IRPC Public : Management Discussion and Analysis Quarter 1 Ending 31 Mar 2020

IRPC Public Company Limited

Management Discussion and Analysis

Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

Management Discussion and Analysis (MD&A)

IRPC Public Company Limited and its subsidiaries

Operating Results for the First Quarter of 2020

Executive Summary

								Quarter			Change
	Unit
				1Q20				1Q19	4Q19		YoY		QoQ
Crude Intake	Million bbl		17.11		17.97	17.51		(5%)		(2%)
Sales[1]	Million Baht		48,910		59,721	55,757		(18%)		(12%)
Net Sales [2]	Million Baht		43,617		54,274	50,337		(20%)		(13%)

Market GIM	Million Baht
	USD/bbl [3]
Accounting GIM	Million Baht
	USD/bbl
EBITDA	Million Baht
Net Profit	Million Baht

3,665	4,958	3,605	(26%)	2%
6.82	8.68	6.76	(21%)	1%
(3,146)	5,678	4,341	(155%)	(172%)
(5.84)	9.94	8.14	(159%)	(172%)
(6,436)	2,355	543	n.a.	n.a.
(8,905)	153	(513)	n.a.	n.a.

Note: [1] Sales includes (1) Petroleum Sales (2) Petrochemical Sales (3) Power and Utilities Sales (4) Sales of tank farm and port service, etc

[2]

[3]

Net Sales includes (1) Petroleum Sales (excluding excise tax) (2) Petrochemical Sales (3) Power and Utilities Sales Market GIM per bbl : [(Market GIM / Crude Intake)/exchange rate]

The operating results in the first quarter of 2020 compared to those in the fourth

quarter of 2019: In the first quarter of 2020 ( 1Q20) , the Company' s net sales was Baht 4 3 ,6 1 7

million, decreasing 13% from the fourth quarter of 2019 ( 4Q19) attributed to a 11% decrease in
									average selling price following a
					Net Sales
								Unit: MB	collapse in crude oil price and a
			1Q20	13%			4Q19	2% decrease in sales volume. The
									average crude intake was 188,000
									barrels per day, slightly decline by
	29%				50,337 27%	2,000 barrels per day. There was
	43,617		72%
	69%			planned shutdown for 27 days of
	2%					1%	the Hyvahl unit in RDCC plant for
									its catalyst replacement.
			Petroleum		Petrochemical			Power & Utilities

2	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

The Market GIM was Baht 3 ,665 million ( USD 6. 82 per barrel) , up by 2% due to higher petrochemical products spread because the product price was gradually moved down while the naphtha price, the petrochemical raw material, dropped sharply in relation with crude oil price. On the contrary, most of the petroleum products spread had dropped significantly amidst the Coronavirus 2019 (COVID- 19) pandemic outbreak.

The crude oil price collapsed during 1Q20. At the beginning of the quarter, Dubai price was USD 67.3 per barrel compared to USD 23.4 per barrel at the end of the quarter, down by USD 43.9 per barrel amid supply glut situation because OPEC and its partners were unable to reach an agreement for production cut. Together with the pandemic of COVID- 19, the number of infected people kept growing leading to the limitation of economic activities and the lockdown measures resulting in a dramatic drop in oil demand. These caused the Company to have a net stock loss totaling Baht 6,811 million or USD 12.66 per barrel including the stock loss of Baht 4 ,4 6 1 million and a loss of LCM amounting to Baht 2,6 7 3 million against oil hedging gain of Baht 323 million. Therefore, the Company reported loss on Accounting GIM amounting to Baht 3 ,146 million or USD 5 . 8 4 per barrel compared to gain on Accounting GIM of Baht 4,341 million in the previous quarter.

The other incomes of Baht 439 million, decreased by 15%. The operating expenses were Baht 3,395 million, down by 14% mainly from the lower staff costs and rental expense. These resulted in the loss before interest, tax, depreciation and amortization (EBITDA) of Baht 6,436 million, comparing with the 4Q19 EBITDA of Baht 543 million

The financial costs were Baht 464 million, similar to those in 4Q19 of Baht 466 million. There were loss from financial derivatives amounting to Baht 558 million while gain by Baht 382 million last quarter due to the Thai Baht currency depreciation against the USD currency when compared to those at the end of 4Q19. This mainly attributed to the realized loss from Cross Currency Swap contracts (CCS) of Baht 346 million and the unrealized loss from the Interest Rate Swap contracts (IRS) of Baht 2 1 7 million according to Thai Financial Reporting Standard No. 9 Financial Instruments ( TFRS 9 ) , effective on January 1, 2020. It makes stipulations relating to hedging instruments have to measures the unexpired contracts value at fair value.

Meanwhile, The Company recorded a foreign exchange loss on USD loan of Baht 500 million, compared to the previous quarter which had a gain of Baht 88 million due to the depreciation of Thai Baht. The outstanding USD loan is USD 200 million at the end of 1Q20. The unrealized loss from oil hedging ( according to TFRS 9) was Baht 993 million. While there was corporate income tax benefit amounting to Baht 2,246 million against corporate income tax benefit of Baht 445 million in the prior quarter, because of the decreasing operating results. All mentioned above resulted to the 1Q20 net loss of Baht 8,905 million versus the net loss of Baht 513 million in 4Q19.

3	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

The operating results in the first quarter of 2020 compared to those in the first

quarter of 2019: The Company' s net sales dropped by Baht 10,657 million or 20% , including 14% decrease in products price as well as 6% decrease in sales volume. The average crude intake was 188,000 barrels per day, declined by 6% . The Market GIM decreased by Baht 1 ,293 million or 26% ( declined by USD 1. 86 per barrel) mostly caused by the drop of products spread both petroleum and petrochemical businesses amidst the U. S. - China trade war tension combined with the COVID- 19 outbreak. The net stock loss was Baht 6,811 million. The profit decreased by Baht 7,531 million when compared with net profit of Baht 720 million in 1Q19. These led to the lower of Accounting GIM by Baht 8,824 million and the lower of EBITDA by Baht 8,791 million. The depreciation rose by Baht 211 million or 10% from the completion of efficiency improvement projects in 2019 such as Catalyst Cooler project.

The Company reported loss from financial derivatives amounting to Baht 558 million while gain of Baht 86 million in 1Q19 and loss from foreign exchange of Baht 500 million this period, compared to the gain of Baht 127 million in the previous quarter as a result of Thai baht depreciation. The corporate income tax benefit increased by Baht 2,237 million due to the decreasing operating results. Therefore, the Company reported the net loss of Baht 8,905 million, compared to the net profit of Baht 153 million at the same period last year.

Key incident in 1Q20

• Thai Financial Reporting Standards announced in the Royal Gazette that have been effective on January 1, 2020 including

1) Group of Financial Instruments Standards

TAS 32 Financial Instruments: Presentation

TFRS 7 Financial Instruments: Disclosures TFRS 9 Financial Instruments

TFRIC 16 Hedges of a Net Investment in a Foreign Operation TFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

2) Thai Financial Reporting Standards No. 16 "Leases"

4	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

Operating Performance

1. Operating Performance by Business Units 1.1. Petroleum business unit

1.1.1 Petroleum Market Overview

Crude oil situation in the first quarter of 2020: The global oil consumption was 94 million

barrels per day, decreasing from the forecast in January 2020 to 7 million barrels per day due to the fuel demand for transportation dropped sharply. The Dubai price had moved between USD 23.20 per

barrel and USD 69.60 per barrel, an average of USD 50.74 per barrel, fell by USD 11.34 per barrel from
				an average of USD 62.08 per
		Dubai Price
			barrel in 4Q19. In the beginning
		Unit : USD/BBL
90
			of	the	year,	crude oil	price
80
4Q19		increased due	to	the	rising
70		AVG price = 62.08 69.60
			demand from the refineries that
60
			have resumed their full capacity
50
1Q20		after the maintenance shutdown
40		AVG price = 50.74
			in	accordance	with	the	new
30
	23.20		shipping	oil	standard	(IMO)
20
			together with the deepening of
				OPEC+	existing	crude	oil

production cut by an additional 0.5 million barrels per day from 1.2 million barrels per day to 1.7 million barrels per day. Crude oil price was subsequently under pressure as petroleum demand for transportation declined sharply amidst the lockdown measures to control the 2019 coronavirus pandemic (COVID-19). The outbreak began in China since the end of January 2020 and has spread rapidly on a global scale. This caused OPEC and its allies to call meeting in March for further crude oil cut in order to balance the reduced crude oil demand but the agreement could not be reach. Therefore, the major crude oil producers set to increase production dramatically leading to the price war. This caused crude oil price to drop to the lowest level in 29 years.

Crude oil outlook in the second quarter of 2020: Crude oil demand is expected to continue to decline, falling below 90 million barrels per day and the price is likely to remain low as the end of 1Q20, moving within the range of USD 20- 25 per barrel. These will be driven by the uncontrollable spread of the COVID- 19 causing the reduced fuel consumption for transportation in accordance with the extended- period of countries lockdown. Therefore, the refineries may reduce production by 15 million barrels per day in 2Q20. Although in early April meeting, the oil producing nations including OPEC, Russia, U. S. and European oil producing countries agree to cut the crude oil output, starting from May, more than 9 million barrels per day. The productions are still exceed the

5	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

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In 1Q20, crude intake was 17.11

million barrels, 87% U-Ratedecreasing by 2% due to the planned shutdown of Hyvahl unit in RDCC plant for catalyst changing

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Executive Summary

Performance

Financial Positions

demand till the oil storage tanks are almost full. As a consequence, the NYMEX WTI crude futures for May delivery fall to negative of 37.63 USD per barrel, the lowest level since NYMEX opened oil futures trading. This is a factor that continuously pressures crude oil price to fall. However, oil demand is likely to increase since 3Q20 after the COVID- 19 pandemic can be controlled and the countries lockdown restrictions are eased.

1.1.2 Crude Intake and Capacity

						Quarter			% Change
	Petroleum
				1Q20		1Q19	4Q19		YoY		QoQ
Crude Intake
	Million barrels		17.11		17.97	17.51		(5%)		(2%)
	KBD		188		200	190		(6%)		(2%)
Utilization Rate
	Refinery		87%		93%	89%		(6%)		(2%)
	RDCC		93%		70%	112%		23%		(19%)
	Lube Base Oil		79%		84%	84%		(5%)		(5%)

Crude intake in 1Q20 was 17. 11 million barrels, or 188,000 barrels per day ( 188 KBD) . The utilization rate was 87% , decreased by 2% when compared to 4Q19 of 89% utilization rate. Likewise, when compared to 1Q19 of 93% of utilization rate, it decreased by 6%. This was resulted from the planned shutdown of Hyvahl unit in RDCC plant for catalyst changing that completed 5- days faster than plan. Hence, utilization rate of RDCC plant reduced to 93% in 1Q20, dropped by 19% from 112% utilization rate in 4Q19. When compared

with 1Q19 of 70 % utilization rate, it increased by 23% owing to the planned shutdown of RDCC plant in 1Q19 for the catalyst cooler equipment installation.

The utilization rate of lube base oil plant in 1Q20 was 79%, decreasing by 5 % from 4Q19 and 1Q19 of 84%, owing to a drop in domestic demand of Asphalt after the decelerating in road construction project that must be waiting for the fiscal 2020 budget approval.

6	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

1.1.3 Petroleum Sales

Sales Volume (Million Barrel)

ProductsQuarter

1Q20 1Q19 4Q19

Refinery	13.42	14.16	14.04
Lube Base Oil	1.74	1.81	1.68
Total	15.16	15.97	15.72

Financial Positions

Sales Value (Million Baht)

Quarter

1Q20 1Q19 4Q19

26,384 33,336 32,193

3,860 4,437 3,823

30,244 37,773 36,016

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In 1Q20, net sales of petroleum businesses decreased by 16% from last quarter due to lower average products prices following the crude oil price and a decrease in sales volume

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mainly from Diesel, Fuel Oil, Naphtha and Asphalt.

In 1Q20, net sales of petroleum businesses were Baht 30,244 million, decreasing by Baht 5,772 million or 16% from 4Q19. This was caused by 12% decrease in average products prices toward the falling crude oil price as well as 4% decrease in sales volume from 15. 72 million barrels to 15. 16 million barrels. The decreased sales volume was

When compared with 1Q19, the net sales were down by Baht 7,529 million or 20% , mainly from 15% decrease in average products prices following the crude oil price and 5% decrease in sales volume. The decline in sales volume was mainly from Naphtha, Diesel and Asphalt while sales volume of Gasoline and Fuel Oil increased.

1.1.4 Petroleum Sales Breakdown

					Quarter
Products	1Q20			1Q19		4Q19
	Local		Export		Local		Export	Local		Export
Refinery	64%		36%	58%		42%	56%		44%
Lube Base Oil	34%		66%	42%		58%	41%		59%
Total	60%		40%	56%		44%	54%		46%

For 1Q20, the percentage of domestic and export of petroleum product was 60% and 40% accordingly. The percentage of domestic sales increased by 6% from 4Q19, mainly from Diesel. When compared with 1Q19, the percentage of domestic increased by 4% , mainly from Low Sulphur Fuel Oil ( LSFO 0. 5% ) and Diesel. The export products in 1Q20 mostly shipped to Singapore, Cambodia and Malaysia, respectively.

7	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive SummaryPerformanceFinancial Positions

1.1.5 Petroleum Product Spread

								Quarter							% Change
	Average price
			1Q20				1Q19				4Q19				YoY			QoQ
Dubai Crude Oil (USD/bbl)		50.74			63.53		62.08			(20%)			(18%)
Petroleum (USD/bbl)
Naphtha - Dubai		(2.9)		(7.5)			(2.2)		61%			(32%)
ULG95 - Dubai		6.7		3.7			12.9			81%			(48%)
Gas Oil 0.05%S - Dubai		11.0		12.8			14.3			(14%)			(23%)
FO 180 3.5%S - Dubai		(7.4)		0.6			(18.7)			N/A			60%
Lube Base Oil (USD/MT)
500SN - FO 180 3.5%S		370			330			384			12%			(4%)
150BS - FO 180 3.5%S		536			482			553			11%			(3%)
Asphalt - FO 180 3.5%S		27			(40)			98			168%			(72%)

The spread between Petroleum products and raw material in 1Q20

The spread between Petroleum products and Dubai

• Naphtha Spread - Lower: Naphtha- Dubai spread in 1Q20 was USD - 2. 9 per barrel, decreased by 32% from USD - 2. 2 per barrel of 4Q19, due to the lower demand for blending into Gasoline as a drop of Gasoline price. When compared to 1Q19 of USD - 7. 5 per barrel, it increased by 61%.
• ULG95 Spread - Lower: ULG95 - Dubai spread in 1Q20 was USD 6.7 per barrel, decreased by 48 % when compared to 4Q19 of USD 12.9 per barrel since the demand decelerated in China and Japan according to the countries lockdown in order to control COVID- 19 outbreak. When compared with 1Q19 of USD 3.7 per barrel, it increased by 81%.
• Gas Oil Spread - Lower: Gasoil- Dubai spread was USD 11. 0 per barrel, decreased by 23% from USD 14. 3 per barrel of 4Q19. This was caused by a decline demand from travel control measures in China affecting the transportation disruption. These measures also caused temporarily suspend operations of various plants. When compared with 1Q19 of USD 12. 8 per barrel, it declined by 14%.
• Fuel Oil Spread - Higher: High Sulphur Fuel Oil (HSFO) - Dubai spread was USD -7.4 per barrel, increasing by USD 11. 3 per barrel from USD - 18. 7 per barrel of 4Q19 because of the limited supply as the HSFO producers has switched to produce Low Sulphur Fuel Oil (LSFO 0.5%) toward the

8	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

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In 1Q20, Market GRM decreased by Baht 482 million from last quarter due to lower products spread mainly from Gasoline and Diesel

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Executive Summary

Performance

Financial Positions

new IMO regulations and low inventory level. When compared with 1Q19 of USD 0. 6 per barrel, it decreased by USD 8 per barrel.

The spread between Lube Base Oil products and FO 180 3.5%S

• 500 SN Spread - Lower: Lube base 500SN - Fuel Oil spread was USD 370 per ton, decreasing by 4% from USD 384 per ton in 4Q19 due to a decline in demand as a result of the COVID- 19 outbreak causing Base Oil producers to cut their run rate in order to balance market. When compared with 1Q19 of USD 330 per ton, it increased by 12%.
• Asphalt spread - Lower: Asphalt - Fuel Oil spread was USD 27 per ton, decreasing by 72% when compared to 4Q19 of USD 98 per ton, owing to a decline demand of Asphalt in the region. Likewise, the domestic demand decreased as a result of the decelerating in road construction projects following the delay in the approval of government budget. When compared with 1Q19 of USD -40 per ton, it rose by 168%.

1.1.6 Gross Refinery Margin

			2,106	1,866			Unit: MB				3.68	3.49		Unit: USD/bbl
			1,022	935							1.78	1.75
	449
	1,084	931						0.84	1.90	1.74				Accounting
					Accounting
															GRM
							GRM
	(4,928)					Net Stock			(9.16)						Net Stock
												Gain/(Loss)
					Gain/(Loss)
	(4,479)					Market GRM			(8.32)						Market GRM
		1Q20	1Q19	4Q19						1Q20	1Q19	4Q19
	(458)	469	56	Refinery			(0.85)	0.82	0.10		Refinery
	907	615	875	Lube Base Oil			1.69	1.08	1.64		Lube Base Oil
	449	1,084	931	Market GRM			0.84	1.90	1.74		Market GRM

Market GRM in 1Q20 was Baht 449 million or USD 0.84 per barrel, declined by Baht 482 million or USD 0.90 per barrel from 4Q19. This was caused by the dramatically decrease in petroleum products spread mainly from Gasoline and Diesel as well as higher crude premium. When compared with 1Q19, Market GRM decreased by Baht 635 million or USD 1.06 per barrel, mainly from lower products spread, especially

Diesel, together with higher crude premium.

In 1Q20, there was the net stock loss of Baht 4,928 million or USD 9.16 per barrel, comprising of stock loss of Baht 3,067 million, loss from LCM of Baht 2,184 million versus oil hedging gain of Baht

9	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

323 million. Hence, Loss on Accounting GRM was Baht 4,479 million or USD 8.32 per barrel. Accounting GRM declined by Baht 6,345 million or USD 11. 81 per barrel compared with 4Q19 Accounting GRM of Baht 1,866 million as well as Accounting GRM decreased by Baht 6,585 million or USD 12.00 per barrel from 1Q19.

1.2 Petrochemical business units

1.2.1 Petrochemical Market Overview

Petrochemical market situation in 1Q20: At the beginning of the quarter, petrochemical products demand gradually increased. This was driven by the U.S.-China trade deal after 18 months of economic combat until signing the first phase of trade agreement on January 15, 2020. Besides, Naphtha price, the petrochemical raw material, had dropped in accordance with the collapse of crude oil price amid the price war. This led to the recovering of petrochemical spread. Nevertheless, the Coronavirus outbreak (COVID-19) that began in China in February and now spreading all over the world. The China central government released control measures in various aspects to control activities including public transport system and the domestic transportation sector in order to contain the outbreak. As a result, China's consumption and production had to cease, causing demand to decline. Although there was increasing demand in the pharmaceutical and packaging products for food delivery, the demand of automotive, electronics, office supplies electrical appliances as well as construction was significantly dropped and further influenced to supply chain disruption in China, the largest country for plastic consumption. So, China's economic growth rate (GDP) in the first quarter of 2020 was -6.8%, posted by the National Bureau of Statistics (NBS), the first negative since 1992.

Petrochemical market situation in 2Q20: The petrochemical products demand is likely to remain subdued as a consequence of the increasing outbreak of COVID 19, in which more than three million people infected though China has lifted the restrictions and restart operations. Meanwhile, the International Monetary Fund (IMF) expects a global recession. The world economic growth rate (GDP) for the year 2020 is estimated at -3 percent and Thailand is at -6.7 percent, the lowest since 1930. For the petrochemical industry, there is tendency to cut production from the previous quarter, especially those with high costs due to the decline demand. Regarding low naphtha price, which fell along with crude oil price, is still support the products spread. It is an opportunity for petrochemical producers to restock the naphtha at low price for their productions as the expectation that products demand will recover after the virus spread is able to contain and will lead to the lockdown easing measure. Moreover, the large economic stimulus packages will support the global growth. It is expected that the economy will start to recover in 3Q20 until the end of 2020.

10	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

	Executive Summary		Performance				Financial Positions
	1.2.2 Petrochemical Capacity
							Quarter				% Change
	Petrochemical
			1Q20				1Q19	4Q19			YoY	QoQ
Utilization Rate
Olefins Group	95%			89%	90%			6%	5%
Aromatics and Styrenics Group	94%			82%	96%			12%	(2%)

In 1Q20, the utilization rate of Olefins was 95%, increasing by 5% from 4Q19 of 90% utilization rate as well as increasing by 6% from 1Q19 of 89% utilization rate. This was caused by the improvement of products spread. Moreover, the Hyvalh unit resumed its operation faster than the plan, resulting in higher operating rate.

The utilization rate of Aromatics and Styrenics in 1Q20 was 94%, decreasing by 2% from 4Q19 of 96% utilization rate, due to the planned maintenance shutdown in average of 2 weeks of PS plant. When compared to 1Q19 of 82% of utilization rate, it increased by 12% . This was caused by planned maintenance shutdown in 1Q19 for the replacement of the new catalyst in the EBSM plant and the new control unit's equipment in ABS plant in order to increase plant efficiency.

1.2.3 Petrochemical Sales

			Sales Volume (KMT)
Products					Quarter
			1Q20		1Q19		4Q19
Olefins Group			274		282		266
Aromatics and Styrenics Group			155		181		168
Total			429		463		434

Sales Value (Million Baht)

Quarter

1Q20 1Q19 4Q19

8,090 9,987 8,277

4,407 5,642 5,150

12,497 15,629 13,427

		Net sales of petrochemical businesses in 1Q20 were Baht
	In 1Q20, net sales of petrochemical	12,497 million, declining by Baht 930 million or 7% from the
	businesses declined by 7% from last	previous quarter. The main reasons were 6% decrease in
	quarter owing to 6% decrease in	average selling prices following lower raw material prices
	average selling prices and 1%	and 1% decrease in sales volume, mainly from Styrenics
	decrease in sales volume	Group.
		Compared with 1Q19, net sales decreased by Baht
	3,132 million or 20% , due to 13% decrease in average selling prices according to lower raw material
	prices and 7% decrease in sales volume by 34,000 Tons (34 KMT).
11	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

1.2.4 Petrochemical Sales Breakdown

				Quarter
Products	1Q20		1Q19	4Q19
	Local	Export		Local	Export	Local	Export
Olefins Group	63%	37%	63%	37%	59%	41%
Aromatics and Styrenics Group	44%	56%	52%	48%	38%	62%
Total	56%	44%	59%	41%	51%	49%

For 1Q20, the proportion of Petrochemical sales were 56% domestic and 44% export. The domestic sales increased by 5% from last quarter, mostly from Polypropylene (PP) in Olefins group and Polystyrenics ( PS) in Styrenics group. When compared with 1Q19, domestic sales decreased by 3% , mainly from PP and Mixed Xylene.

The petrochemical exported products in 1Q20 mostly shipped to Singapore, Hong Kong and Vietnam, respectively.

12	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

1.2.5 The spread between key petrochemical products and raw material

								Quarter					%Change
	Average Price
	(USD/MT)
				1Q20			1Q19			4Q19			YoY			QoQ
	Naphtha			440		519		539			(15%)			(18%)
Olefins
	Ethylene - Naphtha			240		409		203			(41%)			18%
	HDPE - Ethylene			315		262		254			20%			24%
	HDPE - Naphtha			555		671		457			(17%)			21%
	Propylene - Naphtha			347		320		321			8%			8%
	PP - Propylene			180		291		178			(38%)			1%
	PP - Naphtha			527		611		499			(14%)			6%
Aromatics
	BZ - Naphtha			174		71		132			145%			32%
	TOL - Naphtha			123		93		120			32%			3%
	MX - Naphtha			148		154		149			(4%)			(1%)
Styrenics
	SM - Naphtha			367			523		354			(30%)			4%
	ABS - Naphtha			892			1,000		848			(11%)			5%
	PS (GPPS) - Naphtha			678		788		622			(14%)			9%

The spread between Petrochemical products and raw material in 1Q20

The spread between Polyolefins (HDPE/PP) and Naphtha in 1Q20

• HDPE Spread - Higher: HDPE-Naphtha spread was USD 555 per ton, increased by 21% from USD 457 per ton in 4Q19. It was owing to an increasing demand amidst construction season as well as the rising demand in pharmaceuticals. When compared with 1Q19 of USD 671 per ton, spread declined by 17%.
• PP Spread - Higher: PP-Naphtha was USD 527 per ton, increasing by 6% from USD 499 per ton in 4Q19. It was caused by an increase in demand of pharmaceutical sector and packaging for food delivery business. Furthermore, supply was tight after the delay of addition capacity in Asia. While the demand in most of the products had dropped influenced by the COVID- 19 outbreak. Hence, the product price was gradually moved down while the naphtha price, the petrochemical raw material,

13	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

dropped sharply in relation with crude oil price. When compared with 1Q19 of USD 611 per ton, spread declined by 14%.

The spread between Aromatics (Toluene and Mixed Xylene) and Naphtha

• TOL and MX Spread - Unchanged: Toluene - Naphtha spread and Mixed Xylene - Naphtha spread were USD 123 per ton and USD 148 per ton respectively, being stable from 4Q19. This resulted from oversupply situation as the lower demand for Paraxylene due to the COVID- 19 outbreak. Therefore, demand of Toluene and Mixed Xylene, Paraxylene raw material, declined consistent with the sharply decrease in Naphtha price. Toluene - Naphtha spread, when compared with 1Q19 of USD 93 per ton, increased by 32% while Mixed Xylene - Naphtha spread, when compared with 1Q19 of USD 154 per ton, decreased by 4%

The spread between Polystyrenics (ABS/PS) and Naphtha

• ABS Spread - Higher: ABS - Naphtha spread was USD 892 per ton, increasing by 5% from USD 848 per ton of 4Q19. It was because the ABS price was down less than a falling of Naphtha price that dropped sharply similar to the drop of crude oil price. Despite the demand declined in automotive products, electrical equipment and household appliances through the COVID- 19 pandemic. When compared with 1Q19 of USD 1,000 per ton, spread declined by 11 %.
• PS Spread - Higher: PS - Naphtha spread was USD 678 per ton, increasing by 9 %, from USD 622 per ton in 4Q19, due to the falling of products price was less than the falling of Naphtha price that moved following to the crude oil price. However, the weaker demand of PS in electrical appliances sector as a result of the COVID-19 outbreak put pressure on the products price. When compared with 1Q19 of USD 788 per ton, spread declined by 14%.

1.2.6 Product to Feed Margin (Product to Feed : PTF)

						Unit: MB							Unit: USD/bbl
	621	2,945				Accounting			1.16	5.16					Accounting
		1,815			PTF				3.41				PTF
	2,504	3,247	2,014			Net Stock			4.66	5.68					Net Stock
				Gain/(Loss)			3.78				Gain/(Loss)
		(302)	(199)
	(1,883)			Market PTF			(3.50)	(0.52)	(0.37)				Market PTF
	1Q20	1Q19	4Q19						1Q20	1Q19	4Q19
	1,847	2,420	1,352	Olefins Group			3.44	4.23	2.53			Olefins Group
	656	827	662	Aro & Styrenics			1.22	1.45	1.25			Aro & Styrenics
	2,503	3,247	2,014	Market PTF			4.66	5.68	3.78			Market PTF

14	Management Discussion and Analysis and Operating Results for the First Quarter of 2020



In 1Q20, Market PTF of Baht 2,503 million rose by Baht 489 million, QoQ, from the increase in most petrochemical products spread



Executive Summary

Performance

Financial Positions

In 1Q20, Market PTF of Baht 2,503 million or USD 4.66 per barrel increased by Baht 489 million or USD 0.88 per barrel from 4Q19 because most of petrochemical products spread moved up as a falling of the naphtha price, the petrochemical raw material, in relation with crude oil price while the products price was gradually moved down. When compared with 1Q19, Market PTF

dropped by Baht 744 million or USD 1.02 per barrel owing to lower petrochemical products spread.

The net stock loss of Baht 1,883 million in 1Q20, including stock loss of Baht 1,394 million and loss from LCM of Baht 489 million. Therefore, the company had Accounting PTF of Baht 620 million or USD 1. 16 per barrel. When compared with last quarter, it declined by Baht 1,195 million or USD 2. 25 per barrel and fell by Baht 2,325 million or USD 4.00 per barrel from the Accounting PTF of Baht 2,945 million in 1Q19.

1.3 Power Plant and Utility business units

1.3.1 Power Plant Capacity and Sales

				Quarter			% Change
		1Q20		1Q19	4Q19		YoY	QoQ
Utilization Rate
Electricity		71%		67%	71%		4%	0%
Steam		66%		59%	60%		7%	6%
Sales (Baht million)
Electricity		505		534	531		(5%)	(5%)
Steam		308		277	303		11%	2%
Others		63		61	60		3%	5%
Total		876		872	894		0.5%	(2%)
	∙

In 1Q20, the utilization rate of Electricity was 71%, similar to those in 4Q19. When compared with 1Q19, it increased by 4% due to the planned shutdown of the RDCC plant for catalyst cooler equipment installation in 1Q19.

The utilization rate of Steam in 1Q20 was 66%, rose by 6%, QoQ and 7%, YoY. This resulted from an increase in production for the industrial area customers who return to normal operations in 1Q20 after maintenance shutdown.

15	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

In 1Q20, the net sales of power and utility businesses were Baht 876 million, decreasing by Baht 18 million or 2% QoQ. This was due mainly to lower sales volume of electricity to EGAT while higher steam sales volume to Industrial area customers that resumed their operation in 1Q20 after maintenance shutdown.

When compare to the same period last year, net sales of power and utility businesses were Baht 872 million, being similar to 1Q20. This was mainly due to an increase in steam sales volume versus a decrease in electricity sales volume.

16	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive SummaryPerformanceFinancial Positions

2. Total Operating Performance

Total Operating Performance of IRPC and its subsidiaries for quarter 1Q20 are as follow;

	Unit : Million Baht		Unit : USD per barrel
		Quarter			Quarter
	1Q20	1Q19	4Q19	1Q20	1Q19	4Q19
Average FX (THB/USD)	31.45	31.78	30.45
Total Crude Intake (Mbbl)	17.11	17.97	17.51
Average Crude (USD/bbl) (1)	56.05	65.54	67.19
Sales (2)	48,910	59,721	55,757	90.89	104.57	104.58
Net Sales (3)	43,617	54,274	50,337	81.06	95.04	94.41
Cost of Feedstock (Market Price)	(39,952)	(49,316)	(46,732)	(74.24)	(86.36)	(87.65)
Market GIM	3,665	4,958	3,605	6.82	8.68	6.76
Stock Gain (Loss)	(4,461)	(122)	526	(8.29)	(0.21)	0.99
Lower of Cost or Market	(2,673)	841	(163)	(4.97)	1.47	(0.31)
Oil Hedging Gain (Loss)	323	1	373	0.60	0.00	0.70
Accounting GIM	(3,146)	5,678	4,341	(5.84)	9.94	8.14
Other Incomes (4)	439	422	515	0.82	0.74	0.97
Selling Expenses	(335)	(365)	(353)	(0.62)	(0.64)	(0.66)
Accounting GIM and Other Incomes	(3,041)	5,734	4,503	(5.64)	10.04	8.45
OPEX	(3,395)	(3,379)	(3,960)	(6.31)	(5.92)	(7.43)
EBITDA	(6,436)	2,355	543	(11.95)	4.12	1.02
Depreciation	(2,227)	(2,016)	(2,218)	(4.14)	(3.53)	(4.16)
EBIT	(8,663)	339	(1,675)	(16.09)	0.59	(3.14)
Net Financial Cost(5)	(464)	(473)	(466)	(0.86)	(0.83)	(0.87)
Gain (Loss) from Financial Derivatives	(558)	86	382	(1.04)	0.15	0.72
Gain (Loss) from Foreign Exchange	(500)	127	88	(0.93)	0.22	0.17
Unrealized Gain (Loss) from Oil Hedging	(993)	-	-	(1.85)	-	-
Gain (Loss) from impairment and disposal of fixed assets	(4)	(8)	658	(0.01)	(0.01)	1.23
Gain (Loss) from Investment	49	83	65	0.09	0.14	0.12
Other Expenses	(10)	(5)	(3)	(0.02)	(0.01)	(0.01)
Net Profit (Loss) before Income Tax	(11,143)	149	(951)	(20.71)	0.25	(1.79)
Income Tax	2,246	9	445	4.17	0.02	0.83
Gain (Loss) from non-controlling interests	(8)	(5)	(7)	(0.01)	(0.01)	(0.01)
Net Profit (Loss)	(8,905)	153	(513)	(16.55)	0.26	(0.97)

Note : [1]	Average market prices of crude used in the production process
[2]	Sales includes (1) Petroleum Sales (2) Petrochemical Sales (3) Power and Utilities Sales (4) Sales of tank farm and port service, etc.

1. Net Sales includes (1) Petroleum Sales (excluding excise tax) (2) Petrochemical Sales (3) Power and Utilities Sales

[4]	Including port, tank farm and service etc.
[5]	Net Financial Cost excludes gain (loss) from financial derivatives

17	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary	Performance		Financial Positions
2.1 Market Gross Integrated Margin (Market GIM)
			Market GIM
MB					USD/bbl
		GRM			PTF		Power & Utilities
15,000						15

10,000					8.68	10
				6.82	1.10	6.76
		4,958		1.32		1.24
5,000					5
3,665	627	3,605		5.68
		3.78
	713		660	4.66
	3,247
		2,014
	2,503
				1.90	1.74
-	449	1,084	931	0.84	-
	1Q20	1Q19	4Q19	1Q20	1Q19	4Q19

In 1Q20, Market GIM of Baht 3,665 million or USD 6.82 per barrel increased by Baht 60 million or USD 0. 06 per barrel from 4Q19. It caused by the higher petrochemical products spread because petrochemical products price was down less than a falling of Naphtha price that dropped sharply similar to the drop of crude oil price. While petroleum products spread declined amid the COVID-19 quarantine plus higher crude premium by USD 0.2 per barrel.

When compared with 1Q19 Market GIM of Baht 4,958 million dropped by Baht 1,293 million or USD 1. 86 per barrel owing to a rise in crude premium of USD 3. 3 per barrel as well as the decline in most petroleum and petrochemical products spread, especially Diesel, Olefins and Styrenics groups, which continuously affected from trade war between U.S. and China and the COVID-19 outbreak.

18	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

2.2 Accounting Gross Integrated Margin (Accounting GIM)

MB			Accounting GIM			USD/bbl
20,000		Market GIM		Stock Gain/(Loss)+LCM	Oil Hedging	20
15,000							15
10,000			4,341		9.94	8.14	10
	5,678	0.60	1.26	0.70
		373
5,000	323	1			0.68	5
719	363	6.82	8.68	6.76
	3,665	4,958	3,605
-				-
(5,000)	(7,134)						(5)
			(13.26)
(10,000)	(3,146)					(10)
(15,000)				(5.84)			(15)
(20,000)							(20)
	1Q20	1Q19	4Q19	1Q20	1Q19	4Q19

In 1Q20, Loss on Accounting GIM of Baht 3,146 million or USD 5.84 per barrel compared with Accounting GIM of Baht 4,341 million or USD 8.14 per barrel in the previous quarter. The profit declined by Baht 7,487 million or USD 13. 98 per barrel. This resulted from 1Q20 net stock loss of Baht 6,811 million or USD 12. 66 per barrel, compared with 4Q19 net stock gain of Baht 736 million or USD 1. 38 per barrel while 1Q20 Market GIM of Baht 3,665 million was similar to those of last quarter.

When compared with 1Q19 Accounting GIM of Baht 5,678 million of USD 9. 94 per barrel, the profit decreased by Baht 8,824 million or USD 15.78 per barrel because of 1Q20 net stock loss of Baht 6,811 million or USD 12. 66 per barrel, compared with 1Q19 net stock gain of Baht 720 million or USD 1.26 per barrel plus a decrease in Market GIM of Baht 1,293 million or USD 1.86 per barrel.

2.3 Other incomes

Other incomes consist of port and tank farm services and other services. In 1Q20, the Company had other incomes amounting to Baht 439 million, decreased by Baht 76 million from 4Q19 because there was service income from IRPC Clean Power Co., Ltd. in 4Q19. When compared with 1Q19, other incomes rose by Baht 17 million.

2.4 Operating Expenses

In 1Q20, the operating expenses of Baht 3,395 million decreased by Baht 565 million QoQ, mainly from a declined in employee benefit expense and rental fee. When compared with 1Q19, the operating expenses rose by Baht 16 million due mainly to an increase in maintenance expense.

19	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

2.5 Depreciation and Amortization Expenses

In 1Q20, the depreciation of Baht 2,227 million increased by Baht 9 million QoQ and Baht 211 million, YoY. The main reason was the completion of the expansion and efficiency improvement projects such as the Catalyst Cooler project that started commercial operation since May 1, 2019

2.6 Net Financial cost

In 1Q20, net financing cost was Baht 464 million, declining by Baht 2 million QoQ, and Baht 9 million YoY. It was because of a decrease in interest expense.

2.7 Gain (Loss) from Financial Derivatives

In 1Q20, there were loss from financial derivatives amounting to Baht 558 million, mainly attributing to realized loss from Cross Currency Swap ( CCS) of Baht 346 million and unrealized loss from Interest Rate Swap (IRS) of Baht 217 million. According to Thai Financial Reporting Standard No. 9 " Financial Instruments" ( TFRS 9) , effective on January 1, 2020, it makes stipulations relating to hedging instruments have to measures the unexpired contracts value at fair. When compared with 4Q19 and 1Q19, there were realized gain from financial derivatives amounting to Baht 380 million and Baht 83 million, respectively.

2.8 Gain (Loss) from Foreign Exchange

In 1Q20, the Company recorded loss from foreign exchange of Baht 500 million, mainly unrealized loss from foreign exchange due to Thai Baht depreciation from Baht 30. 33 per USD at the end of 2019 to Baht 32. 83 per USD at the end of 1Q20. While there was gain from foreign exchange of Baht 88 million last quarter and gain from foreign exchange of Baht 127 million in 1Q19. The Company has outstanding USD debt of USD 200 million at the end of 1Q20.

2.9 Unrealized Gain (Loss) from Oil Hedging

In 1Q20, the Company had unrealized loss from Oil Hedging of Baht 993 million. According to Thai Financial Reporting Standard No. 9 "Financial Instrument" (TFRS 9), effective on January 1, 2020, it makes stipulations relating to hedging instruments have to measures the unexpired contracts value at fair value.

2.10 Gain (Loss) from Impairment and disposal of fixed assets

In 1Q20, the Company had loss from impairment and disposal of fixed assets of Baht 4 million, while gain of Baht 658 million in previous quarter. This was resulted from the reversal impairment of land and investments in companies related to the previous management in 4Q19.

20	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

2.11 Gain (Loss) from Investments

In 1Q20, there was gain from investments of Baht 49 million, decreased by Baht 16 million from 4Q19 and declined by Baht 34 million from 1Q19. This was caused by lower equity values in associates and joint ventures.

2.12 Corporate Income Tax

In 1Q20, the Company recorded the corporate income tax benefit amounting to Baht 2,246 million, compared with 4Q19 income tax benefit of Baht 445 million and 1Q19 income tax benefit of Baht 9 million. This was mainly caused by lower performance.

21	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive SummaryPerformanceFinancial Positions

Financial Positions as of 31 March 2020

										(Unit: Million Baht)
			180,839	2%	177,850
Current Assets									Current Liabilities
	44,954		50,705		43,647		37,517
Other Non-C/A
	14,523
				12,212			L/T Borrowing
				51,910			52,071	(incl. due within 1 yr)
								4,860	Other Non-Current
	PP&E		5,217					Liabilities
	121,362				121,991
(incl. investment						83,402	Shareholders'
properties and		73,008
					Equity
right-of-use assets)
			As of 31 Mar. 20		As of 31 Dec. 19

Assets

As of March 31, 2020, the Company had total assets of Baht 180,839 million, increased by Baht 2,989 million or 2% from December 31, 2019. It was due to the following reasons:

• Account receivables: decreased by Baht 2,070 million or 20% from the end of 2019, due mainly to a decrease in selling price following crude oil price. As of March 31, 2020, there were overdue more than 3-months account receivables amounting to Baht 66 million or only 0.82% of the total account receivables which incorporated in the provision for doubtful debt of Baht 42 million. The average collection period was 17 days equal to 2019.
• Inventory: decreased by Baht 5,624 million or 22% mainly due to a decrease in products price and crude oil price. The average inventory period was 37 days, decreased by 4 days from 2019.

• Other current assets: increased by Baht 9,002 million or 119%. This was mainly attributed to an increase in cash and cash equivalents by Baht 9,237 million, an increase in refundable value- added-tax of Baht 194 million, as well as an increase in other current assets of Baht 192 million. While other receivables decreased by Baht 518 million and a decrease in prepaid excise tax of Baht 131 million.
• Non-currentassets increased by Baht 1,682 million or 1% mainly due to an increase in

deferred tax asset of Baht 2,115 million as the net loss, right-of-use assets by Baht 270 million due to the recording of lease transaction in accordance with Thai Financial Reporting Standard No.16 Leases which effective on 1 January 2020, an increase of investment in associates and joint ventures of Baht 183 million which mostly from payment for capital increase in ordinary shares in IRPC Clean Power Co.,Ltd. by Baht 137 million while a decrease in fixed assets and investment properties of Baht 899 million which mostly declined by an increase of the accumulated depreciation.

22	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

Liabilities

As of March 31, 2020, the Company had total liabilities of Baht 107,832 million, increasing by Baht 13,383 million or 14%, compared to the end of 2019. It was due to the following reasons:

• Short- terms loans from financial institutions: rose by Baht 6,800 million or 99% for liquidity management during the COVID-19crisis.
• Account payables: increased by Baht 5,525 million or 22%. It was due to an increase of crude oil payable at the end of 1Q20, compared to the end of 2019. The average payment period was 44 days, increased by 5 days from 2019.

Maturity of long-term borrowing

(Unit : Million Baht)

THB Bond

USD Loan

THB Loan

	13,332			14,609
			-
7,652		6,889		8,247	8,070	1,957
-				-	-
			1,305	1,305
1,957		-		6,942	6,765	12,652
5,694	6,443
2020	2021		2022	2023	>2023

Note : Long-term borrowing as of 31 March 2020

• Other current liabilities: increased by Baht 863 million or 15% due to an increase in accrued dividend of Baht 2,041 million, an increase in liabilities of financial derivatives of Baht 374 million, an increase in other payable of Baht 203 million and current portion of leases within one year of Baht 109 million while a decrease in accrued bonus of Baht 1,583 million and a decrease in other current liabilities of Baht 237 million.
• Long- term borrowing including

current portion within one year: decreased by Baht 161 million, mainly due to long- term loans repayment amounted to Baht 670 million while recording of unrealized foreign exchange loss by Baht 500 million.

The details of long-terms borrowing are shown below;
											(Unit: Million Baht)
				Mar 31, 2020			Dec 31, 2019				Change
	Thai Baht Bonds		6,889			6,888			1
	USD Loan		6,524			6,021			503
	Thai Baht Loan		38,497			39,162			(665)
	Total			51,910			52,071				(161)
	less current portion of long-terms		(7,952)			(8,190)			238
	loan
	Net Outstanding Debt			43,958			43,881				77

Note: 1Q20, the Company had unwind Cross Currency Swap (CCS) in a total amount of USD 280 million.

23	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

• Other non-currentliabilities: were up by Baht 357 million.This resulted from an increase in lease liabilities by Baht 143 million due to the recording of leasing transaction in accordance with Thai Financial Reporting Standard No.16 Leases which effective on 1 January 2020 and derivative financial liabilities by Baht 191 million.

Shareholders' Equity

As of 31 March 2020, shareholders' equity was amounted to Baht 73,008 million, which was lower than what was stated as at 31 December 2019 by Baht 10,394 million. This was mainly from net loss amounted to Baht 8,905 million, accrued dividend paid by Baht 2,041 million while there was retained earnings adjustment by Baht 546 million due to the recognition profits of unwind CCS, in accordance with Thai Financial Reporting Standards No.9 Financial Instruments.

Statement of Cash Flow

				(Unit : Million Baht)
			Jan.-Mar. 2020		Jan.-Mar. 2019
1		EBITDA		(6,436)		2,355
2		Change in operating assets and liabilities		11,731		(3,321)
3		Net cash flows from (used in) operating activities		5,295		(966)
4		Net cash flows from (used in) investing activities		(1,368)		(1,766)
5		Net cash flows from (used in) financing activities		5,310		3,200
6		Net increase (decrease)		9,237		468
7		Cash at beginning		3,036		2,338
8		Cash at ending		12,273		2,806
	As of 31 March 2020, the ending cash was Baht 12,273 million.	Net cash flow increased by Baht

9,237 million, which was mainly contributed from the following items;

• Net cash inflow from operating activities of Baht 5,295 million. The cash inflows from a decrease in inventory of Baht 5,624 million, an increase in account payable of Baht 5,520 million, a decrease in account receivable of Baht 2,116 million, a decrease in other receivable of Baht 519 million. Nevertheless, the cash outflows from Loss on EBITDA of Baht 6,436 million and a decrease in accrued bonus of Baht 1,583 million.
• Net cash outflow from investing activities of Baht 1,368 million, mainly from disbursement for projects such as Catalyst Cooler project of Baht 1,194 million and payment for increasing capital of ordinary shares in IRPC Clean Power Co.,Ltd. by Baht 137 million.

24	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

• Net cash inflow from financing activities of Baht 5,310 million, cash inflow were mainly from short-term loan drawdown of Baht 6,800 million. Nevertheless, there were cash outflow included long- term repayment of Baht 670 million, interest payment of Baht 432 million and loss from financial derivatives contracts of Baht 341 million.

Key Financial Ratios

			Unit				Quarter
					1Q20		1Q19		4Q19
Profitability Ratios
EBITDA Margin		%		(13.16)		3.94		0.97
Net Profit Margin		%		(18.21)		0.26		(0.92)
Earnings per share			Baht/share	(0.44)		0.01		(0.03)
Return on Equity*		%		(45.63)		0.70		(1.38)
Liquidity Ratios
Current Ratio			time	0.77		0.96		0.95
Quick Ratio			time	0.35		0.31		0.29
Financial Policy Ratios
Net IBD to Equity			time	0.74		0.66		0.67
Net IBD to EBITDA			time	(2.13)		6.00		9.34

Note: *Annualized

Liquidity and Capital structure

In 1Q20, current ratio was 0.77 times increasing by 0.18 times compared with 4Q19 of 0.95 times. This was due to an increase in current liabilities, mainly from an increase in short-term loan for liquidity management amid the COVID-19 outbreak and an increase in account payable while a decrease in current assets, mainly from a decrease in inventories following low crude oil price and a decrease in account receivable. The Company has sufficient liquidity for its operations.

At the end of 1Q20, net interest bearing debt to equity ratio was 0.74 times, increasing by 0.07 times from 4Q19 of 0. 67 times. This was mainly due to a decrease in shareholders' equities. The Company could complete all payments on due date and comply with all of the Financial Covenants.

25	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary		Performance	Financial Positions
Note:
Account receivable turnover	=	Sales / Average account receivable before doubtful account
Collection period	=	360 / Account receivable turnover
Inventory turnover	=	Cost of Goods Sold / Average Inventory
Inventory period	=	360 / Inventory turnover
Account payable turnover	=	Cost of sales / Average account payable
Payment period	=	360 / Account payable turnover
EBITDA margin	=	EBITDA / Revenue from Sales
Profit margin	=	Net Profit / Revenue from Sales
Return on equity	=	Net Profit / Average shareholders' equity
Current ratio	=	Current assets / Current liabilities
Quick ratio	=	(Cash + Marketable Securities + Account Receivable) / Current Liabilities
Net Interest bearing Debt to Equity	=	(Interest bearing Debt - Cash) / Total Equity
Net Interest bearing Debt to EBITDA	=	(Interest bearing Debt - Cash) / EBITDA

26	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

Impact of the outbreak of COVID-19 and mitigation strategies

The coronavirus (COVID-19) pandemic has rapidly spread across the world and the number of infected patients has continued to grow. The pandemic has caused countries to enforce the " Social distancing" measure and the lockdown restriction against the outbreak. As such, global and Thai economy have tendency to be recession. Growth prospects have been revised down where IMF projected the world GDP in 2020 will be - 3% down from previously projected at 3. 3% . Furthermore, the outbreak has also dampened oil demand by approximately 5 million barrels per day this year which the lowest demand was 17 million barrels per day in April 2020, affecting the performance of the refinery and petrochemical businesses worldwide through the lower products spread trend. However, under low crude oil price and low crude premium circumstances according to the oil price war among major oil producers will be benefit for the refinery and petrochemical businesses because of the cheaper production cost and the low-risk of potential stock loss.

Responding to COVID- 19, the Company has assessed the crisis and implemented the key actions to protect the major stakeholders as following aspects:

Business Continuity Management: The Company is well prepared for the Business Continuity Management ( BCM) and the Business Continuity Plan ( BCP) by providing the manual of operation during crisis as well as rehearsing the BCM/BCP both in plant site and office that encouraging prompt solutions to the potential emergency situations.

The company has released the measures of COVID- 19 prevention and set up special working teams and committees to effectively tackle the crisis. There are regularly communicating with employees and implementing Work from Home policy. The Company has prepared technology, equipment and information systems to ensure smooth operations throughout the business supply chain.

Employees Protection: The Company supports all necessary protective equipment for all employees as well as closely monitors the staff's health and welfare by implementing Work from Home as much as possible in order to limit the risk of infection. We have applied the technology such as teleconference, Daily Check- in application, providing the specifics of employee travel, for tracking purposes in case of a COVID-19 infected. The Company also arranges COVID-19checking-point for all staffs and visitors, wearing a protective mask, measuring body temperature, hand washing and social distancing.

Social Contribution: The Company encourages the country against the crisis of COVID- 19 by alleviating the shortage of infectious prevention materials of the medical professionals. We develop the Polypropylene Spunbond, the specialty grade of Polypropylene, which used to produce personal protective equipment (PPE) suits for the safety of medical staffs and reducing risk of infection because of its properties that be waterproof and secretions preventing. Also, it can replace the importing PPE

27	Management Discussion and Analysis and Operating Results for the First Quarter of 2020

Executive Summary

Performance

Financial Positions

that is more expensive. Meanwhile, we have created further innovation from our specialty polymer to produce bed cover sheet for negative- pressure bed. Including the construction of modular screening and swab units (Modular Room) designed and developed by IRPC engineers. We also make face shield donated to hospitals.

In addition, the company has prepared various mitigation plan as follow;

• Liquidity management: To be able to meet debt obligation and sufficient working capital, the Company has reviewed business partners and customers evaluation, including funding alternatives and sufficient cash available. According to current portion of borrowing approximately 8,000 million baht, the Company has already secured financing from undrawn short-term and long-term loans.
• Production and marketing strategies alignment: To be in accordance with the short- term demand changing influence by COVID-19 situation, such as an increase in plastic consumption of food packaging and protective mask, an increase in export proportion to the lockdown easing countries, including the long- term strategies revision in respond to the new normal of consumer behavior, especially digital transformation.
• Tighten Operating expenses (OPEX): OPEX plan that has no impact to the main business must be reviewed, such as business relationship expenses.The target has been set and allow all departments to conduct the implementation plan to achieve the target.
• Capital spending plan (CAPEX) Reconsideration: The Company has revised CAPEX plan focusing on large projects such as MARS, joint venture projects under the 5- year business plan. We also postpone the non-urgentprojects. Those are no impact to the legal compliance and safety.
• Strengthen IRPC projects: By focus on projects which enhance revenue, increase efficiency and reduce production cost with low investment such as ABS Powder Expansion that could increase 6,000 tons per year production and reduce production cost by improving the production process according to ABS Modernize plan. Likewise, the E4E and IRPC 4.0 projects have to be closely monitored for achieving their target.

28	Management Discussion and Analysis and Operating Results for the First Quarter of 2020