12. Financial Position and Operational performance

12.1 Financial statements

Auditor

+---------------------+------------------+-------+---------------------+
| Year                | Name of auditor  | CPA   | Auditing firm       |
|                     |                  | no.   |                     |
+---------------------+------------------+-------+---------------------+
| 2007/08             | Mr.Narong        | 3315  | Ernst & Young       |
|                     | Puntawong        |       |                     |
| (Apr 1,2007- Mar    |                  |       |                     |
| 31,2008)            |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 2006/2007           | Mr.Pisit         | 2803  | KPMG Phoomchai      |
|                     | Chiwaruangroch   |       | Audit Ltd.          |
| (Apr 1, 2006 – Mar  |                  |       |                     |
| 31, 2007)           |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 2005/2006           | Mr. Vichien      | 3183  | KPMG Phoomchai      |
|                     | Thamtrakul       |       | Audit Ltd.          |
| (Apr 1, 2005 – Mar  |                  |       |                     |
| 31, 2006)           |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 2004/2005           | Mr. Vichien      | 3183  | KPMG Phoomchai      |
|                     | Thamtrakul       |       | Audit Ltd.          |
| (Apr 1, 2004 – Mar  |                  |       |                     |
| 31, 2005)           |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 2003/2004           | Mr. Vichien      | 3183  | KPMG Phoomchai      |
|                     | Thamtrakul       |       | Audit Ltd.          |
| (Apr 1, 2003 – Mar  |                  |       |                     |
| 31, 2004)           |                  |       |                     |
+---------------------+------------------+-------+---------------------+

Auditor’s report

In the Auditor’s report on the financial statements for all the years
from the years ended March 31, 2003 upto the year ended March 31, 2008,
the Auditors have given an unqualified opinion that the financial
statements were fairly presented and prepared in accordance with
generally accepted accounting principles.

For the year 2005/2006, 2006/2007 and 2007/2008, the consolidated
financial statements of PTL and its subsidiary companies are used for
comparison. PTL set up subsidiaries, namely Polyplex (Singapore) Pte.
Ltd. (PSPL) in July 2004, Polyplex Europa Polyester Film Sanayi Ve
Ticaret Anonim Sirketi (PE) in September 2004 and Polyplex (Americas)
Inc. in January 2006. Thus, for convenience in reference, the term ‘the
Company’ referred to hereafter in the financial statements will cover
both the Company and its subsidiaries.

  --------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------
  Polyplex                                                                                                                                             
  (Thailand) Plc.                                                                                                                                      

  Balance Sheet                                                                                                                                        

  Unit: Bt. 000’s                                                                                                                                      

                  Unconsolidated                                                          Consolidated                                                 

                  2005/2006                 2006/2007              2007/2008              2005/2006               2006/2007              2007/2008     

                  April-March               April-March            April-March            April-March             April-March            April-March   

                  Amount           %        Amount        %        Amount        %        Amount         %        Amount        %        Amount        %

  Assets                                                                                                                                                

  Current Assets                                                                                                                                        

   Cash and cash  53,458           1.16     31,154        0.66     9,117         0.16     164,139        2.93     129,638       2.22     86,878        1.05
  equivalents                                                                                                                                          

   Investment in  -                -        -             -        -             -        -              -        -             -        -             -
  marketable                                                                                                                                           
  securities                                                                                                                                           

   Accounts       797,090          17.32    589,476       12.47    943,815       16.59    647,552        11.56    788,529       13.51    1,441,559     17.37
  receivable                                                                                                                                           

   Inventories    436,363          9.48     276,095       5.84     225,976       3.97     871,240        15.55    662,144       11.34    766,603       9.24

   Other current  109,577          2.38     86,208        1.82     53,918        0.95     130,165        2.32     99,589        1.71     81,556        0.98
  assets                                                                                                                                               

  Total Current   1,396,488        30.35    982,932       20.80    1,232,826     21.67    1,813,096      32.36    1,679,899     28.78    2,376,596     28.64
  Assets                                                                                                                                               

  Non-Current                                                                                                                                           
  Assets                                                                                                                                               

   Investment in  1,186,452        25.79    1,745,028     36.93    2,152,858     37.85    -              -        -             -        -             -
  subsidiary                                                                                                                                           

   Land, premises 2,010,874        43.71    1,967,163     41.63    2,285,942     40.19    3,764,846      67.20    3,996,505     68.46    5,898,890     71.08
  and                                                                                                                                                  
  equipment-net                                                                                                                                        

  Intangible      -                -        -             -        -             -        -              -        7,247         0.12     7,225         0.09
  assets-net                                                                                                                                           

   Deferred       2,940            0.06     -             -        -             -        2,940          0.05     -             -        -             -
  expenses-net                                                                                                                                         

  Other non       4,093            0.09     30,188        0.64     16,575        0.29     21,176         0.38     154,268       2.64     16,622        0.20
  current assets                                                                                                                                       

  Total           3,204,359        69.65    3,742,379     79.20    4,455,375     78.33    3,788,962      67.64    4,158,020     71.22    5,922,738     71.36
  Non-current                                                                                                                                          
  Assets                                                                                                                                               

  Total Assets    4,600,847        100.00   4,725,312     100.00   5,688,201     100.00   5,602,058      100.00   5,837,919     100.00   8,299,334     100.00
  --------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

  --------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------
  Polyplex                                                                                                                                             
  (Thailand) Plc.                                                                                                                                      

  Balance Sheet                                                                                                                                        

  Unit: Bt. 000’s                                                                                                                                      

                  Unconsolidated                                                          Consolidated                                                 

                  2005/2006                 2006/2007              2007/2008              2005/2006               2006/2007              2007/2008     

                  April-March               April-March            April-March            April-March             April-March            April-March   

                  Amount           %        Amount        %        Amount        %        Amount         %        Amount        %        Amount        %

  Liabilities &                                                                                                                                         
  Shareholders'                                                                                                                                        
  Equity                                                                                                                                               

  Current                                                                                                                                               
  Liabilities                                                                                                                                          

   Accounts       434,509          9.44     418,490       8.86     522,028       9.18     471,522        8.42     614,153       10.52    898,019       10.82
  payable                                                                                                                                              

   Long-term      -                -        41,224        0.87     114,832       2.02     277,595        4.96     155,740       2.67     252,939       3.05
  loans-due                                                                                                                                            
  within one year                                                                                                                                      

   Short-term                      -        -             -        18,371        0.32     23,652         0.42     238,052       4.08     77,465        0.93
  loans from                                                                                                                                           
  financial                                                                                                                                            
  institutions                                                                                                                                         

   Other current  45,158           0.98     28,318        0.60     36,791        0.65     121,259        2.16     73,324        1.26     87,396        1.05
  liabilities                                                                                                                                          

  Total current   479,667          10.43    488,031       10.33    692,022       12.17    894,028        15.96    1,081,270     18.52    1,315,818     15.85
  liabilities                                                                                                                                          

  Non-current                                                                                                                                           
  Liabilities                                                                                                                                          

  Long-term       522,297          11.35    616,107       13.04    1,077,118     18.94    1,225,141      21.87    1,232,807     21.12    2,652,766     31.96
  loans-net of                                                                                                                                         
  amount due                                                                                                                                           
  within one year                                                                                                                                      

  Other           -                -        -             -        -             -        71             0.00     1,483         0.03     1,869         0.02
  non-current                                                                                                                                          
  liabilities                                                                                                                                          

  Loss on         129,396          2.81     -             -        -             -        -              -        -             -        -             -
  investment in                                                                                                                                        
  subsdiaries                                                                                                                                          
  exceeding                                                                                                                                            
  carrying amount                                                                                                                                      

  Total           1,131,360        24.59    1,104,138     23.37    1,769,139     31.10    2,119,240      37.83    2,315,560     39.66    3,970,453     47.84
  Liabilities                                                                                                                                          

  Shareholders                                                                                                                                          
  Equity                                                                                                                                               

  Issued &                                                                                                                                              
  Paid-up Share                                                                                                                                        
  Capital                                                                                                                                              

  Preferred       -                0.00     -             0.00     -             0.00     -              0.00     -             0.00     -             0.00
  shares                                                                                                                                               

  Ordinary shares 800,000          17.39    800,000       16.93    800,000       14.06    800,000        14.28    800,000       13.70    800,000       9.64

  Premium on      1,370,460        29.79    1,370,460     29.00    1,370,460     24.09    1,370,460      24.46    1,370,460     23.48    1,370,460     16.51
  ordinary shares                                                                                                                                      

   Advance                         0.00     -                      -                                     0.00     -                      -              
  towards future                                                                                                                                       
  paid-up capital                                                                                                                                      

  Translation     (47,320)         -1.03    -             0.00     -             0.00     (47,320)       -0.84    (126,291)     -2.16    2,523         0.03
  adjustment                                                                                                                                           

  Retained        1,346,347        29.26    1,450,714     30.70    1,748,602     30.74    1,346,347      24.03    1,464,189     25.08    2,141,739     25.81
  earnings                                                                                                                                             
  (deficits)                                                                                                                                           

  Total           3,469,487        75.41    3,621,174     76.63    3,919,062     68.90    3,469,487      61.93    3,508,358     60.10    4,314,723     51.99
  Shareholders'                                                                                                                                        
  Equity                                                                                                                                               

  Minority        -                0.00     -             0.00     -             0.00     13,331         0.24     14,002        0.24     14,158        0.17
  Interest                                                                                                                                             

  Total           4,600,847        100.00   4,725,312     100.00   5,688,201     100.00   5,602,058      100.00   5,837,919     100.00   8,299,334     100.00
  Liabilities and                                                                                                                                      
  Shareholders'                                                                                                                                        
  Equity                                                                                                                                               
  --------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

  ---------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------
  Polyplex                                                                                                                                              
  (Thailand) Plc.                                                                                                                                       

  Statement of                                                                                                                                          
  Income and                                                                                                                                            
  Retained                                                                                                                                              
  Earnings                                                                                                                                              

  Unit: Bt. 000’s                                                                                                                                       

                   Unconsolidated                                                          Consolidated                                                 

                   2005/2006                 2006/2007              2007/2008              2005/2006               2006/2007              2007/2008     

                   April-March               April-March            April-March            April-March             April-March            April-March   

                   Amount           %        Amount        %        Amount        %        Amount         %        Amount        %        Amount        %

                                                                                                                                                         

  Revenues                                                                                                                                               

  Net sales        3,283,512        96.23    3,324,285     98.81    3,531,976     99.08    3,299,991      96.28    4,718,570     98.12    6,398,679     98.99

  Other revenues   80,560           2.36     65,508        1.95     77,664        2.18     94,120         2.75     90,263        1.88     111,212       1.72

  Gain/(loss) on   47,946           1.41     (25,503)      (0.76)   (44,797)      (1.26)   33,339         0.97     -             -        (45,672)      (0.71)
  foreign exchange                                                                                                                                      

  Total Revenues   3,412,018        100.00   3,364,289     100.00   3,564,843     100.00   3,427,450      100.00   4,808,832     100.00   6,464,218     100.00

  Costs and                                                                                                                                              
  Expenses                                                                                                                                              

  Cost of sales    2,455,589        71.97    2,850,734     84.74    2,764,455     77.55    2,416,220      70.50    3,854,393     80.15    4,949,656     76.57

  Selling and      253,671          7.43     288,263       8.57     317,808       8.92     420,966        12.28    525,861       10.94    597,585       9.24
  administrative                                                                                                                                        
  expenses                                                                                                                                              

  Loss from        125,926          3.69     -             -        -             -        -              -        -             -        -             -
  investment in                                                                                                                                         
  subsidiary                                                                                                                                            

  Total Expenses   2,835,186        83.09    3,138,997     93.30    3,082,264     86.46    2,837,186      82.78    4,380,254     91.09    5,547,242     85.81

  Profit (loss)    576,832          16.91    225,293       6.70     482,579       13.54    590,264        17.22    428,579       8.91     916,977       14.19
  before interest                                                                                                                                       
  expenses                                                                                                                                              

  Interest         (15,858)         (0.46)   (37,457)      (1.11)   (48,691)      (1.37)   (25,583)       (0.75)   (80,811)      (1.68)   (91,331)      (1.41)
  expenses                                                                                                                                              

  Income Tax       -                -        -             -        -             -        (5,013)        (0.15)   (4,381)       (0.09)   (9,297)       (0.14)

  Net profit       560,974          16.45    187,836       5.58     433,889       12.17    559,668        16.32    343,387       7.14     816,349       12.63
  (loss) after                                                                                                                                          
  income tax                                                                                                                                            

  Net (profit      -                -        -             -        -             -        1,306          0.04     (1,545)       (0.03)   (2,799)       (0.04)
  )/loss of                                                                                                                                             
  minority                                                                                                                                              
  interest                                                                                                                                              

  Goodwill         -                -        -             -        -             -        -              -        -             -        -             -
  ammortised                                                                                                                                            

  Net profit       560,974          17.37    187,836       5.58     433,889       12.17    560,974        16.37    341,842       7.11     813,551       12.59
  (loss)                                                                                                                                                

  Earnings         0.70             -        0.23          -        0.54          -        0.70           -        0.43          -        1.02          -
  (losses) per                                                                                                                                          
  share (Bt.)                                                                                                                                           
  ---------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

  ---------------------- ---------------- ------------- ------------- -------------- ------------- -------------
  Polyplex (Thailand)                                                                              
  Public Company Limited                                                                           

  Cash Flow Statement                                                                              

  Unit : Bt. 000’s                                                                                 

                         Unconsolidated                               Consolidated                 

                         2005/2006        2006/2007     2007/2008     2005/2006      2006/2007     2007/2008

                         April-March      April-March   April-March   April-March    April-March   April-March

                                                                                                    

  Cash flow from                                                                                    
  operating activities                                                                             

  Net profit (loss)      560,974          187,836       433,889       560,974        341,842       813,551

  Adjustment to                                                                                     
  reconcile net profit                                                                             
  of net cash provided                                                                             
  by operating                                                                                     
  activities                                                                                       

  Depreciation and       126,622          130,307       130,698       155,609        223,802       241,788
  amortization                                                                                     

  Increase (decrease)    -                308           (100)         -              308           251
  allowance for doubtful                                                                           
  debts                                                                                            

  Allowance for          -                -             -             -              3,041         (3,041)
  diminution in value of                                                                           
  inventories (reversal)                                                                           

  Dividend income        -                -             (4,315)       -              -             -

  Interest Expense       15,858           37,457        48,691        25,583         80,811        91,331

  Income Tax expense     -                -             -             5,013          4,381         9,297

  Gain on disposal of    (244)            (1)           (155)         (244)          (1)           (155)
  property, plant and                                                                              
  equipment                                                                                        

  Unrealized losses      18,240           6,237         30,057        10,662         6,237         35,710
  (gains) on foreign                                                                               
  exchange                                                                                         

  Loss from subsidiary   125,926          -             -             -              -             -

  Net loss of minority   -                -             -             (1,306)        1,545         2,799
  interest                                                                                         

  Profit (Loss) from     847,376          362,144       638,765       756,291        661,965       1,191,530
  operation before                                                                                 
  changes in operating                                                                             
  assets and liabilities                                                                           

  Decrease (Increase) in                                                                            
  operating assets                                                                                 

  Accounts receivable    (179,287)        198,379       (367,426)     23,669         (150,212)     (679,532)

  Balance due from a     -                -             -             14,079         188           19,916
  related company                                                                                  

  Inventories            (130,674)        160,268       50,119        (497,591)      206,056       (101,418)

  Other current assets   (35,969)         23,369        32,290        (33,631)       30,577        18,785

  Other non-current      (2,564)          (23,156)      (2,219)       (10,727)       (139,072)     137,646
  assets                                                                                           

  Increase (Decrease) in                                                                            
  operating liabilities                                                                            

  Accounts payable       8,835            (44,541)      89,025        (72,404)       95,651        193,726

  Other current          (58,231)         16,329        1,945         (13,714)       8,261         3,018
  liabilities                                                                                      

  Income tax paid        -                -             -             (129)          (6,954)       (4,771)

  Other non- current     -                -             -             71             1,412         386
  liabilities                                                                                      

  Cash flow provided     449,486          692,791       442,498       165,914        707,871       779,286
  from (used in)                                                                                   
  operating activities                                                                             

  Polyplex (Thailand)                                                                              
  Public Company Limited                                                                           

  Cash Flow Statement                                                                              

  Unit : Bt. 000’s                                                                                 

                         Unconsolidated                               Consolidated                 

                         2005/2006        2006/2007     2007/2008     2005/2006      2006/2007     2007/2008

                         April-March      April-March   April-March   April-March    April-March   April-March

  Cash flow from                                                                                   
  Investing activities                                                                             

  Acquisition of         -                -             4,315         (20,497)       -             -
  subsidiary                                                                                       

  Other Long Term        (748,421)        -             -             -              -             -
  Investment                                                                                       

  Repayment of accounts  -                -             15,833        -              -             -
  payable on purchase of                                                                           
  fixed assets                                                                                     

  Investment in          100,763          (500,120)     (407,830)     100,763        -             -
  marketable securities                                                                            

  Purchase of fixed      (160,753)        (91,075)      (431,600)     (1,663,381)    (480,384)     (1,872,461)
  assets                                                                                           

  Payment of intangible  -                -             -             (2,528)        (309)         (1,873)
  asset                                                                                            

  Sale of fixed assets   969              25            234           969            969           1,205

  Increase in Investment (41,660)         -             -             -              -             -
  in subsidiary                                                                                    

  Net cash used in       (849,102)        (591,170)     (819,048)     (1,584,674)    (479,724)     (1,873,129)
  investing activities                                                                             

  Cash flow from                                                                                    
  financing activities                                                                             

  Interest Paid          (13,046)         (37,305)      (44,585)      (22,771)       (80,659)      (87,225)

  Increase (Decrease) in -                -             18,371        23,652         214,400       (178,480)
  loans from financial                                                                             
  institutions                                                                                     

  Dividend Paid          (280,000)        (224,000)     (136,000)     (280,000)      (224,000)     (136,000)

  Dividend paid to       -                -             -             -              -             (1,692)
  minority shareholders                                                                            

  Increase/(decrease) in 515,147          137,380       516,727       1,495,585      (111,843)     1,517,158
  long-term loans                                                                                  

  Investment of minority -                -             -             6,552          -             -
  interest                                                                                         

  Cash provided from     222,101          (123,926)     354,513       1,223,018      (202,102)     1,113,761
  financing activities                                                                             

  Currency Translation   -                -             -             (41,970)       (60,546)      (62,679)
  changes                                                                                          

  Increase in cash and   (177,515)        (22,305)      (22,037)      (237,712)      (34,501)      (42,760)
  cash equivalents                                                                                 

  Cash and cash          230,973          53,458        31,154        391,385        164,139       129,638
  equivalents at the                                                                               
  beginning of period                                                                              
  (April 1)                                                                                        

  Effect of exchange     -                -             -             10,466         -             -
  rate changes on                                                                                  
  balances held in                                                                                 
  foreign currencies                                                                               

  Cash and Cash          53,458           31,154        9,117         164,139        129,638       86,878
  equivalents at the end                                                                           
  of period (March 31)                                                                             
  ---------------------- ---------------- ------------- ------------- -------------- ------------- -------------

  ----------------- -------- ---------------- ------------- ------------- -------------- ------------- -------------
  Polyplex                                                                                             
  (Thailand) Public                                                                                    
  Company Limited                                                                                      

  Ratios                                                                                               

                             Unconsolidated                               Consolidated                 

                             2005/2006        2006/2007     2007/2008     2005/2006      2006/2007     2007/2008

                             April-March      April-March   April-March   April-March    April-March   April-March

  Liquidity Ratios                                                                                      

  Current ratio     (time)   2.91             2.01          1.78          2.03           1.55          1.81

  Quick ratio       (time)   1.77             1.27          1.38          0.91           0.85          1.16

  Cash flow current (time)   0.89             1.43          0.75          0.23           0.72          0.65
  ratio                                                                                                

  Receivable        (time)   4.60             4.79          4.61          5.17           6.57          5.74
  current ratio                                                                                        

  Avg. debt         (day)    78.20            75.08         78.14         69.65          54.78         62.73
  collection period                                                                                    

  Inventory         (time)   47.97            104.31        126.67        20.26          23.16         32.13
  turnover period                                                                                      

  Avg. selling      (day)    7.50             3.45          2.84          17.77          15.54         11.20
  period                                                                                               

  Payable current   (time)   5.71             6.92          6.37          5.38           7.42          7.38
  ratio                                                                                                

  Loan repayment    (day)    63.09            52.04         56.52         66.88          48.50         48.76
  period                                                                                               

  Cash cycle        (day)    22.61            26.49         24.46         20.54          21.83         25.18

  Profitability                                                                                         
  Ratios                                                                                               

  Gross profit      (%)      25.21%           14.25%        21.73%        26.78%         18.31%        22.65%
  margin                                                                                               

  Operating profit  (%)      17.49%           5.57%         12.73%        14.02%         7.17%         13.31%
  margin                                                                                               

  Other profit      (%)      2.36%            1.93%         2.15%         2.75%          1.88%         1.71%
  margin                                                                                               

  Cash to profit    (%)      63.96%           276.24%       83.91%        28.11%         165.17%       80.95%
  margin                                                                                               

  Net profit margin (%)      16.44%           5.54%         12.02%        16.37%         7.11%         12.50%

  Return on equity  (%)      16.77%           5.30%         11.51%        16.74%         9.76%         20.72%

  Efficiency Ratios                                                                                     

  Return on assets  (%)      13.44%           4.03%         8.33%         11.98%         5.98%         11.51%

  Return on fixed   (%)      34.48%           15.99%        26.55%        23.80%         14.56%        21.30%
  assets                                                                                               

  Asset turnover    (time)   0.82             0.73          0.69          0.73           0.84          0.92

  Financial Policy                                                                                      
  Ratios                                                                                               

  Debt to equity    (time)   0.33             0.30          0.45          0.61           0.66          0.92
  ratio                                                                                                

  Interest coverage (time)   44.36            9.49          12.60         29.21          8.05          12.66
  ratio                                                                                                

  Commitment        (time)   2.80             7.61          0.94          0.10           0.93          0.38
  coverage ratio                                                                                       
  (cash basis)                                                                                         

  Pay out ratio     (%)      39%              40%           40%           39%            40%           40%
  ----------------- -------- ---------------- ------------- ------------- -------------- ------------- -------------

12.2 Explanation and analysis of operational performance and financial
status

12.2.1 Operational performance

PTL, a subsidiary of PCL, was incorporated on March 26, 2002 to engage
in the production and distribution of PET film (Polyethylene
Terephthalate Film or Polyester Film) mainly for export markets focusing
on packaging, industrial and electrical segments. PTL commenced
operations from its first production line on April 2, 2003 and the
second production line on November 12 of the same year. PTL’s factory is
situated in Siam Eastern Industrial Park, Rayong on a land area of 20
rai 22 sq. wah which was later expanded by another land area of 8 rai
28.9 sq.wah for implementation of the captive pet resin project.Another
plot of land with an area of 35 rai, 2 nang and 54.80 square wah was
bought opposite to the factory, where PTL’s Extrusion Coating project
started commercial production in April’08. The future expansion projects
of PTL are expected to come up in the vacant part of the new land. PTL
was awarded the ISO 9001:2000 and the ISO14001:2004 accreditation in
December 2003 and May 2004 respectively for its film plants and similar
certification has been received subsequently at the time of extension in
March 2007 for its Resin and Metallizer plants.

The Company has targeted to become one of the world market leaders in
PET film by continuously expanding its market share through regular
expansions in capacity. With the start up of the second thin PET film
line in Turkey in May’08, Polyplex group has become one of the major
global players in the PET film industry with a capacity of more than
100,000 MT per annum. The company has regularly expanded its customer
base and is getting into new product lines, such as metallized film,
extrusion coated films and other specialty films and is now making
investments in other related product diversification projects such as
CPP film etc.. In order to achieve these goals, it has set out clear
business strategies, i.e. 1) focus on product development and technical
services to penetrate high growth and high margin markets, 2) Cost
leadership, 3) boosting delivery efficiency through focus on distributed
manufacturing and logistics, and 4) diversifying the product lines 5)
Customer satisfaction through supply of consistent quality products

Revenues

PTL’s total sales revenue is mainly driven by Exports, with 80-85% of
its total sales revenue coming from exports. It is apparent that PTL
largely concentrates on the overseas markets, fostered by its parent
company’s longstanding relationship with the overseas customers and
experience in the export markets for more than 20 years which helped
build up its name recognition and reliability among these customers.

Table illustrating PTL’s sales revenue film export and domestic sales of
Film and chips

­

  -------------- ---------- -------- ---------- -------- ---------- --------
  Market         2005/06             2006/07             2007/08    

                 Bt.        %        Bt.        %        Bt.        %
                 million             million             million    

  Exports        2,767.78   84.29    2,828.11   85.07    2,890.14   81.83

  Domestic sales 515.73     15.71    496.18     14.93    641.83     18.17

  Total          3,283.51   100.00   3,324.28   100.00   3,531.98   100.00
  -------------- ---------- -------- ---------- -------- ---------- --------

In the year 2007/2008 (April 1- March 31, 2008), PTL achieved total
sales revenues of Bt. 3,532 million, an increase of Bt. 208 million over
the corresponding previous year. Major features of sales revenue in
2007/2008 are as follows:

-   The revenue from sale of film has gone up from Bt. Bt. 2,633.22
    million in 2006-07 to Bt. 2,882 million in 2007-08, an increase of
    about 9.5% from previous year which is attributable to increase in
    volumes coming from productivity improvements in the plain film
    plant ( from an average of 94.5% in 2006-07 to 102.5% in 2007-08) as
    well as significantly higher productivity levels in the Metallised
    film plant ( from an average of 74% in 2006-07 to 90% in 2007-08)
    and better realizations due to higher proportion of value added
    products like Metallised films in the sales portfolio. The increase
    could have been much higher if not for the strong baht appreciation
    against the USD, by about 9-10% as compared to 2006-07. Since PTL’s
    revenue is mainly from exports, the sales revenue in baht terms have
    declined although the average USD pricing of PET films have improved
    by about 20 cents in plain film and about 25-30 cents in Metallized
    films. The value additions have improved by about 10 cents/kg in
    plain film and metallized film by about 20 cents/kg.Below is a
    comparison of quarterly average selling prices and value addition on
    plain and metallized films of PTL for 2007-08 which illustrate the
    improvements in 2007-08 which translated into higher net
    profitability for the year.

  []

  []

-   In 2007/2008, PTL generated revenue from sale of surplus polyester
    chips to its subsidiary in Turkey and also made sales to other
    customers in the export as well as domestic market. These export
    sales contributed Bt. 545.33 million to the total revenue of PTL.
    The revenue generated from sale of chips in domestic market was Bt.
    104.74 million.

Expenses

The key elements of PTL’s cost structure are raw materials (PTA & MEG),
packing, electricity & fuel, depreciation, staff cost and selling &
administrative expenses.

Raw material cost made up 69.10% of total expenses in 2007-08, as
compared to 68.85% in 2006-07 followed by packing costs of 4.08%, which
has reduced from 4.48% in the previous year, electricity & water of
3.83% as compared with 3.93% in the previous year, depreciation on
building, plant and machinery of 4.03% as compared with 3.91% in the
previous year and staff costs of 2.94% as compared with 2.61% in
2006-07.

The selling & administrative expenses amounted to Bt. 317.81 million or
10.31% of total expenses as compared with Bt. 288.26 million or 9.18% in
2006-07. They principally included the shipment costs for the exported
products, freight charges, inland insurance on domestic sales as well as
other general administrative expenses.

The movement in the per unit cost of raw material is a global phenomenon
in the PET film industry resulting from the movement in crude oil prices
and the demand-supply situation for PTA and MEG. The raw material cost
in 2007-08 was Bt 38.49 as against Bt. 40.68/kg in 2006-07. Despite the
increase in USD Raw material prices in 2007-08, there is a drop in raw
material cost per kg in baht terms, as the price increase is completely
offset by the appreciation of Baht against the USD. Since the price
fixation for the raw materials is in USD, the appreciation of Baht has
benefited in terms of lower raw material cost in Baht terms.

The other variable cost which includes packing cost was Bt.3.05 /kg in
2007-08 as against Bt. 3.67/kg in 2006-2007, which is an improvement of
about 17% on account of efficiency in packing material consumption and
other cost saving measures adopted. The per unit cost fixed costs have
reduced to Bt. 11.98 /kg in 2007-08 as against Bt. 13.56/kg in 2006-07
mainly on account of significant savings in stores and spares
consumption resulting from better plant efficiency and savings in power
and fuel expenses due to cost saving measures like use of Natural gas as
fuel etc . Overall, the unit cost of sales has decreased by about 11%
primarily due to cost saving measures and also due to lower raw material
cost in baht terms as explained above.

During the year 2007-08, PTL incurred an extraordinary net FX loss of
Bt. 50.2 million as against Bt. 25.5 million in the previous year. FX
losses were mainly on account of foreign exchange fluctuation on USD
export debtors with the Baht appreciating against the US dollar and also
the losses on restatement of long term Euro loans and Euro denominated
liabilities for import creditors due to appreciation of Euro against
baht. However, this loss was partially offset by some gain on
restatement of USD loans and export debtors denominated in Euro,
resulting in an overall Net FX loss of Bt. 50.2 million. Out of the
entire net FX loss, about Bt. 30 million is net unrealized loss relating
to restatement of Euro loans, Euro import creditors and USD export
debtors.

Gross profit

PTL had a gross profit margin of 21.73% in 2007-08, which is higher than
the 14.25% in the previous year due to improvement in sales realizations
as the industry has started recovering from the downcycle witnessed in
the previous year and also due to increase in share of value added films
in the sales portfolio. The operating profit margin has also increased
to 12.73% from a 5.57% in the previous year due to the same reason and
also due to other savings in fixed costs.

Net profit

During the year 2007-08, there was a significant increase in the Net
profit of PTL from Bt. 187.84 million to Bt. 433.89 million, an increase
of about 130%.The net profit margin was 12.02%, a significant increase
from 5.54% in the previous year. The subsidiaries have also contributed
significantly to the profitability of the company for 2007-08 resulting
in a consolidated net profit of Bt. 813.5 million, an increase by 138%
as compared with 341.84 million in 2006-07. Increased productivity
resulting in increased sales volumes, better sales realizations due to
higher proportion of value added films and various costs savings have
resulted in overall increase in profitability of PTL as well as its
subsidiaries.

Return on equity

The ROE of PTL for 2007-08 has increased to 11.51% from 5.30% in 2006-07
mainly due to increase in profitability for the year. On a consolidated
basis, the increase is from 9.76% in 2006-07 to 20.72% in 2007-08.

PTL has a policy to pay dividend at about 40% of net profits. For the
year 2007-08, PTL’s board has proposed to the shareholders a dividend of
40 satang per share on a par value of Baht 1 each share.

12.2.2 Financial status

Total assets

PTL’s total assets have grown steadily from the time of inception till
date with the installation of new production lines and various other
expansion projects in Thailand and also at the subsidiary level in
Turkey. In 2007-08 PTL’s total assets were 5,688.20 million, an increase
of 20% as compared to Bt. 4,725 million in the previous year. PTL’s
fixed assets were Bt. 2,285.94 million in 2007-08 and Bt. 1967.16
million in 2006-07 which constituted 40.18 % and 41.63% of the total
assets respectively. Increase in value of fixed assets is due to the
capital work-in-progress relating to the investments in new projects –
Extrusion Coating Project and Metallized film project which commenced
production in April ’08 and May’08 respectively.

On a consolidated basis, the total assets in 2007-08 were Bt. 8,299
million, a significant increase from Bt.5,837 million in 2006-07. The
consolidated fixed assets were Bt. 5,898.89 million, up from Bt. 3,996.5
million in 2006/07 which constituted 71.08% and 68.46% of the total
assets respectively. Increase in consolidated fixed assets is on account
of capital work-in-progress relating to the new investments in the PET
thin film line and Metallised film projects in Turkey, which commenced
production in May’08. Part of the investments in the PET thin film
project of Turkey were funded through investments of about USD 15
million from Thailand, out of which USD 10 million were funded through
long term loans availed by PTL from Thai banks and the balance was
funded through internal accruals.

Accounts receivable

The average collection period of PTL was 78 days (96 days based on
closing balance only) in 2007-08,as compared to 75 days( 64 days based
on closing balance only) in 2006-07. The normal credit term granted for
related parties is 60 to 120 days while credit term for third parties
varied from 30 to 165 days. PTL’s net accounts receivable as of March
31, 2008 stood at Bt. 943.82 million which was up from Bt. 589.48
million as of March 31, 2007. The increase in receivables is mainly in
unrelated parties on account of increase in credit period to a key
distributor in Europe and also on account of increase in chips
receivables. Overall increase in receivables is also on account of
increased volumes of sales.

PTL’s outstanding accounts receivable can be classified as shown below:

  (Bt. million)

  ---------------------- ---------------- ---------------- ----------------
  Period                 As at 31.3.2006  As at 31.3.2007  As at 31.3.2008

  Not yet due            757.57           538.12           904.59

  Overdue upto 3 months  35.59            51.11            38,35

  3-6 months             3.93             0.25             0.88

  Total                  797.09           589.48           943.82
  ---------------------- ---------------- ---------------- ----------------

Inventories

The total inventories of PTL for 2007-08 have reduced to Bt. 225.98
million from Bt. 276.1 million in 2006-07 The reduction in inventory is
mainly due to reduction in stock of raw material, mainly polyester
chips.The average selling period for 2007-08 was 3.37 days(2.84 days on
closing balance only) and 3.97 days for 2006-07( 3.79 days on closing
balance only). PTL aligns its supply chain (raw material procurement,
production and dispatch) in a manner that minimum levels of inventories
are required to be maintained.

The consolidated inventory of the company was Bt. 766.6 million in
2007/2008, as against Bt. 662.14 million in 2006-07, an increase of
15.78% mainly on account of increase in stock of finished
goods.(material-in-transit). There is a decrease in stock of raw
materials and some increase in work-in-process at the subsidiary in
Turkey resulting in a net increase of Bt. 104.46 million in overall
inventory.

Return on assets

PTL’s return of assets has increased to 8.33% in 2007-08 from 4.03% in
2006-07 mainly due to increase in profitability.

On a consolidated basis, the return on assets has increased to 11.51% in
2007-08 from 5.98% in 2006-07 which is again due to increase in
profitability.

12.2.3 Liquidity

Cash flow

In the year 2007-08, PTL had a cash flow from operations of Bt. 442.5
million and cash flow from long term loans and other short term bank
borrowings of Bt. 535.1 million. Of these, Bt. 415.53 million was used
for purchase of fixed assets & other assets and Bt. 407.83 million was
invested in subsidiaries and Bt. 44.58 million was paid as finance
charges on the Long term and short term borrowings. Dividend of Bt.4.3
million was received from the USA subsidiary. There is net outflow of
Bt. 136 million on account of dividend for 2006-07. The deficit thereof
together with the opening balance of Bt.31.15 million resulted in a net
closing balance of Bt.9.12 million.

For the year 2007-08, PTL and its subsidiaries showed a cash flow from
operations of Bt. 779.29 million and cash flow from long term loans and
other short term bank borrowings of Bt. 1,338.68 million. Of these, Bt.
1,873.13 million was used for purchase of machinery & equipment and
other fixed assets and Bt. 87.22 million was paid as finance charges on
the long term and short term borrowings. There is net outflow of Bt. 136
million on account of dividend paid by PTL for 2006-07 and Bt 1.7
million of dividend payout by PA to the minority shareholders..The
balance thereof along with the negative translation adjustment of Bt.
62.68 million and the opening balance of Bt. 129.64 million resulted in
a net closing balance of Bt. 86.88 million.

Liquidity ratio

In 2007-08, PTL’s current ratio and quick ratio were 1.78 and 1.38
respectively. The average debt collection period during 2007-08 was 78
days along with loan repayment period of 57 days and average selling
period of 3 days resulted in cash cycle of 24 days. The average debt
collection period has remained more or less the same as in 2006-07.

In 2007-08 the consolidated current ratio and quick ratio were 1.81 and
1.16 respectively. The average debt collection period during 2007-08 was
63 days along with loan repayment period of 49 days and average selling
period of 11 days resulted in a cash cycle of 25 days.

In 2006-07 the PTL’s current ratio and quick ratio were 2.01and 1.27
respectively. The average debt collection period during 2006/2007 was 75
days along with loan repayment period of 52 days and average selling
period of 4 days resulted in to cash cycle of 27 days. The consolidated
current ratio and quick ratio were 1.55 and 0.85 respectively. The
average debt collection period during 2006-07 was 55 days along with
loan repayment period of 48 days and average selling period of 16 days
resulted in a cash cycle of 22 days.

12.2.4 Sources of funds

PTL sources of funds consist of loans from financial institutions and
shareholders’ equity.

Total liabilities

As at 31.3.2008, PTL’s total liabilities stood at Bt 1,769.14 million,
an increase from Bt. 1,104.14 million in the previous year, mainly due
to increase in long term borrowings for financing the investments in new
projects in Thailand and Turkey.

PTL’s current liabilities in 2007-08 were Bt. 692.02 million against Bt
488.03 million in 2006-07. Increase in current liabilities is mainly due
to increase in current portion of long term loans and also due to
increase in payables for raw materials /other trade accounts payables
and also the increase in payables for fixed assets.

The consolidated total liabilities in 2007-08 were Bt 3,970.45 million
as compared with Bt. 2,315.56 million in 2006-07. Of these total
liabilities the current liabilities in 2007-08 were Bt. 1,315.82 million
as against Bt. 1,081.27 million in 2006-07. Increase in total
liabilities is mainly due to increase in long-term loans availed by PTL
and the subsidiary in Turkey from local financial institutions for
financing of following projects.

-   Extrusion Coating line in Thailand

-   PET film line in Turkey

-   Metallizer plant in Turkey and Thailand

In 2007-08, the consolidated accounts payable stood at Bt 773.79
million, as against Bt.567.02 million in 2006-07 representing an
increase of 36.47% due to increase in Trade accounts payables.

Commitments

As at 31 March 2008, company had the following commitments and
contingent liabilities:

(a) PTL had commitments totaling Baht 21.5 million under various service
    agreements. These agreements terminate between June 2008 and July
    2010.

(b) PTL had forward foreign exchange contracts to sell EUR 3.0 million
    at the contractual exchange rates of Baht 47.98 – 49.48 per EUR 1.

  The Turkey subsidiary had forward foreign exchange contracts as
  follows:

+---------------------------+------------------------------------------+
| Bought amount             | Contractual exchange rate                |
+---------------------------+------------------------------------------+
| YTL 0.7 million           | YTL 1.359 per USD 1                      |
+---------------------------+------------------------------------------+
| YTL 1.0 million           | YTL 2.006 - 2.092 per EUR 1              |
+---------------------------+------------------------------------------+
|   USD 0.3 million         |   USD 1.580 per EUR 1                    |
+---------------------------+------------------------------------------+
|                           |                                          |
+---------------------------+------------------------------------------+

(c) The group had capital commitments of approximately Baht 209.54
    million, relating to the construction of factory buildings, and
    acquisition of machinery and equipments. For PTL standalone, the
    capital commitments were Baht 39.27 million.

(d) As at 31 March 2008, the Group is committed for rental as follows:

+----------------------------------------------------+-----------------+
|                                                    | Thousand Baht   |
+----------------------------------------------------+-----------------+
| Payable within:                                    |                 |
+----------------------------------------------------+-----------------+
|   1 years                                          | 2,761           |
+----------------------------------------------------+-----------------+
|   2 to 5 years                                     | 5,134           |
+----------------------------------------------------+-----------------+

(f) PTL has given short term guarantees worth USD 6.0 million against
working capital facilities of its subsidiaries. In addition to this, PTL
has given guarantee of EUR 34.5 million for the long term loans taken by
its Turkey subsidiary, out of which EUR 17.4 million against thin film
line expansion project will be valid until the mortgage and commercial
enterprise pledge are established in favor of the lending bank.

Apart from above, as at 31 March 2008 there were outstanding bank
guarantees of approximately Baht 1.5 million and EUR 7.9 million issued
by the banks on behalf of PTL and its subsidiaries in respect of certain
performance bonds as required in the normal course of businesses.

Shareholders’ equity

PTL’s shareholders’ equity on a consolidated basis in 2007-08 rose to Bt
4,314.72 million from Bt. 3,508.36 million in 2006-07, representing a
growth rate of 23% during the year. The increase in 2007-08 is due to
increased profitability for the year. The shareholder equity is after
accounting for the payment of Bt. 136 million as dividend during
2007-08.

Leveraging & interest coverage

The debt-equity ratio of PTL in 2007-08 was 0.45 times as against 0.3
times in 2006-07, the increase being due to availment of long term loans
from banks during the year. The interest coverage ratio was 12.60 times
in 2007-08 as against 9.49 in 2006-07.Increase in the interest coverage
ratio is due to the increase in the EBITDA as compared to previous year.

On a consolidated basis, the debt-equity ratio in 2007-08 was 0.92
times, as against 0.66 times in 2006-07 with the rise contributed by a
portion of long term loans availed during the year by both PTL and
subsidiary in Turkey for financing the various expansion projects. The
interest coverage ratio was 12.66 times in 2007-08, as against 8.05
times in the previous year, increase being due to improvement in EBITDA
for the year.

12.3 Main factors and influence which may affect the future operational
performance and financial position

  The outlook for the long term remains stable for the company, with the
  immediate outlook for 2008-09 showing positive signs due to continued
  improvement in the market situation and also due to additional volumes
  coming from new projects which started up in Turkey and Thailand in
  May’08. PTL is confident of retaining its competitive edge due to
  various reasons:

1.  Benefit from its various projects as under:

  a. PTL and PE have both derived significant benefits from the captive
  PET resin production to serve its raw material demand on costs,
  quality and security of availability. The main advantages of a captive
  resin plant are lower cost of production because of efficiencies in
  raw material sourcing as also a lower conversion cost besides ensuring
  timely availability of raw material for the film plants. Easy
  availability of PTA and MEG would reduce the supply risk although cost
  of the same still remains a matter of concern for any PET film
  manufacturer as it has a direct impact on the margins of every
  manufacturer. However, with the improving market situation,
  significant cost increase can be passed on to the end customers to
  protect our margins. Captive production of resin would also allow the
  company to develop new film products.

  b. Metallizer plants in Thailand and Turkey have helped improve the
  product mix. With the start up of the second metallizer plants in
  Turkey and Thailand, the company’s capacity to produce value added
  films and sell additional volumes to its existing as well as new
  customers has increased significantly and this is expected to
  contribute to revenue and profitability growth in a significant
  manner.

  c. The new extrusion coating plant in Thailand, which commenced
  operations in April’08 will further help the company to reduce their
  exposure to commodity grades of film and increase the proportion of
  value added films.

  d. The CPP film project under implementation will also help the
  company in product diversification and diversify the risk associated
  with the cyclical nature of the PET film industry.

  2. The company has started deriving benefits from the larger size and
  distributed manufacturing operations across 3 locations whereby it has
  qualified as a preferred global supplier with many multinational and
  large customers with global operations.

  3. The company had also invested significantly in distribution,
  especially the acquisition of a company in USA (Polyplex (Americas)
  Inc.). Although not immediately evident, over the medium term, it is
  expected that this investment would lead to a better market
  penetration and improved customer service for North American markets.

12.4 Remuneration for auditor/s

1.  Audit fee

  The Company and its subsidiaries paid audit fee as below:

  - A total of Bt - paid to the auditor/s for the past fiscal year; and

-   A total of Bt 2,000,000.00 paid to the accounting firm the auditor/s
    work for, or the person or business related to the auditor/s and the
    accounting firm for the past fiscal year.

2.  Non-audit fee

  The Company and its subsidiaries made payment for other services, i.e.
  due diligence, non-accounting advisory service, examination of
  compliance with conditions of promotion certificates, and legal and
  tax services, as follows:

-   A total of Bt. - paid to the auditor/s for the past fiscal year and
    Bt.________ - payable in the future for the service not yet fully
    done for the past fiscal year; and

-   A total of Bt 36,600 paid to the accounting firm the auditor/s work
    for, or the person or business related to the auditor/s and the
    accounting firm for the past fiscal year, and Bt. 517,230.00 payable
    in the future for the service not yet fully done for the past fiscal
    year.