Management's Discussion and Analysis (MD&A)

Thai Oil Public Company Limited

For The Second Quarter and

The First Half of 2020

Table of Contents

Page

1.

Company and its Subsidiaries' Operating Results

2-3

2.

Summary of Financial Result by Business

4

2.1

Market Condition and Financial Result of Refinery Business

5-7

2.2

Market Condition and Financial Result of Aromatics Business

8-10

2.3

Market Condition and Financial Result of an Intermediate for the Production

of Surfactants Business

10-11

2.4

Market Condition and Financial Result of Lube Base Oil Business

11-12

2.5

Financial Result of Power Generation Business

13-14

2.6

Financial Result of Solvent Manufacturing and Distribution Business

14-15

2.7

Financial Result of Crude, Petroleum and Petrochemical Marine Transportation

and Storage, Ship Management Service and Crew & Utility Boat Service Business

16

2.8

Financial Result of Ethanol Business

17

3.

Analysis of Consolidated Financial Statement

3.1

Statement of Financial Position

18-19

3.2

Statement of Cash Flows

20

3.3

Financial Ratios

21

4.

Industry Outlook for the Third Quarter and the Fourth Quarter of 2020

22-24

5.

Appendix

5.1

Summary of Approved Investment Plan

25

5.2

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

26

5.3

Plan of Scheduled Turnaround Maintenance in 2020

26

1

Management's Discussion and Analysis (MD&A)

Thai Oil Public Company Limited and Subsidiaries

For the Second Quarter and the First Half of 2020

1. Company and its Subsidiaries' Operating Results

Table 1: Summary of Consolidated Financial Results

(Million Baht)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Integrated Intake (kbd)

271

309

(38)

288

(17)

290

306

(16)

Gross Integrated Margin (GIM)(1) (US$/bbl)

: excludingStock Gain/(Loss)

2.9

2.1

0.8

4.2

(1.3)

2.5

4.7

(2.3)

: includingStock Gain/(Loss)

1.1

(10.1)

11.2

4.0

(2.9)

(4.8)

6.1

(10.9)

(Million Baht)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Sales Revenue

49,372

76,652

(27,280)

91,962

(42,590)

126,023

183,588

(57,565)

Net Derivative Gain/(Loss) on Hedging

Instruments

(45)

(19)

(26)

90

(135)

(64)

(76)

12

EBITDA

2,881

(12,248)

15,129

2,072

809

(9,367)

8,961

(18,328)

Net Gain/(Loss) on Fair Value Measurement of

Financial Instruments(2)

389

(377)

766

-

389

12

-

12

Net Foreign Exchange Gain/(Loss) (3)

2,045

(2,338)

4,383

594

1,451

(294)

1,246

(1,540)

Finance Costs

(1,029)

(1,105)

76

(1,196)

167

(2,134)

(2,410)

276

Reversal of Income Tax (Expense)

(495)

3,558

(4,053)

(116)

(379)

3,063

(1,116)

4,179

Net Profit/(Loss)

2,480

(13,754)

16,234

567

1,913

(11,274)

4,975

(16,249)

Basic Earnings/(Loss) per Share (Baht)

1.22

(6.74)

7.96

0.28

0.94

(5.53)

2.44

(7.97)

Stock Gain/(Loss)

(1,404)

(10,772)

9,368

(138)

(1,266)

(12,176)

2,335

(14,511)

Reversal/ (Write-Down) on Crude and

Petroleum Product Inventory(4)

2,469

(3,480)

5,949

202

2,267

(1,011)

697

(1,708)

Exchange Rate (Baht: 1 US$)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Average FX

32.11

31.45

0.66

31.76

0.35

31.77

31.78

(0.01)

Ending FX

31.07

32.83

(1.76)

30.92

0.15

31.07

30.92

0.15

Remark(1) Gross integrated margin is the integrated gross margin among Thaioil refinery, Thai Paraxylene Co., Ltd., LABIX Co., Ltd. and Thai Lube Base Plc.

  1. Fair value measurement of financial instruments in accordance with TFRS 9 Financial Intruments, which is effective from 1 January 2020.
  2. Including net foreign exchange gain / (loss) on foreign currency assets and liabilities in Q2/20, Q1/20, Q2/19, 6M/20 and 6M/19 of Baht 1,538 million, Baht (1,772) million, Baht 339 million, Baht (234) million and Baht 673 million, respectively.
  3. Including reversal / (write-down) of allowance for decline in value of crudeinventories adjusted to net realizable value and reversal / (write-down) of petroleum product at cost, and excluding reversal / (write-down) of allowance for decline in value of productinventories adjusted to net realizable value.

Compared Q2/20 with Q1/20, Thaioil and Subsidiaries had a reduction in integrated intake and total product sales volume from the previous quarter. Meanwhile, GIM excludingstock gain / (loss) of 2.9 US$/bbl was recorded during the period, an increase of 0.8 US$/bbl thanks to a significant shrink in crude premium due to the oil price war of OPEC producers. Meanwhile, petroleum product spreads were heavy pressured by the COVID-19 after many countries had announced the lockdown policy to prevent the spread of the COVID-19 led to a significant drop in gasoline and gas oil demand in the industrial and transportation sectors, especially demand for jet/kero that has been severly affected by flight cancellations worldwide. However, fuel oil spread in Q2/20 increased from Q1/20 thanks to a decrease in regional supply after many refineries had switched to produce low sulphur fuel oil following the enforcement of the

2

International Maritime Organization (IMO) regulation in January 2020. For aromatics market, aromatics spreads over ULG95 decreased due to the demand for downstream products used in textile production, including automobile and construction industry affected by economic slowdown from the outbreak of COVID-19. LAB market, on the other hand, was supported by healthy demand in the summer and tight supply owing to more LAB plant maintenances in the region. For lube base oil and bitumen markets, lube base oil and bitumen spreads over fuel oil received positive impact from weakening fuel oil price. However, by products spreads over fuel oil, which refer to the price of diesel, declined following the substantial drop in diesel price. Besides, the sales volume of Treated Distillate Aromatic Extract (TDAE), specialty product used as raw material in a production of automotive tires, decreased. Furthermore, the pandemic of COVID-19 with an increasing number of infections around the world, causing a huge impact on the economy and oil demand. Besides, the price war of OPEC producers resulting in the average of Dubai price in Q2/20 decreased from that of Q1/20 by 20.3US$/bbl. Therefore, Thaioil and Subsidiaries booked lower stock loss of 1.8 US$/bbl or Baht 1,404 million, compared with stock loss of 12.3 US$/bbl or Baht 10,772 million, and had GIM includingstock gain / (loss) of Baht 1.1 US$/bbl, an increase of 11.2 US$/bbl. Moreover, there was the reversal on crude and petroleum product inventory of Baht 2,469 million. Altogether with net realized loss on financial instruments of Baht 45 million, Thaioil and Subsidiaries reported EBITDA of Baht 2,881 million, compared with loss on EBITDA of Baht 12,248 million. In addition, net gain from fair value measurements of financial instruments in accordance with Thai Financial Reporting Standard No.9 - Financial Instruments (TFRS 9), which is effective from 1 January 2020, of Baht 389 million. Moreover, Thaioil and Subsidiaries booked net foreign exchange gain of Baht 2,045 million (which included net foreign exchange gain on foreign currency assets and liabilities of Baht 1,538 million) due to Thai baht appreciation from the end of the previous quarter. Besides, there was finance costs of Baht 1,029 miilion. Offsetting with depreciation and including a reversal of income tax expense, Thaioil and Subsidiaries reported net profit of Baht 2,480 million or 1.22 Baht per share while it reported net loss of Baht 13,754 million in Q1/20.

Compared Q2/20 with Q2/19, Thaioil and Subsidiaries reported lower sales revenue by Baht 42,590 million mainly from lower product selling prices and total product sales volume, together with lower GIM excludingstock gain/ (loss) by 1.3 US$/bbl. This mainly came from 1) a significant plunge in gross refining margin tracking declines in petroleum products over Dubai price 2) substantially lower by products spreads over fuel oil, referred to diesel price 3) a decrease in sales volume of TDAE as a specialty product. However, aromatics margin improved due to better BZ and TL spreads over ULG95. With stock loss from declining crude oil price in Q2/20, lower GIM includingstock gain/ (loss) by 2.9 US$/bbl was recorded. However, there was higher reversal on crude and petroleum product inventory of Baht 2,267 million and net realized loss on financial instruments of Baht 45 million. Besides, in Q2/19, there was severance expense of Baht 384 million due to the recognition of provision for employee benefits in accordance with the new Labour Protection Act, and planned major turnaround expenses of Baht 352 million. Therefore, Thaioil and Subsidiaries reported an increase in EBITDA of Baht 809 million. Altogether, with gain on fair value measurements of financial instruments of Baht 389 million and larger net foreign exchange gain of Baht 1,451 million, Thaioil and Subsidiaries recorded increase net profit by Baht 1,913 million.

Compared 6M/20 with 6M/19, Thaioil and Subsidiaries had sales revenue, decreased by Baht 57,565 million due to decreased average product selling price and total product sales volume as a result of oil price war and COVID-19 outbreak. However, the declines in petroleum product spreads over Dubai, PX spread over ULG95 and by products spread over fuel oil, which refer to diesel price, including TDAE sales volume from the same period of previous year, despite an improvement of LAB margin caused Thaioil and Subsidiaries to have GIM excludingstock gain/ (loss) dropped by 2.3 US$/bbl. Besides, in 6M/20, there was stock loss of Baht 12,176 million, compared with stock gain of Baht 2,335 million in 6M/19, Thaioil and Subsidiaries posted loss on EBITDA of Baht 9,367 million, compared with EBITDA of Baht 8,961 million. Additionally, Thaioil and Subsidiaries had net foreign exchange loss of Baht 294 million owing to Thai Baht depreciation while finance costs decreased by Baht 276 million. Offsetting with depreciation and income tax expense, Thaioil and Subsidiaries recorded net loss of Baht 11,274 million, compared with net profit of Baht 4,975 million.

3

2. Summary of Financial Result by Business

Table 2: Financial Result by Business

(Million Baht)

Sales Revenue

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Consolidated

49,372

76,652

(27,280)

91,962

(42,590)

126,023

183,588

(57,565)

Refinery

48,296

80,241

(31,945)

94,544

(46,248)

128,537

189,630

(61,093)

Aromatics and LAB(1)

7,894

12,477

(4,583)

13,498

(5,604)

20,370

27,947

(7,577)

Lube Base Oil

2,869

3,879

(1,010)

4,827

(1,958)

6,748

9,531

(2,783)

Power Generation(2)

2,880

2,876

4

2,969

(89)

5,756

5,940

(184)

Solvent(3)

1,761

2,141

(380)

2,175

(414)

3,902

4,435

(533)

Marine Transportation(4)

187

142

45

156

31

330

326

4

Ethanol(5)

364

386

(22)

362

2

750

739

11

Others(6)

1,299

1,308

(9)

1,002

297

2,607

1,923

684

EBITDA

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Consolidated

2,881

(12,248)

15,129

2,072

809

(9,367)

8,961

(18,328)

Refinery

1,145

(14,497)

15,642

252

893

(13,352)

4,705

(18,057)

Aromatics and LAB

1,018

1,121

(80)

612

406

2,116

2,178

(62)

Lube Base Oil

(120)

379

(499)

436

(556)

259

533

(274)

Power Generation

653

643

10

637

16

1,296

1,213

83

Solvent

105

103

2

87

18

208

237

(29)

Marine Transportation

81

11

70

10

71

92

47

45

Ethanol

44

64

(20)

39

5

108

77

31

Others

50

124

(74)

40

10

174

72

102

Net Profit / (Loss)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Consolidated

2,480

(13,754)

16,234

567

1,913

(11,274)

4,975

(16,249)

Refinery

1,248

(15,260)

16,508

(441)

1,689

(14,012)

2,527

(16,539)

Aromatics and LAB

514

459

55

40

474

973

814

159

Lube Base Oil

(139)

284

(423)

322

(461)

145

378

(233)

Power Generation (7)

716

586

130

572

144

1,302

1,054

248

Solvent

40

37

3

(4)

44

77

41

36

Marine Transportation

48

(15)

63

(70)

118

33

(72)

105

Ethanol

0

29

(29)

(17)

17

29

(1)

30

Others (8)

64

123

(59)

53

11

187

108

79

Remark(1)Thai Paraxylene Co., Ltd. invested 75% of total investment in LABIX Co., Ltd. which produces an intermediate for the production of surfactants (LAB).

  1. Thaioil Plc. shares 73.99% in Thaioil Power Co., Ltd., and shares 99.99% in TOP SPP Co., Ltd. for small power plants (SPPs) business.
  2. Including Thaioil Solvent Co., Ltd., having respective interests in TOP Solvent Co., Ltd., Sak Chaisidhi Co., Ltd., TOP Solvent (Vietnam) LLC.and PT Tirta Surya Raya
  3. Including Thaioil Marine Co., Ltd., having respective interests in Thaioil Marine International Pte. Ltd., TOP Maritime Service Co., Ltd., TOP-NTL Pte. Ltd., TOP- NTL Shipping Trust, TOP Nautical Star Co., Ltd., TOP-NYK MarineOne Pte. Ltd., and T.I.M. Ship Management Co., Ltd.
  4. Including Thaioil Ethanol Co., Ltd., having respective interests in Sapthip Co., Ltd., and Ubon Bio Ethanol Co., Ltd.
  5. Including Thaioil Energy Services Co., Ltd. (TOP holds 99.99% shares) which provides human resources management service and Thaioil Treasury Center Co., Ltd. (TOP holds 99.99% shares) which conducts the business in the area of International Business Center (IBC) and Treasury Center (TC) for Thaioil and Subsidiaries.

(7) Including Thaioil and Subsidiaries' share of profits from the investments in Global Power Synergy Public Company Limited (GPSC).

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

4

2.1 Market Condition and Financial Result of Refinery Business

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

Average Prices (US$/bbl)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Dubai Crude Oil

30.6

50.9

(20.3)

67.4

(36.8)

40.7

65.4

(24.7)

Unleaded Gasoline (ULG95)

33.1

57.6

(24.5)

74.9

(41.8)

45.4

71.1

(25.7)

Jet/Kero

30.5

59.5

(29.0)

79.6

(49.1)

45.0

78.0

(33.0)

Gas Oil (GO)

36.3

62.0

(25.7)

79.7

(43.4)

49.1

78.0

(28.9)

Fuel Oil (HSFO)

28.9

43.4

(14.5)

65.1

(36.2)

36.2

64.6

(28.4)

Spreads over Dubai (US$/bbl)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Unleaded Gasoline (ULG95)

2.6

6.7

(4.1)

7.5

(4.9)

4.6

5.6

(1.0)

Jet/Kero

(0.1)

8.6

(8.7)

12.2

(12.3)

4.2

12.6

(8.4)

Gas Oil (GO)

5.7

11.1

(5.4)

12.4

(6.7)

8.4

12.6

(4.2)

Fuel Oil (HSFO)

(1.6)

(7.5)

5.9

(2.3)

0.7

(4.5)

(0.9)

(3.6)

Remark

Closing Dubai crude oil price at the end of Q2/20, Q1/20, and Q2/19 were calculated from average Dubai price of June 2020, March 2020, and June 2019,

respectively. The prices were 40.8 US$/bbl, 33.7 US$/bbl, and 61.8 US$/bbl, respectively.

Graph 1: Prices of Crude Oil and Petroleum Product

Dubai crude oil price in Q2/20 was weakened compared to Q1/20 and Q2/19 as it was pressured heavily from COVID-19 pandemic with the risen of reported case of infection, especially in America and Europe. This caused the huge impact on economy and ultimately, oil demand-especially in tourism and transportation sector. At the same time, worldwide crude oil inventory level rose rapidly. Furthermore, oil price war caused crude oil price to drop more than $15/bbl in one day. However, in late Q2/20, the demand improved following the lockdown easing and the economic stimulus plans. Meanwhile, OPEC+

reached an agreement to cut down their aggregated production by 9.7 million barrels per day from May to July 2020, and 7.7 million barrels per day from August to December 2020. This helped curb supply surplus problem in the market and resulted in higher crude oil price.

Gasoline spread over Dubai shrank in Q2/20 compared with Q1/20 and Q2/19 following the decline in worldwide gasoline demand from the COVID-19 pandemic, as many nations still enforced lockdown to mitigate and suppress the infection. World demand for gasoline decreased by 5.7 million barrels per day in Q2/20 compared with Q2/19. Gas oil and jet/kero spreads over Dubai also declined compared with Q1/20 and Q2/19 after the market was curtailed by the COVID-19 pandemic causing gas oil usage in industrial and transportation sector to decline. Besides, jet fuel demand got the servere impact with the demand fell by as much as 63% in April compared with the same period last year as there were numerous flight cancellations. Nevertheless, high sulphur fuel oil spread expanded in Q2/20 compared with Q1/20 and Q2/19 following the lower regional supply as a number of refineries shifted their productions to produce low Sulphur fuel oil to satisfy International Maritime Organization (IMO)'s policy on limiting air pollution caused by maritime transportation, in which 0.5% sulphur cap was imposed on marine fuels from January 2020.

5

Table 4: Financial Result of Refinery Business

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Throughput(1) (%)

98%

111%

(13%)

103%

(5%)

105%

109%

(4%)

Intake (kbd)

269

306

(37)

283

(14)

287

301

(14)

Gross Refining Margin (GRM) (US$/bbl)

: excludingStock Gain/(Loss)

1.4

0.1

1.3

2.6

(1.2)

0.7

2.8

(2.1)

: includingStock Gain/(Loss)

(0.4)

(12.2)

11.8

2.4

(2.8)

(6.7)

4.1

(10.8)

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

In Q2/20, Thaioil refinery reported a rise in GRM excludingstock gain/(loss) thanks to lower crude premiums from oil price war.Moreover, there was the reversal on crude and petroleum product inventorywhich led the refinery to earn net profit.

For 6M/20, Thaioil refinery posted a significant decline in GRM excludingstock gain/(loss) due to COVID-19pandemic impact and recognized the stock loss. The refinery then reported net loss compared with net profit in 6M/19.

In Q2/20, Thaioil refinery had a 98% throughput which decreased from the previous quarter by 13%. This was because of plant optimization during COVID-19 pandemic that had adverse impact on jet/kero demand due to worldwide flight cancellations. Moreover, there was a drop in total product sales volume by 13%. The refinery had petroleum product sales mix of 81% for domestic, 12% for Indochina and the rest 7% for export. It reported sales revenue of Baht 48,296 million, reduced by Baht 31,945 million following lower sales volume and average selling prices impacted by COVID-19 pandemic. However, The refinery posted GRM excludingstock gain/(loss) of 1.4 US$/bbl, uplifted by

1.3 US$/bbl from the prior quarter. This resulted from considerably drops in crude premiums from oil price war amid dips in ULG95, jet/kero, and gas oil spreads due to softened demand from COVID-19 pandemic. However, a collapse in crude oil price during the beginning of quarter led Thaioil refinery to have a stock loss of 1.8 US$/bbl or Baht 1,404 million, dropped by Baht 9,368 million from Q1/20. Besides, a reversal on crude and petroleum product inventory of Baht 2,469 million was recorded, compared with a write-down on crude and petroleum product inventory of Baht 3,480 million in last quarter. Combining with net realized loss on financial instruments of Baht 43 million, Thaioil refinery had EBITDA of Baht 1,145 million, compared with loss on EBITDA of Baht 14,497 million in Q1/20. In addition, the refinery had net gain on fair value measurements of financial instruments according to Thai Financial Reporting Standards No. 9 - Financial Instruments (TFRS 9) of Baht 222 million and had net foreign exchange gain of Baht 2,058 million (included net foreign exchange gain on foreign currency assets and liabilities of Baht 1,557 million). Offsetting with depreciation, finance costs and income tax expense, Thaioil refinery posted net profit of Baht 1,248 million (including dividend income, it had net profit of Baht 2,198 million), compared with net loss of Baht 15,260 million in Q1/20.

Compared with Q2/19, Thaioil refinery had the decreases in throughput and product sales volume of 5% and 10%, respectively, due to COVID-19 pandemic. The refinery had lower sales revenue of Baht 46,248 million following lower product sales volume and average selling prices. Additionally, the refinery had a reduction in GRM excludingstock gain/(loss) of 1.2 US$/bbl due to the weak ULG95, jet/kero and gas oil spreads from softened demand tracking COVID-19 pandemic. Furthermore, the refinery had the stock loss of Baht 1,404 million, higher loss than Q2/19 by Baht 1,266 million. Nevertheless, there was an increase in the reversal on crude and petroleum product inventory of Baht 2,267 million from the same period of last year. Offsetting with net realized loss on financial instruments of Baht 43 million, Thaioil refinery, therefore, reported better EBITDA of Baht 893 million. Including rises in net gain on fair value measurements of financial instruments and net foreign

6

exchange gain of Baht 222 million and Baht 1,458 million, respectively, and offsetting with depreciation, finance costs and income tax expense, the refinery reported net profit of Baht 1,248 million, compared with net loss of 441 million in the same period of the previous year.

Comparing 6M/20 with 6M/19, Thaioil refinery had a slight decrease in throughput and had sales revenue of Baht 128,537 million, dropped by Baht 61,093 million following lower product sales volume and average selling prices impacted by COVID-19 pandemic. The refinery reported GRM excludingstock gain/(loss) of 0.7 US$/bbl, significantly dropped by 2.1 US$/bbl, mainly because of the reductions in product spreads, especially ULG95, jet/kero and gas oil spreads, due to weak demand from COVID-19 pandemic in spite of considerably lower crude premiums from oil price war. Additionally, the collapse in crude oil price resulted in the stock loss of 7.3 US$/bbl or Baht 12,176 million in 6M/20 compared with the stock gain of Baht 2,335 million in 6M/19. Moreover, there was the write-down on crude and petroleum product inventory of Baht 1,011 million while there was the reversal on crude and petroleum product inventory of Baht 697 million in 6M/19. Offsetting with net realized loss on financial instruments of Baht 35 million, Thaioil refinery, therefore, reported loss on EBITDA of Baht 13,352 million, compared with EBITDA of Baht 4,705 million in the same period of last year. Besides, the refinery had net loss on fair value measurements of financial instruments of Baht 130 million and net foreign exchange loss of Baht 354 million, compared with net foreign exchange gain of Baht 1,260 in 6M/20. Offseting with depreciation, interest expenses and income tax expense, Thioil refinery reported net loss of Baht 14,012 million (including dividend income, it had net loss of Baht 11,331 million), compared with net profit of Baht 2,527 million in the first half of 2019.

7

2.2 Market Condition and Financial Result of Aromatics Business

Table 5: Average Prices and Spreads of Aromatics Products

Average Prices (US$/Ton)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Paraxylene (PX)(1)

495

708

(213)

909

(414)

602

995

(393)

Benzene (BZ)(2)

371

616

(245)

625

(254)

493

607

(114)

Toluene (TL)(2)

350

564

(214)

649

(299)

457

631

(174)

Spreads over ULG95 (US$/Ton)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Paraxylene (PX)

214

218

(4)

273

(59)

216

391

(175)

Benzene (BZ)

90

126

(36)

(12)

102

108

3

105

Toluene (TL)

69

75

(6)

13

56

72

27

45

Remark

(1) Based on CFR Taiwan price

(2) Based on FOB Korea price

Graph 2: Prices of Aromatics Products and ULG95

ULG95

PX CFR

BZ FOB

TOL FOB

1,200 1,000 800 600 400 200 0

Q1/19

Q2

Q3

Q4

Q1/20

Q2

In Q2/20, PX price and its spread over ULG95 dropped from Q1/20 and Q2/19 following weak crude oil price. Moreover, PX market was pressured by softened demand in the region owing to COVID-19 pandemic, resulting in lower polyester demand for clothing despite an increase in PET consumption during the pandemic. Additionally, rising in maintenance shutdowns of PTA plants which is PX downstream product, led to an increase in Chinese PX inventory to reach a peak at 4 millions tons.

BZ price in Q2/20 declined from Q1/20 and Q2/19 tracking softened crude oil price. At the same time, BZ spread over ULG95 was softer than Q1/20 because downstream products of BZ used in the automotive and construction industry were affected by global economy and slow consumption. As a result, the inventory of BZ in East China increased to reach 200,000 tons. On the other hand, BZ spread over ULG95 in Q2/20 rose from Q2/19 thanks to an increase in BZ demand for packaging production after the city lockdown policy causing people to stay at home which supports the use of food packaging and packaging that comes with online purchases. In addition, the relaxation of US-China trade war supported BZ spread over ULG95.

TL price in Q2/20 weakened from Q1/20 and Q2/19 following softened crude oil price. Furthermore, TL spread over ULG95 in Q2/20 slightly decreased from Q1/20 because of the weak demand of TL as the precursor to the production of PX and BZ and as a gasoline octane booster during COVID-19 pandamic. However, maintemance shutdowns of TL plants in Q2/20 resulted in tight supply which supported TL spreads over ULG95 to increase from Q2/19.

8

Table 6: Financial Result of TPX

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Aromatics Production Rate (1) (%)

75%

81%

(6%)

64%

11%

78%

78%

-

Aromatics Production (kTon)

156

169

(13)

134

22

324

323

1

Product-to-feed Margin(2) (US$/Ton)

77

85

(8)

75

2

81

113

(32)

Remark(1)

Based on a nameplate capacity of 838,000 Tons/year (527,000 tons of paraxylene per year, 259,000 tons of benzene per year and 52,000 tons of mixed xylene

per year)

(2)

Calculated from gross margin divided by feedstock volume (Ton)

In Q2/20, TPX had decreases in aromatics productions and product-to- feed margin due to softened aromatics demand from COVID-19 pandemic. This resulted in weakened performance from the previous quarter.

For 6M/20, TPX had lower product-to-feed margin owing to weakened PX spread over ULG95. However, with net gain on financial instruments and net foreign exchange gain, TPX posted higher net profit.

In Q2/20, Thai Paraxylene Co., Ltd. (TPX) had aromatics productions at 75% and had sale revenue of Baht 5,933 million, decreased by Baht 2,705 million. Besides, TPX reported product-to-feed margin of 77 US$/ton, a decrease of 8 US$/ton due to both declines in aromatics prices and aromatics spreads over ULG95 tracking crude oil price and sluggish aromatics demand as a result of COVID-19 outbreak. However, TPX had net realized gain on financial instruments of Baht 28 million, increased by Baht 27 million. Thus, TPX recorded EBITDA of Baht 770 million, decreased by Baht 126 million. Besides, in this quarter, net gain on fair value measurement of financial instruments in accordance with Thai Financial Reporting Standard No. 9 - Financial Instruments (TFRS 9) was recorded of Baht 122 million, rose by Baht 103 million. Additionally, TPX had net foreign exchange loss of Baht 19 million, compared with net foreign exchange gain of Baht 85 million in the previous quarter. Offsetting with depreciation, finance costs and income tax expense, in Q2/20, TPX posted net profit of Baht 439 million, declined by Baht 86 million from Q1/20.

Compared with Q2/19, TPX had higher aromatics production rate by 11% and had higher total sales volume by 20% due to planned maintenance shutdown of aromatics complex from mid-June 2019 to July 2019. However, TPX reported a decrease in sales revenue of Baht 3,229 million due to significant drops in aromatics selling prices tracking crude oil price. However, better BZ and TL spread over ULG95, thanks to healthy BZ demand to produce packaging and tight TL supply, resulted in better product-to-feed margin by 2 US$/ton. Furthermore, in Q2/20, there was lower net realized gain on financial instruments by Baht 26 million. Consequently, TPX reported an increase in EBITDA of Baht 328 million. However, TPX recorded increases in net gain on fair value measurement of financial instruments of Baht 122 million and net foreign exchange loss of Baht 15 miilon from the same period of the previous year. Therefore, TPX posted a rise in net profit of Baht 360 million.

Compared 6M/20 with 6M/19. TPX had sales revenue of Baht 14,572 million, decreased by Baht 4,810 million because of lower product selling prices tracking crude oil price. Furthermore, TPX had product-to-feed margin of 81 US$/Ton, decreased by 32 US$/Ton owing to a sharp drop in PX spread over ULG95 due to the effect of COVID-19 pandemic and maintenance shutdowns of many PTA plants. Together with net realized gain on financial instruments of Baht 30 million, compared with net realized loss on financial instruments of Baht 55 million, caused TPX to have EBITDA of Baht 1,667 million, dropped by Baht 198 million. Additionally, TPX had an increase in net gain on fair value measurement of financial instruments of Baht 141 million, and had net foreign exchange

9

gain of Baht 67 million, compared with net foreign exchange loss of Baht 5 million. Therefore, TPX reported net profit of Baht 964 million, rose by Baht 47 million from 6M/19.

In Q2/20, aromatics group (TPX holds 75% shares of LABIX) had consolidated sales revenue of Baht 7,894 million, consolidated EBITDA of Baht 1,018 million and consolidated net profit of Baht 514 million. For 6M/20, aromatics group had consolidated sales revenue of Baht 20,370 million, consolidated EBITDA of Baht 2,116 million and consolidated net profit of Baht 973 million.

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

Table 7: Average Price of LAB

Average Price (US$/Ton)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Linear Alkylbenzene (LAB)(1)

1,158

1,249

(91)

1,253

(95)

1,204

1,233

(29)

Remark(1) Based on ICIS price

Graph 3: Price of LAB

LAB price in Q2/20 declined from Q1/20 and Q2/19 due to lower feedstock prices which were pressured by an economic slowdown as a result of the out break of COVID-19. However, LAB price in Q2/20 was still supported by increasing demand during summer and the higher number of LAB plant maintenances, especially in China and India. Furthermore, the impact of city lockdown policy in many countries resulted in a reduction in kerosene production, which is one of the LAB feedstock, and tight LAB supply.

Table 8: LAB Production

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

LAB Production Rate(1) (%)

113%

113%

-

112%

1%

113%

113%

-

LAB Production (kTon)

34

34

-

34

-

68

67

1

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

In Q2/20, LABIX reported stronger performance than the previous quarter due to higher gross margin from better demand during summer and tight LAB supply.

In Q2/20, LABIX Co., Ltd. (LABIX) had sales revenue of Baht 2,096 million, decreased by Baht 1,985 million from Q1/20 owing to lower LAB price following feedstock prices. However, gross margin was supported by increasing demand in summer and tight LAB supply. Offsetting with net realized loss on financial instruments of Baht 31 million, compared with net realized loss on financial instruments of Baht 28 milion in Q1/20, LABIX then reported EBITDA of Baht 248 million, rose by Baht 46 million. Besides, LABIX had net gain on fair value measurement of financial instruments in accordance with Thai Financial Reporting Standard No.9 - Financial Instruments (TFRS 9) of Baht 44 million, compared with net loss on fair value measurement of financial instruments of Baht 44 million, and had net foreign exchange gain of Baht 9 million, compared with net foreign exchange loss of Baht 26 million. Offsetting with depreciation and finance costs, LABIX posted net profit of Baht 100 million, compared with net loss of Baht 88 million in Q1/20.

10

Compared 6M/20 with 6M/19, LABIX had an increase in gross margin thanks to better demand. Therefore, LABIX reported higher EBITDA and net profit.

Compared with Q2/19, LABIX reported lower sales revenue by Baht 2,458 million because LAB prices decreased following lower feedstock prices. However, LABIX had the rise in gross margin thanks to better demand. Offsetting with net realized loss on financial instruments of Baht 31 million, LABIX reported higher EBITDA by Baht 78 million. With net gain on fair value measurement of financial instruments of Baht 44 million, LABIX then reported net profit of Baht 100 million in Q2/20, compared with net loss of Baht 52 million in Q2/19.

Compared 6M/20 with 6M/19. LABIX had sales revenue of Baht 6,177 million, decreased by Baht 2,807 million because of lower products selling price tracking feedstock prices. Although LABIX had net realized loss from financial instrument of Baht 58 million, with better gross margin, LABIX recorded higher EBITDA by Baht 136 million. Offsetting with net foreign exchange loss of Baht 17 million, compared with net foreign exchange gain of Baht 15 million in the same period of previous year, LABIX posted net profit of Baht 11 million, compared with net loss of Baht 138 million in 6M/19.

2.4 Market Condition and Financial Result of Lube Base Oil Business

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

Average Prices (US$/Ton)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

500SN(1)

556

645

(89)

700

(144)

601

718

(117)

Bitumen(2)

226

302

(76)

409

(183)

264

388

(124)

Spreads over HSFO (US$/Ton)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

500SN

372

369

3

287

85

371

308

63

Bitumen

42

26

16

(4)

46

34

(22)

56

Remark

(1) Based on Ex-tank Singapore price

(2) Based on FOB Singapore price

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

Lube base oil price (500SN) in Q2/20 dropped from Q1/20 and Q2/19 tracking lower crude oil price. Moreover, global lube base oil demand continuously dropped, resulting from weaken global economy due to city lockdown policy in order to prevent the spread of COVID-19. Additionally, there was an additional supply from new Group II and III lube base plant in China with total capacity of 0.90 million tons per annum. However, lube base oil spread over fuel oil in Q2/20 improved from Q1/20 and Q2/19 from the significant drop in crude oil price due to oil price war among producers, leading to a drop in fuel oil price.

Bitumen price in Q2/20 dropped from Q1/20 and Q2/19 because of sluggish region demand from city lockdown policy for controlling the spread of COVID-19. Besides, the delayed government budget disbursement pressured the region demand of road construction and repairment. However, bitumen spread over fuel oil in Q2/20 increased from Q1/20 and Q2/19 from the significant drop in fuel oil price due to weaken crude oil price from oil price war among producers. Furthermore, bitumen supply decreased from the production cuts of region refineries.

11

Table 10: Financial Result of TLB

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Base Oil Production Rate(1) (%)

89%

81%

8%

85%

4%

85%

87%

(2%)

Base Oil Production (kTon)

59

54

5

57

2

113

115

(2)

Product-to-feed Margin(2) (US$/Ton)

24

86

(62)

94

(70)

54

77

(23)

Remark(1) Based on nameplate capacity of 267,015 Tons/year

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

In Q2/20, TLB had the reductions in both sales revenue and product-to-feed margin due mainly to softened byproduct spreads over fuel oil as well as lower sales volume of specialty product. Therefore, TLB reported net loss.

Compared 6M/20 with 6M/19, TLB had a drop in performance due to both lower average unit selling price and byproduct spreads over fuel oil, together with lower specialty product sales.

Compared Q2/20 with Q1/20, Thai Lube Base Plc. (TLB) had base oil production rate of 89% and sales revenue of Baht 2,869 million, dropped by Baht 1,010 million owing to a decrease in average unit selling price tracking crude oil price. In addition, byproduct spreads over fuel oil, mostly based on gas oil price, was soften. Additionally, the sales volume of Treated Distillate Aromatics Extract, as a high value specialty product, dropped from COVID-19 outbreak. This resulted in a reduction of travelling during Q2/20, pressuring gas oil price and tire industry demand. As a result, TLB had a product-to-feed margin of 24 US$/Ton, decreased by 62 US$/Ton from the previous quarter. In addition, TLB reported loss on EBITDA of Baht 120 million, compared with EBITDA of Baht 379 million in Q1/20. Offsetting with depreciation and income tax expense, TLB posted net loss of Baht 139 million, compared with net profit of Baht 284 million in the last quarter.

Compared Q2/20 with Q2/19, TLB had higher base oil production rate by 4%. However, TLB reported a drop in sales revenue of Baht 1,958 million due mainly to the decrease in average unit selling price tracking crude oil price. Moreover, byproduct spreads over fuel oil, mostly based on gas oil price, was weaker. Besides, the sales volume of Treated Distillate Aromatics Extract, high value specialty product, dropped from COVID-19 outbreak. As a result, product-to-feed margin of TLB dropped by 70 US$/Ton, leading to loss on EBITDA of Baht 120 million, compared with EBITDA of Baht 436 million in Q2/19. Therefore, TLB posted net loss of Baht 139 million, compared with net profit of Baht 322 million in the same period of the previous year.

Compared 6M/20 with 6M/19, TLB had sales revenue of Baht 6,748 million, decreased by Baht 2,783 million mainly from lower average product selling price tracking crude oil price. Moreover, TLB had product-to-feed margin of 54 US$/Ton, reduced by 23 US$/Ton mainly due to worse byproduct spreads over fuel oil, as byproduct price mostly based on gas oil price. Furthermore, the sales volume of Treated Distillate Aromatics Extract, as a high value specialty product, decreased from COVID-19 outbreak. Therefore, TLB had EBITDA of Baht 259 million, reduced by Baht 274 million. Offsetting with depreciation and income tax expense, TLB posted net profit of Baht 145 million, dropped by Baht 233 million from the same period of the last year.

12

2.5 Financial Result of Power Generation Business

Table 11: Sales Volume from Power Generation Business

TP + TOP SPP (1)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Electricity Dispatched (GWh)

622

612

10

634

(12)

1,234

1,240

(6)

Steam Exported (kTon)

1,049

1,058

(9)

1,012

37

2,107

2,055

52

Remark(1) 100% of electricity dispatched and steam exported

In Q2/20, TP had lower sales revenue following a decrease in sales volume. However, a drop in tax expense led TP to report a higher net profit. TOP SPP reported higher sales revenue from higher sales volume. Therefore, TOP SPP recorded an increase in net profit.

Comparing 6M/20 with 6M/19, TP and TOP SPP reported a decrease in sales revenue due to lower average selling prices. However, the drops in natural both gas price and fuel oil price, main feedstocks, led TOP SPP to have higher net profit. Meanwhile, TP had net loss from the increase in finance costs.

In Q2/20, compared with Q1/20, Thaioil Power Co., Ltd. (TP) had sales revenue of Baht 1,083 million, reduced by Baht 21 million following the decrease in both electricity dispatched and steam exported from customer demands. As a result, TP had EBITDA of Baht 194 million, decreased by Baht 11 million. However, income tax expense declined by Baht 49 million from dividend received in the previous quarter. Offsetting with depreciation and finance costs, TP recorded net profit, excluding share of profit from the investment in Global Power Synergy Public Co., Ltd. (GPSC), of Baht 13 million, increased by Baht 37 million from the last quarter. TOP SPP Co., Ltd. (TOP SPP) earned Baht 1,797 million in sales revenue, increased by Baht 25 million according to increased electricity dispatched because of less planned maintenance shutdown days than the previous quarter. As a result, TOP SPP reported EBITDA of Baht 459 million, rose by Baht 21 million. Offsetting with depreciation, finance costs and income tax expense, TOP SPP recorded net profit of Baht 246 million, improved by Baht 25 million. Besides, Thaioil and Subsidiaries recognized, without non-controlling interest, share of profit from the investment in GPSC of Baht 461 million, increased by 77 million from prior quarter.

Compared Q2/20 with Q2/19, TP reported lower sales revenue by Baht 4 million mainly came from a drop in electricity dispatched following customer demands. However, the reduction in fuel oil price, as main feedstock, caused TP to report higher EBITDA by Baht 34 million. However, TP posted an increase in finance costs from borrowings by Baht 108 million to purchase new ordinary shares in proportion to the shareholding in GPSC. Offsetting with depreciation and income tax expense, TP posted lower net profit, excluding share of profit from the investment in GPSC, of Baht 49 million from the same period of previous year. For TOP SPP, sales revenue declined by Baht 84 million because of a drop in electricity dispatched, together with lower average selling prices following lower natural gas price. However, the drop in fuel oil price, as main feedstock, resulting TOP SPP to report lower EBITDA by Baht 19 million. Offsetting with depreciation, finance costs and income tax expense, TOP SPP recorded lower net profit by Baht 17 million than the same period of last year.

Comparing 6M/20 with 6M/19, TP reported sales revenue of Baht 2,187 million, decreased by Baht 71 million. This came from the drop in electricity dispatched, following customer demands, and average selling prices, following lower natural gas price. However, the decrease in natural gas price and fuel oil price, main feedstocks, led TP to report EBITDA of Baht 399 million, increased by Baht 41 million. However, there was an increase in finance costs from borrowings by Baht 216 million to purchase new ordinary shares in proportion to the shareholding in GPSC. Offsetting with depreciation and income tax expense, TP reported net loss, excluding share of profit from the investment in GPSC, of Baht 12

13

million compared with net profit of Baht 183 million in the same period of last year. TOP SPP had sales revenue of Baht 3,569 million, diminished by Baht 112 million due to lower average selling prices following a drop in natural gas price. However, the significant drops in both natural gas price and fuel oil price, main feedstocks, causing TOP SPP to report EBITDA of Baht 897 million, increased by Baht 43 million. Offsetting with depreciation, finance costs and income tax expense, TOP SPP posted net profit of Baht 467 million, increased by Baht 40 million.

2.6 Financial Result of Solvent Manufacturing and Distribution Business

Table 12: Financial Result of Thaioil Solvent

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Solvent Utilization Rate (1) (%)

128%

101%

27%

110%

18%

114%

117%

(3%)

Solvent Production(1) (kTon)

45

35

10

39

6

80

82

(2)

Solvent Sales Volume (kTon)

94

87

7

85

9

181

174

7

Remark(1) Produced solvent by Sak Chaisidhi Co., Ltd. (TOP Solvent Co., Ltd. holds 80.52% shares)

In Q2/20, compared with Q1/20, Thaioil Solvent reported a drop in sales revenue from a decline in solvent selling price. However, Thaioil solvent was able to sell tight supplyproducts and launced new product to market. Thus, Thaioil Solvent reported both higher EBITDA and net profit.

Compared with 6M/19, Thaioil Solvent had a dip in average solvent unit sellingprice, leading to a reduction in sales revenue.However, a better gross margin and an increase in FX gain, resulting a rise in net profit of TOP Solvent.

In Q2/20, compared with Q1/20, Thaioil Solvent (Solvent Manufacturing and Distribution Business) had a 128% solvent utilization rate, increased by 27%. In addition, solvent sales volume increased by approximately 7,000 tons mainly due to an increase in purchase orders and low level of solvent inventory. However, average solvent selling prices per unit dropped considerably tracking crude oil price. This led Thaioil Solvent to record sales revenue of Baht 1,761 million, reduced by Baht 380 million. However, Thaioil Solvent reported EBITDA of Baht 105 million, increased by Baht 2 million due to the improvement on gross profit margin from some product groups. This was mainly due to tighthened supply after some producers halted their production temporarily from unprofitable production from a sharp reduction on demand. Moreover, Thaioil Solvent launched the new products during COVID-19 pandemic. In addition, Thaioil Solvent recorded net foreign exchange gain of Baht 8 million, increased by Baht 4 million. Offsetting with depreciation of Baht 47 million, finance costs of Baht 19 million, income tax expense of Baht 6 million, and non-controlling interests of Baht 1 million, Thaioil Solvent posted net profit of Baht 40 million in Q2/20, increased by Baht 3 million from prior quarter.

Compared Q2/20 with Q2/19, Thaioil Solvent had both utilization rate and sales volume increased by 18% and approximately 9,000 tons, respectively. However, a huge reduction in average solvent selling price per unit tracking crude oil price caused sales revenue to drop by Baht 414 million. However, Thaioil Solvent reported a better gross margin as mentioned reasons. Then, Thaioil Solvent posted an increase in EBITDA of Baht 18 million. Besides, Thaioil Solvent posted net foreign exchange gain of Baht 8 million compared with net foreign exchange loss of Baht 13 million in Q2/19. Offsetting with depreciation, finance costs, income tax expense, and non-controlling interests, Thaioil Solvent, in Q2/20, then recorded net profit of Baht 40 million compared with net loss of Baht 4 million from the same period of last year.

14

In 6M/20, compared with 6M/19, Thaioil Solvent had a 114% solvent utilization rate and solvent sales volume increased by approximately 7,000 tons. However, lower average solvent selling price per unit tracking crude oil price led Thaioil Solvent to record sales revenue of Baht 3,902 million, decreased by Baht 533 million. However, Thaoil solvent had better gross profit margin from an increase in sales volume of both high value products and some products from supply shortage. Therefore, Thaioil Solvent posted EBITDA of Baht 208 million, reduced by only Baht 29 million. Moreover, Thaioil Solvent had net foreign exchange gain of Baht 13 million in 6M/20 compared with net foreign exchange loss of Baht 27 million in 6M/19. Offsetting with depreciation, finance costs and income tax expense, Thaioil Solvent posted net profit of Baht 77 million, increased by Baht 36 million from the same period of previous year.

15

2.7 Financial Result of Crude, Petroleum and Petrochemical Marine Transportation and Storage, Ship Management Service and Crew & Utility Boat Service Business

Table 13: Utilization Rate of TM

Utilization Rate (%)

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Petroleum & Petrochemical Product Vessel

100%

85%

15%

85%

15%

83%

90%

(7%)

: TM

Crude Vessel: TOP-NYK(1)

75%

90%

(15%)

100%

(25%)

92%

100%

(8%)

Crew and Utility Boat: TMS

82%

81%

1%

60%

22%

82%

56%

26%

Remark(1) Ship utilization rate decreased in Q2/20 due to asset disposal in last June.

In Q2/20, TM posted higher revenue from an increase inutilization rate. Moreover, TM recorded a hike in the net share of profits from the investments, leading to higher consolidated net profit.

Compared with 6M/19, TM

posted higher services

income. TM also had a

reduction in both services cost and vessel operating expenses. Therefore, TM reported higher consolidatednet profit compared with consolidated net loss in the same period of previous year.

In Q2/20, compared with Q1/20, Thaioil Marine Co., Ltd. (TM) reported services revenue, including revenues from TMS (TM holds 100% shares), of Baht 187 million, increased by Baht 45 million from the last quarter because of an inecrease in utilization rate of TM fleets following market demand. TM reported EBITDA of Baht 81 million, rose by Baht 70 million from prior quarter. In Q2/20, TM had share of profit from the investment in TOP-NYK MarineOne Pte. Ltd. (TOP-NYK) of Baht 40 million, increased by Baht 23 million from the rise of short-term services income. TM also had share of profit, totaling Baht 2 million, from the investments in TOP-NTL Pte. Ltd. (TOP-NTL) and T.I.M. Ship Management (TIM). However, TM had total share of losses from the investments in TOP-NTL Shipping Trust and TOP Nautical Star Co of Baht 5 million, compared with total share of profits of Baht 14 million in Q1/20. This mainly came from loss recognition of impairment on non-current asset. Offsetting with depreciation, finance costs, and income tax expense, TM posted consolidated net profit of Baht 48 million compared with consolidated net loss of Baht 15 million in Q1/20.

Compared Q2/20 with Q2/19, TM had services revenue rose by Baht 31 million due to an increase in both TM and TMS fleets utilization rate. TM consequently reported higher EBITDA by Baht 71 million from Q2/19. Furthermore, TM had share of profit from the investment in TOP-NYK boosted by Baht 28 million. However, TM had shares of profits from the investments in TOP-NTL and TIM alomost similar to the same period of last year. Moreover, TM had total share of losses from the investments in TOP- NTL Shipping Trust and TOP Nautical Star of Baht 5 million, compared with total share of profits of Baht 19 million in Q2/19. Offsetting with depreciation, finance costs, and income tax expense, TM recorded consolidated net profit of Baht 48 million, compared with consolidated net loss of Baht 70 million in the same period of previous year.

Comparing 6M/20 with 6M/19, TM reported services revenue of Baht 330 million, increased by Baht 4 million owing to higher utilization rate of TMS fleets, together with the reduction in both services cost and vessel operating expenses. As a result, TM reported EBITDA of Baht 92 million, boosted by Baht 45 million. TM reported the increase in share of profit by Baht 35 million from TOP-NYK while reported the decrease in total shares of profits from the investments in TOP-NTL,TOP-NTL Shipping Trust, TOP Nautical Star, and TIM of Baht 26 million. Offsetting with depreciation, finance costs, and income tax expense, TM recorded consolidated net profit of Baht 33 million compared with consolidated net loss of Baht 72 million in the same period of previous year.

16

2.8 Financial Result of Ethanol Business

Table 14: Utilization Rate of TET

Q2/20

Q1/20

+/(-)

Q2/19

+/(-)

6M/20

6M/19

+/(-)

Ethanol Utilization Rate (%)

- Sapthip

83%

106%

(23%)

106%

(23%)

94%

101%

(7%)

- Ubon Bio Ethanol

66%

100%

(34%)

56%

10%

83%

76%

7%

In Q2/20, TET reported a decrease in sales revenue from Sapthip Co., Ltd. due to lower ethanol sales volume from COVID-19 outbreak. Therefore, TET reported lower EBITDA andnet profit

For 6M/20, TET reported net profit, compared with net loss in 6M/19. This mainly came from higher ethanol selling price and income from alcohol sanitizer products.

In comparison with Q1/20, TET had consolidated sales revenue from Sapthip Co., Ltd. (TET holds 50% shares) of Baht 364 million, dropped by Baht 22 million mainly from a considerable reduction in ethanol sales volume due to COVID-19 outbreak. As a result, Sapthip Co., Ltd. decided to have an early maintenance shutdown in June instead of July. TET consequently reported EBITDA of Baht 44 million, dropped by Baht 20 million from Q1/20. Moreover, in Q2/20, TET had share of loss of Baht 2 million from the investment in Ubon Bio Ethanol Plc. and subsidiaries (UBE group), compared with the share of profit of Baht 16 million from the previous quarter. Therefore, TET posted a slight net profit of Baht 0.3 million, compared with net profit of Baht 29 million in Q1/20.

In comparison with Q2/19, TET had consolidated sales revenue from Sapthip Co., Ltd., increased by Baht 2 million from higher ethanol selling price, resulting from an increase in the price of molasses, and additional income from alcohol sanitizer products. Therefore, TET reported higher EBITDA of 5 million. Furthermore, TET had share of profit from the investment in UBE group of Baht 2 million, compared with share of loss of Baht 15 million in Q2/19. Taken as a whole, TET reported net profit of Baht 0.3 million, compared with net loss of Baht 17 million in Q2/19.

For 6M/20, TET had consolidated sales revenue of Baht 750 million and EBITDA of Baht 108 million, increased by Baht 11 million and Baht 31 million, respectively from 6M/19 by the reason of 1) higher ethanol selling price though lower ethanol sales volume from COVID-19 outbreak and 2) additional income from alcohol sanitizer products. TET also had share of profit of Baht 15 million from the investment in UBE group increased by Baht 12 million from 6M/19. Therefore, TET posted net profit of Baht 29 million, compared with net loss of Baht 1 million in the same period of previous year.

On 20 July 2020, UBE group received approval of internal restructuring within the group's businesses from the Board of Directors. The purpose of this transaction is to allocate asset in order to be consistent with the business group. The restructuring is expected to be complete within this year after Extraordinary General Meeting scheduled on 13 August 2020.

17

3. Analysis of Consolidated Financial Statement

3.1 Statement of Financial Position

The financial position of Thaioil and Subsidiaries as of 30 June 2020 compared with 31 December 2019 was summarized as follows:

Table 15: Condensed Consolidated Statements of Financial Position

(Million Baht)

30 June

31 December

+/(-)

+/(-) %

2020

2019

Assets

Cash, cash equivalents and short-term investments(1)

80,638

76,937

3,701

4.8%

Other current assets

34,452

57,739

(23,287)

(40.3%)

Non-current assets

183,081

148,768

34,313

23.1%

Total assets

298,170

283,445

14,725

5.2%

Liabilities

Current liabilities

19,433

37,331

(17,898)

(47.9%)

Long-term borrowings and debentures (including current portion)

148,880

116,623

32,257

27.7%

Other non-current liabilities

19,026

5,568

13,458

241.7%

Total liabilities

187,339

159,521

27,818

17.4%

Equity

Equity attributable to owners of the company

106,956

119,973

(13,017)

(10.8%)

Non-controlling interests

3,875

3,951

(76)

(1.9%)

Total equity

110,832

123,924

(13,092)

(10.6%)

Total liabilities and equity

298,170

283,445

14,725

5.2%

Remark(1) Including deposits at a financial institution used as collateral as of 30 June 2020 and 31 December 2019 of Baht 326 million and Baht 325 million, respectively.

Total Assets

As of 30 June 2020, Thaioil and Subsidiaries had total assets of Baht 298,170 million, increased by Baht 14,725 million or 5.2% from

31 December 2019 due to the following main reasons:

- Cash, cash equivalents and short-term investments increased by Baht 3,701 million mainly due to an issuance of US$- denominated debentures of USD 1,000 million deducted by investments in several projects as planned.

  • Other current assets declined by Baht 23,287 million primarily due to decreases in both inventories of Baht 14,691 million and trade accounts receivable of Baht 7,969 million following lower crude oil and finished products volume and lower average crude oil price in June 2020 than that in December 2019. Besides, Thaioil and Subsidiaries had lower prepaid corporate income tax by Baht 1,095 million due to a refund and an adjustment for the year 2019.
  • Non-currentassets climbed by Baht 34,313 million because property, plant, and equipment had a net increase of Baht 18,231 million mainly from several project investments according to the business plan. In addition, there was an increase in deferred tax assets by Baht 3,958 million due mainly to net loss in 6M/20. Moreover, Thaioil and Subsidiaries recorded right-of-use assets according to Thai Financial Reporting Standards No. 16 - Leases (TFRS 16) of Baht 15,298 million which mainly were land lease agreements.

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Total Liabilities

As of 30 June 2020, Thaioil and Subsidiaries had total liabilities of Baht 187,339 million, went up by Baht 27,818 million or 17.4% from 31 December 2019 due to

  • Current liabilities reduced by Baht 17,898 million primarily due to a decrease in trade accounts payable of Baht 17,993 million tracking significantly lower crude oil price in June 2020 than that in December 2019. In addition, other payables decreased by Baht 5,159 million mainly from accounts payable of Clean Fuel Project (CFP) construction with were due in January 2020. However, short-term borrowings increased by Baht 878 million and excise duty payables increased by Baht 3,162 million. Moreover, Thaioil and Subsidiaries recorded current portion of lease liabilities of Baht 878 million according to TFRS 16.
  • Non-currentliabilities increased by Baht 13,458 million primarily because Thaioil and Subsidiaries recorded net lease liabilities of Baht 11,511 million according to TFRS 16 and financial liabilities by Baht 1,044 million according to Thai Financial Reporting Standards No. 9 - Financial Instruments (TFRS 9).
  • Long-termborrowings and debentures (including current portions) increased by Baht 32,257 million mainly because:
    • TTC's US$-denominated debentures increased because, in June 2020, TTC issued Senior Unsecured Notes to foreign institutional investors for the total amount of USD 1,000 million or equivalent to Baht 30,752 million, which were fully guaranteed by Thaioil refinery. The debentures comprised of USD 400 million carrying a coupon of 2.500% p.a. with the tenor of 10 years, and USD 600 million carrying a coupon of 3.750% p.a. with the tenor of 30 years.

Table 16: Consolidated Long-term Borrowings

(Million Baht)

Thaioil

LABIX

TP

TOP SPP

TS

TM

TET

TTC

Total

Debentures: US$-denominated(1)

11,934

-

-

-

-

-

-

97,408

109,342

: Baht-denominated

20,500

-

-

-

-

-

-

-

20,500

Borrowings: Baht-denominated

-

4,963

3,999

7,771

538

1,369

91

-

18,731

: Other currencies-

-

-

-

-

308

-

-

-

308

denominated(1)

As of 30 June 2020

32,434

4,963

3,999

7,771

846

1,369

91

97,408

148,880

As of 31 December 2019

32,129

5,057

3,999

7,921

908

1,459

94

65,055

116,623

+ / (-)

305

(94)

-

(150)

(62)

(90)

(3)

32,353

32,257

Remark(1) Including foreign exchange gain/loss from foreign currency-denominated liabilities revaluation

Total Equity

As of 30 June 2020, Thaioil and Subsidiaries had total equity of Baht 110,832 million, decreased by Baht 13,092 million or 10.6% from 31 December 2019. This resulted from total comprehensive expense of Baht 11,175 million in 6M/20, dividends paid of Baht 1,173 million and loss of Baht 744 million from the first time adoption on new financial reporting standards.

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3.2 Statement of Cash Flows

As of 30 June 2020, Thaioil and Subsidiaries had cash and cash equivalents of Baht 37,364 million while Thaioil refinery had cash and cash equivalents of Baht 32,800 million. In addition, Thaioil and Subsidiaries and Thaioil refinery both had short-term investments of Baht 42,947 million. Cash flows are detailed as presented below:

Table 17: Condensed Statement of Cash Flows

(Million Baht)

Consolidated

Separated

Net cash used in operating activities

(899)

(4,462)

Net cash used in investing activities

(66,440)

(61,733)

Net cash provided by financing activities

26,894

25,080

Net decrease in cash and cash equivalents

(40,446)

(41,114)

Cash and cash equivalents at the beginning of period

74,854

71,042

Effect of exchange rate changes on cash and cash equivalents

2,956

2,872

Cash and cash equivalents at the end of period

37,364(1)

32,800

Remark(1) Excluding deposits at a financial institution used as collateral as of 30 June 2020 of Baht 326 million.

Thaioil and Subsidiaries had cash flows used in operating activities of Baht 899 million consisted of net loss for 6M/20 of Baht 11,076 million, adjustments to reconcile profit (loss) to cash of Baht 2,489 Baht, changes in operating assets and liabilities of Baht 7,081 million and income tax received of Baht 606 million. In addition, Thaioil and Subsidiaries had cash flows used in investing activities of Baht 66,440 million as a consequence of repayment of short-term investments of Baht 42,009 million and purchase of property, plant and equipment of Baht 25,187 million which Thaioil refinery spent Baht 24,794 million in main projects such as the Clean Fuel Project, Jetty No.7 and No.8 Expansion project, and Thaioil Sriracha Building project. The rest of Baht 393 million was used by Subsidiaries for various purposes such as purchase of catalyst of TPX and purchase of absorbent for replacement during scheduled maintenance shutdown of LABIX.

However, Thaioil and Subsidiaries had cash flows provided by financing activities of Baht 26,894 million. These were mainly attributable to proceeds from debenture of Baht 31,120 million and net proceeds from short-term loans from financial institutions of Baht 873 million. Meanwhile, there were finance costs paid of Baht 2,941 million, dividends paid of Baht 1,173 million, repayment of principal of lease of Baht 452 million, net repayment of long-term loans from financial institutions of Baht 416 million and payment for debentures and loans financing fee Baht 123 million.

According to the mentioned cash flows activities, Thaioil and Subsidiaries reported cash and cash equivalents dipped by Baht 40,446 million from 31 December 2019. Furthermore, Thaioil and Subsidiaries recorded gain on effect of exchange rate changes of Baht 2,956 million. Hence, including cash and cash equivalents at the beginning of period of Baht 74,854 million, Thaioil and Subsidiaries had cash and cash equivalents of Baht 37,364 million as of 30 June 2020. Including deposits at a financial institution used as collateral and short-term investments of Baht 326 million and Baht 42,947 million, respectively, Thaioil and Subsidiaries had cash, cash equivalents, and short-term investments of Baht 80,638 million.

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3.3 Financial Ratios

Table 18: Financial Ratios (Consolidated) for Q2/20

Profitability Ratios

Q2/20

Q1/20

+/(-)

Quality of earnings ratio (%)

6%

(16%)

22%

Gross profit margin ratio (%)

5%

(17%)

22%

Net profit margin ratio (%)

5%

(18%)

23%

Liquidity Ratios

Q2/20

Q1/20

+/(-)

Current ratio (times)

4.9

3.7

1.2

Quick ratio (times)

4.1

2.9

1.2

Financial Policy Ratios

Q2/20

Q1/20

+/(-)

Total liability/ Total equity (times)

1.7

1.5

0.2

Net debt/ Equity (times)

0.6

0.6

-

Long-term loan/ Total equity (times)

1.3

1.1

0.2

Interest coverage ratio (times)

2.8

(11.1)

13.9

Long-term loan/ Total capitalization (%)

57%

53%

4%

Financial Ratios Calculation

Q2/19

+/(-)

2%

4%

2%

3%

1%

4%

Q2/19

+/(-)

4.9

-

3.8

(0.3)

Q2/19

+/(-)

1.0

0.7

-

0.6

0.8

0.5

1.7

1.1

44%

13%

Quality of Earnings ratio (%)

=

EBITDA / Sales Revenue

Gross Profit Margin ratio (%)

=

Gross Profit (1)/ Sales Revenue

Net Profit Margin ratio (%)

=

Net Profit for the period / Total Revenue

Current ratio (times)

=

Current Assets / Current Liabilities

Quick ratio (times)

=

(Cash and Cash equivalent + Short-term investments + Accounts Receivable) / Current Liabilities

Total Liabilities / Total Equity (times)

=

Total Liabilities / Total Equity

Net Debt/ Equity (times)

=

Net Debt / Total Equity

Long term loan/ Total Equity (times)

=

Long Term Loan / Total Equity

Long term loan

=

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

Interest Coverage ratio (times)

=

EBITDA / Interest Expenses (Finance costs) (2)

Long term loan/ Total Capitalization (%)

=

Long Term Loan / Total Capitalization

Total Capitalization

=

Long Term Loan + Total Equity

Net Debt

=

Interest bearing debt - Cash and cash equivalent - Short-term investments

Remark(1) Excluding depreciation and amortization.

(2) Including finance costs that Thaioil Treasury Center Co., Ltd. paid to bondholders.

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4. Industry Outlook for the Third Quarter and the Fourth Quarter of 2020

Crude oil and refinery market outlook

In Q3/20, crude oil prices are likely to increase from Q2/20 after the governments of many countries have begun easing lockdown measures despite high rate of new COVID-19 cases resulting in recovering oil demand from domestic transportation and industrial sector following extremely sluggish numbers in Q2/20. According to IEA report as of July'2020, oil demand in Q3/20 is expected to improve to 94.3 million barrels per day compared to Q2/20 at 82.9 million barrels per day. Moreover, oversupply situation of crude oil market is likely to alleviate after OPEC and its allies agreed to cut crude oil production by 9.7 million barrels per day during May-July 2020 while U.S. crude oil production continually declined following lower U.S. crude oil rig counts.

In Q4/20, crude oil prices are likely to slightly increase from Q3/20 due to improving oil demand for heating during the winter and resuming transportation and industrial sectors following economic stimulus measures. However, oil prices are expected to be capped by rising crude oil supply after OPEC and its allies reduced their production cut from 9.7 million barrels per day during May-July'2020 to

7.7 million barrels per day in August'2020 until the end of 2020. Moreover, overall global economy in 2020 is expected to remain under pressure from both business and manufacturing sectors which have been heavily affected by the COVID-19 outbreak. According to International Monetary Fund (IMF), global GDP in 2020 is forecasted to contract by 4.9%.

Gross Refinery Margin (GRM) in Q3/20 is likely to be similar to Q2/20 due to improving petroleum products demand after easing lockdown measures in many countries around the world. The resumption in travelling and public activities will result in recovering gasoline demand, while jet fuel demand starts to recover gradually from returned domestic flights. Therefore, it is expected that global product inventory will start to draw down in 2H/20. Moreover, high sulfur fuel oil (HSFO) product is likely to be supported by increasing demand for power sector in summer especially in the Middle East. However, there are still some concerns over the second wave of COVID-19 pandemic affecting petroleum product demand once again if many countries fail to control the outbreak.

In Q4/20, Gross Refinery Margin (GRM) is expected to be supported by continually rising petroleum product demand after the COVID- 19 situation has been resolved. Moreover, gasoline and diesel demand especially in industrial and transportation sectors will be increasing QoQ mainly from economic stimulus policies of many countries around the world that promote investment and accelerate employment rates. However, jet fuel spread over Dubai crude price is likely to remain under pressure from sluggish demand recovery amid delayed recovery in international flights. (Source: FGE-Asia Pacific Petroleum Monthly, July 2020, Energy Aspects Oil Fundamentals, S&P Global Platts Asia-Pacific Oil Market Forecast, July 2020 and International Energy Agency (IEA), July 2020)

Aromatics Market Outlook

In Q3/20, paraxylene (PX) market is expected to be softer than Q2/20 due to rising new PX supply in China which is expected to be operated in late Q3/20 with the production capacity of 1 million tons per annum as well as high PX inventory in China. However, PTA plant addition in China with the production capacity of approximately 2.5 million tons per annum in Q3/20 will also help reduce PX oversupply situation.

In Q4/20, PX market is expected to be better than Q3/20 due to seasonal demand for downstream products such as clothes and rising PX demand from new PTA plants addition in China with the production capacity of 4.8 million tons per annum in the late of 2020. (Source: WMChemicals Monthly Report, July 2020)

22

For benzene (BZ) market in Q3/20, it is expected to be weaker than Q2/20 due to new supply addition in China which is expected to be operated in late of Q3/20 with the production capacity of 0.3 million tons per annum as well as high BZ inventory in China.

In Q4/20, BZ market is expected to improve from Q3/20 due to relieved the COVID-19 pandemic situation and gradually recovering global economic situation. Moreover, BZ demand from downstream products such Styrene Monomer (SM) is expected to be better from rising SM plants scheduled to be operated in Q3/20. (Source: IHS Aromatics Monthly Report, July 2020)

For toluene (TL) market in Q3/20, it is forecasted to be softer than Q2/20 as TL demand for PX and BZ production remains under pressure amid over supply situation. Moreover, TL product inventory in China is still at high level despite improving TL demand for gasoline blending.

In Q4/20, TL market is likely to be better than Q3/20 due to improving TL demand tracking with recovering PX and BZ market and resuming economic activities after relieved the COVID-19 pandemic situation. However, TL demand for gasoline blending is expected to be slowing down in early Q4/20 after U.S. driving season ends. (Source: IHS Aromatics Monthly Report, July 2020)

LAB Market Outlook

In Q3/20, LAB market is expected to be weaker than Q2/20 driven by softer demand for washing products during monsoon season especially in India and Southeast Asia as well as higher supply from lower LAB plants maintenance shutdowns. However, ongoing tight supply situation from the previous quarter will limit the downside of LAB market. (Source: ICIS LAB Weekly Report, July 2020)

In Q4/20, LAB market is expected to be decreasing compared to Q3/20 pressured by a new LAB plant addition in Saudi Arabia with the production capacity of 0.12 million tons per annum which is scheduled to be operated in Q4/20. In addition, rising LAB supply after many refineries resume their Kerosene production to normal during post-COVID-19 resulting in higher LAB feedstock will also pressure the LAB market. However, LAB market will be supported by increasing LAB demand after monsoon season ends and reducing supply from plant maintenance shutdowns in Korea and Taiwan. (Source: ICIS LAB Weekly Report, July 2020)

Lube Base Oil market outlook

In Q3/20, lube base oil market is expected to be softer than Q2/20 driven by rising crude price trend as well as weak lubricant oil demand during rainy season and weak economic situation from the spread of COVID-19. However, lower supply from higher annual lube base oil plants maintenance compared to the previous quarter will help limit downside of lube base oil market. (Source: ICIS Base Oil Weekly Report, July 2020 and Argus Base Oil Weekly Report, July 2020)

In Q4/20, lube base oil market is expected to be slightly softer than Q3/20 pressured by rising crude oil price trend and sluggish regional demand amid limited economic activities during the winter. Moreover, rising supply of lube base oil plants in the region after completing annual maintenance shutdowns will also pressure the lube base oil market. However, lower price competition between lube base oil group I and group II due to higher feedstock price linked with diesel product will help limit downside for lube base oil group I market. (Source: ICIS Base Oil Weekly Report, July 2020 and Argus Base Oil Weekly Report, July 2020)

Bitumen market outlook

In Q3/20, bitumen market is expected to be slightly better than Q2/20 due to tight bitumen supply in the region from ongoing low refinery run rate in Asia and recovering bitumen import from Indonesia after Ramadan season ends and approaching summer season resulting in increasing road construction and road repair activities. However, rising crude oil price trend and reducing bitumen demand

23

in Asia during rainy season, which normally reduces road construction and repair activities, would cap the upside for bitumen market. (Source: Argus Bitumen Weekly Report, July 2020)

In Q4/20, bitumen market is expected to be softer than Q3/20 due to rising crude oil price trend and slowing bitumen demand in Indonesia during rainy season. However, bitumen demand of other countries in the region is expected to be improving from many road construction activities after rainy season and ahead of the year-end amid recovering economy. (Source: Argus Bitumen Weekly Report, July 2020)

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5. Appendix

5.1 Summary of Approved Investment Plan

Thaioil and Subsidiaries have an investment plan from 2020 to 2024 with total expenditure of US$ 3,513 million which mostly consists of CFP project (Clean Fuel Project) expenditure of US$ 3,292 million. An estimated budgeting for the investment plan (2020-2024) is summarized in a table below;

25

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

The purpose of CFP project is to enhance the competitiveness of the Company by improving its production efficiency to increase the product value by making it more environmentally-friendly, and to increase its oil refining capacity to allow the refineries to handle more types and greater quantities of crude oils, which create an economies of scale and a reduction of raw material costs. Moreover, the project also enhance the country's long-term energy stability and economic development, with the investment project value of approximately US$ 4,825 million. The CFP has been approved by the Company's Extraordinary General Meeting of Shareholders on

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

However, on 10 April 2019, the 2019 Annual General Meeting of Shareholders resolved to approve the disposal of assets to transfer ownership in the Energy Recovery Unit (ERU) which is a part of the CFP and the execution of the Relevant Agreements including the asset sale and purchase agreement, fuel and utilities supply agreement, power purchase agreement, operation and maintenance services agreement and land sub-lease agreement as well as the novation agreement with Global Power Synergy Public Company Limited (GPSC) or wholly owned subsidiary of GPSC (ERU Project). The ERU Project has significant aims to reduce investment costs of the CFP, enhance liquidity and efficiently support future investment; furthermore, the transaction will boost the return on investment of the CFP while the Company can continue to manage and oversee the implementation of the CFP and ERU during the construction phase and the operation phase in respect of the safety, reliability and plant optimization of the projects as originally planned

5.3 Plan of Scheduled Turnaround Maintenance in 2020

Production Unit

Reason

Period

LAB plant*

Major Turnaround

16 July - 29 August

(Approximately 45 days)

Remark*nameplate capacity approximately 120,000 ton per annum

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Thai Oil pcl published this content on 10 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 August 2020 06:03:11 UTC