Message from the Board of Directors Important Financial Information

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3 CONTENTS Message from the Board of Directors Important Financial Information General Information of the Company and the Board of Directors Company Information General Information of Corporate Investment The Board of Directors Report of Nomination and Remuneration Committee Remuneration of the Board of Diretors Summary of Operational Performance Revenue Structure Analysis of Financial Position and Operational Performance Marketing and Competition Operating Results in each segment Business Practice on the Principles of Sustainable Development Awards and Standards of Accreditation Corporate Social Responsibility Financial Position and Financial Statements 32 Report of the Audit Committee 34 Independent Auditor s Report 37 Financial Statement References 118 Share Registrar, Auditor and Legal Counsel

4 Message from the Board of Directors In 2017, the world economy slowly and steadily recovered. The United States recovered earlier because of the private segments investment. Its Consumer Confidence Index increased and interest rates inclined higher. This was a similar situation to Europe where economic recovered after the political instability started to decline and the higher Economic Confidence Index reflected positive viewpoint to consumption and investment while Asia was still growing from infrastructure and import improvement, resulting in the world s overall vinyl business growth around 3%. In 2017, Thai Plastic and Chemicals Public Company Limited and its subsidiaries registered total revenue of 31,913 million Baht and net profits of 5,305 million Baht, a 43% increase from The company s better operating results was a result of the higher selling prices of PVC products due to lower PVC supplies from Chinese manufacturers, the Company s continuous improvement on production quality and profits from selling investment in Thailand, Vietnam and Laos by 1,401 million Baht. The Company is committed to achieving long-term competitive advantage for sustainable business growth in the region. After succeeding in improving the production and implementing Integrated Business Excellence (IBE) for its main businesses, the Company then applied the management system to the downstream businesses in order to improve the effectiveness of the information transfer and demand-supply forecast between upstream and downstream businesses. 4 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

5 For research and development, the Company has continuously invested in and supported various researches, and last year, many new innovative products were introduced the market such as new PVC resin grade for medical equipment production in which high strength and surface smoothness is required, special PVC resin for chemical resistant fittings and hot water fittings, as well as Chlorinated Polyvinyl Chloride (CPVC) pipes that can be used in hot water system and was granted National Sanitation Foundation (NSF) Certification for their cleanliness. In the area of energy conservation, apart from regularly educating the employees, the Company has also designed and improved its mechanical equipment using modern and efficient technologies to lessen energy consumption. These practices led to the Company receiving the Green Star Best Practice Award for PVC Credit Certification from the Green Building Council of Australia and Carbon Reduction Award for the 9 th consecutive year from Thailand Environment Institute (TEI). For safety and security, the Company adopted and developed the Process Safety Management (PSM) to lessen the risk in the production process, which won the Company the Thailand Safety Award: the Best Safety Organization in the level of Platinum for the 11 th consecutive year. Apart from the abovementioned business strategies, the Company also emphasized on sustainable development by improving its production process to lessen the usage of natural resources and creating environmentalfriendly products and services. The Company also strengthened the communities by developing skills of members of every community within the area where the Company conducts its business, as well as remained transparent and fair in their operations for all stakeholders. Lastly, we would like to express our gratitude to all shareholders, business partners, clients, employees, financial institutions and other relevant parties for continuous contribution and support for the Company. The Broad of Directors will ensure that our business conduct is in accordance with good governance and ethics for maximum benefits to all relevant parties and will expand the Company s capability to achieve sustainable growth both in Thailand and ASEAN. - Signed by - Mr. Cholanat Yanaranop Chairman - Signed by - Mr. Apichai Charoensuk Managing Director Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 5

6 Important Financial Information Financial results and statements of financial position of the Company and its subsidiaries in 5 years Consolidated Statements of Income (Million Baht) Revenue from sale of goods and rendering of services 31,913 30,280 29,578 31,870 32,371 Costs and expenses 28,697 26,640 27,822 31,240 29,813 Profit before finance costs, income tax expense, depreciation and amortization and includes dividends from the associates (EBITDA) 7,554 6,182 4,077 2,247 3,867 Profit for the year (1) 5,305 3,721 2, ,605 Consolidated Statements of Financial Position (Million Baht) Assets 27,894 26,504 24,362 24,749 24,852 Liabilities 5,637 6,263 6,440 8,575 7,971 Shareholders' equity 22,257 20,241 17,923 16,175 16,881 Equity attributable to owners of the parent 21,661 19,556 17,463 15,748 16,362 Financial ratio Total number of share issued (Million Shares) Book value per share (Baht) Earnings per share (Baht) Dividends per share (Baht) Dividend payout ratio on profit for the year (%) Return on revenue from sales (%) Return on equity (%) Return on assets (%) EBITDA on total assets (%) Debt to equity ratio (Times) (2) Net debt to EBITDA ratio (Times) (3) N/A (1) Represents profit for the year attributable to owners of the parent (2) Debt to equity ratio = Liabilities divided by shareholders equity (3) Net Debt means interest bearing debt less cash and short-term investments (In 2017, The group does not have net debt) 6 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

7 General Information of the Company and the Board of Directors

8 Company Information Name of Company Thai Plastic and Chemicals PLC Company s Registration Number Type of Business Manufacturer and distributor of PVC resin and related products Website Location of Head Office 1 Siam Cement Road, Bangsue, Bangkok Location of branch (1) 19 m.9 Samrong Tai 21, Bang Ya Phraek, Phra Pradaeng District, Samut Prakarn (2) 8 I-Nueng Road, Maptaput Industrial Estate, Muang District, Rayong Initial Registered Capital Registered Capital 500,000,000 Baht Paid-up Capital 500,000,000 Baht Issued and paid-up Ordinary share 50,000,000 shares Par value 10 Baht Issued and paid-up preferred share Current Registered Capital Registered Capital 875,000,000 Baht Paid-up Capital 875,000,000 Baht Issued and paid-up Ordinary share 875,000,000 shares Par value 1 Baht Issued and paid-up preferred share -None- -None- Products and Production Capacity PVC resin 886,000 tons per year PVC compound 80,000 tons per year Caustic Soda (50%) 52,000 tons per year PVC pipe and fittings 203,500 tons per year PVC profile 24,300 tons per year 8 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

9 Shareholders First 10 major shareholders as of December 31, 2017 Nomber Shareholder No. of Shares % of Shares 1 SCG Chemicals Co., Ltd. 473,924, The Siam Cement Public Company Limited 399,392, SS Integration Co., Ltd. 120, Mr. Apisek Wongvasu 100, MITSUI O.S.K. LINES (THAILAND) CO., LTD. 82, Mr. Singchai Premratanachai 75, Mr. Chaiyasit Uvimolchai 74, Mr. Janut Suchato 71, Ms. Orapin Thidarat 68, Ms. Jariya Taesopapong 63, Contact for Corporate Data Corporate Secretary Office Telephone Fax contact_tpc@scg.com Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 9

10 General Information of Corporate Investment Subsidiaries (The Company held at least 50% of shares) As of December 31, 2017, there were 12 subsidiaries in which the Company held, directly or indirectly, at least 50% of all shares issued by that company. They may be classified by type of business as follows: PVC BUSINESSES 1. TPC Paste Resin Co., Ltd. Type of Business Manufacturer and distributor of PVC paste resin Head Office Location Bangkok, Thailand Telephone: Fax: Registered Capital 333,000,000 Baht Type of Shares Common shares Percentage of Shares 100% 2. TPC Vina Plastic and Chemical Corp., Ltd. Type of Business Manufacturer and distributor of PVC resin Head Office Location Dong Nai, Vietnam Telephone: Fax: Registered Capital 35,000,000 USD Percentage of Shares 70% 3. Viet-Thai Plastchem Co., Ltd. Type of Business Manufacturer and distributor of PVC compound Head Office Location Binh Duong, Vietnam Telephone: Fax: Registered Capital 2,868,041 USD Percentage of Shares 72.49% PVC RELATED BUSINESSES 4. Nawaplastic Industries (Saraburi) Co., Ltd. Type of Business Manufacturer and distributor of PVC pipe and fittings Head Office Location Bangkok, Thailand Telephone: Fax: Registered Capital 400,000,000 Baht Type of Shares Common shares Percentage of Shares 100% 5. Nawaplastic Industries Co., Ltd. Type of Business Manufacturer and distributor of finished PVC products Head Office Location Bangkok, Thailand Telephone: Fax: Registered Capital 426,000,000 Baht Type of Shares Common shares Percentage of Shares 100% 6. Nawaplastic (Cambodia) Co., Ltd. Type of Business Manufacturer and distributor of PVC pipe and fittings Head Office Location Phnom Penh, Cambodia Telephone: Fax: Registered Capital 5,000,000 USD Percentage of Shares 60% 10 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

11 7. Grand Nawaplastic Myanmar Co., Ltd. Type of Business Manufacturer and distributor of PVC pipe and fittings Head Office Location Yangon, Myanmar Telephone: , , , , Fax: - Registered Capital 6,800,000 USD Percentage of Shares 57% 8. Minh Thai House Component Co., Ltd. Type of Business Manufacturer and distributor of finished PVC products Head Office Location Ho Chi Minh City, Vietnam Telephone: Fax: Registered Capital 1,000,000 USD Percentage of Shares 80% 9. Siam Stabilizers and Chemicals Co., Ltd. Type of Business Manufacturer and distributor of PVC stabilizers Head Office Location Bangkok, Thailand Telephone: Fax: Registered Capital 190,000,000 Baht Type of Shares Common shares Percentage of Shares 60% OTHERS 10. Total Plant Service Co., Ltd. Type of Business Investment Head Office Location Bangkok, Thailand Telephone: Fax: Registered Capital 1,180,000,000 Baht Type of Shares Common shares Percentage of Shares 100% 11. Nawa Intertech Co., Ltd. Type of Business Manufacturer and distributor of molds Head Office Location Rayong, Thailand Telephone: Fax: Registered Capital 40,000,000 Baht Type of Shares Common shares Percentage of Shares 100% 12. Chemtech Co., Ltd. Type of Business Manufacturer and distributor of XLPE compound Head Office Location Binh Duong, Vietnam Telephone: Fax: Registered Capital 2,807,000 USD Percentage of Shares 100% Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 11

12 Associated Companies (The Company held at least 10% of shares) As of December 31, 2017, there were 6 associated companies in which the Company held, directly or indirectly, at least 10% but less than 50% of all shares issued by that company. They may be classified by type of business as follows: PVC BUSINESSES 1. PT. TPC Indo Plastic and Chemicals Type of Business Manufacturer and distributor of PVC resin Head Office Location Gresik, Indonesia Telephone: Fax: , 49 Registered Capital 27,600,000 USD Percentage of Shares 40% 2. Riken (Thailand) Co., Ltd. Type of Business Manufacturer and distributor of PVC compound Head Office Location Pathumthani, Thailand Telephone: Fax: Registered Capital 120,000,000 Baht Type of Shares Common shares Percentage of Shares 35% 3. SIAM TPC Co., Ltd. Type of Business Investment Head Office Location Bangkok, Thailand Telephone: Registered Capital 1,196,000,000 Baht Type of Shares Common shares Percentage of Shares 40% 4. SIAM TPC (SINGAPORE) PTE LTD Type of Business Investment Head Office Location Singapore Registered Capital 17,435,825 SGD 21,750,000 USD Type of Shares Common shares Percentage of Shares 40% 5. SCG Plastics (China) Co., Ltd. Type of Business Trading agent Head Office Location Guangzhou, China Telephone: Fax: Registered Capital 100,000 USD Percentage of Shares 20% PVC RELATED BUSINESSES 6. Binh Minh Plastic Joint Stocks Company Type of Business Manufacturer and distributor of PVC pipe and fittings Head Office Location Ho Chi Minh City, Vietnam Telephone: Fax: Percentage of Shares 20.40% 12 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

13 The Board of Directors The Board of Directors of the Company consists of 9 persons as follows: Name Surname Position 1. Mr. Cholanat Yanaranop Chairman 2. Mr. Dhep Vongvanich Director and Chairman of Nomination and Remuneration Committee 3. Mr. Prawit Ninsuvannakul Director and Chairman of Audit Committee 4. Mr. Chaovalit Ekabut Director 5. Mr. Somchai Kongsala Director and Member of Audit Committee and Nomination and Remuneration Committee 6. Mr. Somchai Wangwattanapanich Director and Member of Nomination and Remuneration Committee 7. Mr. Apiporn Pasawat Director and Member of Audit Committee 8. Mr. Aviruth Wongbuddhapitak Director 9. Mr. Apichai Charoensuk Director and Managing Director The Directors Interest The Directors have no interest either directly or indirectly in the Company s entering into any agreements during the financial year ended 2017 Shareholdings of Directors Company Affiliated Companies (The Siam Cement Public Company Limited) Ordinary Shares (shares) Ordinary Shares (shares) Debentures (units) No. Directors As of 1 January 2017 As of 31 Increase/ December (Decrease) 2017 during the financial year As of 1 January 2017 As of 31 Increase/ December (Decrease) 2017 during the financial year As of 1 January 2017 As of 31 Increase/ December (Decrease) 2017 during the financial year 1. Mr. Cholanat Yanaranop ,500 33,500-38,000 41,000 3, Mr. Dhep Vongvanich ,000 8, Mr. Prawit Ninsuvannakul Mr. Chaovalit Ekabut ,000 30, Mr. Somchai Kongsala Mr. Somchai Wangwattanapanich ,300 4, Mr. Apiporn Pasawat ,000 42,000-20,000 25,000 5, Mr. Aviruth Wongbuddhapitak ,000 3, Mr. Apichai Charoensuk Remarks: 1. Thai Plastic and Chemicals Public Company Limited has paid registered capital of 875,000,000 Baht, comprising of 875,000,000 issued and paid ordinary shares and without any preferred stock and debenture. 2. According to the Public Limited Companies Act, an affiliated company means a public limited company with a relationship to a private company, a public limited company, or companies in the following manner: Any company that has the authority to control the appointment and removal of directors with full management authority or that has majority management authority. Holds more than 50% of issued shares. 3. According to the Public Limited Companies Act, declare the amount of ordinary shares and debentures of the company and affiliated companies that holding by directors. 4. Value of the debentures of Siam Cement Group Public Company Limited is 1,000 Baht per unit. 5. Debenture registrar book closing on 18 December 2017 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 13

14 Report of Nomination and Remuneration Committee There are three directors in the Nomination and Remuneration Committee of Thai Plastic and Chemicals Public Company Limited; Mr. Dhep Vongvanich as the Chairman, and Mr. Somchai Kongsala and Mr. Somchai Wangwattanapanich as members of the Committee. None of these individuals are working as corporate executives for the Company. The Nomination and Remuneration Committee implemented the duties and accepted the responsibilities as assigned by the Board of Directors to suggest the nomination process of the Board of Directors, consider individuals with proper qualifications to become members of the Board of Directors who are replacing retiring directors on a rotational basis at the annual meeting of shareholders, and consider the remuneration of the Board of Directors and the Sub- Committees. The significant duties performed by Committee in 2017 were as follows: 1. Suggested the nomination process of the Board of Directors and criteria for selecting qualified candidates to be the directors. The criteria consists of requisite qualifications of each director, requisite expertise of the Board of Directors, especially the expertise and specialization according to the Company s strategies and business medium term plan, and a diverse group of directors. 2. Considered individuals with proper qualifications, in accordance with the nomination process of the Board of Directors as approved by the Board of Directors and also in compliance with the Public Limited Companies Act B.E. 2535, from the list of candidates nominated by each director. The Board of Directors, following the proposal of the Nomination and Remuneration Committee, agreed to propose the Annual General Meeting of Shareholders for the year 2018 to elect the three retiring directors, namely Mr. Dhep Vongvanich, Mr. Prawit Ninsuvannakul and Mr. Aviruth Wongbuddhapitak to be the directors of the Company for another term. 3. Considered the remuneration of the Board of Directors and the Sub-Committees to be in line with the appropriate principles as well as the Company s business growth and performance for the year Evaluated the Nomination and Remuneration Committee, both as a whole and self-assessment. In 2017, all assessment results were under criteria of best practices according to the charter of the Nomination and Remuneration Committee. 5. After being reviewed, the charter of the Nomination and Remuneration Committee is considered to still be appropriate and in line with duties at the present. On behalf of the Nomination and Remuneration Committee - Signed by - (Mr. Dhep Vongvanich) Chairman of the Nomination and Remuneration Committee 14 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

15 Remuneration of Directors The 2017 Annual General Meeting of Share holders (No. 52) held on Tuesday, 28 March 2017, there was approval for the monthly remuneration and meeting fees for the Board of Directors and Committee in the year The bonus which serves as part of the remuneration for the Board, for the operational results of 2016, is 16.7 million Baht in total, which should be allocated between directors under their consideration. Details are as follows: The Board of Directors Audit Committee Nomination and Remuneration Committee Position Monthly Remuneration (Baht/person/month) Meeting Fee (Baht/person/time) Bonus (Baht) Chairman 75,000 - Director 50,000-16,700,000 Chairman 7,500 30,000 - Director 5,000 20,000 - Chairman - 30,000 - Director - 20,000 - Remuneration for the Board of Directors and Sub-Committee in 2017 (1 January - 31 December 2017) Directors Monthly Remuneration 6) Meeting Fee 6) Directors Audit Committee Audit Committee Nomination and Remuneration Committee Annual Bonus 7) 1. Mr. Cholanat Yanaranop 1) 975,000 3,340,000 4,315, Mr. Dhep Vongvanich 2) 651,000 90,000 1,670,000 2,411, Mr. Prawit Ninsuvannakul 3) 651,000 97, ,000 1,670,000 2,568, Mr. Chaovalit Ekabut 651,000 1,670,000 2,321, Mr. Somchai Kongsala 651,000 67, ,000 60,000 1,670,000 2,548, Mr. Somchai Wangwattanapanich 651,000 60,000 1,670,000 2,381, Mr. Apiporn Pasawat 651,000 67,500 80,000 1,670,000 2,468, Mr. Aviruth Wongbuddhapitak 651,000 1,670,000 2,321, Mr. Apichai Chareonsuk 4) 350, , Mr. Suchai Asvathavornvanit 5) 301,000 1,670,000 1,971,000 Total 6,183, , , ,000 16,700,000 23,655,500 Remarks: 1) Chairman of the Broad of Directors 2) Chairman of Nomination and Remuneration Committee 3) Chairman of Audit Committee 4) Mr. Apichai Chareonsuk held directership since June 1, ) Mr. Suchai Asvathavornvanit resigned since June 1, ) Display the remuneration according to the present position and meeting attendance in ) Bonus calculation derived from holding of directorship from April 1, March 31, 2017 Remuneration from ordinary share, debentures or any privileges from the Company -None- Total Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 15

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17 Summary of Operational Performance Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 17

18 Revenue Structure The Company s main revenues come from manufacturing, selling PVC resin and from the related business, that is manufacturing and selling PVC compound, PVC pipes and fittings, and PVC finished products. The Company s revenues structure in details are as follows: Revenue from Sales Million Baht % Million Baht % Million Baht % 1. PVC Business 22, , , PVC Related Business 8, , , Others Total 31, , , % Others 2% Others 3% Others 28% PVC Related Business 70% PVC Business 33% PVC Related Business 65% PVC Business 32% PVC Related Business 65% PVC Business Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

19 Analysis of Financial Position and Operational Performance Sales Revenue and Cost of Sales The Company and its subsidiaries gained a total revenue of 31,913 million Baht from sales and services, a 1,633 million Baht or 5 percent increase from last year due to overall PVC market in 2017, where the average PVC price increased around USD70 per ton. The demands in the Asian Region consistently grew, especially in South East Asia and South Asia, two major markets. The Chinese Government s stricter environmental policy also played some part in lower PVC supply from China, resulting in the Company s overall PVC sales in 2017 being 7 percent higher than the previous year. The Company and its subsidiaries had 25,733 million Baht in total cost of sales, a 2,004 million Baht or 8 percent increase from last year due to prices of the Ethylene being affected by higher average crude oil prices in 2017 and increasing EDC price from maintenance downtime of Middle Eastern manufacturers. According to the above-mentioned sales revenue and cost of sales, the overall gross profit margin decreased to 371 million Baht or by 6 percent from last year, mainly due to higher costs of the main materials. Other Revenues The Company and its subsidiaries gained a total of 2,754 million Baht from other income, a 1,848 million Baht or 204 percent increase from last year. This was mostly from gain on sales of investments before tax of PTT Global Chemicals Public Company Limited, Tien Phong Plastic Joint Stock Company and Inter Plastic Co., Ltd. for 1,726 million Baht in total, and gained from fair value adjustment of Long Son Petrochemicals Co., Ltd. by 106 million Baht due to changing its status from joint venture to other long-term investment of the company. Other Expenses The Company and its subsidiaries had other expenses of 2,979 million Baht in total, a 22 million Baht or 1 percent increase from last year. This was mostly because of increased Administrative expenses of 100 million Baht from 147 million Baht allowance for impairment losses, while the Distribution cost decreased by 66 million Baht and the Financial cost decreased by 12 million Baht. Tax Expense The Company and its subsidiaries had tax expense which was decreased from the previous year 198 million Baht. The main result was the additional tax burden from the annual net profit calculation of the Company and its subsidiaries from which was recorded in 2016 amounting to 514 million Baht. The Company and its subsidiaries were granted investment promotion for more than one project and computed corporate income tax by not offsetting for profit and loss from all projects. However in 2017, the Company and its subsidiaries had better operating results, which was raised tax expense as compared to the previous year. Share of Profit from Investments in Associates and Joint Venture The Company s share of net income from investments in associates and joint venture, including 9 companies, was 419 million Baht. Operating Results The 2017 net profit of the Company and its subsidiaries was 5,305 million Baht, a 1,504 million Baht or 43 percent increase from the previous year, as a result of an increase in gap between products and raw materials price in the PVC businesses as compared to the previous year. The Company also had gain on sales of investments in its associated companies and other companies. Return to Shareholders According to the 2017 financial position and results of operations, the Board of Directors had resolved to propose to the Annual General Meeting of Shareholders to approve a dividend payment for the year 2017 at a rate of 3.65 Baht per share, which was 60 percent of consolidated net income. The Company had paid an interim dividend to shareholders at a rate of 1.20 Baht per share, with the remaining dividend to be paid in final installment payment at a rate of 2.45 Baht per share. Assets As of 31 December 2017, the Company and its subsidiaries had total assets of 27,894 million Baht, a 1,391 million Baht increase from last year. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 19

20 Trade and other current receivables decreased by 787 million Baht, mainly due to a decrease in product sales during the fourth quarter of 2017 from the market recession. For trade receivables of the Company and its subsidiaries at the end of 2017, the enterprise received 3,931 million Baht in value, consisting of about 0.8 percent of outstanding receivables for more than 12 months, a decrease from last year, which was at 1.2 percent. The Company and its subsidiaries had recorded an allowance for doubtful accounts of 32 million Baht, which is considered sufficient. For credit granting policy, the Company will operate in the form of a group credit committee, which will consider granting credit based on client s ability to settle financial status, authorized capital, assets and sales volume. Inventory of the Company and its subsidiaries decreased by 88 million Baht, mainly due to the decrease in the volume of finished goods from efficient inventory management at the end of the year. For the cash flows from financing activities, 2,765 million Baht was spent, a 493 million Baht decrease from the previous year, mainly due to the decrease in loan payment to financial institutions as compared to the previous year. Source of Fund As of 31 December 2017, debt to equity ratio of the Company and its subsidiaries to shareholders was 0.25, decreasing from 0.31 from the previous year. Liabilities The Company and its subsidiaries had total liabilities of 5,637 million Baht, a 626 million Baht decrease from the previous year. The trade and other current payables decreased by 478 million Baht. It was mainly caused by the decrease in creditors of raw materials in both purchase quantity and price from the previous year. The short-term borrowings from the financial institutions decreased by 97 million Baht and the tax payable increment of 83 million Baht as the operating results became better. Property, plant and equipment decreased by 1,184 million Baht, mainly due to the annual depreciation of the Company and its subsidiaries by about 1,655 million Baht. The Company and its subsidiaries set aside 152 million Baht for the Provision for Impairment Losses for Unused Assets. However, the Company and its subsidiaries invested in more properties for about 783 million Baht for PVC machinery replacement and improvement in the PVC business. Liquidity As of 31 December 2017, the working capital ratio of the Company and its subsidiaries is In 2017, the transactions of cash flows are detailed in the following activities. The cash flows receiving from operating activities were 4,641 million Baht, a 602 million Baht increased, mainly due to the higher operating profit. For investments, 2,119 million Baht of net cash was spent, a 1,849 million Baht increase from the previous year. It was mainly due to an increase in payments of short-term borrowings by 5,230 million Baht and a decrease of cash inflow from dividends by 101 million Baht, while cash inflow from sales of investments was increased by 2,933 million Baht and payment for lands, buildings, and equipment was decreased by 629 million Baht, lower than the previous year. 20 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC Shareholders Equity The Company and its subsidiaries possess shareholders equity of 22,257 million Baht in total, a 2,016 million Baht increase from the previous year, as a result of a 2017 net profit of 5,305 million Baht. Losses on remeasuring investments held as available for sale were 398 million Baht. Losses from the differences in translation of financial statements of the subsidiary companies, associated companies, and joint ventures abroad were 219 million Baht. Non-controlling interests decreased by 89 million Baht. In 2017, the Company s annual dividend for 2016 and interim dividend for 2017 were 2,581 million Baht in total. Factors or situations that may affect the financial status or the operation in the future In 2018, the Company believes that PVC demand in the South-East Asia region will grow at a rate of 7 percent according to the investment in basic infrastructure and real estate businesses in the region, while the demand in the region mainly affected by the Chinese Government s policy, that directly influence on the PVC demand and supply, and manufacturing costs in China. The Company s manufacturing cost is affected by the prices of raw materials, EDC and Ethylene that fluctuate according to the supply, demand and crude oil price that may be higher in 2018.

21 Marketing and Competition In 2017, the Company continues to put emphasis on consistent research and development of products to meet customers needs such as the new PVC paste resin formula with superior weight support capability for yoga mat, PVC compound for acoustic plates in air conditioners, and anti-bacteria fitting for sanitary ware and CPVC pipes for hot water system in residences. Furthermore, to maximize client satisfaction and operation efficiency, the Company has continued to improve its supply chain management via demand forecast, production planning, inventory management and product delivery. For export market, the Company has kept its focus on exporting to Asian countries, which has significant growth as the main market. The Company is aiming to expand its sales base, operation capability and product distribution effectiveness in order to meet the clients requirements in all market situation. PVC Market Situation In 2017, the global PVC demand growth was approximately 3% as a result of increasing demand in Asia, especially in India, which grew 8% as a result of the government s public utility development, while Southeast Asia experienced 4% growth led by economic progress in Vietnam and Indonesia. Thailand s PVC demand decreased compared to previous year, due to the effect of slowdown investments in the industrial sector, which was the result of uncertainty in political situation and uncertainty in trade policy with main partner countries. PVC market in Vietnam expanded mainly due to the investment in the infrastructure projects of the government to support the steady foreign investment. In Indonesia, despite the government s slowdown spending in the first half of the year, its PVC demand picked up in the second half of the year by government spending. Price Status of PVC and Materials PVC In 2017, the average price of PVC in Asia increased to 886 US dollars per ton or increase by 9% as compared to the previous year, mainly due to the tight supply from strict environmental policy enforced by the Chinese government, forcing the PVC manufacturers in China to decrease their production rate and export volume to foreign countries. At the same time, PVC demand in India was growing consistently and supported PVC price to rise. VCM The average price of VCM in 2017 was 708 US dollars per ton or increase by 6% as compared to the previous year, VCM price peaked in the first quarter followed high PVC price in Asia from strict environmental policy in China before decreasing in the third quarter due to the additional supply caused by high caustic soda production rate in Asia. EDC The average price of EDC in 2017 was 268 US dollars per ton, an increase by 6% as compared to the previous year mainly from the annual maintenance of manufacturers in the Middle East during the first and second quarters before declining in the third and fourth quarters as those manufacturers resumed their operation combined with additional supply produced to capture high caustic soda price by EDC manufacturers who aimed to maximize their caustic soda production due to the price increase. Ethylene The average ethylene price in 2017 was 1,091 US dollars per ton, an increase of 5% as compared to the previous year due to the increase in oil prices in the first quarter. The price of ethylene decreased in the second quarter as a result of additional supply from the Middle East, while producers inventory still high. Ethylene price recovered in third and fourth quarter mainly from supply tighten due to European petrochemical plant shutdown which caused higher raw material cost. Other reson was increased energy cost following crude oil brent price which conclude of $ 64 per barrel at year end. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 21

22 Operating Results in each segment Business Development, Corporate Development and Management From changing PVC resin demand and supply in global market leading by high demand growth of PVC in India, supply limitation from strict environmental policy in China and soften demand from construction sector in Thailand, the Company adjusted its strategy to focus on expanding sales in overseas markets with high growth and maximize profits to compensate the slowdown in domestic demand. This strategy resulted in the Company being able to maximize it sales. For new product development, the Company aimed to improve its products to better respond to customer s need such as PVC compound for flame retardant cables and acoustic plates in air conditioners, CPVC pipes for hot water systems in residences, and brass fittings with long usage life. As for the improvement in corporate management and efficiency, the Company has extented the Integrated Business Excellence (IBE) system to its downstream business Nawaplastic Industries Co., Ltd., a subsidiary company which produces PVC pipes and fittings as well as vinyl windows and doors, to improve sale and production planning, profitability analysis, product life cycle management and development of new products to ensured alignment of business goal throughout the supply chain. Apart from operational improvement, the Company also aimed to embed continuous improvement culture through Focused Improvement Process concept in order to improve products, services and operation process to efficiently utilize resources and maximize profitability. Product Development and R&D In 2017, the Company supported research and development for new products and innovations that will cater to consumers needs and lifestyle concerning health, safety, convenience, creativity and environmental friendliness, now and for the future. Regarding the PVC resin business, the Company focused on three areas of research, including PVC resin, PVC paste, and chemicals involved in PVC manufacturing. Examples include the developments of a new PVC resin formula using in medical equipment and special formula for producing fitting with chemical resistant and fitting for hot water. New Paste resin formula for soft yoga mats with high performance. Lastly, the chemical product that improve the production efficiency and energy consumption by reducing the stain build up at high temperature in VCM process. For PVC compound, the Company has focused on developing high value-added products and align with international standards concerning safety and environmental friendliness. Examples of construction segment include PVC compound for special cable application with high production rate, for flame retardant in low voltage cables, for building wire & cables and control panels, and for anti-bacteria fittings of sanitary ware. For electrical appliances and electronics segment, the Company has developed a PVC compound with mold and oil resistant property for refrigerator rubber rim using in low and high-temperature condition, and acoustic plates in air conditioner s condensers. For the packaging, the Company developed a PVC compound for seal liners for both crown cap and screw cap of soy milk bottles sterilized at high temperature for a long period of production. For fabricated products, Nawaplastic Industries Co., Ltd, a subsidiary company producing PVC pipe and fitting as well as vinyl window and door, has developed new products. 22 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

23 Example of residential segment, CPVC pipe using in hot water system and certified by NSF and pipe and fitting for construction in Precast Building System. Example for agricultural segment, LDPE pipes and other equipment for agricultural pipe system to fulfill the agriculturists requirement, and smart agricultural irrigation system using digital technology for cost reduction and productivity improvement. For vinyl doors and windows, the Company has developed new model of vinyl hand rail with high strength and also modern appearance. Production Process Improvement The Company realized the importance of sustainable development and has improved the production processes to achieve maximum efficiency and towards becoming a World Class PVC Manufacturer. Total Productive Maintenance (TPM) activities have been implemented with the aim of achieving the TPM Advanced Special Award from Japan Institute of Plant Maintenance (JIPM) in In addition, the principle of Integrated Business Excellence (IBE) has been implemented for consistent practices throughout the supply chain and process improvement for effective loss reduction, the Company also developed and improved its staff s capability via the Learning Talent Transformation Program (LTTP) to optimize the organization s human resource development and management. Apart from improvement on operational development, the Company also realized the importance of the worthwhile and effective use of resources, especially in the energy conservation aspect. The Company took the reinforcement process intensively, start from aspects regarding policy to encourage and support the energy management system within the organization, fortifying the employees with knowledge and awareness on the matter, providing an assortment of advanced, energy-efficient machinery and technology using in the Company, and installing energy recovery system. For PVC production process, the Just in Time production strategy has been applied to the process in order to increase Furthermore R&D was also carried out on existing products, including Smart doors and windows for townhouses and high rise buildings by developing a wall for testing wind and rain resistance of Windsor doors and windows in Rayong plant to ensure that Windsor product will meet the customer requirement and suitable for using conditions of usage. the efficiency along with employing the Focus Improvement (FI) principle to improve the production process by reducing the cost of resources, and using the Lean principle to reduce transition time of grade change. The Company also improved its internal information flow management process for the highest efficiency by considering the needs of clients to achieve maximum satisfaction. Moreover, the Company also improved the effectiveness of daily performance management by preparing KPI Visual Board for all level of employees in order to monitor their respective responsibilities and achieve consistency on mutual goals, which will contribute to fulfilling the company s missions. For VCM production process, the Company conduct the process to improve the production reliability and stability including the improvement of the machinery service life by redesigning and installing the suitable production process measurement such as automatic production process controlling software, and coating incinerators to prevent the heat loss during the various processes. For compound production process, the Company followed the IBE approach to enhance the effectiveness of the production process and supply chain system. In 2017, the compound plant received the Certification of Eco Factory from the Federation of Thai Industries under the concept of sustainable development, focusing on balancing the economic, social and environmental aspects. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 23

24 For fabricated products, Nawaplastic Industry Co., Ltd. has applied the IBE System together with Lean process and TPM in order to increase the process efficiency such as energy consumption, increasing yield, and reduce loss in productivity process by utilizing the innovations which the Company had been successfully developed, including time reduction for mold replacement, automatic system for fitting cutting and packaging, dust-free pipe cutting machines and belling machine. As a result, the Company received the TPM Excellence Award from JIPM, Japan and Thailand Lean Award, and aiming to be Industrial Plant 4.0 in the future. Human Resource Management The business world is changing rapidly and has shifted into an era of knowledge-based management (Knowledge Economy). In order to increase the capability and capacity of the organization to be ready for any situation, the Company focused on creating competitive advantage in many different aspects - in particular the management of its people, as it believes that doing so will yield immense benefits and truly give it a long-term competitive edge. Therefore, the Company always recognizes its employees as human capital and invaluable assets. Consequently, the Company focused on creating and expanding capacity and motivating its personnel, pushing them towards performing activities that achieve the organization s goals as a whole. It initiated HR modernization by employing educational processes and development of the personnel s mindset and behaviors. As the saying goes, happiness leads to workplace successes. As such, the Company collaborated with reputable leading consultant entities such as DuPont and leading educational consultants such as Duke Corporate Education to devise and promote a more effective and sustainable working culture, by incorporating various new tools such as development of IT systems for a more modern and effective HR management. The Company introduced the e-hr system to enhance personnel management services for better mobility, granting all employees the ability to manage personnel-related matters by their own hands (Self Service) with an instantaneous response for any modification made in the system (Real Time Accuracy). Recently, the Company collaborated with SCG subsidiaries to develop a Learning Management System, which is a software designed to manage web-based learning and includes many tools for instructors, learners and moderators to utilize. All in all, the Company still focused on proactive strategies in personnel positioning, hiring andselection, development and retention of talents that are able to support personnel performance and the organization s missions, in order to achieve the goals in the most effective and efficient manner. Workforce Planning The Company has devised a workforce planning scheme to prepare its personnel both in terms of quantity (to ensure the Company s workforce is sufficient in numbers) and quality (to ensure their personnel possess the right abilities, skills and attitude). In addition, the Company also initiates valuable personnel identification (Strategic Position) that will lead to the management and development of high performance individuals (Talent Management) via a competency-oriented learning system (Competency), in accordance with a position succession plan (Succession Plan) to support business growth in the future. Personnel Recruitment and Selection To achieve maximum efficiency in personnel recruitment and the selection process, the Company has applied the Competency system into its interviews to ensure that the person with the right qualifications in terms of knowledge, skills, abilities and other relevant characteristics will be hired. In response to the increasingly complex and competitive business world, the Company then improved its hiring process by employing Build, Buy and Borrow strategies to open more doors. The Company believes that hiring experienced 24 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

25 individuals and exchanging or borrowing staff from other organizations subsequently diversify their personnel pools within the organization, encouraging knowledge exchange and collaboration to achieve organizational innovations. The Company also developed the interview process to ensure that competent and good applicants with high potential, positive attitude and characteristics required by the organization are chosen, by adding measures and all-round development for interviewers. Personnel Retention The Company believes in recognizing values in its employee; therefore, it has personnel retention policies appropriate in all aspects such as compensation and benefits, career growth, safe working environment and better quality of life. The Company adopts DuPont s IBE (Integrated Business Excellent) principle that focuses on bettering its working culture (Cultural Transformation) by analyzing the working life of its employees to identify any obstacles that hinder them from being happy and proposing a solution or improvement accordingly. Also, the Company surveys its employees for their satisfaction annually in order to improve the relevant aspects for the better, which, as a result, will lead toappreciation and loyalty towards the organization (Employee Engagement). Apart from this, the Company also conducts comparative studies in the aforementioned factors with external organizations to ensure that the perks provided by the Company are comparable with other leading companies in the same industry. In addition, the Company also consistently holds various leisure activities such as teamwork activities, Family Day and so on to promote teamwork and relationships among the personnel, under the notion that all employees are treated like family. Moreover, the Company continues to develop and care for its employee, while still developing the operating systems to increase its capacity. The Company fosters an Open & Challenge culture and incorporates the following SCG 4 core values as guidelines: Adherence to fairness, Dedication to excellence, Belief in the value of the individual and Concern for social responsibility. Personnel Development The Company is committed to continuously improving its personnel performance capacities with regards to hardware and software ; for hardware, the Company joined hands with SCG Chemicals Co., Ltd. to launch an Operation Excellence Training Center (OETC), which is targeted at all employees in the production line, by providing them with necessary training in both theoretical and practical aspects, with more emphasis on hands-on experience. As such, the center also contains the Company s numerous petrochemical business-related learning materials that simulate different scenarios designed based on actual situations in the Control Room with real factory tools and equipment that allow the learners to have hands-on learning opportunities in handling their respective machinery. The OETC also provides qualified instructors with working experience of more than 10 years in the manufacturing process from various companies, to teach and impart key techniques for actual work to ensure that the learners fully understand and are ready for the job on site immediately upon graduation. For the Soft Side, the Company realizes the importance of a sustainable working culture and process. Therefore, the Company applies the IBE (Integrated Business Excellent) principle, which will improve its working process, such as faster work done, fewer resources used and decreased losses in the processes. For human resources, the Committee of Cultural Transformation (CT) has been established. The objective of the Committee is to promote a working culture that is conducive for further development. It focuses on encouraging supervisors to give feedback to and coach their subordinate personnel in a more concrete manner, and the use of visual boards for communication and task prioritizing to prevent the overlapping of any task. The IBE principle also facilitates the management to jointly analyze current working cultures, in order to set up an annual project that will address any problem. For the specialist building, the Company supports the employees in utilizing their knowledge so as to improve the working process and design innovations via our new method: Focus Improvement. The Human Resources Development unit and the Company s IBE Committee will Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 25

26 select and develop the group of specialists that are called project leaders and categorize them into 2 levels: Green Belt, the project managers at the department level; and Black Belt, those at the corporate level. Personnel that is important to the production quality maintenance are also trained through management skill building at the production supervisor level. Later on, they will become unit operation managers in order to monitor and control the production process from the policy level to the practical level thoroughly and effectively according to the total productive maintenance principle. Furthermore, the whole learning process has been developed via the Learning Management System (LMS) to ensure that the personnel fully received the necessary knowledge and skills according to the 70 : 20 : 10 Model for Learning and Development (70% referring to learning on-the-job, 20 percent referring to learning from coaching and 10 percent referring to classroom lectures), and the learning materials are easy, convenient and quick access. This creates a learning atmosphere within the organization, and the Company could head towards becoming a Learning Organization in the future. Business Practice on the Principles of Sustainable Development The company always practices sustainable development by focusing on eco efficiency adding value to the products, reduclng environmental burden, and promoting positive societal results (outcome impact) by callaborating with community enterprises, In the year 2017, the Company has achieved The following: Environmental Management The company focused on environmental management by applying 3R principle; reduce, reuse, and recycle of the resource. Examples in 2017 include reusing treated wastewater in production process via sand filter unit approximately 35,000 Cubic meter/month or 10 percent of water bought for production process in each month, increasing the ratio of industrial waste recycle by using as alternative fuels and raw materials for other factories. The company could eliminate wastes through recycle process about 95 percent of total wastes. The Company also focused on reducing greenhouse gas emission. As a result of continuous energy conservation project management, since 2009 Thailand Environment Institute or TEI granted the Company the certificates of Carbon Reduction Label and acknowledge the intention and cooperation for reducing or avoiding greenhouse gas emission for 9 years. As a result of intensive and consistent environmental management, the Company achieved Green Industry Level 4 or Green Culture, meaning that the Company could create environmental corporate culture and performed effectively. Moreover, the company also has continuously received Environmental Governance Award (White Flag with Golden Star) of Environmental Governance Project for 10 years from Industrial Estate Authority of Thailand. Energy Management In 2017, the company implemented energy conservation projects such as reducing steam use in EDC Purification Unit and Wastewater Pretreatment, and reducing use of natural gas in EDC Cracking Unit by installing Advanced Process Control. The program helps us to gather and process data to achieve the most effective production process. As a result, the company could decrease the use of energy about 30,000 GJ/year. Occupational Health and Safety Management The Company has been running its operations according to Process Safety Management system (PSM), and it can raise its safety standards to be on par with those of the world s leading companies in terms of personnel, technology and facility by improving the existing operational system to be more stable, secure, concordant with the plant operation, and 26 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

27 applicable. For example, work permit system, management of change for more effective monitoring; and risk evaluation by considering the preventive methods from case studies all over the world. Furthermore, the company launched new system to cover all safety concern in working process as universal standard, as well as provided the assessment of PSM for continuous improvement and to be the leading companies in safety. The company also operated in accordance with regulations of Industrial Estate Authority of Thailand about the standard of process safety management and the audit of safety process in industrial estate. The company realized the importance of total safety culture by evaluating and analyzing the weakness to specify activities that help personnel to have sustainable safety culture. Furthermore, the company also pay attention to workplace accident prevention of business partners during the turnarounds when the amount of work increase. Therefore, the Company apply PSM into the existing Turnaround Management under the objective of Incident Free Turnaround as well as emphasized preventive occupational illness by appointing working team, planning, training employee, evaluating rand preventing risks. As a result of strict safety operation, the Company achieve the target of zero day-loss accident. Employees and business partners are aware of safety and Occupational Illness, while we continue our production without any negative impact to the environment and community. Awards and Standards of Accreditation 2017 Thai Plastic and Chemicals Public Company Limited TPM Advanced Special Award for TPM Achievement (Rayong Plant) from JIPM Institute, Japan. Green Star Best Practice for PVC Credit Certification (Rayong Plant) from GBCA Institute, Australia. Thailand Safety Award the Best Safety Organization in the level of Platinum for the 11 th consecutive year. Safety Management System Certification for Chemical Laboratory from the National Research Council of Thailand in Thailand Research Expo Good Environmental Governance Flag (White flag and a golden star) from the Good Environmental Governance Project by Map Ta Phut Industrial Estate for the 10 th consecutive year. Certification for Green Industry Level 4, Green Industry Project by the Ministry of Industry Nawaplastic Industry (Saraburi) Co., Ltd. and Nawaplastic Industry Co., Ltd. Carbon Footprint Organization (CFO), Carbon Footprint of Products (CFP) and Carbon Reduction Label Awards for PVC joint products from the Thailand Greenhouse Gas Management Organization (TGO) Three Excellence Awards from Thailand QC Festival by the Ministry of Industry and was chosen to compete in 2017 International Convention on Quality Control Circles (ICQCC 2017) by Quality and productivity association of the Philippines (QPAP), Inc. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 27

28 Corporate Social Responsibility Sustainable Development Policy The Company upholds the Sustainable Development Policy of Siam Cement Group Public Company Limited or SCG, the parent company, as guidelines for the corporate social responsibility. This includes the improvements in manufacturing process designed to reduce the use of natural resources, develop environmentally friendly products and services, as well as create strong communities. At the same time, this strategy is aimed at enhancing the potential of employees and partners to improve work process under the principles of good governance. The Company places great importance in building stronger societies and developing better communities in every place where it operates, both domestically and internationally. For example, the Sharing the Dream program offered scholarships to good students who maintain academic and moral excellence in Indonesia and Vietnam. The Chung Uoc Mo Xanh program in Vietnam also raised environmental awareness among children and teenagers by allowing them to express their opinions through activities and excursions on environmental management. Another program is called Pun Fun Waad O-kard, a program that encourages and fosters the employees to share and contribute to society by asking them to brainstorm and come up with ideas for volunteer projects for society and putting them into action with support from the Company. Corporate Social Responsibility Activities during the Year The Company encouraged communities in its plants vicinity to engage in various activities joined by the government, manufacturers and communities in improving the quality of life, and to work towards the goal of establishing sustainable cooperation and collaboration. Every year, the Company organizes an Open House for community s representatives to visit plant to understand green process. Communities are encouraged to provide suggestions and advices for projects or activities dedicated to maintaining and improving the quality of life in the nearby communities. The dialogue and group activities were held for participants to share thoughts and seek cooperation in designing the quality of life improvement plans. In addition, the Company s executives are encouraged to visit the communities (One Manager One Community: OMOC) to collect direct information, feedback, and suggestions from the locals. All feedbacks were used to design activity plans to meet the communities needs. The engagement of communities throughout the process will be the main focus of each activity. In the previous year, the Company continues to work with a wide range of communities and organizations in arranging social activities to develop careers and improve the quality of life for the locals, as well as to ensure an environmentally sustainable place for everyone to live in. Son Krasip Beach Development Project: Together with Map Ta Phut Municipality, Rayong Provincial Administration, and Ban Nong Fap Community, the Company has arranged the annual activities to develop Son Krasip Beach to be beautiful tourist attraction of Rayong Province, which fully equipped with utilities, security system and local businesses, as well as nice greenery landscape. In 2017, the Company visited Son Krasip Beach two times to improve its landscape by collecting trashes 1,100 kilograms approximately on the beaches and nearby areas. Integrated banana products for community project: Inspired by the idea to promote green space and environmental awareness, the Company encouraged communities to grow plants that also beneficial to the communities, especially those that create jobs and generate income to community members. 28 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

29 The Company collaborated with the community to initiate Plook Kluay (grow bananas) project, starting in the Islamic community since The locals are encouraged to plant bananas for human and animal foods or process them for sales as products in order to reduce expense and increase income, while adding green space in the communities. After successful in the first phase, the project has been expanded to 33 communities in 2017, including temples and schools in Map Ta Phut Municipality and Tambon Ban Chang Municipality. Also, the Company has supported by provide training in bananas processing and establish community enterprise to distribute and sales local quality products such as crisps and jam. The Company also supported Map Chalut communities member to observe activities in Samut Songkram province and learn the production processes and flavoring formulas to register as a 5-star OTOP (One Tambon One Product) item in The Company also helped in developing the modern packaging and introducing the marketing channels to sell the products in its affiliates via the community marketplaces. Presently, the group s products are well-known and demanded in the markets. In 2017, the Company supported the Education Center for Map Chalut Community Enterprise Development s sustainable growth, focusing on improving new packaging, participating in Thailand Expo exhibition in Phnom Penh, Cambodia, and adopting modern and standard manufacturing process using a machine such as raw banana slicers and banana jam cutters. Nearby Community Development Project: Apart from ecology restoration and economic stability support projects, the Company also held many community development projects, such as, a project to clean 108 Buddha statues at Wat Ta Kuan, Rayong Province, Eco Temple at Wat Khao Phai, Rayong Province and two initiatives of Pun Fun Sang O-Kard as proposed by the employees to build classrooms for Wat Chak Look Ya School which was going to be open for middle school education in 2017 academic year in order to enhance local student s opportunities to further their studies. However, the school lacked of funds to build walls for classrooms and learning equipments needed. Those were the reasons why the Company granted the school a fund of 250,000 baht to help paving ways for children who would be parts of the nation s future. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 29

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31 Financial Position and Financial Statements Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 31

32 Report of the Audit Committee The Audit Committee of Thai Plastic and Chemicals Public Company Limited consists of three directors, none of whom is TPC corporate executives, employees, or consultants. The Audit Committee is composed of Mr. Prawit Ninsuvannakul, as the Chairman, Mr. Somchai Kongsala and Mr. Apiporn Pasawat. The Audit Committee implemented the duties and accepted the responsibilities assigned by the Board of Directors, according to the charter of the Audit Committee. The charter is in accordance with international standards such as financial report preparation, supervision, risk management, internal control, regulatory compliance and internal audit. The Company reviews the charter of the Audit Committee annually to make it aligned with the increased or amended responsibilities of each year. In 2017, the Audit Committee met up five times. Meetings were also held with the Audit Committee, the Management, the Auditor, the Internal Auditor and the Auditing Controller whenever it was appropriate. The main activities may be summarized as follows: 1. Review the Company s quarterly and annual financial statements for the year 2017 and the Company s and the subsidiaries consolidated financial statements according to Thai Financial Reporting Standards (TFRS) and in line with International Financial Reporting Standards (IFRS), emphasized on the main activities and special items being reviewed by the Auditor, the Management and the Internal Audit Director that the financial statements preparation, as well as disclosing of the notes to the financial statements were in line with the legal requirements and the Financial Reporting Standards. Therefore, they approved the statements audited and verified by the Auditor, which was an unmodified opinion report. Additionally, the Audit Committee also met the Auditor on one occasion in the absence of the Management, so as to encourage attendees to freely consult in matters of importance regarding the financial statements preparation and information disclosure under the Financial Reporting Standards that will be useful for the financial statements users (Key Audit Matters; KAM), resulting in the Company s financial statements to be trustworthy and transparent, with the Auditor being an independent verifier. 2. Review of the good corporate governance, risk management, legal and regulatory compliance, internal control and internal audit 2.1 Review of the good corporate governance according to the international standards 2.2 Review of the verification, supervision, risk management, information technology control and process, information security, and effective communication network, which are internationally accepted. 2.3 Review of the Anti-Corruption Policy Compliance after the announcement of the Anti-Corruption Policy in 2014 to ensure the interested parties. In 2016, the Company was accepted as a member of Thailand s Private Sector Collective Action against Corruption (CAC) on 14 October Review of the risk management and consideration of the risk warning signals in every quarter to be consistent with the ever-changing risks. Moreover, the corporate risk culture is supported to be expanded to employees in every level, besides Risk Champion. 2.5 Review of the effectiveness and efficiency of the internal control according to COSO Furthermore, the Audit Committee supports the awareness of ethics, virtue and code of conduct in employees to spread knowledge, understanding and apply to everyday operation by preparing the Proactive Preventive System as follows: - Ethics e-testing form - e-policy e-testing form - Communicating the responsibility of risk management and good control under the Three Lines of Defense - Communicating the case studies about corruption, non-compliance with laws and regulations, corporate policies and code of conduct. 3. Review the Company s internal process about the Whistleblower System to prevent corruption in the organization. 4. Review of the work of the Internal Audit Office. 4.1 Support the independence of the Internal Auditor and annual review of the charter of the Audit Committee 32 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

33 and the charter of the Internal Audit for consistency with the risks and the Company s current situations. 4.2 Together with the Management, the Audit Committee considered the matter of appointing, withdrawing, transferring, or terminating the Internal Audit Director. 4.3 Annual assessment, together with the Management, of budgetary and manpower concerns of the Internal Audit Office. In addition, suggestions concerning ways to make its performance more effective were made, along with ways of enhancing the effectiveness according to the operation plan. Furthermore, the Audit Committee evaluated the annual audit plan for 2017 and 2018 on the basis of assessments of the Company s internal controls and risk management, along with plans pertaining to auditing, business operations, information technology, safety and environmental programs. Subsidiaries and associated companies in Thailand and abroad were also evaluated to ensure that the audit plan was sufficiently comprehensive and included all significant risk factors. 4.4 Review of the operation of the Internal Audit Office, from audit planning, audit operation, reporting and follow-up the audit results. 5. Consider with External Auditor and review in determining the objectives, plans, results and main topics of consideration in corporate audits and investigations of compliance with the legislation related to company s business. 6. Consider related-party transactions and potential conflicts of interest, or trading agreements between the Company and the executives, the Management or related persons. The Company strictly complies with legislation consistent with good corporate governance policy. 7. Constantly monitor and consult with the Management concerning general matters of management that could affect the Company. If any suspicious transaction or conduct is found to significantly affect the Company s financial status or operational results, the Audit Committee is to make a report to the Board of Directors 8. In 2017, the Audit Committee reported its activities to the Board of Directors five times. 9. Consider and propose the appointment of Auditor and audit fee to the Board of Directors, for subsequent sub mission to shareholders. Consideration of this matter is to be based upon performance, professional ethics and the reasonableness of the audit fee. For the audit in 2018, the Auditor from KPMG Phoomchai Audit Ltd. was considered as the Auditor as it has good operation results and proficiency in auditing. The Auditors are also independent, skilled and experienced in auditing corporates, are able to give advice on business-related issues apart from issues of the audit field, and received a good assessment result the last year. The Audit Committee agreed to propose to the Board of Directors for approval in the Shareholders meeting that Mr. Wiroj Chindamaneepitak (CPA no. 3565), Ms. Porntip Rimdusit (CPA no. 5565) or Ms. Thanyalak Ketkaew (CPA no. 8179) or Ms. Dussanee Yimsuwan (CPA no ) of KPMG Phoomchai Audit Ltd. be appointed as the Company s Auditors in The Audit Committee s operations were independent and impartial in its deliberations and recommendations in order that operational results might conform to corporate objectives and manifest greater efficiency. The Audit Committee received excellent cooperation from all parties involved, for which we would like to express our appreciation at this time. On behalf of the Audit Committee - Signed by - (Mr. Prawit Ninsuvannakul) Ph.D., C.P.A., IOD Chartered Director Chairman of the Audit Committee Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 33

34 Independent Auditor s Report To the Shareholders of Thai Plastic and Chemicals Public Company Limited Opinion I have audited the consolidated and separate financial statements of Thai Plastic and Chemicals Public Company Limited and its subsidiaries ( the Group ), and of Thai Plastic and Chemicals Public Company Limited ( the Company ), respectively, which comprise the consolidated and separate statements of financial position as at 31 December 2017, the consolidated and separate income statements and statements of comprehensive income, changes in shareholder s equity and cash flows for the year then ended, and notes to the consolidated financial statements, comprising a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying consolidated and separate financial statements present fairly, in all material respects, the financial position of the Group and the Company, respectively, as at 31 December 2017, their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards (TFRSs). Basis for Opinion I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of my report. I am independent of the Group and the Company in accordance with the Code of Ethics for Professional Accountants issued by the Federation of Accounting Professions that is relevant to my audit of the consolidated financial statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Other Information Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated and separate financial statements and my auditor s report thereon. My opinion on the consolidated and separate financial statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the consolidated and separate financial statements, my responsibility is to read and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Consolidated and Separate Financial Statements Management is responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with TFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, management is responsible for assessing the Group s and the Company s ability to continue as a going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Company or to cease operations, or has to realistic alternative but to do so. 34 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

35 Those charged with governance are responsible for overseeing the Group s and the company s financial reporting process. Auditor s Responsibilities for the Audit of the Consolidated and Separate Financial Statements My objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s and the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s and the Company s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor s report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated and separate financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion. I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. Conclude on the appropriateness of management s use of the going concern basis of accounting and, Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 35

36 From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. (Thanyalux Keadkeaw) Certified Public Accountant Registration No KPMG Phoomchai Audit Ltd. Bangkok 9 February Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

37 Statements of financial position Thai Plastic and Chemicals Public Company Limited and its Subsidiaries As at 31 December 2017 Cash and cash equivalents 5 503, ,203 78, ,642 Trade and other current receivables 4, 6, 34 4,159,068 4,945,671 3,669,655 4,114,260 Short-term loans 4 5,229,890-5,229, ,000 Inventories 7 4,202,173 4,289,961 2,253,804 2,076,627 Total current assets 14,094,463 10,033,835 11,232,213 6,811,529 Investments held as available for sale 8 1, , ,339 Investments in associates 9 1,918,138 2,992,499 53,330 53,330 Investments in subsidiaries ,248,915 2,248,915 Investment in joint venture 9-759, ,559 Other long-term investments 11 2,009,643 1,124,615 1,984,174 1,124,615 Other non-current receivables , ,300 73,849 83,022 Property, plant and equipment 13 9,362,036 10,545,963 5,889,589 6,590,207 Intangible assets 14 65,260 79,692 34,955 42,086 Deferred tax assets , , ,717 - Other non-current assets 34 4,013 16,684 2,296 14,967 Total non-current assets 13,799,821 16,469,699 10,390,082 11,555,040 Total assets 27,894,284 26,503,534 21,622,295 18,366,569 The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 37

38 Statements of financial position Thai Plastic and Chemicals Public Company Limited and its Subsidiaries As at 31 December 2017 Bank overdrafts and short-term borrowings from financial institutions , , Trade and other current payables 4, 17, 34 4,268,216 4,746,506 2,989,277 3,179,661 Short-term borrowings ,951, ,430 Accrued expenses 319, ,302 85,187 92,398 Current income tax payable 519, , , ,764 Current provision for employee benefits 18 13,659 12,794 5,792 5,370 Total current liabilities 5,239,994 5,690,989 7,237,937 4,197,623 Deferred tax liabilities 15 62, , ,202 Non-current provision for employee benefits , , , ,992 Total non-current liabilities 397, , , ,194 Total liabilities 5,637,148 6,262,915 7,400,407 4,500,817 The accompanying notes are an integral part of these financial statements. 38 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

39 Statements of financial position Thai Plastic and Chemicals Public Company Limited and its Subsidiaries As at 31 December 2017 Share capital 19 Authorised share capital - Ordinary shares 875, , , ,000 Issued and paid-up share capital - Ordinary shares 875, , , ,000 Premium on ordinary shares 20 2,700,000 2,700,000 2,700,000 2,700,000 Retained earnings Appropriated Legal reserve 20 87,500 87,500 87,500 87,500 General reserve 1,184,000 1,184,000 1,184,000 1,184,000 Unappropriated 17,294,563 14,571,034 9,376,547 8,621,637 Other components of shareholders' equity Foreign currency exchange translation differences 20 (477,559) (258,144) - - Gains (losses) on remeasuring investments held as avaliable for sale 20 (2,028) 396,465 (1,159) 397,615 Total equity attributable to owners of the parent 21,661,476 19,555,855 14,221,888 13,865,752 Non-controlling interests , , Total shareholders' equity 22,257,136 20,240,619 14,221,888 13,865,752 Total liabilities and shareholders' equity 27,894,284 26,503,534 21,622,295 18,366,569 The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 39

40 Income statements Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Revenue from sale of goods and rendering of services 4 31,913,192 30,279,551 23,662,105 21,850,748 Dividend income 737, ,986 1,201,021 1,525,625 Gain on sales of investments 1,726, ,017 - Net foreign exchange gain 14,899 46,663 55,593 45,809 Other income 4 275,473 86, ,813 42,492 Total revenues 34,667,472 31,185,609 25,596,549 23,464,674 Cost of sale of goods and rendering of services 4, 7 25,732,642 23,729,411 20,695,191 18,844,946 Distribution costs 4, 21, 34 1,463,787 1,530, , ,524 Administrative expenses 4, 22, 34 1,499,259 1,398, , ,348 Total expenses 28,695,688 26,658,463 21,763,465 19,785,818 Share of profit of associates and joint venture 9 418, , Profit before finance costs and income tax expense 6,390,657 5,032,893 3,833,084 3,678,856 Finance costs (16,234) (28,073) (6,215) (21,480) Profit before income tax expense 6,374,423 5,004,820 3,826,869 3,657,376 Tax expense 24 (937,811) (1,135,108) (490,689) (752,222) Profit for the year 5,436,612 3,869,712 3,336,180 2,905,154 The accompanying notes are an integral part of these financial statements. 40 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

41 Income statements Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Profit attributable to: Owners of the parent 5,304,822 3,721,488 3,336,180 2,905,154 Non-controlling interests , , ,436,612 3,869,712 3,336,180 2,905,154 Basic earnings per share (in Baht) Attributable to owners of the parent The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 41

42 Statements of comprehensive income Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Profit for the year 5,436,612 3,869,712 3,336,180 2,905,154 Other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss Exchange differences on translating financial statements (286,475) (23,051) - - Gains (losses) on remeasuring investments held as available for sale (498,116) 111,646 (498,468) 111,038 Income tax relating to components of other comprehensive income that will be reclassified to profit or loss 24 99,623 (22,329) 99,694 (22,209) Total components of other comprehensive income that will be reclassified to profit or loss (684,968) 66,266 (398,774) 88,829 Components of other comprehensive income that will not be reclassified to profit or loss Defined benefit plan actuarial gains (losses) 18 (54) 4,365 (25) (1,060) Income tax relating to components of other comprehensive income that will not be reclassified to profit or loss (873) Total components of other comprehensive income that will not be reclassified to profit or loss (43) 3,492 (20) (848) Other comprehensive income for the year, net of tax (685,011) 69,758 (398,794) 87,981 Total comprehensive income for the year 4,751,601 3,939,470 2,937,386 2,993,135 Total comprehensive income attributable to Owners of the parent 4,686,871 3,799,496 2,937,386 2,993,135 Non-controlling interests 64, , ,751,601 3,939,470 2,937,386 2,993,135 The accompanying notes are an integral part of these financial statements. The accompanying notes are an integral part of these financial statements. 42 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

43 Statements of changes in shareholders equity Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Balance at 1 January ,000 2,700,000 87,500 1,184,000 12,553,501 (244,540) 307,148 62,608 17,462, ,018 17,922,627 Transactions with owners, recorded directly in shareholders' equity Contributions by and distributions to owners of the parent Dividends (1,706,250) (1,706,250) (70,400) (1,776,650) Total contributions by and distributions to owners of the parent (1,706,250) (1,706,250) (70,400) (1,776,650) Changes in ownership interests in subsidiaries Acquisition and increase in capital of non-controlling interests with a change in control , ,172 Total changes in ownership interests in subsidiaries , ,172 Total transactions with owners, recorded directly in shareholders' equity (1,706,250) (1,706,250) 84,772 (1,621,478) The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 43

44 Statements of changes in shareholders equity Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Comprehensive income for the year Profit or loss ,721, ,721, ,224 3,869,712 Other comprehensive income Foreign currency exchange translation differences (13,604) - (13,604) (13,604) (9,447) (23,051) Gains (losses) on remeasuring investments held as available for sale , , , ,646 Defined benefit plan actuarial gains , ,168 1,197 4,365 Income tax on other comprehensive income (873) - (22,329) (22,329) (23,202) - (23,202) Total comprehensive income for the year ,723,783 (13,604) 89,317 75,713 3,799, ,974 3,939,470 Balance at 31 December ,000 2,700,000 87,500 1,184,000 14,571,034 (258,144) 396, ,321 19,555, ,764 20,240,619 The accompanying notes are an integral part of these financial statements. 44 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

45 Statements of changes in shareholders equity Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Balance at 1 January ,000 2,700,000 87,500 1,184,000 14,571,034 (258,144) 396, ,321 19,555, ,764 20,240,619 Transactions with owners, recorded directly in shareholders' equity Contributions by and distributions to owners of the parent Dividends (2,581,250) (2,581,250) (153,834) (2,735,084) Total contributions by and distributions to owners of the parent (2,581,250) (2,581,250) (153,834) (2,735,084) Changes in ownership interests in subsidiaries Acquisition and increase in capital of non-controlling interests with a change in control Total changes in ownership interests in subsidiaries Total transactions with owners, recorded directly in shareholders' equity (2,581,250) (2,581,250) (153,834) (2,735,084) The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 45

46 Statements of changes in shareholders equity Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Comprehensive income for the year Profit or loss ,304, ,304, ,790 5,436,612 Other comprehensive income Foreign currency exchange translation differences (219,415) - (219,415) (219,415) (67,060) (286,475) Gains (losses) on remeasuring investments held as available for sale (498,116) (498,116) (498,116) - (498,116) Defined benefit plan actuarial losses (54) (54) - (54) Income tax on other comprehensive income ,623 99,623 99,634-99,634 Total comprehensive income for the year ,304,779 (219,415) (398,493) (617,908) 4,686,871 64,730 4,751,601 Balance at 31 December ,000 2,700,000 87,500 1,184,000 17,294,563 (477,559) (2,028) (479,587) 21,661, ,660 22,257,136 The accompanying notes are an integral part of these financial statements. 46 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

47 Statements of changes in shareholders equity Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Balance at 1 January ,000 2,700,000 87,500 1,184,000 7,423, ,786 12,578,867 Transactions with owners, recorded directly in shareholders' equity Dividends (1,706,250) - (1,706,250) Total transactions with owners recorded directly in shareholders' equity (1,706,250) - (1,706,250) Comprehensive income for the year Profit or loss ,905,154-2,905,154 Other comprehensive income Gains (losses) on remeasuring investments held as available for sale , ,038 Defined benefit plan actuarial losses (1,060) - (1,060) Income tax on other comprehensive income (22,209) (21,997) Total comprehensive income for the year ,904,306 88,829 2,993,135 Balance at 31 December ,000 2,700,000 87,500 1,184,000 8,621, ,615 13,865,752 The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 47

48 Statements of changes in shareholders equity Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Balance at 1 January ,000 2,700,000 87,500 1,184,000 8,621, ,615 13,865,752 Transactions with owners, recorded directly in shareholders' equity Dividends (2,581,250) - (2,581,250) Total transactions with owners recorded directly in shareholders' equity (2,581,250) - (2,581,250) Comprehensive income for the year Profit or loss ,336,180-3,336,180 Other comprehensive income Gains (losses) on remeasuring investments held as available for sale (498,468) (498,468) Defined benefit plan actuarial losses (25) - (25) Income tax on other comprehensive income ,694 99,699 Total comprehensive income for the year ,336,160 (398,774) 2,937,386 Balance at 31 December ,000 2,700,000 87,500 1,184,000 9,376,547 (1,159) 14,221,888 The accompanying notes are an integral part of these financial statements. 48 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

49 Statements of cash flows Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Profit for the year 5,436,612 3,869,712 3,336,180 2,905,154 Adjustments for Depreciation and amortisation 1,702,671 1,701,833 1,045,506 1,024,769 Finance costs 16,234 28,073 6,215 21,480 Unrealised loss on foreign currency exchange 13,402 15,390 10,822 16,215 Allowance for doubtful accounts 1,277 6,171 1,277 2,781 Loss on decline in value of inventories (reversal) (76,528) 13,724 (12,964) (2,555) Provision for impairment loss on property, plant and equipment 147,210 85, ,939 16,043 Loss (gain) on disposal and writen-off on property, plant and equipment (3,440) (10,817) (1,497) 4,152 Gain on sales of investments (1,726,354) - (546,017) - Gain on revaluation of investment (105,754) Share of profit of associates and joint venture (418,873) (505,747) - - Dividend income from subsidiaries and associates - - (463,505) (752,672) Dividend income from other investments (737,554) (772,986) (737,516) (772,953) Employee benefit expense 32,278 33,740 10,723 18,584 Tax expense 937,811 1,135, , ,222 Cash flows generated from operations before changes in operating assets and liabilities 5,218,992 5,599,451 3,277,852 3,233,220 The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 49

50 Statements of cash flows Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Decrease (increase) in operating assets Trade and other current receivables 680,128 (799,528) 569,787 (680,554) Inventories 60,523 (900,952) (164,213) (348,522) Other current assets 4,217 (39,796) (159) (15,683) Other non-current assets 6,115 (16,683) 6, Net decrease (increase) in operating assets 750,983 (1,756,959) 411,530 (1,043,981) Increase (decrease) in operating liabilities Trade and other current payables (291,641) 1,105,335 (154,192) 853,412 Accrued expenses (6,651) 38,655 (4,316) 5,071 Provisions for employee benefits (10,207) (20,643) (5,743) (16,088) Net increase (decrease) in operating liabilities (308,499) 1,123,347 (164,251) 842,395 Net cash flows generated from operations 5,661,476 4,965,839 3,525,131 3,031,634 Income tax paid (1,020,284) (926,531) (706,439) (603,192) Net cash flows provided by operating activities 4,641,192 4,039,308 2,818,692 2,428,442 Dividends received from subsidiaries and associates 240, , , ,698 Dividends received from other investments 737, , , ,953 Payments of short-term borrowings (5,229,890) - (5,044,890) (185,000) Proceeds from sale of investments 2,942,039 8, ,631 - Acquisition of property, plant and equipment (807,150) (1,436,862) (483,477) (714,978) Proceeds from sales of property, plant and equipment 9,358 88,335 2,545 2,114 Acquisitions of intangible assets (11,666) (10,419) (6,076) (1,135) Net cash flows provided by (used in) investing activities (2,119,256) (270,443) (3,896,577) 667,652 The accompanying notes are an integral part of these financial statements. 50 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

51 Statements of cash flows Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Interest paid (19,500) (26,868) (6,215) (21,480) Dividends paid to owners of the parent (2,581,250) (1,706,250) (2,581,250) (1,706,250) Dividends paid to non-controlling interests (88,979) (85,821) - - Payments of bank overdrafts and short-term borrowings from financial institutions (75,818) (1,275,068) - (960,432) Proceeds from short-term borrowings - - 3,308,572 12,390 Payments of long-term borrowings - (319,977) - - Acquisition and increase in captial of non-controlling interests - 155, Net cash flows provided by (used in) financing activities (2,765,547) (3,258,812) 721,107 (2,675,772) Net increase (decrease) in cash and cash equivalents (243,611) 510,053 (356,778) 420,322 Effect of exchange rate changes on cash and cash equivalent (51,260) (22,746) - - Cash and cash equivalents at beginning of year 798, , ,642 15,320 Cash and cash equivalents at end of year 503, ,203 78, ,642 Supplementary information for cash flows Non-cash transactions Accrued dividends income ,931 75,600 Purchase of property, plant and equipment, and intangible assets that have not yet been paid 27,957 69,572 9,912 32,054 Dividends payable to non-controlling interests 97,256 32, The accompanying notes are an integral part of these financial statements. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 51

52 Notes to the Financial Statements Thai Plastic and Chemicals Public Company Limited and its Subsidiaries For the year ended 31 December 2017 Note Contents 1 General information 2 Basis of preparation of the financial statements 3 Significant accounting policies 4 Related parties 5 Cash and cash equivalents 6 Trade and other current receivables 7 Inventories 8 Investments held as available for sale 9 Investments in associates and joint venture 10 Investments in subsidiaries 11 Other long-term investments 12 Non-controlling interests 13 Property, plant and equipment 14 Intangible assets 15 Deferred tax assets (deferred tax liabilities) 16 Interest-bearing liabilities 17 Trade and other current payables 18 Non-current provisions for employee benefits 19 Share capital 20 Reserves and other components of shareholders equity 21 Distribution costs 22 Administrative expenses 23 Employee benefit expenses 24 Tax expense 25 Basic earnings per share 26 Promotional privileges 27 Dividends 28 Management of financial instruments risk exposures 29 Commitments 30 Contingent liabilities 31 Capital management 32 Event after the reporting period 33 Other 34 Reclassification of accounts 52 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

53 These notes form an integral part of the consolidated financial statements. The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai and English language, and were approved and authorised for issue by the Audit Committee as appointed by the Board of Directors of the Company on 9 February General information Thai Plastic and Chemicals Public Company Limited, the Company, is incorporated in Thailand and has its registered office as follows: Head office : 1 Siam Cement Road., Bangsue, Bangkok Thailand Factory 1 : 19, Moo 9, Municipality Samrongtai 21 Road, Bangyaprag, Prapradaeng, Samutprakarn 10130, Thailand Factory 2 : 8, I-1 Road, Maptaphut Industrial Estate, Maptaphut, Meung-Rayong, Rayong 21150, Thailand The Company was listed on the Stock Exchange of Thailand on 27 April 1984 and delisted the Company s securities from the Stock Exchange of Thailand (SET) since 30 January 2017 onwards. The parent company is The Siam Cement Public Company Limited which was incorporated in Thailand. The principal business of the Company and its subsidiaries (together referred to as the Group ) is related to manufacturing and sales of PVC, which include related products produced from PVC. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 53

54 Details of the Company s subsidiaries as at 31 December 2017 and 2016 were as follows: Name of the entity Direct subsidiaries Total Plant Service Co., Ltd. The Nawaplastic Industries (Saraburi) Co., Ltd. Type of business Investments and engineering service Manufacturing and sales of PVC pipe and fittings Country of incorporation Ownership interest (%) Thailand Thailand Viet-Thai Plastchem Co., Ltd. Manufacturing and sales of PVC Vietnam TPC Vina Plastic and Chemical Corporation Ltd. Manufacturing and sales of PVC Vietnam Siam Stabilizers and Chemicals Co., Ltd. Manufacturing and sales Thailand of Stabilizer Indirect subsidiaries Holding by Total Plant Service Co., Ltd. TPC Paste Resin Co., Ltd. Manufacturing and sales of PVC Thailand Holding by The TPC Paste Resin Co., Ltd. Chemtech Co., Ltd. Manufacturing and sales of compound Vietnam Holding by The Nawaplastic Industries (Saraburi) Co., Ltd. Nawaplastic Industries Co., Ltd. Nawa Intertech Co., Ltd. Manufacturing and sales of PVC pipe and plastic products Manufacturing and sales of molding products Thailand Thailand Minh Thai House Component Co., Ltd. On liquidation process Vietnam Nawaplastic (Cambodia) Co., Ltd. Manufacturing and sales of PVC Cambodia pipe and plastic products Grand Nawaplastic Myanmar Co., Ltd. Manufacturing and sales of PVC pipe and plastic products Myanmar Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

55 2 Basis of preparation of the financial statements (a) Statement of compliance The consolidated and separate financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS); guidelines promulgated by the Federation of Accounting Professions ( FAP ). The FAP has issued new and revised TFRSs effective for annual accounting periods beginning on or after 1 January The adoption of these new and revised TFRSs did not have any material effect on the accounting policies, methods of computation, financial performance or position of the Group and the Company. In addition to the above new and revised TFRS, the FAP has issued a number of other new and revised TFRS which are effective for annual financial periods beginning on or after 1 January 2018 and have not been adopted in the preparation of these consolidated and separate financial statements. The Group and the Company has made a preliminary assessment of the potential initial impact on the consolidated and separate financial statements of these new and revised TFRSs and expects that there will be no material impact on the consolidated and separate financial statements in the period of initial application. (b) Basis of measurement The consolidated and separate financial statements have been prepared on the historical cost basis except for the following material items in the consolidated and separate statements of financial position: available-for-sale financial assets are measured at fair value. defined benefit obligations are measured at the present value of non-current provisions for defined benefit plans. (c) Functional and presentation currency The consolidated and separate financial statements are presented in Thai Baht, which is the Group s and Company s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated. (d) Use of estimates and judgements The preparation of consolidated and separate 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. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 55

56 Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes: Notes 9 and 13 Notes 15 and 24 Note 18 Note 30 Impairment test - key assumptions underlying recoverable amounts and measurement of the recoverable amounts of each asset and cash-generating units; Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used; Measurement of defined benefit obligations: key actuarial assumptions; and Recognition and measurement of provisions and contingent liabilities. Measurement of fair value A number of the Group s and the Company s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring the fair value of an asset or a liability, the Group and the 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 that the entity can access at the measurement date. 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 are unobservable inputs for the asset or liability. The Group and the 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 CFO. 56 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

57 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 these valuations should be classified. Significant valuation issues are reported to the Group s and the Company s Audit Committee. 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 and the 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 the following notes: Note 8 - Investments held as available for sale. Note 28 - Financial instruments. 3 Significant accounting policies The accounting policies set out below have been consistently applied to all periods presented in these financial statements. (a) Basis of consolidation The consolidated financial statements relate to the Group and the Group s interests in associates and joint venture. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 57

58 Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Non-controlling interests At the acquisition date, the Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree. Changes in the Group s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Loss of control When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost. Interests in equity-accounted investees The Group s interests in equity-accounted investees comprise interests in associates and a joint venture. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement. Interests in associates and joint ventures are accounted for using the equity method. They are recognised initially at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence or joint control ceases. 58 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

59 (b) Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency using the foreign exchange rates ruling at the dates of the transactions. Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to the functional currency at the foreign exchange rates ruling at the dates that fair value was measured. Foreign entities The assets and liabilities of foreign entities, including goodwill and fair value adjustments arising on acquisition, are translated to Thai Baht at the foreign exchange rates ruling at the end of the reporting period. The revenues and expenses of foreign entities are translated to Thai Baht at the average exchange rates that close to the exchange rates at the date of the transaction. Foreign exchange differences arising on translation are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity until disposal of the investment, except to extent that the translation difference is allocated to non-controlling interest. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group and the Company dispose of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group and the Company dispose of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in other components of equity until disposal of the investment. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 59

60 (c) Derivative financial instruments Derivative financial instruments are used to manage exposure to foreign exchange, arising from operational, financing and investment activities. Derivative financial instruments are not used for trading purposes. Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, they are remeasured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. The fair value of forward exchange rate contracts is their listed market price at the end of the reporting period. (d) Cash and cash equivalents Cash and cash equivalents in the statements of cash flows comprise cash on hand, saving deposits, current deposits and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. In addition, bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows. (e) Trade and other receivables Trade and other receivable are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is primarily assessed on analysis of payment histories and future expectations of receivable payments. Bad debts are written off when incurred. Bad debts recovered are recognised in other income in profit or loss. (f) Inventories Inventories are measured at the lower of cost and net realisable value. Cost is calculated using the following formula: Finished goods - at standard cost which approximates actual production cost Merchandise - at average cost Goods in process - at standard cost Raw materials, spare parts, stores, supplies and others - at average cost 60 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

61 Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and goods in process, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale. (g) Investments Investments in associates, subsidiaries and joint venture Investments in associates and joint venture in the consolidated financial statements are accounted for using the equity method. Investments in associates, subsidiaries and joint venture in the separate financial statements are accounted for using the cost method. Investments in equity securities Marketable equity securities held for trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in profit or loss. Marketable equity securities are classified as investments held as available for sale. Investments held as available for sale are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses and foreign currency differences on available-for-sale monetary items, are recognised directly in equity. Impairment losses and foreign exchange differences on available-for-sale monetary items are recognised in the profit or loss. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Equity securities which are not marketable securities are stated at cost less any accumulated impairment losses. The fair value of available-for-sale securities is determined as the quoted bid price at the end of the reporting period. Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in the profit or loss. If the Group and the Company dispose of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying value of the total holding of the investment. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 61

62 (h) Property, plant and equipment Owned assets Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs of a qualifying asset. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different consumption patterns or useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income or other expenses in profit or loss. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Depreciation Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. 62 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

63 Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows: Land improvement Building and structures Machinery and equipment Vehicles and transportation equipment Furniture, fixtures and office equipment 5-20 years 5-30 years 2-30 years 5-20 years 3-10 years No depreciation is provided on freehold land or assets under construction. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. (i) Intangible assets Intangible assets Intangible assets that are acquired by the Group and the Company, which have finite useful lives are stated at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Amortisation Amortisation is calculated based on the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 63

64 The estimated useful lives are as follows: Software licences 3-15 years No amortisation is provided on assets under development. Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. (j) Impairment The carrying amounts of the Group s and the Company s assets are reviewed at each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the current fair value and acquisition cost, less any impairment loss on that financial asset previously recognised in profit or loss. Calculation of recoverable amount The recoverable amount of the Group s and the Company s investments in held-to-maturity securities carried at amortised cost is calculated as the present value of the estimated future cash flows, discounted at the original effective interest rate. The recoverable amount of a non-financial asset is the greater of the asset s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 64 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

65 Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised in profit or loss. An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or accumulated amortisation, if no impairment loss had been recognised. (k) Interest-bearing liabilities Interest-bearing liabilities are recognised initially at cost less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis. (l) Trade and other payables Trade and other payables are stated at cost. (m) Employee benefits Defined contribution plans Obligations for contributions to defined contribution plans are expensed as the related service is provided. Defined benefit plans The Group s and the Company s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 65

66 The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method which is based on actuarial valuation method. Remeasurements of the net defined benefit liability, actuarial gain or loss are recognised in other comprehensive income. The Group and the Company determine the interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group and the Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. Other long-term employee benefits The Group s and the Company s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognised in profit or loss in the period in which they arise. Short-term employee benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid. If the Group and the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (n) Provisions A provision is recognised if, as a result of a past event, the Group and the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. 66 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

67 (o) Revenue Revenue excludes value added tax and is arrived at after deduction of trade discounts. Sale of goods and rending of services Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods. Revenue from rending of services is recognised as services are provided on the basis of stage of completion of the transaction. Rental income Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Interest and dividend income Interest income is recognised in profit or loss using effective interest method. Dividend income is recognised in profit or loss on the date the Group s right to receive payments is established which in the case of quoted securities is usually the ex-dividend date. (p) Expenses Operating lease Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised in the profit or loss as an integral part of the total lease expense, over the term of lease. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Finance costs Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration, dividends on preference shares classified as liabilities. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 67

68 Early retirement expense The Group and the Company offered certain qualifiable employees the option to take early retirement from the Group and the Company. Eligible employees who accept the offer are paid a lump sum amount which is calculated based on a formula using their final month s pay, number of years of service or the number of remaining months before normal retirement as variables. The Group and the Company records expenses on early retirement upon mutual acceptance. (q) Tax expense Tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries and joint venture to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the end of the reporting period. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group and the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. 68 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

69 In determining the amount of current and deferred tax, the Group and the Company take into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group and the Company believe that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group and the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised. (r) Earnings per share The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. 4 Related parties Parties are considered to be related to the Group and the Company if the Group and the Company have the ability, directly or indirectly, to control, common control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa. Relationships with subsidiaries, associates and joint venture and other related parties were as follows: Name of entities Country of Nature of relationships incorporation/ nationality The Siam Cement Public Company Limited Thailand Parent company The Nawaplastic Industries (Saraburi) Co., Ltd. Thailand Subsidiary Nawaplastic Industries Co., Ltd. Thailand Subsidiary Nawa Intertech Co., Ltd. Thailand Subsidiary Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 69

70 Name of entities Country of Nature of relationships incorporation/ nationality Total Plant Service Co., Ltd. Thailand Subsidiary TPC Paste Resin Co., Ltd. Thailand Subsidiary Siam Stabilizers and Chemicals Co., Ltd. Thailand Subsidiary Chemtech Co., Ltd. Vietnam Subsidiary Minh Thai House Component Co., Ltd. Vietnam Subsidiary Viet-Thai Plastchem Co., Ltd. Vietnam Subsidiary TPC Vina Plastic and Chemical Corporation Ltd. Vietnam Subsidiary Nawaplastic (Cambodia) Co., Ltd. Cambodia Subsidiary Grand Nawaplastic Myanmar Co., Ltd. Myanmar Subsidiary Siam TPC Co., Ltd. Thailand Associate Riken (Thailand) Co., Ltd. Thailand Associate PT. TPC Indo Plastic & Chemicals Indonesia Associate Binh Minh Plastics Joint Stock Company Vietnam Associate SCG Plastics (China) Co., Ltd. China Associate SCG Cement-Building Materials Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited SCG Performance Chemicals Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited CPAC Roof Tile Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited SCG Plastics Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited SCG Chemicals Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited SCG Logistics Management Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited Rayong Engineering & Plant Service Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited SCG Accounting Services Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited RIL 1996 Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited 70 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

71 Name of entities Country of Nature of relationships incorporation/ nationality SCG Sourcing Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited Siam Sanitary Ware Industry Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited Siam Sanitary Ware Industry (Nongkae) Co., Ltd Thailand Subsidiary of The Siam Cement Public Company Limited Thai Container Rayong Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited Rayong Olefins Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited Map Ta Phut Olefins Co., Ltd. Thailand Subsidiary of The Siam Cement Public Company Limited Norner AS Norway Subsidiary of The Siam Cement Public Company Limited Long Son Petrochemicals Co., Ltd. Vietnam Subsidiary of The Siam Cement Public Company Limited Siam Global House Public Company Limited Thailand Associate of The Siam Cement Public Company Limited Siam Styrene Monomer Co., Ltd. Thailand Associate of The Siam Cement Public Company Limited The pricing policies for particular types of transactions are explained further below : Transactions Revenue from sale of goods and rendering of services Other income Purchases of raw materials and services Selling and administrative expenses Interest income and interest expense Pricing policies At prices equivalent to sales/services provided to third parties At contractually agreed prices, equivalent to market prices At prices equivalent to purchases/cost of services from third parties At contractually agreed prices, equivalent to market prices At rates equivalent to market Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 71

72 Significant transactions for the years ended 31 December 2017 and 2016 with related parties were summarised as follows: Consolidated Separate financial statements financial statements Associates Revenue from sale of goods and rendering of services 2,469,798 2,843,282 1,071,474 1,163,140 Dividend income , ,172 Subsidiaries Revenue from sale of goods and rendering of services - - 5,634,613 5,104,997 Other income ,851 70,008 Purchases of raw materials and services ,259 51,594 Interest expense ,113 10,800 Dividend income , ,500 Related parties Revenue from sale of goods and rendering of services 15,504,461 13,254,113 16,956,018 15,715,450 Purchases of raw materials and services 5,694,349 3,626,963 5,449,459 3,379,647 Other income 3,116 3,070 3,116 3,070 Distribution costs and administrative expenses 795, , , ,215 Interest income 5,147-5,147 - Dividend income 737, , , , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

73 Balances as at 31 December 2017 and 2016 with related parties were as follows: Consolidated Separate financial statements financial statements Trade accounts receivable from related parties Associates PT. TPC Indo Plastic & Chemicals 418, , , ,410 Binh Minh Plastics Joint Stock Company 72,986 74, Others - 7, Subsidiaries TPC Vina Plastic and Chemical Corporation Ltd , ,351 TPC Paste Resin Co., Ltd ,737 76,939 Other related parties SCG Plastics Co., Ltd. 1,767,491 1,999,033 1,767,491 1,999,033 SCG Performance Chemicals Co., Ltd. 450, , , ,627 SCG Cement-Building Materials Co., Ltd. 21,969 20, Others 33,714 32, Total 2,765,078 3,215,060 3,318,833 3,811,360 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 73

74 Consolidated Separate financial statements financial statements Other current receivables and short-term loans to related parties Other current receivables from Related parties Associates Inter Plastic Co., Ltd Subsidiaries TPC Vina Plastic and Chemical Corporation Ltd ,938 75,600 TPC Paste Resin Co., Ltd ,424 11,180 Viet-Thai Plastchem Co., Ltd Others Other related parties 1,424 1, ,227 1,424 2, ,525 88,469 Short-term loans to related parties Subsidiaries SCG Chemicals Co., Ltd. The Nawaplastic Industries (Saraburi) Co., Ltd. 5,229, ,229, ,000 5,229,890-5,229, ,000 Total 5,231,314 2,331 5,454, , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

75 Movements during the years ended 31 December 2017 and 2016 of short-term loan to related parties were as follows: Consolidated Separate financial statements financial statements At 1 January ,000 - Increase 5,229,890-5,229,890 1,455,000 Decrease - - (185,000) (1,270,000) At 31 December 5,229,890-5,229, ,000 Trade accounts payable to related parties Subsidiaries - - 5,788 7,371 Other related parties SCG Plastics Co., Ltd. 708, , Rayong Olefin Co., Ltd. 497, , , ,054 Rayong Engineering & Plant Service Co., Ltd. 50,804 92,307 48,911 86,297 SCG Performance Chemicals Co., Ltd. 12,211 14,944 3, Map Ta Phut Olefin Co., Ltd , ,769 Others 29,428 20,861 13,199 7,313 Total 1,298,356 1,310, , ,552 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 75

76 Consolidated financial statements Separate financial statements Other current payables to and short-term loans from related parties Other current payables to related parties Subsidiaries - - 1,432 1,203 Other related parties SCG Chemicals Co., Ltd. 133, ,214 77,796 82,260 SCG Accounting Services Co., Ltd. 24,170 22,461 15,591 15,017 The Siam Cement Public Company Limited 11,017 11,827 4,163 5,334 SCG Logistics Management Co., Ltd. 10,622 11,311 10,400 10,661 Others 18,302 23,657 5,985 13, , , , ,752 Short-term loan from related party Subsidiaries The Nawaplastic Industries (Saraburi) Co., Ltd ,306,739 - Total Plant Service Co., Ltd , , ,951, ,430 Total 197, ,470 4,066, ,182 Movements during the years ended 31 December 2017 and 2016 of short-term borrowings from related parties were as follows: Consolidated Separate financial statements financial statements At 1 January , ,041 Increase - - 3,352, ,656 Decrease - - (43,928) (950,267) At 31 December - - 3,951, , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

77 Key management personnel compensation Consolidated financial statements Separate financial statements Short-term employee benefits 116,107 91, ,107 91,943 Total 116,107 91, ,107 91,943 Significant agreement with related parties The Company has entered into long-term agreements with a related company to purchase raw materials for production at selling prices calculated according to conditions in the agreements, which are based on market prices. The agreements are for 31 years, terminating in A subsidiary entered into agreements and memorandum with a local related company regarding to license for manufacturing and for using technical data and commission on sales. The subsidiary is required to pay license fee and commission at percentage of sales as stipulated in the agreements. The agreements have terms of 7 years. 5 Cash and cash equivalent Consolidated Separate financial statements financial statements Cash on hand 12,245 5,541-3 Cash at banks - current accounts 290, ,528 77,842 8,002 Cash at banks - savings accounts 130, ,074 1, ,637 Highly liquid short-term investments 70,000 89, Total 503, ,203 78, ,642 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 77

78 6 Trade and other current receivables Trade receivables Related parties Other companies Less allowance for doubtful accounts Consolidated Separate financial statements financial statements Note ,765,078 3,215,060 3,318,833 3,811,360 1,166,295 1,382, ,197 (32,105) (54,353) (58) (15,765) Net 1,134,190 1,327,691-86,432 3,899,268 4,542,751 3,318,833 3,897,792 Other current receivables Related parties Other companies Less allowance for doubtful accounts 4 1,424 2, ,525 88, , , , ,897 (3,094) (8,230) (3,094) (2,898) Net 258, , , , , , , ,468 Total 4,159,068 4,945,671 3,669,655 4,114,260 Bad and doubtful debts expenses (reversal) for the year ended 31 December (11,687) (2,299) 186 2, Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

79 Aging analyses for trade accounts receivable were as follows: Consolidated Separate financial statements financial statements Within credit terms 3,727,288 4,352,147 3,318,833 3,897,792 Overdue: Less than 1 months 165, , months 2,575 24, months 1,078 1, Over 6 months but within 12 months 3, Over 12 months 32,105 54, ,765 3,931,373 4,597,104 3,318,891 3,913,557 Less allowance for doubtful accounts (32,105) (54,353) (58) (15,765) Net 3,899,268 4,542,751 3,318,833 3,897,792 The normal credit term granted by the Group is days. 7 Inventories Finished goods Goods in process Raw materials Spare parts, stores, supplies and others Goods in transit Total Less allowance for decline in value of inventory and inventory obsolescence Net Consolidated Separate financial statements financial statements ,455,648 1,880, , , , , , , ,480 1,146, , , , , , , , , , ,570 4,223,294 4,387,610 2,268,152 2,103,939 (21,121) (97,649) (14,348) (27,312) 4,202,173 4,289,961 2,253,804 2,076,627 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 79

80 Consolidated Separate financial statements financial statements Cost of inventories recognised as an expense in cost of sales: Cost of sales and rendering of services 25,732,642 23,729,411 20,695,191 18,844,946 Less write-down to net realisable value (41,138) (28,814) (12,013) (9,747) Add reversal of write-down 77,018 41,991 9,968 13,488 Less service cost and others (31,726) (27,414) - - Net total 25,736,796 23,715,174 20,693,146 18,848,687 Changes in inventories of finished goods and goods in process 294,555 (464,818) (96,621) (539,321) Raw materials and consumables used 21,202,316 17,781,314 20,245,996 16,548,371 8 Investments held as available for sale Consolidated Separate financial statements financial statements Investments held as available for sale - cost 4,530 44,144 1,706 41,321 Add surplus on revaluation of investment (2,534) 495,581 (1,449) 497,018 Total 1, , ,339 The quoted market prices of investments held as available for sale on the Stock Exchange during 2017 are as follows: Cost Consolidated financial statement Quoted market Net changes in fair prices value of available-forsale securities (latest bid price) Marketable securities 4,530 1,996 (2,534) 80 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

81 Cost Separate financial statement Quoted market Net changes in fair prices value of available-forsale securities (latest bid price) Marketable securities 1, (1,449) Movements during the year of net changes in fair value of available-for-sale investments (before tax) were as follows: Consolidated Separate financial statements financial statements Net change in fair value Transfer of gain on net change 6, ,646 6, ,038 in fair value to profit or loss (504,767) - (504,767) - Net (498,116) 111,646 (498,468) 111,038 During 2017, the Company sold the available-for-sale securities and recorded a gain before tax which was presented under the caption of Gain on sales of investments in the consolidated and separate income statements for the year ended 31 December 2017 amounting to Baht 546 million. Carrying amounts and fair values The fair values of available-for-sale securities together with the carrying amounts in the statements of financial position as at 31 December 2017 are as follows: Consolidated financial statements Separate financial statements Carrying Fair value Carrying Fair value amount Level 1 amount Level 1 Investments held as available for sale Marketable equity securities 1,996 1, The table above analyses recurring fair value measurements for available-for-sale securities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The level applicable to the Group s and the Company s investments are defined as follows: Level 1: quoted prices (unadjusted) in active markets (Stock Exchange) for identical assets that the Group and the Company can access at the measurement date. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 81

82 9 Investments in associates and joint venture Movements for the year ended 31 December on investments in associates and joint venture accounted for using the equity method were as follows: Consolidated financial statements Separate financial statements Note Associates At 1 January 2,992,499 2,747,843 53,330 53,330 Share of net profit of investmentsequity method 429, , Dividend income (240,499) (284,650) - - Disposals (1,176,071) Currency translation differences (87,555) (1,037) - - At 31 December 1,918,138 2,992,499 53,330 53,330 Joint venture At 1 January 759, , , ,559 Share of net loss of investmentsequity method (10,891) (24,596) - - Currency translation differences 30,561 (678) - - Revaluation of investment 105, Change of the status to other company 11 (885,028) - (859,559) - At 31 December - 759, ,559 Total At 1 January 3,752,103 3,532, , ,889 Share of net profit of investmentsequity method 418, , Dividend income Disposals Currency translation differences Revaluation of investment (240,499) (284,650) - - (1,176,071) (56,994) (1,715) , Change of the status to other company 11 (885,028) - (859,559) - At 31 December 1,918,138 3,752,103 53, , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

83 Investments in associates and joint venture as at 31 December 2017 and 2016, and dividends for the years ended at the same date were as follows: Consolidated financial statements Total direct/ indirect holding Paid-up capital Cost method Equity method Impairment At equity - net Dividend income (%) Associates Siam TPC Co., Ltd. (ultimate holding company of PT. TPC Indo Plastic & Chemicals in Indonesia) ,195,800 1,195, , , , ,374 (204,426) (204,426) 309, , Riken (Thailand) Co., Ltd , ,000 42,000 42, , , , , , ,000 Inter Plastic Co., Ltd. (held by The Nawaplastic Industries (Saraburi) Co., Ltd.) (*) ,000-2,250-9, ,363-2,025 Tien Phong Plastic Joint Stock Company (held by The Nawaplastic Industries (Saraburi) Co., Ltd.) (*) , ,465-1,097, ,097,736 26, ,644 Binh Minh Plastics Joint Stock Company (held by The Nawaplastic Industries (Saraburi) Co., Ltd.) (**) ,227, , , ,639 1,088,675 1,092, ,088,675 1,092,972 92,605 66,809 SCG Plastics (China) Co., Ltd ,509 4,509 11,330 11,330 17,514 22, ,514 22,915 2,301 2,172 Total 1,173,289 1,914,004 2,122,564 3,196,925 (204,426) (204,426) 1,918,138 2,992, , ,650 Joint venture Long Son Petrochemicals Co., Ltd ,407, , , , (*) During 2017, the Group sold entire 25.00% and 23.84% of investments in Inter Plastic Co., Ltd. and Tien Phong Plastic Joint Stock Company to other shareholders for Baht 8.95 million and Baht 2, million, respectively. The Group recognised profit before tax from sales of investments in consolidated income statement amount to Baht 1,180 million. (**) At the general meeting of shareholders of Binh Minh Plastics Joint Stock Company held on 2 nd quarter 2017, the shareholders approved dividend payment of cash dividend with the date of dividend payment on 30 June 2017 and ordinary shares dividend payment in June The Group is entitled to receive 7.42 million ordinary shares at the par value of Vietnamese Dong 10,000 per share, totaling Baht 111 million. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 83

84 Separate financial statements Total direct/ indirect holding Paid-up capital Cost method Dividend income (%) Associates Riken (Thailand) Co., Ltd , ,000 42,000 42, , ,000 SCG Plastics (China) Co., Ltd ,509 4,509 11,330 11,330 2,301 2,172 Total 53,330 53, , ,172 Joint venture Long Son Petrochemicals Co., Ltd ,407, , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

85 Joint venture The following table summarises the financial information of the joint venture as included in their own financial statements, adjusted for fair value adjustments at acquisition and differences in accounting policies. The table also reconciles the summarised financial information to the carrying amount of the Group s interest in these companies. The financial information for the year 2017 presents information from 1 January 2017 to 30 June 2017 because a subsidiary of The Siam Cement Public Company Limited has purchased 25% of its shares in Long Son Petrochemicals Co., Ltd. ( LSP ) from its existing shareholder in 2 nd quarter of Therefore, LSP changed its status from a joint venture to a subsidiary of The Siam Cement Public Company Limited and change its status from joint venture to other long-term investment of the Company. Long Son Petrochemicals Co., Ltd. 30 June December 2016 Revenue Losses for the year from continuing operations a (60,508) (132,331) Other comprehensive income for the year (229,596) (8,363) Total comprehensive income for the period/year (290,100) (140,405) Group s interest in net assets of investee at 1 January 2017 and , ,878 Total loss for the year attributable to the Group (10,891) (24,596) Currency translation differences 30,561 (678) Adjustment in fair value of investment 105,754 - Carrying amount of interest in investee 885, , December 31 December Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 85

86 Attributable to investee s shareholders Long Son Petrochemicals Co., Ltd. 31 December 31 December (25,237) Current assets b Non-current assets - - 1,308,020 3,410,551 Current liabilities c - (842,149) Net assets - 3,876,422 Attributable to investee s shareholders - 697,756 Remarks: a Includes: - interest income b Includes cash and cash equivalents c Includes current financial liabilities (excluding trade and other payables and provisions) ,282, ,714 Immaterial associates The following is summarised financial information for the Group s interest in immaterial associates based on the amounts reported in the Group s consolidated financial statements Immaterial Associates Carrying amount of interests in immaterial associates and joint ventures Group s share of: 1,918,138 2,992,499 - Profit for the year from continuing operations 429, ,343 - Other comprehensive income for the year (87,555) (1,037) - Total comprehensive income for the year 342, , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

87 10 Investments in subsidiaries Investments in subsidiaries as at 31 December 2017 and 2016, and dividend income for the years at the same date were as follows: Separate financial statements Total direct/ indirect holding Paid-up capital Cost method Dividend income (%) Subsidiaries Total Plant Service Co., Ltd ,180,000 1,180,000 1,180,000 1,180,000 10,620 5,900 The Nawaplastic Industries (Saraburi) Co., Ltd , , , , ,000 Viet-Thai Plastchem Co., Ltd ,071 75,071 57,123 57,123 14,908 - TPC Vina Plastic and Chemical Corporation Ltd ,012,964 1,012, , , ,436 75,600 Siam Stabilizers and Chemicals Co., Ltd , , , ,000 18,240 57,000 Total 2,248,915 2,248, , ,500 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 87

88 11 Other long-term investments Cost method Long Son Petrochemicals Co., Ltd. (*) Rayong Olefins Co., Ltd. Consolidated financial statements Ownership interest Cost Carrying amount Dividend income (%) , , ,124,615 1,124,615 1,124,615 1,124, , ,533 Total 1,984,174 1,124,615 2,009,643 1,124, , ,533 Cost method Long Son Petrochemicals Co., Ltd. (*) Rayong Olefins Co., Ltd. Separate financial statements Ownership interest Cost Carrying amount Dividend income (%) , , ,124,615 1,124,615 1,124,615 1,124, , ,533 Total 1,984,174 1,124,615 1,984,174 1,124, , ,533 (*) During 2017, a subsidiary of The Siam Cement Public Company Limited has purchased 25% of its shares in Long Son Petrochemicals Co., Ltd. ( LSP ) from its existing shareholders. Therefore, LSP changed its status from a joint venture to a subsidiary of The Siam Cement Public Company Limited and change its status from joint venture to other long-term investment of the Company. 12 Non-controlling interests As at 31 December 2017, the Group s subsidiaries had no material non-controlling interest, before any intra group eliminations. 88 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

89 13 Property, plant and equipment Consolidated financial statements Machinery Furniture, Land and Building and Vehicles and fixtures and Assets land and factory delivery office under improvement structure equipment equipment equipment construction Total Cost At 1 January ,194 3,714,594 26,498, , , ,088 31,465,113 Additions - 31,260 1,068,189 14,078 25, ,090 1,407,654 Disposals/written-off (6,263) (24,623) (664,636) (9,590) (37,363) - (742,475) Transfers in (out) - 19, , (286,493) - Currency translation differences (65) (65) At 31 December 2016 and 1 January ,931 3,740,758 27,168, , , ,620 32,130,227 Additions , ,010 6,875 4, , ,337 Disposals/written-off (79) (11,930) (345,336) (5,154) (39,119) (609) (402,227) Transfers in (out) - 20, ,062 18,148 1,759 (238,545) - Currency translation differences - (113,623) (297,789) (7,855) (2,002) (8,115) (429,384) At 31 December ,512 3,656,219 27,240, , , ,346 32,081,953 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 89

90 Accumulated depreciation Consolidated financial statements Machinery Furniture, Land and Building and Vehicles and fixtures and Assets land and factory delivery office under improvement structure equipment equipment equipment construction Total and impairment losses At 1 January 2016 Depreciation 87,798 2,419,381 17,607,892 93, ,616-20,524,858 charge for the year Impairment 2, ,195 1,456,775 11,336 26,084-1,638,794 losses (reversal) Disposals/ ,416 (6) (4) ,012 written-off (6,262) (21,774) (590,264) (9,583) (36,957) - (664,840) Currency transaction differences (21) (22) At 31 December 2016 and 1 January ,940 2,539,976 18,559,128 94, , ,584,264 Depreciation charge for the year 2, ,769 1,498,136 7,815 22,561-1,655,430 Impairment losses - 6, , , ,210 Disposals/written-off (79) (10,910) (340,945) (5,153) (38,616) (606) (396,309) Currency transaction differences - (59,399) (204,247) (5,430) (1,602) - (270,678) At 31 December ,010 2,600,448 19,651,348 92, ,065 1,917 22,719,917 Carrying amount At 31 December 2016 At 31 December ,991 1,200,782 8,609,110 29,388 92, ,014 10,545, ,502 1,055,771 7,588,837 44,170 75, ,429 9,362,036 In 2017, the management of the Company and a subsidiary reviewed and performed impairment testing of property, plant and equipment. The recoverable amount of assets are net from selling price. As a result, the Group recognised impairment loss before tax amounting to Baht 147 million in the consolidated income statement. The gross carrying amount of fully depreciated property, plant and equipment that is still in use amounted to Baht 9,461 million as at 31 December 2017 (2016: Baht 8,069 million). 90 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

91 Separate financial statements Machinery Furniture, Land and Building and Vehicles and fixtures and Assets land and factory delivery office under improvement structure equipment equipment equipment construction Total Cost At 1 January ,186 1,583,544 17,710,736 59, , ,985 19,809,542 Additions , ,398 84, ,041 Disposals/written-off - (4,356) (376,516) (8,559) (29,524) - (418,955) Transfers in (out) - 14, , (175,716) - At 31 December 2016 and 1 January ,186 1,594,883 18,139,770 50, , ,367 20,121,628 Additions 660 1, , ,485 85, ,952 Disposals/written-off - (280) (39,167) (5,140) (894) - (45,481) Transfers in (out) , (51,223) (1,618) At 31 December ,846 1,596,744 18,521,201 45, , ,459 20,537,481 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 91

92 Separate financial statements Machinery Furniture, Land and Building and Vehicles and fixtures and Assets land and factory delivery office under improvement structure equipment equipment equipment construction Total Accumulated depreciation and impairment losses At 1 January ,156,486 11,482,953 57, ,967-12,887,719 Depreciation charge for the year - 46, ,827 1,916 9,688-1,002,274 Impairment losses (reversal) ,809 - (4) - 15,805 Disposals/written-off - (4,234) (332,073) (8,559) (29,511) - (374,377) At 31 December 2016 and 1 January ,199,095 12,110,516 50, ,140-13,531,421 Depreciation charge for the year 14 42, , ,842-1,022,965 Impairment losses - 6, , , ,939 Disposals/written-off - (134) (38,266) (5,140) (893) - (44,433) At 31 December ,247,839 13,175,450 45, ,094 1,917 14,647,892 Carrying amount At 31 December , ,788 6,029, , ,367 6,590,207 At 31 December , ,905 5,345, , ,542 5,889,589 The gross carrying amount of fully depreciated property, plant and equipment that is still in use amounted to Baht 6,289 million as at 31 December 2017 (2016: Baht 5,617 million). 92 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

93 14 Intangible assets Consolidated Separate financial financial statements statements Software Software licenses licenses Cost At 1 January , ,947 Additions 11,841 2,484 Disposals/written-off (2,898) (2,814) At 31 December 2016 and 1 January , ,617 Additions 11,735 6,076 Disposals/written-off (59,559) (58,226) Currency translation differences (1,665) - At 31 December , ,467 Accumulated amortisation and impairment losses At 1 January , ,550 Amortisation charge for the year 30,115 15,446 Disposals/written-off (1,482) (1,465) Currency translation differences 15 - At 31 December 2016 and 1 January , ,531 Amortisation charge for the year 25,719 13,207 Disposals/written-off (59,551) (58,226) Currency translation differences (1,225) - At 31 December ,860 76,512 Carrying amount At 31 December ,692 42,086 At 31 December ,260 34,955 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 93

94 15 Deferred tax assets (deferred tax liabilities) Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity. Deferred tax assets and liabilities as at 31 December were as follows: Consolidated Separate financial statements financial statements Deferred tax assets 198, , ,275 41,265 Deferred tax liabilities (62,774) (258,795) (2,558) (189,467) Net 135,969 (135,178) 102,717 (148,202) Movements in total deferred tax assets and liabilities during the year were as follows: Deferred tax assets Accounts receivable Inventories Investments held as available for sale Other long-term investments Property, plant and equipment Provisions for employee At 1 January 2017 Consolidated financial statements Credited (charged) to: other comprehensive profit or loss income (Note 24) Translation differences At 31 December ,735 (4,623) - (9) 5,103 51,494 (37,001) , , ,779 57,283 59, ,115 benefits 63,337 5,048 - (93) 68,292 Others 2,100 6,150 - (309) 7,941 Total 190,016 29, (411) 219, Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

95 Consolidated financial statements Credited (charged) to: other At 1 comprehensive At 31 January profit or loss income Translation December 2017 (Note 24) differences 2017 Deferred tax liabilities Investments held as available for sale (99,405) - 99, Investments in associates (135,369) 47, (87,758) Property, plant and equipment (88,930) 96, ,473 Finance lease liabilities (4) Others (1,486) (1,489) - - (2,975) Total (325,194) 142,529 99,405 - (83,260) Net (135,178) 171,935 99,623 (411) 135,969 Consolidated financial statements Credited (charged) to: At 1 other comprehensive At 31 January profit or loss income Translation December 2016 (Note 24) differences 2016 Deferred tax assets Accounts receivable 9,856 (121) - - 9,735 Inventories 31,202 20, ,494 Investments held as available for sale Other long-term investments Property, plant and equipment Provisions for employee (121) , ,779 38,415 18, ,283 benefits 60,621 3,810 (1,088) (6) 63,337 Others 2,216 (115) - (1) 2,100 Total 148,498 42,734 (1,209) (7) 190,016 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 95

96 Consolidated financial statements Credited (charged) to: At 1 other comprehensive At 31 January profit or loss income Translation December 2016 (Note 24) differences 2016 Deferred tax liabilities Investments held as available for sale (77,196) - (22,209) - (99,405) Investments in associates (96,536) (38,833) - - (135,369) Property, plant and equipment (138,227) 49, (88,930) Finance lease liabilities (377) (4) Others (704) (782) - - (1,486) Total (313,040) 10,055 (22,209) - (325,194) Net (164,542) 52,789 (23,418) (7) (135,178) At 1 January 2017 Separate financial statements Credited (charged) to: other comprehensive profit or loss income (Note 24) At 31 December 2017 Deferred tax assets Accounts receivable 3,733 (3,102) Inventories 5,460 (2,590) - 2,870 Investments held as available for sale Property, plant and equipment - 67,833-67,833 Provisions for employee benefits 32,072 1,580-33,652 Total 41,265 63, , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

97 At 1 January 2017 Separate financial statements Credited (charged) to: other comprehensive profit or loss income (Note 24) At 31 December 2017 Deferred tax liabilities Investments held as available for sale (99,405) - 99,405 - Property, plant and equipment (88,730) 88, Finance lease liabilities (4) Others (1,328) (1,230) - (2,558) Total (189,467) 87,504 99,405 (2,558) Net (148,202) 151,225 99, ,717 At 1 January 2016 Separate financial statements credited (charged) to: other comprehensive profit or loss income (Note 24) At 31 December 2016 Deferred tax assets Accounts receivable 3, ,733 Inventories 5,974 (514) - 5,460 Provisions for employee benefits 31, ,072 Total 40,203 1,062-41,265 Deferred tax liabilities Investments held as available for sale (77,196) - (22,209) (99,405) Property, plant and equipment (138,227) 49,497 - (88,730) Finance lease liabilities (377) (4) Others (648) (680) - (1,328) Total (216,448) 49,190 (22,209) (189,467) Net (176,245) 50,252 (22,209) (148,202) Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 97

98 The deductible temporary differences and unused tax losses that have not been recognised as deferred tax assets are as the following items: Consolidated financial statements Deductible temporary differences - Inventories 398 6,158 - Investment 204, ,426 - Property, plant and equipment 69, ,486 Unused tax losses 697, ,360 Total 972, ,430 The deductible temporary differences do not expire under current tax legislation and the tax losses which would be expired within The Group has not recognised these items in deferred tax assets. 16 Interest-bearing liabilities Consolidated Separate financial statements financial statements Bank overdrafts and short-term borrowings from financial institutions 118, , Total interest-bearing liabilities 118, , The currency denominations of interest-bearing liabilities were as follows: Consolidated Separate financial statements financial statements Thai Baht Vietnamese Dong (Equivalent to Baht) 101, , Myanmar Kyat (Equivalent to Baht) 16, Total 118, , Interest rates 98 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

99 Interest rates Consolidated financial statements Loans Loans bearing fixed bearing floating interest rate interest rate Total 2017 Bank overdrafts and short-term borrowings from financial institutions - 118, ,512 Total - 118, , Bank overdrafts and short-term borrowings from financial institutions - 215, ,322 Total - 215, ,322 As at 31 December 2017, the Group had bank overdraft facilities amounting to Baht 785 million (2016: Baht 743 million). 17 Trade and other current payables Consolidated Separate financial statements financial statements Note Trade payables Related parties 4 1,298,356 1,310, , ,552 Other companies 2,561,036 2,950,755 2,249,036 2,574,452 Total 3,859,392 4,261,290 2,817,278 2,970,004 Other current payables Related parties 4 197, , , ,752 Other companies 211, ,746 56,632 81, , , , ,657 Total 4,268,216 4,746,506 2,989,277 3,179,661 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 99

100 18 Non-current provisions for employee benefits The Group and the Company operate post-employment benefit and pension based on the requirements of Thai Labour Protection Act B.E (1998) to provide retirement plans benefits and other long-term benefit to employees based on pensionable remuneration and length of service. The defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk. Non-current provisions for employee benefits in statement of financial position as at 31 December Consolidated financial statements Separate financial statements Legal severance payments plan 298, , , ,387 Other long-term employee benefits 22,505 22,909 10,118 9,944 Other employee benefits (pension fund) 12,925 11,785 3,661 3,661 Total non-current provisions for employee benefits 334, , , ,992 Current provision for employee benefits 13,659 12,794 5,792 5, Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

101 Movement in the present value of non-current provisions for defined benefit plans Consolidated financial statements Separate financial statements Non-current provisions for defined benefit plan at 1 January 301, , , ,866 Include in profit or loss: Current service costs 19,615 18,605 8,294 7,884 Interest on obligations 10,623 9,724 5,031 4,670 Actuarial losses recognised ,387 28,972 13,359 12,939 Included in other comprehensive income Actuarial losses (gains) recognised 54 (4,365) 25 1,060 Currency translation differences (686) (632) (4,363) 25 1,060 Other Benefits paid (7,062) (12,532) (3,322) (9,539) Transferred from (to) a related company (2,584) 5 (2,584) 5 (9,646) (12,527) (5,906) (9,534) Non-current provisions for defined benefit as at 31 December 321, , , ,331 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 101

102 Actuarial losses (gains) recognised in other comprehensive income as of the end of the reporting period arising from: Consolidated financial statements Separate financial statements For the years ended 31 December Experience adjustment 54 (4,365) 25 1,060 Total 54 (4,365) 25 1,060 Actuarial assumptions Principal actuarial assumptions as of the end of the reporting period Consolidated financial statements Separate financial statements Discount rate % - Thailand * * * * - Vietnam Salary increase rate Employee turnover rate ** ** ** ** Mortality rate of TMO2008*** of TMO2008*** of TMO2008*** of TMO2008*** * Market yields on government s bonds for legal severance payments plan and pension ** Upon the length of service *** Reference from TMO2008: Thai Mortality Ordinary Table Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

103 Sensitivity analysis Reasonably possible changes at the end of the reporting period to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the non-current provisions for the defined benefit plans by the amounts shown below. Consolidated financial statements Separate financial statements Effect on the non-current provisions for defined benefit plans at 31 December Discount rate 0.5% increase (18,049) (17,440) (7,044) (7,055) 0.5% decrease 19,684 19,053 7,582 7,604 Salary increase rate 1% increase 46,455 41,676 18,459 16,786 1% decrease (39,392) (35,455) (16,092) (14,679) Employee turnover rate 10% increase (7,090) (6,311) (2,830) (2,568) 10% decrease 7,310 6,500 2,900 2,630 Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 103

104 19 Share capital Consolidated financial statements Separate financial statements Par value Number Number per share of shares Value of shares Value (in Baht) (in thousand share /in thousand Baht) Authorised At 1 January - ordinary shares 1 875, , , ,000 At 31 December - ordinary shares 1 875, , , ,000 Issued and paid-up At 1 January - ordinary shares 1 875, , , ,000 At 31 December - ordinary shares 1 875, , , , Reserves and other components of shareholders' equity Share premium Section 51 of the Public Companies Act B.E requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account ( share premium ). Share premium is not available for dividend distribution. Legal reserve Section 116 of the Public Companies Act B.E requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account ( legal reserve ), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution. 104 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

105 Currency translation differences The currency translation differences account within equity comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. Fair value changes in investments held as available for sale The fair value change in investments held as available for sale account within equity comprises the cumulative net change in the fair value of investments held as available for sale until the investments are derecognised. 21 Distribution cost Consolidated Separate financial statements financial statements Freight 730, , , ,883 Sales staff expenses 295, , Sales promotion and advertising expenses 180, , Labor and wages from outside 76,355 87, Others 180, ,045 4,255 3,641 Total 1,463,787 1,530, , , Administrative expenses Consolidated Separate financial statements financial statements Salary, employee welfare and fringe benefit 577, , , ,821 Professional fee 152, ,880 90,698 97,815 Impairment loss on property, plant and equipment 151,803 85, ,532 16,043 Management benefit expenses 116,107 91, ,107 91,943 Rental 55,038 55,335 10,957 13,112 Labor and wages from outside 40,223 39,746 25,265 25,486 Depreciation and amortisation expenses 26,249 31,250 9,088 14,345 Others 379, , , ,783 Total 1,499,259 1,398, , ,348 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 105

106 23 Employee benefit expenses Consolidated financial statements Separate financial statements Salaries, wages and bonus 2,086,811 2,095, , ,091 Pension costs - defined contribution plans 80,925 76,469 34,764 33,595 Pension costs - defined benefit plans 30,387 28,978 13,359 12,982 Others 199, ,902 56,533 63,894 Total 2,398,092 2,416, , ,562 The Group has provident fund plans to provide retirement and gratuity benefits to employees. For most of the plans, the benefits made solely by the Group are payable to the employees upon resignation at 5% to 10% of the employees salaries, depending on the length of employment. In addition to the above provident funds, since April 1995, the Group has established a contributory provident fund covering substantially all employees. This fund was registered with the Ministry of Finance under the Provident Fund Act B.E Membership is voluntary upon employees attaining permanent status. Under the regulations of the fund, members are required to make monthly contributions to the fund at 2% to 13% of the members basic salaries and the Group is required to make monthly contributions to the fund at 5% to 13% of the members basic salaries, depending on the length of employment. 24 Tax expense Tax expense recognised in profit or loss Consolidated financial statements Separate financial statements Note Current tax expense Current year 1,094, , , ,773 Under provided in prior years 15, ,485 14, ,701 1,109,746 1,187, , ,474 Deferred tax Movements in temporary differences 15 (171,935) (52,789) (151,225) (50,252) Total 937,811 1,135, , ,222 Tax expense recognised in other comprehensive income Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 106

107 Tax expense recognised in other comprehensive income Consolidated financial statements Separate financial statements Investments held as available for sale (99,623) 22,329 (99,694) 22,209 Defined benefit plan actuarial gains (losses) (11) 873 (5) (212) Total (99,634) 23,202 (99,699) 21,997 Reconciliation of effective tax rate Consolidated financial statements Rate (%) Rate (%) Profit before tax expense 6,374,423 5,004,820 Share of profit of associate and joint ventures (418,873) (505,747) 5,955,550 4,499,073 Income tax using the Thai corporation tax rate 20 1,191, ,815 Tax rates in foreign jurisdictions (13,224) (11,637) Income not subject to tax (72,598) (144,704) Tax privileges (152,882) (162,628) Expense deductible at a greater amount (9,650) (19,065) Expenses not deductible for tax purposes and others 151, ,631 Current tax 18 1,094, ,412 Under provided in prior years 15, ,485 Movements in temporary differences (171,935) (52,789) Income tax expense , ,135,108 Separate financial statements Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 107

108 Separate financial statements Rate (%) Rate (%) Profit before tax expense 3,826,869 3,657,376 Income tax using the Thai corporation tax rate , ,475 Income not subject to tax (187,565) (304,691) Tax privileges (34,607) (77,672) Expense deductible at a greater amount (5,809) (11,485) Expenses not deductible for tax purposes and others 89,774 58,146 Current tax , ,773 Under provided in prior years 14, ,701 Movements in temporary differences (151,225) (50,252) Income tax expense , ,222 Income tax reduction Revenue Code Amendment Act No. 42 B.E dated 3 March 2016 grants a reduction of the corporate income tax rate to 20% of net taxable profit for accounting periods which begin on or after 1 January Basic earnings per share The calculations of basic earnings per share for the years ended 31 December were based on profit for the year attributable to owners of the parent and the weighted average number of ordinary shares outstanding during the years as follows: Consolidated Separate financial statements financial statements (in thousand Baht/ thousand shares) Profit attributable to equity holders of the Company 5,304,822 3,721,488 3,336,180 2,905,154 Weighted average number of ordinary shares outstanding 875, , , ,000 Basic earnings per share (in Baht) Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

109 26 Promotional privileges By virtue of the provisions of the Investment Promotion Act B.E. 2520, the Group has been granted privileges by the Board of Investment related to: (1) manufacturing of VCM, PVC Resin, Caustic Soda and by-products and investment in research and development of PVC business; (2) manufacturing of PVC Stabilizer; (3) manufacturing of PVC Paste Resin; (4) manufacturing of plastic products, plastic parts and molds; and (5) manufacturing of dies, molds, jigs and fixtures. Subject to certain specified conditions, the tax privileges include the followings: (a) Exemption from import duty on approved machinery and 50% reduction of import duties for machinery not subject to the import tax reduction schedules as per Ministerial Regulation No. Sor Kor 13/2533; (b) Exemption from import duty on the raw and essential materials imported for use specially in producing for export for a periods of 1-5 years from the date of first import; (c) Special permission to take certain deductions in addition to normal expenses in the computation of net profit for tax purposes; (d) Exemption of corporate income tax on profit from the promoted business according to certain prescribed in the promotional certificates for a period of 3-8 years commencing from the date on which revenue from the promoted business is first earned; (e) Corporate income tax reduction on the net profit from promoted business at the rate of fifty percent of normal rate for a period of five years from the expiry of corporate income tax exemption; (f) 5% reduction of any increase in income over the previous year from exports for a period of 10 years from the date on which the Company first receives promoted operating revenues; and (g) Exemption from income tax on dividends paid to the shareholders from the profits derived from promoted business which the Company receives within six months from the expiry of corporate income tax exemption. As promoted companies, the Company and its subsidiaries must comply with certain conditions and restrictions provided for in the promotional certificates. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 109

110 Summary of revenue from promoted and non-promoted businesses: Promoted businesses Consolidated financial statements Nonpromoted businesses Total ( Promoted businesses Nonpromoted businesses Total Revenues Income from export sales 27,143 8,989,941 9,017,084 35,623 8,769,412 8,805,035 Income from local sales and service income 6,151,846 16,744,262 22,896,108 5,538,905 15,935,611 21,474,516 Total income 6,178,989 25,734,203 31,913,192 5,574,528 24,705,023 30,279,551 Share of profit of associates and joint venture 418, ,747 Dividend income 737, ,986 Gain on sales of investments 1,726,354 - Other income and net foreign exchange gain 290, ,072 Total revenues 35,086,345 31,691,356 Promoted businesses Separate financial statements Nonpromoted businesses Total Promoted businesses Nonpromoted businesses Total Revenues Income from export sales - 5,915,610 5,915,610-5,628,052 5,628,052 Income from local sales and service income 3,292,970 14,453,525 17,746,495 3,323,590 12,899,106 16,222,696 Total income 3,292,970 20,369,135 23,662,105 3,323,590 18,527,158 21,850,748 Dividend income 1,201,021 1,525,625 Gain on sale of investment 546,017 - Other income and net foreign exchange gain 187,406 88,301 Total revenues 25,596,549 23,464, Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

111 27 Dividends At the annual general meeting of the shareholders of the Company held on 29 March 2016, the shareholders approved the appropriation of dividend from net profit of 2015 of Baht 1.55 per share, amounting to Baht 1, million. The interim dividends of Baht 0.40 per share, amounting to Baht 350 million, were paid to the shareholders on 19 August The balance dividends of Baht 1.15 per share, amounting to Baht 1, million were paid to the shareholders on 27 April At the annual general meeting of the shareholders of the Company held on 28 March 2017, the shareholders approved the appropriation of dividend from net profit of 2016 of Baht 2.55 per share, amounting to Baht 2, million. The interim dividends of Baht 0.80 per share, amounting to Baht 700 million, were paid to the shareholders on 24 August The balance dividends of Baht 1.75 per share, amounting to Baht 1, million were paid to the shareholders on 26 April At the Board of Directors meeting of the Company held on 25 July 2017, the Board of Directors approved the appropriation of dividend from net profit of 2017 of Baht 1.20 per share, amounting to Baht 1,050 million. The interim dividends were paid to the shareholders on 23 August Management of financial instruments risk exposures The Group and the Company is exposed to risks from changes in market interest rates and in currency exchange rates and from non-performance of contractual obligations by counterparties. The Group and the Company s financial risk management and policies are using derivative instruments, as and when it considers appropriate, to manage such risks. The Group and the Company does not hold or issue derivative instruments for speculative or trading purposes. Interest rate risk Interest rate risk arises from the changing of interest rates in the market which effects net interest expense. The Group manages interest rate risk by using both fixed interest rates and floating interest rates, depending on the market circumstances. Foreign currency risk The Group and the Company is exposed to foreign currency risk relating to purchases, sales and borrowings, which are denominated in foreign currencies. The Group and the Company primarily utilises forward exchange contracts to hedge such financial assets and liabilities denominated in foreign currencies. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 111

112 As at 31 December 2017 and 2016, the Group and the Company had assets and liabilities denominated in foreign currencies which were not hedged from foreign currency risk but mitigates this risk by maintaining a balance of financial assets and liabilities denominated in foreign currencies as follows: Consolidated financial statements US Dollars Vietnamese Dong Others Assets denominated in foreign currencies 540, , Less hedged amounts (208,457) (82,460) Non-hedged amounts 331, , Liabilities denominated in foreign currencies 1,697,817 2,600, ,911 Less hedged amounts (442,683) (306,976) (1,746) Non-hedged amounts 1,255,134 2,293, ,165 Separate financial statements US Dollars Vietnamese Dong Others Assets denominated in foreign currencies 1,261,045 1,431, ,931 75, Less hedged amounts (623,545) (82,460) Non-hedged amounts 637,500 1,348, ,931 75, Liabilities denominated in foreign currencies 1,588,256 1,724, ,090 Less hedged amounts (442,683) (295,039) (1,746) Non-hedged amounts 1,145,573 1,429, ,344 Credit risk Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Group as and when they fall due. 112 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

113 Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Group follows up to check that customers or counterparties make payment on schedule and takes appropriate action on defaulters. At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Liquidity risk The Group monitors its liquidity risk and maintains a level of borrowings and short-term credit facilities with commercial banks and financial institutions, deemed adequate by management to finance the Group s operations and to mitigate the effects of fluctuations in cash flows. Contract amount of financial assets and liabilities, together with fair values shown in the consolidated of financial position at 31 December were as follows: Current Derivatives - foreign currency forward contracts Trade and other current receivables US Dollars Trade and other current payables Contract amount Consolidated financial statements Contract Fair value amount Fair value 658, ,923 82,823 82,460 US Dollars 439, , , ,976 Euro - - 1,702 1,746 Current Derivatives - foreign currency forward contracts Trade and other current receivables Contract amount Separate financial statements Contract Fair value amount Fair value US Dollars Trade and other current payables US Dollars 623, , , ,683 82, ,245 82, ,039 Euro - - 1,702 1,746 Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 113

114 Financial instruments carried at fair value Fair value hierarchy The table above analyses recurring fair value measurements for financial assets. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows: Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rate for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group and counterparty when appropriate. 29 Commitments Consolidated financial statements Separate financial statements Commitments under lease agreements and service agreements Within one year 374, , , ,033 After one year but within five years 1,369,058 1,114,926 1,221, ,505 After five years 2,348,286 1,310,621 1,898, ,371 Total 4,091,590 2,753,207 3,414,539 2,021,909 Commitment for: Purchase of land, construction and installation of machinery, implementation project 186, , ,258 59,063 Unused and irrevocable letters of credit , ,831 Commitment for construction of installation of machinery of joint venture (*) - 443, Purchases of raw materials 66,837 87,112 66,837 87,112 Total 254, , , , Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

115 (*) During 2017, a subsidiary of The Siam Cement Public Company Limited has purchased 25% of its shares in Long Son Petrochemicals Co., Ltd. ( LSP ) from its existing shareholders. Therefore, LSP changed its status from a joint venture to a subsidiary of The Siam Cement Public Company Limited and change its status from joint venture to other long-term investment of the Company. The Group has commitments under lease agreements and service agreements in respect of port, land, buildings, copy machines, computers and cars, which have various periods specified in the agreements. During the year 2014, the Company entered into a tank operations and port service agreement with a company. The Company is committed to payment of service fees as indicated in the agreement for 11 years and 6 months, commencing from July 2014 and expiring in December During the year 2014, the Company entered into various long-term agreements to purchase raw material for production with a related company and a pipeline service agreement with a company at selling prices calculated according to conditions in agreement, which are based on market process. The agreements are for 10 years, terminating in Forward exchange contract As at 31 December 2017, the Group and the Company had outstanding forward exchange contracts for purchase of US Dollars million (2016: US Dollars 8.56 million and Euro 0.05 million) and forward exchange contracts for sale of US Dollars million (2016: US Dollars 2.31 million). Other long-term contracts The Company entered into certain long-term agreements to purchase utilities from certain companies for periods of 10 years to 20 years. The price is agreed in accordance with market price. The agreements will expire during 2017 to Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 115

116 30 Contingent liabilities From non-related parties Consolidated Separate financial statements financial statements Bank guarantees 2,119 2,163 1,337 1,337 Contingent liability includes bank guarantees relating mainly to duty and others. 31 Capital management The management of the Group has the capital management policy for which to maintain a strong capital base by emphasis in planning and determining the operating strategies resulting in good business s performance and sustain good cash flows management. In addition, the Group considers investing in projects which have good rate of return, appropriate working capital management, maintain a strong financial position and appropriate investment structure as to maintain sustain future operations of the business and to maintain shareholders, investors, creditors and others interest s confidence. 32 Event after the reporting period At the Board of Directors Meeting of the Company held on 9 February 2018, the Board of Directors approved to submit for approval at the Annual General Meeting of the Shareholders, dividend payment for the year 2017 of Baht 3.65 per share, amounting to Baht 3, million. The Company paid interim dividend of Baht 1.20 per share in August 2017 as discussed in note 27. Thus, the final dividend of Baht 2.45 per share was scheduled for payment on 18 April This dividend is subject to the approval of the Shareholders at the Annual General Meeting to be held on 23 March Other 116 The Central Administrative Court delivered its judgment to revoke permits issued after the Constitution B.E to projects which are on the list of 11 categories of severe impact projects, announced by the Ministry of Natural Resources and Environment on 31 August Only 1 project which represents a total of Baht 200 million investments belongs to the Company and is now fully compliant with paragraph 2 of Article 67 of the Constitution B.E However, in July 2014, the Supreme Administrative Court has revoked the injunction for continuing in the project and in October 2014, the Company obtained a permit from Industrial Estate Authority of Thailand. At the present, the project is able to operate as normal. At present, the plaintiffs and the government authorities have already appealed the judgement of the Central Administrative Court to the Supreme Administrative Court. Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC

117 34 Reclassification of accounts Certain accounts in the 2016 financial statements have been reclassified to conform to the presentation in the 2017 financial statements were as follows: Statement of financial position Trade and other current receivables Other current assets Other non-current receivables Other non-current assets Trade and other current payables Before reclassification Consolidated financial statements Reclassification After reclassification 4,770, ,086 4,945, ,086 (175,086) , , ,984 (287,300) 16,684 4,648,236 98,270 4,746,506 Other current liabilities 98,270 (98,270) - - Income statement Distribution costs 973, ,009 1,530,228 Administrative expenses 1,955,833 (557,009) 1,398,824 - Before reclassification Separate financial statements After reclassification Reclassification Statement of financial position Trade and other current receivables 4,044,639 69,621 4,114,260 Other current assets 69,621 (69,621) - Other non-current receivables - 83,022 83,022 Other non-current assets 97,989 (83,022) 14,967 Trade and other current payables 3,136,092 43,569 3,179,661 Other current liabilities 43,569 (43,569) - - Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC 117

118 General and Other Important Information References Share Registrar Auditor Legal Counsel Thailand Securities Depositary Company Limited Address The Stock Exchange of Thailand Building 93 Rachadapisek Road, Din Daeng, Din Daeng, Bangkok Telephone Call center Fax Website KPMG Phoomchai Audit Limited Mr. Vairoj Jindamaneepitak (Certified Public Accountant, Registration No. 3565) or Ms. Porntip Rimdusit (Certified Public Accountant, Registration No. 5565) or Ms. Thanyalux Keadkeaw (Certified Public Accountant, Registration No. 8179) or Ms. Dussanee Yimsuwan (Certified Public Accountant, Registration No ) Address 1 Empire Tower, Floors 50-51, South Sathorn Road, Yannawa, Sathorn, Bangkok Telephone Fax SCG Legal Counsel Limited Address 1 Siam Cement Road, Bangsue, Bangkok Telephone , Fax Annual Report 2017 I THAI PLASTIC AND CHEMICALS PLC