Page 97 - BTSGroup ONE REPORT 2021/22_EN

BTS Group Holdings Public Company Limited 4.3 Risk Management Review 95
Annual Report 2021/22

achieve its determined business objectives, hindering its financial performance Ridership trends also depend on several uncontrollable factors such as customer
and development of business prospect. demand, competition in the mass transit industry, traffic conditions, overall
economic conditions, oil price, real estate development around BTS train
Successful business strategies for the mass transit business rely upon stations, political rallies, and risks relating to terrorism. In addition, ridership
(1) decisions and implementations mandated by the government relating to may be affected by the Company’s reliance on the limited feeder system and
the national mass transit system expansion plan, (2) the Company’s ability interchange stations. Moreover, in a case of delay in the development of
to retain and assess business partners, capture lucrative investment, attain the mass transit system network, interruption, or other forms of disruption of
financial support, successful bids for concession, and control of its financial mass transit systems, these events may negatively impact the feeder system
and business operations, as well as (3) factors out of its control such as politics. and ridership trends.
Moreover, there is no guarantee that the government will follow the current
mass transit system expansion plan for Bangkok and Greater Bangkok, nor will Therefore, if farebox revenue or ridership of the BTS SkyTrain Core Network
the Company be granted the concession for the mass transit system project decreases or remains the same, as a major unitholder of 33.33%, who
under its business strategies. receives cash flow from BTSGIF in the form of dividends and capital return,
BTS Group’s operating result and cash inflows may be affected. Since the
In order to ensure appropriate business strategies are put in place, BTS Group BTS SkyTrain commenced its services, the farebox revenue has continually been
carries out regular determination and reviews, paying close attention to political increasing, except from March 2020 until now, which has been impacted by
development and changes in government policies. the COVID-19 pandemic, resulting in a negative impact on Company performance.
Nevertheless, the Company expects the number of passengers to gradually
recover once the situation returns to normal.
Revenue Risk
The financial performance of BTSC’s mass transit business operations is limited Market Risk
by its ability to adjust the fare prices on its Core Network, whereby the effective
fare and authorised fare are pre-determined according to conditions stated The Company operates businesses in the mass transit, media, real estate, and
in the concession agreement and may depend on the effective government other strategic investments, whereby the nature of each business sector differs
policies at the time. Although the government may stipulate certain measures from each other and are affected by different market risk factors. As such,
to compensate in loss or damages, the Company cannot guarantee that changes in factors relating to the market such as demand and supply,
this will always be the case, as the regulation relating to compensation level of competition, and impacts from changing government policies; may result
is broadly prescribed and has never been evaluated, and there is no in the Company not meeting its projections on its financial performance.
specific contractual term to govern such compensation. In addition, BTSC
or BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF) may decide BTS Group has prepared an appropriate risk management system for each
not to adjust the fare prices on the grounds of political, social factors, business unit to develop and implement risk management guidelines, managing
ones relating to competition in the mass transit industry, or other factors which may risks specific to each business unit. The Company is committed to the excellence
include customer satisfaction and ridership trends. Such factors may impact of its core businesses in order to create synergies, which would further increase
farebox revenue. its competitive advantage.