12. Financial Position and Operational performance

    1.  Financial statements

  Auditor

+--------------------+------------------+-------+---------------------+
| Year               | Name of auditor  | CPA   | Auditing firm       |
|                    |                  | no.   |                     |
+--------------------+------------------+-------+---------------------+
| 2012/13            | Mr. Termphong    | 4501  | Ernst & Young       |
|                    | Opanaphan        |       | Office Limited      |
| ( April 1,         |                  |       |                     |
| 2012-Mar 31,2013)  |                  |       |                     |
+--------------------+------------------+-------+---------------------+
| 2011/12            | Mr.Narong        | 3315  | Ernst & Young       |
|                    | Puntawong        |       | Office Limited      |
| (April 1, 2011-Mar |                  |       |                     |
| 31.2012)           |                  |       |                     |
+--------------------+------------------+-------+---------------------+
| 2010/11            | Mr.Narong        | 3315  | Ernst & Young       |
|                    | Puntawong        |       | Office Limited      |
| (April 1, 2010-Mar |                  |       |                     |
| 31.2011)           |                  |       |                     |
+--------------------+------------------+-------+---------------------+
| 2009/10            | Mr.Narong        | 3315  | Ernst & Young       |
|                    | Puntawong        |       | Office Limited      |
| (April 1, 2009-Mar |                  |       |                     |
| 31.2010)           |                  |       |                     |
+--------------------+------------------+-------+---------------------+
| 2008/09            | Mr.Narong        | 3315  | Ernst & Young       |
|                    | Puntawong        |       | Office Limited      |
| (Apr 1,2008-Mar    |                  |       |                     |
| 31,2009)           |                  |       |                     |
+--------------------+------------------+-------+---------------------+

Auditor’s report

For all the past years, including the year ended on March 31st 2013, the
Auditors have given an unqualified opinion that the financial statements
were fairly presented and prepared in accordance with generally accepted
accounting principles.

The financial statements of last 3 years, for both Consolidated and
Standalone, latest being the year ended on 31st March 2013, have been
given for the purpose of comparison and for the appreciation of the
change in revenues and profitability over the years.

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

  Balance Sheet                                                                                                                                          

  Unit: Bt. 000’s                                                                                                                                        

                    Unconsolidated                                                          Consolidated                                                 

                    2010/2011                 2011/2012              2012/2013              2010/2011               2011/2012              2012/2013     

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

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

  Assets                                                                                                                                                 

  Current Assets                                                                                                                                         

  Cash and cash     42,042           0.58     29,641        0.47     75,923        0.94     1,231,009      10.32    1,681,810     14.09    1,468,337     8.92
  Equivalents                                                                                                                                            

  Current           164,947          2.26     0             -        78,000        0.96     164,947        1.38     0             -        94,001        0.57
  investments                                                                                                                                            

  Accounts          1,181,339        16.17    805,876       12.86    760,558       9.38     1,896,159      15.89    1,396,692     11.70    1,384,382     8.41
  receivable                                                                                                                                             

  Amounts due from  -                -        -             -        -             -        221,816.32     1.86     -             -        -             -
  related party                                                                                                                                          

  Inventories       470,777          6.45     564,604       9.01     672,036       8.28     1,732,304      14.52    1,623,792     13.60    1,741,438     10.58

  Other current     132,752          1.82     81,238        1.30     120,178       1.48     212,333        1.78     414,624       3.47     193,424       1.18
  assets                                                                                                                                                 

  Total Current     1,991,857        27.27    1,481,359     23.64    1,706,695     21.04    5,458,568      45.74    5,116,918     42.86    4,881,582     29.66
  Assets                                                                                                                                                 

  Non-Current                                                                                                                                            
  Assets                                                                                                                                                 

  Restricted bank                                                                                                                          11,864        0.07
  deposits                                                                                                                                               

  Investment in     1,936,415        26.51    1,313,492     20.96    1,355,547     16.71    0              -        0             -        0             -
  subsidiary                                                                                                                                             

  Land, premises    3,115,042        42.65    3,118,711     49.77    4,997,595     61.61    5,979,206      50.11    6,360,049     53.27    11,447,677    69.56
  and equipment-net                                                                                                                                      

  Intangible        -                -        -             -        -             -        5,227.99       0.04     5,881.79      0.05     10,175.16     0.06
  assets-net                                                                                                                                             

  Advance payment   0                -        344,485       5.50     37,504        0.46     0              -        447,472       3.75     90,620        0.55
  for purchases of                                                                                                                                       
  assets                                                                                                                                                 

  Other non current 260,825          3.57     8,604         0.14     14,647        0.18     489,899        4.11     8,650         0.07     14,647        0.09
  assets                                                                                                                                                 

  Total Non-current 5,312,282        72.73    4,785,292     76.36    6,405,292     78.96    6,474,333      54.26    6,822,053     57.14    11,574,983    70.34
  Assets                                                                                                                                                 

  Total Assets      7,304,139        100.00   6,266,650     100.00   8,111,987     100.00   11,932,901     100.00   11,938,970    100.00   16,456,565    100.00
  ----------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

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

  Balance Sheet                                                                                                                                            

  Unit: Bt. 000’s                                                                                                                                          

                      Unconsolidated                                                          Consolidated                                                 

                      2009/2010                 2011/2012              2012/2013              2010/2011               2011/2012              2012/2013     

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

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

  Liabilities &                                                                                                                                            
  Shareholders'                                                                                                                                            
  Equity                                                                                                                                                   

  Current Liabilities                                                                                                                                      

  Accounts payable    821,531          11.25    602,327       9.61     665,078       8.20     1,290,564      10.82    1,338,066     11.21    1,178,378     7.16

  Long-term loans-due 256,001          3.50     271,996       4.34     371,427       4.58     387,200        3.24     363,760       3.05     455,194       2.77
  within one year                                                                                                                                          

  Short-term loans    -                -        80,000        1.28     385,000       4.75     194,484        1.63     326,745       2.74     1,044,440     6.35
  from financial                                                                                                                                           
  institutions                                                                                                                                             

  Income tax payable  -                -        -             -        -             -        -              -        20,891        0.17     71            0.00

  Other current       106,458          1.46     79,215        1.26     107,546       1.33     189,958        1.59     168,621       1.41     270,272       1.64
  liabilities                                                                                                                                              

  Total current       1,183,990        16.21    1,033,538     16.49    1,529,051     18.85    2,062,206      17.28    2,218,083     18.58    2,948,354     17.92
  liabilities                                                                                                                                              

  Non-current                                                                                                                                              
  Liabilities                                                                                                                                              

  Long-term loans                                                                                                                            430,732       2.62
  from related party                                                                                                                                       

  Long-term loans-net 1,120,200        15.34    1,156,340     18.45    2,562,418     31.59    1,504,733      12.61    1,250,517     10.47    4,871,709     29.60
  of amount due                                                                                                                                            
  within one year                                                                                                                                          

  Other non-current   -                -        6,052         0.10     7,441         0.09     7,627          0.03     9,768         0.08     16,511        0.10
  liabilities                                                                                                                                              

  Total Liabilities   2,304,191        31.55    2,195,930     35.04    4,098,911     50.53    3,574,566      29.13    3,478,368     29.13    8,267,306     50.24

  Shareholder’s                                                                                                                                            
  Equity                                                                                                                                                   

  Issued & Paid-up                                                                                                                                         
  Share Capital                                                                                                                                            

  Ordinary shares     800,000          10.95    800,000       12.77    800,000       9.86     800,000        6.70     800,000       6.70     800,000       4.86

  Premium on ordinary 1,370,460        18.76    1,370,460     21.87    1,370,460     16.89    1,370,460      11.48    1,370,460     11.48    1,370,460     8.33
  shares                                                                                                                                                   

  Other components of -                -        -             -        -             -        (316,111)      (2.65)   (348,087)     (2.92)   (817,780)     (4.97)
  shareholders'                                                                                                                                            
  equity                                                                                                                                                   

  Legal Reserve       96,000           1.31     96,000        1.53     96,000        1.18     96,000         0.80     96,000        0.80     96,000        0.58

  Retained earnings   2,733,489        37.42    1,804,261     28.79    1,746,617     21.53    6,381,607      53.52    6,401,772     53.62    6,639,743     40.35
  (deficits)                                                                                                                                               

  Total Shareholders' 4,999,949        68.45    4,070,721     64.96    4,013,077     49.47    8,331,956      69.69    8,320,145     69.69    8,088,423     49.15
  Equity                                                                                                                                                   

  Minority Interest   -                -        -             -        -             -        26,380         0.22     140,457       1.18     100,836       0.61

  Total Liabilities   7,304,139        100.00   6,266,650     100.00   8,111,987     100.00   11,932,901     100.00   11,938,970    100.00   16,456,565    100.00
  and Shareholders'                                                                                                                                        
  Equity                                                                                                                                                   
  ------------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

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

  Statement of                                                                                                                                          
  Income and                                                                                                                                            
  Retained                                                                                                                                              
  Earnings                                                                                                                                              

  Unit: Bt. 000’s                                                                                                                                       

                   Unconsolidated                                                          Consolidated                                                 

                   2010/2011                 2011/2012              2012/2013              2010/2011               2011/2012              2012/2013     

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

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

                                                                                                                                                        

  Revenues                                                                                                                                              

  Net sales        4,980,737        97.38    4,560,647     93.92    4,205,440     94.76    11,183,174     98.79    10,143,111    98.82    9,230,018     97.21

  Other revenues   58,745           1.15     295,316       6.08     58,886        1.33     106,586        0.94     120,697       1.18     87,768        0.92

  Gain on foreign  75,517           1.48     -             -        173,836       3.92     30,410         0.27     -             -        177,399       1.87
  exchange                                                                                                                                              

  Total Revenues   5,115,000        100.00   4,855,962     100.00   4,438,162     100.00   11,320,169     100.00   10,263,808    100.00   9,495,185     100.00

  Costs and                                                                                                                                             
  Expenses                                                                                                                                              

  Cost of sales    3,104,616        60.70    3,831,385     78.90    3,941,030     88.80    6,502,517      57.44    7,831,563     76.30    7,874,168     82.93

  Selling and      332,051          6.49     333,606       6.87     372,804       8.40     803,993        7.10     858,032       8.36     1,159,101     12.21
  administrative                                                                                                                                        
  expenses                                                                                                                                              

  Loss of foreign  -                -        221,776       4.57     -             -        -              -        125,978.54    1.23     -             -
  exchange                                                                                                                                              

  Total Expenses   3,436,667        67.19    4,386,767     90.34    4,313,834     97.20    7,306,510      64.54    8,815,573     85.89    9,033,270     95.14

  Profit (loss)    1,678,333        32.81    469,195       9.66     124,329       2.80     4,013,659      35.46    1,448,234     14.11    461,916       4.86
  before interest                                                                                                                                       
  expenses                                                                                                                                              

  Interest         (35,565)         (0.70)   (34,054)      (0.70)   (45,973)      (1.04)   (92,728)       (0.82)   (56,210)      (0.55)   (86,806)      (0.91)
  expenses                                                                                                                                              

  Income Tax       -                -        -             -        -             -        (27,882)       (0.25)   (34,187)      (0.33)   (11,658)      (0.12)

  Net profit       1,642,767        32.12    435,142       8.96     78,356        1.77     3,893,049      34.39    1,357,838     13.23    363,452       3.83
  (loss) after                                                                                                                                          
  income tax                                                                                                                                            

  Net loss of      -                -        -             -        -             -        (10,164)       (0.09)   (230)         (0.00)   10,520        0.11
  minority                                                                                                                                              
  interest                                                                                                                                              

  Net profit       1,642,767        32.12    435,142       8.96     78,356        1.77     3,882,885      34.30    1,357,608     13.23    373,971       3.94
  (loss)                                                                                                                                                

  Earnings         2.05             -        0.54          -        0.10          -        4.85           -        1.70          -        0.47          -
  (losses) per                                                                                                                                          
  share (Bt.)                                                                                                                                           
  ---------------- ---------------- -------- ------------- -------- ------------- -------- -------------- -------- ------------- -------- ------------- --------

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

  Cash Flow Statement                                                                              

  Unit : Bt. 000’s                                                                                 

                         Unconsolidated                               Consolidated                 

                         2010/2011        2011-2012     2012-2013     2010/2011      2011-2012     2012-2013

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

  Cash flow from                                                                                   
  operating activities                                                                             

  Profit before tax      1,642,767        435,142       78,356        3,920,931      1,392,024     375,109

  Adjustments to                                                                                   
  reconcile profit of                                                                              
  net cash provided by                                                                             
  operating activities                                                                             

  Depreciation and       190,413          196,282       234,512       357,538        369,432       411,977
  amortization                                                                                     

  Doubtful debts         (233)            (25)          -             783            279           3,720
  (doubtful debts                                                                                  
  recovery)                                                                                        

  Allowance for          (17,289)         2,720         13,192        (17,289)       2,720         13,192
  diminution in value of                                                                           
  inventories (reversal)                                                                           

  Dividend income        (9,858)          (217,596)     (9,484)       -              -             -

  Interest Expense       33,934           33,003        44,981        76,002         45,147        55,832

  Unrealized losses      (99,795)         20,508        (142,670)     (97,579)       19,969        (150,338)
  (gains) on foreign                                                                               
  exchange                                                                                         

  Exchange loss on the   37,407           253,268       -             -              253,268       -
  redemption of                                                                                    
  investment in                                                                                    
  subsidiary                                                                                       

  Provision for          -                1,682         1,673         -              7,270         12,905
  long-term employee                                                                               
  benefits                                                                                         

  Gains on sales of      (472)            (3,538)       (539)         (472)          (3,538)       (539)
  current investments                                                                              

  Loss (gain) from       (402)            -             13,811        (610)          (2)           26,070
  disposal of F/A                                                                                  

  Profit (Loss) from     1,776,472        721,445       233,834       4,239,304      2,086,570     747,928
  operation before                                                                                 
  changes in operating                                                                             
  assets and liabilities                                                                           

  Accounts receivable    (528,037)        371,036       30,498        (723,653)      496,000       444

  Balance due from a     -                -             -             (161,170)      -             -
  related company                                                                                  

  Inventories            (41,599)         (96,548)      (120,625)     (598,525)      105,741       (130,693)

  Other current assets   (89,258)         51,514        (27,331)      (105,941)      22,992        219,309

  Other non-current      3,994            1,222         (6,043)       3,997          1,221         (5,996)
  assets                                                                                           

  Accounts payable       156,367          (78,613)      46,860        281,323        (56,597)      68,428

  Other current          26,492           (27,381)      24,879        38,614         5,730         108,648
  liabilities                                                                                      

  Payment of long-term   -                -             (283)         (1,199)        (4,988)       (5,524)
  employee benefits                                                                                

  Income tax paid        -                -             -             (14,624)       (42,530)      (30,601)

  Cash flow from (used   1,304,431        942,676       181,788       2,958,128      2,614,138     971,944
  in) operating                                                                                    
  activities                                                                                       

  Cash Flow Statement                                                                              

  Unit : Bt. 000’s                                                                                 

                         Unconsolidated                               Consolidated                 

                         2010/2011        2011-2012     2012-2013     2010/2011      2011-2012     2012-2013

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

  Cash flow from                                                                                   
  Investing activities                                                                             

  Decrease (Increase) in 0.00             0.00          0.00          0.00           0.00          (11,864)
  restricted bank                                                                                  
  deposits                                                                                         

  Decrease (increase) in (164,475)        168,485       (77,461)      (164,475)      168,485       (93,462)
  current investments                                                                              

  Decrease (increase) in 139,665          369,655       (42,055)      -              -             (266,837)
  investments in                                                                                   
  subsidiaries                                                                                     

  Dividend from          9,858            217,596       9,484         -              -             -
  subsidiary                                                                                       

  Increase in advance    (182,321)        (93,486)      306,981       (411,349)      32,556        356,851
  payment for purchases                                                                            
  of assets                                                                                        

  Increase (decrease) in                  (145,631)     18,539        161,359        (145,631)     19,780
  accounts payable for                                                                             
  purchases of fixed                                                                               
  assets                                                                                           

  Purchases of property, (676,237)        (192,207)     (2,110,207)   (760,722)      (914,563)     (5,898,755)
  plant and equipment                                                                              

  Proceeds from sales of 411              -             623           1,718          70,089        15,209
  property, plant and                                                                              
  equipment                                                                                        

  Increase in intangible -                -             -             (731)          (1,433)       (5,275)
  assets                                                                                           

  Net cash used in       (711,739)        324,412       (1,894,096)   (1,174,201)    (790,497)     (5,884,353)
  investing activities                                                                             

  Cash flow from                                                                                   
  financing activities                                                                             

  Interest Paid          (34,285)         (40,538)      (58,875)      (74,766)       (54,135)      (134,916)

  Increase (Decrease) in (50,000)         80,000        305,000       142,218        132,261       717,695
  short term loans from                                                                            
  financial institutions                                                                           

  Increase in long-term  -                -             -             -              -             430,732
  loans from related                                                                               
  party                                                                                            

  Increase/(decrease) in 36,838           41,049        1,648,465     (778,852)      (275,697)     3,987,139
  long-term loans                                                                                  

  Dividend paid to       -                -             -             (278)          -             -
  minority shareholders                                                                            

  Cash received from     -                -             -             -              349,546       -
  capital increase                                                                                 

  Dividend payment       (612,000)        (1,360,000)   (136,000)     (612,000)      (1,360,000)   (136,000)

  Dividend paid to       -                -             -             -              (2,187)       (543)
  non-controlling                                                                                  
  interests of                                                                                     
  subsidiary                                                                                       

  Cash received from     -                -             -             -              -             9,033
  non-controlling                                                                                  
  interests of                                                                                     
  subsidiaries                                                                                     

  Cash provided from     (659,447)        (1,279,489)   1,758,590     (1,323,679)    (1,210,213)   4,873,141
  financing activities                                                                             

  Currency Translation   -                -             -             59,342         (162,626)     (174,205)
  changes                                                                                          

  Increase in cash and   (66,755)         (12,401)      46,282        519,590        450,801       (213,473)
  cash equivalents                                                                                 

  Cash and cash          108,797          42,042        29,641        711,418        1,231,009     1,681,810
  equivalents at the                                                                               
  beginning of period                                                                              
  (April 1)                                                                                        

  Cash and Cash          42,042           29,641        75,923        1,231,009      1,681,810     1,468,337
  equivalents at the end                                                                           
  of period (March 31)                                                                             
  ---------------------- ---------------- ------------- ------------- -------------- ------------- -------------

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

  Financial                                                                                             
  Statement                                                                                             

                              Unconsolidated                               Consolidated                 

                              2010/2011        2011-2012     2012-2013     2010/2011      2011-2012     2012-2013

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

  Liquidity Ratios                                                                                      

  Current ratio      (time)   1.68             1.43          1.12          2.65           2.31          1.66

  Quick ratio        (time)   1.17             0.81          0.60          1.60           1.39          1.00

  Cash flow current  (time)   1.29             0.85          0.14          1.66           1.22          0.38
  ratio                                                                                                 

  Receivable current (time)   5.46             4.59          5.37          7.30           6.16          6.64
  ratio                                                                                                 

  Avg. debt          (day)    65.99            78.43         67.05         49.31          58.44         54.24
  collection period                                                                                     

  Inventory turnover (time)   88.87            97.18         78.84         15.68          14.37         14.84
  period                                                                                                

  Avg. selling       (day)    4.05             3.70          4.57          22.96          25.05         24.27
  period                                                                                                

  Payable current    (time)   5.73             6.27          6.22          6.86           7.18          6.93
  ratio                                                                                                 

  Loan repayment     (day)    62.78            57.40         57.89         52.50          50.16         51.95
  period                                                                                                

  Cash cycle         (day)    7.25             24.73         13.73         19.77          33.32         26.56

  Profitability                                                                                         
  Ratios                                                                                                

  Gross profit       (%)      37.67%           15.99%        6.29%         41.85%         22.79%        14.69%
  margin                                                                                                

  Operating profit   (%)      31.42%           8.68%         -2.58%        35.10%         14.33%        2.13%
  margin                                                                                                

  Other profit       (%)      1.15%            6.08%         1.33%         0.94%          1.18%         0.92%
  margin                                                                                                

  Cash to profit     (%)      74.53%           123.80%       91.23%        69.25%         141.20%       98.12%
  margin                                                                                                

  Net profit margin  (%)      32.12%           8.96%         1.77%         34.30%         13.23%        3.94%

  Return on equity   (%)      36.63%           9.59%         1.94%         58.06%         16.14%        4.49%

  Efficiency Ratios                                                                                     

  Return on assets   (%)      24.63%           6.41%         1.09%         37.34%         11.37%        2.63%

  Return on fixed    (%)      63.83%           20.26%        7.71%         73.13%         27.99%        8.83%
  assets                                                                                                

  Asset turnover     (time)   0.77             0.72          0.62          1.09           0.86          0.67

  Financial Policy                                                                                      
  Ratios                                                                                                

  Debt to equity     (time)   0.46             0.54          1.02          0.43           0.42          1.02
  ratio                                                                                                 

  Interest coverage  (time)   52.54            19.54         7.81          47.03          32.33         10.19
  ratio                                                                                                 

  Commitment         (time)   1.50             2.10          0.08          2.44           2.01          0.16
  coverage ratio                                                                                        
  (cash basis)                                                                                          

  Pay out ratio      (%)      40%              31%           31%           40%            31%           31%
  ------------------ -------- ---------------- ------------- ------------- -------------- ------------- -------------

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. The Company commenced
operations from its first production line on April 2, 2003 and the
second production line on November 12 of the same year. Since then, the
Company has expanded its operations significantly, both within and
outside Thailand. In Thailand, the Company has invested in Extrusion
Coating lines, Cast Polyproplene line, Silicone Coating line, Thick PET
film line and Metallizers. Apart from this the Company has also set up
manufacturing subsidiaries in Turkey (2005) and in USA (2012) and
trading companies in Europe and China.

All our operational product lines in Thailand have the following
certifications:

-   ISO 14001:2004 certification on Environment Management system

-   ISO 9001:2008 certification on Quality Management system

-   OHSAS 18001:2007 certification on Occupational Health and Safety
    Management system

-   ISO 22000:2005 certification on Food Safety standards

-   TPM Excellence Award (Category A)

All our product lines in Turkey have the following certifications:

-   ISO 14001:2004 certification on Environment Management system

-   ISO 9001:2008 certification on Quality Management system

-   OHSAS 18001:2007 certification on Occupational Health and Safety
    Management system

-   BRC/IoP – certification on Global Standard For Packaging and
    Packaging Materials (For Plain and Metallized Film lines)

Polyplex group aims to become one of the world market leaders in plastic
film industry by continuously expanding its market share through regular
expansions in capacity and diversification in its product portfolio. The
new Thin PET film line in US has added another 31,000 MT per annum in
the Company’s combined capacity. By venturing into the manufacture of
related products such as BOPP film (In India) and CPP films (In
Thailand), which are other Packaging substrates, used by Converters, in
addition to PET thin film, Polyplex aims to become 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 value added products such as Silicone
coated film (In India – 2007, Thailand - 2012), Extrusion coated films
(In Thailand – 2008) and Metallized films. Company’s decision to invest
in Thick PET film line along with a Blown PP line and the second line of
Extrusion coating would help the Company to diversify further and
establish itself as a leading plastic film supplier. All these projects
in Thailand are expected to commence operations in H1 of 2013-14. The
recycling project in Thailand is being set up to find sustainable
solution for process as well as post consumer plastic waste. The Company
is also investing in a bottle grade PET resin plant in Turkey which
would be Company’s first project in this industry. The project is
expected to commence commercial operations in H2 of 2013-14

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) Optimal Cost of Production

3) Boosting delivery efficiency through focus on distributed
manufacturing and logistics

4) Diversifying the product portfolio to minimize the risk of cyclical
impact of the PET film industry, to increase stability of Earnings

5) Customer satisfaction through supply of consistent quality products

6) Judicious mix of On-shore, Off-shore and Near-shore strategy.

During the year 2012, the Thin PET film industry witnessed an oversupply
scenario due to excessive capacity addition following the exceptionally
high margins witnessed in the PET film industry in 2010. This resulted
in a significant drop in selling prices, thereby squeezing the margins
to historically low levels. Apart from this, on account of to the
implementation of multiple projects at Thailand, USA and Turkey, the
associated administrative costs went up significantly, resulting in a
sharp drop in the profitability for the current year.

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

TOTAL REVENUES

Consolidated:

Sales Revenue:

The consolidated sales revenue has decreased to Baht 9,230 million,
(Baht 913 million or 9% decline over previous year). Decrease in
revenues is mainly on account of a significant drop in selling prices of
Polyester films due to the excessive oversupply situation as explained
above. Additional sales volumes from the new Silicone Coating line
(which commenced commercial production in March 2012) have helped to
partly offset the impact of lower selling prices of PET films.

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

  ----------- ---------- -------- ----------- -------- ----------- -------- ---------- --------
              2009-10             2010-11              2011-12              2012-13    

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

  Exports     5,965.27   83.72    9,611.07    85.94    8,495.31    83.75    7,438.18   80.59

  Domestic    1,160.09   16.28    1,572.10    14.06    1,647.80    16.25    1,791.84   19.41
  sales                                                                                

  Total       7,125.36   100.00   11,183.17   100.00   10,143.11   100.00   9,230.02   100.00
  ----------- ---------- -------- ----------- -------- ----------- -------- ---------- --------

Note: Sales made by the distribution company in the US/China has been
considered as Exports.

The value additions [VA = Selling price – Raw Material Cost] during the
year for PTL and PE are shown below. During the current year, value
additions have significantly dropped due to the market scenario of
oversupply, as explained above.

[]

[]

Other Income:

The other income has decreased from Baht 120.69 million to Baht 87.77
million, a drop of Baht 32.93 million, mainly due to higher other income
last year at Thailand on account of some creditor balances written off
and also due to lower export incentive income in current year due to
lower selling prices.

The company earned an exchange gain of Baht 177.4 million in this year
as compared to an exchange loss of Baht 125.98 million in the previous
year. The net exchange gains are mainly at Thailand on account of Forex
Loan restatements, due to strengthening of the Baht against the USD as
well as Euro.

The net impact of all the above factors have contributed to an overall
decrease in total revenue by Baht 768.62 million or 7.5% to Baht
9,495.19 million, over the previous year.

Standalone:

Sales Revenue:

The Company’s total sales revenue is mainly driven by Exports, with
75-80% of its total sales revenue coming from exports.

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

  ----------- ---------- -------- ---------- -------- ---------- -------- ---------- --------
              2009-10             2010-11             2011-12             2012-13    

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

  Exports     2,496.48   78.64    3,950.99   79.33    3,640.71   79.83    3,165.86   75.28

  Domestic    678.17     21.36    1,029.75   20.67    919.94     20.17    1,039.58   24.72
  sales                                                                              

  Total       3,174.65   100.00   4,980.74   100.00   4,560.65   100.00   4,205.44   100.00
  ----------- ---------- -------- ---------- -------- ---------- -------- ---------- --------

In the financial year 2012-13, the Company achieved total sales revenues
of Baht 4,205.44 million, a decrease of Baht 355.21 million or 7.8%,
mainly on account of a sharp drop in selling prices, as compared with
the previous year, due to the oversupply situation in the market, as
explained above. The current year also included sales of Silicone Coated
Film which commenced commercial production in March 2012, which have
helped to partly offset the impact of lower sales realization on overall
sales revenue.

Other Income:

The Company has recorded an Exchange gain of Baht 173.84 million as
against an Exchange loss of Baht 221.78 million in the previous year.
The gain is mainly on account of the restatement of USD and Euro term
loans, as explained earlier.

The other income has decreased to Baht 49.40 million from Baht 77.72
million, as last year included an extra ordinary item of income from
write off of an old creditor balance and also due to lower export
incentive income in current year due to lower selling prices.

The dividend income has decreased to Baht 9.5 million from Baht 217.6
million, as there is no dividend income from the Singapore subsidiary
this year and also, the dividend from the US subsidiary was lower due to
lower profits in FY 2011-12 as compared to FY 2010-11.

The net impact of all the above factors have contributed to an overall
decrease in total revenue by Baht 417.8 million or 8.6% to Baht 4,438.16
million, as compared to the previous year.

TOTAL EXPENSES

Consolidated

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

Cost of sales (COS) amounted to Baht 7,874 million as compared to Baht
7,832 million of previous year, representing 87.17% of the total
expenses lower than 88.84% 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                                  2012-13   2011-12   2010-11

  Raw materials and consumables used           76.0%     79.2%     78.2%
  (incl.change in inventory)                                       

  Depreciation ( in COS)                       5.1%      4.6%      5.1%

  Salaries, wages and other employee benefits  6.9%      5.5%      5.7%
  (in COS)                                                         

  Utilities (Power/Natural Gas/ Chilled water  7.6%      6.2%      7.2%
  etc)                                                             

  Others                                       4.4%      4.5%      3.8%

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

The increase in the COS in absolute terms is Baht 42.6 million (or
0.54%), which is mainly on account of lower prices of most of the raw
material, partly offset by higher volumes from the Silicone Coated film
line.

The selling expenses have been higher by about Baht 49.59 million or
8.54% due to higher sales volumes, including additional volumes of the
silicone coated film. The freight rates have also been higher this year.
The administrative expenses have been higher by Baht 251.48 million or
90.74% due to overall increase in scale of operations on account of new
businesses and also higher administrative expenses at the subsidiaries,
particularly the subsidiaries in the USA and Turkey, where new projects’
implementation is underway. Apart from the increase in administrative
expenses due to the project implementations (mainly salaries of service
staff), the subsidiary in USA had higher administrative expenses due to
the operating costs of the metalizing assets acquired in the mid of the
year. The major increase is in salary expense due to increase in the
number of employees to manage the new operations. There is also an
increase in legal and professional charges on a consolidated basis, due
to additional legal opinions taken this year (For merger of Polyplex
(Americas) Inc, acquisition of Polyplex Resins etc).

The finance costs, on consolidated basis, during the year were Baht
86.81 million, an increase of Baht 30.60 million or 54.43% over the
previous year. The key reason for the increase in finance charges is the
higher short term borrowing at Thailand and the subsidiaries at USA and
also the interest on the Silicone Coated film loan, which was under
project implementation phase in previous year. This is partly offset by
the term loan repayments made during the year. There was a significant
increase in finance charges at the Turkey subsidiary, due to the charges
associated with the execution of the term loan agreement for the PET
bottle grade project financing.

Standalone

Cost of sales (COS) amounted to Baht 3,941 million representing 91.4% of
the total expenses, higher than Baht 3,831 million, or 87.4% of the
previous year. The higher cost of sales is due to additional volumes of
silicone coated film this year, partly offset by lower volumes in other
businesses as well as lower raw material costs.

A broad breakup of the COS is given below:

  ------------------------------------------ --------- --------- ---------
  Description                                2012-13   2011-12   2010-11

  Raw materials and consumables (incl.change 77.3%     79.4%     78.3%
  in all inventory)                                              

  Depreciation ( in COS)                     5.7%      4.9%      5.8%

  Salaries, wages and other employee         7.8%      6.4%      6.8%
  benefits (in COS)                                              

  Utilities (Power/Natural Gas/ Chilled      8.2%      7.5%      7.9%
  water etc)                                                     

  Others                                     1.0%      1.8%      1.2%

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

­

The selling expenses have been higher due to higher sales volumes of
silicone coated film and also higher freight charges, as silicone coated
film is exported mainly to Europe and US which have higher freight
rates. The administrative expenses have been higher by 6.31% due to
overall increase in scale of operations.

The finance charges have increased from Baht 36 million to Baht 46
million, due to higher working capital borrowing and also the interest
on the Silicone Coated film loan, which was under project implementation
phase in previous year. This is partly offset by the term loan
repayments made during the year.

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

Gross profit margin on a consolidated basis has been 14.69% as compared
to 22.8% of previous year. On a standalone basis, The Company had a
gross profit margin of 6.29% as compared to 16% in the previous year,
mainly due to drop in the sales realization coupled with increase in
costs.

On a consolidated basis, the operating profit margin in the current year
has decreased from 14.3% to 2.13%. And on a standalone basis, it has
decreased from 8.7% to a loss of 2.58%, mainly due reasons of lower
average sales realization and higher operating costs during the year, as
explained above.

Net profit margin on a consolidated basis has been 3.9%, as compared to
13.2% of the previous year and on a standalone basis it has been 1.8% as
compared to 9% of previous year.

12.2.2 Financial status

TOTAL ASSETS

As at 31^(st) March 2013, The Company’s consolidated total assets were
Baht 16,456 million, higher by 37.84% as compared to Baht 11,939 million
in the previous year.

On a Standalone basis, the total assets as at 31^(st) March 2013 were
Baht 8,112 million, higher by about 29.45% compared to Baht 6,267
million of previous year.

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 Receivables as of March 31, 2013
stood at Baht 1,384 million which is lower compared to Baht 1,397
million as of March 31, 2012 or a marginal decrease of 0.88%.

The Company’s Standalone Net Accounts Receivables as of 31^(st) March,
2013 were Baht 761 million, as against Baht 806 million in the previous
year, or a decrease of 5.6%. The decrease in receivables is mainly due
to the significant decrease in selling prices, partly offset by the
additional sales volumes of the Silicone Coated film line in Thailand.
The average debt collection period has also reduced compared to previous
year for Standalone as well as Consolidated.

Inventories

On a consolidated basis, the total inventories have increased to 1,741
million from Baht 1,624 million, an increase of Baht 118 million or
7.3%. On a standalone basis, there is an increase from Baht 565 million
to Baht 672 million or 19.03%. The increase in inventory levels is
mainly due to higher stock of finished goods and work in process
inventory, higher stock of stores and spares at Thailand and higher raw
material inventory at the US subsidiary to plan for the start up of the
new PET film line in Q1 of 2013-14.

Net Fixed Assets

Consolidated Net Fixed Assets (including capital work in progress –CWIP,
Goodwill and Other Intangible Assets) have increased by Baht 5,092
million from Baht 6,366 million to Baht 11,458 million, due to the net
impact of the following:

-   Increase due to net additions to fixed assets/Intangible assets –
    Baht 5,947 million, mainly on account of the Capital work in
    progress relating to projects under implementation in Thailand,
    Turkey and USA, apart from other normal CAPEX.

-   Decrease on account of Translation adjustment – Baht 443million (net
    of translation impact on accumulated depreciation), mainly due to
    translation of subsidiaries Net Fixed Assets, denominated in Euro,
    USD and RMB, into THB for the purpose of consolidation.

-   Decrease on account of depreciation charged during the year – Baht
    412 million

The Company (standalone) Net Fixed Assets have increased by Baht 1,879
million, from Baht 3,119 million to Baht 4,998 million, due to the net
impact of the following:

-   Increase due to net addition to fixed assets - Baht 2,114 million
    mainly on account of capital work in progress relating to the PET
    Thick Film project, Blown PP and Extrusion Coated Film projects and
    Normal CAPEX in existing plants

-   Decrease on account of depreciation charged during the year – Baht
    235 million

Investment in subsidiaries

During the year, the Company’s subsidiary Polyplex Europa Polyester Film
Sanayi Ve Ticaret A.S. (PE) invested Euro 5.9 million in acquiring 67%
stake in Polyplex Resins Sanayi Ve Ticaret A.S (PR) from Polyplex (Asia)
Pte Ltd. Thereafter in February 2013, PE made an additional investment
of Euro 0.2 million in PR.

During the year, the Company invested Baht 19.3 million in its 80% held
subsidiary EcoBlue Limited in Thailand, under which a project for
recycling of film waste is being implemented.

In January 2013, the Company invested USD 0.7 million in acquiring the
balance stake of 19.76% in Polyplex (Americas) Inc (PA) from the
minority shareholders. Thereafter PA was merged with Polyplex USA LLC
(PUL), another 100% owned subsidiary of PTL.

Return on assets

On a consolidated basis, the return on assets has been 2.63% as compared
to 11.37% in the previous year. On a Standalone basis, the Company’s
return on assets has been 1.09% as compared to 6.41% in the previous
year. Decrease is mainly due to decline in profitability during the
current year and also the significant increase in asset base due to the
investment in projects.

12.2.3 Liquidity

Cash flow

For the year 2012-13, the Company and its subsidiaries generated net
cash from operating activities amounting to Baht 972 million.

The deployment of this cash was as under:

-   Baht 11.9 million had to be kept aside as restricted bank deposit,
    for servicing the loan repayment, as part of the Loan covenants of
    the US subsidiary’s term loan for the PET film line project.

-   Baht 93.5 million was invested in current investments

-   Baht 266.8 million was cash paid for subsidiaries’ acquisition (Baht
    244 million acquisition by Polyplex Europa Polyester Film Sanayi Ve
    Ticaret A.S.(“PE”), Turkey, of the shares of Polyplex Resins Sanayi
    Ve Ticaret A.S (PR), from Polyplex (Asia) Pte Ltd (PAPL) and Baht
    22.8 million paid by the Company for acquiring the balance stake of
    19.76% from the minority shareholders of Polyplex Americas Inc (PA).

-   Net additions to fixed assets, including advances paid for project
    machinery & equipments – Baht 5,512 million. This includes the
    amount expended on various ongoing projects in Thailand, USA and
    Turkey.

Apart from cash generated from operating activities as explained above,
the company and its subsidiaries had net cash inflow of Baht 4,873
million due to following:

-   Drawdown of Short term loan for WC financing – Baht 717.7 million

-   Drawdown of Long term loans from banks, for new projects (net of the
    scheduled repayments of older loans) - Baht 3,987.1 million

-   Drawdown of Long term loan from related party – Baht 430.7 million

-   Cash Received from minority shareholders in subsidiaries – Baht 9
    million

-   Cash paid for interest on term loans and short term loans – Baht 135
    million

-   Dividend payment – Baht 136 million

-   Dividend payment to minority interest of subsidiaries – Baht 0.5
    million

The deficit thereof, along with the reduction on account of translation
adjustment of Baht 174 million, and opening balance of Baht 1,681.8
million resulted in a net closing balance of Baht 1,468.3 million.

During the year 2012-13, the Company, on a standalone basis, had
generated net cash from operating activities of Baht 181.8 million
[dividend from the US subsidiary of Baht 9.5 million], and Baht 1,953.5
million net inflow on account of loan movement (long term and short term
bank borrowings).

The deployment of this cash is as under:

-   Investment in subsidiaries – Baht 42.1 million (Bt 20 million in
    EcoBlue Limited in Thailand and Baht 22 million in acquiring the
    minority stake in Polyplex Americas Inc(PA),

-   Baht 77.5 million was invested in current investments

-   Net additions to fixed assets, including advances paid for project
    machinery & equipments – Baht 1,784.1 million.

-   Cash paid for interest on term loans and short term loans – Baht
    58.9 million

-   Dividend payment – Baht 136 million

-   

The surplus thereof together with the opening balance of Baht 29.6
million resulted in a net closing balance of Baht 75.9 million.

Liquidity ratio

In 2012-13, consolidated current ratio was 1.66 and quick ratio was
1.00. The Company’s (standalone) current ratio and quick ratio were 1.12
and 0.60 respectively. Consolidated average debt collection period
during 2012-13 was 54 days along with Account payables period of 52 days
and average selling period of 24 days, resulting in a cash cycle of 27
days as against a cash cycle of 33 days of previous year. The average
debt collection period of the Company (standalone) during 2012-13 was 67
days along with Accounts payable period of 58 days and average selling
period of 4 days resulting in cash cycle of 14 days as against a cash
cycle of 25 days in previous year.

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, 2013, consolidated current liabilities stood at
Baht 2,948 million, an increase of Baht 730 million from Baht 2,218
million in the previous year, mainly due to the following movements:

-   Increase in short term borrowings at the Company and its subsidiary
    in USA – Baht 717.7 million

-   Increase in Trade and other payables by Baht 84.4 million due to
    increase in scale of operations.

-   Increase in other liabilities by Baht 101.6 million

-   Increase in current portion of long term loans by Baht 91.4 million
    due to overall increase in loans becoming due for repayment, after
    expiry of initial grace period.

-   Decrease in Payable for subsidiary acquisition – Baht 244 million
    (PR acquisition by PE from PAPL, as explained above under 9.2.3 on
    ‘Liquidity’, under deployment of cash generated.

-   Decrease in Income tax payable by Baht 20.8 million, mainly due to
    lower tax in the subsidiary in the USA due to lower taxable profits
    this year.

As at 31^(st) March, 2013, The Company’s Standalone current liabilities
stood at Baht 1,529 million, an increase of Baht 495 million from Baht
1,034 million in the previous year, mainly due to the following:

-   Increase in Short term borrowings by Baht 305million

-   Increase in Trade and other payables Baht 62.7 Million

-   Increase in other current liabilities Baht 28.3 Million

-   Increase in current portion of loans Baht 99.4 Million

Term Debts

On a consolidated basis, the term debt (net of current portion) has
increased by Baht 4,052 million, including Baht 430.7 million of term
loans from related party. The increase in consolidated debt is mainly on
account of new loans drawn by the Company and its subsidiaries in USA
and Turkey for the ongoing expansions. This is partially offset by
repayments made during the year and net exchange gain on loan
restatements in Thailand.

The Company’s term debt (net of current portion) has increased by Baht
1,406 million due to additional borrowings at Thailand for financing the
ongoing projects. This is partly offset by loan repayments during the
year and also due to the exchange gain on the Euro/USD loan
restatements, due to the strengthening of the THB against these
currencies.

Leveraging & interest coverage ratio

The net debt equity ratio (debt only - short term and long term,
including current portion, after netting off cash & cash equivalents and
current investments) of 0.47 on a consolidated basis and 0.69 for the
Company standalone, although higher than previous year, are still quite
comfortable. Debt equity ratio (for total debt, including current +
non-current liabilities), is 1.02 on a consolidated basis as well as for
the Company standalone.

The consolidated interest coverage ratio was 5.32 times as against 25.76
in previous year. The Company’s standalone interest coverage ratio was
2.7 times as against 13.8 times in previous year. Decrease in the
interest coverage ratio is mainly due to decrease in EBITDA during the
current year and increase in interest expense due to higher average
borrowings.

Commitments

As at 31 March 2013, company had the following commitments and
contingent liabilities:

(a) As at 31 March 2013, the Company had commitments totaling Baht 197.0
    million under various service agreements (2012: Baht 221.0 million).
    These agreements expire between April 2013 and September 2016.

(b) The Company’s foreign exchange contracts outstanding at 31 March
    2013 are summarized below.

+------------+-------+-------+-------------------+--------------------+
|            | B     | Sold  | Contractual       |                    |
|            | ought |       | exchange rate     |                    |
+------------+-------+-------+-------------------+--------------------+
| Foreig     | a     | a     | Bought            | Sold               |
| n currency | mount | mount |                   |                    |
+------------+-------+-------+-------------------+--------------------+
|            | (Mil  | (Mil  | (Baht per 1       |                    |
|            | lion) | lion) | foreign currency  |                    |
|            |       |       | unit)             |                    |
+------------+-------+-------+-------------------+--------------------+
| US dollar  | 2.08  | 19.39 | Baht 29.4650 -    | Baht 29.5920 -     |
|            |       |       | 30.2650 per USD 1 | 30.9750 per USD 1  |
+------------+-------+-------+-------------------+--------------------+
|   Swiss    | 0.30  | -     | Baht 32.8089 per  |                    |
|   franc    |       |       | CHF 1             |                    |
+------------+-------+-------+-------------------+--------------------+
|   Euro     | 0.57  | 1.09  | Baht 37.9000 -    | Baht 38.0200 -     |
|            |       |       | 39.5700 per EUR 1 | 40.8268 per EUR 1  |
+------------+-------+-------+-------------------+--------------------+
|   Japanese | -     | 60.06 | -                 | Baht 0.3121 -      |
|   yen      |       |       |                   | 0.3254 per JPY 1   |
+------------+-------+-------+-------------------+--------------------+

  The Company’s subsidiary in Turkey had the following forward exchange
  contracts outstanding at 31^(st) March, 2013:

+--------------------------+-------------------------------------------+
| Bought amount            | Contractual exchange rate                 |
+--------------------------+-------------------------------------------+
| YTL 3.5 million          |   YTL 1.8005 - 1.8231 per USD 1           |
+--------------------------+-------------------------------------------+
| YTL 0.5 million          |   YTL 2.3860 per EUR 1                    |
+--------------------------+-------------------------------------------+
|                          |                                           |
+--------------------------+-------------------------------------------+

  (c) As at 31 March 2013, The Company and its subsidiaries had capital
  commitments of approximately Baht 736.4 million relating to the
  construction of building and acquisition of machinery and equipment
  for the upcoming projects. For the Company Standalone, the capital
  commitments amounted to Baht 263.9 million.

  (d) As at 31 March 2013, the Company is committed for rentals (under
  Operating Lease agreements) as follows:

+----------------------------------------------------+-----------------+
|                                                    | Million Baht    |
+----------------------------------------------------+-----------------+
| Payable within:                                    |                 |
+----------------------------------------------------+-----------------+
|   1 years                                          | 8.1             |
+----------------------------------------------------+-----------------+
|   2 to 5 years                                     | 6.1             |
+----------------------------------------------------+-----------------+

(e) As at 31 March 2013, the Company has provided guarantee of USD 75
million for the long-term loans obtained by its subsidiary (Polyplex USA
LLC). As at 31 March 2013, the outstanding balance of this subsidiary’s
loan was USD 52.1 million.

(f) As at 31 March 2013, the Company has provided guarantee of EUR 2.3
million (2012: EUR 4.5 million) for the long-term loans obtained by its
subsidiary (Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim
Sirketi).

(g) Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi has
provided guarantee for the long-term loans obtained by Polyplex Resins
Sanayi Ve Ticaret Anonim Sirketi to the extent of EUR 27.5 million. As
at 31 March 2013, the outstanding balance of this loan was EUR 20.7
million, of which EUR 13.9 million was guaranteed by Polyplex Europa
Polyester Film Sanayi Ve Ticaret Anonim Sirketi.

(h) The Company has provided guarantee of Baht 15.0 million for credit
facilities obtained by its subsidiary (EcoBlue Limited). As at 31 March
2013, the subsidiary has yet to utilise these credit facilities.

(i) As at 31 March 2013, there were outstanding bank guarantees of
approximately Baht 0.7 million and EUR 15.7 million (2012: Baht 63.8
million and EUR 25.9 million) issued by the banks on behalf of the
Company and its subsidiaries in respect of certain performance bonds as
required in the normal course of businesses

Shareholders’ equity

The Company’s shareholders’ equity on a consolidated basis reduced from
Baht 8,320 million to Baht 8,088 million, which is after accounting for
Translation adjustment loss of Baht 473 million, dividend payment of
Baht 136 million by the Company for FY 2011-12, partly offset by Net
profits during the year of Baht 374 million and surplus on acquisition
of minority stake in Polyplex (Americas) Inc (Baht 3.3 million). On a
standalone basis, the decrease in shareholder equity is Baht 57.6 mainly
due to dividend payout of Baht 136 during the year, partly offset by
profits during the year of Baht 78 million.

Return on equity

On a consolidated basis, the Return on equity has been 4.49% as compared
to 16.14%, in the previous year due to decrease in profitability. The
ROE of the Company Standalone was 1.94% as compared to 9.59% in previous
year mainly due to decrease in profitability for the year.

The Company has a policy to pay dividend at 40% of consolidated net
profits, taking into account economic conditions, growth plans, future
deployment opportunities, the Company’s financial position and liquidity
and subject to the approval by the shareholders. For the year 2012-13,
the Company’s board has proposed a dividend of Baht 0.14 per share
payable in August 2013, subject to the approval of shareholders in the
Annual General meeting in July 2013. The lower than 40% dividend payout
ratio for current year is keeping in mind the lower profitability
achieved in this year and the necessity to conserve cash for deployment
in ongoing expansion projects, including increased working capital
requirement due to various new projects starting in 2013.

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

  In comparison with the previous year, the FY 2012-13 was a very
  challenging year for the Polyester Film industry with excessive
  oversupply resulting in a sharp decline in selling prices and thereby
  squeezing the margins to historically low levels.

  The key challenges for the company in the coming year would be the
  following:

-   Raw material price volatility and any significant upward movement in
    prices, which the company might not be able pass on to the end
    customers in the current weak market scenario.

-   Successful implementation and ramp up of the Thick PET film line,
    Blown PP and Thermal Lamination Line 2 in Thailand and the PET
    Bottle plant in Turkey.

-   Successful Ramp up of the Thin PET film line in USA.

-   Given the recent volatility of THB against USD and Euro, the Impact
    of FX fluctuations on profits of the company will be one of the
    major concerns. The company is exposed to 2 types of risks, one on
    the operational profits as well as the restatement of the assets/
    liabilities of the company on a standalone basis and secondly, on
    the conversion of the subsidiaries’ P&L accounts, which are
    denominated in USD, Euro and RMB, into THB currency for the purpose
    of consolidation. With the new USD and Euro Loans drawn for the
    ongoing expansions, the Forex loan portfolio of the Company has
    increased to almost USD 100 million (including USD equivalent of
    Euro loans), thereby exposing the company to significant FX
    fluctuation risks on the Forex loan restatements.

  In the long run, the Company still remains 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 specialty film products. In
    line with the above strategy, the manufacturing unit in USA will
    also have its own resin plant.

  b. Metallizer plants in Thailand and Turkey have helped improve the
  product mix by increasing the share of specialty film in the overall
  sales portfolio. In Thailand PET as well CPP films are being
  Metallized whereas in Turkey and in US, the Metallizers are used to
  metalize PET films.

  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. The second Extrusion Coating
  line under implementation in Thailand will provide an opportunity to
  the company to meet the growing demand in Europe and USA.

  d. The CPP line which started in Thailand in March 2010 has helped the
  company broad base its product offerings to the converters and move
  towards becoming a complete packaging solution provider for its
  customers, rather than just a PET film supplier.

  e. The Silicone Coating project which commenced commercial production
  in March 2012 and the Blown PP line under implementation in Thailand,
  will further diversify the product portfolio of the company and add a
  highly value added product in its portfolio.

  f. The Thick PET film line, under implementation in Thailand will also
  help further diversify the product portfolio and mitigate the risk
  associated with the cyclical nature of the Thin PET film industry, as
  Thick PET film is a relatively more stable industry.

  g. The Company has successfully implemented the project for Thin PET
  film line in the USA in Q1 2013-14. With its extensive market reach in
  the North American region, the Company remains confident that this
  decision, backed by its near shoring strategy will enable it to
  service its customers in a more efficient manner.

  h. The Bottle grade plant in Turkey which is currently in the
  implementation phase will be the Company’s first project in the PET
  bottle industry.

2.  Polyplex has been deriving benefits from the larger size and
    distributed manufacturing operations across 4 existing locations
    whereby it has qualified as a preferred global supplier with many
    multinational and large customers with global operations.

3.  Polyplex has been able to establish itself as a reliable supplier of
    consistent quality products

4.  Polyplex had also invested significantly in distribution, through
    the acquisition of a company in USA (Polyplex (Americas) Inc. (PA),
    [which has now been merged with Polyplex USA LLC (PUL), the
    manufacturing entity in USA], the investment in Polyplex (Trading)
    Shenzhen Co Ltd, China, setting up of the trading company in
    Netherlands in April 2013 and by establishing warehouses across
    Europe for better distribution.

12.4 Remuneration for auditor/s

1.  Audit fee

  The Company paid audit fee as below:

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

-   A total of Baht 2,175,000.00 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 advisory services, including BOI and tax audit services, as
  follows:

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

-   A total of Baht 238,500 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 Baht 560,000 payable
    in the future for the service not yet fully done for the past fiscal
    year.