Page 97 - ANNUAL REPORT DESIGN

Dear Fellow Stakeholders,
Sluggish economic growth and consumption slowdown from the weakened global economy and Thai political uncertainties have challenged all companies operating in Thailand in the past year. BTS Group is no exception, experiencing a challenging year, particularly within its Media sector. As a result, we have missed some of our full year targets. However, the core business in relation to Mass Transit and Mass Transit Media continued to demonstrate resilience, and net recurring profit increased by 10.0% compared to the previous year.
Ridership increased 1.9% YoY and average fare increased 1.6%. This resulted in a 3.5% growth in the Core Network farebox revenue. O&M revenue also rose 23.2% YoY to THB 1,549.3mn from the full year operation of Green Line - Silom extension from Wongwian Yai to Bang Wa, which began operations in December 2013. BTS-related Media continued to show resilience with a 7.0% growth YoY to reach THB 1,775.9mn.
Once again, in 2014/15, BTS Group continued to deliver returns to shareholders. In the 5-year period ending January 2015, BTS Group has seen its market capitalisation increase more than 25 times and has generated total shareholder return in excess of 35% per year. Subject to the final dividend of THB 3.5bn being approved at the shareholders' meeting in July 2015, BTS Group will have paid a total of THB 7.1bn, representing a dividend yield of 6.38%*. During the course of the year, BTS Group also executed a share buyback programme. Although we were unable to fill our quota of 600mn shares or 5% of issued shares, we did complete the purchase of 95.8mn shares at an average price of THB 9.65 per share, equivalent to 0.8% of paid up capital.
Within our Mass Transit business, we once again saw resilient performance from the increase in Core Network farebox revenue
(increased 3.5% YoY to THB 5,874.1mn). O&M revenue rose 23.2% YoY to THB 1,549.3mn. We have also worked closely with the current government to support them in their new initiatives. Their commitment to the task at hand is clear and this is evident in many ways. For example, they have expedited the award of the Green Line North (Mo Chit - Saphan Mai - Khu Khot) civil works contract and construction has already started in June 2015. Further, in order to have a seamless service via a single operator, the government has instigated the handover of responsibility of the Green Line extensions from the Mass Rapid Transit Authority to the Bangkok Metropolitan Administration and reiterated that these contracts will be awarded on a negoti- ation basis for passengers’ benefit.
The government’s efforts are not limited just to urban mass transit but they are also moving forward resolutely on develop- ment of the national rail network with plans for expansion of the network from single to dual track as well as high speed train capabilities on certain routes.This serves as a good opportunity for BTS Group to be involved in the development of these projects. Amidst the backdrop of consumption slowdown, our Media business has endured a difficult year. Particularly hard hit was our Modern Trade Media, which has a heavy focus on FMCG clients. Despite the anticipated recovery of consumer demand and the expected benefit that it will bring to Modern Trade advertising, we believe it would be prudent to re-consider our strategy in this segment as we were not able to enforce the exclusivity of such contracts, which threatened the viability of the business. As such, we have decided to discontinue our exposure to the
Modern Trade segment. Our Mass Transit Media however, continues to go from strength to strength under hardship, with revenue increasing 7.0% YoY to reach THB 1,775.5mn. As BTS Group hopes to participate in new mass transit extension projects, VGI does also. In May 2015, VGI was successfully awarded the contract to manage a 7-station Green Line extension and such contract lasts until 2029.
It has been an exciting year within our Property business, having announced two partnership deals. On Residential Property, we have signed a Strategic Alliance Framework Agreement with Thai-listed developer, Sansiri Public Company Limited. The first project has already been launched and we are expecting atotal of THB 20-25bn worth of projects adjacent to mass transit stations in Bangkok and vicinities to be announced over the next 3-5 years under this alliance. This should provide a more steady income stream from 2018 onwards. We have also completed the acquisition of 35.6% of a Thai-listed commercial property developer, U City Public Company Limited, under which we intend to i) develop or acquire a portfolio of income generating assets and ii) be the leading developer of innovative community-based solutions. This forms part of our revised strategy, which is to develop property in partnership with others and that each business unit of the Group should remain self-sufficient.
Our Services business has also made strong progress. We were awarded the Central Clearing House establishment for the National Common Ticketing System of Office of Transport and Traffic Policy and Planning. Also, our Food business under our “ChefMan” restaurant brand continues to expand and we also embarked on a new joint venture with Thai-listed AEON Thana Sinsap (Thailand) Public Company Limited. More details are available within Section 3.7.4: Business and Industry Overview: Services of this annual report.
I am personally committed that BTS Group will continue to contribute back to society and our community. In the coming year, I am placing increased importance on our corporate social responsibility programmes and we expect to launch meaningful initiatives. Our corporate governance efforts are once again rewarded with an improved scoring in the 5-star category despite stricter criteria. We are fully committed to full transparency and
BTS Group targets to be a certified member of Thailand’s private sector Collective Action Coalition Against Corrup- tion within 2015 and has hired KPMG to assist on this.
I am also delighted to announce that as part of the BTS Group organisational structure reform designed to enhance the efficiency of the Company’s management and part of the BTS Group succession plan, Mr. Kavin Kanjanapas has formally been appointed as the new CEO of BTS Group. I will continue in my capacity as the Chairman of the Executive Committee and remain fully involved on a day-to-day basis. BTS Group retains a strong balance sheet with THB 24.0bn of cash and liquid investments as of 31 March 2015. If the government can continue to instigate peaceful reform in the best interests of the public, then we are very optimistic that we will be able to find attractive investment opportuni- ties connected to our core rail business.
Once again, let me extend my sincere appreciation to all our staff members within the Group for their commitment and professionalism, our stakeholders for their continued faith and collaboration and our business partners for sharing the same vision. I look forward to bringing you updates throughout the course of the year.
*Subject to shareholders’ approval of the final dividend of THB 0.30 per share. Dividend yield based on share price as of one day prior to the Board of Directors’ approval of relevant dividend payment.
BTS Group Holdings PCL 021 Annual Report 2015/16