Indorama Ventures Public Company Limited and its Subsidiaries

Transcription

1 Indorama Ventures Public Company Limited and its Subsidiaries Interim financial statements for the three-month and nine-month periods ended 2018 and Independent auditor s report on review of interim financial information

2 Independent Auditor s Report on Review of Interim Financial Information To the Board of Directors of Indorama Ventures Public Company Limited I have reviewed the accompanying consolidated and separate statements of financial position of Indorama Ventures Public Company Limited and its subsidiaries, and of Indorama Ventures Public Company Limited, respectively, as at 2018; the consolidated and separate statements of income and comprehensive income for the three-month and nine-month periods ended 2018; the consolidated and separate statements of changes in equity and cash flows for the nine-month period ended 2018; and condensed notes ( interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34, Interim Financial Reporting. My responsibility is to express a conclusion on this interim financial information based on my review. Scope of Review I conducted my review in accordance with Thai Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion. Conclusion Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34, Interim Financial Reporting.

3 Emphasis of Matter I draw attention to the fact, as further detailed in Note 3, that, as at the reporting date, the determination of the fair value and the allocation of the purchase price of several business acquired during 2017 and 2018 was determined provisionally and is subject to potential amendment. My conclusion is not modified in respect of this matter. (Sakda Kaothanthong) Certified Public Accountant Registration No KPMG Phoomchai Audit Ltd. Bangkok 8 November

4 Statement of financial position Consolidated financial Separate financial statements statements Assets Note (Unaudited) (Unaudited) Current assets Cash and cash equivalents 11,116,335 6,877,049 1,627,216 3,194,234 Current investments 211, , Trade accounts receivable 4, 5 44,553,349 32,098, Other receivables 4 1,196,840 1,056,848 49,9 42,024 Short-term loans to related parties 4 167,9 155,611 49,643,609 28,855,5 Inventories 6 62,137,767 46,036, Other current assets 7 8,029,020 6,590,818 47, ,841 Total current assets 127,413,056 92,953,013 51,367,748 32,634,404 Non-current assets Investments in subsidiaries and other equity security ,703,295 65,566,6 Investments in joint ventures 9 8,500,205 6,247, Other long-term investments 15,362 14,9 - - Long-term loans to related parties 4 52,661 53,096 32,597,949,020,889 Property, plant and equipment ,227, ,201, Goodwill 14,169,613 9,837, Other intangible assets 25,076,580 18,027, Deferred tax assests 2,683,048 2,620, Other non-current assets 4, 21 3,575,087 1,402, , ,7 Total non-current assets 229,299, ,405,355 99,503,939 96,717,250 Total assets 356,712, ,358, ,871, ,351,654 The accompanying notes are an integral part of these interim financial statements. 3

5 Statement of financial position Consolidated financial Separate financial statements statements Liabilities and equity Note (Unaudited) (Unaudited) Current liabilities Bank overdrafts and short-term loans from financial institutions 11 18,090,976 6,115,1 - - Trade accounts payable 4, 13 53,896,199 39,1, Current portion of long-term loans from financial institutions 11 8,144,819 6,167,823 1,617,904 - Current portion of debentures 12 5,7,7 2,728,847 4,479,458 2,728,847 Current portion of finance lease liabilities 115,443 48, Current tax payable 4,449,496 1,327, Other current liabilities 4, 14 11,938,270 9,932,494 1,051, ,086 Total current liabilities 101,942,520 65,621,553 7,149,029 3,088,933 Non-current liabilities Long-term loans from financial institutions 11 26,293,459 42,329,057-13,765,704 Debentures 12 59,452,376 38,116,766 48,800,187 33,619,456 Finance lease liabilities 384, , Deferred tax liabilities 14,146,139 13,138, ,077 79,827 Non-current provisions for employee benefits 2,267,767 2,209, Other non-current liabilities 2,193,906 1,677, Total non-current liabilities 104,738,214 97,750,123 48,903,264 47,464,987 Total liabilities 206,680, ,371,676 56,052,293 50,553,920 The accompanying notes are an integral part of these interim financial statements. 4

6 Statement of financial position Consolidated financial Separate financial statements statements Liabilities and equity Note (Unaudited) (Unaudited) Equity Share capital: 15 Authorised share capital 5,666,010 5,666,010 5,666,010 5,666,010 Issued and paid-up share capital 5,614,552 5,245,411 5,614,552 5,245,411 Share premium: Share premium on ordinary shares 15 60,3,434 44,848,154 60,3,434 44,848,154 Gain (loss) on cash flow hedges (358,771) 5, , ,801 Currency translation differences (7,101,848) (2,639,644) - - Excess of cost over book value of acquired subsidiaries (2,837,327) (2,862,259) - - Differences arising from common control transactions (1,235,562) (1,235,562) - - Retained earnings Appropriated Legal reserve 3,137,671 2,956, , ,601 Unappropriated 71,753,649 55,569,532 12,853,496 12,778,695 Equity attributable to owners of the parent 129,3, ,187,579 79,945,322 63,923,662 Subordinated perpetual debentures 14,874,072 14,874,072 14,874,072 14,874,072 Equity attributable to equity holders of the Company 144,177, ,061,651 94,819,394 78,797,734 Non-controlling interests 5,854,355 1,925, Total equity 150,032, ,986,692 94,819,394 78,797,734 Total liabilities and equity 356,712, ,358, ,871, ,351, The accompanying notes are an integral part of these interim financial statements. 5

7 Statement of income (Unaudited) Consolidated financial Separate financial statements statements Three-month period ended Three-month period ended Note Revenues Revenues from sales of goods 4 96,000,729 72,604, Interest income 4 85,415 9,886 1,024, ,203 Dividend income 4, ,126,066 1,271,263 Net foreign exchange gain ,741 Gain on bargain purchases , Other income 4, , ,793 73, ,706 Total revenues 96,366,057 73,054,578 5,224,001 2,140,913 Expenses Costs of sales of goods 4 77,055,007 60,003, Distribution costs 4 5,015,493 4,037, Administrative expenses 4 2,419,509 1,991, ,488 39,839 Doubtful debts expenses 5 15,101 1,862, Management benefit expenses 4 51,502 32,821 2,655 2,505 Impairment loss 10-81, Net foreign exchange loss 157,936 12, ,050 - Finance costs 1,121, , , ,589 Total expenses 85,836,328 68,985,590 1,022, ,933 Share of net profit of joint ventures 9 479,143 46, Profit before income tax expense 11,008,872 4,115,661 4,201,374 1,544,980 Tax expense (benefit) 1,018, ,063 (37,094) 1,879 Profit for the period 9,990,465 3,546,598 4,238,468 1,543,101 Profit attributable to: Owners of the parent 10,053,978 3,516,447 4,238,468 1,543,101 Non-controlling interests (63,513), Profit for the period 9,990,465 3,546,598 4,238,468 1,543, Earnings per share Basic earnings per share (in Baht) Diluted earnings per share (in Baht) The accompanying notes are an integral part of these interim financial statements. 6

8 Statement of comprehensive income (Unaudited) Consolidated financial Separate financial statements statements Three-month period ended Three-month period ended Profit for the period 9,990,465 3,546,598 4,238,468 1,543,101 Other comprehensive income Items that will be reclassified subsequently to profit or loss Exchange differences on translating foreign operations (4,506,616) (628,433) - - Net gain on hedge of net investment in foreign operations 46,996 23,221 46,996 23,221 Net (loss) gain on cash flow hedges (89,868) 6,816 (36,112) - Income tax relating to items that will be reclassified (5,5) (11,224) (2,176) (4,644) Total items that will be reclassified subsequently to profit or loss (4,555,018) (609,620) 8,708 18,577 Item that will not be reclassified to profit or loss Losses on remeasurements of defined benefit plans (548) Income tax relating to item that will not be reclassified Total item that will not be reclassified to profit or loss (384) Other comprehensive income (expense) for the period, net of tax (4,555,402) (609,620) 8,708 18,577 Total comprehensive income for the period 5,435,063 2,936,978 4,247,176 1,561,678 Total comprehensive income attributable to: Owners of the parent 5,857,419 2,939,085 4,247,176 1,561,678 Non-controlling interests (422,356) (2,107) - - Total comprehensive income for the period 5,435,063 2,936,978 4,247,176 1,561, The accompanying notes are an integral part of these interim financial statements. 7

9 Statement of income (Unaudited) Consolidated financial statements Nine-month period ended Separate financial statements Nine-month period ended Note Revenues Revenues from sales of goods 4 255,735, ,915, Interest income 4 213,179 39,182 2,674,956 2,095,383 Dividend income 4, ,055,786 4,185,9 Net foreign exchange gain 410, ,966 73,859 Gain on bargain purchases 3 890, , Other income 4, 17 1,528,152 6, , ,372 Total revenues 258,777, ,796,321 10,068,222 6,745,933 Expenses Cost of sale of goods 4 208,481, ,443, Distribution costs 4 13,552,169 11,946, Administrative expenses 4 7,189,846 5,619, ,515 84,859 Doubtful debts expenses 5 28,078 1,871,0 - - Management benefit expenses 4 125,521 94,763 10,709 10,490 Impairment loss 10-97,5 - - Net foreign exchange loss - 38, Finance costs 2,900,020 2,959,289 1,688,979 1,610,877 Total expenses 232,276, ,071,358 2,248,203 1,706,226 Share of net profit of joint ventures 9 643,8 73, Profit before income tax expense 27,144,151 12,798,029 7,820,019 5,039,707 Tax expense (benefit) 3,044,234 1,748,732 (360) 13,935 Profit for the period 24,099,917 11,049,297 7,820,379 5,025,772 Profit attributable to: Owners of the parent 24,110,685 10,879,995 7,820,379 5,025,772 Non-controlling interests (10,768) 169,2 - - Profit for the period 24,099,917 11,049,297 7,820,379 5,025, Earnings per share Basic earnings per share (in Baht) Diluted earnings per share (in Baht) The accompanying notes are an integral part of these interim financial statements. 8

10 Statement of comprehensive income (Unaudited) Consolidated financial Separate financial statements statements Nine-month period ended Nine-month period ended Profit for the period 24,099,917 11,049,297 7,820,379 5,025,772 Other comprehensive income Items that will be reclassified subsequently to profit or loss Exchange differences on translating foreign operations (4,837,167) (2,834,189) - - Net gain on hedge of net investment in foreign operations 101, , , ,955 Net (loss) gain on cash flow hedges (676,712) 243,643 16,142 - Income tax relating to items that will be reclassified (7,961) (114,327) (23,610) (32,991) Total items that will be reclassified subsequently to profit or loss (5,419,934) (2,539,918) 94,438 1,964 Item that will not be reclassified to profit or loss Losses on remeasurements of defined benefit plans (610) Income tax relating to item that will not be reclassified Total item that will not be reclassified to profit or loss (134) Other comprehensive income (expense) for the period, net of tax (5,420,068) (2,539,918) 94,438 1,964 Total comprehensive income for the period 18,679,849 8,509,379 7,914,817 5,157,736 Total comprehensive income attributable to: Owners of the parent 18,984,444 8,494,588 7,914,817 5,157,736 Non-controlling interests (4,595) 14, Total comprehensive income for the period 18,679,849 8,509,379 7,914,817 5,157, The accompanying notes are an integral part of these interim financial statements. 9

11 Statement of changes in equity (Unaudited) Consolidated financial statements Retained earnings Other components of equity Excess of cost Difference Equity Equity Issued and Share premium Translating Gain (loss) over book value arising from attributable to Subordinated attributable to Nonpaid-up on foreign on cash flow of acquired common control owners of perpetual equity holders of controlling Total Note share capital ordinary shares Legal reserve Unappropriated operations hedges subsidiaries transactions the parent debentures the Company interests equity Nine-month period ended 2017 Balance at 1 January ,814,272 29,775,147 2,327,121 40,352,360 1,491,162 (52,368) (3,290,829) (1,235,562) 74,181,3 14,874,072 89,055,375 2,759,557 91,814,932 Transactions with owners, recorded directly in equity Contribution by and distribution to owners of the parent Issue of ordinary shares due to warrant exercised 15 4,693 15,054, ,484,970-15,484,970-15,484,970 Dividends (4,048,720) (4,048,720) - (4,048,720) (63,469) (4,112,189) Total contribution by and distribution to owners of the parent 4,693 15,054,277 - (4,048,720) ,436,250-11,436,250 (63,469) 11,372,781 Changes in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control , , ,570 (704,577) (276,007) Total changes in ownership interests in subsidiaries , , ,570 (704,577) (276,007) Total transactions with owners, recorded directly in equity 4,693 15,054,277 - (4,048,720) ,570-11,864,820-11,864,820 (768,046) 11,096,774 Comprehensive income for the period Profit ,879, ,879,995-10,879, ,2 11,049,297 Other comprehensive income (2,547,396) 161, (2,385,407) - (2,385,407) (154,511) (2,539,918) Total comprehensive income for the period ,879,995 (2,547,396) 161, ,494,588-8,494,588 14,791 8,509,379 Coupon payment on subordinated perpetual debentures (785,342) (785,342) - (785,342) - (785,342) Transfer to legal reserve ,084 (591,084) Balance at ,244,965 44,829,424 2,918,205 45,807,209 (1,056,234) 109,621 (2,862,259) (1,235,562) 93,755,369 14,874, ,629,441 2,006,2 110,635,743 The accompanying notes are an integral part of these interim financial statements. 10

12 Statement of changes in equity (Unaudited) Consolidated financial statements Retained earnings Other components of equity Excess of cost Difference Equity Equity Issued and Share premium Translating Gain (loss) over book value arising from attributable to Subordinated attributable to Nonpaid-up on foreign on cash flow of acquired common control owners of perpetual equity holders of controlling Total Note share capital ordinary shares Legal reserve Unappropriated operations hedges subsidiaries transactions the parent debentures the Company interests equity Nine-month period ended 2018 Balance at 1 January ,245,411 44,848,154 2,956,803 55,569,532 (2,639,644) 5,144 (2,862,259) (1,235,562) 102,187,579 14,874, ,061,651 1,925, ,986,692 Transactions with owners, recorded directly in equity Contribution by and distribution to owners of the parent Issue of ordinary shares due to warrant exercised ,141 15,483, ,852,421-15,852,421-15,852,421 Dividends (6,960,236) (6,960,236) - (6,960,236) (67,078) (7,027,4) Total contribution by and distribution to owners of the parent 369,141 15,483,280 - (6,960,236) ,892,185-8,892,185 (67,078) 8,825,107 Changes in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control ,932-24,932-24,932 (38,1) (13,369) Acquisition of non-controlling interests through business combination ,339,288 4,339,288 Total changes in ownership interests in subsidiaries ,932-24,932-24,932 4,0,987 4,325,919 Total transactions with owners, recorded directly in equity 369,141 15,483,280 - (6,960,236) ,932-8,917,117-8,917,117 4,233,909 13,151,026 Comprehensive income for the period Profit ,110, ,110,685-24,110,685 (10,768) 24,099,917 Other comprehensive income (122) (4,462,204) (663,915) - - (5,126,241) - (5,126,241) (293,827) (5,420,068) Total comprehensive income for the period ,110,563 (4,462,204) (663,915) ,984,444-18,984,444 (4,595) 18,679,849 Coupon payment on subordinated perpetual debentures (785,342) (785,342) - (785,342) - (785,342) Transfer to legal reserve ,868 (180,868) Balance at ,614,552 60,3,434 3,137,671 71,753,649 (7,101,848) (358,771) (2,837,327) (1,235,562) 129,3,798 14,874, ,177,870 5,854, ,032,225 5,614,552 60,3,434 3,137,671 71,753,649-7,101, ,771-2,837,327-1,235, ,3,798 14,874, ,177,870 5,854, ,032, The accompanying notes are an integral part of these interim financial statements. 11

13 Statement of changes in equity (Unaudited) Separate financial statements Other component of Retained earnings equity Equity Issued and Share premium Gain on attributable to Subordinated paid on cash flow owners of perpetual Total Note share capital ordinary shares Legal reserve Unappropriated hedges the parent debentures equity Nine-month period ended 2017 Balance at 1 January ,814,272 29,775, ,601 10,926, ,271 46,363,942 14,874,072 61,238,014 Transactions with owners, recorded directly in equity Contribution by and distribution to owners of the Company Issue of ordinary shares due to warrant exercised 15 4,693 15,054, ,484,970-15,484,970 Dividends (4,048,720) - (4,048,720) - (4,048,720) Total contribution by and distribution to owners of the Company 4,693 15,054,277 - (4,048,720) - 11,436,250-11,436,250 Total transactions with owners, recorded directly in equity 4,693 15,054,277 - (4,048,720) - 11,436,250-11,436,250 Comprehensive income for the period Profit ,025,772-5,025,772-5,025,772 Other comprehensive income ,964 1,964-1,964 Total comprehensive income for the period ,025,772 1,964 5,157,736-5,157,736 Coupon payment on subordinated perpetual debentures (785,342) - (785,342) - (785,342) Balance at ,244,965 44,829, ,601 11,118, ,235 62,172,586 14,874,072 77,046,658 4,814,328 29,777, ,601 12,155, ,658 47,708,169 14,874,072 62,582,241 The accompanying notes are an integral part of these interim financial statements. 12

14 Statement of changes in equity (Unaudited) Separate financial statements Other component of Retained earnings equity Equity Issued and Share premium Gain on attributable to Subordinated paid on cash flow owners of perpetual Total Note share capital ordinary shares Legal reserve Unappropriated hedges the parent debentures equity Nine-month period ended 2018 Balance at 1 January ,245,411 44,848, ,601 12,778, ,801 63,923,662 14,874,072 78,797,734 Transactions with owners, recorded directly in equity Contribution by and distribution to owners of the Company Issue of ordinary shares due to warrant exercised ,141 15,483, ,852,421-15,852,421 Dividends (6,960,236) - (6,960,236) - (6,960,236) Total contribution by and distribution to owners of the Company 369,141 15,483,280 - (6,960,236) - 8,892,185-8,892,185 Total transactions with owners, recorded directly in equity 369,141 15,483,280 - (6,960,236) - 8,892,185-8,892,185 Comprehensive income for the period Profit ,820,379-7,820,379-7,820,379 Other comprehensive income ,438 94,438-94,438 Total comprehensive income for the period ,820,379 94,438 7,914,817-7,914,817 Coupon payment on subordinated perpetual debentures (785,342) - (785,342) - (785,342) Balance at ,614,552 60,3, ,601 12,853, ,239 79,945,322 14,874,072 94,819,394 5,614,552 60,3, ,601 12,853, ,239 79,945,322 14,874,072 94,819, The accompanying notes are an integral part of these interim financial statements. 13

15 Statement of cash flows (Unaudited) Consolidated financial Separate financial statements statements Nine-month period ended Nine-month period ended Note Cash flows from operating activities Profit for the period 24,099,917 11,049,297 7,820,379 5,025,772 Adjustments to reconcile profit to cash receipts (payments) Tax expense 3,044,234 1,748,732 (360) 13,935 Finance costs 2,900,020 2,959,289 1,688,979 1,610,877 Depreciation 8,618,346 7,659, Amortisation of intangible assets and other assets 1,485,254 1,159, Employee benefits expense 227, , Unrealised foreign exchange (gain) loss (29,793) 1,482,8,490 77,783 Share of net profit of joint ventures 9 (643,8) (73,066) - - Provision for bad and doubtful debts expense, net 5 28,078 1,871,0 - - Provision for impairment on property, plant and equipment 10-97,5 - - Provision for (reversal of) inventories devaluation 6 84,051 (48,787) - - Gains on bargain purchases 3 (890,396) (211,353) - - Gain on return of capital in a subsidiary (10,084) Loss (gain) on disposal of property, plant and equipment, net 432 (1,521) - - Loss on writen-off of property, plant and equipment, net Interest income (213,179) (39,182) (2,674,956) (2,095,383) Dividend income (7,055,786) (4,185,9) 38,712,018 27,850,568 (191,254) 437,581 Changes in operating assets and liabilities Trade accounts receivable (10,848,233) (463,827) - - Inventories (13,195,012) 287, Other current assets (461,246) (834,378) 552, ,441 Other non-current assets (1,238,936) 842,768 (17,946) - Trade accounts payable 12,398,940 (4,482,299) - - Non-current provisions for employee benefit (138,397) (141,171) - - Other current liabilities (6,677) (336,948) 164,444 10,738 Other non-current liabilities 478, , Net cash generated from operating 25,391,105 22,983, , ,760 Taxes paid (1,614,268) (1,178,380) - (9,903) Net cash from operating activities 23,776,837 21,805, , ,857 The accompanying notes are an integral part of these interim financial statements. 14

16 Statement of cash flows (Unaudited) Consolidated financial Separate financial statements statements Nine-month period ended Nine-month period ended Note Cash flows from investing activities Proceeds from return of capital in a subsidiary ,055,017 Net cash outflow on acquisition of businesses 3 (21,265,808) (6,855,943) - - Net cash outflow on acquisition of additional investment in subsidiaries and joint ventures 8, 9 (1,972,707) (558,343) (1,136,665) (,567,064) Advance payment on additional investment in subsidiaries and a joint venture - (225,647) - - Purchase of other investments, net (75,737) (32,339) - - Proceeds from sale of property, plant, and equipment 15,287 16, Acquisition of property, plant and equipment (11,742,621) (14,526,5) - - Proceeds from sale of intangible assets 3, Acquisition of intangible assets (1,933) (49,065) - - Dividend received ,055,786 4,185,9 Interest received 204,802 56,002 12,020 4,910 Net cash from (used in) investing activities (34,964,021) (22,174,690) 5,9,141 3,678,182 Cash flows from financing activities Proceeds from issue of ordinary shares due to warrants exercised, net of agent fee of Baht 20,619,635 (2017: Baht 19,990,389) 15 15,856,259 15,484,970 15,856,259 15,484,970 Proceeds from short and long-term borrowings 11,767,4 15,587,439-11,767,424 Proceeds from debenture, net of debenture issuance costs of Baht 28,9,363 (2017: Baht 19,099,757) 12 17,471,691 7,480,900 17,471,691 7,480,900 Repayment of short and long-term borrowings (18,501,827) (24,503,244) (10,182,632) (9,646,934) Repayment of debenture (550,000) (5,500,000) (550,000) (5,500,000) Payment by a lessee for reduction of the outstanding liability relating to a finance lease (42,736) (11,9) - - Loans to subsidiaries - - (24,185,571) (20,294,285) Loans to joint ventures (4,332) 153, Dividends paid to owners of the Company (6,960,194) (4,048,139) (6,960,194) (4,048,139) Dividends paid to non-controlling interests (67,078) (63,469) - - Interest received - - 2,470,174 1,732,347 Interest paid (2,918,977) (2,977,390) (1,139,978) (1,243,065) Deferred financing cost paid (25,2) (32,913) - (3,424) Coupon payment on subordinated perpetual debentures (785,342) (785,342) (785,342) (785,342) Net cash from (used in) financing activities 15,239, ,010 (8,005,593) (5,055,548) Net increase (decrease) in cash and cash equivalents, before effect of exchange rates 4,052, ,452 (1,567,018) (815,509) Effect of exchange rate changes on cash and cash equivalents 186,807 8, Net increase (decrease) in cash and cash equivalents 4,239, ,616 (1,567,018) (815,509) Cash and cash equivalents at beginning of period 6,877,049 4,025,648 3,194,234 1,068,060 Cash and cash equivalents at ending of period 11,116,335 4,448,264 1,627, ,551 The accompanying notes are an integral part of these interim financial statements. 15

17 For the three-month and nine-month periods ended 2018 (Unaudited) Note Contents 1 General information 2 Basis of preparation of the interim financial statements 3 Acquisitions of businesses 4 Related parties 5 Trade accounts receivable 6 Inventories 7 Other current assets 8 Investments in subsidiaries and other equity security 9 Investments in joint ventures 10 Property, plant and equipment 11 Bank overdrafts, short-term and long-term loans from financial institutions 12 Debentures 13 Trade accounts payable 14 Other current liabilities 15 Share capital and warrants 16 Segments information 17 Other income 18 Earnings per share 19 Dividends 20 Financial instruments 21 Commitments with non-related parties 22 Thai Financial Reporting Standards (TFRS) not yet adopted 23 Events after the reporting period 16

18 For the three-month and nine-month periods ended 2018 (Unaudited) These notes form an integral part of the interim financial statements. The interim financial statements issued for Thai regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language financial statements, and were approved and authorised for issue by the Audit Committee on 8 November General information Indorama Ventures Public Company Limited, the Company, is incorporated in Thailand and has its registered office at 75/102, Ocean Tower II, 37 th Floor, Sukhumvit 19, Asoke Road, Klongtoeynua, Wattana, Bangkok, Thailand. The Company was listed on the Stock Exchange of Thailand in February The immediate and ultimate parent companies during the financial period were Indorama Resources Limited, incorporated in Thailand, and Canopus International Limited, incorporated in Mauritius, respectively. The principal activities of the Company and its subsidiaries ( Group ) are the manufacture and distribution of polyethylene terephthalate ( PET ), purified terephthalic acid ( PTA ), paraxylene ( PX ), isophthalic acid ( IPA ), ethylene oxide and ethylene glycol ( EO&EG ), polyester fibers, and wool products. Details of the Company s subsidiaries and joint ventures as at 2018 and 2017 are given in notes 4, 8 and 9. 2 Basis of preparation of the interim financial statements (a) Statement of compliance The interim financial statements are prepared on a condensed basis in accordance with Thai Accounting Standard (TAS) No. 34 (revised 2017) Interim Financial Reporting; guidelines promulgated by the Federation of Accounting Professions (FAP); and applicable rules and regulations of the Thai Securities and Exchange Commission. The interim financial statements are prepared to provide an update on the financial statements for the year ended They do not include all of the financial information required for full annual financial statements but focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim financial statements should be read in conjunction with the financial statements of the Company and its subsidiaries for the year ended The accounting policies and methods of computation applied in these interim financial statements are consistent with those applied in the financial statements for the year ended 2017 except that the Group/Company has adopted all the new and revised TFRS that are effective for annual periods beginning on or after 1 January The adoption of these new and revised TFRS did not have any material effect on the accounting policies, methods of computation, financial performance or position of the Group or the Company. In addition to the above new and revised TFRS, the FAP has issued a number of new and revised TFRS which are not yet effective for current periods. The Group/Company has not early adopted these standards in preparing these interim financial statements. Those new and revised TFRS that are relevant to the Group s/company s operations are disclosed in note

19 For the three-month and nine-month periods ended 2018 (Unaudited) (b) Functional and presentation currency The interim financial statements are prepared and presented in Thai Baht, which is the Company s functional currency. All financial information presented in Thai Baht has been rounded to the nearest thousand unless otherwise stated. (c) Use of judgements and estimates The preparation of interim financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Group s/company s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended Measurement of fair values The Group/Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the senior management. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of TFRS, including the level in the fair value hierarchy in which the valuations should be classified. Significant valuation issues are reported to the Group s Audit Committee. When measuring the fair value of an asset or a liability, the Group/Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group/Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in note 20 - Financial instruments. 18

20 For the three-month and nine-month periods ended 2018 (Unaudited) 3 Acquisitions of businesses Gains on bargain purchases and goodwill The excess of the Group s interest in the net identified assets and liabilities of the companies acquired over cost during the nine-month period ended 2018 and 2017 is considered by management as gains on bargain purchases. The gains on bargain purchases and goodwill recognised in the consolidated statement of income for the nine-month period ended 2018 and 2017 and the consolidated statement of financial position as at 2018 and 2017 respectively, are as following: Gains on bargain purchases Note Nine-month period ended DuraFiber Mexico, Mexico 3(ii) - 211,353 Egyptian Indian Polyester Company S.A.E., Egypt 3(vi) 890,140 - Sorepla Technologie S.A., France 3(viii) Total gains on bargain purchases 890, ,353 Goodwill Note Glanzstoff Group, Europe 3(i) - 952,174 Avgol Industries 1953 Ltd., Israel 3(vii) 4,619,677 - Total Goodwill 4,619, ,174 (i) Glanzstoff Group, Europe On May 2017, IVL, through its indirect subsidiary, Indorama Netherlands B.V., completed the acquisition of 100% equity interest in Glanzstoff Group (which consist of Glanzstoff Industries (Qingdao) Company Limited, Glanzstoff Holding (Hong Kong) Limited, Glanzstoff Industries S.R.L., Società Industriale Cremonese SICREM s.p.a., Cord A.G., Textilcord Steinfort S.A., Glanzstoff Management GmbH and Glanzstoff - Bohemia s.r.o.) which is Europe s largest converter for tire cord fabrics, a global leader in single-end-cords ( SEC ) from Glanzstoff Industries GmbH, as per definitive share purchase agreement dated 12 April 2017 for a cash consideration of EUR million (Baht 6,100.6 million). The transaction is accounted for as a business combination. Subsequent to completion of the acquisition, Cord A.G. was renamed to Glanzstoff Industries A.G. Management believes that the acquisition will offer a unique opportunity for IVL to supplement its high value-added portfolio. It will further enhance the Group s client-value proposition and provide for collaborative opportunities with the global auto industry including for autonomous and electric vehicles. 19

21 For the three-month and nine-month periods ended 2018 (Unaudited) Identifiable assets acquired and liabilities assumed Fair values as at May 2017 Cash and cash equivalents 96,635 Inventories 1,184,716 Accounts receivable 1,446,021 Property, plant and equipment 3,324,162 Intangible assets 1,958,209 Short-term loan from financial institutions (6,219) Accounts payable (1,106,229) Deferred tax liabilities, net (927,820) Other assets/(liabilities), net (511,075) Net identifiable assets acquired and liabilities assumed 5,148,400 Goodwill arising from the acquisition 952,174 Total consideration 6,100,574 Cash acquired (96,635) Net consideration - paid 6,003,939 The trade receivables comprise gross contractual amounts due of Baht 1,476.4 million, of which Baht.4 million was expected to be uncollectible at the acquisition date. (ii) DuraFiber Mexico, Mexico On , IVL, through its indirect subsidiary, Indorama Ventures Spain S.L., completed the acquisition of 100% equity interest in tire cord business of DuraFiber Mexico (which consist of DuraFiber Technologies DFT Mexico Operations, S.A. de C.V. which is a leading producer of durable technical textiles for industrial, tire reinforcement and speciality applications globally and DuraFiber Technologies DFT Mexico Services, S.A. de C.V.) from Sellers group (DuraFiber Technologies (DFT) Operations LLC, INA Fibers Holdings LLC, DFT DuraFiber Technologies Holdings, INC., DuraFiber Technologies (DFT) Mexico Intermediate I Corp. and DuraFiber Technologies (DFT) Mexico Intermediate II Corp.), as per definitive share purchase agreement dated 11 August 2017 for a cash consideration of USD 26.8 million (Baht million). The transaction is accounted for as a business combination. Subsequent to the completion of the acquisition, DuraFiber Technologies DFT Mexico Operations, S.A. de C.V. and DuraFiber Technologies DFT Mexico Services, S.A. de C.V. were renamed to Performance Fibers Operations Mexico, S. de R.L. de C.V. and Performance Fibers Services, S. de R.L. de C.V., respectively. Management believes that acquisition of DuraFiber Mexico is well aligned with the group s strategy of pursuing accretive growth opportunities in the high value added automotive segment. 20

22 For the three-month and nine-month periods ended 2018 (Unaudited) Identifiable assets acquired and liabilities assumed Fair values as at Cash and cash equivalents 42,496 Inventories 474,5 Accounts receivable 518,448 Property, plant and equipment 937,248 Intangible assets 4 Short-term loan from related party (50,053) Accounts payable (517,326) Deferred tax liabilities, net (218,8) Other assets/(liabilities), net (84,628) Net identifiable assets acquired and liabilities assumed 1,102,402 Gain on bargain purchase (207,902) Total consideration 894,500 Cash acquired (42,496) Net consideration - paid 852,004 The trade receivables comprise gross contractual amounts due of Baht million which was expected to be collectible at the acquisition date. (iii) Longlaville DuraFiber Technologies (DFT) SAS, France On 5 October 2017, IVL, through its indirect subsidiary, Indorama Netherlands B.V., completed the acquisition of 100% equity interest in Longlaville DuraFiber Technologies (DFT) SAS (which consist of Longlaville DuraFiber Technologies (DFT) SAS and European DuraFiber Technologies (DFT) Holdings SAS), as per the purchase and sale agreement dated 4 October 2017 for a cash consideration of EUR 2.7 (Baht 106.0). The transaction is accounted for as a business combination. Subsequent to completion of the acquisition, Longlaville DuraFiber Technologies (DFT) SAS and European DuraFiber Technologies (DFT) Holdings SAS were renamed to Glanzstoff Longlaville S.A.S. and Glanzstoff Services S.A.S., respectively. Management believes that acquisition of Longlaville DuraFiber Technologies (DFT) S.A.S. will further bolster its position as the leading fiber partner for the automotive industry. Identifiable assets acquired and liabilities assumed Fair values as at 5 October 2017 Cash and cash equivalents 43,533 Inventories 177,409 Accounts receivable 538,259 Property, plant and equipment 780,584 Intangible assets 206,605 Short-term loan from financial institutions (423,819) Accounts payable (345,780) Deferred tax liabilities, net (216,739) Other assets/(liabilities), net (158,105) Net identifiable assets acquired and liabilities assumed 601,947 21

23 For the three-month and nine-month periods ended 2018 (Unaudited) Fair values as at 5 October 2017 Gain on bargain purchase (601,947) Total consideration - The trade receivables comprise gross contractual amounts due of Baht million, of which Baht 0.3 million was expected to be uncollectible at the acquisition date. (iv) The PTA assets of Artlant PTA, S.A. and the utility assets of Artelia Ambiente, S.A., Portugal On 29 November 2017, IVL, through its indirect subsidiary, Indorama Ventures Portugal PTA - Unipessoal, LDA. and Indorama Ventures Portugal Utility - Unipessoal, LDA., completed the acquisition of the PTA assets of Artlant PTA, S.A. and the adjacent utility assets of Artelia Ambiente, S.A. in Portugal, as per the agreement in relation to the assets of Artlant PTA, S.A., dated 26 July 2017 and the purchase and sale agreement in relation to the assets of Artelia Ambiente, S.A., dated for a cash consideration of EUR 42.5 million (Baht 1,640.6 million). The transaction is accounted for as a business combination. Management believes that acquisition of PTA assets of Artlant PTA S.A. along with utility assets of adjacent utility provider, Artelia Ambiente, S.A. (Artelia) will enhance the Group s PTA leadership in Europe and the acquisition of utility assets will secure the energy supply to PTA plant and sell excess power to the grid. Identifiable assets acquired and liabilities assumed Fair values as at 29 November 2017 Inventories 157,100 Property, plant and equipment 5,344,895 Intangible assets 233,737 Deferred tax liabilities, net (1,208,067) Other assets/(liabilities), net (24,200) Net identifiable assets acquired and liabilities assumed 4,503,465 Gain on bargain purchase (2,862,876) Total consideration 1,640,589 An independent appraiser has been appointed to determine the fair value of the business but the report of the appraiser is not yet completed as at the date of approval of these interim financial statements. Accordingly, the fair value of assets acquired and liabilities assumed have been provisionally determined at the acquisition date. (v) M&G Polimeros Brazil S.A., Brazil On 24 May 2018, IVL, through its indirect subsidiary, Indorama Ventures Brazil Participacoes S.A., completed the acquisition of 100% equity interest in M&G Polimeros Brazil S.A. in Ipojuca, Brazil (which consist of 100% equity interest in M&G Polimeros Brazil S.A. and 51% equity interest in Tereftaillicos Industries Quimicas Ltda.) from M&G Chemicals Brazil S.A., as per a definitive Securities Purchase Agreement dated 15 March 2018 for a preliminary cash consideration of BRL 1,389.2 million (Baht 12,246.6 million). The transaction is accounted for as a business combination. During the period from acquisition date to 2018, the business contributed revenue of BRL million (Baht 5,252.7 million) and net profit of 22

24 For the three-month and nine-month periods ended 2018 (Unaudited) BRL 52.8 million (Baht million) to the Group s results. If the acquisition had occurred on 1 January 2018, management estimates that consolidated revenue and consolidated net profit for the nine-month period ended 2018 would have increased by Baht 5,218.1 million and decreased by Baht 1,017.8 million, respectively. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January Subsequent to completion of the acquisition, M&G Polimeros Brazil S.A. was renamed to Indorama Ventures Polimeros S.A. Management believes that this acquisition in Brazil is in line with the Group s strategy to further extend its market position, and expand its global footprint in key markets with high growth potential. This strategic position allows the Group to deliver products to key customers in Brazil and elsewhere in South America in a cost-effective and efficient manner. Identifiable assets acquired and liabilities assumed Fair values as at 24 May 2018 Cash and cash equivalents 396,826 Inventories 1,023,543 Accounts receivable 927,944 Property, plant and equipment 5,404,294 Intangible assets 5,188,141 Deferred tax assets, net 135,679 Accounts payable (621,106) Other assets/(liabilities), net (208,674) Net identifiable assets acquired and liabilities assumed 12,246,647 Total consideration 12,246,647 Cash acquired (396,826) Net consideration - paid 11,849,821 The trade receivables comprise gross contractual amounts due of Baht million which was expected to be collectible at the acquisition date. An independent appraiser has been appointed to determine the fair value of the business but the report of the appraiser is not yet completed as at the date of approval of these interim financial statements. Accordingly, the fair value of assets acquired and liabilities assumed have been provisionally determined at the acquisition date. (vi) Egyptian Indian Polyester Company S.A.E., Egypt On 14 June 2018, IVL, through its indirect subsidiary, Indorama Netherlands B.V. ( INBV ) has acquired 35% of equity interest of Egyptian Indian Polyester Company S.A.E. ( EIPET ) from Dhunseri Petrochem Limited ( Dhunseri ) as per the share purchase agreements dated 14 June 2018 for a preliminary cash consideration of USD 1.0 million (Baht 32.2 million). The transaction is accounted for as a business combination. During the period from acquisition date to 2018, the business contributed revenue of USD 5.3 million (Baht million) and net loss of USD 4.9 million (Baht million) to the Group s results. 23

25 For the three-month and nine-month periods ended 2018 (Unaudited) Dhunseri is under obligation as per the share purchase agreement with IVL to purchase the % shareholdings of EIPET from Egyptian Petrochemicals Holding Company ( ECHEM ) and Engineering For The Petroleum & Process Industries Company ( ENPPI ) for the consideration of USD 17.1 million (Baht million) as stipulated in the share purchase agreement between Dhunseri, ECHEM and ENPPI and transfer the 50% of those shareholdings of EIPET (15%) to INBV. Accordingly, INBV has obligation to pay the consideration of USD 8.6 million (Baht million) for those shareholdings of EIPET transferred from Dhunseri. The consideration payable of USD 2.2 million (Baht 70.3 million), USD 1.8 million (Baht 56.2 million), USD 2.6 million (Baht 84.3 million) and USD 2.0 million (Baht 64.1 million) were paid in June, July, August and 2018, respectively, and the 3.83%, 3.07%, 4.6% and 3.5% shareholdings of EIPET have been transferred to INBV in June, July, August and 2018, respectively. Management believes that the acquisition will offer logistics advantage when sourcing feedstocks and delivering end products in key markets, domestically and internationally. This facility is one of the largest in the Middle East and Africa and is well-positioned to cater to the increasing packaging needs of customers in the region and elsewhere. Identifiable assets acquired and liabilities assumed Fair values as at 14 June 2018 Cash and cash equivalents 16,755 Inventories 50,028 Property, plant and equipment 5,168,397 Intangible assets 18,125 Short-term loan (2,797,433) Accounts payable (34,272) Other assets/(liabilities), net (27,172) Net identifiable assets acquired and liabilities assumed 2,394,428 Interest acquired (%) 50 Net identifiable assets acquired and liabilities assumed 1,197,214 Gain on bargain purchase (890,140) Total consideration 7,074 Cash acquired (16,755) Net consideration - paid 290,9 An independent appraiser has been appointed to determine the fair value of the business but the report of the appraiser is not yet completed as at the date of approval of these interim financial statements. Accordingly, the fair value of assets acquired and liabilities assumed have been provisionally determined at the acquisition date. (vii) Avgol Industries 1953 Ltd., Israel On 25 July 2018, IVL, through its indirect subsidiary, Indorama Ventures Spain S.L. ( IVSSL ), completed the acquisition of 65.72% equity interest in Avgol Industries 1953 Ltd. which consist of Avgol Industries 1953 Ltd., Avgol Ltd., Avgol Rus LLC, Hubei Gold Dragon Nonwoven Fabrics Co. Ltd., Avgol India Private Limited, Avgol Cyprus Ltd., Avgol America Inc. and Avgol Distribution Inc., from HFH International B.V and Leumi Partnes Ltd., as per the share purchase agreements dated 13 May 2018 for a preliminary cash consideration of USD 8.9 million (Baht 10,643.5 million). The transaction is accounted for as a business 24

26 For the three-month and nine-month periods ended 2018 (Unaudited) combination. During the period from acquisition date to 2018, the business contributed revenue of USD 70.4 million (Baht 2,3.6 million) and net loss of USD 2.6 million (Baht 85.9 million) to the Group s results. If the acquisition had occurred on 1 January 2018, management estimates that consolidated revenue and consolidated net profit for the ninemonth period ended 2018 would have increased by Baht 7,750.0 million and increased by Baht 16.2 million, respectively. In determining these amounts, management has assumed that the fair value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January Management believe that acquisition of Avgol Industries 1953 Ltd. will provide a unique opportunity for the Group s strategy to strengthen its leadership position in the high growth personal hygiene oriented nonwovens market. Identifiable assets acquired and liabilities assumed Fair values as at 25 July 2018 Cash and cash equivalents 1,903,017 Inventories 1,940,263 Accounts receivable 969,077 Property, plant and equipment 13,548,734 Intangible assets 4,072,389 Accounts payable (1,033,407) Long-term loan from financial institutions (2,624,240) Deferred tax liabilities, net (2,019,433) Other assets/(liabilities), net (7,590,491) Net identifiable assets acquired and liabilities assumed 9,165,909 Interest acquired (%) Net identifiable assets acquired and liabilities assumed 6,023,835 Goodwill 4,619,677 Total consideration 10,643,512 Cash acquired (1,903,017) Net consideration - paid 8,740,495 The trade receivables comprise gross contractual amounts due of Baht million, of which Baht 9.8 million was expected to be uncollectible at the acquisition date. An independent appraiser has been appointed to determine the fair value of the business but the report of the appraiser is not yet completed as at the date of approval of these interim financial statements. Accordingly, the fair value of assets acquired and liabilities assumed have been provisionally determined at the acquisition date. (viii) Sorepla Technologie S.A., France On July 2018, IVL, through its indirect subsidiary, Wellman International Limited, completed the acquisition of 100% equity interest in Sorepla Technologie S.A. and its subsidiary, namely Société de Recyclage de Matières Plastiques (Sorepla Industrie) S.A., in France from Aeromaritime Systems Group B.V., as per a definitive share purchase agreement dated July 2018 for a preliminary cash consideration of EUR 10.1 million (Baht million). The transaction is accounted for as a business combination. During the period from acquisition date to 2018, the business contributed revenue of EUR 1 million 25