12. Financial Position and Operational performance

12.1 Financial statements

Auditor

+-------------------+-------------------+---------+-------------------+
| Year              | Name of auditor   | CPA no. | Auditing firm     |
+-------------------+-------------------+---------+-------------------+
| 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)     |                   |         |                   |
+-------------------+-------------------+---------+-------------------+
| 2002/2003         | Mr. Vichien       | 3183    | KPMG Phoomchai    |
|                   | Thamtrakul        |         | Audit Ltd.        |
| (Apr 1, 2002 –    |                   |         |                   |
| Mar 31, 2003)     |                   |         |                   |
+-------------------+-------------------+---------+-------------------+

Auditor’s report

In the Auditor’s report on the financial statements for the year
2002/2003 ended March 31, 2003, the year 2003/2004 ended March 31,
2004,the year 2004/2005 ended March 31, 2005, and the 2005/2006 ended
March 31, 2006, the Auditor gave an unqualified opinion that the
financial statements were fairly presented and prepared in accordance
with generally accepted accounting principles.

PTL was incorporated in 2002 and started commercial production in April
2003, thus no financial data for 2002/2003 are available for comparison.

For the year 2004/2005 and 2005/2006, 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                          

                      2003/2004                2004/2005              2005/2006              2004/2005               2005/2006     

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

                      Amount           %       Amount        %        Amount        %        Amount         %        Amount        %

  Assets                                                                                                                            

  Current Assets                                                                                                                    

   Cash and cash      26,393           1.22    230,973       6.16     53,458        1.16     391,385        10.39    164,139       2.93
  equivalents                                                                                                                      

   Investment in      0                0       100,763       2.69     0             0        100,763        2.68     0             0
  marketable                                                                                                                       
  securities                                                                                                                       

   Accounts           339,336          15.64   629,408       16.8     437,673       9.51     629,408        16.71    641,078       11.44
  receivable                                                                                                                       

   Receivable from    0                0       0             0        359,417       7.81     0              0        6,474         0.12
  related companies                                                                                                                

   Inventories        145,158          6.69    305,689       8.16     436,363       9.48     305,689        8.12     871,240       15.55

   Other current      43,031           1.98    73,608        1.97     109,577       2.38     77,076         2.05     130,165       2.32
  assets                                                                                                                           

  Total Current       553,918          25.53   1,340,441     35.78    1,396,488     30.35    1,504,320      39.95    1,813,096     32.36
  Assets                                                                                                                           

  Non-Current Assets                                                                                                                

   Investment in      0                0       424,405       11.32    1,186,452     25.79    0              0        0             0
  subsidiary                                                                                                                       

   Land, premises and 1,608,884        74.16   1,977,468     52.78    2,010,874     43.71    2,257,146      59.94    3,764,846     67.20
  equipment-net                                                                                                                    

  Intangible          0                0       0             0        0             0        0              0        8,920         0.16
  assets-net                                                                                                                       

   Deferred           6,568            0.3     0             0        2,940         0.06     0              0        2,940         0.05
  expenses-net                                                                                                                     

  Other non current   0                0       4,469         0.12     4,093         0.09     4,469          0.11     12,256        0.22
  assets                                                                                                                           

  Total Non-current   1,615,453        74.47   2,406,342     64.22    3,204,359     69.65    2,261,616      60.05    3,788,962     67.64
  Assets                                                                                                                           

  Total Assets        2,169,371        100     3,746,783     100      4,600,847     100      3,765,936      100      5,602,058     100

                                                                                                                                    

  Liabilities &                                                                                                                     
  Shareholders'                                                                                                                    
  Equity                                                                                                                           

  Current Liabilities                                                                                                               

   Accounts payable   296,324          13.66   426,189       11.37    434,509       9.44     426,189        11.32    457,443       8.17

   Accounts payable   0                0       0             0        0             0        0              0        14,079        0.25
  to related                                                                                                                       
  companies                                                                                                                        

   Accounts payable   47,652           2.2     39,099        1.04     33,321        0.72     39,099         1.03     53,775        0.96
  for fixed assets                                                                                                                 

   Long-term          27,684           1.28    0             0        0             0        0              0        277,595       4.96
  loans-due within                                                                                                                 
  one year                                                                                                                         

   Short-term loans   0                0       0             0        0             0        0              0        23,652        0.42
  from financial                                                                                                                   
  institutions                                                                                                                     

   Other current      26,175           1.21    61,478        1.64     11,837        0.26     80,631         2.15     67,484        1.20
  liabilities                                                                                                                      

  Total current       397,835          18.34   526,766       14.06    479,667       10.43    545,919        14.5     894,028       15.96
  liabilities                                                                                                                      

  Non-current         832,616          38.38   0             0        522,297       11.35    0              0        1,225,141     21.87
  Liabilities                                                                                                                      

  Long-term loans-net                                                                                                              
  of amount due                                                                                                                    
  within one year                                                                                                                  

  Other non-current   0                0       0             0        0             0        0              0        71            0.00
  liabilities                                                                                                                      

  Loss on investment  0                0       0             0        129,396       2.81                             0             0.00
  in subsdiaries                                                                                                                   
  exceeding carrying                                                                                                               
  amount                                                                                                                           

  Total Liabilities   1,230,451        56.72   526,766       14.06    1,131,360     24.59    545,919        14.06    2,119,240     37.83

                                                                                                                                   

  Polyplex (Thailand)                                                                                                              
  Plc.                                                                                                                             

  Balance Sheet                                                                                                                    

  Unit: Bt. 000’s                                                                                                                  

                      Unconsolidated                                                         Consolidated                          

                      2003/2004                2004/2005              2005/2006              2004/2005               2005/2006     

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

                      Amount           %       Amount        %        Amount        %        Amount         %        Amount        %

  Shareholders Equity                                                                                                               

  Issued & Paid-up                                                                                                                  
  Share Capital                                                                                                                    

  Preferred shares    473,797          21.84   0             0        0             0        0              0        0             0

  Ordinary shares     118,449          5.46    800,000       21.35    800,000       17.39    800,000        21.24    800,000       14.28

  Premium on ordinary 0                0       1,370,460     36.58    1,370,460     29.79    1,370,460      36.39    1,370,460     24.46
  shares                                                                                                                           

   Advance towards    2,324            0.11    0             0        0             0        0              0        0             0
  future paid-up                                                                                                                   
  capital                                                                                                                          

  Translation         0                0       (15,816)      (0.42)   (47,320)      (1.03)   (15,816)       (0.42)   (47,320)      (0.84)
  adjustment                                                                                                                       

  Retained earnings   344,349          15.87   1,065,373     28.43    1,346,347     29.26    1,065,373      28.29    1,346,347     24.03
  (deficits)                                                                                                                       

  Total Shareholders' 938,919          43.28   3,220,017     85.94    3,469,487     75.41    3,220,017      85.5     3,469,487     61.93
  Equity                                                                                                                           

  Minority Interest   0                0       0             0        0             0        0              0        13,331        0.24

  Total Liabilities   2,169,371        100     3,746,783     100      4,600,847     100      3,765,936      100      5,602,058     100
  and Shareholders'                                                                                                                
  Equity                                                                                                                           
  ------------------- ---------------- ------- ------------- -------- ------------- -------- -------------- -------- ------------- --------

The Company set up Polyplex (Singapore) Pte. Ltd., its subsidiary, in
July 2004 ,Polyplex Europa in September 2004.and Polyplex (Americas)
Inc. in Jan’06

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

  Statement of Income                                                                                                               
  and Retained                                                                                                                      
  Earnings                                                                                                                          

  Unit: Bt. 000’s                                                                                                                   

                      Unconsolidated                                                          Consolidated                          

                      2003/2004                 2004/2005              2005/2006              2004/2005               2005/2006     

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

                      Amount           %        Amount        %        Amount        %        Amount         %        Amount        %

                                                                                                                                     

  Revenues                                                                                                                           

  Net sales           1,645,470        95.79    3,262,965     97.27    3,283,512     96.23    3,262,965      97.26    3,299,991     96.28

  Other revenues      34,268           1.99     74,641        2.23     80,560        2.36     74,700         2.23     94,120        2.75

  Gain/(loss) on      38,108           2.22     16,882        0.5      47,946        1.41     17,353         0.51     33,339        0.97
  foreign exchange                                                                                                                  

  Total Revenues      1,717,846        100      3,354,488     100      3,412,018     100      3,355,018      100      3,427,450     100

  Costs and Expenses                                                                                                                 

  Cost of sales       1,179,123        68.64    2,289,166     68.24    2,455,589     71.97    2,289,166      68.23    2,416,220     70.50

  Selling and         145,168          8.45     303,370       9.04     253,671       7.43     318,505        9.49     420,966       12.28
  administrative                                                                                                                    
  expenses                                                                                                                          

  Loss from           0                0        14,605        0.44     125,926       3.69     0              0        0             0
  investment in                                                                                                                     
  subsidiary                                                                                                                        

  Total Expenses      1,324,291        77.09    2,607,141     77.72    2,835,186     83.09    2,607,671      77.72    2,837,186     82.78

  Profit (loss)       393,555          22.91    747,347       22.28    576,832       16.91    747,347        22.28    590,264       17.22
  before interest                                                                                                                   
  expenses                                                                                                                          

  Interest expenses   (26,484)         (1.54)   (26,323)      (0.78)   (15,858)      (0.46)   (26,323)       (0.78)   (25,583)      (0.75)

  Income Tax          0                0        0             0        0             0        0              0        (5,013.00)    (0.15)

  Net profit (loss)   367,071          21.37    721,024       21.50    560,974       17.37    721,024        21.50    559,668       16.33
  after income tax                                                                                                                  

  Net loss of         0                0        0             0        0             0        0              0        1,306         0.04
  minority interest                                                                                                                 

  Net profit (loss)   367,071          21.37    721,024       21.50    560,974       17.37    721,024        21.50    560,974       16.37

  Earnings (losses)   35.94            0        1.58          0        0.70          0        1.58           0        0.70          0
  per share (Bt.)                                                                                                                   
  ------------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- --------

The Company set up Polyplex (Singapore) Pte. Ltd., its subsidiary, in
July 2004 ,Polyplex Europa in September 2004.and Polyplex (Americas)
Inc. in Jan’06

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

  Cash Flow Statement                                                                     

  Unit : Bt. 000’s                                                                        

                              Unconsolidated                               Consolidated   

                              2003/2004        2004/2005     2005/2006     2004/2005      2005/2006

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

                                                                                           

  Cash flow from operating                                                                 
  activities                                                                              

  Net profit (loss)           367,071          721,024       560,974       721,024        560,974

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

  Depreciation and            68,545           108,790       126,622       109,037        155,609
  amortization                                                                            

  Unrealized losses (gains)   0                (155)         0             (155)          0
  on marketable securities                                                                

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

  Unrealized losses (gains)   (48,267)         (5,036)       18,240        (5,036)        10,662
  on foreign exchange                                                                     

  Loss from subsidiary        0                14,605        125,926       0              0

  Net loss of minority        0                0             0             0              (1,306)
  interest                                                                                

  Exchange differences on     0                0             0             (12,314)       (31,504)
  translation of FS of                                                                    
  subsidiary                                                                              

  Profit (Loss) from          387,349          839,228       831,518       812,556        694,191
  operation before changes in                                                             
  operating assets and                                                                    
  liabilities                                                                             

  Decrease (Increase) in                                                                   
  operating assets                                                                        

  Accounts receivable         (337,497)        (286,758)     (179,287)     (286,758)      23,669

  Accrued export incentive    0                0             9,176         0              9,176
  income                                                                                  

  Deferred charges            0                0             (2,940)       0              (2,940)

  Balance due from a related  0                0             0             0              14,079
  company                                                                                 

  Inventories                 (110,645)        (160,531)     (130,674)     (160,531)      (497,591)

  Other current assets        (29,037)         (30,577)      (45,145)      (34,092)       (42,807)

  Other non-current assets    (4,853)          (4,469)       376           (4,469)        (7,787)

  Increase (Decrease) in                                                                   
  operating liabilities                                                                   

  Accounts payable            258,169          129,312       8,835         129,312        (72,404)

  Retention money             (5,221)          2,291         0             2,291           

  Other current liabilities   11,695           33,012        (49,641)      52,419         (20,694)

  Other current liabilities   0                0             0             0              71

  Cash flow provided from     169,961          521,509       442,218       510,728        96,963
  (used in) operating                                                                     
  activities                                                                              

                                                                                           

  Cash flow from Investing                                                                 
  activities                                                                              

  Acquisition of subsidiary   0                0             0             0              (20,497)

  Repayment of accounts       (75,143)         (47,652)      (39,099)      (47,652)       (39,099)
  payable on purchase of                                                                  
  fixed assets                                                                            

  Investment in marketable    0                (100,608)     100,763       (100,608)      100,763
  securities                                                                              

  Purchase of fixed assets    (704,789)        (429,432)     (127,432)     (713,066)      (1,609,606)

  Payment of intangible asset 0                0             0             0              (2,528)

  Sale of fixed assets        0                0             969           0              969

  Investment in subsidiary    0                (454,826)     (790,081)     0              0

  Net cash used in investing  (779,932)        (1,032,518)   (854,880)     (861,326)      (1,569,998)
  activities                                                                              

                                                                                           

  Cash flow from financing                                                                 
  activities                                                                              

  Increase (Decrease) in      (49,259)         0             0             0              23,652
  loans from financial                                                                    
  institutions                                                                            

  Dividend Paid               0                0             (280,000)                    (280,000)

  Increase in long-term loans 423,790          192,743       515,147       192,743        1,495,585

  Repayment of long-term      0                (1,053,043)   0             (1,053,043)     
  loans                                                                                   

  Cash receivable capital     240,247          2,049,687     0             2,049,687       
  increase                                                                                

  Decrease in Preferred       0                (473,797)     0             (473,797)       
  Shares                                                                                  

  Advance towards future      1,788            0             0             0              0
  paid-up capital                                                                         

  Investment of minority      0                0             0             0              6,552
  interest                                                                                

  Cash provided from          616,566          715,590       235,147       715,590        1,245,789
  financing activities                                                                    

                                                                                           

  Increase in cash and cash   6,594            204,580       (177,515)     364,992        (227,246)
  equivalents                                                                             

                                                                                           

  Cash and cash equivalents   19,799           26,393        230,973       26,393         391,385
  at the beginning of period                                                              
  (April 1)                                                                               

                                                                                           

  Cash and Cash equivalents   26,393           230,973       53,458        391,385        164,139
  at the end of period (March                                                             
  31)                                                                                     
  --------------------------- ---------------- ------------- ------------- -------------- -------------

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

  Financial Statement                                                                             

                                      Unconsolidated                               Consolidated   

                                      2003/2004        2004/2005     2005/2006     2004/2005      2005/2006

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

  Liquidity Ratios                                                                                 

  Current ratio              (time)   1.39             2.54          2.91          2.76           2.03

  Quick ratio                (time)   0.92             1.63          1.77          1.87           0.91

  Cash flow current ratio    (time)   0.56             1.13          0.88          1.08           0.13

  Receivable current ratio   (time)   9.7              6.74          4.60          6.74           5.17

  Avg. debt collection       (day)    37.12            53.44         78.20         53.44          69.65
  period                                                                                          

  Inventory turnover period  (time)   45.08            38.35         47.97         38.35          20.26

  Avg. selling period        (day)    7.99             9.39          7.50          9.39           17.77

  Payable current ratio      (time)   7.01             6.34          5.71          6.34           5.38

  Loan repayment period      (day)    51.37            56.81         63.09         56.81          66.88

  Cash cycle                 (day)    -6.26            6.02          22.61         6.02           20.54

  Profitability Ratios                                                                             

  Gross profit margin        (%)      28.34%           29.84%        25.21%        29.84%         26.78%

  Operating profit margin    (%)      19.52%           20.55%        17.49%        20.08%         14.02%

  Other profit margin        (%)      1.99%            2.23%         2.36%         2.23%          2.75%

  Cash to profit margin      (%)      43.19%           68.44%¹       62.93%        68.34%¹        16.43%

  Net profit margin          (%)      21.37%           21.49%        16.44%        21.49%         16.48%

  Return on equity           (%)      57.86%           34.67%        16.77%        34.67%         16.77%

  Efficiency Ratios                                                                                

  Return on assets           (%)      23.20%           24.37%        13.44%        24.30%         11.98%

  Return on fixed assets     (%)      27.53%           28.05%        16.47%        27.97%         15.30%

  Asset turnover             (time)   1.09             1.13          0.82          1.13           0.73

  Financial Policy Ratios                                                                          

  Debt to equity ratio       (time)   1.31             0.16          0.33          0.17           0.61

  Interest coverage ratio    (time)   7.42             20.81         28.89         20.4           4.79

  Commitment coverage ratio  (time)   0.23             1.14          3.47          0.69           0.06
  (cash basis)                                                                                    

  Pay out ratio              (%)      -                -             0.22          -              0.22
  -------------------------- -------- ---------------- ------------- ------------- -------------- -------------

¹Ratios for 2004/05 are calculated prior to netting off investments in
marketable securities from cash flow from operating activities

12.2 Explanation and analysis of operational performance and financial
status

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. It was awarded the ISO 9001:2000 and the ISO14001:1996
accreditation in December 2003 and May 2004 respectively for its film
plants. Similar certification is under process 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. Towards this end, the company has regularly
expanded its customer base and is getting into new product lines, such
as metallized film (already commenced production), extrusion coated
films and other specialty films. 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.

In 2003/2004 (April 1, 2003-March 31, 2004) PTL recorded total revenues
of Bt. 1,717.85 million. In 2004/2005 (April 1, 2004- March 31, 2005)
PTL revenue was Bt. 3,354.49 million a 95.27% increase from
corresponding previous year which is attributable to the utilization of
both film lines capacity for the entire year as also improvement in
productivity levels in the year 2004/2005. In 2005/2006 (April 1
2005-March 31,2006) the total revenue was Bt 3,412.02 million a marginal
increase of 1.72% from corresponding previous year which is ,despite a
fall in selling prices of film in second half of the year due to global
cyclical downtrend in the industry, attributed to sale of chips to
Turkey operations.

Revenues

During its first year of operation, 2003/2004 (April 1, 2003-March 31,
2004), PTL recorded total revenues from sales of Bt. 1,645.47 million.
Of this total, 90.49% or Bt. 1,489.05 million came from export sales and
9.51% or Bt. 156.42 million from local sales. 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 some 18 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                2003/04             2004/05             2005/06    

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

  Exports               1,489.05   90.49%   2,900.51   88.90%   2,767.78   84.29%

  Domestic sales        156.42     9.51%    362.45     11.10%   515.73     15.71%

  Total                 1,645.47   100%     3,262.96   100%     3,283.51   100%
  --------------------- ---------- -------- ---------- -------- ---------- --------

In the year 2005/2006 (April 1- March 31, 2006), PTL achieved total
sales revenues of Bt. 3,283.51 million, an increase of Bt. 20.55 million
over the corresponding previous year. Major features of sales revenue in
2005/2006 are as follows:

-   The revenue from sale of film has come down from Bt. 3,262.96
    million in 2004/2005 to Bt. 2,926.04 million, a decline of 10.33%
    from previous year which is attributable to fall in average sales
    realization of film from Bt. 84.67/kg in 2004/2005 to Bt. 74.09/kg.
    This fall in sales realization is an inherent feature of the
    industry wherein the selling prices rise and fall forming a cyclical
    trend over a period of time. The industry worldwide has seen a
    significant fall in selling prices, especially in second half of the
    year 2005/2006.

-   In 2005/2006, PTL utilized its spare capacity in PET resin plant to
    fulfill raw material requirement of its subsidiary in Turkey. These
    export sales contributed Bt. 308.23 million to the total revenue of
    PTL. The revenue generated from sale of chips in domestic market was
    Bt. 49.06 million.

Expenses

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

Raw material cost made up 70% and 68.25% of total expenses in 2004/05
and 2005/06 respectively, followed by packing 5.51% and 5.06%,
electricity & water 3.41% and 3.92%, and staff salaries 1.80% and 2.81%.
The selling & administrative expenses amounted to Bt. 303.37 million and
Bt. 253.67 million in 2004/05 and 2005/06 respectively. They principally
included the shipment cost for the exported products, which was 6.98%
and 4.32% of the total expenses respectively over the same periods

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 2005/2006 was Bt. 39.33/kg as against Bt. 46.98/kg in 2004/2005, a
fall of 16.28%. The other variable costs which includes packing cost was
Bt. 3.81/kg in 2005/2006 as against Bt. 3.88/kg in 2004/2005. With the
slight fall in production volumes and increased per unit cost of power
and fuel, the fixed costs have surged to Bt. 12.35/kg in 2005/2006 as
against Bt. 7.45/kg in 2004/2005.Overall, the unit cost of sales
decreased by about 8.82% primarily due to lower raw material prices.

During the year 2005/2006, PTL earned an extraordinary income of Bt.
47.95 million as against Bt. 16.88 million in the corresponding previous
year on account of foreign exchange fluctuation on export sales with the
Baht depreciating against the US dollar and also net gains on
restatement of long term Euro loans and payable to foreign creditors.

Gross profit

During 2005/2006, the PTL had a gross profit margin of 25.21% a decrease
from 29.84% in the previous year on account of decline in selling prices
of PET film in second half of the year. The operating profit margin in
2005/2006 has also gone down to 17.49% from 20.55% in 2004/2005 on
account of fall in sales prices as also rise in fixed costs during the
year 2005/2006.

Net profit

In the first year of its commercial operations during 2003/2004, the
company posted a net profit of Bt. 367.07 million or 21.37% of its total
income. In 2004/2005, the company posted a net profit of Bt. 721.02
million, an increase of 96.43% over 2003/2004 on account of the large
increase in sales volumes. In 2005/2006 the net profit was Bt. 560.97
million, a decrease of 22.20% from corresponding previous year mainly on
account of losses from subsidiaries of Bt. 125.93 million. The major
portion of losses from subsidiaries in 2005/2006, Bt. 94.31 million,
comprises of losses from subsidiary in Turkey (PE) owing to preoperative
expenditure prior to commencement of commercial operations in December
2005 as also minor net loss incurred in its first quarter of operations
as it was in the ramp-up phase. Despite adverse market conditions and
lower capacity utilization as compared to normal levels, PE was able to
earn cash profit in its first quarter of operation. Another major
portion of losses from subsidiaries of Bt. 15.52 million was from
subsidiary in Singapore (PSPL), which is an investment holding company
for PE and the losses were mainly due to restatement of loans (in Euro
currency) to PE.

Return on equity

In 2002/2003, PTL generated a negative return on equity (ROE) of 7%,
caused by the fact that it had not yet come into operation and
accordingly did not earn any sales revenues. In 2003/2004, the ROE
surged to 58% as it was the first year of its commercial operation. For
the year 2004/2005, ROE stood at 34.67% (the consolidated company ROE
was 34.67%) due to a increase of Bt. 2281.10 million in the
shareholders’ equity following a capital increase and the net profit
during the year of Bt. 721.02 million. In the year 2005/2006, PTL ROE
was 16.77% (the consolidated company ROE was 16.77%), the reduction in
ROE being mainly due to the decline in profitability and also the
increase in net worth.

PTL has a policy to pay dividend at about 40% of net profits. Although
no dividend was paid upto 2003/2004 in order to fund growth plans and
working capital requirements, in 2004/2005, PTL declared and paid a
dividend of 35 satang per share on a par value of Baht 1 each share. For
the year 2005/2006, PTL’s board has proposed to the shareholders a
dividend of 28 satang per share on a par value of Baht 1 each share.

2.  Financial status

Total assets

PTL’s total assets have grown steadily from Bt. 995.01 million as of
March 31, 2003 when its first production line was about to be
commissioned to Bt. 2,169.37 million as of March 31, 2004 with both its
two PET film production lines in operation and Bt. 3,746.78 million as
of March 31, 2005 with the increase coming mostly from the PET resin
plant, investment in subsidiary and investment in short term marketable
securities. In 2005/2006 the total assets increased to Bt. 4,600.85
million, an increase of 22.79% over the corresponding previous year on
account of addition of Metallizer plant, investment in subsidiaries and
accumulation of chips stock for sale to Turkey operations. PTL’s fixed
assets were Bt. 1,977.47 million and Bt. 2,010.87 million in 2004/2005
and 2005/2006 respectively which constituted 52.78% and 43.70% of the
total assets.

For the company, the total fixed assets in 2004/2005 were Bt. 3,765.94
million which surged to Bt. 5,602.06 million in 2005/2006 with the
increase coming mostly from completion of PET film line and Metallizer
plant projects in PE besides further investments made by PTL in PE for
PET resin plant as also the acquisition of a distribution company in
USA. The Company’s fixed assets were Bt. 2,257.15 million and Bt.
3,764.85 million respectively in 2004/2005 and 2005/2006 which
constituted about 59.94% and 67.20% of the total assets respectively.

Accounts receivable

The average collection period of PTL was 37 days (74 days based on
closing balance only) in 2003/2004 and 53 days (70 days based on closing
balance only) in 2004/2005. During the year 2005/2006 the average
collection period was 79 days (88 days based on closing balance only).
The normal credit term granted for related parties is 60 to 150 days
while credit term for third parties varied from 30 to 120 days. PTL’s
net accounts receivable as of March 31, 2005 stood at Bt. 629.41 million
which rose to Bt. 797.09 million as of March 31, 2006 of which Bt.
359.42 million was the balance due from subsidiaries in Turkey and USA
on account of sale of chips and film respectively.

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

(Bt. million)

+--------------------+--------------+----------------+----------------+
| Period             | 2003/04      | 2004/05        | 2005/06        |
|                    |              |                |                |
|                    | (Apr 1, 03 – | (Apr 1, 04 –   | (Apr 1, 05 –   |
|                    | Mar 31, 04)  | March 31, 05)  | March 31, 06)  |
+--------------------+--------------+----------------+----------------+
| Not yet due to     | 306.06       | 577.57         | 757.57         |
| overdue of less    |              |                |                |
| than 1 month       |              |                |                |
+--------------------+--------------+----------------+----------------+
| Overdue between    | 33.28        | 51.84          | 35.59          |
| 1-3 months         |              |                |                |
+--------------------+--------------+----------------+----------------+
| 3-6 months         | -            | -              | 3.93           |
+--------------------+--------------+----------------+----------------+
| Total              | 339.34       | 629.41         | 797.09         |
+--------------------+--------------+----------------+----------------+

Inventories

PTL had total inventories of Bt. 145.16 million in 2003/2004, Bt. 305.69
million in 2004/2005 and Bt. 436.36 million in 2005/2006, with average
selling period of 7.99 days (15 days on closing balance only), 9.39 days
(11 days on closing balance only) and 7.50 days (4.81 days on closing
balance only) respectively. PTL aligns its supply chain (raw material
procurement, production and dispatch) in a manner that minimum levels of
inventories are required to be maintained. In 2005/2006, PTL’s total
inventory went up by 42.75% mostly due to stock of chips accumulated for
sale to subsidiary in Turkey.

The consolidated inventory of the company was Bt. 871.24 million in
2005/2006 as against Bt. 305.69 million in 2004/2005, an increase of
185% mainly on account of accumulation of chips stock at PTL level for
turkey operations and also the closing stock of inventory with the
subsidiaries in Turkey and USA.

Return on assets

PTL had a return on assets of 23.20% during 2003/2004 which further
increased to 24.37% during 2004/2005. The return on assets during
2005/2006 has declined to 13.44% mainly due to increase in total asset
base and the decline in profitability.

For the company, the return on assets was 24.30% in 2004/2005 and 11.98%
in 2005/2006. This decrease in return can be attributed to the following
two key reasons:

-   Larger asset base due to startup of plain film plant and Metallizer
    plant in December’2005 in subsidiary in Turkey and acquisition of
    subsidiary in USA in January’06.

-   Decline in consolidated profitability.

3.  Liquidity

Cash flow

In the year 2004/2005, PTL showed a cash flow from operations of Bt.
420.90 million and cash

flow from capital increase of Bt. 715.59 million. Of these, Bt. 477.08
million was used for purchase of machinery & equipment and other fixed
assets and Bt. 454.83 million was invested in subsidiary. The balance
thereof plus the beginning balance of Bt. 26.39 million resulted in a
net ending balance of Bt. 230.97 million.

In the year 2005/2006, PTL showed a cash flow from operations of Bt.
442.22 million and cash flow from long term loans and other short term
bank borrowings of Bt. 515.15 million. Of these, Bt. 166.53 million was
used for purchase of fixed assets & other fixed assets and Bt. 790.08
million was invested in subsidiaries. There is net outflow of Bt. 280
million on account of dividend for 2004/2005. The balance thereof plus
the beginning balance of Bt. 230.97 million resulted in a net ending
balance of Bt. 53.46 million.

For the company in 2005/2006, PTL and its subsidiaries showed a cash
flow from operations of Bt. 96.96 million and cash flow from long term
loans and other short term bank borrowings of Bt. 1,519.23. Of these,
Bt. 1,648.71 million was used for purchase of machinery & equipment and
other fixed assets. There is net outflow of Bt. 280 million on account
of dividend paid by PTL for 2004/2005 besides Bt. 20.50 million invested
on acquisition of a distribution company in USA. The balance thereof
plus the beginning balance of Bt. 391.39 million resulted in a net
ending balance of Bt. 164.14 million.

Liquidity ratio

PTL has maintained a strong liquidity position, with current ratio of
1.39 and 2.54 and quick ratio of 0.92 and 1.63 in 2003/2004 and
2004/2005 respectively, as a result of the average debt collection
period of 37 days and 53 days in 2003/2004 and 2004/2005 respectively,
compared with the loan repayment period of 51 days and 57 days over the
same period. The resultant cash cycle was -6.26 days (-1 day based on
the end of period balance) and 6.02 days (13 days based on the end of
period balance) in 2003/2004 and 2004/2005 respectively.

In 2005/2006 the PTL’s current ratio and quick ratio were 2.91 and 1.77
respectively. The average debt collection period during 2005/2006 was 79
days along with loan repayment period of 63 days and average selling
period of 8 days resulted in to cash cycle of 22.61 days. The average
debt collection period has increased due to receivables from subsidiary
companies especially the subsidiary in Turkey to which the sale of chips
was increased in quarter four after it commenced operations in December
2005.

In 2005/2006 the company’s current ratio and quick ratio were 2.03 and
0.91 respectively. The average debt collection period during 2005/2006
was 70 days along with loan repayment period of 67 days and average
selling period of 18 days resulted in a cash cycle of 20.54 days.

4.  Sources of funds

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

Total liabilities

In 2003/2004 and 2004/2005, PTL total liabilities stood at Bt. 1,230.45
million and Bt. 526.77 million respectively which surged by 114.77% in
2005/2006 to Bt. 1,131.36 million as at March 31, 2006. This was due to
availing the long term Euro 11 million loan borrowed for financing of
new projects in Turkey.

PTL’s current liabilities in 2005/2006 were Bt. 479.67 million against
Bt. 526.77 million in 2004/2005 and Bt. 397.84 million in 2003/2004. In
2005/2006, PTL’s accounts payable stood at 434.51 million as against Bt.
296.32 million and Bt. 426.19 million in 2003/2004 and 2004/2005
respectively.

The company’s total liabilities in 2005/2006 were Bt. 2,119.24 million
and Bt. 545.92 million in 2004/2005. Of these total liabilities the
current liabilities in 2005/2006 were Bt. 894.03 million and Bt. 545.92
million in 2004/2005. The long-term loan in 2005/2006 was the balance
outstanding of borrowings by PTL and subsidiary in Turkey from local
financial institutions for financing of following projects in Turkey.

-   PET film line

-   Metallizer plant

-   PET resin plant

In 2005/2006, the company’s accounts payable stood at Bt 471.52 million
as against Bt. 426.19 million in 2004/2005 respectively, representing an
increase of 10.64% over the year 2004/2005, due to consolidation of
payables in subsidiary companies.

Commitments

As at 31 March 2006, company had the following commitments and
contingent liabilities:

  a) the company had unused letters of credit with certain local
  financial institution totaling approximately to USD 4.53 million and
  EUR 0.02 million.

b) the company was contingently liability to certain local financial
institution for letters of guarantee totalling approximately of Baht
20.41 million and approximately of Baht 1.47 million for PTL.

a)  the company has the outstanding forward exchange contracts and
    currency

SWAP contracts as follows:

  --------------------------------- -------------- -- -------- -- ---------- --------
                                    Consolidated                  The        
                                                                  Company    

                                    Currency          Amount      Currency   Amount

                                    (in thousand)                            

  Forward used to hedge monetary    JPY               2,011       JPY        2,011
  assets                                                                     

                                    EUR               570         EUR        570

                                                                             

  Forward used to hedge monetary    EUR               2,266       EUR        2,266
  liabilities                                                                

                                    YTL               1,840                  

                                    USD               2,710                  

                                                                             

  Interest rate swap contract to    EUR               6,000       EUR        6,000
  hedge borrowings                                                           

                                                                             
  --------------------------------- -------------- -- -------- -- ---------- --------

  d) the company was committed to pay for the cost of construction and
  machinery and equipment amounting to Baht 204.20 million (2004/05:
  Baht 983.4 million) and approximately of Baht 5.47 million for PTL
  (2004/05: Baht 96.9 million).

Shareholders’ equity

PTL’s shareholders’ equity rose from Bt. 938.92 million in 2003/2004 to
Bt. 3,220.02 million in 2004/2005 and Bt.3, 469.49 million in 2005/2006,
representing a growth rate of 242.95% and 7.75% respectively. This
increase in 2005/2006 resulted from net increase in retained earnings by
Bt. 280.97 million due to the yearly net profit of Bt. 560.97 million
and after the payment of Bt. 280 million as dividend during 2005/2006.

The company’s shareholders’ equity in 2004/2005 totaled Bt. 3,220.02
million, up from Bt. 938.92 million as of March 31, 2004. This comprised
an increase in share capital of Bt. 205.43 million and premium on common
shares of Bt. 1,370.46 million. The company also had total retained
earnings of Bt. 1,065.37 million as on March 31^(st); 2005, which is
mainly due to a net profit of Bt. 721 million earned in 2004/2005.

For the company, the total shareholders’ equity rose from Bt. 3,220.02
million in 2004/2005 to Bt.3,482.82 million in 2005/2006, representing a
growth rate of 8.16%.

Leveraging & interest coverage

The debt-equity ratio of PTL in 2005/2006 was 0.33 times as against 0.16
times in 2004/2005 with the increase due to availment of long term loans
from banks. The corresponding figure in 2003/2004 was 1.31 times. The
interest coverage ratio was 28.89 times in 2005/2006, the corresponding
figure for the previous year was 20.81 times.

For the company, the debt-equity ratio in 2005/2006 was 0.61 times as
against 0.17 times in 2004/2005 with the rise contributed by long term
loans availed by both PTL and subsidiary in Turkey for financing
projects. The interest coverage ratio for the company was 4.79 times in
2005/2006, the corresponding figure for the previous year was 20.40
times.

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

  While the outlook for the long term remains stable for the company,
  the immediate outlook for 2006/07 would remain weak due to current
  market situation and cyclical downturn which will take some time to
  reverse. However, PTL should be able retain its competitive edge due
  to various reasons:

1.  Benefit from its various projects as under:

  a. PTL has derived significant benefits from the captive PET resin
  production to serve its raw material demand on costs, quality and
  security of availability. Similar benefits would be available to PE
  once it commences production from a new resin plant during 2006-07.
  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
  also reduce the supply risk. Captive production of resin would also
  allow the company to develop new film products.

  b. The start up of Metallizer plants in Thailand and Turkey during
  2005-06 have helped improve the product mix. This will help the
  company produce value added films and sell additional volumes to its
  existing as well as new customers.

  c. PTL is now under process to set up a new extrusion coating plant in
  Thailand which will further help the company to reduce their exposure
  to commodity grades of film and increase the proportion of value added
  films.

  2. The company and its subsidiary in Turkey have started deriving
  benefits from the larger size and distributed manufacturing operations
  whereby it has qualified as a preferred global supplier with many
  multinational and large customers with global operations.

  3. The company has also invested significantly in distribution,
  especially the acquisition of a company in USA which has been renamed
  Polyplex (Americas) Inc. This investment is expected to spearhead
  better market penetration and improve 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 1,800,000.00 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 288,600.00 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, and Bt. 200,000.00 payable
    in the future for the service not yet fully done for the past fiscal
    year.