PTT Global Chemical Public Company...

PTT Global Chemical Public Company Limited

Management Discussion and Analysis 3Q/2014

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(Translation)

Management Discussion and Analysis 3Q/2014 Page | 2

Executive Summary

In 3Q/2014, PTT Global Chemicals Public Company Limited (“the Company”) reported net profit of Baht 7,591 million (Baht 1.68 earnings per share), decreased 21% from Baht 9,610 million (Baht 2.13 earnings per share) in 3Q/2013, and increased 25% from Baht 6,085 million (Baht 1.35 earnings per share) in 2Q/2014.

Table 1 : Performance Summary

(Unit : Million Baht) 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) 9M/2013 9M/2014

Sales Revenue 141,394 152,401 145,820 3% -4% 394,590 444,587

EBITDA 16,388 10,475 12,861 -22% 23% 44,273 34,335

EBITDA Margin (%) 12% 7% 9% -3% 2% 11% 8%

Net Profit 9,610 6,085 7,591 -21% 25% 25,857 19,971

EPS (Baht/Share) 2.13 1.35 1.68 -21% 25% 5.73 4.43

Adjusted EBITDA* 12,619 11,534 15,702 24% 36% 42,570 38,810

Adj. EBITDA Margin (%) 9% 8% 11% 2% 3% 11% 9% Note: * Adjusted EBITDA refers EBITDA excluding impact of inventory value (Inventory and NRV) and the impact from business restructuring of Vencorex

The overall performance excluding the impact of inventory value (Inventory and NRV), or the Adjusted EBITDA in 3Q/2014 improved and was reported at Baht 15,072 million the highest level in the roll of the last 5 quarters due mainly to the Olefins and Olefins Derivative Business which has been the key driver. The improving performance of the Olefins and Olefins Derivative Business was the result of higher and more stable volume of gas feed as well as the increasing prices of polyethylene products. In addition, the Aromatics Business also had a better performance from previous quarter with the improving Benzene-Condensate spread and Paraxylene-Condensate spread. However, the Refinery Business had a drop in performance due to the softened spreads of Petroleum Product over Dubai Crude resulted from the weaker demand of Petroleum Products and the increasing supply from refineries globally, especially in the US, Saudi Arabia and China. In addition, the Crude Oil price continuously decreased during 3Q/2557 due to the increase in production from US Shale Oil, as well as the decline in net long position in oil of Hedge Fund. Subsequently, the company recorded Stock Loss from inventory and NRV of Refinery and Aromatics Businesses of Baht 2,841 million, and reported EBITDA for 3Q/2014 at Baht 12,861 million.

Table 2 : Adjusted EBITDA Margin

% Adj. EBITDA Margin 3Q/2013 2Q/2014 3Q/2014

Business Unit : Refinery 2 4 3 Aromatics 8 (2) 9 Olefins & Derivatives 26 25 28 Green 9 4 1 HVS 4 1 11

Average 9 8 11

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The performance of major business group is as follows:

During 3Q/2014, crude oil price was significantly softened which Dubai Crude Price averaged at 101.45 USD/bbl with the opening at 109.16 USD/bbl, and the closing at 94.61 USD/bbl, a decrease of 14.55 USD/bbl. This was according to a sharp increase in crude supply especially from US shale oil, coupled with a decline in net long position in oil. Therefore, spreads of petroleum products dropped accordingly. In 3Q/2014, the Refinery Business had Market CDU GRM (exclude the impact of inventory value) of 4.81 USD/bbl, decreased 16% from that of 2Q/2014. Comparing to 3Q/2013, CDU GRM increased 12% due to the maintenance shutdown of Hydrocracking Unit (HCU) in 3Q/2013 so that the volume of fuel loss was high in that period. As a result, GRM in 3Q/2013 was lower than normal.

The performance of Aromatics Business in 3Q/2014 improved from 3Q/2013 and 2Q/2014 as the P2F Margin increased. The major factor was from benzene-condensate spread which increased 31% and 16% from 3Q/2013 and 2Q/2014 respectively, to average at 430 USD/ton in 3Q/2014, due to short supply. As for paraxylene, spread was still under pressure from supply surplus. However, many Aromatics plants in Asia have been shutdown because the margin was less than production cost, that subsequently lessened the over supply situation, and led to the improvement of paraxylene-condensate spread in this quarter. As a result, the average P2F of Aromatics Business was 290 USD/ton of BTX, increasing 11% from 3Q/2013, and 235% from 2Q/2014.

The performance of Olefins and Derivatives Business in 3Q/2014 improved with EBITDA 25% higher from 3Q/2013, and 9% higher from 2Q/2014 mainly resulted from higher volume and more stable gas feed from PTT that helped maximize the efficiency of plant production, together with the higher prices of major derivative, especially for HDPE which increased 8% from 3Q/2013 and 2% from previous quarter to average at 1,604 USD/ton in this quarter. The EBITDA margin of Olefins and Derivatives Business in this quarter increased to normal level at 28%, increasing from 26% in 3Q/2013 and 25% in 2Q/2014.

In 3Q/2014, crude price declined continually during the period and after period end. The Company had to realized Stock Loss of Baht 2,595 million, resulted from 14.55 USD/bbl decrease in crude oil price during the quarter while the Company had raw materials and finished products of Refinery and Aromatics Business totaling to 9.12 Mbbl. In addition, the Company had to realized loss from NRV at the amount of Baht 246 million because crude price keeps on dropping after period end.

Summary of events that had significant impact on financial statements in 3Q/2013, 2Q/2014 and 3Q/2014: • On December 23, 2013, the Company

exercised right to purchase Myriant Corporation’s shares from existing shareholders, and Myriant purchased shares from a group of existing shareholders. As a result, the Company’s shareholding in Myriant changed from 47.18% to 84.21%, and Myriant has changed its status from the Company’s affiliate to subsidiary. This share purchase will enable the Company to support business management of Myriant in order to achieve transformation into its Biotechnology Research and Development Center as well as to strengthen its fundamentals for commercial production in the future.

• In June 2014, the company recorded the provision for business restructuring of Vencorex in France. This provision includes expense related to employees and assets that will not be able to be utilized in the future approximately Euro 50.2 million, or Baht 2,239 million. This was contributed to the company’s portion of 51%, or Baht 1,142 million and the total amount of the provision was realized in 2Q/2014.

• On August 28, 2014, the Company has purchased 34% of the registered capital in Vencorex from Perstorp Holding AB and will make PTTGC Group's shareholding in Vencorex change from 51% to 85%. As at the date of acquisition, the Company paid for an initial payment of the shares as agreed and will pay the outstanding in the future, where the total value of the shares will be in accordance with the operating performance of Vencorex for fiscal year 2014 and 2015. As of September 30,

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2014, the Company estimated the consideration at EUR 5.97 million or approximately Baht 245 million and recognized a liability for that amount in other non-current liability. Thus, the increase in PTTGC Group's shareholding in Vencorex will enhance PTTGC's abilities to fulfill its strategic move into downstream business that will help enhance higher value, creating opportunities, quicker and more efficient growth prospects.

In addition, other events in 3Q/2014 and adjacent periods are as follows:

• In July 2014, a group of people in Rayong filed serveral lawsuits with the Civil Court and Rayong Provincial Court against the Company to claim extra compensation from oil spill incident and to perform the rehabilitation of the sea and natural environmental recovery . Currently all cases are in the mediation process by the Courts. The Company believes that the outcome of

the consideration will not result in material damage and material financial impact to the Company.

• On August 15, 2014 the Company’s Board of Directors has approved interim dividend payment to shareholders for first half 2014, from January 1, 2014 to June 30, 2014 of Baht 1.37 per share, totaled to Baht 6,191 million or 50% of 2014 first half net profit.

• On September 15, 2014, the Company has shutdown Aromatics plant unit#2 (Aromatic production capacity of 1,070,000 ton/year) to repair the reactor of platforming unit. The unit is now back in operation.

• On September 22, 2014, the Company’s Board of Directors has passed resolution to appoint Mr. Supattanapong Punmeechaow, to be President and Chief Executive Officer and acting secretary to the Board of Director in replacement of Mr. Bowon Vongsinudom due to his retirement , effective from October 1, 2014 onwards.

Petroleum Market Overview Table 3 : Crude Price & Petroleum Product Spreads

Unit : USD/bbl 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Dubai Crude Oil 106.30 106.13 101.45 -5% -4% Jet-Dubai 16.96 14.29 14.50 -14% 1% Diesel-Dubai 17.32 16.04 14.43 -17% -10% Fuel Oil-Dubai -10.71 -10.65 -8.44 21% 21% Gasoline-Dubai 12.41 16.06 13.18 6% -18%

In 3Q/2014 crude oil price dropped significantly from the quarter opening at 109.16 USD/bbl and closed at 94.61 USD/bbl, or decreased 13%. Dubai crude price for 3Q/2014 averaged at 101.45 USD/BBL, dropped from the previous quarter average by 4.68 USD/bbl, or decreased 4%. This was resulted from additional capacity of crude oil in the US that has been increasing and the returning of Middle East capacities after geopolitic problems were eased i.e. in Iraq and Libya. Meanwhile, the sluggishness in Eurozone’s economy pulled overall demand lower. In addition, hedge fund has decreased their long position on derivative and swtich to invest in other form of investment instead as the US economy show sign of improvement after FED decide to end QE tapering, hence, greater decrease in crude oil price.

The average spread of Diesel-Dubai in 3Q/2014 was at 14.43 USD/bbl, decreased from previous quarter by 10% while the average spread for Gasoline-Dubai in 3Q/2014 was at 13.18 USD/bbl, dropped from the previous quarter by 18%. This was due to higher operating rate of the US refineries to greater than 90% and new refinery capacity from Satorp refinery in Saudi Arabia which ramped up to its full capacity of 400,000 bbl/day. Moreover, the Chinese additional refining capacity has increased which resulted in additional export volume, especially for diesel. In addition, the demand for refined products in Asia decreased from previous quarter. On the other hand, the spread of Jet-Dubai averaged at 14.50 USD/bbl in 3Q/2014, increased 1% from previous quarter due to the higher in Jet fuel reserve from the political unrest in Middle East including Iraq, Libya and Syria.

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Aromatics Market Overview

Table 4 : Aromatics Product Prices and Spreads over Condensate

Unit: USD/ton 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Condensate 930 922 872 -6% -5% Paraxylene (FECP) 1,440 1,256 1,350 -6% 7% Paraxylene (FECP)-Condensate 510 334 479 -6% 43% Benzene (Spot Korea) 1,258 1,293 1,301 3% 1% Benzene (Spot Korea)-Condensate 328 370 430 31% 16% Naphtha-Condensate -9 29 42 542% 42%

Paraxylene

The surplus of paraxylene continued to pressure paraxylene-condensate spread, however the paraxylene-condensate spread in 3Q/214 rose from the previous quarter. 3Q/2014 paraxylene price averaged at 1,350 USD/ton, increased from 2Q/2014 of 1,256 USD/ton or 7% increased while the paraxylene-condensate spread averaged at 479 USD/ton, increased from previous quarter of 334 USD/ton or 43% increased. This was due to shutdowns of many aromatics plants in Asia from production problem and from having negative margin, especially in July and August when paraxylene capacity of around 1 million tons disappeared from the market. On the demand side, the demand for downstream products improved, evidenced by the price of PTA and polyester that has increased from the increasing fiber demand. Furthermore, additional paraxylene capacity from 3 paraxylene plants, South Korean, Indian, and Singaporean, with total capacity of 3 million tons/years have delayed their start up to quarter end. However, at the end of the quarter, paraxylene price slightly declined due to the return to operation of previously turnaround plants and those plants that delayed their start up to the quarter end period. In addition, PTA market shows sign that it will soften from the sign of slow down Chinese economy.

Benzene

In 3Q/2014, benzene market situation improved. Benzene price (Reference: Spot Korea) for 3Q/2014 averaged at 1,301 USD/ton with benzene- condensate spread of 430 USD/ton, increased from 2Q/2014 at 370 USD/ton or 16% increase. This was due to tight supply for feedstock of benzene i.e. pyrolysis gasoline, as more shale gas was used as feedstock for petrochemical production replacing the use of naphtha as a feedstock which has pyrolysis gasoline as by product. In addition, many aromatics plants in Asia, especially in Japan have decreased their operating rate and froze the plant production due the production problem. As a result around 880,000 tons of benzene was missing from the market while demand to product downstream products, stylene monomer, cumene and phenol, improved after downstream plants came back from plant turnaround in previous quarter. Although there were many new plants in India and South Korea, with a total capacity of around 1.2 million tons started up, the overall market supply of benzene in Asia was still a little tight in 3Q/2014.

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Olefins and Olefins derivatives Market Overview Table 5 : Prices and Spreads of Olefins and Olefins derivatives

Unit : USD/ton 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Naphtha (MOPJ) 920 951 913 -1% -4% Ethylene (SEA) 1,322 1,447 1,478 12% 2% HDPE 1,489 1,569 1,604 8% 2% HDPE-Naphtha 568 618 691 22% 12% LLDPE 1,490 1,578 1,601 7% 1% LLDEP- Naphtha 569 627 688 21% 10% LDPE 1,569 1,605 1,601 2% 0% LDPE- Naphtha 649 653 688 6% 5% MEG (ACP) 1,143 1,093 1,143 0% 5% MEG-0.65 Ethylene 284 152 182 -36% 20%

In 3Q/2014, ethylene price average at 1,478 USD/ton, increased from previous quarter at 1,447 USD/ton or 2% increased. The increase was due to tight supply in Asia from annual maintenance of many crackers especially in China, Sinagpore, Japan and Thailand causing approximately 1.2 million tons of missing ethylene supply. There was also approximately 1 million ton/year capacity addition during 3Q/2014 however, not fully operated. On the damand side, the demand for derivative products, polyethylene, was still growing, evidenced by price and margin of polyethylene plastic which remained in high level.

In 3Q/2014, the price of HDPE averaged at 1,604 USD/ton, increased from previous quarter at 1,569 USD/ton or 2% increased. LLDPE price averaged at 1,601 USD/ton, increased from previous quarter at 1,578 USD/ton or 1% increased. The demand for polyethylene still remained level as converters were restocking for the upcomping year end seasonal demand. On the supply side, some HDPE plants in Asia went through a shutdown period due to production problem. Moreover, the Middle East HDPE producer who previously exported Asia has rerouted to export to Latin America instead.

In 3Q/2014, the price of LDPE averaged at 1,601 USD/ton, slightly decreased from previous quarter at 1,605 USD/ton from slight surplus in supply of LDPE in Asia as there were not many production interruptions. In addition, the Middle East producer, especially Iran, exported more LDPE into Asia while the demand for LDPE had smaller growth when compared to other polyethylene products.

3Q/2014 MEG price averaged at 1,143 USD/ton increased from previous quarter at 1,093 USD/ton or 5% increased and MEG-ethylene spread was 182 USD/ton, 20% increased from previous quarter. This was due to an improving demand of downstream products such as PTA and polyester for the upcoming seasonal demand. In addition, there was maintenance shutdown and decrease in operating rate of MEG plants in Taiwan and the Middle East which resulted in a decrease of supply to the market. Meanwhile, there was no additional supply into the market, hence, a tight supply of MEG in 3Q/2014. However, toward the end of the quarter, MEG price declined from the decline in PTA and polyester demand in accordance with Chinese economy.

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Performance Analysis by Business Unit

Refinery Business Unit

In 3Q/2014 the Company’s refinery was able to run at full capacity with CDU utilization rate of 102%, up from 3Q/2013 at 98% as there was a maintenance turnaround to repair HCU for 9 days, while slightly decreased from previous quarter at 103%. The total intake of the refinery unit in 3Q/2014 was at 209.18 KBD, increased 6% from 3Q/2013 and up 1% from previous quarter while crude intake decreased from previous quarter at 148.65 KBD to 148.21 KBD, in correlation with the decreased CDU utilization rate.

Table 6 : Refinery Intake

3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Crude (Mbbl) 13.10 13.53 13.64 4% 1% (KBD) 142.36 148.65 148.21 4% 0% Condensate Residue & Others (Mbbl) 5.10 5.40 5.61 10% 4% (KBD) 55.46 59.32 60.96 10% 3% Total Intake (Mbbl) 18.20 18.92 19.24 6% 2% (KBD) 197.82 207.97 209.18 6% 1% CDU Utilization Rate 98% 103% 102%

CDU GRM in 3Q/2014 was at 4.81 USD/bbl, increased 12% from 3Q/2013 CDU GRM at 4.31 USD/bbl although the petroleum product spread declined. The spread of Jet-Dubai fell by 14% and the spread of Diesel-Dubai fell by 17% from 3Q/2013 as there was a maintenance of Hydrocracking Unit (HCU) which resulted in higher amount of Fuel Loss in the quarter, causing GRM in 3Q/2014, slightly higher than last year. When compared to that of 2Q/2014, CDU GRM of 3Q/2014 fell 16% due to a 10% increase in the spread of diesel product, which accounted for approximately 54% of all petroleum products. Moreover, in 2Q/2014 there were maintenance

shutdowns of 2 refineries in Thailand which had positive impact to the Company’s refinery in 2Q/2014.

In 3Q/2014 the Company reported Stock Loss and NRV due to a decrease in Dubai crude price. Dubai price in 3Q/2014 opened at 109.16 USD/bbl and closed at 94.61 USD/bbl with ending 3Q/2014 crude inventory of 6.27 Mbbl. Therefore, Stock Loss from crude and petroleum products was reported at Baht 1,626 million and NRV of Baht 184 million. However, the Company reported gain from commodity hedging of 0.70 USD/bbl or Baht 432 million.

Table 7 : Gross Refinery Margin

Unit: USD/bbl 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Market GRM 3.48 4.44 3.83 10% -14% CDU GRM 4.31 5.74 4.81 12% -16% CRS GRM 2.90 2.76 2.82 -3% 2% Hedging Gain/(Loss) 0.98 0.66 0.70 -29% 6% Stock Gain/(Loss) Net NRV 4.21 0.73 -2.92 -169% -499%

Accounting GRM 8.67 5.83 1.61 -81% -72%

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Table 8 : Petroleum Sales Volume

Product 3Q/2013 2Q/2014 3Q/2014 YoY QoQ

'000 barrels

% '000

barrels %

'000 barrels

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

Naphtha 1,204 7% 1,408 8% 1,022 6% -15% -27% Reformate 781 5% 1,324 8% 666 4% -15% -50% Jet/Kero 1,923 12% 2,201 13% 2,034 12% 6% -8% Diesel 8,376 52% 8,735 51% 8,892 54% 6% 2% Fuel Oil 2,358 15% 2,155 13% 2,356 14% 0% 9% Others 1,512 9% 1,319 8% 1,510 9% 0% 14%

Total 16,155 100% 17,143 100% 16,480 100% 2% -4%

Aromatics Business Unit

The performance of Aromatics business unit improved with higher P2F (price to feed margin) in 3Q/2014 compared to that in 3Q/2013 and 2Q/2014 due mainly to the increase in benzene-condensate spread to average at 430 USD/ton in 3Q/2014, or 31% increase from 3Q/2013 and 16% increase from 2Q/2014. While paraxylene-condensate spread averaged at 479 USD/ton in 3Q/2014, decreased 6% from 3Q/2013 but increased 43% from previous quarter.

However, the aromatics utilization rate (BTX utilization) in 3Q/2014 averaged at 83%, decreased from 3Q/2013 at 91% and decreased from 2Q/2014 at 89%. While the intake for 3Q/2014 totaled to 1.43 Mton, 6% decreased from 3Q/2013 and 7% from previous quarter. This was due to an unplanned

shutdown of Aromatics plant unit#2 to fix the reforming unit in 3Q/2014 which caused the missing utilization and the declined of production volume.

Aromatics P2F margin in 3/2014 was at 290 USD/ton increased 11% from 3Q/2013 and increased 235% from 2Q/2014 from price and volume factors mentioned above. There was also another factor in the prices of Aromatics by-products such as naphtha and raffinate, which accounted for approximately 33% of Aromatics product sales which pushed this quarter P2F margin to a higher level. Naphtha – Dubai spread in 3Q/2014 was at 42 USD/ton increased from 3Q/2013 at -9 USD/ton and increased from 2Q/2014 at 29 USD/ton. Therefore, by-products had a positive effect on earnings in 3Q/2014.

Table 9 : Aromatics Intake and Productions

3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Condensate ('000 tons) 1,195 1,288 1,147 -4% -11% Others ('000 tons) 334 245 286 -14% 17% Total Intake ('000 tons) 1,529 1,533 1,433 -6% -7% BTX Production ('000 tons) 533 518 483 -9% -7% BTX Utilization Rate 91% 89% 83% * Aromatics capacity 2.259 Mton/year

Table 10 : Aromatics Sales Volume

Product 3Q/2013 2Q/2014 3Q/2014 YoY QoQ

'000 tons % '000 tons % '000 tons % % + /(-) % + /(-) Benzene (BZ) 134 15% 148 17% 134 16% 0% -9% Cyclohexane 54 6% 53 6% 45 5% -18% -16% Paraxylene (PX) 309 35% 304 35% 281 34% -9% -8% Other BTX Products 70 8% 67 8% 60 7% -14% -10%

Total BTX Products 568 65% 572 67% 520 63% -8% -9% Naphtha and Raffinate 270 31% 238 28% 270 33% 0% 14% Other By-Products 38 4% 50 6% 32 4% -17% -37%

Total 876 100% 860 100% 822 100% -6% -4%

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Table 11 : Aromatics market P2F

Unit: USD/ton 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Market P2F 262 86 290 11% 235% NRV 0.0 12.5 -5.3 N/A N/A Hedging Gain/(Loss) 0.0 0.0 0.0 N/A N/A Stock Gain/(Loss) 84.1 27.9 -63.3 N/A N/A Accounting P2F 346 127 221 -36% 74%

Aromatic business unit reported a Stock Loss in 3Q/2014 at Baht 969 million or 63.3 USD/ton from feedstock and product prices that declined in accordance with the crude oil price especially in the second half of the year. Moreover, Aromatics business unit had NRV of Baht 81 million or 5.3 USD/ton from value of stock that had declined after quarter end. As a result, Aromatics business unit had Accounting P2F at 221 USD/ton, 36% decreased from 3Q/2013 but increased 74% from 2Q/2014.

Olefins and Olefins derivatives Business Unit

The performance of Olefins and Olefins derivatives business unit improved in 3Q/2014 from 3Q/2013 and 2Q/2014. In 3Q/2014 adjusted EBITDA was at Baht 9,545 million, 25% increase from 3Q/2013 and 9% increase from 2Q/2014, resulted from the more steady flow of gas feedstock from the supplier, PTT, hence, the Company could operate its Olefins plants more efficiently with higher utilization rate. Moreover, product price of Olefins and olefins derivatives mostly improved. As a result, Olefins and Olefins derivatives adjusted EBITDA in 3Q/2014 was at 28%, up to a normal level. Details are as follows:

Table 12 : Adjusted EBITDA of Olefins and Olefins derivatives

Unit: MB 3Q/2013 2Q/2014 3Q/2014 YoY

% + /(-) QoQ

% + /(-) Adj. EBITDA 7,611 8,719 9,545 25% 9% Adj. EBITDA Margin 26% 25% 28% 1% 3%

Olefins Business Unit

In 3Q/2014, the utilization rate of Olefins plants averaged at 94% with maintenance shutdown of I-4/2 plant for 14 days (August 30 to September 12). However, the utilization of Olefins plants in this quarter was higher than 3Q/2013 at 75% due to an accident in 3Q/2013 of PTT’s GSP#5 which caused cease of its operation, and was unable to feed raw materials to the Company’s Olefins plants and was higher than the utilization rate in 2Q/2014 at 91%. The used feedstock portion in this quarter was

comprised of 86% natural gas, 4% naphtha, and 10% NGL.

The sales volume of Olefins to external parties in 3Q/2014 totaled to 172 Kton, 17% increased from 3Q/2013 and 2% increased from previous quarter in accordance with the increased utilization rate. Ethylene price in 3Q/2013 averaged at 1,478 USD/ton, 12% increased from 3Q/2014 and 2% increased from 2Q/2014 and resulted in an increase in sales revenue 34% from 3Q/2013 and 14% from 2Q/2014.

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Table 13 : Sales Volume and Utilization Rate of Olefins and Olefins derivatives

3Q/2013 2Q/2014 3Q/2014 YoY QoQ

Sales

Volume '000 tons

Utilization Rate

Sales Volume

'000 tons

Utilization Rate

Sales Volume

'000 tons

Utilization Rate

% + /(-)

% + /(-)

Olefins * 147 75% 168 91% 172 94% 17% 2% HDPE 208 106% 218 107% 210 114% 1% -4% LLDPE 119 113% 105 112% 85 84% -29% -19% LDPE 25 5% 92 93% 75 104% 205% -19% Total PE 352 88% 415 106% 369 104% 5% -11%

MEG 95 92% 95 99% 110 112% 15% 15% Note: * Sales Volume of Olefins is external volume.

Polymer Business UnitPerformance: HDPE

In 3Q/2014 total HDPE utilization rate was at 114%, increased from 3Q/2013 at 106% and increased from 2Q/2014 at 107%. The sales volume in 3Q/2014 was at 210 Kton, increased 1% from 3Q/2013, while HDPE price increased 8%. This resulted in 14% increase in sales revenue.

However, when compared to that of 2Q/2014, sales revenue decreased 1% as a result of 4% decrease in sales volume, and 2% increase in HDPE price. The decrease in sales volume in 3Q/2014 was due to a decrease in crude oil price at the end of the quarter which led to slow down in HDPE sales as buyers are expecting a decrease in HDPE price.

Performance: LLDPE

The utilization rate of LLDPE in 3Q/2014 was at 84%, decreased from 3Q/2013 at 113% and a decreased from 2Q/2014 at 112% from the planned shutdown of LLDPE plant for 20 days in 3Q/2014 (July 26 – August 14). This resulted in a decrease in sales revenue of LLDPE in 3Q/2014 20% from 3Q/2013 as the sales volume in 3Q/2014 decreased 29% from the same quarter last year to 85 Kton while LLDPE price increased 7%. When compare to 2Q/2014, sales revenue decreased 17% from 19% decrease in sales volume while price increased 1%.

Performance: LDPE

In 3Q/2014 the utilization rate of LDPE was at 104%, increased from 3Q/2013 at 5% due to an the unplanned shutdown of LDPE plant for 78 days in 3Q/2013 and increased 93% from 2Q/2014 due to a

10-day planned shutdown in 2Q/2014. In 3Q/2014, the LDPE plant was able to run at its full capacity.

LDPE sales revenue in 3Q/2014 increased 254% from 3Q/2013 due to a 205% increase in sales volume to 75 Kton in 3Q/2014 which was caused by unplanned shutdown mentioned earlier. In comparison with 2Q/2014, the sales revenue decreased 18% due to a 19% decrease in sales volume and slight decline in LDPE product price. However, the decrease sales volume in 3Q/2014 was in an opposite direction with with the increased utilization rate. This was caused by a decrease in crude oil price at the end of the quarter which led to slow down in LDPE sales as buyers are expecting a decrease in LDPE price

Ethylene Oxide Business Unit

In 3Q/2014, the utilization rate of MEG was at 112%, increased from 3Q/2013 at 92% and increased from 2Q/2014 at 99%. This resulted in a better performance of overall EO business unit in 3Q/2014. The MEG sales volume in 3Q/2014 was at 110 Kton, 15% increase from 3Q/2013 while MEG price was in the same level as a result, an 8% increase in sales revenue. While comparing to 2Q/2014, MEG sales volume increase 15% and MEG price increased 5%, resulted in sales revenue of EO business unit to increase 9%.

(Translation)


Operating Performance

3Q/2013 2Q/2014 3Q/2014 YoY QoQ 9M/2013 9M/2014

MB % MB % MB % MB % MB % MB % MB %

Sales Revenue 141,394 100 152,401 100 145,820 100 4,426 3 (6,581) (4) 394,590 100 444,587 100

Feedstock Cost (116,522) (82) (126,966) (83) (117,045) (80) 523 0 (9,921) (8) (316,462) (80) (365,162) (82)

Product to Feed Margin

24,872 18 25,435 17 28,775 20 3,903 16 3,340 13

78,128 20 79,425 18

1 Variable Cost (6,211) (4) (7,601) (5) (7,042) (5) 831 12 (559) (7) (19,203) (5) (22,059) (5)

2 Fixed Cost (4,028) (3) (4,904) (3) (4,337) (3) 309 8 (567) (12) (12,207) (3) (13,874) (3)

3 Stock Gain/(Loss) & NRV

3,768 3 1,180 1 (2,841) (2) (6,609) (175) (4,021) (341)

1,703 0 (2,236) (1)

4 Gain/(Loss) Commodity Hedging

560 0 411 0 425 0 (135) (24) 14 3

1,127 0 1,030 0

5 Other Income 1,235 1 1,249 1 1,113 1 (122) (10) (136) (11) 3,921 1 3,680 1

6 SG&A (3,808) (3) (3,056) (2) (3,232) (2) (576) (15) 176 6 (9,197) (2) (9,392) (2)

Extraordinary Item

7 Provision for Business Restructuring**

0 0 (2,239) (1) 0 0 0 0 2,239 100

0 0 (2,239) (1)

EBITDA 16,388 12 10,475 7 12,861 9 (3,527) (22) 2,386 23 44,273 11 34,335 8

Depreciation & Amortization

(4,149) (3) (4,415) (3) (4,308) (3) 159 4 (107) (2)

(12,289) (3) (12,925) (3)

EBIT 12,239 9 6,060 4 8,553 6 (3,686) (30) 2,493 41 31,984 8 21,410 5

Finance Cost (1,144) (1) (1,097) (1) (1,095) (1) (49) (4) (2) (0) (3,379) (1) (3,333) (1)

8 FX Gain/(Loss) (738) (1) 71 0 381 0 1,119 152 310 437 (1,479) (0) 1,054 0

9 Shares of Profit/(Loss) from Investments

(54) (0) 290 0 240 0 294 544 (50) (17)

(93) (0) 771 0

10 Income Tax Expense

(708) (1) (599) (0) (521) (0) (187) (26) (78) (13)

(1,419) (0) (1,493) (0)

Net Profit 9,595 7 4,725 3 7,558 5 (2,037) (21) 2,833 60 25,614 6 18,409 4

Profit/(loss) attributable to:

Owners of the Company

9,610 7 6,085

4 7,591 5 (2,019) (21) 1,506 25

25,857 7 19,971

4

Non-controlling interests

(15) (0) (1,360) (1) (33) (0) (18) (120) 1,327 98

(243) (0) (1,563) (0)

Adjusted EBITDA* 12,619 9 11,534 8 15,702 11 3,083 24 4,168 36 42,570 11 38,810 9

Note: * Adjusted EBITDA refers to EBITDA excluding impact of inventory value (excludes Inventory and NRV) and the impact from business restructuring of Vencorex ** Vencorex business restructuring provision expense at 100% share *** Vencorex business restructuring provision expense portion of 49% for non-controlling interests or Baht 1,097 million

*** ***

(Translation)


Performance Comparison (1) Variable Cost

Variable cost increased by Baht 831 million or 12% from 3Q/2013 in line with an increase in overall production and sales volume. The major increment was from Olefins and derivatives business that had LLDPE plant shutdown in 3Q/2013.

In comparison to 2Q/2014, variable cost decreased by Baht 559 million or 7% as a result of unstable gas feedstock in previous quarter. Olefins plants could not operate in full capacity, thus lower stream had been generated from production. The Company had to purchase more stream from outside which made variable cost in 2Q/2014 higher than usual.

(2) Fixed Cost

In 3Q/2014, fixed cost increased by Baht 309 million or 8% from 3Q/2013. This was mainly due to an increase in staff cost around Baht 108 million from the increment in number of employees as well as annual salary adjustment and an increase in maintenance cost around Baht 109 million as a result of Polymers and Refinery maintenance shutdown during the period.

In comparison to 2Q/2014, fixed cost decreased by Baht 567 million or 12%. This was mainly due to a decline in maintenance cost of Vencorex as there was higher shutdown in 2Q/2014. Consequently, staff cost decreased from previous quarter.

(3) Stock Gain/(Loss) and NRV

In 3Q/2014, the Company reported Stock Loss and NRV of Baht 2,841 million, of which Stock Loss was Baht 2,595 million, and NRV was Baht 246 million.

The Stock Loss of Baht 2,595 million in 3Q/2014 comprised of Stock Loss from Aromatics of Baht 969 million and Stock Loss from Refinery of Baht 1,626 million. The major factor was from the continually decline in crude price that opened at 109.16 USD/bbl in the beginning of period and closed at 94.61 USD/bbl in the end of period.

Additionally, NRV of Baht 246 million in 3Q/2014 was mainly from Aromatics and Refinery

business as the product price continued to decrease after period end.

Previously, the Company had total Stock Gain and NRV Gain of Baht 3,768 million in 3Q/2013 and Baht 1,180 million in 2Q/2014.

(4) Gain/(Loss) Commodity Hedging

In 3Q/2014, the Company reported Gain from Commodity Hedging of Baht 425 million. In order to manage risk, the Company has done Crack Spread Hedging and in this quarter, the actual spread for petroleum products was lower than the spread that the Company had sold in advance. As a result, the Company had gain from commodity hedging. Previously, the Company had Gain from Commodity Hedging of Baht 560 million and Baht 411 million in 3Q/2013 and 2Q/2014, respectively.

(5) Other Income

In 3Q/2014, the Company reported other income of Baht 1,113 million, a decrease of Baht 122 million or 10% from 3Q/2013. This came from the reduction in other income from shared facility of Vencorex. As the production volume decreased, utility delivered to other factories nearby decreased as a consequence.

In comparison to 2Q/2014, other income decreased by Baht 136 million or 11%. This is due to Vencorex recognized rebate of utility purchased in 2013 as other income in previous quarter but no such amount in this quarter.

(6) SG&A

In 3Q/2014, SG&A expense decreased by Baht 576 million or 15% from 3Q/2013 due mainly to Oil Spill related expense that the Company accrued in 3Q/2013 of Baht 1,059 million. However, the consolidation of Myriant in last quarter made SG&A expense increased by Baht 169 million, whereas it was recognized as share of profit/(loss) in 3Q/2013. Moreover, there was a 370-million Baht donation for the foundation of PTT Group Science and Technology Institution in 3Q/2014.

In comparison to 2Q/2014, SG&A expense increased by Baht 176 million or 6% which was mainly from the donation in Science and Technology

(Translation)


Institution of PTT Group in this period. Nevertheless, marketing expense of Emery and NatureWorks decreased from the decrement in sales volume comparing to last period.

(7) Provision for Business Restructuring

In 2Q/2014, the Company recorded the provision for business restructuring of Vencorex in France as an extraordinary item. This included impairment of assets, employee compensation and other related expense totaling to Baht 2,239 million. However, there was no provision in 3Q/2014 and 3Q/2013.

(8) Gain/(Loss) from Foreign Exchange

In 3Q/2014, the Company reported gain from foreign exchange of Baht 381 million which was mainly came from foreign currency forward contract and translation of ending balance of loan and investment denominated in foreign currency. In 3Q/2014, Thai Baht was slightly appreciated by Baht 0.08 per USD comparing to last quarter (Based on average sales BOT, end of 3Q/2014 at Baht 32.52 per USD against end of 2Q/2014 at Baht 32.60 per USD). As at Sep 30, 2014, the Company had foreign liabilities of USD 1,675 million. Previously, the Company reported loss from foreign exchange of Baht 738 million in 3Q/2013 and gain from foreign exchange of Baht 71 million in 2Q/2014.

(9) Share of Profit/(Loss) from Investments

In 3Q/2014, the Company realized total share of profit from investments of Baht 240 million, increased from loss of Baht 54 million or an increase by Baht 294 million in 3Q/2013. The major factor was the change in the method to recognize the performance of Myriant from Taking Equity to Consolidation after the change in the proportion of investment in Myriant and its status changed from associate to subsidiary since 1Q/2014. The Company recognized loss of Myriant totaling to Baht 196 million in 3Q/2013.

The remaining difference of Baht 98 million was mainly due to additional share of profit from GPSC as a result of dividend income, an adoption of new standard, TFRIC4, in 1Q/2014, and new investments during the end of 2013.

In comparison to 2Q/2014, share of profit/(loss) from investments decreased by Baht 50 million. This was mainly from decreasing in contribution from VNT since last quarter VNT recorded deferred tax asset from carried forward tax losses.

(10) Income Tax Expense

The Company reported income tax expense totaling to Baht 521 million in 3Q/2014, a decrease of Baht 187 million or 26% from 3Q/2013 (Effective tax rate: ETR decreased from 7% in 3Q/2013 to 6% in 3Q/2014). The major reason was from Refinery business that had negative performance from Stock Loss in 3Q/2014, whereas generated high profit in 3Q/2013 from Stock Gain which was subject to 20% tax rate.

In comparison to previous quarter (ETR 11% or 8% excluding Vencorex restructuring provision expense), income tax expense decreased by Baht 78 million, resulted from a decrease in performance of non-tax privilege operations especially for the Refinery business in 3Q/2014.

(Translation)


Statement of Financial Position

Assets

As at September 30, 2014, the Company had total asset of Baht 425,919 million, decreased by Baht 6,791 million from December 31, 2013 which came from a decrease in current asset of Baht 6,776 million and a decrease in non-current asset of Baht 15 million.

1) Current asset decreased Baht 6,776 million or 4% mainly due to the following reasons:

• Cash and cash equivalents and current investments decreased by Baht 1,939 million or 4% which was mainly due to cash received from operation of Baht 34,711 million and cash received from bond issuing of Baht 10,000 million, while there was cash used in purchasing assets totaling to Baht 14,231 million, net repayment of loan and interest of Baht 2,279 million, repayment of debenture of Baht 15,000, and payment of dividend totaled Baht 14,740 million.

• Accounts receivable decreased by Baht 11,112 million or 19% that was mainly due to a decrease of Baht 6,625 million in accounts receivable of Refinery business. This was because of a decrease in bio-diesel volume export to China around 0.9 Mbbl and a decline in jet and diesel

price. As for Aromatics business, account receivables decreased by Baht 4,222 million as a result of significant drop in product price comparing to the end of last year. In addition, sales volume declined from unplanned shutdown of Aromatics 2 plant in September 2014.

YE 2013

(Day) 3Q/2014

(Day) +/(-) (Day)

AR Turnover 37 33 (4)

• AR Turnover for 3Q/2014 averaged at 33 days, 4 days decreased from end of 2013 which was due mainly to a decrease in AR days in almost all business units. There was overdued accounts recievable at year end as a result of long holiday. For Aromatics business, AR days decreased from averaged at 40 days to 33 days. This was because domestic sales portion increased in comparison to last year from 53% to 63%. Credit term of domestic sales is by nature shorter than export sales.

• Inventory increased by Baht 6,692 million or 13%. An increment was mainly come from Refinery business at the amount of Baht 3,064 million, especially for in transit crude which increased by 2 Mbbl compared to the end of last year. As for Aromatics business, inventory increased by Baht 1,970 million. From unplanned shutdown of Aromatics 2 plant in September so

Cash/ Cash equivalent/ Short term investment

Current Asset

PP&E

Non-Current Asset

Other Liability Interest Bearing Debt Shareholders’ Equity

31 December 2013 Baht 433 Billion

30 September 2014 Baht 426 Billion

Unit: Billion Baht

(Translation)


there was high raw material at 3Q/2014 as it could not be consumed in production. Inventory of Olefins and Derivatives business increased by Baht 1,307 million as a result of Olefins plant shutdown around the end of 3Q/2013, consequently made inventory level low at the end of the year. Moreover, customers of Polymers business expect downtrend in product price so that they slow down the purchase.

YE 2013

(Day) 3Q/2014

(Day) +/(-) (Day)

Inventory Turnover

23 28 5

• Inventory turnover for 3Q/2014 averaged at 28 days, increased from end of year 2013 by 5 days from an increase in inventory of Refinery business as mentioned.

• Other current asset decreased by Baht 417 million or 6%, resulted from 1) a decrease of other receivable of Baht 1,141 million which mainly from prepaid insurance recognized during the period 2) a decrease of receivable from Oil Fund totaled Baht 248 million because of the cancelation of compensation in diesel at the beginning of the year together with the reduction in compensation rate of LPG 3) a decrease of deferred VAT amounting to Baht 214 million due to the timing of payment period. However, VAT receivable increased by Baht 1,117 million since the Company did not get the refund for 2Q/2014 in this period.

2) Non-current asset decreased by Baht 15 million which was mainly due to:

• Property, plant and equipment decreased by Baht 1,628 million or 1%. This came from an increase in assets cost by Baht 9,303 million, net off the depreciation recognized in the period by Baht 9,772 million and impairment of assets from Vencorex restructuring at the amount of Baht 1,159 million. The increment in assets cost was mainly resulted from additional assets and construction-in-progress from on-going projects such as Phenol II project, BV project and Aromatics 2 debottlenecking project. In addition, there was an increase in plant turnaround recognized as asset during the period.

• Other non-current asset increased by Baht 1,613 million or 4% due mainly from an increase of investment in associates totaled Baht 758 million from share of profit recognized in 9M/2014 and the recognition of intangible assets to support LLDPE expansion project around Baht 1,057 million.

Liability

As at September 30, 2014, the Company had total liability of Baht 178,308 million, decreased by Baht 9,044 million or 5% from December 31, 2013 which resulted from a decrease in current liability of Baht 8,204 million and a decrease in non-current liability of Baht 840 million.

1) Current liability decreased Baht 8,204 million or 10% from the following reasons:

• Accounts payable decreased by Baht 4,890 million or 11%, which was mainly from a decrease in accounts payable of Olefins and Derivatives business totaling to Baht 4,789 million and a decrease in accounts payable of TOL and PPCL totaling to Baht 577 million. This was due to the timing of payment period. Additionally, accounts payable of Aromatics business decreased by Baht 2,813 million because of the reduction in material purchased to align with planned shutdown of Aromatics 1 plant in October. Moreover, accounts payable of Vencorex decreased by Baht 223 million as a result of Baht appreciation against Euro. However, accounts payable of Refinery business increased by Baht 3,989 million as a result of an increment of in transit crude.

• Other accounts payable decreased Baht 418 million or 5% as a result of a decrease in accrued expense for contribution to Oil Fund and a decrease of accrued interest according to bond repayment during the period.

• Current portion of long-term loan decreased by Baht 1,857 million or 9% from loan repayment in April 2014 totaled Baht 15,000 million. However, there had been the reclassification of long term debenture to current portion by USD 300 million or around Baht 9,780 million. The maturity date of this debenture is June 2015. Moreover, long term loan from financial institution which will

(Translation)


reach the due date within 1 year increased by Baht 3,427 million.

• Income tax payable decreased by Baht 737 million or 57% due mainly to the payment of half year tax in August 2014. Therefore, income tax payable in 3Q/2014 was for three-month period performance whereas income tax payable at year end was for six-month period performance.

2) Non-current liability decreased by Baht 840 million or 1% which was mainly due to:

• Long-term loan decreased by Baht 1,543 million or 2%. This was mainly due to the reclassification of long term debenture to current portion at the amount of USD 300 million or about Baht 9,780 million, including the repayment of loan during the period. However, there had been new bond issuing totaling to Baht 10,000 million in August 2014 with the objective to support investment projects and to be used as working capital and repayment of existing loan.

• Deferred tax liability decreased by Baht 271 million or 6% from last year due to the reversal from actual tax paid in 2Q/2014 totaled to Baht 300 million.

• Other non-current liability increased by Baht 990 million or 115% from provision for business restructuring of Vencorex which comprised of staff compensation and factory development cost amounting to Baht 779 million. The addition also included estimated consideration to be paid for step up investment in Vencorex (increase shareholding interest from 51% to 85%). As of September 30, the Company estimated the consideration at EUR 5.97 million or approximately Baht 245 million and recognized a

liability for that amount in other non-current liability.

Shareholder’s Equity

As of September 30, 2014, the Company reported total shareholders’ of Baht 247,611 million, increased by Baht 2,253 million from December 31, 2013. This included an increase in the Company’s portion of Baht 6,628 million whereas non-controlling interest portion reduced by Baht 4,375 million.

The Company’s portion increased by Baht 6,628 million or 3% arose from the Company’s net profit in 9M/2014 of Baht 19,971 million, profit from an increase in shareholding portion of Vencorex from 51% at the end of 2013 to 85% totaled to Baht 1,792 million, net loss from an increase in shareholding portion of Myriant from 72.21% at the end of 2013 to 84.18% amounting to Baht 236 million, dividend payment of Baht 14,198 million and loss in the foreign currency translation differences for international operations and loss from financial derivative valuation to reduce risk of cash flow for Baht 701 million.

However, non-controlling interest portion reduced by Baht 4,375 million or 64%. This included loss from operation during the period of Baht 1,563 million, dividend payment to non-controlling interest portion of Baht 556 million, a decrease in non-controlling interest portion in Vencorex and Myriant of Baht 2,052 million and Baht 111 million, loss from foreign currency translation of Baht 88 million and loss of non-controlling interest portion from investment in subsidiaries of Baht 5 million.

Statement of Cash Flows

For statement of cash flows for 9 months ended September 30, 2014, the Company had net cash from operating activities of Baht 34,711 million, net cash used in investing activities of Baht 19,656 million which was mainly from investment in on-going projects such as Phenol II, Aromatics 2 Debottlenecking and TOCGC improvement project, etc. In addition, the Company had net cash used in financing activities of Baht 22,561 million from repaying debenture and long-term loan, interest expense, and dividend payment. Adding up together with beginning cash and cash equivalents and effect of exchange rate changes on balances held in foreign currencies of Baht 18,173 million, the Company had cash and cash equivalents at the end of 3Q/2014 of Baht 10,677 million. Including current investments, the Company reported cash and cash equivalents and current investments totaled to Baht 42,444 million.

(Translation)


Key Financial Ratios

Financial Ratios 3Q/2013 2Q/2014 3Q/2014

Current Ratio (Times) 1.86 1.91 2.05

EBITDA to sales revenue (%) 11.19% 8.73% 8.08%

Net Profits to sales revenues (%) 6.61% 4.95% 4.57%

Return on total assets (%) 10.50% 8.64% 7.95%

Return on equity (%) 16.11% 12.51% 11.52%

Interest Bearing Debt to equity (Times) 0.51 0.43 0.47

Net interest bearing debt to equity (Times) 0.30 0.30 0.30

Net interest bearing debt to EBITDA (Times) 1.18 1.41 1.52

Note:

Current ratio = Current assets divided by current liabilities

EBITDA to sales revenue = EBITDA divided by sales revenue (for the last 4 quarters)

Net profit on sale revenue = Net profit divided by sales revenue (for the last 4 quarters)

Return on total assets = Net profit (for the last 4 quarters) divided by average total assets

Return on equity = Net profit (for the last 4 quarters) divided by average total shareholder’s equity

Interest Bearing Debt to Shareholders’ Equity

= Interest Bearing Debt divided by shareholder’s equity

Net Interest Bearing Debt to Shareholders’ Equity

= Interest Bearing Debt net from cash and cash equivalent and current investments divided by shareholder’s equity

Net Interest Bearing Debt to EBITDA = Interest Bearing Debt net from cash and cash equivalent and current investments divided by EBITDA (for the last 4 quarters)

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