12. Financial Position and Operational performance

12.1 Financial statements

Auditor

+---------------------+------------------+-------+---------------------+
| Year                | Name of auditor  | CPA   | Auditing firm       |
|                     |                  | no.   |                     |
+---------------------+------------------+-------+---------------------+
| 2008/09             | Mr.Narong        | 3315  | Ernst & Young       |
|                     | Puntawong        |       |                     |
| (Apr 1,2008-Mar     |                  |       |                     |
| 31,2009)            |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 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)           |                  |       |                     |
+---------------------+------------------+-------+---------------------+
| 2003-04 to 2005-06  | Mr. Vichien      | 3183  | KPMG Phoomchai      |
|                     | Thamtrakul       |       | Audit Ltd.          |
| (Apr 1, 2003 – Mar  |                  |       |                     |
| 31, 2006)           |                  |       |                     |
+---------------------+------------------+-------+---------------------+

Auditor’s report

For all the past years, until the year ended on March 31^(st) 2009, the
Auditors have given an unqualified opinion that the financial statements
were fairly presented and prepared in accordance with generally accepted
accounting principles.

PTL had 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. The financial statements of last 3 years, for both
Consolidated and Standalone, latest being the year ended on 31^(st)
March 2009, have been given for the purpose of comparison and for the
appreciation of the growth in revenues and profitability over the years.

­

[TABLE]

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

  Statement of                                                                                                                                          
  Income and                                                                                                                                            
  Retained                                                                                                                                              
  Earnings                                                                                                                                              

  Unit: Bt. 000’s                                                                                                                                       

                   Unconsolidated                                                          Consolidated                                                 

                   2006/2007                 2007/2008              2008/2009              2006/2007               2007/2008              2008/2009     

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

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

                                                                                                                                                        

  Revenues                                                                                                                                              

  Net sales        3,324,285        98.07    3,531,976     97.85    3,236,610     95.98    4,718,570      98.12    6,398,679     98.26    6,859,738     97.12

  Other revenues   65,508           1.93     77,664        2.15     74,881        2.22     90,262         1.88     113,335       1.74     74,921        1.06

  Gain on foreign  -                -        -             -        60,739        1.80     -              -        -             -        128,166       1.82
  exchange                                                                                                                                              

  Total Revenues   3,389,793        100.00   3,609,640     100.00   3,372,230     100.00   4,808,832      100.00   6,512,014     100.00   7,062,825     100.00

  Costs and                                                                                                                                             
  Expenses                                                                                                                                              

  Cost of sales    2,850,734        84.10    2,798,051     77.52    2,385,424     70.74    3,854,393      80.15    4,975,768     76.41    5,078,941     71.91

  Selling and      288,263          8.50     283,426       7.85     304,440       9.03     525,860        10.94    570,687       8.76     704,132       9.97
  administrative                                                                                                                                        
  expenses                                                                                                                                              

  Loss of foreign  25,503           0.75     44,797        1.24     -             -        -              -        45,672        0.70     -             -
  exchange                                                                                                                                              

  Total Expenses   3,164,500        93.35    3,126,274     86.61    2,689,864     79.77    4,380,253      91.09    5,592,127     85.87    5,783,073     81.88

  Profit (loss)    225,293          6.65     483,366       13.39    682,366       20.23    428,579        8.91     919,887       14.13    1,279,752     18.12
  before interest                                                                                                                                       
  expenses                                                                                                                                              

  Interest         (37,457)         (1.10)   (49,477)      (1.37)   (68,194)      (2.02)   (80,811)       (1.68)   (94,241)      (1.45)   (219,210)     (3.10)
  expenses                                                                                                                                              

  Income Tax       -                -        -             -        -             -        (4,381)        (0.09)   (9,297)       (0.14)   (13,863)      (0.20)

  Net profit       187,836          5.55     433,889       12.02    614,172       18.21    343,387        7.14     816,349       12.54    1,046,679     14.82
  (loss) after                                                                                                                                          
  income tax                                                                                                                                            

  Net loss of      -                -        -             -        -             -        (1,545)        (0.03)   (2,798)       (0.06)   (4,713)       (0.07)
  minority                                                                                                                                              
  interest                                                                                                                                              

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

  Net profit       187,836          5.54     433,889       12.02    614,172       18.21    341,842        7.11     813,551       12.48    1,041,966     14.75
  (loss)                                                                                                                                                

  Earnings         0.23             -        0.54          -        0.77          -        0.43           -        1.02          -        1.30          -
  (losses) per                                                                                                                                          
  share (Bt.)                                                                                                                                           
  ---------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

­­

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

  Cash Flow Statement                                                                                  

  Unit : Bt. 000’s                                                                                     

                             Unconsolidated                               Consolidated                 

                             2006/2007        2007/2008     2008/2009     2006/2007      2007/2008     2008/2009

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

  Cash flow from operating                                                                              
  activities                                                                                           

  Net profit (loss)          187,836          433,889       614,172       341,842        813,551       1,041,966

  Depreciation and           130,307          130,698       154,466       223,802        241,788       343,266
  amortization                                                                                         

  Increase (decrease)        308              (100)         (74)          308            251           (74)
  allowance for doubtful                                                                               
  debts                                                                                                

  Allowance for diminution   -                -             16,183        3,041          (3,041)       19,558
  in value of inventories                                                                              
  (reversal)                                                                                           

  Dividend income            -                (4,315)       (2,525)       -              -             -

  Interest Expense           37,457           48,691        66,837        80,810         91,330        196,993

  Income Tax expense         -                -             -             4,381          9,297         13,863

  Gain on disposal of        (1)              (155)         (534)         (1)            (155)         1,172
  property, plant and                                                                                  
  equipment                                                                                            

  Unrealized losses (gains)  6,237            30,057        21,192        6,237          35,710        34,128
  on foreign exchange                                                                                  

  Exchange loss on share     -                -             6,026         -              -             -
  deposit paid in advance                                                                              

  Gains on sales of current  -                (1,614)       (2,191)       -              (1,614)       (2,191)
  investments                                                                                          

  Net loss of minority       -                -             -             1,545          2,799         4,713
  interest                                                                                             

  Profit (Loss) from         362,144          637,151       873,552       661,965        1,189,916     1,653,394
  operation before changes                                                                             
  in operating assets and                                                                              
  liabilities                                                                                          

  Decrease (Increase) in     -                                            -                             
  operating assets                                                                                     

  Accounts receivable        198,379          (367,426)     284,286       (150,212)      (679,532)     104,591

  Balance due from a related -                -             -             188            19,916        (52,241)
  company                                                                                              

  Inventories                160,268          50,119        (103,925)     206,056        (101,418)     (212,666)

  Other current assets       23,369           32,290        6,285         30,577         18,785        6,774

  Other non-current assets   (23,156)         (2,219)       277           (139,072)      (2,214)       188

  Increase (Decrease) in                                                                                
  operating liabilities                                                                                

  Accounts payable           (44,541)         89,025        (147,061)     95,651         193,726       (261,311)

  Other current liabilities  16,328           1,945         34,633        8,260          3,019         47,629

  Income tax paid            -                -             -             (6,954)        (4,771)       (9,516)

  Other non- current         -                -             -             1,412          386           87
  liabilities                                                                                          

  Cash flow provided from    692,791          440,885       948,047       707,871        637,813       1,276,929
  (used in) operating                                                                                  
  activities                                                                                           
  -------------------------- ---------------- ------------- ------------- -------------- ------------- -------------

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

  Cash Flow Statement                                                                                      

  Unit : Bt. 000’s                                                                                         

                                 Unconsolidated                               Consolidated                 

                                 2006/2007        2007/2008     2008/2009     2006/2007      2007/2008     2008/2009

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

  Cash flow from Investing                                                                                 
  activities                                                                                               

  Decrease (increase) in current -                1,614         (346,509)     -              1,614         (346,509)
  investments                                                                                              

  Dividend from subsidiary       -                4,315         2,525         -              -             -

  Other Long Term Investment     -                -                           -              -             -

  Repayment of accounts payable  -                15,832        (57,828)      -              139,860       (57,828)
  on purchase of fixed assets                                                                              

  Increase in Investment in      (500,120)        (407,830)     (261,950)     -              -             -
  subsidiary                                                                                               

  Purchase of fixed assets       (91,075)         (431,600)     (91,845)      (480,384)      (1,872,461)   (341,105)

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

  Sale of fixed assets           25               234           1,019         969            1,205         4,308

  Net cash used in investing     (591,170)        (817,435)     (754,588)     (479,724)      (1,731,655)   (741,134)
  activities                                                                                               

  Cash flow from financing                                                                                 
  activities                                                                                               

  Interest Paid                  (37,306)         (44,585)      (67,741)      (80,659)       (87,226)      (204,346)

  Increase (Decrease) in bank    -                18,371        (18,371)      214,400        (160,587)     26,629
  overdraft/ short term loans                                                                              
  from financial institutions                                                                              

  Dividend Paid                  (224,000)        (136,000)     (320,000)     (224,000)      (136,000)     (320,000)

  Dividend paid to minority      -                -             -             -              (1,692)       (1,119)
  shareholders                                                                                             

  Increase in long-term loans    137,380          516,727       221,103       (111,843)      1,499,266     347,752

  Cash provided from financing   (123,926)        354,513       (185,009)     (202,102)      1,113,761     (151,084)
  activities                                                                                               

                                                                                                           

  Currency Translation changes   -                -             -             (60,546)       (62,679)      (39,050)

                                                                                                           

  Increase in cash and cash      (22,305)         (22,037)      8,450         (34,501)       (42,760)      345,659
  equivalents                                                                                              

                                                                                                           

  Cash and cash equivalents at   53,458           31,154        9,117         164,139        129,638       86,878
  the beginning of period (April                                                                           
  1)                                                                                                       

  Cash and Cash equivalents at   31,154           9,117         17,566        129,638        86,878        432,538
  the end of period (March 31)                                                                             
  ------------------------------ ---------------- ------------- ------------- -------------- ------------- -------------

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

  Financial                                                                                            
  Statement                                                                                            

                             Unconsolidated                               Consolidated                 

                             2006/2007        2007/2008     2008/2009     2006/2007      2007/2008     2008/2009

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

  Liquidity Ratios                                                                                      

  Current ratio     (time)   2.01             1.78          1.52          1.55           1.81          2.29

  Quick ratio       (time)   1.27             1.38          1.13          0.85           1.16          1.52

  Cash flow current (time)   1.43             0.75          1.18          0.72           0.53          0.94
  ratio                                                                                                

  Receivable        (time)   4.79             4.61          4.01          6.57           5.74          4.94
  current ratio                                                                                        

  Avg. debt         (day)    75.08            78.14         89.78         54.78          62.73         72.84
  collection period                                                                                    

  Inventory         (time)   104.31           128.21        109.61        23.16          32.30         22.70
  turnover period                                                                                      

  Avg. selling      (day)    3.45             2.81          3.28          15.54          11.14         15.86
  period                                                                                               

  Payable current   (time)   6.92             6.45          5.89          7.42           7.42          7.91
  ratio                                                                                                

  Payable repayment (day)    52.04            55.84         61.11         48.50          48.50         45.54
  period                                                                                               

  Cash cycle        (day)    26.49            25.11         31.95         21.83          25.37         43.16

  Profitability                                                                                         
  Ratios                                                                                               

  Gross profit      (%)      14.25%           20.78%        26.30%        18.31%         22.24%        25.96%
  margin                                                                                               

  Operating profit  (%)      5.57%            12.75%        16.89%        7.17%          13.32%        15.70%
  margin                                                                                               

  Other profit      (%)      1.93%            2.15%         4.02%         1.88%          1.74%         2.88%
  margin                                                                                               

  Cash to profit    (%)      276.24%          83.48%        138.94%       165.17%        66.06%        99.78%
  margin                                                                                               

  Net profit margin (%)      5.54%            12.02%        18.21%        7.11%          12.49%        14.75%

  Return on equity  (%)      5.30%            11.51%        15.72%        9.76%          20.72%        23.35%

  Efficiency Ratios                                                                                     

  Return on assets  (%)      4.03%            8.33%         10.43%        5.98%          11.51%        12.13%

  Return on fixed   (%)      15.99%           26.55%        34.23%        14.56%         21.30%        24.07%
  assets                                                                                               

  Asset turnover    (time)   0.73             0.69          0.57          0.84           0.92          0.82

  Financial Policy                                                                                      
  Ratios                                                                                               

  Debt to equity    (time)   0.30             0.45          0.56          0.66           0.92          0.94
  ratio                                                                                                

  Interest coverage (time)   9.49             12.41         12.27         8.05           12.30         7.38
  ratio                                                                                                

  Commitment        (time)   7.61             0.93          4.59          0.93           0.31          2.15
  coverage ratio                                                                                       
  (cash basis)                                                                                         

  Pay out ratio     (%)      40%              40%           39%           40%            0%            0%
  ----------------- -------- ---------------- ------------- ------------- -------------- ------------- -------------

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 CPP Project under
implementation is also coming up on this plot of land and any other
future expansion project of PTL can also be set up on this land, as
there would still be a considerable portion of the land vacant after the
set up of the CPP Project. 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 Extrusion Coating plant is also certified with
ISO 9001-2000, ISO 14001 – 2004 and OHSAS 18001 – 2007.

Polyplex group aims to become one of the world market leaders in PET
thin film by continuously expanding its market share through regular
expansions in capacity. With the start up of the second PET thin 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. In order to achieve further growth and also to
de-risk the existing PET film business, Polyplex is adding new products
to its portfolio.

By undertaking expansions for manufacturing of related products such as
BOPP film (In India) and CPP film (In Thailand), which are other
Packaging substrates used by Converters, in addition to PET thin film,
Polyplex is moving towards establishing itself as a Preferred packaging
substrate provider as against just a PET thin film supplier. Apart from
this, in order to further diversify its product range, the group has
regularly been expanding into new value added products such as Silicone
coated film (In India – 2007), Extrusion coated films ( In Thailand –
2008). As an ongoing effort in this direction, the board of PTL has
recently approved an investment for a new Silicone Coated Film line,
which will be the second line for the group.

Polyplex group has set out clear business strategies:

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

4) Diversifying the product lines

5) Customer satisfaction through supply of consistent quality products

The financial year 2008-09, has shown a 40% growth in standalone profits
of PTL and 28% growth in consolidated profits, despite the various
challenges posed by the global economic slowdown, affecting almost all
sectors of the economy, including the industry Polyplex is operating in
– the PET thin film industry.

The highlights of the year’s performance are as follows:

TOTAL REVENUES

Consolidated:

Sales Revenue:

Consolidated sales revenue has been Bt 6,860 million, an increase of Bt
461 million or 7.2% over the previous year. The key reasons for the
increase are as follows:

-   During the year, the Company has commenced production in Thailand,
    from the Extrusion Coating line in April 2008 and the Metallized
    film line in May 2008. Polyplex Europa, the Company’s subsidiary in
    Turkey, has commenced production from the 2nd Plain film and
    Metallized film lines in May 2008. Growth in revenue is mainly on
    account of the additional volumes from the new capacity additions in
    Thailand as well as Turkey.

-   The growth could have been even higher, if not for the sharp decline
    in sales volumes in the second half of the year, due to de-stocking
    along the entire supply chain, which resulted in a sudden
    contraction in the demand for PET film and a consequential drop in
    our sales volumes.

Table illustrating Consolidated sales revenue from Exports and Domestic
sales is as below:

  ------------- ---------- --------- ---------- --------- ---------- ---------
                2006-07              2007-08              2008-09    

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

  Exports       3,481.03   73.77     4,335.42   67.75     4,496.09   65.54

  Domestic      1,237.53   26.23     2,063.26   32.25     2,363.65   34.46
  sales                                                              

  Total         4,718.57   100.00    6,398.68   100.00    6,859.74   100.00
  ------------- ---------- --------- ---------- --------- ---------- ---------

FX Fluctuation gain and Other Income:

There has been an exchange gain of Bt 128 million as compared with an
exchange loss of Bt 46 million in the previous year. The Other income
has been Bt 75 million, almost the same as in the previous year.

Standalone:

Sales Revenue:

PTL’s total sales revenue is mainly driven by Exports, with 75-85% of
its total sales revenue coming from exports.

Table illustrating PTL’s sales revenue from export and domestic sales is
below:

  -------------- ---------- -------- ---------- -------- ---------- --------
  Market         2006-07             2007-08             2008-09    

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

  Exports        2,828.11   85.07    2,890.14   81.83    2,522.67   78.16

  Domestic sales 496.18     14.93    641.83     18.17    713.94     21.84

  Total          3,324.29   100.00   3,531.97   100.00   3,236.61   100.00
  -------------- ---------- -------- ---------- -------- ---------- --------

In the year 2008-09 (April 1- March 31, 2009), PTL achieved total sales
revenues of Bt. 3,237 million, a decrease of Bt. 295 million over the
previous year. The major features of sales revenue in 2008-09 are as
follows:

-   There is a marginal increase of 3.1 % in the revenue from sale of
    film from Bt. 2,882 million to Bt 2,972 million. The growth in
    revenue was suppressed by the significant drop in sales volumes
    witnessed in the second half of the year, particularly from
    November’08- January’09 due to the aggressive de-stocking along the
    value chain, thereby resulting in drop in customer orders. The
    increase could have been much higher if not for this contraction in
    demand, as the avg.sales realizations for the year were better than
    in the previous year by about 8-10 cents/ Kg.

  The value additions (VA = Selling price – Raw Material Cost) during
  the year for PTL are shown below. Surge in Value Addition (VA) in
  Q2/Q3 above normal levels was mainly due to sudden drop in raw
  material prices, resulting from global crude oil price drop. The time
  lag in adjusting the selling prices for the drop in input prices
  resulted in the above normal value additions during these 2 quarters.
  VA levels in Q4 have returned to normal levels as the selling prices
  have been adjusted in line with the reduction in input prices as also
  due to drop in demand.

  []

-   Revenue from sale of surplus polyester chips/others to its
    subsidiary in Turkey and also to other customers in the export as
    well as domestic market was Bt 265 million ( Exports – Bt 141
    million,& Domestic Bt 124 million), as compared to Bt 650 million in
    the previous year. Decline in sales of polyester chips was one of
    the key reasons for the drop in overall sales revenues.

FX Fluctuation gain and Other Income:

PTL has made an exchange gain of Bt 61 million, as compared to an
exchange loss of Bt 45 million in the previous year. There have been
gains on USD denominated accounts receivables due to the USD
appreciation against baht, which has been offset partially by the
unrealized loss on the USD loan restatements. On the Euro front also,
the Euro depreciation against the baht has resulted in unrealized
exchange gains on the Euro loan restatements, which are partially offset
by loss on the Euro denominated accounts receivables. So, in addition to
improved value additions and other factors of operational excellence,
cost saving measures etc, the exchange gain is also a key contributor to
the increased profitability for the year.

The other income has been Bt 75 million, as against Bt 78 million in the
previous year. Some of the main items included in other income are
miscellaneous sales, Export Incentive, Interest income, Dividend Income,
Profit on sale of fixed assets, Insurance claims etc.

TOTAL EXPENSES

Consolidated

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

Cost of sales (COS) amounted to Bt 5,078 million, representing 87.8% of
the total expenses, lower than 89% of the previous year. Cost of sales
includes mainly the raw material costs, packing costs, utilities,
depreciation on building and machinery, staff costs etc. A broad break
up of COS is given below:

  ----------------------------------------------------------- -----------
  Description                                                 %

  Raw materials and consumables used (incl.change in          74.3%
  inventory)                                                  

  Depreciation ( in COS)                                      6.3%

  Salaries, wages and other employee benefits (in COS)        6.1%

  Utiilties (Power/Natural Gas/ Chilled water etc)            10.4%

  Others                                                      2.9%

                                                              100.0%
  ----------------------------------------------------------- -----------

The selling expenses amounted to Bt. 492 million or 8.5 % of total
expenses as compared with Bt. 396 million or 7.1% in the previous year.
They principally included the shipment costs for the exported products,
freight charges, inland insurance on domestic sales as well as other
selling expenses. The increase in selling expenses is due to higher
sales volumes in the year (on a consolidated basis) and the increase in
% to the total expenses is mainly due to increase in other selling
expenses like credit insurance, commission etc. The exchange loss of the
previous year is also a reason for lower % to total expenses of last
year.

The administrative expenses amounted to Bt 212 million or 3.7% of total
expenses as compared with Bt 175 million or 3.1% in the previous year.
The main reason for the increase in admin expenses is the increased
scale of operations in the subsidiaries, apart from reasons of increased
professional/legal fees at PTL, as explained above.

The finance charges increased from Bt 94 million to Bt 219 million,
mainly due to increase in borrowings for the expansion projects in
Thailand and in Turkey. The cost on additional borrowings has been
partly offset by the reduction in the interest rates.

Standalone

Cost of sales (COS) amounted to Bt 2,385 million, representing 88.7% of
the total expenses, lower than Bt 2,798 million or 89.5% of the previous
year. A broad break up of the COS is given below:

  ------------------------------------------------------------- ---------
  Description                                                   %

  Raw materials and consumables (incl.change in all inventory)  74.8%

  Depreciation ( in COS)                                        6.2%

  Salaries, wages and other employee benefits (in COS)          6.3%

  Utiilties (Power/Natural Gas/ Chilled water etc)              8.8%

  Others                                                        3.9%

                                                                100.0%
  ------------------------------------------------------------- ---------

­The selling expenses amounted to Bt. 246 million or 9.2 % of total
expenses as compared with Bt. 238 million or 7.6% in the previous year.
They principally included the shipment costs for the exported products,
freight charges, inland insurance on domestic sales as well as other
selling expenses. The increase in % to the total expenses is mainly due
to lower total expenses in the current year, mainly resulting from lower
raw material costs.

The administrative expenses amounted to Bt 58 million or 2.1% of total
expenses as compared with Bt 45 million or 1.5% in the previous year.
The main reason for the increase in admin expenses is the increase in
professional fees & legal consultation fees etc, particularly due to the
US anti dumping investigation related attorney fees. Also, the
independent Directors have been paid a remuneration of Bt 2.25 million
this year, which was NIL in the earlier year.

Finance charges have increased from Bt 50 million to Bt 68 million, due
to increased term debt borrowings as explained above.

Profit margins – Gross Profit, Operating Profit and Net profit ratios

Gross profit margin on a consolidated basis has improved from 22.24% to
25.96% in the current year. On a standalone basis, PTL had a gross
profit margin of 26.3% in 2008-09, which is higher than the 20.78% in
the previous year due to lower raw material costs and improvement in
sales realizations due to increase in share of value added films in the
sales portfolio.

On a consolidated basis, the operating profit margin has increased from
13.32% to 15.70% in the current year. On a standalone basis, it has
improved from 12.75% to 16.89% in the current year. The improvement is
mainly due to the same reason of lower raw material costs and some other
savings in packing costs etc.

Net profit margin on a consolidated basis has improved from 12.49% to
14.75% and on a standalone basis from 12.02% to 18.21%. The combined
factors of lower raw material costs, higher share of value added
products in the sale portfolio, exchange gain as against an exchange
loss in the earlier year, benefit of economies of scale etc have all
together contributed to a significant improvement in all the
profitability ratios.

11.2.2 Financial status

TOTAL ASSETS

As at 31^(st) March 2009, PTL’s consolidated total assets were 8,881
million, an increase of 7% as compared to Bt. 8,299 million in the
previous year.

On a Standalone basis, the total assets as at 31^(st) March 2009 were
Bt. 6,087 million, an increase of 7% over Bt.5,688 million of previous
year.

The company’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.

The main components of Total Assets are Current assets, Fixed assets,
Investments and other non-current assets. A brief summary of the
movement in the various components of total assets is given below:

Accounts receivable

The Company’s consolidated net accounts receivable as of March 31, 2009
stood at Bt. 1,334 million which is lower than Bt. 1,442 million as of
March 31, 2008 or decrease of 7.5%. The reduction in receivables is
mainly on account of lower average credit period of sales.

PTL’s Standalone Net Accounts Receivables as of 31^(st) March, 2009 were
Bt. 671 million, as against Bt 944 million in the previous year, or a
decrease of 29%. The decrease in receivables is mainly due to reduction
in sales volumes, including volumes of Chips, during the last quarter of
the year..

Inventories

On a consolidated basis, the total inventories have gone up from 767
million to 960 million, an increase of Bt 193 million or 25%. On a
standalone basis, the increase is from Bt. 226 million to Bt. 314
million or 39%. The increase in inventory levels is mainly due to higher
stock of raw materials in PTL (Chips stock) as the surplus stock could
not be liquidated owing to a fall in demand. There has also been an
increase in stock of finished goods mainly in the subsidiaries (Turkey
and US) and also some increase in stock of spares parts, which are
mainly insurance spares.

Net Fixed Assets

Consolidated Net Fixed Assets (including capital work in progress -CWIP)
have decreased by Bt 300 million from Bt 5,899 million to Bt 5,599
million, mainly due to depreciation charge of Bt. 342 million, which has
been partially offset by the net impact of the following:

-   Increase due to additions to fixed assets – Bt 243 million, mainly
    on building improvements and machinery additions, on account of the
    expansion projects in Thailand and Turkey, which commenced
    operations in May’08, although major costs relating to these
    projects was already incurred in the previous year and was appearing
    under CWIP, forming part of the Net Fixed assets balance as on
    31^(st) March 2008.

-   Decrease on account of fixed assets disposed during the year - Bt 5
    million, mainly motor vehicles and some machinery items.

-   Decrease on account of Translation adjustment – Bt 196 million,
    mainly due to translation of subsidiary Net Fixed Assets,
    denominated in Euro and USD, into THB for the purpose of
    consolidation.

PTL Net Fixed Assets have decreased by Bt 80 million, from Bt 2,286
million to Bt 2,206 million, mainly due to the depreciation charge of Bt
154 million, which has been partially offset by the net impact of the
following:

-   Increase due to addition to fixed assets - Bt 75 million mainly on
    account of following:

    -   Addition to Motor vehicles – Bt 11 million

    -   Addition to Machinery in Film and Chips plant – Bt 38 million
        (Band Pinning, Coating unit etc)

    -   Building improvements, mainly for the new metallizer – Bt 13
        million

    -   CWIP relating to the new CPP project – Bt 9 million,

    -   Other asset additions – Bt 4 million

-   Decrease on account of net fixed assets disposed during the year –
    Bt 1 million, mainly motor vehicles

Investment in subsidiaries

During the year, PTL made an investment of USD 4 million in Polyplex
(Americas)Inc (PA) toward their working capital requirement and invested
USD 3.5 million in the Preference Shares of Polyplex (Singapore) Pte Ltd
(PSPL).

Return on assets

PTL’s return of assets has increased to 10.43% in 2008-09 from 8.33% in
the previous year mainly due to increase in profitability. The return
would have been higher, if not for the 7% increase in the total assets
base.

On a consolidated basis also, the return on assets has increased to
12.13% in 2008-09 from 11.51% in 2007-08 which is again due to increase
in profitability. The return would have been higher, if not for the 7%
increase in the total assets base.

12.2.3 Liquidity

Cash flow

For the year 2008-09, PTL and its subsidiaries generated cash flow from
operations amounting to Bt. 1,277 million and cash flow from long term
loans and other short term bank borrowings of Bt. 374 million. Of these,
Bt. 394 million (net of sales of fixed assets) was expended for purchase
of machinery & equipment and other fixed assets, Bt. 204 million was
paid as finance charges on the long term and short term borrowings and
Bt 347 million was invested in liquid investments. There was a net
outflow of Bt. 320 million on account of dividend paid by PTL for
2007-08 and Bt 1 million of dividend payout by PA to the minority
shareholders. The balance thereof along with the negative translation
adjustment of Bt. 39 million and the opening balance of Bt. 87 million
resulted in a net closing balance of Bt. 433 million.

In the year 2008-09, PTL had a cash flow from operations of Bt. 948
million, net cash flow from long term loans and other short term bank
borrowings of Bt. 203 million, dividend from the US subsidiary Bt 3
million. Of these, Bt. 149 million was used for purchase of fixed assets
& other assets, Bt. 262 million was invested in subsidiaries, Bt. 68
million was paid as finance charges on the Long term loans, Bt 347
million was invested in liquid investments. There was a net outflow of
Bt. 320 million on account of dividend for 2007-08. The surplus thereof
together with the opening balance of Bt.9 million resulted in a net
closing balance of Bt.17 million.

Liquidity ratio

In 2008-09, consolidated current ratio was 2.29 and quick ratio was
1.52. PTL’s current ratio and quick ratio were 1.52 and 1.13
respectively. Consolidated average debt collection period during 2008-09
was 73 days along with a loan repayment period (Account payables period)
of 46 days and average selling period of 16 days, resulting in a cash
cycle of 43 days. The average debt collection period during 2008-09 was
90 days along with loan repayment period of 61 days and average selling
period of 3 days resulting in cash cycle of 32 days.

In 2007-08, consolidated current and quick ratio were 1.81 and 1.16
respectively and PTL’s current ratio and quick ratio were 1.78 and 1.38
respectively. Consolidated average debt collection period during 2007-08
was 63 days along with a loan repayment period (Account payables period)
of 49 days and average selling period of 11 days, resulting in a cash
cycle of 25 days. PTL’s average debt collection period during 2007-08
was 78 days along with loan repayment period of 56 days and average
selling period of 3 days resulting in a cash cycle of 25 days.

12.2.4 Sources of funds

Sources of funds consist of long term and short term loans from
financial institutions and shareholders’ equity.

TOTAL LIABILITIES

Current Liabilities

As at 31^(st) March, 2009, consolidated current liabilities stood at Bt
1,396 million, an increase of Bt 80 million from Bt. 1,316 million in
the previous year, mainly due to provision for the Interim dividend
payable of Bt 320 million, which is partially offset by a net impact of
the following:

-   Net increase in short term borrowings by Bt 26 million, mainly on
    account of increase in the US subsidiary’s working capital
    requirement

-   Increase in current portion of long term loans by Bt 45 million

-   Increase in other liabilities by Bt 46 million, mainly due to O/S
    expenses such commission, freight charge, finance charges, staff
    bonus, probable quality claims etc.

-   Decrease in Trade payables by Bt 262 million, mainly due to drop in
    raw material prices

-   Decrease in payables for fixed assets by Bt 95 million, mainly due
    to start up of the expansion projects and release of the relates
    machinery payables.

As at 31^(st) March,2009, PTL’s current liabilities stood at Bt 918
million, an increase of Bt 226 million from Bt. 692 million in the
previous year, mainly due to provision for the Interim dividend payable
of Bt 320 million, which is offset by a net decrease of Bt 94 million in
the other current liabilities (trade payables/payables for purchase of
fixed assets etc)

Term Debts

On a consolidated basis, the term debt (net of current portion) has
increased by Bt 233 million from Bt 2,653 million to Bt 2,886 million.
PTL’s term debt (net of current portion) has increased from Bt. 1,077
million to Bt 1,276 million. The increase in debt is mainly on account
of additional borrowings at Thailand and Turkey for the expansion
projects, partially offset by loan repayments made during the year.

Leveraging & interest coverage ratio

The debt equity ratio (debt only, short term and long term, including
current portion) of 0.70 on a consolidated basis and 0.37 for PTL
standalone is quite comfortable. Debt equity ratio (for total debt,
including current + non-current liabilities), is 0.94 on a consolidated
basis and 0.56 for PTL standalone, which is also quite comfortable.

The consolidated interest coverage ratio was 7.38 times in 2008-09 as
against 12.3 in 2007-08.Decrease in the interest coverage ratio is due
to the increase in interest cost, due to higher borrowings as compared
to previous year. PTL’s interest coverage ratio was 12.27 times in
2008-09 as against 12.41 times in 2007-08. Despite the increase in
interest cost, the decrease in ratio is not so significant due to
increase in EBITDA during the year.

Commitments

As at 31 March 2009, company had the following commitments and
contingent liabilities:

(a) PTL had commitments totaling Baht 9.6 million under various service
    agreements. These agreements terminate between May 2009 and August
    2010.

(b) The Company’s foreign exchange contracts outstanding at 31 March
    2009 are summarised below.

+----------------+-----------+----------+--------------+--------------+
|                | Bought    | Sold     | Contractual  |              |
|                |           |          | exchange     |              |
|                |           |          | rate         |              |
+----------------+-----------+----------+--------------+--------------+
| Fo             | amount    | amount   | Bought       | Sold         |
| reign currency |           |          |              |              |
+----------------+-----------+----------+--------------+--------------+
|                | (Million) | (        | (Baht per 1  |              |
|                |           | Million) | foreign      |              |
|                |           |          | currency     |              |
|                |           |          | unit)        |              |
+----------------+-----------+----------+--------------+--------------+
| US dollar      |   7.8     |   14.8   |   33.5000 -  |   33.7900 -  |
|                |           |          |   36.0650    |   36.0050    |
+----------------+-----------+----------+--------------+--------------+
|   Euro         |   2.7     |   0.5    |   45.2294 -  |   45.0500 -  |
|                |           |          |   49.4500    |   47.9050    |
+----------------+-----------+----------+--------------+--------------+
|   Japanese yen |   85.4    |   16.7   |   0.3231 -   |   0.3599 -   |
|                |           |          |   0.3695     |   0.3628     |
+----------------+-----------+----------+--------------+--------------+
|                |           |          |              |              |
+----------------+-----------+----------+--------------+--------------+

(c) As at 31 March 2009, PTL had capital commitments of approximately
    Baht 291.03 million relating to the construction of factory
    buildings, and acquisition of machinery and equipment

(d) As at 31 March 2009, the PTL is committed for rentals (under
    Operating Lease agreements) as follows:

+----------------------------------------------------+-----------------+
|                                                    | Thousand Baht   |
+----------------------------------------------------+-----------------+
| Payable within:                                    |                 |
+----------------------------------------------------+-----------------+
|   1 years                                          | 2,462           |
+----------------------------------------------------+-----------------+
|   2 to 5 years                                     | 2,929           |
+----------------------------------------------------+-----------------+

(e) PTL has given short term guarantees worth USD 7.0 million against
working capital facilities of its subsidiaries. PTL has also given a
guarantee of EUR 19.4 million for the long term loans taken by the
Turkey subsidiary. .

Apart from above, as at 31 March 2009 there were outstanding bank
guarantees of approximately Baht 0.7 million and EUR 6.8 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 rose to Bt 4,576
million from Bt. 4,315 million in the previous year, representing a
growth rate of 6% during the year, which is after accounting for
dividend payment of Bt 640 million in PTL( 320 million relating to FY
2007-08 and Bt 320 million of Interim dividend for FY 2008-09) and USD
106,875 in the books of Polyplex (Americas) Inc. The increase is due to
increased profitability for the year. On a standalone basis, there is
actually a decrease in shareholder equity by Bt 26 million, mainly due
to dividend payout/proposed dividend of Bt 640 million which is offset
by the profits of Bt 614 million generated during the year,

Return on equity

On a consolidated basis, the Return on equity has increased from 20.72%
in 2007-08 to 23.35% in 2008-09. The ROE of PTL for 2008-09 has
increased to 15.72% from 11.51% in 2007-08 mainly due to increase in
profitability for the year.

PTL has a policy to pay dividend at about 40% of consolidated net
profits. For the year 2008-09, PTL’s board has proposed a dividend of Bt
0.52 per share, out of which, Bt 0.40 pre share has already been paid in
April 2009 as Interim dividend and the balance is payable in August
2009, subject to the approval of shareholders in the Annual General
meeting in July 2009.

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

  The outlook for the long term remains stable and positive for the
  company, but the immediate outlook for the year 2009-10 is very
  challenging due to change in the market situation as a result of the
  global economic slowdown and also due to capacity additions coming up
  in the industry, which is likely to impact the demand-supply balance
  to some extent, thereby resulting in under utilization of some
  capacities. In addition to this, the raw material volatility is also
  likely to affect the stability in the value addition levels, as the
  cost increase will put considerable pressure on the margins.

  However, PTL is confident of retaining its competitive edge due to
  various reasons:

1.  Benefit from its various projects, the past projects and the ones
    under implementation 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. 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
  in the long run.

  c. The Extrusion coating plant in Thailand, which commenced operations
  in April’08, has further helped the company to reduce their exposure
  to commodity grades of film and increase the proportion of value added
  films and other specialty grades of film.

  d. The CPP film project under implementation and the Silicone Coating
  project announced in May 2009 will also help the company in product
  diversification and diversify the risk associated with the cyclical
  nature of the PET film industry.

2.  Polyplex has been 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.  Polyplex had also invested significantly in distribution, especially
    the acquisition of a company in USA (Polyplex (Americas) Inc.) and
    the ongoing investment in the Trading Company to be set up in China.
    The Investment in PA has lead to a better market penetration and
    improved customer service for North American markets and it is
    evident from the increasing sales volumes of PA. The negative injury
    ruling in favor of Thailand, in the Anti Dumping investigation
    launched by US against imports from China, Brazil, Thailand and UAE,
    can provide an opportunity for Polyplex to increase its market share
    in the USA.

12.4 Remuneration for auditor/s

1.  Audit fee

  The Company paid audit fee as below:

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

-   A total of Bt 2,100,000.00 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 made payment for other services, i.e. examination of
  compliance with conditions of promotion certificates, and legal and
  tax services, including BOI and tax audit 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 - 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. 600,000 payable in
    the future for the service not yet fully done for the past fiscal
    year.