THB 2,886.5mn in 2Q 13/14. The

reduction was primarily due to (1) a decrease in revenue of sales of real estate of THB 541.1mn, (2) a gain on the sales of land of THB 379.8mn in 2Q 13/14 which was not repeated in 2Q 14/15, yet offset with (3) an increase in service income of THB 170.5mn mainly from the increased O&M revenue. Despite (1)

higher O&M revenue from additional service income from the Silom line extension (2) additional scope of work in BRT contract and (3) an increase in share of

net profit from BTSGIF units, operating revenue2 fell by 17.8% YoY to THB 1,871.5mn largely as a result of the reduction in Property revenue from fewer

transferred units of Abstracts Phahonyothin Park Condominium in 2Q 14/15 and the softened Media revenue. Revenue from the Mass Transit, Media, Property

and Services businesses accounted for 32.6%, 42.1%, 17.7% and 7.7% of total operating revenue, respectively.

Operating Revenue2

(THB mn) 2Q 14/15 % of Total2 2Q 13/14 % of Total2 % Change

(YoY) 2Q 14/15

GP Margin5 2Q 13/14

GP Margin5

Mass Transit3 609.4 32.6% 462.2 20.3% 31.9% 66.3% 58.1%

Media 787.0 42.1% 847.2 37.2% (7.1)% 58.3% 62.8%

Property4 330.9 17.7% 863.3 37.9% (61.7)% 41.7% 39.5%

Services1 144.2 7.7% 103.7 4.6% 39.1% 54.0% 50.0%

TOTAL2 1,871.5 100.0% 2,276.2 100.0% (17.8)% 57.6% 52.4%




However, operating revenue rose 7.3% QoQ to THB 1,871.5mn as a result of the improved performance of all business units. Mass Transit revenue rose 11.8%

QoQ, which was mainly attributable to an increase in share of net profit in BTSGIF units and the additional scope of work in BRT contract. Media revenue

rebounded 4.4% QoQ, which was in line with the slow economic growth momentum. Property revenue also increased 3.6% from the previous quarter as a

result of the improvement in our group of hotels’ business. Lastly, Services revenue showed 14.6% growth, largely owing to the strong performance of

ChefMan Restaurants.

Total consolidated expenses and SG&A reached THB 1,275.2mn in 2Q 14/15, a reduction of THB 312.1mn or 19.7% YoY mainly from the decline in cost of sales

of real estate as well as selling and marketing expenses related to sales of Abstracts Condominium project. Operating costs decreased by 26.8% YoY to THB

793.0mn, which was in line with the reduction in total operating revenue. Nonetheless, as operating costs decreased at a higher rate than the decline in

operating revenues, the Group operating gross profit margin5 improved to 57.6% from 52.4% in the previous year.

As a result of the aforementioned changes, the Group operating EBITDA6 was THB 738.7mn, a decrease of THB 102.8mn or 12.2% YoY and an increase of THB

49mn or 7.1% QoQ. However, the operating EBITDA margin improved to 39.5% in 2Q 14/15 (versus 37.0% in 2Q 13/14) from growth in O&M margin and lower

contribution from low margin business. Finance costs fell by 35.6% or THB 61.9mn to THB 112.0mn, primarily as the Group repaid the third tranche of BTSC

debentures (THB 3,611.3mn) in August 2014. The net recurring (post-tax) profit7 margin for this quarter improved to 32.9% from 28.2% in 2Q 13/14 from the improved operating gross profit, an increase in other recurring income of THB 48.4mn, a reduction in finance costs as well as a reduction in income tax

expenses of THB 21.7mn. Taking into account all the aforesaid transactions, the Group recorded a consolidated profit of THB 751.5mn (decreasing 31.0% YoY)

and profit attributable to the equity holders of the Company of THB 633.4mn (decreasing 33.1% YoY).

1 Services revenue includes sales from BSS, revenue from Carrot, revenue from HHT construction and revenue from ChefMan Restaurants. Note that transactions related to

ChefMan Restaurants were reclassified from Property business to Services business in 4Q 13/14 2 Operating revenue from the operational performances from 4 BUs and share of net profit (loss) from BTSGIF, EXCLUDES interest income, dividend income and non-recurring items 3 Mass Transit revenues include:

i) Share of net profit (loss) from BTSGIF (included in ‘Share of profit from investments in associates’ in Statement of comprehensive income) ii) Service Income from Train & Bus Operation Management (included in ‘Service income’ under ‘Revenues from provision of operating services’)

4 Property includes Sales from Real Estate, Rental and Service Income, Construction & Services Businesses and Service income related to Thana City Golf & Sports Club Co., Ltd. 5 Operating gross profit margin calculated based on the operational performances from 4 BUs and share of net profit (loss) from BTSGIF 6 Operating EBITDA calculated based on the operational performances from 4 BUs, share of net profit (loss) from BTSGIF, EXCLUDES interest income, dividend income, share of net profit (loss) from other associates (except from BTSGIF) and joint venture, non-recurring items from sales of net fare-box revenue to BTSGIF and other non-recurring items 7 Recurring profit calculated based on the operational performances from 4 BUs, share of net profit (loss) from BTSGIF and other associates and joint venture, as well as including other recurring items which are interest income and other recurring items (before MI)

SEGMENTAL PERFORMANCE

MASS TRANSIT Total Mass Transit revenue3 increased 31.9% YoY to THB 609.4mn supported by an increase in O&M income and an increase in share of net profit from BTSGIF.

O&M revenue rose by 36.3% or THB 104.5mn YoY to THB 392.2mn, mainly attributable to the additional service income from the Silom line extension which

opened on 5 December 2013 and the additional scope of work in BRT contract.

Share of net profit from investment in BTSGIF units in 2Q 14/15 increased by THB 42.8mn or 24.6% YoY to THB 217.2mn. This increase came from revision of

amortisation method for fund set-up cost, offset with the decrease in net fare-box revenue. Fare-box revenue of the core system rose by 2.7% YoY or THB

38.2mn to THB 1,455.0mn attributable to both ridership growth (up 2.1% YoY to 54.6mn trips) and average fare increase (which rose by 0.6% YoY to THB 26.6

per trip). Cost of fare-box revenue rose at a faster rate than revenue growth, resulting in the decline in net fare-box revenue.

However, there was revision of amortisation method for fund set-up cost from 3 years to the end of concession to be in line with other BTSGIF related items.

As such, the “share of net profit in BTSGIF” this quarter includes an adjustment of the previous ‘over amortisation’ in the amount of THB 54.5mn.

Cost of Mass Transit revenue, including SG&A expenses, increased by 6.2% or THB 12.0mn YoY to THB 205.6mn, in line with higher O&M revenue. As operating

revenue grew more than the increase in operating cost and SG&A expenses, this led to an improvement in the operating EBITDA margin to 66.8% in 2Q 14/15

(versus 59.8% in 2Q 13/14).

2Q 14/15 2Q 13/14 % YoY

Total Ridership (million trips) 54.6 53.5 2.1%

Average weekday ridership (trip) 662,713 643,920 2.9%

Average Fare (THB / trip) 26.6 26.5 0.6%




Historical Quarterly Ridership and % QoQ Growth Historical Quarterly Ridership and % QoQ Growth

MEDIA

The economy continued to show signs of slow recovery despite the establishment of clearer political policies. As a result, media advertising spending grew

2.3% QoQ, in line with the slow economic growth momentum. Our Media business outperformed the media industry with revenue growth of 4.4% from the

previous quarter to THB 787.0mn.

Factors contributing to revenue growth QoQ came from all three business segments:

BTS-related Media continued to grow resiliently to THB 441.6mn with increased revenue of THB 13.7mn (or 3.2% QoQ) mainly coming from (1) the increase in

capacity from new digital media (Platform Truss LEDs and Platform Screen Doors) on BTS stations, (2) higher revenue from merchandising space and (3) higher

revenue from In-Train static media as a result of new sales strategies. Our Modern Trade Media revenue showed growth of 6.4% due to increase in sales and

Office Building and Other Media revenue grew 2.4% as a result of the increase in office building contracts.

However, Media revenue contracted 7.1% (or THB 60.2mn) YoY mainly owing to weaker economic momentum due to the previous political uncertainty. The

decrease was primarily from the reduction in Modern Trade Media revenue, offset with the growth in BTS-related Media revenue, which continued to perform

well despite the aforementioned external challenges.

BTS-related Media revenue of THB 441.6mn represented growth of 3.6% or THB 15.5mn YoY despite the domestic political uncertainty and economic slowdown. The key growth drivers were the increase in capacity from Platform Truss LEDs and Platform Screen Doors. Revenue from Modern Trade Media

reached THB 304.8mn, a decrease of 17.0% or THB 62.4mn YoY as a result of weakening consumer spending and political disruptions. Office Building & Other

Media revenue was THB 40.6mn, decreasing by 24.7% YoY or THB 13.3mn. This decrease was primarily due to consumption slowdown and political

instabilities.

Cost of revenue increased 4.0% or THB 12.7mn YoY to THB 328.1mn as a result of higher depreciation expenses of new digital media such as Platform Truss

LEDs and Platform Screen Doors. Media SG&A also increased by 10.4% or THB 10.1mn YoY to THB 107.8mn largely resulting from employee expenses.

Consequently, as operating revenue declined whilst total cost and SG&A expenses increased, the operating EBITDA margin decreased to 49.5% (versus 53.3%

in 2Q 13/14).

CONTRIBUTION OF REVENUE (MEDIA BUSINESS)

OPERATING PROFIT MARGIN (MEDIA BUSINESS)

2Q 14/15 2Q 13/14 1Q 14/15

Operating gross profit margin (overall)*

58.3% 62.8% 58.8%

Operating EBITDA margin (overall) 49.5% 53.3% 50.2%

*Operating gross profit margin excludes the cost of concession payable to BTSC

OFFICE BUILDINGS

MODERN TRADE

BTS RELATED MEDIA




PROPERTY

Property operating revenue dropped a significant 61.7% YoY or THB 532.4mn to THB 330.9mn, which was largely attributable to the decline in Residential

Property revenue as a result of fewer transferred condominium units of Abstracts Phahonyothin Park (Tower A) compared to 2Q 13/14.

Residential Property revenue decreased by 81.7% YoY or THB 540.9mn to THB 121.2mn in 2Q 14/15. This decrease was mainly driven by a decline in sales of

real estate of THB 541.1mn (largely in relation to 33 transferred units of Abstracts Phahonyothin Park (Tower A) in this quarter versus 201 transferred units in

2Q 13/14).

Commercial Property revenue reached THB 207.6mn, an increase of 4.3% YoY or THB 8.6mn mainly supported by an improvement in Thana City Golf Course

and the Groups hotel business performance.

Operating costs decreased at the same rate as the reduction in operating revenues. The decrease of 63.1% YoY or THB 329.5mn to THB 192.9mn was mainly

from a decline in costs from transferred units of Abstracts Phahonyothin Park. Property SG&A expenses also decreased by 31.9% YoY or THB 60.8mn to THB

129.8mn largely from the reduction in selling and marketing expenses related to Abstracts Condominium project. As a result of the decrease in sales of real

estate from the aforesaid reasons, the operating EBITDA margin contracted to 13.9% in 2Q 14/15 compared to 21.8% in 2Q 13/14.

RESIDENTIAL PROPERTY SUMMARY

PROJECT SUMMARY

Type: Mid-High End Condominium

Location: Phahonyothin Road, North Bangkok. 250m from new BTS station

Site area: 33,420sqm (20-3-55 rai)

#Units GFA (sqm) NFA (sqm)

Tower A 1,012 62,091 42,818 Tower B 1,012 62,091 42,818 Tower C 1,012 62,091 42,818

Total 3,036 189,273 128,455

PRESOLD UNITS AS OF 30 SEP 14

COMMERCIAL PROPERTY SUMMARY

EASTIN GRAND HOTEL SATHORN PROJECT SUMMARY

Type: Four Star Hotel

Location: Sathorn Road, Direct access to BTS Surasak

Site area: 3,828sqm. (2-1-57 rai)

Construction completed: Apr 2012

Soft Opening: May 2012

Official Launch: Oct 2012

Average Occupancy Rate: 82% (2Q 14/15)

U SATHORN BANGKOK PROJECT SUMMARY

Type: Four Star Hotel

Location: Sathorn Bangkok

Site: 16-0-81 Rai (3 fl, 86 rooms)

Land Tenure: Leasehold, 30 Years Lease Contract With Treasury Department

Expected Operation: December 2014

SERVICES

Services business revenue increased YoY by THB 40.5mn or 39.1% to THB 144.2mn. This increase was primarily due to growth in the revenue generated from

ChefMan Restaurants (increased by THB 30.6mn or 57.2% YoY to THB 84.0mn) as well as growth in the revenue from marketing and co-promotion of rabbit

cards of THB 13.0mn.

Operating costs increased by 28.1% YoY or THB 14.5mn to THB 66.4mn, increasing at a lower rate than operating revenue. There was also THB 72.9mn SG&A

expenses, an increase of 56.9% YoY. Key costs and SG&A items were mainly from staff costs, food & beverage cost at ChefMan Restaurants and depreciation

expenses (for hardware, software and machines).




STATEMENT OF FINANCIAL POSITION

Total assets as of 30 September 2014 stood at THB 71,305.7mn, a decrease of THB 5,405.4mn or 7.0% from 31 March 2014. Total current assets stood at THB

31,806.2mn, decreasing 14.8% mainly from (1) a decrease in current investment of THB 2,991.1mn (mainly from the collateralised debenture, which was used

to repay the third tranche of BTSC debentures of THB 3,611.3mn and the reclassification of the fourth tranche of BTSC debentures of THB 1,466.2mn to

current portion from long-term portion), (2) a reduction in cash of THB 2,712.8mn (see further details in Cash Flow section), offset with (3) an increase in trade

and other receivables of THB 377.4mn. Total non-current assets was THB 39,499.5mn, an increase of 0.3% mainly from (1) an increase in restricted deposits of

THB 574.5mn (cash collateral placed with banks), (2) an increase in PP&E of THB 567.7mn mainly for the development of U Sathorn hotel and renovation of

sport club in Thana City, offset by (3) a decrease in other long-term investments of THB 1,337.9mn primarily from the aforementioned movement of the fourth

tranche of BTSC debentures which will mature in August 2015 to current portion.

Total liabilities decreased from 31 March 2014 by 14.6% or THB 2,502.6mn to stand at THB 14,666.3mn largely due to (1) the third tranche repayment of BTSC

debentures in August 2014, (2) a decrease in income tax payable of THB 442.4mn, offset with (3) an increase in loans from financial institutions of THB

1,195.5mn, of which THB 220.0mn was used by VGI to purchase MACO shares and THB 966.9mn were loans taken to invest in offshore deposits and

investments. Total equity decreased by THB 2,902.8mn or 4.9% to THB 56,639.4mn mainly attributable to (1) a reduction in surplus from the changes in the

ownership interests in subsidiaries of THB 574.9mn primarily as a result of the Company increasing its shareholding in subsidiary VGI, (2) a decrease in non-

controlling interest of the subsidiaries of THB 415.4mn due to the purchases of investments in subsidiaries (VGI and Nuvo Line) and (3) a reduction in

unappropriated retained earnings (excluding the portion reserved for treasury stock) of THB 2,143.3mn. The decline in unappropriated retained earnings were

mainly from dividend payment of THB 2,501.4mn for the period of October 2013 to March 2014. As of 30 September 2014, total issued and fully paid-up

shares stood at 11,914.2mn shares.

CASH FLOW

For the six months ended 30 September 2014, cash and cash equivalents reached THB 5,955.7mn. Cash from operating activities was THB 1,080.1mn,

declining 52.4% or THB 1.2bn primarily due to lower operating revenue of Property and Media businesses and the decrease in trade and other payable of THB

508.2mn. Cash paid for corporate income tax of THB 1.1bn (1H 13/14; THB 261.8mn) meant that net cash used in operating activities was THB 186.3mn. Net

cash from investing activities was THB 3,661.0mn. The key components are (1) decrease in current investment of THB 4,567.4mn largely from the repayment

of the third tranche of BTSC debenture, (2) cash proceeds from the sale of “available-for-sale” investments of THB 1,004.7mn, (3) dividend received of THB

635.4mn (mainly from BTSGIF), (4) cash paid for purchases of other long-term investments of THB 1,308.7mn and (5) investment in MACO of THB 681.2mn.

Net cash used in financing activities was THB 6,188.9mn mainly from (1) the cash paid for the repayment of the third tranche of BTSC debenture of THB

3,611.3mn, (2) dividend payment of THB 2,493.5mn, (3) net cash paid for purchases of investments in subsidiaries of THB 618.5mn and (4) cash paid for the

purchase of BTS Group treasury stock of THB 925.5mn.

Six-Months Cash Flow Snapshot

* after tax (THB 1,064.4mn) and interest expense (THB 202.0mn)

** excluding BTSC sinking fund and THB 23.3bn liquid investments




BTS GROUP IN THE COMMUNITY

The BTS Group is committed to improving the lives of people, through its vision of being a leading provider of mass transit services. The Group has also

initiated many special Corporate Social Responsibility (CSR) projects in both Bangkok and other provinces of Thailand. Activities cover a broad spectrum of

social concerns, with a focus on environmental impact. The Group continuously participates in community development in areas including religion, education,

sport, public health and encourages staff involvement in all these efforts.

10 JUL 2014 Participants in RTAF’s ‘Youth are under the same sky’ campaign participate in ‘Nuduan invites children to visit the BTS

SkyTrain’ activity

A group of 100 students and teachers in the ‘Youth are under the same sky’ campaign from Narathiwas province organised by the Royal Thai Air Force (RTAF) participated in the ‘4th Nuduan invites Childrent to Visit the BTS SkyTrain’ activity. The event was organised at BTSC Head Office and provided educational activities on BTS’s energy efficient public transportation system as well as hosting lunch, presenting of school stationery and visiting the Siam Ocean World. The group was welcomed by Mr. Charoen Wattanasin, Member of Corporate Governance Committee; Mr. Rangsin Kritalug, Director & Chief Operating Officer; Khun Duangkamol Chaichanakajorn, Accounting Director; Mr. Pipop Intaratut, Internal Audit Director and Khun Patchaneeya Pootme, Corporate Communications Director, together with the honored guest Group Captain Noppadol Boonmun, Deputy Director of Directorate of Civil Affairs, RTAF.

25 JUL 2014 ‘BTS Group Businesses present cash to the

Basketball Sport Association of Thailand’

Mr. Rangsin Kritalug, Executive Director & Chief Operating Officer of BTS Group and Mr. Surapong Laoha-Unya, Director & Chief Operating Officer of the BTSC presented THB 500,000 to Mr. Pipat Labpratana, President of the Basketball Sport Association of Thailand at the BTSC Head Office, Phaholyothin Road. The donation aims to support the annual basketball championship tournament to be held from 6 September-31 October 2014.

8 SEP 2014 ‘BTS Group will organised the annual Vegetarian

Food Festival’

BTS Group organised the annual ‘Vegetarian Food Festival with Nuduan’ from 24-26 September 2014, at the Walkway, BTS National Stadium by providing more than 15 vegetarian food dishes for people to enjoy free of charge. The event was held to pay a tribute to Her Majesty the Queen’s 82nd Birthday. .




SUMMARY COVERAGE AND ANALYST RECOMMENDATIONS

Company Name Recc Target Price

Report Date Sales* EBITDA* Net Profit* Analyst Name

2014/15E (THB mn)

JP Morgan Overweight 11.50 5-Nov-14 7,066 3,582 2,664 Sumedh Samant

Phillip Securities Accumulate 11.20 28-Oct-14 7,668 3,178 2,381 Siam Tiyanont BNP Paribas Buy 11.70 21-Oct-14 7,488 3,097 2,709 Somkij Oranchatchawan DBS Vickers Securities Buy 11.07 20-Oct-14 7,888 5,018 2,869 Sombat Agekavanpattana SCB Securities Buy 10.80 17-Oct-14 8,292 3,526 2,404 Sirima Dissara CIMB Securities Buy 10.50 17-Oct-14 9,232 3,288 2,438 Praphan Yukhunthorntham Thanachart Securities Buy 11.50 17-Oct-14 6,389 2,317 2,282 Saksid Phadthananarak Credit Suisse Buy 11.40 17-Oct-14 7,338 2,907 2,656 Warayut Luangmettakul KTZMICO Securities Buy 11.30 17-Oct-14 7,273 2,682 2,577 Raenoo Bhandasukdi Kim Eng Securities Buy 12.10 17-Oct-14 7,286 2,565 2,189 Jaroonpan Wattanawong IV Global Buy 11.10 16-Oct-14 8,387 2,884 2,533 Rattana Leenutaphong Asia Plus Securities Buy 12.00 16-Oct-14 7,604 3,992 2,363 Anuwat Srikajornratkul Bualuang Securities Buy 11.60 7-Oct-14 7,339 2,579 2,289 Suppata Srisuk UBS Buy 10.35 7-Oct-14 7,572 2,694 2,558 Eric Lin

Finansia Syrus Buy 10.80 13-Aug-14 8,706 4,742 2,614 Amnart Ngosawang

Trinity Securities Buy 11.20 13-Aug-14 7,626 2,263 1,930 Duladeth Bik

Jefferies Buy 10.00 4-Aug-14 7,445 3,221 2,654 Avin Sony

BofA Merril Lynch Neutral 8.10 23-Jul-14 7,383 2,964 2,682 Kaseedit Choonnawat

Summary Target Price

Sales* EBITDA* Net Profit*

2014/15E (THB mn)

Average 11.01 7,666 3,194 2,488 *Excludes non-recurring items

Max 12.10 9,232 5,018 2,869

Min 8.10 6,389 2,263 1,930

Source: Broker reports, Bloomberg, SETTrade

SHAREHOLDER CONTACT AND REFERENCE INFORMATION

Shareholder Services:

For any matters relating to your shareholding such as transfer of shares,

change of name and address and loss of share certificates should be

addressed in writing to the Registrar:

The Thailand Securities Depository Co., Ltd. (TSD)

62 The Stock Exchange of Thailand Building,

Rachadapisek Road, Klongtoey,

Bangkok 10110, Thailand

Website: http://www.tsd.co.th

Telephone: +66 (02) 229 2888

Facsimile: +66 (02) 654 5426

E-mail: [email protected]

Investor Relations:

For enquiries from Institutional investors and securities analysts, please contact:

Investor Relations Department, BTS Group Holdings Plc., 15F TST Tower, 21 Viphavadi-Rangsit Rd,

Jompol, Jatujak, Bangkok 10900

Telephone: +66 2 2738525-6

Email: [email protected]

Financial Calendar: The Quarter Ahead

Event Date

2Q 2014/15 Earnings Released 7 November 2014 Analyst Meeting for 2Q 2014/15 12 November 2014 FY 2014/15 Investor Day 2-3 December 2014 End of 3Q 2014/15 31 December 2014 3Q 2014/15 Earnings Released 9 February 2015 Analyst Meeting 3Q 014/15 13 February 2015

Notes: A Data as of 5 November 2014. Source: Company and Bloomberg E Source: BTS Group Holding Public Co.Ltd. as of 10 June 2014 B Based on exchange rate of 32.721 as of 5 November 2014 F New par value (THB 4.0 per share) and numbers of new outstanding shares are effective since 7 Aug 2012 C Assumes no cost of concession payable by VGI to BTSC G Source: BTS Group Holding Public Co.Ltd. as of 5 November 2014 D Source: Bloomberg, data as of 5 November 2014 H Source: Bloomberg, data as of 5 November 2014

This document has been prepared and distributed by the Investor Relations Department of BTS Group Holdings Plc. (“BTSG”) solely for information purposes. It does not represent or constitute an offer, invitation,

recommendation or solicitation to trade shares in BTSG and should not be relied on as such. Some of the information in this document has not been independently verified, and also includes information made

available from public sources and other third party opinion or analyst. BTSG does not monitor or control the content of third party opinion or statements and does not endorse or accept any responsibility for the

content or the use of any such opinion or statements. Thus, BTSG assumes no responsibility and makes no representations with respect to the accuracy and/or completeness of the information described herein.

None of BTSG or any of its agents, or all of their respective affiliates, or representatives shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents

or otherwise arising in connection with this document. All information contained in this document is presented as of the date indicated within, and BTSG assumes no duty to confirm, revise or update the

information. Certain statements in this document may be deemed to contain forward-looking statements, including the statements included or incorporated with the words "believe", "anticipate", "estimate",

"target", or "hope", or that otherwise relate to objectives, strategies, plans, intentions, beliefs or expectations or that have been constructed as statements as to future performance or events. These forward-looking

statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking

statements are made. Thus, BTSG assumes no responsibility and makes no representations with respect to the accuracy and/or completeness of the forward-looking statements. BTSG undertakes no obligation to

publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

prepared by Investor Relations department BTS Group Holdings PCL
http://www.tsd.co.th/mailto:[email protected]

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