O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT 47 As of 31 December 2022, the Company had a loss before interest expenses, taxes, depreciation and amortisation (EBITDA) of Baht 2,302.6 million and interest-bearing liabilities of Baht 43,844.2 million, resulting in the inability to calculate the interest-bearing debt to EBITDA. In addition, the loss resulted in a negative interest coverage ratio (ICR) of 1.04 times and a negative debt service coverage ratio (DSCR) of 0.24. Also, liquidity ratio was at 0.24 times, indicating that the Company is illiquid and has a high short-term debt burden. Overall, this shows that the Company has a risk in the ability to repay debt and may cause a default on debt payment. As of 31 December 2022, the Company had interest-bearing liabilities due within one year in the amount of Baht 9,740.7 million, consisting of short-term loans from financial institutions in the amount of Baht 750.0 million, short-term debentures of Baht 742.9 million, short-term borrowing from parent company of Baht 89.0 million, current portion of long-term borrowings from financial institutions of Baht 828.0, current portion of long-term debentures of Baht 999.8 million and current portion of liabilities under lease agreements of Baht 6,331.1 million. The interest-bearing liabilities due more than one year was Baht 34,103.5 million comprising of long-term loans from financial institutions in the amount of Baht 2,560.3 million, debentures in the amount of Baht 1,417.8 million, and liabilities under hire-purchase contracts due more than one year in the amount of Baht 30,125.4 million. The Company plans to repay the portion of long-term loans from financial institutions due within one year from capital increase, borrowing and debenture issuance, and the Company plans to repay the debentures due in June 2023 from operating income including cash that the company has. As of 31 December 2022, the Company had cash and cash equivalents in the amount of Baht 794.1 million. In the situation of the COVID-19 epidemic, the Company negotiated with the aircraft lessor to adjust the conditions to relieve various rental fees, such as extending the contract term in exchange for exemption from rent, etc. In the past, the Company has had no problem being unable to repay debentures or loans from financial institutions or lease liabilities. However, if the Company is unable to issue the new debentures in full amount, the Company still has a reserve fund loans from related companies and is in the process of requesting a loan from a financial institution for debt repayment if such reserve funding source is insufficient. The Company will need to procure additional liquidity from other sources to pay off debts that are due or negotiate to adjust the repayment conditions if the Company is unable to provide additional liquidity may result in debt that is due to default. 2. The risk of maintaining financial ratios with financial institutions The Company must maintain the net financial debt to equity ratio (Debt Covenant) with financial institutions at the end of 2022 not exceeding 3 times. As of 31 December 2022, the above ratio could not be calculated due to negative equity. Therefore, it is considered that the Company is unable to maintain financial ratios (Covenant) in accordance with the requirements of financial institutions. However, the Company received a letter of waiver from financial institutions on 26 December 2022 for the 2022 financial statements and was not considered a breach of the loan agreement. However, if the Company has an increased debt burden or has poor operating performance, there may be a risk that the Company will not be able to maintain financial ratios in accordance with the terms and conditions with financial institutions if the financial institution does not grant a waiver. This may result in such financial institutions calling for premature repayment, resulting in the Company losing liquidity and being unable to pay debts which may be in the category of debenture default (Cross Default). In this regard, the Company has remedies and supporting plans to maintain the ratio of debt to shareholders at an appropriate level as follows: 3. Cash flow management risks in the business The aviation industry inevitably faces significant risks in managing its cash flow. It is a result of unexpected events that can happen at any time such as a loss of aircraft, an emergency or serious incident, terrorism, natural disaster or a serious epidemic. This may affect business operations causing the Company to temporarily or permanently suspend flight operations and affect the cash flow of the Company’s operations. Sometimes the damage caused is greater than the value of compensation under the insurance policy. The Company has assigned the Finance Department to continuously plan and prepare cash flow budgets, including planning to find funding sources to bring more liquidity if necessary. While the Human Resources Department asks for cooperation from employees to save costs in order to improve cash flow management and liquidity under a crisis, such as allowing employees to work from home or asking employees for voluntary leave without pay, etc. 4. High Operating Cost due to fuel price may have a negative impact on the business The cost of fuel is the main expense in operating the aviation business. The Company had fuel costs accounting for 31 percent of the Company’s 1. Negotiate with financial institutions regarding the Company’s operating results to request a waiver 2. Improve operational results to return to profit.
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