ANNUAL REPORT 2014 - listed companyesso.listedcompany.com/misc/ar/20150403-esso-ar2014-en.pdfMESSAGE...

ANNUALREPORT

2014ESSO (THAILAND) PUBLIC COMPANY LIMITED

OPERATIONAL EXCELLENCE

• EmployaHighStandardofEthicsandBusiness Controls

• ReceivedExxonMobilGlobalStandardof ExcellenceAward

REFINERY

• ImplementedEnergyefficiencyandMargin enhancements

10.9 million work hours without a lost time incident

1.5% Energy Intensity Index Improvement

24 New service stations

280 Mobil 1 Centers

RETAIL• Expandedservicestationnetworkandpremium productoffering

MOBIL 1• Celebrated40thanniversaryofMobil1& IncreasedfootprintofMobil1centers

MessagefromtheChairmanGeneralInformationOurBusinessFinancialHighlightsOurPerformanceManagement’sDiscussionandAnalysisCorporateSocialResponsibility ShareholdingandManagementStructure

468

1214202430

CONTENT

SUSTAINABLE &RESILIENT GROWTH

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CorporateGovernanceRiskManagementInternalControlsReportoftheAuditCommitteeRelatedPartyTransactionsBoardofDirectorsandExecutiveOfficersStatementofDirectors’ResponsibilitiesforFinancialReportingAuditor’sReportFinancialStatements

ESSO (THAILAND) PUBLIC COMPANY LIMITED

ANNUAL REPORT 2014

To Our Shareholders

Weremainsteadfastinourcommitmenttogeneratelong-termvalueforourshareholdersbysupplyingsafe,reliable,

andaffordableenergy.Anunwaveringfocusonsafety,controls,operationalexcellence,andcorporatecitizenshipforms

theframeworkofabusinessmodelthatisdesignedtocapturevaluethroughouttheupsanddownsofthebusinesscycle.

While2014representedanotherdifficultyearforrefinersandchemicalproducersintheregion,wecontinuedto

emphasizethefactorswithinourcontrolthatwebelievewillmaximizeshareholdervalueoverthelong-term.

Regionalindustryrefiningandparaxylenemarginsin2014reachedtheirlowestlevelssince2010.Inaddition,global

crudeoilpricesdeclinedbyapproximately45%duringtheyear.Thechallengingpriceandmarginenvironmentnegatively

impactedour2014financialresultsasweincurredalossofBaht10.3billion,mainlyfromnegativegrossrefiningmarginsas

aresultofsignificantstocklossesthatweregeneratedfromthesharpdecreaseinoilpricesinthesecondhalfoftheyear.

Ourfinancialresultswerealsoadverselyinfluencedbylowercruderunsandadeclineinparaxyleneproduction,driven

byeconomicoptimizationeffortsinresponsetomarketconditionscombinedwithpartialplannedshutdowns.Refinery

throughputaveraged130thousandbarrelsadayandparaxyleneproductionwas254thousandtons,downfrom140

thousandbarrelsadayand324thousandtonsin2013,respectively.

Althoughweoperatedinaverychallengingenvironmentin2014,wecontinuedeffortstoenhancemarginsbymaximizing

theproductionofhighervalueproductswhileminimizingrawmaterialcosts.Self-helpinitiativeswerealsoundertaken

tode-bottleneckprofitableunitsandimproveenergyefficiency.Multipleprojectswereimplementedthatimprovedour

EnergyIntensityIndexby1.5%.Inaddition,marginenhancementprojectsprogressedduringtheyearandareexpected

tocompletebythefirsthalfof2015,whichwillenableustomaximizetheFluidizedCatalyticCrackingUnit(FCCU)more

efficiently.Webelievetheseeffortspositiontherefineryforimprovedprofitabilityinthefuture.

Esso(Thailand)PublicCompanyLimited4

Essoprogressedmultipleprojectsduringthe year to improve energy efficiency,enhancemargins,andexpandandoptimizeourretailandlubricantsnetworks.Theseeffortssupportoursteadfastcommitmentto generate long-term value for ourshareholders.

TO OURSHAREHOLDERS

MESSAGE FROM THE CHAIRMAN

AnnualReport2014 5

Ourmarketingbusinesscontinuestoprovideasecureandreliableoutletforourrefinedproductsandremainsakey

priorityforthecompany.Weexecutedmultipleinitiativesduringtheyeartooptimizeourretailandlubricantnetworks.

Severalpromotionalprogramswereconductedtoimproveengagementwithcustomersandincreasebrandawareness

whilewealsoactivelyexpandedthenumberofsites,premiumproductofferings,andalliancepartnerships.Weopened

24newEsso-brandedservicestationsin2014,bringingthetotalnumberofretailsitesto524comparedto516atthe

endof2013.Thisrepresentsthefirstyear-on-yeargainintheretailnetworksinceourinitialpublicofferingin2008.

Inaddition,weincreasedthenumberofretailsitesofferingpremiumdieselandsupremeE20to151and327sites,

respectively,upfrom67and35sitesattheendof2013.Weenhancedrelationshipswithstrategicpartnersbyopening

anadditional22alliancesinservicestationsincludingnewpartnerssuchasBosch,Lawson,andBurgerKing.Wealso

expandedthenumberofMobil1centersto280sites,upfrom263sitesin2013asweseektogrowvolumesforour

flagshiplubricantsbrandMobil1.

Effectiveexecutionofthesebusinessinitiativesprovidesfoundationforstrongerfinancialandoperatingresults.Atthe

sametime,wecontinuetoemphasizetheimportanceofconductingbusinesswiththehighestlevelsofintegrityand

socialresponsibility.Safetyandcontrolsexcellenceremainsatoppriority,asdemonstratedbyseveralkeyaccomplishmentsin

2014.TheSriracharefinerywasoneofonlythreeExxonMobil-ownedrefineriestoreceiveExxonMobil’sGlobalStandard

ofExcellenceawardfordemonstratingexcellenceinbothpersonnelandprocesssafety.Wealsoachievedourstrongest

safetyperformancesince2010asmeasuredbytherateofrecordableincidentsandtheabsenceofanyincidentsthat

resultedinlosttime.Thisexceptionalsafetyperformancewashighlightedbyourterminaloperationsreachingamilestone

of21yearswithoutalost-timesafetyincident.Theseimpressiveresultsarereflectiveofastrongsafetyculturethat

permeateseveryleveloftheorganization.Wealsoplacesignificanceonexecutingdailyactivitieswiththehighestlevels

offinancialandoperationalcontrols.Well-establishedandconsistently-appliedcontrolsandoperationalexcellence

systemsprovidetheprocessesandtoolstoeffectivelymanagefinancialandoperationalrisks.

Inadditiontoexceptionalsafetyandcontrolsperformance,wearecommittedtotransparencyandsoundcorporate

governance.ThisisdemonstratedbythecoreprinciplesoutlinedinourStandardsofBusinessConduct,whichprovides

eachemployeewiththeguidelinesformanagingbusinessactivities.Wealsostrictlyadheretoprinciplesandpractices

thatmakeusagoodcorporatecitizenaswestrivetoworkcloselywithourvaluedpartnersinthecommunitiesinwhich

weoperate.Asrecognitionoftheseefforts,wereceivedtheThailandAmericanChamberofCommerce(AMCHAM)

recognitionawardforCorporateSocialResponsibilityexcellenceforthefifthconsecutiveyear.

Consistentapplicationofthesebusinesspracticeshasresultedinasustainablebusinessmodel.Weareproudofour

120-yearhistoryofhelpingtomeetthegrowingdemandforenergyinThailand.Essentialtooursuccessoverthepast

12decadesareouremployeeswhodemonstratedadailycommitmenttosoundprinciplesandpractices.Iappreciatethe

confidenceyouplaceinourcompanyandemployeesasdemonstratedbyyourongoinginvestmentinEsso(Thailand)Public

CompanyLimited.WereaffirmourcommitmenttoworkdiligentlytosupplyThailandwithsafe,reliable,andaffordable

energy.

NeilA.Hansen

ChairmanandManagingDirector

Esso (Thailand) Public Company Limited6

GENERAL INFORMATION

Company information:

Company Name Esso(Thailand)PublicCompanyLimited

Symbol ESSO

Registration Number 0107539000073

Business Integratedpetroleumrefining,petrochemical,andmarketing

Registered Capital Baht17,110,007,246.71

Comprising3,467,916,666commonsharesofBaht4.9338pershare

Paid-up Capital Baht17,075,181,200.40

Comprising3,460,858,000commonsharesofBaht4.9338pershare

Head Office 3195/17-29RamaIVRoad,KlongTonKlongToeyDistrict,Bangkok10110

Telephone:02262-4000

Website www.esso.co.th

Investor Relations Telephone:02262-4788

E-mail:[email protected]

References:

Securities Registrar ThailandSecuritiesDepositoryCompanyLimited

TheStockExchangeofThailandBuilding,62RatchadapisekRoad,

KlongToeyDistrict,Bangkok10110

Telephone:02229-2888(CallCenter)

Auditor PricewaterhouseCoopersABASLimited

15thFloor,BangkokCityTower,

179/74-80SouthSathornRoad,Bangkok10120


Annual Report 2014 7

• Operatewithahighstandardofethics,goodcorporategovernance, accountability,honesty,andstrongbusinesscontrols.• Commitmenttosafety,health,andenvironmentalexcellence

• Sriracharefinerywasoneofthreeoutof24ExxonMobilrefineries thatreceivedanawardin4categories:

1. StandardofExcellenceinPersonnelSafety 2. StandardofExcellenceinProcessSafety 3. StandardofExcellenceinEnvironmentalPerformance 4. OperationalExcellenceAward

High Standard of Ethics and Business Controls

ExxonMobil Global Standard of Excellence Award

2014 BUSINESS HIGHLIGHTS: OPERATIONAL EXCELLENCE

AnnualReport2014 7


Esso(Thailand)PublicCompanyLimited(“thecompany”)

isanaffiliateofExxonMobilCorporation,anindustryleader

intheglobalenergybusiness.Wehaveoperatedbusinesses

inThailandformorethan120years.

WeemployExxonMobil’shighly-disciplinedbusiness

modelwithafocusonlong-termfundamentalsandgrowth

inshareholdervalue.ThebenefitsofmajorityExxonMobil

ownership includeaccess to expertise in crudeoil and

rawmaterialprocurementservices,aglobalsalesnetwork

forrefinedpetroleumproductsandchemicals,advanced

technological,operationalandengineering services,and

researchanddevelopmentprograms.Wealsobenefitfrom

theuseofEssoandotherExxonMobiltrademarkslicensed

fromExxonMobilaswellastheavailabilityofExxonMobil

and affiliatedmanagement, technical personnel, and

corporatesupportservices.

Weareanintegratedpetroleumrefining,petrochemical,

andmarketingcompanywiththefollowingkeybusinesses:

• Acomplexrefinerywithamaximumratedcapacity

(basedonstreamdays)of174,000barrelsperday

• Anaromaticsplantwithacapacityof500,000tonsper

annumofparaxylene

• Asolventproductionunitwithacapacityof50,000tons

perannum

• AnextensivenetworkofEssobrandedretailservice

stationsthroughoutThailand

• Directcommercialsalesofpetroleumproductsinthe

industrial,wholesale,aviationandmarinesectors

comprisingofLPG,gasoline,jetfuel/kerosene,diesel,

fueloil,asphalt,andlubricants

• Professionalservicesandapremierelineofsynthetic

lubricantsthroughMobil1centers

• Salesofaromaticsandotherchemicalproducts

OUR BUSINESS


Our refinery configuration incorporates ExxonMobil’s

unique proprietary technologies that provide uswith

significantflexibilitytoprocessawiderangeofcrudeoilsand

producehigh-valueproductssuchasgasoline,diesel,and

jetfuel.OurrefineryisstrategicallylocatedneartheLaem

ChabangdeepseaportinSriracha,ChonburiProvince.The

sitebenefitsfromitsreadyaccesstoadeepseaport,road

networks,andamulti-producttransmissionpipeline.This

providesuswiththeflexibilityofdeliveringourrefined

petroleumproducts viapipeline inaddition to truckand

marine.

Ouraromaticsproductionisfullyintegratedwithour

refineryoperations.Weproducearomaticsprimarilyinthe

formofparaxylenewhichisusedtomakepurifiedterephthalic

acid(PTA),therawmaterialusedforproducingpolyester

film,packagingresin,andfabrics.Ourotherchemicalproducts

includesolventsandplasticizers.

Anindustry

leaderintheenergy

business.Wehave

operatedinThailand

formorethan120years.


Number of employees as of December 31, 2014

Corporate Refining & Distribution (1) Retail & Lubricants (2) Chemicals Total

23460947584

(1) Includes engineers, technical staff and operators at Sriracha Refinery complex, together with commercial and export sales personnel.

(2) Includes retail and lubricant sales personnel.

2013 2012

Million Baht % Million Baht % Million Baht %

NetSales

Downstreamsegment:

Refinedpetroleumproducts 194,431 88.1 206,898 84.4 211,770 86.5

Lubricants 3,825 1.7 3,772 1.5 3,753 1.5

Others(1) 3,339 1.5 9,665 3.9 4,370 1.8

Services(2) 605 0.3 634 0.3 591 0.2

TotalDownstreamsegment 202,200 91.6 220,969 90.1 220,484 90.0

Petrochemicalsegment:

Paraxylene 11,336 5.1 17,101 7.0 17,511 7.1

Others(3) 7,163 3.3 7,055 2.9 7,085 2.9

Services 36 0.0 48 0.0 47 0.0

TotalPetrochemicalsegment 18,535 8.4 24,204 9.9 24,643 10.0

Total Sales revenue 220,735 100.0 245,173 100.0 245,127 100.0

(1) Mainly sales of crude oil which were purchased from an affiliate and resold before processing. Also included are goods sold at convenience stores.(2) Mainly franchise fees from dealers, product handling and storage fees from aviation customers, and rental income.(3) Mainly sales of benzene, solvents, plasticizers, and other chemicals.

Operation and Revenue Structure

Oursalesrevenueinthedownstreamandpetrochemicalsegmentsaredividedasfollows:

2014


Subsidiaries, Associated and Related Companies

Registered Capital Shareholding

(Baht) (%)

MobilEnterprises(Thailand)Limited(METL) Currentlydormant 3,333,000 100

3195/17-29RamaIVRoad,KlongTon,



IndustryPromotionEnterprisesLimited(IPEL) Realestateleasing 3,333,400 30(1)

3195/26RamaIVRoad,KlongTon,



UnitedIndustryDevelopmentCompanyLimited(UIDC) Realestateleasing 10,000,000 49(1)




PacesetterEnterprisesLimited(PSE) Realestateleasing 10,000,000 33(2)




ThaiC-CenterCompanyLimited(TCC) Servicestationand 50,000,000 0(3)

3195/21RamaIVRoad,KlongTon, conveniencestore

KlongToeyDistrict,Bangkok10110 operation


ThaiPetroleumPipelineCompanyLimited(THAPPLINE) Petroleum 8,479,000,000 21

2/8Moo11,LumlukkaRoad,Ladsawai, productspipeline

Lumlukka,Pathumthani12150 transportation


BangkokAviationFuelsServices Aircraftrefuelling 509,998,044 7

PublicCompanyLimited(BAFS) services

171/2Moo10,VibhavadiRangsitRoad,Sikan,

DonMuangDistrict,Bangkok10210


(1) The remaining preferred shares are held by employees of the Company and/or ExxonMobil affiliates.(2) The remaining shares are held by UIDC and IPEL.(3) The Company does not directly hold shares in TCC. All of TCC’s issued shares are held by UIDC.

Company Name and Address Business


Financial Highlights 2014 2013 2012

(millionsofBaht,unlessotherwisestated)

Salesrevenue 220,735 245,174 245,127

Grossprofit/(loss) (5,980) 6,230 5,496

EBITDA (9,738) 2,752 2,546

Profit/(loss)fortheperiod (10,346) (378) (1,698)

Profit/(loss)pershare(Baht)(1) (2.99) (0.11) (0.49)

Totalassets 63,868 74,010 75,862

Totalliabilities 51,527 51,431 52,930

Totalshareholders’equity 12,341 22,579 22,932

Key Financial Ratios 2014 2013 2012

Netprofit/(loss)margin(%) (4.7) (0.2) (0.7)

Interestcoverage(times) (10.8) 2.8 2.1

Netdebttoequity(times) 2.9 1.5 1.4

Dividend Payment 2014 2013 2012

Dividendpayment(Baht/share)(1) - - 0.05

(1) Based on current number of shares: 3,461 million shares

FINANCIAL HIGHLIGHTS


• Enhancemarginsbymaximizingproductionofhighervalueproducts• Minimizerawmaterialcostsbyutilizingtechnology• Implement“Self-Help”improvementprogram

Investedinmultipleprojectstoimproveenergyefficiencyandmarginenhancement:

• 7projectstoimproveenergyefficiencyandreduceEnergyIntensityIndexby1.5%• 5projectstoimprovegrossrefiningmargins

ENERGY EFFICIENCY AND MARGIN ENHANCEMENT

2014 BUSINESS HIGHLIGHTS: REFINERY

AnnualReport2014 13


TheCompanybelievestherigor,disciplineanddegreeofaccountabilityrequired

toachievestrongsafetyperformanceare thesameattributes thatproduce

successfulbusinessresults-bothoperationalandfinancial.

Optimization through Integration

Theproductionlevelsofourrefiningandpetrochemicalunitsareprimarily

determinedbymarketdemandandeconomics.Webenefitfromtheintegration

ofouroperations,whichprovidesuswiththeabilitytoproducehigher-value

products,optimizeoperations,andcapturecostsavings.

We sell petroleumproducts throughdiversified channels including retail,

commercial,andexportmarketsforoptimalproductrealization.Wemaximize

salesvalueinthegeneralinterestbyworkingcloselyacrossallofourbusiness

linesinawell-establishedIntegratedBusinessTeam.

Operational Excellence and Continuous Improvement

Refining and Petrochemical

Ourrefinerythroughputwas130thousandbarrelsperdayin2014,downfrom

140thousandbarrelsperdayin2013,reflectingrefiningeconomicsandplanned

maintenancefor21daysinJuneontheFluidizedCatalyticCrackingUnitand

ContinuousCatalyticReformerand46daysinSeptemberontheAtmospheric

Pipestill, VacuumPipestill, andNaphtha/Kerosene/GasoilHydrofiner. The

maintenancewasconductedtoimprovecapacityutilization.Wealsotookthe

opportunityduringthescheduleddowntimetoimproverefineryefficiencyand

implementmarginenhancementprojects.Industryrefiningmarginsremained

challengingin2014andreachedtheirlowestlevelssince2010duetotighter

crude-productspreads.Thegrossrefiningmarginin2014wasnegative,mainly

fromstocklosses,asoilpricesdeclinedby45%overtheyear.Inaddition,the

OUR PERFORMANCE


government ’s regulation of LPG prices continued to

negativelyimpactearningsasthecontrolledpriceswere

wellbelowinternationalmarketprices.Whilewecannot

controlmargin fluctuations andmarket conditions,we

continuedeffortstoreducecostsandenhancemarginswith

severalself-helpprojects.Multipleprojectswereimplemented

thatimprovedourEnergyIntensityIndexby1.5%,resulting

inlowerenergycosts.Inaddition,weprogressedseveral

marginenhancementprojectsduringtheyearthatare

expectedtocompletebythefirsthalfof2015.Theseprojects

willenableustooperatetheFluidizedCatalyticCracking

Unit(FCCU)moreefficiently.

Paraxyleneproductionwas254 thousand tons in2014,

downfrom324thousandtonsin2013.Weakerdemand

andlowermarginsalongwithplannedshutdownsimpacted

productionlevels.Wemanagedparaxyleneproduction

levelstoachieveoptimumvaluebyleveragingtheintegration

ofour refiningandpetrochecmicalunits andoptimizing

contractualcommitmentstocustomers,consistentwiththe

weakermarketconditions.

Morethan80%ofouraromaticsproducts,Paraxyleneand

Benzene,weresolddomesticallytocommercialcustomers.

Otherchemicalproducts,includingsolventsandplasticizers,

weremainlysoldtolocalcommercialcustomers.

Wecontinuetoutilizeandmanageourdistributionassets

toimproveoverallefficiency,reduceoperatingcosts,and

increaseterminalreliability.Inaddition,theCompanyinstalled

facilitiesatourterminalstoenableourmarketingbusiness

tomaximize thevalueofoursaleschannelsand improve

competitiveness.

Marketing

Wesellpetroleumproducts throughdiversifiedchannels

includingretail,commercial,andexportforoptimalproduct

realization.

Essoservicestationscontinuetoprovideasecure,value-added,

andsteadyoutlet.Salesthroughourservicestationsaccounted

for38%oftotalsalesvolumein2014.

Wearewell-positioned tocompete in thisdynamicand

competitivemarketwithlogisticalandoperationaladvantages.

Essoincreaseditsretailnetworkto524servicestationsby

theendof2014,an increaseof8sitescompared to the

endof2013,representingthefirstyear-on-yeargainsince

ourinitialpublicofferingin2008.Asaresultofmarketing

campaignsandstrategiclocations,ourmarketpenetration

wasapproximately14.6%aswemaintainedourposition

asthelargestinternationalbrandfuelsretailerinThailand.

In addition to increasing thenumberof retail sites,we

successfullyintroducedpremiumproductsatmoreofour

service stations.Wehad151and327 stationsoffering

PremiumADOandSupremeE20,respectively,attheend

of2014.ThePremiumDieselandSupremeE20offerings

werehigherthanourinitialplans,resultinginstrongerbrand

equityandincreasedsalesvolumes.Nationwidemarketing

programswerealsolaunchedinlate2014toincreasebrand

awarenessandintroducenewproducts.Asaresultofthese

actions,wesuccessfullymaintainedourpositionasthelargest

internationalbrandfuelsretailerinThailandandincreased

revenue.

Reduced Energy Intensity Index by 1.5%

Energy costs are one of the largest components of our cost structure. We completed multiple projects to reduce energy consumption and overall operating costs.

Industry Refining Margins at lowest levels since 2010

Market conditions remained challenging with capacity additions outpacing demand growth

Reuters Gross Refining Margin bbl$/

6.27.6

8.2

5.84.6

20100

4

2

6

8

10

2011 2012 2013 2014


Inadditiontofueloperations,weenhancedournon-fuel

income throughstrongallianceprograms.We launched

newalliancesin2014withBurgerKing,Bosch,andLawson.

TheCompanyalsofurtherexpandedthenumberofalliance

partnershipswithTescoLotusExpress,B-Quik,WizardCar

Wash,Mobil 1 centers,McDonalds,FamilyMart,Rabika

Coffee, andCaffe’D’Oro,bringing the total numberof

alliancepartnerlocationsto179acrossourretailnetwork.

Theseallianceshelpustooptimizeretailsiteprofitabilityand

providehighqualityofferingsandservicesforourcustomers.

Ourcommercialsaleschannelsincludefourbusiness-to-business

segments:IndustrialandWholesale,Aviation,Marine,and

Supply.Salesthroughthesechannelsaccountedfor48%

of total sales volume in2014.Wecontinue to focuson

efficiencyenhancementsacrossthenetwork.Inaddition,

welaunchedacustomerappreciationprogramtoimprove

value-addedofferings forour Industrial andWholesale

customers.

Theremaining14%ofourpetroleumproductswereexported,

mainlywithintheAsiaPacificregion.

Lowest Mogas export sales volume since the IPO

Our commercial sales channels expanded by 30 new customers in 2014 and achieved their highest sales volume since the IPO. This helped the company reduce Mogas export volumes to only 3.9 KBD, compared to the previous annual average of 6 KBD.

Opened 24 new service stations and experienced a gain in the retail network for the first time since our IPO in 2008

We opened 24 new service stations in 2014 and our retail network increased to 524 service stations. A larger retail network improves our ability to provide high-quality products for our customers and helps us to maximize sales through our most profitable sales channel.

Service Stations

of Mogas Export

Market expansion reduced Mogas export

volume to only

KBDin 2014

3.9 KBD

3.9

24 NEWWecontinuedtoachieveoutstandingperformanceinour

lubricantsbusinessin2014asaresultofvariousmarketing

andsalesinitiatives,resultinginexcellentsalesresultsforour

AutomotiveandIndustrialflagshipsyntheticproducts.We

alsocelebratedthe40thanniversaryofMobil1andcontinued

toexpandthenumberofMobil1Centers.


Mobil SHC - The premiere line of synthetic lubricants for industry

There are now 280 Mobil 1 centers nationwide, providingprofessional services and premium products to customers.

Quality Workforce

Webelievethatourcapableanddedicatedemployeesare

oneoftheCompany’sgreateststrengths.Ouremployee

development systemutilizes integratedprocesses that

ensure theongoingdevelopmentof highlyproductive,

dedicated,andmotivatedemployees.

Werecruittalentedindividualsandarecommittedtoemployee

developmentthroughworkassignments,on-the-job

experiences,focusedtraining,andeducation.Webelieve

ongoingcareerplanningisasharedresponsibilitybetween

theCompanyanditsemployees.Wepromotefromwithin

andrequiremanagersandsupervisorstofosteranenvironment

where continuouspersonal andprofessional growth is

encouraged.Ourgoalistodevelopemployeestohavethe

highesttechnicalandleadershipcapabilitiesintheindustry.

WeleveragetheExxonMobilnetworktoprovidetraining

toemployees,includingforeignassignmentsinother

ExxonMobilaffiliatesforselectedindividuals.Equally

important,wepromoteanenvironmentofhighexpectations

thatrecognizesandrewardsemployeecontributionstoboth

individualandteamgoals.

Disciplined Investing

Wefurtheroptimizedourretailmarketingnetworkduring

theyear,makingopportunisticenhancements to service

stationswhilemaintaining capital and cost discipline.

Increasedfuelsaleswereachievedbyofferinganattractive

productmixandimprovingsiteequipmentandappearance

viaourImageUpgradeProgramatselectivelocations.We

upgraded108sitesin2014,bringingthetotalnumberof

sitestoreceiveanimageupgradesince2011tomorethan

400sites.Theenhancementprogramincludedforecourt,

backcourt,andrestroomimprovements.Theseupgrades

help toensure sustainablegrowth in the retailbusiness.

Inaddition,theCompanyopened24newservicestations

acrossthecountryin2014.

We supply automotiveand industrial lubricantproducts

directlytostrategiccustomersandtodistributorsforresale.

Weexpandedourautomotivelubricantsbusinessin2014

andnowhaveanetworkof280Mobil1centersnationwide.

TheseMobil1centersprovidebest-in-classcarcareservices

tocustomers throughconsistentdeliveryofprofessional

servicesandpremiumproducts.

Thecompanymaintainedadisciplinedapproachtocredit

managementandimprovedoverdueandbaddebtperformance

duringtheyeardespiteintensecompetitionandunfavorable

economicconditions.

Mobil 1 centers280


Commitment to Safety, Health, and Environment

Safety and Health

Wehaveacultureinwhichthevalueofsafetyisembedded

ateveryleveloftheorganization.OurOperationsIntegrity

ManagementSystem(OIMS)providesarobustframework

formanagingboth the safetyofouroperationsandour

personnel.OurpersonnelsafetyprogramsutilizetheLoss

PreventionSystem(LPS),aprovenapproachforfocusingon

underlyingbehaviorstoidentifyenhancementstofacilities,

systems,andcompetencies.Ourapproach tosafetyand

healthmanagementyieldssuccessful results,butwewill

notbesatisfieduntilwehaveachievedaworkenvironment

inwhichNobody Gets Hurt.

OnecriticalsuccessfactorinachievingourgoalofNobody

Gets HurtistheempowermentofeveryoneintheCompany

tointerveneandchallengewhenunsafeactsareobserved.

Eachandeveryemployeeintheorganizationisempowered

tocautiontheircolleaguesiftheyobserveanunsafesituation

or behavior. Employees are encouraged towelcome

suggestionsonhowtoworkmoresafely.Asaresultofthese

robustprograms,weachievedseveralkeysafetymilestones

in2014.Forexample,theSriracharefinerycomplexhasoperated

for10.9millionworkhourswithoutalost-timesafetyincident

andwasoneofonlythreeExxonMobil-ownedrefineriesto

receiveExxonMobil’sGlobalStandardofExcellenceaward

fordemonstratingexcellenceinbothpersonnelandprocess

safety.Ourterminaloperationsreachedamilestoneof21years

withoutalost-timesafetyincident.Overall,weachievedour

strongestsafetyperformanceasacompanysince2010as

measuredbytherateofrecordableincidentsandtheabsence

ofanyincidentsthatresultedinlosttime.Theseimpressive

resultsarereflectiveofastrongsafetyculturethatpermeates

everyleveloftheorganization.

The Sriracha Refinery received Standard of Excellence Awards from ExxonMobil

for Personnel Safety, Process Safety, Environmental Performance, and Operational Excellence. It was one of only 3 ExxonMobil refineries worldwide to receive the awards.

million work hours with no lost time incidentat Sriracha refinery

10.9


Continued excellence in environmental performance

with no recordable oil or chemical spills for seven consecutive years.

without a recordable spill

7 Years

ENvIRONMENT7Yearswithoutarecordablespill7Yearswithoutarecordablespill7Yearswithoutarecordablespill7Yearswithoutarecordablespill7Yearswithoutarecordablespill

Environment

Weconductregularreviewsofallaspectsofourbusinessto

ensurecompliancewithenvironmentallawsandregulations

andinternalpolicies.Weimplementvariouspollutioncontrol

andotherenvironmental impactmitigationmeasures to

controlwasteemissions,includingExxonMobiltechnologies

thatreduceemissionsandconserveresources.

Our refineryoperationsalsoutilize recycled freshwater

producedbyourtwodesalinationplants,thuspreserving

naturalfreshwaterresources.Inaddition,weinstalledvapor

recoveryunitsatallofouroperatedandjointly-operated

terminals toreducethehydrocarbonvaporreleased into

theatmospherebyrecoveringitasaproduct.

Wecontinuetoimproveourwastewatertreatmentfacilities

includingtheinstallationofanewBiologicalOxidationUnit

in2014.Thenewunitenhancesourability totreatused

waterpriortoitsreleasebacktotheenvironment.


Income Statement 2014 2013

Sales 220,735 245,174

Profit/(loss)fromsales (11,888) 567

Downstream (9,034) 1,173

Petrochemical (2,854) (606)

EBITDA (9,738) 2,752

Financecosts,net (896) (984)

Incometax(expenses)/credit 2,617 (420)

Profit/(loss)fortheperiod (10,346) (378)

Profit/(loss)pershare(Baht/share) (2.99) (0.11)

Based on current number of shares of 3,461 million shares

Review of consolidated results for 2014

Salesin2014declinedfromthepreviousyearduetolowerproductpricesandproduction.Thefullyear2014loss

fromsaleswasBaht11,888million,comparedtoaprofitofBaht567millionin2013.Downstreamhadanincremental

lossofBaht10,207millionandPetrochemicalshadanincrementallossofBaht2,248million,comparedto2013.

Refiningmarginsdecreasedtoanegative3.5dollarperbarrel,downfrom2.9dollarperbarrelin2013,drivenbythe

decreaseincrudeoilpricesinthesecondhalfoftheyearthatresultedinastockloss.2014Paraxylenemarginsdecreased

toanegative168dollarspertoncomparedtoapositive34dollarspertonin2013.

(Million Baht)

MANAGEMENT’S DISCUSSION

AND ANALYSIS


Balance Sheet 2014 2013

Totalassets 63,868 74,010

Totalliabilities 51,527 51,431

Totalshareholders’equity 12,341 22,579

2014EBITDAwasnegativeBaht9,738million,comparedtopositiveBaht2,752millionin2013.Sellingand

administrativeexpenseswerehigherthanthepreviousyearbyBaht245millionlargelyduetohighermarketingexpenses

relatingtothelaunchofnewpremiumproducts,advertising&salespromotions,andservicestationimageupgrades.

FinancecostsdecreasedbyBaht88millionfromtheprioryearduetolowerinterestrates,despitehigheraverage

debtbalancesduringtheyear.Theincometaxcreditforfullyear2014wasBaht2,617million,comparedtoanincome

taxexpenseofBaht420millionforthepreviousyear.

Thelossforfullyear2014wasBaht10,346million,mainlycausedbyastocklossandweakindustrialrefiningmargins.

CurrentassetsdecreasedbyBaht12,410millionfromyear-end2013,mainlyduetolowercashandcashequivalents,

tradereceivables,inventories,andtaxclaimreceivables.Non-currentassetswerehigherbyBaht2,268million,primarily

duetoanincreaseininvestmentsinsubsidiariesandassociatesanddeferredincometaxassets,partlyoffsetbyadecrease

inproperty,plantandequipment.

TotalliabilitiesincreasedbyBaht97millionmainlyresultingfromhigherdebt,partlyoffsetbylowertradepayables.

Non-currentliabilitiesdecreasedfromBaht12,746millionin2013toBaht11,456millionin2014duetoareclassification

oflong-termdebtthatisdueinthenexttwelvemonthstoshorttermdebt.

(Million Baht)

Operating Performance-Marketing

Strong marketing position

•Maintainedstrongmarketpresenceintermsofthenumberofservice stations;opened24newEsso-brandedservicestations,bringingthe totalnumberofretailsitesto524

•Expandedpremiumproducts:PremiumADOandSupremeGasohol E20,offeredat151and327servicestations,respectively

•ContinuedwithFuelsQualityCampaignwithastrongnationwidemarketingprogram

Service Stations offering E20

Number of Service Stations

Total 547 537 535 524 516 516 524

Thai C operated Dealer operated

2008 2009 2010 2011 2012 2013 2014

388

159

382

155

380

155

371

153

364

152

368

148 128

396

Service Stations offering Premium ADO

2013 2014 Plan 2014

151120

67

2013

35

327300

2014 Plan 2014


Asofyear-end2014,totaldebtwasBaht35,675million,anincreasefromBaht34,396millionatyear-end2013.

DebtconsistedofBaht26,075millionofshort-termdebtandBaht9,600millionoflong-termborrowings.Short-termdebt

includedBaht979millionofBillsofExchangeandBaht12,366millionofshort-termloansfromrelatedparties.Newfacilities

in2014includedaBaht7,000million5-yearfloatingrateloanfromanExxonMobilAffiliateandaBaht1,000million5-year

floatingrateloanfromafinancial institution,whichwereusedtopartiallyrefinanceexistingshort-termrevolvingloans.

ThecompanyalsoobtainedanadditionalcreditlimitofBaht7,000millionforrevolvingloanfacilitiesfromanExxonMobil

Affiliate.TheCompanycontinuestomaintainacreditratingofA-fromTRISRatingagencyandF1(tha)fromFitchRatings.

CashflowusedinoperatingactivitieswasBaht1,062million,mainlyduetothelossfortheperiod.Cashflowused

ininvestingactivitieswasBaht1,010million,reflectingcapitalinvestmentsforcapacitymaintenance.Cashflowfrom

financingactivitieswasBaht1,477million,mainlyresultingfromnetproceedsfromshorttermborrowings,partlyoffset

bytherepaymentoflongtermborrowings.Intotal,cashdecreasedbyBaht595millionasofDecember31,2014.

Cash Flow 2014 2013

Cashgeneratedfrom/(usedin)operations 33 (1,636)

- Net cash generated from/(used in) operating activities (after interest and tax) (1,062) (2,169)

Cashflowfrominvestment (1,010) (1,038)

Cashflowfromfinancing 1,477 2,155

Netincrease/(decrease)incash (595) (1,052)

Financial Ratio 2014 2013

Currentratio(times) 0.6 1.0

Quickratio(times) 0.1 0.2

Totaldebttoequityratio(times) 2.9 1.5

Longtermdebttoequityratio(times) 0.8 0.5

Netdebttoequityratio(times) 2.9 1.5

(Million Baht)

Totalshareholders’equitydecreasedbyBaht10,238million,reflectingthelossfor2014.

Current ratio = Current assets / Current liabilities

Quick ratio = (Cash and cash equivalents + Short term investments + Trade receivables) / Current liabilities

Total debt to equity ratio = Total debt / Total shareholders’ equity

Long term debt to equity ratio = Non-current borrowings / Total shareholders’ equity

Net debt to equity ratio = (Total debt - Cash and cash equivalents) / Total shareholders’ equity


• Expandedservicestationnetworkandpremiumproductofferings

• Continuedimprovingsiteequipmentandappearancethroughour

ImageUpgradeProgram;108sitesupgradedin2014

• LaunchednewallianceswithBurgerKing,BoschandLawson;expanded

partnershipwithTescoLotusExpress,FamilyMart,Rabikacoffee,and

Caffe’D’oro

New Service Stations Service Stations offering E20 Service Stations offering Premium ADO

24

151327

1667

35

2013 20132013 2014 2014 2014

2014 BUSINESS HIGHLIGHTS: RETAIL

AnnualReport2014 23


CORPORATE SOCIAL RESPONSIBILITY

Supporting Royal Initiatives

• Assistedwithbuildingofaricemill underHisMajesty ’sinitiativein SakonNakhonprovince.• Supportedtheconstructionofa buildingandinstallationofequipment forthedairyprojectatthePhuPhan RoyalDevelopmentStudyCenter.• CollaboratedwiththetheSatellite EducationFoundationtoexpand educationalopportunitiestochildren andyouththroughoutthecountry.• Suppliedrefrigeratedblooddelivery vanstotheThaiRedCrossSociety.• Constructedacheckdamandsupported marineconservationactivitiesatthe KungKrabaenBayDevelopment StudyCenter.• Providedassistancetotheorganization oftheNationalArtsExhibition.• Supportedactivitiesorganizedbythe BangsaiArtsandCraftCenterunder theroyalpatronageofHerMajesty theQueen.

Mr.NeilA.Hansen,ChairmanandManagingDirectorofEsso (Thailand)PublicCompanyLimited,presenteda3,111,120BahtchecktoHRHPrincesssMahaChakriSirindhorn,inhercapacityastheExecutiveVicePresidentoftheThaiRedCrossSociety


HRHPrincessMahaChakriSirindhornviewedoneoftheEsso-VocationalSciencecontestantsduringtheNationalScienceWeek.

Promoting Education in Thailand• Supportededucationfrombasictoadvanced

levels.

• Createdtoylibrarieswherekidslearntoplay

andshare.

• ProvidedUniversitystudentswiththeEsso

ChallengeInnovativeInternshipprogramto

gainprofessionalexperiencealongwith

opportunitiestocontributetoabettersociety.

• Promotedscienceknowledgeforchildren

andyouthacrossthecountrythroughthe

Esso-VocationalScienceContest;supported

theNationalScienceMuseuminvarious

scienceinnovationactivities,e.g.Science

MovieDomeandanewexhibitiontitled

“ScienceontheMove”.

• Joinedeffortswithpublicandprivatepartners

toprovideinformationandknowledgeto

promoteroadsafety.

• Supportedcommunitycollegestohelpstrengthen

ThaistudentsinpreparationfortheASEAN

EconomicCommunity.


Empowering Women for Sustainable Development• SupportedfemalesocialworkersfromThailandthrough

the“LeadershipforDevelopment”globaltrainingin

WashingtonD.C;helpedthemtoapplyknowledgegained

totheThaicontext.

Building a Better Society• Participatedinblooddonations.

• Partneredwithacustomertorenovatealibrary,acomputer

room,andasportsfacilityfortheWatPhoSchool.

• Constructedahome,inpartnershipwiththeHabitatfor

HumanityThailandforthelessfortunate.

• Establishedanoccupationalpromotioncentertobuild

theskillsofwomenin10communitiesneartheEsso

Sriracharefinery.

• TaughtEnglishtostudentsattheWatLaemChabang

School.

• Providedlecturesonenergytouniversitystudentsand

scienceteachersthroughoutthecountry.


EssohasoperatedinThailandformorethanacentury,holdingfasttotheprincipleofgoodcorporatecitizenship.ThecompanyhasworkedwithmanypartnersinitsendeavorstobetterthelivesoftheThaipeople.Someexamplesareprovidedbelow.

120 Years of Continued Friendship

“TheEsso-RattanakosinBicentennialscholarships,which

Essohasbeensupportingformorethan30years,provide

anopportunity forneedystudentsstudyingengineering,

science, technology,energyand related fields fromstate

universitiesnationwide.WithEssoscholarships,students

areequippedwiththeknowledgeandskills thatprepare

themforbettercareeropportunitiesandtobecomeamajor

drivingforceofthecountry.”

Assoc.Prof.KamjornTatiyakavee,

M.D.SecretaryGeneral,

OfficeoftheHigher

EducationCommission

“ThescholarshipfromEssothatwasgrantedtomefor

2yearswhenIwasstudyingintheFacultyofEngineeringat

WalailakUniversityallowedmetobeabletofocusonand

fullycommitmyselftostudying.Ihadlessworriesaboutthe

educationexpensesandthefinancialburdentomyfamily,

andfelthopefulandencouragedtofollowmydreamand

pursuemygoalofbecominganenergyengineer.”

WaranyooSaisawa

Essoscholarshipstudent,

2011-2012

Promoting Thailand to Become a Society of Learning Esso-RattanakosinBicentennialFundscholarships

Esso received the “Gold Level”awardfromtheAmericanChamberofCommerce inThailand for itscontinuedcommitmenttocorporatesocialresponsibility.

Pictured at the ceremony, are(lefttoright):Mr.PatrickMurphy,DeputyChief ofMission of theU.S.Embassy;MrNeilA.Hansen,ChairmanandManagingDirectorofEsso(Thailand);andMr.DarrenBuckley,PresidentofAMCHAM.


Building Skilled Workers, Creating Jobs, Promoting Art and Culture

BangSaiFolkArtsandCraftsCenter

PrivyCouncilorH.E.

Mr.TaninKraivixien

VicePresident,SUPPORT

FoundationundertheRoyal

PatronageofHerMajesty

theQueen

“Ontheoccasionofthe120thanniversaryofEssoinThailand,Iwould like to thankEsso for thecontinuedsupport totheorganizationofBangSaiFolkArtsandCraftsCenterexhibitionof arts and crafts products and showcasingactivities.Esso’ssupportcontributestoourworktofulfillQueenSirikit ’s goalsofprovidingThaipeoplewhoarelivinginpovertywithspecialskillsthatcangenerateincomeforthemselves,andpromotingskilledworkerstoexpandknowledgetocreatejobsintheirrespectivecommunities.Thisproject,therefore,notonlyhelpsimprovethequalityoflifeofThaivillagersbutalsopreservesthetraditionalThaicultureinartandhandicraft”

Promoting volunteer Spirit, Expanding Knowledge to Young People

MaeFahLuangUniversity

Assoc.Prof.

Dr.ChomnardPotjanamart

ViceDean,Schoolof

Nursing,CommunityService

MaeFahLuangUniversity

“Theproject ‘HealthPromotionandCommunityHealthServicesforPeoplewithDisabilities,ChronicPatients,andDisadvantagedPeople’, supportedbyEsso, follows theKing’sMother,HerRoyalHighnessPrincessSriNakarindraBaromrajChonni’sinterestinforestplantationandpeopledevelopment.Theactivitiesfocusonprovidingknowledgeoncomprehensivehealthpromotiontostudentsinremoteareassothattheycanbringbackinformationtoeducatetheircommunities.Thisprojectnotonlycontributestothesustainablehealthattheindividual,familyandcommunitylevels,but also creates volunteer spirit amongMaeFahLuangUniversitystudentsaswellasitsstaff”

Building Skills of People with Disabilities, Creating Sustainable Job Opportunities

FatherRayFoundation

FatherDr.PicharnJaiseri

VicePresident,

FatherRayFoundation

“IwouldliketothankEssoforcontinuouslysupportingour

activities,especiallyorganizingtheEsso120thAnniversary

CharityMiniMarathontohelpraisefunds,fortheFatherRay

Foundation,andforprovidingnotebookcomputerstothe

computerlaboftheElectronicsandComputerSkillCenter

oftheRedemptoristVocationalSchoolofPeoplewith

Disabilities.Esso’ssupportfulfillstheneedsoftheschooland

allowsstudentswithdisabilitiestoequipthemselveswith

knowledgeandskillsoncomputerrepairandmaintenance.

Theseskillsallowstudentswithdisabilitiestofindadecent

jobaftergraduation,whichwillthenleadtoabetterquality

oflifeandhigherself-esteemastheyentertheworkforce.”

PathumSukkerd

OfficeManager,

FatherRayFoundation

“Afterstudentssuccessfullygainhands-onexperienceinthecomputerrepairandmaintenanceclasswherecomputersareprovidedbyEsso,wethenreturnsuchcomputersinsafeandsoundconditiontoEssosothattheycanbegiventoorganizations,communities,ortemplesthathaveaneed

forcomputerstosupporttheirrespectivecommunities.”


Contributing to Treatment and Life-Saving Blood Delivery ThaiRedCrossSociety

“ThaiRedCrossSocietyplaysakeyroleinprovidingblood

fromdonors tosupport the treatmentofpatientsacross

thecountry.Uptothepresent,wehavereceivedsupport

fromEssoinmanyareas,suchasthesupporttothemalaria

clinicalongtheThaiborder, theprovisionofrefrigerated

blooddeliveryvans,thepurchaseofmedicalequipmentfor

the‘BhumisiriMungklanusorn’buildingatChulalongkorn

Hospital,andtheblooddonationfromEssostaffregularly

everyyear.”

M.R.PriyangsriWattanakul

DirectorofFundRaisingBureau,

NationalBloodCenter,ThaiRed

CrossSociety

SupaneeGewalin

ChiefofGeneralAdministration

DivisionNationalBloodCenter,

ThaiRedCrossSociety

“The refrigeratedblooddelivery vansprovidedbyEsso

greatlycontributetotheplasmafractionationplantwhich

marksthe60thanniversaryofH.R.H.PrincessMahaChakri

Sirindhornon2April2015.Whilethesevanshelpdeliver

plasma-thecrucialbloodcomponentinthetreatmentof

manyserioushealthproblems,ourrelevantstaffweregiven

anopportunitytolearnabouttheoperationoftherefrigerated

blooddeliverymobile system including the temperature

controlandthestorageofplasmaduringdeliveryinorder

tomaintainitsbestqualityforthebestbenefitofpatients

whoneedit”.

HRHPrincessMahaChakriSirindhorn,inhercapacityasExecutiveVicePresidentoftheThaiRedCrossSociety,graciouslygrantedanaudience toMr.MongkolnimitAuacherdkul,EssoDirectorandPublicandGovernmentAffairsManager,toreceivearefrigeratedblooddeliveryvanfromEssoforusebytheNationalBloodCenter,theThaiRedCrossSociety.


1. Shareholders

Thetop10majorshareholdersregisteredintheshareregisterbookasofMarch27,2014wereasfollows:

Shareholders * Number of Shares Shareholding (%)

1. ExxonMobilInternationalHoldingsInc.** 2,264,500,000 65.43

2. VayupakFund1byMFCAssetManagementPublicCo.,Ltd 126,875,000 3.67

3. VayupakFund1byKrungThaiAssetManagementPublicCo.,Ltd 126,875,000 3.67

4. Mr.SupachaiSuthipongchai 30,025,800 0.87

5. StateStreetBankEuropeLimited 25,394,200 0.73

6. EastFourteenLimited-DimensionalEMERMKTSValueFund 23,848,000 0.69

7. StateStreetBankandTrustCompany 23,146,100 0.67

8. Mr.ChaipitakVorapatrasilawong 16,302,300 0.47

9. Mr.PrawitPhansaichuea 14,188,900 0.41

10. EastFourteenLimited-EmergingMarketsSmallCapSeries 12,141,400 0.35

Total 2,663,296,700 76.96

* Excluding 49,334,402 shares (1.43%) under Thai NVDR Co., Ltd.** Effective November 28, 2014, ExxonMobil International Holdings Inc. and the other seven ExxonMobil shareholders, who collectively held 65.99% of the Company’s issued shares, transferred their shareholdings in the Company to ExxonMobil Asia Holdings Private Limited, an ExxonMobil affiliate.

SHAREHOLDINGAND MANAGEMENT STRUCTURE


TheBoardconsistsofqualifiedpersonswithrelevantexperience.OurBoardofDirectorsservingin2014comprised:

Name Position

1. Mr.NeilA.Hansen(1) Chairman

2. Mr.ChaiJangsirikul(2) Director

3. Mr.MongkolnimitAuacherdkul DirectorandMemberofPerformanceEvaluationCommittee

4. Mr.YodpongSutatham Director

5. Mr.AdisakJangkamolkulchai Director

6. Mr.SomjateSaifon Director

7. Ms.RatrimaniPasiphol Director

8. Mr.SutthichaiSungkamanee(3) IndependentDirector

9. Mr.WattanaChantarasorn(4) IndependentDirectorandMemberofPerformanceEvaluationCommittee

10. Mr.SompopAmatayakul IndependentDirectorandChairmanofAuditCommittee

11. Mr.SmitTiemprasert IndependentDirector,ChairmanofPerformanceEvaluationCommittee,

andMemberofAuditCommittee

12. Ms.WattaneePhanachet IndependentDirectorandMemberofAuditCommittee

Ms. Kathiona Lie and Ms. Angsna Pirentorn are the Company’s secretaries (1) Mr. Neil A. Hansen was appointed chairman to replace Mr. Z John Atanas effective June 12, 2014 (2) Mr. Chai Jangsirikul was appointed director to replace Mr. Anuwat Rungruangrattanagul (who resigned from the director position effective February 3, 2014) with effect from February 24, 2014 (3) Mr. Sutthichai Sungkamanee was appointed independent director to replace Mr. Kurujit Nakornthap (who resigned from the independent director position effective July 1, 2014) with effect from September 10, 2014 (4) Mr. Wattana Chantarasorn was appointed independent director effective September 10, 2014

2. Dividend Policy

OurBoardofDirectorsmayrecommendannualdividends,

subjecttotheapprovaloftheCompany’sshareholders.Our

BoardofDirectorsmay,byresolution,decidetopaytoour

shareholderssuchinterimdividendsasappeartothedirectors

tobe justifiedbyourprofits.Distributionof an interim

dividendmustbereportedtotheshareholdersatthenext

generalmeetingofshareholdersfollowingapprovalofour

BoardofDirectors.

ItisthecurrentpolicyofourBoardofDirectorstorecommend

toourshareholdersadividendofnotlessthan40%ofnet

profitsafterdeductionofallspecifiedreserves,subjectto

ourinvestmentplans,applicablelaws,contingencies,and

otherrelevantconsiderations.Theactualdividendpayout

ratiomayvaryaboveorbelowthe level indicated inour

dividendpolicyand issubjecttotherisksoutlined inour

regulatoryfilings.

3. Board of Directors

OurArticles ofAssociation provide that theBoard of

Directors (the“Board”)willbecomprisedofat least five

directors,notlessthanhalfofwhomarerequiredtoreside

inThailand.Inaddition,one-third,orthenumberofdirectors

closest to one-third if thenumberofdirectors is not a

multipleofthree,oftheBoardisrequiredtoretireateach

annualgeneralmeetingofshareholders.Retiringdirectors

areeligibleforre-election.


Scope of Duties and Responsibilities of the Board

TheBoardofDirectorshas full powerandauthority to

conduct theCompany’sbusiness inaccordancewiththe

Company’spolicies,objectives,ArticlesofAssociation,board

andshareholderresolutions,andapplicablelaws.TheBoard

alsohasdutiesandresponsibilitiesprescribedinapplicable

laws.TheBoardappreciatestheimportanceofgood

corporate governance, and believes in the following

principles:

1.Commitmenttothecreationofaddedvaluetothe

businessinthelongrun,managementofthebusiness

withprudence,andtheavoidanceofconflictsof

interest;

2.Operationofthebusinessinatransparentwaywith

adequatedisclosuretorelevantparties;

3.Operationofthebusinessbasedonappropriaterisk

controlandmanagementsystems;

4. ImplementationofappropriateStandardsofBusiness

ConductapplicabletotheCompany’sdirectors,officers,

andemployees.

TheBoardwillissueadirectors’reportontheactivitiesof

theCompanyanditsfinancialperformanceforreviewprior

totheshareholders’meeting.

Board Appointment

Theappointment,removal,orresignationofdirectorsis

prescribedinourArticlesofAssociationwhichissummarized

asfollows:

1.TheBoardshallconsistofatleastfivedirectorsandnot

lessthanhalfofthedirectorsarerequiredtoresidein

Thailand.

2.Theshareholdersshallappointdirectorsinaccordance

withthefollowingprinciplesandprocedures:

i.Intheelectionofeachdirector,eachshareholderwill

havevote(s)equaltothenumberofsharesheldby

him/her.

ii.Eachshareholdermayvoteallofhis/hersharesinthe

exerciseoftherighthe/shehasunder(i)toelecteach

ofthecandidatesofhis/herchoiceasadirectorbut

he/shecannotsplithis/hersharesandcasthis/hersplit

infavoroftwoormorecandidatestoonedirectorship;

and

iii.Candidateswhoreceivethelargestnumberofvotes

indescendingorderfromthehighesttothelowest

numberofvotesreceivedwillbeelecteduntilalldirector

positionsrequiredatsuchtimearefilled.Intheevent

ofcandidatesreceivingequalvotesandexceedingthe

numberofvacanciestobefilled,thechairmanofthe

meetingshallhaveacastingvote,or,incasethe

chairmanisnottheCompany ’sshareholder,the

decisionshallbemadebydrawingalot;

3.Ateachannualgeneralmeetingofshareholders,

one-thirdorthenumberofdirectorsclosestto

one-third,oftheBoardisrequiredtoretire.Retiring

directorsareeligibleforre-election;

4.Anydirectorwhodecidestoresignmustsubmitaletter

ofresignationtotheCompany.Theresignationshallbe

effectiveonthedatetheCompanyreceivestheletter;

and

5.Removalofadirectorbeforetheendofthetermshall

requirearesolutionofshareholderspassedbynotless

thanthree-fourthsofthetotalvotesofshareholdersand

proxies(ifany)attendingthemeetingandeligibleto

voteandnotlessthanone-halfofthetotalnumberof

sharesheldbyshareholdersandproxies(ifany)

attendingthemeetingandeligibletovote.


Independent Directors

Inadditiontothequalificationdescribedinitem7(Nomination

ofDirectorsandExecutives), independentdirectorsmeet

thefollowingqualificationspursuanttotheregulationofthe

SecuritiesandExchangeCommissionandStockExchange

ofThailand:

1.Notholdsharesexceeding1%ofthetotalnumberof

votingrightsoftheCompany,itsparentcompany,its

subsidiaries,affiliates,majorshareholderorcontrolling

person,includingthesharesheldbyrelatedpersonsof

theindependentdirector;

2.Notbenorhavebeenanexecutiveofficer,employee,

staff,salariedconsultantoracontrollingpersonofthe

Company,itsparentcompany,itssubsidiaries,affiliates,

same-levelsubsidiaries,majorshareholderorcontrolling

personunlessforegoingstatushasendednotlessthan

twoyearspriortothedateofappointmentexceptwhere

theindependentdirector(s)wasthegovernmentofficer

orconsultantofthegovernmentagencywhichisthe

majorshareholderoracontrollingpersonofthe

Company;

3.Notbeapersonrelatedbybloodorregistrationunder

laws,suchasfather,mother,spouse,siblingorchild,

includingspouseofthechildren,executivesormajority

shareholdersorcontrollingpersonsorpersonstobe

nominatedasexecutiveorcontrollingpersonsofthe

Companyoritssubsidiaries;

4.NothaveabusinessrelationshipwiththeCompany,its

parentcompany,itssubsidiaries,affiliates,major

shareholderorcontrollingpersonwhichmayinterfere

withhis/herindependentjudgmentandneitherbeing

norhavingbeenasignificantshareholderorcontrolling

personofanypersonhavingabusinessrelationship

withtheCompany,itsparentcompany,itssubsidiaries,

affiliates,majorshareholderorcontrollingpersonunless

theforegoingrelationshiphasendednotlessthan

twoyearspriortothedateofappointment.

Theterm“businessrelationship”includesnormalbusiness

transactions,rentorleaseofimmovableproperty,transactions

relatedtoassetsorservicesorgrantingorreceiptoffinancial

assistancethroughreceivingorextendingloans,guarantees,

providingassetsascollateral,andanyothersimilaractions

whichresultintheCompanyoritscounterpartybeingsubject

toindebtednesspayabletotheotherpartyamountingto

three(3)percentormoreofthenettangibleassetsofthe

CompanyorBahttwenty(20)million,whicheverislower.

Thevalueofthebusinessrelationshipshallbecalculated

accordingtothemethodstipulatedbytheCapitalMarket

SupervisoryBoardgoverningrulesonconnectedtransactions.

The consideration of such indebtedness shall include

indebtednessoccurredduringtheperiodofoneyearprior

to thedateonwhich thebusiness relationshipwith the

personcommences;

5.NeitherbenorhavebeenanauditoroftheCompany,

itsparentcompany,itssubsidiaries,affiliates,major

shareholderorcontrollingperson,andnotbeinga

significantshareholder,controllingperson,orpartner

ofanauditfirmwhichemploysauditorsoftheCompany,

itsparentcompany,itssubsidiaries,affiliates,major

shareholderorcontrollingpersonunlesstheforegoing

relationshiphasendednotlessthantwoyearsprior

tothedateofappointment;

6.Neitherbenorhavebeenanyprofessionaladvisor,

includinglegaladvisororfinancialadvisor,whoreceives

anannualservicefeeexceedingtwomillionBahtfrom

theCompany,itsparentcompany,itssubsidiaries,

affiliates,majorshareholderorcontrollingperson,and

neitherbeingnorhavingbeenasignificantshareholder,

controllingpersonorpartneroftheprofessionaladvisor

unlesstheforegoingrelationshiphasendednotless

thantwoyearspriortothedateofappointment;

7.Notbeadirectorwhohasbeenappointedasa

representativeoftheCompany ’sdirector,major

shareholderorshareholderswhoarerelatedtothe

Company’smajorshareholder;

8.Notoperateabusinessofthesamenatureasandin

competitionwiththeCompanyorsubsidiariesnorbe

thepartnerorexecutive,director,employee,staff,

salariedconsultantorholdsharesexceeding1%ofthe

totalnumberofvotingrightsoftheothercompanies

operatingthebusinessofthesamenatureasandin

competitionwiththeCompanyorsubsidiaries;and

9.Nothaveanycharacteristicswhichmakehimincapable

ofexpressingindependentopinionswithregardtothe

Company’sbusinessaffairs.

4. Audit Committee TheAuditCommittee,whichwasappointedbytheBoardof

Directors,iscomprisedsolelyofindependentdirectorswhomeetthequalificationssetoutinregulationoftheSecuritiesandExchangeCommissionandStockExchangeofThailand.

TheChairmanandmembersoftheAuditCommitteeholdofficeforatermoftwoyearssubjecttothemmeetingthe

requisitequalificationsand remainingasdirectorsof theCompany.


TheAuditCommitteememberslistedbelowwerere-appointedforanother2yeartermattheBoardofDirectors’meeting

effectiveOctober19,2013:

Name Position

1. Mr.SompopAmatayakul IndependentDirector/Chairman

2. Mr.SmitTiemprasert IndependentDirector/Member

3. Ms.WattaneePhanachet IndependentDirector/Member(withaccountingandfinancebackground)

Mr. Chai Jangsirikul is the Audit Committee secretary ; Mr. Arthit Piya-Isragul is the Audit Committee coordinator replacing Ms.Tanyarat Ratwattanakulkil

effective May 7, 2014.

Audit Committee Responsibilities

The scope of duties and responsibilities of theAudit

Committeeareasfollows:

1.ToreviewtheCompany’sfinancialreportingprocessto

ensureaccuracyandadequacy;

2.ToensurethattheCompanyhasasuitableandefficient

internalcontrolsystemandaninternalauditsystem,to

determinetheinternalauditunit’sindependence,aswell

astoapprovetheappointment,transferanddismissal

ofthechiefofaninternalauditunitoranyotherunitin

chargeofinternalaudit;

3.ToreviewtheperformanceoftheCompanytoensure

compliancewiththesecuritiesandexchangelaw,

regulationsoftheStockExchangeofThailandandlaws

relatingtothebusinessoftheCompany;

4.Toconsider,select ,nominateandrecommend

remunerationoftheCompany’sexternalauditorsas

wellastoattendanon-managementmeetingwiththe

externalauditoratleastonceayear;

5.Toreviewaconnectedtransactionortransactionthat

mayleadtoconflictofinterestsoastoensurethatthey

areincompliancewithlawsandtheExchange’s

regulations,andarereasonableandforthebenefitof

theCompany;

6.ToprepareareportonmonitoringactivitiesoftheAudit

Committeeanddiscloseitintheannualreportofthe

Company,andhavesuchreportsignedbytheChairman

oftheAuditCommitteeprovidedthatitshallconsistof

atleastthefollowinginformation:

(a) anopiniononthereliability,completeness,and

creditabilityoftheCompany’sfinancialreport;

(b) anopinionontheadequacyoftheCompany ’s

internalcontrolsystem;

(c) anopinionontheCompany’scompliancewiththe

securitiesandexchangelawsandregulations,and

otherlawsapplicabletotheCompany’sbusiness;

(d) anopiniononthesuitabilityofthenominated

externalauditors;

(e) anopinionontransactionsthatmayleadtoconflicts

ofinterests,ifany;

(f) thenumberofauditcommitteemeetings,andthe

attendanceatsuchmeetingsbyeachcommittee

member;

(g) anopinionorgeneralcommentobservedbythe

auditcommitteefromitsperformanceofdutiesin

accordancewiththecharger;and

(h) othertransactions,withinthescopeofdutiesand

responsibilitiesassignedbytheBoard,which,

accordingtotheauditcommittee’sopinion,should

bedisclosedtotheshareholdersandgeneral

investors;

7.ToperformanyothertaskassignedbytheBoardand

agreedtobytheAuditCommittee;

8.ToreporttotheBoardforrectificationwithintheperiod

thattheAuditCommitteethinksfitiftheAuditCommittee

foundorsuspectedthatthereisatransactionoranyof

thefollowingactswhichmaymateriallyorsignificantly

affecttheCompany’sfinancialconditionandoperating

results;

(a) atransactionwhichcausesaconflictofinterest;

(b) anyfraud,irregularity,ormaterialdefectinan

internalcontrolsystem;or

(c) aninfringementofthesecuritiesandexchangelaws

andregulations,oranylawapplicabletothe

Company’sbusiness;and


9.Toreviewwithoutdelayafterreceivingwrittennotice

fromtheexternalauditorofthediscoveryofany

suspiciouscircumstancethatthedirector,manageror

anypersonresponsiblefortheCompanycommitsan

offenseasprescribedbytherelevantSecuritiesand

Exchangeregulations,reportanyfindingconfirming

thesuspicionoftheexternalauditortotheBoardand

requesttheBoardtodisclosesuchfindingtotheOffice

oftheSecuritiesandExchangeCommissionand/or

theexternalauditorortotheOfficeoftheSecurities

andExchangeCommissionand/ortheexternalauditor

asrequiredbytheSecuritiesandExchangeActwithin

thirtydays.

5. Performance Evaluation Committee OurPerformanceEvaluationCommitteewasappointedbytheBoardofDirectors.TheChairmanandmembersof

thePerformanceEvaluationCommitteewillholdofficeforatermoftwoyearssubjecttothemretainingtheirposition

asdirectorsoftheCompany.

OurPerformanceEvaluationCommitteememberslistedbelowwerere-appointedforanother2yeartermattheBoard

ofDirectors’meetingeffectiveNovember29,2013:

Name Position

1. Mr.SmitTiemprasert IndependentDirector/Chairman

2. Mr.WattanaChantarasorn IndependentDirector/Member

3. Mr.MongkolnimitAuacherdkul Director/MemberactingasSecretaryofthePerformanceEvaluationCommittee

Performance Evaluation Committee Responsibilities

ThescopeofdutiesandresponsibilitiesofthePerformanceEvaluationCommitteearetoassesstheperformanceof

theManagingDirector,toreviewtheManagingDirector’sperformancewiththeBoard,andtoprovidefeedbacktothe

ManagingDirector’shomeaffiliateregardingsuchperformanceduringtheregularperformanceappraisalcycle.

6. Executive Officers

ThefollowingexecutiveofficersconstitutedthemanagementcommitteeasofDecember31,2014.

Name Position

1. Mr.NeilA.Hansen(1) ChairmanandManagingDirector

2. Mr.ChaiJangsirikul DirectorandController

3. Mr.MongkolnimitAuacherdkul DirectorandPublicandGovernmentAffairsManager

4. Mr.YodpongSutatham DirectorandRetailManager

5. Mr.AdisakJangkamolkulchai DirectorandRefineryManager

6. Mr.SomjateSaifon DirectorandChemicalsManager

7. Ms.RatrimaniPasiphol DirectorandTreasurer/TaxManager

8. Mr.PhiroonYolwised IndustrialandWholesaleManager

9. Mr.KemchaiOsathapan InvestorRelationsManager

(1) Mr. Neil A. Hansen became an executive officer replacing Mr. Z John Atanas effective June 12, 2014.


Managing Director’s Responsibilities

TheManagingDirectorhas full authority tomanage the

affairsof theCompany in accordancewith its policies,

objectives,ArticlesofAssociation,BoardandShareholders’

resolutions,andapplicablelawsprovidedthattheManaging

Directormaynotexercise suchauthority ifhe/shehasa

conflictof interest inanymannerwith theCompany, in

exercisingsuchauthority.

IftheManagingDirectordelegatesauthoritytoaperson,

suchpersonshallhavetherighttoexercisesuchauthority

on theManagingDirector’sbehalf,provided that such

personmaynotexercise suchauthority if he/shehasa

conflictof interest inanymannerwith theCompany, in

exercisingsuchauthority.

7. Nomination of Directors and Executives

Intheeventadirectorvacancyarisesorintheeventthatan

additionaldirectoristobeappointed,theremainingdirectors

willnominateaqualifieddirectorwithrelevantknowledge,

experienceandskilltofillthevacancy.Anappointeddirector

orexecutivemusthaveallthequalificationssetoutinSection

68ofthePublicLimitedCompaniesActB.E.2535(andas

amended)andtheSecuritiesandExchangeCommission

Procedure no. Tor Jor 24/2552, “TheQualification

of Director andExecutiveof ListedCompany” (andas

amended).Fordirectorsretiringbynormalrotationorfor

electionofnewdirectors, after theBoardhasapproved

the listofdirectornominees, theBoardwillpropose the

listofnomineesatageneralmeetingofshareholders in

accordancewith the votingproceduredescribedunder

item3(BoardofDirectors).

8. Remuneration of Directors and Executives

Directors Remuneration

Thedirectorswilldeterminetheremunerationofdirectors

takingintoaccountallappropriatefactorsincludingmarket

compensation levels fordirectors. The remunerationof

directorsiscomparabletothosepaidbyothercompanies,

andisasfollows:

1.DirectorswhoalsoaremembersoftheAuditCommittee

receiveamonthlyremunerationof166,667Baht.

2.DirectorswhoarenotmembersoftheAuditCommittee

receiveamonthlyremunerationof133,334Baht.

3.Notwithstandingitem(1)and(2),directorswhoreceive

separatecompensationfromtheCompanyorits

affiliatesforanytypeoffull-timeservicerenderedare

noteligibleforremunerationasdirectors.


Thefollowingremunerationwaspaidtodirectorsin2014:

1. Mr.NeilA.Hansen(1) - - - -

2. Mr.ChaiJangsirikul(1) - - - -

3. Mr.MongkolnimitAuacherdkul(1) - - - -

4. Mr.YodpongSutatham(1) - - - -

5. Mr.AdisakJangkamolkulchai(1) - - - -

6. Mr.SomjateSaifon(1) - - - -

7. Ms.RatrimaniPasiphol(1) - - - -

8. Mr.SutthichaiSungkamanee(2) - 488,491 - 488,491

9. Mr.WattanaChantarasorn - 1,600,008 - 1,600,008

10.Mr.SompopAmatayakul - 2,000,004 - 2,000,004

11.Mr.SmitTiemprasert - 2,000,004 - 2,000,004

12.Ms.WattaneePhanachet - 2,000,004 - 2,000,004

Directorresigningduring2014

Mr.ZJohnAtanas(1) - - - -

Mr.AnuwatRungruangrattanagul(1) - - - -

Mr.KurujitNakornthap(3) - 800,004 - 800,004

Total - 8,888,515 - 8,888,515

(1) Not eligible for director remuneration as they receive separate compensation from the Company or its affiliates for full-time services rendered. (2) Appointed independent director effective September 10, 2014 (3) Resigned from independent director position effective July 1, 2014

Name Meeting

allowance

Fiscal year ended December 31, 2014 (Baht)

Monthly

remuneration

Bonus Total


Executives Remuneration

ForthefiscalyearendedDecember31,2014,totalexecutiveremunerationfor11executives(includingthe2executives

whoresignedin2014),whichincludessalaries,wages,benefits,andpost-employmentbenefits,totheextentbornebythe

Company,wasBaht78.3Million.

Salariesandothershort-termemploymentbenefit 11 57,575 12 60,446

Post-employmentbenefit 11 20,760 12 21,727

Bonus 11 0 12 0

Total 78,335 82,173

9. Management Structure

ThemanagementstructureoftheCompany,itssubsidiaries,andassociatedcompaniesasofDecember31,2014isasfollows:

1. Mr.NeilA.Hansen* x,/,// x,/,//

2. Mr.ChaiJangsirikul* /,// // // // // //

3. Mr.MongkolnimitAuacherdkul* /,//

4. Mr.YodpongSutatham* /,// x,/,// x,/,// x,/,//

5. Mr.AdisakJangkamolkulchai* /,//

6. Mr.SomjateSaifon* /,//

7. Ms.RatrimaniPasiphol* /,// // // // // //

8. Mr.SutthichaiSungkamanee /

9. Mr.WattanaChantarasorn /

10. Mr.SompopAmatayakul /

11. Mr.SmitTiemprasert /

12. Ms.WattaneePhanachet /

13. Mr.PhiroonYolwised //

14. Mr.KemchaiOsathapan //

x=Chairman/=Director//=ExecutiveOfficer*=AuthorizedDirector

1.MobilEnterprises(Thailand)Limited

2.IndustryPromotionEnterprisesLimited

3.UnitedIndustryDevelopmentCompanyLimited

4.PacesetterEnterpriseLimited

5.ThaiC-CenterCompanyLimited

6.ThaiPetroleumPipelineCompanyLimited

Number of Executives

Company

Compensation

2014 2013

Subsidiaries/Associated Company

Amount (K Baht)

Number of Executives

Amount (K Baht)

1 2 3 4 5 6Name


10. Shareholding of Directors and Executives *

ShareholdingofdirectorsandexecutivesasofDecember31,2014isasfollows:

1. Mr.NeilA.Hansen - - - - -

2. Mr.ChaiJangsirikul - - - - -

3. Mr.MongkolnimitAuacherdkul - - - - -

4. Mr.YodpongSutatham - - - - -

5. Mr.AdisakJangkamolkulchai - - - - -

6. Mr.SomjateSaifon - - - - -

7. Ms.RatrimaniPasiphol 10,000 10,000 - 0.0003% METL

1(0.003%)

8. Mr.SutthichaiSungkamanee - - - - -

9. Mr.WattanaChantarasorn - - - - -

10. Mr.SompopAmatayakul - - - - -

11. Mr.SmitTiemprasert - - - - -

12. Ms.WattaneePhanachet - - - - -

13. Mr.PhiroonYolwised 80,300 80,300 - 0.0023% -

14. Mr.KemchaiOsathapan 100,000 100,000 - 0.0029% -

* Including shareholding of spouse and minor child.

Remark: Some of the employee directors and executives may own shares of Exxon Mobil Corporation stock through employee savings or other plans sponsored by Exxon Mobil Corporation and / or its affiliates.

**

1.MobilEnterprises(Thailand)Limited(METL)

2.IndustryPromotionEnterprisesLimited(IPEL)

3.UnitedIndustryDevelopmentCompanyLimited(UIDC)

4.PacesetterEnterpriseLimited(PSE)

5.ThaiC-CenterCompanyLimited(TCC)

6ThaiPetroleumPipelineCompanyLimited(THAPPLINE)

No. of Shares as

of December 31, 2013

No. of Shares as

of December 31, 2014

Shareholdings (%)

(company / No. of shares

(%))

Change Increase/

(Decrease) in 2014

Company Subsidiaries**

Name


TheCompanybelievesthemethodsitemploystoachieve

businessresultsareasimportantastheresultsthemselves.

Ourdirectors, officers, andemployees are expected to

observethehigheststandardsofintegrityandmustcomply

withour“StandardsofBusinessConduct”.Inaddition,our

corporategovernance practices reflect the principles

prescribedbytheStockExchangeofThailand.

1. Standards of Business Conduct TheCompanyhaslongestablished“StandardsofBusiness

Conduct”consistingofvariouspoliciesandguidelinesthat

applytoourofficersandemployees.Officersandemployees

areexpectedtoreviewthesepoliciesannually,andprovide

writtenconfirmationofcompliance.Formal“BusinessPractices

Review” training sessionsareconductedperiodically for

all employees toensureanevengreaterunderstanding

ofthesestandards. Inaddition,periodictrainingsessions

areheldon specificpolicies.Forexample, theCompany

providestrainingontheanti-corruptionpolicyannuallyto

employeesindesignatedpositions.

Our”StandardsofBusiness”Conductcontain17foundational

policiesasfollows:

1. EthicsPolicy

2. ConflictsofInterestPolicy

3. CorporateAssetsPolicy

4. DirectorshipsPolicy

5. GiftsandEntertainmentPolicy

6. PoliticalActivitiesPolicy

7. InternationalOperationsPolicy

8. AntitrustPolicy

9. HealthPolicy

10. EnvironmentPolicy

11. SafetyPolicy

12. ProductSafetyPolicy

13. CustomerRelationsandProductQualityPolicy

14. AlcoholandDrugUsePolicy

15. EqualEmploymentOpportunityPolicy

16. HarassmentintheWorkplacePolicy

17. Anti-corruptionPolicy

In addition, pursuant to ” Procedures &OpenDoor

Communication”,employeesareencouragedtoaskquestions,

voiceconcerns,andmakeappropriatesuggestionsregarding

thebusinesspracticesof theCompany. Employees are

expectedtoreportpromptlytomanagementsuspected

violationsoflaw,theCompany’spolicies,andtheCompany’s

internalcontrols,sothatmanagementcantakeappropriate

correctiveaction.Thesefoundationalpoliciesandprocedures

arepostedontheCompany’swebsiteatwww.esso.co.th.

CORPORATE GOvERNANCE


2. Corporate Governance Practices TheCompanygenerallyobservestheprinciplesofgood

corporategovernanceencouragedbytheStockExchange

ofThailandincludingthefollowing:

2.1 Rights of Shareholders

TheCompany recognizes the rights of shareholders,

includingtherighttofreelybuy,sellortransfershares;to

participate in,expressopinions, raisequestions,propose

agenda items for theannualgeneralmeeting;nominate

directors; and vote atgeneralmeetingsof shareholders

regardingtheCompany’sperformancereview,electionor

removalofdirectors,directors’remuneration,appointment

of external auditors, auditor ’s fee, declarationof final

dividends,amendmentstotheMemorandumandArticlesof

Association,capitalincreasesordecreasesandtheapproval

ofextraordinarytransactionsrequiringshareholderapproval.

Generalmeetingsofshareholdersareattendedbyrelevant

knowledgeableexecutivestoanswerquestions.

Shareholdersareprovidedwithadequate information,

includingrelevantopinionsofthedirectors,regardingissues

presentedforvotingatgeneralmeetingsofshareholders

inatimelymannertoenableshareholderstoexercisetheir

votingrightseffectively.

2.2 Equitable Treatment of Shareholders

ItistheCompany ’spolicythatdirectors,officers,and

employeesareexpectedtoavoidanyactualorapparent

conflict between their ownpersonal interests and the

interests of theCompany.Our directors, officers, and

employeesareexpectedtoavoidsecuritiestransactionsthat

arebasedonmaterial,non-publicinformationobtained

throughtheirpositionswiththeCompany.Inrelationtothe

misuseofinsiderinformation,theCompanyhasundertaken

thefollowingsteps:

• Educate the Company ’s executives regarding their

responsibilitiestoreportholdingsoftheCompany’sshares,

andthepenaltiesfornon-disclosureundertheSecurities

andExchangeActB.E.2535andSETregulations;

• AdvisetheCompany’sexecutivestoreportchanges in

such holdings of theCompany’s shares to the SEC in

accordancewiththeSecuritiesandExchangeActB.E.2535;

• Counsel theCompany’sexecutiveson the sensitivities

associatedwith theuseofCompany informationwhich

mayhaveabearingon theCompany’s shareprice.The

Companyadvisesrelevantemployeesonemonthpriorto

thereleaseoftheCompany’sannualfinancialstatements

nottodiscloseanymaterialinformationpriortodisclosure

totheSETandtheboardofdirectors;and

GoodCorporateGovernanceencouragedbytheStockExchange

ofThailand


• RemindtheCompany’sdirectors,executives,employees,

officersthatthey,alongwiththeirrespectivespousesand

dependents, are prohibited fromusing theCompany’s

informationtosell,buy,transferorreceiveanytransferof

theCompany’ssharesbeforesuchinformationisdisclosed

tothepublic.Anysuchusemayviolateapplicablelawsand

maysubjecttheoffendingemployeetodisciplinaryactionby

theCompany.

2.3 Role of Stakeholders

TheCompanyrecognizestheimportanceofthelegalrights

of variousgroupsof stakeholders.We strive toprovide

channelsforstakeholderstocommunicatetheirconcerns

with regard to irregularities, incorrect financial reporting,

insufficientinternalcontrolsorunethicalpractices.

Werecognizetheimportanceofthecommunitiesandthe

environment inwhichweoperate.Wehaveapolicy to

complywithallapplicablelaws,rules,andregulations,and

respectlocalandnationalcultures.Aboveallotherobjectives,

we arededicated to running safe and environmentally

responsibleoperations.

2.4 Disclosure and Transparency

TheCompanyexpects compliancewith its standardsof

integritythroughouttheorganizationandwillnottolerate

employeeswhoachieveresultsbyviolatingthelawsorthe

Company’s policies.All transactionswill be accurately

reflectedinitsbooksandrecords.Thefalsificationofbooks

and recordsand thecreationormaintenanceofany

off-the-recordbankaccountsisstrictlyprohibited.

ItistheCompany’spolicytomakefull,fair,accurate,timely

andunderstandabledisclosuresinreportsanddocuments

that theCompany fileswith theauthorities,and inother

publiccommunications.Relevant informationwillbe

disclosed to shareholders inaccordancewithapplicable

laws. In thepast year, theCompanydisclosedessential

mattersasrequiredbyrelevantrulesandregulationsthrough

theStockExchangeofThailand’schannelinatimelymanner.

Financialreportsandrelevantinformationarealsoposted

ontheCompany’swebsite(www.esso.co.th).

Moreover,theCompanyhassetupanInvestorRelations

functionasafocalpointtoconductinvestorrelations

activities and to ensure effective communicationwith

investorsandsecuritiesanalysts.Variouscommunication

channelsareavailableviatheCompany’swebsite,quarterly

analystmeetings,companyvisits,e-mails,andtelephone

calls.Adirect IRphone line (02262-4788) ande-mail

([email protected])arealsoprovided for contact

convenience.

2.5 Board Responsibilities

Board Structure and Responsibilities

SeeBoardofDirectorsstructureandresponsibilities,and

the listof thedirectors serving theBoard in the section

ShareholdingandManagementStructureunder item3

(BoardofDirectors).

Board Meetings

UnderourArticlesofAssociation,theBoardnormallymeets

onceeverythreemonths.However,additionalmeetingsmay

bescheduledasrequired.ThedatesoftheBoardmeetings

throughouttheyeararescheduledwithnotificationprovided

toeverydirectorinadvance.Normally,thenoticeofthe

meetingwillbesenttoeverydirectoratleastsevendays

priortothedateofthemeeting.

Theminutesofkeyitemsaredocumentedandpresented

forapprovalatsubsequentBoardmeetings,andretained

forinspectionbyrelevantpersons.

Independent directorsmaymeet as necessary among

themselveswithoutthemanagementteamtodiscusstheir

concernsaboutmanagementissues.Theoutcomeisrelayed

totheBoard.


In2014,theBoardmet5timeswithdetailsofattendanceasfollows:

1.Mr.NeilA.Hansen(1) 2/2

2.Mr.ChaiJangsirikul(2) 4/4

3.Mr.MongkolnimitAuacherdkul 3/5

4.Mr.YodpongSutatham 5/5

5.Mr.AdisakJangkamolkulchai 4/5

6.Mr.SomjateSaifon 5/5

7. Ms.RatrimaniPasiphol 5/5

8.Mr.SutthichaiSungkamanee(3) 1/1

9.Mr.WattanaChantarasorn 5/5

10.Mr.SompopAmatayakul 5/5

11.Mr.SmitTiemprasert 5/5

12.Ms.WattaneePhanachet 4/5

Director resigning during 2014

Mr.AnuwatRungruangrattanagul 0/0

Mr.ZJohnAtanas 3/3

Mr.KurujitNakornthap(3) 2/3

(1) Mr. Neil A. Hansen was appointed director to replace Mr. Z John Atanas effective June 12, 2014. (2) Mr. Chai Jangsirikul was appointed director to replace Mr. Anuwat Rungruangrattanagul (who resigned from the director position effective February 3, 2014) effective February 24, 2014. (3) Mr. Sutthichai Sungkamanee was appointed independent director to replace Mr. Kurujit Nakornthap (who resigned from the independent director position effective July 1, 2014) effective September 10, 2014.

Audit Committee

SeetheAuditCommitteecharteranditsresponsibilities,andthelistofmembersinthesectionShareholdingand

ManagementStructureunderitem4(AuditCommittee).

In2014,theAuditCommitteemet9timeswhichincludedmeetingsforindividualdiscussionswithinternallegal

counselorsandexternalauditors.Thedetailsofattendancewere:

1.Mr.SompopAmatayakul 9/9

2.Mr.SmitTiemprasert 9/9

3.Ms.WattaneePhanachet 9/9

Name

Name

Board Meeting Attendance (times)

Audit Committee Attendance (times)

Performance Evaluation Committee

See thePerformanceEvaluationCommitteecharterand

itsresponsibilities,andthelistofmembersinthesection

ShareholdingandManagementStructureunderitem5

(PerformanceEvaluationCommittee).

ThePerformanceEvaluationCommittee assessed the

ManagingDirector’sperformancefor2014andreviewed

theassessmentwiththeBoard,andprovidedfeedbackto

theManagingDirector’shomeaffiliate.

Director Remuneration

Detailsofremunerationpaidtodirectorsisdisclosedinthe

sectionShareholdingandManagementStructureunder

item8(RemunerationofDirectorsandExecutives).

Executive Remuneration

Totalremunerationpaidtoexecutivesisdisclosedinthe

sectionShareholdingandManagementStructureunder

item8(RemunerationofDirectorsandExecutives).


Director and Executive Report of Interest

DirectorsandexecutivesarerequiredtofilewiththeCompanyareportontheirinterest,orrelatedperson’sinterest

(i.e.informationonshareholdinganddirectorshiporexecutivepositionheldinotherlegalentity(ies))whichrelatesto

managementoftheCompanyoritssubsidiariesatthebeginningoftheyearanduponachange.

Director Development

Itisexpectedthatdirectorswillremainwell-informedregardingcurrentaspectsoftheCompany’soperations,developments,

andbestpracticesincorporategovernance.Inthatregard,theBoardconsidersitdesirablethatdirectorsparticipatein

continuingeducationopportunitieswithrelevantavailabletrainingprogramsinsideandoutsidetheCompany,suchas

theprogramsofferedbytheThaiInstituteofDirectorsAssociation(IOD).

DirectorswhohavecompletedtrainingcoursesbytheIODcanbesummarizedasfollows:

1. Mr.NeilA.Hansen DAP * -

2. Mr.ChaiJangsirikul DAP 15Feb2011 -

3. Mr.MongkolnimitAuacherdkul DAP 26Sep2008 -

4. Mr.YodpongSutatham DAP 30Nov2010 -

5. Mr.AdisakJangkamolkulchai DAP 7Nov2008 -

6. Mr.SomjateSaifon DAP 26Sep2008 -

7. Ms.RatrimaniPasiphol DAP 16Jul2012 -

8. Mr.SutthichaiSungkamanee DAP ** -

9. Mr.WattanaChantarasorn DAP 27Mar2009 -

10.Mr.SompopAmatayakul DAP 26Sep2008 -

11.Mr.SmitTiemprasert DCP Jan-Mar2006 -

FN 2005 -

12.Ms.WattaneePhanachet DCP 12Mar-16Aug2002 -

DCPRefresher 25Feb2007 -

ACP 14-15Feb2007 -

* Attended DAP in February 2015 ** Registered to attend DAP in May 2015

DAP = Director Accreditation Program DCP = Director Certification Program ACP = Audit Committee Program FN = Finance for Non-Finance Director

Auditor Remuneration

ForthefiscalyearendedDecember31,2014,thetotalremunerationfortheCompany’sauditorwasBaht4.5Million.

TherewerenootherfeespaidtotheCompany’sauditor.

Name Course Date of Attendance Course Attendance in year 2014

AnnualReport2014 45

Comprehensive Risk Management TheCompanysystematicallyappliesriskassessmentandmanagementpracticesandprocessestoaddressinherentrisks inboth theoperationaland financial aspectsof itsbusiness.Wehaveputinplaceprocessestoidentify,analyze,andassessthesignificanceofpotentialrisksanddeterminemitigationmeasures to reduce those risks toacceptablelevels.Theultimategoal is to safeguardshareholders’interestsandCompanyassets.Theprimarycornerstonesof our riskmanagement approach are theOperationsIntegrityManagementSystem (OIMS)and theControlsIntegrityManagementSystem(CIMS).OIMSisutilizedforsettingtolerancelevelsforsafety,security,health,andenvironmental(SSH&E)riskswhilemethodicallymanagingthem.ThepurposeofCIMSistodothesameforthefinancialandbusinessrisksfacedbythecompany.

Inaccordancewiththeaforementionedframeworksandguidelines, riskmanagementplansareembeddedasanintegralpartofeverybusinessprocess.Theyaredevelopedwithconsiderationforbothinternalandexternalriskfactorsandincludeongoingassessmentsandfollow-upprocessestoensureeffectiveimplementationandcontinuousimprovement.Asaresultofthisembeddedriskmanagementstructure, the company ’s management committeeeffectivelyassumestherolesandresponsibilitiesofariskmanagementcommittee.

Operations Integrity Management System (OIMS)TheCompany is committed toconductingbusiness inamannerthat iscompatiblewiththeenvironmentalandeconomicneedsofthecommunitiesinwhichweoperate,andprotectsthesafety,security,andhealthofouremployees,thoseinvolvedwithouroperations,ourcustomers,andthepublic.ThesecommitmentsaredocumentedinourSafety,Security,Health,Environmental,andProductSafetypolicies.ThesepoliciesareputintopracticethroughadisciplinedmanagementframeworkcalledtheOperationsIntegrityManagementSystem(OIMS).

OIMSprovidesasystematic,structured,anddisciplinedapproach tomeasureprogressand trackaccountabilityacrossbusinesslines,facilities,andprojects.In2011,Lloyd’sRegisterQualityAssurance, Inc., reviewedourongoingperformanceandattestedthatOIMSisconsistentwiththestandardonenvironmentalmanagementsystemsof the InternationalOrganization for standardization(ISO14001 : 2004) and theOccupationalHealth andSafetyAssessmentSeriesforhealthandsafetymanagementsystems(OHSAS18001:2007).OIMSconsistsofthe11elementsillustratedinthefollowingdiagram.

RISK MANAGEMENT


Control Systems TheSystemofManagementControlBasicStandards(SMC)definesessentialprinciplesandconceptsthatformthefoundationofourbusinesscontrols.SimilartoOIMS,theControlsIntegrityManagementSystem(CIMS)isdesignedtoassessandmeasure financial andbusiness risks.Thisincludesembeddedproceduresformitigatingtheserisks,stepstomonitorcompliancewithstandards,andpracticesfor reporting results to theappropriateoperationalandmanagementgroups.Thesecompany-widecontrolsmeetorexceedtherequirementsoftheSarbanes-OxleyActandNYSElistingstandards.

PricewaterhouseCoopersLLPconductedanindependentassessmentofourinternalcontrolsystemsanddeterminedtheyareeffective.Regular self-assessmentsand internalauditshelpensure thateveryoperatingunit consistentlyimplementsthesecontrolstandards.

Risk FactorsTheCompanyissubjecttoavarietyoffinancialandoperationalrisksinherentintheregionalandglobalpetroleumandpetrochemicalbusinesses.Althoughthecompanymonitorsandmanages these risks through the comprehensivemanagementsystemsmentionedabove,manyoftheseriskfactorsarenotwithintheCompany’scontrolandcouldadverselyaffectourbusinessandourfinancialandoperatingresults.Someoftheseriskfactorsincludethefollowing:

Supply and DemandThe petroleum and petrochemical businesses arefundamentally commoditybusinesses. Thismeans theCompany’soperationalandfinancialresults,includingstock

gainsandlosses,maybesignificantlyimpactedbychangesinrefinedpetroleumandpetrochemicalproductpricesandmargins.Refinedpetroleumandpetrochemicalproductpricesandmarginsaredeterminedbylocal,regional,andglobaleventsorconditionsthataffectsupplyanddemandfortherelevantcommodity.

Economic Conditions

Thedemand for refinedpetroleumandpetrochemicalproductscorrelatescloselywithgeneraleconomicgrowthrates.Theoccurrenceofrecessionsorotherperiodsoflowornegativeeconomicgrowthwill typicallyhaveadirectadverseimpact.Otherfactorsthataffectgeneraleconomicconditionsintheworldorinamajorregion,suchaschangesin populationgrowth rates or periods of civil unrest,alsoimpactthedemandforenergyandpetrochemicals.Economicconditionsthatimpairthefunctioningoffinancialmarketsand institutionsalsoposerisks to theCompany,includingriskstothesafetyoffinancialassetsandtheabilityofpartnersandcustomerstofulfilltheircommitmentstotheCompany.

Other Demand-Related

Other factors thatmayaffect thedemand foroil andpetrochemicals include technological improvements inenergyefficiency;seasonalweatherpatterns,whichaffectthedemandforenergyassociatedwithheatingandcooling;increasedcompetitivenessofalternativeenergysourcesthathavesofargenerallynotbeencompetitivewithoilandgaswithoutthebenefitofgovernmentsubsidiesormandates;andchangesintechnologyorconsumerpreferencesthatalterfuelchoicessuchasalternativeenergyfueledvehicles.


Other Supply-Related

Commoditypricesandmarginsalsovarydependingonanumberoffactorsaffectingsupply.Forexample,increasesin industry refining or petrochemicalmanufacturingcapacity above current demand levels tend to reducemargins.Theglobalpetroleumandpetrochemicalindustrycanalsobeaffectedbyotherfactorsthatreduceavailablesupplies,suchasadherencebyOPECmembercountriestoproductionquotas,theoccurrenceofwars,hostileactions,natural disasters, or the unexpected unavailability ofdistributionchannels.Technologicalchangecanalsoaltertherelativecoststoproduceandrefineoilandmanufacturepetrochemicals.

Other Market Factors

TheCompany’sbusinessresultsarealsoexposedtopotentialnegativeimpactsduetochangesincurrencyexchangerates,interestrates,inflation,andotherlocalorregionalmarketconditions.Wedonotusefinancialinstrumentstohedgesuchmarketexposures.

Government Policies, Laws and RegulationsThe Company ’s results can be adversely affected bychanges ingovernmentpolicy, the laws thatgovernourbusinesses,orother regulatory factorssuchas increasesin taxes; restrictivepermitting;pricecontrols;changes inenvironmentalregulationsorotherlawsthatincreasecostof compliance or reduce or delay available businessopportunities;adoptionofregulationsmandatingtheuseofalternativefuelsorotheruncompetitivefuelcomponents.Wealsomaybeadverselyaffectedby theoutcomeoflitigationorother legalproceedings includingvery largeandunpredictablepunitivedamageawards.

Management EffectivenessInadditiontoexternalfactors,ourfuturebusinessresultsdependonourabilitytosuccessfullymanagethosefactorsthatareat least inpartwithinourcontrol.Theextent towhichwemanagethesefactorswillimpactourperformance.

Operational Efficiency

AnimportantcomponentoftheCompany’sperformance,especiallygiventhecommodity-basednatureofmanyofourbusinesses,istheabilitytooperateefficiently,includingmanagingexpensesandimprovingproductionyields.Thisrequiresongoingmanagementfocus,technologyimprovements, cost control,productivityenhancements,andregularreappraisalofourassetportfolio.

Safety, Business Controls & Environmental

Thecompanyfacesavarietyofrisksassociatedwithsafety,businesscontrols,andtheenvironmentthatareinherenttothepetroleumandpetrochemicalbusinesses.Ourresultsdependonmanagement’sabilitytomitigatetheserisksand

effectivelycontrolourbusinessactivities.Weapplyrigorousmanagementsystemsandacontinuousfocustominimizeoreliminateriskssuchasworkplacesafety,spillsorotheradverseenvironmentalevents,airemissions,andcybersecuritybreaches.Substantialliabilitiesandotheradverseimpactscouldresult ifmanagementsystemsandcontrolsdonotfunctiontomitigatetheserisks.

Preparedness

Ourabilitytomitigateadverseimpactsfromnaturaldisasters,humanerror, political or civil unrest, and similar eventsdepends inpartupon theeffectivenessofour rigorousdisasterpreparednessand responseplanning,aswell asbusinesscontinuityplanning.

OthersDependence on Exxon Mobil Corporation and/or

its affiliates for numerous services

WearehighlydependentonExxonMobilCorporationand/oritsaffiliateswithrespecttoseveralaspectsofouroperations,includingaccesstoexpertiseincrudeoilandrawmaterialprocurementservices,aglobal salesnetwork for refinedpetroleumproductsandchemicals,advancedtechnological,operational and engineering services, research anddevelopmentprograms, trademarksandother services.WecannotassurethatExxonMobilCorporationand/oritsaffiliateswillcontinuetoprovidethissupporttous.IfweweretolosethesupportofExxonMobilCorporationand/oritsaffiliates,or ifanyofoursignificantagreementswithExxonMobilCorporationanditsaffiliateswereterminated,andweareunabletosecurealternativesourcesforsuchservicesor recruit additional keypersonnel, this couldadverselyaffectourbusiness.ManyoftheagreementswehavewithExxonMobilforservices,technology,trademarksandothersupportservicescontainautomaticterminationclauses in theeventExxonMobilCorporationdirectlyorindirectlyceasestoownorcontrolmorethan50%oftheownership interest intheCompany.Certainpre-emptionrightsapplyifExxonMobilshareholderswishtoreducetheiraggregateshareholdingsintheCompanytobelow50%.

OurExxonMobilshareholdersarenotboundtoretainanyminimuminterestintheCompanyandmayreducetheirshareholdings in theCompanyatany time. Inaddition,ExxonMobilCorporationanditsaffiliatesarenotobligatedtograntloanstousorprovideanyothertypeoffinancialassistanceandtherecanbenoassurancethattheywilldosointhefuture.

Current and future litigation

Wearedefendants inavarietyof litigationcases in theordinarycourseofbusiness.Anysignificantnewlitigationwith an unfavorable outcome could have amateriallyadverseeffectonourbusiness.


TheAuditCommitteeindependentlyassessesandevaluates

theeffectivenessoftheCompany’sinternalcontrolsystems

toensurethattheyareincompliancewithgoodcorporate

governanceprinciples.TheAuditCommitteehasperformed

anassessmentoftheeffectivenessofoursystemofinternal

controls includinga reviewof all internal audit findings

and recommendations.Basedon theAuditCommittee’s

assessment,theBoardhasconcludedthattheCompany’s

internalcontrolsystemsaresuitableandadequate,andare

functioningconsistentwiththegoodcorporategovernance

aspectsdescribedbelow.

Organization and Control Environment

TheCompanybelievestheexistingorganizationalstructure

isappropriateandeffectiveinoperatingtheCompany’s

businesses.ItistheCompany’spolicythatdirectors,officers,

andemployeesareexpectedtoobservethehighestcode

ofethicsandavoidanyactualorapparentconflictbetween

theirownpersonalinterestsandtheinterestsoftheCompany.

Theyarealsoexpectedtodealfairlywitheachotherand

withthecompany’ssuppliers,customers,competitors,and

otherthirdparties.

INTERNAL CONTROLS


Risk ManagementThe Company applies rigorous risk assessment andmanagementpracticesinallaspectsofourbusiness.TheCompanyhasprocesses inplace to analyzeandassessthesignificanceofpotentialriskanddeterminemitigationmeasurestoreducethoseriskstotheextentfeasible.Riskmanagementplansareembeddedasan integralpartofbusinessprocesses,developedwithconsiderationforbothinternalandexternalriskfactors,anddesignedtoincludefollow-upprocessestoensureeffectiveimplementationandcontinuousimprovement.

Management Control

TheCompanyhasadoptedaDelegationofAuthorityGuidewhichsummarizestheresponsibilitiesandauthoritiesthatform theoverall framework for ensuring that businessarrangementsandtransactionsarereviewedandapprovedatanappropriatelevel.Bydelegatingauthority,managementensuresthatdecisionswillbemadebyindividualswiththerequiredskillsandknowledge.Abasicpremiseisthatthedelegatedauthoritybearswithittheobligationtoexercisegoodbusiness judgment anddue diligence aswell aseffectivesegregationofduties.

Information and Communication

MeetingagendasandsupportinginformationareprovidedtoBoardmembersinatimelyfashiontoensurethatmaterialinformation isavailabletothoseresponsible formakingrelevantdecisions.MinutesoftheBoardmeetings,includingrelevant comments byBoardmembers, are properlydocumented for subsequent review.All financial andsupportingdocumentsareretainedinaccordancewiththeCompany’sInformationManagementSystem(IMS).

Monitoring and Evaluation

Controlstrainingisprovidedtoallemployeesconsistentwithjobrequirements.Internalauditstaffindependentlyassessescompliancewithpoliciesandproceduresandevaluatestheeffectivenessofallcontrolsystemsrelatingtothebusiness.Material controlweaknesses, irregularities, andbusinesspractice issues arepromptly addressedand reported tomanagementandsubsequentlyreviewedbytheBoardAuditCommittee.Correctiveactions,inaccordancewithinternalauditfindingsandrecommendations,aremonitoredbythemanagementof eachbusiness unit until the issues areappropriatelyresolved.TheAuditCommitteeperiodicallyreviewsandassessestheeffectivenessofthemanagementfollowupprocess.

Internal Control System TheCompanyrecognizestheimportanceofaneffectiveinternal control system. In this regard,extensive internalcontrols andprocedures, including those setout inourSystemofManagementControl(SMC)-BasicStandardsandControlsIntegrityManagementSystem(CIMS),arefullyestablishedatalllevelsintheorganization.

The internal control system, includingcompliancewithpoliciesandprocedures,isformallyassessedbyindependentinternalauditstaffandexternalauditorsduringeachauditcycle. This includes a reviewof the effectivenessof allfinancial,operational,andrelatedcontrols.

System of Management Control (SMC)

OurSystemofManagementControl (SMC) sets forthbasiccontrol principles, concepts and standards.Wehavedevelopedthissystemofmanagementcontrol toensuretheeffective,efficientandproperutilizationoftheCompany’sresources.Thebasicpurposeofthecontrolsframeworkistomakesurebusinessactivitiesareconductedproperly and inaccordancewithmanagement’sgeneralandspecificdirectives.

TheSMCisbasedon7basicprinciples:DecentralizationofManagement,SegregationofDutiesandResponsibilities,Documentation, Supervision and Review, Timeliness,Relevance to Risk, andMinimum InterdependenceofControls.Managementatall levelsandinallbusinessesisrequiredtoestablishsystemsandproceduresthatmeetorexceedthesecontrolprinciples.

Controls Integrity Management System (CIMS)

OurControlsIntegrityManagementSystem(CIMS)isaformalsystemofinternalmethodsandanalyticaltoolstoassessandmitigateoperational,financial,andadministrativecontrol risks. It also facilitates the timely reporting tomanagementofcontrolweaknessesandbusinesspracticeissues.CIMSisbasedontheprinciplesandstandardsofSMCandprovideskeyattributesofaneffectivecontrolsystem thathelps toensure theCompany’spoliciesandin-linecontrolsareimplementedandeffectivelysustainedovertime.


CIMS is comprisedof seven elements: “Management,

Leadership,Commitment&Accountability”,“RiskAssessment”,

“Business Process Management & Improvement ”,

“Personnel & Training”, “Management of Change”,

“Reporting & Resolution of ControlWeakness”, and

“Controls IntegrityAssessment”. Each element has five

components:Objectives,Standards,Procedures,Expected

Results,andVerification&FeedbackMechanism.

Auditing and ComplianceBusiness Practices Reviews (BPR)

TheCompanyhas long recognized the importanceand

valueofsoundcorporategovernance,astraight-forward

businessmodel,andethicalbusinessstandards.Webelieve

themethodsweusetoobtainbusinessresultsareasimportant

astheresults themselves.Allemployeesareexpectedto

befamiliarwiththeCompany’spoliciesandstandardsof

businessconductandapplythemtotheirdailywork.They

arerequiredtoconfirmtheirknowledgeandcompliance

with the policies and standardson an annual basis. In

addition,formalBusinessPracticesReview(BPR)sessions

areattendedbyallemployeeseveryfouryears.TheBPR

objectivesare:

• PromotetheCompany ’sreputationforhonestyand

straightforwardapproachtobusinessintegrity;

• Promoteclearunderstandingofandcompliancewiththe

StandardsofBusinessConduct;

• DemonstrateapplicabilityoftheStandardstoallaspects

ofday-to-daybusinessactivitiesandpracticesatevery

levelintheorganization;

• Conveyconsequencesfornon-compliancewiththe

Standards;

• Identify,evaluate,report,andwherenecessary,correct

practicesthatmaynotbeconsistentwiththepolicy;and

• Reportcomplianceconcernsandensureemployee

awarenessofchannelsavailableforreportingtheir

concerns.

Internal Audit

Theinternalauditstaffindependentlyassessescompliance

withpoliciesandprocedures,andevaluatestheeffectiveness

ofallcontrolsystemsrelatedtothebusiness.Management

ofeachbusinesssegmentisobligatedtoconsiderallinternal

auditfindingsandrecommendations,andtakeappropriate

correctiveactions.Generally,eachsegmentofthebusiness

receivesan internal auditevery threeyears. In addition,

businesssegmentsappointControlsAdvisorstoprovide

guidanceoncontrolsandfacilitateself-assessmentsfortheir

unitsatthemid-pointoftheauditcyclebasedonCIMSand

auditstandards.

Theplanandresultsofinternalauditsarereviewedbythe

AuditCommittee.

Independent External Audit

IndependentexternalauditorsaudittheCompany’sfinancialstatementsinaccordancewithgenerallyacceptedauditing

standardsinThailandtoensurethatthefinancialstatements

arefreeofmaterialmisstatementandinconformitywith

generallyacceptedaccountingprinciples.

Auditor’s Remuneration

Theaudit feepaid to theofficeof theexternal auditor,

PricewaterhouseCoopersABAS Limited, for the 2014

accountingperiodwasBaht4,500,000.


• IncreasedfootprintofMobil1centersfrom263to280• Continuedtoachieveoutstandingperformanceinourlubricantsbusiness• Celebratedthe40thanniversaryofMobil1

263230

160

280

100

2010 2011 2012 2013 2014

Mobil 1 Centers

2014 BUSINESS HIGHLIGHTS: MOBIL 1

AnnualReport2014 51


REPORT OF THE AUDIT COMMITTEE

TheAuditCommittee consistsof three independentdirectors as

appointedbytheBoardofDirectors.OnememberoftheCommittee

hasfinancialaccountingcompetencyasrequiredbytheguidelinesof

theStockExchangeofThailand;onememberhasrefineryexperience;

andonememberhasexperienceingeneralandinternationalmanagement.

TheCommitteeheldninemeetingsin2014,aswellasextensivereviews

anddiscussionswiththeexternalauditors,theinternalcontrolmanager,

andtheCompany’smanagement.TheCommitteesubmittedreportsand

presentedfindingstotheBoardofDirectorsonaquarterlybasis.

TheCommitteereviewedanddiscussedwithmanagementandthe

external auditors the accounting policies applied to the financial

statements,financial issues,andjudgmentsmadeinconnectionwith

thefinancialstatements.TheCommitteemetwiththeexternalauditors

withoutthepresenceofmanagementanddiscussedtheappropriateness

ofaccountingpolicies, theapplicationofnewaccounting standards,

andtheadequacyofriskmanagementprocessesrelatedtothefinancial

statements.TheCommitteereviewedanddiscussedwithmanagement

andtheexternalauditorsthedrasticdecreaseinoilpricesinthesecond

halfoftheyear,whichimpactedthecompanyearningsnegativelyasa

resultofthesignificantstockloss.Theexternalauditorsexpressedtheir

opinionthatthefinancialstatementsarefairlystatedinconformitywith

Thaiaccountingstandards.Asaresult,theCommitteeconcludedthat

thefinancialstatementswerepreparedinaccordancewithThaiFinancial

ReportingStandards (TFRS),and information, including transactions

withrelatedparties,wasadequatelydisclosed.


TheCommitteereviewedtheriskmanagementframeworkincludingriskidentification,riskassessment,mitigationmeasures

andthecontrolsthattheCompanydeploys,andconsidereditacomprehensiveandappropriateriskmanagementprocess.

TheCommitteehad fourmeetingswith the internalcontrolmanager to reviewthescope,activities, responsibilities,

resources,andstaffingforinternalcontrolfunctions.TheCommitteereviewedtheadequacyandintegrityofinternal

control,reportsfrominternalauditcoveringmajorissuesarisingfrominternalauditactivities,andthestatusofactions

takenbymanagement.TheCommitteealsodiscussedinternalcontrolsinrelationtoriskmanagementwiththeexternal

auditors,whoconfirmedtheadequacyofinternalcontrolsoverthefinancialreportingprocess.

TheCommitteereviewedtheappropriatenessandreasonablenessofrelated-partytransactions,andqueriedmanagement

regardingsignificantchangestothetermsandconditionsofkeyintercompanyagreements.Therewerenoissuesidentified.

TheCommitteereviewedthelegalandregulatorycomplianceprocessandviewedthattheprocessinplacewasadequate.

TheCommitteeparticipated inscreeningandreviewingthequalificationsandremunerationsofexternalauditorsas

proposedbymanagementandconsentedtotheBoardofDirectorstoproposetheexternalauditorsforapprovalatthe

AnnualShareholders’GeneralMeeting.

Mr.SompopAmatayakul Mr.SmitTiemprasert Mrs.WattaneePhanachet

ChairmanoftheAuditCommittee AuditCommitteeMember AuditCommitteeMember


Inorder to leverage theglobalexpertiseofExxonMobil,theCompanyhasexecutednumerousagreementswithExxonMobilanditsaffiliates.TheseagreementsarebeneficialtotheCompanyandpositivelycontributetothewaytheCompanyoperatesitsbusinesses.Theseagreementshavetermandconditionsthatareonthesamebasisasthoseappliedgenerally toallExxonMobil affiliatesworldwide.Webelievetheseagreementsareatarm’slengthandhaveterms,andconditionsthatarefairandreasonable.AlloftheserelatedpartyagreementshavebeenreviewedbytheAuditCommitteeorareconsistentwithprescribedcriteria.

Necessity and reasonableness of related party transactionsAllrelatedpartytransactionsundertakeninthepastyearpursuant to theseagreementsare for thebenefitof theCompanyandhavebeensubjecttoreviewbytheCompany’sexternalauditorsaspartoftheirauditoftheCompany’sannualfinancialstatementsandbytheAuditCommittee.TheAuditCommitteehas consideredandprovidedanopinion that such transactionswereentered into in thenormalcourseofbusiness,arearm’slength,andhavebeenproperlydisclosed.

Approval of related party transactions Allofourexistingrelatedpartyagreementsareestablishedin thenormalcourseofbusiness.Theapprovalprocessesfor relatedparty agreements are consistentwith thoseprescribedby the relevant rules and regulationsof theCapitalMarketSupervisoryBoardandtheStockExchangeofThailand.Whenthere isa likelihoodofaconflictofinterestarisingfromtheCompany’sentryintoarelatedpartyagreementwithapersonwhoisashareholder,directororexecutiveoftheCompany,thesaidshareholder,directororexecutivewillnotparticipate in theapprovalprocessforsuchagreement.

OnAugust28,2008,theBoardofDirectorsapprovedtheCompanyanditssubsidiariestoenterintocertaintransactionswith its directors, executives and/or related persons(asdefinedintheSecuritiesandExchangeAct)where,inprinciple,suchtransactionshavethesametermsasthosewhichmayordinarilybeenteredintobyordinarypersonswithunrelatedcounterpartiesundersimilarcircumstances,basedoncommercialnegotiations,andwithoutpreferenceresultingfromthestatusofbeingadirector,executiveorrelatedperson,asthecasemaybe,orwherethetransactionsreflectfairpricesorareonacostorcostplusbasispursuanttoagreementsbetweentheCompanyanditsaffiliates,orwherethechargesunderthetransactionsareconsistentwiththosechargedbyotheraffiliatesaroundtheworldforsimilarservicesorgoods,orwheretheinterestexpensesinconnectionwithfinancingtransactionswiththeCompany’saffiliatesaregenerallybasedonfairmarketrates.

Related party transactions in the futureAnynewrelatedpartyagreementsinthefuturewillcomplywith theBoardresolutionofAugust28,2008describedabove,aswellasapplicable lawsand regulationsof theSecuritiesandExchangeCommission,theCapitalMarketSupervisoryBoard,andtheStockExchangeofThailand.

Subjecttotheabove,whentheCompanyproposesexecutingarelatedpartyagreement,theAuditCommitteewillreviewandrenderanopiniononsuchanagreement.TheAuditcommittee’sopinionwillbecommunicatedtotheBoardofdirectorsorshareholders,asthecasemaybe,toensuretheproposedagreementisinthebestinterestoftheCompany.

RELATED PARTY TRANSACTIONS

AnnualReport2014 55

Det

ail o

f rel

ated

par

ty tr

ansa

ctio

nsWelistbelow

themainagreem

entswithrelatedpartiesasofD

ecem

ber3

1,2014.

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eem

ents

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ies/

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nshi

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with

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pany

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urch

ase

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ice

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me

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ice

Expe

nses

Mai

n P

urpo

ses

2014

Tra

nsac

tion

val

ue (M

illio

n B

aht)

Crudeoil,LPG

,Products

andFeedstock,andLubeBasestock

Supp

lyAgreement

ParaxyleneandBenzenecon

centrate

Supp

lyandOfftakeAgreement

FinishedlubesSaleandPurchase

Agreement(spotbasis)

(Witheffe

ctiveNovem

ber1,2014,

thisspo

tbasisagreementw

as

replacedbyInter-AffiliateProd

uct

SaleandPurchaseAgreement)

Assignm

entandAssum

ption

AgreementfortheManufacture

and/orsaleofToyotaOiland

ChemicalProduct

SaleAgreement

Poroxyienesalesagreement

ExxonM

obilAsiaPacificPte.Ltd.

(“EM

APP

L”)

EMAPP

LisanaffiliateofExxon

Mob

ilCorpo

ration(EMC),EM

C

indirectlyholds100%ofshares

inEMAPP

L

EMAPP

L

EMAPP

L

EMAPP

L

ExxonM

obilChemicalAsia

Pacific(“EM

CAP”),adivision

ofEMAPP

L.EMCAPisan

affiliateofEMC,w

hichEMC

indirectlyholds100%ofshares

inEMCAP

EMCAP

EMAPP

Lsellsorp

rocuresforsaletoEssoAsiaPacificcrudeoil.

Inadd

ition

tosuchcrudeoil,EM

APP

Lagreesto

sellorp

rocure

forsaleLP

G,productsandfeedstock,andlubebasestock.

EMAPP

Lpurchasescrudeoil,LP

G,products,feedstockand

lubebasestockwhichEssodesirestosellandexport.

EssosellsEMAPP

Lparaxyleneandbenzenecon

centrate.

Essopurchasesfinishedlubricants,baseoils,basestocks,and/or

lubricantadd

itivesfrom

EMAPP

L.

EMAPP

Lassignsitsrightsandobligationsunderrelevant

agreem

entw

ithToyotaMotorCorpo

rationasalocalblender

and/orsellero

fToyotabrandedoilandchemicalproducts

inThailandto

Esso.

EMCAPsellsorcausestobesoldto

Essochem

icalproducts

insuchavolumeasEssono

minatesfrom

timetotime.

EMCAPsellsto

EssoparaxyleneproductsinsuchavolumeasEsso

nominatesfrom

timetotime.

Goo

ds a

nd S

ervi

ces

16,879

72,741

4,355

179


Crudeoil,ProductsandFeedstocks

Supp

lyAgreement

“BangkokBusinessSupp

ortC

enter”

MasterS

erviceAgreement

Dow

nstreamRegionalH

eadq

uarters/

AffiliateMasterS

erviceAgreement

ChemicalRegionalH

eadq

uarters/

AffiliateServiceAgreement

MasterS

erviceAgreement

ExxonM

obilPetroleum&Chemical

MasterB

usinessSupp

ort

Agreement

EssoAirServiceAgreement

ExxonM

obilSalesandSupp

ly

(“EM

S&S”)

EMS&

SisanaffiliateofEMC,

EMCindirecthyholds100%

ofsharesinEMS&

S

ExxonM

obilLimited(“EM

L”)

EMLisanaffiliateofEMC

andasubsidiaryofExxon

Mob

il

InternationalH

oldingsInc.,

EMCindirectlyholds100%

ofsharesinEMC

EMAPP

L

EMAPP

L

ExxonM

obilGlobalServices

Com

pany(“EM

GSC

”)

EMGSC

isanaffiliateofEMC,

EMCdirectlyholds100%

ofsharesinEMGSC

ExxonM

obilPetroleum&

Chemical(”EM

PC”)

EMPC

isanaffiliateofEMC,


ofsharesinEMPC

ExxonM

obilAviation

InternationalLtd.(“EM

A”)

EMAisanaffiliateofEMC,


ofsharesinEMA

EMS&

Ssellsorp

rocurestosellnon

AsiaPacificcrudeoil.

Inadd

ition

tosuchcrudeoil,EM

S&Sagreesto

sellorp

rocure

forsaleprod

uctsandfeedstocktoEsso.EMS&

Spurchases

crudeoil,LP

G,products,feedstockandlubebasestockwhich

Essodesirestosellandexport.

EMLprovidesvariousservicesincludingcertainmanagem

ent

consulting,functionaladvice,adm

inistrative,technical,professio

nal

andothersuppo

rtingservicesrelatingtoEsso’sbusinessand

operations.

EMAPP

Lprovides/receivesservicesto

/fromEssocoveringa

widerangeofmanagem

entcon

sulting,functionaladvice,

administrative,technical,profession

al,andothersuppo

rting

servicesrelatingtoEsso’sdo

wnstreambusinesssuchasfuels

marketing,refiningandsupp

ly,etc.

EMAPP

Lprovides/receivesservicesto

/fromEssocovering

certainmanagem

entcon

sulting,functionaladvice,adm

inistrative,

technical,profession

al,andothersuppo

rtingservicesincon

nection

withchemicalsbusinesssuchasaccou

nting,legal,tax,hum

an

resources,officespace,andclericalactivities,com

putern

etwork

servicesandprocurementservices.

EMGSC

providesEssowithadviceandassistancerelatingto(i)

inform

ationtechno

logyservices(ii)procurementservices(iii)real

estateservicesandfacilitiesservices.

EMPC

providesEssoavarietyofservicesrelatingtoaccou

nting

andadministrativeservicesthroughperson

nelbasedoutof

businesscentersestablishedou

tsideofThailand.

EMAprovidesEssoawiderangeofmarketingandtechnical

assistanceapp

ropriateto

Esso’saviationfuelbusinessincluding

solicitationofaviationsalesandgeneraladvisoryservicesand

consultancy.

Goo

ds a

nd S

ervi

ces

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eem

ents

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val

ue (M

illio

n B

aht)

2,637

90,729

1,358

1,483

68 5 97

8

AnnualReport2014 57

InterA

ffiliateMarineTransportation

ServicesAgreement

StandardResearchAgreement

CatalystLeaseAgreement

Tradem

arkLicenseAgreement

ClearingHou

seServiceAgreement

ServiceAgreement

ServiceAgreement

StandardTankersBaham

asLtd

(“STB”)

STBisanaffiliateofEMC,


ofsharesinSTB

ExxonM

obilResearchand

EngineeringCom

pany

(“EM

RE”)

EMREisanaffiliateofEMC,


ofsharesinEMRE

ExxonM

obilCatalyst

Techno

logiesLLC

(“EM

CT”)

EMCTisanaffiliateofEMC,


ofsharesinEMCT

ExxonMob

ilCorpo

ration

(“EM

C”)

EMCistheultim

ateparent

companyofvariousaffiliates

andsubsidiaries

EMC

ExxonM

obilHon

gKo

ngLimited

(“EM

HKL”)

EMHKL

isanaffiliateofEMC,


ofsharesinEMHKL

ExxonM

obilCatalystServicesInc.

(“EM

CSI”)

EMCSIisanaffiliateofEMC,


ofsharesinEMCSI

STBprovidesservicesrelatedto(i)vesselpoolactivitiesandtransportation

forp

urchasers’cargo

esofcrudeoil,petroleum

products,and

chem

icals(ii)charteringandtransportationsupp

ortservices

(iii)marinevettingservices(iv)othersuppo

rtingservicesrelated

tothepo

olvesselsaswellasotherm

arinetransportationactivities.

Agreementismadeforthepurpo

seof(i)creation,acquisitionand

managem

entofabod

yoftechnicalinformation,technicalservices,

andpatentandcop

yrightprotectionforthebenefitofpetroleum

andchem

icaloperations(ii)accessto

technicalinformationandthe

useofpatentandcop

yrightprotection(iii)engineeringassistance

andspecialresearch(iv)adm

inisterintellectualpropertyand

technicalinformationacquiredormadeforthebenefitofEsso.

EMCT,asalessor,com

mitsto

supplyandleasecatalyststoEsso.

EMCautho

rizesEssotouseEsso,Exxon

,EssoOvalandExxon

Em

blem

tradem

arksinThailandinassociationwiththeprod

ucts

andservicessoldorprovided.

EMCprovidestheserviceofoperatingtheTradeCentralClearing

HouseSub

-AccountandotherCentralClearingHouseSub

-Account

forthepurpo

seoffacilitatingefficientsettlementandprocessingof

transactions.

EMHKL

provides/receivesservicesto

/fromEssocovering

managerial,profession

alandadm

inistrative,andotheroperational

advicerelatingtotheiro

verallcorporateop

erationsto

Esso.

EMCSIprovidesservicesincludingarrangingforsupplyofpreciou

smetals;arrangingforthefabricationofcatalyst,thereclam

ationof

preciousmetalsfrom

spentcatalyst,andcatalystoperationssuchas

regenerationaswellasconsultingservicesrelatingtocatalyst.

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ice

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me

Serv

ice

Expe

nses

Mai

n P

urpo

ses

2014

Tra

nsac

tion

val

ue (M

illio

n B

aht)

Goo

ds a

nd S

ervi

ces

1,735

2 95 27 4 1 1


ชื่อสัญ

ญา

ServiceAgreement

ExxonM

obilMarineFuelsSupp

ly

andServicesAgreement

Other

ExxonM

obilChemicalCom

pany

(“EM

CC”)

EMCCisadivisionofEMC

ExxonM

obilMarineLimited

(“EM

ML”)andEMAPP

L

EMMLisanaffiliateofEMC,


ofsharesinEMML

Essoprovidescertainservicesrelatingtomarketingefforts

inThailandto

EMCC.

Essosellsanddeliversmarinefuelsaswellasprovidesrelated

servicesto

EMMLandEM

APP

L.

TOTA

L ( s

ee n

ote

to fi

nanc

ial s

tate

men

t no.

34)

(1)Baht818millionserviceexpensespaidtoThaiPetroleum

PipelineCom

panyLimitedisnotincluded

ชื่อสัญ

ญา

LoanandCurrentAccou

ntAgreement

Prom

issoryNotes

Short-TermLoanAgreement

Long-TermLoanAgreement

EML

Exxo

nMob

il Un

ited

Fina

nce

Com

pany

(“EM

UFC”

)

Exxo

nMob

il De

velo

pmen

t Finan

ce

Com

pany

(“EM

DFC”

)

EMDF

C

Essoprovidesaloancom

mitm

enttoEM

Lwiththemaximum

principalamou

ntofB

aht3,000million.Intheeventthatm

oney

from

EMLisdepositedincurrentaccou

nt,Essocanmakeuseof

suchfundandisrequiredtopayinterestforthedepositedam

ount.

EssoissuedfivepromissorynotesatadiscountedvalueofBaht

5,000millioninSeptember2

012andmaturitydateinSeptember

2015andthreeprom

issorynotesatadiscountedvalueofBaht

3,000millioninApril2013.Essoalreadyredeem

edBaht3,000

millionfrom

holdero

nmaturitydateinMay2014.

EMDFC

providesrevolvingloanfacilitytoEssowiththemaximum

aggreg

ateam

ountofB

aht1

2,00

0million.Drawdo

wnand

repaym

entcanbemadeon

cepercalendarm

onth.

EMDFC

providesThaiBaht-deno

minatedlong-termloanto

Esso

ofBaht7,000millionwithprincipalrepaymentevery3months.

TheloanwillbematuredinDecem

ber2

019.

TOTA

L(seenotetofinancialstatementno.34)

Fina

ncia

l Ass

ista

nce

Agr

eem

ents

Part

ies

Loan

Bal

ance

Dep

osit

Bal

ance

Inte

rest

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nse

Inte

rest

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me

Mai

n P

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ses

2014

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val

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Part

ies/

Rel

atio

nshi

p

with

the

Com

pany

Sale

sP

urch

ase

Serv

ice

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me

Serv

ice

Expe

nses

Mai

n P

urpo

ses

2014

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nsac

tion

val

ue (M

illio

n B

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Goo

ds a

nd S

ervi

ces

0 1196

0150

0

19,527 754

19

5,388

206

4,823

204

7,000

20

17,965

449

169,656

(1)

83,470

AnnualReport2014 59

BOARD OF DIRECTORS

AND EXECUTIvE OFFICERS


Mr. Neil A. Hansen Chairman and Managing DirectorAge: 40

Education:

• MSinAccounting, UniversityofSt.Thomas,Texas,USA• MBA,ThunderbirdSchoolofGlobal Management,Arizona,USA

Current Positions:

• ChairmanandManagingDirector, Esso(Thailand)PublicCompanyLimited• ChairmanandManagingDirector, ExxonMobilLimited• ChairmanandManagingDirector, MobilEnterprises(Thailand)Limited• Director,ExxonMobilExplorationand ProductionKhoratInc.

Work Experience:

2013-2014• FinanceManager,AffiliateFinance, Treasurer’s,ExxonMobilCorporation,USA

2012-2013• Manager,Planning&FinancialMarkets, Treasurer’s,ExxonMobilCorporation,USA

2010-2012• Advisor,InvestorRelations, ExxonMobilCorporation,USA

Recordsofviolationoflaw*:NoneFamilyRelationshipwithExecutivesoftheCompany:NoneShareholdingintheCompany:None

Mr. Mongkolnimit AuacherdkulDirector and Member of Performance Evaluation Committee Age: 56

Education:

• M.ScinMechanicalEngineering, UniversityofCincinnati,USA

Current Positions:

• PublicandGovernmentAffairsManager, Esso(Thailand)PublicCompanyLimited

Work Experience:

2010-2014• PublicandGovernmentAffairsManager, Esso(Thailand)PublicCompanyLimited


Mr. Adisak JangkamolkulchaiDirector Age: 51

Education:

• Ph.DinChemicalEngineering, UniversityofTulsa,USA

Current Positions :

• RefineryManager, Esso(Thailand)PublicCompanyLimited

Work Experience:

2013-2014• RefineryManager, Esso(Thailand)PublicCompanyLimited

2010-2013• RefineryProcessManager, Esso(Thailand)PublicCompanyLimited


BOARD OF DIRECTORS


Mr. Somjate SaifonDirectorAge: 57

Education:

• M.Eng,AsianInstituteofTechnology, Thailand

Current Positions:

• ChemicalsManager, Esso(Thailand)PublicCompanyLimited

Work Experience:

2010-2014• ChemicalsManager, Esso(Thailand)PublicCompanyLimited


Mr. Chai JangsirikulDirector Age: 57

Education:

• MBA,ThammasatUniversity,Thailand

Current Positions:

• Controller, Esso(Thailand)PublicCompanyLimited• DirectorandController,ExxonMobilLimited• Controller,IndustryPromotionEnterprises Limited• Controller,UnitedIndustryDevelopment CompanyLimited• Controller,PacesetterEnterprisesLimited• Controller,ThaiC-CenterCompanyLimited• Controller,ExxonMobilExplorationand ProductionKhoratInc.

Work Experience:

2010-2014• Controller, Esso(Thailand)PublicCompanyLimited• Controller,ExxonMobilLimited• Controller,IndustryPromotionEnterprises Limited• Controller,UnitedIndustryDevelopment CompanyLimited• Controller,PacesetterEnterprisesLimited• Controller,ThaiC-CenterCompanyLimited


Mr. Yodpong SutathamDirectorAge: 47

Education:

•MBAinGeneralManagement, SeattlePacificUniversity,USA

Current Positions:

• RetailManager, Esso(Thailand)PublicCompanyLimited• ChairmanandManagingDirector,Industry PromotionEnterprisesLimited• ChairmanandManagingDirector,United IndustryDevelopmentCompanyLimited• ChairmanandManagingDirector, PacesetterEnterprisesLimited

Work Experience:

2010-2014• RetailManager, Esso(Thailand)PublicCompanyLimited• ManagingDirector, IndustryPromotionEnterprisesLimited• ManagingDirector, UnitedIndustryDevelopmentCompany Limited• ManagingDirector, PacesetterEnterprisesLimited



Ms. Ratrimani PasipholDirectorAge: 47

Education:

• MBA,UniversityofWashington,USA

Current Positions:• Treasurer/TaxManager, Esso(Thailand)PublicCompanyLimited• DirectorandTreasurer/TaxManager, ExxonMobilLimited• Treasurer/TaxManager, IndustryPromotionEnterprisesLimited• Treasurer/TaxManager, UnitedIndustryDevelopmentCompany Limited• Treasurer/TaxManager, PacesetterEnterprisesLimited• Treasurer/TaxManager, ThaiC-CenterCompanyLimited• Treasurer/TaxManager,ExxonMobil ExplorationandProductionKhoratInc.

Work Experience:

2010-2014• Treasurer/TaxManager, Esso(Thailand)PublicCompanyLimited• Treasurer,ExxonMobilLimited• Treasurer, IndustryPromotionEnterprisesLimited• Treasurer,UnitedIndustryDevelopment CompanyLimited• Treasurer,PacesetterEnterprisesLimited• Treasurer,ThaiC-CenterCompanyLimited• Treasurer,ExxonMobilExplorationand ProductionKhoratInc.

Recordsofviolationoflaw*:NoneFamilyRelationshipwithExecutivesoftheCompany:NoneShareholdingintheCompany:10,000share(0.0003%)

Ms. Wattanee PhanachetIndependent Director and Member of Audit CommitteeAge: 77

Education:

• M.A.(Accounting), UniversityofAlabama,USA• CertifiedPublicAccountant

Current Positions:

•IndependentDirectorandChairmanof AuditCommittee,CapitalNomuraSecurities PublicCompanyLimited• Specialistinthefieldoffinanceand accounting,CivilServiceCommission

Work Experience:

• AssociateDeanforAcademicAffairs, memberoftheExecutiveBoard,Facultyof CommerceandAccountancy, ChulalongkornUniversity• ExecutiveCommitteeandSubcommittee Member,TheFederationofAccounting Professions• GroupBusinessCommitteeMember, ElectricityGeneratingPublicCompany Limited• IndependentDirectorandAuditCommittee Member,ElectricityGeneratingPLC• IndependentDirectorandChairmanof AuditCommittee,ThaiPolyAcrylicPublic CompanyLimited• IndependentDirectorandChairmanof AuditCommittee,DeltaElectronics ThailandPublicCompanyLimited


Mr. Wattana ChantarasornIndependent Director and Member ofPerformance Evaluation Committee Age: 68

Education:

• M.ScinChemicalEngineering, IllinoisInstituteofTechnology,USA

Current Positions:

• -

Work Experience:

2006-2007• AsiaPacificRefiningBusinessAdvisor, ExxonMobilLimited

2004-2006• AsiaPacificRefiningBusinessAdvisor, Esso(Thailand)PublicCompanyLimited

1997-2004• RefineryManager, Esso(Thailand)PublicCompanyLimited


BOARD OF DIRECTORS


Mr. Sutthichai Sungkamanee Independent DirectorAge: 58

Education:

• HonoraryDegreeDoctorofPhilosophy (ManagementofDevelopment), RajabhatRajanagarindaUniversity• BachelorofBusinessAdministration, UniversityofChamberofCommerce• Certificate,SeniorExecutiveDevelopment Program,OfficeoftheCivilService Commission• NationalDefenseCollegeYear2013

Current Positions:

• InspectorGeneral,MinistryofFinance

Work Experience:

2014-Present• InspectorGeneral,MinistryofFinance

2013-2014• DirectorGeneral,RevenueDepartment

2013• InspectorGeneral,MinistryofFinance

2012-2013• DeputyDirectorGeneral, RevenueDepartment

2010-2012• Director,RegionalRevenueOffice3


Mr. Smit TiemprasertIndependent Director, Chairman of Performance Evaluation Committee and Member of Audit CommitteeAge: 75

Education:

• M.S.inIndustrialEngineeringand Management,OklahomaStateUniversity, USA

Current Positions:

• -

Work Experience:

• Over35yearsextensivemanagementand engineeringexperienceinthepetroleum andpetrochemicalindustries;servedvarious keyexecutivepositionsinsupply,planning, distribution,refining,andmarketinginEsso (Thailand)PublicCompanyLimitedand ThaiPetrochemicalIndustryPublicCompany Limitedbeforeretirementin2003


Mr. Sompop AmatayakulIndependent Director and Chairman of Audit CommitteeAge: 74

Education:

• MBAinGeneralManagement, UniversityofThaiChamberofCommerce• HonoraryDoctorateinCommerce, ThammasatUniversity,Thailand• HonoraryDoctorateinBusinessAdministration, NationalInstituteofDevelopment Administration,Thailand• InternationalManagementCourse, ColumbiaUniversity,USA

Current Positions:

• DirectorofCivilServiceCommission, RoyalThaiGovernment• ChairmanofSub-committee, BureauofClassificationandCompensations, CivilServiceCommission• ChairmanoftheCommitteeofClassification andCompensationministryofCommerce, TheBoardofInvestmentofThailand, TheRoyalInstitute• ChairmanofThailandQualityAward(TQA), ThailandProductivityInstitute• ChairmanofSub-committeeofState EnterprisePerformanceAppraisal, StateEnterprisePolicyOffice• DirectorofMonitoringandEvaluation Committee,KingPrajadhipok’sInstitute

Work Experience:

• DeputyMinisterofIndustry• ChairmanoftheBoard, BangkokMetropolitanBankPLC• ChairmanoftheBoard, TheStateRailwayofThailand• GeneralManager,IBMThailandCo.,Ltd.



* This covers any of the following within the past 10 years : (1) a conviction under a criminal charge, excluding conviction for traffic offences and minor charges ; (2) being declared bankrupt or having assets controlled; or (3) being dismissed from government service or a state organization or agency for dishonesty at work.

Mr. Phiroon YolwisedIndustrial and Wholesales Manager Age: 57

Education:

• MBA,NovaSoutheasternUniversity, Florida,USA

Current Positions:

• IndustrialandWholesalesManager Esso(Thailand)PublicCompanyLimited

Work Experience:

2010-2014• IndustrialandWholesalesManager Esso(Thailand)PublicCompanyLimited

Recordsofviolationoflaw*:NoneFamilyRelationshipwithExecutivesoftheCompany:NoneShareholdingintheCompany:35,000shares;Spouse45,300shares(0.0023%)

Mr. Kemchai OsathapanInvestor Relations Manager Age: 44

Education:

• MBAinInternationalBusiness, LoyolaCollege,Baltimore,USA

Current Positions:

• InvestorRelationsManager, Esso(Thailand)PublicCompanyLimited

Work Experience:

2013-2014• InvestorRelationsManager, Esso(Thailand)PublicCompanyLimited

2010-2013

• AsiaPacificCustomerSupportManager, AsiaPacificFuelsMarketingCustomer Services,ExxonMobilLimited

Recordsofviolationoflaw*:NoneFamilyRelationshipwithExecutivesoftheCompany:NoneShareholdingintheCompany:100,000shares(0.0029%)

EXECUTIvE OFFICERS


TheaccompanyingconsolidatedfinancialstatementsofEsso(Thailand)Public

CompanyLimitedand its subsidiaries and the financial statementsofEsso

(Thailand)PublicCompanyLimitedhavebeenprepared in conformitywith

generallyacceptedaccountingstandardsinThailandundertheAccounting

ActB.E.2543,andthefinancialreportingrequirementsoftheSecuritiesand

ExchangeCommissionundertheSecurityandExchangeActB.E.2535.

TheBoardofDirectorsisoftheopinionthatthefinancialstatementshavebeen

preparedinaprudentmannerandcontainaccurateandcompletematerial

informationinrespecttothefinancialcondition,resultsofoperations,andcash

flowsoftheCompanyanditssubsidiaries.Aneffectiveinternalcontrolsystem

hasbeenestablishedtoensurethataccountingrecordsareaccurate,complete

andtimely,assetsaresafeguarded,andweaknessesareidentifiedtoprevent

fraud,unlawfulconductandotherirregularitieswithmaterialimplications.The

appropriateaccountingpolicieswereconsistentlyappliedinaccordancewith

generally accepted accounting principles andmaterial informationwas

adequatelydisclosedinthenotestothefinancialstatements.

Mr.NeilA.Hansen

ChairmanandManagingDirector

Esso(Thailand)PublicCompanyLimited

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

FOR FINANCIAL REPORTING



CONSOLIDATED AND COMPANY FINANCIAL STAEMENTS

31 DECEMBER 2014

AUDITOR’S REPORT

To the Shareholders of Esso (Thailand) Public Company Limited

IhaveauditedtheaccompanyingconsolidatedandcompanyfinancialstatementsofEsso(Thailand)PublicCompanyLimitedanditssubsidiariesandofEsso(Thailand)PublicCompanyLimited,whichcomprisetheconsolidatedandcompanystatementsoffinancialpositionasat31December2014,andtherelatedconsolidatedandcompanystatementsofcomprehensive income,changes inshareholders’equityandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandothernotes.

Management’s Responsibility for the Financial Statements

ManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithThaiFinancialReportingStandards,andforsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibility

Myresponsibility is toexpressanopiniononthesefinancialstatementsbasedonmyaudit. Iconductedmyaudit inaccordancewithThaiStandardsonAuditing.ThosestandardsrequirethatIcomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyauditopinion.

OpinionInmyopinion,theconsolidatedandcompanyfinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedandcompanyfinancialpositionofEsso(Thailand)PublicCompanyLimitedanditssubsidiariesandofEsso(Thailand)PublicCompanyLimitedasat31December2014,anditsconsolidatedandcompanyresultsofoperationsanditscashflowsfortheyearthenendedinaccordancewithThaiFinancialReportingStandards.

NattapornPhan-Udom CertifiedPublicAccountant(Thailand)No.3430 PricewaterhouseCoopersABASLtd.

Bangkok 23February2015

AnnualReport2014 67


Current assets

Cashandcashequivalents 5 409,116 1,002,448 277,156 502,421

Tradereceivables,net 6 4,271,010 6,697,414 4,256,254 6,673,449

Tradereceivablesfromarelatedparty 34f - - 968,082 2,543,788

Amountsduefromrelatedparties 34f - 133 58,659 100,982

Inventories,net 7 19,201,910 27,889,024 18,925,024 27,494,851

Taxclaimreceivable,net 8 1,177,220 2,103,690 1,130,917 2,101,922

Othercurrentassets 9 952,700 729,100 1,096,451 893,819

26,011,956 38,421,809 26,712,543 40,311,232

Non-current assets

Investmentsinsubsidiariesandanassociate 10 2,076,517 1,705,346 1,843,949 1,843,949

Available-for-salefinancialassets 11 1,125,000 990,000 1,125,000 990,000

Long-termloanstorelatedparties 34g - - 2,416,901 2,383,058

Deferredincometaxassets,net 12 3,576,293 983,768 3,459,261 853,418

Intangibleassets,net 13 177,789 229,924 177,789 229,924

Property,plantandequipment,net 14 29,833,726 30,818,597 25,575,241 26,560,930

Non-currentassetsheldforsale,net 15 - 104,710 - -

Prepaidrentalanddeferredcharges 16 967,040 720,847 2,300,038 2,195,490

Othernon-currentassets 100,150 35,037 83,120 18,948

37,856,515 35,588,229 36,981,299 35,075,717

Total assets 63,868,471 74,010,038 63,693,842 75,386,949

Thenotesonpages74to111areanintegralpartoftheseconsolidatedandcompanyfinancialstatements.

Consolidated Company

Assets Notes 2014 2013 2014 2013

Esso (Thailand) Public Company Limited

Statement of Financial PositionAs at 31 December 2014 (All amounts in Baht thousand unless otherwise stated)


Current liabilities

Borrowings 17 13,709,656 17,184,230 13,709,656 17,184,230

Tradeandotherpayables 18 3,509,415 3,674,121 3,413,910 3,570,747

Short-termloansfromrelatedparties 34h 12,365,557 6,198,667 12,873,593 7,833,629

Amountsduetorelatedparties 34f 9,640,017 11,131,340 9,630,029 11,132,490

Short-termprovisionsforemployeebenefits 19 846,986 496,932 636,949 496,932

40,071,631 38,685,290 40,264,137 40,218,028

Non-current liabilities

Long-termloansfromrelatedparties 34h 5,600,000 5,213,195 5,600,798 5,213,804

Borrowings 17 4,000,000 5,800,000 4,000,000 5,800,000

Long-termprovisionsforemployeebenefits 19 1,851,466 1,730,652 1,851,466 1,730,652

Othernon-currentliabilities 4,821 1,893 4,821 1,893

11,456,287 12,745,740 11,457,085 12,746,349

Total liabilities 51,527,918 51,431,030 51,721,222 52,964,377

Shareholders’equity

Sharecapital

Authorisedsharecapital

3,467,916,666ordinaryshareswith

parvalueofBaht4.9338each 20 17,110,007 17,110,007 17,110,007 17,110,007

Issuedandpaid-upsharecapital

3,460,858,000ordinaryshareswith

paidupvalueofBaht4.9338each 20 17,075,181 17,075,181 17,075,181 17,075,181

Sharepremium 20 4,031,711 4,031,711 4,031,711 4,031,711

Retainedearnings(Deficit)

Appropriated

Legalreserve 22 653,243 653,243 653,243 653,243

Unappropriated (10,298,213) 48,242 (10,658,715) (100,763)

Othercomponentsofequity 23 871,200 763,200 871,200 763,200

Equityattributabletoownersoftheparent 12,333,122 22,571,577 11,972,620 22,422,572

Non-contrillinginterests 7,431 7,431 - -

Total shareholders’ equity 12,340,553 22,579,008 11,972,620 22,422,572

Total liabilities and shareholders’ equity 63,868,471 74,010,038 63,693,842 75,386,949



Liabilities and shareholders’ equity Notes 2014 2013 2014 2013


Statement of Financial PositionAs at 31 December 2014 (All amounts in Baht thousand unless otherwise stated)


Sales 24 218,187,435 242,304,975 216,632,036 240,739,559

SubsidyfromOilFuelFund 2,547,570 2,868,344 2,547,570 2,868,344

Costofsales 25 (226,715,122) (238,943,704) (225,937,640) (238,140,926)

Gross (loss)/profit (5,980,117) 6,229,615 (6,758,034) 5,466,977

Sellingexpenses 25 (5,487,679) (5,278,082) (4,894,205) (4,627,967)

Administrativeexpenses 25 (419,996) (384,755) (419,996) (384,755)

(Loss)/profit from sales (11,887,792) 566,778 (12,072,235) 454,255

Otherincome 98,975 89,125 81,666 69,267

Financecosts,net 26 (896,755) (984,328) (764,387) (861,241)

Shareofprofitfromanassociate 10 371,171 363,893 - -

Othernon-operatin(expense)/income 28 (648,940) 6,953 (435,787) -

(Loss)/profit before income tax (12,963,341) 42,421 (13,190,743) (337,719)

Incometaxcredit/(expense) 27 2,617,702 (420,349) 2,632,791 (415,671)

Loss for the year (10,345,639) (377,928) (10,557,952) (753,390)

Other comprehensive income,

net of income tax:

Gainsonremeasuringavailable-for-sale

investments 23 108,000 198,720 108,000 198,720

Total comprehensive expense

for the year (10,237,639) (179,208) (10,449,952) (554,670)

Loss attributable to:

Ownersoftheparent (10,346,455) (378,755) (10,557,952) (753,390)

Non-controllinginterests 816 827 - -

(10,345,639) (377,928) (10,557,952) (753,390)

Total comprehensive expense

attributable to:

Ownersoftheparent (10,238,455) (180,035) (10,449,952) (554,670)

Non-controllinginterests 816 827 - -

(10,237,639) (179,208) (10,449,952) (554,670)

Loss per share for loss attributable

to the equity holders of the parent

(expressedinBahtpershare)

Basic/diluted 29 (2.99) (0.11) (3.05) (0.22)



Assets Notes 2014 2013 2014 2013


Statement of Comprehensive IncomeFor the year ended 31 December 2014 (All amounts in Baht thousand unless otherwise stated)


Not

esSh

are

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ium

Ava

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17,075,181

4,031,711

653,243

600,04

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7,43

122,932,086

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Totalcom

prehensive(expense)/income

-

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(378,755)

198,72

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827

(179,208)

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--

-(173,043)

-(173,043)

(827)

(173,870)

Clo

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48,242

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17,075,181

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112,340,553

Thenoteson

pages74to111areanintegralpartofthesecon

solidatedandcom

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17,075,181

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023,150,285

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-

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(753,390)

198,72

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Dividend

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-(173,043)

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Closingbalanceat201

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17,075,181

4,031,711

653,24

3(100,763)

763,20

022,422,572

Openingbalance201

4

17,075,181

4,031,711

653,24

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763,20

022,422,572

Cha

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-

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Cash flows from operating activities

Cashgeneratedfrom/(usedin)operations 30 32,574 (1,635,895) 1,525,300 (2,717,655)

Interestpaid (1,087,971) (528,573) (1,119,753) (566,888)

Incometaxpaid (6,367) (4,631) - -

Net cash (used in)/generated from

operating activities (1,061,764) (2,169,099) 405,547 (3,284,543)

Cash flows from investing activities

Netadditionallong-termloans

torelatedparties 34g - - (33,843) (155,349)

Purchaseofproperty,plantandequipment 14 (1,161,698) (1,126,699) (1,161,698) (1,126,698)

Interestreceived 5,017 4,686 167,739 162,051

Dividendreceived 35,280 29,161 38,080 33,661

Proceedsfromdisposalsofproperty,plant

andequipment,andnon-currentassets

heldforsale 30 111,520 54,952 6,519 18,452

Net cash used in investing activities (1,009,881) (1,037,900) (983,203) (1,067,883)

Cash flows from financing activities

Netproceeds/(repayments)from

short-termborrowings 1,300,000 (2,260,000) 1,300,000 (2,260,000)

Paymentsonlong-termborrowings (7,100,000) (1,600,000) (7,100,000) (1,600,000)

Proceedsfromlong-termborrowings 1,000,000 500,000 1,000,000 500,000

Netproceedsfromshort-termloans

fromrelatedparties 677,760 5,689,153 (449,167) 6,745,863

Paymentonlong-termloansfromrelatedparty - - (4,036) (6,099)

Proceedsfromlong-termloansfromrelatedparty 5,600,000 - 5,604,225 4,261

Dividendspaidtoequityholders 21 - (173,043) - (173,043)

Dividendspaidtominorityinterests (816) (827) - -

Net cash generated from financing activities 1,476,944 2,155,283 351,022 3,210,982

Net increase/(decrease) in cash and

cash equivalents and bank overdrafts (594,701) (1,051,716) (226,634) (1,141,444)

Cashandcashequivalentsandbankoverdrafts

atthebeginningoftheyear 993,490 2,045,206 493,463 1,634,907

Cash and cash equivalents and bank overdrafts

at the end of the year 5 398,789 993,490 266,829 493,463



Statement of Cash FlowsFor the year ended 31 December 2014 (All amounts in Baht thousand unless otherwise stated)


Notes 2014 2013 2014 2013



Notes to the Consolidated and Company Financial StatementsFor the year ended 31 December 2014 (All amounts in Baht thousand unless otherwise stated)

1. General information

Esso(Thailand)PublicCompanyLimited(“theCompany”)isapubliclimitedcompanyincorporatedanddomiciled

inThailand.Theaddressofitsregisteredofficeis3195/17-29RamaIVRoad,Klongton,Klongtoey,Bangkok,10110.

TheCompanylistedontheStockExchangeofThailand(“SET”)on6May2008.

TheCompanyanditssubsidiaries(together“theGroup”)areinvolvedintherefiningandmarketingofpetroleum

productsaswellasintheoperationofretailservicestations.TheGroupoperatesarefineryandchemicalsmanufacturing

plantinSriracha,Thailand.TheGroupalsooperatesdistributionfacilitiesandoilterminalsthroughoutThailand.The

Group’sproductsaresoldthroughanetworkofretailservicestations,directlytoindustrialcustomersandthrough

export.Additionally,theGroupisalsoinvolvedinthesaleofchemicalproductstobothdomesticandoverseascustomers.

TheCompanyisasubsidiaryofExxonMobilGroupwhichholds65.99%oftheCompany’sshares.

TheseconsolidatedandcompanyfinancialstatementswereauthorisedforissuebytheBoardofDirectorson

23February2015.

2. Summary of significant accounting policies

Theprincipalaccountingpoliciesappliedinthepreparationoftheseconsolidatedandcompanyfinancialstatements

aresetoutbelow.Thesepolicieshavebeenconsistentlyappliedtoallyearspresented,unlessotherwisestated.

2.1 Basis of preparation

TheconsolidatedandcompanyfinancialstatementshavebeenpreparedinaccordancewithThaigenerally

acceptedaccountingprinciples(“ThaiGAAP”)undertheAccountingActB.E.2543,beingthoseThaiFinancial

ReportingStandardsissuedundertheAccountingProfessionsActB.E.2547,andthefinancialreporting

requirementsoftheSecuritiesandExchangeCommissionundertheSecuritiesandExchangeActB.E.2535.

Theconsolidatedandcompanyfinancialstatementshavebeenpreparedunderthehistoricalcostconvention,

exceptasdisclosedintheaccountingpoliciesfortherevaluationofavailable-for-salefinancialassets.

ThepreparationoffinancialstatementsinconformitywithThaiGAAPrequirestheuseofcertaincritical

accountingestimates.ItalsorequiresmanagementtoexercisejudgementintheprocessofapplyingtheGroup’s

accountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptions

andestimatesaresignificanttotheconsolidatedandcompanyfinancialstatementsaredisclosedinNote3.

Asat31December2014,thecurrentliabilitiesoftheGroupexceededthecurrentassetsbyapproximatelyBaht

14,059,675thousand.TheGroupcurrentlyhasadequatefinancingsourcestoenablethepaymentofliabilities

andwhentheybecomedueasfollows:(1)uncommittedborrowingfacilitiesfromrelatedcompaniesandthird

partiesintheamountofBaht77,099,556thousandtofundthepaymentofliabilities,and(2)theGrouphas

alsoreceivedanapprovalfromtheSecuritiesandExchangeCommissiontoofferforsaleBaht12,000,000


thousandofbillsofexchangeinarevolvingprogram,ofwhichBaht1,000,000thousandhasbeenutilised

asof31December2014.Accordingly,theconsolidatedandcompanyfinancialstatementshavebeenprepared

onagoingconcernbasisanddonotincludeanyadjustmentsrelatingtotherecoverabilityandclassificationof

recordedassetamounts,ortoamountsorclassificationofliabilitiesthatmaybenecessaryifthegoingconcern

basisofpreparingtheconsolidatedandcompanyfinancialstatementsisnotappropriate.

AnEnglishversionoftheconsolidatedandcompanyfinancialstatementshavebeenpreparedfromthestatutory

financialstatementsthatareintheThailanguage.Intheeventofaconflictoradifferenceininterpretation

betweenthetwolanguages,theThailanguagestatutoryfinancialstatementsshallprevail.

2.2 New financial reporting standards and revised financial reporting standards

1) Revisedaccountingstandardswhichareeffectiveon1January2014.

TAS1(Revised2012) Presentationoffinancialstatements

TAS7(Revised2012) StatementofCashFlows

TAS12(Revised2012) Incometaxes

TAS17(Revised2012) Leases

TAS18(Revised2012) Revenue

TAS19(Revised2012) EmployeeBenefits

TAS21(Revised2012) TheEffectsofChangesinForeignExchangeRates

TAS24(Revised2012) Relatedpartydisclosures

TAS28(Revised2012) Investmentsinassociates

TAS31(Revised2012) InterestinJointventures

TAS34(Revised2012) Interimfinancialreporting

TAS36(Revised2012) Impairmentofassets

TAS38(Revised2012) Intangibleassets

TFRS2(Revised2012) Share-basedpayment

TFRS3(Revised2012) Businesscombinations

TFRS5(Revised2012) Non-currentassetsheldforsaleanddiscontinuedoperations

TFRS8(Revised2012) Operatingsegments

TFRIC1 Changesinexistingdecommissioning,restorationandsimilarliabilities

TFRIC4 Determiningwhetheranarrangementcontainsalease

TFRIC5 RighttoInterestsarisingfromdecommissioning,restorationand

environmentalrehabilitationfunds

TFRIC7 ApplyingtherestatementapproachunderTAS29FinancialReporting

inhyperinflationaryeconomics

TFRIC10 Interimfinancialreportingandimpairment

TFRIC12 Serviceconcessionarrangements

TFRIC13 Customerloyaltyprogrammes

TFRIC17 Distributionsofnon-cashassetstoowners

TFRIC18 Transfersofassetsfromcustomers

TSIC15 Operatingleases-Incentives

TSIC27 Evaluatingthesubstanceoftransactionsinthelegalformofalease

TSIC29 Serviceconcessionarrangements:disclosure

TSIC32 Intangibleassets-WebSiteCosts


TAS1(revised2012)clarifiesthatconversionfeaturesthatareattheholder’sdiscretiondonotimpactthe

classificationoftheliabilitycomponentofaconvertibleinstrument.TAS1alsoexplainsthat,foreachcomponent

ofequity,anentitymaypresentthebreakdownofothercomprehensiveincomeeitherinthestatementof

changesinequityorinthenotestothefinancialstatements.

TAS7(revised2012)clarifiesthatonlyexpendituresthatresultinarecognizedassetinthestatementof

financialpositionareeligibleforclassificationasinvestingactivities.

TAS12(revised2012)amendsanexceptiontotheexistingprincipleforthemeasurementofdeferredtax

assetsorliabilitiesoninvestmentpropertymeasuredatfairvalue.TAS12currentlyrequiresanentityto

measuredeferredtaxrelatingtoanassetdependingonwhethertheentityexpectstorecoverthecarrying

amountoftheassetthroughuseorsale.Thisamendmentthereforeaddstherebuttablepresumptionthat

thecarryingamountofaninvestmentpropertymeasuredatfairvalueisentirelyrecoveredthroughsale.As

theresultoftheamendment,TSIC21-Incometax-recoveryofrevaluednon-depreciableassetsis

incorporatedintoTAS12(revised2012).

TAS17(revised2012)deletestheguidancefortheleaseoflandwithanindefiniteusefullifetobeclassified

asanoperatinglease.Thestandardhasbeenamendedtoclarifythatwhenaleaseincludesbothlandand

buildings,classificationasafinanceoroperatingleaseisperformedseparatelyinaccordancewithTAS17’s

generalprinciples.

TAS18(revised2012)removestheappendixtoTAS18.

TAS19(revised2012)deletesthetransitionprovisionsofthecurrentTAS19.

TAS21(revised2012)clarifiesthemethodofrecordingcumulativeamountoftheexchangeratedifferences

relatingtodisposalorpartialdisposalofaforeignoperation.Thismattershouldbeadjustedprospectively

effectivefortheperiodthatbeginsonorafter1January2011.

TAS24(revised2012)removestherequirementforgovernment-relatedentitiestodisclosedetailsofall

transactionswiththegovernmentandothergovernment-relatedentities.Italsoclarifiesandsimplifiesthe

definitionofrelatedparties.

TAS28(revised2012)clarifiesthatwhenthemethodofaccountingofanentityischangedfromtheequity

basisaccountingtothecostbasisofaccountinginthecompany’sseparatefinancialstatements,thestandard

requiresthistobeadjustedretrospectively.Whenanentitylosessignificantinfluence,theremaininginterest

ofinvestmentshouldbevaluedatfairvalue.Thismattershouldbeadjustedprospectivelyeffectiveforthe

periodthatbeginsonorafter1Jan2011.

TAS34(revised2012)emphasisestheexistingdisclosureprinciplesforsignificanteventandtransactions.

Additionalrequirementscoverdisclosureofchangesinfairvaluemeasurements(ifsignificant),andtheneed

toupdaterelevantinformationfromthemostrecentannualreport.


TFRS2(revised2012)expandsthescopetocoverclassificationandaccountingofbothcash-settledand

equity-settledshare-basedpaymenttransactionsingroupsituation.

TFRS5(revised2012)specifiesthedisclosuresrequiredforassetsheldforsaleanddiscontinuedoperations.

Disclosuresinotherstandardsdonotapply,unlessthoseTFRSrequires.

TFRS8(revised2012)clarifiesthatanentityisrequiredtodiscloseameasureofsegmentassetsonlyifthe

measureisregularlyreportedtothechiefoperatingdecision-maker.

TFRIC1providesguidanceonaccountingforchangesinthemeasurementofanexistingdecommissioning,

restorationandsimilarliabilitythatresultsfromchangesinestimatedtimingoramountoftheoutflowof

resourcesembodyingeconomicbenefitsrequiredtosettletheobligation,orachangeinthediscountrate.

TFRIC10prohibitsreversalofimpairmentlossesrecognisedinapreviousinterimperiodinrespectofgoodwill.

2) Newfinancialreportingstandardsandrevisedaccountingstandards,revisedfinancialreportingstandards

areeffectiveon1January2015.

TAS1(Revised2014) Presentationoffinancialstatements

TAS16(Revised2014) Property,plantandequipment

TAS19(Revised2014) Employeebenefits

TAS27(Revised2014) Separatefinancialstatements

TAS28(Revised2014) Investmentsinassociatesandjointventures

TAS34(Revised2014) Interimfinancialreporting

TFRS10 Consolidatedfinancialstatements

TFRS11 Jointarrangements

TFRS12 Disclosureofinterestinotherentities

TFRS13 Fairvaluemeasurement

TFRIC14(Revised2014) TAS19-Thelimitonadefinedbenefitasset,minimum

fundingrequirementsandtheirinteraction

TFRIC20 Strippingcostsintheproductionphaseofasurfacemine

TAS1(revised2014),themainchangeisthatarequirementforentitiestogroupitemspresentedin‘other

comprehensiveincome’(OCI)onthebasisofwhethertheyarepotentiallyreclassifiabletoprofitorloss

subsequently(reclassificationadjustments).TheamendmentsdonotaddresswhichitemsarepresentedinOCI.

TAS16(revised2014)indicatesthatsparepart,stand-byequipmentandservicingequipmentarerecognised

asPP&EwhentheymeetthedefinitionofPP&E.Otherwise,suchitemsareclassifiedasinventory.


TAS19(revised2014),thekeychangesare(a)actuarialgainsandlossesarerenamed‘remeasurements’

andwillberecognisedimmediatelyin‘othercomprehensiveincome’(OCI).Actuarialgainsandlosseswill

nolongerbedeferredusingthecorridorapproachorrecognisedinprofitorloss;and(b)past-servicecosts

willberecognisedintheperiodofaplanamendment;unvestedbenefitswillnolongerbespreadovera

future-serviceperiod.

TAS28(revised2014)providetherequirementsforinvestmentinassociatesandjointventuresaccounted

forbytheequitymethod.

TAS34(revised2014),thekeychangeisthedisclosurerequirementsforoperatingsegment.Anentityshall

discloseinformationofameasureoftotalassetsandliabilitiesforaparticularreportablesegmentifsuch

amountsareregularlyprovidedtothechiefoperatingdecisionmakerandiftherehasbeenamaterialchange

fromtheamountdisclosedinthelastannualfinancialstatementsforthatreportablesegment.

TFRS10hasasingledefinitionofcontrolandsupersedestheprinciplesofcontrolandconsolidationincluded

withintheoriginalTAS27,‘Consolidatedandseparatefinancialstatements’.Thestandardsetsoutthe

requirementsforwhenanentityshouldprepareconsolidatedfinancialstatements,definestheprinciplesof

control,explainshowtoapplytheprinciplesofcontrolandexplainstheaccountingrequirementsforpreparing

consolidatedfinancialstatements.Thekeyprincipleinthenewstandardisthatcontrolexists,andconsolidation

isrequired,onlyiftheinvestorpossessespowerovertheinvestee,hasexposuretovariablereturnsfromits

involvementwiththeinvesteeandhastheabilitytouseitspowerovertheinvesteetoaffectitsreturns.

TFRS13aimstoimproveconsistencyandreducecomplexitybyprovidingaprecisedefinitionoffairvalue

andasinglesourceoffairvaluemeasurementanddisclosurerequirementsforuseacrossTFRSs.

TFRIC14(Revised2014),thisinterpretationappliestoallpost-employmentdefinedbenefitsandother

long-termemployeebenefits.Forthepurposeofthisinterpretation,minimumfundingrequirementsareany

requirementstofundapost-employmentorotherlong-termbenefitplan.Thisinterpretationexplainshow

thepensionassetorliabilitymaybeaffectedbyastatutoryorcontractualminimumfundingrequirement.

TheGroup’smanagementhasdeterminedthattherevisedaccountingstandards,revisedfinancialreporting

standards,andrelatedinterpretationswillnotsignificantlyimpactthefinancialinformationbeingpresented.

2.3 Consolidation

(a) Subsidiaries

SubsidiariesareallentitiesoverwhichtheGrouphasthepowertogovernthefinancialandoperatingpolicies

generallyaccompanyingashareholdingofmorethanonehalfofthevotingrights.Theexistenceandeffect

ofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhether

theGroupcontrolsanotherentity.Subsidiariesarefullyconsolidatedfromthedateonwhichthecontrolis

transferredtotheGroup.Theyarede-consolidatedfromthedatethatthecontrolceases.


ThepurchasemethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheGroup,

includingthoseundercommoncontrol.Thecostofanacquisitionismeasuredasthefairvalueoftheassets

given,equityinstrumentsissuedandliabilitiesincurredorassumedatthedateofexchange,pluscostsdirectly

attributabletotheacquisition.Identifiableassetsacquired,andliabilitiesandcontingentliabilities

assumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.Onan

acquisition-by-acquisitionbasis,theGrouprecognisesanynon-controllinginterestintheacquireeeither

atfairvalueoratthenon-controllinginterest’sproportionateshareoftheacquiree’snetassets.Theexcess

ofthecostofacquisitionoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredis

recordedasgoodwill.Ifthecostofacquisitionislessthanthefairvalueofthenetassetsofthesubsidiary

acquired,thedifferenceisrecogniseddirectlyinthestatementofcomprehensiveincome.

Intercompanytransactions,balancesandunrealisedgainsorlossontransactionsbetweenGroupcompanies

areeliminated.Unrealisedlossesarealsoeliminated.Accountingpoliciesofsubsidiarieshavebeenchanged,

wherenecessary,toensureconsistencywiththepoliciesadoptedbytheGroup.

IntheCompany’sseparatefinancialstatements,investmentsinsubsidiariesarereportedusingthecostmethod.

DetailsofthesubsidiariesareincludedinNote10.

(b) Transactions with non-controlling interests

TheGrouptreatstransactionswithnon-controllinginterestsastransactionswithequityownersoftheGroup.

Forpurchasesfromnon-controllinginterests,thedifferencebetweenanyconsiderationpaidandtherelevant

shareacquiredofthecarryingvalueofnetassetsofthesubsidiaryisrecordedinequity.Gainsorlosseson

disposalstonon-controllinginterestsarealsorecordedinequity.

(c) Associates

AssociatesareallentitiesoverwhichtheGrouphassignificantinfluencebutnottheabilitytogovernthe

financialandoperatingpolicies,generallyaccompanyingashareholdingofbetween20%and50%ofthe

votingrights.Investmentsinassociatesareaccountedforusingtheequitymethodofaccountingandare

initiallyrecognisedatcost.

TheGroup’sshareofitsassociate’spost-acquisitionprofitsorlossesisrecognisedintheconsolidatedstatement

ofcomprehensiveincome,anditssharesofpost-acquisitionmovementsinreservesarerecognisedinequity.

Thecumulativepost-acquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.

WhentheGroup’sshareoflossesinanassociateequalsorexceedsitsinterestintheassociate,including

anyotherunsecuredreceivables,theGroupdoesnotrecognisefurtherlosses,unlessithasincurred

obligationsormadepaymentsonbehalfoftheassociate,oriscommittedtoprovidingcontinuedfinancial

support.

IntheCompany’sseparatefinancialstatements,theinvestmentinanassociateisreportedusingthecost

method.DetailsoftheassociateareincludedinNote10


UnrealisedgainsontransactionsbetweentheGroupanditsassociateareeliminatedtotheextentofthe

Group’sinterestintheassociate.Unrealisedlossesarealsoeliminatedunlessthetransactionprovidesevidence

ofanimpairmentoftheassettransferred.Accountingpoliciesoftheassociatehavebeenchanged,where

necessary,toensureconsistencywiththepoliciesadoptedbytheGroup.

2.4 Cash and cash equivalents

Cashandcashequivalentsincludescashonhand,depositsheldatcallwithbanks,othershort-termhighlyliquid

investmentswithoriginalmaturitiesofthreemonthsorless,andbankoverdrafts.Bankoverdraftsareshown

withinborrowingsincurrentliabilitiesonthestatementoffinancialposition.

2.5 Investments

Available-for-sale financial assets

Available-for-salefinancialassetsarenon-derivativesthatareeitherdesignatedinthiscategoryornotclassified

inanyoftheothercategories.Theyareincludedinnon-currentassetsunlessmanagementintendstodispose

oftheinvestmentwithin12monthsofthestatementoffinancialpositiondate.

Investmentsareinitiallyrecognisedatfairvalueplustransactioncosts.Financialassetsarederecognisedwhen

therightstoreceivecashflowsfromtheinvestmentshaveexpiredorhavebeentransferredandtheGrouphas

transferredsubstantiallyallrisksandrewardsofownership.Available-for-salefinancialassetsaresubsequently

carriedatfairvaluebasedonthequotedbidpriceontheStockExchangeofThailandatthestatementoffinancial

positiondate.

Unrealisedgainsorlossesarisingfromchangesinthefairvalueofinvestmentsclassifiedasavailable-for-sale

arerecognised,netoftax,intheconsolidatedandcompanystatementofcomprehensiveincome.When

investmentsclassifiedasavailable-for-salearesoldorimpaired,theaccumulatedfairvalueadjustmentsrecognised

inequityareincludedintheconsolidatedandcompanystatementofcomprehensiveincomeaspartofother

incomeorcosts.Dividendsonavailable-for-salefinancialassetsarerecognisedintheconsolidatedandcompany

statementofcomprehensiveincomeaspartofotherincomewhentheGroup’sandCompany’srighttoreceive

paymentisestablished.

2.6 Trade receivables

Tradereceivablesarecarriedatoriginalinvoiceamountandsubsequentlymeasuredattheinvoiceamountless

allowanceforimpairment.Anallowanceforimpairmentisestablishedwhenthereisobjectiveevidencethat

theGroupwillnotbeabletocollectallamountsdueaccordingtotheoriginaltermsofthereceivables.Significant

financialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganisation

anddefaultordelinquencyinpaymentsareconsideredindicatorsthatthetradereceivableisimpaired.The

amountoftheallowanceisthedifferencebetweenthecarryingamountandtheamountexpectedtobecollectible.

Thecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccount,andtheamountofthe

lossisrecognisedinthestatementofcomprehensiveincomewithin‘sellingexpenses’.Thereceivablesare

written-offagainsttheallowanceaccountwhenitisuncollectible.Subsequentrecoveriesofaccountspreviously

written-offarecreditedagainst“sellingexpenses”inthestatementofcomprehensiveincome.


2.7 Inventories

Inventoriesarestatedatthelowerofcostornetrealisablevalue.Costisdeterminedunderthefollowingmethods:

Crudeoilandpetroleumproducts First-in,first-outmethod

Chemicalproducts First-in,first-outmethod

Materialsandsupplies Averageunitcostmethod

Othermerchandise Averageunitcostmethod

Purchasecostincludesthepurchasepriceandcostsdirectlyattributabletotheacquisitionoftheinventory,such

asimportdutiesandtransportationcharges,lessallattributablediscounts,allowancesorrebates.Thecostof

finishedgoodsisprimarilycomprisedofrawmaterials,transportationcosts,directlabour,anddirectmanufacturing

expenditure.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessapplicable

variablesellingexpenses.Allowanceismade,wherenecessary,forobsolete,slow-movinganddefectiveinventories.

2.8 Current and deferred income tax

Thetaxexpensefortheperiodcomprisescurrentanddeferredtax.Taxisrecognisedinprofitorloss,except

totheextentthatitrelatestoitemsrecognisedinothercomprehensiveincomeordirectlyinequity.Inthiscase

thetaxisalsorecognisedinothercomprehensiveincomeordirectlyinequity,respectively.

Thecurrentincometaxchargeiscalculatedonthebasisofthetaxlawsenactedorsubstantiallyenactedatthe

statementoffinancialpositiondate.Managementperiodicallyevaluatespositionstakenintaxreturnswith

respecttosituationsinwhichapplicabletaxregulationsaresubjecttointerpretationandestablishesprovisions

whereappropriateonthebasisofamountsexpectedtobepaidtothetaxauthorities.

Deferredincometaxisrecognised,usingtheliabilitymethod,ontemporarydifferencesarisingfromdifferences

betweenthetaxbaseofassetsandliabilitiesandtheircarryingamountsinthefinancialstatements.However,

thedeferredincometaxisnotaccountedforifitarisesfrominitialrecognitionofanassetorliabilityinatransaction

otherthanabusinesscombinationthatatthetimeofthetransactionaffectsneitheraccountingnortaxable

profitorloss.Deferredincometaxisdeterminedusingtaxrates(andlaws)thathavebeenenactedorsubstantially

enactedbytheendofthereportingperiodandareexpectedtoapplywhentherelateddeferredincometax

assetisrealisedorthedeferredincometaxliabilityissettled.

Deferredincometaxassetsarerecognisedonlytotheextentthatitisprobablethatfuturetaxableprofitwillbe

availableagainstwhichthetemporarydifferencescanbeutilised.

Deferredincometaxisprovidedontemporarydifferencesarisingoninvestmentsinsubsidiariesandassociates,

exceptwherethetimingofthereversalofthetemporarydifferenceiscontrolledbytheGroupanditisprobable

thatthetemporarydifferencewillnotreverseintheforeseeablefuture.


2.9 Intangible assets

(a) Royalties and licenses

Acquiredroyaltiesandlicensesareshownathistoricalcost.Royaltiesandlicenseshaveafiniteusefullife

andarecarriedatcostlessaccumulatedamortisation.Amortisationiscalculatedusingthestraightline

methodtoallocatethecostofroyaltiesandlicensesovertheirestimatedusefullives(5to20years).

(b) Computer software

Acquiredcomputersoftwarelicensesarecapitalisedonthebasisofcostsincurredtoacquireandbringto

usethespecificsoftware.Costsassociatedwithdevelopingormaintainingcomputersoftwareprograms

arerecognisedasanexpenseasincurred.Coststhataredirectlyassociatedwiththedevelopmentof

identifiableanduniquesoftwareproductscontrolledbytheGroup,andwhichwillprobablygenerate

economicbenefitsexceedingcostsbeyondoneyear,arerecognisedasintangibleassets.Costsincludethe

softwaredevelopmentemployeecostsandanappropriateportionofrelevantoverheads.

Computersoftwaredevelopmentcostsrecognisedasassetsareamortisedovertheirestimatedusefullives

(5to15years).

2.10 Property, plant and equipment

Landisstatedathistoricalcost.Allotherproperty,plantandequipmentisstatedathistoricalcostlessaccumulated

depreciation.Historicalcostincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.

Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,

onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupand

thecostoftheitemcanbemeasuredreliably.Allotherrepairsandmaintenancearechargedtotheconsolidated

andcompanystatementofcomprehensiveincomeduringthefinancialperiodinwhichtheyareincurred.

Depreciationiscalculatedusingthestraight-linemethodtoallocatethecostofeachasset,exceptforland

whichisconsideredtohaveanindefinitelife,toitsresidualvalueoveritsestimatedusefullife,asfollows:

-Buildings 20years

-Plantandequipment 3to25years

Anasset’scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset’scarryingamount

isgreaterthanitsestimatedrecoverableamount(Note2.11).

Gainsandlossesondisposalsaredeterminedbycomparingtheproceedswiththecarryingamountandare

recognisedwithin‘sellingexpenses’,‘administrativeexpenses’and‘otherincome’inthestatementofcomprehensive

income.

Thecapitalisationrateusedtodeterminetheamountofborrowingcoststobecapitalisedistheweighted-average

interestrateapplicabletotheoutstandingborrowingsduringtheyear.Wherefundsareborrowedspecifically

fortheconstructionofproperty,plantandequipment,theamountofborrowingcostsforcapitalisationis

determinedfromtheactualborrowingcostsduringtheperiodlessanyincomeonthetemporaryinvestment

ofthoseborrowings.


2.11 Impairment of non-financial assets

Assetsthathaveanindefiniteusefullife,forexampleland,arenotsubjecttodepreciationoramortisationand

aretestedannuallyforimpairment.Assetsthataresubjecttodepreciation,oramortisation,arereviewedfor

impairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotbe

recoverable.Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsits

recoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalue

inuse.Forthepurposeofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereare

separatelyidentifiablecashflows(cash-generatingunits).Non-financialassetsthathavesufferedanimpairment

arereviewedforpossiblereversaloftheimpairmentateachreportingdate.

2.12 Leases - where the Group is the lessee

TheGroupleasescertainproperty,plantorequipment.Leasesofproperty,plantandequipment,wherethe

Grouphassubstantiallyalltherisksandrewardsofownership,areclassifiedasfinanceleases.Financeleases

arecapitalisedattheinceptionoftheleasesatthelowerofthefairvalueoftheleasedassetsandthepresent

valueoftheminimumleasepayments.

Eachleasepaymentisallocatedbetweentheliabilityandfinancechargessoastoachieveaconstantrateon

thefinancebalanceoutstanding.Thecorrespondingrentalobligations,netoffinancecharges,areincludedin

financeleaseliabilities.Theinterestelementofthefinancecostischargedtotheconsolidatedandcompany

statementofcomprehensiveincomeovertheleaseperiodsoastoproduceaconstantperiodicrateofinterest

ontheremainingbalanceoftheliabilityforeachperiod.Theproperty,plantandequipmentacquiredunder

financeleasesisdepreciatedovertheshorteroftheusefullifeoftheassetandtheleaseterm.

Leasesinwhichasignificantportionoftherisksandrewardsofownershipareretainedbythelessorareclassified

asoperatingleases.Paymentsmadeunderoperatingleases,netofanyincentivesreceivedfromthelessor,

arechargedtothestatementofcomprehensiveincomeonastraight-linebasisovertheperiodofthelease.

2.13 Borrowings

Borrowingsarerecognisedinitiallyatcontractualamounts,netoftransactioncostsincurred.Borrowingsare

subsequentlystatedatamortisedcostwithanydifferencebetweentheproceeds,netoftransactioncosts,and

theredemptionvaluebeingrecognisedintheconsolidatedandcompanystatementofcomprehensiveincome

overtheperiodoftheborrowingsusingtheeffectiveinterestmethod.

BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlement

oftheliabilityforatleast12monthsaftertheendofreportingdate.

2.14 Employee benefits

(a) Provident Fund Plan

TheGroupoperatesaProvidentFundthatisadefinedcontributionplan,theassetsofwhichareheldina

separatetrustfund,inaccordancewiththeProvidentFundActB.E.2530.TheProvidentFundisfunded

bypaymentsfromemployeesandtheGroup.ContributionstotheProvidentFundarechargedtothe

statementofcomprehensiveincomeintheyeartowhichtheyrelate.Allemployeeshiredonorafter

1September1997arerequiredtobemembersoftheProvidentFund.


TheGroupprovidesforpost-employmentbenefits,payabletoProvidentFundmembersreachingnormal

retirementage,inaccordancewithThaiLabourLaw.Thebenefitliabilityisrecordedasthepresentvalueof

estimatedfuturecashoutflowsusinginterestrateswhichhavetermstomaturityapproximatingtheterms

oftherelatedliabilities.

(b) Employee Separation Benefit and Long Service Allowance Plan

TheGroupmaintainsadefinedbenefitplanforemployeeshiredpriorto1September1997andwhodo

notelecttoparticipateintheProvidentFund,withthisplanbeingunfunded.TheplancontainsEmployee

SeparationBenefitandLongServiceAllowancePlans,whichisinaccordancewiththeretirementlawsand

regulationsofThailand.Entitlementtothesebenefitsisbasedonaminimumserviceperiod,andfinal

month’ssalaryandtheplanprovisions.

Actuarialvaluationsofthebenefitplanrequirementsareperformedevery3yearsusingtheprojected

unitcreditmethod.Basedonthevaluation,appropriateprovisionsareaccruedandallpaymentsaremade

againsttheaccumulatedprovisions.Theliabilityrecognisedinthestatementoffinancialpositionisthe

presentvalueofthedefinedbenefitobligationattheendofthereportingperiod,togetherwithadjustments

forunrecognisedpastservicecostsandunrecognisedactuarialgains/losses.

Actuarialgainsandlossesarisingfromexperienceadjustmentsandchangesinactuarialassumptionsare

amortisedonastraightlinebasisovertheremainingexpectedservicelifeofemployeestoreceivetheplan

benefits.

Thepresentvalueofthedefinedbenefitobligationisdeterminedbydiscountingtheestimatedfuturecash

flowsusinginterestratesofinvestmentsgradeprivatedebtsecuritiesthataredenominatedinthecurrency

inwhichthebenefitswillbepaid,andthathavetermstomaturityapproximatingtothetermsoftherelated

obligations.

(c) Employee Saving Plan

Beginning2009,theGroupoperatesanEmployeeSavingPlanforallregularThaiemployees.Theentitlement

tothisplanisbasedonaminimumserviceperiodofthreeyearsandtheplan’sprovisionsonwithdrawal

rightsaftervesting.Thisplanwillvest50percentafterthreeyearsand100percentaftersixyears.

2.15 Provisions

ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpast

eventssuchthatitisprobablethatanoutflowofresourceswillberequiredtosettletheobligation,andthe

amounthasbeenreliablyestimated.WheretheGroupexpectsaprovisiontobereimbursed,forexampleunder

aninsurancecontract,thereimbursementisrecognisedasaseparateassetatthetimewhenreimbursement

isvirtuallycertain.

Provisionsaremeasuredatthepresentvalueoftheexpendituresexpectedtoberequiredtosettletheobligation

usingapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecific

totheobligation.Theincreaseintheprovisionduetopassageoftimeisrecognisedasinterestexpense.


2.16 Share capital

Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissuanceofnewshares

areshowninequityasadeduction,netoftax,fromtheproceeds.

2.17 Foreign currency translation

Itemsincludedinthefinancialstatementsofeachofthegroup’sentitiesaremeasuredusingthecurrencyof

theprimaryeconomicenvironmentinwhichtheentityoperates(‘thefunctionalcurrency’).Theconsolidated

financialstatementsarepresentedinThaiBaht,whichisthecompany’sfunctionalandthegroup’spresentation

currency.

Foreigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangeratesprevailing

atthedatesofthetransactionsorvaluationwhereitemsarere-measured.Foreignexchangegainsandlosses

resultingfromthesettlementofsuchtransactionsandfromthetranslationatyear-endexchangeratesof

monetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedintheprofitorloss.

Whenagainorlossonanon-monetaryitemisrecognisedinothercomprehensiveincome,anyexchange

componentofthatgainorlossisrecognisedinothercomprehensiveincome.Conversely,whenagainorloss

onanon-monetaryitemisrecognisedinprofitorloss,anyexchangecomponentofthatgainorlossisrecognised

inprofitorloss.

2.18 Revenue recognition

Revenuecomprisesthefairvalueoftheconsiderationreceivedorreceivableforthesalesofgoodsandservices

intheordinarycourseoftheGroup’sactivities.Revenueisshownnetofvalue-addedtax,returns,rebatesand

discountsandaftereliminatingsaleswithintheGroup.

TheGrouprecognisesrevenuewhentheamountofrevenuecanbereliablymeasured,itisprobablethatfuture

economicbenefitswillflowtotheentityandwhenspecificcriteriahavebeenmetforeachoftheGroup’s

activitiesasdescribedbelow.

(a) Sales of goods

Salesofgoodsarerecognisedatthetimewhentherisksandrewardsofownershiphavepassedtothebuyer

whichisgenerallyatthepointofdelivery.

(b) Sales of services

TheGroupreceivesrentalincomeandfranchisefeesfromdealerswhooperatebrandedretailstations.

Revenueisrecognisedintheperiodinwhichtheservicesareprovided.

(c) Interest income

Interestincomeisrecognisedonatime-proportionbasisusingtheeffectiveinterestmethod.

(d) Dividend income

Dividendincomeisrecognisedwhentherighttoreceivepaymentisestablished.

Wheninventoriesareexchangedorswappedforinventorieswhichareofasimilarnatureandvalue,the

exchangeisnotconsideredatransactionwhichgeneratesrevenue.


2.19 Dividend distribution

DividenddistributiontotheCompany’sshareholdersisrecognisedasaliabilityintheGroup’sfinancialstatements intheperiodinwhichthedividendsareapprovedbytheCompany’sshareholders.

2.20 Financial instruments

Financialassetscarriedonthestatementoffinancialpositionincludecashandcashequivalents,short-term investments,tradereceivables,tradereceivablesfromarelatedparty,amountsduefromrelatedparties,loans torelatedparties,taxclaimreceivables,andotherassets.Financialliabilitiescarriedonthestatementoffinancial positionincludeborrowings,tradeandotherpayables,amountsduetorelatedparties,loansfromrelated parties,andotherliabilities.Theparticularrecognitionmethodsadoptedaredisclosedintheindividualpolicy statementsassociatedwitheachitemwhereapplicable. 2.21 Segment reporting

SegmentresultsthatarereportedtotheGroup’sManagementCommittee(thechiefoperatingdecisionmaker) includeitemsdirectlyattributabletoasegmentaswellasthosethatcanbeallocatedonareasonablebasis. 2.22 Non-current assets (or disposal groups) held-for-sale

Non-currentassets(ordisposalgroups)areclassifiedasassetsheldforsalewhentheircarryingamountisto berecoveredprincipallythroughasaletransactionandasaleisconsideredhighlyprobable.Theyarestatedat thelowerendofthecarryingamountandfairvaluelesscosttoselliftheircarryingamountistoberecovered principallythroughasaletransactionratherthanthroughcontinueduse.

3. Critical accounting estimates and judgements

Estimatesandjudgementsarecontinuallyevaluatedandarebasedonhistoricalexperienceandotherfactors, includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.

Critical accounting estimates and assumptions

TheGroupmakesestimatesandassumptionsconcerningthefuture.Theresultingaccountingestimateswill,by definition,notnecessarilyequaltherelatedactualresults.Theestimatesandassumptionsthathaveasignificantrisk ofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyearare discussedbelow.

Recognition of deferred tax assets associated with tax losses carried forward

Adeferredtaxassetisrecognisedtotheextentitisprobablethatthetaxlossescarriedforwardwillbeutilised.Such anassessmentisbaseduponmanagement’sreviewoftheforecastedfinancialincome.4. Segmental information

Asof31December2014,theGroupisorganisedintotwomainbusinesssegments,namely:

• Downstream,whichincludestherefiningandmarketingofpetroleumproductsaswellas,theoperationofretail servicestations;and, • Petrochemicals,whichincludesthemanufacturingandmarketingofchemicalproducts.

Inter-segmenttransactionsarepricedundernormalcommercialtermsandconditionsthatwouldalsobeavailable tounrelatedthirdparties.


Downstream

Downstream

Petrochemicals

Petrochemicals

Group

Group

Totalsegmentrevenue 232,177,642 37,598,591 269,776,233

Inter-segmentrevenue (29,977,899) (19,063,329) (49,041,228)

Revenue 202,199,743 18,535,262 220,735,005

Segmentlossfromsales (9,033,701) (2,854,091) (11,887,792)

Segmentfixedassets 26,416,470 3,417,255 29,833,725

Totalsegmentrevenue 253,543,287 45,294,489 298,837,776

Inter-segmentrevenue (32,574,531) (21,089,926) (53,664,457)

Revenue 220,968,756 24,204,563 245,173,319

Segmentprofit/(loss)fromsales 1,173,327 (606,550) 566,777

Segmentfixedassets 26,816,103 4,002,494 30,818,597

Thesegmentinformationfortheyearended31December2013areasfollows:

5. Cash and cash equivalents

Cashatbankandonhand 102,539 265,235 81,756 157,312

Cashintransit 306,577 737,213 195,400 345,109

Cashandcashequivalents 409,116 1,002,448 277,156 502,421

Theaverageinterestrateoncashatbankin2014is0.7%(2013:0.3%).

Cash,cashequivalentsandbankoverdraftsarerepresentedinthestatementofcashflowsasfollows:

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013

Cashandcashequivalents 409,116 1,002,448 277,156 502,421

Bankoverdrafts(Note17) (10,327) (8,958) (10,327) (8,958)

398,789 993,490 266,829 493,463

Thesegmentinformationfortheyearended31December2014areasfollows:


6. Trade receivables, net

Tradereceivables,gross 4,296,772 6,718,492 4,282,016 6,694,527

Less:Allowanceforimpairmentoftrade

receivables(Note30) (25,762) (21,078) (25,762) (21,078)

Tradereceivables,net 4,271,010 6,697,414 4,256,254 6,673,449

7. Inventories, net

Crudeoil 9,540,233 14,862,914 9,540,233 14,862,914

Petroleumproducts 7,476,055 10,452,799 7,257,816 10,126,616

Chemicalproducts 1,212,882 1,433,473 1,212,882 1,433,473

Materialsandsupplies 907,469 1,065,336 907,469 1,065,336

Othermerchandise 65,271 74,502 6,624 6,512

Inventories,net 19,201,910 27,889,024 18,925,024 27,494,851

Asat31December2014,petroleumandchemicalproductsintheconsolidatedandcompanyfinancialstatements

ofBaht2,740,567thousandandBaht2,622,999thousand,respectively(2013:PetroleumproductsofBaht1,709,955

thousandintheconsolidatedandcompanyfinancialstatements),arecarriedatnetrealisablevaluewiththisbeinglower

thancost.

TheprovisionsoftheOilTradingActB.E.2543requiretheGrouptomaintaincertainminimumlevelsofinventory

atalltimes.Asat31December2014,thevalueofthisinventoryamountedtoBaht8,612,769thousand(2013:Baht

14,285,009thousand).

Outstandingtradereceivables,asat31December2014and2013,areanalysedasfollows:

Current 4,269,738 6,237,992 4,254,982 6,214,027

Overdue:

-Lessthan3months - 448,554 - 448,554

-3to6months - - - -

-6to12months - 9,720 - 9,720

-Over12months 27,034 22,226 27,034 22,226

4,296,772 6,718,492 4,282,016 6,694,527

Less:Allowanceforimpairmentoftrade

receivables(Note30) (25,762) (21,078) (25,762) (21,078)

4,271,010 6,697,414 4,256,254 6,673,449

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


8. Tax claim receivable, net

9. Other current assets

% Ordinary share ownership

Investment value per cost method

20142014 20132013Business

Accountsreceivable-other 89,661 194,025 69,361 172,286

Prepaidexpensesanddeferredcharges 863,039 535,075 1,027,090 721,533

952,700 729,100 1,096,451 893,819

Prepaidexpensesanddeferredchargesprimarilyrelatetoprepaidexcisetaxandtheshort-termportionofrental

prepaymentsonservicestations.

MobilEnterprises(Thailand)Limited LubesandSpecialties 833 833 100.00 100.00

IndustryPromotionEnterprisesLimited RealEstateLeasing 51,484 51,484 100.00 100.00

UnitedIndustryDevelopmentCompany RealEstateLeasing 58,939 58,939 100.00 100.00

Limitedanditssubsidiaries

-PacesetterEnterprisesLimited RealEstateLeasing 3,333 3,333 99.99 99.99

-ThaiC-CenterCompanyLimited ServiceStationOperator - - 99.99 99.99

Thetaxclaimreceivablesprimarilyrelatetovalue-addedtaxandsubsidyclaimswhichareexpectedtoberefunded

within12months.

10. Investments in subsidiaries and an associate

At1January 1,705,346 1,341,453 1,843,949 1,843,949

Shareofprofitfromanassociate(Note30) 371,171 363,893 - -

At31December 2,076,517 1,705,346 1,843,949 1,843,949

Themovementsininvestmentsinsubsidiariesandanassociateareasfollows:

10.1 Subsidiaries

Theprincipalsubsidiaries,allofwhichareincorporatedanddomiciledinThailand,are:

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


11. Available-for-sale financial assets

Theownershippercentagesdetailedaboveincludetheeffectsofbothdirectandindirectordinaryshareholdings,

butexcludepreferenceshares.TheCompanydoesnotownanyofthepreferencesharesissuedbythesesubsidiaries,

buthastheabilitytogovernthefinancialandoperatingpoliciesofeachsubsidiary.

Consolidated and Company

At1January 990,000 741,600

Unrealisedgainrecognisedinequity(Note23) 135,000 248,400

At31December 1,125,000 990,000

Available-for-salefinancialassetsconsistprimarilyofaninvestmentinequitysecuritiesofBangkokAviationFuel

ServicesPublicCompanyLimited(BAFS)whichislistedontheStockExchangeofThailand.

10.2 Associate

TheCompanyholdsa20.78%interestinanassociate,ThaiPetroleumPipelineCompanyLimited(“Thappline”),

whichisincorporatedanddomiciledinThailandwithitsprimarybusinessactivitybeingtheoperationofa

petroleumpipelinebusiness.

TheGroup’sshareoftheresultsofitsassociate,whichisunlisted,anditsaggregatedassetsandliabilities,

areasfollows:

Consolidated

2014

2014

2013

2013

Assets 2,233,750 1,863,260

Liabilities (157,233) (157,914)

Netassets 2,076,517 1,705,346

Revenues 696,077 664,885

NetProfit 371,171 363,893


Deferredincometaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttooffsetcurrenttaxassets

againstcurrenttaxliabilitiesandwhenthedeferredincometaxassetsandliabilitiesrelatetoincometaxesissuedby

thesametaxationauthority.Thefollowingamounts,determinedafterappropriateoffsetting,areshowninthe

consolidatedandcompanystatementoffinancialposition:

12. Deferred income tax, net

Deferredtaxassets:

-Toberecoveredaftermorethan12months 3,580,889 979,151 3,471,905 853,255

-Toberecoveredwithin12months 213,204 195,417 205,156 190,963

3,794,093 1,174,568 3,677,061 1,044,218

Deferred tax liabilities:

-Toberecoveredaftermorethan12months (217,800) (190,800) (217,800) (190,800)

Deferred tax assets, net 3,576,293 983,768 3,459,261 853,418

Deferredincometaxesarecalculatedonalltemporarydifferences,undertheliabilitymethod,usingthestatutorytax

ratesexpectedtoapplyinperiodswhentherelateddeferredtaxassetisrealisedorthedeferredtaxliabilityissettled.

On21December2011,newcorporatetaxrateswereenactedinaccordancewiththeRoyalDecreenumber530.

Pursuanttothisenactment,astatutorytaxrateof23%mustbeappliedfor2012and20%mustbeappliedduring

2013and2014.Subsequently,theRoyalDecreeNo.577enactedon3November2014,extendsthestatutorytaxrate

of20%foryear2015.Withrespecttotaxyearsbeginning2016onwards,theCompanycontinuestoapplytherate

of20%,consistentwithfurtherguidanceforcompaniesprovidedpreviouslybytheFederalofAccountingProfessionals

asbeingconsideredsubstantiallyenacted.

Thegrossmovementofthedeferredincometaxaccountisasfollows:

At1January 983,768 1,451,901 853,418 1,318,769

Chargedtoprofitorloss

(Note27) 2,619,525 (418,453) 2,632,843 (415,671)

Taxchargeddirectlytoequity

(Note23) (27,000) (49,680) (27,000) (49,680)

At31December 3,576,293 983,768 3,459,261 853,418

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


Themovementindeferredincometaxassetsandliabilitiesduringtheyear,withouttakingintoconsiderationthe

offsettingofbalanceswithinthesametaxjurisdiction,isasfollows:

Consolidated

Deferred tax assets

Depreciation 348,802 (33,217) 315,585 (40,670) 274,915

Pensionsandemployeebenefits 386,189 59,328 445,517 52,166 497,683

Taxlossescarriedforward 616,314 (527,437) 88,877 2,703,639 2,792,516

Interestonzerocouponbonds 65,057 87,339 152,396 (74,724) 77,672

Others 176,659 (4,466) 172,193 (20,886) 151,307

Deferredtaxassets 1,593,021 (418,453) 1,174,568 2,619,525 3,794,093

Deferred tax liabilities

Unrealisedgainonavailable-for-sale

financialassets(Note23) (141,120) (49,680) (190,800) (27,000) (217,800)

Deferredtaxliabilities (141,120) (49,680) (190,800) (27,000) (217,800)

Company

(Charged)/Credited to profit

or loss/Equity


or loss/Equity

At1 January

2013

At31 December

2013

Deferred tax assets

Depreciation 348,802 (33,217) 315,585 (40,670) 274,915

Pensionsandemployeebenefits 386,189 59,328 445,517 52,166 497,683

Taxlossescarriedforward 602,812 (521,605) 81,207 2,703,262 2,784,469

Interestonzerocouponbonds 65,057 87,339 152,396 (74,724) 77,672

Others 57,029 (7,516) 49,513 (7,191) 42,322

Deferredtaxassets 1,459,889 (415,671) 1,044,218 2,632,843 3,677,061

Deferred tax liabilities

Unrealisedgainonavailable-for-sale

financialassets(Note23) (141,120) (49,680) (190,800) (27,000) (217,800)

Deferredtaxliabilities (141,120) (49,680) (190,800) (27,000) (217,800)

At31 December

2014

At31 December

2014


or loss/Equity


or loss/Equity

At1 January

2013

At31 December

2013


Deferredincometaxassetsarerecognisedfortaxlossescarriedforwardtotheextentthattherealisationofthe

relatedtaxbenefitthroughfuturetaxableprofitsisprobable.

TheCompanyhadwrittenofforrecognisedvaluationallowanceforlossescarriedforwardthatwerenotutilisedin

theamountofBaht479millionin2013.

13. Intangible assets, net


Royaltiesand licences

Computersoftware Total

At 1 January 2013

Cost 616,400 805,248 1,421,648

Less:Accumulatedamortisation (510,283) (627,201) (1,137,484)

Net book amount 106,117 178,047 284,164

Year ended 31 December 2013

Openingnetbookamount 106,117 178,047 284,164

Amortisationcharge(Note30) (31,161) (23,079) (54,240)

Closing net book amount 74,956 154,968 229,924

At 31 December 2013

Cost 616,354 805,248 1,421,602


Net book amount 74,956 154,968 229,924


Openingnetbookamount 74,956 154,968 229,924

Write-off* - - -

Amortisationcharge(Note30) (29,057) (23,078) (52,135)

Closing net book amount 45,899 131,890 177,789

At 31 December 2014

Cost 612,148 805,248 1,417,396


Net book amount 45,899 131,890 177,789

Allamortisationchargesarerecordedincostofsales,sellingexpensesandadministrativeexpensesinthestatement

ofcomprehensiveincomebasedonthenatureoftheasset.

* In2014,theCompanywroteoffcomputersoftwarewithanetbookvalueofBaht6,Baht4,206,055incost,andBaht

4,206,049inaccumulatedamortisation.


14. Property, plant and equipment, net

Consolidated

Constructionin progress

Buildingsplant and

equipmentLand Total

At 1 January 2013

Cost 5,150,490 58,471,219 630,975 64,252,684

Less:Accumulateddepreciation - (32,199,556) - (32,199,556)

Net book amount 5,150,490 26,271,663 630,975 32,053,128


Openingnetbookamount 5,150,490 26,271,663 630,975 32,053,128

Additions - - 1,126,699 1,126,699

Disposals(Note30) (10,614) (67,399) (32,210) (110,223)

Transferredtonon-currentassets

heldforsale(Note15) (121,011) - - (121,011)

Transfers - 445,388 (445,388) -

Depreciationcharge(Note30) - (2,129,996) - (2,129,996)

Closing net book amount 5,018,865 24,519,656 1,280,076 30,818,597

At 31 December 2013

Cost 5,018,865 58,447,546 1,280,076 64,746,487


Net book amount 5,018,865 24,519,656 1,280,076 30,818,597


Openingnetbookamount 5,018,865 24,519,656 1,280,076 30,818,597

Additions - - 1,161,698 1,161,698

Disposals(Note30) - (49,125) (680) (49,805)

Adjustment 818 - - 818

Transfers - 1,833,261 (1,833,261) -


Closing net book amount 5,019,683 24,206,210 607,833 29,833,726

At 31 December 2014

Cost 5,019,683 59,835,232 607,833 65,462,748


Net book amount 5,019,683 24,206,210 607,833 29,833,726


Company

Constructionin progress

Buildingsplant and

equipmentLand Total

At 1 January 2013

Cost 675,420 58,106,033 630,975 59,412,428


Net book amount 675,420 26,342,684 630,975 27,649,079


Openingnetbookamount 675,420 26,342,684 630,975 27,649,079

Additions - - 1,126,698 1,126,698

Disposals(Note30) - (67,400) (32,210) (99,610)

Transfer - 445,388 (445,388) -


Closing net book amount 675,420 24,605,435 1,280,075 26,560,930

At 31 December 2013

Cost 675,420 58,082,275 1,280,075 60,037,770


Net book amount 675,420 24,605,435 1,280,075 26,560,930


Openingnetbookamount 675,420 24,605,435 1,280,075 26,560,930

Additions - - 1,161,698 1,161,698

Disposals(Note30) - (49,125) (680) (49,805)

Transfer - 1,833,261 (1,833,261) -


Closing net book amount 675,420 24,291,989 607,832 25,575,241

At 31 December 2014

Cost 675,420 59,469,960 607,832 60,753,212


Net book amount 675,420 24,291,989 607,832 25,575,241

InFebruary2013,asubsidiaryoftheCompanysoldaplotoflandvaluedatBaht10,614thousand.Baht36,500

thousandwasreceivedascompensation.

Asat31December2014,thecostoffullydepreciatedproperty,plantandequipmentoftheGroupandtheCompany,

thatwerestillinuseamountedtoBaht11,139,096thousandandBaht10,802,816thousand,respectively(2013:Baht

10,438,119thousandandBaht10,101,839thousand).


15. Non-current assets held for sale, net

InNovember2013,asubsidiaryofthecompanyenteredintoanagreementtosellaplotoflandvaluedatBaht

121,011thousand.ThetransactionwascompletedinMarch2014.Baht16,301thousandallowanceforimpairment

wasrecognisedtoreflecttheanticipatedlossnetofrelatedsellingcostsasat31December2013.

16. Prepaid rental and deferred charges

Prepaidrentalanddeferredchargesprimarilyrelatetothelong-termportionofrentalprepaymentsonservice

stationsandrefinerycatalystreplacement.

17. Borrowings

Consolidated


2014

2014

2013

2013

Non-currentassetsheldforsale,gross - 121,011

Less:Allowanceforimpairmentofnon-currentassetsheldforsale

(Note30) - (16,301)

Non-currentassetsheldforsale,net - 104,710

Current

Bankoverdrafts(Note5) 10,327 8,958

Short-termborrowings 9,920,000 8,100,000

Billofexchange 979,329 1,496,839

Currentportionoflong-termloan 2,800,000 7,578,433

13,709,656 17,184,230

Non-current

Bankborrowings 4,000,000 5,800,000

17,709,656 22,984,230

Bankborrowingsandotherfacilitiesdetailedbelowareunsecuredandbearinterestatratesbasedonprevailing

marketrates.Theinterestratesin2014rangedbetween2%to3%perannum(2013:3%to4%perannum).

Short-termborrowings

Short-termborrowingscomprisedofbankrevolvingfacilities(overnightloansandpromissorynotesduewithin

3months)andbillsofexchangeduewithin270days.


Maturity of long-term bank borrowings Consolidated and Company

2014 2013

Nolaterthan1year 2,800,000 7,592,457

Laterthan1yearandnolaterthan5years 4,000,000 5,800,000

6,800,000 13,392,457

Long-termborrowings

Thelong-termbankloansconsistedofthefollowing:

•A7-yearloanofBaht8,000,000thousandwhichwasobtainedin2010andisrepayablein20quarterlyinstallments

commencingfromFebruary2013toNovember2017.Theloanbearstheinterestat1-month(BIBOR)rateplusa

margin.Asat31December2014,theoutstandingloanbalancewasBaht4,800,000thousand,ofwhichBaht

1,600,000thousandispayablein2015.

•A3-yearfixedinterestrateloanofBaht1,000,000thousandwhichwasobtainedinSeptember2012andispayable

inSeptember2015.Theinterestispayableannually.Asat31December2014,thebookvalueandthefairvalueof

theloanwasBaht1,008,653thousandandBaht1,016,222respectively.

•A5-yearloanofBaht1,000,000thousandwhichwasobtainedinNovember2014andisrepayablein20quarterly

installmentscommencingfromMarch2015toDecember2019.Theloanbearstheinterestat1-month(BIBOR)

rateplusamargin.Asat31December2014,theoutstandingloanbalancewasBaht1,000,000thousand,ofwhich

Baht200,000thousandispayablein2015.

Thecarryingamountsateachyearendofshort-termborrowingsandlong-termborrowingsotherthanlong-term

fixedratepromissorynotereasonablyapproximatetheirfairvalues.AllborrowingsaredominatedinBaht.

18. Trade and other payables

Tradeaccountspayable 1,964,273 2,520,173 1,889,480 2,449,250

Othertaxpayables 819,571 389,893 819,292 378,003

Otherpayablesandaccruals 725,571 764,055 705,138 743,494

3,509,415 3,674,121 3,413,910 3,570,747

Othertaxpayablerepresentsexcisetaxpayablegeneratedasaresultofnormaloperations.

CompanyConsolidated

20142014 20132013


Presentvalueofunfundedobligations 3,223,887 2,805,160 3,013,850 2,805,160

Unrecognisedactuarialloss (525,435) (577,576) (525,435) (577,576)

Liabilityinthestatementoffinancialposition 2,698,452 2,227,584 2,488,415 2,227,584

At1January 2,805,160 2,649,030 2,805,160 2,649,030

Currentservicecost 354,846 162,130 139,846 162,130

Interestcost 134,659 119,776 134,659 119,776

Actuarialgain (2,600) (80,626) (2,600) (80,626)

Benefitspaid (68,178) (45,150) (63,215) (45,150)

At31December 3,223,887 2,805,160 3,013,850 2,805,160

At1January 2,227,584 1,930,944 2,227,584 1,930,944

Netexpenseschargedtothestatement

ofcomprehensiveincome 539,046 341,790 324,046 341,790

Paymentstoseparatingemployees

andretirees (68,178) (45,150) (63,215) (45,150)

At31December 2,698,452 2,227,584 2,488,415 2,227,584

19. Provisions for employee benefits

Theamountsrecognisedinthestatementoffinancialpositionaredeterminedasfollows:

Themovementinthedefinedbenefitobligationovertheyearisasfollows:

Thechangesintheprovisionforemployeebenefitsunderthedefinedbenefitplanduringtheyearwereasfollows:

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


- Current 846,986 496,932 636,949 496,932

- Non-current 1,851,466 1,730,652 1,851,466 1,730,652

At31December 2,698,452 2,227,584 2,488,415 2,227,584

Currentservicecost 354,846 162,130 139,846 162,130

Interestcost 134,659 119,776 134,659 119,776

Amortisationofactuarialloss 49,541 59,884 49,541 59,884

Total 539,046 341,790 324,046 341,790

Analysisoftotalprovisionsforemployeebenefits:

Theamountsrecognisedinthestatementofcomprehensiveincomeareasfollows:

Thechargetothestatementofcomprehensiveincomeisincludedwithincostofsales,sellingexpensesand

administrativeexpensesunderemployeeexpenses.

Theprincipalactuarialassumptionsusedwereasfollows:

Thediscountrateusedisbasedoninvestmentgradeprivatedebtsecuritieswithtenureapproximatingthetenureof

theemployeebenefitsliability.Thesalarygrowthratetakesintoaccountmarketfactorssuchasprojectedmarket

salarygrowthandincorporatesassumptionsrelatingtoinflationrates.

% %

Discountrate 4 5

Expectedrateofsalaryincreases 7 7

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


2014 2013


Issued and paid-up share capital

Sharepremium

Number of Shares

(thousands) TotalOrdinary

shares

At1Januaryand31December2014

and2013 3,460,858 17,075,181 4,031,711 21,106,892

Asat31December2014and2013,thetotalauthorisednumberofordinarysharesis3,467,917thousandshares

withaparvalueofBaht4.9338pershare.Allissuedsharesarefullypaid.

20. Share capital and premium

22. Legal reserve

23. Other component of equity

Themovementofothercomponentofequitywhichisthefairvaluerevaluationofavailable-for-salefinancialassets

isasfollows:

21. Dividends

FurthertoaresolutionpassedbymajorityvoteattheAnnualGeneralMeetingofshareholderson25April2013,

theCompanypaidadividendfromtheCompany’sretainedearningsasof31December2012atBaht0.05pershare,

totallingBaht173,043thousandon23May2013.

At1January 653,243 653,243

Currentyearallocationofnetprofit - -

At31December 653,243 653,243

UnderthePublicLimitedCompaniesActB.E.2535,theCompanyisrequiredtosetasideasalegalreserveatleast

5percentofitsnetprofitaftertakingintoaccountanyaccumulateddeficitbroughtforwarduntilthereserveisnot

lessthan10percentoftheregisteredcapital.Thelegalreserveisnon-distributable.

At1January 763,200 564,480

Netunrealisedgainrecognisedinequity,netoftax

(Notes11and12) 108,000 198,720

At31December 871,200 763,200



2014

2014

2013

2013


24. Sales

26. Finance costs, net

25. Expenses by nature

Salesofgoods 217,545,985 241,623,229 215,890,997 239,951,269

Salesofservices 641,450 681,746 741,039 788,290

218,187,435 242,304,975 216,632,036 240,739,559

Interestincome 5,017 4,686 167,194 164,498

Interestexpense (901,772) (989,014) (931,581) (1,025,739)

Financecosts,net(Note30) (896,755) (984,328) (764,387) (861,241)

Netchangesininventoriesoffinishedgoods 3,178,877 (230,059) 3,089,280 (199,876)

Rawmaterialsandconsumablesused 217,475,942 233,529,960 216,788,058 232,697,000

Depreciationandamortisation

(Notes13and14) 2,149,717 2,184,236 2,149,717 2,169,477

Employeeexpenses 1,762,093 1,842,798 1,762,093 1,842,798

Maintenanceandrepair,materials,

contractservices,andutilities 1,596,208 1,800,792 1,638,389 1,800,792

Transportanddistribution 1,397,840 1,374,971 1,397,840 1,374,971

Businessserviceexpenses 1,023,730 826,284 1,015,424 819,476

Businessandtechnicalsupport,

researchanddevelopmentexpenses 1,654,990 1,504,906 1,654,990 1,504,906

Companyoperatedservicestationexpenses 827,700 797,759 - -

Otherexpenses 1,555,700 974,894 1,756,050 1,144,104

Totalcostofsales,sellingexpenses

andadministrativeexpenses 232,622,797 244,606,541 231,251,841 243,153,648

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


27. Income tax expense

Current tax:

Currenttaxonprofitsfortheyear 1,771 1,719 - -

Adjustmentsinrespectofprioryear 52 177 52 -

Total current tax 1,823 1,896 52 -

Deferred tax:

Originationandreversaloftemporary

differences (2,661,532) (60,245) (2,632,843) (63,027)

Taxlossescarriedforwardvaluation

reversal - (1,286,800) - (1,286,800)

Taxlossescarriedforwardwritten-off - 1,765,498 - 1,765,498

Deferredtaxassetsvaluationallowance 42,007 - - -

Total deferred tax (Note 12) (2,619,525) 418,453 (2,632,843) 415,671

Total income tax (credit)/expense (2,617,702) 420,349 (2,632,791) 415,671

(Loss)/profitbeforetax (12,963,341) 42,421 (13,190,743) (337,719)

Taxcalculatedatdomestictaxrates (2,592,668) 8,484 (2,638,149) (67,544)

Taxeffectof:

Incomenotsubjecttotax (76,110) (78,688) (3,126) (6,732)

Expensesnotdeductiblefortaxpurposes 9,069 11,855 8,484 11,249

Taxlossescarriedforwardrevaluation

reversal - (1,286,800) - (1,286,800)

Taxlossescarriedforwardwritten-off - 1,765,498 - 1,765,498

Deferredtaxassetsvaluationallowance 42,007 - - -

Incometax(credit)/expense (2,617,702) 420,349 (2,632,791) 415,671

Thestatutorytaxratefortheyear2014and2013is20%.

ThetaxontheGroup’sandCompany’sprofitbeforetaxdiffersfromthetheoreticalamountthatwouldariseusing

theweightedaveragetaxrateapplicabletoprofitsoftheconsolidatedentitiesandCompanyasfollows:

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


30. Cash generated from/(used in) operations

Netloss (10,345,639) (377,928) (10,557,952) (753,390)

Adjustmentsfor:

Depreciation(Note14) 2,097,582 2,129,996 2,097,582 2,115,237

Amortisation(Note13) 52,135 54,240 52,135 54,240

Allowanceforimpairmentoftrade

receivables(Note6) 4,684 (1,194) 4,684 (1,194)

Write-downofinventorytonetrealisablevalue 184,434 64,249 181,074 64,249

Allowanceforimpairmentofnon-currentassets

heldforsale(Note15) (16,301) 16,301 - -

Lossondisposalofproperty,plantand

equipmentandintangibleassets 58,478 39,271 43,286 65,158

Shareofprofitfromanassociate(Note10) (371,171) (363,893) - -

Financecosts,net(Note26) 896,755 984,328 764,387 861,241

Dividendincome (35,280) (29,161) (38,080) (33,661)

Incometax(credit)/expense(Note27) (2,617,702) 420,349 (2,632,791) 415,671

Netunrealisedforeignexchange

loss/(gain) 215,947 (268,111) 215,947 (268,111)

Lossattributabletoequityholders

oftheCompany (10,346,455) (378,755) (10,557,952) (753,390)

Weightedaveragenumberofordinary

sharesinissue(thousandsshares) 3,460,858 3,460,858 3,460,858 3,460,858

Basiclosspershare(Bahtpershare) (2.99) (0.11) (3.05) (0.22)

Therearenopotentialordinarysharesinissueduringtheyearspresentedandassuchdilutedearningspershareis

notpresented.

28. Other non-operating expense

Othernon-operatingexpenseofBaht648,940thousandconsistedmainlyofthefollowing:

• Baht215,000thousandemployeeseveranceprovisionrecognizedbyThaiC-CenterCompanyLimited,asubsidiary oftheCompany,followingarestructuringofcompanyoperations.

• Baht435,787thousandpaymentforacustomsfinepaidfollowingaSupremeCourtrulingagainstthecompany inrespecttolubebasestocksimportedin1987and1988.

29. Loss per share

BasiclosspershareiscalculatedbydividingthelossattributabletoequityholdersoftheCompanybytheweighted

averagenumberofordinarysharesinissueduringtheyear.

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


Changesinworkingcapital

Tradereceivables 2,411,212 388,006 2,402,004 390,890

Tradereceivablesfromarelatedparty - - 1,575,705 (1,141,417)

Amountduefromrelatedparties 133 (3) 41,780 (46,608)

Inventories 8,502,680 (317,360) 8,388,753 (301,215)

Taxclaimreceivables 926,471 (511,312) 971,006 (521,501)

Othercurrentassets (223,652) 92,727 (202,632) 101,401

Prepaidrentalanddeferredcharges (246,192) 78,766 (104,548) 306,494

Othernon-currentassets (65,115) 468 (64,225) 400

Tradeandotherpayables (147,437) (422,980) (144,165) (410,406)

Amountduetorelatedparties (1,723,243) (3,909,383) (1,732,408) (3,911,862)

Provisionsforemployeebenefits 470,867 296,640 260,830 296,640

Othernon-currentliabilities 2,928 89 2,928 89

Cash generated from/(used in) operations 32,574 (1,635,895) 1,525,300 (2,717,655)

Netbookamount 169,998 110,223 49,805 99,610

Lossondisposalofproperty,plantand

equipmentandnon-currentassets

heldforsale (58,478) (39,271) (43,286) (65,158)

Accountsreceivablefromdisposal

ofproperty,plantandequipment - (16,000) - (16,000)

Proceedsfromdisposalofproperty,

plantandequipmentandnon-current

assetsheldforsale 111,520 54,952 6,519 18,452

Inthecashflowstatements,proceedsfromsaleofproperty,plantandequipment,andnon-currentassetsheldfor

salecomprise:

31. Contingent liabilities

Asat31December2014,theGrouphadcontingentliabilitiesinrespectofbankguaranteesarisingintheordinary

courseofbusiness,amountingtoBaht61,955thousand(2013:Baht71,693thousand)tothirdparties.Itisnot

anticipatedthatanymaterialliabilitieswillarisefromthesebankguarantees.

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


32. Commitments

Capital commitments

Capitalexpenditurecontractedforatthestatementoffinancialpositiondatebutnotyetincurredamountedto

approximatelyBaht166,948thousand(2013:Baht363,075thousand).

Operating lease commitments - Group company as lessee

TheGroupleasesvariousplotsoflandonwhichretailservicestationsareoperatedundernon-cancellableoperating

leaseagreements.Theleasetermsgenerallyrangebetween15and25years,andthemajorityofleaseagreements

arerenewableattheendoftheleaseperiodatmarketrate.

33. Financial risk management

TheGroup’sactivitiesexposeittoavarietyoffinancialrisks,whichincludemarketrisk(includingmarketpricesfor petroleumcommoditiesrisk,foreignexchangeriskandinterestraterisk),creditrisk,liquidityrisk,andcapitalrisk.

33.1 Market risk

(a) Market prices for petroleum commodities risk

TheGroup’sfinancialresultscanbesignificantlyaffectedfromtimetotimebyvolatilityandcyclical

movementinthemarketpricesforcrudeoil,petroleumandpetrochemicalproductsthatarenotpredictable.

Giventhelargesizeandthelong-termnatureofitsbusiness,theGroupexpectsthatthisriskwillbe

moderatedovertime.TheGroupdoesnotemploytheuseofderivativeinstrumentstomanagetherisk.

(b) Foreign exchange risk

TheGroup’sactivitiesareexposedtoforeignexchangeriskarisingfromvariouscurrencyexposures,

primarilywithrespecttotheUSDollar.Purchasesofgoodsandexportsalesareprimarilytransactedin

USDollars.DomesticsalesaretransactedpredominantlyinBaht,andarethusnotsubjecttoforeign

exchangerisk.

Thefutureaggregateminimumleasepaymentsundernon-cancellableoperatingleasesareasfollows:

Nolaterthan1year 103,926 87,958

Laterthan1yearandnolaterthan5years 262,441 199,792

Laterthan5years 355,743 181,744

722,110 469,494

CertainsubsidiariesleaselandtotheCompany;however,therearenofutureminimumleasepaymentsinrespect

ofsuchleaseswhichareprepaid(Notes9and16).


2014 2013


Asat31December2014and2013,theGrouphasnoshort-termorlong-termdebtdenominatedin

foreigncurrencies.In2014,theGroupdidnotenterintoanyforwardforeigncurrencycontracts.

TheGroup’sforeignexchangeguidelinesprohibitspeculativeforeignexchangetransactions.

(c) Interest rate risk

AstheGrouphasnosignificantinterestbearingassets,theGroup’sincomeandoperatingcashflowsare

substantiallyindependentofchangesinmarketinterestrates.

TheinterestrateriskarisesfromborrowingswiththoseissuedatvariableinterestratesexposingtheGroup

tocashflowinterestraterisk.TheGroupcontinuallyoptimisesthemixinitsborrowingfacilitiestomaximise

financingflexibilitywhileminimisingfinancingcost.

33.2 Credit risk

CreditriskismanagedonaGroupbasis.Creditriskprimarilyarisesfromcashandcashequivalents,andcredit

exposurestowholesaleandretailtradecustomers,includingoutstandingreceivablesandcommittedtransactions.

Creditriskinrespectofbalancesoutstandingwithrelatedpartieshasbeenassessedtobelowduetothe

overallstrengthoftheExxonMobilGroup.

Inthecaseofcashandcashequivalents,onlyindependentlyratedbankswithaminimumratingofatleast

BBB-,orequivalent,areaccepted.

Fortradecustomers,riskevaluationsareperformedinternallywhichincludereviewsoffinancialpositions,

businesssuccessindicators,pastexperienceandotherfactors.Individualrisklimitsaresetbasedonthe

resultantinternalratingsinaccordancewithlimitssetbythemanagement.Riskcategoriesareestablishedfor

individualcustomersbasedoninternalcreditguidelinesrangingfromverylowtoveryhighrisk.Therisk

categoriesareintendedtoreflecttheriskofpaymentdefaultbyacustomerandaresimilartotheratingscales

establishedbyexternalratingagencies.

33.3 Liquidity risk

TheGroupmanagesliquidityriskbymaintainingsufficientcashandcashequivalentbalances.Inaddition,the

Groupmaintainscommittedcreditfacilitiesaswellasanumberofuncommittedcreditfacilitiesfrombanks

andrelatedparties.TheGroupreviewsrequirementsforfuturecashflowsthroughthecompletionofan

annualfinanceplanreview.Thefinanceplanreviewiscompletedfortheforthcomingyeartoensurethat

estimatesoffuturerequirementsareanalysedsuchthatappropriatefacilitiescanbemadeavailable.

TheGroupcurrentlyhasadequatefinancingsources.Asof31December2014,theGrouphasuncommitted

facilitiesofBaht77,099,556thousand(2013:Baht71,664,926thousand).TheGrouphasalsoreceivedan

approvalfromtheSecuritiesandExchangeCommissiontoofferforsaleBaht12,000,000thousandofbillsof

exchangeinarevolvingprogram,ofwhichBaht1,000,000thousandhasbeenutilisedasof31December2014

(2013:Baht1,500,000thousand).

LiquidityriskmayalsoariseifcustomersarenotabletosettleobligationstotheGroupwithinthenormal

creditterm.Tomanagethisrisk,theGroupperiodicallyassessesfinancialviabilityofcustomersandmay

requirecertaincustomerstoprovidebankguaranteesorothersimilarinstruments.


33.4 Capital risk

TheGroup’sobjectivewhenmanagingcapitalistosafeguardtheGroup’sabilitytocontinueasagoingconcern inordertoprovidereturnstoshareholdersandbenefitstootherstakeholders.Inthefuture,theGroupmay adjusttheamountofdividendpaidtoshareholdersinordertomaintainanappropriatecapitalstructure. Annually,theGroupcompletesafinanceplanwhichseekstoestablishpositionsforthecurrentandfuture

years’dividendprojections.

34. Related party transactions

ExxonMobilAsiaHoldingPrivateLimitedacquired65.43%ofthesharesfromExxonMobilInternationalHoldings Incorporatedand0.56%ofthesharesfromothercompanieswithintheExxonMobilGroupon28November2014.

Therefore,theGroupiscontrolledbyExxonMobilAsiaHoldingPrivateLimitedincorporatedinSingapore,which owns65.99%oftheCompany’ssharesasof31December2014.TheultimateholdingcompanyisExxonMobil CorporationincorporatedintheUnitedStatesofAmerica.Afurther7.33%ofthesharesareheldbyVayupakFund1, amutualfundestablishedbytheMinistryofFinance,withtheremainingsharesheldbyavarietyofinstitutionaland retailinvestors.

TheVayupakFund1acquiredthesharesfromtheMinistryofFinanceon15September2010.Thesignificant investmentsinsubsidiariesandanassociatearesetoutinNote10.

Salesofgoodsandservices:

-Subsidiary - - 25,407,622 27,474,922

-Otherrelatedparties 19,535,459 32,732,490 19,535,459 32,732,490

19,535,459 32,732,490 44,943,081 60,207,412

Salesofgoodsandservicesbetweenrelatedpartiesarebasedonmarketpricesandprimarilyrelatetothesale

ofpetroleumandpetrochemicalproducts.

(b) Purchases of goods and services

Thefollowingtransactionswerecarriedoutwithrelatedparties:

(a) Sales of goods and services

Purchasesofgoods:

-Otherrelatedparties 169,655,744 190,873,523

Purchasesofservices:

-Anassociate 818,498 872,066

170,474,242 191,745,589

Purchasesofgoodsfromrelatedpartiesprimarilyrelatetothepurchaseofpetroleumandpetrochemicalproducts.

PurchasesofservicesfromanassociaterelatetotheprovisionofpipelinetransportationservicesfortheGroup’s

products.Purchasesofgoodsandservicesarebasedonmarketprices.


2014 2013

CompanyConsolidated

20142014 20132013


(c) Expenses

(d) Finance costs, net

(e) Key management compensation

Expensespaidto:

-Subsidiaries - - 252,042 179,134


3,470,533 2,937,283 3,606,139 3,035,964

Expensesprimarilyrelatetotheprovisionofsupportservicesandarechargedoneitheratcostorcostplusbasis.

Interestincomereceivedfrom:

-Subsidiaries - - 162,264 159,887

- - 162,264 159,887

Interestexpensespaidto:

-Subsidiaries - - 30,159 37,273

-Otherrelatedparties 449,482 276,481 449,482 276,481

449,482 276,481 479,641 313,754

Interestchargesarebasedonmarketratesatthetimetheagreementswereentered.

Salariesandothershort-termemploymentbenefits 57,575 60,446

Post-employmentbenefits 20,760 21,727

78,335 82,173

TheaboveinformationispreparedinaccordancewiththeSecuritiesandExchangeCommission‘sregulations.

Thisincludesthemanagingdirector,thefirstfourmanagersreportingtomanagingdirectoraswellasallmanagers

atthesamelevel.

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


2014 2013


(f) Year-end balances arising from sales/purchases of goods/services and expenses

(g) Loans to related parties

Tradereceivables:

-Subsidiaries - - 968,082 2,543,788

Amountsduefrom:

-Subsidiaries - - 58,659 100,849

-Otherrelatedparties - 133 - 133

- 133 58,659 100,982

Amountsdueto:

-Subsidiaries - - 6,994 8,618


9,640,017 11,131,340 9,630,029 11,132,490

Tradereceivablesfromarelatedpartyarisemainlyfromthesaleofpetroleumproductswithcredittermsbeing

approximately25days.

Amountsduefromrelatedpartiesrelateprimarilytodividendandinterestreceivableonlong-termloans(Note34g).

Theamountsduetorelatedpartiesreflectanetpayablewhicharisesmainlyfromthepurchaseandsalesof

petroleumandpetrochemicalproductsunderstandardindustryterms.

Long-termloansto:

-Subsidiaries - - 2,416,901 2,383,058

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


Movementsinlong-termloanstorelatedpartiesareanalysedasfollows:

Openingamountasat1January 2,383,058 2,227,709

Additionalborrowings 222,602 199,162

Repaymentsofborrowings (188,759) (43,813)

Closingamountasat31December 2,416,901 2,383,058

Long-termloanstorelatedpartiesareunsecured.Theybearinterestbasedontheminimumlendingrateof

BangkokBankPublicCompanyLimitedminusaspread.

(h) Loans from related parties

Short-termloansfrom:

-Subsidiaries - - 508,036 1,634,962

-Otherrelatedparty 12,365,557 6,198,667 12,365,557 6,198,667

12,365,557 6,198,667 12,873,593 7,833,629

Long-termloansfrom:

-Subsidiaries - - 798 609

-Otherrelatedparty 5,600,000 5,213,195 5,600,000 5,213,195

5,600,000 5,213,195 5,600,798 5,213,804

Short-termloansfromotherrelatedpartyinclude:

• RevolvingloanfromarelatedpartytotalingBaht4,822,711thousandoutoffacilitysizeBaht12,000,000

thousandattheendofDecember2014.

• Short-termloanfromarelatedpartyunderLoanandCurrentAccountAgreementtotalingBaht754,487

thousandattheendofDecember2014.

• FivepromissorynotesissuedinSeptember2012atdiscountedvalueofBaht5,000,000thousand,which

havematuritydateinSeptember2015.Theamortisedcostandthefairvalueofthepromissorynotewas

Baht5,388,359thousandand5,431,942thousand,respectively,attheendofDecember2014.

Short-termloansfromrelatedpartiesareunsecured.ExceptthepromissorynotesissuedinSeptember2012,

theyhavenofixedtermofrepaymentandbearinterestbasedontheadjustedminimumlendingrateofBangkok

BankPublicCompanyLimitedorBangkokInterbankOfferedRate(BIBOR).

Company

2014 2013

CompanyConsolidated

20142014 20132013


Movementsinshort-termloansfromrelatedpartiesareanalysedasfollows:

Movementsinlong-termloansfromrelatedpartiesareanalysedasfollows:

Openingamountasat1January 6,198,667 427,574 7,833,629 1,005,826

Additionalborrowings 11,529,293 6,529,296 12,002,233 8,276,476

Repaymentsofborrowings (12,150,762) (758,203) (13,750,628) (1,448,673)

Long-termloansduewithin1year 6,788,359 - 6,788,359 -

Closingamountasat31December 12,365,557 6,198,667 12,873,593 7,833,629

Long-termloansfromotherrelatedpartyinclude:

• A5-yearloanofBaht7,000,000thousandwhichwasobtainedinNovember2014isrepayablein20quarterly

installmentscommencingfromMarch2015toDecember2019.Theloanbearstheinterestat1-month

(BIBOR)rateplusamargin.Asat31December2014,theoutstandingloanbalancewasBaht7,000,000

thousand,ofwhichBaht1,400,000thousandispayablein2015.

Long-termloansfromrelatedpartiesbearinterestbasedontheadjustedminimumlendingrateofBangkok

BankPublicCompanyLimited.

Openingamountasat1January 5,213,195 5,043,726 5,213,804 5,046,173

Additionalborrowings 7,175,164 169,469 7,179,389 173,730

Repaymentsofborrowings - - (4,036) (6,099)

Long-termloansduewithin1year (6,788,359) - (6,788,359) -

Closingamountasat31December 5,600,000 5,213,195 5,600,798 5,213,804

35. Asset retirement obligations

ItisrecognisedthattheGroupmayincurassetretirementobligationsforthedismantlingandsiterestorationcosts

ofitsmanufacturingfacilities.ThetimingandamountofcashflowsisdifficulttoestimateastheGrouphasno

intentiontodecommissionthesitesinthenearfuture.Accordinglyandconsistentwithindustrypractice,noprovision

isrecordedforassetretirementobligationsastheamountcannotbemeasuredwithsufficientreliabilityduetothe

significantuncertaintiesinvolved.

CompanyConsolidated

20142014 20132013

CompanyConsolidated

20142014 20132013


Corporate Separateness Notice

Nothinginthismaterialisintendedtooverridethecorporateseparatenessoflocalentities.Workingrelationshipsdiscussed

inthismaterialdonotnecessarilyrepresentareportingconnection,butmayreflectafunctionalguidance,stewardship,

orservicerelationship.Whereshareholderconsiderationofalocalentitymatteriscontemplatedbythismaterial,responsibility

foractionremainswiththelocalentity.

ExxonMobilCorporationhasnumerousaffiliates,manywithnamesthatincludeExxonMobil,Exxon,EssoandMobil.

Forconvenienceandsimplicityinthisreport,thosetermsandtermslikecorporation,company,our,weanditsare

sometimesusedasabbreviatedreferencestospecificaffiliatesoraffiliategroups.Abbreviatedreferencesdescribing

globalorregionaloperationalorganizationsandglobalorregionalbusinesslinesarealsosometimesusedforconvenience

andsimplicity.Similarly,ExxonMobilhasbusinessrelationshipswiththousandsofcustomers,suppliers,governments,

andothers.Forconvenienceandsimplicity,wordslikeventure, jointventure,partnership,co-venturer,andpartner

areusedtoindicatebusinessrelationshipsinvolvingcommonactivitiesandinterests,andthosewordsmaynotindicate

preciselegalrelationships.


3195/17-29 Rama Iv Road, Klong Ton, Klong Toey District, Bangkok 10110

Telephone: 02 262-4000 Website: www.esso.co.th

Investors can obtain more information about the Company from the Company’s Annual Registration Statement (Form 56-1)

available at www.sec.or.th or www.esso.co.th

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