Page 98 - BTSGroup ONE REPORT 2021/22_EN

96 l Introduction l Nature of Business l Organisation and Shareholding Structure l Business Review l Corporate Governance l Financial Statements l Other Information l

Investment Risk demand on the mass transit systems. Nevertheless, the concession agreement

Expanding its businesses in order to achieve sustainable growth, BTS Group or the long-term operation and maintenance service agreements (as the case
seeks new business opportunities, both by itself or through its subsidiaries. may be) allows BTSC to propose adjustments to fare prices or service fees
However, such investment may expose the Company to investment risks, in accordance with the consumer price index (CPI) or other indicators stated
including underperforming rates of return, project delays, and over-budgeted in the relevant agreements. However, there has never been an incident that
projects. causes BTSC’s operational costs to significantly increase.

Risks and uncertainties from such investments may cause a reduction in profit Business Interruption Risk
distributed to shareholders. This includes a case where the Company decides The Company’s business operations are exposed to external risks which
to raise capital to finance ongoing projects. Moreover, the Company may be may hinder business operations. These external risks include political unrest,
exposed to risks of underperforming rates of return from new businesses, which, acts of terrorism, and natural disasters. For example, in the first quarter of 2010/11,
causes the Company’s overall rates of return to fall short of its targets and an act of terrorism caused the BTS Skytrain to suspend its operations for a full
possibly affect long-term growth. 8 days, limiting its services for several days, incurring a loss of approximately
THB 180mn to BTS Group. Later, in the third quarter of 2011/12, Bangkok was
BTS Group manages these risks to ensure that potential investments support and severely impacted by a flood which resulted in a slight decrease in ridership
create values for the Company and its subsidiaries. The Investment Committee during that period. In the first half of 2014/15, BTSC reduced its service hours
consists of executives and relevant experts with objectives to assess potential due to the imposed curfew in response to the political unrest in Bangkok.
risks and returns from such investments as well as monitoring performance Most recently, the government initiated a policy to control the outbreak of
subject to change dependent on various factors, thereby preventing the Company the novel coronavirus (COVID-19), resulting in a reduction of its service hours.
to achieve expected returns for further review of the investment plan. Therefore, any similar future incidents that would cause an interruption to
business operations, whether to a mass transit system or to an advertisement
Operational Risk including distribution business, may negatively impact the Company operating
result and its potential growth. Nevertheless, BTS Group has held business
Operational Cost Risk
insurance policies in the likely events of interruption and ones against damages
BTS Group’s major operational costs are personnel expenses, electricity to its property, including acts of terrorism, political rallies, and natural disasters.
costs, and maintenance costs, which may fluctuate and eventually diminish
the Company’s profit margin. In operating the BTS SkyTrain Core Network and Limited Service Provider Reliance Risk
Extension Network, such operational cost may increase as a result of changes in
various factors, including the performance of the obligations under property or The Company may need to rely on external or international service providers
structural maintenance agreements to keep services up to the relevant standards; for training purposes, specifically in repair and maintenance of its system and
an increase in personnel compensation, welfare, and benefits; or changes in equipment. For example, in its mass transit business, BTSC relies on Siemens
the government’s financial or other policies that affect the operations of or to repair and maintain its 35, 4-car trains along with other electrical and