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Thai Tap Water Supply Public Company LimitedThai Tap Water Supply Public Company LimitedThe largest privately owned tap water producer in ThailandThe largest privately owned tap water producer in Thailand
Presentation of the 1Presentation of the 1stst Debenture IssuanceDebenture IssuanceJanuary 2009January 2009
The largest privately owned tap water producer in Thailand - 2
Agenda
3. Tentative Schedule
2. Indicative Key Features of the Debentures
1. Investment Highlights
The largest privately owned tap water producer in Thailand - 3
Why invest in TTW Debenture?
Business Overview
The Largest Private Operator
Assured Stability with Long-term Off-take Agreement
High Growth Potential
Strong Financial Position and Performance
One of a Kind
The largest privately owned tap water producer in Thailand - 4
Business Structure
Prov
inci
al W
ater
wor
ks A
utho
rity
(“PW
A”)
Tha
Tha
Chi
n Ri
ver
Chi
n Ri
ver
Cha
o Ph
raya
Riv
erC
hao
Phra
ya R
iver En
d U
sers
Capacity : 388,000 Capacity : 388,000 cu.mcu.m./day./day
Capacity : 320,000 Capacity : 320,000 cu.mcu.m./day./day
Water ExtractionWater Extraction Water TreatmentWater Treatment
OffOff--take Contracttake Contract
MOQ : 300,000 MOQ : 300,000 cu.mcu.m./day./day
OffOff--take Contracttake Contract
MOQ : 310,000 MOQ : 310,000 cu.mcu.m./day./day
Business Overview
The largest privately owned tap water producer in Thailand - 5
Business Overview
LDN LDN
BTM (1.0-m. dia., 20-km. long)
BTM(1.5-m. dia., 30-km. long) Distribution Station #1
(Buddha Monthon)
(0.40–1.35 m. dia., 112-km. long)
LDN LDN
Distribution Station #2(Mahachai)
TTW’s Production and Distribution Overview
Note :- BTM = Bulk Transmission Main- LDN = Local Distribution Network
Water Treatment Plant (Banglen)
(320,000 cu.m./day max. capacity)
The largest privately owned tap water producer in Thailand - 6
PTW’s Production and Distribution Overview
BTM(1.5-m. dia., 2.35-km. long)
BTM(1.2-m. dia., 2.57-km. long)
BTM(1.0-m. dia., 8.31-km. long)
BTM(1.0-m. dia., 0.63-km. long)
BTM(0.6-m. dia., 0.45-km. long)
BTM(0.7-m. dia., 0.55-km. long)Thammasat
Distribution Station PathumthaniDistribution Station
RangsitDistribution Station
Note :- BTM = Bulk Transmission Main
Business Overview
Water Treatment Plant
(388,000-cu.m./day max. capacity)
The largest privately owned tap water producer in Thailand - 7
Dominant Position in the Private Tap Water Market
Capacity 708,000 m3/dayCapacity 858,400 m3/dayCapacity 1,195,877 m3/day
Total Private Operators = 817 Large Private Operators with >15,000 cu.m./day
100.0%
71.8%59.3%
2 Large Private Operators with > 100,000 cu.m./day
Note :- Information as of 31 December 2007, adjusted to reflect PTW’s recent increased capacity- Since 1 August 2008, PTW has increased its capacity from 308,000 cu.m./day to 388,000 cu.m./day
The Largest Private Operator
The largest privately owned tap water producer in Thailand - 8
The Largest Private Operator
388
320
43 37 36 18 16
0
100
200
300
400
500
Relative Production CapacityTh
ousa
nd c
u.m
./day
Note: 1) Bangpakong Waterworks Co., Ltd.
2) Chachoengsao Waterworks Co., Ltd.
3) Industrial Water Resource Management Co., Ltd.
4) R.E.Q. Water Services Co., Ltd.
REQ4IWR3BW1 CW2 Egcomp Tara
The largest privately owned tap water producer in Thailand - 9
Advantageous Water Purchase Agreements
Highest Guaranteed Off-take Volume
Longest Agreement (30 Years vs. Industry Average of 7.9 Years)
More Favorable Water Tariff with Additional Annual Escalation Factor
Punctual Payment from PWA (TTW 15 Days and PTW 10 Days)
Assured Stability
The largest privately owned tap water producer in Thailand - 10
Assured Stability
0
100,000
200,000
300,000
400,000
Jan-0
4Apr-
04Ju
l-04
Oct-04
Jan-0
5Apr-
05Ju
l-05
Oct-05
Jan-0
6Apr-
06Ju
l-06
Oct-06
Jan-0
7Apr-
07Ju
l-07
Oct-07
Jan-0
8Apr-
08Ju
l-08
Oct-08
cu.m
./day
Actual Production MOQ
0
100,000
200,000
300,000
400,000
Jan-0
4Apr-
04Ju
l-04
Oct-04
Jan-0
5Apr-
05Ju
l-05
Oct-05
Jan-0
6Apr-
06Ju
l-06
Oct-06
Jan-0
7Apr-
07Ju
l-07
Oct-07
Jan-0
8Apr-
08Ju
l-08
Oct-08
cu.m
./day
Actual Production MOQ
11.4910.5210.349.908.548.288.138.127.957.807.897.89
23.5522.75
21.4820.2618.6117.44
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
PTW
TTW Water tariff is adjusted annually throughout WPSAs/WPDA with:(THB/m3)
- General CPI
K Factor CPI for Central Region
CAGR = 6.2%
CAGR = 3.5%
Water Tariff
Secured Off-Take Agreement with Favorable Tariff Actual Sale of Treated Water & MOQ - TTW Actual Sale of Treated Water & MOQ - PTW
Bt/cu.m.
CAGR = 26.8%CAGR = 26.8% CAGR = 6.6%CAGR = 6.6%
The largest privately owned tap water producer in Thailand - 11
0
200,000
400,000
600,000
800,000
1,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Existing Areas Future Areas
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2005 2006 2007 2008
Samutsakorn Nakornpathom
1,260,978
0
2,000
4,000
6,000
8,000
10,000
2005 2006 2007 2008
Samutsakorn Nakornpathom
Water Consumption by Sector for the Period of 2004-2008
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
2004 2005 2006 2007 2008
Industrial Commercial Household
CAGR 31.02%CAGR 13.32%
CAGR3.68% CAGR 1.62%
Source : PWA, MWA and Department of Water Resources, Ministry of Natural Resources and Environment
Forecast Water Demand
(cu.
m./d
ay)
Increasing PopulationIncreasing Number of Factories
(cu.
m./a
nnum
)
(No.
of f
acto
ry)
(No.
of p
opul
atio
n)
Source : Thai DCI Co., Ltd.
1,284,415 1,323,245
6,906 7,3437,983
Demand Growth in TTW Areas
1,300,9047,697
High growth
The largest privately owned tap water producer in Thailand - 12
High growth
0
100,000
200,000
300,000
400,000
500,000
600,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Residence Industry Business, State Enterprise, and Governmental Agency
2,7782,563
2,1702,372
0
500
1,000
1,500
2,000
2,500
3,000
2005 2006 2007 20080
200,000
400,000
600,000
800,000
1,000,000
2005 2006 2007 2008
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
2004 2005 2006 2007 2008Industrial Commercial Household
CAGR 8.64%
CAGR 5.54%
No.
of f
acto
ry
CAGR 8.58%
No.
of p
opul
atio
n
CAGR 4.48%
Source : PWA, MWA and Department of Water Resources, Ministry of Natural Resources and Environment
Forecast Water Demand Water Consumption by Sector for the Period of 2004-2008
Increasing PopulationIncreasing Number of Factories
Source : ASDECON Corporation Co., Ltd.
815,402 861,338930,040
Demand Growth in PTW Areascu
.m./d
ay
cu.m
./ann
um
896,843
The largest privately owned tap water producer in Thailand - 13
High growth
288,000 308,000 388,000 388,000
320,000 320,000320,000 320,000
120,000
0
250,000
500,000
750,000
1,000,000
2006 2007 2008 Future Expansion
cu.m
./day
Capacity Expansion Project
Current combined capacity is 708,000 cu.m./dayRecently entered into additional WPSA to start selling water by November 2010Future combined capacity will be 828,000 cu.m./day to support increasing demandRequires investment of Baht 1,352 million
608,000 628,000708,000
828,000
The largest privately owned tap water producer in Thailand - 14
Strong Financial
1,3561,698 1,987
1,471 1,720
852
1,0251,173
888900
427
0
1,000
2,000
3,000
4,000
2005 2006 2007 9-mo 2007 9-mo 2008
Bt.m
TTW PTW Discrepency of Tariff Rate PTW
Sale of Treated Water
Continually Increasing Sales
20.3%
25.2%17.0%
14.4%
16.9%
1.4% 2,6202,359
The largest privately owned tap water producer in Thailand - 15
Strong Financial
Cost per Unit
43%55% 50% 50% 53%
45%
18%
27% 25%28%
11%15%
16%28%
7% 13% 17%4% 4% 3%
44%52%
23%25%27%21%
9%
7%
9% 12% 14%
13%7%11%
15%3%
0%
20%
40%
60%
80%
100%
TTW PTW TTW PTW TTW PTW TTW PTW
Depreciation Electricity Chemical Others Land lease
5.9
4.3 4.6
5.86.0
7.7
4.14.0
0
2
4
6
8
2005 2006 2007 9-mo 2009
Cost per unit - TTW Cost per unit - PTW
Bt/unit
Cost Breakdown
2005 2006 2007
5.9
Excluding LCA, TSA Termination
Bt 920m Bt 941m Bt 1,025m
Reducing Cost via Efficiency
9-mo 2008
Bt 865m
Note :- LCA = Local Coordination Agreement- TSA = Technical Service Agreement
The largest privately owned tap water producer in Thailand - 16
Strong Financial
1,28
9 1,75
3
258
1,11
1
969
2,20
9
2,13
51,
038
64%66% 68% 67%
24%
17%
32% 36%
0
500
1,000
1,500
2,000
2,500
2005* 2006** 2007 9-mo 2008
Bt.m
0%
10%
20%
30%
40%
50%
60%
70%
80%
Gross Profit Net ProfitGross Margin (RHS) Net Margin (RHS)
Note :Based on Pro Forma Financial Statements* Excluding LCA&TSA termination** Excluding discrepancy of tariff rate of PTW received in 2006
Improving Gross and Net Profit Margins
The largest privately owned tap water producer in Thailand - 17
Strong Financial
Strong Operating Cash Flows
1,58
8
2,59
1
2,09
7
948
1,92
2
1,52
2
2,52
41,
818
79%78%77%77%
57%56%
48%
53%
0
500
1,000
1,500
2,000
2,500
3,000
2005* 2006** 2007 9-mo 2008
Bt.m
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
EBITDA EBITEBITDA Margin (RHS) EBIT Margin (RHS)
Note :* Excluding LCA&TSA termination** Excluding discrepancy of tariff rate of PTW received in 2006
The largest privately owned tap water producer in Thailand - 18
Strong Financial
2,59
1
2,52
4
1,58
8 2,09
7
542766
773
639
3.4
2.5
3.33.9*
0
500
1,000
1,500
2,000
2,500
3,000
2005** 2006*** 2007 9-mo 2008
Bt.m
0
1
2
3
4
5EBITDA Interest EBITDA/Int. (RHS)
Strong Debt Service Capability
Note :* Calculated from annualized EBITDA** Excluding LCA&TSA termination*** Excluding discrepancy of tariff rate of PTW received in 2006**** Net Debt = O/D + Loans - Cash – ST Investment
Investment Highlights
The largest privately owned tap water producer in Thailand - 19
Strong Financial
9,60
8
8,71
8 12,1
56
7,85
0
2,09
7
1,99
6
1,37
7
904
6.3
10.6
6.1
2.8*
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2005** 2006*** 2007 9-mo 2008
Bt.m
0
3
6
9
12Net DebtEBITDANet Debt****/EBITDA (RHS)
Low Indebtedness
Note :* Calculated from annualized EBITDA** Excluding LCA&TSA termination*** Excluding discrepancy of tariff rate of PTW received in 2006**** Net Debt = O/D + Loans - Cash – ST Investment
Investment Highlights
The largest privately owned tap water producer in Thailand - 20
Strong Financial
1.2
3.7
6.7
2.8
0.92.4
4.0
2.2
0
2
4
6
8
2005** 2006*** 2007 9-mo 2008
Bt.m
Debt/Equity Net Debt*/Equity
Conservative Capital Structure
Note :* Net Debt = O/D + Loans - Cash – ST Investment** Excluding LCA&TSA termination*** Excluding discrepancy of tariff rate of PTW received in 2006
Investment Highlights
The largest privately owned tap water producer in Thailand - 21
One of a Kind
Essential product for daily living
Home delivery service having no brand loyalty
Physically constrained product
The largest privately owned tap water producer in Thailand - 22
Agenda
3. Tentative Schedule
2. Indicative Key Features of the Debentures
1. Investment Highlights
The largest privately owned tap water producer in Thailand - 23
Indicative Key FeaturesType : Unsubordinated and Unsecured Debentures
with Debenture Holder Representative
Purpose : Refinance existing debt and invest in capacity expansion project
Placement : Public Offering
Total Size : Not exceeding [6,700] million
Indicative Issue Size : 3-Year: THB [] million
5-Year: THB [] million
7-Year: THB [] million
Repayment : Bullet
Interest Rate : Fixed Rate
Interest Payment : Semi-annually
Coupon : Bookbuilding
Credit Rating : [AA-] by TRIS
Listing : ThaiBMA
The largest privately owned tap water producer in Thailand - 24
Agenda
3. Tentative Schedule
2. Indicative Key Features of the Debentures
1. Investment Highlights
The largest privately owned tap water producer in Thailand - 25
Tentative Schedule
Book Building : [2nd – 3rd week of February 2009]
Allotment & Confirmation : [2nd – 3rd week of February 2009]
Subscription : [3rd – 4th week of February 2009]
Issued Date : [4th week of February 2009]
The largest privately owned tap water producer in Thailand - 26
Question and Answer SessionQuestion and Answer Session
The largest privately owned tap water producer in Thailand - 27
Appendix
The largest privately owned tap water producer in Thailand - 28
Group Structure & Major Shareholders
Group Structure
98.0%
99.9%99.9%
Tap
Wat
er P
rodu
cer
O&M
Pro
vide
rMajor Shareholders
Mitsui
26%
Others
20%
CK
35%
BECL
9%
NVDR
4%HSBC
4%
BBL
2%
Note :- Information as of 20 November 2008- Ch. Karnchang Plc. (“CK”)- Mitsui Water Holdings (Thailand) Co., Ltd.(“Mitsui”)- Bangkok Expressway Plc. (“BECL”)- HSBC (Singapore) Nominees Pte. Ltd. (“HSBC”)- Thai NVDR Co., Ltd. (“NVDR”)- Bangkok Bank Plc. (“BBL”)
The largest privately owned tap water producer in Thailand - 29
Off-take Contract Summary
Contracts and Terms
Service Areas
TTW
Off-taker
Current Capacity
Current MOQ
O&M Provider
Type of Contract
25 years (13 January 2000 to 12 January 2025) from the Ministry of Interior
25 years (11 March 2005 to 10 March 2030) from the Ministry of Natural Resources and Environment
Build-Own-Operate-Transfer (BOOT)Build-Own-Operate (BOO)
388,000 cu.m./day320,000 cu.m./day
Muang and Rangsit Districts in PathumthaniProvince
Nakhon Chaisri, Sampran, and Putthamonthon Districts in NakhonpathomProvinceKratoomban and Muang Districts in Samutsakorn Province
310,000 cu.m./day300,000 cu.m./day
WPDA - 25 years (15 October 1998 to 14 October 2023)WPSA for additional capacity - 17 years (15 September 2006 to 14 October 2023)
WPSA – 30 years (21 July 2004 to 20 July 2034)WPSA for additional capacity - 24 years (2010E to 20 July 2034)
BJT Water, PTW’s subsidiary Water Flow, TTW’s subsidiary
Provincial Waterworks Authority (PWA)Provincial Waterworks Authority (PWA)
PTW
Concession Rights
Note : WPSA = Water Purchase and Sale AgreementWPDA = Water Production and Distribution Agreement
The largest privately owned tap water producer in Thailand - 30
Basis for Pro Forma Statements
Acquisition of WF for 100.00%
• 1 January 2005 with an investment of THB2,166 mm• 89.15% on 29 June 2007 with an investment of
THB3,637 mm
• PTW terminated O&M Agreement with OPCO in 31 December 2004, which caused THB385 mm termination fee, and entered in new O&M with BJT in 1 January 2005
• PTW terminated O&M Agreement with OPCO on 26 January 2007, which caused THB385 mm termination fee, and entered in new O&M with BJT on the same date
• All investments have been realized under “account payable for investments” as if TTW and PTW had not paid for the purchase price until actual transactions occurred
N/A
• 1 January 2005 with an investment of THB305 mm• 26 January 2007 with an investment of THB305 mm
• No BOI privilege and corporate income tax rate of 30% WF and BJT
• No BOI privilege and corporate income tax rate of 30% WF and BJT
• 1 January 2007 with an investment of THB 215 mm (equivalent to intrinsic value after incorporating capital injection/reduction)
• 8.85% on 18 December 2007 with an investment of THB 361 mm
• 1 January 2005 with an investment of THB700 mm• 27 February 2006 with an investment of THB700 mm
Acquisition of PTW for 98.0%
Acquisition of BJT for 100.00% (by PTW)
Termination of O&M Contract with OPCO
Tax rate for operating company
Accrued Account for Investments
Actual Pro Forma
The largest privately owned tap water producer in Thailand - 31
Financial Summary : Consolidated Pro Forma
(1.3%)
(8.7%)
(2.1%)
0.7%
4,1684,1893,8013,897Assets for production - net
78.5%78.0%80.3%71.2%EBITDA Margin
2,0972,53663.2%2,5911,588EBITDA
57.0%55.9%59.6%42.5%EBIT Margin
36.3%31.7%32.3%11.2%Net Profit Margin
317.2%
110.1%
44.8%
(Bt.m)
8,9929,1979,3699,615PP&E – net
2,0941,9581,7571,214Total current assets
9761,0291,043250Net profit
--934934L/T loans from shareholders
9,76610,67310,03110,561L/T loans from financial institutions
18,45218,97918,48018,289Total assets
3,9903,2903,2503,000Issued and fully paid-up shares
4,973
14,006
1,818
3,250
9,90914,56615,905Total liabilities
8,5433,9142,383Total shareholders equity
1,5221,992948EBIT
2,6703,2272,229Total revenue
2005 2006 2007%Change %Change
Remark: Based on Pro Forma financial statements
Note : *Based on reviewed consolidated financial statement
9-mo 2008*
The largest privately owned tap water producer in Thailand - 32
71% 71% 73% 73%
50%53%
56%60%
23%28% 30%
39%
0%
20%
40%
60%
80%
2005** 2006 2007 9-mo 2008
Gross profit* EBIT* Net profit*
250
616
1,029 969
126
427
0
200
400
600
800
1,000
1,200
2005 2006 2007 9-mo 2008
Profitability Analysis (Pro Forma)
LCA, TSA termination
Bt.m Discrepancy of tariff rate of PTW received in 2006
Stable selling and administration expenses consistent with industry practice
Soaring net profits stem from :
Lower loan outstanding as payments set forth quarterly
Lower interest rate from the amendment of credit agreements between PTW and its lenders
146%
Net Profit
54%59% 58% 56%
46%53% 54%
9%
55%
38%19% 35%
0%
20%
40%
60%
80%
2005 2006*** 2007 9-mo 2008
Gross profit EBIT Net profit
•excluding profit sharing from investment in PTW** excluding LCA&TSA termination
*** excluding discrepancy of tariff rate received in 2006
67%
The largest privately owned tap water producer in Thailand - 33
Assets Analysis
19.4% 18.1% 18.2% 15.9%
21.3% 20.6% 22.1% 22.6%
52.6% 50.6% 48.5% 48.7%
6.6% 9.6% 10.3%0.1% 1.1% 0.9%
12.7%0.0%
0%
20%
40%
60%
80%
100%
2005 2006 2007 9-mo 2008
Right to produce & sell of treated water Assets for production-PTWPPE-TTW Current assetsOthers
Bt 18,289m Bt 18,480m
No significant change in total assets: In-line with public utility sector, a large amount of investment at the beginning with minimal capacity
expenditure after commencement
Bt 18,979m Bt 18,452m
The largest privately owned tap water producer in Thailand - 34
Depreciation & Amortization Policy
Unit of production methodUnit of production method
Straight-line methodStraight-line method2H 2007
Unit of production methodUnit of production method
+
The difference of using straight-line vs
unit of production method for PTW is minimal
Actual Right to produce & sell of treated water (net) from acquiring PTW as of 30 September 2008 = Bt 2,933 m
Right to produce & sell of treated water is amortised as an expense annually, using the straight line method, for the remainder of the term under the Water Purchase and Sale Agreement of PTW
Depreciation expense is major component of cost structure (9-mo 2008):• Contribute 33% to total cost and accounted for 13% to total revenue of TTW• Contribute 41% to total cost of and accounted for 19% to total revenue of PTW
Depreciation Policy
Right to produce & sell of treated water