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VISION Leading chemical company for better living through innovative technology and people

MISSION To be a top quartile performer in Asia/Pacific as PTT flagship in chemical business To be a trustworthy company to all stakeholders with social responsibility and environmental care To excel in R&D and to intelligently apply state-of-the-art technologies To persistently cultivate highly proficient workforce with profound engagement and commitment to professional excellence

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10

Annual Report 2010 PTT Chemical Public Company Limited

%86,1(66 9$/8( &+$,1

BUSINESS VALUE CHAIN

%XVLQHVV RSHUDWLRQ RI WKH FRPSDQ\ LWV VXEVLGLDULHV DIILOLDWHV DQG WKHLU FDSDFLWLHV *Projects currently under development

Olefins & Shared Facilities

Polymers Products Value Center

â&#x20AC;˘ Olefins (1) â&#x20AC;˘ Mixed C4 â&#x20AC;˘ Pyrolysis Gasoline Cracker Bottom Hydrogen â&#x20AC;˘ Butene-1(2)* â&#x20AC;˘ Utility Jetty & Buffer Tank Farm

â&#x20AC;˘ High Density Polyethylene (HDPE)(3) â&#x20AC;˘ Low Density Polyethylene (LDPE)(4) â&#x20AC;˘ Linear Low Density Polyethylene (LLDPE)(5) â&#x20AC;˘ Polystyrene (PS)(6)

(1) PTTCH production = 1,863,000 tons per year and PTTPE production = 1,025,000 tons per year (2) PTTCH production of Butene-1 and Butadiene = 100,000 tons per year

(3) PTTCH production = 300,000 tons per year and BPE production = 500,000 tons per year (4) PTTPE production = 300,000 tons per year (5) PTTPE production = 400,000 tons per year (6) TSCL production = 90,000 tons per year

11

EO-Based Performance Products Value Center

Oleochemical Products Value Center

Services & Others

• Ethylene Oxide/Ethylene Glycol (EO/EG)(7) • Ethanolamine (8) • Ethoxylate(9)

• Methyl Ester Fatty Alcohol & Glycerin(10) • Base & Specialty Oleochemicals(11) • Carotenoid(12)*

• Jetty(13) • Utility(14) • Safety & Environmental Services(15) • Maintenance & Engineering(16) • Pipe Line Transportation(17) • Poly Vinyl Chloride (PVC)(18) • Phenol/BPA*(19) • Trading Health & Nutrition Products(20)* • R & D Green Chemicals(21)* • Information and Communication Technology(22)

(7) TOCGC production = 300,000 tons per year and expansion project production = 95,000 tons per year (8) EA production = 50,000 tons per year (9) TEX production = 50,000 tons per year

(10) TOL production = 331,000 tons per year (11) EMERY production = 976,000 tons per year (including MPR*) (12) Bio Spectrum production of Carotenoid (by-production of Methyl Ester used in food coloring)

(13) (14) (15) (16) (17) (18) (19)

TTT PTTUT NPC S&E PTTME EFT VNT production = 280,000 tons per year PPCL production = 200,000 tons per year and Bis-Phenol-A = 150,000 tons per year (20) Bio Creation (21) Myriant (22) PTTICT

12

Annual Report 2010 PTT Chemical Public Company Limited

MORE GREEN for your better world

MORE WELLNESS for your well-being

MORE KNOWLEDGE for your concerns

MORE PROFITABLE for beneficial growth

&5($7( 9$/8(

What makes us different?

At PTT Chemical, we make a sustainable business difference through the "values" created Shareholders' value that comes

not just from profits, but from happiness

of ownership Business partners' value that comes not just from business, but from joint success Employees' value that comes not just from work, but from being the Company's priceless assets Social and environmental value that comes not just from mere co-existence, but from mutual improvement and neighborly care.

Our pledge is that we will relentlessly march toward success-and go beyond with diverse, creative ideas in all processes, apart from responsibility to society, the environment, and other matters improvable for today and tomorrow.

M RE GREEN for your better world

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M RE KNOWLEDGE for your concerns

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16

Annual Report 2010 PTT Chemical Public Company Limited

Leading the regional petrochemical industry with manufacturing and marketing strength, PTT Chemical combines management acumen with smart application of technology-resulting in a spectrum of quality and essential chemicals.

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2OHILQV 6KDUHG )DFLOLWLHV

18

Annual Report 2010 PTT Chemical Public Company Limited

2OHILQV 6KDUHG )DFLOLWLHV 2YHUYLHZ 2OHILQV 3URGXFWLRQ DQG 'LVWULEXWLRQ

As a part of the upstream petrochemical industry, the Company produces and distributes Ethylene and Propylene, known collectively as "Olefins", from natural gas and petroleum product feedstock. The products are supplies to downstream petrochemical operators in the Industrial Estate and to High-Density Polyethylene (HDPE) plants of PTT Chem Group and the Ethylene Oxide/Ethylene Glycol (EO/EG) plant of TOC Glycol Co., Ltd. (TOCGC) - a wholly-owned subsidiary of PTT Chemical (100% of the shares). Given surplus Olefins and attractive prices, the Company exports its outputs to international spot markets.

With both natural gas and naphtha serving as feedstock, the Company can adjust its feedstock choices for maximum benefit. As of year-end 2010, its nameplate capacity was 2,888,000 tons per year (2,376,000 tons per year of Ethylene and 512,000 tons per year of Propylene) at the following plants: The gas-based I-1 Olefins Plant with a capacity of 461,000 tons per year of Ethylene and 127,000 tons per year of Propylene The gas and naphtha-based I-4/1 Olefins Plant with a capacity of 515,000 tons per year of Ethylene and 310,000 tons per year of Propylene The gas-based I-4/2 Plant with a capacity of 400,000 tons per year of Ethylene, and 50,000 tons per year of Propylene The PTT Polyethylene Co., Ltd. Olefins Plant (wholly-owned by PTT Chemical, 100% of the shares), running on ethane derived from Unit 6 of PTT's gas separation plant (GSP #6). With a capacity of 1,000,000 tons per year of Ethylene and 25,000 tons per year of Propylene, this plant went on commercial production in December 2010 PTT Chemical also produces and distributes Olefins by-products comprising Mixed C-4, pyrolysis gasoline, tail gas, cracker bottoms, and hydrogen, to domestic customers.

In addition, product value addition comes from the Butene-1 project, by - product of Mixed C-4, with a capacity of 100,000 tons per year and Butadiene. Curently, the engineering design has been completed, it is scheduled to commence in the second quarter of 2014.

19

8WLOLWLHV 3URGXFWLRQ DQG 'LVWULEXWLRQ

Valuing and supporting businesses and activities that strengthen the petrochemical business and enhance a greater integration, PTT Chemical provides key public utilities such as power, electricity, steam, and for industrial usage, consisting of Treated, Potable, and Demineralized water to the Olefins Plants and distribute to downstream plants in concession area and to other companies in Map Ta Phut Industrial Estate.

As of year-end 2010, the Company commanded 210 megawatts (MW) of power generation capacity, 650 tons per hour of steam generation, 2,080 cubic meters per hour of industrial water production, and 1,000 cubic meters per hour of sea water reverse osmosis (SWRO). In addition, the Company is planning on an electricity and steam plant (the EPS Project) with a capacity of 112.5 megawatts and 560 tons per hour of steam for the use of productions and expansion. This project is scheduled for start-up in the fourth quarter of 2011.

PTT Chemical also runs two jetties of 9,000 and 35,000-Dead Weight Ton (DWT) capacities together with petrochemical buffer tank facilities for its own supply security in case the production is suspended or temporarily shutdown for maintenance. Besides providing product storage, import, and export for its outputs, these facilities also serve the downstream petrochemical group.

3HUIRUPDQFH 2YHUYLHZ The Olefins & Shared Facilities Value Center has consistently developed processing efficiency for competitive costs, which would serve as a firm base for creating opportunities and expanding businesses, with the following hightlights of 2010 : 3URFHVVLQJ (IILFLHQF\ DQG &RPSHWLWLYHQHVV

Improved and installed machinery/equipment while improving plant conditions to reuse energy and lower its processing needs for energy Studied benchmarking of the past year's performance for continued reference in monitoring and processing, as well as improving plants for peer-industry competitiveness Fostered Olefins processing strength by building on feedstock advantages and optimization of facilities; improved processes and key equipment for efficiency Developed sales and marketing capabilities and information systems to plan domestic and international market competition Reduced operating costs by managing feedstock through optimization, managing inventory of feedstock and products, and managing facilities for optimal cost-effectiveness Introduced a variety of software, including Supply Chain Management (SCM) and Systems Applications and Products (SAP), for operating efficiency improvement

20

Annual Report 2010 PTT Chemical Public Company Limited

PTT Chemical also prepared for future growth while seeking opportunities to expand its capacities which require low capital cost and leverage the technical capability, the readiness of the current infrastructure, as well as personnel's expertise, to lead to maximum operating efficiency.

The Company continued to implement the strategic action plan drawn up to tackle the economic crisis from last year, namely a resilient marketing policy, inventory management, and production cost reduction.

All of Which helps the company maintain its competitive position.

$VLDQ 2OHILQV 0DUNHW 2YHUYLHZ This year's market proved better than expected, with average prices moderately higher than in 2009. Yet, the market still remained volatile. Ethylene prices remained high during the year because of maintenance shutdowns and capacity reduction of the crackers in the region, coupled with some production issues during the first quarter, which took 1.02 million tons out of the market.* Meanwhile, oil and naphtha prices were on the rise benefiting for Olefins prices during the quarter.

From the second quarter to the third, the Company was impacted by oversupply in the world market due to the start up of many new Asian Olefins Plants, including some from the Middle East. Meanwhile, market demand began to slow down, notably in China, due to its government's economic measures. These factors taking effect brought down Ethylene market prices. However, the fourth quarter saw recovering oil and feedstock prices, planned production shutdowns of regional producers, and rising market demand with the world economic recovery, coupled with manufacturers' needs to produce goods in time for Christmas and New Year. These proved instrumental to Ethylene market prices returning to a high range. For the year, Ethylene commanded an average price of over USD 1,000 per ton, which continued to the year-end, enabling naphtha-based Ethylene producers to make more profits, with the spread between Ethylene and naphtha prices reaching USD 363 per ton, or USD 46 per ton higher than the previous year.**

21

The Asian market situation for Propylene in 2010 resembled that of Ethylene fairly tighter because of a disruption to the Propylene unit's on-purpose processing among the six Asian Propylene plants with a combined capacity of about 1,200,000 tons per year by maintenance shutdowns and process problems. This, combined with the shutdown and capacity reduction of crackers, took 644,000 tons of Propylene out of the market.* In addition, as a result of many countries' economic stimulus packages, propylene demand remained high. Finally, oil and feedstock prices were on the rise throughout the latter half of 2010. All these contributed to Asian Propylene prices being higher than those of Ethylene, with the spread between Propylene and naphtha for the year averaging USD 419 per ton, or USD 83 per ton higher than that of 2009.** Note that petrochemical tariff reduction under AFTA, in effect since 1 January 2010, did not affect the Company's overall business because of its establised customer base, which prevent the Company from competing with imported Olefins.

Together with, its downstream products set for export derived benefited fully from zero tariff.

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

* Source ** Source

: CMAI : ICIS

22

Annual Report 2010 PTT Chemical Public Company Limited

We treat our customers as our Partners and together we grow, side by side.

As an integrated upstream and downstream petrochemical producer, we continue to strive for success by strengthening our portfolio with a wide range of products that fulfill every customer's needs.

$ %ULJKW )XWXUH 'ULYHQ

3RO\PHUV 3URGXFWV

24

Annual Report 2010 PTT Chemical Public Company Limited

3RO\PHUV 3URGXFWV 9DOXH &HQWHU 2YHUYLHZ An essential part of the Olefins Value Chain, Polymers Products are very close to people's life because they are processed into everyday consumer products, essential goods for both the industrial sector and the agricultural sector, and modern amenities. Therefore, this value chain represents a business that PTT Chemical is very proud of. A wide range of Plastics Polymers in which the Company has invested fall into these categories.

High Density Polyethylene (HDPE): Under the InnoPlus brand, PTT Chemical's HDPE is produced with a capacity of 250,000 tons per year and another 250,000 tons per year through Bangkok Polyethylene Plc (BPE) - a wholly owned subsidiary. In addition, the Company has undertaken capacity expansion by 50,000 tons per year, and BPE by 250,000 tons per year, with start-ups due for the first quarter of 2011.

Both companies rely on the processing technology of Mitsui Chemical Inc. of Japan, capable of producing diverse types of HDPE, including plastic bags, drinking water bottles, milk bottles, lubricant gallons, home appliances, toys, carbonated drink crates, showcase boxes, ropes, fishing nets and seines, cables, electrical wire pipes, and telecommunication cables.

Linear Low Density Polyethylene (LLDPE): is produced by a subsidiary company - PTT Polyethylene Co., Ltd. (PTTPE), with a capacity of 400,000 tons per year, commercial y operational since January 2010 through the Unipol processing technology, a US patent of Univation. A variety of LLDPE outputs are used in the packaging industry, including shrink film, stretch film, heavy-duty bags, garment bags, frozen-food bags,water pipes, and electrical wire or cable coating.

Low Density Polyethylene (LDPE): is produced by PTTPE with a capacity of 300,000 tons per year. The facility is undergoing process of commissioning and is expected to commence commercial operation in the first quarter of 2011 using the Tubular Reactor process technology, a Basell (Germany) patent, for producing molding containers.

Polystyrene (PS): Also known as thermoplastics, Polystyrene can be melted and molded. Thai Styrenics Co., Ltd. (TSCL), (PTTPE - a wholly owned subsidiary of PTTCH hold 100% shares) is the operator with a capacity of 90,000 tons per year of GPPS (General Purpose Polystyrene) and HIPS (High Impact Polystyrene). GPPS, characterized by its clarity and low cost, is suitable for the production of office appliances and disposable kitchenwave and utensils. HIPS, offering high impact strength, is commonly used in the production of electrical appliances and toys. The product is distributed under the "Diarex" trademark.

25

3RO\PHUV 3URGXFWV 9DOXH &HQWHU 3HUIRUPDQFH Since Polymers production forms a capital-intensive downstream petrochemical industry with price cycles tracking crude oil prices, production cost control and a firm customer base are crucial. The Value Center has therefore not only continually improved its processing efficiency for competitive costs, but has also focused on product development to respond to demand while keeping up with customers' needs and expanding commercial opportunities to accommodate its own rising capacities. The performance highlights this year are: 3URGXFWLRQ (IILFLHQF\ 3URFHVVHV

Use of Ethylene as the primary feedstock for Olefins Plant Energy-saving improvement Laying of a Styrene Monomer (SM), core feedstock for PS, pipeline to accommodate SM imports to raise the capacity for SM cost management to a competitive level Installation of a Reverse Osmosis (RO) System to purify treated waste water from the plant into clarified water for use in the process of cooling water system to in turn cut effluents and maximize the integrated use of natural resources based on Eco-Efficiency application Installation of a Bag Filter system, which is highly efficient for the prevention of air pollutants resulting from product transfer to the silo Full execution of Supply Chain Management (SCM) 0DUNHWLQJ DQG 'LVWULEXWLRQ ,PSURYHPHQW

Together with PTT Plc, the Company formed PTT Polymer Marketing Co., Ltd. (PTTPM), for the marketing and distribution of Polymers and all by-products of PTT Chem Group. Today, PTTPM boasts more than 120 agents worldwide, with representative offices in China and Vietnam along with one subsidiary in the United Arab Emirates to expand its marketing network and achieve more efficiency in customer service and comprehensive customer relation management in addition to Polymers products distribution expansion to the market. The Company has assigned PTT Polymers Logistics Co., Ltd. (PTTPL), of PTT Group to handle warehouse management and product logistics of PTT Group's Polymers products.

Running at full capacity, PTT Chemical is confident that the Polymers Business Value Chain of the Group wil augment its marketing strength and distribution and logistics cost effectiveness. All of which strength the Company's ability to reach the customers in over 80 countries worldwide.

26

Annual Report 2010 PTT Chemical Public Company Limited

3URGXFW 9DOXH $GGLWLRQ

One of the keys to achieve sustainable growth is the Company's innovative approach to customer care with a focus on Co-Creation with customers in introducing new products to the market or adding product value.

Development of innovative products jointly with customers enhances product values for the mutual benefit of upstream and downstream operators. A case in point is the joint effort with a manufacturer of lubricant gallons which relies on HD68000B InnoPlus to make lighter containers by using less Polymers while retaining or increasing container strength. Another is the application of HD3520C InnoPlus to make lighter and thinner drinking water bottle caps but with the same sturdiness and safety of application.

3RO\PHUV 0DUNHW 2YHUYLHZ The global economy this year continued its recovery, as did petroleum and petrochemical markets. Feedstock prices rose by 30% over 2009, squeezing the margins of LLDPE and HDPE producers over the same period, whereas the margins of PP, PS, and LLDPE producers headed the other way in 2010. The average price of LDPE for the year was $1,450 per ton; LLDPE, $1,290 per ton; HDPE, $1,220 per ton; PP, $1,320 per ton; HIPS, $1,360 per ton; and GPPS, $1,470 per ton.* Polymers prices stayed fairly high in the first quarter because of several Asian plants' seasonal shutdowns and turnarounds, coupled with reduced exports from the Middle East to Asia. On the other hand, the US and European markets were tight in supply through the year, with feedstock costs also remained high, thus badly depressing margins for regional operators. As a result, some producers had to lower their capacities and constantly tried to hike their prices-in short, a golden profit-making period for Asian producers.

As for the Thai market, the domestic economy of 2010 as a whole expanded by a healthy 7.8%, a far cry from last year. With the economy growing, domestic plastic demand took off. Thai exports, the driver of the economy, boasted Baht 200,000 mil ion in total export value (32% growth), which is expected to continue through 2011. However, demand for Thai exports is likely to slow down with developed countries stil facing economic crises. Fortunately, Thai exports still enjoy support in demand coming from emerging countries to replace that from developed countries.

The year also saw a shrink of 6-8% in growth coming from the manufacturing sector. Stil , PE, PP, and PVC for food containers managed steady expansion in demand. Thailand's main export destinations are China, Hong Kong, and Vietnam. * Source: ICIS

27

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28

Annual Report 2010 PTT Chemical Public Company Limited

To cater to consumers' needs, we pioneered the expansion of our products and capacities to trailblaze the market. By supplementing value to Ethylene Oxide and related products, we have reduced cost on foreign exchange trading while supporting sustainable development.

0D[LPL]LQJ 9DOXH &UHDWLRQ

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30

Annual Report 2010 PTT Chemical Public Company Limited

(2 %DVHG 3HUIRUPDQFH 3URGXFWV 9DOXH &HQWHU 2YHUYLHZ To raise the value of Olefins and address the demand of industrial groups and consumers more comprehensively, PTT Chemical recognizes the need to make new domestic products with high value added, import substitution, and greater competitiveness for the benefit of the Thai petrochemical industry.

As a result, the Company has turned to EO-Based Performance Products : Ethylene Oxide/Ethylene Glycol (EO/EG): Operated by TOC Glycol Co., Ltd. (TOCGC), a wholly owned subsidiary, the plant yields EO and EG in the form of Mono Ethylene Glycol (MEG), a primary product and feedstock for polyester fiber for the textile industry and clear-plastic bottle (PET) industry. Today, TOCGC is capable of producing 300,000 tons per year of MEG from Ethylene as feedstock. As for the capacity expansion plan to 95,000 tons per year, this is still under suspension ordered by the Central Administrative Court concerning the Map Ta Phut case to complete EIA and HIA requirements.

TOCGC's policy is to primarily distribute EO/EG to domestic operators at competitive prices and under commercial conditions, supplying products continuously and rapidly while also focusing on maintaining and raising its domestic market share as well as maximizing product value addition by investigating market development to constantly invest more in downstream businesses. Besides focusing on maintaining and raising its domestic market share, TOCGC strives to maintain its overseas customer base and nurture relations to accommodate exports as a result of future capacity expansion.

Ethanolamines: Operated by Thai Ethanolamines Co., Ltd. (EA), a wholly owned subsidiary of PTT Chemical.

The core products are Monoethanolamine (MEA), Diethanolamine (DEA), and Triethanolamine (TEA), based on EO derived from TOCGC, with a total capacity of 50,000 tons per year. The products find applications in the production of shampoos, conditioners, fabric softeners, pharmaceutical product, the cement industry, among others.

As for product distribution, EA values sale to domestic customers by doing its best to expand its domestic market shares through direct sale to bulk customers and through distribution agents to retail domestic customers. EA maintains its traditional overseas customer base while searching for new regional markets through maintaining and fostering relationships with customers and distribution agents.

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Ethoxylate: Operated by Thai Ethoxylate Co., Ltd. (TEX), a joint venture with Cognis Thai Ltd. (an affiliate of Cognis Group, the world's leading specialty chemical producer). [Note that on 10 December 2010, BASF took over Cognis's business.] Its feedstock is EO from TOCGC and Fatty Alcohol from Thai Fatty Alcohol Co., Ltd. (TFA). Ethoxylate is a raw material for shampoos, dish-washing liquids, and assorted washing liquids. With a nameplate capacity of 50,000 tons per year, TEX's is the first plant to produce Ethoxylate in Thailand. In marketing and distribution, TEX focuses on maintaining and raising domestic market shares together with import substitution while maintaining overseas customers and searching for new markets since the regional manufacturing base yields personal-care and home-care products-to optimize business opportunities. Products are also exported to Asia and Europe.

(2 %DVHG 3HUIRUPDQFH 3URGXFWV 9DOXH &HQWHU 3HUIRUPDQFH The Value Center is determined to raise its processing efficiency for international competitiveness, including the expansion of processing capability to accommodate domestic market growth, with the following highlights in 2010: 3URFHVVLQJ (IILFLHQF\ ,PSURYHPHQW

Improvement of energy saving and energy conservation, including less dependence on steam supply shortfall needed from a steam plant, more circulation of thermodynamic substances with latent heat values for process heat transfer, search for processing equipment and reduction of unnecessary electricity requirements, and improved timing to trim electricity peak loads for large water pumps Achievement of lower operating costs through feedstock and product inventory management (QKDQFHPHQW RI &RPSHWLWLYHQHVV

Commitment to building a long-term customer base through key account management Increase of revenue-generating ability by focusing on proactive marketing and distribution through the export of diverse products and maintaining domestic market shares and import substitution

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Annual Report 2010 PTT Chemical Public Company Limited

0DUNHW 2YHUYLHZ Since MEG is a commodity product also used as feedstock for polyester, in turn the feedstock for the textile industry and the clear-plastic bottle industry, its market situation tracks that of the polyester industry, particularly the market in China (one of the biggest users and importers of MEG) and other Asian countries that still need MEG imports to constantly meet market demand.

As for the overall Ethanolamine market, 2010 belonged to the business down cycle, resulting in a business slowdown as well as a demand slowdown for operators in related industries, including personal-care products, anti-weed chemical products, and construction materials. As a result, Ethanolamine prices dropped from the previous year, but look to improve with the rising demand of 2011.

As for marketing and distribution of the EO groups, both domestic and international, most major producers of the world-including Optimal, Ineos, and Dow-are based in the Middle East, with a long history of business as well as good relations with customers and distribution agents throughout the world. In addition, they command labor and feedstock cost advantages. Capacities will be expanded for competitive advantage and optimum responses to MEG demand in the world market.

Today, most major producers export MEG to Thailand through direct sale and agents. All suppliers strive to keep major customers and part of the domestic market share. Still, in 2010, TOCGC's domestic market share was quite a healthy 65%.

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Annual Report 2010 PTT Chemical Public Company Limited

We incorporate environmental stewardship into our business-from upstream to downstream. While adding Value to our products. And we will not stop here. Our ultimate goal is to become a global business leader with a global recognition of a leadership in contributing to sustainable development.

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Annual Report 2010 PTT Chemical Public Company Limited

2OHRFKHPLFDO 3URGXFWV 9DOXH &HQWHU 2YHUYLHZ Because Thailand and Southeast Asia have suitable terrains and climate for oily plants with ideal potential for processing into chemicals, and because today's needs for alternative energy and environmentally friendly products are continuingly increasing, PTT Chemical foresees a need for the Oleochemical business based on natural raw materials like palm oil, palm kernel oil, vegetable oil, or animal fats. The resulting Oleochemicals can yield various downstream products used in the personal care industry, pharmaceutical industry, etc.

The Oleochemical Products Value Center consists of Thai Oleochemicals Co., Ltd. (TOL) (a wholly owned subsidiary), Thai Fatty Alcohols Co., Ltd. (TFA) (TOL's wholly owned subsidiary), and Emery Olechemicals (M) Sdn. Bhd. (a 50%-50% joint venture between PTT Chem Group companies-namely PTT Chemical International Pte. Ltd. and Sime Darby Plantation Co. (Malaysia)). These collaboration add capability and integrate the product processing and sale businesses for new markets in Asia, Europe, and the US. Below are the Value Center's key products.

Methyl Ester: TOL operates a 200,000-ton-per-year plant with outputs of basic Oleochemicals derived from blending Methyl Ester (B100) with diesel to obtain biodiesel (B3 or B5) of a European standard (EN14214) that gives higher efficiency to diesel (particularly its lubricating quality), engine combustion efficiency, longer engine life, and lower pollution or environmental impacts.

PTT Chemical also invested in Bio Spectrum Co., Ltd., with the Inventa Group of Singapore at a ratio of 75% to 25% to produce Carotenoid, an extract from Methyl Ester used as a food coloring additive.

Now filing for construction approval, the plant is due for completion in 2012.

Fatty Alcohols: TFA is the sole producer in Thailand with a capacity of 100,000 tons per year of these Oleochemical products-key precursors to personal-care products-which can substitute a staggering cost of imports. A part of fatty alcohols also can be used as Ethoxylate feedstock.

Glycerin: This is a by-product obtained from Oleochemical production. It is especially useful in the pharmaceutical industry, food industry, and personal-care industry. The production capacity is 31,000 tons per year.

Fatty Acids: These are basic Oleochemical product of Emery, Malaysia, with applications in the personal-care industry, soaps, and cosmetics industry.

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Specialty Oleochemicals: Obtained from the processing of basic Oleochemicals, these products find applications in assorted industries, including cleaning-agent, personal-care, and plastic industries.

Specialty Oleochemicals, including Triacetin, Ozone Acid, plastics additives, and chemicals used for oil well drilling, can be produced by Emery.

In addition, the Multi-Purposed Reactor (MPR) project with a capacity of 14,000 tons per year - operated

by TFA (TOL holds 100% shares) has been sold to Emery Oleochemicals (in which CH Inter holds 50% equity)

2OHRFKHPLFDO 3URGXFWV 9DOXH &HQWHU 3HUIRUPDQFH Valuing quality and standard systems, which are essential foundations for its operations, PTT Chemical consistently implemented process quality improvement through efficiency improvement and processing cost reduction together with confidence bolstering for products this year, as highlighted below: 3URFHVVLQJ (IILFLHQF\ ,PSURYHPHQW

Developed the quality and services of Fatty Alcohols, including investigation of development and investment in downstream products under the specialty Oleochemical group.

Research into product value addition, for instance, through the production of white Methyl Ester and classification of fatty alcohols into grades in response to customers' needs.

Improved processing efficiency by developing C16/18 fatty alcohol processes for direct processing at the fractionating unit, thus shortening the production process.

Improved energy-saving.

Strived for operating cost reduction by sourcing diverse raw materials with low costs, including Palm Fatty Acid Distillate (PFAD) and palm stearin, to produce Methyl Ester; TOL also looked into buying palm oil from a greater variety of producers and using other raw materials. &RPSHWLWLYHQHVV DQG 0DUNHWLQJ 5HODWHG $FWLYLWLHV

Increased revenue-generating ability since Methyl Ester played a key role in high domestic-market shares; developed assorted grades to address customers' needs; incidentally, fatty alcohols and glycerin contribute to an international marketing and distribution network.

Granted certification of ISO 14000 (Environmental Management Systems, EMS), TIS 18000, and OHSAS 18000 (Occupational Health and Safety Assessment System).

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Annual Report 2010 PTT Chemical Public Company Limited

Recieve Certification of GMP (Good Manufacturing Practice), a key basic system for food safety, and HACCP (Hazard Analysis and Critical Control Point), which enabled TOL to sell glycerin in the pharmaceutical industry, food industry, and personal-care industry; the certificates also extended to fatty alcohols and glycerin certified by the Halal Standard Institute of Thailand.

Chose alternative raw materials for its processes, including coconut oil for fatty alcohol processes to not only save production costs, but also ease occasional raw-material shortages.

0DUNHW 2YHUYLHZ In view of the steady rise in the oil price worldwide, the Ministry of Energy's clear goal for alternative-energy consumption led to a policy for B2 (that is, 98% Diesel and 2% Methyl Ester by volume) enforced nationwide on 1 February 2008 and a planned goal for exclusively B5 biodiesel (95% Diesel and 5% Methyl Ester) in the second quarter of 2011, which implied a need for about 800,000 tons per year (or 2.5 million liters per day) of Methyl Ester.

However, today there are many additional domestic biodiesel producers, which causes a biodiesel glut amid heated competition. Similarly, overseas markets saw lower biodiesel demand than supply capacity. Add to this scenario the highly volatile Methyl Ester situation in the world market stemming from a dramatic rise in palm oil and soybean oil prices due to climate change, thus lowering agricultural outputs than expected.

The higher the raw material prices, the higher the Methyl Ester prices.

The market for Fatty Alcohols improved from the trough of 2009, with demand expected to approach the capacity in 2011. The rising demand came mainly from Mid-Cut Alcohols for the personal-care industry and from Long-Chain alcohols for industrial applications-their higher demand reflected the improving global economy. In any case, the total capacity stil outstripped market demand. Key factors to the Fatty Alcohol market are the volume and price of raw materials (palm kernel oil and coconut oil). The price of the former rose sharply (70-80%) in the past year and wil remain high in 2011, a fact which has caused certain producers to trim their capacities or suspend their production because of financial problems and inventory management problems.

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A by-product of Methyl Ester and Fatty Alcohols, Glycerin bears the direct impact of the Methyl Ester and Fatty Alcohol markets stemming from the increasing worldwide popularity of biodiesel and the policy for mandatory use of biodiesel in many countries, which has steadily raised the market supply of Glycerin, thus depressing its price. However, since the price recorded such a big jump in the fourth quarter of 2010, it is expected to come down to about the same level of 2010 by the first quarter of 2011.

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Annual Report 2010 PTT Chemical Public Company Limited

Our commitment to service excellence drives our enthusiastic, competent people.

Not contented with merely good services, we are prepared to forge ahead along with customers to bring prosperity to Thailand's petrochemical industry through integrated services.

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INTERNATIONAL BUSINESS

Building on past successes, PTT Chemical aims to hit its stride and identify new enterprises in new markets, leveraging competitive strengths and technical capability.

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Annual Report 2010 PTT Chemical Public Company Limited

Innovation leads our way in identifying mutual values between business and society. To us, innovation comes from thinking, learning, and acting for a better future-starting with each one of us.

SHAPING AN INNOVATIVE SOCIETY

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â&#x20AC;˘ Executive Vice President Acting for Senior Executive Vice President, PTT Public Company Limited â&#x20AC;˘ Executive Vice President-Polymers Products Value Center, PTT Chemical Public Company Limited â&#x20AC;˘ Executive Vice President-Marketing & Commercial, PTT Chemical Public Company Limited 5HODWLRQ DPRQJ IDPLO\ ZLWKLQ WKH &RPSDQ\

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168

Assets

Note

Consolidated

Separate

financial statements

financial statements

2010

2009

2010

2009

(in Baht) Current assets Cash and cash equivalents

5

14,837,702,189

11,050,292,553

11,633,781,606

7,767,293,426 6,355,240,864

Trade accounts receivable and notes receivable

4, 6

11,406,754,628

9,667,798,873

5,687,163,392

Other accounts receivable from related parties

4

895,895,996

748,777,309

206,580,605

106,047,186

Inventories

7

11,084,237,188

8,537,365,815

4,461,627,998

4,332,985,726

Short-term loans to related parties

4

-

-

13,447,000,000

11,277,000,000

Current portion of long-term loans to related parties

4

-

-

5,546,000,000

3,313,000,000

54,265,473

67,505,200

Value-added tax receivable

115,168,304

1,136,636,294

Other current assets

1,315,194,379

1,273,644,347

678,166,031

767,026,845

Total current assets

39,654,952,684

32,414,515,191

41,714,585,105

33,986,099,247

38,392,325,977

Non-current assets Investments in subsidiaries

4, 8

-

-

40,962,010,977

Investments in jointly-controlled entity

4, 8

-

-

210,000,000

210,000,000

Investments in associates

4, 9

9,735,319,613

8,370,334,303

8,587,851,913

8,478,066,913

Other long-term investments

10

324,374,468

323,196,388

Long-term loans to related parties

4

Property, plant and equipment

11, 14

-

-

290,238,392

290,238,392

20,681,000,000

26,027,000,000

109,240,345,477

111,063,466,713

39,875,592,727

39,574,556,078 729,153,215

Intangible assets

12

6,627,283,670

6,519,820,210

728,538,916

Deferred tax assets

13

293,543,965

131,906,503

4,791,389

3,096,578

2,145,810,882

1,427,685,166

1,127,409,404

625,574,649

Total non-current assets

128,366,678,075

127,836,409,283

112,467,433,718

114,330,011,802

Total assets

168,021,630,759

160,250,924,474

154,182,018,823

148,316,111,049

Other non-current assets

The accompanying notes are an integral part of these financial statements.

169

Liabilities and equity

Note

Consolidated

Separate

financial statements

financial statements

2010

2009

2010

2009

(in Baht) Current liabilities 14

1,459,861,740

771,721,822

Trade accounts payable

4, 15

7,845,586,674

5,891,962,161

5,309,472,510

Other accounts payable

4, 16

Short-term loans from financial institutions

-

4,318,542,340

1,488,551,323

1,260,311,691

663,017,864

537,166,008

Retention payables

4

42,652,717

490,695,673

23,333,217

186,456,986

Payables to contractors

4

917,199,789

1,451,959,603

499,278,494

665,776,081

3,107,199,197

855,546,545

1,983,121,212

Current portion of long-term loans

14

Current portion of debentures

14

Income tax payable

27

427,822,670

1,339,266,972

309,087,259

Other current liabilities

17

1,906,974,870

1,721,602,422

896,830,537

633,876,421

17,195,848,980

14,183,066,889

9,684,141,093

8,483,050,459

14

11,255,298,471

12,817,834,335

10,707,787,878

11,090,909,091

Debentures

14

29,443,918,457

30,398,595,244

29,443,918,457

30,398,595,244

Deferred tax liabilities

13

1,080,889,349

881,969,619

886,487,168

720,564,582

Total current liabilities

-

400,000,000

-

545,454,545 400,000,000 1,195,778,078

Non-current liabilities Long-term loans from financial institutions

1,082,542,235

876,436,935

404,115,383

268,559,154

Total non-current liabilities

Other non-current liabilities

42,862,648,512

44,974,836,133

41,442,308,886

42,478,628,071

Total liabilities

60,058,497,492

59,157,903,022

51,126,449,979

50,961,678,530

The accompanying notes are an integral part of these financial statements.

170

Consolidated

Separate

financial statements Liabilities and equity

Note

2010

financial statements

2009

2010

2009

(in Baht) Equity Share capital

18

Authorised share capital Issued and paid-up share capital Reserves

15,191,153,000

15,191,153,000

15,191,153,000

15,191,153,000

15,158,208,000

15,010,400,000

15,158,208,000

15,010,400,000

31,728,079,018

30,892,963,818

31,728,079,018

30,892,963,818

234,348,736

376,268,307

-

-

10,998,638

10,998,638

-

-

1,519,115,300

1,519,115,300

19

Share premium Currency translation changes Investment changes Retained earnings Appropriated Legal reserve Loan repayment reserve

19

1,519,115,300

1,519,115,300

807,802,564

807,802,564

807,802,564

807,802,564

5,932,994,126

5,932,994,126

5,932,994,126

5,932,994,126

50,716,313,237

44,713,499,156

47,909,369,836

43,191,156,711

106,107,859,619

99,264,041,909

103,055,568,844

97,354,432,519

1,855,273,648

1,828,979,543

Total equity

107,963,133,267

101,093,021,452

103,055,568,844

97,354,432,519

Total liabilities and equity

168,021,630,759

160,250,924,474

154,182,018,823

148,316,111,049

Projects expansion reserve Unappropriated Total equity attributable to equity holders of the Company Minority interests

The accompanying notes are an integral part of these financial statements.

-

-

171

Note

Consolidated

Separate

financial statements

financial statements

2010

2009

2010

2009

(in Baht) Revenues Revenue from sale of goods Revenue from rendering of services Dividends income Interest income

4, 28

98,656,003,913

83,952,092,721

4, 28

2,431,290,126

4,8,9,21 4, 21

Net foreign exchange gain Other income

4, 21

Total revenues

-

58,084,976,345

59,930,898,598

2,077,078,053

353,780,999

333,916,864

21,090,045

4,171,011,741

975,212,042

163,387,735

219,177,658

2,112,830,806

2,001,587,050

1,475,848,967

648,469,768

1,469,550,233

589,950,500

459,882,792

165,022,462

580,001,383

603,803,065

103,186,413,533

87,082,930,707

66,772,151,507

64,435,368,119

83,491,856,323

69,428,524,825

51,289,285,479

48,659,672,510

636,876,413

1,017,941,703

105,765,047

93,819,399

Expenses Cost of sale of goods Cost of rendering of services

4, 7 4 4, 22

1,522,682,298

1,455,118,072

14,032,519

17,097,136

Administrative expenses

23

4,329,240,430

3,267,423,124

2,970,696,680

2,470,488,436

Management benefit expenses

24

200,100,670

189,982,519

112,587,183

97,670,302

90,180,756,134

75,358,990,243

54,492,366,908

51,338,747,783

1,362,215,355

144,450,952

14,367,872,754

11,868,391,416

12,279,784,599

2,239,176,094

2,259,379,686

2,119,310,246

2,078,297,855

12,128,696,660

9,609,011,730

10,160,474,353

11,018,322,481

Selling expenses

Total expenses

Sh off profit Share fit off associates, i t nett off income tax expense

9

-

-

Profit before finance costs and income tax expense Finance costs

26

Profit before income tax expense Income tax expense

27

Net profit for the year

13,096,620,336

1,388,371,072

2,328,589,820

1,154,839,295

1,896,423,820

10,740,325,588

7,280,421,910

9,005,635,058

9,121,898,661

10,290,236,014

6,801,876,570

9,005,635,058

9,121,898,661

Profit attributable to: Equity holders of the Company Minority interest Net profit for the year

Earnings per share

450,089,574

478,545,340

10,740,325,588

7,280,421,910

9,005,635,058

9,121,898,661

29

Basic

6.83

4.54

5.98

6.09

Diluted

6.81

4.54

5.96

6.09

The accompanying notes are an integral part of these financial statements.

15,158,208,000

-

The accompanying notes are an integral part of these financial statements.

Balance at 31 December 2010

30

Dividends

-

147,808,000

Total recognised income and expense

18

-

Net profit for the year

Issue of ordinary shares

-

-

Net loss recognised directly in equity

31,728,079,018

-

835,115,200

-

-

-

30,892,963,818

30,892,963,818

-

-

15,010,400,000

Balance at 1 January 2010

-

237,887,600

Translation of financial statement differences

15,010,400,000

-

Balance at 31 December 2009

30

Dividends

-

42,104,000

Total recognised income and expense

18

-

Net profit for the year

Issue of ordinary shares

-

-

Net loss recognised directly in equity -

-

30,655,076,218

-

14,968,296,000

234,348,736

-

-

-

-

(141,919,571)

(141,919,571)

376,268,307

376,268,307

-

-

-

-

(78,316,712)

(78,316,712)

454,585,019

changes

translation

Share

premium

paid-up

share capital

Translation of financial statement differences

Balance at 1 January 2009

Note

Currency

Issued and

Reserves

10,998,638

-

-

-

-

-

-

10,998,638

10,998,638

-

(40)

-

-

-

-

10,998,678

holding

investment

Change in

1,519,115,300

-

-

-

-

-

-

1,519,115,300

1,519,115,300

-

-

-

-

-

-

1,519,115,300

Legal reserve

807,802,564

-

-

-

-

-

-

807,802,564

807,802,564

-

-

-

-

-

-

807,802,564

(in Baht)

reserve

repayment

Loans

Appropriated to

5,932,994,126

-

-

-

-

-

-

5,932,994,126

5,932,994,126

-

-

-

-

-

-

5,932,994,126

reserve

expansion

Projects

Retained earnings

Consolidated financial statements

50,716,313,237

(4,287,421,933)

-

10,290,236,014

10,290,236,014

-

-

44,713,499,156

44,713,499,156

(2,394,698,760)

-

6,801,876,570

6,801,876,570

-

-

40,306,321,346

Unappropriated

Total equity

106,107,859,619

(4,287,421,933)

982,923,200

10,290,236,014

10,290,236,014

(141,919,571)

(141,919,571)

99,264,041,909

99,264,041,909

(2,394,698,760)

279,991,560

6,801,876,570

6,801,876,570

(78,316,712)

(78,316,712)

94,655,189,251

the Company

equity holders of

attributable to Minority

1,855,273,648

(473,121,800)

75,000,000

450,089,574

450,089,574

(25,673,669)

(25,673,669)

1,828,979,543

1,828,979,543

(464,380,644)

309,029,537

478,545,340

478,545,340

(36,500,326)

(36,500,326)

1,542,285,636

interests

Total

107,963,133,267

(4,760,543,733)

1,057,923,200

10,740,325,588

10,740,325,588

(167,593,240)

(167,593,240)

101,093,021,452

101,093,021,452

(2,859,079,404)

589,021,097

7,280,421,910

7,280,421,910

(114,817,038)

(114,817,038)

96,197,474,887

equity

172

18

18

Dividends

30 15,158,208,000

The accompanying notes are an integral part of these financial statements.

Balance at 31 December 2010

147,808,000

31,728,079,018

-

835,115,200

-

-

Total recognised income and expense

Issue of ordinary shares

-

30,892,963,818

-

15,010,400,000

30,892,963,818

-

237,887,600

-

-

30,655,076,218

premium

Net profit for the year

Balance at 1 January 2010

15,010,400,000

30

Balance at 31 December 2009

Dividends

42,104,000

-

Total recognised income and expense

Issue of ordinary shares

-

14,968,296,000

share capital

Net profit for the year

Balance at 1 January 2009

Note Legal reserve

6

1,519,115,300

-

-

-

-

1,519,115,300

1,519,115,300

-

-

-

-

1,519,115,300

807,802,564

-

-

-

-

807,802,564

807,802,564

-

-

-

-

807,802,564

(in Baht)

reserve

repayment

paid-up

Share

Loans

5,932,994,126

-

-

-

-

5,932,994,126

5,932,994,126

-

-

-

-

5,932,994,126

reserve

expansion

Projects

Retained earnings Appropriated to

Issued and

Reserves

Separate financial statements

47,909,369,836

(4,287,421,933)

-

9,005,635,058

9,005,635,058

43,191,156,711

43,191,156,711

(2,394,698,760)

-

9,121,898,661

9,121,898,661

36,463,956,810

Unappropriated

103,055,568,844

(4,287,421,933)

982,923,200

9,005,635,058

9,005,635,058

97,354,432,519

97,354,432,519

(2,394,698,760)

279,991,600

9,121,898,661

9,121,898,661

90,347,241,018

the Company

equity holders of

attributable to

Total equity

173

174

Consolidated

Separate

financial statements 2010

financial statements

2009

2010

2009

(in Baht) Cash flows from operating activities Net profit for the year

10,740,325,588

7,280,421,910

9,005,635,058

9,121,898,661

5,568,479,380

4,913,676,157

2,977,279,784

2,861,550,897

(2,112,830,806)

(2,001,587,050)

2,119,310,246

2,078,297,855

Adjustments for Depreciation and amortisation Interest income Finance costs Unrealised gain on exchange Doubtful debts expense

(163,387,735) 2,239,176,094 (1,315,482,373) 6,821,367

Dividends income

-

(219,177,658) 2,259,379,686 (562,780,719) 13,994,116 (21,090,045)

(1,399,115,249) (4,171,011,741)

(539,996,034) (975,212,042)

Reversal of allowance for loss on decline in value of inventories Allowance for obsolete stock

(14,706,868) 7,521,828

(785,293,105) (79,931)

1,494,303

(283,525,238) (79,931)

Impairment loss on intangible assets and property, plant and equipment (Gain) loss on disposal of property, plant and equipment

(21,153,362)

3,223,982

-

-

154,142,936

19,975,560

153,905,087

(35,473,865)

(17,608,257)

(36,334,689)

(17,608,257)

(1 362 215 355) (1,362,215,355)

(144 450 952) (144,450,952)

Realised deferred pipeline income and equipment and other income Sh fit off associates, i t nett off iincome ttax expense Share off profit Income tax expense

-

-

1,388,371,072

2,328,589,820

1,154,839,295

1,896,423,820

17,038,275,771

15,202,947,940

7,559,241,761

12,294,067,768

(1,887,136,982)

(3,237,862,666)

(148,964,727)

(674,468,956)

(100,533,419)

67,337,215 (819,392,390)

Changes in operating assets and liabilities Trade accounts receivable and notes receivable Other accounts receivable from related parties Inventories Value-added tax receivable Other current assets Other non-current assets

(212,656,024) 1,021,478,228 (270,783) (54,961,832)

Trade accounts payable

1,905,197,340

Other accounts payable

342,527,803

Retention payables Other current liabilities Other non-current liabilities

667,201,178

(3,302,177,275)

(295,100,306)

(132,468,613)

(916,059,731)

13,239,728

153,071,363

(295,692,251)

97,453,359

(348,117,331)

(146,402,448)

(126,648,819)

2,693,145,552

990,868,729

(237,720,477) 2,747,658,772

(58,423,086)

128,656,394

(465,266,477)

72,104,528

(172,721,517)

27,241,584

(52,944,149)

358,417,329

241,496,704

176,211,249

85,522,318

Income tax paid

(2,300,898,839)

Net cash provided by operating activities

15,269,901,647

The accompanying notes are an integral part of these financial statements.

(220,197,815) (910,153,309) 11,572,254,781

151,738,122 (1,877,302,340) 7,440,221,267

(981,060,875)

53,860,529 (714,105,378) 9,116,874,754

175

Consolidated

Separate

financial statements 2010

financial statements

2009

2010

2009

(in Baht) Cash flows from investing activities Interest received Dividends received Purchase of property, plant and equipment Sale of property, plant and equipment

152,502,518 108,199,041 (6,727,379,581) 638,789,235

238,733,062 124,703,586 (17,369,087,056) 35,171,343

2,103,188,261

2,022,922,399

4,172,061,741

1,440,870,042

(3,120,311,047)

(4,524,512,399)

32,209,808

5,853,049

Increase in short-term loans to related parties

-

-

(3,390,000,000)

(4,402,000,000)

Proceeds from short-term loans to related parties

-

-

1,220,000,000

1,120,000,000

Increase in long-term loans to related parties

-

-

Proceeds from long-term loans to related parties

-

-

Increase in intangible assets

(541,724,421)

Net cash outflow for investments in subsidiaries Net cash outflow for investments in associates

(109,785,000)

Proceeds from sale of long-term investments Net cash provided by (used in) investing activities

(6,479,398,208)

(502,087,681) (327,975,000) 27,231,377 (17,773,310,369)

(200,000,000) 3,313,000,000

(7,661,786,800) -

(124,649,278)

(371,880,638)

(2,569,685,000)

(4,639,785,840)

(109,785,000)

(327,975,000)

1,326,029,485

(17,338,295,187)

Cash flows from financing activities Interest paid

(2,219,091,064)

(2,319,852,606)

(2,104,630,528)

(2,085,323,116)

Di id d paid Dividends id

(4 (4,760,543,733) 760 543 733)

(2 (2,880,852,811) 880 852 811)

(4 (4,287,421,933) 287 421 933)

(2 (2,394,698,760) 394 698 760)

(194,561,974)

(77,531,609)

(145,178,205)

(37,033,290)

752,873,239

(177,772,611)

Finance lease payments (Repayment of) proceeds from short-term loans from financial institutions Proceeds from long-term borrowings Repayment of long-term borrowings

1,740,000,000 (884,546,545)

Proceeds from issue of debentures Redemption of debentures Proceeds from issue of share capital Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year

-

235,055,000 (1,592,793,843) 3,000,000,000

1,600,000,000 (545,454,545) -

(545,454,545) 3,000,000,000

(400,000,000)

(400,000,000)

(400,000,000)

(400,000,000)

982,923,200

317,440,712

982,923,200

279,991,600

(4,982,946,877)

(3,896,307,768)

(4,899,762,011)

(2,182,518,111)

3,807,556,562

(10,097,363,356)

3,866,488,741

(10,403,938,544)

11,050,292,553

21,174,886,782

7,767,293,426

18,171,231,970

Effect of exchange rate changes on balances held in foreign currencies Cash and cash equivalents at end of year

(20,146,926) 14,837,702,189

The accompanying notes are an integral part of these financial statements.

(27,230,873) 11,050,292,553

(561) 11,633,781,606

7,767,293,426

176

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 24 February 2011

1

General information PTT Chemical Public Company Limited, the “Company”, is incorporated in Thailand and has its registered offices as follows: Head Office

: 555/1, Energy Complex, Building A, 15th - 18th Floor, VibhavadiRangsit Road, Chatuchak, Bangkok, Thailand

Branch 2 (I-1 Road Branch) : 14, I-1 Road, Tumbon Map Ta Phut, Amphoe Mueang Rayong, Rayong, Thailand Branch 3 (I-4 Road Branch)

: 9, I-4 Road, Tumbon Map Ta Phut, Amphoe Mueang Rayong, Rayong, Thailand

: 19, Rong Pui Road, Tumbon Map Ta Phut, Amphoe Mueang Branch 4 (Jetty and Buffer Tank Farm Rayong, Rayong, Thailand Branch) Branch 5 (Radniyom Road)

: 59, Radniyom Road, Tumbon Noenphra, Amphoe Mueang Rayong, Rayong, Thailand

: 24/9, Pakorn Songkrao-Rat Road, Tumbon Map Ta Put, Amphoe Branch 7 (Pakorn Songkrao-Rat Road Mueang Rayong, Rayong, Thailand Branch) The Company registered to terminate Branch 1 (Suntowers A Branch) and Branch 6 (Suntowers B Branch) and registered to change the address of Head Office in March 2010.

The Company was listed on the Stock Exchange of Thailand in December 2005.

The Company is a company in the PTT Public Company Limited (“PTT”) group of companies.

PTT is incorporated in Thailand and is the major shareholder of the Company, holding 48.68% of the Company’s issued and paid-up share capital.

The principal businesses of the Company are production and distribution of Ethylene, Propylene Polyethylene and Biochemical products. By-products are Mixed C4, Pyrolysis gasoline, Cracker bottom and tail gas. Minor activities are production and distribution of electricity, water, steam and other utilities. In addition, the Company also operates production support facilities such as jetty and buffer tank farm services for liquid chemical, oil and gas. Details of the Company’s subsidiaries and jointly - controlled entities as at 31 December 2010 and 2009 were as follows:

177

Name of the entity

Type of business

Direct subsidiaries Bangkok Polyethylene Plc. Manufacturing and distributing petrochemical products Bio Creation Co., Ltd. Manufacturing and (Formerly Thai Choline distributing petrochemical Chloride Co., Ltd.) products, health and nutrition products Bio Spectrum Co., Ltd. Manufacturing and distributing biochemical products TOC Glycol Co., Ltd. Manufacturing and distributing petrochemical products Thai Ethanolamines Manufacturing and Co., Ltd. distributing petrochemical products Thai Oleochemicals Manufacturing and Co., Ltd. distributing biochemical products Thai Tank Terminal Service for the storage and Limited handling of liquid chemicals, oil and gas PTT Polyethylene Manufacturing and Co., Ltd. distributing petrochemical products PTT Maintenance and Maintenance factory and Engineering Co., Ltd. services engineering NPC Safety and Safety and environmental Environmental Service services Co., Ltd. PTT Chemical Holding and operating International Pte. Ltd. international business Indirect subsidiaries Thai Fatty Alcohol Manufacturing and Co., Ltd. distributing biochemical products Thai Styrenics Co., Ltd. Manufacturing and distributing petrochemical products PTT Chemical Services rendering to the International (Asia Group Pacific ROH) Ltd. Jointly-controlled entity Thai Ethoxylate Co., Ltd. Manufacturing and distributing petrochemical products

Country of incorporation

Ownership interest (%) 2010 2009

Thailand

100

100

Thailand

100

100

Thailand

75

-

Thailand

100

100

Thailand

100

100

Thailand

100

100

Thailand

51

51

Thailand

100

100

Thailand

60

60

Thailand

100

100

Singapore

100

100

Thailand

100

100

Thailand

100

100

Thailand

100

100

Thailand

50

50

178

Name of the entity

Type of business

Indirect jointly-controlled entity Emery Oleochemical (M) Manufacturing and distributing biochemical Sdn. Bhd. products

2

Country of incorporation

Malaysia

Ownership interest (%) 2010 2009 50

50

Basis of preparation of the financial statements The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language.

The financial statements are prepared and presented in Thai Baht. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest million . They are prepared on the historical cost basis except as stated in the accounting policies.

The financial statements are prepared in accordance with Thai Financial Reporting Standards (“TFRS”) and guidelines promulgated by the Federation of Accounting Professions (“FAP”) and with generally accepted accounting principles in Thailand.

During 2010, the FAP announced the re-numbering of the following TFRS. Former no.

Revised no.

Topic

TAS 11

TAS 101

Doubtful Account and Bad Debts

TAS 26

TAS 102

Income Recognition For Real Estate Business

TAS 27

TAS 103

Disclosures in the Financial Statements of Banks and Similar Financial Institutions

TAS 34

TAS 104

Accounting for Troubled Debt Restructuring

TAS 40

TAS 105

Accounting for Investment in Debt and Equity Securities

TAS 42

TAS 106

Accounting For Investment Companies

TAS 48

TAS 107

Financial Instruments Disclosure and Presentation

The Group/Company has adopted the revised Framework for the Preparation and Presentation of Financial Statements (revised 2010), which was issued by the FAP during 2010 and effective on 26 May 2010. The adoption of the revised framework does not have any material impact on the consolidated or separate Company’s financial statements.

The FAP has issued during 2010 a number of new and revised TFRS which are not currently effective and have not been adopted in the preparation of these financial statements. These new and revised standards and interpretations are disclosed in note 35.

179

The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates.

The preparation of financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may diff from estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes: Note 10 Note 12 Note 13 Note 31

Other long-term investments Intangible assets Deferred tax Financial instruments

3

Significant accounting policies

(a)

Basis of consolidation The consolidated financial statements relate to the Company and its subsidiaries and jointly-controlled entities (together referred to as the “Group”) and the Group’s interests in associates.

Business combinations Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.

Business combinations of entities or businesses under common control are accounted for using a method similar to the pooling of interest method and in accordance with the Guideline issued in 2010 by the FAP. Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

Jointly-controlled entities Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. The consolidated financial statements include the Group’s proportionate share of the entities’ assets, liabilities, revenue and expenses combined with items of a similar nature on a line by line basis, from the date that joint control commences until the date that joint control ceases.

180

Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. The consolidated financial statements include the Group’s share of the income, expenses and equity movements of associates after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (b)

Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of income.

Non-monetary assets and liabilities measured at cost in foreign currencies are translated to Thai Baht using the foreign exchange rates ruling at the dates of the transactions.

Foreign entities The assets and liabilities of foreign entities are translated to Thai Baht at the foreign exchange rates ruling at the reporting date.

Goodwill and fair value adjustments arising on the acquisition of foreign entities are stated at exchange rates ruling on the reporting date.

181

The revenues and expenses of foreign entities are translated to Thai Baht at rates approximating the foreign exchange rates ruling at the dates of the transactions.

Foreign exchange differences arising on translation are recognised in a separate component of equity until disposal of the investments.

Where monetary items, in substance, form part of the Groupâ&#x20AC;&#x2122;s net investment in a foreign entity, foreign exchange differences arising on such monetary items and related hedges are recognised directly in a separate component of equity until disposal of the investment. (c)

Derivative financial instruments Derivative financial instruments are used to manage exposure to foreign exchange, interest rate arising from operating and financing activities. Derivative financial instruments are not used for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in the statement of income when incurred. Subsequent to initial recognition, they are remeasured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the statement of income.

The fair value of interest rate swaps is based on broker quotes at the reporting date. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the reporting date.

The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price at the reporting date for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

182

(d)

Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and highly liquid short-term investments. Bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.

(e)

Trade and other accounts receivable Trade and other accounts receivable are stated at their invoice value less allowance for doubtful accounts.

The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(f)

Inventories Raw materials, work in progress and finished goods Inventories are stated at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost principle, and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and work-in-progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

(g)

Investments Investments in subsidiaries, jointly-controlled entities and associates Investments in subsidiaries, jointly-controlled entities and associates in the separate financial statements of the Company are accounted for using the cost method. Investments in associates in the consolidated financial statements are accounted for using the equity method.

Investments in equity securities Equity securities which are not marketable are stated at cost less any impairment losses.

Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount is recognised in the statement of income.

If the Group/Company disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying value of the total holding of the investment.

183

(h)

Property, plant and equipment Owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Leased assets Leases in terms of which the Group/Company substantially assumes all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalised at the lower of its fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the statement of income.

Depreciation Depreciation is charged to the statement of income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows: Plant, machinery and equipment Factory tools and equipment Buildings and other constructions Leasehold improvement Furniture, fixtures and office equipment Vehicles

3-30 3-20 5-25 5-30 5-20 3-20

No depreciation is provided on freehold land or assets under construction.

years years years years years years

184

(i)

Intangible assets Goodwill Goodwill in a business combination represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired. The Group changed its accounting policy for goodwill with effect from 1 January 2008 as follows: Acquisitions prior to 1 January 2008 Goodwill was stated at cost from the date of initial recognition and amortised over its estimated useful life of 20 years. On 1 January 2008, the Group/Company discontinued amortisation of goodwill. The remaining balance is subject to testing for impairment, as described in note 3 (j).

Acquisitions on or after 1 January 2008 Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 3 (j).

Other intangible assets Other intangible assets that are acquired by the Group/Company, which have finite useful lives, are stated at cost less accumulated amortisation and impairment losses. Other intangible assets are amortised in the statement of income on a straight-line basis over their estimated useful lives from the date that they are available for use. The estimated useful lives are as follows: Production licence fees Computer software Right to use pipe rack Trademark

(j)

10- 25 3-15 9-15 10

years years years years

Impairment The carrying amounts of the Group’s/Company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, the recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.

Calculation of recoverable amount The recoverable amount of a non-financial asset is the greater of the asset’ s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.

185

Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâ&#x20AC;&#x2122;s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (k)

Interest-bearing liabilities Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges.

Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the statement of income over the period of the borrowings on an effective interest basis.

(l)

Trade and other accounts payable Trade and accounts payable are stated at cost.

(m)

Employee benefits Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the statement of income as incurred.

Share based payments The employee share option programme allows certain of the Groupâ&#x20AC;&#x2122;s directors and employees to acquire shares of the Company under certain conditions. The proceeds received on exercise of the options, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

(n)

Provisions A provision is recognised when the Group/Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

(o)

Revenue Revenue excludes value added taxes and is arrived at after deduction of trade discounts.

186

Sale of goods and services rendered Revenue is recognised in the statement of income when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods. Service income is recognised as services are provided.

Rental income Rental income from investment property is recognised in the statement of income on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income. Contingent rentals are recognised as income in the accounting period in which they are earned.

Interest and dividend income Interest income is recognised in the statement of income as it accrues. Dividend income is recognised in the statement of income on the date the Groupâ&#x20AC;&#x2122;s/Companyâ&#x20AC;&#x2122;s right to receive payments is established.

(p)

Expenses Operating leases Payments made under operating leases are recognised in the statement of income on a straight line basis over the term of the lease. Lease incentives received are recognised in the statement of income as an integral part of the total lease payments made. Contingent rentals are charged to the statement of income for the accounting period in which they are incurred.

Finance costs Interest expenses and similar costs are charged to the statement of income for the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. The interest component of finance lease payments is recognised in the statement of income using the effective interest rate method.

(q)

Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

187

Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor tax profit; and differences relating to investments in subsidiaries and joint venture to the extent that it is probably that they will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

4

Related party transactions and balances Related parties are those parties linked to the Group and the Company as shareholders or by common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices.

Relationships with related parties that control or jointly control the Group or are being controlled or jointly controlled by the Company or have transactions with the Group/Company were as follows: Name of entities

Country of incorporation/ nationality

Nature of relationships

PTT Plc.

Thailand

Major shareholder, some common directors and management and the Company’s director as a management

Bangkok Polyethylene Plc.

Thailand

Subsidiary, 100% shareholding, some common directors and the Company’s management as a director

Bio Creation Co., Ltd.

Thailand

Subsidiary, 100% shareholding and the Company’s management as a director

Bio Spectrum Co., Ltd.

Thailand

Subsidiary, 75% shareholding

TOC Glycol Co., Ltd.

Thailand

Subsidiary, 100% shareholding and the Company’s management as a director

Thai Ethanolamines Co., Ltd.

Thailand

Subsidiary, 100% shareholding and the Company’s management as a director

Thai Oleochemicals Co., Ltd.

Thailand

Subsidiary, 100% shareholding, some common directors and the Company’s management as a director

188

Name of entities

Country of incorporation/ nationality

Nature of relationships

Thai Tank Terminal Limited

Thailand

Subsidiary, 51% shareholding, some common directors and the Company’s management as a director

PTT Polyethylene Co., Ltd.

Thailand

Subsidiary, 100% shareholding, some common directors and management and the Company’s management as a director.

PTT Maintenance and Engineering Co., Ltd.

Thailand

Subsidiary, 60% shareholding and the Company’s management as a director

NPC Safety and Environmental Service Co., Ltd.

Thailand

Subsidiary, 100% shareholding, some common directors and the Company’s management as a director.

PTT Chemical International Pte. Ltd.

Singapore

Subsidiary, 100% shareholding , some common directors and the Company’s management as a director.

Thai Fatty Alcohols Co., Ltd.

Thailand

Subsidiary of the Company’s subsidiary, 100% shareholding by the Company’s subsidiary, some common directors and the Company’s management as a director

Thai Styrenics Co., Ltd.

Thailand

Subsidiary of the Company’s subsidiary, 100% shareholding by the Company’s subsidiary and the Company’s management as a director

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

Thailand

Subsidiary, 100% shareholding, , some common directors and the Company’s management as a director

Thai Ethoxylate Co., Ltd.

Thailand

Jointly - controlled entity, 50% shareholding

Emery Oleochemical (M) Sdn. Bhd.

Malaysia

Jointly - controlled entity of the Company’s subsidiary, 50% shareholding by a subsidiary , some common directors and the Company’s management as a director

Bangkok Synthetics Co., Ltd.

Thailand

Some common shareholder

Thai Plastic and Chemical Plc.

Thailand

Some common shareholder

Thai Polypropylene Co., Ltd.

Thailand

Some common shareholder

Thai Polyethylene Co., Ltd.

Thailand

Some common shareholder

Thaioil Public Company Limited

Thailand

Major shareholding by the Company’s major shareholders and some common directors

189

Country of incorporation/ nationality

Nature of relationships

Thai Industrial Gases Plc.

Thailand

Some common directors

Thai Petroleum Pipeline Co., Ltd.

Thailand

Major shareholding by the Company’s major shareholder

Dhipaya Insurance Plc.

Thailand

PTTEP Siam Limited.

Thailand

Major shareholding by the Company’s major shareholder Subsidiary of the related party with common major shareholder

PTT Exploration and Production Plc.

Thailand

Major shareholding by the Company’s major shareholder and some common directors

PTT Aromatics and Refining Plc.

Thailand

Major shareholding by the Company’s major shareholder and some common directors

PTT Tank Terminal Ltd.

Thailand

Major shareholding by the Company’s major Shareholder and some common directors

PTT Polymer Logistic Co., Ltd.

Thailand

Major shareholding by the Company’s major Shareholder, some common directors and the Company’s management as a director

PTT Polymer Marketing Co., Ltd.

Thailand

Associate, 25% shareholding, major shareholding by the Company’s major shareholder, common directors and the Company’s management as a director

PTT Phenol Co., Ltd.

Thailand

Associate, 30% shareholding, major shareholding by the Company’s major shareholder, common directors and the Company’s management as a director

PTT Utility Co., Ltd.

Thailand

Associate, 40% shareholding , the Company’s management as a director and major shareholding by the Company’s major shareholder

PTT Asahi Chemical Co., Ltd.

Thailand

Major shareholding by the Company’s major shareholder and some common directors

PTT International Ltd.

Thailand

Major shareholding by the Company’s major shareholder and some common directors

PTT ICT Solutions Co., Ltd.

Thailand

Associate, 20% shareholding, some common directors and the Company’s management as a director

Name of entities

190

Name of entities

Country of incorporation/ nationality

Nature of relationships

Rayong Olefins Co., Ltd.

Thailand

Major shareholding by the Company’s major shareholder and some common directors

Vinythai Plc.

Thailand

Associate, 25% shareholding, some common directors and the Company’s management as a director

Siam Mitsui PTA Co., Ltd.

Thailand

Some common shareholder

Siam Styrene Monomer Co., Ltd.

Thailand

Some common shareholder

Star Petroleum Refining Co., Ltd.

Thailand

Major shareholding by the Company’s major shareholder

Eastern Fluid Transport Co., Ltd.

Thailand

Associate, 15% shareholding, 15% shareholding by the Company’s subsidiary and the Company’s management as a director

HMC Polymers Co., Ltd.

Thailand

The Company’s shareholder and some common director

Energy Complex Co., Ltd.

Thailand

Major shareholding by the Company’s major shareholder

IRPC Plc.

Thailand

Major shareholding by the Company’s major shareholder and some common directors

Alliance Petrochemical Investment (Singapore) Pte. Ltd. PTT International Trading Pte. Ltd. Ltd.

Singapore

The Company’s management as a director

Singapore

Major shareholding by the Company’s major shareholder

The pricing policies for particular types of transactions are explained further below: Transactions

Pricing policies

Revenue from sale of goods Revenue from rendering of services Purchase of goods/raw materials/ services Interest on loan

Contract price / Regional market price / World market price Contract price Contract price / Market price Average cost of fund

191

Significant transactions for the years ended 31 December 2010 and 2009 with related parties were as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Major Shareholder Sales of goods or rendering of services Purchases of goods or receiving of services Other income Other expense Subsidiaries Sales of goods or rendering of services Purchases of goods or receiving of services Other income Other expense Interest income Dividend income Jointly - controlled entities Other income Dividend income Associates Sales of goods or rendering of services Purchases of goods or receiving of services Other income Other expense Dividend income Other related parties Sales of goods or rendering of services Purchases of goods or receiving of services Other income Other expense Dividend income

3,506 36,591 14 84

4,485 38,159 12 71

270 34,810 14 56

1,742 38,076 12 36

-

-

16,129 5,662 419 233 1,995 4,066

17,147 793 353 208 1,816 824

-

-

11 -

31 25

40,108 1,494 56 143 106

29,004 1,410 78 166 105

17,972 59 56 87 106

17,410 68 77 139 105

23,461 5,500 4 150 -

22,448 2,096 31 59 21

21,984 4,053 1 83 -

21,545 1,586 31 7 21

192

Balances as at 31 December 2010 and 2009 with related parties were as follows: Trade accounts receivable from related parties

Major Shareholder PTT Plc. Subsidiaries Bangkok Polyethylene Plc. PTT Polyethylene Co., Ltd. TOC Glycol Co., Ltd. Thai Ethanolamines Co., Ltd. Thai Oleochemicals Co., Ltd. Thai Tank Terminal Limited Thai Styrenics Co., Ltd. Associates PTT Utility Co., Ltd. PTT Polymer Marketing Co., Ltd. PTT Phenol Co., Ltd. Vinythai Plc. Other related parties Bangkok Synthetics Co., Ltd. Thai Plastic and Chemical Plc. Thai Polypropylene Co., Ltd. Thai Polyethylene Co., Ltd. Siam Mitsui PTA Co., Ltd. Siam Styrene Monomer Co., Ltd. Star Petroleum Refining Co., Ltd. Thai Industrial Gas Plc. Bangkok Industrial Gas Co., Ltd. PTTEP Siam Limited.

PTT Exploration and Production Plc. PTT Aromatics and Refining Plc. PTT Asahi Chemical Co., Ltd. IRPC Plc. HMC Polymers Co., Ltd. PTT International Trading Pte. Ltd. Others Less allowance for doubtful accounts Net

Bad and doubtful debts expense for the year

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 307

352

7

173

-

-

933 521 8 21 6 3

1,188 507 686 1 7 10 5

34 3,234 355 504

66 1,605 265 608

901 317 501

464 247 605

154 216 165 292 6 189 7 5 2 459 9 459 298 37 6,732 6,732

135 226 292 215 6 230 8 3 2 6 335 365 291 169 15 5,194 5,194

153 216 165 292 188 330 458 290 5,310 5,310

134 226 292 215 230 3 2 308 365 286 169 6,123 6,123

-

-

-

-

193

Other accounts receivable from related parties Major Shareholder PTT Plc. Subsidiaries Bangkok Polyethylene Plc. Bio Creation Co., Ltd. PTT Chemical International (Asia Pacific ROH) Ltd. PTT Polyethylene Co., Ltd. PTT Maintenance and Engineering Co., Ltd. TOC Glycol Co., Ltd. Thai Fatty Alcohol Co., Ltd. Thai Ethanolamine Co., Ltd. Thai Oleochemicals Co., Ltd. Thai Tank Terminal Limited NPC Safety and Environmental Service Co., Ltd. PTT Chemical International Pte. Ltd. Jointly - controlled entity Thai Ethoxylate Co., Ltd. Associates PTT Utility Co., Ltd. PTT Polymer Marketing Co., Ltd. PTT Phenol Co., Ltd. PTT ICT Solutions Co., Ltd. HMC Polymers Co., Ltd. Less allowance for doubtful accounts Net

Bad and doubtful debts expense for the year

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 1

4

1

4

-

-

40 2

5 1

-

-

7 59 2 22 3 15 19 3

2 22 1 8 6 19 1

-

-

8 2

8 -

-

-

5

2

4 876 2 12 1 896 896

3 718 1 23 749 749

4 2 12 1 207 207

3 2 22 106 106

-

-

-

-

194

Loans to related parties

Interest rate 2010

Short-term loans

2009

Consolidated financial statements

Separate financial statements

2010

2010

2009

(% per annum)

2009

(in million Baht)

Subsidiaries Bangkok Polyethylene Plc. PTT Polyethylene Co., Ltd. Thai Oleochemicals Co., Ltd. Thai Ethanolamines Co., Ltd. NPC Safety and Environmental Service Co., Ltd.

4.81-4.89

4.93-5.14

-

-

500

310

4.81-4.89

4.93-5.14

-

-

3,200

600

4.81-4.89

4.93-5.14

-

-

8,060

8,580

4.81-4.89

4.93-5.14

-

-

1,397

1,497

4.81-4.89

4.93-5.14

-

-

290

290

-

-

13,447

11,277

Less allowance for doubtful accounts

-

-

-

-

Short-term loans to related parties, net

-

-

13,447

11,277

Loans to related parties

Interest rate 2010

Long-term loans Subsidiaries Bangkok Polyethylene Plc. PTT Polyethylene Co., Ltd.

2009

Consolidated financial statements

Separate financial statements

2010

2010

2009

(% per annum)

2009

(in million Baht)

4.81-4.89

4.93-5.14

-

-

4,240

4,040

4.81-4.89

4.93-5.14

-

-

21,987 26,227 (5,546) 20,681

25,300 29,340 (3,313) 26,027

Less allowance for doubtful accounts Total loans to related parties, net

-

-

13,447 5,546 20,681 39,674 39,674

11,277 3,313 26,027 40,617 40,617

Bad and doubtful debts expenses for the year

-

-

Less current portion due within one year Less allowance for doubtful accounts Long-term loans to related parties, net Summary of loans to related parties Short-term loans Current portion due within one year Long-term loans

-

-

195

Movements during the years ended 31 December 2010 and 2009 of loans to related parties were as follows: Loans to related parties

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht)

Short-term loans Subsidiaries At 1 January Increase Decrease At 31 December

-

-

11,277 3,390 (1,220) 13,447

7,995 4,402 (1,120) 11,277

Long-term loans Subsidiaries At 1 January Increase Due within one year Decrease At 31 December

-

-

29,340 200 (5,546) (3,313) 20,681

21,678 7,662 (3,313) 26,027

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Investments in subsidiaries (Note 8)

-

-

40,962

38,392

Investments in jointly-controlled entity (Note 8)

-

-

210

210

8,370

8,588

8,478

Investments in associates (Note 9) Advanced for construction in progress to related party

Subsidiary PTT Maintenance and Engineering Co., Ltd.

9,735

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht)

-

-

-

7

196

Trade accounts payable to related parties

Major Shareholder PTT Plc. Subsidiary PTT Polyethylene Co., Ltd. Associate PTT Utility Co.,Ltd. Other related parties Bangkok Synthetics Co., Ltd. Bangkok Industrial Gas Co., Ltd. PTT Aromatics and Refining Plc. Star Petroleum Refining Co., Ltd. Siam Styrene Monomer Co., Ltd. IRPC Plc. Thai Industrial Gas Plc. PTT International Trading Pte. Ltd. Total Other accounts payable to related parties

Major Shareholder PTT Plc. Subsidiaries Bangkok Polyethylene Plc. Bio Creation Co., Ltd. PTT Polyethylene Co., Ltd. PTT Maintenance and Engineering Co., Ltd. TOC Glycol Co., Ltd. Thai Ethanolamine Co., Ltd. Thai Oleochemicals Co., Ltd. Thai Tank Terminal Limited NPC Safety and Environmental Service Co., Ltd Associates Vinythai Plc. PTT Utility Co., Ltd. PTT ICT Solutions Co., Ltd. Eastern Fluid Transport Co., Ltd. Other related parties Bangkok Synthetics Co., Ltd. Thai Polypropylene Co., Ltd. PTT Polymer Logistics Co., Ltd. Dhipaya Insurance Plc. Thai Plastic and Chemical Plc. Thai Industrial Gas Plc. Bangkok Industrial Gas Co., Ltd. IRPC Plc. Energy Complex Co., Ltd. Total

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 4,417

4,076

3,432

4,076

-

-

492

-

8

-

8

-

25 979 48 17 170 1 47 5,712

13 6 41 1 4,137

7 979 48 149 5,115

8 5 4,089

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 173

28

41

4

-

-

34 2 2 22 9 2 11 1

14 1 80 7 1 5 2

-

-

21

11

3 363 43 2

1 300 59 4

1 1 43 2

1 1 59 2

71 32 1 8 18 8 722

61 4 59 13 1 7 2 11 550

4 11 1 6 10 8 232

3 2 13 1 5 10 222

197

Payables to contractor - related parties

Major Shareholder PTT Plc. Subsidiary PTT Maintenance and Engineering Co., Ltd. Associates PTT Utility Co., Ltd. PTT ICT Solutions Co., Ltd. Other related party Bangkok Industrial Gas Co., Ltd. Total Retention payable - related party

Subsidiary PTT Maintenance and Engineering Co., Ltd.

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 1

-

-

-

-

-

38

156

12

4 2

12

2

13

1 7

50

158

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) -

-

7

8

Significant agreements with related parties As at 31 December 2010, the Company has significant agreements with related parties as follows: Olefins Sales Agreements The Company has the Olefins Sales Agreement with five downstream petrochemical companies that guarantee to purchase Olefins products not less than the volume specified in the agreement with selling price based on prices prevailing in the world market. The agreement is for the period of 15 years, commencing from the date as specified in the agreement and will expire in December 2011.

The Company has 5 Ethylene Sales Agreements with certain related parties. Selling prices are determined based on prices prevailing in the world market, Polyethylene price in the world market and Ethane price.

These agreements are for the periods from 7 years to 15 years, commencing from the effective date specified in each agreement and will expire in July 2012, in December 2016 (for 2 agreements), in August 2021 and in May 2022.

The Company has 3 Propylene Sales Agreements with certain related parties. Selling prices are determined based on Polypropylene price in the world market, Polypropylene and Propylene prices in the world market. These agreements are for the periods from 12 years to 15 years, commencing from the effective date specified in each agreement and will expire in March 2011, in December 2016 and in December 2024.

By Product Sales Agreements The Company has 2 Hidrogen Sales Agreements with certain related parties. Selling prices in each agreement are determined based on Natural Gas price for the industry. These agreements are for the periods from 3 years to 15 years, commencing from the date as specified in each agreement and will expire in November 2012 and in December 2023.

The Company has the Pyrolysis Gasoline Sales Agreement with a related party that guarantee to purchase such products not less than the volume specified in the agreement with selling price based on Aromatic

198

product price prevailing in the world market. The agreement is for the period of 15 years, commencing from the date as specified in the agreement and will expire in November 2011. However, the agreement are automatically renewable with the one year advance notice by either party.

The Company has the Supply Mixed C4 Agreement with a related party that guarantee to purchase the product not less than the volume specified in the agreement with selling price based on Naphtha price prevailing in the world market. The agreement is for the period of 15 years, commencing from the date as specified in the agreement and will expire in May 2010. However, the agreement is still effective until either party give a minimum of four year advance notice in order to terminate the agreement.

The Company is in process of renewing the contract.

The Company has the Tail Gas Supply Agreement with a related party. Selling prices are determined based on Natural Gas price for the industry. The agreement is for the period of 15 years, commencing from the date as specified in the agreement and will expire in July 2022.

Utilities and Other Services Agreements The Company has 3 Power Supply Agreements with certain related parties. Selling prices in these agreements are determined based on pricing from Provincial Electricity Authority. These agreements are for the periods from 5 years to 15 years, commencing from the date as specified in each agreement and will expire in July 2012, in September 2014 and in December 2017. The agreement with the term of 5 years can be renewed for 5 years.

The Company has 5 Utilities Agreements covering electricity, steam and demineralised water with certain related parties. These agreements are for the periods from 10 years to 15 years, commencing from the date as specified in each agreement. Three agreements will expire in December 2016 and others will expire in December 2021 and July 2024.

The subsidiaries have 3 Utilities Agreements covering steam, electricity and water with a related party. These agreements are for the period of 15 years, commencing from the date as specified in each agreement and will expire in May 2021, in December 2021and in June 2023.

The Company has 2 Product Transportation Agreements with certain related parties. These agreements are for the periods from 3 years to 10 years, commencing from the date as specified in each agreement and will expire in December 2012, and May 2015. The agreement with the term of 3 years is renewable for another period of 3 years, not exceeding total periods of 15 years.

The Company has 2 Nitrogen Supply Agreements with certain related parties. Selling prices are determined based on prices prevailing in the market. These agreements are for the periods from 8 years to 10 years, commencing from the date as specified in each agreement and will expire in October 2014 and in June 2016. These agreements can be renewed or terminated by either party providing not less than 2 yearsâ&#x20AC;&#x2122; prior written notice to the counterparty and the other not less than 12 monthsâ&#x20AC;&#x2122; prior written notice to the counterparty.

Feedstock and Fuel Gas Sales Agreements

The Company has the LPG Supply Agreement with a related party. Selling prices are determined based on Polypropylene. These agreements are for the periods of 15 years, commencing from the date as specified in each agreement and will expire in May 2021.

The Company has the Natural Gas Supply Agreement with a related party. Selling prices are determined based on fuel oil price. The agreement is for the period of 20 years, commencing from the

199

date as specified in the agreement and will expire in December 2019. The agreement is renewable for the period of 4 years, by providing not less than 1 yearâ&#x20AC;&#x2122; prior written notice to the counterparty.

The Company has the Natural Gas Liquid Agreement with a related party. Selling prices are determined based on the standard price of Naphtha in the region. The agreement is for the period of 15 years, commencing from the date as specified in the agreement and will expire in May 2021. The agreement is renewable for the period of 5 years with the agreement of both parties.

The Company has the Light Naphtha and Raffinate Sales Agreement with a related party. Selling prices are determined based on the standard price of Naphtha in the region. The agreement commences on 1 January 1999. Subsequently, on 1 June 1999, the Company had another agreement to transfer the right and commitment under the Light Naphtha and Raffinate Sales Agreement to another related party. The agreement will be effective in November 2012.

The Company has 2 Ethane, Propane and LPG Supply Agreements with a related party. Selling prices in an agreement are determined based on Polyethylene and Polypropylene price and another agreement is determined based on Polyethylene price. These agreements are for the periods of 12 years and 15 years, commencing from the date as specified in each agreement and will expire in December 2011 and in July 2020. All agreements are renewable for the period of 5 years with the agreement of both parties.

The Company has 2 LPG Supply Agreements with certain related parties. Selling prices are determined based on Polypropylene. These agreements are for the periods of 1 year, commencing from the date as specified in each agreement and will expire in May 2011 and November 2011. The agreements are automatically renewable for one year or more with the agreement of both parties.

Polyethylene Sales Agreement The Company has the Polyethylene Sales Agreement with a relate party to entirely sell all Polyethylene to the related party for distributing to the customers. Under the agreement, the Polyethylene pricing structure is changed to link to the Polyethylene product price, which the Company sells to ended customers, adjusted by the appropriate marketing expenses for fairness to both parties. The agreement is for the period of 15 years, commencing from the effective date as specified in the agreement and will expire in January 2022.

Loan Agreements The Company has an unsecured loan agreement with a related party with the credit limit of Baht 26,700 million. The loan agreement consists of Baht 25,300 million of long-term loan and Baht 1,400 million of short-term loan. The loan bears interest at the rate of the Companyâ&#x20AC;&#x2122;s average cost of fund.

This long-term loan is repayable in equally quarter instalments, commencing from June 2010 and within 5 years. Additionally, the Company provides temporary working capital (due is less than 1 year) for the amount of Bath 3,500 million to such related party.

The Company entered into an unsecured loan agreement with a related party with the credit limit of Baht 5,105 million. The loan agreement consists of Baht 4,605 million of long-term loan and Baht 500 million of short-term loan. The loan bears interest at the rate of the Companyâ&#x20AC;&#x2122;s average cost of fund. This long-term loan is repayable in semi-annual instalments, commencing from June 2011 and within 5 years.

200

The Company received unsecured promissory notes from three related parties for the total amount of Baht 9,747 million. The interest rate is at the rate of the Companyâ&#x20AC;&#x2122;s average cost of fund. The promissory will be expired in 1 month but renewable.

Service Agreements The Company has All Quality Guarantee, Machinery and Equipment Checking with a related party, for the period of 3 years, which will expire in February 2011.

The Company has Share Service Agreements with its 9 subsidiaries for the provision of general services. Service charges will be reviewed and agreed in the fourth quarter of each year. These agreements are effective from 1 July 2008 and may be terminated by either party with 3 months written notice.

The Company has two Emergency Control and Management Agreement with a related party for the provision of services relating to consulting, training for safety, health and environmental and establishment of emergency control centre. The agreement is for the period of 3 years and will expire in December 2011.

The Company has four Security Service and Fire Protection Agreement with a related party. The agreements are to provide security and fire protection service to asset, employee and visitor in the location of the Company. The agreement is for the period of 2 years and will be expired in September 2012.

The Company has the Service Agreement with a related party for the provision of general services in the building and rental space. The agreement is for the period of 3 years and will expire in September 2012 and is renewable for another period of 3 years with the service rate and committed conditions as stipulated in the agreement.

The Company has the Lab Analysis Service Agreement with a related party. The agreement is for the period of 1 year and is automatically renewable and may be terminated by either party with 1 month prior written notice.

Office Rental Agreement The Company has the Office Rental Agreement with a related party. The agreement is for the period of 3 years and will expire in September 2012 and is renewable for another period of 3 years with the office rental rate of Baht 86 million per annum and has committed conditions as stipulated in the agreement.

5

Cash and cash equivalents

Cash on hand Cash at banks - current accounts Cash at banks - savings accounts Fixed deposit Highly liquid short-term investments Total

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 1 537 469 (4) (2) 1,941 2,026 562 469 120 570 1 12,239 7,985 11,075 7,300 14,838 11,050 11,634 7,767

201

The currency denomination of cash and cash equivalents as at 31 December was as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 14,122 10,058 11,634 7,767 145 151 187 404 238 283 146 154 14,838 11,050 11,634 7,767

Thai Baht (THB) United States Dollars (USD) Euro (EUR) Ringgit (MYR) Others Total 6

Trade accounts receivable and notes receivable

Note Related parties Other parties

4

Less allowance for doubtful accounts Total Bad and doubtful debts expenses for the year

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 6,732

5,194

5,310

6,123

4,692

4,489

379

234

11,424

9,683

5,689

6,357

(17)

(15)

(2)

(2)

11,407

9,668

5,687

6,355

7

14

-

-

Aging analyses for trade accounts receivable were as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Related parties Within credit terms Overdue: Less than 3 months 3 - 6 months 6 - 12 months Over 12 months Less allowance for doubtful accounts Net

6,712

5,149

5,310

6,118

20 6,732 6,732

45 5,194 5,194

5,310 5,310

5 6,123 6,123

202

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Other parties Within credit terms Overdue: Less than 3 months 3 - 6 months 6 - 12 months Over 12 months Less allowance for doubtful accounts Net Total

4,293

4,007

373

231

378 7 7 7 4,692 (17) 4,675 11,407

467 3 6 6 4,489 (15) 4,474 9,668

2 2 2 379 (2) 377 5,687

1 2 234 (2) 232 6,355

The normal credit term granted by the Group/Company ranges from 15 days to 90 days.

The currency denomination of trade accounts receivable as at 31 December was as follows:

Thai Baht (THB) United States Dollars (USD) Euro (EUR) Others Total 7

Consolidated Separate financial statements financial statements 2010 2009 2009 2010 (in million Baht) 8,974 7,053 5,588 6,186 1,461 1,591 101 171 744 628 245 411 11,424 9,683 5,689 6,357

Inventories Consolidated Separate financial statements financial statements 2010 2009 2009 2010 (in million Baht) Finished goods Work in progress Raw materials Factory supplies Spare parts Goods in transit Less allowance for decline in value allowance for obsolescence Net

3,582 1,429 2,067 632 3,222 243 11,175 (53) (38) 11,084

2,707 947 1,702 509 2,650 117 8,632 (95) 8,537

1,334 911 153 1,964 100 4,462 4,462

865 1,070 213 2,185 4,333 4,333

203

Consolidated Separate financial statements financial statements 2009 2010 2009 2010 (in million Baht) Inventories recognised as an expense in â&#x20AC;&#x2DC;cost of sales of goodsâ&#x20AC;&#x2122;: - Cost - Reversal of write - down

- Net total 8

83,507 (15)

70,213 (785)

51,289 -

48,943 (283)

83,492

69,428

51,289

48,660

Investments in subsidiaries and jointly-controlled entity

Separate financial statements 2009 2010 (in million Baht) Subsidiaries At 1 January Acquisitions Allowance for impairment Disposals At 31 December

38,392 2,570 40,962

33,753 4,639 38,392

Jointly-controlled entity At 1 January Acquisitions Allowance for impairment Disposals At 31 December

210 210

210 210

Total At 1 January Acquisitions Allowance for impairment Disposals At 31 December

38,602 2,570 41,172

33,963 4,639 38,602

100

100

and Environmental Service Co., Ltd.

100

100

100

100

100

100

100

Co., Ltd. Thai Oleochemicals Co., Ltd.

PTT Polyethylene Co., Ltd. NPC Safety

100

100

100

100

100

Co., Ltd. Bio Creation

Thai Ethanolamine

Co., Ltd.

Subsidiaries Bangkok Polyethylene Plc. TOC Glycol

Ownership interest 2010 2009 (%)

165

22,000

2,400

280

900

5,395

1,700

165

19,600

2,400

280

900

5,395

1,700

Paid-up capital 2010 2009

165

22,600

2,400

280

900

5,395

3,664

165

20,200

2,400

280

900

5,395

3,664

Cost method 2010 2009

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Impairment 2010 2009

165

22,600

2,400

280

900

5,395

3,664

165

20,200

2,400

280

900

5,395

3,664

At cost - net 2010 2009 (in million Baht)

Separate financial statements

-

-

-

-

-

-

-

Market price of listed securities 2010 2009

-

-

-

-

-

-

-

-

-

-

-

-

3,561

-

-

-

-

-

-

-

341

Dividend income for the years ended 2010 2009

Investments in subsidiaries and jointly-controlled entities as at 31 December 2010 and 2009, and dividend income from those investments for the years then ended were as follows:

204

Total

entity Thai Ethoxylate Co., Ltd.

50

51

Jointly-controlled

60

Thai Tank Terminal Limited

100 75

and Engineering Co., Ltd.

Co., Ltd. PTT Maintenance

Pte. Ltd. Bio Spectrum

Subsidiaries PTT Chemical International

50

51

60

100 -

Ownership interest 2010 2009 (%)

420

900

137

4,961 131

420

900

137

4,847 -

Paid-up capital 2010 2009

41,172

38,602

210 210

210 210

459 38,392

459

82

4,847 -

40,962

82

4,961 56

Cost method 2010 2009

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Impairment 2010 2009

41,172

210

210

40,962

459

82

4,961 56

38,602

210

210

38,392

459

82

4,847 -

At cost - net 2010 2009 (in million Baht)

Separate financial statements

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Market price of listed securities 2010 2009

4,066

-

-

4,066

463

42

-

849

25

25

824

483

-

-

Dividend income for the years ended 2010 2009

205

50

50

2010 Thai Ethoxylate Co., Ltd.

2009 Thai Ethoxylate Co., Ltd.

(%)

Ownership

523

714

Current assets

245

233

Noncurrent assets

768

947

Total assets

Noncurrent liabilities

226

294

122

96

(in million Baht)

Current liabilities

348

390

Total liabilities

1,183

1,521

Total revenues

1,072

1,385

Total expenses

111

136

Net Profit

The following summarised financial information on jointly-controlled entity which has been accounted for using the equity method represents the Groupâ&#x20AC;&#x2122;s share:

206

207

Increase of investments in subsidiaries At the meeting for incorporate of Bio Spectrum Co., Ltd. held on 9 November 2010, the meeting approved to issue common share 10,000 shares at Baht 100 par value, totalling Baht 1 million which the subsidiary called and recieved in cash of Baht 25 par value , totalling Baht 0.25 million.

At the Extraordinary meeting of shareholders of Bio Spectrum Co., Ltd. held on 29 November 2010, the Shareholders approved to increase the registered share capital from Baht 1 million (divided into 10,000 shares at Baht 100 par value) to Baht 300 million (divided into 300 million shares at Baht 100 par value) by issuing new common shares of Baht 299 million (divided into 2.99 million shares at Baht 100 par value) which shall be allotted into two portions. The first portion is divided into 0.75 million shares at Baht 100 per share, and will be fully paid-up, in consideration of transferring the Production Technology.

The remaining portion is divided into 2.24 million shares at Baht 100 per share, will be called and received in cash of Baht 25 per share, totalling Baht 56 million in 2010.

Increase in share capital At the Annual General Meeting of the shareholders of PTT Polyethylene Co., Ltd. held on 8 February 2010, the shareholders approved to increase the registered share capital from Baht 19,600 million (divided into 196 million shares at Baht 100 par value) to Baht 22,000 million (divided into 220 million shares at Baht 100 par value) by issuing new common shares of Baht 2,400 million (divided into 24 million shares at Baht 100 par value) of which such subsidiary called and received in full amount in the first quarter of the year 2010.

At the Board of Directors meeting of PTT International Private Co., Ltd. held on 20 November 2009, the Board approved to increase the registered share capital from SGD 205.2 million (divided into 205.2 million shares at SGD 1 par value) to SGD 219.2 million (divided into 219.2 million shares at SGD 1 par value) by issuing new common shares of SGD 14 million (divided into 14 million shares at SGD 1 par value) of which such company called and received of SGD 0.25 per share, totalling SGD 3.5 million in 2009 and received of SGD 0.35 per share, totalling SGD 4.9 million in the third quarter of the year 2010.

Dividends At the Board of Directors’ meeting of TOC Glycol Co., Ltd. held on 29 November 2010, the Board approved the appropriation of dividends of Baht 18.00 per share, amounting to Baht 971.10 million. The dividend was paid to shareholders in November 2010.

At the Board of Directors’ meeting of TOC Glycol Co., Ltd. held on 26 August 2010, the Board approved the appropriation of dividends of Baht 19.00 per share, amounting to Baht 1,025.05 million.

The dividend was paid to shareholders in August 2010.

At the Board of Directors’ meeting of TOC Glycol Co., Ltd. held on 25 May 2010, the Board approved the appropriation of dividends of Baht 15.00 per share, amounting to Baht 809.25 million. The dividend was paid to shareholders in May 2010.

At the Annual General Meeting of the shareholders of PTT Maintenance and Engineering Co., Ltd. held on 28 April 2010, the shareholders approved the appropriation of dividends from the net profit of Baht 34.75 per share, amounting to Baht 69.50 million. The dividend was paid to shareholders in April 2010.

208

At the Annual General Meeting of the shareholders of TOC Glycol Co., Ltd. held on 27 April 2010, the shareholders approved the appropriation of dividends from the net profit after the appropriation to legal reserve of Baht 14.00 per share, amounting to Baht 755.30 million, which was paid to the shareholders in April 2010.

At the Annual General Meeting of the shareholders of Thai Tank Terminal Limited held on 23 April 2010, the shareholders approved the appropriation of dividends of Baht 100.98 per share, amounting to Baht 908.83 million. The dividend, amounting to Baht 300 million, was paid to the shareholders in May 2010, and the net balance of dividend, amounting to Baht 608.83 million, was paid to the shareholders in December 2010.

At the Board of Directorsâ&#x20AC;&#x2122; meeting of TOC Glycol Co., Ltd. held on 25 December 2009, the Board approved the appropriation of dividends of Baht 14.97 per share, amounting to Baht 807.63 million. The dividend was paid to shareholders during 2009. Also, at the Annual General Meeting of the shareholders of a subsidiary held on 27 April 2009, the shareholders approved to change the appropriation of dividends to Baht 20.39 per share, amounting to Baht 1,100.04 million from Baht 29.04 per share, amounting to 1,566.71 million, which had been approved by the Board of Directors meeting of the subsidiary held on 17 November 2008, resulting in the change in dividend paid in 2009 of Baht 466.67 million.

At the annual general meeting of the shareholders of Thai Tank Terminal Ltd. held on 24 April 2009, the shareholders approved the appropriation of dividends from the net profit of Baht 105.30 per share, amounting to Baht 947.72 million. The dividend was paid to shareholders during 2009.

At the annual general meeting of the shareholders of Thai Ethoxylate Co., Ltd. held on 29 April 2009, the shareholders approved the appropriation of dividends from the net profit of Baht 12 per share, amounting to Baht 50.40 million. The dividend was paid to shareholders during 2009.

9

Investments in associates Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) At 1 January Share of net profit of investments - equity method Acquisitions Dividend income Allowance for impairment Disposals At 31 December

8,370

8,001

8,478

8,150

1,362 109 (106) 9,735

146 328 (105) 8,370

110 8,588

328 8,478

PTT ICT Solutions Co., Ltd. Total

Co., Ltd.

Fluid Transport

Vinythai Plc. Eastern

Marketing Co., Ltd.

PTT Polymer

Co., Ltd.

PTT Phenol

Co., Ltd.

Associates PTT Utility

20

23

25

25

30

40

20

23

25

25

30

40

Ownership interest 2010 2009 (%)

150

10

7,111

40

8,351

6,859

150

10

7,111

40

7,985

6,859

Paid-up capital 2010 2009

30 8,588

1

3,297

10

2,506

2,744

30 8,478

1

3,297

10

2,396

2,744

Cost method 2010 2009

40 9,735

13

4,008

75

2,980

2,619

40 8,370

13

3,717

46

2,067

2,487

-

-

-

-

-

-

-

-

-

-

-

-

Equity method Impairment 2010 2009 2010 2009 (in million Baht)

Consolidated financial statements

40 9,735

13

4,008

75

2,980

2,619

40 8,370

13

3,717

46

2,067

2,487

At equity - net 2010 2009

Investments in associates as at 31 December 2010 and 2009, and dividend income from those investments for the years then ended were as follows:

106

2

104

-

-

-

105

1

104

-

-

-

Dividend income 2010 2009

209

Total

PTT ICT Solutions Co., Ltd.

Ltd.

Transport Co.,

Co., Ltd. Vinythai Plc. Eastern Fluid

PTT Phenol Co., Ltd. PTT Polymer Marketing

Associates PTT Utility Co., Ltd.

20

15

25 25

30

40

20

15

25 25

30

40

Ownership interest 2010 2009 (%)

150

10

40 7,111

8,351

6,859

150

10

40 7,111

7,985

6,859

Paid-up capital 2010 2009

8,588

30

1

10 3,297

2,506

2,744

8,478

30

1

10 3,297

2,396

2,744

Cost method 2010 2009

-

-

-

-

-

-

-

-

-

-

-

-

8,588

30

1

10 3,297

2,506

2,744

8,478

30

1

10 3,297

2,396

2,744

Impairment At cost - net 2010 2009 2010 2009 (in million Baht)

Separate financial statements

-

-

-

-

-

-

-

-

-

-

-

-

Market price of listed securities 2010 2009

106

-

2

104

-

-

105

1

104

-

-

Dividend income 2010 2009

210

40 30 25 25 23 20

40 30 25 25 23 20

2010 PTT Utility Co., Ltd. PTT Phenol Co., Ltd. PTT Polymer Marketing Co., Ltd. Vinythai Plc. Eastern Fluid Transport Co., Ltd. PTT ICT Solutions Co., Ltd. Total

2009 PTT Utility Co., Ltd. PTT Phenol Co., Ltd. PTT Polymer Marketing Co., Ltd. Vinythai Plc. Eastern Fluid Transport Co., Ltd. PTT ICT Solutions Co., Ltd. Total

Ownership (%)

8,398 5,712 749 3,823 18 176 18,876

9,437 6,014 1,240 4,153 21 264 21,129

Total assets

5,911 3,644 703 294 6 136 10,694

6,818 3,034 1,166 341 7 225 11,591

2,460 2,189 6,518 2,980 18 171 14,336

3,538 4,027 9,825 3,272 30 236 20,928

Total Total revenues liabilities (in million Baht)

9 (97) 17 246 3 (6) 172

132 802 29 386 4 (10) 1,343

Net profit/ (loss)

The following summarised financial information on associates which have been accounted for using the equity method is not adjusted for the percentage of ownership held by the Group:

211

212

10

Other long-term investments Consolidated Separate financial statements financial statements 2009 2010 2009 2010 (in million Baht) Other long-term investments Other non marketable equity securities Alliance Petrochemical Investment (Singapore) Pte. Ltd. (16.67% Shareholding) Guangzhou Keylink Chemical Co., Ltd. (15% Shareholding)

290

290

290

290

34 324

33 323

290

290

The currency denomination of other long-term investments as at 31 December was as follows:

Singapore Dollars (SGD) Hong Kong Dollars (HKD) Total

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 290 290 290 290 34 33 324 323 290 290

Finance costs capitalised during 2010 (note 26) Rates of interest capitalised during 2010 (% per annum)

Finance costs capitalised during 2009 (note 26) Rates of interest capitalised during 2009 (% per annum) -

-

-

-

(699) 117,212

(11) 3,358

-

86,692 333 31,080 (194)

3,266 103 -

-

610

(86)

-

83,720 145 2,474 (257)

Plant, machinery and equipment

3,292 26 57 (23)

Land

Property, plant and equipment

Cost At 1 January 2009 Additions Transfers Disposals Effect of movement in exchange rates At 31 December 2009 and 1 January 2010 Additions Transfers Disposals Effect of movement in exchange rates At 31 December 2010

11

-

-

-

-

1,342

1,154 134 67 (13)

-

667 230 262 (5)

Factory equipment and tools

-

-

-

-

(308) 7,724

7,334 8 708 (18)

(3)

-

-

-

-

121 1,015

833 61 -

-

-

-

-

-

93

213 1 (63) (58)

-

-

-

-

-

(18) 1,462

1,277 160 73 (30)

4

Consolidated financial statements Furniture, fixtures Buildings Leasehold and improveimproveequipment ment ment Buildings (in million Baht) 6,212 447 54 1,201 17 1 107 1,108 389 159 (10) (4) (25)

-

-

-

-

8 784

659 125 112 (120)

(7)

531 71 98 (34)

Vehicles

4

6

3-4

1

(8) 23,883

53,288 3,532 (32,431) (498)

(106)

43,217 15,148 (4,971) -

Assets under construction

4

6

3-4

1

(915) 156,873

154,716 4,396 (393) (931)

412

139,341 15,745 (434) (348)

Total

213

538 (42,007)

49,044 49,044

-

3,292 3,292

3,358 3,358

75,205 75,205

48,216 48,216

(733)

(38,476) (4,183) 119 (5)

-

3,266 3,266

(610) (138) 12 3

(171)

-

608 1 609

543 1 544

223 223

-

(34,676) (3,770) 103 38

-

(444) (91) 5 (80)

Factory equipment and tools

4,495 4,495

4,261 4,261

3,380 3,380

160 (3,229)

(3,073) (320) 13 (9)

-

(2,832) (281) 40

Buildings

681 681

567 567

212 212

(19) (334)

(266) (50) 1

-

88 88

152 152

14 14

(5)

(61) (14) 46 24

-

Leasehold Buildings improveimprovement ment (in million Baht) (235) (40) (33) (12) 3 (1) (9)

399 93 492

376 77 453

416 75 491

10 (970)

(824) (186) 28 2

(9)

(710) (158) 24 29

Furniture, fixtures and equipment

Consolidated financial statements

193 236 429

91 225 316

25 250 275

(6) (355)

(343) (122) 117 (1)

2

(256) (106) 32 (15)

Vehicles

23,883 23,883

53,288 53,288

43,217 43,217

-

-

-

-

Assets under construction

The gross amount of the Groupâ&#x20AC;&#x2122;s fully depreciated property and equipment that was still in use as at 31 December 2010 amounted to Baht 10,010 million (2009: Baht 10,084 million).

At 31 December 2010 Owned assets Assets under finance leases

At 31 December 2009 and 1 January 2010 Owned assets Assets under finance leases

Accumulated depreciation At 1 January 2009 Depreciation charge for the year Disposals Transfers Effect of movement in exchange rates At 31 December 2009 and 1 January 2010 Depreciation charge for the year Disposals Transfers Effect of movement in exchange rates At 31 December 2010 Net book value At 1 January 2009 Owned assets Assets under finance leases

Land

Plant, machinery and equipment

108,910 330 109,240

110,760 303 111,063

99,823 325 100,148

683 (47,633)

(43,653) (5,013) 335 15

(178)

(39,193) (4,451) 167 2

Total

214

Cost At 1 January 2009 Additions Transfers Disposals At 31 December 2009 and 1 January 2010 Additions Transfers Disposals At 31 December 2010

51,647 83 2,370 (195)

53,905 166 2,739 (159) 56,651

1,721 33 -

1,754 1,754

Land

Plant, machinery and equipment

682 76 31 (3) 786

566 185 (64) (5)

Factory equipment and tools

2,164 2 114 (10) 2,270

1,864 300 -

Buildings

446 16 462

376 1 71 (2) 79 64 (58) 85

49 30 -

Leasehold Buildings improveimprovement ment (in million Baht)

Separate financial statements

787 100 55 (20) 922

815 60 (86) (2)

Furniture, fixtures and equipment

401 93 1 (90) 405

365 23 36 (23)

Vehicles

7,780 2,820 (3,157) (1) 7,442

5,829 4,858 (2,907) -

Assets under construction

67,998 3,257 (137) (341) 70,777

63,232 5,210 (217) (227)

Total

215

27,538 27,538

27,486 27,486

1,721 1,721

1,754 1,754 27,988 27,988

(2,336) 92 (28,663)

-

1,754 1,754

(24,109) (2,262) (48) (26,419)

-

308 308

285 285

153 153

(83) 2 (478)

(413) (63) 79 (397)

Factory equipment and tools

1,576 1,576

1,565 1,565

1,348 1,348

(108) 13 (694)

(516) (97) 14 (599)

Buildings

219 219

221 221

164 164

(18) (243)

(212) (16) 3 (225)

81 81

23 23

11 11

(5) 57 (4)

(38) (7) (11) (56)

Leasehold Buildings improveimprovement ment (in million Baht)

326 326

245 57 302

356 57 413

(130) 19 (596)

(402) (114) 31 (485)

Furniture, fixtures and equipment

Separate financial statements

16 166 182

19 139 158

4 178 182

(69) 89 (223)

(183) (69) 9 (243) -

-

7,442 7,442

7,780 7,780

5,829 5,829

Assets under Vehicles construction

The gross amount of the Companyâ&#x20AC;&#x2122;s fully depreciated property and equipment that was still in use as at 31 December 2010 amounted to Baht 1,492 million (2009: Baht 1,012 million).

At 31 December 2010 Owned assets Assets under finance leases

Accumulated depreciation At 1 January 2009 Depreciation charge for the year Disposals At 31 December 2009 and 1 January 2010 Depreciation charge for the year Disposals At 31 December 2010 Net book value At 1 January 2009 Owned assets Assets under finance leases At 31 December 2009 and 1 January 2010 Owned assets Assets under finance leases

Land

Plant, machinery and equipment

39,710 166 39,876

39,378 196 39,574

37,124 235 37,359

(2,749) 272 (30,901)

(25,873) (2,628) 77 (28,424)

Total

216

12

(198) (69) (2) 15 (254) (86) (9) (349) 200 318 293

(2,142) (130) 5 63 (2,204) (132) 302 (2,034) 562 392 1,874

Accumulated amortisation At 1 January 2009 Amortisation charge for the year Transfers Effect of movement in exchange rates Loss from impairment At 31 December 2009 and 1 January 2010 Amortisation charge for the year Transfers Effect of movement in exchange rates

Loss from impairment At 31 December 2010 Net book value

At 1 January 2009 At 31 December 2009 and 1 January 2010 At 31 December 2010

398 22 152 572 18 64 (12) 642

Software Licences

2,704 1 (5) (104) 2,596 18 1,579 (285) 3,908

License for production process

Cost At 1 January 2009 Additions Transfers Effect of movement in exchange rates At 31 December 2009 and 1 January 2010 Additions Transfers Effect of movement in exchange rates At 31 December 2010

Intangible assets

13 68 84

(32)

(12) (12) (24) (8) -

96 88 81

(34)

(19) (8) (27) (7) -

27 21 62

(43)

(46) (9) 6 (49) (18) 11 13

Consolidated financial statements Right for Right to use Right to use other Pipeline Jetty operation (in million Baht) 25 115 73 67 4 (7) 92 115 70 24 45 (10) 116 115 105

3,021 3,021 3,015

(390)

(390) (3) (393) 3

3,411 3 3,414 (9) 3,405

Goodwill

1,695 2,612 1,218

-

-

1,695 628 (4) 293 2,612 233 (1,627) 1,218

Intangible in progress

5,614 6,520 6,627

(2,882)

(2,807) (228) 3 81 (2,951) (251) 304 16

8,421 718 147 185 9,471 269 85 (316) 9,509

Total

217

218

License for production Cost At 1 January 2009 Additions Transfers At 31 December 2009 and 1 January 2010 Additions Transfers At 31 December 2010 Accumulated amortisation At 1 January 2009 Amortisation charge for the year At 31 December 2009 and 1 January 2010 Amortisation charge for the year At 31 December 2010 Net book value At 1 January 2009 At 31 December 2009 and 1 January 2010 At 31 December 2010

Separate financial statements Right for other Intangible Software operation in progress licences

Total

680 -

271 10 144

4

6 218 (4)

957 228 144

680 680

425 44 469

4 99 (29) 74

220 (2) 218

1,329 143 (31) 1,441

(355) (57)

(144) (43)

(1)

-

(499) (101)

(412) (57) (469)

(187) (54) (241)

(1) (1) (2)

-

(600) (112) (712)

325

127

-

6

458

268 211

238 228

3 72

220 218

729 729

51

219

13

Deferred tax Deferred tax assets and liabilities determined after appropriate offsetting are included in the balance sheets as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 294 132 5 3 (1,081) (882) (886) (720) (787) (750) (881) (717)

Deferred tax assets Deferred tax liabilities Net

Movements in deferred tax assets and liabilities during the year were as follows:

At 1 January 2010 Deferred tax assets Allowance for decline in value of inventories Loss carryforward Others Total

2 53 77 132

Consolidated financial statements (Charged) / credited to: Statement Acquisition of income of Exchange Equity subsidiary differences (note 27) (in million Baht)

2 172 174

-

-

At 31 December 2010

(12) (12)

4 53 237 294

Deferred tax liabilities Depreciation and Amortisation (Depreciation gap) Finance lease assets Net gain on remeasurement to fair value of interest rate swap contracts Others Total

(852) (19)

(136) (2)

-

-

-

(988) (21)

(9) (2) (882)

(49) (14) (201)

-

-

2 2

(58) (14) (1,081)

Net

(750)

(27)

-

-

(10)

(787)

220

At 1 January 2009 Deferred tax assets Net loss on remeasurement to fair value of cross currency interest rate swap contracts Allowance for decline in value of inventories Loss carryforward Others Total Deferred tax liabilities Depreciation and amortization (Depreciation gap) Finance lease assets Net gain on remeasurement to fair value of interest rate swap contracts Others Total Net

Consolidated financial statements (Charged) / credited to: Acquisition Statement Exchange of of income differences Equity subsidiary (note 27) (in million Baht)

At 31 December 2009

48

(48)

-

-

-

-

119 30 197

(117) 53 47 (65)

-

-

-

2 53 77 132

(709) (22)

(143) 3

-

-

-

(852) (19)

(12) (7) (750) (553)

3 (6) (143) (208)

(1) (1) (1)

-

12 12 12

(9) (2) (882) (750)

Separate financial statements (Charged) / credited to: Statement At 1 At 31 of income January December (note 27) Equity 2010 2010 (in million Baht) Deferred tax assets Allowance for decline in value of inventories Others Total

3 3

2 2

-

2 3 5

221

Separate financial statements (Charged) / credited to: Statement At 1 At 31 of income January December Equity (note 27) 2010 2010 (in million Baht) Deferred tax liabilities Depreciation Finance lease assets Net gain on remeasurement to fair value of interest rate swap contracts Total

(695) (16)

(114) (2)

(9) (720)

(50) (166)

-

(59) (886)

Net

(717)

(164)

-

(881)

-

(809) (18)

Separate financial statements (Charged) / credited to: Statement At 31 At 1 of income December January (note 27) Equity 2009 2009 (in million Baht) Deferred tax assets Allowance for decline in value of inventories Net loss on remeasurement to fair value of cross currency interest rate swap Others Total

72

(72)

-

-

38 3 113

(38) (110)

-

3 3

Deferred tax liabilities Depreciation Finance lease assets Net gain on remeasurement to fair value of interest rate swap contracts Total

(616) (19)

(79) 3

-

(695) (16)

(13) (648)

4 (72)

-

(9) (720)

Net

(535)

(182)

-

(717)

222

14

Interest-bearing liabilities Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Current Short-term loans from financial institutions unsecured

Current portion of long-term loans from financial institutions secured unsecured Debentures secured Current portion of finance lease liabilities Non-current Long-term loans from financial institutions secured unsecured Debentures secured unsecured

Finance lease liabilities Total

1,460

772

-

-

3,107 3,107

21 835 856

1,983 1,983

546 546

-

400

-

400

182 4,749

155 2,183

130 2,113

111 1,057

93 11,162 11,255

122 12,696 12,818

10,708 10,708

11,091 11,091

29,444 29,444

30,399 30,399

29,444 29,444

30,399 30,399

214 40,913 45,662

196 43,413 45,596

146 40,298 42,411

126 41,616 42,673

223

The periods to maturity of interest-bearing liabilities, excluding finance lease liabilities, as at 31 December were as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Within one year After one year but within five years After five years Total

4,567 30,008 10,691 45,266

2,028 15,913 27,304 45,245

1,983 29,461 10,691 42,135

946 14,186 27,304 42,436

Secured interest-bearing liabilities following the percentage of ownership held by the group as at 31 December were secured on the following assets:

Consolidated Separate financial statements financial statements 2009 2010 2009 2010 (in million Baht) Machinery and equipment Building Total

122 39 161

12,166 42 12,208

-

12,000 12,000

Baht

Unsubordinated and unsecured debenture

2,800

2,100

Baht

Unsubordinated and unsecured debenture

2,000

300

Baht

1,000

1,000

10,000

1,000

Per share

Currency (in million)

U.S. Unsubordinated and Dollars unsecured debenture, value of debenture is 99.46 percentage of the face value, a time period of 10 years

Secured and installment of principal debenture which condition specified in the agreement

Face Value

Facilities

-

-

-

-

Years

The principal features of debentures as at 31 December were as follows:

10,019

2,090

2,790

9,059

2,094

2,791

Interest is payable on semi-annual basis and maturity to redeem on June 2015

Interest is payable on semi-annual basis and maturity to redeem on October 2012 Interest is payable on semi-annual basis and maturity to redeem on October 2017

4.58

5.5

Principal and interest are payable on semiannual basis and maturity to redeem on September 2010.

Repayment Terms

2,791

2,094

9,059

2,790

2,090

10,019

Separate Consolidated financial statements financial statements 2010 2009 2010 2009 (in million Baht) 400 400

5.5

Average Baht 6month time deposit rate plus 2.5% p.a.

Rates (%) p.a.

Interest

224

Baht

Baht

Baht

Baht

Unsubordinated and unsecured debenture

Unsubordinated and unsecured debenture

Unsubordinated and unsecured debenture

Unsubordinated and unsecured debenture

Total Less: Current portion Net

Baht

1,942

1,058

4,000

8,000

500

1,000

1,000

1,000

1,000

1,000

Per share

Currency (in million)

Unsubordinated and unsecured debenture

Face Value

Facilities

10

7

1-3 4-5 6-7

1-3 4-5

-

Years

5.5

4.9

5.3 6 6.45

5.3 6

5.6

Rates (%) p.a.

Interest

29,444 29,444

1,942

1,058

Interest is payable on semi-annual basis and maturity to redeem on June 2016 Interest is payable on semi-annual basis and maturity to redeem on June 2019

4,000

8,000

Interest is payable on quarterly basis and maturity to redeem on December 2015

Interest is payable on quarterly basis and maturity to redeem on December 2013

Interest is payable on semiannual basis and maturity to redeem on October 2015

Repayment Terms

30,799 (400) 30,399

1,942

1,058

4,000

8,000

29,444 29,444

1,942

1,058

4,000

8,000

30,799 (400) 30,399

1,942

1,058

4,000

8,000

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 500 500 500 500

225

3,000

1,000

7,500

1,500

1,600

Baht

Baht

Baht

Baht

-

-

-

-

-

(in million) Years

Baht (Draw-down only permitted until December 2006)

Currency The Company

Facilities

The details of loans as at 31 December were as follows:

The principal will be repayable on semiannual basis, in 9 instalments commencing in October 2011.

The principal will be repayable on semiannual basis, in 11 instalments commencing in September 2007.

Repayment Terms

THBFIX 6 M plus margin

Fixed rate

The principal will be repayable on semiannual basis, in 8 instalments commencing in March 2013.

The principal will be repayable on semiannual basis, in 9 instalments commencing in September 2011.

Highest interest rate for The principal will be repayable on semi6 month-fixed deposit annual basis, in 15 instalments commencing in August 2011. plus margin

Average 3 month â&#x20AC;&#x201C;fixed deposit rate of Government Saving Bank plus margin THBFIX 6 M plus margin

Interest Rates (%) p.a.

Interest

7,500

7,500

1,500

-

7,500

1,500

1,600

1,600

1,500

1,000

1,000

1,000

1,091

1,636

1,091

-

1,500

7,500

1,000

1,637

Separate Consolidated financial statements financial statements 2010 2009 2010 2009 (in million Baht)

226

1,000

135

41.8

Baht

Baht

Euro

74

Highest interest rate for The principal is repayable on quarterly 3 month-fixed deposit basis, in 11 instalments commencing in plus margin November 2009.

13,674 (856) 12,818

(3,107) 11,255

Less: Current portion

Net

Baht

14,362

1,001

Total

Interest rate for 3 month- The principal is repayable on semi-annual basis, in 14 instalments commencing on 31 fixed deposit plus August 2008. margin

EURIBOR plus margin The principal is repayable on maturity date in February 2011.

834

600

360

The principal is repayable on quarterly basis, in 17 instalments, commencing on June 2008.

THBFIX 3 M plus margin

123

-

140

THBFIX 3 M plus margin

The principal is repayable on quarterly basis, in 12 instalments, commencing on September 2012.

170

170

The principal is repayable on quarterly basis, in 12 instalments, commencing on March 2012.

THBFIX 3 M plus margin

Repayment Terms

10,708

(1,983)

12,691

-

-

-

-

-

-

11,091

(546)

11,637

-

-

-

-

-

-

Separate Consolidated financial statements financial statements 2010 2009 2010 2009 (in million Baht)

144

9

-

-

-

-

-

Interest Rates (%) p.a.

Interest

93

183

140

Baht

Jointly-controlled entities

170

(in million) Years

Subsidiaries Baht

Currency

Facilities

227

228

As at 31 December 2010 the Group and the Company had unutilised credit facilities totalling Baht 22,176 million and 21,230 million, respectively (2009: Baht 7,188 million and Baht 6,300 million, respectively).

The currency denomination of interest-bearing liabilities as at 31 December was as follows: Separate Consolidated financial statements financial statements 2010 2009 2010 2009 (in million Baht) 34,304 33,802 33,352 32,654 9,648 10,620 9,059 10,019 1,710 1,174 45,662 45,596 42,411 42,673

Thai Baht (THB) United States Dollars (USD) Others Total 15

Trade accounts payable

Note

Related parties Other parties Total

4

Consolidated Separate financial statements financial statements 2009 2010 2009 2010 (in million Baht) 5,712 4,137 5,115 4,089 2,134 1,755 194 229 7,846 5,892 5,309 4,318

The currency denomination of trade accounts payable as at 31 December was as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 6,503 4,360 5,303 4,076 400 630 6 207 429 414 35 514 488 7,846 5,892 5,309 4,318

Thai Baht (THB) United States Dollars (USD) Euro (EUR) Others Total

16

Other accounts payable

Note

Related parties Other parties Total

4

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 722 550 232 222 767 710 431 315 1,489 1,260 663 537

229

17

Other current liabilities Consolidated Separate financial statements financial statements 2009 2010 2009 2010 (in million Baht) 946 898 595 376 198 174 159 137 763 650 143 121 1,907 1,722 897 634

Accrued interest and other accrued expenses Withholding tax payable Others Total 18

Share capital Par value per share (in Baht) Authorised At 1 January - ordinary shares At 31 December ordinary shares Issued and paid up At 1 January - ordinary shares Issue of new shares At 31 December ordinary shares

2010 Number

2009 Baht Number Baht (million shares / million Baht)

10

1,519.1

15,191

1,519.1

15,191

10

1,519.1

15,191

1,519.1

15,191

10 10

1,501.0 14.8

15,010 148

1,496.8 4.2

14,968 42

10

1,515.8

15,158

1,501.0

15,010

During the year 2010, holders of 14,780,800 warrants under the Companyâ&#x20AC;&#x2122;s Employee Stock Ownership Plan exercised their rights to purchase ordinary shares in the Company at the exercise price of Baht 66.50 per share. The Company registered the increase in the paid-up share capital of Baht 147,808,000 (divided into 14,780,800 shares at Baht 10 par value) with the Ministry of Commerce, increasing the issued and paid-up share capital from Baht 15,010,400,000 (divided into 1,501,040,000 shares at Baht 10 par value) to Baht 15,158,208,000 (divided into 1,515,820,800 shares at Baht 10 par value). The new shares were issued at Baht 66.50 per share, resulting in an increase in share premium of Baht 835,115,200.

During the year 2009, holders of 4,210,400 warrants under the Companyâ&#x20AC;&#x2122;s Employee Stock Ownership Plan exercised their rights to purchase ordinary shares in the Company at the exercise price of Baht 66.50 per share. The Company registered the increase in the paid-up share capital of Baht 42,104,000 (divided into 4,210,400 shares at Baht 10 par value) with the Ministry of Commerce, increasing the issued and paid-up share capital from Baht 14,968,296,000 (divided into 1,496,829,600 shares at Baht 10 par value) to Baht 15,010,400,000 (divided into 1,501,400,000 shares at Baht 10 par value). The new shares were issued at Baht 66.50 per share, resulting in an increase in share premium of Baht 237,887,600 As at 31 December 2010, there were 3,294,500 units of unexercised warrants, which will expire on 28 September 2011.

230

19

Additional paid-in capital and reserves Share premium Section 51 of the Public Companies Act B.E. 2535 requires companies to set aside share subscription monies received in excess of the par value of the shares issued to a reserve account (“share premium”). Share premium is not available for dividend distribution.

Legal reserve Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward, to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.

Currency translation differences The currency translation differences account within equity comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign operation.

20

Segment information Segment information is presented in respect of the Group’s business segments. The primary format, business segments, is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest or dividend-earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Business segments The Group comprises the following main business segments: Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6 Segment 7

Olefins / Shared Facilities Polymers EO-Based Performance Oleochemicals Services & Others International Business Dividends income

expenses

the year

Net profit (loss) for

Income tax expense

income tax expenses Finance costs

finance cost and

Profit (loss) before

Total expenses

1,751

487

3,316 1,078

46,301

2,907

43,394

Cost of sales

Selling and administrative

49,617

Total revenues

-

1,435

Other income

Dividend income

136

48,046

Interest income

Revenue

2010

4,205

1,588

7,071 1,278

44,096

2,422

41,674

51,167

-

582

490

50,095

2009

Segment 1

Business segment results

4,441

11

4,895 443

27,586

731

26,855

32,481

-

1,441

27

31,013

3,439

187

3,800 174

18,034

543

17,491

21,834

-

401

133

21,300

2009

Segment 2

2010

3,015

11

3,059 33

8,597

387

8,210

11,656

-

62

18

11,576

1,059

2

1,081 20

10,273

351

9,922

11,354

-

54

7

11,293

2009

Segment 3 2010

19

7

428 402

(747)

1

(348) 398

302 9,590

315

9,288

9,242

-

125

2

9,115

8,058

7,743

8,486

-

161

3

8,322

2009

Segment 4 2010

2,207

751

4,186 1,228

2,478

456

2,022

6,664

-

766

1,999

3,899

1,904

554

3,324 866

2,884

297

2,587

6,208

-

579

1,420

4,209

(in million Baht)

2009

Segment 5 2010

-

121

190 69

15,183

1,971

13,212

15,373

-

34

3

15,336

(115)

12

(6) 97

13,067

1,885

11,182

13,061

-

133

13

12,915

2009

Segment 6 2010 -

4,172

-

4,172 -

-

-

-

4,172

4,172

-

-

975

-

975 -

-

-

-

975

975

-

-

-

2009

Segment 7 2010

(4,865)

-

(5,879) (1,014)

(18,022)

(715)

(17,307)

(19,729)

(4,172)

(601)

(2,023)

(17,105)

(3,440)

(15)

(4,029) (574)

(22,585)

(888)

(21,697)

(26,614)

(954)

(916)

(1,846)

(22,898)

2009

Eliminations 2010

10,740

1,388

14,367 2,239

90,181

6,052

84,129

104,548

-

3,298

163

101,087

2010

Total

7,280

2,329

11,868 2,259

75,359

4,912

70,447

87,227

21

958

219

86,029

2009

231

Total assets

81,320

1,293

14

Deferred tax assets

Other non-current assets

646

59,886

-

-

-

-

-

9

143

-

470

4,686

770

5,281

7,097

Intangible assets

equipment

Property, plant and

parties

Long term loan to related

investment

Other long-term

Investments in associates

controlled entity

Investments in jointly-

subsidiaries

Investments in

Other current assets

receivable

Value-added tax

related party

long-term loans to

Current portion of

related parties

Short-term loans to

Inventories

from related parties

Other accounts receivable

and notes receivable

Trade accounts receivable

Cash and cash equivalent

2010

77,318

328

3

622

59,053

-

-

-

-

-

686

355

-

-

3,964

106

5,892

6,309

2009

Segment 1

41,355

159

223

2,474

28,313

-

-

-

-

-

369

9

-

-

2,217

349

3,233

4,009

35,017

325

-

2,068

26,245

-

-

-

-

-

2

2

-

-

1,256

733

1,605

2,294

2009

Segment 2

2010

Business segment financial position

14,466

686

21

162

10,684

-

-

-

-

-

42

55

-

-

457

10

1,456

893

15,222

750

21

188

11,143

-

-

-

-

-

161

362

-

-

367

13

1,850

367

2009

Segment 3 2010

9,608

9

5

193

6,597

-

-

-

-

-

51

5

-

-

1,138

11

1,077

468

9,508

12

5

112

7,248

-

-

-

-

-

38

170

-

-

834

5

690

394

2009

Segment 4 2010

46,264

2

-

124

4,347

20,681

-

-

-

-

8

-

5,546

13,447

59

2

504

1,465

46,134

18

1

115

4,164

26,027

-

-

-

-

7

-

3,313

11,277

55

42

502

548

(in million Baht)

2009

Segment 5 2010

9,721

1

31

497

3,483

-

-

-

-

-

198

-

-

-

2,451

-

2,154

906

9,205

107

102

471

3,212

-

-

-

-

-

159

-

-

-

2,062

-

1,954

1,138

2009

Segment 6 2010

51,331

-

-

-

-

-

325

9,734

210

41,062

-

-

-

-

-

-

-

-

47,505

-

-

-

-

-

325

8,478

210

38,492

-

-

-

-

-

-

-

-

2009

Segment 7 2010

(85,953)

(3)

-

2,531

(4,070)

(20,681)

(1)

1

(210)

(41,062)

(376)

(151)

(5,546)

(13,917)

76

(246)

(2,298)

-

-

(79,658)

(112)

-

2,943

(1)

(26,027)

(2)

(108)

(210)

(38,492)

(58)

(26)

(3,313)

(11,277)

-

(150)

(2,825)

2009

Eliminations 2010

168,022

2,147

294

6,627

109,240

-

324

9,735

-

-

1,315

115

-

-

11,084

896

11,407

14,838

2010

Total

160,251

1,428

132

6,519

111,064

-

323

8,370

-

-

1,273

1,137

-

-

8,538

749

9,668

11,050

2009

232

109

684

Retention payables

Payables to contractors

term loans

Total liabilities

liabilities

Other non-current

Deferred tax liabilities

Debentures

related parties

Long-term loans from

financial institutions

Long-term loans from

Other current liabilities

Income tax payable

debentures

Current portion of

57,662

131

744

24,699

9,088

8,983

1,183

259

-

4,453

997

Other accounts payable

Current portion of long-

6,201

131

-

Trade accounts payable

related parties

Short-term loans from

financial institutions

Short - term loans from

2010

-

63,231

251

601

29,514

12,104

9,255

548

1,196

334

2,279

1,052

176

1,289

4,302

330

2009

Segment 1

27,689

49

246

4,662

11,593

1,695

288

51

-

3,070

279

16

588

1,113

4,039

-

-

21,864

42

214

885

13,923

1,836

167

66

66

1,579

548

262

632

1,064

580

2009

Segment 2

2010

Business segment financial position

2,538

8

3

-

-

93

90

-

-

-

6

-

170

771

1,397

-

-

2,770

7

-

-

122

-

25

(3)

-

21

50

11

159

881

1,497

2009

Segment 3 2010

8,754

3

12

-

-

-

128

-

-

-

28

2

209

312

8,060

-

-

8,971

9

4

-

-

-

121

-

-

-

28

15

129

85

8,580

2009

Segment 4 2010

2,016

234

5

83

-

484

300

85

-

295

23

14

37

166

290

-

2,062

78

2

-

-

604

521

62

-

289

18

34

34

130

290

-

(in million Baht)

2009

Segment 5 2010

4,618

567

71

-

-

-

438

38

-

835

-

-

44

1,165

-

1,460

4,048

602

60

-

-

1,001

425

18

-

-

-

-

2

1,169

-

771

2009

Segment 6 2010

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2009

Segment 7 2010

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(43,219)

90

-

-

(20,681)

-

(520)

(4)

-

(5,546)

(103)

(98)

(557)

(1,883)

(13,917)

-

-

(43,788)

(113)

-

-

(26,149)

122

(84)

-

-

(3,313)

(244)

(8)

(983)

(1,739)

(11,277)

2009

Eliminations 2010

Total

60,058

1,082

1,081

29,444

-

11,255

1,907

429

-

3,107

917

43

1,488

7,845

-

1,460

2010

59,158

876

881

30,399

-

12,818

1,723

1,339

400

855

1,452

490

1,262

5,892

-

771

2009

233

234

21

Investment income

Note Rental income Operating lease rental income

1

6

4

4 4 4

-

21 21

4,066 105 4,171

824 25 105 21 975

Interest income Subsidiaries Other parties

4

163 163

219 219

1,995 118 2,113

1,816 186 2,002

164

241

6,290

2,981

Selling expenses

Distribution Promotional Marketing Personnel Others Total

23

1

Dividend income Subsidiaries Jointly-controlled entities Associates Other parties

Total

22

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht)

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 1,129 1,103 4 6 48 23 10 7 1 4 4 209 265 136 60 1,523 1,455 14 17

Administrative expenses

Personnel Administrative Depreciation and amortisation Loss on disposal of fixed assets Total

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 1,414 1,530 1,077 937 2,306 1,145 1,500 1,073 566 436 372 307 43 156 22 154 4,329 3,267 2,971 2,471

235

24

Employee benefit expenses Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht)

Management Wages and salaries Contribution to defined contribution plans

Other employees Wages and salaries Contribution to defined contribution plans Others

Total

194 6 200

187 3 190

108 5 113

95 3 98

3,395 126 88 3,609

3,177 146 56 3,379

1,929 83 2,012

1,688 84 1,772

3,809

3,569

2,125

1,870

The defined contribution plans comprise provident funds established by the Group in Thailand for its employees. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at the minimum rate as required by law not exceeding 10% of their basic salaries and the Group contributes at the minimum rate as required by law not exceeding 10% of the employeesâ&#x20AC;&#x2122; basic salaries. The provident funds are registered with the Ministry of Finance as juristic entities and are managed by a licensed Fund Manager.

25

Expenses by nature The statements of income include an analysis of expenses by function. Expenses by nature disclosed in accordance with the requirements of various TAS and TFRS were as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Included in cost of sales of goods: Changes in inventories of finished goods and work in progress Raw materials used Depreciation of property, plant and equipment Amortisation of intangible assets Included in administrative expenses: Depreciation of property, plant and equipment Amortisation of intangible assets Lease payments recognised as an operating lease expense

26

1,345 65,673

245 56,995

469 41,803

(76) 35,300

4,626 161

4,000 184

2,445 59

2,363 80

477 90

451 63

305 67

264 43

326

269

159

105

Finance costs

Note Interest paid and payable to financial institutions Capitalised as cost of assets under construction Net

11

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 2,245

2,260

2,119

2,078

(6) 2,239

(1) 2,259

2,119

2,078

236

27

Income tax expense

Note Current tax expense Current year Under / (over) provided in prior years Deferred tax expense Movements in temporary differences

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 1,337 2,151 968 1,723 24 (30) 23 (9) 1,361 2,121 991 1,714

13 27

208

164

182

Total

1,388

2,329

1,155

1,896

Reconciliation of effective tax rate

Consolidated financial statements 2010 2009 Rate (in million Rate (in million Baht) (%) Baht) (%) 12,129 9,609 30.00 3,639 30.00 2,883 (0.12) (15) (0.14) (14) 0.49 59 (21.87) (2,652) (8.11) (779) 2.94 357 2.49 239 11.44 1,388 24.24 2,329

Profit before income tax expense Income tax using the Thai corporation tax rate Income tax reduction Effect of different tax rates in foreign jurisdictions Income not subject to tax Expenses not deductible for tax purposes Total

Reconciliation of effective tax rate

Profit before income tax expense Income tax using the Thai corporation tax rate Income tax reduction Income not subject to tax Expenses not deductible for tax purposes Total

Separate financial statements 2010 2009 (in million Rate (in million Rate (%) Baht) (%) Baht) 10,160 11,018 30.00 3,048 30.00 3,305 (0.15) (15) (0.13) (14) (18.91) (1,921) (13.35) (1,471) 0.42 43 0.69 76 11.36 1,155 17.21 1,896

Income tax reduction Royal Decree No. 387 B.E. 2544 dated 5 September 2001 grants companies listed on the Stock Exchange of Thailand a reduction in the corporate income tax rate from 30% to 25% for taxable profit not exceeding Baht 300 million for the five consecutive accounting periods beginning on or after enactment. Listed companies that received income tax reduction under this Royal Decree are also eligible to continue the period of tax reduction under Royal Decree No. 475 but not beyond the 2010 accounting period ending on or after 31 December 2010. The Company has, accordingly, calculated income tax on its taxable profit for the years ended 31 December 2010 and 2009 at the corporate income tax rate as specified in the Royal Decree.

237

28

Promotional privileges By virtue of the provisions of the Industrial Investment Promotion Act of B.E. 2520, the Group/Company has been granted privileges by the Board of Investment relating to production and distribution of petrochemical product, Polyethylene plastic resin, utilities and production support facilities such as jetty and buffer tank farm services for liquid chemical and marine transportation services. The privileges granted include: (a)

exemption from payment of import duty on machinery approved by the Board;

(b)

exemption from payment of income tax for certain operations for a period of eight years from the date on which the income is first derived from such operations; and

(c)

a 50% reduction in the normal income tax rate on the net profit derived from certain operations for a period of five years, commencing from the expiry date in (b) above.

As promoted companies, the Company and its subsidiaries must comply with certain terms and conditions prescribed in the promotional certificates.

Summary of revenues from promoted and non-promoted businesses:

Promoted businesses Export sales Local sales Service income Eliminations Total Revenues

3,904 48,010

Consolidated financial statements 2010 2009 NonNonPromoted promoted promoted busibusinesses Total nesses businesses (in million Baht) 6,966 10,870 3,808 13,398 60,577 108,587 36,787 50,525 6,165 (24,535) 101,087

Total 17,206 87,312 4,409 (22,898) 86,029

Separate financial statements Promoted businesses Export sales Local sales Service income Total Revenues

755 15,214 188 16,157

2010 Nonpromoted businesses 283 41,833 166 42,282

Promoted busiTotal nesses (in million Baht) 1,038 380 57,047 18,540 354 94 58,439 19,014

2009 Nonpromoted businesses 41,011 239 41,250

Total 380 59,551 333 60,264

238

29

Earnings per share Basic earnings per share The calculations of basic earnings per share for the years ended 31 December 2010 and 2009 were based on the profit for the years attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the years as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht / million shares) Profit for the year attributable to equity holders of the Company (basic) Number of ordinary shares outstanding at 1 January Effect of shares issued during the year Weighted average number of ordinary shares outstanding (basic) Earnings per share (basic) (in Baht)

10,290

6,802

9,006

9,122

1,501.1 5.7

1,496.7 1.1

1,501.1 5.7

1,496.7 1.1

1,506.8

1,497.8

1,506.8

1,497.8

6.83

4.54

5.98

6.09

Diluted earnings per share The calculations of diluted earnings per share for the years ended 31 December 2010 and 2009 were based on the profit for the years attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the years after adjusting for the effects of all dilutive potential ordinary shares as follows: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht / million shares) Profit for the year attributable to equity holders of the Company (diluted) Weighted average number of ordinary shares outstanding (basic) Effect of shares options on issue Weighted average number of ordinary shares outstanding (diluted) Earnings per share (diluted) (in Baht)

10,290

6,802

9,006

9,122

1,506.8 4.9

1,497.8 0.4

1,506.8 4.9

1,497.8 0.4

1,511.7

1,498.2

1,511.7

1,498.2

6.81

4.54

5.96

6.09

239

30

Dividends At the Board of Directors’ Meeting held on 20 August 2010, the Board approved the appropriation of interim dividends for the performance from 1 January 2010 to 30 June 2010 of Baht 1.45 per share, which was paid to the shareholders entitled to receive dividends, totalling approximately Baht 2,187 million in September 2010.

At the Annual General Meeting of the shareholders of the Company held on 7 April 2010, the shareholders approved the appropriation of dividends of Baht 2.0 per share, of which Baht 0.60 per share was paid as an interim dividend in August 2009. The remaining dividend at the rate of Baht 1.40 per share was paid to the shareholders entitled to receive dividends, totalling approximately Baht 2,101 million in April 2010.

At the Board of Directors meeting held on 21 August 2009, the Board approved the appropriation of interim dividends of Baht 0.6 per share, amounting to Baht 898 million, from the net profit for the six-month period ended 30 June 2009. The dividend was paid to shareholders on 17 September 2009.

At the annual general meeting of the shareholders of the Company held on 8 April 2009, the shareholders approved the appropriation of dividends of Baht 4 per share, amounting to Baht 5,937 million, from the net profit of 2008 after deducting the interim dividends of Baht 3 per share, amounting to Baht 4,490 million, paid to shareholders during 2008, from the net profit for the six-month period ended 30 June 2008. The balance of dividend, amounting to Baht 1,497 million, was paid to shareholders during 2009.

31

Financial instruments Financial risk management policies The Group/Company is exposed to normal business risks from changes in market interest rates and currency exchange rates and from non-performance of contractual obligations by counterparties. The Group/Company does not hold or issue derivative financial instruments for speculative or trading purposes.

Risk management is integral to the whole business of the Group/Company. The Group/Company continually has a system of risk management process to create an acceptable and appropriate balance of risk.

Interest rate risk Interest rate risk is the risk that future movements in market interest rates will affect the results of the Group’s / Company’s operations and its cash flows because the Group’s / Company’s finances loans which have both floating and fixed interest rates, for their operations. The Group/Company mitigates this risk by ensuring that the majority of its borrowings are at fixed interest rates.

240

The effective interest rates of loans receivable as at 31 December and the periods in which the loans receivable mature or re-price were as follows: Effective interest Rate (% per annum) 2010 Current Loans receivable – Related parties Average cost of fund Non-current Loans receivable – Related parties Average cost of fund Total 2009 Current Loans receivable – Related parties Average cost of fund Non-current Loans receivable – Related parties Average cost of fund Total

Separate financial statements Within 1 After 1 year but After 5 Total year within 5 years years

(in million Baht)

13,447

-

-

13,447

5,546 18,993

20,681 20,681

-

26,227 39,674

11,277

-

-

11,277

3,313 14,590

24,365 24,365

1,662 1,662

29,340 40,617

The effective interest rates of interest-bearing liabilities at 31 December 2010 and 2009 and the periods in which those liabilities mature or re-price were disclosed in note 14.

Foreign currency risk The Group/Company is exposed to foreign currency risk relating to purchases and sales, including borrowings which are denominated in foreign currencies. The Group/Company primarily utilizes forward exchange contracts to hedge such financial assets and liabilities denominated in foreign currencies. The forward exchange contracts entered into at the balance sheet date also relate to anticipated purchases and sales, denominated in foreign currencies, for the subsequent period.

In addition, the Group and the Company uses derivative financial instruments, principally interest rate and currency swaps, to manage exposure to fluctuations in interest rates and in exchange rates on specific debt securities and borrowings.

At 31 December, the Group and the Company were exposed to foreign currency risk in respect of financial assets and liabilities denominated in the following currencies:

241

Note USD Cash and cash equivalents Trade accounts receivable Interest-bearing liabilities Trade accounts payable Retention payables Payable to contractors Other payables Gross balance sheet exposure Currency swaps Currency forwards Net exposure EUR Cash and cash equivalents Trade accounts receivable Advance payment Interest-bearing liabilities Trade accounts payable Retention payables Payable to contractors Other payables Gross balance sheet exposure Currency swaps Currency forwards Net exposure SGD Cash and cash equivalents Other investments Other payables Gross balance sheet exposure Currency swaps Currency forwards Net exposure JPY Cash and cash equivalents Trade accounts receivable Advance payment Interest-bearing liabilities Trade accounts payable Retention payables Payable to contractors Other payables Gross balance sheet exposure Currency swaps Currency forwards Net exposure

5 6 14 15

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) 145 151 1,461 1,591 101 171 (9,649) (10,620) (9,060) (10,019) (400) (630) (6) (207) (14) (73) (5) (73) (300) (190) (6) (6) (25) (145) (68) (8,782) (9,916) (8,976) (10,202) 4,108 4,574 4,108 4,574 1,613 888 (3,061) (4,454) (4,868) (5,628) 187 744 3 (835) (429) (2) (332) 40 (292)

404 628 156 (1,003) (468) (10) (1) (40) (334) 17 (317)

5 10

15 290 (7) 298 298

23 290 (7) 306 306

290 290 290

290 290 290

5 6

46 147 (110) (22) (9) (24) (28) -

37 185 4 (18) (8) (8) 192 192

(8) (24) (29) (61) (61)

4 (8) (8) (12) (12)

5 6 14 15

14 15

3 3 3

151 (35) (10) (1) (10) 95 95

242

Note MYR Cash and cash equivalents Trade accounts receivable Interest-bearing liabilities Trade accounts payable Gross balance sheet exposure Currency swaps Currency forwards Net exposure

238 45 (746) (463) (926) (926)

5 6 14 15

Note Others Cash and cash equivalents Trade accounts receivable Other investments Interest-bearing liabilities Trade accounts payable Gross balance sheet exposure Currency swaps Currency forwards Net exposure

Consolidated financial statements 2010 2009

5 6 10 14 15

283 138 (156) (430) (165) (165)

-

Consolidated Financial statements 2010 2009 85 52 34 (19) (28) 124 40 (22) 142

Separate financial statements 2010 2009

93 89 33 (15) (39) 161 56 217

-

Separate Financial statements 2010 2009 -

-

Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Group/Company as and when they fall due.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. However, the majority of the customers are on the long-term contracted commitment and parts of them are the Companyâ&#x20AC;&#x2122;s shareholders which the company has consistently collected from them. For the customers who do not have the long-term contracted commitments, the Group monitors the risk on an ongoing basis and would do the business only with the credible customers by limiting the credit lines and requesting the guarantee on some cases. For the export, the credit of counterparty will be considered and will demand a payment on a case to case basis. Management does not anticipate material losses from its debt collection.

Liquidity risk The Group/Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Groupâ&#x20AC;&#x2122;s/Companyâ&#x20AC;&#x2122;s operations and to mitigate the effects of fluctuations in cash flows.

243

Determination of Fair values A number of the Groupâ&#x20AC;&#x2122;s/Companyâ&#x20AC;&#x2122;s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an armâ&#x20AC;&#x2122;s length transaction. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

The fair value of trade and other short-term receivables is taken to approximate the carrying value.

The fair value of investments in equity securities, which are held for held-to-maturity, is determined by reference to their quoted bid price at the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only.

The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

The fair value of forward exchange contracts is based on their listed market price of forward rate for the residual maturity of the contract.

The fair value of non-derivative financial liabilities, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

Fair values of debentures, together with the carrying values shown in the balance sheets at 31 December were as follows:

2010 Current Debentures Non-current Debentures Total 2009 Current Debentures Non-current Debentures Total

Consolidated Separate financial statements financial statements Fair Carrying Fair Carrying value value value value (in million Baht) -

-

-

-

30,801 30,801

29,444 29,444

30,801 30,801

29,444 29,444

400

400

400

400

31,108 31,508

30,399 30,799

31,108 31,508

30,399 30,799

244

32

Commitments with non-related parties The Company has the following significant commitments with non-related parties: Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Capital commitments Contracted but not provided for Plant, machinery and equipment Buildings Total

827 43 870

2,595 22 2,617

575 575

1,560 18 1,578

Consolidated Separate financial statements financial statements 2010 2009 2010 2009 (in million Baht) Non-cancellable operating lease commitments Within one year After one year but within five years After five years Total

132 153 31 316

150 289 27 466

-

-

Consolidated Separate financial statements financial statements 2009 2010 2009 2010 (in million Baht) Other commitments Unused letters of credits Bank guarantees Forward contracts Swap contracts Other agreements Total

33

200 1,000 1,963 4,108 364 7,635

307 530 1,463 4,574 736 7,610

21 154 4,108 17 4,300

293 140 4,574 17 5,024

Others On 29 September 2009, following the petition no. 586/2009 (Map Ta Phut case), the Central Administrative Court ordered Government authorities as defendants to temporarily suspend 76 projects, which have not fully complied with the Section 67 chapter II of the Constitution of the Kingdom of Thailand, in Map Ta Phut Industrial Estate and vicinity areas as attached no. 7 in the petition. Subsequently, on 2 December 2009, the Supreme Administrative Court ordered, following the petition no. 592/2009, to confirm the order of the Central Administrative Court except for 11 projects. Of these 11 projects, 8 projects are projects of the Group.

245

On 22 January 2010, the Central Administrative Court ordered the temporarily suspended 65 projects, following the undecided case no. 908/2009, to coordinate with the relevant authorities to jointly consider whether the projects have complied with the conditions as ordered in the writ to continue their operations.

During 2010, the Company and companies in the Group are coordinating with the relevant authorities to acknowledge the detail of projects either temporarily suspended by order of the Court or to be allowed to resume operations as a corrected order or damage of the Court. Subsequently, on 2 September 2010, the Central Administrative Court rendered a judgment of a case under the undecided case no.908/2009. The case affected 7 projects of the Company and the companies in the Group, which are not projects under the Notification of the Ministry of Natural Resources and Environment, dated 31 August 2010 and are allowed to resume their operations. However, for the remaining 1 project, the Group currently operates complying with the Central Administrative Court’s order in such undecided case. As at 31 December 2009, the Group has already invested a total of Baht 1,627 million for the remaining 1 project.

34

Events after the reporting period On 13 January 2011, PTT Chemical International Pte. Ltd., in which the Company holds 100%, signed a share purchase agreement with Myriant Technologies, Inc., USA., which conducts business focusing on research and development of bio-based chemical products. The transaction cost was USD 60 million.

At the Board of Directors’ meeting held on 24 February 2011, the Board approved to submit for approval at the Annual General Meeting of the Shareholders, a full year 2010 dividend payment at the rate of Baht 3.07 per share, of which Baht 1.45 per share was paid as an interim dividend on 17 September 2010 as discussed in note 30. Thus, the remaining dividend will be at the rate of Baht 1.62 per share to the shareholders entitled to receive dividends, totalling approximately Baht 2,456 million. This dividend is subject to the approval of the Shareholders at the Annual General Meeting on 21 April 2011.

At the Board of Directors’ meeting held on 24 February 2011, the Board approved the almagamation between the Company and PTT Aromatics and Refining Public Company Limited and will propose this to be approved in the Shareholders' meeting on 21 April 2011.

35

Thai Financial Reporting Standards (TFRS) not yet adopted The Group/Company has not adopted the following new and revised TAS/TFRS that have been issued as of the reporting date but are not yet effective. The new and revised TAS/TFRS are anticipated to become effective for annual financial periods beginning on or after 1 January in the year indicated.

TFRS

Topic

Year effective

TAS 1 (revised 2009)

Presentation of Financial Statements

2011

TAS 2 (revised 2009)

Inventories

2011

TAS 7 (revised 2009)

Statement of Cash Flows

2011

246

TFRS TAS 8 (revised 2009)

Topic

Year effective

TAS 10 (revised 2009)

Accounting Policies, Changes in Accounting Estimates and Errors Events after the Reporting Period

2011 2011

TAS 16 (revised 2009)

Property, Plant and Equipment

2011

TAS 17 (revised 2009)

Leases

2011

TAS 18 (revised 2009)

Revenue

2011

TAS 19

Employee Benefits

2011

TAS 21 (revised 2009)

The Effects of Changes in Foreign Exchange Rates

2013

TAS 23 (revised 2009)

Borrowing Costs

2011

TAS 24 (revised 2009)

Related Party Disclosures

2011

TAS 26

Accounting and Reporting by Retirement Benefit Plans

2011

TAS 27 (revised 2009)

Consolidated and Separate Financial Statements

2011

TAS 28 (revised 2009)

Investments in Associates

2011

TAS 31 (revised 2009)

Interests in Joint Ventures

2011

TAS 33 (revised 2009)

Earnings per Share

2011

TAS 34 (revised 2009)

Interim Financial Reporting

2011

TAS 36 (revised 2009)

Impairment of Assets

2011

TAS 37 (revised 2009)

Provisions, Contingent Liabilities and Contingent Assets

2011

TAS 38 (revised 2009)

Intangible Assets

2011

TAS 40 (revised 2009)

Investment Property

2011

TFRS 2

Share-based Payment

2011

TFRS 5 (revised 2009)

Non-current Assets Held for Sale and Discontinued Operations

2011

Management expects to adopt and apply these new TFRS in accordance with the FAPâ&#x20AC;&#x2122;s announcement and has made a preliminary assessment of the potential initial impact on the consolidated and separate Companyâ&#x20AC;&#x2122;s financial statements of those new standards assessed to have the greatest potential impact on the financial statements in the period of initial application. These standards are as follows:

247

TAS 16 (revised 2009) â&#x20AC;&#x201C; Property, plant and equipment The principal changes introduced by the revised TAS 16 and affecting the Group/Company are that (i) costs of asset dismantlement, removal and restoration have to be included as asset costs and subject to annual depreciation; (ii) the depreciation charge has to be determined separately for each significant part of an asset; and (iii) in determining the depreciable amount, the residual value of an item of property, plant and equipment has to be measured at the amount estimated receivable currently for the asset if the asset were already of the age and in the condition expected at the end of its useful life. Furthermore, the residual value and useful life of an asset have to be reviewed at least at each financial year-end.

The revised TAS 16 permits as a transitional provision that these changes may be introduced prospectively from the year of introduction.

Management intends to adopt this transitional provision and accordingly the introduction of the revised TAS 16 from 1 January 2011 has no impact on the financial statements of 2010 or prior years.

TAS 19 â&#x20AC;&#x201C; Employee benefits There is currently no Thai accounting standard covering employee benefits and the Group/Company does not presently account for the costs of post-employment benefits under defined benefit plans; other long-term employee benefits; and termination benefits until such costs are incurred. The new TAS 19 includes the requirements to recognise and account for such costs in the period in which the service is performed. The requirements are complex and require actuarial assumptions to measure the obligation and expense. Moreover, the obligations are measured on a discounted basis because they may be settled many years after the employees render the related service. The transitional provisions of TAS 19 permit the transitional liability to be recognised and accounted for in one of four different ways which the Group choose to adopt transitional provision by retrospective application.

Management has determined that the transitional liability as at 1 January 2011 for post-employment benefits which resulted to increase in liability approximately Baht 602 million for the Group and Baht 487 million for the Company, respectively and decrease in retained earnings for the Group and the Company by the same amount.

248

Annual Report 2010 PTT Chemical Public Company Limited

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