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|  Financial Information                                                |
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1.1 Independent Auditor's Report

I have audited the accompanying consolidated and separate financial
statements of Thai Carbon Black Public Company Limited and its
subsidiary (the “Group”), and of Thai Carbon Black Public Company
Limited (the “Company”), respectively, which comprise the consolidated
and separate statements of financial position as at 31 March 2016, the
consolidated and separate statements of income, comprehensive income,
changes in equity and cash flows for the year then ended, and notes,
comprising a summary of significant accounting policies and other
explanatory information.

Management’s Responsibility for the Consolidated and Separate Financial
Statements

Management is responsible for the preparation and fair presentation of
these consolidated and separate financial statements in accordance with
Thai Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of
consolidated and separate financial statements that are free from
material misstatement, whether due to fraud or error.

Auditor’s Responsibility

My responsibility is to express an opinion on these consolidated and
separate financial statements based on my audit. I conducted my audit in
accordance with Thai Standards on Auditing. Those standards require that
I comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated and separate
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and
appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the consolidated and separate financial statements
present fairly, in all material respects, the financial position of the
Group and the Company, respectively, as at 31 March 2016, and their
financial performance and cash flows for the year then ended in
accordance with Thai Financial Reporting Standards.

(Orawan Chunhakitpaisan)

Certified Public Accountant

Registration No. 6105

KPMG Phoomchai Audit Ltd.

Bangkok

30 May 2016

1.2 Summary of Financial Information

Statement of financial position (Audited) (Unit : Baht)

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Statement of financial position (Audited) (Continued) (Unit : Baht)

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Statement of income (Audited) (Unit : Baht)

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Statement of comprehensive income (Audited) (Unit : Baht)

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Statement of cash flow (Audited) (Unit : Baht)

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Statement of cash flow (Audited) (Continued) (Unit : Baht)

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Financial Ratio (The Company only)

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Financial Ratio (Consolidated)

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| 13. Management Discussion and Analysis of Operating Results           |
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Production and sales

In spite of continuing recessionary conditions in key economies, and
high level of import of Chinese Carbon black in Thailand and Asian
markets, the production and sales performance of the company this year
demonstrated signs of improvement over immediately preceding 12 months’
period. Total production during the year remained at 181,124 MT which is
14.1% higher than 158,803 MT in preceding period. Total sales during the
current year were up by 6.9% to 175,784 MT as compared to 164,452 MT
preceding period. Sales revenue declined to THB 4,836 million during
financial year 2015-16 as compared to 6,608 million in preceding period.
The revenue remained down in terms of total amount because of lower raw
material prices and its linkage with the selling price.

Other Income

During current year the company earned interest and dividend of THB 388
million as compared to 287 million in preceding period due to higher
dividend received. Current year, other incomes includes Insurance claim
received of THB 82 million and exchange loss of THB 56 million compared
to exchange gain of THB 117 million.

Cost and Expenses

Cost of sale of current period was 3,779 million, which is 78% of sales
as compared to 5,423 million, which is 82% of sales in preceding period.
Several initiatives taken by the company to improve efficiency like
strategized raw material buying, yield, productivity and quality have
benefitted company in maintaining gross margins even in challenging
market scenarios.

During the period overhead costs were kept under control. The selling,
general and administration costs remained at THB 417 million compared to
THB 434 million during preceding period, posting an improvement of 4.0%
over last year. During current year, finance cost was lower by 12.6% at
THB 111 million compared to THB 127 million in the preceding year.

Impairment losses

There was no impairment recognized during the current year however in
line with company’s policy to account for an impairment loss on any
investment where there has been a significant and prolonged decline in
the fair value below the cost, company had recognized a loss of THB 59
million during preceding year on equity investments in Alexandria Fiber
S.A.E., Egypt.

Profits

On a consolidated basis, the company recorded a net profit of 927
million as compared to 993 million during preceding period. The main
reason for lower profit is exchange loss of 56 million baht in the
current year compared to exchange gain of 117 million in preceding year.
This is also impacted by the lower equity income of 161 million during
the year compared to 166 million in the preceding year.

Financial Position (Company only)

Assets

The total assets as of 31^(st) March 2016 amounted to THB 15,276 million
compared to 13,159 million as of 31^(st) March 2015. Details of major
assets are as follow

-   Cash

During current year, TCB has repaid long term debt of THB 487 million
out of internal accruals. The existing high interest bearing long term
debt was replaced by low interest bearing long term debt, resulting in a
gain of 55 basis points. The repayment schedule is also softer than the
earlier one. The cash reserves increased from THB 1,062 million on
31^(st) March 2015 to THB 2,382 million on 31 March 2016.

-   Inventory

At the year end the inventories were at THB 574 million compared to THB
404 million because of inventory of finished goods and raw material
being on the higher side compared to last year. This is for building
stocks in view of upcoming annual turnaround.

-   Receivables

Trade and other receivables as of 31 March 2016 were lower at THB 690
million THB as compared to 889 million THB as of 31^(st) March 2015. The
reduction is due to raw material prices being on the lower side
consequently bringing final products prices lower.

-   Property, plant and equipment

Net value of Property, Plant and Equipment (after depreciation) was
1,536 million as compared to 1,614 million as of 31^(st) March 2015.
During current year company added THB 174 million in property, plant and
equipment. The addition was primarily in efficiency improvement, health,
environment, and safety projects.

Liabilities and Shareholders’ Equity

The total liabilities increased from THB 3,296 million as of 31^(st)
March 2015 to 4,797 million THB as of 31^(st) March 2016. The increase
is mainly due to availing long term loan on softer terms to replace the
earlier long term loan taken in 2011.

Total equity during the current period increased to 10,479 million as of
31^(st) March 2016 from 9,863 million as of 31^(st) March 2015. The net
increase of 616 million THB is represented by current year profit of 796
million THB and dividend distributions of 180 million THB for year
2014-15.

Earnings per share

The current year’s earnings per share decreased to THB 2.65 compared to
THB 2.83 in the preceding period in view of lower profit amount.

Book value per share

As of 31^(st) March 2016, book value per share was THB 34.93 compared to
32.88 as on 31^(st) March 2015. The increase is due to current year’s
profit adjusted with dividends paid during the year.

Analysis of Financial Ratios (Company only)

Liquidity

The company’s current ratio as of 31^(st) March 2016 was 11.22 against
1.47 as of 31^(st) March 2015. This is due to current assets increased
in view of the receivable from Indigold falling due within one year.
However company continued to follows prudent cash flow management
policies and maintains good liquidity. The company’s quick ratio for the
year 2015-16 remains at 10.52 against 1.17 in the preceding year. The
reason for this change is the same as mentioned above.

Profitability

Current year gross profit margin of the company improved to 22%,
compared to 18% in preceding period. The net profit margin was 15%
compared to 12% in the preceding period. This is due to sharp focus on
raw material buying, increased customer focus and keeping the cost under
control.

Efficiency

Lower unit selling prices in view of lower raw material prices have
resulted in lower revenue, consequently the assets turnover ratio has
dropped to 0.37 in 2015-16 from 0.53 in 2014-15.