Table of Contentpttgc.listedcompany.com/misc/FORM561/20111020-PTTGC...HMC HMC Polymer Co, Ltd. ICIS Chemical Industry News and Intelligent Indorama Indorama Petrochem Co., Ltd. LPG

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Table of Content

1. GENERAL INFORMATION ................................................................................................................ 5

2. TYPES OF BUSINESS AND BUSINESS OPERATIONS ................................................................... 7

2.1 PRODUCT CHARACTERISTICS .......................................................................................................... 9

2.2 REVENUE STRUCTURE .................................................................................................................. 11

2.3 TARGET CUSTOMERS.................................................................................................................... 12

2.4 DISTRIBUTION CHANNELS .............................................................................................................. 13

2.5 SOURCES OF SUPPLY ................................................................................................................... 14

2.6 MARKET COMPETITION ................................................................................................................. 14

2.7 ENVIRONMENTAL IMPACT .............................................................................................................. 20

3. SUMMARY OF THE ESSENCE OF THE CONTRACTS/AGREEMENTS TRANSFERRED FROM

PTTAR TO THE COMPANY .............................................................................................................. 21

3.1 FEEDSTOCK AGREEMENTS ............................................................................................................ 21

3.2 PETROLEUM PRODUCTS AND AROMATICS PRODUCTS OFFTAKE AGREEMENTS................................. 22

3.3 UTILITIES AGREEMENTS ................................................................................................................ 23

3.4 LAND LEASE AGREEMENTS ........................................................................................................... 24

4. SUMMARY OF THE ESSENCE OF THE CONTRACTS/AGREEMENTS TRANSFERRED FROM

PTTCH TO THE COMPANY ............................................................................................................. 24

4.1 AGREEMENTS RELATING TO THE OLEFINS-SHARED FACILITIES ........................................................ 24

4.2 SALES AGREEMENTS IN RELATION TO SERVICE BUSINESS AND OTHERS ......................................... 26

4.3 AGREEMENT RELATED TO THE POLYMER PRODUCTS VALUE CENTER .............................................. 28

4.4 LEASE AGREEMENTS .................................................................................................................... 28

5. FUTURE PROJECTS......................................................................................................................... 29

6. TECHNICAL AND MANAGEMENT ASSISTANCE .......................................................................... 30

7. CONNECTED TRANSACTIONS ....................................................................................................... 31

8. DEBTS AND FINANCIAL OBLIGATIONS ........................................................................................ 36

8.1. LONG-TERM CREDIT FACILITIES AGREEMENTS ASSUMED FROM PTTAR ......................................... 36

8.2. WORKING CAPITAL CREDIT FACILITIES AGREEMENTS ASSUMED FROM PTTAR ............................... 40

8.3. DEBENTURES ASSUMED FROM PTTAR ......................................................................................... 42

8.4. LONG-TERM CREDIT FACILITIES AGREEMENTS ASSUMED FROM PTTCH ......................................... 42

8.5. WORKING CAPITAL CREDIT FACILITIES AGREEMENTS ASSUMED FROM PTTCH ............................... 44

8.6. DEBENTURES ASSUMED FROM PTTCH ......................................................................................... 46

8.7. LIABILITIES WHICH MAY ARISE FROM TAX ASSESSMENTS ................................................................. 48

8.8. WARRANTS .................................................................................................................................. 48

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9. GENERAL BUSINESS RISKS (SYSTEMATIC RISKS).................................................................... 49

10. CORPORATE SPECIFIC RISK ....................................................................................................... 52

11. DISPUTES ........................................................................................................................................ 57

12. EMPLOYEES ................................................................................................................................... 57

13. COMPANY OVERVIEW ................................................................................................................... 57

14. INVESTMENT IN SUBSIDIARIES, AFFILIATES AND ASSOCIATES ........................................... 58

15. BOI INVESTMENT PROMOTION CERTIFICATES ........................................................................ 60

15.1 BOI INVESTMENT PROMOTION CERTIFICATES TRANSFERRED FROM PTTAR .................................... 60

15.2 BOI INVESTMENT PROMOTION CERTIFICATES TRANSFERRED FROM PTTCH ................................... 62

16. SHAREHOLDER .............................................................................................................................. 65

16.1 NUMBER OF SHAREHOLDER .......................................................................................................... 65

16.2 MAJOR SHAREHOLDERS ................................................................................................................ 65

16.3 FOREIGN SHAREHOLDER ............................................................................................................... 66

17. BOARD OF DIRECTORS ................................................................................................................ 66

18. LISTING CONDITIONS .................................................................................................................... 68

19. SILENT PERIOD .............................................................................................................................. 68

20. SET’S WEIVERS.............................................................................................................................. 68

21. OTHER IMPORTANT MATTER (IF ANY) ....................................................................................... 68

22. STATISTIC ....................................................................................................................................... 69

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Definition

EGAT Electric Generating Authority of Thailand

IEAT Industrial Estate Authority of Thailand

Pro forma Financial

Statements The Unaudited Pro Forma Consolidated Financial Information

The Company PTT Global Chemical Plc.

The New Company The new company created as a resulted of the amalgamation

between PTT Aromatics and Refining Plc. and PTT Chemical Plc. as

per the PLC Act

PTT PTT Plc.

PLC Act The Public Limited Companies Act B.E. 2535 (1992), as amended

SEC Act The Securities and Exchange Act B.E. 2535 (1992), as amended

USD or US Dollars the United States Dollars, the lawful currency of the United States of

America

AR1 Refinery Plant

AR2 Aromatics Complex I

AR3 Aromatics Complex II

API Alliance and Petrochemical Investment (Singapore) Pte. Ltd.

AP ROH PTT Chemical International (Asia Pacific ROH) Ltd.

ATC The Aromatics (Thailand) Plc.

BIG Bangkok Industrial Gas Co., Ltd.

Bio Creation Bio Creation Co., Ltd. (formerly, Thai Choline Chloride Co. Ltd.)

Bio Spectrum Bio Spectrum Co., Ltd.

BPE Bangkok Polyethylene Plc.

BSA Businesses Services Alliance Co., Ltd.

CH Inter PTT Chemical International Pte. Ltd.

CMAI Chemical Market Associates, Inc.

EA Thai Ethanolamines Co., Ltd.

EFT Eastern Fluid Transport Co., Ltd.

EMERY Emery Oleochemicals (M) Sdn. Bhd.

ESSO ESSO (Thailand) Plc.

Evergreen Basis The agreement that is made on an evergreen basis whereby it will

continue to be in effect after the term of such agreement has lapsed,

unless terminated by either party by a prior written notice

HMC HMC Polymer Co, Ltd.

ICIS Chemical Industry News and Intelligent

Indorama Indorama Petrochem Co., Ltd.

LPG Liquefied Petroleum Gas

MYRIANT Myriant Technologies, Inc.

NPC National Petrochemicals Plc.

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NGL Natural Gas Liquid

NPC S&E NPC Safety and Environmental Service Co., Ltd.

OPEC Organization of Petroleum Exporting Countries

OSA Olefins Sales Agreement

PPCL PTT Phenol Co., Ltd.

PTTAR PTT Aromatics and Refining Plc.

PTTAR US Notes USD 300,000,000 Senior Unsecured Seven-Year Notes of PTTAR

PTTCH PTT Chemical Plc.

PTTCH Group PTTCH, its subsidiaries and associated companies

PTTGC PTT Global Chemical Plc.

PTTES PTT Energy Solutions Co., Ltd.

PTTICT PTT ICT Solutions Co., Ltd.

PTTME PTT Maintenance and Engineering Co., Ltd.

PTTPE PTT Polyethylene Co., Ltd.

PTTPM PTT Polymer Marketing Co., Ltd.

PTTUT PTT Utility Co., Ltd.

RRC Rayong Refinery Plc.

SAKC Sak Chaisidhi Co., Ltd.

SCG Chemicals SCG Chemicals Limited

SET The Stock Exchange of Thailand

SMPC Siam Mitsui PTA Co., Ltd.

SPP Small Power Producer

SPRC Star Petrolieum Refining Co., Ltd.

SSMC Siam Styrene Monomer Co., Ltd.

TEX Thai Ethoxylate Co., Ltd.

TFA Thai Fatty Alcohol Co., Ltd.

TOC Thai Olefins Plc.

TOCGC TOC Glycol Co., Ltd.

TOL Thai Oleochemicals Co., Ltd.

TPC Thai Plastics and Chemicals Co., Ltd.

TPC-PR TPC Paste Resin Co., Ltd.

TPE Thai Polyethylene Co., Ltd.

TPP Thai Polyprolylene Co., Ltd.

TPT TPT Petrochemicals Plc.

TSCL Thai Styrenics Co., Ltd.

TSSC Tokuyama Siam Silica Co., Ltd.

TTT Thai Tank Terminal Co., Ltd.

UCHA Ube Chemicals (Asia) Plc.

VNT Vinythai Plc.

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Information Memorandum

PTT Global Chemical Public Company Limited (“PTTGC”)

1. General Information

Head Office Location Head Office

555/1 Energy Complex, Building A,

14-18th Floor, Vibhavadi Rangsit Road,

Chatuchak, Chatuchak, Bangkok 10900

Tel: 66(0) 2 265-8400

Fax: 66(0) 2 265-8500

Website www.pttgcgroup.com

Branch Location 1 Rayong Branch

59 Rachniyom Road, Tambon Noen-Phra,

Amphoe Mueang Rayong, Rayong 21150

Tel: 66(0) 3899-4000

Fax: 66(0) 3899-4111

Branch Location 2 Olefin Plant I-1 Branch

14 I-1 Road, Map Ta Phut Industrial Estate,

Tambon Map Ta Phut, Amphoe Mueang Rayong,

Rayong 21150

Tel: 66(0) 3899-4000

Fax: 66(0) 3899-4111

Branch Location 3 Olefin Plant I-4 Branch

9 I-4 Road, Map Ta Phut Industrial Estate,


Rayong 21150

Tel: 66(0) 3899-4000

Fax: 66(0) 3899-4111

Branch Location 4 Aromatics Plant 1

4 I-2 Road Map Ta Phut Industrial Estate,


Rayong 21150

Tel: 66(0) 3897-1000

Fax: 66(0) 3899-4111

Branch Location 5 Aromatics Plant 2

98/9 Rayong Highway Road 3191, RIL Industrial Estate

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Rayong 21150

Tel: 66(0) 3897-1000

Fax: 66(0) 3899-4111

Branch Location 6 Refinery Branch

No. 8, I-8 Road, Map Ta Phut Industrial Estate,


Rayong 21150

Tel: 66(0) 3897-1000

Fax: 66(0) 3899-4111

Branch Location 7 Jetty and Buffer Tank Farm Branch

19 Rong-Pui Road, Map Ta Phut Industrial Estate,


Rayong 21150

Tel: 66(0) 3899-4000

Fax: 66(0) 3899-4111

Branch Location 8 Aromatics Tank Farm Branch

11, I-4 Road, Map Ta Phut Industrial Estate,


Rayong 21150

Tel: 66(0) 3897-1000

Fax: 66(0) 3899-4111

Branch Location 9 Lab Service Center Branch

24/9 Pakorn Songkro-Radh Road,


Rayong 21150

Tel: 66(0) 3899-4000

Fax: 66(0) 3899-4111

Registered: 19 October 2011

Effective date since 20 October 2011 in the trading system

(First day trade on the Stock Exchange of Thailand on 21 October

2011)

Type of Registered Capital 4,512,930,269 ordinary shares, with par value of THB 10 totaling to

THB 45,129,302,690

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Share Capital: PTT Global Chemical Plc. (“PTTGC” or the “Company”) has

registered capital of THB 45,129,302,690 divided into 4,512,930,269

ordinary shares, with par value of THB 10. Registered capital of the

Company can be divided into 2 portions as follows:

1. Paid-up capital in the amount of THB 45,059,846,380 divided into

4,505,984,638 paid-up ordinary shares, with par value of THB10

par value

2. The unpaid capital of THB 69,456,310 divided into 6,945,631

unpaid ordinary shares, with par value of THB 10

Secondary Market: The Stock Exchange of Thailand (“SET”)

2. Types of Business and Business Operations

PTTGC is a new resulting entity arising from the amalgamation between PTT Aromatics

and Refining Plc. (“PTTAR”) and PTT Chemical Plc. (“PTTCH”) in accordance with the Public

Limited Companies Act B.E. 2535 (1992), as amended (“PLCA”), on 19 October 2011 and assumes

all assets, liabilities, rights, duties and obligations from both PTTCH and PTTAR per operation of

law.

Current Group Structure of the Company is as follows:

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Subsidiaries

BPE = Bangkok Polyethylene Plc.

PTTPE = PTT Polyethylene Co., Ltd.

TSCL = Thai Styrenics Co., Ltd.

TOCGC = TOC Glycol Co., Ltd.

EA = Thai Ethanolamines Co., Ltd.

Bio Creation = Bio Creation Co., Ltd. (formerly, Thai Choline Chloride Co., Ltd.)

TOL = Thai Oleochemicals Co., Ltd.

TFA = Thai Fatty Alcohol Co., Ltd.

40.0%

PTTGC

BPE

PTTPE

Bio Creation

TOL

PPCL

PTTME

NPC S&E

PTTUT

PTTPM

PTTICT

VNT

API

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

60.0%

60.0%

60.0%

25.0%

25.0%

16.7%

EFT

22.7% TSCL 100.0%

100.0% TFA

CH Inter 100.0% MYRIANT

50.0%

AP ROH 100.0%

Bio Spectrum 75.0%

TOCGC

EA 100.0%

EMERY

47.4%

TTT

TEX

51.0%

50.0%

PTTES 20.0%

BSA 25.0%

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NPC S&E = NPC Safety and Environmental Service Co., Ltd.

CH Inter = PTT Chemical International Pte. Ltd.

EMERY = Emery Oleochemicals (M) Sdn. Bhd.

AP ROH = PTT Chemical International (Asia Pacific ROH) Ltd.

Bio Spectrum = Bio Spectrum Co., Ltd.

PTTME = PTT Maintenance and Engineering Co., Ltd.

PPCL = PTT Phenol Co., Ltd.

PTTUT = PTT Utility Co., Ltd.

TTT = Thai Tank Terminal Co., Ltd.

TEX = Thai Ethoxylate Co., Ltd.

Associated Companies

EFT = Eastern Fluid Transport Co., Ltd.

PTTPM = PTT Polymer Marketing Co., Ltd.

PTTICT = PTT ICT Solutions Co., Ltd.

VNT = Vinythai Plc.

API = Alliance and Petrochemical Investment (Singapore) Pte. Ltd.

MYRIANT = Myriant Technologies, Inc.

PTTES = PTT Energy Solutions Co., Ltd.

Other Company

BSA = Businesses Services Alliance Co., Ltd.

2.1 Product Characteristics

After the amalgamation of PTTCH and PTTAR, the Company will continue to operate the

businesses currently engaged by both companies, which can be classified into 3 main types of

business as follows:

2.1.1 Petrochemicals and Chemicals Business

2.1.1.1 Olefins & Shared Facilities Business

Ethylene and propylene are collectively called “Olefins”, which is the

hydrocarbon compound used as a raw material for plastics production. Olefin &

Shared Facilities’s products comprise:

A. Olefins (Ethylene and Propylene): the nameplate capacity of olefins

is 2,888,000 tons per year, consisting of ethylene capacity and

propylene capacity of 2,376,000 tons per year and 512,000 tons per

year, respectively

B. By-products from Olefins productions: pyrolysis gasoline, Mixed C4,

tail gas, cracker bottom and hydrogen

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C. Shared facilities: electricity, steam and water used for industrial

purposes (industrial water, tap water and natural water)

2.1.1.2 Aromatics Products and Downstream Business

Aromatics products comprise paraxylene, benzene, cyclohexane,

orthoxylene, mixed xylenes and toluene. Such products are used as feedstock in

various downstream industries. Details of the Company’s Aromatics products are as

follows:

A. Paraxylene with nameplate capacity of 1,195,000 tons per year

B. Benzene with nameplate capacity of 662,000 tons per year

C. Cyclohexane with nameplate capacity of 200,000 tons per year

D. Orthoxylene with nameplate capacity of 66,000 tons per year

E. Mixed Xylenes with nameplate capacity of 76,000 tons per year

F. Toluene with nameplate capacity of 60,000 tons per year

2.1.1.3 Polymer Products Business

Polymer products business includes the business of plastic pallet, which is

a downstream petrochemical product used for producing finished plastics in

downstream businesses and everyday life such as packaging, electrical appliance,

construction material, and etc. The Polymer products businesses that the Company

invested in are as follows:

A. High density polyethylene (PE) or HDPE with nameplate capacity of

800,000 tons per year

B. Low Density polyethylene (PE) or LDPE with nameplate capacity of


C. Linear low density polyethylene (PE) or LLDPE with nameplate

capacity of 400,000 tons per year

D. Polystyrene (PS) with capacity of nameplate 90,000 tons per year

2.1.1.4 Ethylene Oxide Products Business

Ethylene Oxide comprises Ethylene Oxide/Ethylene Glycol, Ethanolamine

and Fatty Alcohol Ethoxylate as per the following details:

A. Ethylene Oxide / Ethylene Glycol (EO/EG)’s core product is Mono

Ethylene Glycol (MEG), a raw material for polyester fiber

production, with nameplate capacity of 395,000 tons per year

B. Ethanolamine’s core product is Monoethanolamine (MEA),

Diethanolamine (DEA) and Triethanolamine (TEA). Ethanolamine

products are used in shampoo production, conditioner, fabric

softener, medicine, cement, and etc. Ethanolamine’s nameplate

capacity is 50,000 tons per year and it is expected to start the

commercial operation in 2011

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C. Fatty Alcohol Ethoxylates, with nameplate capacity of 50,000 tons

per year, is raw material for shampoo production, dishwashing

liquid and other washing liquid

2.1.1.5 Oleochemical Products Business

Details of the Company’s Oleochemical products are as follows:

A. Methyl Ester with nameplate capacity of 200,000 tons per year

B. Fatty Alcohol with nameplate capacity of 100,000 tons per year

C. Glycerin with nameplate capacity of 31,000 tons per year

D. Base & Specialty Oleochemicals with nameplate capacity of


2.1.2 Refining and petroleum products supply sourcing

The Company operates refining and supply petroleum products with the nameplate

capacity of 280,000 barrels per day of crude oil and condensate intake. The Company has

ability to supply various high-quality petroleum products of 228,000 barrels per day,

including

2.1.2.1 Light distillates, consisting of Liquefied Petroleum Gas (LPG), light

naphtha, and reformate

2.1.2.2 Middle distillates, consisting of jet fuel and diesel

2.1.2.3 Heavy distillates such as fuel oil

2.1.3 Services & Others

2.2 Revenue Structure

(Unit : THB million)

For the Six-Month

Ended 30 June 2011 *

Consolidated Revenue Structure (Pro-Forma) Revenue %

1. Petrochemicals and Chemicals Business

1.1 Olefin & Shared Facilities

Revenue from Sales of Ethylene 8,568 4

Revenue from Sales of Propylene 5,838 2

Others 3,927 2

1.2 Aromatics Products and Downstream Business

Revenue from Sales of Paraxylene 27,788 12

Revenue from Sales of Benzene 7,288 3

Others 38,032 15

1.3 Polymer Products

Revenue from Sales of Polyethylene 27,109 11

Others 1,671 1

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(Unit : THB million)

For the Six-Month

Ended 30 June 2011 *

1.4 Ethylene Oxide Products

Revenue from Sales Ethylene Oxide/Ethylene Glycol 5,799 2

Others 973 0

1.5 Oleochemical Products

Revenue from sales base and Specialties Oleochemical

Products from PTTCH Inter and EMERY

9,607 4

Revenue from Sales Methyl Ester/Fattyalcohol 4,994 2

2. Refining and petroleum products supply sourcing

Revenue from Sales of Diesel 50,226 21

Revenue from Sales of Jet Fuel 10,278 4

Others 24,373 11

3. Services & Others

Services and Others 11,175 5

Total 237,644 100 Note: * Source: Pro-forma Financial Statements of the Company for the six-month period ended 30 June 2011

2.3 Target Customers

2.3.1 Petrochemicals and Chemicals Business

2.3.1.1 Olefin & Shared Facilities

A. Olefins Sales Agreement (OSAZ)

Major customers for Olefin under the Olefin Sales Agreement are Thai

Polyethylene Limited (“TPE”) and Bangkok Polyethylene Plc. (“BPE”). Other

customers include Thai Plastic and Chemicals Plc. (“TPC”), Siam Styrene Monomer

Co., Ltd. (“SSMC”), Vinythai Plc. (“VNT”) and Thai Polypropylene Co., Ltd. (“TPP”)

and HMC Polymers Co., Ltd. (“HMC”). Selling prices for such products are per

conditions specified in the OSA.

B. Olefins Sales Other than OSA

Major customers for Olefin other than that of OSA include TOC Glycol Co.,

Ltd. (“TOCGC”), PTT Plc. (“PTT”). Other customers include VNT and PTT Phenol

Co., Ltd. (“PPCL”). Selling prices for such products are per conditions specified in

other long-term Olefin sale contracts.


Major customer for Aromatics Products and Downstream Business is PTT.

Other customers include SCG Chemical Co., Ltd. (“SCG Chemicals”), Sak Chaisidhi

Co., Ltd. (“SAKC”), PPCL, TPT Petrochemical Plc. (“TPT”), Siam Mitsui PTA Co.,

Ltd. (“SMPC”), Indorama Petrochemical Co., Ltd. (“Indorama”), Ube Chemicals (Asia)

Plc. (“UCHA”). The selling prices for such products are per market prices.

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2.3.1.3 Polymer Products

The Company has entered into an agreement to sells HDPE through PTT

Polymer Marketing Co., Ltd (“PTTPM”), with the HDPE sale agreement period of 6

months, and can be extended 1 year per time. On 27 September 2006, both parties

have changed such contract into a 15 years long-term contract, extendable 5 years

per time, with price equaled to the terms of the original contracts.

2.3.1.4 Ethylene Oxide Products

The Company sales its products mainly to domestic customers through

direct sales, brokers and distributors. The remaining products will be export to the

international market. The selling prices for such products are per market prices.

2.3.1.5 Oleochemical Products

A. Methyl Ester Products

Major customers for Methyl Ester products are those domestic refinery

customers, which include PTT, Chevron (Thai) Co., Ltd., ESSO (Thailand) Plc.

(“ESSO”), Thaioil Plc. The selling prices for such products are per market prices.

B. Fatty Alcohol

Major customer for Fatty Alcohol products is Thai Etoxilate Co., Ltd.

(“TEX”). The Company also exports such products to sale in the international market.

The selling price for such product is per market price.

C. Glycerin

Major customers for Glycerin are mainly international customers. The

Company’s export to domestic sales proportion is 70% and 30% accordingly. Most

Glycerin products are sold mainly through distributors. The selling price for such

product is per market price.


The Company’s major customer for such products is PTT, and selling price is per

market price.


The Company’s major customers are petrochemical and shared facilities plants.

Currently, such customers include TPE, TPC, HMC and other customers in Map Ta Put

Industrial Estate.

2.4 Distribution Channels

The Company sells products under the long-term and short-term contracts, as per details

in 3.2 Petroleum Products and Aromatics Products Offtake Agreements, 4.1 Agreements relating

to the Olefins-Shared Facilities, 4.2 Sales Agreements in Relation to Service Business and

Others and 4.3 Agreement related to the Polymer Products Value Center.

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2.5 Sources of Supply

The Company sources its supply of feedstock under the long-term and short-term

contracts, as per details in 3.1 Feedstock Agreements and 4.1 Agreements relating to the

Olefins-Shared Facilities.

2.6 Market Competition

2.6.1 Petrochemical and Chemicals

2.6.1.1 Olefin & Shared Facilities

Olefin price in first half 2011 had continuously increased from second half

of last year. The average ethylene price in South East Asia during the first half 2011

was at USD1,265 per ton, which was higher than that of the same period from

previous year by approximately 7%. On the other hand, the average propylene price

was at USD1,433 per ton, which was higher than that of the same period from

previous year by approximately 24% (Source: ICIS).

The increase in ethylene price during the first half 2011 was mainly due to

the limited supply, as plants in many countries in the region had reduced/halt their

planned production capacity. The limited supply also resulted from unplanned

reduced/halt in production as a result from the earthquake in Japan, as well as many

fire accidents at the Formosa Petrochemical Corporation’s plant in Taiwan. Such

incidents decreased the ethylene supply from the market by approximately 1.73

million tons (Source: CMAI). In addition, other Middle East producers, especially

those in Iran, reduced the amount of supply exported to Asia, as those producers

also faced their own production problems. On the other hand, the demands for

products, especially downstream products such as PE and MEG, had been on an

increasing trend. The main reason for the increase in the demand was resul from the

turnaround of Shell Chemical’s cracker plant in Singapore, and as a result, MEG

plant of such company needed to find Ethylene from the spot market for its

production.

The propylene market in Asia during the first half of 2011 was similar to

that of Ethylene. However the impact of limited supply was more severe, due to 4 on-

purposed propylene production plants (propylene production units that yield

propylene as their main products) in Asia with the capacity of 950,000 tons per year

had stopped or reduced their operations, for schedule and nonschedule maintenance

due to production problems and the above mentioned shutdown of cracker plants. As

a result, the production of propylene decreased by 1.04 million tons (source : CMAI).

In addition, the demand for such product was still at a high level. These factors

contributed to the higher Propylene price in Asia than that of Ethylene.

In the second half of 2011, there will be seasonal factors that will increase

the demand, as middle and downstream producers require more feedstock for their

productions in preparation for Christmas and New Year holidays. On the other hand,

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the supply may also be limited as cracker plants in many countries, such as China,

Japan, Taiwan and Singapore, will have turnaround. Moreover, operations of new

capacity have been postponed and will, instead, start up their productions next year.

Consequently, these factors will result in the Olefin price expected to be at a high

level. However, the economic problems in the United States as well as many

countries in Europe combined with inflation factors in China may have impacts on the

prices of crude oil and petrochemical products, which, in turn, may slow the demand

for Olefin’s products. As a result, the price of Olefin will not substantially increase in

the second half of 2011 due to these important factors.


The price of Paraxylene and Benzene during the first half of 2011 had

continuously increased from year ended 2010, especially during first quarter of 2011,

where the Paraxylene price was at its highest level in 16 years, due to limited supply

as a result of the earthquake in Japan. On the other hand, the demand for such

products was still at a high level due to long winter and Chinese New Year. In

addition, Aromatic plants in many countries, such as China, Malaysia and the Middle

East countries, such as Oman and Kuwait had undertook unplanned shutdown. As a

result, the price of Paraxylene and Benzene had continuously maintained at a high

level. However, in second quarter of 2011, the price faced a downward pressure

from the increase in supply, as a result of Aromatics plants in China and South

Korea started their commercial operations, adding 2 million tons of capacity per year.

However, in the second half of 2011, the price of Aromatics products will remain at a

high level, due to seasonal demand as middle and down-stream Paraxylene and

Benzene producers will require more feedstock for their productions in preparation for

various holidays. Moreover, Purified Terephthalic Acid plant in China with the

capacity of 3.5 million ton per year will start its commercial operation in the second

half of 2011. Such plant will require paraxylene as its main feedstock, while there will

be no new supply of Paraxylene in the market. These factors contribute to the

forecast that the demand for the Aromatics Products in second half of 2011 will

remain strong.

2.6.1.3 Polymer Products

Price of Polyolefin products during the first half of 2011 had continuously

increased from year ended 2010. The average price of HDPE, LDPE, LLDPE and

Polypropylene (PP) were USD1,381 per tons, USD1,402 per ton, USD1,707 per ton

and USD1,655 per ton accordingly, and such prices had increased from the previous

year by approximately 10%, 5%, 18% and 23% respectively.

The increase in Polyethylene price during the first half of this year was

due to important factors, such as oil price, feedstocks prices and limited supply in

the region (resulting from the reduction of HDPE production in China in May and

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June). On the other hand, the demand for such products had decreased due to

plastic processing plants’ reduction in their production capacity (as the demand for

end-products decreased during the long Chinese New Year holiday in February),

China’s stricter policy in extending loan and the inability of PE producers to adjust

their prices at the same rate as that of the increased in Ethylene price.

For the remaining of 2011, the price of Polyolefins will increase as the

demand for products will increase from the downstream producers, who will increase

their productions in preparation for various end of the year festivals. In addition, with

the price of feedstock remain at a high level and many Olefin plants will stop their

operations for maintenance during the second half of this year, the supply of such

products will be limited. However, the economic problems in the United States and

many countries in Europe, as well as the inflation pressure in China, may decrease

the demand for Polyolefin. As a result, the price of Polyolefin may not increase by

much during the second half of 2011.

On the other hand, the overall market conditions for PP and PS will have

an upward trend with regard to price, because the price of Propylene and Styrene,

which is their feedstock, have been on an increasing trend (similar to that of PE).

The demand will also increase during the Christmas and New Year Holiday, but

there will be many other factors that may soften the increase in price for such

products, similar to that of PE.

2.6.1.4 Ethylene Oxide Products

The MEG market in the first half of 2011 moved toward the same trend as

those of Olefin and Polyolefin. MEG price had increased to USD1,185 per ton, an

increased by 33% from the same period of last year.

During the first quarter of 2011, the price of MEG products increased

from the limited supply, as the demand for products used in Polyester Fiber and

PET Resin industries had continuously increased, while there was no new supply

capacity in 2011. For the second quarter of 2011, MEG’s price had slightly

decreased due to the inflation problem in China, which resulted in producers

producing limited MEG supply, just enough to serve the demand of the consumers

with no inventory storage. Such factors slowed the demand for MEG products. In

contrast, during the later part of the second quarter of 2011, 4 MEG plants with the

capacity of 1.8 million ton per year owned by Nan Ya Plastics shutdown for security

inspections per government’s orders due to fire accidents at the petrochemical

complex owned by Formosa Petrochemical Corporation. However, such incident will

not increase the demand by much.

For the second half of 2011, the price of the MEG is estimated to be at a

high level as a result of a higher demand from Polyester producers due to the

seasonality. In addition, the ethylene feedstock price is on an upward trend, as a

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result of crude oil price. Moreover, many of the MEG plants in the region, including

Taiwan, China and countries in the Middle East will shutdown for maintenance

during the second half of the year, which will, in turn, limit the supply until the end of

2011.

As for the Ethanolamine market during the first half of 2011, the price had

slightly increased from the end of 2010, because the price of feedstock had increased.

Moreover, the price of Ethylene Glycol products had significantly increased as compared

to year 2010. Such increased in prices gave incentive to most producers to use

Ethyleneoxide to produce a higher proportion of Ethylene Glycol, and, as a result, might

have reduced the supply of Ethanolamine in the beginning of the year. On the other

hand, the overall demand for MEA and TEA products was on an increasing trend.

However, for DEA products, such demand was still slow due to the laggard Glyphosate

market and during the second quarter, there were two new Ethanolamine plants in China

started their commercial operations, which resulted in higher supply in the market. In

addition, the inflation control policy from the Chinese government had impacted the

industry domestically, resulted in the reduction of prices. However, it is foreseen that

toward the end of 2011, the price may increase due to higher feedstock price.

2.6.1.5 Oleochemical Products

A. Methyl Ester Market

The price of crude palm oil, which was used in the price calculation

formula of Methyl Ester, had fluctuated widely in the first half of 2011. During the

first quarter of 2011, the domestic crude palm oil price increased significantly due to

volatile weather pattern and flooding in the southern part of the country. However,

the government had solved such problems by importing crude palm oil from the

international market, and the domestic production of palm had gradually improved

to the level that is enough for domestic consumption. This later factor resulted in the

decrease in price of crude palm oil in March. These fluctuations resulted in the price

of Methyl Ester to increase significantly in the early part of the year, and

subsequently reduced in March. During the second quarter, the price of Methyl Ester

had reduced significantly following the reduction of domestic crude palm oil price.

The problem of insufficient amount of crude palm oil supply resulted in an

unclear policy regarding the use of crude palm oil as an alternative source of

energy. The government had canceled its enforcement of 2 grades biodiesel in

January (cancelling the subsidy for biodiesel B5), adjusted to one usage of biodiesel

B3 grade in February, and subsequently in March and April adjusted to one usage of

biodiesel B2 grade. The adjustment of biodiesel usage resulted in a significant

reduction in Methyl Ester demand. However, once the crude palm oil crisis had

lapsed, and the crude palm oil inventory had increased, the usage of biodiesel B3

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grade had been enforced in May to June, and biodiesel B4 grade had been enforced

after June onwards.

B. Fatty Alcohol

In 2011, the Fatty Alcohol market had performed well comparing to the

year 2010. In the first quarter of 2011, the price of Mid-cut Fatty Alcohol had

continuously increased, with the price at USD3,500 per ton in March, which was the

highest price in the history of such product. Such increase in price was the resulted

of higher demand from the down-stream Fatty Alcohol producer, especially personal

hygienic products and house cleaning products. In addition, the higher feedstock

price was also a factor that contributes to the high price of Fatty Alcohol products.

However, the price of Short-chain and Long-chain Fatty Alcohol did not increase

similar to that of the Mid-cut. As a result, the average 3 cuts Fatty Alcohol prices

were approximately USD2,700 – USD2,800 per ton.

The overall Fatty Alcohol price in second quarter in 2011 for 3 cuts were

at approximately USD2,700 - USD2,800 per ton, which were at the similar level to

that of the first quarter. The Mid-cut was still the most demanded Fatty Alcohol with

the highest price. However, during the second quarter, the price of the Mid-cut Fatty

Alcohol had been reduced following the reduction of feedstock price. As for Short-

chain and Long-chain, the prices were adjusted downward, but at the lower rate than

that of the Mid-cut.

C. Glycerin

During the first quarter of 2011, the Glycerin price had decreased as

compare to that of December 2010 (the month of which the Glycerin’s price was at

the highest level of that year). The average price was at approximately USD832 per

ton, and such price had gradually decreased during the quarter.

During the second quarter of 2011, Glycerin price had significantly

decreased from the first quarter with the average price of USD710 per ton. This was

due to the lower demand from China and the increase in Glycerin supply resulted

from the increase in production of Methyl Ester Palm from Asian producers. Such

increased in supply by Asian producers would be used to fulfill the demand from

users in Europe, where such users mix Methyl Ester Palm Oil with biodiesel to

reduce production cost in the summer. The price of Glycerin is forecasted to be

higher in the latter part of the year, especially after the new Epichlorohydrin (ECH)

plants in Thailand and China, whose main feedstock is Glycerin, will begin their

operations toward the end of this year.


2.6.2.1 Crude Oil Price

As the global economy continues to expand in 2011, the demand for

crude oil is forecast to grow at an average rate from 1.5 million barrels per day in

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2010 to 89.4 million barrels per day in 2011. Such growth in global demand will be

driven mainly by Asia. On the other hand, demand from countries in Europe and

North America will be at the same level or lower in 2011, even if the economies in

such region are forecasted to grow as these countries used their energy more

efficiently and there are policies that support alternative energies rather than the

usage of crude oil.

Crude oil supply in 2011 will slightly increase from the Non-OPEC

countries, which forecasted to have the production capacity of 53.5 million barrels

per day, an increase from 2010 of 0.7 million barrels per day. Most of the production

capacity from these countries will be from Latin America, North America, Canada

and former Soviet Union countries. On the other hand, the OPEC countries will

produce more Natural Gas Liquid (NGL), due to the increase in production capacity

of such gas, which will resulted in an increase in NGL production to 5.8 barrels per

day in 2011, an increase of 0.5 barrels per day. Such supply is still lower than that

of demand in 2011 by 0.3 barrels.

2.6.2.2 Middle Distillates Products

As the global economy continues to expand in 2011, the industrial

production and international logistics will see a positive growth, which, in turn,

increase the demand for Diesel and Jet Fuel. In 2011, the spread between Diesel

and Jet Fuel as compared to Dubai Crude Oil will be wider than that of 2010, which

was, at that time, at USD14 - USD15 per barrels. Such widen spread is forecasted

to continue its trend throughout 2011 as a result of higher demand for Diesel and

Jet Fuel, while there is limited supply of distillates products entering the market.


2.6.3.1 Competition in Map Ta Phut Industrial Estate

The initial investment is the investment per demand for public facilities.

The Company has received concession in the area near the Company’s plants from

the Department of Public Work and Town & Country Planning, as part of the interior

ministry. The Company has a total of 210 Megawatts of electricity production

capacity to be used for its own production and sell it to other shared facilities.

Subsequently, as the customers of the Company and others operators within the

industrial estate have increased their capacity, there are other electricity producers

beside the Provincial Electricity Authority, such as Glow Energy Plc., whose

concession is outside the Company’s area, in/or nearby such industrial estate. The

Company has regularly expanded its electricity production capacity as well as steam

to fulfill the demand of its customers within their concession area.

For steam, there is a limit on the right of way for piping and loss yield due

to distanced transfer of such steam. As a result, the competition is limited to the

surrounding area only. The Company capacity is at approximately 650 ton per hour.

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20

Such capacity may differ from the Company’s competitors, but the Company

operates in the petrochemical industry and shared facilities, and, as a result, has in-

depth knowledge of the needs and limitations of the petrochemical production.

Consequently, the Company can provide public facilities services that match the

needs petrochemical business, which help the Company gain a competitive

advantage in its business of selling public facilities within the Company’s concession

estate.

2.7 Environmental Impact

The Company emphasizes the important of following the laws and related policies with

regard to the environment and corporate social responsibility (CSR). The Company has

implemented the Environmental Management System: ISO-14001 firm-wide as the standard of

operating procedures. In addition, the Company has proactively designed the strategies with

regard to the environmental management for companies within the group to follow. Such

companies can use this strategy in their productions and services, thereby systematically and

continuously increase the efficiency in the environmental management, which, in turn, will

resulted in the effective usage of resources, reduction of production cost and the businesses

operations that are friendly to the environment . The Company aims to increase its

environmental standards so that it can grow its business in a sustainable manner, and focuses

on production procedures that have the environmental standards higher than those required by

policies or related laws. In order to reach its goal and minimize any impact to the environment,

the Company uses the Eco-efficiency philosophy to systematically measure the outcome of the

Company’s environmental competence, which can be divided into 5 categories, namely the

usage of water, the usage of energy, the activities that may contribute to global warming,

activities that cause substance that may deplete the ozone and the amount of wastes. As for

the employees, the Company has the policy to emphasize their consciousness in their work to

ensure that their work will have minimum or no impact to the environment.

The Company has set the target to reduce the amount of waste to be secured in the

landfill to 0 for the Company’s petrochemical plants within 2015. The Company will use 3R

philosophy and Innovation Technology that will be suitable for the current business environment.

The Company also conducted a research and development to add value to such waste, thereby

develop the Eco-Industry. In addition, the Company strictly manages its production waste as

required by law and adds certain policies beyond those required by law, such as requiring those

who are responsible for transfer of the dangerous waste to install GPS system on their trucks in

order to prevent such waste to be discarded in an illegal manner. The Company also use

certain waste in other industries. As for the Olefin and shared facilities, the Company has

conducted studies on carbon footprint on the HDPE with the purpose of obtaining carbon

footprint of HDPE, for the HDPE I-1 production unit and will proceed to other products at a later

stage.

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21

The Company also has a Pollution Prevention policies, such as air quality control for

refinery and aromatics plants within the Map Ta Phut Estate, thereby controlling volatile organic

compounds (VOC) from the storage and transportation tanks. In addition, the Company has kept

records the amount of VOC emission and consistently maintains the equipments to ensure

minimum VOC emitted to the environment. The Company also uses clean fuel in order to

reduce the emission of sulfur dioxide gas, and keeps on improving the system, such as

improving the efficiency of the burning of the electricity generating turbine in order to decrease

the amount of Nitrogen Oxide emission. Moreover, the Company has the environmental

management system that is transparent and auditable by governmental agencies, and the

Company has installed the automatic tools that consistently measure air quality release from the

plants and submits such information to Map Ta Phut Industrial Estate’s Environmental

Monitoring & Control Center 24 hours a day.

Lastly, the Company is fully aware the important of sources of water and its quality in

Rayong. As a result, the Company has installed a system that maximizes and allows waste

water to be reused, and reduced the release of waste water from the plants. Such system will

reuse the water that is being treated in the Company plants’ operations. Moreover, the

Company has the waste water pool, in which the Company must conduct tests on the quality of

such waste water to ensure that they are above the standard as required by law before

releasing it from the plants.

3. Summary of the Essence of the Contracts/Agreements Transferred from PTTAR to the

Company

3.1 Feedstock Agreements

Material feedstock agreements for the production of the aromatics products and

petroleum products are as follows:

Key Feedstock Party Contract Quantity

(Barrels per Annum)

Termination Year

Crude Oil PTT As designated by the

Company

2024*

Condensate PTT 40,000,000 – 51,000,000 2016* Note* The agreement is made on an evergreen basis whereby it will continue to be in effect after the term of such agreement has lapsed,

unless terminated by either party by a prior written notice.

The crude oil agreement will be terminated on 9 February 2024. Under this agreement,

PTT agrees to supply crude oil and other feedstock according to the types and quantities designated

by the Company for the operations of the Company’s refinery. The condensate agreement will be

expired on 31 December 2016. Under this agreement, PTT has an obligation to supply

approximately 40-51 million barrels of condensate per annum.

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3.2 Petroleum Products and Aromatics Products Offtake Agreements

The Company has the offtake agreements which cover all of its petroleum products and

aromatics products. Most of these agreements are long-term agreements made with PTT. The key

terms and conditions of the material products offtake agreements are summarised as follows:

• Offtake Agreement on Petroleum Products

A. Long-term products offtake agreement for petroleum products generated from

AR1 i.e. jet fuel, diesel fuel and fuel oils with PTT, under which PTT is obliged to

purchase petroleum products from AR1 the minimum amount of at least 70 per

cent of the total production amount. The term of the agreement is 18 years

(ending on 9 February 2024), after which the agreement will automatically

continue to be in effect, unless the agreement is terminated by either party by a

prior written notice (on an “Evergreen Basis”).

B. An offtake agreement for petroleum products generated from the New Complex

(New Product Offtake Agreement) with PTT, under which PTT agrees to

purchase 100 per cent of the petroleum products of the Company, which is

produced from the Condensate Residue Splitter (the Upgrading Complex Project

Phase 1). The purchase price for at least 50 per cent of the products shall be the

domestic market price and the remaining shall be sold at the export market price

or at any other price that would be mutually agreed. This agreement has the

same termination period as the products offtake agreement for petroleum

products which is generated from AR1.

C. The light naphtha offtake agreements with 2 domestic customers, SCG

Chemicals and SAKC, with the term of 1 – 4 years.

D. The condensate residue offtake agreement with PTT, with a term of 15 years.

This agreement will expire in January 2012. However, the Company already sent

notice of termination to PTT before the amalgamation.

• Offtake Agreement on Aromatics Products

E. The offtake agreements for most of its aromatics products in the amount of

approximately 70 per cent of total production amount to domestic customers. The

aromatics products produced from AR2 are sold to domestic customers through

PTT under the long-term agreement. In respect of the aromatics products

generated from AR3, PTTAR has directly made long-term offtake agreements

with domestic customers, such as Indorama Petrochem Limited and PPCL.

F. For the offtake agreement for aromatics products which must be exported for

sale, in the amount of approximately 30 per cent of the production amount, the

Company sells these products to PTT under long-term agreements, and directly

supply these products to PTT’s customers.

The essence of the offtake agreements for these two kinds of products are summarised as

follows:

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23

Product Party Contract Quantity

(Barrels per Annum) Termination Year

Petroleum Product

Petroleum Product

from AR1

PTT

Not less than 70 per cent

of the production amount 2024 *

Petroleum Product from the New

Complex PTT

100 per cent of the

production amount 2024 *

Light Naphtha

SCG

Chemicals 840,000 - 1,080,000 2011 ****

SAKC 63,360 – 79,200 Evergreen **

Condenste Residue PTT 585,000 2012 ***

Aromatics Products

Benzene PTT 120,240 – 353,720 2012 *

PPCL 150,000 - 180,000 2023 *

Paraxylene

PTT 430,000 – 591,000 2012 *

TPT 80,000 – 100,000 2016 *

SMPC 250,000 – 270,000 2012 *

Indorama 190,000 – 200,000 2013 *

Orthoxylene PTT 28,200 – 55,410 Evergreen **

Cyclohexane UCHA 76,000 – 81,000 2011**** Note *The agreement is made that is on an evergreen basis whereby it will continue to be in effect after the term of such agreement

has lapsed, unless terminated by either party by a prior written notice.

**The agreement is on an evergreen period where it will be terminated upon a prior written notice by either party.

***PTTAR has given a notice to PTT for a termination of the offtake agreement for Condensate Residue.

****Negotiation is in progress for extension of term.

3.3 Utilit Agreements

• Tank Farm Storage and Service Agreement

• Material tank farm storage and service agreements with Thai Tank Terminal Co.,

Ltd. for the purposes of storing the aromatics products which will be exported and

the Condensate feedstock obtained from domestic sources. These agreements will

end during a period between 2011 - 2028.

• Supply Agreement for Power, Steam and Water for Industrial Use

• A long-term supply agreement with Glow Energy Plc. for the purchase of power,

steam and water for industrial use with the term of 25 years ending in April 2021.

• Head of Agreement with PTT Utility Co., Ltd. for the supply of power, steam and

water for industrial use with respect to AR3.

• Gas Supply Agreement

• PTTAR has entered into 4 gas supply agreements with PTT to be used as

feedstock /fuel for refinery plant and aromatics plant. The term of each agreement

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is 10 years, whereby PTTAR is entitled to renew each agreement by giving a

notice not less than 6 months prior to termination of such agreement.

3.4 Land Lease Agreements

• The land lease agreement and agreement on the permission for the use of land with the

Industrial Estate Authority of Thailand (IEAT)

A. Land plot No. I-20/2 with the leased area of 156.25 Rai for the term of 30 years

from 18 September 1992 to 17 September 2022

B. Land plot No. I-17/2 with the leased area of 97 Rai 1 Ngan and 60.71 square wah

for the term of 27 years and 10 months from 13 January 1993 to 14 November

2020

C. Land plot Nos. I-14/3 and I-24/4 with the leased area of 248 Rai 3 Ngan and 10.60

square wah for the term of 30 years from 28 March 1991 to 28 March 2021

D. Land plot Nos. I-25/1 and I-25/2 with the leased area of 500 Rai and 26.46 square

wah for the term of 30 years from 10 September 1993 to 9 September 2023

E. Land plot No. I-14/4 with the leased area of 36 Rai 3 Ngan 30.80 square wah for

unlimited term from 22 January 1996

F. Land plot No. G-3 with the leased area of 1 Rai, 3 Ngan and 22.56 square wah for

the term of 3 years from 16 July 2010 to 15 July 2013

G. Land plot No. G-8/1 with the leased area of 1 Rai and 59.14 square wah for the

term of 28 years and 4 months from 20 November 1992 to 28 March 2021

• Lease Agreement and Service Agreement with Energy Complex Co., Ltd.

H. 555/1 Energy Complex Building A Floor 14, Vibhavadi Rangsit Road, Chatuchak

Sub-district, Chatuchak District, Bangkok, for use as head office premises, with the

total office area of 2,735 square meters. The agreement term is from 1 October

2009 to 30 September 2012.

• Lease Agreement and Service Agreement with State Railway of Thailand

I. The land in the Map Ta Phut train station with the leased area of 15,900 Sq.

metres for the term of 3 years from 16 June 2010 to 15 June 2013

• The land lease agreement with RIL Co., Ltd.

J. The land title deed No. 127402 with the leased area of 10 Rai 3 Ngan and 79.5

square wah for the term of 30 years from 14 June 2008 to 26 April 2037

4. Summary of the Essence of the Contracts/Agreements Transferred from PTTCH to the

Company

4.1 Agreements relating to the Olefins-Shared Facilities

• Long-term Olefins Sales Agreement (OSA)

Long-term OSA were made with downstream petrochemical plants. These OSA were

structured on Minimum Contract Quantity, that is, such group of downstream petrochemical plants

must buy products in the minimum quantity specified in the agreement. The Company has an

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obligation to sell 576,700 tons of Ethylene per annum and 198,680 tons of Propylene per annum

under the OSA.

The essence of the agreements are summarised as follows:


(Tons/Year)

Agreement

Expiry Year

Ethylene

TPE 176,000 2016

44,000 2011

TPC 50,700 2016

BPE 176,000 2011

SSMC 61,000 2012

VNT 69,000 2011*

Propylene TPP

95,000 2011

9,180 2016

HMC 94,500 2016 Note *Negotiation is in progress for extension of terms.

• Olefins Sales Agreements other than the OSA



(Tons/Year)

Agreement

Expiry Year

Ethylene VNT 69,000 2022

TOCGC 300,000 2021

Propylene PPCL OP,QQQ 2023

Aditya Birla Chemicals

(Thailand) Co., Ltd.

10,000 2014

• Sales Agreements in relation to other By-products from the Manufacture of Olefins

Agreements for the production of commercial quantities of several kinds of by-products

from the manufacture of olefins, viz. mixed C4, pyrolysis gasoline, tail gas, cracker bottom and

hydrogen, through the long-term and short-term agreements referencing to the prices of products in

the Asian markets.



(Tons/Year)

Agreement

Expiry Year

Mixed C4 Bangkok Synthetics Co., Ltd. 70,000 2015

Pyrolysis Gasoline PTT 150,000-300,000 2012

Tail Gas TIG Hyco Co., Ltd. 17,520 2012

TOCGC 4,380 2022

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(Tons/Year)

Agreement

Expiry Year

Cracker Bottom Thai Tokai Carbon Products

Co., Ltd.

12,000-30,000 2011*

Hydrogen Thai Oleochemical Co., Ltd. 2,760-3,780 2023 Note * Renewable on a year-by-year basis.

• Agreements for sales of feedstock for the production of olefin products

These are agreements for sales of feedstock, such as ethane, propane, LPG and NGL

with ESSO as contractual party.



(Tons/Year)

Agreement

Expiry Year

Ethane PTT 454,000 - 605,000 2004 - 2016

Ethane from the 5th

Gas Separation Plant

PTT 370,000 – 500,000 2005 - 2020

Propane PTT 126,000 - 168,000 2004 - 2016

LPG PTT 100,000 - 160,000 2004 - 2016

LPG PTT > 240,000 2010 - 2011*

LPG from the 5th

Gas Separation Plant

PTT > 156,000 2006 - 2021

LPG PTT 336,000 2010 - 2011*

NGL PTT 380,000 – 470,000 2006 - 2021

LPG ESSO 10,000 – 15,000 2008 - 2011** Note* The agreement is made on an evergreen basis whereby it will continue to be in effect after the term of such agreement has lapsed,

unless terminated by either party by a prior written notice.

** Negotiation is in progress for extension of terms.

4.2 Sales Agreements in Relation to Service Business and Others

• Utilities sales agreements and port and product storage services agreements

A. Utilities Sales Agreement with TPC on 1 January 2007 to supply utilities such as

electricity, steam and industrial water, for a period of 10 years

B. Utilities Sales Agreement with TPE on 1 January 2007, to supply utilities such as


C. Utilities Sales Agreement with HMC on 1 January 2007, to supply utilities such as


D. A Small Power Producer Power Supply Agreement with EGAT under which PTTCH

shall supply 32 MW of electricity for a period of 21 years. The commercial

operation date in the form of a Firm Contract commenced on 1 April 1997

E. A Power Supply Agreement with TPC Paste Resin Co., Ltd. to supply 4 MW of

electricity for a period of 15 years, commencing from March 2003

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F. A Power Supply Agreement with TPC (PVC 9 units) to supply 3 MW of electricity

for a period of five years, with a renewal for another term of five years. The power

supply commenced in January 2007.

G. A Utilities Sales Agreement with BPE on 1 August 2009 to supply utilities such as

electricity and steam for a period of 15 years.

H. A Power Supply Agreement with Thai Styrenics Co., Ltd. to supply 1.8 MW of

electricity for a period of 15 years. The power supply commenced in September

1999.

I. An Additional Power Supply Agreement with Tokuyama Siam Silica Co., Ltd.

(“TSSC”) Plant 2 to supply 1.8 MW of electricity for a period of 15 years,

commencing from October 2006

J. A Power Supply Agreement with Thai Tank Terminal Co., Ltd. (“TTT”) to supply 2.5

MW of electricity for a period of 15 years, commencing from January 2002

K. A Steam Supply Agreement with TSSC to supply steam at an average rate of 4

tons per hour for a period of 15 years. The steam supply commenced in October

2002

L. A Steam Supply Agreement with Solvay Peroxythai Limited to supply steam at an

average rate of 4 tons per hour for a period of five years with a renewal for another

term of five years, commencing from January 2004

M. A Power Supply Agreement with Bangkok Industrial Gas Co., Ltd. to supply 5 MW

of electricity, commencing from August 2009 and will be expire on 31 July 2012.

N. A Power Supply Agreement with HMC (Plant 3) on 1 April 2009 to supply utilities

such as electricity, steam and industrial water for a period of 15 years

O. A new Memorandum of Agreement of Product Loading Services to provide product-

loading services through ports and warehouses with TPC for a term of 10 years,

commencing from June 2005 and expiring in May 2015

P. A Memorandum of Agreement with Apex Petrochemical Co., Ltd. to provide loading

services for the Vinyl Chloride Monomer product. Currently, the guaranteed

minimum quantity is 70,000 tons per year. The agreement term is 15 years,

commencing from 1997 with a renewal for another term of five years

Q. A Memorandum of Agreement with Thai-MC Co., Ltd. in relation to loading services

for methanol. Currently, the guaranteed minimum quantity is 32,000 tons per year.

The agreement term is 15 years, commencing from 5 November 1998 and

renewable for another five years

R. A Product Loading Service Agreement with HMC to provide loading services for the

propylene product. The agreement term is 3 years, commencing from 1 December

2009 with a renewal for another term of three years per each renewal. However,

the total term of the agreement shall not exceed 15 years

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4.3 Agreement related to the Polymer Products Value Center

The Memorandum of Agreement on the sales of products which covers the distribution

and marketing activities with PTTPM. The Company will receive 25 per cent of the shares in

PTTPM. These shares were formerly held by PTTCH as the distributor of all polymer products.

4.4 Lease Agreements

• Land lease agreements with the Industrial Estate Authority of Thailand (IEAT)

A. Land plot with an area of 433 rai, 2 ngan, 50 square wah, for construction of a

factory and carrying out the business of producing ethylene and propylene products

(Factory I-1), having a lease term of 30 years from 5 April 1986 to 4 April 2016,

with a renewal for another term of 20 years

B. Land plot with an area of 8 rai, 1 ngan, 95 square wah, for carrying out the

business of pipe laying for product transportation and utility systems, having a

lease term of 30 years from 9 August 1989 to 8 August 2019, with a renewal for

another term of 20 years

C. Land plot with an area of 312 rai, 1 ngan, 89.23 square wah, for the construction of

a factory and operation of an industrial business which includes the existing factory

and the new production of ethylene (Factory I-4), having a lease term of 30 years

which will expire in November 2020

D. Land plot with an area of 41 rai, 2 ngan, 45.83 square wah, for the operation of an

industrial business, having a lease term of 30 years from 28 June 2002 to 27 June

2032

E. Land plot with an area of 7 rai, 1 ngan, 2.58 square wah, for the production of

Ethylene Glycol, Ethylene Oxide, C9 and Resin, having a lease term of 12 years

from 1 July 2005 to 30 June 2017

F. Agreement on Permission to Use the Land for Carrying Out Other Businesses that

Benefit and Relate to the Business in the Map Ta Phut Industrial Estate (for

product transportation), land plot with an area of 7 rai, 1 ngan, 2.33 square wah,

having a lease term starting from 9 August 1989 to 4 April 2016 for carrying out the

business of pipe laying for product transportation

G. Agreement on Permission to Use the Land for Carrying Out Other Businesses that

Benefit and Relate to the Business in the Map Ta Phut Industrial Estate (for

electricity transportation), land plot with an area of 2 rai, 2 ngan, 95.55 square wah,

having a lease term starting from 23 February 1999 to 4 April 2016 for carrying out

the business of pipe laying for electricity transportation

• Land lease agreements with PTT

H. The land located at Map Ta Phut Subdistrict, Muang District, Rayong Province, with

an area of 75 rai, 3 ngan, 91.1 square wah, in order to construct a jetty and

warehouses for liquid chemical products, having a lease term of 30 years from 20

December 1991 to 19 December 2021, with a renewal for another term of 20 years

• Land lease agreement with Energy Complex Co. Ltd.

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29

I. The land located at No. 555/1 Energy Complex Building A Floor 15-18, Vibhavadi

Rangsit Road, Chatuchak, Bangkok, as the head office, comprising: office area of

10,460 square meters, corridor area of 480 square meters and storage area of 90

square meters, having lease term from 1 October 2009 to 30 September 2012

• Land lease agreements with BPE, as a subsidiary of the Company

J. Land plot with an area of 84 rai, 1 ngan, 52 square wah, according to the land

lease agreement no. 12/2533-nor.por. for carrying out the business of producing

polyethylene, having a lease term of 30 years (from 9 August 1990 to 8 August

2020)

K. Land plot with an area of 7 rai, 3 ngan, according to the land lease agreement no.

2/2552, in order to build storages, having a lease term of 3 years (from 4 January

2010 to 3 January 2013)

L. Land plot with an area of 1 rai, 95 square wah, according to the land lease

agreement no. nor.por. 003/2552, for parking area, having a lease term of 3 years

(from 1 June 2009 to 31 May 2012)

M. Land plot with an area of 62.5 square wah, according to the land lease agreement

no. 3/2550- nor.por., in order to carry out the business of pipe laying for product

transportation, having a lease term of 26 years (from 8 May 1994 to 8 August

2020)

5. Future Projects

5.1. Clean fuel and Upgrading Complex Phase 2 Project or Deep Hydrodesulfurization

(DHDS) Project is the project that produces 50 ppm ultra-low sulfur diesel (Euro 4 Standard), in

order to comply with the policy to improve fuel quality that will start being enforced throughout the

country on 1 January 2012. The investment of this project will be approximately USD 220 million. As

of 30 June 2011, the overall project has progressed 98.6%.

5.2. Project EPS (Utility project for PTTCH’s internal use): The objective of Project EPS

is to produce steam and electricity for PTTCH’s internal use for its expansion. This project shall

enhance stability and reliability of PTTCH’s utility, resulted in stability of revenue and overall

performance of PTTCH. Investment of the project is approximately USD210 million. The construction

is expected to be completed in July 2011. As of 30 June 2011, the progress of overall construction

is approximately 99.17%.

5.3. Project Bio Spectrum: Project of color extraction from Methyl Ester for production

of food additives is a joint venture project between PTTCH and Inventa Group with the stake in the

joint venture of 75% and 25%, respectively. PTTCH and Inventa Group conducted the joint feasibility

study of color extraction from Methyl Ester for production of food additives. Methyl Ester from TOL

will be sent to Project Bio Spectrum for colors extraction (Carotenoids) and it will be sent back to

TOL for selling accordingly. PTTCH’s investment in this project is approximately USD11.2 million.

Benefits from this project to PTTCH are the value added for its oleochemical business, benefits from

using raw material in the group and project, and brand creation for PTTCH’s products. Currently, the

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the project has completed its Basic Engineering Package and is working on the Detail Engineering

Package (DEP). As for the environmental related work, the project has sent the IEE report, on SPD,

to the IEAT for its consideration.

5.4. Project Butene-1: The objective of Project Butene-1 is to enhance product value

and co-invest to expand business into new markets. PTTCH’s policy is to add value to the entire

product chain. Upon the project completion, capacity of Butene-1 and Butadiene will be 100,000 tons

per year in aggregate and total investment is approximately THB 6,100 million. Construction is

expected to complete in second quarter of 2014.

In addition to projects of each company mentioned above, the Comapny may undertake

additional projects as appropriate depending on business opportunities that may arise. If that is the

case, the company will disclose information as appropriate in accordance with relevant laws and

regulations.

6. Technical and Management Assistance

- None -

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31

7. Connected Transactions

Connected Transactions between The Company and related companies for the six- month

ended 30 June 2011 are presented according to the unaudited pro forma consolidated financial

information (“Pro forma financial statements”) for the six-month ended 30 June 2011, which is issued

for presenting the financial position and the results of operations from the business combination

under amalgamation of PTTCH and PTTAR on 1 January 2010

Company Name Relationship Connected Transaction For the Six-Month

Ended

30 June 2011

(Million Thai Baht)

1. PTT Plc. The Company’s Major

shareholder, share

some common

executives and

directors

Income statement transaction

Sales of goods or

rendering of services

111,585

Purchases of goods or

receiving of services

172,071

Other income 48

Other expense 74

Loss on difference of crack

spread swap and crude oil

spread swap agreements

1,107

Finance cost 177

Balance sheet transaction

Trade accounts receivable

– related parties

14,077

Trade accounts payable –

related parties

21,229

2. PTT Polymer

Marketing Co.,

Ltd.

Associated company,

the Company hold

25% shares, common

major shareholders,

share some common

directors


Sales of goods or


28,777

Other income 3

Other expense 3



– related parties

4,467

3. Vinythai Plc. Associated company, Income statement transaction

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Ended

30 June 2011

(Million Thai Baht)

the Company hold

24.98% shares, share

some common

directors

Sales of goods or


3,077



18

Other income 2

Dividend income 207



– related parties

577

4. PTT ICT Solution

Co., Ltd.

Associated company,

the Company hold

40% shares, and The

company’s executives

are directors




1

Other income 19

Other expense 95

5. Star Petroleum

Refining Co., Ltd.

Common major

shareholders, share

some common

directors


Sales of goods or


3,871



4,738

Other income 5

Other expense 9



– related parties

517


related parties

1,100

6. PTTEP Siam Ltd. Subsidiary of related

company which has

common major

shareholder


Sales of goods or


30



– related parties

6

7. PTT Exploration Common major Income statement transaction

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33


Ended

30 June 2011

(Million Thai Baht)

and Production

Plc.

shareholder and share

some common

directors

Sales of goods or


9



– related parties

3

8. PTT Asahi

Chemical Co.,

Ltd.

Common major

shareholder


Sales of goods or


180

Other income 2



– related parties

64

9. IRPC Plc. Common major


some common

directors


Sales of goods or


2,593



597

Other income 6



– related parties

2


related parties

68

10. HMC Polymers

Co., Ltd.

The Company’s

shareholder


Sales of goods or


2,454



130



– related parties

557


related parties

33

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34


Ended

30 June 2011

(Million Thai Baht)

11. Bangchak

Petroleum Plc.

Common major


some common

directors




6



related parties

1

12. Thai Industrial

Gas Plc.

Share some common

directors


Sales of goods or


2



43

Other expense 1



related parties

2

13. PTT International

Trading Pte. Ltd.

Common major

shareholder


Sales of goods or


761



424

Other income 8



– related parties

127


related parties

64

14. Dhipaya

Insurance Plc.

Common major


some common director




160

Other income 523

Other expense 52

15. Energy Complex

Co., Ltd.

Common major

shareholder


Other expense 29

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35


Ended

30 June 2011

(Million Thai Baht)

16. Thai Oil Plc. Common major


some common

directors


Sales of goods or


1,519



372



– related parties

226


related parties

193

17. Business

Services Alliance

Co., Ltd.

Common major

shareholder




97

Other expense 27

18. PTT Polymer

Logistic Co., Ltd.

Common major

shareholder


Sales of goods or


18



348

Other expense 98



– related parties

3

19. Others Income statement transaction

Sales of goods or


130



12

Other income 1

Justification and Rationale for Connected Transaction

Sales of products by The Company to connected parties have been carried out mainly for

such connected parties to convert the Company’s products to their own products for their own sales.

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36

The selling prices should be corresponding to the formula as specified in the long-term off-take

agreements or at the spot prices, as the case may be. Prices must be proven reasonable to both

parties and based on market prices without any undue transfer of interests. When providing services

to connected parties, such transactions should be for transportation or product storage costs of such

related parties. The charge for services should be market-based and benefit both parties without any

transfer of interests.

Transactions involving purchases products, feedstock and/or services from related parties

are being conducted as per normal business practice. The volume of products or feedstock that the

Company purchases, or the services that the Company receives from related parties are for the

need of the Company business’s operations. The purchase price for products or services from the

related parties are according to terms of the contracts, which benefit the Company and such related

parties and without any transfer of interest or with any special arrangements. In addition, the

Company needs to purchase its feedstock from related parties as such related parties have the

production capacity to feed its products to the Company and such feedstock has the specifications

as demanded by the Company’s plants. The Company also benefits from lower transportation cost

since it is able to transfer such feedstock from related parties through its internal secured piping

systems. This is because some related parties have their plants, which produced the Company’s

feedstock, located near Map Ta Phut, Rayong.

8. Debts and Financial Obligations

8.1. Long-Term Credit Facilities Agreements Assumed from PTTAR

Agreement Summary of Terms and Conditions

1 USD 300,000,000 Credit Facilities

Agreement dated 20 December

2005 between syndicated

financial institutions and PTTAR

1. The lender shall provide the following credit facilities:

• Tranche A : a USD term loan in aggregate amount of

USD 100,000,000

• Tranche B : a USD revolving long-term loan in

aggregate amount of USD 200,000,000

2. Term of Repayment :

• Tranche A : to be repaid in 12 installments within 7

years from the date of this agreement.

• Tranche B : to be repaid on the last day of the tenor

under the relevant promissory notes but shall not

exceed 5 years from the first availability date

3. Interest rate : LIBOR plus applicable margin

2 THB 13,200,000,000 Syndicated

Loan Agreement dated 20

December 2005 between

syndicated domestic financial

1. The lender shall provide 4 credit facilities which as of 30

June 2011, the following 2 facilities remain outstanding :

• Tranche D : a THB revolving long-term loan in

aggregate amount of THB 4,800,000,000

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institutions and PTTAR • Tranche E : a THB short-term loan in aggregate

amount of THB 2,200,000,000

2. Term of Repayment :

• Tranche D and Tranche E : to be repaid on the last

day of the tenor under the relevant promissory notes

but shall not exceed 7 years from the first availability

date

3. Interest Rate :

• Tranche D : Fixed deposit rate plus applicable margin

• Tranche E : MMR

3 THB 6,000,000,000 Credit

Facilities Agreement dated 26

May 2008 between a domestic

financial institution and PTTAR

1. The lender shall provide the following 2 credit facilities :

• Facility 1 : THB long-term loan in the amount of THB

2,000,000,000

• Facility 2 : THB Revolving long-term loan in the amount

of THB 4,000,000,000

2. Term of repayment :

• Facility 1 : to be repaid in full within 9 years from the

date of the agreement

• Facility 2 : to be repaid on the last day of the tenor


exceed 9 years from the date of the agreement

3. Interest rate : Fixed deposit rate plus applicable margin

4 THB 2,500,000,000 Credit Facility

Agreement dated 22 July 2008

between a domestic financial

institution and PTTAR

1. The lender shall provide a THB long-term credit facility in

the amount of THB 2,500,000,000


• to be repaid in 3 installments within 10 years from the


3. Interest rate : THBFIX plus applicable margin


Agreement dated 22 August 2008

between a domestic financial


1. The lender shall provide a THB revolving long-term credit

facility in the amount of THB 2,000,000,000


• to be repaid on the last day of the tenor under the

relevant promissory notes but shall not exceed 10

years from the date of the agreement



Agreement dated 17 November

1. The lender shall provide a THB long-term credit facility in

the amount of THB 3,000,000,000

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2009 between a domestic



• to be repaid in full within 8 years from the first

availability date

3. Interest rate : Prime rate minus applicable margin

7 THB 6,000,000,000 Credit


January 2010 between a

domestic financial institution and

PTTAR

1. The lender shall provide 2 long-term credit facilities in an

aggregate amount of THB 6,000,000,000 :

• A long-term loan facility and revolving long-term loan

facility in the amount of THB 3,000,000,000 which the

revolving long-term loan facility shall be transferred to

long-term loan facility on the 5th anniversary of the


• A short-term loan facility in the amount of THB

3,000,000,000


• Long-term loan facility : to be repaid in 10 installments

within 10 years from the date of the agreement

• Short-term loan facility : to be repaid on the last day

of the tenor under the relevant promissory notes but

shall not exceed 5 years from the date of the

agreement

3. Interest rate :

• Long-term loan facility : Fixed Deposit Rate plus

applicable margin

• Short-term loan facility : MMR

8 THB 400,000,000 Credit Facility


between a foreign financial


1. The lender shall provide a revolving long-term loan facility

in the amount of THB 400,000,000



relevant promissory notes but shall not exceed 3 years

from the date on which PTTAR accepted the Offer

Letter of the lender

3. Interest rate : LIBOR plus applicable margin or MMR


Agreement dated 13 September




in the amount of THB 2,000,000,000




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39


September 2018


10 USD 200,000,000 Credit Facilities


2010 between syndicated lenders

and PTTAR

1. The lenders shall provide the following 2 loan facilities:

• Tranche A : a long-term loan facility in the amount of

USD 80,000,000

• Tranche B : a revolving long-term loan facility in the

amount of USD 120,000,000


• Tranche A : to be repaid in full within 5 years from the


• Tranche B : to be repaid on the last day of the tenor















12 THB 7,000,000,000 Credit


September 2010 between a


PTTAR

1. The lender shall provide the following loan facilities :

• Facility 1 : THB 3,500,000,000

• Facility 2 : THB 3,500,000,000


• to be repaid in 15 installments within 10 years from the


3. Interest rate : Fixed Deposit Rate plus applicable margin

13 THB 9,897,500,000 Credit


September 2010 between

syndicated lenders and PTTAR

1. The lender shall provide the following loan facilities:

• Facility I : a long-term loan facility in the amount of

THB 9,897,500,000

• Facility II : a revolving long-term loan facility in the

amount of THB 3,959,000,000 (the facility amount on

the date of the agreement shall equal to zero and shall

gradually increase upon the repayment of Facility I)


• Facility I : to be repaid in 20 installments within 10

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40



• Facility II : to be repaid on the last day of the tenor




14 USD 100,000,000 Credit Facility

Agreement dated 3 November




in the amount of USD 100,000,000 (or a THB equivalent)




years from the date on which PTTAR accepted the

Offer Letter of the lender

3. Interest rate : THBFIX or LIBOR plus applicable margin


Agreement dated 28 December










16 Shareholder Loan Agreement 1. Shareholder shall provide a long-term loan facility in the

amount of THB 5,050,053,041.29


• One bullet repayment within 30 days from the maturity

date of the USD Notes

3. Interest rate : MLR

8.2. Working Capital Credit Facilities Agreements Assumed from PTTAR


1 THB 1,800,000,000 Short-Term

Credit Facility Agreement dated 2

March 2009 between a domestic


1. The lender shall provide a short-term loan facility in the

amount of THB 1,800,000,000 to be repaid in full within 3


2. Interest rate : MMR


Credit Facility Agreement dated

16 December 2008 between a



amount of THB 1,000,000,000 which shall be repaid on

the last day of the tenor under the relevant promissory

notes issued by the borrower to the lender

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PTTAR 2. Interest rate : MMR

3 THB 600,000,000 Short-Term


17 December 2008 between a


PTTAR


amount of THB 600,000,000 which shall be repaid on the

last day of the tenor under the relevant promissory notes

issued by the borrower to the lender




30 April 2008 (as amended on 11

June 2008) between a domestic



amount of THB 1,000,000,000 which shall be repaid on

the last day of the tenor under the relevant promissory

notes issued by the borrower to the lender


5 EUR 40,000,000 Short-Term


October 2008 (as amended on 10

September 2010) between a

foreign financial institution and

PTTAR

1. The lender shall provide a short-term loan facility (EUR

40,000,000) and a guarantee facility (EUR 10,000,000) in

an aggregate amount of EUR 40,000,000

2. Interest Rate and Fee :

• Short-term loan : MMR

• Letter of guarantee : guarantee fee as quoted by the

lender


Credit Facility and USD

30,000,000 Foreign Exchange

Facility Agreement dated 24

January 2011 between a foreign



amount of THB 1,200,000,000 and a foreign exchange

facility in the amount of USD 30,000,000

2. Interest rate and fee :

• Short-term loan : MMR

• Foreign exchange facility : Foreign exchange fee as

quoted by the lender



February 2010 between a


PTTAR


amount of THB 3,000,000,000 which shall be repaid within

90 days from the date of the relevant promissory notes.


8 USD 30,000,000 Short-Term


24 February 2011 between a


PTTAR


amount of USD 30,000,000 or an equivalent amount which

shall be repaid within 180 days from the date of the

relevant promissory notes


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42

8.3. Debentures Assumed from PTTAR


1 Unsecured debenture of PTTAR

no. 1/2009 due 2014

1. The debenture was issued on 30 April 2009 comprising

15,000,000 units at THB 1,000 each in the total amount of

THB 15,000,000,000 for the tenor of 5 years maturing on

30 April 2014

2. Coupon rate : 5.5% per annum, payable quarterly on 30

January, 30 April, 30 July and 30 October each year

during the term of the debentures

3. The outstanding balance as shown in the latest financial

statements of PTTAR as of 30 June 2011 was THB

15,000,000,000

2 USD 300,000,000 seven-year

unsubordinated and unsecured

debentures (“USD Notes”)

1. USD Notes were issued on 20 July 2005 in the amount of

USD 300,000,000 with the tenor of 7 years maturing on 20

July 2012

2. Interest Rate : 5.5% per annum, payable semi-annually

with first interest payment on 20 January 2006

3. The outstanding balance as shown in the latest financial

statements of PTTAR as of 30 June 2011 was THB 7,252

million

8.4. Long-Term Credit Facilities Agreements Assumed from PTTCH


1 THB 9,000,000,000 Credit


September 2010 between


PTTCH

1. Lender shall provide 2 credit facilities as follows:

• Facility 1 : long-term loan facility in the amount of

THB 3,000,000,000

• Facility 2 : long-term loan facility in the amount of

THB 6,000,000,000


• Facility 1 : To be repaid in 14 equal semi-annual

installments from the date falling 42 months from the


• Facility 2 : To be repaid in 10 equal semi-annual

installments from the date falling 66 months from the





1. Lender shall provide a loan facility in the amount of THB

1,600,000,000

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2009 between domestic financial

institution and PTTCH


• To be repaid in 8 equal semi-annual installments

from the date falling 42 months from the date of this

agreement but shall not exceed 7 years from the







1. Lender shall provide a credit facility in the amount of THB

3,000,000,000


• To be repaid in full in one lump sum within 30 June

2020



Agreement Dated 30 September



1. Lender shall provide a revolving long-term loan in the



• To be repaid in 2 equal installments on 28

September 2018 and on 30 September 2020


5 USD 100,000,000 Credit Facility




1. Lender shall provide a term loan facility in the amount of

USD 100,000,000



from the date falling 66th month from the date of the

agreement but shall not exceed 21 September 2020





institution and Thai Olefins Plc.

as Borrower


THB 3,000,000,000



from the date falling 24 months from the date of the

agreement




2008 between foreign financial



THB 1,500,000,000



from the date falling 36 months from the date of the

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44


agreement

3. Interest rate : Fixed interest rate



between foreign financial



THB 1,000,000,000


• To be repaid in 9 equal semi-annual installments with

first installment on 1 October 2011




between domestic financial



THB 7,500,000,000



with first installment on 29 August 2011


8.5. Working Capital Credit Facilities Agreements Assumed from PTTCH


1. THB 4,200,000,000 Revolving


22 September 2009 between


PTTCH

1. Lender shall provide a revolving credit facility in the

amount of THB 4,200,000,000 with the term of repayment

to be mutually agreed between the parties provided that

the loan shall be repaid in full within 5 years from the


2. Interest Rate : Fixed Deposit Rate plus for applicable

margin

2. Credit Facilities Agreement dated

28 November 2007 between


PTTCH

1. Lender shall provide credit facilities comprising

promissory note (P/N), trade finance facilities (L/C,

Acceptance and Shipping Guarantee) and bank

guarantee facility in the aggregate amount of USD

10,000,000

2. Foreign exchange facility in the amount of USD

10,000,000

3. Overdraft Credit Facility




Lender shall provide an overdraft credit facility in the amount

of THB 15,000,000


21 September 2006 between

1. Lender shall provide uncommitted short-term loan in the

amount of THB 1,200,000,000 consisting of overdraft

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45



PTTCH

credit facility and bank guarantee facility

2. Forward Exchange (FX) Contracts in the amount of USD

10,000,000

5. Simplified Agreement on Bank

Transaction dated 26 September

2006 between foreign financial


Lender shall provide credit facilities comprising promissory

note, overdraft facility, foreign exchange facility and other

transactions


4 August 2008 between foreign

financial institution and PTTCH

Lender shall provide the following credit facilities :

1. Overdraft credit facility : THB 5,000,000

2. Cash and trade finance facilities (short term loans,

packing credit and trust receipt) : in aggregate amount of

not exceeding THB 200,000,000

3. Trade finance facilities (L/C and shipping guarantee) : in

aggregate amount of not exceeding USD 42,330,000

4. Net variation : USD 33,350,000

5. Maximum daily-delivery limit for FX contracts : USD

50,000,000

7. Banking Facility Agreement dated

20 August 2009 between a


PTTCH

Lender shall provide PTTCH the working capital facilities in

the amount of THB 100,000,000 which are set out as follows:

1. Import credit facility : THB 50,000,000

2. Import cash limit : THB 50,000,000

3. Guarantee facility : THB 100,000,000

4. FOREX facility : USD 10,000,000

8. Various agreement letters


institution and TOC dated 30

August 2005

Various agreement letters between TOC and domestic

financial institution :

1. Request for overdraft credit facility dated 30 August 2005

from TOC to a domestic financial institution proposing for

an overdraft credit facility in the amount of THB

30,000,000

2. Overdraft credit agreement dated 30 August 2005

between TOC and a domestic financial institution in an

amount of THB 30,000,000

3. Amendment of overdraft credit agreement dated 30

August 2005 regarding disbursement allocation between

bank’s branches

4. Agreement dated 30 August 2005 permitting bank to set-

off from TOC’s bank account to repay loan, interest and

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46


insurance premium

5. Acknowledgement of debt dated 30 August 2005 in form

of L/C and T/R in the amount of THB 100,000,000

6. Request for guarantee facility dated 30 August 2005 by

TOC to a financial institution for a guarantee facility in the

amount of THB 50,000,000

9. Correspondence dated 24 April

2007 detailing the credit facilities

for the year 2007 between


PTTCH

Lender shall provide the following credit facilities to PTTCH :

1. Overdraft credit facility : THB 30,000,000

2. Revolving credit facilities (short term loan, L/C, trust

receipt, bank guarantee) : in aggregate amount of not

exceeding THB 130,000,000

3. Forward/Swap/Option facility : THB 8,200,000,000

10. Overdraft Credit Facility

Agreement dated 15 October



Lender shall provide an overdraft credit facility to PTTCH in

the amount of not exceeding THB 30,000,000


19 November 2009 between


PTTCH

Lender shall provide the following credit facilities to PTTCH :

1. Trade finance facility (L/C and trust receipt) : in the


2. Short term loan facility : in the amount of THB

1,000,000,000

8.6. Debentures Assumed from PTTCH


1. Unsubordinated and unsecured

debentures of PTTCH no. 1/2007

1. Series 1 totalling THB 2,100,000,000 and series 2 totalling

THB 2,800,000,000 with maturity dates on 10 October

2012 and 10 October 2017, respectively

2. Interest rate :

• Series 1 : 4.58% per annum

• Series 2 : 5.50% per annum

Interest rate payable twice a year on 10 April and 10

October

3. The remaining outstanding balance in the latest financial

statements of PTTCH as of 30 June 2011 was THB

2,096,000,000 for Series 1 and THB 2,791,000,000 for

Series 2

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47



debenture of PTTCH no. 1/2008

due 2015

1. The debentures issue totalling THB 500,000,000 with

maturity date on 22 October 2015

2. Interest rate : 5.6% per annum, payable twice a year on

22 April and 22 October

3. The remaining outstanding balance as shown in the latest

financial statements of PTTCH on 30 June 2011 was THB

500,000,000




THB 4,000,000,000 with maturity dates on 4 December

2013 and 4 December 2015, respectively

2. Interest rate :

• Series 1 - 5.3% per annum for first 3 years

- 6.0% per annum for year 4 and 5

• Series 2 - 5.3% per annum for first 3 years



Interests are payable quarterly on 4 March, 4 June, 4

September and 4 December each year

3. The remaining outstanding balances as shown in the latest

financial statements of PTTCH as of 30 June 2011 were

THB 8,000,000,000 for Series 1 and THB 4,000,000,000

for Series 2




THB 1,942,000,000 with maturity dates on 19 June 2016

and 19 June 2019, respectively

2. Interest rate :

• Series 1 – 4.9% per annum

• Series 2 – 5.5% per annum

Interests are payable twice a year on 19 June and 19

December


financial statements of PTTCH as of 30 June 2011 were

THB 1,058,000,000 for Series 1 and THB 1,942,000,000

for Series 2

5. USD 300,000,000 unsubordinated

and unsecured debenture of

PTTCH

1. USD 300,000,000 senior unsecured debentures of PTTCH

maturing on 24 June 2015

2. Interest rate is 5.5% per annum, payable twice a year on

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48


24 June and 24 December


financial statements of PTTCH as of 30 June 2011 was

THB 9,240,000,000

8.7. Liabilities which may arise from Tax Assessments

PTTAR and PTTCH could be subject to a tax audit before dissolutions of the companies

under the amalgamation process. The Revenue Department has the authority to perform such tax

audit despite that the PLCA does not require the two companies to liquidate their accounts before

the registration of the Company. Such tax assessments of PTTAR and/or PTTCH may result in tax

liabilities which would have to be assumed by the Company.

However, as PTTAR and PTTCH had jointly engaged a tax advisor to perform audit on

key tax liabilities and risks in the past 2 years in respect of each company to identify any material

tax impacts on the companies, the tax advisor reported that there was no material tax liability or risk

relative to the sizes and business operations of the companies.

8.8. Warrants

When Rayong Refinery Plc. (“RRC”) and The Aromatics (Thailand) Plc. (“ATC”) were

amalgamated into PTTAR, PTTAR assumed all rights and obligations under 57,999,996 warrants to

purchase ordinary shares which were issued and offered for sale to directors, management and

employees of RRC, including the management and employees of PTT who were seconded to work

with RRC on a full time basis. The exercise price and exercise ratio of these warrants were adjusted

according to the terms and conditions of the warrants which thereafter became the warrants of

PTTAR (“PTTAR ESOP Warrants”).

The remaining PTTAR ESOP Warrants owned by PTTAR’s or PTT’s directors,

management or employees will be transferred to the Company. As of 29 August 2011, there are

12,939,342 units of PTTAR ESOP Warrants outstanding, with the conversion ratio of 1 unit warrant

per 0.5167553 of the Company’s shares and the exercise price of 23.22 per share.

According to the terms and conditions of PTTAR ESOP Warrants, PTTAR must adjust the

exercise price and exercise ratio of PTTAR ESOP Warrants when it enters into an amalgamation as

follows:

1. The exercise price of the Company ESOP Warrants

= Exercise price before the change of PTTAR ESOP Warrants .

The Swap Ratio for share of the Company per 1 PTTAR share

2. The exercise ratio of the Company ESOP Warrants

= Exercise ratio before the change of PTTAR ESOP Warrants X

The Swap Ratio for share of the Company per 1 PTTAR share

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49

Hence, the new exercise price is Baht 46.32 per the Company share, and the new

exercise ratio is 1 warrant per 0.2590478 the Company share.

The adjustment of the exercise price and exercise ratio will be effective on the date the

public companies registrar registers the amalgamation.

All terms and conditions of the warrants shall remain unchanged except for the exercise

price and exercise ratio, which shall be equivalent to those stated above.

9. General Business Risks (Systematic Risks)

9.1. Product and Feedstock Price Risks that may Affect the Gross Margin

The volatility in product and feedstock prices from PTTAR’s and PTTCH businesses,

which will be transferred to the Company, may significantly affect the Company’s performance as

products and feedstock prices, or price formula, are quoted according to the world market prices.

These prices are directly impacted by the changes in products demand, which, in turn, are the

resulted of the change in global economy, or the domestic economy in major consuming countries,

as well as the change in capacity of a certain product in the world market. All these factors are

beyond the Company’s control. Therefore, such future volatilities may negatively affect the

Company’s businesses, financial condition, operating results, and business prospects that the

Company will take from PTTAR and PTTCH.

In order to mitigate these price fluctuation risks, the Company has the policies to

purchase forward contracts as risk management tools, and to have a clear pricing formula that

reflects the reference prices in major markets in the sale of products and feedstock contracts for the

Company’s and its group. These policies aim to mitigate the volatility to some extent. The Company

also applies the pricing formula based on the production cost as appropriate in the sales of products

and feedstock contracts of the Company, or between the Company and other companies within its

group, or among the companies within its Group. This should help mitigate the impact of market

prices of some products fall below the production cost to the Company or other companies within

the Group, who is the suppliers of the Company. For example, the price of natural gas, which is the

Company’s major feedstock, has been reflected into the price of plastic pellets, which are its major

downstream products. Such policy allows costs of the Company’s and the companies within the

Group’s feedstock to have more flexibility to better reflect end-product prices, and to cushion price

volatility, especially during the industry’s downturn at some extent.

The Company continuously seeks business opportunities, especially in the downstream

businesses and those businesses that are friendly to the environment. Such strategy will help the

Company reduce the impact of the price volatility on certain product segments, because the price

cycle of certain downstream business (such as Polymers) may differ from the price cycle of the

upstream business (such as ethylene). In addition, the increase in sale proportion from the

downstream business and the increase of sale of highly innovative and environmental friendly

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50

products will help reducing the price competition pressure, which, in turn, will help the Company

compete and achieve growth in the long term.

The Company has put in place the centralised production planning in aromatics, olefins,

polymer products, ethylene oxide-based performance products, and refined petroleum products

business unit, so that the distribution of feedstock for each business unit and production in individual

product groups may achieve maximum efficiency and highest aggregated returns. This will help

reduce the impact of price fluctuations on feedstock and products to some extent.

The Company will continue to search for business opportunities to expand the production

into potential downstream, and environmentally friendly products, so as to mitigate the negative

impact of the falling price on individual products caused by the price cycle of some downstream

products, such as polymer, which sometimes differs from that of ethylene, which is an upstream

product. The expansion into downstream petrochemicals, or the increase in the ratio of downstream

products to upstream products, as well as the expansion into higher value-added, or more

innovative, downstream, and environmentally-friendly products, will lessen the impact of price

competition, and give the Group an opportunity to enjoy long-term sustainable growth.

The Company recognizes both short-term and long-term impact if the global economic

has not recovered as expected. Such incident will potentially lead to a significant decline in the

demand for its products. Therefore, the Company will setup plans to expand its markets of some

products that have potential or an attractive gross margin into the countries or regions having solid

demand for the group’s products. Meanwhile, the Company and its group will develop products that

are able to respond to the requirement of the markets, which would help lessen the impact of price

volatility of its main commodity products to a certain extent.

9.2. Cluster-of-Plants Risk

Large-sized petrochemical plants are usually located near their feedstock suppliers or

major customers to reduce logistics costs of their feedstock or products. The Company’s and its

group’s facilities are located in Map Ta Phut Industrial Estate and nearby areas, which are close to

those of feedstock suppliers or major customers. Serious damage or losses to the plants, offices, or

pipelines of the Company and its group or the Company’s and its group’s main suppliers or

customers could lead to a severe impact on the operations of the Company or its group.

However, the Company will implement a security system at its plants that is up to an

international standard, while develop a policy to procure all-risk insurance policies for commercial

operations of the Group or of subsidiaries that have carried out their commercial operations, and all-

risk insurance policies for undergoing construction projects to meet an international standard, so as

to mitigate the impact in the case of severe damage to its Group.

9.3. Environmental Risk

Generally, petrochemical operations tend to be associated with chemical activities and

others that could harm human health and environment. Accidents, malfunctions, or other mishaps

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may significantly harm stakeholders, investment plans, the operations, and the image of the

Company and its Group, in both short term and long term.

However, the Company will develop its framework policies on occupational health, safety,

and environment, starting from planning to selecting technologies and production processes,

designing installation to setting up work processes, building up safety culture, having environmental

risk assessment, preventing and minimising environmental impact on stakeholders, assuring strict

compliance with laws and regulations and proactively improving environmental management to

enhance eco-efficiency or energy efficiency for sustainable growth. The Company will follow the ISO

14001 environmental practice, prepare action reports in line with environmental prevention and

mitigation plans and regularly report environment monitoring results to the Office of Natural

Resources and Environment Policy and Planning, while communicating with all parties involved. The

Company and its group will establish an environmental consulting group which comprises members

of communities around the plants and relevant government agencies, so that they take part in the

plants’ safety and environmental activities, for accurate understanding of the monitored risks.

9.4. Risk from Changes in the Government’s Rules, Regulations and Policies, which may

Adversely Affect the Businesses

Like other domestic operators, business operations transferred from PTTAR and PTTCH

are subject to the laws and strict supervision of the government. Therefore, the Company’s

businesses are exposed to direct impact from the changes in government policies, such as the LPG

price control policy, environmental policy and etc.

Although the Company may not be directly affected by the lawsuit filed with the

Administrative Court by some non-governmental organisations, with respect to the compliance with

section 67 paragraph two of the Constitution, the Company may suffer an indirect impact in its

procurement of public utilities from third parties, or due to the suspension of product off-taking by its

affected customers, or any unpredictable future changes in the environmental regulations. These

factors may negatively affect the Company’s business, financial condition, operating results and

business prospects.

The Company has a contingency plan to cope with the procurement of public utilities, in

order to minimise the impact. However, the Company is unable to assure that such plan can be

implemented without any obstruction or delay, or an increased cost.

9.5. Foreign Exchange Risk

The Company’s revenue and costs are, for the most part, in US Dollars, and therefore

has a natural hedge. However, the Company bears risks from currency exchange rates that affect

the difference between its revenue and feedstock costs and debts denominated in foreign

currencies. Should the Baht strengthen against the US Dollar, it would pressure the Company’s

profitability in Baht term. This clearly indicates that fluctuation and changes in the Baht against the

dollar will have a significant impact on the Company and the Group and will be beyond control of the

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Company and the Group. Therefore, the exchange rate volatility may either positively or negatively

affect the Company and its Group.

To reduce such foreign exchange risk, the Company will develop a policy to manage

cash flows for revenue and expenditure in the same foreign currencies, by ensuring that its foreign

debts mostly match the net income which is the product to-feedstock-margin, and using other

financial tools, such as forwards, to lessen the impact in a timely manner.

9.6. Interest Rate Risk

The Company incurs loans with either fixed interest rates or floating interest rates that are

subject to an increase following the economic recovery and inflation trends. Therefore, the Company

may conduct interest rate swaps, as a part of these loans, to arrive at suitable fixed and floating

interest rates.

Due to the business expansion plan of the Company and to accommodate long-term

growth, the Company cannot avoid the risks resulting from the possible increase in the interest rates

in financial market, especially when the Company and its group wishes to obtain loans from the

financial market. Hence, the Company or its group may not be able to fully obtain the desired

amount of loan, or may have an increased financing cost.

To reduce the impact of fluctuation in interest rate in financial market, and of rising

interest rate when the Company is in demand for loans:

• The Company may prepare to seek short-term credit lines from financial institutions, while

the market interest rates are high (bridge finance); and

• The Company may take into account the structure of its fixed rate loans and floating rate

loans. The ratio of fixed rate loans and floating rate loans will be adjusted to ensure that it

is properly balanced and is in accordance with the capital requirement, as well as the

circumstances and interest rate trend.

10. Corporate Specific Risk

10.1. Conflict-of-Interests Risk

PTT, the largest shareholder with 48.92% shareholding in the Company, is a major

supplier of feedstock with the supply of over four-fifths of the total feedstock that the Company and

its group use in their olefins production. A conflict of interest between the Company, itsgroup and its

largest shareholder is therefore possible, and could affect the Company’s capability in maximizing its

benefits.

However, the Company will carry on its business in accordance with the principle of good

corporate governance by disseminating information on the importance of and the compliance with

the principle of good corporate governance with respect to the business operations of the Company

and its group. These practices are expected from, and required to be implemented by, personnel at

all levels, i.e. the Board members, executives, employees, subcontracted workers, and contractor’s

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53

employees, who must acknowledge and follow the policies and guidelines which include guidelines

on transactions with shareholders, subsidiaries or associated companies of shareholders, directors

or executives, as well as connected transactions. Those having interest in the matter are excluded

from voting at both the board of directors meeting and shareholders meeting, to prevent a possible

conflict of interest. In order to list on the Stock Exchange of Thailand, the Company is committed to

complying with the Securities and Exchange Act, B.E. 2535 (1992), as amended. The Company will

appoint independent directors and the audit committee to safeguard the interests of minority

shareholders, and ensure fair treatment to its stakeholders.

10.2. Risks from Shortage of the Main Aromatics Feedstock

The main aromatics feedstock is condensate. The shortage of condensate can be caused

by several factors, such as the major supplier’s (PTT) inability to supply such feedstock in time or at

the required amount, the delay of feedstock carriers, etc. Such shortage may result in the Company

losing its opportunity to generate income, and may also create negative impact on the Company’s

operating results and business prospects.

However, the Company will be able to use reformate from the refinery as a replacement

and will be able to make a reserve of condensate stock for production for seven days, procure

condensate from other foreign sources, or use naphtha as alternate feedstock. The Company also

closely monitors feedstock procurement and transport while preparing additional channels for

condensate loading and storage.

10.3. Supplier Risk

The Company and some companies in its group may have to rely on PTT as the major

supplier of feedstock. Therefore, the Company and its group bear a supplier risk to some extent.

As the major feedstock supplier is also the major shareholder of the Company, coupled

with the facts that the supply contracts are of long term nature, and that petrochemical suppliers

generally have limitation on securing new customers, there is a slim chance that this feedstock

supplier would not perform its obligations under the contracts or amend the supply volume on short

notice. Consequently, the Company and some companies in its group bear only a limited risk by

relying on such supplier.

10.4. Risks from Dependence on Imports of Crude Oil and other Feedstock Especially from the

Middle East for the Refining Business

The Company’s refinery will base its crude oil feed choice on properties and prices, as

well as product slates. The ability to procure crude oil and other feedstock from various regions

depends on a number of factors that are beyond control of the Company. This includes unrests and

political stability of countries within the region, crude oil logistics, routes made by crude oil carriers,

government regulations concerning the oil and energy industry, and the climate and overall economy

of the region.

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Although, prior to the amalgamation, PTTAR and PTTCH has never faced major

obstacles in purchasing adequate supplies of crude oil and other feedstock, the Company cannot

assure that, after the amalgamation, an adequate supply of crude oil will continue in order to

maintain the current refinery operations at acceptable prices and on satisfactory terms. If the

Company is unable to source sufficient crude oil from the spot markets, or other sources or

suppliers, in the amount it requires to maintain the refinery levels, or if the Company is only able to

obtain adequate volumes at unfavorable prices or on unfavorable terms, its financial condition,

operating results and business prospects may be adversely affected.

However, the Company has entered into a partial term crude oil purchase agreement to

lower the risks concerning spot-market supply, and reserves 14– 18 days’ worth of crude oil for

production. In addition, the Company may appoint a task force to constantly monitor market changes

to provide it with information about crude oil and feedstock market trends, as well as information

about transportation potentially affecting gross margins to ensure acceptable level of risks.

10.5. Plant Operation Risk

In operating plant machines of the Company and its group, there are possibilities where

malfunctions or interruptions could be unexpectedly caused by various reasons, both internally and

externally. These occurrences include human errors, accidents, insufficient utilities (electricity, water,

steam, etc.), machinery failures, and failure at feedstock plants which cuts the supply, or failure at

customers’ plants which causes disruption to the agreed delivery. These occurrences could lead to

an interruption of, or a change in, the businesses of the Company or its group, and may create a

significant impact on its revenue and profits.

However, the Company will establish a contingency plan to control emergency accidents,

to mitigate damage to properties and to prevent harm that could be caused to personnel and

environment to achieve normalisation of the plants as soon as possible. Furthermore, the Company

will ensure a reserve of necessary materials and equipments and will carry out maintenance of

machines of all production units within the specified time. It will also put in place a preventive/

predictive maintenance plan to minimise machinery-related risks. It will also prepare manuals and

procedures for machinery operation and maintenance, as well as will provide regular training to

review the manuals and procedures to minimise errors, accidents and disruptions. There will be

policies for the Company and its subsidiaries that are in commercial operation to have an all-risk and

business interruption insurance policy in accordance with international standards, in order to

minimise the Group’s losses in case such risks occur.

10.6. Risks from the Inability to Access a Part of the Crude Oil Pipeline for Maintenance and

Repairs

The Company’s refinery is linked to offshore Single Point Mooring (SPM) facilities to be

jointly owned by the Company and Star Petroleum Refining Co., Ltd. (“SPRC”). Construction of a

related crude oil pipeline was completed in 1993, most of which was laid on the sea floor. Later, the

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Industrial Estate Authority of Thailand (“IEAT”) reclaimed land for industrial use, therefore resulting in

part of this pipeline being buried under the reclaimed land. BLCP Power Co., Ltd. (“BLCP”) was

permitted by IEAT to use part of such reclaimed land for the purpose of constructing a power

generation plant, a part of which lies over the pipeline. This may limit the Company’s prompt access

to the pipeline to take remedial actions should leaks develop or should it need to inspect and do

maintenance work to reduce the risks of such leaks.

However, PTTAR and SPRC have jointly carried out a study to identify guidelines for the

maintenance and inspection of crude oil pipelines and have jointly negotiated with IEAT and BLCP in

order for the crude oil pipelines to be laid on the reclaimed land to replace the buried pipelines. This

would provide the Company and SPRC with an access to carry out repair and maintenance works

for such pipelines. SPRC has been assigned to design plan the construction of the pipeline in

question. Construction and link-up are expected to complete in 2013, coinciding with SPRC

Refinery’s turnaround maintenance.

10.7. Project Risks

The project risks of the Company and its group may be categorised into 2 (two) types,

i.e. construction-typed project risks and risks in respect of Mergers & Acquisitions (M&A risks).

Most construction projects are connected in terms of feedstock and product transfers, or

transfers of electricity and steam between product lines and utilities system. Therefore, the Company

Group cannot avoid many forms of project risks, which, if realized, could cause various impacts,

mainly on project delay, cost overrun, and the worthiness of the investment projects. The risk that

could cause such impacts are, for instance, feedstock supply risk, environmental risk, health risk,

project design risk, equipment and machinery procurement risk, machinery execution risk, market

risk, and logistics risk, etc.

The M&A risks may be related to other projects or production units which are currently

operated by the Company and its group, or support the Company’s long-term business plan to

diversify its investment and create added values to its diversified downstream products, including the

expansion of its businesses to environmentally-friendly products. Certain risks may be different from

the construction-typed project risks, and could, if realised, cause material impact on the project

goals, such as the risks from changes in significant economic assumptions of the projects, which

cause the reduction in project yields, the related legal risks, technology risk, and human resources

risk, etc.

However, to minimise the risk, the Company and its group will, after the amalgamation,

assign the project owners to take responsibility for project risk management under the Company’s

policy following prescribed risk management procedures and framework, which includes indentifying

project risks, assessing the impacts and likelihood of identified risks, formulating and implementing

risk mitigation plans, continuously reporting and reviewing risk report, and enhancing the risk-

handling efficiency. The Company will develop a policy to have an insurance policy to comply with

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56

international standard, for the projects under construction to minimise losses to the Group if severe

project risks were to occur.

10.8. Human Resource Risks

The Company and its group will assume PTTCH’s and PTTAR’s plans to expand their

businesses into downstream petrochemicals, derivatives, environmentally-friendly products, or other

businesses domestically and internationally. Consequently, the configuration and running of plants

and machinery as well as product planning and sales management of the expanded businesses may

differ radically from the present. Current personnel may lack knowledge in new researches and

developments, technologies, or advanced production process, or lack skills and experiences in

carrying out new modes of operation efficiently or sufficiently for international competition.

Alternatively, the Group may be unable to recruit external personnel with the required skills and

experiences, or to retain the human resources transferred from PTTCH and PTTAR. In the worst

case, these human resources risk could pose significant impact on the Group’s operations.

To alleviate these human resource risks, the Company will after the amalgamation

conduct personnel trainings on a regular basis, and improve the Group’s HR shared services in

terms of forms of service provision, work process, and related computer systems to support the

growth of the Group.

10.9. Legal Dispute Risk

On 3 December 2009, an application for arbitration proceedings was filed by a listed

company, demanding that PTT and the Company, as the producer, comply with the feedstock

agreement between such company and PTT, or jointly pay compensation in the amount of

approximately Baht 13.805 billion. On 8 March 2010, the arbitrators issued an order to dismiss the

proceedings in respect of the Company because it was not a direct contractual party of that

company.

On 27August 2010, such listed company entered a civil lawsuit, demanding that PTT and

the Company, as the producer, comply with the feedstock agreement between such company and

PTT, or jointly pay compensation in the amount of approximately Baht 9.380billion. The Company

filed with the Civil Court a statement of objection to such demand on grounds that it was not a direct

contractual party of that company. The Company believes that the outcome of the Court’s

consideration will not adversely affect it.

10.10. Impact of the Map Ta Phut Case

On 29 September 2009, the Central Administrative Court issued an order under petition

No. 586/2552 (the Map Ta Phut case) requiring that the government agencies sued under this case

suspend the 76 projects or activities under Complaint Exhibit 7 on grounds of their failure to correctly

comply with article 67, paragraph two of the Constitution of the Kingdom of Thailand. On 2

December 2009, the Supreme Administrative Court issued an order under Petition No. 592/2552

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upholding the Central Administrative Court’s order, except for 11 projects. Eight of these projects

belong to the Company and its Group.

On 22 January 2010, the Central Administrative Court issued an order under Black Case

No. 908/2552 requiring that the 65 projects that were temporarily suspended coordinate with the

relevant government agencies for their consideration as to whether these projects were eligible for an

exemption according to the court order and could have been continued.

In 2010, the Company and its Group coordinated with the relevant government agencies

to reach an understanding of the details of the projects that were subject to temporary suspension

according to the court order, and the projects that were eligible for exemption according to the court

order or ruling and could have been continued. On 2September 2010, the Central Administrative

Court passed a judgment under Black Case No. 908/2552. As a result of this judgment, seven

projects of the Company and its Group were not deemed to be projects that may cause a severe

impact on communities under Notification of the Ministry of Natural Resources and Environment

dated 31August 2010and were permitted to continue its operation. There is one project of the Group

that remains suspended. An environmental impact assessment report for this project has already

been prepared and submitted to the relevant government agency. The steps required by the law are

in progress. As of 31December 2009, a sum of Baht 1.627billion had already been invested for this

suspended project.

11. Disputes

As specified in items 10.9 and 10.10 of Corporate Specific Risk.

12. Employees

As of 30 June 2011, the Company has 2,572 employees

13. Company Overview

The Company was established from the amalgamation between PTTAR and PTTCH, which

was registered on 19 October 2011. The Company has assumed all the assets, liabilities, rights, and

responsibilities of those two companies, by the operation of the law. The Company’s paid-up capital

is THB 45,059,846,380 divided into 4,505,984,638 shares, with a par value of THB 10 each, and

paid-up capital is THB 45,059,846,380.

PTTAR was established from the amalgamation under the PLCA between ATC and RRC.

Its core businesses were petroleum refinery and supply of petroleum products including light

distillates, middle distillates and heavy distillates, and producer and distributor of aromatics products

and other petroleum products. Aromatics products comprised of benzene, paraxylene, cyclohexane,

orthoxylene, toluene and mixed xylenes and petroleum products comprised of light naphtha,

raffinate, LPG, condensate residue and heavy aromatics. PTTAR was registered on 27 December

2007 with registered capital, as at 14 October 2011, of THB 29,938,149,690 divided into

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2,993,814,969 ordinary shares at par value of THB 10 each, and a paid-up capital of THB

29,869,135,380.

PTTCH was established from the amalgamation between NPC and TOC to engage in the

fully-integrated petrochemical and chemical businesses, which was originated from the upstream

petrochemical industry producing ethylene and propylene, collectively called “olefins,” from natural

gas and petroleum products. PTTCH had 16 subsidiaries and 8 associates. At the end of 2010,

PTTCH had nameplate capacity of 2,888,000 tons per year of olefins production, comprising

2,376,000 tons per year of ethylene production and 512,000 tons per year of propylene production.

PTTCH was registered on 7 December 2005 with registered capital, as of 14 October 2011, of THB

15,191,153,000 divided into 1,519,115,300 shares, with a par value of THB 10 each, and paid-up

capital of THB 15,190,711,000.

14. Investment in subsidiaries, affiliates and associates

The essence of the investments are summarised as follows:

Company

Symbol Business Type

Registered

Capital

(THB MM)

Paid-up

Capital

(THB MM)

% of

Ownership

1 PTT Polyethylene Co., Ltd. PTTPE

Produce and distribute

petrochemical

products

22,600 22,000 100.0

2 Bangkok Polyethylene Plc. BPE


petrochemical

products

1,700 1,700 100.0

3 TOC Glycol Co., Ltd. TOCGC


petrochemical

products

5,395 5,395 100.0

4 Thai Ethanolamine Co.,

Ltd. EA


petrochemical

products

900 900 100.0

5 Bio Creation Co., Ltd. Bio Creation


petrochemical

products

560 280 100.0

6 Thai Oleochemical Co.,

Ltd. TOL


petrochemical

products

2,400 2,400 100.0

7

NPC Safety and

Environmental Service Co.,

Ltd.

NPC S&E

Safety and

environmental service

provider

165 165 100.0

8 Bio Spectrum Co., Ltd. Bio Spectrum Produce and distribute

chemical products 300 221 75.0

9 PTT Management and

Engineering Co., Ltd. PTTME

Maintenance and

engineering service

provider

200 137 60.0

10 Thai Tank Terminal Co.,

Ltd. TTT

The service in relation

to storage and 900 900 51.0

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Company


Registered

Capital

(THB MM)

Paid-up

Capital

(THB MM)

% of

Ownership

transport of liquid

chemicals and oil

11 PTT Chemical International

Pte. Ltd. CH Inter

Foreign investment in

petrochemical

business

6,969 6,969 100.0

12 Thai Ethoxilate Co., Ltd. TEX


petrochemical

products

420 420 50.0

13 PTT Polymer Marketing

Co., Ltd. PTTPM

Marketing arm for

polymer products of

PTT Group

40 40 25.0

14 Vinythai Plc. VNT


petrochemical

products

7,111 7,111 25.0

15 Eastern Fluid Transport

Co., Ltd. EFT

Providing pipline and

transport service for

petrochemical product

10 10 22.7

16 PTT Phenol Co., Ltd. PPCL


petrochemical

products

9,252 8,351 60.0

17 PTT Utilities Co., Ltd. PTTUT Produce and distribute

of utilities 6,859 6,859 60.0

18 PTT ICT Solutions Co.,

Ltd. PTTICT

Information

communication

technology service

provider

150 150 40.0

19 PTT Energy Solutions Co.,

Ltd. PTTES Engineering consultant 150 113 20.0

20 Thai Styrenics Co., Ltd. TSCL


petrochemical

products

190 145

100.0

(through

PTTPE)

21 Thai Fatty Alcohol Co.,

Ltd. TFA


petrochemical

products

1,720 1,720

100.0

(through

TOL)

22 Myriant Technologies, Inc. MYRIANT


petrochemical

products

USD 92.49

million

92.49 ลา้น

เหรยีญ

สหรฐัฯ

47.4

(through

CH Inter)

23 Emery Oleochemicals (M)

Sdn. Bhd. EMERY


petrochemical

products

Malaysian

Ringgit 500

million

Malaysian

Ringgit 400

million

50

(through

CH Inter)

24 PTT Chemical International

(Asia Pacific ROH) Ltd. AP ROH

Management and

investment services 42 42

100

(through

CH Inter)

25 Alliance and Petrochemical

Investment (Singapore) API

Joint investment in

petrochemical

SGD30,000*

and

SGD30,000*

and 16.7

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Company


Registered

Capital

(THB MM)

Paid-up

Capital

(THB MM)

% of

Ownership

Pte. Ltd. business in Iran USD42.72 USD42.72

26 Business Services and

Alliance Co., Ltd. BSA

Labor and contractor

services for PTT and

companies in PTT’s

Group

2 2 25

Remarks: *API registered and increased its capital using two currencies namely SGD and USD

Changes of Capital None as the Company was emerged from the amalgamation on 19

October 2011.

Accounting Period 19 October 2011 – 31 December 2011

Auditors KPMG Phoomchai Audit Co., Ltd.

1. Mr. Vairoj Jindamaneepitak CPA No. 3565 or

2. Mr. Winid Silamongkol CPA No. 3378 or

3. Mr. Nirand Lilamethwat CPA No. 2316 or

4. Mr. Charoen Phosamritlert CPA No. 4068

Registrar Thailand Securities Depository Co., Ltd.

Financial Advisors Kasikorn Securities Plc.

and Finansa Securities Co., Ltd.

Dividend Policy Not less than 30% of net profit after tax and reserves.

(With additional terms in accordance with article 48 of the Articles of

Association)

15. BOI Investment Promotion Certificates

PTTAR’s and PTTCH’s BOI investment promotion certificateswhich remained effective as

on 30 June 2011 were transferred to the Company upon registration of the amalgamationwith details

as follow:

15.1. BOI Investment Promotion Certificates transferred from PTTAR

No. BOI Investment

Promotion Certificate

No./Issue Date

Description Expiry of Corporate Income

Tax Privileges

1. No. 1039/2551

dated 11 January 2008

Refinery: for production of various

types of petroleum products with a

capacity of 50,000 barrels/day and

naphtha with a capacity of 40,100

tons/year

Not eligible for corporate

income tax privileges since it

is a refining business.

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61

No. BOI Investment


No./Issue Date


Tax Privileges

2. No. 2292(2)/Or./2550 dated

27 December 2007

Public Transport and Large Cargo

Transport: for oil transportation

through pipeline with a capacity of

91,800,000 cubic feet/year

24 July 2018

3. No. 2290/Or./2550 dated 27

December 2007

Production of Chemical Products

from Petroleum: for production of

Aromatics products with the

following capacity: benzene 480,000

tons/year, toluene 111,000

tons/year, xylenes 764,000 tons/year

and other products and by-products

such as LPG 268,500 tons/year,

naphtha 1,100,000 tons/year,

condensate residue 845,000

tons/year, raffinate 323,000

tons/year, heavy aromatic 87,500

tons/year, hydrogen 170,000

tons/year and scraps or wastes from

the production process

1 December 2009

4. No. 2289(2)/Or./2550 dated

27 December 2007

Production of Petrochemical

Products: for production of

cyclohexene with a capacity of

223,000 tons/year and by-products

such as scraps or wastes from the

production process

12 June 2019

5. No.1949(2)/OrRor./2551

dated 29 September 2008

Production of Petrochemical

Products: for production of the

products from Reformer Complex

Unit with the following capacity:

reformate 1,178,360 tons/year,

naphtha 418,300 tons/year, LPG

170,900 tons/year and condensate

residue 805,600 tons/year;

production of products from

Aromatic Complex Unit with the

22 August 2021

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62

No. BOI Investment


No./Issue Date


Tax Privileges

following capacity: paraxylene

616,300 tons/year, benzene 364,200

tons/year, toluene 59,500 tons/year,

heavy aromatics 12,700 tons/year,

raffinate 112,600 tons/year and

crude LPG 18,910 tons/year; and

by-products such as scraps and

wastes from the production process

6. No. 9014(2)/2553

dated 22 December 2010

Refinery Business: for production of

products from the petroleum refinery

which is an improvement of

production efficiency according to

the measure to solve environmental

problems under the BOI Certificate

No. 2293(2)/ Or./2550 dated 27

December 2007 with a petroleum

refining capacity of approximately

145,000 barrels/day and by-product

such as scraps and wastes from the

production process

21 December 2013

15.2. BOI Investment Promotion Certificates transferred from PTTCH

No. BOI Investment


No./Issue Date

Description Expiry of Corporate

Income Tax

Privileges

1. No. 2111/Or./2548 dated

7 December 2005

Manufacture of approximately 378,000 tons

of ethylene per year, approximately

126,000 tons of propylene per year, and

public utilities service for factories in the

continuous petrochemical industry

15 February 2003

2. No. 2112/Or./2548 dated

7 December 2005

Electricity production: size 21.7 – 33.9

megawatts

23 March 2009

3. No. 2113/Or./2548 dated

7 December 2005

Steam production with a capacity of

approximately 140 tons per hour, and

industrial water production with a capacity

31 October 2010

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63

No. BOI Investment


No./Issue Date


Income Tax

Privileges

of approximately 90 cubic meters per hour

4. No. 2114/Or./2548 dated

7 December 2005

Liquid goods transportation business with a

capacity of approximately 900,000 tons per

year

17 January 2010

5. No. 2115/Or./2548 dated

7 December 2005


of ethylene per year, approximately 70,000

tons of propylene per year, and

approximately 40,000 tons of mixed c4 per

year, and a by-product, which is hydrogen,

in the amount of approximately 60,000 tons

per year

16 July 2009

6. No. 2116/Or./2548 dated

7 December 2005

Electricity production: size 70 megawatts

and steam production with a capacity of

approximately 20 tons per hour

30 October 2013

7. No. 2117/Or./2548 dated

7 December 2005

Manufacture of high density polyethylene,

approximately 328,500 tons per year, and a

by-product which is low polymer, in the

amount of approximately 9,000 tons per

year

15 August 2017

8. No. 2118(2)/Or./2548


Electricity production size 35 megawatts,

and steam production with a capacity of

approximately 70 tons per hour

29 June 2020

9. No. 2119/Or./2548 dated

7 December 2005


of ethylene per year, approximately

334,000 tons of propylene per year,


year, and approximately 216,000 tons of

pyrolysis gas per year, and a by-product

which is cracker bottom in the amount of

approximately 40,000 tons per year

27 April 2008

10. No. 2120(2)/Or./2548



of propylene per years, approximately

20,000 tons of propane per year, and


year

14 December 2018

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64

No. BOI Investment


No./Issue Date


Income Tax

Privileges

11. No. 1004(2)/2549 dated 9

January 2006

Manufacture of plastic granule, low density

polyethylene, and ethylene vinyl acetate in

the amount of approximately 100,000 tons

per years

13 years from the

date of realizing

income (the project

has not yet

commenced)

12. No. 2022(4)/2549 dated

19 October 2006

Chemical product, polymer, and chemical

formula research and development

business

8 years from the

date of realizing

income (the project

has not yet

commenced)

13. No. 1071(2)/2550 dated

31 January 2007

Industrial water production with a capacity

of approximately 9,000,000 cubic meter per

year

8 years from the

date of realizing

income (the project

has not yet

commenced)

14. No. 1762(2)/2550 dated 3

August 2007


of ethylene per year, and approximately

792 tons of pyrolysis gas per year

30 January 2022

15. No. 2188(4)/2550 dated

27 November 2007

Testing of raw material and petrochemical

products, petroleum, chemical, polymer,

water, and environment - approximately

60,000 pieces/ jobs per year

18 January 2023

16. No. 2189(2)/2550 dated

29 November 2007


of propylene per year, and approximately

40,000 tons of butane-1 per year and by-

products which are isobutene, isobutylene,

n-butane and c5+ in the amount of

approximately 71,000 tons per year

13 years from the

date of realizing

income (the project

has not yet

commenced)

17. No. 1730(2)/2551 dated

22 July 2008

Electricity production size 112.5 megawatts

and steam production, with a capacity of

560 tons per hour

13 years from the

date of realizing

income (the project

has not yet

commenced)

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65

16. Shareholder

16.1 Number of Shareholder

On 19 October 2011, the number of shareholder is as follow:

Number of

Shareholder

Number of

Share

Percentage of

Paid-up Capital

1. Strategic shareholders

1.1 Directors, manager, and executive

including associated and related persons

24 2,213,882 0.049132

1.2 Shareholder who holds more than 5% of

total shares, including related person

2 2,287,746,545 50.771290

1.3 Shareholders with control - - -

2. Non-strategic shareholders who hold more

than 1 trading unit

68,809 2,215,943,436 49.177784

3. Non-strategic shareholders who hold less

than 1 trading unit

2,798 80,775 0.001793

Total Shareholders 71,633 4,505,984,638 100.000000

16.2 Major Shareholders

On 19 October 2011, major shareholders are as follow:

Name

Number of

Ordinary Paid-up

Shares

Percentage of

Paid-up Capital

1. PTT Plc. 2,204,318,909 48.92

2. NVDR Co., Ltd 206,803,072 4.59

3. HSBC (SINGAPORE) NOMIBEES PTE LTD 147,407,566 3.27

4. HMC Polymer Co, Ltd. 83,427,636 1.85

5. Siam Cement Plc. 82,164,775 1.82

6. CHASE NOMINEES LIMITED 42 75,474,306 1.68

7. STATE STREET BANK EUROPE LIMITED 71,017,132 1.58

8. NORTRUST NOMINEES LIMITED-NT0 SEC LENDING

THAILAND 60,310,434 1.34

9. STATE STREET BANK AND TRUST COMPANY 53,624,104 1.19

10. THE BANK OF NEW YORK MELLION-CGT TAXABLE 50,270,230 1.12

Total 3,034,818,164 67.36

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66

16.3 Foreign Shareholder

On 19 October 2011, the Company has 300 foreign shareholders, holding 971,484,372

shares in total which accounted for 21.56 percent of paid-up capital.

The Company has foreign shareholding limitation as specified in article 8 of the Article of

Assosiation that “The Company’s shares can be transferred without any restriction, except in the

case where the said transfer would result in more than thirty-seven (37) percent of the

Company’s total paid up shares being held by foreigners”.

17. Board of Directors

On 19 October 2011, members of the Board of Directors are as follow:

Name Position

1. Mr. Prasert Bunsumpun Chairman of the Board of Director

2. Mr. Chitrapongse Kwangsukstith Director

3. Mr. Nuttachat Charuchinda Director

4. Mr. Sukrit Surabotsopon Director

5. Mr. Bowon Vongsinudom Director

6. Mr. Veerasak Kositpaisal Director

7. Pol.Gen. Sereepisut Tameeyaves Independent Director

8. Mr. Suthep Liumsirijarern Independent Director

9. Pol.Gen. Sombat Amornvivat Independent Director

10. Mr. Kriengkrai Thiennukul Independent Director

11. Mr. Vasin Teeravechyan Independent Director

12. Air Chief Marshal Somchai Thean-anant Independent Director

13. Mr. Amnuay Preemonwong Independent Director /

Chairman of the Audit Committee

14. Mr. Somchai Kuvijitsuwan Independent Director / Audit Committee Member

15. Mrs. Raweporn Kuhirun ** Independent Director / Audit Committee Member

* Note that all directors will be assigned to their duty on 19 October 2011

** Audit Committee Member who has knowledge and experience to review the reliability of Fnancial Information

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67

Duties and Responsibilities of Audit Committee are as follow:

(1) To review the Company’s financial reporting process to ensure that it is accurate and

adequate;

(2) To review the Company’s internal control system and internal audit system to ensure that they

are suitable, effective and efficient, to determine the independence ofthe internal audit unit, as

well as to approve the appointment, transfer and dismissal of the chief of an internal audit unit

or any other unit in charge of an internal control process;

(3) To review the Company’s compliance with the law relating to Securities and Exchange, the

Stock Exchange of Thailand’s regulations, or the laws relating to the Company’s business;

(4) To approver, and nominate the independent person to be the Company’s auditor, and to

propose such person’s remuneration, as well as to attend the non-management attended

meeting with an auditor at least once a year;

(5) To review the Connected Transactions, or the transactions that may lead to conflicts of

interests, to ensure that they are in compliance with the laws and the Exchange’s regulations,

and are reasonable and for the highest benefit of the Company;

(6) To prepare, and to disclose in the Company’s annual report, an audit committee’s report

which must be signed by the audit committee’s chairman and consist of at least the following

information:

(a) An opinion on the accuracy, completeness and creditability of the Company’s financial

report,

(b) An opinion on the adequacy of the Company’s internal control system,

(c) An opinion on the compliance with the law on securities and exchange, the Exchange’s

regulations, or the laws relating to the Company’s business,

(d) An opinion on the suitability of an auditor,

(e) An opinion on the transactions that may lead to conflicts of interests,

(f) The number of the audit committee meetings, and the attendance of such meetings by

each committee member,

(g) An opinion or overview comment received by the audit committee from its performance of

duties in accordance with the charter, and

(h) Other transactions which, according to the audit committee’s opinion, should be known to

the shareholders and general investors, Duties and responsibilities 255 subject to the

scope of duties and responsibilities assigned by the Company’s board of directors,

(7) To review the major risk management processes of the Company in order to be connected to

internal control process;

(8) To reconsider and propose amendment of scope, duties and responsibilities of Audit

Committee to be consistent with current situation;

(9) To perform any other act as assigned by the Company’s board of directors, with the approval

of the audit committee. The Audit Committee deemed to have responsibilities of such

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68

assignment to the board of directors, while the board of directors deemed to have

responsibilities to the public;

(10) In case of the Audit Committee investigate the following acts that could have significantly

affect to the Company’s financial position and financial performance, the Audit Committee

shall report such act to the board of directors to resolve within the appropriate timeline.

10.1) Transactions that involve conflict of interest

10.2) Fraud or material problems with the internal control system

10.3) Violation of the Securities and Exchange Acts, SET’s regulations or any regulations

that related to the Company’s business

Terms of the Audit Committee

1. Chairman of the Audit Committee 3 Years

2. Audit Committee Member 3 Years

18. Listing Conditions

- None -

19. Silent Period

- None -

20. SET’s Waivers

- None -

21. Other Important Matter (if any)

- None –

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69

22. Statistic

PTT Global Chemical Public Company Limited and its Subsidiaries*

Period Total revenue

(THB

Thousand)

Net profit

(THB

Thousand)

Earnings

(THB per

share**)

Book value

(THB per

share**)

For the six-month ended 2011 239,289,731 20,732,463 4.36 54.44

For the year ended 2010 382,548,136 17,172,487 3.45 51.16

* According to Pro forma Consolidated Financial Information for the six-month period ended 30 June 2011 and for the

year ended 31 December 2011

** Par value 10 Baht

Unaudited Pro Forma, for the six-month period ended 30 June 2011

Unaudited pro forma consolidated balance sheet As at 30 June 2011

(Unit : THB Thousand)

Assets

Current Assets

Cash and cash equivalents 28,879,700

Short term investment 100,000

Trade accounts receivable 36,539,758

Other accounts receivable 249,304

Inventories 44,764,281

Receivable from Oil Fuel Fund 850,850

Value-added tax receivable 1,873,205

Derivatives 58,869

Other current assets 1,738,086

Total current assets 115,054,053

Non-current assets

Investments in associates 6,104,255

Other long-term investments 325,702

Property, plant and equipment 241,742,203

Leasehold prepayment 1,398,091

Intangible assets 57,242,290

Derivatives 582,383

Deferred tax assets 1,188,642

Other non-current assets 1,935,094

Total non-current assets 310,518,660

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Total assets 425,572,713

Liabilities and equity

Current liabilities

Short-term loans from financial institutions 8,718,663

Trade accounts payable 25,081,954

Current portion of long-term loans from financial institutions 5,115,886

Current portion of subordinated loans 2,268,939

Other accounts payable 2,768,906

Retentions payable 349,988

Construction payables 2,931,268

Accrued excise tax 79,086

Income tax payable 1,092,313

Derivatives 173,476

Other current liabilities 2,904,918

Total current liabilities 51,485,397

Non-current liabilities

Long-term loans from financial institutions 63,790,581

Debentures 52,344,511

Subordinated loans 4,670,859

Derivative 144,437

Deferred tax liabilities 5,582,374

Employee benefit obligations 1,751,770

Other non-current liabilities 596,159

Total non-current liabilities 128,880,691

Total liabilities 180,366,088

Equity

Share capital

Authorised share capital 45,129,303

Issued and paid-up share capital 45,038,793

Equity from exercising warrants under the Employee

Vested stock options in the process of exercise

132,565

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Surplus

Share premium 89,196,592

Business combination 357,123

Retained earnings

Appropriated

Legal reserve 4,436,798

Loan repayment reserve 807,802

Business expansion reserve 12,446,994

Unappropriated 82,598,689

Other comprehensive income 562,735

Total equity attributable to equity holders of the Company 235,578,091

Non-controlling interests 9,628,534

Total equity 245,206,625

Total liabilities and equity 425,572,713

Unaudited pro forma consolidated statement of income For the Six-Month Ended

30 June 2011


Revenues

Revenue from sale of goods 236,899,255

Revenue from rendering of services 744,416

Investment income 250,934

Gain from derivatives 424,384

Other income 970,742

Total revenues 239,289,731

Expenses

Cost of sale of goods 206,673,406

Cost of rendering of services 57,782

Selling expenses 853,433

Administrative expenses 3,724,884

Difference of crack spread swap and crude oil spread swap

agreements

1,107,232

Finance costs 2,938,106

Loss from derivatives 533,528

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Unaudited pro forma consolidated statement of income For the Six-Month Ended

30 June 2011


Loss from exchange rate - net 202,640

Total expenses 216,091,011

Share of profit of associates 114,148

Profit before income tax expense 23,312,868

Income tax expense 2,580,405

Net profit for the year 20,732,463

Profit attributable to:

Equity holders of the Company 19,600,428



Earnings per share

Basic 4.36

Diluted 4.35

Profit for the period 20,732,463

Unaudited pro forma statements of comprehensive income For the Six-Month ended

30 June 2011

(Unit : Thousand)

Profit for the period 20,732,463

Other comprehensice income

Foreign currenct translation difference for foreign operations 334,672

Other comprehensive income for the period, net of income tax 334,672

Total comprehensice income for the period 21,067,135

Tota comprehensice income attributable to :-

Owners of the Company 19,917,814


Total comprehensice income for the period 21,067,135

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73

Unaudited Pro Forma, for the year ended 2010

Unaudited pro forma consolidated balance sheet As at 31 December 2010


Assets

Current Assets

Cash and cash equivalents 21,035,134

Trade accounts receivable 34,546,666

Other accounts receivable 1,002,238

Inventories 34,365,688

Receivable from Oil Fuel Fund 44,238

Refundable value-added tax 1,241,970

Value-added tax receivable 210,014

Other current assets 1,902,577

Total current assets 94,348,525

Non-current assets

Investments in associates 4,175,823

Other long-term investments 324,874

Property, plant and equipment 245,477,329

Leasehold prepayment 1,440,849

Intangible assets 57,385,229

Deferred tax assets 2,712,992

Other non-current assets 2,649,008

Total non-current assets 314,166,104

Total assets 408,514,629

Liabilities and equity

Current liabilities

Short-term loans from financial institutions 3,315,462

Trade accounts payable 30,872,166

Current portion of long-term loans from financial institutions 10,948,848

Other accounts payable 2,085,147

Retentions payable 586,003

Construction payables 2,515,960

Accrued finance costs 552,976

Accrued excise tax 386,655

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74

Unaudited pro forma consolidated balance sheet As at 31 December 2010


Income tax payable 427,823

Other current liabilities 2,714,385

Total current liabilities 54,405,425

Non-current liabilities

Long-term loans from financial institutions 56,772,973

Long-term loans from related companies 699,610

Debentures 52,330,097

Subordinated loans 6,708,636

Deferred tax liabilities 5,839,383

Other non-current liabilities 1,814,986

Total non-current liabilities 124,165,685

Total liabilities 178,571,110

Equity

Share capital

Authorised share capital 45,129,303

Issued and paid-up share capital 44,949,270

Equity from exercising warrants under the Employee

Vested stock options in the process of exercise

220,474

Surplus

Share premium 88,852,997

Business combination 77,693

Currency translation changes 234,349

Investment changes 10,999

Retained earnings

Appropriated

Legal reserve 4,112,621

Loan repayment reserve 807,802

Business expansion reserve 12,446,994

Unappropriated 70,400,977

Total equity attributable to equity holders of the Company 222,114,176


Total equity 229,943,519

Total liabilities and equity 408,514,629

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75

Unaudited pro forma consolidated statement of income For the year ended

31 December 2010


Revenues

Revenue from sale of goods 375,304,052

Revenue from rendering of services 1,396,744

Difference of crack spread swap and crude oil spread swap

agreements

63,583

Interest income 163,988

Net foreign exchange gain 3,910,700

Gain on changes in the level of ownership interests 834,621

Other income 874,449

Total revenues 382,548,137

Expenses

Cost of sale of goods 347,510,041

Cost of rendering of services 636,876

Selling expenses 2,089,079

Administrative expenses 7,063,408

Management benefit expenses 401,392

Total expenses 357,700,796

Share of profit of associates 426,790

Profit before finance costs and income tax expense 25,274,131

Finance costs 5,669,658

Profit before income tax expense 19,604,473

Income tax expense 2,431,986


Profit attributable to:

Equity holders of the Company 15,520,858



Earnings per share

Basic 3.45

Diluted 3.45

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76

This Information Memorandum was prepared by PTT Global Chemical Public Company Limited

_____________________________________

( __________________________________ )

Documents

Table of Contentpttgc.listedcompany.com/misc/FORM561/20111020-PTTGC...HMC HMC Polymer Co, Ltd. ICIS Chemical Industry News and Intelligent Indorama Indorama Petrochem Co., Ltd. LPG