(Translation) 2Q/2012 (Restate) 1Q/2013

Transcription

1 Executive Summary In, PTT Global Chemical Public Company Limited ( the Company ) reported net profit of 4,172 MB or 0.93 Baht/share, increased from 2Q/2012 (restated) with net profit of 1,508 MB or 0.33 Baht/share and decreased 65% from 1Q/2013 with net profit of 12,075 MB or 2.68 Baht/share. Performance Summary (Unit: Million Baht) 2Q/2012 (Restate) 1Q/ Month Ending June 30, 2013 Sale Revenue 111, , ,309-20% -21% 253,196 EBITDA 11,466 7,537 16,419 52% -30% 27,885 EBITDA Margin (%) 10% 5% 12% 5% -1% 11% Net Profit 4,172 1,508 12, % -65% 16,247 Earnings Per Share % -65% 3.60 Adjusted EBITDA 1 12,469 13,422 16,914-7% -26% 29,383 Adjusted EBITDA Margin (%) 11% 10% 12% 2% -1% 12% Note: 1. Adjusted EBITDA refers to EBITDA excluding impact of inventory value (excludes Inventory and NRV) and excluding impact of commodity hedging In, Dubai crude was in the range of USD/bbl, and averaged at 101 USD/bbl, decreased from the same period of previous year by 5 USD/bbl or 5%, and decreased from previous quarter by 7 USD/bbl or 7% due to seasonally low demand including economy slowdown in US, China, and Europe as well as unrest in Middle East. As a result, market GRM was at 2.38 USD/bbl coupled with 44 day turnaround of the Refinery, and CDU utilization rate was 63%. Aromatics business had P2F of 325 USD/ton, decreased from previous quarter at 394 USD/ton due to lower spreads of paraxylene and benzene over condensate, including planned shutdown of Aromatics plant no 2, resulting with BTX utilization rate of 84%. Olefins and olefins derivatives business had lower utilization rate and lower PE sales from previous quarter due to planned shutdown of some PE plants. As a result, PE utilization rate was at 90%. HDPE price averaged at 1,443 USD/ton, decreased 3% from previous quarter. In, the Company had stock loss net NRV of 1,422 MB from decreasing crude price during the quarter and had FX loss of 2,726 MB from THB depreciation of approximately 1.82 THB/USD. According to market situation and business operation as mentioned above, the Company had EBITDA of 11,466 MB, increased 52% from 2Q/2012 and decreased 30% from 1Q/2013 while EBITDA margin was at 10%. However, adjusted EBITDA for this quarter was 12,469 MB and adjusted EBITDA margin of 11%. Page 1

2 Changes that have impact on financial statements of, 2Q/2012, and 1Q/2013: On May 2, 2013, the Company acquired the remaining 40% shares of PTT Phenol Company Limited ( PPCL ) from PTT Public Company Limited ( PTT ). The Company s holding in PPCL changed from 60% to 100%, as a result, the minority of PPCL decreased from 40% to 0%. In, the purchase price adjustment (PPA) for the investment of NatureWorks and Vencorex on May 31, 2012 was restated. The valuation of the PPA was completed at the end of 4Q/2012, thus the accounting standard required the Company to realize the adjusted PPA on the investment date, and therefore 2Q/2012 financial statements were restated. On January 10, 2013, PTT Utility Company Limited ( PTTUT ) amalgamated with Independent Power (Thailand) Company Limited ( IPT ) and became Global Power Synergy Company Limited ( GPSC ) which reduced the Company s shareholding structure from 60% to 30.31%. The Company has changed the method in realizing gain/loss from investment of GPSC from consolidating PTTUT s financial statement after elimination of connected transaction into the Company s (Consolidation) to realizing only gain/loss of the investment portion in to the Company s financial statements (Take equity). This method has been applied since 1Q/2013, however when compare year-on-year, the account basis will still be different. Summary of the Company s major events in until the release of financial statement as follows: On April 4, 2013, the Company held an annual general meeting for the year 2012 and the Company s shareholders approved the dividend payment for the year 2012 performance at the rate of 3.40 Baht per share, totaling 15,329 MB. On April 26, 2013, the Board of Directors of the Company approved the acquisition of 40% shareholding in PPCL and the acquisition transaction was completed on May 2, Currently, the Company holds 100% shares in PPCL. In April 2013, Myriant Corporation had completed the construction of a 14,000 ton/year Succinic Acid Plant in Louisiana State and is currently commissioning. In April 2013, Natureworks has started commissioning of the expansion portion of PLA plant which increases the nameplate capacity of PLA from 140,000 ton/year to 150,000 ton/year. In May 2013, the Company set up a joint venture in Auria BioChemicals Company Limited ( Auria BioChemical ) with Myriant Corporation ( Myriant ) (the Company holds 47.25% in Myriant). The purpose of this joint venture is to conduct research and development of bio-based chemicals to enhance the Myriant s technology and pave the way towards an investment in a commercial scale production plant in South East Asia. The Company holds 54% and Myriant holds another 46% of total share. Page 2

3 On June 21, 2013, the Board of Director had approves on capital increase of PPCL for the investment of Phenol 2 project with total investment of MUSD (Approximately 10,450 MB). Phenol 2 project will have phenol capacity of 250,000 tons per year and acetone of 155,000 tons per year. On July 1, 2013, the Company has completed the entire business transfer of Bangkok Polyethylene Public Company Limited ( BPE ) and PTT Polyethylene Company Limited ( PTTPE ) to the Company is effective under the law and the Company will proceed with the dissolution of BPE and PTTPE. Since July 10, 2013, the Company has shutdown LDPE plant (capacity 300,000 tons per year) to repair the cylinder of the Booster/Primary Compressor with an estimate repair period of 3.5 months. The Company expected the impact of no greater than 2% of the year net profit. On July 27, 2013, at 6.50 hrs., leakage in the flexible hose was found at the Single Point Mooring (SPM) while discharging crude oil from a vessel to the Refinery. The leakage resulted in oil spill of approximately 50,000 liters or equivalent to 316 barrels into the sea. The Company together with private and public agencies has continuously been mitigating the incident by collecting oil from the sea surface, and spraying oil-spill dispersants both by ships and aircrafts. However, on July 28, 2013 some of the leaked crude oil has hit the Prao bay, Samed Island in Rayong Province which the Company has urgently clean the oil slick in the bay. Currently the oil slick has been completely cleaned. Furthermore, the Company has set up a mitigation plan to mitigate the environment and community in the area such as short-term measure is to set petition center for the community, medium-term measure is to work together with environmental experts to study the impact on the marine environment, to put together the rehabilitation plan and implement the plan and investigate cause of the oil leak and finally long-term measure is to investigate cause of the oil leak and explore fact finding investigation result and improve operating procedures standard. The Refinery is currently running at normal. Page 3

4 Petroleum Market Overview Table: Petroleum Product Spread over Dubai Crude Unit: USD/BBL 2Q/2012 1Q/2013 Dubai % -7% Jet-Dubai % -24% Diesel 1 -Dubai % -14% Fuel Oil-Dubai % -50% Note: 1. Reference Gasoil 0.05% In, Dubai crude oil price fluctuated between 97 and 108 USD/bbl. Dubai crude oil price for averaged at 101 USD/bbl, decreased from the same quarter last year by 5 USD/ bbl, or a decreased of 5% and decreased from the previous quarter by 7 USD/bbl, or a decreased of 7% due from demand factors as follows: - During, the demand for petroleum products was low from several factors including warm weather and a non-driving season. As a result, many refineries shutdown during this time of year. - Short-term impact on US economy when the Federal Reserve signaled tapering of the QE - Slowdown of Chinese economy when Chinese government issued policies to slow lending and lower expenses of local government And supply factors as follows: - The new president of Iran showed signs of easing up on the Western sanction against nuclear weapons program. However, he will continue to produce nuclear weapon for peace. This has reduced the risk of world short supply - Unrest in the Middle East and North Africa, in countries such as Sudan, Syria, and Iraq From factors in the market stated above, the lack of seasonality demand has pressured the petroleum product and crude oil spread to decrease. The average spread for jet-dubai in was at 15 USD/bbl decreased from the same period last year by 1 USD/bbl, down by 5 USD/bbl from the previous quarter. The average spread of diesel-dubai was 17 USD/bbl, increased from the same period last year by 2 USD/bbl and down by 3 USD/bbl when compared to the previous quarter. This was due to lack of seasonal demand for diesel and jet fuel. Page 4

5 Aromatics Market Overview Table: Spread of aromatics product and condensate Unit: USD/Ton 2Q/2012 1Q/2013 Condensate % -8% Paraxylene FECP 1,409 1,497 1,618-6% -13% Paraxylene FECP-Condensate % -19% Benzene Spot Korea 1,286 1,107 1,379 16% -7% Benzene Spot Korea-Condensate % -3% Naphtha Condensate % -195% The price of paraxylene (FECP) for averaged at 1,409 USD/ton, decreased from the same period last year by 88 USD/ton, a down by 6% and declined from the previous quarter by 209 USD/ton, a down by 13%. This is due to the slowdown of demand, especially in China, of paraxylene midstream and downstream products. In addition, the supply of paraxylene in Asia is down due to the resumption of aromatic plants in Malaysia and India. Benzene prices (SPOT Korea) in averaged at 1,286 USD/ton. Compare to 2Q/2012, benzene price rose by 179 USD/ton, an increase of 16%. There was a decline from the previous quarter by 93 USD/ton, a decreased of 7%. This may be due to the fact that supply have recovered as Aromatics plants in Japan, South Korea and Taiwan went back up to normal operation levels. However, demand for midstream and downstream products (Polystryrene and Stylene Monomer) slowed down resulting from weak demand in China and the U.S. In addition, benzene inventory increased in South Korea from the shutdown of SM producers in the U.S., Europe, and Asia. Page 5

6 Olefins and Olefin Derivatives Market Overview Table: Olefins and derivatives price and spread Unit: USD/Ton 2Q/2012 1Q/2013 Naphtha % -11% Ethylene 1,265 1,146 1,395 10% -9% HDPE 1,443 1,387 1,482 4% -3% HDPE-Naphtha % 12% LLDPE 1,433 1,357 1,477 6% -3% LLDEP-Naphtha % 11% LDPE 1,444 1,362 1,459 6% -1% LDPE-Naphtha % 18% MEG 1,173 1,167 1,282 1% -9% MEG-0.65 Ethylene % -5% Olefins and Olefin Derivatives Market Overview In, polyethylene market situation improved from 2Q/2012, but worsen from 1Q/2013. Polyethylene (HDPE) buyers still showed concerns on world s economic in. The demand for plastic resins did not improved as buyer were still buying on a needed basis. However, both the buyers and traders kept control over their inventory levels, therefore, no excess supply in inventory, and product prices were able to maintain. Naphtha price decreased in the same way as crude oil and resulted in an increased in HDPE-naphtha spread. Naphtha price in was at 858 USD/ton, decreased 4% from 2Q/2012 and decreased 11% from 1Q/2012. HDPE price (SEA) averaged at 1,443 USD/ton in, increased by 86 USD/ton or 4% from 2Q/2012, decreased by 39 USD/ton or 3% from 1Q/2013. LLDPE price (SEA) in averaged at 1,433 USD/ton, increased by 76 USD/ton or 6% from 2Q/2012 and decreased by 44 USD/ton or 3% from 1Q/2013. LDPE price was supported by the decreased in imported LDPE resins from Iran to China which resulted in stable LDPE price. LDPE (SEA) in averaged at 1,444 USD/ton, increased by 82 USD/ton or 6% from 2Q/2012 and decreased by 15 USD/ton or 1% from the previous quarter. The MEG market situation in had worsen due to decreased in prices of feedstock Ethylene with the needs of polyester downstream products and declining economic conditions. MEG price averaged at 1,173 USD/ton in, increased by 6 USD/ton or 1% from 2Q/2012 and decreased from the precious quarter by 109 USD/ton or 9%. However, there is an expectation in 3Q/2013 that MEG price will raise in accordance with an increase demand of polyester and apparel in the winter season of the year. Page 6

7 Performance Analysis by Business Unit Refinery Business Unit Table: Refinery Intake 2Q/2012 1Q/2013 Crude (M.BBL) % -37% (KBD) % -37% Condensate Residue & Others (M.BBL) % -37% (KBD) % -37% Total Intake (M.BBL) % -37% (KBD) % -37% CDU Utilization Rate 63% 98% 101% CDU Capacity = 145 KBD; Condensate Residue Splitter Capacity = 58 KBD; Total Capacity = 203 KBD In company s refinery has planned shut down for 44 days (from May 15 - June 27, 2013). The CDU Utilization Rate of this quarter was 63 percent, down from 98% in 2Q/2012 and from 101% in 1Q/2013. The condensate residue and other feedstock totaled to 36 KBD has decreased from 2Q/2012 by 38% and down from 4Q/2012 by 37%. As a result, in this quarter, the total refining intake totaled to 129 KBD, decreased by 73 KBD or by 36% from 2Q/2012 and decreased by 75 KBD or 37% from 1Q/2013. Table: Gross Refinery Margin Unit: USD/BBL 2Q/2012 1Q/2013 % - /(+) % - /(+) Market GRM % -46% CDU GRM % -50% CRS GRM % -23% Hedging Gain/(Loss) % 356% Stock Gain/(Loss) Net NRV % 169% Accounting GRM % -69% Market GRM in was at 2.38 USD/bbl decreased from 4.32 USD/bbl in 2Q/2012 or 45% decreased. Which was mainly due to the planned maintenance as mentioned above, resulted in a change in the production yield during the ramping down as well as the starting up of Page 7

8 the plant, especially during the starting up. Due to sequence when starting the plant, the CDU would start first then the Hydro cracking unit, resulted in the production of more intermediate products and fuel oil in that period. Also, when compared to 1Q/2013, Market GRM fell from 4.37 USD/bbl decreased by 46% primarily due to lower petroleum product spreads. As the jet-dubai spread averaged at 15 USD/bbl, down by 5 USD/bbl or decreased by 24% from the previous quarter. Diesel-Dubai spread averaged at 17 USD/bbl, down by 3 USD/bbl or decreased by 14% from the previous quarter resulted in a fall by 50% from 1Q/2013 for the GRM CDU. The market GRM of CRS unit was also affected by the decreased in product spread as the feedstock for CRS unit is condensate residue which the price associated with middle distillate product such as jet fuel and diesel, making the GRM CRS dropped by 29% from the previous quarter. Table: Petroleum Production Product 2Q/2012 1Q/2013 '000 Barrels % '000 Barrels % '000 Barrels % Naphtha 975 8% 1,384 8% 1,598 9% -30% -39% Reformate 1,206 10% 1,981 11% 1,942 11% -39% -38% Jet/Kero 1,582 13% 1,491 9% 2,420 13% 6% -35% Diesel 6,257 51% 8,987 51% 8,685 47% -30% -28% Fuel Oil 1,729 14% 2,532 14% 2,412 13% -32% -28% Others % 1,101 6% 1,382 7% -51% -61% Total 12, % 17, % 18, % -30% -33% In, the Company had a profit from commodity hedging of 1.23 USD/bbl and as Dubai price continued to drop, resulting in the loss of inventory (including NRV) of 2.45 USD/bbl. Loss has fallen from 2Q/2012 at 8.79 USD/bbl and increased from 1Q/2013 by 0.91 USD/bbl. The Company reported accounting GRM of 1.15 USD/bbl, increased from a loss of 3.89 USD/bbl when compared to 2Q/2012 and decreased from 3.73 USD / bbl in 1Q/2013. Page 8

9 Aromatics Business Unit In, two aromatics plants had total intake of 1.43 Mton, 6% decreased from 2Q/2012 and 3% decreased from 1Q/2013. The utilization rate for aromatics (BTX utilization) was at 84% in, decreased from 2Q/2012 of 92% and down from 92% in 1Q/2013. Due to in, aromatics plant 2 had planned shutdown for 17 days (June 1-17). Table: Aromatics Intake and Productions 2Q/2012 1Q/2013 Total Intake ('000 Tons) 1,426 1,525 1,477-6% -3% BTX Production ('000 Tons) % -7% BTX Utilization Rate 84% 92% 92% Note: BTX capacity = million tons per year Table: Aromatics Sales Volume Product '000 Tons 2Q/2012 1Q/2013 % '000 Tons % '000 Tons % Benzene (BZ) % % % 11% 14% Paraxylene (PX) % % % -7% -9% Cyclohexane 52 6% 49 6% 40 5% 6% 30% Other BTX Products 15 2% 16 2% 16 2% -6% -4% Total BTX Products % % % -1% 1% Naphtha and Raffinate % % % -15% -12% Condensate Residue 20 2% - 0% - - N/A N/A Other By-Products 96 12% % % -24% -12% Total % % % -6% -2% In, the Company total BTX sales volume was 504 kton, decreased by 4 kton from 2Q/2012 or 1% decreased, while paraxylene spread decreased by 5% and benzene spread increased significantly to 131% and resulted in P2F of 325 USD/ton (BTX), increased by 70% when compare to 1Q/2013, the total sale of BTX increased by 5 kton or 1% increased. While paraxylene spread decreased by 19% and benzene spread decreased by 3%. The product spread pushed P2F ($/Ton) of aromatic business unit to decrease by 18% from 1Q/2013. Page 9

10 Table: Aromatics market P2F Unit: USD/Ton 2Q/2012 1Q/2013 Market P2F % -18% NRV N/A N/A Hedging Gain/(Loss) N/A N/A Stock Gain/(Loss) N/A N/A Accounting P2F % -29% The Company reported stock loss (including NRV) in at 46 USD/ton, decreased from 72 USD/ton in Q2/2012 and increased by 1.5 USD/ton from 1Q/2013. This resulted in unit report accounting P2F at 278 USD/ton, increased 161 USD/ton from 2Q/2012 and decreased 115 USD/ton from 1Q/2013. Olefins and Derivatives Business Unit Table: Sales volume and utilization rate of olefins and derivatives 2Q/2012 1Q/2013 Sale Volume '000 Tons Utilization Rate Sale Volume '000 Tons Utilization Rate Sale Volume '000 Tons Utilization Rate Olefins % % % 1% 9% HDPE % % % (2%) (11%) LLDPE 70 72% 70 77% % 1% (31%) LDPE 71 99% 54 98% % 31% (5%) Total Polyethylene % % % 4% -15% Note: MEG % 90 85% 83 97% 16% 26% 1. Sales volume of olefins is external volume 2. Utilization calculated on MEG capacity of 395 KTA Page 10

11 Olefins utilization rate in was 93%, increased from 89% in 2Q/2012, due to better gas flow from PTT gas separation plant, hence gas volume supplied increased by 13% from 2Q/2012. In comparison to 1Q/2013, the utilization rate of decreased from 97% in 1Q/2013 due mainly to the shutdown of plant I4-1, the mixed feed cracker in total of 10 days (May 2-11) while gas feedstock volume decreased only 2% in. In addition, the HDPE price was at 1,443 USD/ton in increased 4% from 2Q/2012 and decreased 3% from 1Q/2013 and resulted in the performance of olefins and olefins derivatives business unit improved when compare to 2Q/2012 and decreased when compare prior quarter. Table: Olefins Feedstock Used 2Q/2012 1Q/ Tons % 000 Tons % 000 Tons % Gas % % % 13% -2% Naphtha 95 10% % % -11% -19% Total ,012 10% -4%.Table: Olefins and derivatives adjusted EBITDA 2Q/2012 1Q/2013 Adj. EBITDA Margin 28% 27% 30% 1% -2% Adjusted EBITDA margin of olefins and olefins derivatives in was at 28%, increased from 27% in 2Q/2012 and decreased from 30% in 1Q/2013 following the rate of utilization in olefins. Olefins Business Unit This resulted in olefins sales to external customer increased by 1% from 2Q/2012 while the utilization rate was higher due mainly to the use of ethylene in the production of MEG that has increased 14,511 tons. Ethylene price was at 1265 USD/ton in, increased 10% from the same period in prior year, and resulted in 14% increase in the overall sales. When compared to 2Q/2012, external customers have increased by 9%, due to shutdown of some of polyethylene plant in. Ethylene price also decreased by 9% from 1Q/2013 and resulted in an increase of only 1% of ethylene external sales. Polymer Business Unit The performances of polymer business unit improved when compared to 2Q/2012 and worsen when compared to 1Q/2013. Performances of main products were as follows. Page 11

12 Performance: HDPE The utilization rate of the 3 HDPE plants in was at 96%, decreased from 104% in 2Q/2012 and from 109% in 1Q/2013. Due to a planned shutdown of HDPE I-1 plant for 15 days and another 30 days for BPE2 plant. While there was only 15 days shut down in 2Q/2012 and in 1Q/2013 there was no shutdown. Overall performance of HDPE had worsened in when compared with 2Q/2012. HDPE sales volume decreased by 2% resulted from the appreciation of the baht averaged from THB/USD in 2Q/2012 to While the price of HDPE was 1,443 USD/ton, increased by 4% resulting in a 6% decreased in the revenue of HDPE. When compared to 1Q/2013, HDPE sales volume decreased by 11% although price had also fallen by 3%. This result in a 12% decreased in HDPE revenue. However, in this quarter the company was able to sell HDPE products more than the production, so inventory was down from 42,903 ton in 1Q/2013 to 38,925 ton in. Performance: LLDPE The utilization rate of LLDPE plant in was at 72%, decreased from 77% in 2Q/2012 and decreased from 113% in 1Q/2013, due to shutdown in for 25 days (May 4-28) while there was no shutdown in 1Q/2013. Overall performance of LLDPE improved in when compare with 2Q/2012 from LLDPE sales volume increased 1% while price in 1Q/2013 was at 1,433 USD/ton, increased 6% and resulted in an increase in LDPE sales revenue of 4%. When compared with 1Q/2013, LDPE sales volume decreased by 31% while price increased 3% and resulted in a decrease in LLDPE sales revenue of 33%. Performance: LDPE The utilization rate of LDPE plant in was at 93%, decreased from 98% in 2Q/2012 and decreased from 101% in 1Q/2013 due to shutdown in for 9 days while there was no shutdown in 2Q/2012 and 1Q/2013. Overall performance of LDPE improved in. When compared with 2Q/2012, LDPE sales volume increased by 31% while price in was at 1,444 USD/ton, increased 6% and resulted in an increase in LDPE sales revenue of 18%. When compared with 1Q/2013, LDPE sales volume decreased by 5% while price decreased by 1% and resulted in a decreased in LDPE sales revenue of 5%. Performance: MEG The utilization rate of MEG in was at 100%, increased from 85% in 2Q/2012 and increased from 97% in 1Q/2013 (the calculation of utilization based on MEG production including the extension capacity of 95,000 ton/year) due to MEG plant that has been running with no shutdown in this quarter. While in 2Q/2012, the extension capacity of 95,000 ton/year was unable to operate and there was no shutdown in 1Q/2013. Overall performance of MEG had improved in when compared to 2Q/2012 with 13% higher revenue from an increase of 16% in sales volumes. However, product spread decreased to 356 USD/ton in decreased 12% from 2Q/2012. When compared to 1Q/2013, sales volume increased by 26%. Despite the fact that product spread decreased by 6%, this resulted in 4% increase in ethylene oxide business unit sales revenue. Page 12

13 Operating Performance 2Q/2012 (Restate) 1Q/ Month Ending June 30, 2013 M. Baht % M. Baht % M. Baht % M. Baht % M. Baht % M. Baht % Sales Revenue 111, , , , , , Feedstock Cost -87, , , , , , Product to Feed Margin 24, , , , , , Variable Cost (1) -6, , , , ,107-5 Fixed Cost (2) -4, , , ,291-3 Stock Gain/(Loss) & NRV (3) -1, , , ,065-1 Gain/(Loss) Hedging Commodity (4) Other Income (5) 1, , , ,686 1 SG&A (6) -2, , , ,388-2 EBITDA 11, , , , , , Depreciation & Amortization (7) -4, , , ,139-3 EBIT 7, , , , , ,746 8 Financing Expenses (Net Interest Earned) -1, , , ,235-1 FX Gain/(Loss) (8) -2, , , , Shares of gain/(loss) from investments (9) Corporate Income Tax (10) , , Net Profit After Income Tax 3, , , , , ,020 6 Portion of Net Profit: Shareholders 4, , , , , ,247 6 Minorities Adjusted EBITDA 12, , , , , Note: 1. Adjusted EBITDA refers to EBITDA excluding impact of inventory value (excludes Inventory and NRV) and excluding impact of commodity hedging Page 13

14 Performance Comparison (1)Variable Cost Variable costs in were at 6,204 MB, increased by 2,209 MB or increased by 55% from the same quarter last year. This primarily resulted from an increased in the variable costs of international businesses of 734 MB. Of which, 58 MB are variable costs from Natureworks and Vencorex. Due to only recently, the Company had invested in those companies in May In addition, the change in holding proportion of investment in PTTUT which changed the revenue/expense recognition method from consolidation to take equity of GPSC (PTTUT amalgamated entity). This result in, cost of buying electricity and steam from GPSC has increased by 1,696 MB or increased by 57%. Compared to the previous quarter, variable costs decreased by 699 MB, or down 10%. This is mainly due to lower production volumes of petroleum products from the shutdown of the refinery for 44 days. From this, production volumes and production costs decreased from the previous quarter. (2)Fixed Cost Fixed costs were 4,163 MB in, increased by 789 MB or up 23% from 2Q/2012. Mainly due to the fixed costs from Vencorex and Natureworks totaled to 719 MB. Furthermore, by changing the method to recognition the performance of PTTUT from consolidation to take equity decreased the fixed costs for PTTUT by 118 MB, as a result of the change in the proportion of investment in PTTUT. In comparison to the previous quarter, fixed costs were down by 35 MB, or decreased by 1%. (3)Stock Gain/ (Loss) and NRV In, the company Stock loss and NRV were reported at 1,422 MB, of which 1,676 were stock loss and NRV gain of 254 MB (stock loss of the aromatics plant was 656 million and refinery stock loss of 1,020 MB). In, Dubai crude oil declined from 107 USD/bbl to 100 USD/bbl with total inventory of 7.32 million barrels. However, in, the Company's NRV gain was 255 MB. Towards the end of 1Q/2013, crude oil price sharply decreased and caused an NRV loss while at the end of, crude oil price maintained therefore no NRV loss was reported. The company had to adjust 1Q/2013 NRV loss to a gain in. In 2Q/2012, the company's stock loss and total NRV were at 6,187 MB and in 1Q/2013, the company's stock loss and total NRV were 643 MB. (4) Gain/(Loss) Commodity Hedging In this quarter, the company had a profit of 419 MB from commodity hedging, increased by 117 MB or up 39% compared to 2Q/2012. The main reason was due to the Crack Spread Hedging to maintain the profits level. By, the actual spread for petroleum products was Page 14

15 lower than the spread that the company has sold in advance. Moreover, the volumes that were made Crack Spread Hedging were approximately 4.7 million barrels. However, in 2Q/2012, there were only 0.6 million barrels available for Crack Spread Hedging. Also, in 2Q/2012, the company had done Stock loss hedging for 1.3 million barrels. The actual prices for the products were lower than the prices sold in advance. While in this quarter, there weren t any Stock loss hedging, so the overall net profit for this quarter was 419 MB. But from 2Q/2012, there were 302 MB gained from Hedging. As compared to 1Q/2013, the Company had gain from commodity hedging of 148 MB because the Company has made a total of 3.9 million barrels Spread Hedging as well as the actual spread for petroleum products was lower than the spread that the company has sold in advance. (5) Other Income. The Company reported other income of 1,362 MB, a decreased of 702 MB, down 34% from 2Q/2012, this was mainly due to the investment in Vencorex. The Company paid for Vencorex share below its fair value, the different in the paid and fair value was reported at gain on bargain purchase of 944 MB. In addition, Vencorex has service income of the shared facility among plants in the area in France increased 151 MB. When compared with the previous quarter, other income increased by 38 million, or an increase of 3% due to the write off of 85 MB vessel demurrage cost booked in 1Q/2013. While income from services decreased from a dropped in Vencorex s services income by 35 MB. (6) SG&A In, SG&A expense reported at 2,829 MB, increased by 298 MB or up 12% compared to 2Q/2012. Mainly due to SG&A expense from Natureworks and Vencorex which increased by 245 MB as the Company had invested in Natureworks and Vencorex on May 31, Therefore, the expense was only taken into account for only 1 month in 2Q/2012, while in costs were recognized for the entire quarter. Such expenses include sales expense of 112 MB, employee cost of 40 MB, professional fee of 48 MB and other administrative expense of 65 MB. Also, SG&A of PTTUT decreased 40 MB, due to change in recognition method of PTTUT from consolidation to take equity. However, when compared to the previous quarter, SG&A expense increased 250 MB, or an increase of 10%. This was mainly due to the expenses for provision of spare part for PTTPE Cracker totaled to 105 MB. (7) Depreciation and Amortization Depreciation and amortization costs in were at 4,187 MB, increased by 130 MB or increased by 3% from 2Q/2012. Mainly due to the depreciation and amortization costs of Natureworks and Vencorex totaled to 213 MB. As the company had invested in Natureworks and Vencorex on May 31, 2012, in 2Q/2012 the cost of the two companies has taken into account for only a month, while in, costs were recognized for the entire quarter. A decreased in depreciation and amortization costs of PTTUT by 255 MB, as PTTUT changed the way of recognizing the results of operations from Consolidation to Take Equity as a result of the change in the proportion of investment in PTTUT. In addition, amortization costs of catalyst from refinery and aromatics were 170 MB. Page 15

16 Compared to the previous quarter, depreciation and amortization costs increased by 235 MB, or up by 6%. This is mainly due to the increased in amortization cost of catalyst from refinery and aromatics for 170 million as mentioned above. (8) Gain/ (loss) from FX Loss on foreign exchange 2,726 MB, the main reason was that Thai baht depreciated by 1.82 per USD (Based on average sales BOT, end of at per USD and 1Q/2013 at per U.S. dollar). At the end of, the Company had foreign liabilities of about 1,380 MUSD and risk management in the U.S. currency for 737 MUSD. While in 2Q/2012, there was a loss from foreign exchange of 1,281 MB, but a gain in FX in 1Q/2013 of 1,986 MB. (9) Gain/(Loss) from Share of Investment Share of loss from investments in increased by 123 MB, or increased by 122%. This primarily resulted from the realization of an increased of a loss on the investment in Myriant by 74 MB and a decreased in profit on investments from Vinithai plc. While, there was an increase in profit of 97 MB from GPSC (due to take equity methodology) as well as an increased in profit from PTTPM by 17 MB. In comparison to 1Q/2013, share of loss on investments increased by 4 MB or up by 22%. This was mainly due to a fallen in profit on investments from Vinithai plc and a rise in profit on investments from GPSC by 65 MB. (10) Corporate Income tax. Corporate income tax in was a reversal of corporate income tax recorded in 1Q/2012 of 250 MB due to the well performed 1Q/2012 of the non- tax privilege plant such as the refinery which is better than the 1H/2013 performance. Excess tax was recorded in 1Q/2012, therefore, the excess income tax amount had to be reverse in. In addition, there was an effect of deferred tax of 258 MB. When in comparison with the same quarter last year, an increase of corporate tax rate of 119 MB or 19% increase due to a decrease in corporate income tax of 48 MB from a decrease non-tax privilege plant performance. In addition, there was deferred tax from refinery turnaround costs, loss on sale of investments in EA, and income tax for PTTUT due to change of account record method. Furthermore, there was a change in account standard regarding recognition of deferred tax in the future of loss in international operation. As compared to 2Q/2012 income tax decreased 1,729 MB or 142% decreased due to a down in performance of non-tax privilege operations and decrease in product spread. Page 16

17 Statement of Financial Position Cash / cash equivalent / Short term investment 58,773 54,437 Unit: MB Unit: MB 60,062 61,161 Other Liabilities Current Asset 86, , , ,857 IBD PP&E 224, , , ,045 Shareholders Equity Non Current Asset 39,523 34, Billion Baht As at June 30, Billion Baht As at December 31, 2012 Assets At 30 June 2013, the Company had total assets of 409,005 million baht, down from 27,057 million baht in December 31, 2012 or decreased by 6%. Mainly from a reduction in the current assets by 15,776 million baht or fallen by 10% as well as a decreased of 11,281 or 4% for noncurrent assets. 1) Current assets decreased by 15,776 million baht, reasons were as follows. Cash and cash equivalents decreased by 9,538 MB or down 31%. A major cause was from investment in notes and deposits with maturity over three months increased by 8,251 MB as well as the payment to purchase shares of PPCL 4,790 MB. This results in an increased in shares from 40% to 100%. It was also caused from a decreased in cash and cash equivalents of PTTUT by 2,337 MB. From the change in accounting method from Consolidation to Take Equity is due to the change in investment proportion and the repayment of loans and dividend. Short-term investments increased to 8,251 MB or an increase of 29%. Primarily due to an increase in short-term investments of the Company by 9,542 MB from investment in notes and deposits. While short-term investments of PTTUT decreased by 1,253 million baht because of the change in accounting method. (Day) YE 2012 (Day) +/(-) (Day) AR Turnover Inventory Turnover Trade receivables decreased by 16,875 million or down by 32%, primarily due to a decreased in trade receivables of petroleum products by 12,300 million or down by 65%, from shutdown of the plant in May - June 2013 for 44 days. Resulted in a decreased Page 17

18 in volume intake in the period of approximately 60% when compared to the year-end It was also caused from a decrease in trade receivable of PTTUT by 953 million baht resulted from a change in the accounting method as mentioned above. AR Turnover for average number of days was 31 days increased by 1 day from end of year Inventories increased by 3,122 million baht or an increase of 8 percent. One of the major causes was an increase in inventories of petroleum products by 2,667 million baht. In particular, crude oil feedstock increased by 1.03 million barrels and Intermediate product inventories rose by 0.38 million barrels due to plant shutdown in May - June While inventories of PTTUT such as spare part decreased by 208 million baht due to the change in accounting method by changing the proportion of investment. The average number of days for inventory turnover is approximately 22 days which is the same as at the end of Other current assets decreased by 736 million or down 10%, as Oil Funds trade receivables decreased by 537 million baht. As there was a reduction of oil and fuels compensation from 40 million kg to 12 million kg and the rate of compensation fund of LPG dropped from baht per kg to 9.75 baht per kg. In addition, prepaid expenses decreased by 360 million baht as there s recognition of prepaid insurance expenses and the refundable tax increased by 160 million baht from an increased in tax to pay for the plant's Turnaround Vencorex. 2) Non-current assets decreased by 11,281 million or down by 4% from the following. Property, plant and equipment decreased by 16,131 million baht or a decreased of 7% from the decreased in asset value of PTTUT accounting for 17,558 million baht. Depreciation during the period increased by 6,632 million baht. However, assets increased by 8,054 million baht from an increased in the cost of plant shutdown (Turnaround), which can be recognized as an asset at certain proportion and an increased in the value of the projects. Other non-current asset increased 4,850 million baht or 14% mainly from an increased in investment in associates 5,239 million baht from change in shareholding structure in PTTUT from 60% to 30.31% resulting in the change in investment from being a subsidiary (with elimination) to an investment in associates. The goodwill of PTTUT arises from the merger of the Company (PTTCH + PTTAR) fell to 633 million baht as well as intangible assets of PTTUT were down by 175 million baht resulted from the change in shareholding structure. However, due to the increased in loans to companies such as Myriant of 9.95 million or an increase of 396 million baht. Liabilities As at June 30, 2013, the Company had total liability of 174,694 million baht, decreased by 23,333 million baht or 12% from December 31, 2012, of which the increased in current liability for 6,062 million baht or 9% and non-current liability for 29,385 million baht or 23%. 1) Current liabilities increased by 6,062 million baht or increased by 9% from the following factors: Short term loan from financial institutions decreased by 620 million baht mainly due to the company's overdraft Vencorex decreased by 558 million baht. In the company sold Vencorexs trade receivable (AR Factoring) instead of borrowing from financial institutions. Trade payable decreased by 6,569 million baht or down by 17% mainly because the creditors of petroleum products decreased by 8,635 million baht. As the refinery plant has shut down for 44 days resulted in a reduction in the amount of raw material Page 18

19 purchased. It can also be caused by the decreased in trade payable of PTTUT by 904 million baht because of the change in accounting method from the effect of changing the proportion of investment in PTTUT. Long-term loans that were due within one year increased by 13,234 million baht or an increase of 98%. Since the classification of bonds due within one year shown under current liabilities of 15,000 million baht and the PPA value of debentures amounting to 164 million baht these notes are due in April Another caused was PTTUT long-term loans due within one year decreased by 1,796 million baht from changing the proportion of investment in PTTUT resulting in the accounting method changed from Consolidation to Take Equity. Income tax payable decreased by 481 million baht primarily due to a decreased in income tax payable of PTTGC when compared to the first half of the year 2013 and the second half of As well as a fall in the tax rate from 23% in 2012 to 20% in Current liabilities increased by 275 million baht or an increase of 24% mainly due to the increased in the creditor derivative by 634 million baht. The derivatives (Forward Contract - Selling for P2F) rose by USD 615 million. As the baht depreciated more than stated in the forward contract, this resulted in the Mark to market loss on such derivative instruments and income tax withholding for delivery fell by 170 million baht. Primarily due to income tax withholding for employees have decreased from bonus received in December 2012, while employees will be paid normally in June. Moreover, due to a reduction of deferred VAT of PTTPE down by 35 million baht. There was a reduction in income in June 2013 from December 2012 and a decreased in other taxes of 75 million baht. Resulting from funds pending submission of oil refineries fell due to lower sales in June ) Non-current liabilities decreased 29,385 MB or 23% decrease mainly due to Long term loan decreased 29,213 MB or 24% decrease from PTTUT s long term loan of 12,191 MB due to change in accounting treatment for PTTUT from consolidation to take equity. Also, repayment of PTTGC s loan during the period of 2,584 MB, of which 1,000 MB is revolving loan. Also there is a reclassify of current portion of debenture from non-current liabilities to current liabilities of 15,164 MB (to be paid in April 2014). In addition, Thai Baht soften 0.49 Baht/USD (reference: selling average from BOT, end of FX was Baht/USD and year end 2012FX was at Baht/USD). This resulted in a decrease in value of the Company s USD loan from year end 2012 of 637 MB. Shareholder s Equity As of June 30, 2013, the Company recorded total shareholders of 234,311 MB decreased 3,734 MB or 2% from December 31, The Company s equity portion increased 5,273 MB or 2% increase due to the Company s net profit of 16,247 MB in 1H/2013 and an increase in shareholding portion of PPCL from 60% to 100% in the amount of 79 MB. Also, dividend was paid for 11,045 MB and loss in the foreign currency translation differences for in international operations of by 8 MB. Statement of Cash Flows Statement of cash flows of 6 months ending June 30, 2013, the Company had net cash from operating activities of 32,773 MB, net cash used in investing activities of 21,340 MB (mainly from investment in subsidiaries), net cash used in financing activities of 17,515 MB from repaying long-term loan, debenture, and dividend. Therefore, the Company had cash and cash equivalents at ending of 21,731 MB from 31,269 MB at the beginning of the quarter. Page 19

20 Key Financial Ratios Financial Ratios 1Q/2013 4Q/2013 (Restate) Current Ratio EBITDA to sales revenue 11.51% 10.27% 10.16% Net Profits to sales revenues 7.17% 6.35% 6.04% Return on total assets 11.80% 11.13% 10.43% Return on equity 17.09% 16.39% 16.15% Interest Bearing Debt to equity Net interest bearing debt to equity Net interest bearing debt to EBITDA Note: Current ratio = Current assets divided by current liabilities EBITDA to sales revenue = EBITDA divided by sales revenue (for the last 4 quarters) Net profit on sale revenue = Net profit divided by sales revenue (for the last 4 quarters) Return on total assets = Net profit (for the last 4 quarters) divided by average total assets Return on equity = Net profit (for the last 4 quarters) divided by average total shareholder s equity Interest Bearing Debt to Shareholders Equity = Interest Barring Debt divided by shareholder s equity Net Interest Bearing Debt to Shareholders Equity = Interest Barring Debt net from cash and cash equivalent and current investments divided by shareholder s equity Net Interest Bearing Debt to EBITDA = Interest Barring Debt net from cash and cash equivalent and current investments divided by EBITDA (for the last 4 quarters) Page 20