Management’s Discussion and Analysis (MD&A) Thai Oil Public Company Limited For The Second Quarter and The First Half of 2019 For The Second Quarter and The First Half of 2019

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Table of Contents

Page

1. Company and its Subsidiaries’ Operating Results 2-4

2. Summary of Financial Result by Business 5

2.1 Market Condition and Financial Result of Refinery Business 6-8

2.2 Market Condition and Financial Result of Aromatics Business 9-11

2.3 Market Condition and Financial Result of an Intermediate for the Production

of Surfactants Business 11-12

2.4 Market Condition and Financial Result of Lube Base Oil Business 12-13

2.5 Financial Result of Power Generation Business 14-15

2.6 Financial Result of Solvent Manufacturing and Distribution Business 16

2.7 Financial Result of Crude, Petroleum and Petrochemical Marine Transportation

and Storage, Ship Management Service and Crew & Utility Boat Service Business 17-18

2.8 Financial Result of Ethanol Business 18

3. Analysis of Consolidated Financial Statement

3.1 Statement of Financial Position 19-20

3.2 Statement of Cash Flows 21

3.3 Financial Ratios 22

4. Industry Outlook for the Third Quarter and the Fourth Quarter of 2019 23-25

5. Appendix

5.1 Summary of Approved Investment Plan 26

5.2 Summary of Key Project Investment: Clean Fuel Project (CFP) 27

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Management’s Discussion and Analysis (MD&A) Thai Oil Public Company Limited and Subsidiaries For the Second Quarter and the First Half of 2019

1. Company and its Subsidiaries’ Operating Results

Table 1: Summary of Consolidated Financial Results

(Million Baht) Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-)

Integrated Intake (kbd) 288 324 (36) 299 (11) 306 306 - Gross Integrated Margin (GIM)(1) (US$/bbl) : excluding Stock Gain/(Loss) 4.2 5.2 (1.0) 5.9 (1.7) 4.7 7.0 (2.3) : including Stock Gain/(Loss) 4.0 7.9 (3.9) 10.9 (6.9) 6.1 9.7 (3.6)

(Million Baht) Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-)

Sales Revenue(2) 91,962 91,626 336 96,637 (4,675) 183,588 188,172 (4,584) Net Derivative Gain/(Loss) on Hedging Instruments 90 (166) 256 70 20 (76) 172 (248) EBITDA 2,072 6,889 (4,817) 9,337 (7,265) 8,961 16,696 (7,735)

Net Foreign Exchange Gain/(Loss)(3) 594 652 (58) (1,159) 1,753 1,246 312 934

Finance Costs (1,196) (1,215) 19 (1,270) 74 (2,410) (2,020) (390)

Income Tax Expense (116) (1,000) 884 (1,081) 965 (1,116) (2,290) 1,174

Net Profit 567 4,408 (3,841) 4,795 (4,228) 4,975 10,403 (5,428)

Basic Earnings per Share (Baht) 0.28 2.16 (1.88) 2.35 (2.07) 2.44 5.10 (2.66)

Stock Gain/(Loss) (138) 2,473 (2,611) 4,345 (4,483) 2,335 4,727 (2,392) (A Reversal of) Write-Down to NRV on Petroleum Inventory (4) (749) 1,314 (2,063) 110 (859) 565 - 565

Net Profit excluding Stock Gain/(Loss) and (a Reversal of) Write-Down to NRV on Petroleum Inventory (5) 1,454 622 832 340 1,114 2,076 5,676 (3,600)

Exchange Rate (Baht: 1 US$) Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-)

Average FX 31.76 31.79 (0.03) 32.12 (0.36) 31.78 31.91 (0.13)

Ending FX 30.92 31.98 (1.06) 33.33 (2.41) 30.92 33.33 (2.41) Remark (1) Gross integrated margin is the integrated gross margin among Thaioil refinery, Thai Paraxylene Co., Ltd., LABIX Co., Ltd. and Thai Lube Base Plc.

(2) The comparative figures have been adjusted due to reclassification.

(3) Including net foreign exchange gain on foreign currency assets and liabilities in Q2/19, Q1/19, 6M/19 and 6M/18 of Baht 339 million, Baht 334 million, Baht 673

million and Baht 517 million, respectively; while including net foreign exchange loss on foreign currency assets and liabilities in Q2/18 of Baht 653 million.

(4) In Q2/19, the write-down to NRV on petroleum inventory was recorded at Baht 749 million (consisted of crude NRV of Baht 72 million and product NRV of Baht

677 million), in Q1/19, Q2/18, 6M/19, the reversal of write-down to NRV on petroleum inventory were recorded at Baht 1,314 million (consisted of crude NRV of

Baht 769 million and product NRV of Baht 545 million), Baht 110 million (which was wholly crude NRV) and Baht 565 million (consisted of the reversal of write-

down crude NRV of Baht 697 million and the product NRV of Baht 132 million), respectively.

(5) Excluding pre-tax stock gain/ (loss) and pre-tax write-down to NRV on petroleum inventory/ (a reversal of write-down to NRV on petroleum inventory) which are

included in cost of sales of goods and services in the financial statements.

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Compared Q2/19 with Q1/19, Thaioil and Subsidiaries had planned major turnarounds of Crude Distillation Unit – 3 (CDU-3), and other

subunits as well as Aromatics Complex since mid-June. This caused decreases in both integrated intake and product sales volume

from previous quarter. Meanwhile, GIM excluding stock gain/ (loss) of 4.2 US$/bbl, reduced by 1.0 US$/bbl, was recorded due to

increasing production cost tracking average crude oil price and crude premium. In addition, gas oil and jet/kero spreads weakened from

warmer-than-normal winter in Europe while fuel oil spread declined due to softer bunker demand after New Year and Chinese New

Year. However, gasoline spread improved from firm U.S. driving demand in summer and rising gasoline demand in the Middle East

before Ramadan. For aromatics market, aromatics spreads declined due to rising supply after a startup of a new aromatics plant in

China, particularly PX spread. Meanwhile, BZ spread was still pressured by persistent excessive supply in the market which was owing

to higher production than demand. LAB market, on the other hand, was supported by firm summer demand as well as maintenance

shutdowns of LAB plants in the region, especially those in China and India. Unfortunately, lube base oil market was pressured by

decreased demand due to sluggish world economy from the US-China trade war. Nevertheless, bitumen market improved thanks to

better demand in the region before rainy season and lower supply following refinery maintenances in Asia. However, a decrease in

closing crude oil price from previous quarter caused Thaioil and Subsidiaries to have a stock loss of 0.2 US$/bbl and GIM including

stock gain/ (loss) of 4.0 US$/bbl, decreased by 3.9 US$/bbl from Q1/19. Furthermore, Thaioil and Subsidiaries recorded severance

expense of Baht 384 million due to the recognition of provision for employee benefits in accordance with the new Labour Protection

Act, which stipulated additional compensation rates for employees who have worked for 20 years or more to have the right to receive

compensation not less than the final 400-day wages from the original of 300 days. Including net derivative gain on hedging instruments

of Baht 90 million and planned major turnaround expenses of CDU-3, and other subunits as well as Aromatics Complex of Baht 352

million in this quarter, Thaioil and Subsidiaries posted EBITDA of Baht 2,072 million, decreased by Baht 4,817 million. In addition,

Thaioil and Subsidiaries had net foreign exchange gain of Baht 594 million (which included net foreign exchange gain on foreign

currency assets and liabilities of Baht 339 million), decreased by Baht 58 million as a result of an appreciation in Thai Baht against US

Dollar, compared with the end of past quarter. During the period, finance costs of Baht 1,196 million were booked, a slight decrease

from Q1/19. Offsetting with depreciation and income tax expense, Thaioil and Subsidiaries recorded net profit of Baht 567 million or

Baht 0.28 per share in Q1/19, reduced by Baht 3,841 million from Q1/19.

Compared Q2/19 with Q2/18, Thaioil and Subsidiaries had sales revenue of Baht 91,962 million, decreased by Baht 4,675 million due

to planned major turnarounds since mid-June and decreases in product selling prices. GIM excluding stock gain/ (loss) declined by 1.7

US$/bbl from lower GRM from decreased petroleum product spreads, particularly gasoline, jet/kero and gas oil spreads which

substantially dropped due to surplus supply. Moreover, BZ spread over ULG95 considerably declined due to persistent surplus supply

and softened demand from China and the U.S. Additionally, base oil spread over fuel oil weakened owing to lower demand. Therefore,

Thaioil and Subsidiaries posted a drop in GIM including stock gain/ (loss) of 6.9 US$/bbl and a decrease in EBITDA of Baht 7,265

million. Moreover, Thaioil and Subsidiaries had increasing net foreign exchange gain of Baht 1,753 million compared with net foreign

exchange loss of Baht 1,159 million in Q2/18. Offsetting with depreciation, finance costs, and income tax expense, Thaioil and

Subsidiaries recorded decreased net profit by Baht 4,228 million from Q2/18.

Compared 6M/19 with 6M/18, Thaioil and Subsidiaries had sales revenue decreased by Baht 4,584 million due to decreased average

product selling prices tracking crude oil price. However, declines in petroleum product spreads over Dubai, BZ spread over ULG95 and

base oil spread over fuel oil from the same period of previous year caused Thaioil and Subsidiaries to have GIM excluding stock gain/

(loss) declined by 2.3 US$/bbl to 4.7 US$/bbl. Besides, in 6M/19, there was stock gain of Baht 2,335 million, dipped by Baht 2,392

million from 6M/18. Including planned major turnaround expenses, Thaioil and Subsidiaries posted EBITDA of Baht 8,961 million,

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plunged by Baht 7,735 million which included net derivative loss on hedging instruments of Baht 76 million. However, Thaioil and

Subsidiaries had net foreign exchange gain increased by Baht 934 million owing to Thai Baht appreciation while finance costs

increased by Baht 390 million because, since late Q4/18, Thaioil Treasury Center Company Limited (TTC) had issued Senior

Unsecured Notes to foreign institutional investors with the total amount of USD 1,000 million in order to prepare financial readiness to

support an investment in Clean Fuel Project (CFP). Offsetting with depreciation and income tax expense, Thaioil and Subsidiaries

recorded net profit of Baht 4,975 million in 6M/19, fallen by Baht 5,428 million.

On 10 January 2019, the Annual General Meeting of Shareholders approved the disposal of assets to transfer the ownership in the

Energy Recovery Unit (ERU) which was a part of the CFP and the execution of the relevant agreements, including the asset sale and

purchase agreement, fuel and utilities supply agreement, power purchase agreement, operation and maintenance services agreement

and land sub-lease agreement as well as the novation agreement and any other agreements necessary for and in connection with the

disposal of assets to transfer the ownership in the ERU and the execution of the Relevant Agreements (the ERU Project) with Global

Power Synergy Public Company Limited (GPSC) or a wholly owned subsidiary of GPSC. The ERU Project has significant aims to

reduce investment costs of the CFP, enhance liquidity and efficiently support future investment; furthermore, the transaction will boost

the return on investment of the CFP.

Additionally, on 31 May 2019, the Board of Directors’ meeting of TOP Solvent Company Limited (TS), an indirect subsidiary in which

was wholly-owned by Thaioil Solvent Company Limited (TOS), in which the Company holds 100% shares, resolved to approve an

acquisition of the investment in PT.Tirta Surya Raya (TSR), a company that supplied and distributed chemicals and solvents in

Indonesia with working experience with TS for a long time and with products which were consistent with TS's business, for the amount

of up to USD 1.5 million, or approximately Baht 47.7 million. In addition, this acquisition was a business expansion of Thaioil and

Subsidiaries to strengthen the business structure of distributing solvents in foreign countries. Moreover, this transaction was a

company’s strategy in response to the current market trend with an aim to improve business competitiveness.

On 25 June 2019, the Board of Directors’ meeting of TTC (100% owned by the Company) resolved to establish TOP Ventures

Company Limited and TOP Ventures Hong Kong Limited for Corporate Venture Capital (CVC) transactions for the purposes of

investing venture capital (VC) fund and/or startup business. The objective of this establishment was to expand into business which

Thaioil and Subsidiaries had expertise in and new business in order to support business changes. TOP Ventures Company Limited and

TOP Ventures Hong Kong Limited were 100% owned by TTC with the registered share capital of Baht 35 million and HKD 1,

respectively.

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2. Summary of Financial Result by Business

Table 2: Financial Result by Business (Million Baht)

Sales Revenue Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-) Consolidated(1) 91,962 91,626 336 96,637 (4,675) 183,588 188,172 (4,584) Refinery(1) 94,544 95,086 (542) 100,669 (6,125) 189,630 195,120 (5,490) Aromatics and LAB(2) 13,498 14,448 (950) 15,584 (2,086) 27,947 31,414 (3,467) Lube Base Oil 4,827 4,704 123 5,026 (199) 9,531 10,011 (480) Power Generation(3) 2,969 2,971 (2) 2,880 89 5,940 5,580 360 Solvent(4) 2,175 2,259 (84) 2,524 (349) 4,435 4,791 (356) Marine Transportation(5) 156 170 (14) 159 (3) 326 313 13 Ethanol(6) 362 377 (15) 379 (17) 739 744 (5) Others(7) 1,002 921 81 416 586 1,923 615 1,308

EBITDA Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-) Consolidated 2,072 6,889 (4,817) 9,337 (7,265) 8,961 16,696 (7,735) Refinery 252 4,452 (4,200) 7,086 (6,834) 4,705 11,615 (6,910) Aromatics and LAB 612 1,566 (954) 939 (327) 2,178 2,320 (142) Lube Base Oil 436 96 340 463 (27) 533 1,017 (484) Power Generation 637 575 62 678 (41) 1,213 1,342 (129) Solvent 87 149 (62) 148 (61) 237 277 (40) Marine Transportation 10 37 (27) 22 (12) 47 52 (5) Ethanol 39 37 2 16 23 77 83 (6) Others 40 32 8 14 26 72 21 51

Net Profit / (Loss) Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-) Consolidated(8) 567 4,408 (3,841) 4,795 (4,228) 4,975 10,403 (5,428) Refinery (441) 2,968 (3,409) 3,374 (3,815) 2,527 7,122 (4,595) Aromatics and LAB 40 774 (734) 196 (156) 814 946 (132) Lube Base Oil 322 56 266 360 (38) 378 776 (398) Power Generation (9) 572 482 90 608 (36) 1,054 1,200 (146) Solvent (4) 44 (48) 83 (87) 41 121 (80) Marine Transportation (70) (2) (68) 6 (76) (72) 23 (95)

Ethanol (17) 16 (33) (19) 2 (1) 7 (8) Others (10) 53 54 (1) 27 26 108 39 69

Remark (1) The comparative figures have been adjusted due to reclassification. (2)Thai Paraxylene Co., Ltd. invested 75% of total investment in LABIX Co., Ltd. which produces an intermediate for the production of surfactants (LAB).

(3) Thaioil Plc. shares 73.99% in Thaioil Power Co., Ltd., and shares 99.99% in TOP SPP Co., Ltd. for small power plants (SPPs) business. (4) Including Thaioil Solvent Co., Ltd., having respective interests in TOP Solvent Co., Ltd., Sak Chaisidhi Co., Ltd. and TOP Solvent (Vietnam) LLC. (5) Including Thaioil Marine Co., Ltd., having respective interests in Thaioil Marine International Pte. Ltd., TOP Maritime Service Co., Ltd., TOP-NTL Pte. Ltd., TOP-

NTL Shipping Trust, TOP Nautical Star Co., Ltd., TOP-NYK MarineOne Pte. Ltd., and T.I.M. Ship Management Co., Ltd. (6) Including Thaioil Ethanol Co., Ltd., having respective interests in Sapthip Co., Ltd., Ubon Bio Ethanol Co., Ltd. and Maesod Clean Energy Co., Ltd. in which

investment was disposed in February 2017. (7) Including Thaioil Energy Services Co., Ltd. (TOP holds 99.99% shares) which provides human resources management service and Thaioil Treasury Center Co.,

Ltd (TOP holds 99.99% shares) which conducts the business in the area of International Business Center (IBC) and Treasury Center (TC) for Thaioil and Subsidiaries.

(8) Including dividends received from Thai Petroleum Pipeline Co., Ltd. of Baht 160 million for Q2/19 and 6M/19 and Baht 154 million for Q2/18 and 6M/18 (9) Including Thaioil and Subsidiaries’ share of profits from the investments in Global Power Synergy Public Company Limited (GPSC).

(10) Including net profit / (loss) from Thaioil Energy Services Co., Ltd. and Thaioil Treasury Center Co., Ltd. and shares of profits from the investments in PTT Digital Solutions Co., Ltd. and PTT Energy Solutions Co., Ltd.

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2.1 Market Condition and Financial Result of Refinery Business

Table 3: Average Crude Oil Price, Petroleum Product Prices and Crack Spreads

Average Prices (US$/bbl) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Dubai Crude Oil 67.4 63.5 3.9 72.1 (4.7) 65.4 68.0 (2.6)

Unleaded Gasoline (ULG95) 74.9 67.2 7.7 84.2 (9.3) 71.1 80.9 (9.8)

Jet/Kero 79.6 76.5 3.1 87.3 (7.7) 78.0 83.7 (5.7)

Gas Oil (GO) 79.7 76.3 3.4 86.7 (7.0) 78.0 82.7 (4.7)

Fuel Oil (HSFO) 65.1 64.1 1.0 67.7 (2.6) 64.6 63.3 1.3

Spreads over Dubai (US$/bbl) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Unleaded Gasoline (ULG95) 7.5 3.7 3.8 12.1 (4.6) 5.6 12.9 (7.3)

Jet/Kero 12.2 13.0 (0.8) 15.3 (3.1) 12.6 15.7 (3.1)

Gas Oil (GO) 12.4 12.8 (0.4) 14.6 (2.2) 12.6 14.7 (2.1)

Fuel Oil (HSFO) (2.3) 0.6 (2.9) (4.4) 2.1 (0.9) (4.7) 3.8

Remark Closing Dubai crude oil at the end of Q2/19, Q1/19, and Q2/18 were calculated from average Dubai price of June 2019, March 2019, and June 2018, respectively.

The prices were 61.8 US$/bbl, 66.9 US$/bbl, and 73.6 US$/bbl, respectively.

Graph 1: Prices of Crude Oil and Petroleum Product

Crude oil price in Q2/19 rose from Q1/19 as it was supported by

supply reduction thanks to OPEC and non-OPEC supply cut

following an agreement to reduce output by 1.2 million barrels

per day. In June 2019, crude oil production of Saudi Arabia, the

largest OPEC producer, decreased to 9.8 million barrels per day

which was less than the agreed level at 10.31 million barrels per

day. Moreover, Venezuelan crude oil export in Q2/19 decreased

by 0.2 million barrels per day, compoared with Q1/19, which was

resulted from the U.S. sanction. Iranian crude oil export also

dropped by 0.7 million barrels per day, compared with Q1/19,

after the U.S. had ended sanction exemptions of Iranian crude oil export to 8 countries since 2 May 2019. In addition, unrests in the

Middle East near the Strait of Hormuz which is strategic location of crude oil export from the Middle East to other regions, for example;

assaulting oil tankers and the US drone shooting, resulted in concerns over crude oil supply. However, the price in Q2/19 fell from

Q2/18 because it was pressured by sluggish demand following US-China trade war. In June 2019, the U.S. Energy Information

Administration (EIA) revised down the global oil demand forecast to 1.2 million barrels per day, compared with 1.4 million barrels per

day in May 2019. Besides, crude oil market was still under pressure from continuous rising U.S. crude oil supply which, in June 2019,

maintained its production at 12.2 million barrels per day.

Gasoline spread over Dubai in Q2/19 increased from Q1/19 thanks to U.S. driving demand during summer and higher demand from the

Middle East before Ramadan. Additionally, global gasoline inventory reduced to below 5 years average level. However, the spread in

Q2/19 dropped from Q2/18 after two major Chinese refineries had started their operation which resulted in higher gasoline supply. Gas

oil and jet/kero spreads over Dubai in Q2/19 reduced from prior quarter and the same period last year as their inventories in Europe

maintained at high level due to warmer-than-normal winter which led to lower gas oil and jet/kero export from Asia to Europe and

caused excess supply in the region. Moreover, gas oil and jet/kero demand for heating oil decreased as summer approached from the

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mid-quarter. Meanwhile, fuel oil spread over Dubai in Q2/19 decreased from Q1/19 due to soft bunker demand after New Year and

Chinese New Year. On the other hand, the spread rose from Q2/18 thanks to the US sanction on Venezuela which caused reductions

in heavy crude supply and fuel oil.

Table 4: Financial Result of Refinery Business

Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Throughput(1) (%) 103% 116% (13%) 108% (5%) 109% 110% (1%)

Intake (kbd) 283 319 (36) 296 (13) 301 303 (2) Gross Refining Margin (GRM) (US$/bbl) : excluding Stock Gain/(Loss) : including Stock Gain/(Loss)

2.6 2.4

3.0 5.7

(0.4) (3.3)

4.0 9.0

(1.4) (6.6)

2.8 4.1

4.9 7.6

(2.1) (3.5)

Remark (1) Throughput (%) calculated based on 275,000 barrels per day

In Q2/19, Thaioil refinery had the planned major turnaround of Crude Distillation Unit - 3 (CDU-3)

and other related production units since mid-June 2019 which led to refinery throughput at 103%,

plunged by 13%, and had lower total product sales volume by 6% from Q1/19. The refinery had

petroleum product sales proportion of 88% for domestic, 10% for Indochina and the rest 2% for

export. It reported sales revenue of Baht 94,544 million, dipped by Baht 542 million, and posted

GRM excluding stock gain/(loss) of 2.6 US$/bbl, reduced by 0.4 US$/bbl from last quarter. This was

mainly due to 1) higher production costs following average crude oil price and crude premium

together with 2) lower jet/kero, gas oil and fuel oil spreads. Nonetheless, a reduction in closing

crude oil price at the end of Q2/19 from the end of previous quarter led Thaioil refinery to record

stock loss of 0.2 US$/bbl or Baht 138 million, compared with stock gain of Baht 2,473 million in

Q1/19. It also had a write-down to NRV on petroleum inventory of Baht 749 million, which mostly

came from a write-down to NRV on petroleum inventory of finished products, compared with a

reversal of write-down to NRV on petroleum inventory of Baht 1,314 million in Q1/19. Besides,

Thaioil refinery recorded higher expenses by Baht 305 million owing to the provision for employee

benefits according to the new Labor Protection Act. Combining with net derivative gain on hedging

instruments of Baht 36 million and planned major turnaround expenses of Baht 280 million, the

refinery then reported EBITDA of Baht 252 million, plunged by Baht 4,200 million from Q1/19.

Moreover, the refinery had net foreign exchange gain of Baht 600 million (which included net foreign

exchange gain on foreign currency assets and liabilities of Baht 341 million), decreased by Baht 60

million from prior quarter. Offsetting with depreciation and finance costs and including a reversal of

income tax expense, Thaioil refinery reported net loss of Baht 441 million (including dividend

income, it had net profit of Baht 819 million), compared with net profit of Baht 2,968 million in

Q1/19.

Comparing with Q2/18, Thaioil refinery had a 5% decrease in throughput and had a reduction in

sales revenue of Baht 6,125 million owing to lower total product sales volume by 2% and lower

average selling prices. It also booked GRM excluding stock gain/(loss) dropped by 1.4 US$/bbl

mainly because of decreasing petroleum product spreads. Morover, the refinery had stock loss and

the write-down to NRV on petroleum inventory while recording stock gain and the reversal of the

In Q2/19, the refinery had a

considerable drop in

throughput due to its

planned major turnaround

and had decreased GRM

excluding stock gain/(loss)

owing to higher crude cost.

In addition, it booked stock

loss and major turnaround

costs. Thaioil refinery then

had lower EBITDA than

Q1/19 and recorded net

loss.

For 6M/19, the refinery

posted dramatically declined

GRM excluding stock

gain/(loss) while having

lower stock gain and higher

finance costs. This resulted

in less EBITDA and net

profit than 6M/18.

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write-down to NRV on petroleum inventory in Q2/18. This led Thaioil refinery to post EBITDA

reduced by Baht 6,834 million, which included lower net derivative gain on hedging instruments by

Baht 41 million. Nevertheless, the refinery had net foreign exchange gain of Baht 600 million,

compared with net foreign exchange loss of Baht 1,159 million. Offsetting with depreciation and

finance costs and including the reversal of income tax expense, Thaioil refinery realized net profit

reduced by Baht 3,815 million from Q2/18.

To compare 6M/19 with 6M/18, Thaioil refinery had a slight decrease in throughput and had sales

revenue of Baht 189,630 million, dropped by Baht 5,490 million following lower average selling

prices. The refinery reported GRM excluding stock gain/(loss) of 2.8 US$/bbl, significantly dropped

by 2.1 US$/bbl, mainly because of reductions in petroleum product spreads, especially gasoline

spread which dramatically fell due to surplus supply, despite a significant decline in crude premium

following increased light crude supply. However, Thaioil refinery had stock gain of 1.3 US$/bbl or

Baht 2,335 million, less than 6M/18 by Baht 2,392 million. Moreover, it booked net derivative loss on

hedging instruments of Baht 21 million compared with net derivative gain on hedging instruments of

Baht 188 million in the same period last year. This brought the refinery to record EBITDA of Baht

4,705 million, decreased by Baht 6,910 million. Besides, Thaioil refinery had net foreign exchange

gain of Baht 1,260 million, increased by Baht 1,048 million, and had finance costs rose by Baht 352

million which was because of higher long-term borrowings from TTC in order to prepare financial

readiness to support an investment in Clean Fuel Project. Offsetting with depreciation and income

tax expense, Thaioil refiney reported net profit of Baht 2,527 million, reduced by Baht 4,595 million

from 6M/18 (including dividend income in 6M/19, it had net profit of Baht 4,397 million).

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2.2 Market Condition and Financial Result of Aromatics Business

Table 5: Average Prices and Spreads of Aromatics Products Average Prices (US$/Ton) Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-)

Paraxylene (PX)(1) 909 1,080 (171) 984 (75) 995 974 21

Benzene (BZ)(2) 625 590 35 842 (217) 607 866 (259)

Toluene (TL)(2) 649 612 37 754 (105) 631 736 (105)

Spreads over ULG95 (US$/Ton) Q2/19 Q1/19 +/(-)

Q2/18 +/(-) 6M/19 6M/18 +/(-)

Paraxylene (PX) 273 508 (235) 268 5 391 286 105

Benzene (BZ) (12) 18 (30) 126 (138) 3 179 (176)

Toluene (TL) 13 41 (28) 38 (25) 27 48 (21) Remark (1) Based on CFR Taiwan price

(2) Based on FOB Korea price

Graph 2: Prices of Aromatics Products and ULG95

In Q2/19, PX price weakened from Q1/19 and Q2/18 due

to a concern over surplus supply from a startup of the

first production unit of a new aromatics plant in China

with PX capacity of 2.25 million tons per annum and a

trial run of the second production unit with the same

capacity in May 2019 which was earlier than expected (it

was expected to start in the second half of 2019).

Although there were a number of maintenance

shutdowns of PX plants, PTA plants, whose feedstocks

were PX, were also under maintenance shutdowns. PX

spread over ULG95 in Q2/19 softened from Q1/19 but slightly higher than Q2/18. This was pressured by increasing supply from the

startup of new aromatics plant as mentioned above. Moreover, a surge in crude oil price from tighter supply after the U.S. sanction

against Iran and Venezuela led to a rise in ULG95 pressuring PX spread over ULG95.

In Q2/19, BZ price improved from Q1/19 tracking a recovery of crude oil price but was lower than Q2/18 due to lower crude oil price. In

addition, the price was pressured by excess supply from the startup of the first production unit of a new aromatics plant in China with

BZ capacity of 0.65 million tons per annum and the trial run of the second production unit with the same capacity. Moreover, excessive

BZ supply was persistent from more BZ production than demand after aromatics producers had ramped up their PX production in order

to capture gains from a healthy PX price since late 2018. Meanwhile, BZ import demand in China remained weak owing to high

Chinese BZ inventory at above 3-year-average level by 1.5 times. Additionally, demand in the U.S. was still softened due to a number

of maintenance shutdowns of styrene monomer plants. As a result, BZ spread over ULG95 in Q2/19 was weakened from Q1/19 and

Q2/18.

TL price in Q2/19 increased from Q1/19 tracking recovering crude oil price but it was lower than Q2/18 due to lower crude oil price. TL

spread over ULG95 in Q2/19 declined from Q1/19 and Q2/18, despite improving gasoline spread over Dubai in Q2/19. This was

because TL demand for PX and BZ production was sluggish as some aromatics plants in Asia and the U.S. were temporary shutdowns

as they could not achieve break even points.

0

200

400

600

800

1,000

1,200

1,400

ULG95 PX CFR BZ FOB TOL FOB

Q1/18 Q2 Q3 Q4 Q1/19 Q2

US$/Ton

10

Table 6: Financial Result of TPX

Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Aromatics Production Rate (1) (%) 64% 92% (28%) 84% (20%) 78% 87% (9%)

Aromatics Production (kTon) 134 189 (55) 177 (43) 323 362 (39)

Product-to-feed Margin(2) (US$/Ton) 75 143 (68) 87 (12) 113 99 14 Remark (1) Based on a nameplate capacity of 838,000 Tons/year (527,000 tons of paraxylene per year, 259,000 tons of benzene per year and 52,000 tons of mixed xylene

per year) (2) Calculated from gross margin divided by feedstock volume (Ton)

In Q2/19, Thai Paraxylene Co., Ltd. (TPX) had a 64% aromatics production rate owing to the

planned major turnaround of its Aromatics Complex from mid-June 2019 to late July 2019. This

resulted in sales revenue of Baht 9,163 million, fallen by Baht 1,056 million from Q1/19. Moreover,

an increase in aromatics supply after the new Chinese aromatics plant started up, led to declines in

aromatics product spreads over ULG95, particularly PX spread which dropped by 235 US$/Ton.

This resulted in product-to-feed margin of 75 US$/Ton, decreased by 68 US$/Ton. However, TPX

had net derivative gain on hedging instruments from PX spread over ULG95 of Baht 55 million,

compared with net derivative loss on hedging instruments of Baht 109 million in Q1/19.

Furthermore, there were planned major maintenance expenses of Baht 72 million. Thus, TPX

recorded EBITDA of Baht 442 million, decreased by Baht 980 million. Offsetting with depreciation,

finance costs and income tax expense, TPX posted net profit of Baht 79 million, declined by Baht

760 million from Q1/19.

Compared Q2/19 with Q2/18, TPX had sales revenue dipped by Baht 1,956 million or 18% due to a

decrease in sales volume following the planned major turnaround. Moreover, drops in aromatics

prices tracking crude oil price and a rise in supply from the new producer as well as a decrease in

BZ demand due to high inventory in China and styrene monomer plant shutdowns in the U.S.

pressured BZ spread over ULG95 to decline by 138 US$/Ton. This resulted in a decline in product-

to-feed margin of 12 US$/Ton. Therefore, in Q2/19, TPX posted EBITDA and net profit decreased

by Baht 318 million and Baht 279 million, respectively.

Compared 6M/19 with 6M/18, TPX had sales revenue of Baht 19,382 million, decreased by Baht

3,298 million or 15% mainly because of lower sales volume following the planned major turnaround.

Furthermore, TPX had product-to-feed margin of 113 US$/Ton, increased by 14 US$/Ton thanks to

rising PX spread over ULG95 of 105 US$/Ton from firmer demand and tighter supply than expected

during Q1/19. However, net derivative loss on hedging instruments from PX spread over ULG95 of

Baht 55 million caused TPX to have EBITDA of Baht 1,864 million, dropped by Baht 61 million.

Additionally, TPX had net foreign exchange loss of Baht 5 million compared with net foreign

exchange gain of Baht 74 million in 6M/18. Offsetting with depreciation, finance costs and income

tax expense, TPX reported net profit of Baht 917 million, reduced by Baht 75 million from 6M/18.

In Q2/19, aromatics group (TPX holds 75% shares of LABIX) had consolidated sales revenue of

Baht 13,498 million, consolidated EBITDA of Baht 612 million and consolidated net profit of Baht 40

In Q2/19, TPX had planned

major turnaround of its

Aromatics Complex.

Meanwhile, PX spread over

ULG95 substantially

decreased owing to a

surplus supply from the

startup of new aromatics

plant in China. Together

with planned maintenance

shutdown expenses, TPX

reported reductions in

product-to-feed margin and

net profit from Q1/19.

In 6M/19, TPX had slightly

dropped performance from

6M/18 due to the planned

major turnaround while PX

spreads over ULG95 rose

from firmer demand and

tighter supply than expected

in Q1/19. This resulted in

product-to-feed margin to

increase.

11

million. For 6M/19, aromatics group had consolidated sales revenue of Baht 27,947 million,

consolidated EBITDA of Baht 2,178 million and consolidated net profit of Baht 814 million.

2.3 Market Condition and Financial Result of an Intermediate for the Production of Surfactants Business Table 7: Average Price of LAB

Average Price (US$/Ton) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Linear Alkylbenzene (LAB)(1) 1,253 1,212 41 1,331 (78) 1,233 1,309 (76) Remark (1) Based on ICIS price

Graph 3: Price of LAB

LAB price in Q2/19 slightly increased from Q1/18 following

higher feedstock prices tracking crude oil price. Moreover, the

LAB price in Q2/19 was supported by improved demand

during summer and higher number of LAB plants having

maintenance shutdowns particulary in China and India.

However, the market was pressured by sluggish Indian

demand during general election from April to May and

Ramadan during May.

Compared with Q2/18, LAB price in Q2/19 went down

following lower feedstock prices, especially BZ, tracking crude

oil price. Nevertheless, larger number of regional LAB plants having maintenance shutdowns compared with the same period of prior

year supported the LAB price to decline marginally.

Table 8: LAB Production

Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

LAB Production Rate(1) (%) 112% 114% (2%) 102% 10% 113% 103% 10%

LAB Production (kTon) 34 34 - 31 3 67 61 6

Remark (1) Based on nameplate capacity of 120,000 Tons/year

Q2/19, LABIX Co., Ltd. (LABIX) had sales revenue of Baht 4,554 million, increased from Q1/19 by

Baht 124 million. This was due to a rise in LAB price following feedstock prices even though LAB

sales volume dropped by approximately 6% tracking softened Indian demand in Q2/19. Together

with a reduction in selling expenses following lower sales volume, LABIX had a growth in EBITDA of

Baht 26 million to Baht 170 million. Offsetting with depreciation and finance costs, LABIX reported

net loss of Baht 52 million which narrowed from Baht 86 million in Q1/19.

Compared with Q2/19, LABIX reported a reduction in sales revenue of Baht 190 million following a

decline in LAB price tracking feedstock prices, especially BZ price, and a slight decrease in LAB

sales volume. This resulted in LABIX to have a dip in EBITDA of Baht 9 million. Including net

foreign exchange gain of Baht 8 million, compared with net foreign exchange loss of Baht 171

million in Q2/18, and offsetting with depreciation and finance costs, in Q2/19, LABIX recorded net

In Q2/19, LABIX had better

sales revenue than previous

quarter thanks to an

increase in LAB price

tracking feedstock prices. In

addition, a drop in selling

expenses resulted in greater

EBITDA and narrower net

loss than prior quarter.

12

loss of Baht 52 million, compared with net loss of Baht 215 million in the same period of previous

year.

Compared 6M/19 with 6M/18, LABIX had sales revenue of Baht 8,984 million, reduced by Baht 325

million following a decline in LAB price tracking feedstock prices, especially BZ price. Moreover,

narrower gross profit margin due to higher cost from greater beginning inventory cost led LABIX to

have a decrease in EBITDA of Baht 80 million to Baht 314 million. Offsetting with depreciation and

finance costs, LABIX had net loss of Baht 138 million, compared with net loss of Baht 62 million in

6M/18.

2.4 Market Condition and Financial Result of Lube Base Oil Business

Table 9: Average Prices and Spreads of Key Lube Base Oil Products

Average Prices (US$/Ton) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

500SN(1) 700 737 (37) 911 (211) 718 899 (181)

Bitumen(2) 409 367 42 363 46 388 341 47

Spreads over HSFO (US$/Ton) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

500SN 287 330 (43) 481 (194) 308 497 (189)

Bitumen (4) (40) 36 (67) 63 (22) (61) 39 Remark (1) Based on Ex-tank Singapore price

(2) Based on FOB Singapore price

Graph 4: Prices of Lube Base Oil (500SN), Bitumen and Fuel Oil

Lube base oil price (500SN) and its spread over fuel oil in

Q2/19 was weakened from Q1/19 and Q2/18 due to a

continuous drop of demand as a result of sluggish world

economy from the prolonged US-China trade war.

Additionally, there was a new lube base plant producing

lube base oil Group II and III in China with total capacity of

0.60 million tons per annum. However, many lube base oil

Group I plants in Asia had annual maintenance shutdowns,

such as those in Indonesia and Japan whose total

capacities of 0.44 and 0.32 million tons per annum,

respectively. Moreover, a lube base oil plant in India with

total capacity of 0.48 million tons per annum had production outages.

Bitumen price and its spread over fuel oil in Q2/19 improved from Q1/19 and Q2/18 as they were supported by rising regional demand

from expediated road construction and repair before rainy season. Furthermore, Indonesia general election ended in April 2019 helped

to increase paving demand. Moreover, the market was supported by lower supply as a consequence of the maintenance shutdowns of

several refineries in Asia during Q2/19. This resulted in partly missing bitumen supply in the market.

0

200

400

600

800

1,000HSFO 500SN BitumenUS$/Ton

Q1/18 Q2 Q3 Q4 Q1/19 Q2

Compared 6M/19 with

6M/18, LABIX had greater

net loss mainly owing to

lower gross profit margin.

13

Table 10: Financial Result of TLB

Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Base Oil Production Rate(1) (%) 85% 89% (4%) 89% (4%) 87% 89% (2%)

Base Oil Production (kTon) 57 59 (2) 59 (2) 115 118 (3)

Product-to-feed Margin(2) (US$/Ton) 94 59 35 97 (3) 77 101 (24) Remark (1) Based on nameplate capacity of 267,015 Tons/year (2) Calculated from gross margin divided by feedstock volume (Ton)

Compared Q2/19 with Q1/19, Thai Lube Base Plc. (TLB) had base oil production rate of 85%. There

was sales revenue of Baht 4,827 million, increased by Baht 123 million because of better average

product selling prices. Moreover, bitumen spread over fuel oil improved thanks to greater base oil

demand in the region from accelerating road construction and repair before rainy season.

Furthermore, supply in the market was lower as a consequence of the maintenance shutdowns of

several base oil plants in Asia. These led TLB to report product-to-feed margin of 94 US$/Ton,

added by 35 US$/Ton from the previous quarter and to record EBITDA of Baht 436 million, added

by Baht 340 million. Offsetting with depreciation and income tax expense, TLB posted net profit of

Baht 322 million, increased by Baht 266 million from last quarter.

Compared with Q2/18, TLB had lower base oil production rate by 4%. Moreover, sales revenue

dropped by Baht 199 million due to both lower base oil prices and total product sales volume.

Furthermore, lube base oil spread over fuel oil considerably decreased by 194 US$/Ton as it was

pressured by higher lube base oil supply from Group II and III while bitumen spread over fuel oil

was better. Therefore, TLB posted declined product-to-feed margin of 3 US$/Ton and had dropped

EBITDA and net profit by Baht 27 million and Baht 38 million, respectively from the same period of

previous year.

Compared 6M/19 with 6M/18, TLB had sales revenue of Baht 9,531 million, dropped by Baht 480

million mainly because of both lower product selling prices and total product sales volume. In

addition, TLB had product-to-feed margin of 77 US$/Ton, decreased by 24 US$/Ton due to

weakened base oil spread over fuel oil as there was additional supply from a new lube base oil

Group II and III plant in China. However, bitumen spread over fuel oil was higher as a result of

higher road paving demand from Indonesia general election during Q2/19 and lower supply from the

maintenance shutdowns of several refineries in Asia. Therefore, TLB had EBITDA of Baht 533

million, dropped by Baht 484 million. Offsetting with depreciation and income tax expense, TLB

posted net profit of Baht 378 million, reduced by Baht 398 million from the same period of previous

year.

Compared Q2/19 with

Q1/19, TLB had increases in

sales revenue and product-

to-feed margin from wider

bitumen spread over fuel oil.

This resulted in higher

EBITDA and net profit than

last quarter.

Compared 6M/19 with

6M/18, TLB had lowered

performance owing to both

lower sales volume and

base oil spread over fuel oil.

14

2.5 Financial Result of Power Generation Business

Table 11: Sales Volume from Power Generation Business

TP + TOP SPP (1) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Electricity Dispatched (GWh) 634 606 28 643 (9) 1,240 1,265 (25)

Steam Exported (kton) 1,012 1,043 (31) 1,087 (75) 2,055 2,128 (73) Remark (1) 100% of electricity dispatched and steam exported

In Q2/19, compared with Q1/19, Thaioil Power Co., Ltd. (TP) had sales revenue of Baht 1,088

million, lower by Baht 83 million following drops in electricity dispatched and steam exported due to

the major turnarounds of Thaioil and Subsidiaries. As a result, TP had EBITDA of Baht 160 million,

a Baht 38 million decrease. Offsetting with depreciation, finance costs and income tax expense, TP

recorded net profit, excluding share of profit from the investment in Global Power Synergy Public

Co., Ltd. (GPSC), of Baht 62 million declined by Baht 59 million from the last quarter. TOP SPP

Co., Ltd. (TOP SPP) earned Baht 1,881 million in sales revenue, increased from previous quarter by

Baht 81 million according to increased electricity dispatched and steam exported from a resumption

to normal operation after a planned maintenance shutdown in previous quarter. As a result, TOP

SPP reported EBITDA of Baht 478 million, higher by Baht 101 million. Offsetting with depreciation,

finance costs and income tax expense, TOP SPP recorded net profit of Baht 263 million, improved

by Baht 99 million. Besides, Thaioil and Subsidiaries recognized, without non-controlling interest,

share of profit from the investment in GPSC of Baht 263 million, which increased by 34 million from

prior quarter.

Compared Q2/19 with Q2/18, TP reported higher sales revenue by Baht 16 million because of rises

in average selling prices of electricity and steam following higher natural gas price allthough the

volume of sales decreased as a result of the major turnarounds of Thaioil and Subsidiairies.

However, the increase in natural gas price (main feedstock) caused TP to report lower EBITDA by

Baht 38 million. Offsetting with depreciation, finance costs and income tax expense, TP posted

lower net profit, excluding share of profit from the investment in GPSC, of Baht 28 million from the

same period of previous year. For TOP SPP, sales revenue boosted by Baht 73 million because of

rises in average selling prices of electricity and steam following higher natural gas price.

Nevertheless, the hike in natural gas price (main feedstock) and a rise in maintenance cost resulted

in TOP SPP to have lower EBITDA by Baht 2 million. Offsetting with depreciation, finance costs and

income tax expense, TOP SPP recorded lower net profit by Baht 23 million than the same period of

last year.

Comparing 6M/19 with 6M/18, TP reported sales revenue of Baht 2,258 million, an increase of Baht

195 million. This was because of rises in average selling prices of electricity and steam following

larger natural gas price and higher electricity dispatched. However, the increase in natural gas price

(main feedstock) led TP to report EBITDA of Baht 358 million, or a dip of Baht 11 million. Offsetting

with depreciation, finance costs and income tax expense, TP reported net profit, excluding share of

profit from the investment in GPSC, of Baht 183 million, which was similar to the same period of

In Q2/19, TP had lower

sales revenue following a

decrease in sales volume

from the major turnarounds

of Thaioil and Subsidiaries.

Thus, TP reported lower net

profit. TOP SPP posted

higher sales revenue from

higher electricity dispatched

and steam exported from a

resumption to normal

operation after a planned

maintenance shutdown in

previous quarter. Therefore,

TOP SPP recorded

increased net profit.

Comparing 6M/19 with

6M/18, TP and TOP SPP

reported increased sales

revenue from higher

average electricity and

steam selling prices.

However, a rise in natural

gas pricea (main feedstock)

resulted in TP and TOP

SPP to have lower net profit.

15

previous year. TOP SPP had sales revenue of Baht 3,681 million, surged by Baht 164 million

thanks to higher average selling prices of electricity and steam following a higher natural gas price

although TOP SPP had the planned maintenance shutdown in Q1/19 causing decreases in

electricity dispatched and steam exported. However, hikes in natural gas price (main feedstock) and

maintenance cost caused TOP SPP to report EBITDA of Baht 854 million, a decrease of Baht 119

million. Offsetting with depreciation, finance costs and income tax expense, TOP SPP posted net

profit of Baht 427 million, a Baht 158 million decreased.

16

2.6 Financial Result of Solvent Manufacturing and Distribution Business

Table 12: Financial Result of Thaioil Solvent

Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Solvent Utilization Rate (1) (%) 110% 123% (13%) 114% (4%) 117% 116% 1%

Solvent Production(1) (kTon) 39 44 (5) 40 (1) 82 82 -

Solvent Sales Volume (kTon) 85 90 (5) 88 (3) 174 169 5 Remark (1) Produced solvent by Sak Chaisidhi Co., Ltd. (TOP Solvent Co., Ltd. holds 80.52% shares)

In Q2/19, compared with Q1/19, Thaioil Solvent (Solvent Manufacturing and Distribution Business)

had a 110% solvent utilization rate reduced by 13%. In addition, solvent sales volume decreased by

approximately 5,000 tons from Q1/19 mainly because buyers delayed their purchases after crude oil

price weakened within the quarter. This led Thaioil Solvent to record sales revenue of Baht 2,175

million, reduced by Baht 84 million. Thaioil Solvent also reported EBITDA of Baht 87 million,

decreased by Baht 62 million from previous quarter. This was due to a reversal of inventory write-

down to NRV of Baht 21 million in Q1/19. Moreover, Thaioil Solvent recorded severance expense of

Baht 7 million due to recognition of provision for employee benefits in accordance with the new

Labour Protection Act. In addition, Thaioil Solvent had net foreign exchange loss of Baht 13 million in

Q2/19. Offsetting with depreciation of Baht 50 million, finance costs of Baht 22 million, income tax

expense of Baht 5 million, and non-controlling interests of Baht 2 million, Thaioil Solvent posted net

loss of Baht 4 million in Q1/19, compared with net profit of Baht 44 million in prior quarter.

Compared Q2/19 with Q2/18, Thaioil Solvent had solvent utilization rate reduced by 4% and solvent

sales volume dropped by approximately 3,000 tons mainly due to slow buying demand following a

decline in crude oil price within the quarter and high level of solvent supply in the market. Together

with a reduction in average solvent selling price per unit tracking crude oil price, Thaioil Solvent

posted sales revenue reduced by Baht 349 million. Moreover, higher competition led to squeezed

gross profit margin. Then, Thaioil Solvent posted a drop in EBITDA of Baht 61 million. Besides,

Thaioil Solvent had lower net foreign exchange loss by Baht 2 million than Q2/18. Offsetting with

depreciation, finance costs, income tax expense, and non-controlling interests, Thaioil Solvent, in

Q2/19, then recorded net loss of Baht 4 million compared with net profit of Baht 83 million from the

same period of last year.

In 6M/19, compared with 6M/18, Thaioil Solvent had a 117% solvent utilization rate and solvent sales

volume increased by approximately 5,000 tons. However, lower average solvent selling price per unit

tracking crude oil price led Thaioil Solvent to record sales revenue of Baht 4,435 million, decreased by

Baht 356 million. Besides, Thaoil solvent had lower gross profit margin owing to an increase in supply

of some product groups compared with 6M/18. Therefore, Thaioil Solvent had EBITDA of Baht 237

million, reduced by Baht 40 million. However, Thaioil Solvent had net foreign exchange loss of Baht

27 million compared with net foreign exchange gain of Baht 14 million in 6M/18. Offsetting with

depreciation, finance costs and income tax expense, Thaioil Solvent posted net profit of Baht 41

million, dipped by Baht 80 million from the same period of previous year.

In Q2/19, compared with

Q1/19, Thaioil Solvent had a

decline in sales revenue

following a drop in sales

volume tracking weakened

demand from downward

trend of feedstock prices

within the quarter.

Moreover, a drop in gross

profit margin resulted in a

decline in EBITDA. Thus,

Thaioil Solvent reported net

loss compared with net

profit in previous quarter.

Comparing 6M/19 with

6M/18, Thaioil Solvent had

dips in average solvent unit

selling price and gross profit

margin owing to softened

crude oil price and an

increase in supply. This led

to reduced sales revenue,

EBITDA and net profit from

the same period of last year.

17

2.7 Financial Result of Crude, Petroleum and Petrochemical Marine Transportation and Storage, Ship Management

Service and Crew & Utility Boat Service Business

Table 13: Utilization Rate of TM

Utilization Rate (%) Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-) Petroleum & Petrochemical Product Vessel : TM (1)

85% 95% (10%) 97% (12%) 90% 96% (6%)

Crude Vessel: TOP-NYK 100% 100% - 100% - 100% 100% -

Crew and Utility Boat: TMS 60% 51%(2) 9% 67% (7%) 56% 60% (4%) Remark (1) In 2019, TM has 5 vessels, including Phubai Nadda 1 which has provided transportation service since January 2019. (2) Retrospective adjustment of utilization rate (%)

In Q2/19, compared with Q1/19, Thaioil Marine Co., Ltd. (TM) reported services revenue, including

revenues from TMS (TM holds 100% shares) (3), of Baht 156 million, decreased by Baht 14 million

from the last quarter because of dry-docking of some TM fleets resulting in a decrease in utilization

rate. Together with the recognition of the cost estimate on the new Labor Protection Act, TM

reported EBITDA of Baht 10 million, a decrease of Baht 27 million from prior period. In Q2/19, TM

had share of profit from the investment in TOP-NYK MarineOne Pte. Ltd. (TOP-NYK) of Baht 12

million, an increase of Baht 1 million, and it had shares of profits totaling Baht 21 million from the

investments in TOP-NTL Pte. Ltd. (TOP-NTL), TOP-NTL Shipping Trust, TOP Nautical Star Co.,

Ltd. (TOP Nautical Star), and T.I.M. Ship Management (TIM), increased by Baht 3 million which

mainly came from an unrealized net foreign exchange gain from US$-denominated borrowings.

However, TMS recognized loss from non-current asset held for sales of Baht 44 million. Offsetting

with depreciation, finance costs, and income tax expense, TM posted consolidated net loss of Baht

70 million compared with consolidated net loss of Baht 2 million in Q1/19.

Compared Q2/19 with Q2/18, TM services revenue went down by Baht 3 million mainly due to a

decrease in TM fleets utilization rate. Moreover, higher services cost and vessel operating expenses

led TM to have lower EBITDA by Baht 12 million from Q2/18. Furthermore, TM had share of profit

from the investment in TOP-NYK decreased by Baht 5 million and had shares of profits from the

investments in TOP-NTL, TOP-NTL Shipping Trust, TOP Nautical Star, and TIM increased by Baht

18 million. However, in Q2/19, TMS recognized loss from non-current asset held for sales.

Offsetting with depreciation, finance costs, and income tax expense, TM recorded consolidated net

loss of Baht 70 million, compared with consolidated net profit of Baht 6 million in the same period of

previous year.

Comparing 6M/19 with 6M/18, TM booked services revenue of Baht 326 million, a rise of Baht 13

million owing to TM had the acquisition of 1 additional vessel which started operating since January

2019. However, higher services cost and vessel operating expenses, therefore, TM reported lower

EBITDA of Baht 5 million to Baht 47 million. TM booked lower share of profit by Baht 12 million from

TOP-NYK while reported larger shares of profits from the investments in TOP-NTL, TOP-NTL

Shipping Trust, TOP Nautical Star, and TIM by Baht 11 million combined with, in Q2/19, TMS

recognized loss from asset reclassification. Offsetting with depreciation, finance costs, and income

In Q2/19, TM had lower

revenue than Q1/19 mainly

because of a decline in

utilization rate. Moreover,

higher services cost and

vessel operating expenses

and TMS loss from non-

current asset held for sales

led TM to post higher

consolidated net loss.

Comparing 6M/19 with

6M/18, TM booked larger

services revenue. However,

increases in services cost

and vessel operating

expenses and TMS loss

from non-current assets

held for sales resulted in TM

to record higher

consolidated net loss.

18

tax expense, TM recorded consolidated net loss of Baht 72 million compared with consolidated net

profit of Baht 23 million in the same period of previous year.

Remark (3) Thaioil Marine Co., Ltd. acquired shares in TOP Maritime Service Co., Ltd (TMS). The transaction consisted of

purchasing 45% registered shares at Baht 1 and loan repayment of Baht 81 million which TMS borrowed from the seller. The

transaction was completed on 21 June 2018.

2.8 Financial Result of Ethanol Business

Table 14: Utilization Rate of TET

Q2/19 Q1/19 +/(-) Q2/18 +/(-) 6M/19 6M/18 +/(-)

Ethanol Utilization Rate (%)

- Sapthip 106% 97% 9% 73% 33% 101% 80% 21%

- Ubon Bio Ethanol 56% 97% (41%) 65% (9%) 76% 87% (11%)

In Q2/19, TET had consolidated sales revenue from Sapthip Co., Ltd. (TET holds 50% shares) of

Baht 362 million, dropped by Baht 15 million from Q1/19 mainly due to a reduction in average

ethanol selling price. However, TET posted higher gross profit margin due to a decrease in

feedstock cost from lower chips price than previous quarter. As a result, TET had EBITDA of Baht

39 million, increased by Baht 2 million from Q1/19. Moreover, in Q2/19, TET had share of loss of

Baht 15 million from the investment in Ubon Bio Ethanol Plc., (UBE) compared with the share of

profit of Baht 18 million in Q1/19. This was because of decreases in both ethanol selling price and

sales volume, together with a maintenance shutdown. As a result, TET posted net loss of Baht 17

million in Q2/19, compared with net profit of Baht 16 million from previous quarter.

In comparison with Q2/18, TET had consolidated sales revenue from Sapthip Co., Ltd., dipped by

Baht 17 million due to lower ethanol selling price and sales volume. However, TET had higher gross

profit margin from low maintenance expense due to no maintenance shutdown, compared with

Q2/18. Therefore, TET had EBITDA of Baht 16 million, increased by Baht 23 million. Furthermore,

in Q2/19, TET had share of loss from the investment in UBE of Baht 15 million, compared with

share of loss of Baht 7 million in the same period of prior year. Taken as a whole, TET reported net

loss of Baht 17 million, compared with net loss of Baht 19 million in Q2/18.

For 6M/19, TET had consolidated sales revenue of Baht 739 million and EBITDA of Baht 77 million,

reduced by Baht 5 and 6 million from 6M/18, respectively, by the reason of lower average ethanol

selling price and sales volume which were pressured by molasses-based ethanol producers who

had low feedstock cost. Furthermore, TET also had share of profit of Baht 3 million from the

investment in UBE dropped by Baht 4 million from 6M/18. Therefore, TET posted net loss of Baht 1

million, compared with net profit of Baht 7 million from the same period of previous year.

In Q2/19, TET reported a

decrease in sales revenue

from Q1/19. However, TET

reported higher EBITDA

from lower feedstock cost.

Additionally, TET had share

of loss from the investment

in an associate. As a result,

TET had net loss of Baht 17

million, compared with net

profit from previous quarter.

For 6M/19, TET reported net

loss of Baht 1 million,

compared with net profit of

Baht 7 million in 6M/18,

mainly due to reductions in

both average ethanol selling

price and sales volume.

19

3. Analysis of Consolidated Financial Statement

3.1 Statement of Financial Position

The financial position of Thaioil and Subsidiaries as of 30 June 2019 compared with 31 December 2018 was summarized as follows:

Table 15: Condensed Consolidated Statements of Financial Position

(Million Baht) 30 June

2019 31 December

2018 +/(-) +/(-) %

Assets

Cash, cash equivalents and short-term investments(1) 94,178 107,262 (13,084) (12.2%)

Other current assets 52,769 57,481 (4,712) (8.2%)

Non-current assets 109,506 103,869 5,637 5.4%

Total assets 256,453 268,613 (12,160) (4.5%)

Liabilities

Current liabilities 28,584 33,471 (4,887) (14.6%)

Long-term borrowings and debentures (including current portion) 97,740 104,668 (6,928) (6.6%)

Other non-current liabilities 4,975 4,001 974 24.3%

Total liabilities 131,299 142,141 (10,842) (7.6%)

Equity

Equity attributable to owners of the company 121,153 121,712 (559) (0.5%)

Non-controlling interests 4,001 4,760 (759) (15.9%)

Total equity 125,154 126,472 (1,318) (1.0%)

Total liabilities and equity 256,453 268,613 (12,160) (4.5%) Remark (1) Including deposits at a financial institution used as collateral as of 30 June 2019 and 31 December 2018 of Baht 320 million and Baht 300 million, respectively.

Total Assets

As of 30 June 2019, Thaioil and Subsidiaries had total assets of Baht 256,453 million, decreased by Baht 12,160 million or 4.5% from

31 December 2018 due to the following main reasons:

- Cash, cash equivalents and short-term investments dipped by Baht 13,084 million mainly because of redemption of due

Baht-denominated debenture, finance costs paid, dividends paid, and investments in several projects as planned.

- Other current assets declined by Baht 4,712 million primarily due to a drop in trade accounts receivable of Baht 5,654

million following lower sales volume. However, inventories rose by Baht 1,919 million following higher crude oil price while

inventory levels declined from planned major turnarounds since mid-June 2019.

- Non-current assets climbed by Baht 5,637 million because property, plant, and equipment had a net increase of Baht

9,062 million mainly from several project investments executed as planned while investments in associates dipped by Baht

3,583 million mainly due to deficit from the change in the net assets in an associate.

Total Liabilities

As of 30 June 2019, Thaioil and Subsidiaries had total liabilities of Baht 131,299 million, went down by Baht 10,842 million or 7.6%

from 31 December 2018 due to

20

- Current liabilities reduced by Baht 4,887 million primarily due to a dip in trade accounts payable of Baht 4,578 million from

lower crude purchasing volume owing to planned major turnarounds since mid-June 2019.

- Long-term borrowings and debentures (including current portions) decreased by Baht 6,928 million mainly because:

: Thaioil refinery repaid its due Baht-denominated debenture of Baht 3,000 million in March 2019. Moreover, Thaioil

refinery’s US$-denominated debentures dropped by Baht 648 million owing to an appreciation in Thai Baht from the

end of 2018.

: TTC’s US$-denominated debentures reduced by Baht 2,703 million due to an appreciation in Thai Baht from the end of

2018.

: LABIX (shares indirectly held by TPX) repaid its due Baht-denominated borrowings of Baht 268 million.

: TOP SPP repaid its due Baht-denominated borrowings of Baht 139 million.

Table 16: Consolidated Long-term Borrowings

(Million Baht) Thaioil LABIX TOP SPP TS TM TET TTC Total

Debentures : US$-denominated(1) 11,861 - - - - - 49,354 61,216

: Baht-denominated 20,500 - - - - - - 20,500 Borrowings : Baht-denominated - 5,322 8,070 696 1,534 60 - 15,681 : Other currencies- denominated(1)

- - - 343 - - - 343

As of 30 June 2019 32,361 5,322 8,070 1,039 1,534 60 49,354 97,740

As of 31 December 2018 36,009 5,590 8,209 1,123 1,609 72 52,057 104,668

+ / (-) (3,648) (268) (139) (84) (75) (12) (2,703) (6,928) Remark (1) Including foreign exchange gain/loss from foreign currency-denominated liabilities revaluation

Total Equity

As of 30 June 2019, Thaioil and Subsidiaries had total equity of Baht 125,154 million, decreased by Baht 1,318 million or 1.0% from 31

December 2018. This resulted from total comprehensive income for 6M/19 of Baht 5,017 million, deducted by dividends paid from

Thaioil and Subsidiaries of Baht 2,513 million and deficit from the change in the net assets in an associate of Baht 3,823 million.

21

3.2 Statement of Cash Flows

As of 30 June 2019, Thaioil and Subsidiaries had cash and cash equivalents of Baht 57,338 million and deposits at a financial

institution used as collateral of Baht 320 million while Thaioil refinery had cash and cash equivalents of Baht 54,336 million. In addition,

Thaioil and Subsidiaries and Thaioil refinery had short-term investments of Baht 36,520 million and Baht 36,520 million, respectively.

Cash flows are detailed as presented below:

Table 17: Condensed Statement of Cash Flows

(Million Baht) Consolidated Separated

Net cash provided by operating activities 8,647 5,404

Net cash provided by investing activities 26,266 29,279 Net cash used in financing activities (9,097) (8,012)

Net increase in cash and cash equivalents 25,816 26,672

Effect of exchange rate changes (2,219) (2,204) Cash and cash equivalents at the beginning of period 33,741(1) 29,868

Cash and cash equivalents at the end of period 57,338(1) 54,336 Remark (1) Excluding deposits at a financial institution used as collateral as of 30 June 2019 and 31 December 2018 of Baht 320 million and Baht 300 million,

respectively.

Thaioil and Subsidiaries had cash flows provided by operating activities of Baht 8,647 million from net profit for 6M/19. In addition,

Thaioil and Subsidiaries had cash flows provided by investing activities of Baht 26,266 million as a consequence of net disposal of

short-term investments of Baht 36,259 million. However, there were purchases of property, plant and equipment of Baht 10,377 million

which Thaioil refinery spent Baht 9,129 million in main projects such as Thaioil Sriracha Building project, TOP Crude Oil Tank project,

Jetty Expansion project, and the Clean Fuel Project. The rest of Baht 1,248 million was used by subsidiaries for various purposes such

as the purchase of absorbent for aromatics production units which was scheduled for a maintenance shutdown from mid-June to end of

July 2019.

However, cash flows used in financing activities were Baht 9,097 million. These were mainly attributable to the redemption of debenture

of Baht 3,000 million, dividends paid of Baht 2,513 million, and finance costs paid of Baht 2,482 million.

According to the mentioned cash flows activities, Thaioil and Subsidiaries reported cash and cash equivalents increased by Baht

25,816 million from 31 December 2018. Furthermore, Thaioil and Subsidiaries recorded loss on effect of exchange rate changes of

Baht 2,219 million. Hence, Thaioil and Subsidiaries had cash and cash equivalents of Baht 57,338 million as of 30 June 2019. Including

deposits at a financial institution used as collateral and short-term investments of Baht 320 million and Baht 36,520 million, respectively,

Thaioil and Subsidiaries had cash, cash equivalents, and short-term investments of Baht 94,178 million.

22

3.3 Financial Ratios

Table 18: Financial Ratios (Consolidated) for Q2/19

Profitability Ratios Q2/19 Q1/19 +/(-)

Q2/18 +/(-)

Quality of earnings ratio (%) 2% 8% (6%) 10% (8%)

Gross profit margin ratio (%) 2% 8% (6%) 10% (8%)

Net profit margin ratio (%) 1% 5% (4%) 5% (4%)

Liquidity Ratios Q2/19 Q1/19 +/(-)

Q2/18 +/(-)

Current ratio (times) 4.9 4.4 0.5 3.7 1.2

Quick ratio (times) 3.8 3.3 0.5 2.6 1.2

Financial Policy Ratios Q2/19 Q1/19 +/(-)

Q2/18 +/(-)

Total liability/ Total equity (times) 1.0 1.1 (0.1) 0.9 0.1

Net debt/ Equity (times) - - - - -

Long-term loan/ Total equity (times) 0.8 0.8 - 0.6 0.2

Interest coverage ratio (times) 1.7 5.7 (4.0) 7.4 (5.7)

Long-term loan/ Total capitalization (%) 44% 43% 1% 36% 8%

Financial Ratios Calculation

Quality of Earnings ratio (%) = EBITDA / Sales Revenue

Gross Profit Margin ratio (%) = Gross Profit / Sales Revenue

Net Profit Margin ratio (%) = Net Profit for the period / Total Revenue

Current ratio (times) = Current Assets / Current Liabilities

Quick ratio (times) = (Cash and Cash equivalent + Current investments + Accounts Receivable) / Current Liabilities

Total Liabilities / Total Equity (times) = Total Liabilities / Total Equity

Net Debt/ Equity (times) = Net Debt / Total Equity

Long term loan/ Total Equity (times) = Long Term Loan / Total Equity

Long term loan = Long-term borrowings from financial institutions + Debentures (includes current portion)

Interest Coverage ratio (times) = EBITDA/ Interest Expenses (Finance costs)(1)

Long term loan/ Total Capitalization (%) = Long Term Loan / Total Capitalization

Total Capitalization = Long Term Loan + Total Equity

Net Debt = Interest bearing debt - Cash and cash equivalent - Current investments Remark (1) Including finance costs that Thaioil Treasury Center Co., Ltd. paid to bondholders.

23

4. Industry Outlook for the Third Quarter and the Forth Quarter of 2019

Crude Oil and Refinery Market Outlook

In Q3/19, crude oil market is expected to be lower than Q2/19 due to lower oil demand growth after being affected by the prolonged

trade war between China and the U.S., causing the global economy to slow down i.e. the Chinese economic number in Q2/19 grew 6.2

percent, the lowest growth in 27 years. Moreover, continually rising U.S. crude supply could pressure the oil market. However, the oil

market still have some supportive factors from an expansion of OPEC’s and Non-OPEC’s crude production cut agreement of 1.2 million

barrels per day until March 2020 as well as lower crude oil export from Iran and Venezuala due to the U.S. sanction.

In Q4/19, crude oil prices are likely to increase from improving finished oil products demand in the winter. Moreover, OPEC crude

supply is expected to be lower due to the continually cut crude production according to its production cut agreement to balance global

crude oil market. However, rising U.S. crude oil supply; which U.S.’s Energy Information Administration (EIA) forecasted that its crude

oil production will be at 12.9 million barrels per day in Q4/19 increased from the 12.6 million barrels per day in Q3/19, wil l cap the

upside of the market. Furthermore, crude oil supply could be rising from a commercial operation of Permian pipelines in the U.S.

(Source: IEA Oil Monthly Report and EIA Short-term Energy Outlook, July 2019)

Gross Refinery Margin (GRM) in Q3/19 is expected to be better than Q2/19 due to improved gasoline spread over Dubai supported by

lower supply from a permanent closure of Philadelphia refinery, which its gasoline production is approximately 0.15 million barrels per

day. In addition, gasoline demand is expected to remain high during U.S. driving season. Moreover, gas oil and jet/kero spreads over

Dubai are expected to rise due to lower supply as Asian refineries reduced their refinery production after facing low refining margin in

the first half of 2019. Furthermore, gas oil demand for agriculture in India will not be decreased much during rainy season this year due

to lower rainfall this year compared to the general monsoon season. For fuel oil spread over Dubai, although, it is rising in the early of

the quarter from summer demand in the Middle East and lower western inflow, it is likely to be weak toward the end of the quarter

pressured by lower bunker oil demand as shipowners are likely to prepare themselves ready for the International Marinetime

Organization’s (IMO’s) regulation; which is to control sulfur emission from bunkers by reducing sulfur content in marine fuel oil to 0.5%

starting from 1 January 2020 onwards.

In Q4/19, GRM is forecasted to be supported by rising gas oil demand in a shipping sector according to the new IMO’s regulation in

2020 as well as increasing jet/kero demand during travelling season. However, GRM will be pressured by lower gasoline spread over

Dubai due to higher gasoline supply after new large refineries in China began to run at full capacity. Besides, fuel oil spread over Dubai

is likely to be weak due to lower bunker oil demand from the new IMO’s regulation impact. (Source: Energy Aspects Oil Fundamentals

and S&P Global Platts Asia-Pacific Oil Market Forecast, July 2019)

Aromatics Market Outlook

In Q3/19, paraxylene (PX) market is expected to be weaker than Q2/19 pressured by rising supply from new aromatics plants addition

in China and Brunei with PX production capacity of 2.25 million tons per annum and 1.50 million tons per annum, respectively, as well

as increasing supply from aromatics plants’ resumption from maintenance. Moreover, PX demand is likely to be sluggish after summer

end. (Source: WM Chemicals, June 2019 and PRISM, July 2019)

In Q4/19, PX market is expected to be stable to slightly recover from Q3/19, though the new supply additions will continue to pressure

the market. However, the market is still supported by polyester demand in winter as well as PTA demand from a new PTA plant

24

addition in China with production capacity of 2.3 million tons per year which is expected to be operated by the end of this year.

(Source: WM Chemicals, June 2019 and PRISM, July 2019)

For benzene (BZ) market in Q3/19, it is likely to be recovered from Q2/19 due to easing oversupply situation. Some producers has

been reduced their operating rates due to uneconomical operation after facing weak margin condition. Moreover, BZ demand is likely to

be improved as seasonal demand for styrene monomer production; one of BZ’s downstream product. However, the market will be

under pressure from the new supply additons in China and Brunei with production capacity of 0.79 million tons per year and 0.55

million tons per year, respectively.

In Q4/19, BZ market is expected to remain stable from Q3/19 supported by seasonal demand for styrene monomer production in the

beginning of the quarter. Including BZ demand for a new styrene monomer plant in China with production capacity of 1.2 million tons

per year expected to be started its operation by the end of the year. However, rising BZ supply from the new aromatics plants addition

in the second half of the year will pressure the market. (Source: WM Chemicals, June 2019, IHS Spring 2019 and PRISM, June 2019)

For toluene (TL) market in Q3/19, it is likely to remain stable from Q2/19 due to weak TL demand for xylene and BZ production from

some uneconomical aromatics production units. However, the market is likely to be supported by TL demand for gasoline blending

during U.S. driving season.

In Q4/19, TL market is likely to be weaker than Q3/19 as lower TL demand for gasoline blending from slowing down gasoline market in

the end of U.S. driving season. (Source: WM Chemicals, June 2019 and PRISM, July 2019)

LAB Market Outlook

In Q3/19, LAB market is expected to be weaker than Q2/19 pressured by sluggish demand of washing products during monsoon

season in India and South East Asia. Moreover, the market will also be pressured by lower regional LAB plants’ maintainance

shutdown in Q3/19 compared to Q2/19. However, LAB market is still expected to be supported by a closure of LAB plant in Japan

which has a production capacity of 90,000 tons per year since the end of May 2019.

In Q4/19, LAB market is expected to improve compared to Q3/19 driven by rising demand in the region after the monsoon season end.

However, LAB market will be pressured by decreasing regional plants’ maintenance shutdowns, especially in China, compared to

Q2/19. (Source: ICIS LAB Weekly Report, July 2019)

Lube Base Oil Market Outlook

In Q3/19, lube base oil market is expected to be weaker than Q2/19 pressured by softer lube base oil demand in rainy season.

Moreover, the market will be under pressure from rising supply of new lube base oil group II which has been operated since the first

half of the year and is going to be operated in Q3/19 in Singapore with production capacity of 0.1 million tons per year. Including, the

resumption of lube base oil plants’ maintenance in Q2/19 will further pressure the market. (Source: ICIS Base Oil Weekly Report, July

2019 and Argus Base Oil Weekly Report, July 2019)

In Q4/19, lube base oil market is expected to be slightly recovered from Q3/19 supported by decling fuel oil price; a reference price of

lube base oil group I’s feedstock, from IMO impact limiting the downside of lube base oil product spread. Moreover, reducing price

competition of lube base oil group II from higher gas oil price; a reference price of lube base oil group II’s feedstock, from IMO impact

will help support the demand of lube base oil group I. However, oversupply situation will pressure overall lube base oil market. (Source:

ICIS Base Oil Weekly Report, July 2019 and Argus Base Oil Weekly Report, July 2019)

25

Bitumen Market Outlook

In Q3/19, bitumen market is expected to be weaker than Q2/19 pressured by weak Asian demand for road construction during rainy

season. Eventhough, Indonesian bitumen import demand will be higher due to more road contruction activities during the end of

Ramadan and approaching to summer. (Source: Argus Bitumen Weekly Report, July 2019)

In Q4/19, bitumen market is expected to be softer than Q3/19 due to rising supply from many producers switching back their production

to bitumen yield instead of fuel oil yield when the fuel oil market is likely to be weak from IMO impact. However, bitumen demand is

likely to be improved from many road construction activities after rainy season and ahead of the year-end. (Source: Argus Bitumen

Weekly Report, July 2019)

26

5. Appendix

5.1 Summary of Approved Investment Plan

Thaioil and Subsidiaries has investment plan which has been approved by Board of Directors as of 30 June 2019 as summarized;

27

5.2 Summary of Key Project Investment: Clean Fuel Project (CFP)

The purpose of CFP project is to enhance the competitiveness of the Company by improving its production efficiency to increase the

product value by making it more environmentally-friendly, and to increase its oil refining capacity to allow the refineries to handle more

types and greater quantities of crude oils, which create an economies of scale and a reduction of raw material costs. Moreover, the

project also enhance the country’s long-term energy stability and economic development, with the investment project value of

approximately US$ 4,825 million. The CFP has been approved by the Company’s Extraordinary General Meeting of Shareholders on

27 August 2018. The CFP construction is expected to be completed in Q1/23 according to the CFP timeline as summarized below:

However, on 10 April 2019, the 2019 Annual General Meeting of Shareholders resolved to approve the disposal of assets to transfer

ownership in the Energy Recovery Unit (ERU) which is a part of the CFP and the execution of the Relevant Agreements including the

asset sale and purchase agreement, fuel and utilities supply agreement, power purchase agreement, operation and maintenance

services agreement and land sub-lease agreement as well as the novation agreement with Global Power Synergy Public Company

Limited (GPSC) or wholly owned subsidiary of GPSC (ERU Project). The ERU Project has significant aims to reduce investment costs

of the CFP, enhance liquidity and efficiently support future investment; furthermore, the transaction will boost the return on investment

of the CFP while the Company can continue to manage and oversee the implementation of the CFP and ERU during the construction

phase and the operation phase in respect of the safety, reliability and plant optimization of the projects as originally planned.