Management s Discussion and Analysis (MD&A) Thai Oil Public Company Limited and subsidiaries For the Second Quarter and the First Half of 2011

Transcription

1 Management s Discussion and Analysis (MD&A) Thai Oil Public Company Limited and subsidiaries For the Second Quarter and the First Half of Company and its subsidiaries Operating Results Table 1: Summary of Consolidated Financial Results (Million Baht) Q2/11 Q2/10 (2) +/(-) 6M/11 6M/10 (2) +/(-) Integrated Intake (kbd) Gross Integrated Margin (excluding stock gain/(loss)) (1) (US$/bbl) Gross Integrated Margin (including stock gain/(loss)) (1) (US$/bbl) Sale revenue 109,167 79,148 30, , ,105 62,904 EBITDA 6,582 3,046 3,536 18,661 6,761 11,900 Finance costs (524) (457) 67 (1,067) (880) 187 FX gain/ (loss) (206) (782) Income tax expense (1,252) (273) 979 (4,060) (724) 3,336 Net profit/(loss) (2) 3,245 1,079 2,166 10,473 3,056 7,417 Basic earnings/(loss) per share (Baht) Exchange rate (Baht : 1 USD) Average FX (2.10) (2.23) Ending FX (1.70) (1.70) Note: (1) Gross Integrated Margin is the integrated gross margin among TOP, TPX and TLB. (2) The Group adopted TAS 19 - Employee Benefits retrospectively and adjusted 2010 financial statements accordingly. Refinery Business Crude oil price continued climbing up in Q2/11 as a main result of unrests in oil-producing countries as well as weakening US Dollar. Product oil prices also increased tracking crude oil price as regional demand continued to expand. The shutdown of several refiners in Asia also supported product oil prices to stand at high level. TOP had gross refinery margin of 4.3 US$/bbl, up by 1.4 US$/bbl from Q2/10. TOP had 99% throughput, equivalent to intake of 271,000 bbl/day. For the first half year 2011, oil prices were higher than the same period of prior year. TOP had gross refinery margin of 5.2 US$/bbl and 102% throughput, equivalent to 281,000 bbl/day. Aromatics Business Aromatics price in Q2/11 was higher, compared with the same period of prior year, due to rising feedstock cost tracking oil price. However, the Paraxylene price turned lower from Q1/11 as a result of supply added by a new Paraxylene plant in South Korea and by Japanese plant that restored its operations after the earthquake in Q1/11. TPX had aromatics utilization rate of 90% and product-to-feed margin of 147 US$/ton, up by 44 US$/ton from Q2/10. For the first half year 2011, TPX had 6% sale increase from the same period of previous year, with 92% aromatics utilization and product-to-feed margin of 164 US$/ton. 1

2 Lube Base Oil Production Business Base oil price continued to rise because of growing regional demand, particularly from China, as well as price adjustments by suppliers, tracking high fuel oil cost. Base oil supply was also largely tightened by shutdown of several regional base oil plants. In Q2/11, TLB had 100% base oil production and had more high-valueadded TDAE (Treated Distillate Aromatic Extract) sales, after integrating TDAE unit expansion completed in Q4/10. This resulted in TLB having product-to-feed margin increased to 212 US$/ ton. For the first half year 2011, TLB had 100% base oil production and profit-to-feed margin of 194 US$/ton. Based on refinery and petrochemical business in Q2/11, Thaioil Group had intake of 284,000 barrels per day and gross integrated margin (GIM) of 7.9 US$/bbl, jumped by 2.9 US$/bbl from Q2/10. The oil prices considerably climbed up due to increasing fears of tight supply and growing demand. Aromatics and lube base product prices were also higher. This resulted in Thaioil Group had total revenues and EBITDA of Baht 109,167 million and Baht 6,582 million, respectively. Aggregated with operating costs, financial costs and income tax expense, Thaioil Group had net profit for Q2/11 of Baht 3,245 million, 1.59 Baht per share. For the first half year 2011, Thaioil Group had GIM of 8.9 US$/bbl. As a result of Dubai crude price closing higher by 18.7 US$/bbl from Q4/10, GIM including stock gain was added up to 12.0 US$/bbl. Thaioil Group had total revenues and EBITDA of Baht 221,009 million and Baht 18,661 million, respectively. Aggregated with operating costs, financial costs and income tax expense, Thaioil Group had net profit for the first half year 2011 of Baht 10,473 million, 5.13 Baht per share. Without stock gain, Thaioil Group had net profit of Baht 6,921 million, up by Baht 3,808 million from the same period of prior year. 2. Market Conditions of Oil, Aromatics and Lube Base Oil 2.1 Oil Market Condition Table 2: Closing and Average Crude Oil Price and Crack Spreads US$/bbl Q2/11 Q1/11 +/(-) Q2/10 +/(-) 6M/11 6M/10 +/(-) Crude Dubai Dubai Spread Unleaded gasoline (ULG95) Jet/Kero Gas oil Fuel oil (8.6) (8.6) (0.0) (6.7) (1.9) (8.6) (4.8) (3.8) Note: (1) Average Dubai crude prices for June 2011, March 2011 and December 2010 were US$/bbl, US$/bbl and 89.0 US$/bbl, respectively. Crude oil price in Q2/11 largely improved from Q2/10, supported by the intensifying unrest in Libya that cut its oil production by 1.3 mbbl/ day. Later the unrest was widely extended to other oil producing countries including Yemen, Syria and Bahrain, without any sign of ending soon. This resulted in more concerns over tight supply whereas global oil demand improved during the second half of year. Moreover, the weakening US Dollar after European Central Bank (ECB) raised their interest rate in early April cause more fund flows moving from money market to oil market, and this factor driving crude oil price to reach 120 US$/bbl which later declined and ranged bound US$/bbl. After US dollar had rebound, the market had concerns that high oil price had been threatening the global economic growth as seen in declining manufacturing indicators in US, Europe and China as well as the returned fears over Greece s public debt. In addition, International Energy Agency (IEA) announced to release strategic oil reserve totally 60 mbbl, offsetting disrupted oil production from Libya, and accordingly oil price declined late quarter. 2

3 The crack spread in Q2/11 significantly increased from Q2/10 and continued to increase from Q1/11, especially gasoline and gas oil. This was supported by growing demand from Asia and several refinery shutdowns in Japan, Indonesia, Malaysia and India. In this Q2/11, these countries had more imports and consequently the regional supply became more tightened. Moreover, regional gasoline price was higher, supported by US gasoline market due to low stock level during US summer driving season. Gas oil also increased as it was expected China would import more gas oil for power generation in summer. 2.2 Aromatics Market Condition Table 3: Average Prices of Key Aromatics Products US$/Ton Q2/11 Q1/11 +/(-) Q2/10 +/(-) 6M/11 6M/10 +/(-) Paraxylene 1,509 1,630 (121) ,570 1, Benzene 1,149 1, , Toluene 1,091 1, , Spread with ULG95 Paraxylene (223) Benzene (99) 159 (73) (52) Toluene (12) 72 (44) (66) In Q2/11, Aromatics product prices jumped considerably from Q2/10 due mainly to higher feedstock cost tracking crude oil price. However, Paraxylene price stated lower from Q1/11 after the supply tightened from shutdowns of Paraxylene plants in Asia and Japan s earthquake that triggered Paraxylene price to spike over 1,800 US$/ton. Then the price retreated due to PTA plant shutdowns early this quarter either planned or by economical reason from very high Paraxylene cost. In addition, the supply shortage had been alleviated after S-Oil 2 plant in South Korea had run commercially in April 2011 with capacity of 900,000 tons/ year. The Paraxylene supply was also added up in the market as Japanese plants had restored their operations. Regarding other Aromatics, Benzene and Toluene prices were not significantly changed from Q1/11. Aromatics demand in Q2/11 was reduced from Q1/11 as market buyers slowed down their orders while Aromatics prices were fluctuating during May, tracking crude oil price swing. Electricity brown-outs in China that forced downstream plants to reduce intakes as well as tightening monetary policy for inflation control including hiking interest rate and deposit reserve ratio had lowered Aromatics import to China. These had pressured Aromatics spread to ULG95 in Q2/11 to drop from Q1/11, especially the spread Toluene to ULG95 that was squeezed to very low level. Moreover, Benzene market was hit by shrinking demand after shutdown over 1 month of styrene polymer plants in Singapore and Taiwan for technical difficulties and fires. The demand from the West also declined, eliminating arbitrage opportunities from Asia to that region and leaving Benzene supply glut and spread Benzene to ULG95 squeezed as well. 3

4 2.3 Lube Base Oil and Bitumen Market Condition Table 4: Average Prices of Key Lube Base Oil Products US$/Ton Q2/11 Q1/11 +/(-) Q2/10 +/(-) 6M/11 6M/10 +/(-) 500SN 1,445 1, , , Bitumen Spread with fuel oil 500SN Bitumen (85) (97) (123) (91) 32 (123) In Q2/11, regional lube base oil market continued its growth, supported by regional demand especially from China s seasonal agricultural activities and by three regional price adjustments in Q2/11, made by key players for tracking higher fuel oil prices. In addition, the regional supply was deeply tightened due to the start-up delays by a base oil plant in Singapore and maintenance shutdowns by plants in Indonesia, Taiwan and South Korea. Supply shortage continued through this quarter although there was new supply from a group-ii base oil plant of China National Offshore Oil Corp (CNOOC) late Q2/11. However, base oil price was considerably high and was unable to continue rising. Late Q2/11, customers had slowed down their purchases and ordered as necessary. Due to better fundamental factors from growing demands and supply shortage from maintenance shutdown, the spread base oil to fuel oil in Q2/11 improved from Q1/11 and significantly higher than Q2/10. Bitumen price in Q2/11 gradually increased, tracking skyrocketing fuel oil price and hit a 6-year high in Singapore market. However, higher bitumen price had erased regional demands. China, a regional major importer, had reduced its import volume as a result of tightening monetary policy during mid Q2/11 that slowed down domestic investments. This caused bitumen price to move up slower than the increase in fuel oil price, but still at high level due to regional demand for road construction in summer. The spread bitumen price to fuel oil price was negative and worsened compared with Q2/10 as a result of high fuel oil price, but better from Q1/11. 4

5 3. Summary of Financial Result by Business Table 5: Financial Result by Business (Million Baht) Q2/11 Q2/10 (4) +/(-) 6M/11 6M/10 (4) +/(-) Sale revenue Consolidated 109,167 79,148 30, , ,105 62,904 Refinery 104,751 76,121 28, , ,823 60,513 Aromatics 16,958 12,793 4,165 33,225 24,742 8,483 Lube base oil 7,087 6, ,835 11,320 2,515 Power generation - IPT 2, ,137 4,949 2,297 2,652 - TP 1, ,014 1, Solvent (1) 2,334 1, ,581 3,529 1,052 Marine transportation (43) (46) Ethanol (2) (12) Others (3) EBITDA Consolidated 6,582 3,046 3,536 18,661 6,761 11,900 Refinery 2,983 1,220 1,763 11,349 2,746 8,603 Aromatics 1, ,675 2,225 1,450 Lube base oil 1, ,134 1, Power generation - IPT 353 (307) (223) TP (5) (20) Solvent Marine transportation Ethanol (22) 23 (45) (29) 21 (50) Others (3) (1) (2) (4) (2) (2) Net profit/ (loss) Consolidated 3,245 1,079 2,166 10,473 3,056 7,417 Refinery (5) 1, ,059 6, ,300 Aromatics ,397 1, Lube base oil , Power generation - IPT 200 (319) (332) TP Solvent Marine transportation Ethanol (22) 85 (107) (30) 61 (91) Others (3) (1) (2) (4) (2) (2) Note: (1) Including Thaioil Solvent Co., Ltd., having respective interests in TOP Solvent Co., Ltd., Sak Chaisidhi Co., Ltd. and TOP Solvent (Vietnam) LLC. (2) Including Thaioil Ethanol Co., Ltd. (TET), having respective interests in Maesod Clean Energy Co., Ltd., and Sapthip Co., Ltd. and Ubon Bio Ethanol Co. Ltd. (3) Including Thaioil Energy Solutions Co., Ltd., changed to Thaioil Energy Services Co., Ltd., effective on July 19, (4) The Group adopted TAS 19 - Employee Benefits retrospectively and adjusted 2010 financial statements accordingly. (5) In Q2/11 and first half year 2011, TOP reported stock gain of Baht 69 million and Baht 3,552 million, respectively. In Q2/10 and first half year 2010, TOP reported stock loss of Baht 442 million and Baht 57 million, respectively. 5

6 3.1 Financial Result of Thai Oil (Refinery Business) Table 6: Financial Result of Thai Oil Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/(-) Throughput (%) (1) 99% 93% 6% 102% 94% 8% Intake (kbd) Market GRM (2) (US$/bbl) Note (1) Throughput (%) calculated based on 275,000 barrels per day (2) Gross Refining Margin (GRM) excluded stock gain/(loss) In Q2/11, TOP had 99% throughput and intake of 271,000 barrels per day. TOP had a 19-day maintenance shutdown of unit CCR-2 (Continuous Catalyst Regeneration Platformer Unit) and unit HVU-3 (High Vacuum Unit). As a result of rising oil price and improved throughput compared with Q2/10, TOP had revenues of Baht 104,751 million, up by Baht 28,630 million from Q2/10. TOP had EBITDA of Baht 2,983 million, up by Baht 1,763 million as a result of improved gross refinery margin (GRM) to 4.3 US$/bbl in Q2/11. In this quarter, TOP had foreign exchange loss of Baht 43 million due to weakening Baht, finance costs of Baht 493 million and income tax of Baht 466 million. Therefore, TOP reported net profit, before dividends received, of Baht 1,110 million, increased by Baht 1,059 million from Q2/10. For the first half year 2011, TOP had revenues of Baht 212,336 million and EBITDA of baht 11,349 million. TOP had foreign exchange gain of Baht 108 million, but finance costs of Baht 1,001 million and income tax of Baht 2,565 million. Consequently, TOP reported net profit, before dividends received, of Baht 6,105 million, up by Baht 5,300 million from the same period of prior year. Excluding stock gain, TOP reported net profit of Baht 2,553 million, increased by Baht 1,691 million from the same period of previous year. 3.2 Financial Result of TPX (Aromatics Business) Table 7: Financial Result of TPX Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/- Aromatics utilization rate (%) 90% 88% 2% 92% 88% 4% Aromatics production (kton) Product to feed margin (1) (US$/Ton) Note: (1) Calculated from gross margin divided by feedstock (Ton) In Q2/11, Aromatics prices were still maintained high compared with Q2/10 as higher feedstock cost and tightened regional supply had pressured the spread Paraxylene to ULG95 to increase sharply. As a result of same level Aromatics utilization compared with Q2/10, TPX had sale revenue of Baht 16,958 million, jumped by Baht 12,793 million and EBITDA of Baht 1,581 million, up by Baht 598 million. Having financial costs of Baht 19 million and income tax expense of Baht 331 million, TPX reported net profit of Baht 990 million, increased by Baht 457 million from Q2/10. For the first half year 2011, TPX had sales increased by 6% from the same period of prior year. Due to higher product prices and spreads, TPX had sale revenue increased to Baht 33,225 million, climbed by Baht 8,483 million. TPX had EBITDA of Baht 3,675 million, up by Baht 1,450 million. After the deduction of finance costs and income tax expense, TPX reported net profit of Baht 2,397 million, increased by Baht 997 million from the same period of last year. 6

7 3.3 Financial Result of TLB (Lube Base Oil Production Business) Table 8: Financial Result of TLB Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/(-) Base oil production (%) 100% 94% 6% 100% 93% 7% Product to feed margin (1) (US$/Ton) Note: (1) Calculated from gross margin divided by feedstock (Ton) In Q2/11, base oil price was relatively increased from Q2/10 as a result of growing demand from China whereas supply was still tightening from maintenance shutdown of several regional plants. In Q2/11, TLB had base oil production of 100% and had sale revenue of Baht 7,087 million, increased from Q2/10 by Baht 883 million and EBITDA of Baht 1,186, jumped by Baht 380 million due to increasing spread base oil to fuel oil that climbed by 240 US$/Ton as seen in higher product-to-feed margin to 212 US$/Ton. Having income tax expense of Baht 296 million, TLB reported net profit of Baht 797 million, increased from Q2/10 by Baht 292 million. For the first half year 2011, TLB had sale revenue of Baht 13,835 million, up by Baht 2,515 million from the first half year 2010 due to higher product prices and more high-value-added TDAE sales after TLB had completely integrated TDAE (Treated Distillate Aromatic Extract) expansion at the beginning of year, with additional capacity of 50,000 tons/ year. TLB had EBITDA of Baht 2,134 million, jumped by Baht 839 million. Having income tax expense of Baht 538 million, TLB reported net profit of Baht 1,415 million, increased by Baht 634 million from the same period of previous year. 3.4 Financial Result of IPT and TP (Power Generation Business) Table 9: Financial Result of IPT Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/(-) Availability rate (%) 98% 13% 85% 91% 39% 52% In Q2/11, IPT had the availability rate of 98% whereas in Q2/10 there was an accident causing damages on steam turbine and accordingly suspending its power generation late April The steam turbine was repaired and restored its operation on November 30, IPT had sale revenue and EBITDA for Q2/11 of Baht 2,633 million and Baht 353 million, respectively. However, IPT received additional insurance claims for the accident of Baht 79 million. After deduction of finance costs and income tax expense, IPT reported net profit of Baht 200 million, compared with net loss of Baht 319 million in Q2/10. Due to availability rate recovered from restoration of steam turbine, IPT had sale revenue for the first half year 2011 of Baht 4,949 million and EBITDA of Baht 617 million. IPT had financial costs of Baht 32 million and income tax expense of Baht 118 million. As a result, IPT reported net profit of Baht 274 million, compared with net loss of Baht 332 million for the first half year Table 10: Financial Result of TP Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/(-) Utilization rate (%) 90% 83% 7% 89% 82% 7% 7

8 In Q2/11, TP had increased the utilization rate to 90%, 7% up from the same period of prior year and accordingly had more electricity and steam sales. TP had sale revenue of Baht 1,031 million, jumped by Baht 57 million from Q2/10. However, TP had EBITDA dropped to Baht 148 million due to higher gas cost. In Q2/11, TP had financial costs of Baht 3 million. As TP was granted a promotional tax privilege from the investment in Dry Low Nox Low Emission Combustion project, TP had income tax expense of Baht 3 million compared with income tax of Baht 24 million in Q2/10. Thus, TP reported net profit of Baht 87 million, up by Baht 14 million from Q2/10. For the first half year 2010, TP had sale revenue of Baht 2,014 million and EBITDA of Baht 299 million. Having finance costs of Baht 3 million and income tax expense of Baht 3 million, TP reported net profit of Baht 179 million, up by Baht 28 million from same period of prior year. 3.5 Financial Result of Thaioil Solvent (Solvent Manufacturing and Distribution Business) Table 11: Financial Result of Thaioil Solvent Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/(-) Solvent utilization rate (%) 99% 93% 6% 97% 88% 9% Solvent production (kton) Solvent sale volume (kton) In Q2/11, Thaioil Solvent (Solvent Manufacturing and Distribution Business) had 99% solvent production utilization and solvent sale revenue of Baht 2,334 million, increased from Q2/10 by Baht 550 million due mainly to economic expansion from prior year. In addition, the Japan s earthquake disaster in March had triggered a remarkable increase in gross profit margin. Accordingly, Thaioil Solvent had EBITDA of Baht 258 million, up by Baht 169 million from Q2/10. Thaioil Solvent had finance costs of Baht 34 million and foreign exchange gain of Baht 8 million associated with loan to TOP Solvent (Vietnam) LLC. Aggregated with operating costs and finance costs, Thaioil Solvent had net profit of Baht 160 million, increased by Baht 131 million from Q2/10. For the first half year 2011, Thaioil Solvent had 97% solvent production utilization, up by 9% from the same period of prior year. Thaioil Solvent had sale revenue and EBITDA of Baht 4,581 million and Baht 434 million, respectively. Aggregated with operating costs and finance costs, Thaioil Solvent had net profit of Baht 243 million, jumped by Baht 177 million from the same period of prior year. 3.6 Financial Result of TM (Marine Transportation Business) Table 12: Financial Result of TM Q2/11 Q2/10 +/(-) 6M/11 6M/10 +/(-) Vessel utilization rate: TM (%) 94% 97% (3%) 95% 95% 0% Vessel utilization rate: TOP-NYK (%) 100% NA NA 100% NA NA In Q2/11, TM had service revenue of Baht 256 million, declined by Baht 43 million from Q2/10. TM had a 28-day planned dry-docking maintenance for Thaioil 9. However, TM accepted the delivery of Thaioil 12 vessel, with 96,000 dead-weight Ton and has started its commercial operations since May This resulted in TM having EBITDA of Baht 8

9 90 million, Baht 17 million increased from Q2/10. In addition, TM also had share of profit of Baht 11 million from the investment in TOP-NYK MarineOne Pte Ltd. (TOP-NYK) through Thaioil Marine International Pte Ltd. (TOMI). Having financial costs of Baht 24 million, TM had net profit for Q2/11 of Baht 35 million, jumped by Baht 34 million from the same period of prior year as TM had a one-time loss on Kamee disposal of Baht 19 million in Q2/10. For the first half year 2011, TM had service revenue of Baht 501 million and EBITDA of Baht 171 million. TM had share of profit of Baht 7 million from the investment in TOP-NYK. Aggregated with operating costs and finance costs, TM had net profit of Baht 56 million, jumped by Baht 45 million from the same period of prior year. 3.7 Financial Result of TET (Ethanol Business) For Q2/11, TET had sale revenue of Baht 108 million, dropped by Baht 12 million from Q2/10. Although TET had investment in Sapthip Co., Ltd. (Sapthip) starting in June 2010, TET had EBITDA of loss Baht 22 million as Sapthip, due to remarkably high feedstock cost triggered by natural disaster, suspended its ethanol production and sold its own feedstock instead. However, TET had share of profit of Baht 9 million from the investment in Maesod Clean Energy Co., Ltd., and of Baht 2 million from the investment in Ubon Bio Ethanol Company Limited. Having finance costs of Baht 18 million, TET had net loss for Q2/11 of Baht 22 million, whereas TET had net profit of Baht 85 million for Q2/10 due to the gain on a bargain purchase of Baht 77 million, associated with the investment in Sapthip. For the first half year 2011, TET had service revenue of Baht 394 million and EBITDA of loss Baht 29 million. Nonetheless, TET had share of profit of Baht 26 million from the investment in Maesod Clean Energy Co., Ltd., and of Baht 2 million from the investment in Ubon Bio Ethanol Company Limited. Aggregated with operating costs and finance costs, TM had net loss of Baht 30 million. The Extraordinary General Meeting of Shareholders of TET No. 1/2011 held on February 14, 2011, resolved to approve a share capital increase from Baht 670 million to Baht 1,450 million in order to invest in Ubon Bio Ethanol Company Limited (UBE) within Baht million, equivalent to 21.28% of total registered capital. UBE has cassavabased ethanol production project with a capacity of 400,000 liters per day or 132 million liters per year, intended mainly for export to China. The project is currently under construction and expected to be completed in Q4/12. In addition, UBE had 2 wholly-owned subsidiaries currently with commercial operations. These are Ubon Agricultural Company Limited (UAE), a starch manufacturer with capacity of 600 tons per day and Ubon Bio Gas Company Limited (UBG), a biogas producer from waste water from UAE s starch manufacturing process, with capacity of 72,000 cubic meters per day. The purpose of this investment is to support long-term investment strategy in alternative energy and to develop ethanol export market. 9

10 4. Analysis of Consolidated Financial Status The financial position of the Company and subsidiaries as of June 30, 2011, compared with December 31, 2010 was summarized as follows: 4.1 Statements of Financial Position Table 13: Condensed Consolidated Statements of Financial Position Assets (Million Baht) 30 June Dec 2011 (1) + / (-) % + / (-) Current assets 97,635 74,724 22, % Investments in associates, jointly-controlled entity and other long-term investments 1,962 1, % Property, plant and equipment 65,760 67,413 (1,653) (2.5%) Other non-current assets 4,184 3, % Total assets 169, ,148 22, % Liabilities Current liabilities 36,138 24,872 11, % Long-term borrowings and debentures (including current portion) 47,282 43,563 3, % Other non-current liabilities 3,068 3,137 (69) (2.2%) Total liabilities 86,488 71,572 14, % Equity Equity attributable to owners of the company 77,684 70,160 7, % Non-controlling interests 5,369 5,416 (47) (0.9%) Total equity 83,053 75,576 7, % Total liabilities and equity 169, ,148 22, % Note: (1) Reclassified for comparison with interim financial statements 2011 Total Assets As of June 30, 2011, the Company and subsidiaries had total assets of Baht 169,541 million, increased by Baht 22,393 million or 15.2% from December 31, 2010 due to the following: : Current assets increased by Baht 22,911 million or 30.7% as trade accounts receivable jumped by Baht 7,062 million, inventories up by Baht 11,646 million, short-term investment increased by Baht 5,293 million and and receivable from Oil Fuel Fund up by Baht 596 Baht. : Investments in associates, jointly-controlled entity and other long-term investments increased by Baht 831 million as the Company and subsidiaries had invested in 2 associates: an investment of Baht 23 million, 20% interest in PTT Energy Solutions Co., Ltd., and an investment of Baht 749 million, 21.28% interest in Ubon Bio Ethanol Company Limited. In addition, TM had an investment of Baht 274 million in TOP-NYK MarineOne Pte Ltd. through Thaioil Marine International Pte Ltd. (TOMI). 10

11 Total Liabilities As of June 30, 2011, the Company and subsidiaries had total liabilities of Baht 86,488 million, increased by Baht 14,916 million or 20.8% from December 31, 2010 due to the following: : Current liabilities jumped by Baht 11,266 million or 45.3% as trade accounts payable increased by Baht 9,685 million and accrued income tax up by Baht 1,890 million. : Long-term borrowings and debentures (including current portion) increased by Baht 3,719 million from the following: o o TOP drew US-denominated borrowings of USD 200 million for investment and long-term liquidity enhancement. The Company and subsidiaries repaid due Baht-denominated borrowings of Baht 2,236 million and USDdenominated borrowings of USD 17 million. Table 14: Consolidated Long-term Loans (Million Baht) TOP TPX TP IPT TET Total Debentures - USD denominated 10,805 10,805 - Baht denominated 20,639 20,639 Borrowings - USD denominated 6, ,656 - Baht denominated 5,334 1, ,182 As of 30 June ,956 2, , ,282 As of 31 December ,312 2, , ,563 + / (-) 4,644 (595) (25) (246) (60) 3,719 Total Equity As of June 30, 2011, the Company and subsidiaries had total shareholders equity of Baht 83,053 million, increased by Baht 7,477 million or 9.9% from December 31, 2010 as a main result of net profit for the first half year 2011 of Baht 10,473 million and dividends paid of Baht 2,856 million, Baht 1.40 per share, for the second half year 2010 operating result. 4.2 Statements of Cash Flows As of June 30, 2011, the Company and subsidiaries had cash and cash equivalents of Baht 11,848 million. The Company had cash and cash equivalents of Baht 9,325 million. Cash flows by activity are detailed below: Table 15: Cash Flows for the first half year 2011 (Million Baht) Consolidated Separate Net cash provided/ (used) by operating activities 6,907 2,125 Net cash provided/ (used) by investing activities (8,089) (5,109) Net cash provided/ (used) by financing activities (187) 1,513 Net increase/ (decrease) in cash and cash equivalents (1,369) (1,471) Cash and cash equivalents at beginning of period 13,217 10,796 Cash and cash equivalents at end of period 11,848 9,325 11

12 For the first half year 2011, Cash flows provided by operating activities was Baht 6,907 million, derived from net profit to cash receipt from operation of Baht 19,429 million. In addition, there were cash paid of Baht 12,522 million as a result of change in working capital. This was caused by inventories and trade accounts receivable jumped by Baht 11,646 million and Baht 7,009 million, respectively, tracking rising oil prices and income tax paid of Baht 2,346 million, offsetting with trade accounts payable increased by Baht 9,640 million. Cash flow used in investing activities was Baht 8,089 million. There were cash outflows for short-term investments of Baht 5,286, for additional property, plant and equipment of Baht 1,556 million, and for additional investments in ethanol and marine transportation business of Baht 1,066 million. Cash flow used in financing activities was Baht 187 million, primarily consisted of dividends paid of Baht 3,069 million, short-term and long-term loan repayment of Baht 2,951 million, and finance costs paid of Baht 1,027 million, but offsetting with cash receipt relating to short-term and long-term borrowings from financial institutions of Baht 6,859 million. Therefore, the Company and subsidiaries had cash and cash equivalents at the end of period of Baht 11,848 million, decreased by Baht 1,369 million. 4.3 Financial Ratios Table 16: Financial Ratios (Consolidated) for Q2/11 Profitability Ratios Q2/11 Q1/11 (1) +/(-) Q2/10 (2) +/(-) Quality of earnings ratio (%) 6% 11% (5%) 4% 2% Gross profit margin ratio (%) 5% 10% (5%) 2% 3% Net profit margin ratio (%) 10% 6% 4% 1% 9% Liquidity Ratios Current ratio (times) (0.4) 2.8 (0.5) Quick ratio (times) (0.2) 1.4 (0.3) Financial Policy Ratios Total liability/ equity (times) (0.0) Long-term loan/ equity (times) (0.0) Interest coverage ratio (times) (9.7) Long-term loan/ total capitalization (%) 36% 37% (1%) 39% (3%) Net debt to equity ratio (times) (0.1) Note (1) Recalculated for change in accounting policy regarding the investment in jointly-controlled entity. (2) Recalculated as the Group adopted TAS 19 - Employee Benefits retrospectively and adjusted 2010 financial statements accordingly. Financial Ratios calculation Quality of Earnings ratio (%) = EBITDA / Sales Revenue Gross Profit Margin ratio (%) = Gross Profit / Sales Revenue Net Profit Margin ratio (%) = Net Profit / Total Revenue Current ratio (times) = Current Assets / Current Liabilities 12

13 Quick ratio (times) = (Cash and Cash equivalent + Current investments + Accounts Receivable) / Current Liabilities Total Liabilities / Total Equity (times) = Total Liabilities / Total Equity Long term loan/ Total Equity (times) = Long Term Loan / Total Equity Long term loan = Long-term borrowings from financial institutions + Debentures (includes current portion) Interest Coverage ratio (times) = EBITDA/ Interest Expenses (Finance costs) Long term loan/ Total Capitalization (%) = Long Term Loan / Total Capitalization Total Capitalization = Long Term Loan + Total Equity Net Debt to Equity ratio (times) = Net Debt / Total Equity Net Debt = Interest bearing debt Cash and cash equivalent - Current investments 13